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NOTE 5 - LINE OF CREDIT:

Under the terms of a revolving line of credit with Bank of America, the Company may borrow up to $2,000,000 through April 30, 2001. At any time prior to May, 2001, the Company may convert borrowings, if any, into a three-year term loan with principal and interest payable monthly commencing May 31, 2001. The interest rate is at the bank's reference rate unless the Company elects an optional interest rate. The borrowing agreement contains various covenants, the more significant of which require the Company to maintain certain levels of shareholders' equity and working capital. The Company was in compliance with all provisions of the agreement during the year. There were no borrowings under this line of credit during the year.

NOTE 6 - CONTINGENCIES AND COMMITMENTS:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the respective reporting periods. Actual results could differ from those estimates.

The Company leases certain transportation equipment under operating leases expiring in 2005. The terms of the lease provide for annual renewal options, and contingent rental payments based upon mileage and adjustments of rental payments based on the Consumer Price Index. Minimum rental payments were $320,000, $316,000, and $255,000 in fiscal years 1999, 1998, and 1997, respectively. Contingent payments were $102,000, $105,000 and $98,000 in 1999, 1998 and 1997, respectively. Future minimum lease payments are approximately $320,000 in the years 2000 through 2004 and $240,000 in 2005.

NOTE 7 - SUBSEQUENT EVENTS:

In November 1999 the City of San Diego redevelopment agency acquired, under eminent domain proceedings, land owned by the Company and a pretax gain of $675,000 was recognized.

In November 1999 the Board of Directors approved the repurchase of up to 1,000,000 shares of common stock. These repurchases will be made on the open market at prevailing market prices or in negotiated transactions off the market.