HARRELL INTERNATIONAL, INC.

                  211 East Louisiana Street
                    McKinney, Texas 75069






                         Form 10-KSB



                  For the fiscal year ended:
                      September 30, 1999





                         Submitted to





              SECURITIES AND EXCHANGE COMMISSION
                      Washington, D. C.

                  Commission File No. 0-2661

             SECURITIES AND EXCHANGE COMMISSION
                   Washington, D. C. 20549

                         FORM 10-KSB.

       ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
             THE SECURITIES EXCHANGE ACT OF 1934

  For the fiscal year ended:          September 30, 1999
  Commission File No.:                            0-2661

                 HARRELL INTERNATIONAL, INC.
                 (Exact name in its charter)

   Delaware                  13-1946181
  (State of Incorporation)  (I.R.S. Employer Id.No.)

  211 East Louisiana Street, McKinney, Texas 75069
  (Address of principal executive offices)  (Zip Code)

  Registrant's telephone number, including area code:
  (972)  542-9525
  Securities registered pursuant to Section 12(b) of the Act:

                             None

  Securities registered pursuant to Section 12(g) of the Act:

             Class A Common Stock, Par Value $.01
                       (Title of Class)

   Check whether the issuer (1) filed all reports required
  to be filed by Section 13 or 15(d) of the Exchange Act
  during the past 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.

             (1)  YES   X     NO
             (2)  YES   X     NO
   Check if there is no disclosure of delinquent filers in
  response to Item 405 of Regulation S-B is not contained in
  this form, and no disclosure will be contained, to the best
  of registrant's knowledge, in definitive proxy or
  information statements incorporated by reference in Part III
  of this form 10-KSB or any amendment to this Form 10-KSB.
  [ X]

    Issuer's revenues for its most recent fiscal year
  $588,906

   The Company has no current information regarding the
  prices of stock traded by non-affiliates.  The aggregate
  market value of the registrant's Class A Common Stock held
  by non-affiliates of the registrant, computed by reference
  to the average bid and asked prices of such stock as of July
  1, 1991, the last available quotation date:  Approximately
  $95,099.

   The number of shares of the registrant's Class A, $.01
  par value Common Stock outstanding as of September 30,1999
  was 976,580.

   In October 1997, the Company changed transfer agents
  from Chase Mellon to Registrar and Transfer Company. When
  transferring the records to Registrar and Transfer Company,
  Chase Mellon showed additional shares of common stock of the
  Company as being issued and outstanding. Chase Mellon gave
  no explanation for this discrepancy, and for the past
  several years has consistently reported the number of shares
  outstanding as approximately 976,580.  The Company has
  disputed the report and demanded that Chase Mellon provide
  supporting documentation. Thus far, Chase Mellon has not
  provided any response or explanation other than the letter
  attached as Exhibit 4. The Company will continue to follow
  up. It is not known at this time whether Chase Mellon's
  records are in error, and for purposes of this report and
  until a satisfactory answer is received from Chase Mellon,
  the Company shall continue to use 976,580 as the number of
  outstanding shares.



                            PART I

  Item I. Description of Business

  (A) Business Development: During the last three years the
  Company has focused on hotel management and in the
  acquisition, development and management of hotels through
  joint ventures and partnerships.

  (B) Business of the Issuer:

                           HISTORY

   HARRELL INTERNATIONAL, INC. (the "Company") is a
  Delaware corporation which was originally incorporated in
  1959 in Massachusetts under the name of Formula 409, Inc.
  In 1967, the Company's name was changed to The Harrell
  Corporation and in 1968 to Harrell International, Inc.  The
  Company changed its state of incorporation from
  Massachusetts to Delaware in March, 1987.  The Company
  originally manufactured and sold a multi-purpose household
  spray cleaner under the registered trademark "Formula 409."
  In 1970, the Company sold the rights to "Formula 409" to
  Clorox Corporation.  During the period 1970 to 1983 the
  Company was primarily engaged in the business of acquiring
  and operating food and non-food brokers which represented
  the products of various unrelated manufacturers to either
  the U. S. Domestic Civilian Market or to the U. S. Military
  Resale System.  In 1983, the Company completed the
  divestiture of its consumer products brokerage businesses
  and entered a phase during which its revenues were derived
  primarily from the collection of receivables acquired in
  connection with such divestitures.

   During fiscal 1988, the Company continued to attempt to
  develop a business as an international marketing agent for
  foreign-produced goods in the United States and for U.S.
  products abroad.  However, because of  disappointing results
  and the high costs of continuing to operate the Company, the
  Board of Directors decided to explore the liquidation or
  reorganization of the Company.

   During the fall of 1988, Wilson Harrell, then President
  of the Company,  began the search for a possible merger
  candidate, and to negotiate the sale of notes receivable
  from the divestiture of its consumer product brokerage
  business.  The Company and Sarvis,  Incorporated entered
  into a Note Purchase Agreement dated as of August 15, 1989.
  The sale of the Sarvis Note was consummated on October 11,
  1989.

   Following the sale of the Sarvis Note, the Company
  continued searching for a possible merger candidate.  In
  early March, 1990, Wilson Harrell renewed discussions with
  Geoffrey G. Dart ("Dart"), of Clover, Inc.,  an Australian
  businessman with whom the Company had negotiated to the
  point of a verbal understanding in September, 1988.

   On June 12, 1990,  the Company and Clover, Inc.
  ("Clover") entered into a  Stock Purchase Agreement.
  Pursuant to the Stock Purchase Agreement, as amended in
  August 1990, in exchange for a purchase price of $500,000,
  Clover was issued certain shares of Class A Common Stock and
  warrants to purchase shares of a new Class B stock.  In
  addition, Dart was elected president and CEO and added as a
  new director.  Clover paid $65,000 at closing with the
  remainder due within approximately six months, in two
  installments of $185,000 and $250,000 respectively. Clover
  failed to make either additional payment and on December 23,
  1991,  the Company and Clover entered into a Restructuring
  Agreement.

   In light of Clover's failure to make the additional
  installments  and the Company's need for capital in order to
  pursue the business plan discussed above, the Company
  determined that it should seek a new capital partner.  On
  December 23, 1991, the Company's Board of Directors
  authorized Wilson Harrell and Geoffrey Dart to actively seek
  such a partner. In October 1991, the Company borrowed
  $50,000 from Xenex International, Inc., a Florida
  corporation.  In 1992 the Company and Xenex entered into
  agreements whereby Xenex agreed to treat the $50,000 loan as
  an equity investment in the Company and invest an additional
  $100,000 into the Company in exchange for 291,228 shares of
  the Company's  common stock.  In 1993 Xenex loaned the
  Company $150,000, and in 1994 the parties entered into an
  agreement (the "Debt Agreement") to convert the loan into
  stock of the Company. On December 15, 1994, Agreement was
  reached between Businesship International, Inc.("BI") and
  its wholly owned subsidiary Xenex, Inc. to merge Xenex, Inc.
  into Businesship International, Inc.  The effect was to
  transfer 291,228 shares of the Company's Class A Common
  Stock from Xenex, Inc. to BI.

   On August 18,  1992, the Company entered into an
  Agreement with Hotel Management Group, Inc., a Texas
  corporation ("HMG"), wherein the Company acquired one
  hundred percent (100%) of HMG's issued and outstanding
  shares in exchange for 200,000 shares of the Company's Class
  A Common Stock.

   Effective as of September 1, 1996 the Company and BI
  entered into a Preferred Stock Purchase and Release of Debt
  Agreement (the "Modification Agreement") that modified and
  replaced the Debt Agreement.  Under the terms of the
  Modification Agreement, the parties agreed that the Company
  would issue 243,331 shares of $1.00, par value preferred
  stock (the "Preferred Stock") in exchange for a release of
  the Company's obligation to BI on the Xenex Loan.  Under the
  Modification Agreement the Preferred Stock is
  nonconvertible, nonvoting, noncumulative dividend, with
  dividends of 10% of par value.  The Company has the right,
  but not the obligation, to redeem the Preferred Shares at
  any time at par value. The Preferred Shares are not
  registered under federal securities laws or the laws of any
  state.

   On December 31, 1996, the Articles of Incorporation of
  the Company were amended to authorize 1,000,000 shares of
  Preferred Stock and to eliminate the Class B Common Stock.
  On  December 31, 1996, the closing of the Modification
  Agreement occurred and the 243,331 shares of Preferred Stock
  were issued to BI.

  SUBSEQUENT EVENTS

   On November 23, 1999, the Company entered into a Stock
  Acquisition and Option Agreement (the "Stock Agreement")
  with Merchant Capital Holdings, Ltd. ("MCH"), a British
  Virgin Islands Company,  whereby MCH agreed to buy 1,000,000
  shares of the Company's Class A Common Stock for US$1.00 per
  share, together with certain options to purchase additional
  shares of Class A Common Stock.  As part of the Stock
  Agreement, two advisors of MCH, Geoffrey Dart ("Dart") and
  Gerard Thompson ("Thompson")  were  appointed to the Board
  of Directors of the Company, with Dart appointed as Chairman
  of the Board. In connection with the transactions
  contemplated under the Stock Agreement, the Company, MCH,
  Norman L. Marks (and his family affiliates) and Paul L.
  Barham (and his family affiliates) entered into a
  Shareholders Agreement, providing for certain transfer
  restrictions and voting agreements, on the Class A Common
  Stock held by certain of the parties.  Also, MCH required,
  as part of the Stock Agreement, that two Employment
  Agreements be entered into between the Company and Norman
  Marks and Paul Barham.

                          OPERATIONS


  APARTMENT MANAGEMENT

   In late 1992,  Hotel Management Group assumed the
  management of the Athena Gardens Apartments, Athens, Texas,
  Riviera Apartments, Dallas, Texas,  and Villa Martinique
  Apartments, Irving, Texas. The Riviera Apartments were sold
  in 1996 and the Villa Martinique Apartments sold in
  September 1999.  Currently, HMG manages only the Athena
  Gardens Apartments, and that project is currently under
  contract to be sold by its owners.  In the fiscal year
  ending September 30, 1999, revenues from apartment
  management were approximately $45,987 constituting
  approximately 8% of the Company's total revenues.

  HOTEL MANAGEMENT

   Hotel Management Group - California, Inc.("HMG
     California")

        Effective January 1, 1994, Hotel Management Group,
          Inc. formed a wholly owned subsidiary, Hotel
          Management Group - California, Inc., to hold the
          management contract for the operations of the
          Biltmore Hotel and Suites in Santa Clara,
          California.  The Biltmore Hotel is a 262 room full
          service hotel with 8,000 square feet of meeting
          space. HMG California's management contract is a
          two-year renewable contract that began in January
          1992 and has a current expiration of December 31,
          2001. HMG California receives a management fee
          equal to ten percent (10%) of the hotel's net
          income pre debt, after a 3% reserve for furniture,
          fixtures and equipment.

        HMG California entered into a management contract
          of the Rancho Santa Barbara Marriott in May
          1995.The Marriott is a 149 room full service hotel
          with 8,000 square feet of meeting space and health
          and spa facilities.  HMG California's management
          contract is a two-year renewable contract that
          began in June 1995 and has a current expiration of
          December 31, 2001.  HMG California receives a
          management fee equal to ten percent (10%) of the
          hotel's net income pre-debt, after a 3% reserve
          for furniture, fixtures and equipment.

        Management fee revenues of HMG California amounted
          to approximately $457,128 constituting
          approximately 77% of the Company's total revenues.


   Ennis, Texas hotel

        In August 1997, HMG entered into a management
          agreement to manage the Holiday Inn Express in
          Ennis, Texas for a fee of $2,500 per month. The
          contract was canceled by mutual agreement on
          February 1, 1999. Management fee revenues from the
          hotel in Ennis amounted to approximately $15,000,
          constituting approximately 2.5% of the Company's
          total revenues.


   Hotel Management Group - Virginia, Inc. ("HMG
  Virginia")

        On February 17, 1998 Hotel Management Group -
          Virginia, Inc. assumed the management of the
          Chamberlin Hotel in Hampton Virginia, an historic
          225 room hotel overlooking the Chesapeake Bay.
          Plans called for a $2M renovation of the property.
          On November 6, 1998 the owner took over the
          management of the hotel and incorporated it into a
          portfolio of hotels that it had acquired, which it
          then was intending to operate without the use of a
          third party management company.  Management fee
          revenues of HMG Virginia amounted to approximately
          $5,000 constituting approximately 1% of the
          Company's total revenues.


   H.M.Group - Alabama, Inc. ("HMG Alabama")

        On December 1, 1998, H.M.Group - Alabama, Inc.
          assumed the management of the Governors House
          Hotel in Montgomery Alabama, a 200 room full
          service hotel.  Management fee revenues of HMG
          Alabama amounted to approximately $51,300
          constituting approximately 9% of the Company's
          total revenues.

   Hotel Management Group has managed nationally
     recognized franchises, including Sheraton, Holiday Inn,
     and Ramada, and is approved as one of a few independent
     management companies accepted by Marriott to manage its
     full service franchised hotels.

  Number of Employees

   At September 30, 1999, the Company and its subsidiaries
  had 296 full time employees and 87 part time employees.  Of
  these employees, 5 are paid from the revenues of the
  Company. The remaining 378 are paid from the revenues of the
  hotels or apartments.


  Item 2. Description of  Property

  (A)   Principal Offices

   The Company maintains its administrative and executive
  offices in leased commercial office space located at 211
  East Louisiana Street, McKinney, Texas.  In the opinion of
  management, the premises are suitable and adequate for the
  present requirements of the Company and ample comparable
  space is available on comparable terms in the market.

  (B)   Investment Policies

   The Company may from time to time invest in hotel
  properties.  Typically such investment would be a partial
  interest in the hotel property in concert with a hotel
  developer or other investors.  While it currently has no
  such investments, the Company is seeking such investment
  with both existing hotel properties and hotels to be
  constructed.  Expected ownership in any such hotel would be
  a minority position in a real estate limited partnership.
  Such hotel ownership is anticipated to be coupled with a
  management contract for the hotel(s).  These hotel
  investments, if made, are expected to be for long term
  capital appreciation rather than primarily for current
  income.

  Item 3.  Legal Proceedings

   There were no material legal proceedings, either on-going,
  instituted by or against, or otherwise involving the
  Registrant during the period ended September 30, 1999.

  Item 4.  Submission of Matters to a Vote of Security Holders

   There were no matters submitted to a vote of security
  holders during the fourth quarter of the fiscal year ended
  September 30, 1999.
                               PART II

  Item 5.  Market for Common Equity and Related Security
  Holder Matters

   (a)  The following table shows the range of closing bid
  prices for the Company's Common Stock in the over-the-counter
  market for the fiscal quarters indicated, as
  reported by the National Quotation Bureau.  The quotations
  represent limited or sporadic trading and, therefore, do not
  constitute an "established public trading market".  The
  quotations represent prices in the over-the-counter market
  between dealers in securities, without retail markup,
  markdown or commission and may not represent actual
  transactions.

<TABLE>
<CAPTION>
                             Fiscal 1998         Fiscal  1999
                              Bid Prices          Bid Prices

  Fiscal Period                  High      Low    High    Low

<S>                              <C>              <C>
  First Quarter                  NOT QUOTED       NOT QUOTED
  Second Quarter                 NOT QUOTED       NOT QUOTED
  Third Quarter                  NOT QUOTED       NOT QUOTED
  Fourth Quarter                 NOT QUOTED       NOT QUOTED

</TABLE>

   (b)  As of September 30, 1999, there were 694 record
  holders of the Company's $.01 par value Class A Common
  Stock.

    (c)      There have been no cash dividends paid on the
  Company's Common Stocks in fiscal years 1996, 1997, 1998 or
  any subsequent year.   On September 30, 1999, the Company
  paid the 10% dividend on the 243,331 shares of Preferred
  Stock.  The Company has no present plans to pay further
  dividends on the Company's Common Stock.


  Item 6.  Management's Discussion and Analysis or Plan of
  Operation

  RESULTS OF OPERATIONS

  A.    Revenues

   Revenues for the periods ended September 30, 1998 and
  1999 were primarily produced from the Company's interest in
  Hotel Management Group.  The decrease in revenues in 1999
  over 1998 was a result of no longer having the properties in
  Oklahoma, Tennessee and Virginia, but there was improved
  performance in the hotels with incentive based management
  fees that the Company operates in California.

   The Company anticipates income from Hotel Management
  Group to increase as the subsidiary secures more management
  contracts and consulting assignments. The Company expects to
  be able to meet its normal cash needs from operations.

  B.    Employee Compensation

   Employee compensation expense includes salaries for
     Messrs Barham and Marks as well as accounting staff of
     HMG.

   In January 1998, the Company purchased $500,000 and
     $300,000 increasing life insurance policies on the
     lives of each Paul L. Barham and Norman L. Marks,
     respectively.  The purposes of the policies are both
     (i) to protect the Company's financial interest in the
     event of the premature death of either of these key
     employees, and (ii) to provide an employee benefit to
     these key employees.  The Company is the owner and
     beneficiary of the policies, although the cash value
     accumulation will accrue to the benefit of the key
     employees and is payable to the employees upon their
     retirement or termination of employment, or their heirs
     in the event of their death during employment.

  C.    General and Administrative Expenses

   General and Administrative Expenses were reduced in
     response to slightly lower revenues.


  LIQUIDITY AND CAPITAL RESOURCES

  Funds generated from company operations are the major source
  of liquidity.  The Company generated $69,376 in cash from
  operating activities in the 1999 fiscal year.  At September
  30, 1999, the Company had $263,693 in cash and $274,443 in
  working capital.  The Company expects to make one or more
  investments in hotel properties in the next fiscal year.
  The source of cash for such investments is expected from
  sale of the Company's Class A Stock to MCH pursuant to the
  Stock Agreement.  Management of the Company believes that it
  will have sufficient working capital to fund its operating
  and investing needs during fiscal 2000.

  YEAR 2000 COMPUTER ISSUES

  The Company currently believes that it does not have
  significant exposure to Year 2000 computer problems
  including Company, vendor, and customer issues.  The
  Company's current computer systems and any anticipated
  upgrades are Year 2000 compliant.

  Item 7.  Financial Statements

   The following financial statements are filed as a part
  of this report:

  See the Index to Financial Statements on page F-1
  immediately following page 23 of this report. All such
  financial statements, schedules and supplementary data are
  incorporated herein by this reference.


  Item 8.  Changes in and Disagreements with Accountants on
  Accounting and Financial Disclosure


   There were no disagreements regarding matters of
  accounting principles or practices, financial statement
  disclosure, or auditing scope or procedure.  Thus, pursuant
  to Item 304 of Regulation 8-KSB, and Rule 12b-2 under the
  Exchange Act, no further disclosure regarding the Company's
    change in accountants is necessary or provided herein.

                           PART III

  Item 9.  Directors,  Executive Officers, Promoters and
  Control Persons:   Compliance with Section 16 (a) of the
  Exchange Act

   The following table provides certain information
  concerning each of the directors of Harrell International,
  Inc. (the "Company") as of September 30, 1999.

<TABLE>
<CAPTION>


  Name          Principal Occupation     Consecutive         Age
                for the past 5 years     Service Since

<S>             <C>                        <C>            <C>

Paul L. Barham  CFO, Hotel Management      1992           46
                Group, since December
                1989

                Current Position:
                Chief Financial
                Officer, Harrell
                International

Norman L. Marks President, Hotel           1995           58
                Management Group,
                since December 1989

                Current Position:
                Chief Operating
                Officer, Harrell
                International

</TABLE>


  The following table provides certain information concerning
  each of the executive officers of the Company as of
  September 30, 1999.


<TABLE>
<CAPTION>


  Name              Age  All Positions and Terms of Office
                         with the Company and Five Year
                         Employment History

<S>                 <C>  <C>

  Norman L. Marks   58   Executive Vice President and
                         Chief Operating Officer from
                         August 19, 1992, Member of Board
                         of Directors from September 20,
                         1995. President of Hotel
                         Management Group, Inc. since
                         December 1989

  Paul L. Barham    46   Vice President and Chief
                         Financial Officer of the  Company
                         from August 19, 1992, Member of
                         Board of Directors of Company
                         from August 19, 1992; Secretary
                         to Board of Directors of Company
                         from August 19, 1992; CFO, Hotel
                         Management Group since December
                         1989.

</TABLE>

  There has been no involvement by the executive officers or
  directors in any legal proceeding during the last five (5)
  years that is material to an evaluation of the ability or
  integrity of such officer or director.

  The Company has not made inquiry of its Directors, Officers
  and 10 % or more security holders, and otherwise does not
  have information to determine the level of compliance with
  the reporting obligation under Section 16 (a) of the
  Exchange Act.


  Item 10.  Executive Compensation

   The following table shows the aggregate cash
  compensation for services in all capacities paid or accrued
  by the Company and its subsidiaries during the fiscal year
  ended September 30, 1999, and in each of the two prior
  years, to (i) each executive officer whose aggregate cash
  compensation exceeded $100,000 during such year and (ii) all
  executive officers of the Company as a group.

<TABLE>
<CAPTION>


  Name of Individual or  Capacity in    Year   Compensation(1)
  Number of Persons in   which served
  Group

<S>                      <C>            <C>    <C>

  Norman L. Marks        COO            1997   $103,700
  Norman L. Marks        COO            1998   $105,787
  Norman L. Marks        COO            1999   $104,375
  Paul L. Barham         CFO            1997   $103,700
  Paul L. Barham         CFO            1998   $105,787
  Paul L. Barham         CFO            1999   $104,375
  - Position Vacant -    CEO            1997   $0
  - Position Vacant -    CEO            1998   $0
  - Position Vacant -    CEO            1999   $0



<FN>
  (1)   This does not include medical expense reimbursement,
          club dues, or the value of automobiles (and their
          maintenance, repair and insurance) furnished to all of
          the executive officers of the Company, which in the
          aggregate for all officers amounted to $15,600 during
          fiscal year 1999.

</TABLE>

   At the present time the Company has, and at all times
  during the past three fiscal years, the Company had no
  pension, retirement, annuity, deferred compensation,
  incentive or stock purchase, thrift or profit-sharing plan,
  except the accumulated cash value of the life insurance
  policies detailed under item 6B above.

   Directors receive no fees for serving in such capacity.



  Item 11.  Security Ownership of Certain Beneficial Owners
  and Management

   The following table sets forth as of September 30,
  1999, (i) the name of each current director of the Company
  and each person or entity known to the Company to be the
  beneficial owner of more than 5% of the Company's Class A
  Common Stock, (ii) the number of shares of the Company's
  Class A Common Stock beneficially owned by each such current
  director and 5% beneficial owner and all officers and
  directors of the Company as a group, and (iii) the percent
  of outstanding Class A Common Stock so owned by each such
  director, 5% beneficial owner and management group:

<TABLE>
<CAPTION>

 Name and Address of    Number of Shares of Class     Approximate
 Beneficial Owner            A Common Stock           Percent of
                        Beneficially owned as of      Class
                        September 30, 1999 (1)


  DIRECTORS:

<S>                     <C>                           <C>

  Paul L. Barham (2)     0                             0
  211 East Louisiana
  Street
  McKinney, Texas 75069

  Norman L. Marks (3)    0                             0
  211 East Louisiana
  Street
  McKinney, Texas 75069

  5% BENEFICIAL OWNERS:

  Businesship             291,288                       29.82%
  International, Inc.
  One Alhambra Plaza
  Suite 1400
  Coral Gables, FL 33134

  Barham Family           100,000                       10.24%
  Interests, Inc.         63,639 options (4)
  211 East Louisiana
  Street
  McKinney, Texas 75069

  Marks & Associates,     100,000                       10.24%
  Inc.                    63,639 options (4)
  211 East Louisiana
  Street
  McKinney, Texas 75069

  The Estate of Wilson    164,570 (5)                   16.85%
  Harrell
  7380 Pine Valley Road
  Cumming, GA 30131

  Shillingtons, Inc       50,000                         5.12%
  2661 Midway Road,
  Suite 224
  Carrollton, Texas
  75006

<FN>

       (1)     Except as noted below, the individual listed has
  sole voting and investment power.

       (2)     Barham and his other family members own 100,000
  shares through Barham Family Interests, Inc.

       (3)     Marks and his other family members own 100,000
  shares through Marks and Associates, Inc.

       (4)     On September 27, 1996, Businesship International
  granted Barham Family Interests, Inc., and Marks and
  Associates, Inc., each an option to acquire 63,639 shares
  from BI.  The options shall automatically expire on
  September 30, 2001, if not exercised.

       (5)     The 5,850 shares of Class A Common Stock owned by
  Charlene Echols Harrell, Wilson L. Harrell's widow, are
  included in the estate's beneficial ownership in the above
  table.


</TABLE>

  Item 12.  Certain Relationships and Related Transactions

  Transactions involving related parties in the last two
  years are outlined in Item 1 of this report.


                             PART IV

  Item 13.  Exhibits and Reports on Form 8-K

       (a)     Exhibits --

            (1)     The following exhibits, as required by Item
                      601 of Regulation SB, are attached hereto or
                      incorporated herein by this reference:

            (2)     Certificate of Incorporation as last
                      amended, effective as of January 21, 1989, a
                      copy of which was filed with the Company's
                      Form 10-K report for the fiscal year ended
                      September 30, 1990.

            (3)     Bylaws

            (4)  Material Contracts:


                 (A)     Preferred Stock Purchase and Release of
                           Debt Agreement between the Company and
                           Businesship International, Inc. dated
                           September 1, 1996, a copy of which was
                           attached to the Company's Form 10-KSB
                           for the fiscal year ended September 30,
                           1996.

                 (B)     Stock Acquisition and Option Agreement
                           between the Company and Merchant
                           Capital Holdings, Ltd., dated November
                           23, 1999.

                 (C)     Employment Agreements (2) between the
                           Company and Messrs. Marks and Barham
                           dated November 23, 1999.

                 (D)     Shareholders' Agreement dated November
                           23, 1999 by and among the Company,
                           Merchant Capital Holdings, Ltd.,
                           Messrs. Marks and Barham, Barham Family
                           Interests, Inc., and Marks &
                           Associates, Inc.

            (5)     Additional Exhibits:

               Letter from Chase Mellon Shareholder
                 Services dated September 22, 1999, together
                 with an attached memorandum dated June 8,
                 1992 to W. Powers, Vice President of Mellon
                 Securities Trust Co.

    SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) 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.

                                HARRELL INTERNATIONAL, INC.



                                By:

                                     Paul L. Barham
                                     Vice President,
                                     Chief Financial Officer
                                     And Director

  DATE: ________________________

       Pursuant to the requirements of the Securities
  Exchange Act of 1934, this report has been signed below by
  the following persons comprising the majority of the
  current Directors on behalf of the registrant and in the
  capacities and on the dates indicated.





  _________________________________________  ____________________
  Paul L. Barham, Vice President,            Date
  Chief Financial Officer and Director


  _________________________________________  ____________________
  Norman L. Marks, Vice President            Date
  Chief Operating Officer and Director



HARRELL INTERNATIONAL, INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>


                                                                 Page

<S>                                                              <C>

  Independent Auditors' Report                                   F-2


  Consolidated Balance Sheets at September 30, 1999 and 1998     F-3


  Consolidated Statements of Income For the Years Ended          F-4
     September 30, 1999 and 1998


  Consolidated Statements of Changes in Shareholders' Equity     F-5
     For the Years Ended September 30, 1999 and 1998

  Consolidated Statements of Cash Flows For the Years Ended      F-6
     September 30, 1999 and 1998

  Notes to Consolidated Financial Statements                     F-7

</TABLE>


  INDEPENDENT AUDITORS' REPORT



  Board of Directors and Shareholders
  Harrell International, Inc.


  We have audited the accompanying consolidated balance sheets of Harrell
  International, Inc. and subsidiaries as of September 30, 1999 and 1998,
  and the related consolidated statements of income, changes in
  shareholders' equity and cash flows for the years then ended. These
  financial statements are the responsibility of the Company's management.
  Our responsibility is to express an opinion on these consolidated
  financial statements based on our audits.

  We conducted our audits in accordance with generally accepted auditing
  standards.  Those standards require that we plan and perform the audits
  to obtain reasonable assurance about whether the financial statements
  are free of material misstatement.  An audit includes examining, on a
  test basis, evidence supporting the amounts and disclosures in the
  financial statements.  An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as
  evaluating the overall financial statement presentation.  We believe
  that our audits provide a reasonable basis for our opinion.

  In our opinion, the consolidated financial statements referred to above
  present fairly, in all material respects, the consolidated financial
  position of Harrell International, Inc. and subsidiaries as of September
  30, 1999 and 1998, and the results of their operations and their cash
  flows for the years then ended in conformity with generally accepted
  accounting principles.




                     Jackson & Rhodes P.C.
                         Dallas, Texas
                     November 23, 1999


HARRELL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 1999 and 1998

<TABLE>
<CAPTION>


Assets
                                                      1999            1998

<S>                                                <C>             <C>
Current assets:
   Cash                                              $263,693        $194,792
   Accounts receivable, net allowance for doubtful
     accounts of $33,248 in 1998                       66,994         116,543
   Note receivable                                          0           9,869
   Other assets                                        14,237             150
       Total current assets                           344,924         321,354

Property and equipment:
   Furniture and fixtures                              42,483          42,008
     Less accumulated depreciation                    (32,228)        (25,964)
       Total property and equipment                    10,255          16,044

Other assets:
   Investment in limited partnerships (Note 5)          1,850           1,850
                                                     $357,029        $339,248

Liabilities and Shareholders' Equity

Current liabilities:
   Accounts payable and accrued liabilities           $39,518         $30,400
   Dividends payable                                   24,331               0
   Accrued salaries                                     6,632          16,496
       Total current liabilities                       70,481          46,896

Long-term debt:
   Amounts payable to related parties                       0           8,000
       Total liabilities                               70,481          54,896

Commitments and contingencies (Note 7)                      0               0

Shareholders' equity:
   Preferred stock, $1 par, 1,000,000 shares author
     243,331 shares issued and outstanding (Note 3)   243,331         243,331
   Common stock:
     Class A, $.01 par; 9,000,000 shares authorized
       976,580 shares issued and outstanding            9,766           9,766
     Class B, $.01 par; 1,000,000 shares authorized
       no shares issued or outstanding                      0               0
   Additional paid-in capital                       2,077,287       2,077,287
   Accumulated deficit                             (2,043,836)     (2,046,032)
       Total shareholders' equity                     286,548         284,352
                                                     $357,029        $339,248

</TABLE>


See accompanying notes to consolidated financial statements.

F-3






HARRELL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended September 30, 1999 and 1998


<TABLE>
<CAPTION>

                                                     1999            1998

<S>                                                 <C>            <C>

Revenues:
   Management fees                                  $568,117        $623,719
   Consulting fees                                     7,300           3,500
   Other                                              13,489           1,299
         Total revenues                              588,906         628,518

Expenses:
   Employee compensation                             406,466         393,318
   General and administrative                        155,914         179,426
         Total expenses                              562,380         572,744

         Operating income                             26,526          55,774

Gain on sale of joint ventures                         0.000          13,889

Net income (see Note 6)                               26,526          69,663

Preferred dividends accrued                           24,331          24,331

Net income available for common shareholders          $2,195         $45,332

Basic earnings per common share                        $0.00           $0.05

Weighted average shares outstanding                  976,580         976,580

</TABLE>


See accompanying notes to consolidated financial statements.

F-4

HARRELL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years Ended September 30, 1999 and 1998

<TABLE>
<CAPTION>

                       Preferred Stock          Common Stock - Class A
                         Shares       Amount      Shares   Amount

<S>                      <C>          <C>         <C>      <C>
Balance, September 30,    243,331     $243,331    976,580  $9,766

Net income                      0            0          0       0

Preferred dividends
 payable ($.10 per share)       0            0          0       0

Balance, September 30,    243,331      243,331    976,580   9,766

Net income                      0            0          0       0

Preferred dividends
 payable($.10 per share)        0            0          0       0

Balance, September 30,    243,331     $243,331    976,580  $9,766

<CAPTION>
Additional                 Total
Paid-In   Accumulated  Shareholders'
Capital     Deficit      Equity
<C>         <C>           <C>
$2,077,287  ($2,091,364)  $239,020

         0       69,663     69,663


         0      (24,331)   (24,331)

 2,077,287   (2,046,032)   284,352

         0       26,526     26,526


         0      (24,331)   (24,331)

$2,077,287  ($2,043,837)  $286,547



See accompanying notes to consolidated financial statements.
F-5


HARRELL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended September 30, 1999 and 1998


</TABLE>
<TABLE>
<CAPTION>

                                                      1999            1998

<S>                                                 <C>             <C>

Cash flows from operating activities:
  Net income available for common shareholders        $2,195         $45,332
   Adjustments to reconcile net income to
      net cash provided by operating activities:
    Depreciation                                       6,240           3,360
    Gain on sale of joint venture                          0         (13,889)
    Changes in assets and liabilities:
     Accounts receivable                              49,549         (27,079)
     Other assets                                     (4,218)          3,789
     Accounts payable and accrued liabilities         11,921          (1,577)
     Accounts payable to related parties              (8,000)              0
     Preferred dividends accrued                      24,331          24,331
     Accrued salaries                                (12,642)          8,281
       Net cash provided by operating activities      69,376          42,548

Cash flows from investing activities:
  Purchase of furniture and equipment                   (475)        (11,241)
  Proceeds from sale of joint venture/limited part         0         113,239
       Net cash provided by (used in) investing ac      (475)        101,998

Cash flows from financing activities:
  Dividends paid                                           0         (48,662)

Net increase (decrease) in cash                       68,901          95,884

Cash at beginning of year                            194,792          98,908

Cash at end of year                                 $263,693        $194,792


</TABLE>

See accompanying notes to consolidated financial statements.
F-6




  1.    Description of Business

  Organization

  Harrell International, Inc., a Delaware corporation (the
      "Company"), began operations in 1959.  The Company entered into the
      acquisition, development and management of real estate properties
      including joint ventures and partnerships (in which its interests
      would be that of a general partner having substantial involvement
      in management) beginning December 1990.  The Company plans to focus
      its real estate activities upon purchase, development and
      management of hotels, and other income-producing properties located
      in the southwestern and southeastern United States.  The Company
      acquired Hotel Management Group, Inc. ("HMG") in August 1992.  The
      Company has created five other wholly-owned subsidiaries   see Note
      4.

  2.      Summary of Significant Accounting Policies

  Principles of Consolidation

  The consolidated financial statements include the accounts of the
      Company and its subsidiaries.  All significant intercompany
      balances and transactions are eliminated in consolidation.

  Use of Estimates and Assumptions

  Preparation of the Company's financial statements in conformity
      with generally accepted accounting principles requires management
      to make estimates and assumptions that affect certain reported
      amounts and disclosures.  Accordingly, actual results could differ
      from those estimates.

  Cash Equivalents

  For statement of cash flow purposes, the Company considers short-term
investments with original maturities of three months or less
      to be cash equivalents.

  Property and Equipment

  Property and equipment is recorded at cost.  Depreciation is
      computed on the straight-line method over the estimated lives of
      the assets, principally over three years.



  F - 7

  2.    Summary of Significant Accounting Policies (Continued)

  Investments in Joint Ventures

  The Company uses the equity method of accounting for its
      investments in joint ventures.  Accordingly, the Company recorded
      its investment in joint ventures at cost and records subsequent
      contributions, returns of capital and equity in earnings as an
      adjustment to the initial investment (Note 6).

  Income Taxes

  The Company accounts for income taxes pursuant to Statement of
      Financial Accounting Standards No. 109, "Accounting for Income
      Taxes" (SFAS 109) which utilizes the asset and liability method of
      computing deferred income taxes.  The objective of the asset and
      liability method is to establish deferred tax assets and
      liabilities for the temporary differences between the financial
      reporting basis and the tax basis of the Company's assets and
      liabilities at enacted tax rates expected to be in effect when such
      amounts are realized or settled.

  Earnings Per Common Share

      In March 1997, the Financial Accounting Standards Board issued
      Statement of Financial Accounting Standards No. 128, Earnings Per
      Share ("SFAS 128"). SFAS 128  provides a different method of
      calculating earnings per share than was formerly used in APB
      Opinion 15.  SFAS 128 provides for the calculation of basic and
      diluted earnings per share.  Basic earnings per share includes no
      dilution and is computed by  dividing income available to common
      stockholders by the weighted average number of common shares
      outstanding for the period.  Dilutive earnings per share reflects
      the potential dilution of securities that could share in the
      earnings of the Company.  The Company was required to adopt this
      standard in the fourth quarter of calendar 1997.  Because the
      Company has no potential dilutive securities outstanding, the
      accompanying presentation is only of basic earnings per share.

  3.  Preferred Stock Transaction

  By agreement with Businesship International ("Businesship") dated
      September 27, 1996, the outstanding balance of a certain note of
      $243,331, including accrued interest of $26,398, was converted into
      preferred stock to be issued by the Company.  The preferred shares
      were from a new class of stock authorized by the Company and are
      nonvoting, non-convertible and will pay a 10% dividend ($24,331
      annually), beginning with the year ended

      F - 8

  3.  Preferred Stock Transaction (Continued)

      September 30, 1996.  The Company shall have the right, but not the
      obligation, to redeem the shares at any time at par value.  By
      agreement, the Company paid a full year's dividend on the preferred
      shares for 1996.

  4.  Acquisition of Hotel Management Group

  In August 1992, the Company purchased 100% of the issued and
      outstanding common stock of HMG.  HMG is engaged in the business of
      managing the general operations of hotels and providing them with
      accounting services.

    Hotel Management Group   California, Inc.

  Effective January 1, 1994, HMG formed a wholly-owned subsidiary,
      Hotel Management Group - California, Inc. ("HMG - California"), to
      hold the management contract for the operations of the Biltmore
      Hotel and Suites in Santa Clara, California.  HMG   California now
      also manages the Rancho Santa Barbara Marriott.

      Hotel Management Group   Tennessee, Inc.

      Effective September 23, 1996, HMG formed a wholly-owned subsidiary,
      Hotel Management Group   Tennessee, Inc. ("HMG   Tennessee"), to
      hold the management contract for the Sheraton Four Points Hotel in
      Memphis, Tennessee.  The Company also had a limited partnership
      interest in the hotel.  (See Note 5.)

      Hotel Management Group   Oklahoma, Inc.

      Effective May 20, 1997, HMG formed a wholly-owned subsidiary, Hotel
      Management Group   Oklahoma, Inc. ("HMG   Oklahoma"), to hold the
      management contract for the  Ramada Inn in Tulsa, Oklahoma.  The
      Company also had a limited partnership interest in the hotel.  (See
      Note 5.)

      Hotel Management Group   Virginia, Inc.

      On February 17, 1998, HMG formed a wholly-owned subsidiary, Hotel
      Management Group   Virginia, Inc. to hold the management contract
      for the Chamberlin Hotel in Hampton Virginia.



      F - 9

      4.    Acquisition of Hotel Management Group (Continued)

      Hotel Management Group   Alabama, Inc.

      On December 1, 1998, Hotel Management Group   Alabama, Inc., a
      wholly owned subsidiary of HMG, assumed the management of the
      Governors House Hotel in Montgomery, Alabama.

      5.   Hotel Investments

    Tennessee Hotel Project

      On October 17, 1996 the Company purchased, for $100,000, a minority
      limited partnership interest in the Sheraton Four Points Hotel,
      located near the Memphis Airport in Memphis, Tennessee and a
      subsidiary of the Company was contracted to manage the hotel.

      The Company completed negotiations for the sale of its limited
      partnership interest in the hotel, received the return of its
      investment on April 3, 1998, and resigned as manager.

    Tulsa Hotel Project

      On June 4, 1997, the Company acquired a limited partnership
      interest in the Ramada Inn, located on I-44 in Tulsa, Oklahoma.  At
      the same closing a subsidiary of the Company contracted with the
      new ownership to manage the hotel.

      On June 3, 1998, the Company sold its interest in the hotel and
      resigned as manager of the hotel.

      6. Income Taxes

  As of September 30, 1999, the Company had net operating loss
      carryforwards of approximately $2,581,000 for book and tax
      purposes.  Unused operating loss carryforwards may provide future
      tax benefits, although there can be no assurance that these net
      operating losses can be recognized in the future.  Also, if
      substantial changes in the Company's ownership should occur, there
      may be an annual limitation on the amount of the carryforwards
      which can be utilized.  Accordingly, deferred tax assets have been
      offset in the accompanying financial statements by a valuation
      allowance.


  F - 10

  6.  Income Taxes (Continued)

      The loss carryforwards expire as follows:


<TABLE>
<CAPTION>

           Year of Expiration                     Operating Loss
                                             Carryforward
                                             Expirations
           <S>                          <C>

           2000                              $  210,000
           2001                                 485,000
           2002                                   74,000
           2003                                   26,000
           2004                                1,116,000
           2005                                  278,000
           2006                                   35,000
           2007                                  134,000
           2008                                  105,000
           2009                                  118,000

           Total                              $2,581,000

</TABLE>




      7.  Commitments and Contingencies

  Leases

  The Company leases its office facilities from an unrelated party.
      The lease expires on December 31, 1999 and the lease commitment for
      the remaining three month period is $7,260.  The Company also
      leases an off-site storage facility on a month-to-month basis.
      Rental expense for the years ended September 30, 1999 and 1998
      amounted to $29,290 and $28,002, respectively.

  Concentration of Credit Risk

  The Company invests its cash and certificates of deposit primarily
      in deposits with major banks.  Certain deposits, at times, are in
      excess of federally insured limits.  The Company has not incurred
      losses related to its cash.

      8.  Management Fee Revenues

  The Company received approximately 81% and 64% of gross management
      revenues from the Biltmore Hotel in California for the years ended
      September 30, 1999 and 1998, respectively.


      F - 11

      9. Accounting Developments

  SFAS 130

      Statement of Financial Accounting Standards (SFAS) 130, "Reporting
      Comprehensive Income", establishes standards for reporting and
      display of comprehensive income, its components and accumulated
      balances.  Comprehensive income is defined to include all changes
      in equity except those resulting from investments by owners and
      distributions to owners.  Among other disclosures, SFAS 130
      requires that all items that are required to be recognized under
      current accounting standards as components of comprehensive income
      be reported in a financial statement that is displayed with the
      same prominence as other financial statements. Results of
      operations and financial position are unaffected by implementation
      of this new standard.

      SFAS 131

      SFAS  131,  "Disclosure  about Segments of a Business  Enterprise",
      establishes  standards for the way that public enterprises report
      information about operating  segments in annual financial
      statements and requires reporting of selected information about
      operating segments in interim financial statements issued to the
      public.  It also establishes standards for disclosures regarding
      products and services, geographic areas and major  customers.  SFAS
      131 defines operating segments as components of an enterprise about
      which separate financial information is available that is evaluated
      regularly by the chief operating decision maker in deciding how to
      allocate resources and in assessing performance.  This accounting
      pronouncement will not have an effect on the Company's financial
      statements, since the

      SFAS 131

      Company only operates in one segment of business, the management of
      real estate properties.

      SFAS 132

      Statement of Financial Accounting Standards (SFAS) 132, "Employers'
      Disclosure about Pensions and Other Postretirement Benefits,"
      revises standards for disclosures regarding pensions and other
      postretirement benefits.  It also requires additional information
      on changes in the benefit obligations and fair values of plan
      assets that will facilitate financial analysis.  This statement
      does not change the measurement or recognition of the pension and
      other postretirement plans.  The financial statements are
      unaffected by implementation of this new standard.

      F - 12

     9.   Accounting Developments

      SFAS 133

      Statement of Financial Accounting Standards (SFAS) 133, "Accounting
      for Derivative Instruments and Hedging Activities," establishes
      accounting and reporting standards for derivative instruments,
      including certain derivative instruments embedded in other
      contracts, (collectively referred to as derivatives) and for
      hedging activities.  It requires that an entity recognize all
      derivatives as either assets or liabilities in the statement of
      financial position and measure those instruments at fair value.  If
      certain conditions are met, a derivative may be specifically
      designated as (a) a hedge of the exposure to changes in the fair
      value of a recognized asset or liability or an unrecognized firm
      commitment, (b) a hedge of the exposure to variable cash flows of a
      forecasted transaction, or (c) a hedge of the foreign currency
      exposure of a net investment in a foreign operation, an
      unrecognized firm commitment, an available-for sale security, or a
      foreign-currency-denominated forecasted transaction.  Because the
      Company has no derivatives, this accounting pronouncement has no
      effect on the Company's financial statements.

      10. Subsequent Events

      On November 23, 1999, the Company entered into a Stock Acquisition
      and Option Agreement (the "Stock Agreement") with Merchant Capital
      Holdings, Ltd. ("MCH"), a British Virgin Islands Company, whereby
      MCH agreed to buy 1,000,000 shares of the Company's Class A Common
      Stock for US$1.00 per share, together with certain options to
      purchase additional shares of Class A Common Stock.  As part of the
      Stock Agreement, two advisors of MCH, Geoffrey Dart ("Dart") and
      Gerard Thompson ("Thompson") were appointed to the Board of
      Directors of the Company, with Dart appointed as Chairman of the
      Board.  In connection with the transactions contemplated under the
      Stock Agreement, the Company, MCH, Norman L. Marks (and his family
      affiliates) and Paul L. Barham (and his family affiliates) entered
      into a Shareholders Agreement, providing for certain transfer
      restrictions and voting agreements, on the Class A Common Stock
      held by certain of the parties.  Also, MCH required, as part of the
      Stock Agreement, that two Employment Agreements be entered into
      between the Company and Norman Marks and Paul Barham.






      F - 13