During the third quarter of 2000, the Circuit Court of the Sixth Circuit in and
for Pinellas County, Florida entered Final Judgements of damages in favor of Mr.
Edwin B. Salmon, Jr., the former Chief Executive Officer and Chairman of the of
the Board of the Company, in the amount of $468,467.34 (Case No.
00-002088-CI-15), and in favor of Mr. William Van Hook, an associate of Mr.
Salmon, in the amount of $164,253 (Case No. 00-002946-CI-15). Neither of these
cases was defended by the Company, due to the Company's inability to engage and
pay legal counsel. To the best of the Company's knowledge and belief, the basis
of the complaints brought against the Company by Messrs. Salmon and Van Hook
allege that the Company wrongfully denied the removal of restrictive legends,
pursuant to Rule 144 of the Securities Act of 1933, on the share certificates of
the Company held by them.

Had the Company been able to defend the actions brought against the Company by
Mr. Salmon, it believes that it would have defended those actions by alleging
that Mr. Salmon defrauded the Company's stockholders, engaged in activities
detrimental to the Company's stockholders and misrepresented the financial
affairs of the Company prior to the Merger. Had the Company been able to defend
the actions brought against the Company by Mr. Van Hook, it believes that that
it would have defended those actions by alleging that Mr. Van Hook participated
in the alleged causes of action the Company believes it would have asserted
against Mr. Salmon; and, further, that the shares of common stock transferred to
Mr. Van Hook by Mr. Salmon were transferred in violation of an agreement between
the Company and Mr. Salmon regarding the transferability and sale the shares.
Should either Mr. Salmon or Mr. Van Hook seek a "sister judgement" in the State
of California and attempt to enforce the judgements, the Company intends to
vigorously seek to vacate the judgements. The Company also intends, to the
extent it is able to do so, bring actions against Messrs. Salmon and Van Hook,
which would allege the causes of actions against them, as set forth above. As of
September 30, 2000, the Company believes that it has made adequate provision for
these potential loss contingencies.