<html>

<head>
<title>Form 8-K</title>
</head>

<body LINK="#0000FF" VLINK="#800080">
<div><font SIZE="5">

<p ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</p>

<p ALIGN="CENTER">WASHINGTON, D.C. 20549</p>
</font>

<p ALIGN="CENTER">&nbsp;</p>

<p ALIGN="CENTER"><font SIZE="5"><strong>FORM 8-K</strong></font></p>

<p ALIGN="CENTER"><b><font size="4">CURRENT REPORT</font></b></p>

<table border="0" cellspacing="0" width="100%" height="80" cellpadding="0">
  <tr>
    <td width="100%" colspan="3" height="11"><p ALIGN="CENTER">PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934</td>
  </tr>
  <tr>
    <td width="100%" colspan="3" height="11">&nbsp; </td>
  </tr>
  <tr>
    <td width="100%" colspan="3" height="11"><font size="3"><p ALIGN="CENTER">Date of Report:
    September 30, 2003</font></td>
  </tr>
  <tr>
    <td width="100%" colspan="3" HEIGHT="0"><font SIZE="1"><p ALIGN="CENTER">(Date of Earliest
    Event Reported)</font></td>
  </tr>
  <tr>
    <td width="100%" colspan="3" height="11">&nbsp; </td>
  </tr>
  <tr>
    <td width="100%" colspan="3" height="11">&nbsp; </td>
  </tr>
  <tr>
    <td width="100%" colspan="3" height="11"><font size="3"><u><b><p ALIGN="CENTER">AMERICAN
    INTERNATIONAL INDUSTRIES, INC.</b></u></font></td>
  </tr>
  <tr>
    <td width="100%" colspan="3" HEIGHT="0"><font SIZE="1"><p ALIGN="CENTER">(Exact Name of
    Registrant as Specified in its Charter)</font></td>
  </tr>
  <tr>
    <td width="100%" colspan="3" height="11">&nbsp; </td>
  </tr>
  <tr>
    <td width="37%" align="center" height="11"><u>Nevada</u></td>
    <td width="30%" height="11"><p align="center"><u>0-25223</u></td>
    <td width="33%" height="11"><p align="center"><u>88-0326480</u></td>
  </tr>
  <tr>
    <td width="37%" align="center" HEIGHT="0"><font SIZE="1">(State or other jurisdiction of
    incorporation)</font></td>
    <td width="30%" HEIGHT="0"><p align="center"><font SIZE="1">(Commission File Number)</font></td>
    <td width="33%" HEIGHT="0"><p align="center"><font SIZE="1">(IRS Employer Identification
    No.)</font></td>
  </tr>
  <tr>
    <td width="37%" align="center" height="11">&nbsp; </td>
    <td width="30%" height="11">&nbsp; </td>
    <td width="33%" height="11">&nbsp; </td>
  </tr>
  <tr>
    <td width="37%" align="center" height="11"><u>601 Cien Street, Suite 235, Kemah, TX</u></td>
    <td width="30%" height="11"></td>
    <td width="33%" height="11"><p align="center"><u>77565</u></td>
  </tr>
  <tr>
    <td width="37%" align="center" height="1"><font SIZE="1">(Address of principal executive
    offices)</font></td>
    <td width="30%" height="1"></td>
    <td width="33%" height="1"><p align="center"><font SIZE="1">(Zip Code)</font></td>
  </tr>
  <tr>
    <td width="37%" height="1">&nbsp; </td>
    <td width="30%" height="1"></td>
    <td width="33%" height="1"></td>
  </tr>
</table>
<font size="3">

<p>&nbsp;</p>

<p ALIGN="CENTER">Registrant's telephone number, including area code: (281) 334-9479</font></p>

<p align="center">&nbsp;</p>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<p><font size="3">Table of Contents</font></p>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0">
  <tr>
    <td WIDTH="90%" VALIGN="top"></td>
    <td WIDTH="10%" VALIGN="top"><p ALIGN="CENTER"><font size="3">Page</font></td>
  </tr>
  <tr>
    <td WIDTH="90%" VALIGN="top"><font size="3">Item 1. Changes in Control of Registrant</font></td>
    <td WIDTH="10%" VALIGN="top"><p ALIGN="CENTER"><font size="3">3</font></td>
  </tr>
  <tr>
    <td WIDTH="90%" VALIGN="top"><font size="3">Item 2. Acquisition or Disposition of Assets</font></td>
    <td WIDTH="10%" VALIGN="top" align="center">3</td>
  </tr>
  <tr>
    <td WIDTH="90%" VALIGN="top"><font size="3">Item 3. Bankruptcy or Receivership</font></td>
    <td WIDTH="10%" VALIGN="top" align="center">4</td>
  </tr>
  <tr>
    <td WIDTH="90%" VALIGN="top"><font size="3">Item 4. Changes in Registrant's Certifying
    Accountants</font></td>
    <td WIDTH="10%" VALIGN="top" align="center">4</td>
  </tr>
  <tr>
    <td WIDTH="90%" VALIGN="top"><font size="3">Item 5. Other Events and FD Disclosure</font></td>
    <td WIDTH="10%" VALIGN="top" align="center">4</td>
  </tr>
  <tr>
    <td WIDTH="90%" VALIGN="top"><font size="3">Item 6. Resignations of Directors and
    Executive Officers</font></td>
    <td WIDTH="10%" VALIGN="top" align="center">4</td>
  </tr>
  <tr>
    <td WIDTH="90%" VALIGN="top"><font size="3">Item 7. Financial Statements and Exhibits</font></td>
    <td WIDTH="10%" VALIGN="top" align="center">5</td>
  </tr>
</table>

<p>&nbsp;</p>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div><b>

<p><font size="3">ITEM 1. CHANGES IN CONTROL OF REGISTRANT</font></p>
</b>

<p><font size="3">Not applicable.</font></p>

<p><b><font size="3">ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS</font></b></p>

<p ALIGN="JUSTIFY">Effective September 30, 2003, American International Industries, Inc.
(the &quot;Company&quot;) acquired a 51% interest in Delta Seaboard Well Service, Inc. and
related entities (Seaboard Equipment Company and Seaboard Well Service)
(&quot;Delta&quot;), all Texas corporations, for cash consideration in the amount of
$1,000,000. The Stock Purchase Agreement between the Company and Delta is attached as an
exhibit to this current report.</p>

<p ALIGN="JUSTIFY">Delta is on onshore rig-based well servicing contractor, providing
services to oil companies and independent oil and natural gas companies operating in South
and East Texas, Louisiana, Mississippi and Alabama. These services include rig-based
workover, plugging and abandonment, and well completion and recompletion services.</p>

<p ALIGN="JUSTIFY">Among the clients of Delta are El Paso Production Company, The Houston
Exploration Company, Burlington Resources Company, The Railroad Commission of Texas, Pogo
Producing/North Central Oil Corporation, and Dominion Exploration and Production, Inc. </p>

<p ALIGN="JUSTIFY">Delta is managed by Rob Derrick and Ron Burleigh, who are Delta's
executive officers and owners of 49% of Delta and have over twenty years of experience in
the oil and gas industry. Both have been with Delta for many years and have signed long
term employment agreements with Delta. Delta was founded in 1958 and has its headquarters
in Houston and maintains administrative and sales offices in both Lafayette and Houston,
TX.</p>

<p ALIGN="JUSTIFY">Demand for oil and gas well services historically has been cyclical in
nature and depends substantially on the condition of the oil and gas industry. The level
of expenditures is sensitive to existing oil and gas prices as well as the oil and gas
industry's view of such prices in the future. The trend has been for increasing commodity
prices which has resulted in greater demand for Delta's products and services. In
addition, demand for Delta's services to the oil and gas well industry depends upon the
number of oil and natural gas wells being drilled, the depth and drilling conditions of
such wells, the number of well completions and the level of workover activity in Delta's
markets.</p>

<p ALIGN="JUSTIFY">Delta believes that it has certain competitive advantages related to
cost efficiencies, material coordination, reduced engineering time resulting from its
highly experienced staff of toolpushers, field supervisors and operations managers, and
its fully integrated operations with cementing and electric wireline operations that
include cutting casing and tubing as part of Delta's services. Delta also believes that
with the economic resources of the Company and its access to the public capital markets.
Delta also plans to pursue strategic acquisitions and enter into ventures for long-term
growth and market expansion. </p>

<p ALIGN="JUSTIFY">Our services are sold in highly competitive markets. The competition in
our industry could result in reduced profitability and loss of market share for Delta. In
its markets, in South and East Texas, Louisiana, Mississippi and Alabama, Delta competes
principally with the following entities: Tetra Apllied Technologies, Key Energy Services,
Basic Energy and other small companies. Many of Delta's competitors have greater financial
resources than Delta has had historically and may continue to have as a subsidiary of the
Company. Delta will rely upon the ability of the Company to provide working capital and
secure debt and equity financing in order to Delta to continue to expand its oil and gas
well services business and to develop its plan to participate in exploration and drilling
operations.</p>
<b>

<p><font size="3">ITEM 3. BANKRUPTCY OR RECEIVERSHIP</font></p>
</b>

<p><font size="3">Not applicable.</font></p>
<b>

<p><font size="3">ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT</font></p>
</b>

<p><font size="3">Not applicable.</font></p>

<p><b><font size="3">ITEM 5. OTHER EVENTS</font></b></p>

<p><font size="3">Not applicable.</font></p>
<b>

<p><font size="3">ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS</font></p>
</b>

<p><font size="3">Not applicable.</font></p>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<p><strong><font size="3">ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS</font></strong></p>
<b><font FACE="Arial">

<p ALIGN="CENTER"></font></b><font face="Times New Roman" size="3">DELTA SEABOARD WELL
SERVICE, INC. AND RELATED ENTITIES</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%">
  <tr>
    <td width="90%"><p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">Independent
    Auditors' Reports</font></td>
    <td width="10%" align="center"><font face="Times New Roman" size="3">6</font></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="3">Combined Financial Statements:</font></td>
    <td width="10%" align="center"></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="3">&nbsp;&nbsp; Balance Sheets -
    December 31, 2002 and 2001</font></td>
    <td width="10%" align="center"><font face="Times New Roman" size="3">7</font></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="3">&nbsp;&nbsp; Statements of
    Operations - Years ended December 31, 2002 and 2001</font></td>
    <td width="10%" align="center"><font face="Times New Roman" size="3">8</font></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="3">&nbsp;&nbsp; Statements of
    Stockholders'&nbsp; Equity - Years ended December 31, 2002 and 2001</font></td>
    <td width="10%" align="center">9</td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="3">&nbsp;&nbsp; Statements of Cash
    Flows - Years ended December 31, 2002 and 2001</font></td>
    <td width="10%" align="center"><font face="Times New Roman" size="3">10</font></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="3">&nbsp;&nbsp; Notes to Combined
    Financial Statements</font></td>
    <td width="10%" align="center">11</td>
  </tr>
</table>
<font FACE="Arial" SIZE="2">

<p ALIGN="CENTER"></font><font face="Times New Roman" size="3">DELTA SEABOARD WELL
SERVICE, INC.<br>
UNAUDITED PROFORMA COMBINED FINANCIAL STATEMENTS</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">Effective September 30, 2003, the
Company acquired a 51% interest in Delta Seaboard Well Service, Inc. and related entities
for cash consideration. The acquisition was accounted for using the purchase method of
accounting.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">The following unaudited proforma
consolidated statements of operations for the nine months ended September 30, 2003 and for
the year ended December 31, 2002, assumes the acquisition of Delta had occurred on January
1, 2002 and include the historical unaudited consolidated statements of operations for the
Registrant for the year ended December 31, 2002 and nine months ended September 30, 2003,
adjusted for the proforma effects of the acquisition.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">The unaudited proforma
consolidated statements are not necessarily indicative of the results of operations that
would actually have occurred if the transactions had been consummated as of January 1,
2002. These statements should be read in conjunction with the historical financial
statements and related notes thereto of the Registrant, in its annual report on Form
10-KSB and Delta Seaboard Well Service, Inc. financial statements included herein.</font></p>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<table width="100%" cellspacing="0" cellpadding="0" height="146" border="0">
  <tr>
    <td width="100%" height="20"><font size="5"><strong>R. E. Bassie &amp; Co.</strong></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-bottom: 1px solid rgb(0,0,0)" height="21"><font size="3"><strong><i>Certified
    Public Accountants</i></strong></font></td>
  </tr>
  <tr>
    <td width="100%" height="21"><font size="3">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="94%" height="21"><p align="right"><font size="3">6671 Southwest Freeway, Suite
    550</font></td>
  </tr>
  <tr>
    <td width="94%" height="21"><p align="right"><font size="3">Houston, Texas 77074-2220</font></td>
  </tr>
  <tr>
    <td width="94%" height="21"><p align="right"><font size="3">Tel: (713) 272-8500 Fax: (713)
    272-8515</font></td>
  </tr>
  <tr>
    <td width="94%" height="21"><p align="right"><font size="3">E-Mail: Rebassie@aol.com</font></td>
  </tr>
</table>
<u><b><font FACE="Arial" SIZE="3">

<p ALIGN="CENTER"></font><font face="Times New Roman" size="3">Independent Accountants';
Report</font></b></u></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">To The Board of Directors and
Stockholders<br>
Delta Seaboard Well Service, Inc.:</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">We have audited the combined
balance sheets of Delta Seaboard Well Service, Inc. and related entities (the Company) as
of December 31, 2002 and 2001, and the related combined statements of operations,
stockholders' equity and cash flows for the years then ended. These combined financial
statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these combined financial statements based on our audits.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">We conducted our audits in
accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">In our opinion, the combined
financial statements referred to above present fairly, in all material respects, the
financial position of Delta Seaboard Well Service, Inc. and related entities as of
December 31, 2002 and 2001, and the results of their operations and their cash flows for
the years then ended, in conformity with accounting principles generally accepted in the
United States of America.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">/s/ R. E. Bassie &amp; Co.<br>
Houston, Texas<br>
October 31, 2003</font></p>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<table BORDER="0" CELLSPACING="0" BORDERCOLOR="#000000" CELLPADDING="0" WIDTH="100%"
height="0%">
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><font face="Times New Roman" size="2"><u><p
    align="center"></u><b>DELTA SEABOARD WELL SERVICE, INC. AND RELATED ENTITIES</b></font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><font face="Times New Roman" size="2"><u><p
    align="center"></u><b>Combined Balance Sheets</b></font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><font face="Times New Roman" size="2"><u><p
    align="center"></u>December 31, 2002 and 2001</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><u><p ALIGN="CENTER"><font face="Times New Roman" size="2">Assets</font></u></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><u><p ALIGN="right"><font face="Times New Roman" size="2">2002</font></u></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><u><p ALIGN="right"><font face="Times New Roman" size="2">2001</font></u></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Current
    assets:</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Cash</font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">119,276
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">151,081
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Accounts receivable, less allowance for doubtful accounts of </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    $1,613,454 in 2002 and $155,496 in 2001 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">1,650,475
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">1,635,694
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Inventories </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">397,090
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">106,227
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Drilling rigs held for sale</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">3,001,281
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">2,795,212
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Prepaid expenses and other current assets</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">337,660 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">341,654 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total current assets</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">5,505,782 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">5,029,868 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Property
    and equipment, net of accumulated </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    depreciation and amortization</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">6,421,032
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">6,415,841
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Other
    assets</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">6,150 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">6,150 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total assets</font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">11,932,964 </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">11,451,859 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><u><p ALIGN="CENTER"><font face="Times New Roman" size="2">Liabilities
    and Stockholders' Equity</font></u></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Current
    liabilities:</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Accounts payable and accrued expenses</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">3,368,397
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">2,411,871
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Short-term notes payable</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">2,941,678
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">3,402,147
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Due to related parties</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">1,266,290
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">1,065,581
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Current installments of long-term debt </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">3,282,690 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">337,313 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total current liabilities </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">10,859,055
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">7,216,912
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Long-term
    debt, less current installments</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">298,622 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">3,185,077 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total liabilities</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">11,157,677 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">10,401,989 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Stockholders'
    equity:</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Common stock</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">2,140 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">2,140 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Retained earnings</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">773,147 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">1,047,730 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total stockholders' equity</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">775,287
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">1,049,870
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Commitments
    and contingent liabilities</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total liabilities and stockholders' equity </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">11,932,964 </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">11,451,859 </font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><font size="2">&nbsp; </font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><font size="2">See accompanying notes to combined
    financial statements.</font></td>
  </tr>
</table>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<table BORDER="0" CELLSPACING="0" BORDERCOLOR="#000000" CELLPADDING="0" WIDTH="100%">
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><p align="center"><font face="Times New Roman"
    size="2"><b>DELTA SEABOARD WELL SERVICE, INC. AND RELATED ENTITIES</b></font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><b><p ALIGN="CENTER"><font face="Times New Roman"
    size="2">Combined Statements of Operations </font></b></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><p ALIGN="CENTER"><font face="Times New Roman"
    size="2">Years ended December 31, 2002 and 2001 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><u><p ALIGN="right"><font face="Times New Roman"
    size="2">2002</font></u></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><u><p ALIGN="right"><font face="Times New Roman" size="2">2001</font></u></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Revenues
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">14,536,075 </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font face="Times New Roman" size="2">17,169,884
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Costs
    and expenses: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp; Materials
    and supplies</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">4,060,371 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">9,137,145
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Salaries, wages, and employee benefits </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">4,904,775 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">4,116,731
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Contractual and professional services </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">279,858 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">229,084
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Insurance </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">1,221,288 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">514,380
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Rental and leases </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">442,921 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">261,189
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Telephone and utilities </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">191,913 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">157,662
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Repairs and maintenance </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">413,659 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">243,861
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Other expenses </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">779,462 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">1,755,066
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Bad debt expense </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">1,472,822 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">115,491
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Interest expense </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">597,183 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">206,541
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Depreciation and amortization </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right"><font face="Times New Roman" size="2">446,406 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">295,389 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total expenses </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right"><font face="Times New Roman" size="2">14,810,658 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    face="Times New Roman" size="2">17,032,539 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Net income (loss) from operations before income taxes </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">(274,583)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font face="Times New Roman" size="2">137,345
    </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">Provision
    for income taxes </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Net income (loss) </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(274,583)</font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">137,345 </font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5">&nbsp;&nbsp; </td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><font size="2">See accompanying notes to combined
    financial statements.</font></td>
  </tr>
</table>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<table BORDER="0" CELLSPACING="0" BORDERCOLOR="#000000" CELLPADDING="0" WIDTH="100%"
height="1%">
  <tr>
    <td WIDTH="100%" HEIGHT="0%" valign="middle" colspan="10" align="center"><font
    face="Times New Roman" size="2"><b>DELTA SEABOARD WELL SERVICE, INC. AND RELATED ENTITIES</b></font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" valign="middle" colspan="10" align="center"><font
    face="Times New Roman" size="2"><strong>Combined Statements of Stockholders' Equity</strong></font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" valign="middle" colspan="10" align="center"><font
    face="Times New Roman" size="2">Years ended December 31, 2002 and 2001</font></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    </font></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">Additional </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">Total </font></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="28%" COLSPAN="3" HEIGHT="0%" valign="middle"><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">Common Stock </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">paid-in </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">Retained </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">stockholders' </font></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"><p ALIGN="right"><u><font
    face="Times New Roman" size="2">shares</font></u></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"><p ALIGN="right"><u><font
    face="Times New Roman" size="2">amount </font></u></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><u><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">capital </font></u></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><u><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">earnings </font></u></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><u><p ALIGN="CENTER"><font
    face="Times New Roman" size="2">equity </font></u></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle">&nbsp;&nbsp; </td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"><p ALIGN="LEFT"><font face="Times New Roman"
    size="2">Balance, December 31, 2000 </font></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"><p ALIGN="right"><font face="Times New Roman"
    size="2">601,000 </font></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"><p ALIGN="right"><font face="Times New Roman"
    size="2">2,140 </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="right"><font
    face="Times New Roman" size="2">297,000 </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="right"><font
    face="Times New Roman" size="2">910,385 </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="right"><font
    face="Times New Roman" size="2">1,209,525 </font></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle">&nbsp;&nbsp; </td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"><p ALIGN="LEFT"><font face="Times New Roman"
    size="2">&nbsp;&nbsp; Transfer of capital to loan </font></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"><p ALIGN="LEFT"><font face="Times New Roman"
    size="2">&nbsp;&nbsp;&nbsp;&nbsp; from related parties </font></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="right"><font
    face="Times New Roman" size="2">(297,000)</font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="right"><font
    face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">(297,000)</font></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle">&nbsp;&nbsp; </td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"><p ALIGN="LEFT"><font face="Times New Roman"
    size="2">&nbsp;&nbsp; Net income </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)" valign="middle"><p
    ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)" valign="middle"><p
    ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"
    valign="middle"><p ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"
    valign="middle"><p ALIGN="right"><font face="Times New Roman" size="2">137,345 </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"
    valign="middle"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">137,345 </font></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="1%" valign="middle"><p ALIGN="LEFT"><font face="Times New Roman"
    size="2">Balance, December 31, 2001 </font></td>
    <td WIDTH="13%" HEIGHT="1%" valign="middle"><p ALIGN="right"><font face="Times New Roman"
    size="2">601,000 </font></td>
    <td WIDTH="2%" HEIGHT="1%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="1%" valign="middle"><p ALIGN="right"><font face="Times New Roman"
    size="2">2,140 </font></td>
    <td WIDTH="2%" HEIGHT="1%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="1%" align="right" valign="middle"><p ALIGN="right"><font
    face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="1%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="1%" align="right" valign="middle"><p ALIGN="right"><font
    face="Times New Roman" size="2">1,047,730 </font></td>
    <td WIDTH="2%" HEIGHT="1%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="1%" align="right" valign="middle"><p ALIGN="right"><font
    face="Times New Roman" size="2">1,049,870 </font></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle">&nbsp;&nbsp; </td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" valign="middle"></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"><p ALIGN="LEFT"><font face="Times New Roman"
    size="2">&nbsp;&nbsp; Net loss </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)" valign="middle"><p
    ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)" valign="middle"><p
    ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"
    valign="middle"><p ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"
    valign="middle"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">(274,583)</font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"
    valign="middle"><p ALIGN="RIGHT"><font face="Times New Roman" size="2">(274,583)</font></td>
  </tr>
  <tr>
    <td WIDTH="27%" HEIGHT="0%" valign="middle"><p ALIGN="LEFT"><font face="Times New Roman"
    size="2">Balance, December 31, 2002 </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)" valign="middle"><p
    ALIGN="right"><font face="Times New Roman" size="2">601,000 </font></td>
    <td WIDTH="2%" HEIGHT="0%" valign="middle"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)" valign="middle"><p
    ALIGN="right"><font face="Times New Roman" size="2">2,140 </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 2px double rgb(0,0,0)"
    valign="middle"><p ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 2px double rgb(0,0,0)"
    valign="middle"><p ALIGN="right"><font face="Times New Roman" size="2">773,147 </font></td>
    <td WIDTH="2%" HEIGHT="0%" align="right" valign="middle"><p ALIGN="RIGHT"><font
    face="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%" align="right" style="border-bottom: 2px double rgb(0,0,0)"
    valign="middle"><p ALIGN="right"><font face="Times New Roman" size="2">775,287 </font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" valign="middle" colspan="10">&nbsp;&nbsp; </td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" valign="middle" colspan="10"><font size="2">See accompanying
    notes to combined financial statements.</font></td>
  </tr>
</table>

<p>&nbsp;</p>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<table BORDER="0" CELLSPACING="0" BORDERCOLOR="#000000" CELLPADDING="0" WIDTH="100%"
height="0%">
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5" align="center"><font face="Times New Roman"
    size="2"><b>DELTA SEABOARD WELL SERVICE, INC. AND RELATED ENTITIES</b></font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><b><p ALIGN="CENTER"><font size="2">Combined
    Statements of Cash Flows</font></b></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><p ALIGN="CENTER"><font size="2">Years ended
    December 31, 2002 and 2001</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><u><p ALIGN="right"><font size="2">2002</font></u></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><u><p ALIGN="right"><font size="2">2001</font></u></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">Cash flows from operating
    activities: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Net income (loss) </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="right"><font size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">(274,583)</font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="right"><font size="2">$</font></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">137,345 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Adjustments to
    reconcile net income (loss) to net cash </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    provided by (used in) operating activities: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Depreciation and amortization </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">446,406 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">295,389 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Bad debt expense </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">1,472,822 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">115,491 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (Increase) decrease in operating assets: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Accounts receivable </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">(1,487,603)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">(92,470)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Inventories </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">(290,863)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">729,275 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Drilling rigs held for sale </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">(206,069)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">(1,833,846)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Prepaid expenses and other current assets </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">3,994 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">(163,235)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Other assets </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">- </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="RIGHT"><font size="2">11,160 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Increase (decrease) in operating liabilities: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Accounts payable and accrued expenses </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">1,086,259 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">379,773 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Net cash provided by (used in) operating activities </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    size="2">750,363 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    size="2">(421,118)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">Cash flows from investing
    activities: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Capital
    expenditures for property and equipment </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    size="2">(135,597)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    size="2">(41,374)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Net cash used in investing activities </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    size="2">(135,597)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    size="2">(41,374)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">Cash flows from financing
    activities: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Proceeds from
    short-term borrowing </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">1,266,524 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">1,525,318 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Repayment of
    short-term borrowing </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">(1,790,125)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">(1,144,808)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Proceeds from
    borrowing from related parties </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">40,976 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">332,905 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Repayment of
    borrowing from related parties </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">(18,000)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">- </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Proceeds from
    long-term debt </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">223,999 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">- </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Principal payments
    on long-term debt </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    size="2">(369,945)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font
    size="2">(314,381)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Net cash provided by (used in) financing activities </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">(646,571)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">399,034 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Net decrease in cash </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">(31,805)</font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"><p ALIGN="right"><font size="2">(63,458)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">Cash at beginning of year </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">151,081 </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">214,539 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">Cash at end of year </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="CENTER"><font size="2">$ </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">119,276 </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="CENTER"><font size="2">$ </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">151,081 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">Supplemental schedule of cash
    flow information: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Interest paid </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="CENTER"><font size="2">$ </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">124,923 </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="CENTER"><font size="2">$ </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">128,704 </font></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Non-cash
    transactions: </font></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
    <td WIDTH="2%" HEIGHT="0%"></td>
    <td WIDTH="13%" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="70%" HEIGHT="0%"><p ALIGN="LEFT"><font size="2">&nbsp;&nbsp; Issuance of
    promissory notes to acquire property and equipment </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="CENTER"><font size="2">$ </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">268,000 </font></td>
    <td WIDTH="2%" HEIGHT="0%"><p ALIGN="CENTER"><font size="2">$ </font></td>
    <td WIDTH="13%" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT"><font
    size="2">5,440,163 </font></td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5">&nbsp;&nbsp; </td>
  </tr>
  <tr>
    <td WIDTH="100%" HEIGHT="0%" colspan="5"><font size="2">See accompanying notes to combined
    financial statements.</font></td>
  </tr>
</table>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<p align="center"><strong>Delta Seaboard Well Services, Inc.<br>
and Related Entities<br>
Notes to Combined Financial Statements<br>
</strong>December 31, 2002 and 2001</p>

<p><b>(1) Summary of Significant Accounting Policies</b></p>

<p>Organization, Ownership and Business</p>

<p ALIGN="JUSTIFY">Delta Seaboard Well Service, Inc. (the &quot;Company&quot; or
&quot;Delta&quot;), a Texas corporation, was incorporated in 1958. The Company's core
business is well plugging and abandonment, workovers, and completions.</p>
<b>

<p ALIGN="JUSTIFY">Principles of Combing Financial Statements</b></p>

<p ALIGN="JUSTIFY">The combined financial statements include the accounts of the Company
and two other companies under common ownership and interrelated operations: Seaboard
Equipment Company, Inc. and Seaboard Well Service, Inc. All significant intercompany
transactions and balances have been eliminated in combining the three companies.</p>
<b>

<p ALIGN="JUSTIFY">Accounts Receivable</b></p>

<p ALIGN="JUSTIFY">Accounts receivable consist primarily of trade receivables, net of a
valuation allowance for doubtful accounts.</p>
<b>

<p ALIGN="JUSTIFY">Inventories</b></p>

<p ALIGN="JUSTIFY">Inventories are valued at the lower-of-cost or market on a first-in,
first-out basis.</p>
<b>

<p>Investment Securities</b></p>

<p ALIGN="JUSTIFY">The Company accounts for its investments in accordance with Statement
of Financial Accounting Standards No. 115, &quot;Accounting for Certain Investments in
Debt and Equity Securities.&quot; Management determines the appropriate classification of
its investments in marketable securities at the time of purchase and reevaluates such
determination at each balance sheet date. Securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading securities.
Debt securities for which the Company does not have the intent or ability to hold to
maturity and equity securities not classified as trading securities are classified as
available-for-sale. The cost of investments sold is determined on the specific
identification or the first-in, first-out method. Trading securities are reported at fair
value with unrealized gains and losses recognized in earnings, and available-for-sale
securities are also reported at fair value but unrealized gains and losses are shown in
the caption &quot;unrealized gains (losses) on shares available-for-sale&quot; included in
stockholders' equity. Management determines fair value of its investments based on quoted
market prices at each balance sheet date. </p>
<b>

<p ALIGN="JUSTIFY">Property, Equipment and Depreciation</b></p>

<p ALIGN="JUSTIFY">Property and equipment are recorded at cost less accumulated
depreciation. Upon retirement or sale, the cost of the assets disposed of and the related
accumulated depreciation are removed from the accounts, with any resultant gain or loss
being recognized as a component of other income or expense. Depreciation is computed over
the estimated useful lives of the assets (5-20 years) using the straight-line method for
financial reporting purposes and accelerated methods for income tax purposes. Maintenance
and repairs are charged to operations as incurred.</p>
<b>

<p ALIGN="JUSTIFY">Drilling Rigs Held for Sale</b></p>

<p ALIGN="JUSTIFY">Drilling rigs held for sale are carried at the lower-of-cost or fair
market value, net of selling costs. Management assesses the value of drilling rig held for
sale on a quarterly and annual basis to determine if any impairment to this net realizable
value has occurred. Management closely monitors any changes in the market, which would
indicate that a change in the value of its holdings has occurred and also obtains
independent third party appraisals on its holdings on an as-needed basis.</p>
<b>

<p ALIGN="JUSTIFY">Revenue Recognition</b></p>

<p ALIGN="JUSTIFY">The Company recognizes revenue at the time of shipment of product to
its customers or completion of services provided.</p>
<b>

<p ALIGN="JUSTIFY">Income Taxes</b></p>

<p ALIGN="JUSTIFY">The Company is a taxable entity and recognizes deferred tax assets and
liabilities for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using enacted tax
rates expected to be in effect when the temporary differences reverse. The effect on the
deferred tax assets and liabilities of a change in tax rates is recognized in income in
the year that includes the enactment date of the rate change. A valuation allowance is
used to reduce deferred tax assets to the amount that is more likely than not to be
realized.</p>
<b>

<p ALIGN="JUSTIFY">Advertising Costs</b></p>

<p ALIGN="JUSTIFY">The cost of advertising is expensed as incurred.</p>
<b>

<p ALIGN="JUSTIFY">Management's Estimates and Assumptions</b></p>

<p ALIGN="JUSTIFY">The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenues
and expenses. Actual results could differ from these estimates.</p>
<b>

<p ALIGN="JUSTIFY">Concentration of Credit Risk</b></p>

<p ALIGN="JUSTIFY">Trade accounts receivable subject the Company to the potential for
credit risk with customers in the oil and gas drilling sectors. To reduce credit risk, the
Company performs ongoing evaluations of its customer's financial condition but generally
does not require collateral.</p>
<b>

<p ALIGN="JUSTIFY">Fair Value of Financial Instruments</b></p>

<p ALIGN="JUSTIFY">The Company estimates the fair value of its financial instruments using
available market information and appropriate valuation methodologies. However,
considerable judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the Company estimates of fair value are not necessarily
indicative of the amounts that the Company could realize in a current market exchange. The
use of different market assumption and/or estimation methodologies may have a material
effect on the estimated fair value amounts. The interest rates payable by the Company on
its notes payable approximate market rates. The Company believes that the fair value of
its financial instruments comprising accounts receivable, notes receivable, accounts
payable, and notes payable approximate their carrying amounts.</p>
<b>

<p>New Standards Implemented</b></p>

<p ALIGN="JUSTIFY">In January 2003, the FASB issued SFAS No. 148, &quot;<i>Accounting for
Stock-Based Compensation; Transition and Disclosures.&quot;</i> This statement provides
alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement also amends
the disclosure requirements of SFAS No. 123 to require more prominent and frequent
disclosures in the financial statements about the effects of stock-based compensation. The
transitional guidance and annual disclosure provisions of this Statement were effective
for the December 31, 2002 financial statements.</p>

<p ALIGN="JUSTIFY">In May 2003, the FASB issued SFAS No. 150. &quot;<i>Accounting for
Certain Instruments with Characteristics of Both Liabilities and Equity</i>,&quot; which
establishes standards for how an issuer classifies and measures certain financial
statements with characteristics of both liabilities and equity. SFAS No. 150 requires that
an issuer classify a financial instrument that is within its scope, which may have
previously been reported as equity, as a liability (or an asset in some circumstances).
This statement is effective for financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003 for public companies. The Company does not believe that the
adoption of SFAS No. 150 will have a significant impact on its financial statements.</p>
<b>

<p ALIGN="JUSTIFY">(2) Property and Equipment</b></p>

<p ALIGN="JUSTIFY">Major classes of property and equipment together with their estimated
useful lives, consisted of the following:</p>

<table BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%" height="0%">
  <tr>
    <td WIDTH="52%" VALIGN="TOP"></td>
    <td WIDTH="9%" VALIGN="TOP"></td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="36%" VALIGN="TOP" COLSPAN="3"><p ALIGN="CENTER">December 31</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"></td>
    <td WIDTH="9%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="CENTER">Years</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="15%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right">2002</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="16%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right">2001</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Drilling rigs and related equipment</td>
    <td WIDTH="9%" VALIGN="TOP"><p ALIGN="CENTER">7-15</td>
    <td WIDTH="4%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="15%" VALIGN="TOP"><p ALIGN="RIGHT">6,428,513</td>
    <td WIDTH="4%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">6,057,752</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Machinery and equipment</td>
    <td WIDTH="9%" VALIGN="TOP"><p ALIGN="CENTER">3-20</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="15%" VALIGN="TOP"><p ALIGN="RIGHT">754,050</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">631,835</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Furniture and fixtures</td>
    <td WIDTH="9%" VALIGN="TOP"><p ALIGN="CENTER">5-10</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="15%" VALIGN="TOP"><p ALIGN="RIGHT">60,191</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">52,398</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Leasehold improvements</td>
    <td WIDTH="9%" VALIGN="TOP"><p ALIGN="CENTER">10</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="15%" VALIGN="TOP"><p ALIGN="RIGHT">6,616</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">6,616</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Vehicles</td>
    <td WIDTH="9%" VALIGN="TOP"><p ALIGN="CENTER">5</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="15%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT">842,191</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="16%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT">939,363</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"></td>
    <td WIDTH="9%" VALIGN="TOP"></td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="15%" VALIGN="TOP"><p ALIGN="RIGHT">8,091,561</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">7,687,964</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Less accumulated depreciation and
    amortization</td>
    <td WIDTH="9%" VALIGN="TOP"></td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="15%" VALIGN="bottom" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">1,670,529</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="16%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT">1,272,123</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Net property and equipment</td>
    <td WIDTH="9%" VALIGN="TOP"></td>
    <td WIDTH="4%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="15%" VALIGN="top" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT">6,421,032</td>
    <td WIDTH="4%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="16%" VALIGN="top" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT">6,415,841</td>
  </tr>
</table>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div><b>

<p>3. Short-term Notes Payable</p>
</b>

<table BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%" height="0%">
  <tr>
    <td WIDTH="70%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="28%" VALIGN="top" COLSPAN="3"><p ALIGN="CENTER">December 31</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right">2002</td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right">2001</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Note payable, due in monthly
    installments of interest only, with interest at the prime rate as published in the Wall
    Street Journal, the note is payable when the two drillings rigs are sold, secured by the
    two drilling rigs</td>
    <td WIDTH="2%" VALIGN="BOTTOM"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="BOTTOM"><p ALIGN="RIGHT">2,503,359</td>
    <td WIDTH="2%" VALIGN="BOTTOM"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="BOTTOM"><p ALIGN="RIGHT">2,503,359</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle">&nbsp;&nbsp; </td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"></td>
    <td WIDTH="2%" VALIGN="BOTTOM"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"></td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Demand note payable to bank, due in
    monthly installments of $8,483, including interest at prime plus 1.5%, if demand is not
    made, the remaining principal balance due May 2006, secured by equipment</td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"><p ALIGN="RIGHT">348,209</td>
    <td WIDTH="2%" VALIGN="BOTTOM"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"><p ALIGN="RIGHT">458,617</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle">&nbsp;&nbsp; </td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"></td>
    <td WIDTH="2%" VALIGN="BOTTOM"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"></td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Demand note payable to bank, due in
    monthly installments of $2,067, including interest at prime plus 2%, if demand is not
    made, the remaining principal balance due May 2006, secured by equipment</td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"><p ALIGN="RIGHT">83,877</td>
    <td WIDTH="2%" VALIGN="BOTTOM"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"><p ALIGN="RIGHT">108,784</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle">&nbsp;&nbsp; </td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"></td>
    <td WIDTH="2%" VALIGN="BOTTOM"></td>
    <td WIDTH="13%" VALIGN="BOTTOM"></td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Other notes with various terms</td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="bottom" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">6,233</td>
    <td WIDTH="2%" VALIGN="BOTTOM"></td>
    <td WIDTH="13%" VALIGN="bottom" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">331,387</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="top" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT">2,941,678</td>
    <td WIDTH="2%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="top" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT">3,402,147</td>
  </tr>
</table>
<b>

<p ALIGN="JUSTIFY">(4) Long-term Debt</b></p>

<p ALIGN="JUSTIFY">Long-term debt consisted of the following:</p>

<table BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%" height="0%">
  <tr>
    <td WIDTH="70%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="28%" VALIGN="middle" COLSPAN="3"><p ALIGN="CENTER">December 31</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right">2002</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right">2001</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Note payable, due in monthly
    installments of $62,210, with interest at 12%, through November 2006, secured by two
    drilling rigs</td>
    <td WIDTH="2%" VALIGN="middle"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="middle"><p ALIGN="RIGHT">3,092,531</td>
    <td WIDTH="2%" VALIGN="middle"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="middle"><p ALIGN="RIGHT">2,796,641</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle">&nbsp;&nbsp; </td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"></td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Note payable to a bank, due in monthly
    installments of $8,802, including interest at 7.9%, secured by equipment</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"><p ALIGN="RIGHT">101,908</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"><p ALIGN="RIGHT">165,040</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle">&nbsp;&nbsp; </td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"></td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Other notes with various terms</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">386,873</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">560,709</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Total long-term debt</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"><p ALIGN="RIGHT">3,581,312</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"><p ALIGN="RIGHT">3,522,390</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Less current installments</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">3,282,690</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">337,313</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Total long-term debt, less current
    installments</td>
    <td WIDTH="2%" VALIGN="middle"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT">298,622</td>
    <td WIDTH="2%" VALIGN="middle"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT">3,185,077</td>
  </tr>
</table>

<p ALIGN="JUSTIFY">Principal repayment provisions of long-term debt are as follows at
December 31, 2002:</p>
<div align="center"><center>

<table BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="50%">
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="JUSTIFY">2003</td>
    <td WIDTH="4%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">3,282,690</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="JUSTIFY">2004</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">116,753</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="JUSTIFY">2005</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">102,874</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="JUSTIFY">2006</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT">78,995</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="CENTER">Total</td>
    <td WIDTH="4%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="18%" VALIGN="top" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT">3,581,312</td>
  </tr>
</table>
</center></div></div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div><b>

<p ALIGN="JUSTIFY">(5) Income Taxes</b></p>

<p ALIGN="JUSTIFY">A reconciliation of income taxes at the federal statutory rate to
amounts provided for the years ended December 31, are as follows:</p>

<table BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
  <tr>
    <td WIDTH="70%" VALIGN="top"></td>
    <td WIDTH="2%" VALIGN="top"></td>
    <td WIDTH="28%" VALIGN="top" COLSPAN="3"><p ALIGN="CENTER">December 31</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="top"></td>
    <td WIDTH="2%" VALIGN="top"></td>
    <td WIDTH="13%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right">2002</td>
    <td WIDTH="2%" VALIGN="TOP"></td>
    <td WIDTH="13%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right">2001</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="top"><p ALIGN="JUSTIFY">Tax expense/(benefit) computed at
    statutory rate for continuing operations</td>
    <td WIDTH="2%" VALIGN="top"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="BOTTOM" align="right"><p ALIGN="right">(93,358)</td>
    <td WIDTH="2%" VALIGN="BOTTOM"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="BOTTOM"><p ALIGN="right">46,697</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="top">Tax (benefit) of operating loss carryforwards</td>
    <td WIDTH="2%" VALIGN="top"></td>
    <td WIDTH="13%" VALIGN="bottom" style="border-bottom: 1px solid rgb(0,0,0)" align="right"><p
    ALIGN="right">93,358</td>
    <td WIDTH="2%" VALIGN="BOTTOM"></td>
    <td WIDTH="13%" VALIGN="bottom" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right">(46,697)</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="top">Tax expense/(benefit) for continuing operations</td>
    <td WIDTH="2%" VALIGN="top"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="bottom" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="right">-</td>
    <td WIDTH="2%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="bottom" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="right">-</td>
  </tr>
</table>

<p ALIGN="JUSTIFY">The Company has current net operating loss carryforwards in excess of
$1,124,000 as of December 31, 2002, to offset future taxable income, which expires 2020. </p>

<p ALIGN="JUSTIFY">Deferred taxes are determined based on the temporary differences
between the financial statement and income tax bases of assets and liabilities as measured
by the enacted tax rates, which will be in effect when these differences reverse. The
components of deferred income tax assets are as follows:</p>

<table BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%" height="0%">
  <tr>
    <td WIDTH="70%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="28%" VALIGN="middle" COLSPAN="3"><p ALIGN="CENTER">December 31</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right">2002</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right">2001</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Deferred tax assets:</td>
    <td WIDTH="2%" VALIGN="middle"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="middle"></td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle">Net operating loss</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">1,124,622</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">1,031,264</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle">&nbsp;&nbsp; </td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"></td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Total deferred tax asset</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"><p ALIGN="RIGHT">1,124,622</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"><p ALIGN="RIGHT">1,031,264</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle">&nbsp;&nbsp; </td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"></td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle"></td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Valuation allowance</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">(1,124,622)</td>
    <td WIDTH="2%" VALIGN="middle"></td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT">(1,031,264)</td>
  </tr>
  <tr>
    <td WIDTH="70%" VALIGN="middle"><p ALIGN="JUSTIFY">Net deferred asset</td>
    <td WIDTH="2%" VALIGN="middle"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT">-</td>
    <td WIDTH="2%" VALIGN="middle"><p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="middle" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT">-</td>
  </tr>
</table>

<p ALIGN="JUSTIFY">At December 31, 2002, the Company provided a 100% valuation allowance
for the deferred tax asset because given the volatility of the current economic climate,
it could not be determined whether it was more likely than not that the deferred tax
asset/ (liability) would be realized.</p>
<b>

<p ALIGN="JUSTIFY">(6) Leases</b></p>

<p ALIGN="JUSTIFY">The Company leases office and spaces for storage facilities under
noncancellable-operating leases, which expires in various terms through December 2011.
Future minimum lease payments under these operating leases are as follows:</p>
<div align="center"><center>

<table BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="50%">
  <tr>
    <td WIDTH="78%" VALIGN="TOP">Year Ended December 31,</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="TOP"><p align="right">Amount</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="JUSTIFY">2003</td>
    <td WIDTH="4%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">71,550</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="JUSTIFY">2004</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">45,300</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="JUSTIFY">2005</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">8,550</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">2006</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="TOP" align="right">8,550</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">2007</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="TOP" align="right">8,550</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="JUSTIFY">Thereafter</td>
    <td WIDTH="4%" VALIGN="TOP"></td>
    <td WIDTH="18%" VALIGN="top" style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="RIGHT">34,200</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP"><p ALIGN="CENTER">Total</td>
    <td WIDTH="4%" VALIGN="TOP"><p ALIGN="RIGHT">$</td>
    <td WIDTH="18%" VALIGN="top" style="border-bottom: 2px double rgb(0,0,0)"><p ALIGN="RIGHT">176,700</td>
  </tr>
</table>
</center></div></div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div><b>

<p ALIGN="JUSTIFY">(7) Stockholders' Equity</b></p>

<p ALIGN="JUSTIFY">The number of stock authorized, outstanding and the par value of these
shares for each company are as following:</p>

<table border="0" width="100%" cellpadding="0" cellspacing="0">
  <tr>
    <td width="40%"></td>
    <td width="25%" align="center"><u>Number of Shares Authorized</u></td>
    <td width="25%" align="center"><u>Number of Shares Outstanding</u></td>
    <td width="10%" align="center"><u>Par Value</u></td>
  </tr>
  <tr>
    <td width="40%">Delta Seaboard Well Service, Inc.</td>
    <td width="25%" align="center">1,000</td>
    <td width="25%" align="center">1,000</td>
    <td width="10%" align="center">N/A</td>
  </tr>
  <tr>
    <td width="40%">Seaboard Equipment Company, Inc.</td>
    <td width="25%" align="center">500,000</td>
    <td width="25%" align="center">500,000</td>
    <td width="10%" align="center">N/A</td>
  </tr>
  <tr>
    <td width="40%">Seaboard Well Service, Inc.</td>
    <td width="25%" align="center">100,000</td>
    <td width="25%" align="center">100,000</td>
    <td width="10%" align="center">N/A</td>
  </tr>
</table>

<p>&nbsp;</p>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div><font FACE="Arial" SIZE="2">

<p ALIGN="CENTER"></font><font face="Times New Roman" size="3">DELTA SEABOARD WELL
SERVICE, INC.<br>
UNAUDITED PROFORMA COMBINED FINANCIAL STATEMENTS</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%">
  <tr>
    <td width="90%"><p ALIGN="JUSTIFY"><font size="3">Proforma Financial Information</font></td>
    <td width="10%" align="center">4</td>
  </tr>
  <tr>
    <td width="90%"><font size="3">Proforma Consolidated Balance Sheet - September 30, 2003</font></td>
    <td width="10%" align="center">18</td>
  </tr>
  <tr>
    <td width="90%"><font size="3">Proforma Consolidated Statement of Operations - Year ended
    December 31, 2002</font></td>
    <td width="10%" align="center">19</td>
  </tr>
  <tr>
    <td width="90%"><font size="3">Proforma Consolidated Statement of Operations - Nine months
    ended September 30, 2003</font></td>
    <td width="10%" align="center">20</td>
  </tr>
  <tr>
    <td width="90%"><font size="3">Note to Unaudited Proforma Consolidated Financial
    Statements</font></td>
    <td width="10%" align="center">20</td>
  </tr>
</table>
<font FACE="Arial" SIZE="2">

<p ALIGN="CENTER"></font><font face="Times New Roman" size="3">DELTA SEABOARD WELL
SERVICE, INC.<br>
UNAUDITED PROFORMA COMBINED FINANCIAL STATEMENTS</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">Effective September 30, 2003, the
Company acquired a 51% interest in Delta Seaboard Well Service, Inc. and related entities
for cash consideration. The acquisition was accounted for using the purchase method of
accounting.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">The following unaudited proforma
consolidated statements of operations for the nine months ended September 30, 2003 and for
the year ended December 31, 2002, assumes the acquisition of Delta had occurred on January
1, 2002 and include the historical unaudited consolidated statements of operations for the
Registrant for the year ended December 31, 2002 and nine months ended September 30, 2003,
adjusted for the proforma effects of the acquisition.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">The unaudited proforma
consolidated statements are not necessarily indicative of the results of operations that
would actually have occurred if the transactions had been consummated as of January 1,
2002. These statements should be read in conjunction with the historical financial
statements and related notes thereto of the Registrant, in its annual report on Form
10-KSB and Delta Seaboard Well Service, Inc. financial statements included herein.</font></p>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<table CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%" height="1%">
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0%" colspan="9" align="center"><font
    face="Times New Roman" size="2"><strong>AMERICAN INTERNATIONAL INDUSTRIES, INC. AND
    SUBSIDIARIES </strong></font></td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0%" colspan="9" align="center"><font
    face="Times New Roman" size="2">Unaudited Proforma Consolidated Balance Sheet</font></td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0%" colspan="9" align="center"><font
    face="Times New Roman" size="2">September 30, 2003 </font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">Delta</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">American</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">Seaboard Well</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">International</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">Services, Inc.</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">Industries, Inc.</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">and Related</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">Proforma</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"><font face="Times New Roman"
    size="2">Proforma</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="center"><font face="Times New Roman" size="2">and Subsidiaries</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="center"
    style="border-bottom: 1px solid rgb(0,0,0)"><font face="Times New Roman" size="2">Entities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="center"><font face="Times New Roman" size="2">Adjustments</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="center"><font face="Times New Roman" size="2">Consolidated</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><p align="center"><font face="Times New Roman"
    size="2">Assets</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Current
    assets:</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Cash </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">496,368</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"><p align="right"><font face="Times New Roman"
    size="2">$ </font></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"><p align="right"><font face="Times New Roman"
    size="2">$ </font></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"><p align="right"><font face="Times New Roman"
    size="2">$ </font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">496,368</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Certificate of deposit</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">300,000</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">300,000</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Trading securities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">19,200</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">19,200</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Available-for-sale securities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">4,500,000</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">4,500,000</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Accounts receivable, net</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">1,745,786</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">1,149,121</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">2,894,907</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Accounts receivable from related parties</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">515,378</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">36,479</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">551,857</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Inventories</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">2,275,608</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">231,481</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">2,507,089</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Real estate held for sale </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">225,000</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">225,000</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Prepaid expenses and other current assets</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">10,687</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">344,432</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">355,119</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Drilling rigs held for sale</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">1,687,408</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">1,687,408</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Intercompany receivable (payable)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font face="Times New Roman" size="2">3,670,564</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font face="Times New Roman" size="2">(3,670,564)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font face="Times New Roman" size="2">- </font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total current assets</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">13,758,591</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(221,643)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">13,536,948</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Notes
    receivable</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">970,208</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">970,208</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Property
    and equipment, net</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">1,055,501</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">6,458,250</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">7,513,751</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Excess
    of cost over net assets of businesses acquired, net</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">674,539</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">674,539</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Investment
    in consolidated subsidiary</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">1,270,828</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">(1,270,828)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Other
    assets</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">6,183</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">6,150</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">12,333</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total assets</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">17,735,850</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">6,242,757</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(1,270,828)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">22,707,779</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><p align="center"><font face="Times New Roman"
    size="2">Liabilities and Stockholders' Equity</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Current
    liabilities:</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Accounts payable and accrued expenses</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">3,052,395</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">1,989,235</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">5,041,630</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Short-term notes payable</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">716,016</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">716,016</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Current installments of long-term debt</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">35,000</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">45,686</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">80,686</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total current liabilities </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">3,087,396</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">2,750,937</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">5,838,332</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Long-term
    notes payable to related parties</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">33,800</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">33,800</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Long-term
    debt</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">1,143,849</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">1,000,000</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">2,143,849</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Minority
    interest</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">82,097</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">1,220,992</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">1,303,089</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total liabilities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">4,347,141</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">3,750,937</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">1,220,992</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">9,319,070</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%">&nbsp;&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">Stockholders'
    equity:</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Preferred stock</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">400</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">400</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Common stock</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">2,466</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">2,466</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">(2,466)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="right"><font face="Times New Roman"
    size="2">2,466</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Additional paid-in capital </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">24,560,956</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">2,489,354</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(2,489,354)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">24,560,956</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Accumulated deficit</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(11,141,085)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(11,141,085)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">13,422,737</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">2,491,820</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(2,491,820)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">13,422,737</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Less treasury stock, at cost</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(34,028)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(34,028)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total stockholders' equity</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">13,388,709</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">2,491,820</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(2,491,820)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">13,388,709</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%">&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total liabilities and stockholders' equity </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="14%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">17,735,850</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="12%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">6,242,757</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(1,270,828)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">22,707,779</font></td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0%" colspan="9">&nbsp; </td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0%" colspan="9"><font face="Times New Roman"
    size="2">See accompanying notes to unaudited Proforma consolidated financial statements.</font></td>
  </tr>
</table>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<table CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%" height="0%">
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0" colspan="9"><p align="center"><font
    face="Times New Roman" size="2"><strong>AMERICAN INTERNATIONAL INDUSTRIES, INC. AND
    SUBSIDIARIES </strong></font></td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0" colspan="9"><p align="center"><font
    face="Times New Roman" size="2">Unaudited Proforma Consolidated Statement of Operations </font></td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0" colspan="9"><p align="center"><font
    face="Times New Roman" size="2">Year ended December 31, 2002</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%" align="center"><font size="2">Delta</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%" align="center"><font size="2">American</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%" align="center"><font size="2">Seaboard Well</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">International</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">Services,
    Inc.</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%" align="center"><font size="2">Industries, Inc.</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">and Related</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">Proforma</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">Proforma</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%" align="center"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">and Subsidiaries</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="center"><font size="2">Entities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="center"><font size="2">Adjustments</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="center"><font size="2">Consolidated</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">Revenues</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">13,378,040</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">14,536,075</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">27,914,115</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">Costs and
    expenses:</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Costs of sales</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">6,817,904</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">8,961,221</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">15,779,125</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Selling, general and administrative</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">1,955,133</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">3,779,432</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">5,734,565</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Bad debt expense</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">1,536,004</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px none rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">1,472,822</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px none rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px none rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">3,008,826</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total costs and expenses</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">10,309,041</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px none rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">14,213,475</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px none rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px none rgb(0,0,0)"
    align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">24,522,516</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0">&nbsp;&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Operating income</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">3,068,999</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">322,600</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">-</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">3,391,599</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0">&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">Other
    income (expenses):</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Interest income</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">36,051</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">36,051</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Realized losses on securities available for sale</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">(614,935)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">(614,935)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Realized losses on trading securities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">(97,100)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" align="right"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" align="right"><font face="Times New Roman"
    size="2">(97,100)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Unrealized losses on trading securities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(13,200)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(13,200)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Loss on sale of subsidiary</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(179,608)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(179,608)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="1"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Loss on sale of assets</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="1"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="1"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(37,030)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="1"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="1"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="1"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="1"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="1"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="1"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(37,030)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Interest expense</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(100,378)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(597,183)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(697,561)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Other income</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">39,225</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">39,225</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total other expenses</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(966,975)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(597,183)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(1,564,158)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0">&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Net earnings (loss) before income taxes</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">2,102,024</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">(274,583)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">1,827,441</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0">&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">Provision
    for income taxes </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">- </font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0">&nbsp; </td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 1px solid rgb(0,0,0)"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Net earnings (loss) from operations</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">2,102,024</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(274,583)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">1,827,441</font></td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="1" colspan="9">&nbsp; </td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="middle" HEIGHT="0" colspan="9"><font face="Times New Roman"
    size="2">See accompanying notes to unaudited Proforma consolidated financial statements.</font></td>
  </tr>
</table>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<table CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%" height="603">
  <tr>
    <td WIDTH="97%" VALIGN="middle" HEIGHT="17" colspan="9"><p align="center"><font
    face="Times New Roman" size="2"><strong>AMERICAN INTERNATIONAL INDUSTRIES, INC. AND
    SUBSIDIARIES </strong></font></td>
  </tr>
  <tr>
    <td WIDTH="97%" VALIGN="middle" HEIGHT="17" colspan="9"><p align="center"><font
    face="Times New Roman" size="2">Unaudited Proforma Consolidated Statement of Operations </font></td>
  </tr>
  <tr>
    <td WIDTH="97%" VALIGN="middle" HEIGHT="17" colspan="9"><p align="center"><font
    face="Times New Roman" size="2">Nine months ended September 30, 2003</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" align="center" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%" align="center"><font size="2">Delta</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" align="center" HEIGHT="0%"><font size="2">American</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%" align="center"><font size="2">Seaboard Well</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"><font size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">International</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">Services,
    Inc.</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" align="center"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">Industries,
    Inc.</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">and Related</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">Proforma</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" align="center"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%"><p align="center"><font size="2">Proforma</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%"></td>
    <td WIDTH="17%" VALIGN="middle" align="center" style="border-bottom: 1px solid rgb(0,0,0)"
    HEIGHT="0%"><font size="2">and Subsidiaries</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="center"><font size="2">Entities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="center"><font size="2">Adjustments</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="0%" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="center"><font size="2">Consolidated</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="17"><font face="Times New Roman" size="2">Revenues
    </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="17"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="17%" VALIGN="middle" height="17"><p ALIGN="right"><font face="Times New Roman"
    size="2">4,010,008</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="17"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="17"><p ALIGN="right"><font face="Times New Roman"
    size="2">5,230,123</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="17"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="17"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="17"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="17"><p ALIGN="right"><font face="Times New Roman"
    size="2">9,240,131</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">Costs
    and expenses: </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Costs of sales </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">3,338,693</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="RIGHT"><font face="Times New Roman"
    size="2">3,463,258</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"><p ALIGN="right"><font
    face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21" align="right"><p ALIGN="right"><font
    face="Times New Roman" size="2">6,801,951</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Selling, general and administrative </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" style="border-bottom: 1px none rgb(0,0,0)" height="21"><p
    align="right"><font face="Times New Roman" size="2">1,792,539</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">1,326,894</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"
    style="border-bottom: 1px none rgb(0,0,0)"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21" align="right"
    style="border-bottom: 1px none rgb(0,0,0)"><font face="Times New Roman" size="2">3,119,433</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Bad debt expense</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)" height="21"><p
    align="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">29,749</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font face="Times New Roman"
    size="2">29,749</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total costs and expenses </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)" height="21"><p
    align="right"><font face="Times New Roman" size="2">5,131,232</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right"><font face="Times New Roman" size="2">4,819,901</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font face="Times New Roman"
    size="2">9,951,133</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">Operating
    income (loss)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">(1,121,224)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">410,222</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">(711,002)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">Other
    income (expenses): </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Interest income </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">35,009</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"><p ALIGN="right"><font
    face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">35,009</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Realized losses on sales of trading securities</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p align="right"><font face="Times New Roman"
    size="2">(232,548)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"><p ALIGN="right"><font
    face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"><p align="right"><font face="Times New Roman"
    size="2">(232,548)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Gain on sale of assets</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">469,400</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"><p ALIGN="right"><font
    face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">469,400</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;
    Interest expense</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">(71,742)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">(355,775)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"><p ALIGN="right"><font
    face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">(427,517)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;
    Other income </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">2,288</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" align="right"><p ALIGN="right"><font
    face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">2,288</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;
    Minority interest in income of subsidiary</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)" height="21"><p
    ALIGN="right"><font face="Times New Roman" size="2">-</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right"><font face="Times New Roman" size="2">(26,679)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font face="Times New Roman"
    size="2">(26,679)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Total other income</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)" height="21"><p
    ALIGN="right"><font face="Times New Roman" size="2">202,407</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right"><font face="Times New Roman" size="2">(382,454)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"><p
    ALIGN="right"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><p ALIGN="right"><font face="Times New Roman"
    size="2">(180,047)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    Net earnings (loss) before income taxes </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">(918,817)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">27,768</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">(891,049)</font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">Provision
    for income taxes </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" height="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21"><p ALIGN="right"><font face="Times New Roman"
    size="2">- </font></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="21"><font face="Times New Roman" size="2">&nbsp; </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="middle" style="border-bottom: 1px solid rgb(0,0,0)" height="21"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="21" style="border-bottom: 1px solid rgb(0,0,0)"></td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="middle" HEIGHT="18"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;
    Net earnings (loss) from operations</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="18"><p align="right"><font face="Times New Roman"
    size="2">$</font></td>
    <td WIDTH="17%" VALIGN="middle" style="border-bottom: 2px double rgb(0,0,0)" height="18"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(918,817)</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="18" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="15%" VALIGN="middle" HEIGHT="18" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">27,768</font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="18" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="10%" VALIGN="middle" HEIGHT="18" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">- </font></td>
    <td WIDTH="1%" VALIGN="middle" HEIGHT="18" style="border-bottom: 2px none rgb(0,0,0)"><p
    align="right"><font face="Times New Roman" size="2">$</font></td>
    <td WIDTH="9%" VALIGN="middle" HEIGHT="18" style="border-bottom: 2px double rgb(0,0,0)"><p
    ALIGN="RIGHT"><font face="Times New Roman" size="2">(891,049)</font></td>
  </tr>
  <tr>
    <td WIDTH="96%" VALIGN="middle" HEIGHT="17" colspan="9"><font face="Times New Roman"
    size="2">See accompanying notes to unaudited Proforma consolidated financial statements.</font></td>
  </tr>
</table>

<p ALIGN="CENTER"><font face="Times New Roman" size="3"><b>Unaudited Proforma Consolidated
Financial Statements<br>
</b>Notes to Unaudited Proforma Consolidated Financial Statements</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">(1) Basis of Presentation</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">The unaudited Proforma
Consolidated Statement of Operations for the nine months ended September 30, 2003,
included the unaudited historical results of operations for American International
Industries, Inc. and Delta Seaboard Well Service, Inc. for the nine months ended September
30, 2003, adjusted for the proforma effects of the acquisition assuming the acquisition
occurred on January 1, 2002.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">The unaudited Proforma
Consolidated Statement of Operations for the year ended December 31, 2002, included the
audited historical results of operations of the Company and Delta, and adjusted for the
proforma effects of the acquisition assuming the acquisition occurred on January 1, 2002.
The unaudited Proforma Balance Sheet at September 30, 2003, included the unaudited balance
sheet of the Company and Delta as of September 30, 2003, assuming the acquisition occurred
on September 30, 2003, adjusted for the proforma effects of the acquisition.<br>
The capital accounts of the Company have been adjusted as of September 30, 2003 to report
the effects of the acquisition, assuming the acquisition occurred on September 30, 2003.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="3">EXHIBITS</font></p>

<p><font face="Times New Roman" size="3">The following exhibits are filed as exhibits and
are part of this Form 8-K Current Report:</font></p>

<table border="0" cellspacing="0" width="100%">
  <tr>
    <td width="10%"><font size="2">Exhibit No.</font></td>
    <td width="90%"><font size="2">Description</font></td>
  </tr>
  <tr>
    <td width="10%"><font size="2">10.13</font></td>
    <td width="90%"><font size="2">Delta Seaboard Well Services, Inc. Stock Purchase Agreement</font></td>
  </tr>
</table>
</div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<p ALIGN="CENTER"><font size="3">SIGNATURES</font></p>

<p ALIGN="JUSTIFY"><font size="3">Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.</font></p>

<table border="0" cellspacing="0" width="100%">
  <tr>
    <td width="100%"><font size="3">American International Industries, Inc.</font></td>
  </tr>
  <tr>
    <td width="100%"><u><font size="3">By /s/ Daniel Dror, CEO, President and Chairman</font></u></td>
  </tr>
  <tr>
    <td width="100%">&nbsp; </td>
  </tr>
  <tr>
    <td width="100%"><font size="3">Date: December 29, 2003</font></td>
  </tr>
</table>
</div>
</body>
</html>
[{"type": "8-K", "sequence": "1", "filename": "form-8k.htm", "secsgml_size_bytes": 210846}]
{"company-data": {"conformed-name": "AMERICAN INTERNATIONAL INDUSTRIES INC", "cik": "0001073146", "assigned-sic": "6799", "irs-number": "880326480", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-25223", "film-number": "031077301"}, "business-address": {"street1": "601 CIEN ST", "street2": "SUITE 235", "city": "KEMAH", "state": "TX", "zip": "77565-2701", "phone": "2813349479"}, "mail-address": {"street1": "601 HANSON RD", "city": "KEMAH", "state": "TX", "zip": "77565-2701"}}
Form 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report:
    September 30, 2003
(Date of Earliest
    Event Reported)
AMERICAN
    INTERNATIONAL INDUSTRIES, INC.
(Exact Name of
    Registrant as Specified in its Charter)
Nevada
0-25223
88-0326480
(State or other jurisdiction of
    incorporation)
(Commission File Number)
(IRS Employer Identification
    No.)
601 Cien Street, Suite 235, Kemah, TX
77565
(Address of principal executive
    offices)
(Zip Code)
Registrant's telephone number, including area code: (281) 334-9479
Table of Contents
Page
Item 1. Changes in Control of Registrant
3
Item 2. Acquisition or Disposition of Assets
3
Item 3. Bankruptcy or Receivership
4
Item 4. Changes in Registrant's Certifying
    Accountants
4
Item 5. Other Events and FD Disclosure
4
Item 6. Resignations of Directors and
    Executive Officers
4
Item 7. Financial Statements and Exhibits
5
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective September 30, 2003, American International Industries, Inc.
(the "Company") acquired a 51% interest in Delta Seaboard Well Service, Inc. and
related entities (Seaboard Equipment Company and Seaboard Well Service)
("Delta"), all Texas corporations, for cash consideration in the amount of
$1,000,000. The Stock Purchase Agreement between the Company and Delta is attached as an
exhibit to this current report.
Delta is on onshore rig-based well servicing contractor, providing
services to oil companies and independent oil and natural gas companies operating in South
and East Texas, Louisiana, Mississippi and Alabama. These services include rig-based
workover, plugging and abandonment, and well completion and recompletion services.
Among the clients of Delta are El Paso Production Company, The Houston
Exploration Company, Burlington Resources Company, The Railroad Commission of Texas, Pogo
Producing/North Central Oil Corporation, and Dominion Exploration and Production, Inc.
Delta is managed by Rob Derrick and Ron Burleigh, who are Delta's
executive officers and owners of 49% of Delta and have over twenty years of experience in
the oil and gas industry. Both have been with Delta for many years and have signed long
term employment agreements with Delta. Delta was founded in 1958 and has its headquarters
in Houston and maintains administrative and sales offices in both Lafayette and Houston,
TX.
Demand for oil and gas well services historically has been cyclical in
nature and depends substantially on the condition of the oil and gas industry. The level
of expenditures is sensitive to existing oil and gas prices as well as the oil and gas
industry's view of such prices in the future. The trend has been for increasing commodity
prices which has resulted in greater demand for Delta's products and services. In
addition, demand for Delta's services to the oil and gas well industry depends upon the
number of oil and natural gas wells being drilled, the depth and drilling conditions of
such wells, the number of well completions and the level of workover activity in Delta's
markets.
Delta believes that it has certain competitive advantages related to
cost efficiencies, material coordination, reduced engineering time resulting from its
highly experienced staff of toolpushers, field supervisors and operations managers, and
its fully integrated operations with cementing and electric wireline operations that
include cutting casing and tubing as part of Delta's services. Delta also believes that
with the economic resources of the Company and its access to the public capital markets.
Delta also plans to pursue strategic acquisitions and enter into ventures for long-term
growth and market expansion.
Our services are sold in highly competitive markets. The competition in
our industry could result in reduced profitability and loss of market share for Delta. In
its markets, in South and East Texas, Louisiana, Mississippi and Alabama, Delta competes
principally with the following entities: Tetra Apllied Technologies, Key Energy Services,
Basic Energy and other small companies. Many of Delta's competitors have greater financial
resources than Delta has had historically and may continue to have as a subsidiary of the
Company. Delta will rely upon the ability of the Company to provide working capital and
secure debt and equity financing in order to Delta to continue to expand its oil and gas
well services business and to develop its plan to participate in exploration and drilling
operations.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
DELTA SEABOARD WELL
SERVICE, INC. AND RELATED ENTITIES
Independent
    Auditors' Reports
6
Combined Financial Statements:
Balance Sheets -
    December 31, 2002 and 2001
7
Statements of
    Operations - Years ended December 31, 2002 and 2001
8
Statements of
    Stockholders'  Equity - Years ended December 31, 2002 and 2001
9
Statements of Cash
    Flows - Years ended December 31, 2002 and 2001
10
Notes to Combined
    Financial Statements
11
DELTA SEABOARD WELL
SERVICE, INC.
UNAUDITED PROFORMA COMBINED FINANCIAL STATEMENTS
Effective September 30, 2003, the
Company acquired a 51% interest in Delta Seaboard Well Service, Inc. and related entities
for cash consideration. The acquisition was accounted for using the purchase method of
accounting.
The following unaudited proforma
consolidated statements of operations for the nine months ended September 30, 2003 and for
the year ended December 31, 2002, assumes the acquisition of Delta had occurred on January
1, 2002 and include the historical unaudited consolidated statements of operations for the
Registrant for the year ended December 31, 2002 and nine months ended September 30, 2003,
adjusted for the proforma effects of the acquisition.
The unaudited proforma
consolidated statements are not necessarily indicative of the results of operations that
would actually have occurred if the transactions had been consummated as of January 1,
2002. These statements should be read in conjunction with the historical financial
statements and related notes thereto of the Registrant, in its annual report on Form
10-KSB and Delta Seaboard Well Service, Inc. financial statements included herein.
R. E. Bassie & Co.
Certified
    Public Accountants
6671 Southwest Freeway, Suite
    550
Houston, Texas 77074-2220
Tel: (713) 272-8500 Fax: (713)
    272-8515
E-Mail: Rebassie@aol.com
Independent Accountants';
Report
To The Board of Directors and
Stockholders
Delta Seaboard Well Service, Inc.:
We have audited the combined
balance sheets of Delta Seaboard Well Service, Inc. and related entities (the Company) as
of December 31, 2002 and 2001, and the related combined statements of operations,
stockholders' equity and cash flows for the years then ended. These combined financial
statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these combined financial statements based on our audits.
We conducted our audits in
accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the combined
financial statements referred to above present fairly, in all material respects, the
financial position of Delta Seaboard Well Service, Inc. and related entities as of
December 31, 2002 and 2001, and the results of their operations and their cash flows for
the years then ended, in conformity with accounting principles generally accepted in the
United States of America.
/s/ R. E. Bassie & Co.
Houston, Texas
October 31, 2003
DELTA SEABOARD WELL SERVICE, INC. AND RELATED ENTITIES
Combined Balance Sheets
December 31, 2002 and 2001
Assets
2002
2001
Current
    assets:
Cash
$
119,276
$
151,081
Accounts receivable, less allowance for doubtful accounts of
$1,613,454 in 2002 and $155,496 in 2001
1,650,475
1,635,694
Inventories
397,090
106,227
Drilling rigs held for sale
3,001,281
2,795,212
Prepaid expenses and other current assets
337,660
341,654
Total current assets
5,505,782
5,029,868
Property
    and equipment, net of accumulated
depreciation and amortization
6,421,032
6,415,841
Other
    assets
6,150
6,150
Total assets
$
11,932,964
$
11,451,859
Liabilities
    and Stockholders' Equity
Current
    liabilities:
Accounts payable and accrued expenses
3,368,397
2,411,871
Short-term notes payable
2,941,678
3,402,147
Due to related parties
1,266,290
1,065,581
Current installments of long-term debt
3,282,690
337,313
Total current liabilities
10,859,055
7,216,912
Long-term
    debt, less current installments
298,622
3,185,077
Total liabilities
11,157,677
10,401,989
Stockholders'
    equity:
Common stock
2,140
2,140
Retained earnings
773,147
1,047,730
Total stockholders' equity
775,287
1,049,870
Commitments
    and contingent liabilities
Total liabilities and stockholders' equity
$
11,932,964
$
11,451,859
See accompanying notes to combined
    financial statements.
DELTA SEABOARD WELL SERVICE, INC. AND RELATED ENTITIES
Combined Statements of Operations
Years ended December 31, 2002 and 2001
2002
2001
Revenues
$
14,536,075
$
17,169,884
Costs
    and expenses:
Materials
    and supplies
4,060,371
9,137,145
Salaries, wages, and employee benefits
4,904,775
4,116,731
Contractual and professional services
279,858
229,084
Insurance
1,221,288
514,380
Rental and leases
442,921
261,189
Telephone and utilities
191,913
157,662
Repairs and maintenance
413,659
243,861
Other expenses
779,462
1,755,066
Bad debt expense
1,472,822
115,491
Interest expense
597,183
206,541
Depreciation and amortization
446,406
295,389
Total expenses
14,810,658
17,032,539
Net income (loss) from operations before income taxes
(274,583)
137,345
Provision
    for income taxes
-
-
Net income (loss)
$
(274,583)
$
137,345
See accompanying notes to combined
    financial statements.
DELTA SEABOARD WELL SERVICE, INC. AND RELATED ENTITIES
Combined Statements of Stockholders' Equity
Years ended December 31, 2002 and 2001
Additional
Total
Common Stock
paid-in
Retained
stockholders'
shares
amount
capital
earnings
equity
Balance, December 31, 2000
601,000
$
2,140
$
297,000
$
910,385
$
1,209,525
Transfer of capital to loan
from related parties
-
-
(297,000)
-
(297,000)
Net income
-
-
-
137,345
137,345
Balance, December 31, 2001
601,000
2,140
-
1,047,730
1,049,870
Net loss
-
-
-
(274,583)
(274,583)
Balance, December 31, 2002
601,000
$
2,140
$
-
$
773,147
$
775,287
See accompanying
    notes to combined financial statements.
DELTA SEABOARD WELL SERVICE, INC. AND RELATED ENTITIES
Combined
    Statements of Cash Flows
Years ended
    December 31, 2002 and 2001
2002
2001
Cash flows from operating
    activities:
Net income (loss)
$
(274,583)
$
137,345
Adjustments to
    reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization
446,406
295,389
Bad debt expense
1,472,822
115,491
(Increase) decrease in operating assets:
Accounts receivable
(1,487,603)
(92,470)
Inventories
(290,863)
729,275
Drilling rigs held for sale
(206,069)
(1,833,846)
Prepaid expenses and other current assets
3,994
(163,235)
Other assets
-
11,160
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses
1,086,259
379,773
Net cash provided by (used in) operating activities
750,363
(421,118)
Cash flows from investing
    activities:
Capital
    expenditures for property and equipment
(135,597)
(41,374)
Net cash used in investing activities
(135,597)
(41,374)
Cash flows from financing
    activities:
Proceeds from
    short-term borrowing
1,266,524
1,525,318
Repayment of
    short-term borrowing
(1,790,125)
(1,144,808)
Proceeds from
    borrowing from related parties
40,976
332,905
Repayment of
    borrowing from related parties
(18,000)
-
Proceeds from
    long-term debt
223,999
-
Principal payments
    on long-term debt
(369,945)
(314,381)
Net cash provided by (used in) financing activities
(646,571)
399,034
Net decrease in cash
(31,805)
(63,458)
Cash at beginning of year
151,081
214,539
Cash at end of year
$
119,276
$
151,081
Supplemental schedule of cash
    flow information:
Interest paid
$
124,923
$
128,704
Non-cash
    transactions:
Issuance of
    promissory notes to acquire property and equipment
$
268,000
$
5,440,163
See accompanying notes to combined
    financial statements.
Delta Seaboard Well Services, Inc.
and Related Entities
Notes to Combined Financial Statements
December 31, 2002 and 2001
(1) Summary of Significant Accounting Policies
Organization, Ownership and Business
Delta Seaboard Well Service, Inc. (the "Company" or
"Delta"), a Texas corporation, was incorporated in 1958. The Company's core
business is well plugging and abandonment, workovers, and completions.
Principles of Combing Financial Statements
The combined financial statements include the accounts of the Company
and two other companies under common ownership and interrelated operations: Seaboard
Equipment Company, Inc. and Seaboard Well Service, Inc. All significant intercompany
transactions and balances have been eliminated in combining the three companies.
Accounts Receivable
Accounts receivable consist primarily of trade receivables, net of a
valuation allowance for doubtful accounts.
Inventories
Inventories are valued at the lower-of-cost or market on a first-in,
first-out basis.
Investment Securities
The Company accounts for its investments in accordance with Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Management determines the appropriate classification of
its investments in marketable securities at the time of purchase and reevaluates such
determination at each balance sheet date. Securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading securities.
Debt securities for which the Company does not have the intent or ability to hold to
maturity and equity securities not classified as trading securities are classified as
available-for-sale. The cost of investments sold is determined on the specific
identification or the first-in, first-out method. Trading securities are reported at fair
value with unrealized gains and losses recognized in earnings, and available-for-sale
securities are also reported at fair value but unrealized gains and losses are shown in
the caption "unrealized gains (losses) on shares available-for-sale" included in
stockholders' equity. Management determines fair value of its investments based on quoted
market prices at each balance sheet date.
Property, Equipment and Depreciation
Property and equipment are recorded at cost less accumulated
depreciation. Upon retirement or sale, the cost of the assets disposed of and the related
accumulated depreciation are removed from the accounts, with any resultant gain or loss
being recognized as a component of other income or expense. Depreciation is computed over
the estimated useful lives of the assets (5-20 years) using the straight-line method for
financial reporting purposes and accelerated methods for income tax purposes. Maintenance
and repairs are charged to operations as incurred.
Drilling Rigs Held for Sale
Drilling rigs held for sale are carried at the lower-of-cost or fair
market value, net of selling costs. Management assesses the value of drilling rig held for
sale on a quarterly and annual basis to determine if any impairment to this net realizable
value has occurred. Management closely monitors any changes in the market, which would
indicate that a change in the value of its holdings has occurred and also obtains
independent third party appraisals on its holdings on an as-needed basis.
Revenue Recognition
The Company recognizes revenue at the time of shipment of product to
its customers or completion of services provided.
Income Taxes
The Company is a taxable entity and recognizes deferred tax assets and
liabilities for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using enacted tax
rates expected to be in effect when the temporary differences reverse. The effect on the
deferred tax assets and liabilities of a change in tax rates is recognized in income in
the year that includes the enactment date of the rate change. A valuation allowance is
used to reduce deferred tax assets to the amount that is more likely than not to be
realized.
Advertising Costs
The cost of advertising is expensed as incurred.
Management's Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenues
and expenses. Actual results could differ from these estimates.
Concentration of Credit Risk
Trade accounts receivable subject the Company to the potential for
credit risk with customers in the oil and gas drilling sectors. To reduce credit risk, the
Company performs ongoing evaluations of its customer's financial condition but generally
does not require collateral.
Fair Value of Financial Instruments
The Company estimates the fair value of its financial instruments using
available market information and appropriate valuation methodologies. However,
considerable judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the Company estimates of fair value are not necessarily
indicative of the amounts that the Company could realize in a current market exchange. The
use of different market assumption and/or estimation methodologies may have a material
effect on the estimated fair value amounts. The interest rates payable by the Company on
its notes payable approximate market rates. The Company believes that the fair value of
its financial instruments comprising accounts receivable, notes receivable, accounts
payable, and notes payable approximate their carrying amounts.
New Standards Implemented
In January 2003, the FASB issued SFAS No. 148, "
Accounting for
Stock-Based Compensation; Transition and Disclosures."
This statement provides
alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement also amends
the disclosure requirements of SFAS No. 123 to require more prominent and frequent
disclosures in the financial statements about the effects of stock-based compensation. The
transitional guidance and annual disclosure provisions of this Statement were effective
for the December 31, 2002 financial statements.
In May 2003, the FASB issued SFAS No. 150. "
Accounting for
Certain Instruments with Characteristics of Both Liabilities and Equity
," which
establishes standards for how an issuer classifies and measures certain financial
statements with characteristics of both liabilities and equity. SFAS No. 150 requires that
an issuer classify a financial instrument that is within its scope, which may have
previously been reported as equity, as a liability (or an asset in some circumstances).
This statement is effective for financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003 for public companies. The Company does not believe that the
adoption of SFAS No. 150 will have a significant impact on its financial statements.
(2) Property and Equipment
Major classes of property and equipment together with their estimated
useful lives, consisted of the following:
December 31
Years
2002
2001
Drilling rigs and related equipment
7-15
$
6,428,513
$
6,057,752
Machinery and equipment
3-20
754,050
631,835
Furniture and fixtures
5-10
60,191
52,398
Leasehold improvements
10
6,616
6,616
Vehicles
5
842,191
939,363
8,091,561
7,687,964
Less accumulated depreciation and
    amortization
1,670,529
1,272,123
Net property and equipment
$
6,421,032
$
6,415,841
3. Short-term Notes Payable
December 31
2002
2001
Note payable, due in monthly
    installments of interest only, with interest at the prime rate as published in the Wall
    Street Journal, the note is payable when the two drillings rigs are sold, secured by the
    two drilling rigs
$
2,503,359
$
2,503,359
Demand note payable to bank, due in
    monthly installments of $8,483, including interest at prime plus 1.5%, if demand is not
    made, the remaining principal balance due May 2006, secured by equipment
348,209
458,617
Demand note payable to bank, due in
    monthly installments of $2,067, including interest at prime plus 2%, if demand is not
    made, the remaining principal balance due May 2006, secured by equipment
83,877
108,784
Other notes with various terms
6,233
331,387
$
2,941,678
$
3,402,147
(4) Long-term Debt
Long-term debt consisted of the following:
December 31
2002
2001
Note payable, due in monthly
    installments of $62,210, with interest at 12%, through November 2006, secured by two
    drilling rigs
$
3,092,531
$
2,796,641
Note payable to a bank, due in monthly
    installments of $8,802, including interest at 7.9%, secured by equipment
101,908
165,040
Other notes with various terms
386,873
560,709
Total long-term debt
3,581,312
3,522,390
Less current installments
3,282,690
337,313
Total long-term debt, less current
    installments
$
298,622
$
3,185,077
Principal repayment provisions of long-term debt are as follows at
December 31, 2002:
2003
$
3,282,690
2004
116,753
2005
102,874
2006
78,995
Total
$
3,581,312
(5) Income Taxes
A reconciliation of income taxes at the federal statutory rate to
amounts provided for the years ended December 31, are as follows:
December 31
2002
2001
Tax expense/(benefit) computed at
    statutory rate for continuing operations
$
(93,358)
$
46,697
Tax (benefit) of operating loss carryforwards
93,358
(46,697)
Tax expense/(benefit) for continuing operations
$
-
$
-
The Company has current net operating loss carryforwards in excess of
$1,124,000 as of December 31, 2002, to offset future taxable income, which expires 2020.
Deferred taxes are determined based on the temporary differences
between the financial statement and income tax bases of assets and liabilities as measured
by the enacted tax rates, which will be in effect when these differences reverse. The
components of deferred income tax assets are as follows:
December 31
2002
2001
Deferred tax assets:
$
$
Net operating loss
1,124,622
1,031,264
Total deferred tax asset
1,124,622
1,031,264
Valuation allowance
(1,124,622)
(1,031,264)
Net deferred asset
$
-
$
-
At December 31, 2002, the Company provided a 100% valuation allowance
for the deferred tax asset because given the volatility of the current economic climate,
it could not be determined whether it was more likely than not that the deferred tax
asset/ (liability) would be realized.
(6) Leases
The Company leases office and spaces for storage facilities under
noncancellable-operating leases, which expires in various terms through December 2011.
Future minimum lease payments under these operating leases are as follows:
Year Ended December 31,
Amount
2003
$
71,550
2004
45,300
2005
8,550
2006
8,550
2007
8,550
Thereafter
34,200
Total
$
176,700
(7) Stockholders' Equity
The number of stock authorized, outstanding and the par value of these
shares for each company are as following:
Number of Shares Authorized
Number of Shares Outstanding
Par Value
Delta Seaboard Well Service, Inc.
1,000
1,000
N/A
Seaboard Equipment Company, Inc.
500,000
500,000
N/A
Seaboard Well Service, Inc.
100,000
100,000
N/A
DELTA SEABOARD WELL
SERVICE, INC.
UNAUDITED PROFORMA COMBINED FINANCIAL STATEMENTS
Proforma Financial Information
4
Proforma Consolidated Balance Sheet - September 30, 2003
18
Proforma Consolidated Statement of Operations - Year ended
    December 31, 2002
19
Proforma Consolidated Statement of Operations - Nine months
    ended September 30, 2003
20
Note to Unaudited Proforma Consolidated Financial
    Statements
20
DELTA SEABOARD WELL
SERVICE, INC.
UNAUDITED PROFORMA COMBINED FINANCIAL STATEMENTS
Effective September 30, 2003, the
Company acquired a 51% interest in Delta Seaboard Well Service, Inc. and related entities
for cash consideration. The acquisition was accounted for using the purchase method of
accounting.
The following unaudited proforma
consolidated statements of operations for the nine months ended September 30, 2003 and for
the year ended December 31, 2002, assumes the acquisition of Delta had occurred on January
1, 2002 and include the historical unaudited consolidated statements of operations for the
Registrant for the year ended December 31, 2002 and nine months ended September 30, 2003,
adjusted for the proforma effects of the acquisition.
The unaudited proforma
consolidated statements are not necessarily indicative of the results of operations that
would actually have occurred if the transactions had been consummated as of January 1,
2002. These statements should be read in conjunction with the historical financial
statements and related notes thereto of the Registrant, in its annual report on Form
10-KSB and Delta Seaboard Well Service, Inc. financial statements included herein.
AMERICAN INTERNATIONAL INDUSTRIES, INC. AND
    SUBSIDIARIES
Unaudited Proforma Consolidated Balance Sheet
September 30, 2003
Delta
American
Seaboard Well
International
Services, Inc.
Industries, Inc.
and Related
Proforma
Proforma
and Subsidiaries
Entities
Adjustments
Consolidated
Assets
Current
    assets:
Cash
$
496,368
$
-
$
-
$
496,368
Certificate of deposit
300,000
-
-
300,000
Trading securities
19,200
-
-
19,200
Available-for-sale securities
4,500,000
-
-
4,500,000
Accounts receivable, net
1,745,786
1,149,121
-
2,894,907
Accounts receivable from related parties
515,378
36,479
-
551,857
Inventories
2,275,608
231,481
-
2,507,089
Real estate held for sale
225,000
-
-
225,000
Prepaid expenses and other current assets
10,687
344,432
-
355,119
Drilling rigs held for sale
-
1,687,408
-
1,687,408
Intercompany receivable (payable)
3,670,564
(3,670,564)
-
-
Total current assets
13,758,591
(221,643)
-
13,536,948
Notes
    receivable
970,208
-
-
970,208
Property
    and equipment, net
1,055,501
6,458,250
-
7,513,751
Excess
    of cost over net assets of businesses acquired, net
674,539
-
-
674,539
Investment
    in consolidated subsidiary
1,270,828
-
(1,270,828)
-
Other
    assets
6,183
6,150
-
12,333
Total assets
$
17,735,850
$
6,242,757
$
(1,270,828)
$
22,707,779
Liabilities and Stockholders' Equity
Current
    liabilities:
Accounts payable and accrued expenses
3,052,395
1,989,235
-
5,041,630
Short-term notes payable
-
716,016
-
716,016
Current installments of long-term debt
35,000
45,686
-
80,686
Total current liabilities
3,087,396
2,750,937
-
5,838,332
Long-term
    notes payable to related parties
33,800
-
-
33,800
Long-term
    debt
1,143,849
1,000,000
-
2,143,849
Minority
    interest
82,097
-
1,220,992
1,303,089
Total liabilities
4,347,141
3,750,937
1,220,992
9,319,070
Stockholders'
    equity:
Preferred stock
400
-
-
400
Common stock
2,466
2,466
(2,466)
2,466
Additional paid-in capital
24,560,956
2,489,354
(2,489,354)
24,560,956
Accumulated deficit
(11,141,085)
-
-
(11,141,085)
13,422,737
2,491,820
(2,491,820)
13,422,737
Less treasury stock, at cost
(34,028)
-
-
(34,028)
Total stockholders' equity
13,388,709
2,491,820
(2,491,820)
13,388,709
Total liabilities and stockholders' equity
$
17,735,850
$
6,242,757
$
(1,270,828)
$
22,707,779
See accompanying notes to unaudited Proforma consolidated financial statements.
AMERICAN INTERNATIONAL INDUSTRIES, INC. AND
    SUBSIDIARIES
Unaudited Proforma Consolidated Statement of Operations
Year ended December 31, 2002
Delta
American
Seaboard Well
International
Services,
    Inc.
Industries, Inc.
and Related
Proforma
Proforma
and Subsidiaries
Entities
Adjustments
Consolidated
Revenues
$
13,378,040
$
14,536,075
$
-
$
27,914,115
Costs and
    expenses:
Costs of sales
6,817,904
8,961,221
-
15,779,125
Selling, general and administrative
1,955,133
3,779,432
-
5,734,565
Bad debt expense
1,536,004
1,472,822
-
3,008,826
Total costs and expenses
10,309,041
14,213,475
-
24,522,516
Operating income
3,068,999
322,600
-
3,391,599
Other
    income (expenses):
Interest income
36,051
-
-
36,051
Realized losses on securities available for sale
(614,935)
-
-
(614,935)
Realized losses on trading securities
(97,100)
-
-
(97,100)
Unrealized losses on trading securities
(13,200)
-
-
(13,200)
Loss on sale of subsidiary
(179,608)
-
-
(179,608)
Loss on sale of assets
(37,030)
-
-
(37,030)
Interest expense
(100,378)
(597,183)
-
(697,561)
Other income
39,225
-
-
39,225
Total other expenses
(966,975)
(597,183)
-
(1,564,158)
Net earnings (loss) before income taxes
2,102,024
(274,583)
-
1,827,441
Provision
    for income taxes
-
-
-
-
Net earnings (loss) from operations
$
2,102,024
$
(274,583)
$
-
$
1,827,441
See accompanying notes to unaudited Proforma consolidated financial statements.
AMERICAN INTERNATIONAL INDUSTRIES, INC. AND
    SUBSIDIARIES
Unaudited Proforma Consolidated Statement of Operations
Nine months ended September 30, 2003
Delta
American
Seaboard Well
International
Services,
    Inc.
Industries,
    Inc.
and Related
Proforma
Proforma
and Subsidiaries
Entities
Adjustments
Consolidated
Revenues
$
4,010,008
$
5,230,123
$
-
$
9,240,131
Costs
    and expenses:
Costs of sales
3,338,693
3,463,258
-
6,801,951
Selling, general and administrative
1,792,539
1,326,894
-
3,119,433
Bad debt expense
-
29,749
-
29,749
Total costs and expenses
5,131,232
4,819,901
-
9,951,133
Operating
    income (loss)
(1,121,224)
410,222
-
(711,002)
Other
    income (expenses):
Interest income
35,009
-
-
35,009
Realized losses on sales of trading securities
(232,548)
-
-
(232,548)
Gain on sale of assets
469,400
-
-
469,400
Interest expense
(71,742)
(355,775)
-
(427,517)
Other income
2,288
-
-
2,288
Minority interest in income of subsidiary
-
(26,679)
-
(26,679)
Total other income
202,407
(382,454)
-
(180,047)
Net earnings (loss) before income taxes
(918,817)
27,768
-
(891,049)
Provision
    for income taxes
-
-
-
-
Net earnings (loss) from operations
$
(918,817)
$
27,768
$
-
$
(891,049)
See accompanying notes to unaudited Proforma consolidated financial statements.
Unaudited Proforma Consolidated
Financial Statements
Notes to Unaudited Proforma Consolidated Financial Statements
(1) Basis of Presentation
The unaudited Proforma
Consolidated Statement of Operations for the nine months ended September 30, 2003,
included the unaudited historical results of operations for American International
Industries, Inc. and Delta Seaboard Well Service, Inc. for the nine months ended September
30, 2003, adjusted for the proforma effects of the acquisition assuming the acquisition
occurred on January 1, 2002.
The unaudited Proforma
Consolidated Statement of Operations for the year ended December 31, 2002, included the
audited historical results of operations of the Company and Delta, and adjusted for the
proforma effects of the acquisition assuming the acquisition occurred on January 1, 2002.
The unaudited Proforma Balance Sheet at September 30, 2003, included the unaudited balance
sheet of the Company and Delta as of September 30, 2003, assuming the acquisition occurred
on September 30, 2003, adjusted for the proforma effects of the acquisition.
The capital accounts of the Company have been adjusted as of September 30, 2003 to report
the effects of the acquisition, assuming the acquisition occurred on September 30, 2003.
EXHIBITS
The following exhibits are filed as exhibits and
are part of this Form 8-K Current Report:
Exhibit No.
Description
10.13
Delta Seaboard Well Services, Inc. Stock Purchase Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
American International Industries, Inc.
By /s/ Daniel Dror, CEO, President and Chairman
Date: December 29, 2003