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<TITLE>The Colonel's International, Inc. Form 10-Q/A (q/e 6/30/1999)</TITLE>
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<B><CENTER>SECURITIES AND EXCHANGE COMMISSION</CENTER></B>
<CENTER>Washington, D.C. 20549</CENTER><BR>
<CENTER>___________________</CENTER><P>
<B><CENTER><FONT SIZE="+1">Form 10-Q/A</FONT><BR>
(Amendment No. 1)</CENTER></B><P>
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<TD WIDTH="5%" ALIGN="RIGHT" VALIGN="TOP"><U> x </U> </TD>
<TD WIDTH="95%">QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES</TD>
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<CENTER>EXCHANGE ACT OF 1934</CENTER><BR>
<CENTER>For the quarterly period ended June 30, 1999</CENTER><P>
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<TD WIDTH="95%">TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES</TD>
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<CENTER>EXCHANGE ACT OF 1934</CENTER><P>
<CENTER>For the transition period from ____________________ to ____________________</CENTER><P>
<CENTER>Commission File Number: 2-98277C</CENTER><P>
<B><CENTER><FONT SIZE="+2">THE COLONEL'S INTERNATIONAL, INC.</FONT></CENTER></B>
<CENTER>(Exact name of registrant as specified in its charter)</CENTER><P>
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<TD WIDTH="62%" ALIGN="CENTER"><B>Michigan</B></TD>
<TD WIDTH="38%" ALIGN="CENTER"><B>38-3262264</B></TD>
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<TD WIDTH="62%" ALIGN="CENTER">(State or other jurisdiction of incorporation or organization)</TD>
<TD WIDTH="38%" ALIGN="CENTER">(I.R.S. employer identification no.)</TD>
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<TD WIDTH="62%" ALIGN="CENTER"><B>5550 Occidental Highway, Tecumseh, Michigan</B></TD>
<TD WIDTH="38%" ALIGN="CENTER"><B>49286</B></TD>
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<TD WIDTH="62%" ALIGN="CENTER">(Address of principal executive offices)</TD>
<TD WIDTH="38%" ALIGN="CENTER">(Zip code)</TD>
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<B><CENTER>(517) 423-4800</CENTER></B>
<CENTER>(Registrant's telephone number, including area code)</CENTER><P>
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<CENTER>Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 Par Value</CENTER><P>
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days.<P>
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<TD WIDTH="40%" ALIGN="RIGHT">Yes <U> X </U></TD>
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<TD WIDTH="40%">No <U> </U></TD>
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Number of shares of the registrant's Common Stock, $0.01 par value, outstanding as of August 13, 1999: 24,518,326<P>
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The Colonel's International, Inc. (the "Company") is filing this Amendment No. 1 to Report on Form 10-Q for the purpose of supplying the information that had been omitted pursuant to Rule 12b-25 under the
Securities Exchange Act of 1934 from the Company's Form 10-Q filed with the Securities and Exchange Commission on August 16, 1999, namely Items 1, 2 and 3 of Part I.<P>
<B><CENTER>PART I</CENTER></B>
<CENTER><B>FINANCIAL INFORMATION</B></CENTER><P>
<B>Item 1. Financial Statements.</B><P>
The financial statements required under Item 1 of Part I are set forth in Appendix A to this Amendment No. 1 to Report on Form 10-Q and are herein incorporated by reference.<P>
<B>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.</B><P>
<B>Background</B><P>
The Company has four subsidiaries: The Colonel's Truck Accessories, Inc. ("CTA"), The Colonel's Rugged Liner, Inc. ("CRL"), Brainerd International Raceway, Inc. ("BIR"), and The Colonel's, Inc. ("The
Colonel's").<P>
<B>The Colonel's Truck Accessories, Inc.</B><P>
CTA manufactures and sells pickup truck bedliners and tail gate covers through a distributor network. In March 1997, CTA began to acquire retail outlet stores to sell its manufactured items and other truck
accessories that it purchases from third parties to wholesale sub-distributors and dealerships. These retail outlet stores offer installation services and direct sales to retail customers. CTA markets through these various methods to sell CTA's
manufactured bedliners and other truck accessories products.<P>
CTA's first acquisition, in March 1997, was Truckware in Baldwin Park, California. Truckware, which was the Company's pilot retail outlet store, attempted to attract customers from a competitor's product to
CTA's manufactured bedliner. In addition to selling bedliners, it purchased products from other manufacturers and sold them through a warehouse/retail outlet store setting. In 1997, CTA purchased certain assets of Eastern Off Road Equipment, Inc., which
had similar retail outlet stores in Pennsylvania, Maryland, Virginia and West Virginia. In 1998, CTA purchased the assets of the following: Road and Truck, which is located in Thousand Oaks, California; Dealers Choice, which is located in Collinsville,
Illinois and serves the St. Louis metropolitan area; Duraliner of Nashville in Nashville, Tennessee; Sun Shade Custom located in Franklin, Tennessee; Wild Bill's Truck Accessories in Upland, California; Bedliner Kingdom in Los Angeles, California;
Southland Shell in Pomona, California; Accessories Plus in Santa Clara, California; Truck Stuff in South Sacramento, California and Roseville, California; and Camper Place Warehouse with locations in El Paso, Texas, and Las Cruces, Ruidoso, and Roswell,
New Mexico. All these facilities warehouse and sell bedliners, caps and tonneau covers that CTA manufactures, as well as other purchased truck accessory products to the wholesale and retail markets. In addition, CTA purchased the assets of Horizon Coach,
Inc., a manufacturing company located in Riverside, California. This facility manufactures custom pick-up truck caps, sport tops and tonneau covers. CTA uses this facility to supply products to CTA's truck accessory outlet stores.<P>
<B>The Colonel's Rugged Liner, Inc.</B><P>
CRL was formed in March 1998 in connection with the acquisition by merger of four Pennsylvania corporations: Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc. and<BR>
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Ground Force, Inc. (collectively, the "Rugged Liner Companies"). In this transaction, which was consummated in April 1998, each of the Rugged Liner Companies merged with and into CRL, with CRL being the surviving corporation. CRL, which is located in
Uniontown, Pennsylvania, manufactures non-skid bedliners and bed mats, as well as ground lowering kits for sport utility vehicles (SUVs) and three piece sliding tonneau covers for pickup trucks. CRL has a distribution warehouse/service center in Pomona,
California and also markets its products through CTA's retail outlet stores. CRL, as successor to the Rugged Liner Companies, concentrates its efforts on export bedliner sales, and domestic ground effects, tonneau cover and bed mat sales. <P>
<B>The Colonel's Brainerd International Raceway, Inc.</B><P>
BIR operates a motor sports facility located approximately six miles northwest of Brainerd, Minnesota. Substantially all of BIR's revenues are obtained from motor sports racing events at the racetrack. BIR
schedules racing and other events held at the racetrack during weekends in May through September of each year. In 1998, BIR's name was changed from Brainerd International Raceway, Inc. to The Colonel's Brainerd International Raceway, Inc. to better
reflect the racetrack's affiliation with the Company and The Colonel's products. <P>
In addition to spectator-related revenues, BIR receives: (i) sponsorship fees from businesses which promote their products and services at the Raceway; (ii) entry fees from participants in the races and
other events; and (iii) rent for use of the track for private racing events, driving schools and the testing or filming of motor vehicle operations.<P>
<B>The Colonel's, Inc.; Major Sale of Assets</B><P>
The Colonel's was organized in 1982 and began producing and selling plastic bumpers and facias in 1983. By 1996, The Colonel's had grown through acquisitions and normal expansion to two manufacturing
plants, five distribution warehouses (located in Dallas, Texas; Houston, Texas; Glendale (Phoenix), Arizona; West Memphis, Arkansas; and Totowa, New Jersey), and a network of independent distributors that sell The Colonel's products throughout the United
States, Canada, Mexico and the District of Columbia. <P>
Last year, the Company sold substantially all of the assets of The Colonel's used in its bumper production operations to AutoLign Manufacturing Group, Inc. pursuant to an Asset Purchase Agreement. This
transaction was completed on December 17, 1998. The sale consisted of substantially all of The Colonel's inventory, machinery and equipment, accounts receivable and prepaid items. AutoLign also assumed certain liabilities such as accounts payable and
purchase commitments. Certain real estate and transportation equipment that was not part of the sale remains with The Colonel's.<P>
<B>Purchase of Trader's</B><P>
In May of 1999 CTA purchased the assets of Trader's LLC, a nationally known catalog retailer, for $461,000 in cash and the assumption of $114,000 in liabilities. Trader's has a 42,000 square foot facility
in Whittier, California.<P>
<B>Sale/Consolidation of Stores</B><P>
During June of 1999, CTA sold its Pomona, California store and consolidated its Baldwin Park, California store with its new Trader's store. It also consolidated its Roswell, New Mexico and Ruidoso, New
Mexico stores with its El Paso, Texas store.<P>
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Subsequently, in July of 1999 CTA sold stores in Santa Clara, California and Upland, California. CTA also merged its Los Angeles, California store and the Rugged Liner warehouse in California into its new
Trader's location in Whittier, California and merged its Franklin, Tennessee store into its Nashville, Tennessee store. The Wexford, Pennsylvania store was closed in August of 1999.<P>
Proceeds from the sale of stores totaled approximately $180,000, predominantly for the sale of miscellaneous inventory. Revenue for the locations sold or consolidated with other stores was approximately
$3,050,000 for the first six months of 1999. The Company does not expect an adverse impact on continuing operations due to cost reductions and greater efficiencies associated with these activities.<P>
<B>Financial Statement Presentation</B><P>
The comparative financial statements and the results of operations have had previous years comparatives adjusted for discontinued operations that occurred in December 1998. As noted above, in December 1998,
the Company sold its bumper manufacturing operations to AutoLign. The financial statements set forth in Appendix A and the discussion below represent continuing operations only.<P>
<B>Liquidity and Capital Resources</B><P>
The Company's consolidated current assets decreased from $30,725,000 at December 31, 1998 to $15,744,000 at June 30, 1999. This decrease primarily relates to capital expenditures made during this
period for which the Company paid cash and the advance of $5,175,000 cash to the majority shareholder for a long-term note receivable. The Company's consolidated current liabilities decreased from $13,628,000 at December 31, 1998 to $12,446,000 at June
30, 1999. This primarily relates to a $2,161,000 decrease in accounts payable, and an offsetting increase in deferred revenue related to Brainard of $1,013,000. See below for further discussion of these changes.<P>
Cash decreased by $16,805,000 from the year end 1998 to June 30, 1999 due to acquisitions of land and buildings, machinery and equipment, an aircraft, reduction of accounts payable, and pay-offs of small
vehicle loans. The cash balance was unusually high at the end of 1998 because of the sale of the Company's bumper operations, which was completed in December 1998. Proceeds were subsequently used in 1999 as previously described.<P>
Accounts receivable increased by approximately $226,000 at June 30, 1999 over year end 1998. The increase is from the warehouse distribution stores expanding to the local wholesale dealership market. The
Company's subsidiaries continue to offer early payment discounts and incentives for prompt payments to their customers.<P>
Inventories increased by approximately $212,000 at June 30, 1999 as compared to December 31, 1998. Tools to produce bedliners are located in Owosso, Michigan and Uniontown, Pennsylvania. Tools used to
produce tonneau cover inventory are located in Riverside, California and Uniontown, Pennsylvania. Tools used to manufacture ground effects lowering packages offered by CRL are located in Owosso, Michigan and Uniontown, Pennsylvania.<P>
Prepaid expenses increased by $633,000 between December 31, 1998 to June 30, 1999, primarily due to advance payments made to the NHRA for sanction fees. The Company's prepaids also include advance rent
payments and the last month's rent for leased facilities. The security deposits are recorded in deposits while the advance and last month's rent is recorded in prepaids.<P>
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Net deferred taxes at December 31, 1998 of $1,042,000 decreased to $974,000 as of June 30, 1999.<P>
Property, plant and equipment increased by approximately $6,758,000 from December 31, 1998 to June 30, 1999, primarily due to the purchase of the Company's new headquarters in Tecumseh, Michigan for
$4,150,000, investment in land and a building for $1,159,000, the purchase and refurbishment of an airplane for $1,130,000 and the purchase of production presses for $805,000, offset by deprecation for the period of $1,290,000.<P>
Notes receivable at June 30, 1999 increased by $5,175,000 from December 31, 1998, due to a note with the majority shareholder. This note is secured with a personal guarantee and calls for monthly principal
and interest payments. Previous notes with the majority shareholder that were executed in 1998 have a balance at June 30, 1999 of $1,600,000.<P>
Deferred compensation decreased by $48,000 from year end 1998 to the end of the second quarter of 1999, due to normal payments of employee compensation.<P>
Deposits on tools and machinery decreased by approximately $132,000 at June 30, 1999 compared to December 31, 1998, mainly due to the transfer of deposits to depreciating assets for tools and equipment that
were put into service during the period.<P>
Goodwill decreased by approximately $240,000 from December 31, 1998 to June 30, 1999, primarily as a result of amortizing this goodwill over a seven-year period. The balance in goodwill at June 30, 1999 was
$3,929,000.<P>
<B>Liabilities and Equity</B><P>
Accounts payable decreased from $3,077,000 at December 31, 1998 to $916,000 at June 30, 1999. The decrease is a result of normal accounts payable activity and the Company's ability to take advantage of
early pay discounts offered by vendors.<P>
Accrued expenses increased from $1,144,000 at December 31, 1998 to $1,164,000 at June 30, 1999.<P>
Deferred revenue is comprised of advance payments received by BIR for events not yet held. The balance at June 30, 1999 is $1,013,000. There was no deferred revenue balance at December 31, 1998.<P>
Income taxes payable increased from $8,221,000 in 1998 to $8,316,000 at June 30, 1999.<P>
<B>Outstanding Loans</B><P>
The Colonel's line of credit was paid off with the proceeds from the sale of the bumper production operations. The Colonel's has suspended its credit facilities with its current lending institution until
the Company deems it necessary to reopen borrowings. Interest paid during 1998 on a monthly basis was at prime and was secured by all the Company's assets, principally accounts receivable and inventory.<P>
BIR has a term loan in the amount of $300,000 which is secured by property. The loan requires quarterly interest payments at 2 percent above prime and a single principal payment of $50,000 per year through
2004.<P>
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The Colonel's entered into a capital lease to finance equipment for its Owosso, Michigan bedliner plant. In 1995, The Colonel's leased $2,689,000 worth of equipment under a six-year agreement that calls for
monthly payments of $41,000 and includes an option to purchase the equipment for $1.00 upon expiration of the lease term. That amount represents principal and interest at rates between 7.5 and 8.5 percent. The lease is collateralized by the machinery.
In 1996, The Colonel's leased additional equipment in the amount of $3,744,000, structured in the same manner noted as above. The balance on this leased equipment at June 30, 1999 was $4,055,000.<P>
The Company believes that it will be able to satisfy ongoing cash requirements for the next 12 months and thereafter with cash flows from operations and with the proceeds obtained from the sale of the bumper
production operations, supplemented by borrowing arrangements that may be necessary from time to time.<P>
<B>Results of Continuing Operations</B><P>
Revenues for the Company from continuing operations were $10,086,000 for the quarter ended June 30, 1999, compared to $7,653,000 for the same period in 1998. The $2,443,000 growth in 1999 was primarily
due to the addition and acquisition of sixteen new factory warehouse/stores during 1997 and 1998. CTA was started in 1996 and has grown through acquisitions of retail outlet warehouses. CTA's revenues for the quarter ended June 30, 1999 were $7,374,000,
compared to $5,397,000 for the same period in 1998. Revenues for CRL, which was acquired in April of 1998, increased from $1,891,000 for the quarter ended June 30, 1998 to $2,384,000 for the quarter ended June 30, 1999. Revenues for the first six months
of 1999 were $7,274,000 greater than the same period in 1998. CTA's revenues increased from $9,259,000 for the six months ended June 30, 1998 to $14,288,000 for the six months ended June 30, 1999. CRL's revenues increased from $1,891,000 (revenues prior
to acquisition of CRL in April of 1998 not included) for the six months ended June 30, 1998 to $4,177,000 for the same period in 1999.<P>
Cost of sales for the second quarters in 1999, and 1998 were 85% and 76% respectively. The Company continues to sell at low gross margins in an effort to establish market share.<P>
Selling, general and administrative expenses increased from 20% in the second quarter of 1998 to 26% in the second quarter of 1999.<P>
Interest expense decreased from $239,000 for the quarter ending June 30, 1998 to $115,000 for the same period in 1999. This decrease is due to the Company's ability to pay off the vehicle financing during
the first quarter of 1999 and the reduction of debt amounts resulting in lower interest amounts.<P>
Interest income increased in the second quarter of June 1999 by $206,000 over 1998 because of short term investment of excess cash and interest earned on notes receivable from the majority shareholder.<P>
Rental income increased $202,000 in the second quarter of 1999 compared to the same period in 1998, primarily due to the third party rental of production space at the Colonel's headquarters in Tecumseh,
Michigan.<P>
Results from continuing operations showed a loss for both quarters ending June 30, 1998 and 1999. The Company has used the proceeds from the sale of the bumper production operations to expand its truck
accessories business, acquire capital assets as described earlier and make loans to the majority shareholder.<P>
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<B>Discontinued Operations</B><P>
As noted, in December 1998 the Company sold substantially all of the assets of The Colonel's used in its bumper production operations.<P>
<B>Market Risk Disclosure</B><P>
The Company has assets, liabilities and inventory purchase commitments outside the United States that are subject to foreign market fluctuations. At present, all sales transactions are conducted in United
States Dollars. The Company does not believe that it faces significant exposure to foreign currency fluctuations. However, as the Company's sales to foreign countries continue to expand there is a risk that such markets may suddenly change and that the
Company may have to accept payment in foreign currencies.<P>
The Company has a Canadian currency account which fluctuates with the rate of exchange. Because this account is seldom used and there presently is less than $15,000 (Canadian) in it, the Company believes
that the risks associated with this account are not material.<P>
The Company from time to time purchases products from outside the United States. The Company usually pays for its purchases in U.S. Dollars. These purchases are based on the foreign countries' economic
conditions and because the Company markets and sells its products throughout the world, it could be affected by a weak economic condition associated with a foreign entity.<P>
The Company's loss from continuing operations during the first two quarters of 1999 may have an effect on its ability to borrow funds from lending institutions.<P>
The Company currently has no outstanding borrowings. When the Company borrows money in the future, it may be exposed to changes in interest rates. The Company's interest rates are usually based on the
prime rate. If this rate changes there could be an adverse effect on the Company's cash flow and profits.<P>
The Company deals in a marketplace that generally has been favorably changing over the past five years. The SUV market has increased in the last five years. More new SUVs and trucks are now sold in the
United States than new automobiles. This market change has had a positive impact on the Company. Any change in the buying habits of consumers could have an adverse effect on the Company. Because the Company invests up front money in tooling to
manufacture models, any downward trend would change the product mix analysis and drive costs higher. <P>
The Company's contract with the NHRA for the national race at the BIR race facility is critical to the track. The track obtains 60% of its sales and 70% of its profit from this race. The loss of the
national race with the NHRA would immediately impact the income potential at BIR.<P>
The Company operates using a very thinly staffed management group. The sudden loss of one of the key managers could have an immediate impact on the Company because of the lack of redundant or cross trained
personnel. Management restructuring since the sale of the bumper manufacturing business is expected to continue but the Company believes that the losses will be corrected.<P>
<B>Effects of Inflation</B><P>
The Company believes that the relatively moderate inflation rate over the last few years has not had a significant impact on the Company's revenues or profitability. The Company does not expect<BR>
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inflation to have any near-term material effect on the sales of its products, although there can be no assurance that such an effect will not occur in the future.<P>
<B>New Accounting Standards</B><P>
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133") which is effective for fiscal years beginning after June 15, 2000. This statement
standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, by recognition of these items as assets and liabilities in the statement of financial position and measurement at fair value.
The Company will adopt this statement effective January 1, 2001, as required. The impact of SFAS No. 133 on the Company's financial position and results of operations has not yet been determined.<P>
<B>Year 2000 Readiness Disclosure</B><P>
With respect to the Company's computer systems, the Company continues to implement changes designed to provide accurate date recognition and data processing with respect to the year 2000, including modifying
existing computer programs and converting to new programs. The Company has examined all these systems that it believes are affected by the year 2000 problem and believes that all of the systems have been adequately upgraded or replaced. This study has
included all of the computer systems that are used to operate the Company's accounting, billing and customers systems, inventory control, purchasing and payroll, alarm systems, and machine controls. <P>
With respect to the Company's machinery and other equipment, the Company's management has met with representatives of the primary manufacturer of such equipment and has been assured that the equipment will
not experience any material system interruptions or failures as a result of the year 2000 issue. While the Company has no reason to believe that the manufacturer's statements are incorrect, the Company has not undertaken an independent investigation of
the year 2000 readiness of all of its machinery and other equipment.<P>
The Company has surveyed many of its significant suppliers and customers to determine the extent to which the Company may be vulnerable to a failure by any of these third parties to remediate their own year
2000 problems. Based on these surveys, the Company believes that these third parties have satisfactory plans in place to address the year 2000 problem. The Company does not have any computer or other data links with its customers, suppliers or others. <P>
To date, the Company has spent approximately $270,000 to address the year 2000 issue and estimates that it will additionally spend less than $10,000 before year end. Such costs are being expensed as incurred
and are not expected to have a material impact on the Company's results of operations, liquidity or financial position. The projected costs of year 2000 modifications and the projected date on which the Company believes it will complete the project are
management's best estimates, based on a variety of assumptions. There can be no guarantee that these estimates will be achieved and actual results could differ materially from those anticipated. <P>
Management does not expect any material disruptions to the Company's operations arising from the failure of the Company's computer systems or other equipment to properly handle the year 2000 issue. In most
cases, the Company's inventories of products should be sufficient to support sales for some period of time following any such failure. If such problems were to continue for an extended period of time, however, they could have a material impact on the
Company's results of operations, liquidity and financial position. In addition, the Company could face potential adverse effects if external systems, such as telephone lines or electrical service, were rendered inoperable due to the year 2000 issue.
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while as noted above certain third parties have stated that they are year 2000 compliant or will be in the near future, there can be no assurances that such third parties will not experience year 2000 problems of their own, thereby disrupting the
Company's operations.<P>
The Company is currently developing a contingency plan to address the year 2000 issue.<P>
This Year 2000 Readiness Disclosure is based in part on and repeats information supplied by outside sources, including the Company's customers and suppliers. Although the Company has no reason to believe
that this information is inaccurate, the Company is not the source of this information and in most cases has not independently verified its accuracy.<P>
<B>Forward-Looking Statements</B><P>
With the exception of historical matters, the matters discussed in this report, particularly descriptions of the Company's plans to develop and expand the business of CTA, contain forward-looking statements
that are based on management's beliefs, assumptions, current expectations, estimates and projections about the industries in which the Company operates, the economy, and about the Company itself. Words such as "anticipates," "believes," "estimates,"
"expects," "intends," "is likely," "plans," "predicts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions ("Future Factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or
forecasted in such forward-looking statements. Furthermore, the Company undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.<P>
Future Factors include, but are not limited to, uncertainties relating to changes in demand for the Company's products or trucks and SUVs; the cost and availability of inventories, raw materials and
equipment to the Company; the degree of competition by the Company's competitors; changes in government and regulatory policies; and changes in economic conditions. These matters are representative of the Future Factors that could cause a difference
between an ultimate actual outcome and a forward-looking statement.<P>
<B>Item 3. Quantitative and Qualitative Disclosures About Market Risk.</B><P>
See the discussion under "Market Risk Disclosure" in Item 2 above, which is herein incorporated by reference.<P>
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<CENTER><B>PART II</B></CENTER>
<CENTER><B>OTHER INFORMATION</B></CENTER><P>
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<B>Item 6. Exhibits and Reports on Form 8-K.</B><P>
(a) <U>Exhibits</U>. The following exhibits are filed as part of this report.<P>
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<TD WIDTH="15%" VALIGN="TOP">2.1</TD>
<TD WIDTH="85%">Agreement and Plan of Merger between The Colonel's, Inc. and Brainerd Merger Corporation and joined in by Brainerd International, Inc. Incorporated by reference from Exhibit A to the Proxy Statement of Brainerd International, Inc. for
the Annual Meeting of Shareholders of Brainerd International, Inc. held on November 21, 1995.</TD>
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<TD COLSPAN="2"> </TD>
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<TD WIDTH="15%" VALIGN="TOP">2.2</TD>
<TD WIDTH="85%">Agreement and Plan of Reorganization among Brainerd International, Inc. and The Colonel's Holdings, Inc. Incorporated by reference from Exhibit D to the Proxy Statement of Brainerd International, Inc. for the Annual Meeting of
Shareholders of Brainerd International, Inc. held on November 21, 1995.</TD>
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<TD COLSPAN="2"> </TD>
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<TR>
<TD WIDTH="15%" VALIGN="TOP">2.3</TD>
<TD WIDTH="85%">Amended and Restated Asset Purchase Agreement by and between Colonel's Acquisition Corp. (later renamed AutoLign Manufacturing Group, Inc.), The Colonel's International, Inc., The Colonel's, Inc. and Donald J. Williamson dated November
23, 1998. Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on December 7, 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="15%" VALIGN="TOP">2.4</TD>
<TD WIDTH="85%">First Amendment to Amended and Restated Asset Purchase Agreement by and between AutoLign Manufacturing Group, Inc. (formerly known as Colonel's Acquisition Corp.), The Colonel's International, The Colonel's, Inc. and Donald J. Williamson
dated December 17, 1998. Incorporated by reference to Exhibit 2(b) to the Company's Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="15%" VALIGN="TOP">2.5</TD>
<TD WIDTH="85%">Agreement and Plan of Merger by and among The Colonel's International, Inc., The Colonel's Rugged Liner, Inc., Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., Ground Force, Inc., and certain shareholders of the
foregoing, dated March 13, 1998. Incorporated by reference to Exhibit 2(a) to the Registrant's Current Report on Form 8-K dated May 8, 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="15%" VALIGN="TOP">2.6</TD>
<TD WIDTH="85%">First Amendment to Agreement and Plan of Merger, by and among The Colonel's International, Inc., The Colonel's Rugged Liner, Inc., Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., Ground Force, Inc., and certain
shareholders of the foregoing, dated April 23, 1998. Incorporated by reference to Exhibit 2(b) to the Registrant's Current Report on Form 8-K dated May 8, 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="15%" VALIGN="TOP">3.1</TD>
<TD WIDTH="85%">Articles of Incorporation of the Company, as amended. Incorporated by reference from Exhibit 3.1 to the Company's Report on Form 10-Q for the period ended March 31, 1997.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="15%" VALIGN="TOP">3.2</TD>
<TD WIDTH="85%">Bylaws of the Company, as amended. Incorporated by reference from Exhibit 3.2 to the Company's Report on Form 10-Q for the period ended March 31, 1997.</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<CENTER>-10-
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="15%" VALIGN="TOP">27</TD>
<TD WIDTH="85%">Financial Data Schedule.</TD>
</TR>
</TABLE>
<BR>
(b) <U>Reports on Form 8-K</U>. The Registrant did not file any reports on Form 8-K during the
quarter ended June 30, 1999.<BR>
<BR>
<BR>
<CENTER>-11-
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<B><CENTER>SIGNATURES</CENTER></B><P>
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.<P>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="45%"> </TD>
<TD WIDTH="55%">THE COLONEL'S INTERNATIONAL, INC.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP">Dated: August 23, 1999</TD>
<TD WIDTH="55%">By: /s/ Gregory Strzynski<HR SIZE="1" NOSHADE WIDTH="90%"></TD>
</TR>
<TR>
<TD WIDTH="45%"> </TD>
<TD WIDTH="55%">Gregory Strzynski</TD>
</TR>
<TR>
<TD WIDTH="45%"> </TD>
<TD WIDTH="55%">Chief Financial Officer</TD>
</TR>
<TR>
<TD WIDTH="45%"> </TD>
<TD WIDTH="55%">(Duly Authorized Officer and Principal Financial</TD>
</TR>
<TR>
<TD WIDTH="45%"> </TD>
<TD WIDTH="55%"> Officer of the Registrant)</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<CENTER>-12-
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<B><CENTER>APPENDIX A</CENTER></B><P>
<B><CENTER>THE COLONEL'S INTERNATIONAL, INC.</CENTER></B>
<B><CENTER>CONSOLIDATED BALANCE SHEETS</CENTER></B><P>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="65%"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">June 30,<BR>
1999<BR>
(unaudited)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">December 31,<BR>
1998<BR>
(audited)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="65%"><B>ASSETS</B></TD>
<TD COLSPAN="3"> </TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">CURRENT ASSETS:</TD>
<TD COLSPAN="3"> </TD>
</TR>
<TR>
<TD WIDTH="65%"> Cash</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 1,497,917</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 18,303,097</TD>
</TR>
<TR>
<TD WIDTH="65%"> Accounts receivable - trade (net of allowance<BR>
for doubtful accounts of $988,000 and $1,048,000<BR>
at June 30, 1999 and December 31, 1998,<BR>
respectively)</TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM">3,298,745</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM">3,072,330</TD>
</TR>
<TR>
<TD WIDTH="65%"> Notes receivable from majority shareholder (Note 2)</TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,712,925</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,600,787</TD>
</TR>
<TR>
<TD WIDTH="65%"> Inventories (Note 3)</TD>
<TD WIDTH="15%" ALIGN="RIGHT">6,300,563</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">6,088,332</TD>
</TR>
<TR>
<TD WIDTH="65%"> Prepaid expense</TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,155,518</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">522,793</TD>
</TR>
<TR>
<TD WIDTH="65%"> Deferred taxes - current</TD>
<TD WIDTH="15%" ALIGN="RIGHT">974,000</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,042,000</TD>
</TR>
<TR>
<TD WIDTH="65%"> Current portion of deferred compensation</TD>
<TD WIDTH="15%" ALIGN="RIGHT">81,112</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">95,667</TD>
</TR>
<TR>
<TD WIDTH="65%" VALIGN="TOP"> Federal income taxes receivable</TD>
<TD WIDTH="15%" ALIGN="RIGHT">723,428<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD> Total current assets</TD>
<TD WIDTH="15%" ALIGN="RIGHT">15,744,208</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">30,725,006</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">PROPERTY, PLANT, AND EQUIPMENT - Net (Note 4)</TD>
<TD WIDTH="15%" ALIGN="RIGHT">23,687,008</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">16,929,227</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">OTHER ASSETS:</TD>
<TD COLSPAN="3"> </TD>
</TR>
<TR>
<TD WIDTH="65%"> Note receivable from majority shareholder (Note 2)</TD>
<TD WIDTH="15%" ALIGN="RIGHT">4,936,197</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">--</TD>
</TR>
<TR>
<TD WIDTH="65%"> Long-term portion of deferred compensation</TD>
<TD WIDTH="15%" ALIGN="RIGHT">140,400</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">173,678</TD>
</TR>
<TR>
<TD WIDTH="65%"> Deposits</TD>
<TD WIDTH="15%" ALIGN="RIGHT">114,455</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">246,044</TD>
</TR>
<TR>
<TD WIDTH="65%"> Goodwill</TD>
<TD WIDTH="15%" ALIGN="RIGHT">3,929,050</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">4,168,589</TD>
</TR>
<TR>
<TD WIDTH="65%" VALIGN="TOP"> Other</TD>
<TD WIDTH="15%" ALIGN="RIGHT">179,149<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">180,349<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="65%">Total other assets</TD>
<TD WIDTH="15%" ALIGN="RIGHT">9,299,251</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">4,768,660</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%" VALIGN="TOP">TOTAL ASSETS</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 48,730,467<HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 52,422,893<HR></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<CENTER>A-1
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="65%"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">June 30,<BR>
1999<BR>
(unaudited)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">December 31,<BR>
1998<BR>
(audited)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%"><B>LIABILITIES & SHAREHOLDERS'S EQUITY</B></TD>
<TD COLSPAN="3"> </TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">CURRENT LIABILITIES:</TD>
<TD COLSPAN="3"> </TD>
</TR>
<TR>
<TD WIDTH="65%"> Current portion of long-term obligations (Note 6)</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 956,764</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 1,089,138</TD>
</TR>
<TR>
<TD WIDTH="65%"> Accounts payable - trade</TD>
<TD WIDTH="15%" ALIGN="RIGHT">915,769</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">3,077,409</TD>
</TR>
<TR>
<TD WIDTH="65%"> Accrued expenses (Note 5)</TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,163,998</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,144,370</TD>
</TR>
<TR>
<TD WIDTH="65%"> Deferred revenue</TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,013,019</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">--</TD>
</TR>
<TR>
<TD WIDTH="65%"> Current portion of deferred compensation</TD>
<TD WIDTH="15%" ALIGN="RIGHT">81,112</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">95,667</TD>
</TR>
<TR>
<TD WIDTH="65%" VALIGN="TOP"> Income taxes payable</TD>
<TD WIDTH="15%" ALIGN="RIGHT">8,315,638<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">8,221,895<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">Total current liabilities</TD>
<TD WIDTH="15%" ALIGN="RIGHT">12,446,300</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">13,628,479</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">LONG-TERM OBLIGATIONS, NET OF<BR>
CURRENT PORTION (Note 6)</TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM">3,569,834</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM">3,942,686</TD>
</TR>
<TR>
<TD WIDTH="65%">LONG-TERM PORTION OF DEFERRED<BR>
COMPENSATION</TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM">140,400</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM">173,678</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">DEFERRED TAXES - LONG-TERM</TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,280,000</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,191,000</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">SHAREHOLDERS'S EQUITY:<BR>
Common stock: 35,000,000 shares authorized<BR>
at $0.01 par value, 24,631,832 issued</TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM">246,318</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM">246,318</TD>
</TR>
<TR>
<TD WIDTH="65%"> Additional paid-in-capital</TD>
<TD WIDTH="15%" ALIGN="RIGHT">9,230,911</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">9,230,911</TD>
</TR>
<TR>
<TD WIDTH="65%"> Retained earnings</TD>
<TD WIDTH="15%" ALIGN="RIGHT">22,747,793</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">24,009,821</TD>
</TR>
<TR>
<TD WIDTH="65%" VALIGN="TOP"> Less common stock redeemed, 113,506 shares (Note 10)</TD>
<TD WIDTH="15%" ALIGN="RIGHT">(931,089)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%">Total shareholders' equity</TD>
<TD WIDTH="15%" ALIGN="RIGHT">31,293,933</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">33,487,050</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="65%" VALIGN="TOP">TOTAL LIABILITIES & SHAREHOLDER'S EQUITY</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 48,730,467<HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 52,422,893<HR></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<CENTER>A-2
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<B><CENTER>THE COLONEL'S INTERNATIONAL, INC.<BR>
CONSOLIDATED STATEMENTS OF INCOME<BR>
(unaudited)</CENTER></B><P>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD><FONT SIZE="-1"> </FONT></TD>
<TD COLSPAN="3" ALIGN="CENTER"><FONT SIZE="-1">Six Months Ending</FONT></TD>
<TD><FONT SIZE="-1"> </FONT></TD>
<TD COLSPAN="3" ALIGN="CENTER"><FONT SIZE="-1">Three Months Ending</FONT></TD>
</TR>
<TR>
<TD> </TD>
<TD COLSPAN="3" ALIGN="CENTER"><FONT SIZE="-1">June 30</FONT><HR SIZE="1" NOSHADE></TD>
<TD> </TD>
<TD COLSPAN="3" ALIGN="CENTER"><FONT SIZE="-1">June 30</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD> </TD>
<TD ALIGN="CENTER"><FONT SIZE="-1">1999</FONT><HR SIZE="1" NOSHADE></TD>
<TD> </TD>
<TD ALIGN="CENTER"><FONT SIZE="-1">1998</FONT><HR SIZE="1" NOSHADE></TD>
<TD> </TD>
<TD ALIGN="CENTER"><FONT SIZE="-1">1999</FONT><HR SIZE="1" NOSHADE></TD>
<TD> </TD>
<TD ALIGN="CENTER"><FONT SIZE="-1">1998</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">SALES</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 18,810,876</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 11,537,392</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 10,086,042</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 7,653,236</FONT></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP"><FONT SIZE="-1">COST OF SALES</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">15,952,050</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">9,095,401</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">8,527,852</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">5,789,634</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">GROSS PROFIT</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">2,858,826</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">2,441,991</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">1,558,190</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">1,863,602</FONT></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">SELLING, GENERAL AND</FONT></TD>
<TD COLSPAN="7"> </TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP"><FONT SIZE="-1"> ADMINISTRATIVE EXPENSES</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">4,898,369</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">2,288,070</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">2,618,819</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">1,496,506</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">INCOME FROM OPERATIONS</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">(2,039,543)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">153,921</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">(1,060,629)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">367,096</FONT></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">OTHER INCOME (EXPENSE):</FONT><BR>
<FONT SIZE="-1"> Interest expense</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(236,373)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(405,712)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(114,734)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(238,505)</FONT></TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1"> Interest income</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">357,087</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">11,121</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">214,476</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">8,091</FONT></TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1"> Rental income</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">267,788</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">202,179</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%"> </TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP"><FONT SIZE="-1"> Other</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">15,949</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">(25,794)</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">255</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">964</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1"> Other income (expense) net</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">404,451</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">(420,385)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">302,176</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">(229,450)</FONT></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">INCOME (LOSS) FROM<BR>
CONTINUING OPERATIONS</FONT></TD>
<TD COLSPAN="7"> </TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP"><FONT SIZE="-1"> BEFORE INCOME TAX BENEFIT</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(1,635,092)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(266,464)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(758,453)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">137,646</FONT></TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP"><FONT SIZE="-1"> Income Tax Benefit</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">373,064</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">--</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">373,064</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">--</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">INCOME (LOSS) FROM CONTINUING</FONT></TD>
<TD COLSPAN="7"> </TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP"><FONT SIZE="-1">OPERATIONS</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(1,262,028)</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(266,464)</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">(385,389)</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">137,646</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">DISCONTINUED OPERATIONS:<BR>
Income from Discontinued Operations,</FONT></TD>
<TD COLSPAN="7"> </TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP"><FONT SIZE="-1"> Net of Tax</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">--</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">2,207,650</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">--</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">737,854</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%" VALIGN="TOP"><FONT SIZE="-1">NET INCOME</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">$ (1,262,028)</FONT><HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">$ 1,941,186</FONT><HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">$ (385,389)</FONT><HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">$ 875,500</FONT><HR></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1">BASIC AND DILUTED EARNINGS<BR>
PER SHARE (Note 7)<BR>
From continuing operations</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">$ ( 0.05)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">$ 0.01</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">$ (0.02)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">$ 0.01</FONT></TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1"> Income from discontinued operations</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 0.00</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 0.09</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 0.00</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 0.03</FONT></TD>
</TR>
<TR>
<TD COLSPAN="8"> </TD>
</TR>
<TR>
<TD WIDTH="45%"><FONT SIZE="-1"> Net Income</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ ( 0.05)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 0.08</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ (0.02)</FONT></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 0.04</FONT></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<CENTER>A-3
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<CENTER><B>THE COLONEL'S INTERNATIONAL, INC.<BR>
CONSOLIDATED STATEMENTS OF CASH FLOWS<BR></B>
(Unaudited)</CENTER><P>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="75%"> </TD>
<TD COLSPAN="3" ALIGN="CENTER">Six Months Ending<BR>
June 30<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> </TD>
<TD WIDTH="10%" ALIGN="CENTER">1999<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="CENTER">1998<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4">CASH FLOWS FROM OPERATING ACTIVITIES:</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="75%">Net Income (Loss)</TD>
<TD WIDTH="10%" ALIGN="RIGHT">$(1,262,028)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 1,941,186</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Adjustments to reconcile net income (loss) to net cash<BR>
provided by operating activities:<BR>
Income from discontinued operations</TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM">--</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM">(2,207,650)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Depreciation and amortization</TD>
<TD WIDTH="10%" ALIGN="RIGHT">1,635,465</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">959,537</TD>
</TR>
<TR>
<TD WIDTH="75%"> Deferred tax provision</TD>
<TD WIDTH="10%" ALIGN="RIGHT">157,000</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(114,000)</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD COLSPAN="4">Changes in assets and liabilities that provided (used) cash</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Accounts receivable</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(226,415)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(1,096,484)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Inventories</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(212,231)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(1,814,712)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Prepaid expenses</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(632,725)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(25,269)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Federal income taxes receivable</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(723,428)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">--</TD>
</TR>
<TR>
<TD WIDTH="75%"> Other assets</TD>
<TD WIDTH="10%" ALIGN="RIGHT">49,033</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">6,571</TD>
</TR>
<TR>
<TD WIDTH="75%"> Accounts payable</TD>
<TD WIDTH="10%" ALIGN="RIGHT"> (2,161,640)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">799,824</TD>
</TR>
<TR>
<TD WIDTH="75%"> Accrued expenses</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(28,205)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(815,798)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Deferred revenue</TD>
<TD WIDTH="10%" ALIGN="RIGHT">1,013,019</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">747,202</TD>
</TR>
<TR>
<TD WIDTH="75%"> Goodwill</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(105,995)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">--</TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP"> Income taxes payable</TD>
<TD WIDTH="10%" ALIGN="RIGHT">93,743<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">377,488<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Net cash used in continuing operations</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(2,404,407)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(1,242,105)</TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP"> Net cash provided by discontinued operations</TD>
<TD WIDTH="10%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">4,531,182<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Net cash (used in) provided by operating activities</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(2,404,407)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">3,289,177</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD COLSPAN="4">CASH FLOWS FROM INVESTING ACTIVITIES:</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Acquisitions of consolidated subsidiaries, net of cash required</TD>
<TD WIDTH="10%" ALIGN="RIGHT">--</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(4,328,565)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Expenditures for property, plant and equipment</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(8,047,712)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(1,345,401)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Net change in deposits</TD>
<TD WIDTH="10%" ALIGN="RIGHT">131,589</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(686,720)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Additions to notes receivable-related party</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(5,175,000)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">--</TD>
</TR>
<TR>
<TD WIDTH="75%"> Payments received on notes receivable-related party</TD>
<TD WIDTH="10%" ALIGN="RIGHT">126,665</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">--</TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP"> Payment to stockholder for deposit on land</TD>
<TD WIDTH="10%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(48,406)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Net cash used in continuing investing activities</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(12,964,458)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(6,409,092)</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Net cash used in discontinued investing activities</TD>
<TD WIDTH="10%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(958,502)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Net cash used in investing activities</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(12,964,458)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(7,367,594)</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<CENTER>A-4
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD COLSPAN="4">CASH FLOWS FROM FINANCING ACTIVITIES:</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%"> Net borrowings (payments) under notes payable</TD>
<TD WIDTH="10%" ALIGN="RIGHT">--</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">579,498</TD>
</TR>
<TR>
<TD WIDTH="75%"> Proceeds from long-term obligations</TD>
<TD WIDTH="10%" ALIGN="RIGHT">--</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">4,075,152</TD>
</TR>
<TR>
<TD WIDTH="75%"> Principal payments on long-term debt</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(141,519)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(1,317,169)</TD>
</TR>
<TR>
<TD WIDTH="75%"> Principal payments on obligations under capital leases</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(363,707)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(399,521)</TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP"> Common stock redeemed</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(931,089)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="75%"> Net cash provided by (used in) financing activities</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(1,436,615)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">2,937,960</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP">NET (DECREASE) IN CASH</TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ (16,805,180)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ (1,140,457)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP">CASH , BEGINNING OF PERIOD</TD>
<TD WIDTH="10%" ALIGN="RIGHT">18,303,097<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">1,723,652<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP">CASH, END OF PERIOD</TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 1,497,917<HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 583,195<HR></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD COLSPAN="4">SUPPLEMENTAL SCHEDULES OF NONCASH<BR>
FINANCING AND INVESTING ACTIVITIES:</TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD COLSPAN="4"> Notes payable and future inventory credits issued</TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP"> in connection with acquisitions</TD>
<TD WIDTH="10%" ALIGN="RIGHT"> </TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 621,955<HR></TD>
</TR>
<TR>
<TD COLSPAN="4"> </TD>
</TR>
<TR>
<TD COLSPAN="4"> Common stock issued in connection with the acquisition</TD>
</TR>
<TR>
<TD WIDTH="75%" VALIGN="TOP"> of the Rugged Liner Companies</TD>
<TD WIDTH="10%" ALIGN="RIGHT"> </TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 3,724,407<HR></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>
<CENTER>A-5
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<B><CENTER>THE COLONEL'S INTERNATIONAL, INC.</CENTER></B>
<CENTER><B><U>Notes to Consolidated Financial Statements (Unaudited)</U></B></CENTER><P>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%" VALIGN="TOP">Note 1</TD>
<TD WIDTH="90%"><B>BASIS OF PRESENTATION</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">The financial information included herein is unaudited; however such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of
the results of operations, financial position and cash flows for the periods presented.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">The results of operations for the six months ended June 30, 1999 are not necessarily indicative of the results expected for the full year.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">In June 1997, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income", which is effective for fiscal years beginning after December 15, 1997.
The statement changes the reporting of certain items currently reported in the shareholders' equity section of the balance sheet and establishes standards for reporting of comprehensive income and its components in a full set of general purpose financial
statements. For all periods presented, comprehensive income (loss) equals net income (loss).</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%">Note 2</TD>
<TD WIDTH="90%"><B>NOTES RECEIVABLE FROM MAJORITY SHAREHOLDER</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">During the first quarter of 1999, a note receivable from the majority shareholder of $5,175,000 was established. The note requires monthly payments of $43,976 including principal and interest at 8.0% through February 2005 at which time
the unpaid balance is due. Additional notes outstanding are $1,600,787 and require interest at 8.0%, due in 1999.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%">Note 3</TD>
<TD WIDTH="90%"><B>INVENTORIES</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
</TABLE>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP">Inventories are summarized as follows:</TD>
<TD WIDTH="15%" ALIGN="CENTER">June 30,<BR>
1999<BR>
(unaudited)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">December 31,<BR>
1998<BR>
(audited)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Finished products</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 5,893,223</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 5,701,017</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP">Raw materials</TD>
<TD WIDTH="15%" ALIGN="RIGHT">407,340<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">387,315<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="5"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP">Total inventories</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 6,300,563<HR></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 6,088,332<HR></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<CENTER>A-6
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">Note 4</TD>
<TD WIDTH="90%"><B>PROPERTY, PLANT AND EQUIPMENT</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">Property, plant and equipment is summarized by major classification as follows:</TD>
</TR>
</TABLE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">June 30,<BR>
1999<BR>
(unaudited)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">December 31,<BR>
1998<BR>
(audited)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Land and improvements</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 5,889,400</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 3,276,217</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Track</TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,927,275</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,781,299</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Buildings</TD>
<TD WIDTH="15%" ALIGN="RIGHT">4,075,199</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,201,433</TD>
</TR>
<TR>
<TD WIDTH="10%" WIDTH="10%"> </TD>
<TD WIDTH="50%">Leasehold improvements</TD>
<TD WIDTH="15%" ALIGN="RIGHT">249,913</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">751,642</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Bleachers & fencing</TD>
<TD WIDTH="15%" ALIGN="RIGHT">815,692</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">755,662</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Equipment</TD>
<TD WIDTH="15%" ALIGN="RIGHT">12,152,963</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">9,623,859</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Transportation equipment</TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,286,207</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">1,246,535</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Furniture & fixtures</TD>
<TD WIDTH="15%" ALIGN="RIGHT">982,152</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">853,624</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP">Tooling</TD>
<TD WIDTH="15%" ALIGN="RIGHT">3,666,693<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">3,483,510<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="5"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%"> Total</TD>
<TD WIDTH="15%" ALIGN="RIGHT">31,045,494</TD>
<TD WIDTH="10%" WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">22,973,781</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP"> Less accumulated depreciation</TD>
<TD WIDTH="15%" ALIGN="RIGHT">(7,358,486)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">(6,044,554)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="5"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP">Net property, plant and equipment</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 23,687,008<HR></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 16,929,227<HR></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">Note 5</TD>
<TD WIDTH="90%"><B>ACCRUED EXPENSES</B></TD>
</TR>
</TABLE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%"> </TD>
<TD COLSPAN="4"> Accrued expenses consist of the following:</TD>
</TR>
<TR>
<TD COLSPAN="5"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">June 30,<BR>
1999<BR>
(unaudited)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="CENTER">December 31,<BR>
1998<BR>
(audited)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="5"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Accrued settlements</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 392,482</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 562,663</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Accrued taxes</TD>
<TD WIDTH="15%" ALIGN="RIGHT">--</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">203,726</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Accrued wages and related taxes</TD>
<TD WIDTH="15%" ALIGN="RIGHT">560,819</TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">--</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%" VALIGN="TOP">Other</TD>
<TD WIDTH="15%" ALIGN="RIGHT">210,697<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">377,981<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="5"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="50%">Total</TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 1,163,998<HR></TD>
<TD WIDTH="10%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT">$ 1,144,370<HR></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<CENTER>A-7
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">Note 6</TD>
<TD WIDTH="90%"><B>LONG TERM OBLIGATIONS</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
</TABLE>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%" VALIGN="TOP">Long term obligations consists of the following:</TD>
<TD WIDTH="13%" ALIGN="CENTER"><FONT SIZE="-1">June 30,<BR>
1999<BR>
(unaudited)</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="CENTER"><FONT SIZE="-1">December 31,<BR>
1998<BR>
(audited)</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="5"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%"><FONT SIZE="-1">Mortgage payable to a bank, interest at the bank's prime<BR>
rate plus 2% (effective rate of 10% at June 30, 1999),<BR>
annual principal payments of $50,000 plus interest due quarterly,<BR>
through September 2004. Secured by underlying property.</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">300,000</FONT></TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">300,000</FONT></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%"><FONT SIZE="-1">Capital lease obligations through December 2002;<BR>
monthly installments include interest at rates between<BR>
7.5% and 8.75%, collateralized by the related machinery<BR>
and equipment.</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">4,044,654</FONT></TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">4,399,655</FONT></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%"><FONT SIZE="-1">Capital lease obligation through March 1999; monthly<BR>
installments of $15,987 including interest at 8.5%</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="BOTTOM">--</TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">47,594</FONT></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%"><FONT SIZE="-1">Vehicle Financing</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="BOTTOM">--</TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE="-1">136,245</FONT></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%" VALIGN="TOP"><FONT SIZE="-1">Other</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE="-1">181,944</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="-1">148,330</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%"><FONT SIZE="-1"> Total</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE="-1">4,526,598</FONT></TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="-1">5,031,824</FONT></TD>
</TR>
<TR>
<TD COLSPAN="5"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%"><FONT SIZE="-1">Less current portion</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE="-1">(956,764)</FONT><HR SIZE="1" NOSHADE></TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="-1">(1,089,138)</FONT><HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="59%"><FONT SIZE="-1">Long-term portion</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE="-1">$ 3,569,834</FONT><HR></TD>
<TD WIDTH="3%"> </TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="-1">$ 3,942,686</FONT><HR></TD>
</TR>
</TABLE>
<BR>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">Note 7</TD>
<TD WIDTH="90%"><B>EARNINGS PER SHARE</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">In accordance with SFAS 128, basic earnings per share for June 30, 1999 and 1998 is calculated as net income divided by the weighted average number of common shares outstanding. Diluted earnings per share was calculated as net income
divided by the weighted average number of common shares outstanding increased by the number of additional common shares that would have been outstanding if the dilutive shares had been issued. Due to the small number of additional potentially dilutive
shares, there was no material effect on earnings per share, therefore basic and diluted earnings per share are the same.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%">Note 8</TD>
<TD WIDTH="90%"><B>LITIGATION</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">No material developments in the litigation discussed in the Company's Report on Form 10-K for the year ended December 31, 1998 occurred during the second quarter of 1999.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%">Note 9</TD>
<TD WIDTH="90%"><B>ENVIRONMENTAL </B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">No material developments in the environmental matters discussed in the Company's Report on Form 10-K for the year ended December 31, 1998 occurred during the second quarter of 1999.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%">Note 10</TD>
<TD WIDTH="90%"><B>REDEEMED COMMON STOCK</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">Pursuant to the Merger Agreement between the Company and the Rugged Liner Companies, on March 6, 1999, the shareholders of the Rugged Liner Companies exercised 25% of their put option. Consequently, the Company redeemed 113,506 of their
shares at $8.20 per share for a total redemption price of $931,089.</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<CENTER>A-8
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">Note 11</TD>
<TD WIDTH="90%"><B>SEGMENTS OF BUSINESS</B></TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">In 1998 the Company adopted Statement of Financial Accounting Standards No. 131, "Disclosure about Segments of an Enterprise and Related Information," which established standards for reporting information about operating segments and
requires selected information about operating segments in interim financial reports issued to stockholders. The statement also establishes standards for related disclosures about products and services, geographic areas, and major customers. Operating
segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing
performance. The Company's chief operating decision-maker is its Chief Executive Officer.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">The Company's reportable segments are strategic business units that offer different products and services. The business units have been divided into two reportable segments; the manufacturing plants in Owosso, Michigan and Union Town,
Pennsylvania, and sale of these bedliners and other truck accessories throughout the country ("Truck Accessories"), and operation of a multi-purpose motor sports facility in Brainerd, Minnesota ("Raceway").</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">The Company evaluates performance based on stand-alone product segment operating income. Intersegment sales and transfers, interest income and expenses are not significant. Reportable segments for 1999 and 1998 have been restated to
exclude the "bumper segment" which was discontinued during 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="90%">Financial information segregated by reportable product segments is as follows:</TD>
</TR>
</TABLE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD> </TD>
<TD> </TD>
<TD COLSPAN="3" ALIGN="CENTER">Six Months Ending</TD>
<TD> </TD>
<TD COLSPAN="3" ALIGN="CENTER">Three Months Ending</TD>
</TR>
<TR>
<TD> </TD>
<TD> </TD>
<TD COLSPAN="3" ALIGN="CENTER">June 30<BR>
(unaudited)<HR SIZE="1" NOSHADE></TD>
<TD> </TD>
<TD COLSPAN="3" ALIGN="CENTER">June 30<BR>
(unaudited)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="9"> </TD>
</TR>
<TR>
<TD> </TD>
<TD> </TD>
<TD ALIGN="CENTER">1999<HR SIZE="1" NOSHADE></TD>
<TD> </TD>
<TD ALIGN="CENTER">1998<HR SIZE="1" NOSHADE></TD>
<TD> </TD>
<TD ALIGN="CENTER">1999<HR SIZE="1" NOSHADE></TD>
<TD> </TD>
<TD ALIGN="CENTER">1998<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD COLSPAN="9"> </TD>
</TR>
<TR>
<TD> </TD>
<TD COLSPAN="8">Sales:</TD>
</TR>
<TR>
<TD> </TD>
<TD COLSPAN="8"> Truck</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%"> Accessories</TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 18,465,290</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 11,150,806</TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 9,758,381</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$7,288,671</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP"> Raceway</TD>
<TD WIDTH="10%" ALIGN="RIGHT">345,586<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">386,586<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">327,661<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">364,565<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP"> Sub-Total</TD>
<TD WIDTH="10%" ALIGN="RIGHT">18,810,876</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">11,537,392</TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">10,086,042</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">7,653,236</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD COLSPAN="8"> Discontinued</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP"> Operations</TD>
<TD WIDTH="10%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">14,503,449<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">6,756,651<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP"> Total</TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 18,810,876<HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 26,040,841<HR></TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 10,086,042<HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 14,409,887<HR></TD>
</TR>
<TR>
<TD COLSPAN="9"> </TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP">Income From<BR>
Operations:<BR>
Truck<BR>
Accessories</TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM">(1,245,649)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM">777,188</TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM">(899,125)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="BOTTOM">671,912</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP"> Raceway</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(793,849)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(623,267)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(161,504)<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(304,816)<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP"> Sub-Total</TD>
<TD WIDTH="10%" ALIGN="RIGHT">(2,039,498)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">153,921</TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">(1,060,629)</TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">367,096</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD COLSPAN="8"> Discontinued</TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP"> Operations</TD>
<TD WIDTH="10%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">2,651,679<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">--<HR SIZE="1" NOSHADE></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">1,359,439<HR SIZE="1" NOSHADE></TD>
</TR>
<TR>
<TD WIDTH="10%"> </TD>
<TD WIDTH="25%" VALIGN="TOP"> Total</TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ (2,039,498)<HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 2,805,600<HR></TD>
<TD WIDTH="15%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ (1,060,629)<HR></TD>
<TD WIDTH="5%"> </TD>
<TD WIDTH="10%" ALIGN="RIGHT">$ 1,726,535<HR></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<CENTER>A-9
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
<B><CENTER>EXHIBIT INDEX</CENTER></B><P>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="15%">Exhibit<BR>
<U>Number</U></TD>
<TD WIDTH="85%"> <U>Description</U></TD>
</TR>
</TABLE>
<BR>
<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%" VALIGN="TOP">2.1</TD>
<TD WIDTH="90%">Agreement and Plan of Merger between The Colonel's, Inc. and Brainerd Merger Corporation and joined in by Brainerd International, Inc. Incorporated by reference from Exhibit A to the Proxy Statement of Brainerd International, Inc. for
the Annual Meeting of Shareholders of Brainerd International, Inc. held on November 21, 1995.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%" VALIGN="TOP">2.2</TD>
<TD WIDTH="90%">Agreement and Plan of Reorganization among Brainerd International, Inc. and The Colonel's Holdings, Inc. Incorporated by reference from Exhibit D to the Proxy Statement of Brainerd International, Inc. for the Annual Meeting of
Shareholders of Brainerd International, Inc. held on November 21, 1995.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%" VALIGN="TOP">2.3</TD>
<TD WIDTH="90%">Amended and Restated Asset Purchase Agreement by and between Colonel's Acquisition Corp. (later renamed AutoLign Manufacturing Group, Inc.), The Colonel's International, Inc., The Colonel's, Inc. and Donald J. Williamson dated November
23, 1998. Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on December 7, 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%" VALIGN="TOP">2.4</TD>
<TD WIDTH="90%">First Amendment to Amended and Restated Asset Purchase Agreement by and between AutoLign Manufacturing Group, Inc. (formerly known as Colonel's Acquisition Corp.), The Colonel's International, The Colonel's, Inc. and Donald J. Williamson
dated December 17, 1998. Incorporated by reference to Exhibit 2(b) to the Company's Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%" VALIGN="TOP">2.5</TD>
<TD WIDTH="90%">Agreement and Plan of Merger by and among The Colonel's International, Inc., The Colonel's Rugged Liner, Inc., Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., Ground Force, Inc., and certain shareholders of the
foregoing, dated March 13, 1998. Incorporated by reference to Exhibit 2(a) to the Registrant's Current Report on Form 8-K dated May 8, 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%" VALIGN="TOP">2.6</TD>
<TD WIDTH="90%">First Amendment to Agreement and Plan of Merger, by and among The Colonel's International, Inc., The Colonel's Rugged Liner, Inc., Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., Ground Force, Inc., and certain
shareholders of the foregoing, dated April 23, 1998. Incorporated by reference to Exhibit 2(b) to the Registrant's Current Report on Form 8-K dated May 8, 1998.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%" VALIGN="TOP">3.1</TD>
<TD WIDTH="90%">Articles of Incorporation of the Company, as amended. Incorporated by reference from Exhibit 3.1 to the Company's Report on Form 10-Q for the period ended March 31, 1997.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%" VALIGN="TOP">3.2</TD>
<TD WIDTH="90%">Bylaws of the Company, as amended. Incorporated by reference from Exhibit 3.2 to the Company's Report on Form 10-Q for the period ended March 31, 1997.</TD>
</TR>
<TR>
<TD COLSPAN="2"> </TD>
</TR>
<TR>
<TD WIDTH="10%" VALIGN="TOP">27</TD>
<TD WIDTH="90%">Financial Data Schedule.</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<CENTER>A-10
</CENTER>
<HR SIZE="4" NOSHADE>
<BR>
</BODY>
</HTML>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED STATEMENT OF INCOME, BALANCE SHEETS, AND STATEMENT
OF CASH FLOWS OF THE COLONEL'S INTERNATIONAL, INC. AND ITS SUBSIDIARIES AS OF
AND FOR THE QUARTER ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,497,917
<SECURITIES> 0
<RECEIVABLES> 4,286,745
<ALLOWANCES> 988,000
<INVENTORY> 6,300,563
<CURRENT-ASSETS> 15,744,208
<PP&E> 31,045,494
<DEPRECIATION> 7,358,486
<TOTAL-ASSETS> 48,730,467
<CURRENT-LIABILITIES> 12,446,300
<BONDS> 0
<COMMON> 246,318
0
0
<OTHER-SE> 31,047,615
<TOTAL-LIABILITY-AND-EQUITY> 48,730,467
<SALES> 18,810,876
<TOTAL-REVENUES> 18,810,876
<CGS> 15,952,050
<TOTAL-COSTS> 20,850,419
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 236,373
<INCOME-PRETAX> (1,635,092)
<INCOME-TAX> 373,064
<INCOME-CONTINUING> (1,262,028)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,262,028)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
