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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001104659-01-501606.txt : 20010814
<SEC-HEADER>0001104659-01-501606.hdr.sgml : 20010814
ACCESSION NUMBER:		0001104659-01-501606
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010630
FILED AS OF DATE:		20010813

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NORTECH SYSTEMS INC
		CENTRAL INDEX KEY:			0000722313
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC COMPONENTS, NEC [3679]
		IRS NUMBER:				411681094
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-13257
		FILM NUMBER:		1705874

	BUSINESS ADDRESS:	
		STREET 1:		641 EAST LAKE ST
		STREET 2:		SUITE 234
		CITY:			WAYZATA
		STATE:			MN
		ZIP:			55391
		BUSINESS PHONE:		6124734102

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DIGIGRAPHIC SYSTEMS CORP
		DATE OF NAME CHANGE:	19881113

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DSC NORTECH INC
		DATE OF NAME CHANGE:	19901217
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>j1431_10q.htm
<DESCRIPTION>10-Q
<TEXT>
<html>

<head>
<title>Prepared by MerrillDirect</title>
</head>

<body link=blue vlink=purple>

<div>




<hr size=2 width="100%" noshade color=black align=right>






<hr size=1 width="100%" noshade color=black align=right>



<p align=center><b><font size=5>SECURITIES AND EXCHANGE
COMMISSION</font></b><font size=2><br>
<b>WASHINGTON,&nbsp;
D.C. 20549</b></font></p>

<p align=center><b><font size=5>FORM
10-Q</font></b></p>

<p align=center><font size=2>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width=41 valign=top><font size=2   face=Wingdings>&#253;</font></td>
  <td width=681 valign=top><b><font size=3>Quarterly Report
  Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</font></b></td>
 </tr>
 <tr>
  <td width=41 valign=top>&nbsp;</td>
  <td  align=center width=681 valign=top><b><font size=2>For
  the quarterly period ended June 30, 2001.</font></b>&nbsp;</td>
 </tr>
 <tr>
  <td width=41 valign=top><font size=2   face=Wingdings>o</font></td>
  <td width=681 valign=top><b><font size=3>Transition Report
  Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</font></b></td>
 </tr>
 <tr>
  <td width=41 valign=top>&nbsp;</td>
  <td  align=center width=681 valign=top><b><font size=2>For
  the Transition period from ___________ to ___________.</font></b></td>
 </tr>
</table>

<p><font size=2>Commission File Number 0-13257.</font></p>

<div align=center>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width=721 colspan=8 valign=top><b><font size=5>NORTECH&nbsp; SYSTEMS&nbsp;
  INCORPORATED</font></b></td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=8 valign=top><div align=center><b><font size=5><hr size=1 width="71%" noshade color=black align=center></font></b></div></td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=8 valign=top><font size=2>(Exact name of registrant as specified in its chapter)</font></td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=8 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=280 valign=top><b><font size=2>MINNESOTA</font></b></td>
  <td  align=center width=110 colspan=4 valign=top>&nbsp;</td>
  <td  align=center width=26 valign=top>&nbsp;</td>
  <td  align=center width=194 valign=top><b><font size=2>41-1681094</font></b></td>
  <td  align=center width=110 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=280 valign=top>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=center width=110 colspan=4 valign=top>&nbsp;</td>
  <td  align=center width=26 valign=top>&nbsp;</td>
  <td  align=center width=194 valign=top>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=center width=110 valign=top>&nbsp;</td>
 </tr>
 <tr height=15>
  <td  align=center width=280 rowspan=2 valign=top><font size=2>(State of other
  jurisdiction of<br>
  Incorporation or organization)</font></td>
  <td  align=center width=110 colspan=4 rowspan=2 valign=top>&nbsp;</td>
  <td  align=center width=26 rowspan=2 valign=top>&nbsp;</td>
  <td  align=center width=194 height=15 valign=top><font size=2>(I.R.S. Employer</font></td>
  <td  align=center width=110 rowspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr height=15>
  <td  align=right width=194 height=15 valign=top><font size=2>Identification No.)</font></td>
 </tr>
 <tr>
  <td  align=center width=280 valign=top>&nbsp;</td>
  <td  align=center width=110 colspan=4 valign=top>&nbsp;</td>
  <td  align=center width=26 valign=top>&nbsp;</td>
  <td  align=center width=194 valign=top>&nbsp;</td>
  <td  align=center width=110 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width=294 colspan=2 valign=top><b><font size=2>1120 Wayzata Blvd East Suite 201, Wayzata, MN</font></b></td>
  <td width=122 colspan=4 valign=top>&nbsp;</td>
  <td  align=center width=194 valign=top><b><font size=2>55391</font></b></td>
  <td  align=center width=110 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=305 colspan=4 valign=top>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=center width=111 colspan=2 valign=top>&nbsp;</td>
  <td  align=center width=194 valign=top>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=center width=110 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=305 colspan=3 valign=top><font size=2>(Address of principal
  executive offices)</font></td>
  <td  align=center width=86 colspan=2 valign=top>&nbsp;</td>
  <td  align=center width=26 valign=top>&nbsp;</td>
  <td  align=center width=194 valign=top><font size=2>(Zip Code)</font></td>
  <td  align=center width=110 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=305 colspan=3 valign=top>&nbsp;</td>
  <td  align=center width=86 colspan=2 valign=top>&nbsp;</td>
  <td  align=center width=26 valign=top>&nbsp;</td>
  <td  align=center width=194 valign=top>&nbsp;</td>
  <td  align=center width=110 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=8 valign=top><b><font size=2>(952)
  473-4102</font></b></td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=8 valign=top>
<hr size=1 width="45%" noshade color=black align=center></td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=8 valign=top><font size=2>&nbsp;(Registrant's telephone number, including
  area code)</font></td>
 </tr>

<!-- DO NOT remove the following table row. It is needed for  .               the proper rendering of tables containing misaligned cells.-->
 <tr height=0>
  <td width=280></td>
  <td width=14></td>
  <td width=10></td>
  <td width=1></td>
  <td width=85></td>
  <td width=26></td>
  <td width=194></td>
  <td width=110></td>
 </tr>
</table>

</div>

<p><font size=2>Securities registered pursuant to Section
12(b) of the Act:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="24%" valign=bottom><font   size=2>None</font></td>
  <td  align=center width="24%" valign=bottom>&nbsp;</td>
  <td  align=center width="49%" valign=bottom>&nbsp;</td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="49%" colspan=2 valign=bottom>
<hr size=1 width="50%" noshade color=black align=left></td>
  <td  align=center width="49%" valign=bottom>&nbsp;</td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
 </tr>
</table>

<p align=center><font size=2>&nbsp;</font></p>

<p><font size=2>Securities registered pursuant to Section
12(b) of the Act:<br>
Common Stock,&nbsp; $.01 per share per value.</font></p>


<table border=0 cellspacing=0 cellpadding=0 width="99%">
 <tr>
  <td width=720 colspan=5 valign=top><font size=2>Indicate
  by check mark whether the registrant (1) has filed all reports required to be
  filed</font></td>
 </tr>
 <tr>
  <td width=720 colspan=5 valign=top><font size=2>by
  Section 13 or 15(d) of the securities Exchange Act of 1934 during the
  preceding 12</font></td>
 </tr>
 <tr>
  <td width=720 colspan=5 valign=top><font size=2>months
  (or for such shorter period that the registrant was required to file such
  reports),</font></td>
 </tr>
 <tr>
  <td width=720 colspan=5 valign=top><font size=2>and
  (2) has been subject to such filing requirements for the past 90 days.</font></td>
 </tr>
 <tr>
  <td width=720 colspan=5 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width=213 valign=top>&nbsp;</td>
  <td width=62 valign=top><font size=2>YES</font></td>
  <td width=62 valign=top><font size=2   face=Wingdings>&#253;</font></td>
  <td width=62 valign=top><font size=2>NO</font></td>
  <td width=321 valign=top><font size=2   face=Wingdings>o</font></td>
 </tr>
</table>


<p><font size=2>APPLICABLE ONLY TO CORPORATE REGISTRANTS;</font></p>

<p><font size=2>Indicate the number of shares outstanding
of each of the issuer's classes of<br>
common stock, as of latest practicable data.</font></p>

<p><font size=2>As of July 31, 2001, there were 2,361,192
shares of the Company's $.01<br>
per share par value common stock outstanding.</font></p>

<p><font size=2>(The remainder of this page was
intentionally left blank.)</font></p>





<hr size=1 width="100%" noshade color=black align=right>






<hr size=2 width="100%" noshade color=black align=right>


<page>


<p align=center><b><font size=2>NORTECH SYSTEMS INCORPORATED<br>
FORM 10-Q<br>
QUARTER ENDED JUNE 30, 2001</font></b></p>

<p align=center><b><font size=2>INDEX</font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="11%" valign=bottom>&nbsp;</td>
  <td  align=center width="8%" valign=bottom>&nbsp;</td>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="70%" valign=bottom>&nbsp;</td>
  <td  align=center width="6%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="93%" colspan=4 valign=bottom><font size=2>PART
  I&nbsp; -&nbsp;
  FINANCIAL INFORMATION</font></td>
  <td  align=center width="6%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="93%" colspan=4 valign=bottom>&nbsp;</td>
  <td  align=center width="6%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top><font size=2><a
  href="#NortechSystemsIncorporated"   title="Click to goto   NORTECH SYSTEMS INCORPORATED">Item 1</a></font></td>
  <td width="3%" valign=top><font size=2>-</font></td>
  <td width="70%" valign=top><font size=2><a
  href="#NortechSystemsIncorporated"   title="Click to goto   NORTECH SYSTEMS INCORPORATED">Financial Statements</a></font></td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="70%" valign=top>&nbsp;</td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2><a
  href="#NotesToCondensedConsolidatedFinancialSta"   title="Click to goto NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS">Notes
  to Condensed Consolidated Financial Statements</a></font></td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="70%" valign=top>&nbsp;</td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top><font size=2><a
  href="#Item2_ManagementsDiscussionAndAnalysisOf"   title="Click to goto ITEM 2.   MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION">Item
  2</a></font></td>
  <td width="3%" valign=top><font size=2>-</font></td>
  <td width="70%" valign=top><font size=2><a
  href="#Item2_ManagementsDiscussionAndAnalysisOf"   title="Click to goto ITEM 2.   MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION">Management's
  Discussion and Analysis of Financial Condition</a></font></td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2><a
  href="#Item2_ManagementsDiscussionAndAnalysisOf"   title="Click to goto ITEM 2.   MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION">And
  Results of Operations</a></font></td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="70%" valign=top>&nbsp;</td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="93%" colspan=4 valign=top><font size=2><a
  href="#PartIiOtherInformation"   title="Click to goto PART II  - OTHER INFORMATION">PART II&nbsp; -&nbsp;
  OTHER INFORMATION</a></font></td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="93%" colspan=4 valign=top>&nbsp;</td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top><font size=2><a
  href="#Item6_ExhibitsAndReportsOnForm8k_"   title="Click to goto Item 6.  Exhibits and Reports on Form 8-K.&#13;">Item 6</a></font></td>
  <td width="3%" valign=top><font size=2>-</font></td>
  <td width="70%" valign=top><font size=2><a
  href="#Item6_ExhibitsAndReportsOnForm8k_"   title="Click to goto Item 6.  Exhibits and Reports on Form 8-K.&#13;">Exhibits
  and Reports on Form 8-K</a></font></td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="70%" valign=top>&nbsp;</td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="20%" colspan=2 valign=top><font size=2><a   href="#Signatures" title="Click to goto SIGNATURES&#13;">SIGNATURES</a></font></td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="70%" valign=top>&nbsp;</td>
  <td  align=right width="6%" valign=top>&nbsp;</td>
 </tr>
</table>

<page>


<p><br><br></p>


<p><a name=NortechSystemsIncorporated><b><font size=2>&nbsp; NORTECH SYSTEMS INCORPORATED</font></b></a><b><font size=2><br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></b><b><font size=2>CONSOLIDATED BALANCE SHEETS<br>
JUNE 30, 2001 AND DECEMBER 30, 2000</font></b><b><font size=2>&nbsp;</font></b></p>


<p><font size=3 face=Times>&nbsp;</font></p>


<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="23%" colspan=2 valign=bottom><b><font   size=2>JUNE 3</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=3 valign=bottom><b><font   size=2>DECEMBER 31</font></b></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="48%" valign=bottom><b><font size=2>ASSETS</font></b></td>
  <td  align=center width="23%" colspan=2 valign=bottom><b><font   size=2>2001</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=3 valign=bottom><b><font   size=2>2000</font></b></td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="23%" colspan=2 valign=bottom><b><font   size=2>(UNAUDITED)</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=3 valign=bottom><b><font   size=2>(AUDITED</font></b><b><font size=2>)</font></b></td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom><div align=center><b><font   size=2><hr size=1 width="100%" noshade color=black align=center></font></b></div></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=3 valign=bottom><div align=center><b><font   size=2><hr size=1 width="100%" noshade color=black align=center></font></b></div></td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Current Assets</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom><font size=2>Cash
  and cash equivalents</font></td>
  <td width="1%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom><font   size=2>316,608</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="1%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="19%" valign=bottom><font   size=2>527,998</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Accounts
  receivable, net of allowance</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>8,142,635</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>8,580,791</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom><font size=2>Inventories:</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="48%" valign=bottom bgcolor="#cceeff"><font size=2>Finished
  goods</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,982,937</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,298,626</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="48%" valign=bottom><font size=2>Work
  in process</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom><font   size=2>2,295,491</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom><font   size=2>1,848,025</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="48%" valign=bottom bgcolor="#cceeff"><font size=2>Raw
  materials</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>8,811,805</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>8,448,484</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom><font size=2>Prepaid
  expenses and other</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom><font   size=2>158,907</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom><font   size=2>47,462</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Deferred
  tax asset</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,329,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,422,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="48%" valign=bottom bgcolor="#cceeff"><font size=2>Total
  Current Assets</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>23,037,383</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="19%" valign=bottom bgcolor="#cceeff"><font   size=2>22,173,386</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="48%" valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Property and Equipment</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom><font size=2>Land
  and building/leaseholdsat Cost:</font></td>
  <td width="1%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom><font   size=2>4,510,406</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="1%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="19%" valign=bottom><font   size=2>4,386,421</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Manufacturing
  equipment</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>4,910,758</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>4,594,607</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom><font size=2>Office
  and other equipment</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom><font   size=2>2,398,792</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom><font   size=2>2,325,189</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff">
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff">
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="48%" valign=bottom bgcolor="#cceeff"><font size=2>Total</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>11,819,956</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="19%" valign=bottom bgcolor="#cceeff"><font   size=2>11,306,217</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom><font size=2>Accumulated
  depreciation</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom><font   size=2>(5,615,174</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom><font   size=2>(4,987,805</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom><font size=2>Net
  Property and Equipment</font></td>
  <td width="1%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom><font   size=2>6,204,782</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="1%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="19%" valign=bottom><font   size=2>6,318,412</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom><font size=2>Other Assets</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Goodwill
  and other intangible assets</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>79,066</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>99,750</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom><font size=2>Deferred
  tax asset</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom><font   size=2>127,000</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom><font   size=2>31,000</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Other
  assets from discontinued operations</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>24,563</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>30,401</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="48%" valign=bottom bgcolor="#cceeff"><font size=2>Total
  Other Assets</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>230,629</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>161,151</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="48%" valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="48%" valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="48%" valign=bottom bgcolor="#cceeff"><font size=2>Total
  Assets</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>29,472,794</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="19%" valign=bottom bgcolor="#cceeff"><font   size=2>28,652,949</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>

<!-- DO NOT remove the following table row. It is needed for  .               the proper rendering of tables containing misaligned cells.-->
 <tr height=0>
  <td width=16></td>
  <td width=16></td>
  <td width=352></td>
  <td width=8></td>
  <td width=159></td>
  <td width=11></td>
  <td width=8></td>
  <td width=139></td>
  <td width=11></td>
 </tr>
</table>


<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; See
notes to consolidated financial statements</font></p>

<page>


<p>&nbsp;</p>


<p><b><font size=2>&nbsp;&nbsp; CONSOLIDATED
BALANCE SHEETS<br>
JUNE 30, 2001 AND DECEMBER 31, 2000<br>
</font></b><font size=2>&nbsp;</font></p>


<p><font size=3 face=Times>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="63%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=center width="16%" colspan=3 valign=bottom><b><font   size=2>JUNE 30</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="17%" colspan=4 valign=bottom><b><font   size=2>DECEMBER 31</font></b></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom><b><font size=2>LIABILITIES AND SHAREHOLDERS' EQUITY</font></b></td>
  <td  align=center width="16%" colspan=3 valign=bottom><b><font   size=2>2001</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="17%" colspan=4 valign=bottom><b><font   size=2>2000</font></b></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=center width="16%" colspan=3 valign=bottom><b><font   size=2>(UNAUDITED)</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="17%" colspan=4 valign=bottom><b><font   size=2>(AUDITED</font></b><b><font size=2>)</font></b></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=center width="17%" colspan=4 valign=bottom>
<hr size=1 width="88%" noshade color=black align=left></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom bgcolor="#cceeff"><font size=2>Current Liabilities</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom><font size=2>Current
  maturities of notes and capital lease payable</font></td>
  <td width="1%" colspan=2 valign=bottom><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>3,078,506</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="1%" colspan=2 valign=bottom><font size=2>$</font></td>
  <td  align=right width="14%" valign=bottom><font   size=2>3,333,401</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Accounts payable</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff"><font   size=2>5,551,780</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff"><font   size=2>5,743,836</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom><font size=2>Accrued
  payrolls and commissions</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom><font   size=2>1,706,497</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom><font   size=2>1,668,748</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Accrued
  income taxes</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff"><font   size=2>228,330</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff"><font   size=2>182,330</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom><font size=2>Other
  liabilities</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom><font   size=2>926,239</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom><font   size=2>1,200,296</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Net
  current liabilities from discontinued operations</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff"><font   size=2>472,288</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff"><font   size=2>411,236</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="6%" colspan=4 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="57%" valign=bottom bgcolor="#cceeff"><font size=2>Total
  Current Liabilities</font></td>
  <td width="1%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>11,963,640</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="1%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="14%" valign=bottom bgcolor="#cceeff"><font   size=2>12,539,847</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="6%" colspan=4 valign=bottom>&nbsp;</td>
  <td width="57%" valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom bgcolor="#cceeff"><font size=2>Long-Term Debt</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom><font size=2>Notes
  and capital lease payable (net of <br>
  current maturities)</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="15%" colspan=2 valign=bottom><font   size=2>8,268,165</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="14%" colspan=2 valign=bottom><font   size=2>7,665,536</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="4%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="59%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom><font size=2>Shareholders' Equity:</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="61%" colspan=4 valign=bottom bgcolor="#cceeff"><font size=2>Preferred
  Stock, $1 par value;<br>
  1,000,000 shares authorized; 250,000<br>
  shares issued and outstanding</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>250,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="14%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>250,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom><font size=2>Common
  Stock - $.01 par value; 9,000,000<br>
  hares authorized; 2,361,192 and 2,361,055 shares<br>
  issued and outstanding</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom><font   size=2>23,612</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom><font   size=2>23,611</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Additional
  paid-in capital</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff"><font   size=2>12,159,004</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff"><font   size=2>12,158,036</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom><font size=2>Accumulated
  deficit</font></td>
  <td  align=right width="16%" colspan=3 valign=bottom><font   size=2>(3,191,627</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom><font   size=2>(3,984,081</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="6%" colspan=4 valign=bottom>&nbsp;</td>
  <td width="57%" valign=bottom><font size=2>Total
  Shareholders' Equity</font></td>
  <td width="1%" colspan=2 valign=bottom><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>9,240,989</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="1%" colspan=2 valign=bottom><font size=2>$</font></td>
  <td  align=right width="14%" valign=bottom><font   size=2>8,447,566</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="6%" colspan=4 valign=bottom>&nbsp;</td>
  <td width="57%" valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="2%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="61%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Total
  Liabilities &amp; Shareholders' Equity</font></td>
  <td width="1%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>29,472,794</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="1%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="14%" valign=bottom bgcolor="#cceeff"><font   size=2>28,652,949</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="63%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=3 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" colspan=3 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>

<!-- DO NOT remove the following table row. It is needed for  .               the proper rendering of tables containing misaligned cells.-->
 <tr height=0>
  <td width=13></td>
  <td width=3></td>
  <td width=15></td>
  <td width=16></td>
  <td width=413></td>
  <td width=7></td>
  <td width=1></td>
  <td width=113></td>
  <td width=12></td>
  <td width=7></td>
  <td width=1></td>
  <td width=107></td>
  <td width=14></td>
 </tr>
</table>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; See
notes to consolidated financial statements</font></p>

<page>



<p>&nbsp;</p>



<p><b><font size=2>&nbsp;&nbsp; CONSOLIDATED STATEMENTS OF INCOME<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FOR THE THREE MONTHS ENDED<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; JUNE 30, 2001 AND JUNE 30,
2000</font></b></p>


<p><font size=3 face=Times>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="98%">
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=2 valign=bottom><b><font   size=2>JUNE&nbsp; 30</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=2 valign=bottom><b><font   size=2>JUNE&nbsp; 30</font></b></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=2 valign=bottom><b><font   size=2>2001</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=2 valign=bottom><b><font   size=2>2000</font></b></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=2 valign=bottom><b><font   size=2>(Unaudited)</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=2 valign=bottom><b><font   size=2>(Unaudited</font></b><b><font size=2>)</font></b></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=2 valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=2 valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Sales</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="23%" valign=bottom bgcolor="#cceeff"><font   size=2>12,622,055</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>13,199,584</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Cost of Sales</font></td>
  <td  align=right width="24%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>10,622,729</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>10,838,359</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="22%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Gross Profit</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="23%" valign=bottom bgcolor="#cceeff"><font   size=2>1,999,326</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>2,361,225</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Selling, General and
  Administrative Expenses</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="23%" valign=bottom bgcolor="#cceeff"><font   size=2>1,344,838</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>1,330,228</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom><font size=2>Interest Expense</font></td>
  <td  align=right width="24%" colspan=2 valign=bottom><font   size=2>187,328</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom><font   size=2>276,464</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Miscellaneous (Income)
  Expense</font></td>
  <td  align=right width="24%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(15,880</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>37,719</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="22%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net Income Before
  Income Tax</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="23%" valign=bottom bgcolor="#cceeff"><font   size=2>483,040</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>716,814</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Income Tax Expense</font></td>
  <td  align=right width="24%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>181,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>268,805</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="22%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net Income</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="23%" valign=bottom bgcolor="#cceeff"><font   size=2>302,040</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>448,009</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="22%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Basic Income per Share
  of Common Stock</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="23%" valign=bottom bgcolor="#cceeff"><font   size=2>0.13</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>0.19</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="22%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Diluted Income per
  Share of Common Stock</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="23%" valign=bottom bgcolor="#cceeff"><font   size=2>0.12</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>0.19</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="22%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Weighted Average
  Common Shares:</font></td>
  <td  align=right width="24%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="49%" valign=bottom><font size=2>Basic</font></td>
  <td  align=right width="24%" colspan=2 valign=bottom><font   size=2>2,361,192</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom><font   size=2>2,352,884</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="49%" valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="22%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="49%" valign=bottom bgcolor="#cceeff"><font size=2>Diluted</font></td>
  <td  align=right width="24%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>2,481,401</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>2,393,692</font></td>
 </tr>
 <tr>
  <td width="51%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="24%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="22%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
 </tr>
</table>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; See
notes to consolidated financial statements</font></p>

<page>


<p>&nbsp;</p>

<p><font size=2>&nbsp;</font></p>


<p><b><font size=2>CONSOLIDATED
STATEMENTS OF INCOME<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FOR THE SIX MONTHS ENDED<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; JUNE 30, 2001 AND JUNE 30, 2000</font></b><font size=2>&nbsp;</font></p>


<p><font size=3 face=Times>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="23%" colspan=2 valign=bottom><b><font   size=2>JUNE&nbsp; 30</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom><b><font   size=2>JUNE&nbsp; 30</font></b></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="23%" colspan=2 valign=bottom><b><font   size=2>2001</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom><b><font   size=2>2000</font></b></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="23%" colspan=2 valign=bottom><b><font   size=2>(Unaudited)</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom><b><font   size=2>(Unaudited</font></b><b><font size=2>)</font></b></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="23%" colspan=2 valign=bottom><div align=center><b><font   size=2><hr size=1 width="100%" noshade color=black align=center></font></b></div></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom><div align=center><b><font   size=2><hr size=1 width="100%" noshade color=black align=center></font></b></div></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Sales</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>27,467,359</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="20%" valign=bottom bgcolor="#cceeff"><font   size=2>25,768,565</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Cost of Sales</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>22,774,761</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>21,194,319</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Gross Profit</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>4,692,598</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="20%" valign=bottom bgcolor="#cceeff"><font   size=2>4,574,246</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Selling, General and
  Administrative Expenses</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>2,942,266</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="20%" valign=bottom bgcolor="#cceeff"><font   size=2>2,653,127</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom><font size=2>Interest Expense</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom><font   size=2>428,833</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom><font   size=2>571,766</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Miscellaneous (Income)
  Expense</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>47,352</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(23,681</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net Income Before
  Income Tax</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>1,274,147</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="20%" valign=bottom bgcolor="#cceeff"><font   size=2>1,373,034</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Income Tax Expense</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>478,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>514,805</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net Income</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>796,147</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="20%" valign=bottom bgcolor="#cceeff"><font   size=2>858,229</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Basic Income per Share
  of Common Stock</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>0.34</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="20%" valign=bottom bgcolor="#cceeff"><font   size=2>0.36</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Diluted Income per
  Share of Common Stock</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="22%" valign=bottom bgcolor="#cceeff"><font   size=2>0.32</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="20%" valign=bottom bgcolor="#cceeff"><font   size=2>0.36</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Weighted Average
  Common Shares:</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="51%" valign=bottom><font size=2>Basic</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom><font   size=2>2,361,146</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom><font   size=2>2,352,884</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="51%" valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="51%" valign=bottom bgcolor="#cceeff"><font size=2>Diluted</font></td>
  <td  align=right width="23%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>2,481,147</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>2,379,609</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="23%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="20%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
</table>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; See
notes to consolidated financial statements</font></p>

<page>


<p>&nbsp;</p>

<p><font size=2>&nbsp;</font></p>


<p><b><font size=2>CONSOLIDATED
STATEMENTS OF CASH FLOWS<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FOR THE SIX MONTHS ENDED<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; JUNE 30, 2001 AND JUNE 30, 2000</font></b></p>


<p><font size=3 face=Times>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=2 valign=bottom><b><font   size=2>JUNE 30</font></b></td>
  <td  align=center width="0%" valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=2 valign=bottom><b><font   size=2>JUNE 30</font></b></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=2 valign=bottom><b><font   size=2>2001</font></b></td>
  <td  align=center width="0%" valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=2 valign=bottom><b><font   size=2>2000</font></b></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=2 valign=bottom><b><font   size=2>(UNAUDITED)</font></b></td>
  <td  align=center width="0%" valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=2 valign=bottom><b><font   size=2>(UNAUDITED</font></b><b><font size=2>)</font></b></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=2 valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td  align=center width="0%" valign=bottom>&nbsp;</td>
  <td  align=center width="21%" colspan=2 valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom bgcolor="#cceeff"><font size=2>Cash Flows from
  Operating Activities</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="52%" colspan=4 valign=bottom><font size=2>Net
  income from continuing operations</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>796,147</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>858,229</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="52%" colspan=4 valign=bottom bgcolor="#cceeff"><font size=2>Adjustments
  to reconcile net income from<br>
  continuing operations to net cash provided<br>
  (used) by continuing operations</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="5%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="48%" colspan=2 valign=bottom><font size=2>Depreciation
  and amortization</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>648,053</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>512,291</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="5%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="48%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Deferred
  taxes</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(3,000</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>515,000</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in Operating Assets and
  Liabilities:</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="47%" valign=bottom bgcolor="#cceeff"><font size=2>Accounts
  receivable</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>438,156</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(2,539,675</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom>&nbsp;</td>
  <td width="47%" valign=bottom><font size=2>Inventories</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>(1,495,098</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>(1,309,412</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="47%" valign=bottom bgcolor="#cceeff"><font size=2>Prepaid
  expenses</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(111,445</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(61,956</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom>&nbsp;</td>
  <td width="47%" valign=bottom><font size=2>Other
  assets</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>-</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>18,920</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="47%" valign=bottom bgcolor="#cceeff"><font size=2>Accounts
  payable</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(192,056</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,739,235</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom>&nbsp;</td>
  <td width="47%" valign=bottom><font size=2>Accrued
  payrolls &amp; commissions</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>37,749</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>556,083</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="47%" valign=bottom bgcolor="#cceeff"><font size=2>Accrued
  income taxes</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>46,000</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom>&nbsp;</td>
  <td width="47%" valign=bottom><font size=2>Other
  liabilities</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>(274,057</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>9,206</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="7%" colspan=4 valign=bottom>&nbsp;</td>
  <td width="47%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom><font size=2>Net
  Cash Provided (Used) by Continuing Operations</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>(109,551</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>297,921</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Net
  Cash Provided by Discontinued Operations</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>66,890</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>218,463</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom><font size=2>Net
  Cash Provided (Used) by Operating Activities</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>(42,661</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>516,384</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom><font size=2>Cash Flows from
  Investing Activities:</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Acquisition
  of equipment</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(513,739</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(486,257</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Net
  Cash Used by Investing Activities</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>(513,739</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom bgcolor="#cceeff"><font   size=2>(486,257</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom bgcolor="#cceeff"><font size=2>Cash Flows from
  Financing Activities:</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom><font size=2>Proceeds
  from notes payables</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>4,459,000</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>1,950,873</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Payments
  on notes and capital lease payable</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(4,114,959</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(2,088,292</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom><font size=2>Issuance
  of common stock</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>969</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>3,493</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="50%" colspan=3 valign=bottom><font size=2>Net
  Cash Provided (Used) by Financing Activities</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>345,010</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>(133,926</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom><font size=2>Net Decrease in Cash
  and Cash Equivalents</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>(211,390</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>(103,799</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom><font size=2>Cash and Cash
  Equivalents - Beginning</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>527,998</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom><font   size=2>453,500</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom><font size=2>Cash and Cash Equivalents
  - Ending</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>316,608</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="21%" valign=bottom><font   size=2>349,701</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="54%" colspan=5 valign=bottom>&nbsp;</td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="21%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>

<!-- DO NOT remove the following table row. It is needed for  .               the proper rendering of tables containing misaligned cells.-->
 <tr height=0>
  <td width=13></td>
  <td width=13></td>
  <td width=13></td>
  <td width=13></td>
  <td width=340></td>
  <td width=6></td>
  <td width=152></td>
  <td width=7></td>
  <td width=6></td>
  <td width=151></td>
  <td width=7></td>
 </tr>
</table>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; See
notes to consolidated financial statements</font></p>

<page>


<p>&nbsp;</p>

<p><a name=NotesToCondensedConsolidatedFinancialSta><b><font size=2>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</font></b></a></p>

<p><font size=2>NOTE 1.&nbsp;
BASIS OF PRESENTATION</font></p>

<p><font size=2>The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America for
interim financial information and in accordance with the rules and regulations
of the Securities and Exchange Commission.&nbsp;
Accordingly, they do not include all of the financial information and
footnotes required by generally accepted accounting principles for complete
financial statements.&nbsp; In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included.</font></p>

<p><font size=2>The operating results of the interim
periods presented are not necessarily indicative of the results expected for
the year ending December 31, 2001 or for any other interim period.&nbsp; The accompanying condensed consolidated
financial statements should be read in conjunction with the audited financial
statements and notes thereto for the year ended December 31, 2000 included in
the Company&#146;s Annual Report Form 10-K for the year ended December 31, 2000 as filed
with the Securities and Exchange Commission.</font></p>

<p><font size=2>NOTE 2.&nbsp;
NEW ACCOUNTING PRONOUNCMENTS</font></p>

<p><font size=2>In June 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 142
(SFAS 142) &quot;Goodwill and Other Intangible Assets&quot;. The statement
addresses accounting and reporting for (i) intangible assets at acquisition and
(ii) for intangible assets and goodwill subsequent to their acquisition. As it
relates to the Company's goodwill and intangible assets in existence at June
30, 2001, the statement requires that management reassess the useful lives and
amortization period of such assets. For those with an indefinite useful life,
periodic amortization is to be discontinued and an annual impairment test,
beginning January 1, 2002, is to be established. The Company's Management does
not feel as if this pronouncement will have material impact on its statement of
financial condition or cash flows at the effective date and is currently
assessing the impact that the pronouncement may have on its results of
operations in fiscal 2002 and thereafter.</font></p>

<p><font size=2>In July 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 141
&#147;Business Combinations&#148;, which is required for all business combinations
initiated after June 30, 2001. The standard eliminates the use of the
pooling-of-interest method and improves the accounting and reporting for
business combinations. The Company does not expect that the new standard will
have a material effect on the results of operations or cash flows.</font></p>

</div>

<page>


<div>

<p><a name="Item2_ManagementsDiscussionAndAnalysisOf"><b><font size=2>ITEM
2.&nbsp;&nbsp; MANAGEMENT&#146;S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION</font></b></a><b><font size=2> AND RESULTS OF OPERATIONS.</font></b></p>

<p><u><font size=2>(1.) Results of
Operations for Quarter and Period Ended June 30, 2001<br>
</font></u><font size=2>The Company had revenues of $12,622,055
compared to revenues of $13,199,584 for the quarters ended June 30, 2001 and
2000, respectively.&nbsp; The decrease in
revenues resulted primarily from order delays and move-outs from several large
customers.&nbsp; The net income for the three
months ended June30, 2001 was $302,040 or $.13 per share, compared to a net
income of $448,009 or $.19 per share, for the three months ended June 30,
2000.&nbsp; The unfavorable variance in net
income for the quarter ended June 30, 2001 compared to the prior year quarter
was the result of realizing lower margins on reduced revenue levels as well as
changes in the mix of products manufactured.</font></p>

<p><font size=2>The Company had revenues of $27,467,359,
compared to revenues of $25,768,565, for the six-month periods ended June 30,
2001 and 2000, respectively.&nbsp; The
increased revenues result primarily from additional revenues generated from
internal growth.&nbsp; The net income for the
six month period ended June 30, 2001, was $796,147 or $.34 per share, compared
to net income of $858,229 or $.36 per share for the same period in 2000.</font></p>

<p><font size=2>The year to date results reflects the
effects of the downturn in the economy.&nbsp;
To offset the effect in future quarters, the Company has taken
aggressive cost-reduction measures across the corporation, including consolidation
of plant operations and reassessment of personnel needs.&nbsp; In July, the Company opened a service and
repair center in Baxter, Minn., to refurbish printed circuit board assemblies
and higher-level assemblies. The company also recently signed a four-year service
contract with a major medical OEM and expects this facility to contribute
positively in future quarters.</font></p>

<p><font size=2>The Company's 90 day order backlog was
$10,750,000 as of June 30, 2001, compared with $10,550,000 at the beginning of
the quarter.&nbsp; Based on the current
conditions, the Company anticipates revenue levels in the third quarter of 2001
to be higher than second quarter of 2001.</font></p>

<p><font size=2>&nbsp;(2.) <u>Liquidity and Capital Resources.<br>
</u>The Company's working capital increased to $11,073,743 during the second
quarter of 2001, compared to $9,633,539 as of December 31, 2000.&nbsp; The Company believes that its financial
stability will continue to improve during 2001 and would expect that its
operating cash flow and available credit faculties will be sufficient to fund
the expected growth in the near term.</font></p>

</div>

<page>


<div>

<p><u><font size=2>Forward-Looking
Statements<br>
</font></u><font size=2>Those statements in the foregoing report
that are not historical facts are forward-looking statements made pursuant to
the safe-harbor provisions of the Private Securities Litigation Reform Act of
1995.&nbsp; Such statements generally will be
accompanied by words such as &#147;anticipate,&#148; &#147;believe,&#148; &#147;estimate,&#148; &#147;expect,&#148;
&#147;forecast,&#148; &#147;intend,&#148; &#147;possible,&#148; &#147;potential,&#148; &#147;predict,&#148; &#147;project,&#148; or other
similar words that convey the uncertainty of future events or outcomes.&nbsp; Although Nortech Systems Inc. believes these
forward-looking statements are reasonable, they are based upon a number of
assumptions concerning future conditions, any or all of which may ultimately
prove to be inaccurate.&nbsp; Forward-looking
statements involve a number of risks and uncertainties.&nbsp; Important factors that could cause actual
results to differ materially from the forward-looking statements include,
without limitation:</font></p>

<dir><dir>
<table border=0 cellspacing=0 cellpadding=0 width="86%">
 <tr>
  <td width=24 valign=top><font size=2>&#149;</font></td>
  <td width=603 valign=top><font size=2>Volatility
  in the marketplace which may affect market supply and demand for Nortech
  Systems Inc.&#146;s products;</font></td>
 </tr>
 <tr>
  <td width=24 valign=top><font size=2>&#149;</font></td>
  <td width=603 valign=top><font size=2>Increased
  competition;</font></td>
 </tr>
 <tr>
  <td width=24 valign=top><font size=2>&#149;</font></td>
  <td width=603 valign=top><font size=2>Changes
  in the reliability and efficiency of the Company&#146;s operating facilities or
  those of third parties;</font></td>
 </tr>
 <tr>
  <td width=24 valign=top><font size=2>&#149;</font></td>
  <td width=603 valign=top><font size=2>Risks
  related to availability of labor;</font></td>
 </tr>
 <tr>
  <td width=24 valign=top><font size=2>&#149;</font></td>
  <td width=603 valign=top><font size=2>General
  economic, financial and business conditions that could affect Nortech Systems
  Inc.&#146;s financial condition and results of operations.</font></td>
 </tr>
</table>
</dir></dir>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>The factors identified above are believed
to be important factors) but not necessarily all of the important factors) that
could cause actual results to differ materially from those expressed in any
forward-looking statement made by Nortech Systems Inc.&nbsp; Unpredictable or unknown factors not
discussed herein could also have material adverse effects on forward-looking
statements.&nbsp; All forward-looking
statements included in this Form 10-Q are expressly qualified in their entirety
by the forgoing cautionary statements.&nbsp;
The Company undertakes no obligations to update publicly any
forward-looking statement (or its associated cautionary language) whether as a
result of new information or future events.</font></p>

<p align=center><font size=2><br>
<page>

<br>
<a name=PartIiOtherInformation><b>PART II&nbsp; - OTHER INFORMATION</b></a></font></p>

<p><a name="Item6_ExhibitsAndReportsOnForm8k_"><b><font size=2>Item 6.&nbsp; Exhibits and
Reports on Form 8-K.</font></b></a></p>



<p><font size=2>&nbsp;</font></p>

<p><font size=2>None</font></p>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>(The remainder of this page was
intentionally left blank.)</font></p>

<page>


<p align=center><a name=Signatures><b><font size=2>SIGNATURES</font></b></a></p>



<p><font size=2>&nbsp;</font></p>

<p><font size=2>Pursuant to the requirements of the
Securities and 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><font size=2>Dated:&nbsp;
August 10, 2001&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NORTECH
SYSTEMS INCORPORATED</font></p>

<p><font size=2>&nbsp;</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="6%" valign=top><font size=2>By:/s/</font></td>
  <td  align=center width="26%" colspan=2 valign=top><font size=2>Quentin E. Finkelson</font></td>
  <td width="24%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="6%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td width="24%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="32%" colspan=3 valign=top>&nbsp;</td>
  <td width="24%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="48%" colspan=2 valign=top><font size=2>Quentin
  E. Finkelson</font></td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="48%" colspan=2 valign=top><font size=2>Its
  President and Chief</font></td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="48%" colspan=2 valign=top><font size=2>Executive
  Officer</font></td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="32%" colspan=3 valign=top>&nbsp;</td>
  <td width="24%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="6%" valign=top><font size=2>By:/s/</font></td>
  <td  align=center width="26%" colspan=2 valign=top><font size=2>Garry M. Anderly</font></td>
  <td width="24%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="6%" valign=top>&nbsp;</td>
  <td width="26%" colspan=2 valign=top>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td width="24%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="32%" colspan=3 valign=top>&nbsp;</td>
  <td width="24%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="48%" colspan=2 valign=top><font size=2>Garry
  M. Anderly</font></td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="48%" colspan=2 valign=top><font size=2>Principal
  Financial</font></td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="48%" colspan=2 valign=top><font size=2>Officer
  and Principal</font></td>
 </tr>
 <tr>
  <td width="42%" valign=top>&nbsp;</td>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="48%" colspan=2 valign=top><font size=2>Accounting
  Officer</font></td>
 </tr>

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  <td width=45></td>
  <td width=16></td>
  <td width=173></td>
  <td width=179></td>
 </tr>
</table>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;</font></p>

</div>

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