UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    Form 10-K
                            Annual Report Pursuant to
                           Section 13 or 15(d) of the
                       Securities and Exchange Act of 1934

         For the
   fiscal year ended                                          Commission File
   November 30, 2001                                              #09-9599

                                    HIA, INC.
             (Exact name of registrant as specified in its charter)

             New York                                     16-1028783
(State or other jurisdiction of                       (Federal employer
 Incorporation or Organization)                        identification number)

                               4275 Forest Street
                             Denver, Colorado 80216
                     (Address of principal executive office)

                                 (303) 394-6040
                (Issuer's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:            NONE

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

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

The check  mark below  indicates  whether  the Issuer (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  twelve months (or reports),  and (2) has been subject
to such filing requirements for the past ninety days.

                  YES      X                         NO
                      ----------                        ----------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-B is not contained herein, and will not 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-K or any amendment to this
Form 10-K. (X).

The Issuer had net sales of  $31,270,000  for the fiscal year ended November 30,
2001.

The aggregate market value of voting stock held by  non-affiliates of the Issuer
as of January 10, 2002 was  $801,765  based on market value of stock as compiled
by finance.yahoo.com.

The number of shares of the only class of Common Stock of the Issuer outstanding
as of January 10, 2002 was 10,281,526.




<PAGE>



                                     PART I

Item 1. Business

(a) General Development of Business

     HIA, Inc. (the "Company" or "HIA") was incorporated in 1974. The Company is
     a holding  company  with all of its business  conducted  through its wholly
     owned subsidiary, CPS Distributors,  Inc. ("CPS"). Through CPS, the Company
     distributes  turf  irrigation  equipment  and  commercial,  industrial  and
     residential  well pumps and equipment on a wholesale  basis.  The principal
     executive offices of the Company are located at 4275 Forest Street, Denver,
     Colorado 80216, telephone (303) 394-6040.

(b) Narrative Description of Business

     General (Y) The Company acquired CPS, a one hundred-year-old  company based
     in Denver,  Colorado,  in February 1984. CPS serves  customers in the Rocky
     Mountain region in five states consisting of Colorado, Wyoming, New Mexico,
     Kansas  and  Nebraska.  CPS  carries  a  variety  of brand  name  products,
     including pumps and water systems, water conditioning  equipment,  pump and
     well accessories,  pipe valves and fittings and sprinkler system equipment.
     The Company's net sales for industrial,  commercial and  residential  pumps
     and  turf  irrigation  equipment  represented  approximately  14% and  86%,
     respectively,   of  net  sales  for  2001,   approximately   10%  and  90%,
     respectively,  of net sales for 2000 and 12% and 88%, respectively,  of net
     sales for 1999.

     During 1999, the Company's  directors  investigated the best possible means
     to expand the business  operations.  In the past, the Company has grown the
     business by establishing  branch operations as start-up  enterprises.  This
     strategy has been very  successful over the past ten years with each branch
     operating at a profit after its first full year of operations.  In order to
     expand operations further,  the choices were to continue to set up branches
     (start-ups)  or acquire a company in the same or similar  type of business.
     Since the Company had an  internally-calculated  market  share for its turf
     and  irrigation  products of over 38% at the end of 1999, it was determined
     by the  directors  of the Company  that  present  market  territories  were
     adequately  represented by its existing  branches and further  expansion of
     the present product lines would probably be best served by acquisition into
     a local market in which the Company was not  adequately  represented.  (The
     majority  of  the  branches  were  located  in  metropolitan  Denver).  The
     directors  identified  a short list of these local market  territories  and
     consulted its financial  advisors in  determining  the size of business the
     Company could purchase without adversely affecting its liquidity.



<PAGE>



     On May 25th,  1999, the Company through its wholly-owned  subsidiary,  CPS,
     acquired  all of the issued and  outstanding  common  stock of Western Pipe
     Supply,  Inc. ("WPS"), a privately-held  corporation  established under the
     laws of Colorado,  for a purchase price of $2,746,739  including $84,244 in
     acquisition costs. Of the total purchase price, $1,485,385 was paid in cash
     directly  to the seller and  $1,177,110  was in the form of a  subordinated
     promissory  note  taken by the  seller.  The cash  paid to the  seller  was
     financed in part by  additional  borrowings  on the existing line of credit
     with Norwest Bank of Denver and a  $1,000,000  five-year  note payable also
     with Norwest Bank of Denver.

     On October 31,  2000,  the Company  sent to all its  shareholders  a tender
     offer for up to 3,000,000  shares of its common stock for a purchase  price
     of $.25 per share.  The total amount expected to be disbursed,  as a result
     of the  tender  offer  was  $850,000  ($750,000  for the  common  stock and
     $100,000 for the associated legal, accounting and transfer agent fees). The
     total amount was to be financed by Wells Fargo Bank,  Denver by  increasing
     the  existing  line of  credit  by  $500,000  (to an  aggregate  amount  of
     $5,000,000)  and a term note not to exceed  $500,000 at an interest rate of
     1/8th percent less than prime  interest  rate;  the note to be amortized no
     more than five years.

     The purposes of the offer was to (1) offer the shareholders the opportunity
     to sell some or all of their shares on a basis that was more favorable than
     could  probably be achieved  in the open  market (the  closing  price as of
     October  19th,  2000 was $.13 per  share)  and (2)  extend  an offer  which
     represented a good investment  opportunity for the Company and its existing
     shareholders.

     The Company filed the necessary  Schedule TO and related documents with the
     SEC on October 27,  2000.  A revision was filed on November 6, 2000 and the
     final amendment was filed on January 4, 2001. The offer expired on December
     15, 2000. 732,456 shares of common stock were tendered for a total purchase
     prices of $183,114. A total of $56,677 was incurred for legal,  accounting,
     transfer agent and other related costs.

     Marketing  - CPS's line of  products  has changed in response to the supply
     and demand forces of the  marketplace.  The management of CPS believes that
     its two divisions  (i.e.,  turf and  irrigation  equipment and  industrial,
     commercial and residential  pumps and equipment)  reduce the cyclicality of
     sales and earnings that would  otherwise be affected by product line shifts
     caused by economic and demographic changes; however, the Company is subject
     to the ups and  downs of the  overall  construction  activity  in the Rocky
     Mountain region.  The Company  purchases  approximately  25% and 19% of its
     products volume from two manufacturers. However, the products purchased can
     be obtained from other  competing  manufacturers  but not as a consolidated
     product group.

     CPS's  sales and  service  engineers  provide  technical  support to assist
     customers in developing a system  specifically  tailored to the  customers'
     needs.

     Customer Base and  Seasonality  (Y) CPS's  customers  include  contractors,
     dealers  and  municipalities  with  the  majority  of  sales  derived  from
     contractors.  The Company believes neither its aggregate sales nor those of
     any of its business units are concentrated in or materially  dependent upon
     any single customer or small group of customers.

     Quotation  activity is  especially  intense in the winter and spring months
     (December to April) when contracts are reviewed and eventually  awarded for
     spring or summer construction. Since approximately 86% of CPS's business is
     composed of turf and irrigation  products,  its sales are concentrated from
     March to October and are therefore seasonal in nature.

     Competition  -   The  Company  operates  in a  highly  competitive  market.
     Manufacturers  have  abandoned  the  exclusive   relationships  with  their
     distributors.  As a result, the Company is competing with other wholesalers
     of the same products.

     Most  manufacturers  have also abandoned  prices based on volume buying and
     have gone to a pricing  system based on a percentage of purchases  over the
     previous years' business.  This change allows smaller wholesalers to buy at
     the same price levels as the larger wholesalers.  Therefore, a mid-to-large
     sized  wholesalers,  such as CPS, no longer has a price  advantage to cover
     the higher operating costs of a larger operation.

     CPS offers standard  discounts on merchandise to its customers.  Additional
     discounts  are  given  based  on  quantity  of order or  annual  volume  of
     purchases, depending on product and competitive conditions. The Company has
     monthly  specials on certain of its  inventory  and provides  discounts for
     orders  placed at trade shows.  The  majority of the  programs  offered are
     based on discounts received from the Company's suppliers.  Therefore, there
     is no material effect on operating results from providing these discounts.

     Each territory  salesperson receives a draw against commission.  Commission
     is determined as a percentage of the gross profit  generated  from sales to
     the  accounts in the sales  representative's  territory.  Sales  quotas are
     established for each area. Additional  remunerative  incentives are created
     for meeting or exceeding assigned quotas.

     CPS emphasizes  customer service,  convenient  availability of products and
     knowledge of the industry. However, pricing, currently an important factor,
     is expected to continue in importance  because the  competition can provide
     the same products and warranties.

     CPS has seven major  competitors in its market area for turf and irrigation
     equipment  and six major  competitors  in its market  area for  industrial,
     commercial  and  residential  pumps  and  equipment.  It  is  estimated  by
     management  that CPS has over  15% of the  total  market  in  Colorado  for
     residential pumps and over 38% of the total market in Colorado for turf and
     irrigation  equipment.  Some of CPS's competitors have financial  resources
     greater than CPS.

     CPS  increased its market share  considerably  in 1999 with the purchase of
     WPS which had net sales of over $7 million in 2000 (the first full year the
     Company had  ownership of WPS).  The  acquisition  increased  the number of
     branch  outlets the Company owns and operates  from nine branch  outlets to
     eleven branch outlets.



<PAGE>



     Management  believes CPS has an established  reputation as a distributor of
     quality  product  lines such as Rainbird,  Hunter,  Lasco and Jacuzzi.  CPS
     competes  primarily on service and, to a lesser extent,  on price,  quality
     and  reliability  of  products,  technical  services  and  availability  of
     products.

     Employees  (Y) At November 30, 2001,  the Company  employed 89 persons,  of
     which 23 were warehouse and branch counter  employees and 66 were sales and
     administrative  employees.  The Company considers its employee relations to
     be good.  None of the Company's  employees is covered by union contracts or
     collective bargaining agreements.

     The Company uses computer resources for its order entry, inventory, payroll
     and accounting function.


Item 2. Properties

     The Company's  leased  facilities  in Denver,  Colorado are comprised of an
     aggregate of 32,265 square feet of offices and warehouse on 166,000  square
     feet of land.  This  building  serves as the main  warehouse of CPS and the
     executive offices of the Company.  The lease has a ten-year term, beginning
     March 1995,  with  monthly  rent at $9,500 for the first five years,  after
     which the  monthly  rent is  adjusted  by the  percentage  increase  in the
     Consumer  Price  Index.  The Company has an option to purchase  the related
     property at the end of the initial  ten-year term at a price  approximating
     the market value at that time, subject to certain  conditions.  The Company
     also has two  five-year  options  to  extend  the  lease  term,  one at the
     beginning of the eleventh  year and one at the  beginning of the 16th year.
     The  Company  is to pay for all taxes,  insurance  and  maintenance  on the
     property.

     The Company sold its property in Casper,  Wyoming, which consisted of 6,159
     square feet of  office/warehouse  space on 33,600  square feet of land in a
     private  transaction  with an unrelated third party. The sale took place on
     September 18, 2001. The property was sold for $58,000 less  commissions and
     related costs of $5,131.  The Company executed a contract for deed with the
     buyer  which  called for payment of $53,000  ($5,000  paid down at closing)
     amortized  over 15 years at an interest rate of 8.75% per annum,  principal
     and interest payments made monthly.  The Company recorded a capital gain on
     the sale of $1,956.

     The Company leased a new warehouse facility in Casper,  Wyoming on February
     18, 2000 with 14,544 square feet of office/warehouse space situated on 2.65
     acres of land.

     The Company  also leases  9,954  square feet of  office/warehouse  space on
     21,781 square feet of land in Colorado Springs, Colorado; 4,100 square feet
     of  office  and  warehouse  space  on  14,000  square  feet of land in Fort
     Collins,  Colorado;  10,000  square feet of office and  warehouse  space in
     Thornton,  Colorado;  10,000 square feet of office and  warehouse  space in
     Littleton,  Colorado;  13,400  square  feet of  warehouse/office  space  in
     Englewood,  Colorado;  9,120 square feet of office and  warehouse  space in
     Cheyenne,  Wyoming and 6,400 square feet of office and  warehouse  space in
     Broomfield, Colorado.

     On May 25,  1999,  CPS  acquired  Western  Pipe  Supply  Company  (WPS)  in
     Longmont,  Colorado  and  contracted  with the  former  owner to lease  its
     existing  two  facilities.  One  warehouse  facility is located in Boulder,
     Colorado  consisting  of 8,000  square feet of office and  warehouse  space
     situated on 1.8 acres of land.  The main  warehouse  facility is located in
     Longmont, Colorado consisting of 14,340 square feet of warehouse and office
     space situated on 3.9 acres of land. Both facilities  utilize the available
     land for outside storage and customer pickup of pipe and accessories.  Both
     leases  are for a  five-year  period  with an option to renew the lease for
     another five years.

     The Company  believes its leased  facilities are adequate to meet its needs
     for the next several years and anticipates  that it would encounter  little
     difficulty  in  locating  alternative  facilities  should its  requirements
     change.


Item 3. Legal Proceedings

     As part of its  ordinary  course of  business,  the  Company is involved in
     certain  litigious  activities  from time to time. No litigation  exists at
     November  30,  2001 or to the date of this report  that  management  or its
     legal counsel believe will have a material impact on the financial position
     or operations of the Company.


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

    There were no matters submitted to a shareholder vote during the fiscal year
ended November 30, 2001.


<PAGE>


                                     PART II

Item 5. Market for the Company's Common Stock and Related Security Holders
Matters
-------------------------------------------------------------------------------

     The  principal  market  on  which  HIA's  common  stock  is  traded  is the
     over-the-counter  market.  Although at least one market maker  continues to
     quote  prices  for HIA's  common  stock,  the  Company  is not aware of any
     established  public  trading  market for HIA's  common  stock since June 6,
     1986.

     The following  table sets forth the high and low closing bid quotations for
     the common stock for the fiscal years ended November 30, 2001 and 2000. The
     quotations  reflect  inter-dealer  prices,  without  adjustment  for retail
     mark-ups,  mark-downs  or  commissions  and may not  necessarily  represent
     actual transactions.
<TABLE>

          Fiscal year ended November 30, 2001                                        Bid Quotations
          ------------------------------------------------------------- -----------------------------------------
                                                                               High                  Low
                                                                        -------------------- --------------------
         <S>                                                            <C>                     <C>
          First Quarter                                                             .38                  .19
          Second Quarter                                                            .25                  .22
          Third Quarter                                                             .26                  .22
          Fourth Quarter                                                            .30                  .20

          Fiscal year ended November 30, 2000                                        Bid Quotations
          ------------------------------------------------------------- -----------------------------------------
                                                                               High                  Low
                                                                        -------------------- --------------------
          First Quarter                                                             .30                  .25
          Second Quarter                                                            .40                  .156
          Third Quarter                                                             .21                  .156
          Fourth Quarter                                                            .21                  .13

</TABLE>

     The  approximate  number of holders of record of HIA's  common  stock as of
     November 30, 2001 was 1,650.

     The Company has never  declared any dividends  with respect to HIA's common
     stock.  The Company has not in the past and is  currently  restricted  from
     paying cash dividends under its existing line-of-credit agreement.

     During  fiscal 2001,  2000 and 1999,  the Company  issued  600,000  shares,
     600,000 shares and 300,000  shares from treasury to its executive  officers
     for cash  proceeds of $150,000,  $111,000 and $67,000 in  conjunction  with
     their  exercise  of  options  previously  granted.  During  the year  ended
     November 30, 1999,  the officers of the Company  purchased  185,287  shares
     from the  Company's  treasury  at $0.16 per share  for  gross  proceeds  of
     $31,000.  All of the foregoing shares were sold in reliance upon exemptions
     afforded by Section 4(2) of the Securities Act and Regulation D promulgated
     under the Securities Act.



<PAGE>



Forward Looking Statements

     Statements  made in this Form 10-K that are historical or current facts are
     "forward-looking statements" made pursuant to the safe harbor provisions of
     Section  27A of the  Securities  Act of 1933 ("The ACT") and Section 21E of
     the  Securities  Exchange  Act  of  1934.  These  statements  often  can be
     identified by the use of terms such as "may," "will," "expect," "believes,"
     "anticipate,"  "estimate,"  "approximate,"  or  "continue," or the negative
     thereof.  The  Company  intends  that such  forward-looking  statements  be
     subject to the safe  harbors for such  statements.  The  Company  wishes to
     caution  readers  not to place undue  reliance on any such  forward-looking
     statements,  which  speak  only as of the date  made.  Any  forward-looking
     statements  represent  management's best judgements as to what may occur in
     the  future.  However,  forward-looking  statements  are  subject to risks,
     uncertainties  and important factors beyond the control of the Company that
     could cause actual results and events to differ  materially from historical
     results of operations to revise any  forward-looking  statements to reflect
     events or circumstances  after the date of such statement or to reflect the
     occurrence of anticipated or unanticipated events.


Item 6.     Selected Financial Data

The following table sets forth selected consolidated financial data for each of
the Company's last five fiscal years:

<TABLE>
                                                                     Years Ended November 30,
                                                                     ------------------------
                               2001                  2000                 1999*                 1998                  1997
                            ---------             ----------           ----------            ----------             -----------
<S>                         <C>                 <C>                  <C>                   <C>                    <C>

Net Sales                    $31,270,000         $32,141,000          $26,133,000           $18,786,000            $17,016,000

Net Income                   $   365,000         $   378,000          $   488,000           $   418,000            $   418,000

Net Income
     Per Common
     Share                   $       .04         $       .04          $       .05           $       .04            $       .05

Cash Dividend Per                      -                   -                    -                     -                      -
     Common Share
<FN>
* During 1999, the company purchased Western Pipe Supply Company (WPS).
   Refer to item 1 (b)
</FN>
AT YEAR END

Total Assets                 $ 9,320,000         $10,181,000          $ 9,305,000           $ 4,609,000           $ 5,033,000

Long-Term                    $ 1,282,000         $ 1,772,000          $ 2,106,000           $   287,000                 - 0 -
     Obligations
</TABLE>

The following table sets forth selected  unaudited  consolidated  financial data
for each of the Company's last eight fiscal quarters:
<TABLE>
                                                                         2001
                                                                         ----
                                    Nov. 30, 2001        Aug. 31, 2001        May 31, 2001        Feb. 28, 2001
                                    -------------        -------------        ------------        -------------
<S>                             <C>                     <C>                  <C>                <C>

Net Sales                         $ 6,483,000             $11,729,000          $ 9,285,000        $ 3,773,000

Gross Profit                      $ 2,440,000             $ 3,365,000          $ 2,705,000        $ 1,162,000

Net Income (loss)                 $    52,000             $   876,000          $   471,000        $(1,034,000)
                                  -----------             -----------          -----------        ------------

Income (Loss)                     $       .01             $       .09          $       .05        $      (.10)
     Per share

</TABLE>
<TABLE>
                                                                         2000
                                                                         ----
                                  Nov. 30, 2000        Aug. 31, 2000        May 31, 2000        Feb. 28, 2000
                                  -------------        -------------        ------------        -------------
<S>                             <C>                   <C>                  <C>                 <C>

Net Sales                         $ 6,898,000           $10,693,000          $ 9,922,000         $ 4,628,000

Gross Profit                      $ 2,064,000           $ 3,132,000          $ 2,950,000         $ 1,245,000

Net Income (loss)                 $  (126,000)          $   392,000          $   663,000         $  (551,000)
                                  -----------             -----------          -----------        ------------


Income (Loss)                     $      (.01)          $       .04          $       .06         $      (.05)
     Per share
</TABLE>


Item 7. Management's Discussion and Analysis or Plan of Operation

Liquidity and Capital Resources

     For the year ended November 31, 2001, the Company's net income was $365,000
compared to $378,000 for the year ended November 30, 2000. Net income  decreased
by $13,000 as compared to the prior year  primarily  as a result of the decrease
in operating  income of $199,000  substantially  offset by the increase in other
income of $156,000  (including a reduction  in interest  expense of $67,000) and
the  decrease in income tax expense of $30,000.  During the year ended  November
30, 2001, the Company  provided  $1,127,000 in cash from operations  compared to
$527,000 used in operations during the year ended November 30, 2000.



<PAGE>



The  decrease in  inventories  of $480,000 in 2001 as compared to an increase of
$905,000 in 2000 was  attributable to the efficiencies of utilization of the new
computer system installed in March of 1999 and management's  response to reduced
sales volumes in early spring of 2001 which prompted  management to reduce large
stock orders from  manufacturers  in  anticipation  of a "flat" sales year.  The
decrease  in  accounts  payable in 2001 of $319,000 as compared to a decrease of
$147,000 in 2000 was  primarily  attributable  to the  decrease in  purchases of
merchandise  inventory at the end of 2001  together with the increase in rebates
from  manufacturers in 2001 of $51,000 which further reduced accounts payable at
year end. The increase in accounts  receivable in 2001 of $21,000 as compared to
an increase in 2000 of $154,000 was primarily  due to better  credit  management
with the hiring of a full time  credit  manager in April 2000.  The  increase in
other  current  liabilities  of $72,000 in 2001 as compared  to the  decrease of
$9,000  in 2000 was  primarily  attributable  to the  increase  in  compensation
payable at the end of 2001 by $70,000.

Net cash used for investing activities decreased by $106,000 in 2001 as compared
to a decrease of $1,257,000 in 2000.  The change was  attributable  to a $49,000
decrease in  purchases  of property  plant and  equipment in 2001 as compared to
2000 and a decrease of $57,000 for the purchases of other assets.

Net  cash  used in  financing  activities  increased  by  $1,738,000  in 2001 as
compared to a decrease of $749,000 in 2000  primarily  as a result of a decrease
in net  borrowings  on the  line of  credit  with the  bank of  $1,725,000.  The
decrease was due  principally to the decrease in cash provided by inventories of
a $1,337,000 change from 2000 to 2001.

During 2001,  the Company  issued  600,000  shares of treasury stock at $.25 per
share for cash  proceeds of $150,000  pursuant to stock  options  granted to the
officers in 1999. In early 2001, the Company  purchased 732,456 shares of common
stock pursuant to the tender offer proffered to all  shareholders on October 31,
2000 for a total purchase price of $183,114.  An additional $56,677 was paid for
legal and stock  transfer  fees for the tender offer.  The Company  purchased an
additional 101,550 shares during 2001 from non-affiliates at an average price of
$.276 per share.

For the year ended  November 30,  2000,  the  Company's  net income was $378,000
compared to $488,000 for the year ended November 30, 1999. Net income  decreased
by $110,000 as compared to the prior year  primarily as a result of the increase
in interest  expense of $259,000  partially  offset by the increase in operating
income of $146,000.  During the year ended  November 30, 2000,  the Company used
$527,000 in cash from  operations  compared to $7,000 in cash used in operations
during the year ended November 30, 1999.


<PAGE>



The  increase  in  inventories  of  $905,000  in 2000 as  compared  to 1999  was
attributable  to the change in the method of  stocking  inventory  at the branch
operations of the Company.  In early 2000,  management  decided that operational
efficiencies  would be  realized  and sales  would be  increased  if the  branch
operations  stock a larger  share of the  stocking  inventory as compared to the
hub-and-spoke  method of inventory  distribution  utilized in the past,  whereby
larger quantities of inventory were kept at the central location and less at the
branch level.  Management  contemplated the overall increase in inventory at the
time the decision was made,  and expected that after a full year of  operations,
inventory levels would begin to decrease  (assuming the same volume of sales) as
the central distribution center adjusted its inventory levels to accommodate the
change in inventory procedures.

Deferred  income  taxes  decreased  by $118,000  primarily  as the result of the
utilization of net operating losses acquired from the WPS purchase. The decrease
in both accounts  payable and checks written against future deposits of $283,000
as  compared  to the prior year was  primarily  due to the  precipitous  drop in
inventory  stocking  volume (over $1.4  million)  during the last 60 days of the
fiscal year 2000 in order to reach the  projected  inventory  levels to coincide
with the  Company's  cash flow budget.  All payables are normally  paid within a
30-day period from date of invoice.

The decrease in other current  liabilities  which includes  accrued  payroll and
bonuses,  income taxes  payable and other  current  liabilities  of $240,000 was
primarily  attributable  to the overall  decreases  in accrued  income  taxes at
fiscal year end 2000 due to the fact that the  Company's  estimated tax payments
made during the year slightly exceeded the liability at November 30, 2000.

Investing and financing activities were directly effected by the purchase of WPS
on May 25, 1999. The Company financed the business acquisition with a $1,177,000
subordinated promissory note with the seller and $1,379,000 in cash.

Net  borrowings  on the  line-of-credit  increased  by  $1,599,000  primarily to
finance the increases in  inventories  for fiscal year 2000.  The Company had no
proceeds from  long-term  debt in fiscal 2000 as compared to the prior year when
the Company  entered into a $1,000,000  five-year  term note payable  during May
1999 to partially fund its business acquisition.  Payments on long-term debt and
capital lease  obligations  increased by $212,000  during fiscal 2000 due to the
additional  loans  executed as a result of the purchase of WPS in May 1999,  and
the purchase of $216,000 and $162,000 in equipment  during  fiscal 2000 and 1999
through capital lease obligations.

During  fiscal 2000,  the Company  issued  600,000  shares of treasury  stock at
$0.1859 per share to its  officers  for cash  proceeds  of $112,000  pursuant to
stock options  granted to the officers in 1998.  During fiscal 1999, the Company
issued  485,287  shares from treasury at $.20 per share to its officers for cash
proceeds of $97,000. During fiscal 1999, the Company acquired from non-affiliate
stockholders  119,239 shares of its common stock at $.15 to $.20 per share for a
total cost of $22,000.



<PAGE>


On October 31, 2000 the Company sent to all its  shareholders a tender offer for
up to  3,000,000  shares of its common  stock for a  purchase  price of $.25 per
share. The total amount expected to be disbursed as a result of the tender offer
was $850,000  ($750,000  for the common  stock and  $100,000 for the  associated
legal,  accounting and transfer agent fees). The total amount was to be financed
by Wells  Fargo  Bank,  Denver  by  increasing  the  existing  line of credit by
$500,000 (to an aggregate  amount of  $5,000,000)  and a term note not to exceed
$500,000 at an interest rate of 1/8th percent less than prime interest rate; the
note to be amortized no more than five years.

The purposes of the offer was to (1) offer the  shareholders  the opportunity to
sell some or all of their shares on a basis that was more  favorable  than could
probably be achieved in the open market (the closing  price as of October  19th,
2000 was $.13 per  share)  and (2)  extend  an offer  which  represented  a good
investment opportunity for the Company and its existing shareholders.

The Company filed the necessary  Schedule TO and related  documents with the SEC
on October  27,  2000.  A revision  was filed on  November 6, 2000 and the final
amendment was filed on January 4, 2001.  The offer expired on December 15, 2000.
A total of 732,456  shares of common stock were  tendered  for a total  purchase
prices of  $183,000.  A total of $57,000  was  incurred  for legal,  accounting,
transfer agent and other related costs.

Given the amount of stock that was ultimately acquired through the tender offer,
the Company  increased its line of credit to a maximum of $5,000,000 on December
12, 2001, but did not enter into a term note as was expected.

    The following is a two-year summary of working capital and current ratios:

                                      2001                        2000
                                      ----                        ----

        Working Capital             $3,862,000                $3,757,000

        Current Ratios               2.07 to 1                1.89 to 1

The increase in the current  ratio in 2001 was  primarily  due to the  decreased
levels of  inventories  carried at November 30, 2001 as compared to November 30,
2000.

The decrease in the current  ratio in 2000 was  primarily  due to the  increased
levels of  inventories  carried at November 30, 2000 as compared to November 30,
1999.

As of  November  30,  2001,  the  Company and its  subsidiary  had an  available
line-of-credit totaling $5,000,000 of which $3,185,000 was available and unused.
The line of credit  expires on December 31, 2002  however,  management  believes
that they will have the opportunity to renew upon expiration.


<PAGE>


Management  believes that the present  working  capital as well as its available
line-of-credit is adequate to conduct its present  operations.  The Company does
not  have  any  additional  purchase  commitments  nor  does it  anticipate  any
additional material capital expenditure for fiscal 2002.

Results of Operations

Comparison Fiscal 2001 vs. Fiscal 2000

Net sales were down $871,000  primarily as a result of the inclement  weather in
early spring which delayed  contractors  on beginning jobs for at least a month.
This work was not able to be made up by the end of the year by the  contractors.
Cost of sales  decreased by $1,152,000 due to adjustments to pricing on specific
lines of inventory,  lower sales volume, better pricing from vendors and reduced
inventory shrinkage due to better inventory control in 2001 by $194,000.  Due to
the  reduction  of cost of sales the gross profit  percentage  increased by 1.7%
30.9% in 2001 versus 29.2% in 2000).

Selling, general and administrative expenses increased by $480,000 primarily due
to the increase in payroll of $166,000 as a result of a buildup of staff for the
first quarter of 2001 in anticipation of a robust sales year and the increase of
truck  leasing and  maintenance  of $149,000 due to the  purchase of  additional
trucks for each branch  location to better their ability to deliver  merchandise
to the  customer on a timely basis  (improved  customer  service).  In addition,
there was an increase of $102,000 in general  expenses in 2001 for the Southeast
Denver branch (opened April 2000).

Other  income  increased  by  $156,000  in 2001 as  compared  to the prior  year
primarily due to a decrease in interest expense of $67,000 which was a result of
the decrease in the weighted  average rate on bank  borrowings from 9.5% to 7.4%
(reduction of prime  interest  rate) and the reduced  amount of interest paid on
long term,  amortized  loans of $38,000.  In addition,  there was an increase of
$55,000  in  miscellaneous  income  primarily  due  to  the  sale  of a  limited
partnership at the end of 2000 for a recorded loss of $46,000.

The  weighted-average  interest rates on bank  borrowings were 7.4% and 9.5% for
2001  and  2000,  respectively.  The  weighted-average  bank  borrowing  balance
outstanding of $3,095,000 for 2001 increased by $365,000 compared to 2000.

Net Income decreased by $13,000.

Income Taxes

     At November 30,  2001,  the Company has recorded a current net deferred tax
     asset  totaling  $151,000 and has  recorded a  noncurrent  net deferred tax
     asset totaling $36,000.  Based upon the Company's recent history of taxable
     income and its projections for future earnings, management believes that is
     more likely than not that  sufficient  taxable  income will be generated in
     the near term to utilize the net  deferred  tax  assets.  See Note 7 to the
     Company's Consolidated Financial Statements.

     The Company's  effective  tax rate for the year ended  November 30, 2001 of
     approximately  46% differs from the Company's blended Federal and State tax
     rate of 37% due primarily to the non-deductible  nature of the amortization
     of  goodwill  for tax  purposes  and other  non-deductible  items  which is
     consistent with prior years.


Comparison Fiscal 2000 vs. Fiscal 1999

     Net  sales  were up  $6,008,000  primarily  as a result  of a four  percent
     increase in the sale price of merchandise,  the additional  sales generated
     by WPS for the first six  months of 2000 of  $3,159,000,  and the effect of
     the general  increase in business  activity in the Rocky  Mountain  Region.
     Cost of sales  increased by  $4,409,000  which  increase  was  generally in
     proportion  to the  increase  in sales  with  the  exception  of a  general
     decrease  in gross  margins  due to  competitive  bidding in the  Company's
     general market territories. Gross profit percent decreased by .6% (29.2% in
     2000 versus 29.8% in 1999) primarily due to competitive pricing.

     Selling,  general  and  administrative  expenses  increased  by  $1,453,000
     primarily due to the increase in payroll of $843,000 of which  $312,000 was
     attributable  to the WPS  payroll  for the  first 6  months  of  2000.  The
     additional increase in payroll of $531,000 was due primarily to increase in
     pay to  compensate  essential  employees  in a tight  labor  market and the
     addition of salaries due to adding five key  administrative  positions  and
     ten non-administrative positions. It was anticipated that these tight labor
     market  conditions  will  continue for the next two to three years or until
     such  time as the  economic  growth  begins  to  flatten  out in the  Rocky
     Mountain region. In addition,  rent increased by $218,000  primarily due to
     general  cost-of-living  increases  and the  addition  of the new branch in
     Englewood,  Colorado of  $114,000.  Data  processing  expense  increased by
     $102,000  primarily  as a  result  of  the  expenses  associated  with  the
     changeover  in  computer  systems  during the last  quarter of 1999 and the
     first quarter of 2000.

     Interest expense increased $259,000, primarily due to the first six month's
     interest in the amount of $80,000 for the two loans used to finance the WPS
     purchase in May of 1999 and the increase in interest due to the increase in
     the weighted  average  line-of-credit  loan of $1,119,000  contributing  an
     additional $153,000 in interest as a result (computed at 9.5% per annum).

     The  weighted-average  interest rates on bank borrowings were 9.5% and 7.5%
     for  2000 and  1999,  respectively.  The  weighted-average  bank  borrowing
     balance,  outstanding  of  $2,730,000  for  2000  increased  by  $1,611,000
     compared to 1999.

     Net income for fiscal 2000  decreased by $110,000  primarily as a result of
     the additional  interest  expense of $259,000  partially  offset by the net
     increase in the additional operating income of $146,000.



<PAGE>


Income Taxes

     At November 30,  2000,  the Company has recorded a current net deferred tax
     asset  totaling  $137,000 and has  recorded a  noncurrent  net deferred tax
     asset totaling $68,000.  Based upon the Company's recent history of taxable
     income and its projections for future earnings, management believes that is
     more likely than not that  sufficient  taxable  income will be generated in
     the near term to utilize the net  deferred  tax  assets.  See Note 7 to the
     Company's Consolidated Financial Statements.

     The Company's  effective  tax rate for the year ended  November 30, 2000 of
     approximately  47% differs from the Company's blended Federal and State tax
     rate of 37% due primarily to the non-deductible  nature of the amortization
     of  goodwill  for tax  purposes  and other  non-deductible  items  which is
     consistent with prior years.


Recent Accounting Pronouncements

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
     Statements   of   Financial   Accounting   Standards   No.  141   "Business
     Combinations"  ("SFAS  141") and No.  142  "Goodwill  and Other  Intangible
     Assets" ("SFAS 142"). SFAS 141 requires all business combinations initiated
     after June 30, 2001 to be accounted for under the purchase method.  For all
     business  combinations  for which the date of acquisition is after June 30,
     2001, SFAS 141 also  establishes  specific  criteria for the recognition of
     intangible  assets  separately  from  goodwill  and  requires   unallocated
     negative  goodwill to be written off immediately as an extraordinary  gain,
     rather than deferred and  amortized.  SFAS 142 changes the  accounting  for
     goodwill  and  other  intangible  assets  after  an  acquisition.  The most
     significant changes made by SFAS 142 are: 1) goodwill and intangible assets
     with  indefinite  lives  will no  longer  be  amortized;  2)  goodwill  and
     intangible  assets with  indefinite  lives must be tested for impairment at
     least annually;  and 3) the amortization  period for intangible assets with
     finite  lives  will no  longer  be  limited  to  forty  years.  SFAS 142 is
     effective for fiscal years  beginning  after December 15, 2001,  with early
     application  permitted  in  certain  circumstances.  The  Company  does not
     believe  that the  adoption of SFAS 141 will have a material  effect on its
     financial position, results of operations, or cash flows. At this time, the
     Company cannot  estimate the effect of Statement SFAS 142 on it's financial
     position, results of operations or cash flows.



<PAGE>


     In June  2001,  the  FASB  also  approved  for  issuance  SFAS  143  "Asset
     Retirement  Obligations." SFAS 143 establishes accounting  requirements for
     retirement   obligations   associated  with  tangible   long-lived  assets,
     including  (1)  the  timing  of  the  liability  recognition,  (2)  initial
     measurement of the liability,  (3) allocation of asset  retirement  cost to
     expense,  (4)  subsequent  measurement  of the  liability and (5) financial
     statement  disclosures.  SFAS 143 requires  that an asset  retirement  cost
     should be capitalized as part of the cost of the related  long-lived  asset
     and  subsequently  allocated  to expense  using a  systematic  and rational
     method.  The  Company  will  adopt the  statement  effective  no later than
     January 1, 2003, as required.  The transition adjustment resulting from the
     adoption of SFAS 143 will be reported as a cumulative effect of a change in
     accounting  principle.  The Company  does not believe  that the adoption of
     this  statement  will have a  material  effect on its  financial  position,
     results of operations, or cash flows.

     In  October  2001,  the FASB also  approved  SFAS 144,  Accounting  for the
     Impairment  or Disposal of Long-Lived  Assets.  SFAS 144 replaces SFAS 121,
     Accounting  for the  Impairment  of  Long-Lived  Assets and for  Long-Lived
     Assets to Be Disposed Of. The new accounting model for long-lived assets to
     be  disposed  of by  sale  applies  to  all  long-lived  assets,  including
     discontinued operations, and replaces the provisions of APB Opinion No. 30,
     Reporting  Results of  Operations-Reporting  the  Effects of  Disposal of a
     Segment  of a  Business,  for  the  disposal  of  segments  of a  business.
     Statement  144  requires  that those  long-lived  assets be measured at the
     lower of carrying amount or fair value less cost to sell,  whether reported
     in  continuing  operations  or  in  discontinued   operations.   Therefore,
     discontinued  operations will no longer be measured at net realizable value
     or  include  amounts  for  operating  losses  that  have not yet  occurred.
     Statement  144 also broadens the  reporting of  discontinued  operations to
     include  all  components  of  an  entity  with   operations   that  can  be
     distinguished  from the rest of the entity and that will be eliminated from
     the  ongoing  operations  of the  entity  in a  disposal  transaction.  The
     provisions of Statement 144 are effective for financial  statements  issued
     for fiscal years beginning after December 15, 2001 and,  generally,  are to
     be applied prospectively. The Company does not believe that the adoption of
     this  statement  will have a  material  effect on its  financial  position,
     results of operations, or cash flows.


Item 7a.    Quantitative and Qualitative Disclosures about Market Risk

     The Company  does not have  material  market risk on market risk  sensitive
     instruments.  It has no exposure to fluctuations in currency exchange rates
     or  commodity  prices.  Its only  interest  rate risk  arises from its bank
     line-of-credit.

     The  Company's  long-term  debt  consists  of fixed rate loans and  capital
     leases that are  unaffected  by interest  rate  fluctuations  and have fair
     values  approximately  equal  to  their  carrying  values.  It's  operating
     line-of-credit  bears  interest at lender prime (5% at November 30,  2001).
     For the year ended November 30, 2001, the Company's total interest  expense
     was $394,000. Assuming outstanding borrowings under the Company's revolving
     line-of-credit  at the same levels that prevailed during fiscal 2001, a 10%
     decrease or increase in the prime rate  prevailing  at year-end 2001 (i.e.,
     from 5% to 4.5% or 5.5%) would  result in a decrease or increase of $39,400
     in the Company's interest expense in fiscal 2002.

Item 8. Financial Statements

    The response to this item is submitted as a separate section of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
-------------------------------------------------------------------------------

     There have been no  disagreements  between the Company and its  independent
     accountants  on  any  matter  of  accounting  principles  or  practices  or
     financial statement disclosure since the Company's  inception.  On November
     15,  2001  the  Company  dismissed  BDO  Seidman,  LLP as  its  independent
     accountant and engaged Hein + Associates LLP as the principal accountant to
     audit the  registrant's  financial  statements.  The decision to change was
     approved by the Board of Directors. Form 8-K was filed regarding the change
     of auditors dated November 15, 2001.


<PAGE>


                                    PART III

Item 10.    Directors and Executive Officers of the Company

    (a) Identification of Directors

          The  list  presented  below  sets  forth  the  names  and  ages of all
          directors of the Company indicating all positions and offices with the
          Company  held by each such  person and his term of office as  director
          and the period during which he has served as such.
<TABLE>
          Name                     Age    Positions                               Director Since
          ----                    ----    ---------                            -----------------
 <S>                            <C>      <C>                                    <C>

          Carl J. Bentley           68    Chairman of the Board                       1994
                                          and Director

          Alan C. Bergold           53    President, Treasurer                        1981
                                          and Director

          Donald L. Champlin        50    Executive Vice President,                   1994
                                          Secretary and Director
</TABLE>
    (b) Identification of Executive Officers

          The  list  presented  below  sets  forth  the  names  and  ages of all
          executive officers of the Company indicating all positions and offices
          held by such person and the period during which he has served as such.
<TABLE>

          Name                     Age    Positions                            Year  First Elected (1)
          ----                    ----    ---------                            -----------------------
<S>                              <C>    <C>                                     <C>

        Carl J. Bentley             68    Chairman of the Board                          1996
                                          and Director                                   1994

        Alan C. Bergold             53    President, Treasurer                           1996
                                          and Director                                   1981

        Donald L. Champlin          50    Executive Vice President,                      1996
                                          Secretary
                                          and Director                                   1994
<FN>

(1) All officers serve at the discretion of the Board of Directors.
</FN>
</TABLE>


<PAGE>



(c) Business Experience

          The  material  presented  below  sets  forth  a brief  account  of the
          business  experience  during  at  least  the past  five  years of each
          director, executive officer and significant employee.

          Carl J.  Bentley,  age 68,  was  appointed  Chairman  of the  Board in
          October 1996. He joined the Company as General  Manager of CPS in July
          1985. In November 1986, he became  President and a member of the Board
          of  Directors  of CPS.  He was  appointed  to the  Company's  Board of
          Directors in 1994.

          Alan C. Bergold,  age 53, was appointed  President in October 1996 and
          Executive  Vice  President  of the Company in July 1983.  He served as
          Vice  President  and  Secretary of the Company from 1981 to 1983.  Mr.
          Bergold has been a director of the Company since 1981.

          Donald L. Champlin,  age 50, was appointed Executive Vice President in
          October 1996. He joined the Company as Pump Product Manager in October
          1983. In February  1989,  he became Vice  President of Marketing and a
          member of the  Board of  Directors  of CPS.  He was  appointed  to the
          Company's Board of Directors in 1994.


(d) Involvement in Certain Legal Proceedings

        None.

(e) Promoters and Control Persons

        Not applicable.

(f)   Section 16(a) Beneficial Ownership Reporting Compliance

     Based  solely  upon  a  review  of  Forms  3 and 4 and  amendments  thereto
furnished to the Company during fiscal 2001 and Forms 5 and  amendments  thereto
furnished  to the  Company  with  respect to fiscal  2001,  if any,  and written
representations  furnished  to the Company as to the absence of any  requirement
for the filing of Forms 5, the Company believes that its officers, directors and
10% beneficial owners have filed on a timely basis all required Forms 3, 4 and 5
under  Section 16(a) of the Exchange Act due in or in respect of the 2001 fiscal
year.



<PAGE>



Item 11.    Executive Compensation

    Summary Compensation Table

          The following  table reflects cash and non-cash  compensation  paid or
          accrued by the  Company  during the fiscal  years ended  November  30,
          2001,  2000  and 1999 to or for the  account  of the  chief  executive
          officer and each executive  officer whose cash  compensation  exceeded
          $100,000, and all executives of the Company as a group:

<TABLE>

                                         Annual Compensation                             Long-term Compensation

    Name and              Year                               Other      Restricted Securities
    Principal            Ended                              Annual         Stock   Underlying      LTIP          All Other
    Position            Nov. 30   Salary       Bonus     Compensation      Award   Options/SARs   Payouts       Compensation
    --------            -------   ------       -----     ------------      -----   ------------   -------       ------------
<S>                    <C>       <C>          <C>       <C>               <C>     <C>           <C>           <C>
Carl J. Bentley           2001    $185,000    $ 96,723     $12,000          $   -    250,000      $   -          $6,720
   Chairman of the        2000     169,900      81,407           -              -    200,000          -           3,400
   Board                  1999     157,500      99,381           -              -    200,000          -               -



Alan C. Bergold           2001     182,500      96,723     $12,000              -    250,000          -         $16,876
   President              2000     167,400      81,407           -              -    200,000          -           8,700
                          1999     155,000      99,381           -              -    200,000          -               -


Donald L. Champlin        2001     182,500      96,723     $12,000              -    250,000          -         $18,708
   Executive              2000     167,400      81,407           -              -    200,000          -           9,800
   Vice-President         1999     155,000      99,381           -              -    200,000          -               -

</TABLE>

          The  preceding  table  does  not  include  any  amounts  for  non-cash
          compensation,  including personal  benefits,  paid to the above-listed
          officers.  The  Company  believes  that  the  value  of such  non-cash
          benefits and  compensation  paid during the periods  presented did not
          exceed the lessor of $50,000 or 10% of the cash compensation reported.

          The Company  compensated  the directors for payments they made on life
          insurance  policies  on the  life of each of the  director's  lives in
          order to  substantially  complete the purchase of the other director's
          common stock ownership in case of death of a director.  The details of
          the stock purchase agreement are included in the employment  agreement
          of the officers with the Company.  The agreement  basically  calls for
          the first  right of refusal by the Company to  purchase  the  deceased
          directors stock for a price per share in relation to net book value.


<PAGE>


       The Company has employment agreements as follows:

          Carl J. Bentley (1):  $185,000  annual  salary per year,  adjusted for
          cost of living plus seven percent per annum base increase;  plus eight
          and  one-half   percent  bonus  of  net  pretax  income  exclusive  of
          contributions  to the  401(k) and profit  sharing  plan;  term of five
          years beginning May 31, 2001.

          Alan C. Bergold (1):  $182,500  annual  salary per year,  adjusted for
          cost of living plus seven percent per annum base increase;  plus eight
          and  one-half   percent  bonus  of  net  pretax  income  exclusive  of
          contributions  to the  401(k) and profit  sharing  plan;  term of five
          years beginning May 31, 2001.

          Donald L. Champlin (1): $182,500 annual salary per year,  adjusted for
          cost of living plus seven percent per annum base increase;  plus eight
          and  one-half   percent  bonus  of  net  pretax  income  exclusive  of
          contributions  to the  401(k) and profit  sharing  plan;  term of five
          years beginning May 31, 2001.

     (1)  There is a  provision  for  payment  of one year's  compensation  as a
          result  of  the  sale  of all or  substantially  all of the  Company's
          assets.

(b)   Option/SAR Grants in Last Fiscal Year
<TABLE>

                                                           % of Total
                                  Number of               Options/SARs
                                  Securities               Granted to                                                   Grant
                                  Underlying                                             Market                         Date
                                Options/SARs                                         Price on Date      Expiration      Present
            Name                   Granted                                              of Grant            Date        Value
            ----                   -------                                              --------            ----        -----

                                                    Employees        Exercise
                                                    in Fiscal         or Base
                                                                      Price/
                                 Year ($ Share)
<S>                              <C>                  <C>           <C>               <C>               <C>
Carl J. Bentley                     250,000              21%           $   .20          $  .19            12/31/03      $.11
Alan C. Bergold                     250,000              21%               .20             .19            12/31/03      $.11
Donald L. Champlin                  250,000              21%               .20             .19            12/31/03      $.11
</TABLE>



<PAGE>



(c)  Aggregated Option/SAR Exercises and Last Fiscal Year and Year-End Option/
     SAR Values
     --------------------------------------------------------------------------
<TABLE>

                                                                        Number of              Value of
                                                                         Securities           Unexercised
                                                                        Underlying           In-the-Money
                                                                       Unexercised              Options/
                                      Shares                           Options/SARs             SARs at
                                    Acquired           Value             at FY-end               FY-end
                  Name             on Exercise        Realized        (all exercisable)      (all exercisable)
         ---------------------     -----------       ----------       -----------------      -----------------
<S>                             <C>                 <C>               <C>                   <C>

         Carl J. Bentley              200,000        $     50,000             250,000        $      50,000
         Alan C. Bergold              200,000              50,000             250,000               50,000
         Donald L. Champlin           200,000              50,000             250,000               50,000
</TABLE>

         Refer to Note 8 to the Consolidated Financial Statements for
description of Stock Option Plan.


Item 12.Security Ownership of Certain Beneficial Owners and Management

(a)      Security Ownership of Certain Beneficial Owners

          The following table shows the beneficial  ownership of Common Stock by
          each  person  known by the  Company  to own  beneficially  more than 5
          percent of the outstanding shares of its Common Stock. The Company has
          no other class of voting securities.
<TABLE>
                                                   Common Stock

                    Name and Address of           Amount and Nature of               Percent
                    Beneficial Owner              Beneficial Ownership               of Class
---------------------------------------          ----------------------             ---------
<S>                                             <C>                                <C>
           Carl J. Bentley                          2,166,153 (1)                       20.6%
           4275 Forest Street
           Denver, CO  80216

           Alan C. Bergold                          2,652,646 (1)                       25.2%
           4275 Forest Street
           Denver, CO  80216

           Donald L. Champlin                       2,239,797 (1)                       21.3%
           4275 Forest Street
           Denver, CO  80216
<FN>

     (1)  Includes  250,000  shares,  which  may  be  acquired  pursuant  to the
          exercise of stock options exercisable on or before December 31, 2003.
</FN>
</TABLE>

<PAGE>



  (b)   Security Ownership of Management

        The following table shows the equity securities beneficially owned by
        all directors of the Company and all directors and officers of the
        Company as a group.

(1) Directors
<TABLE>
                                                   Common Stock

                    Name and Address of                   Amount and Nature of               Percent
                    Beneficial Owner                     Beneficial Ownership               of Class
---------------------------------------          -----------------------------             ---------
<S>                                               <C>                                     <C>

           Carl J. Bentley                                2,166,153 (1)                       20.6%
           4275 Forest Street
           Denver, CO  80216

           Alan C. Bergold                                2,652,646 (1)                       25.2%
           4275 Forest Street
           Denver, CO  80216

           Donald L. Champlin                             2,239,797 (1)                       21.3%
           4275 Forest Street
           Denver, CO  80216
<FN>

(1)  Includes 250,000 shares,  which may be acquired pursuant to the exercise of
     stock options exercisable on or before December 31, 2003.
</FN>
</TABLE>

(2) Directors and Officers as a Group
<TABLE>
                                                          Amount and Nature of               Percent
                       Title of Class                    Beneficial Ownership               of Class
---------------------------------------          -----------------------------             ---------
<S>                                             <C>                                        <C>

                  Common Stock                            7,058,596 (1)                       64.0%
                  (par value $.01)
<FN>

(1)  Includes 750,000 shares,  which may be acquired pursuant to the exercise of
     stock options exercisable on or before December 31, 2003.
</FN>
</TABLE>
(c) Changes in Control
    ------------------

        None.



<PAGE>



Item 13.    Certain Relationships and Related Transactions

(a)   Transactions With Management and Others

          On January 1, 1999,  the Board of Directors  granted an option to each
          of the officers of the Company to purchase  600,000 shares of treasury
          stock at $.18585 per share by December 31, 1999. The options' exercise
          price  was equal to the  common  stock's  market  price at the date of
          grant. On December 31, 1999, the officers and directors of the Company
          exercised  a total of 600,000  shares of the January 1, 1999 option at
          $.18585  per share.  During  the year ended  November  30,  1999,  the
          Company  issued  185,287 shares from treasury to its officers for cash
          proceeds of $30,504.

          On January 1, 2000,  the Board of Directors  granted an option to each
          of the officers of the Company to purchase  600,000 shares of treasury
          stock at $.25 per share by December  31, 2000.  The options'  exercise
          price  was equal to the  common  stock's  market  price at the date of
          grant.  During the year ended  November 30, 2000,  the Company  issued
          600,000  shares from  treasury to its  officers  for cash  proceeds of
          $111,510.

          On January 1, 2001,  the Board of Directors  granted an option to each
          of the officers of the Company to purchase  750,000 shares of treasury
          stock at $.20 per share by December  31, 2003.  The options'  exercise
          price was greater than the common  stock's market price at the date of
          grant.

          On July 18, 2001, the Board of Directors  granted common stock options
          to ten middle and senior managers of the Company.  The options totaled
          460,000 shares of which 165,000 shares of options  expired on December
          31, 2001 if not subscribed by that date. The option price was $.30 per
          share. The remainder of the options were to be exercised no later than
          December  31,  2002.  As of December  31,  2001,  105,000  shares were
          subscribed to by the managers  which meant that the  remaining  60,000
          options expired as of that date.  Three senior managers were given, as
          a bonus for 2001,  an additional  16,667  shares  (valued at $0.30 per
          share)  which were  granted on December 20, 2001 when the market price
          was $.21 per share.

(b) Certain Business Relationships
        None.

(c) Indebtedness of Management
        None.

(d) Transactions with Promoters
        Not applicable.



<PAGE>



                                                       PART IV

Item 14.    Exhibits and Reports on Form 8-K

Exhibits

     (a)  The documents listed below have been filed as exhibits to this report.
          As  used  in  this  exhibit  list,   "Form  10"  means  the  Company's
          Registration  Statement  on Form 10  filed  with  the  Securities  and
          Exchange Commission in March 1981.

          3.1  Articles of Incorporation  (incorporated by reference to Exhibits
               3.1 and 3.2 to Form 10).

          3.2  By-laws  (incorporated  by  reference  to Exhibit 3.3 to the Form
               10).

          21   Subsidiary of the Company.

     (b)  During  the last  quarter of the  period  covered  by this  report the
          Company  filed a Current  Report on Form 8-K dated  November  15, 2001
          reporting a change of accountants pursuant to Item 4 of that form.



<PAGE>




                                   Exhibit 21

                            SUBSIDIARY OF THE COMPANY


Name                                                   State of Incorporation

CPS Distributors, Inc.                                        Colorado



<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities  and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    HIA, INC.



                                       By:/s/ Alan C. Bergold
                                         ---------------------------------------
                                         Alan C. Bergold, President,
                                         Treasurer and Director

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

Signature                                        Title                 Date


/s/ Carl J. Bentley                          Chairman of the Board
---------------------------------------
Carl J. Bentley                              and Director


 /s/ Alan C. Bergold                         President,
---------------------------------------
Alan C. Bergold                              Treasurer and Director


 /s/ Donald L. Champlin                       Executive Vice
---------------------------------------
Donald L. Champlin                            President, Secretary
                                              and Director


<PAGE>






                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                      PAGE

Independent Auditor's Report...........................................F-2

Report of Independent Certified Public Accountants.....................F-3

     Financial Statements

       Consolidated Balance Sheets - November 30, 2001 and 2000........F-4

       Consolidated Statements of Income - For the Years Ended
       November 30, 2001, 2000 and 1999................................F-6

       Consolidated Statements of Stockholders' Equity - For the
       Years Ended November 30, 2001, 2000, and 1999...................F-7

       Consolidated Statements of Cash Flows - For the Years
       Ended November 30, 2001, 2000, and 1999.........................F-8

     Notes to Consolidated Financial Statements........................F-9


                                      F-1

<PAGE>









                          INDEPENDENT AUDITOR'S REPORT






Board of Directors
HIA, Inc. and Subsidiaires
Denver, Colorado


We have audited the  accompanying  consolidated  balance  sheet of HIA, Inc. and
Subsidiaries   (the  "Company")  as  of  November  30,  2001,  and  the  related
consolidated statements of income,  stockholders' equity, and cash flows for the
year then  ended.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit 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  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of HIA,  Inc. and
Subsidiaries  as of November  30, 2001 and the results of their  operations  and
their  cash  flows  for the year  then  ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.




HEIN + ASSOCIATES LLP
Denver, Colorado

January 21, 2002


<PAGE>

Report of Independent Certified Public Accountants



To the Stockholders and Board of Directors
HIA, Inc. and Subsidiary
Denver, Colorado

We have audited the  accompanying  consolidated  balance  sheet of HIA, Inc. and
subsidiary (the "Company") as of November 30, 2000 and the related  consolidated
statements  of income,  stockholders'  equity and cash flows for the years ended
November 30, 2000 and 1999. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
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 audit 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  financial  position of HIA,  Inc. and
subsidiary  at November 30, 2000 and the results of their  operations  and their
cash flows for the years ended  November  30, 2000 and 1999 in  conformity  with
generally accepted accounting principles.


                                                     /s/ BDO Seidman, LLP


Denver, Colorado
January 10, 2001
                                      F-3
<PAGE>

                           HIA, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
                                                                                                 NOVEMBER 30,
                                                                                      -----------------------------------
                                                                                      ----------------   ----------------
                                                                                           2001               2000
                                                                                   -------------------   ----------------

                                     ASSETS

CURRENT ASSETS:
<S>                                                                                <C>                  <C>
    Cash                                                                              $       1,000      $           -
    Accounts receivable, net of allowance of $146,000 and $111,000, respectively          3,452,000          3,466,000
    Inventories                                                                           3,784,000          4,264,000
    Other current assets                                                                    204,000            224,000
                                                                                      -------------      -------------
             Total current assets                                                         7,441,000          7,954,000
PROPERTY AND EQUIPMENT:
    Leasehold improvements                                                                  289,000            286,000
    Equipment                                                                             1,347,000          1,308,000
                                                                                      -------------      -------------
                                                                                          1,636,000          1,594,000
    Less accumulated depreciation and amortization                                       (1,216,000)        (1,009,000)
                                                                                      -------------      -------------
             Net property and equipment                                                     420,000            585,000
OTHER ASSETS:
    Goodwill, net of accumulated amortization of $383,000 and $230,000                    1,151,000          1,304,000
    Deferred tax asset                                                                       36,000             68,000
    Non-compete agreement, net of accumulated amortization of $37,000 and $23,000           113,000            127,000
    Other                                                                                   159,000            143,000
                                                                                      -------------      -------------
             Total other assets                                                           1,459,000          1,642,000
                                                                                      -------------      -------------

TOTAL ASSETS                                                                          $   9,320,000      $  10,181,000
                                                                                      =============      =============

</TABLE>
          See accompanying notes to consolidated financial statements.
                                       F-4
<PAGE>


                           HIA, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)

<TABLE>

                                                                                                 NOVEMBER 30,
                                                                                       ----------------------------------
                                                                                       ---------------   ----------------
                                                                                            2001              2000
                                                                                       ---------------   ----------------

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
<S>                                                                                <C>                  <C>
    Line-of-credit                                                                     $   1,815,000     $   2,381,000
    Current maturities of long-term debt                                                     298,000           290,000
    Current maturities of capital lease obligations                                          189,000           174,000
    Accounts payable                                                                         477,000           796,000
    Checks written against future deposits                                                   207,000           124,000
    Accrued payroll and bonuses                                                              354,000           301,000
    Income taxes payable                                                                      36,000                 -
    Other current liabilities                                                                203,000           131,000
                                                                                       -------------     -------------
             Total current liabilities                                                     3,579,000         4,197,000
LONG-TERM LIABILITIES:
    Long-term debt, less current maturities                                                1,165,000         1,464,000
    Capital lease obligations, less current maturities                                       117,000           308,000
                                                                                       -------------     -------------
             Total long-term liabilities                                                   1,282,000         1,772,000
                                                                                       -------------     -------------
             Total liabilities                                                             4,861,000         5,969,000
COMMITMENTS (Notes 6 and 9)
STOCKHOLDERS' EQUITY:
    Common stock, $.01 par value; 20,000,000 shares authorized; 13,108,196 and
         13,107,896 issued and 10,126,525 and 10,360,231 outstanding                         131,000           131,000
    Additional paid-in capital                                                             3,109,000         3,109,000
    Retained earnings                                                                      1,831,000         1,466,000
    Less treasury stock at cost; 2,981,671 and 2,747,665 shares                             (612,000)         (494,000)
                                                                                       -------------     -------------
             Total stockholders' equity                                                    4,459,000         4,212,000
                                                                                       -------------     -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             $   9,320,000     $  10,181,000
                                                                                       =============     =============
</TABLE>
          See accompanying notes to consolidated financial statements.
                                       F-5

<PAGE>

                           HIA, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>

                                                                  2001              2000                1999
                                                             ----------------  ----------------   -----------------
                                                             ----------------  ----------------   -----------------
<S>                                                         <C>               <C>                 <C>

NET SALES                                                    $  31,270,000     $  32,141,000      $  26,133,000

COST OF SALES                                                   21,598,000        22,750,000         18,341,000
                                                             -------------     -------------      -------------

    Gross profit                                                 9,672,000         9,391,000          7,792,000

SELLING, GENERAL AND ADMINISTRATIVE                              8,748,000         8,268,000          6,815,000
                                                             -------------     -------------      -------------

OPERATING INCOME                                                   924,000         1,123,000            977,000

OTHER INCOME (EXPENSE):
    Interest income                                                 84,000            50,000             52,000
    Interest expense                                              (394,000)         (461,000)          (202,000)
    Miscellaneous income                                            56,000             1,000             36,000
                                                             -------------     -------------      -------------
         Total other expense                                      (254,000)         (410,000)          (114,000)
                                                             -------------     -------------      -------------
INCOME BEFORE INCOME TAXES                                         670,000           713,000            863,000

INCOME TAXES                                                       305,000           335,000            375,000
                                                             -------------     -------------      -------------

NET INCOME                                                   $     365,000     $     378,000      $     488,000
                                                             =============     =============      =============

NET INCOME PER COMMON SHARE:
    Basic                                                    $         .04     $         .04      $         .05
    Diluted                                                  $         .04     $         .04      $         .05

BASIC WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING                10,184,000        10,309,000          9,774,000
                                                             -------------     -------------      -------------

DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING              10,217,000        10,324,000          9,813,000
                                                             -------------     -------------      -------------

</TABLE>
          See accompanying notes to consolidated financial statements.
                                       F-6
<PAGE>

                           HIA, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>


                                                                                Additional
                                                                                Paid-In          Retained
                                                    Common Stock                Capital          Earnings
                                           --------------------------------  --------------   ----------------
                                           --------------------------------
                                              Shares           Amount
                                           ------------   -----------------  --------------   ----------------
                                           ------------                      --------------   ----------------
<S>                                     <C>              <C>                <C>              <C>

Balance, December 1, 1998                    13,107,896  $     131,000       $ 3,109,000      $    600,000

    Acquisition of treasury stock                     -              -                 -                 -

    Issuance of shares held in treasury               -              -                 -                 -

    Net income                                        -              -                 -           488,000
                                            -----------     ----------         ---------        ----------

Balance, November 30, 1999                   13,107,896        131,000         3,109,000         1,088,000

    Issuance of shares held in treasury               -              -                 -                 -

    Net income                                        -              -                 -           378,000
                                            -----------     ----------         ---------        ----------

Balance, November 30, 2000                   13,107,896        131,000         3,109,000         1,466,000

    Issuance of common stock                        300              -                 -                 -

    Issuance of shares held in treasury               -              -                 -                 -

    Acquisition of treasury stock                     -              -                 -                 -

    Net income                                        -              -                 -           365,000
                                            -----------     ----------         ---------        ----------

Balance, November 30, 2001                   13,108,196  $     131,000       $ 3,109,000      $  1,831,000
                                            ===========  =============       ===========      ============

</TABLE>
<TABLE>
                                                                              Total
                                                                           Stockholders
                                                   Treasury Stock            Equity
                                           -----------------------------  -------------------
                                           -----------------------------
                                               Shares         Amount
                                           -------------- --------------  -------------------
                                           --------------                 -------------------
<S>                                       <C>               <C>                 <C>

Balance, December 1, 1998                        3,713,713     $   (681,000)   $    3,159,000

    Acquisition of treasury stock                  119,239          (22,000)          (22,000)

    Issuance of shares held in treasury           (485,287)          97,000            97,000

    Net income                                           -                -           488,000
                                                ----------         ---------        ---------

Balance, November 30, 1999                       3,347,665         (606,000)        3,722,000

    Issuance of shares held in treasury           (600,000)         112,000           112,000

    Net income                                           -                -           378,000
                                                 ---------         --------         ---------

Balance, November 30, 2000                       2,747,665         (494,000)        4,212,000

    Issuance of common stock                             -                -                 -

    Issuance of shares held in treasury           (600,000)         150,000           150,000

    Acquisition of treasury stock                  834,006         (268,000)         (268,000)

    Net income                                           -                -           365,000
                                                ----------      ------------     ------------

Balance, November 30, 2001                       2,981,671     $   (612,000)   $    4,459,000
                                                ==========      ============    =============

</TABLE>
          See accompanying notes to consolidated financial statements.
                                       F-7


<PAGE>





                           HIA, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
                                                                            FOR THE YEARS ENDED NOVEMBER 30,
                                                                  -----------------------------------------------------
                                                                  -----------------------------------------------------
                                                                       2001              2000               1999
                                                                  ---------------   ----------------   ----------------
                                                                  ---------------   ----------------   ----------------
<S>                                                             <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                    $     365,000     $     378,000      $     488,000
    Adjustments to reconcile net income to net cash provided
         by (used in) operating activities:
           Depreciation and amortization                                374,000           396,000            347,000
           Gain on sale property                                         (2,000)                -                  -
           Loss on disposal of assets                                         -            46,000             94,000
           Allowance for doubtful accounts                               35,000                 -             10,000
           Allowance for inventory obsolescence                          48,000                 -                  -
           Deferred income taxes                                         18,000           118,000            (82,000)
           Changes in operating assets and liabilities, net
           of business combination:
               Accounts receivable                                      (21,000)         (154,000)          (862,000)
               Inventories                                              432,000          (905,000)           132,000
               Other current assets                                     (15,000)          (19,000)            35,000
               Accounts payable                                        (319,000)         (147,000)          (408,000)
               Other current liabilities                                161,000          (240,000)           239,000
                                                                  -------------     -------------      -------------
                 Net cash provided by (used in) operating
                      activities                                      1,076,000          (527,000)            (7,000)
                                                                  -------------     -------------      -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of WPS, net of cash acquired                                     -                 -         (1,379,000)
    Purchase of property and equipment                                  (42,000)          (91,000)           (44,000)
    Increase (decrease) in other assets                                  35,000           (73,000)             2,000
                                                                  -------------     -------------      -------------
         Net cash used in investing activities                           (7,000)         (164,000)        (1,421,000)
                                                                  -------------     -------------      -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from line-of-credit                                     10,087,000         9,578,000          7,553,000
    Repayments on line-of-credit                                    (10,653,000)       (8,419,000)        (6,992,000)
    Proceeds on long-term debt                                                -                 -          1,000,000
    Repayments on long-term debt                                       (291,000)         (283,000)          (139,000)
    Repayments on capital lease obligations                            (176,000)         (182,000)          (114,000)
    Acquisitions of treasury stock                                     (268,000)                -            (23,000)
    Proceeds from sale of treasury stock                                150,000           112,000             97,000
    Increase (decrease) in checks written against future                 83,000          (136,000)            37,000
                                                                  -------------     -------------      -------------
    deposits
         Net cash provided by (used in) financing activities         (1,068,000)          670,000          1,419,000
                                                                  -------------     -------------      -------------
INCREASE (DECREASE) IN CASH                                               1,000           (21,000)            (9,000)
CASH, beginning of year                                                       -            21,000             30,000
                                                                  -------------     -------------      -------------
CASH, end of year                                                 $       1,000     $           -      $      21,000
                                                                  =============     =============      =============

</TABLE>
          See accompanying notes to consolidated financial statements.
                                       F-8

<PAGE>


                           HIA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
    ------------------------------------------------

     Principles of Consolidation - The consolidated financial statements include
     the  accounts of HIA,  Inc.  (the  "Company"  or "HIA"),  its  wholly-owned
     subsidiary  CPS  Distributors,   Inc.  ("CPS"),   and  CPS's   wholly-owned
     subsidiary,  Western  Pipe  Supply  ("WPS")  and Water  Systems,  Inc.  All
     significant  intercompany accounts and transactions have been eliminated in
     consolidation.

     Lines of Business - The principal  business of HIA,  conducted  through its
     subsidiary,  is the  wholesale  business  distribution  of turf  irrigation
     equipment and pumps.

     Concentration  of  Risk - The  Company's  financial  instruments  that  are
     exposed to  concentrations  of credit risk  consist  primarily  of cash and
     accounts receivable.  The Company invests temporary cash in demand deposits
     with federally insured financial institutions. Such demand deposit accounts
     at  times  may  exceed  federally  insured  limits.  The  Company  has  not
     experienced any losses in such accounts.

     Concentrations  of credit  risk with  respect to  accounts  receivable  are
     limited due to the large number of customers  and  generally  short payment
     terms.  The Company  reviews a customer's  credit history before  extending
     credit and  establishes  an allowance for doubtful  accounts based upon the
     credit risk of specific customers, historical trends and other information.
     Generally, the Company does not require collateral from its customers.

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

     Financial  Instruments - The following methods and assumptions were used to
     estimate the fair value of each instruments class of financial  instruments
     for which it is practicable to estimate that value.

     Fair values of accounts  receivables,  accounts  payable and other  current
     liabilities are assumed to approximate  carrying values for these financial
     instruments since they are short term in nature.

     The note  payable,  long-term  debt,  and capital  lease  obligations  bear
     interest  at fixed  and  floating  rates of  interest  based  upon  lending
     institutions'   prime   lending   rate.   Accordingly,   their  fair  value
     approximates their reported carrying amounts at November 30, 2001 and 2000.

     Inventories - Inventories consist of wholesale goods held for resale, which
     are primarily  valued at the lower of cost (as determined  using  first-in,
     first-out method) or market.

     Cost of Sales - Cost of  sales  consists  of the  actual  cost of  products
     purchased for resale and related in-bound shipping charges.


                                      F-9
<PAGE>


     Fulfillment Costs - Included in selling, general and administrative expense
     are fulfillment  costs, which consist of the cost of operating and staffing
     each branch location.  Such costs include those  attributable to receiving,
     inspecting  and  warehousing  inventories.  Fulfillment  costs  amounted to
     approximately  $3,283,000,  $3,608,000 and $2,628,000 in fiscal 2001, 2000,
     and 1999, respectively.

     Depreciation, Amortization, Property and Equipment - Property and equipment
     are stated at cost. Depreciation is computed using the straight-line method
     of accounting  over the estimated  useful lives of the assets,  which range
     from three to ten years.  Leasehold  improvements  and leased equipment are
     amortized over the lesser of the estimated useful lives or over the term of
     the  leases.  Upon sale or  retirement,  the cost and  related  accumulated
     depreciation of disposed assets are eliminated from the respective accounts
     and the  resulting  gain or loss is included in the  statements  of income.
     Depreciation  expense was  $207,000,  $261,000,  and $230,000 for the years
     ended November 30, 2001, 2000, and 1999.

     Long-Lived  Assets  -  Long-lived  assets  and  identifiable   intangibles,
     including  goodwill  and  the  non-compete  agreement,   are  reviewed  for
     impairment  whenever events or changes in  circumstances  indicate that the
     carrying amount may not be recoverable. If the expected undiscounted future
     cash flow from the use of the asset and its  eventual  disposition  is less
     than the carrying  amount of the assets,  an impairment  loss is recognized
     and measured using the asset's fair value. Included in selling, general and
     administrative  expense for 1999 is  approximately  $94,000  related to the
     impairment loss of certain  capitalized  computer software abandoned by the
     Company.

     Goodwill  and   Non-Compete   Agreement  -  Goodwill  and  the  non-compete
     agreement,  which relate to the  acquisition  of WPS in Agreement 1999 (see
     Note 2), are being amortized over a 10-year period using the  straight-line
     method.  Amortization expense was $167,000,  $135,000, and $118,000 for the
     years ended November 30, 2001, 2000, and 1999.

     Revenue  Recognition - The Company recognizes revenue at the time goods are
     shipped to customers in the normal course of business.

     Income Taxes - The Company  accounts  for income taxes under the  liability
     method,  which  requires an entity to  recognize,  deferred  tax assets and
     liabilities. Temporary differences are differences between the tax basis of
     assets  and  liabilities  and  their  reported  amounts  in  the  financial
     statements  that will  result in  taxable or  deductible  amounts in future
     years.

     Advertising  Costs  -  The  Company  recognizes  advertising  expense  when
     incurred.  Advertising  expense was  approximately  $31,000,  $10,000,  and
     $25,000 for the years ended November 30, 2001, 2000, and 1999.

     Net Income Per Common Share - Statement of Financial  Accounting  Standards
     No. 128,  "Earnings Per Share"  provides for the calculation of "Basic" and
     "Diluted"  earnings  or net income  per  share.  Basic net income 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.  Diluted  net  income  per share  reflects  the  potential
     dilution of securities that could share in the earnings of an entity.

                                      F-10

<PAGE>


     For the year ended  November  30,  2001,  32,738  shares  were  included in
     dilutive  shares  outstanding  which  related to employee  stock options to
     purchase  750,000  shares of the Company's  common stock at $.20 per share.
     For the year ended  November  30,  2000,  15,000  shares  were  included in
     dilutive  shares  outstanding  which  relate to employee  stock  options to
     purchase  600,000 shares of the Company's common stock at $.1859 per share.
     Employee  stock  options to  purchase  460,000  and  600,000  shares of the
     Company's  common  stock at $.30 and $.25 per share  were not  included  in
     dilutive  shares  outstanding for the year ended November 30, 2001 and 2000
     as their  exercise price exceeded the average market price of the Company's
     common stock during the period.  Likewise,  for the year ended November 30,
     1999,  600,000  employee  stock options to purchase the common stock of the
     Company  at  $0.1859  were not  included  in  calculating  dilutive  shares
     outstanding  as the exercise price exceeded the average market price of the
     common stock during the period.

     Cash  Equivalents - The Company  considers  all highly  liquid  investments
     purchased  with an  original  maturity  of three  months or less to be cash
     equivalents.

     Stock  Option  Plans - The  Company  applies  Accounting  Principles  Board
     ("APB")  Opinion 25,  "Accounting  for Stock Issued to Employees,"  and the
     related interpretations in accounting for all stock option plans. Under APB
     Opinion 25, no  compensation  cost has been  recognized  for stock  options
     issued to employees as the exercise  price of the  Company's  stock options
     granted equals or exceeds the market price of the  underlying  common stock
     on the date of grant.

     Statement  of  Financial  Accounting  Standards  No. 123,  "Accounting  for
     Stock-Based Compensation" ("SFAS No. 123"), requires the Company to provide
     pro forma information  regarding net income as if compensation cost for the
     Company's  stock options plans had been  determined in accordance  with the
     fair value based method prescribed in SFAS No. 123. To provide the required
     pro forma  information,  the Company estimates the fair value of each stock
     option at the grant date by using the Black-Scholes option-pricing model.

     Reclassifications  - Certain  reclassifications  have been made to the 1999
     and 2000  financial  statements  in order for them to  conform  to the 2001
     presentation.  Such  reclassifications  have  no  material  impact  on  the
     Company's consolidated financial position or results of operations.

     Comprehensive  Income - Comprehensive income is comprised of net income and
     all changes to the consolidated  statement of stockholders'  equity, except
     those  changes  made  due  to  investments  by  stockholders,   changes  in
     paid-in-capital  and distributions to stockholders.  There is no difference
     between net income and  comprehensive  income for the years ended  November
     30, 2001, 2000, and 1999.

     Fourth Quarter  Adjustments - The Company recorded in the fourth quarter of
     the year ended November 30, 2001,  2000, and 1999,  adjustments to properly
     accrue  for  officer  bonuses  in the  amount  of  $140,000,  $24,000,  and
     $298,000, respectively.

                                      F-11

<PAGE>


     Recent Accounting  Pronouncements - In June 2001, the Financial  Accounting
     Standards  Board  ("FASB")  issued   Statements  of  Financial   Accounting
     Standards  No.  141  "Business  Combinations"  ("SFAS  141")  and  No.  142
     "Goodwill and Other Intangible  Assets" ("SFAS 142"). SFAS 141 requires all
     business  combinations  initiated  after June 30, 2001 to be accounted  for
     under the purchase method. For all business combinations for which the date
     of acquisition is after June 30, 2001, SFAS 141 also  establishes  specific
     criteria for the recognition of intangible  assets separately from goodwill
     and requires unallocated negative goodwill to be written off immediately as
     an extraordinary gain, rather than deferred and amortized. SFAS 142 changes
     the  accounting  for  goodwill  and  other   intangible   assets  after  an
     acquisition. The most significant changes made by SFAS 142 are: 1) goodwill
     and intangible assets with indefinite lives will no longer be amortized; 2)
     goodwill and  intangible  assets with  indefinite  lives must be tested for
     impairment at least annually; and 3) the amortization period for intangible
     assets with finite lives will no longer be limited to forty years. SFAS 142
     is effective for fiscal years beginning after December 15, 2001, with early
     application  permitted  in  certain  circumstances.  The  Company  does not
     believe  that the  adoption of SFAS 141 will have a material  effect on its
     financial position, results of operations, or cash flows. At this time, the
     Company  cannot  estimate the effect of statement SFAS 142 on its financial
     position, results of operations, or cash flows.

     In June  2001,  the  FASB  also  approved  for  issuance  SFAS  143  "Asset
     Retirement  Obligations." SFAS 143 establishes accounting  requirements for
     retirement   obligations   associated  with  tangible   long-lived  assets,
     including  (1)  the  timing  of  the  liability  recognition,  (2)  initial
     measurement of the liability,  (3) allocation of asset  retirement  cost to
     expense,  (4)  subsequent  measurement  of the  liability and (5) financial
     statement  disclosures.  SFAS 143 requires  that an asset  retirement  cost
     should be capitalized as part of the cost of the related  long-lived  asset
     and  subsequently  allocated  to expense  using a  systematic  and rational
     method.  The  Company  will  adopt the  statement  effective  no later than
     January 1, 2003, as required.  The transition adjustment resulting from the
     adoption of SFAS 143 will be reported as a cumulative effect of a change in
     accounting  principle.  The Company  does not believe  that the adoption of
     this  statement  will have a  material  effect on its  financial  position,
     results of operations, or cash flows.

     In  October  2001,  the FASB also  approved  SFAS 144,  Accounting  for the
     Impairment  or Disposal of Long-Lived  Assets.  SFAS 144 replaces SFAS 121,
     Accounting  for the  Impairment  of  Long-Lived  Assets and for  Long-Lived
     Assets to Be Disposed Of. The new accounting model for long-lived assets to
     be  disposed  of by  sale  applies  to  all  long-lived  assets,  including
     discontinued operations, and replaces the provisions of APB Opinion No. 30,
     Reporting  Results of  Operations-Reporting  the  Effects of  Disposal of a
     Segment  of a  Business,  for  the  disposal  of  segments  of a  business.
     Statement  144  requires  that those  long-lived  assets be measured at the
     lower of carrying amount or fair value less cost to sell,  whether reported
     in  continuing  operations  or  in  discontinued   operations.   Therefore,
     discontinued  operations will no longer be measured at net realizable value
     or  include  amounts  for  operating  losses  that  have not yet  occurred.
     Statement  144 also broadens the  reporting of  discontinued  operations to
     include  all  components  of  an  entity  with   operations   that  can  be
     distinguished  from the rest of the entity and that will be eliminated from
     the  ongoing  operations  of the  entity  in a  disposal  transaction.  The
     provisions of Statement 144 are effective for financial  statements  issued
     for fiscal years beginning after December 15, 2001 and,  generally,  are to
     be applied prospectively. The Company does not believe that the adoption of
     this  statement  will have a  material  effect on its  financial  position,
     results of operations, or cash flows.



                                      F-12

<PAGE>


                           HIA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



2.  BUSINESS ACQUISITION:
    --------------------

     On May 25, 1999, the Company,  through its  wholly-owned  subsidiary,  CPS,
     acquired  all of the issued and  outstanding  common  stock of Western Pipe
     Supply,  Inc. ("WPS") for a purchase price of $2,746,739  including $84,244
     in acquisition  costs. Of the total purchase price,  $1,485,385 was paid in
     cash  directly  to  the  seller  and  $1,177,110  was  in  the  form  of  a
     subordinated promissory note. (See Note 4.) The cash paid to the seller was
     financed in part by additional borrowings on the Company's existing line of
     credit of $927,889 (of which  $442,504  was the amount  required to pay off
     the seller's existing line of credit) and a $1,000,000  five-year term note
     payable.

     The  acquisition  was recorded  using the purchase  method of accounting by
     which  the  assets  were  valued  at  fair  market  value  at the  date  of
     acquisition.  The preliminary purchase price allocation as reflected in the
     Company's  1999  quarterly  financial  statements  was  adjusted to reflect
     deferred  tax  assets  of  $163,099  that  existed  at the  purchase  date.
     Accordingly,  the amount of goodwill  recorded  pursuant to the preliminary
     purchase price allocation was reduced by $163,099. The operating results of
     this  acquisition  have  been  included  in the  accompanying  consolidated
     financial statements from the date of acquisition.

     The final allocation of the purchases price was as follows:
<TABLE>
<S>                                                             <C>
                   Cash                                                  $         191,000
                   Accounts receivable, net                                        806,000
                   Inventories                                                   1,328,000
                   Other current assets                                             16,000
                   Property and equipment                                          178,000
                   Deferred tax assets                                             163,000
                   Goodwill                                                      1,534,000
                   Non-compete agreement                                           150,000
                   Less:
                       Accounts payable                                          1,052,000
                       Other current liabilities                                   101,000
                       Line-of-credit                                              443,000
                       Long-term obligation                                         23,000
                                                                         -----------------

                   Total purchase price                                  $       2,747,000
                                                                         =================
</TABLE>


     The result of WPS' operations for the year ended November 30, 2001 and 2000
     are included in the  Company's  consolidated  statement of income.  For the
     year ended November 30, 1999,  the results of WPS'  operations are included
     from May 25, 1999, the date of purchase, through November 30, 1999.

     The following  unaudited pro forma  information  presents the  consolidated
     results of operations of the Company as if the  acquisition of WPS occurred
     at the beginning of fiscal year 1999.  The  unaudited  pro forma  financial

                                      F-13
<PAGE>

     data does not purport to be indicative of the results which  actually would
     have been obtained had the purchase  occurred on the dates  indicated or of
     the results which may be obtained in the future.
<TABLE>
                               Year Ended November 30,                           1999
                   -------------------------------------------------     ---------------------
                   -------------------------------------------------     ---------------------
<S>                                                                     <C>

                   Net sales                                             $      29,327,944

                   Net income                                            $         363,486

                   Net income per common share:
                       Basic                                                           .04
                       Diluted                                                         .04
</TABLE>


3.  NOTE PAYABLE AND LONG-TERM DEBT:
    -------------------------------

     Line-of-Credit  Agreement - CPS and its  subsidiary  have a  line-of-credit
     agreement  with a bank,  which expires on December 31, 2002.  During fiscal
     2001,  the  available  line-of-credit  was  increased  from  $4,500,000  to
     $5,000,000.  The  available  loan amount is the lesser of $5,000,000 or the
     computed  borrowing  base,  as defined by the terms of the  agreement.  The
     line-of-credit  provides  for  interest  at the  bank's  prime  rate (5% at
     November 30, 2001). The agreement is  collateralized  by principally all of
     the Company's  business assets including accounts  receivable,  inventories
     and property and equipment,  excluding owned real estate. Additionally, the
     bank has the right of set-off under this  agreement.  The agreement is also
     guaranteed by HIA.

     The  agreement  contains  several  covenants,  which,  among other  things,
     require that the Company maintain  certain  financial  ratios,  minimum net
     worth  and  minimum  working  capital  as  defined  in  the  line-of-credit
     agreement. In addition, the agreement limits the payment of dividends,  the
     purchase  of  property   and   equipment,   and  officer  and   stockholder
     compensation.  As of November 30, 2001, the Company was in compliance  with
     these covenants under the line-of-credit agreement.

     As  of  November  30,  2001  and  2000,   $1,815,000  and  $2,381,000  were
     outstanding under this line-of-credit agreement.

                                      F-14

<PAGE>


4.  LONG-TERM DEBT:
    --------------

       Long-term debt consisted of the following:
<TABLE>

                                                                                              November 30,
                                                                               -------------------------------------------
                                                                               ------------------- -- --------------------
                                                                                      2001                   2000
                                                                               -------------------    --------------------
                                                                               -------------------
<S>                                                                           <C>                    <C>

       Subordinated note dated May 24, 1999; monthly principal and interest
           payments of $14,282 through June 2009, including interest at 8% per
           annum. Collateralized by common shares of
           WPS.                                                                $        963,000       $       1,054,000

       Promissory note dated May 24, 1999; monthly principal and interest
           payments of approximately $23,000 through May 2004, including
           interest at 8.125% per annum. Collateralized by substantially all of
           the Company's business assets including accounts receivable,
           inventories and property and equipment, excluding owned real estate.
                                                                                        500,000                 700,000
                                                                               ----------------       -----------------

       Total long-term debt                                                           1,463,000               1,754,000

       Less current maturities                                                         (298,000)               (290,000)
                                                                               ----------------       -----------------

       Long-term debt, less current maturities                                 $      1,165,000       $       1,464,000
                                                                               ================       =================
</TABLE>

       Aggregate maturities of long-term debt at November 30, 2001 are as
follows:

                   2002                                   $         298,000
                   2003                                             306,000
                   2004                                             215,000
                   2005                                             124,000
                   2006                                             134,000
                   Thereafter                                       386,000
                                                          -----------------

                                                          $       1,463,000
                                      F-15

<PAGE>


5.  CAPITAL LEASE OBLIGATIONS:
    --------------------------

     The  following  is a  schedule  by year of  future  non-cancelable  minimum
     payments required under the capital lease,  together with the present value
     of the related payments as of November 30, 2001.

                   2002                                   $         208,000
                   2003                                             121,000
                                                          -----------------
                                                                    329,000

               Less amount representing interest                    (23,000)
                                                          -----------------

               Present value of minimum lease payments              306,000

               Less current maturities                             (189,000)
                                                          -----------------

               Long-term  capital  lease  obligation,
                   less current maturities                $         117,000


     As of November 30, 2001,  2000, and 1999, the cost of the  computer-related
     equipment  leased  under  the  capital  lease  obligations  were  $244,000,
     $662,000,  and  $446,000,  net of  accumulated  amortization  of  $387,000,
     $276,000, and $154,000.

6.  COMMITMENTS:
    -----------

     Operating   Leases  -  The  Company  leases  its  main  warehouse  under  a
     non-cancelable  operating lease requiring monthly payments through February
     2005. The Company has an option to purchase the related property at the end
     of the initial ten-year term at a price  approximating  the market value at
     that time, subject to certain  conditions.  The lease also provides for two
     five-year options to extend the lease term.

     The Company also leases vehicles, equipment and other warehouse space under
     noncancellable operating leases.

     Total lease expense was approximately  $1,043,000,  $908,000,  and $648,000
     for fiscal 2001, 2000, and 1999.

                                      F-16

<PAGE>


     As of  November  30,  2001  future  annual  minimum  lease  payments  under
     non-cancelable operating leases are as follows:

               Years Ending November 30,
               -----------------------------------------------------
               -----------------------------------------------------

                   2002                                $         989,000
                   2003                                          925,000
                   2004                                          640,000
                   2005                                          208,000
                   2006                                          137,000
                                                       -----------------

                                                       $       2,899,000


     Employment  Agreements - The Company has entered into employment agreements
     that extend to May 31, 2006 with three officers.  The employment agreements
     set forth  annual  compensation  to its  officers of between  $183,000  and
     $185,000  each.  Compensation  is  adjusted  annually  based on the cost of
     living index plus seven percent per annum base increase;  plus an eight and
     one-half   percent   bonus  of  net   pretax   income   exclusive   of  the
     401(k)/profit-sharing contribution.

7.  TAXES ON INCOME:
    ---------------

       The provision for taxes on income for the years ended November 30, 2001,
       2000, and 1999 consisted of the following:
<TABLE>
                                                                   2001              2000              1999
                                                              ----------------  ---------------   ---------------
                                                              ----------------  ---------------   ---------------
<S>                                                          <C>               <C>                <C>

              Current:
                  Federal                                     $     259,000     $     188,000     $     395,000
                  State                                              28,000            29,000            62,000
                                                              -------------     -------------     -------------
                                                                    287,000           217,000           457,000
              Deferred (benefit):
                  Federal                                            18,000            99,000           (75,000)
                  State                                                   -            19,000            (7,000)
                                                              -------------     -------------     -------------
                                                                     18,000           118,000           (82,000)
                                                              -------------     -------------     -------------

                                                              $     305,000     $     335,000     $     375,000
                                                              =============     =============     =============
</TABLE>
                                      F-17



<PAGE>


     A reconciliation of taxes on income at the federally  statutory rate to the
     effective tax rate is shown below:
<TABLE>
                                                                           Years Ended November 30,
                                                              ---------------------------------------------------
                                                                   2001              2000              1999
                                                              ----------------  ---------------   ---------------
                                                              ----------------  ---------------   ---------------
<S>                                                          <C>                <C>             <C>

              Income taxes computed at the federal
                  statutory rate                              $     228,000     $     243,000     $     293,000
              State income taxes, net of federal benefit             21,000            21,000            26,000
              Amortization of goodwill                               41,000            41,000            41,000
              Other permanent differences                            15,000            30,000            15,000
                                                              -------------     -------------     -------------

              Taxes on income                                 $     305,000     $     335,000     $     375,000
                                                              =============     =============     =============
</TABLE>


     Temporary   differences  between  the  consolidated   financial  statements
     carrying amounts and the tax basis of assets and liabilities that give rise
     to significant portions of the net deferred tax assets at November 30, 2001
     and 2000 relate to the following:
<TABLE>
                                                         2001                                       2000
                                         --------------------------------------     --------------------------------------
                                         ---------------- --- -----------------     ---------------- --- -----------------
                                             Current             Long-Term              Current             Long-Term
                                         ----------------     -----------------     ----------------     -----------------
                                         ----------------     -----------------     ----------------     -----------------
<S>                                     <C>                  <C>                   <C>                  <C>

       Inventories                       $      97,000        $             -       $      96,000        $             -
       Allowance for bad debt                   54,000                      -              41,000                      -
       Property and equipment                        -                  5,000                   -                 10,000
       Net operating loss
           carryforwards                             -                      -                   -                 26,000
       Intangible assets                             -                 29,000                   -                 30,000
       Other                                         -                  2,000                   -                  2,000
                                         -------------        ---------------       -------------        ---------------

       Net deferred tax asset            $     151,000        $        36,000       $     137,000        $        68,000
                                         =============        ===============       =============        ===============

</TABLE>

     At November  30, 2001 and 2000,  $151,000  and $137,000 of the net deferred
     tax asset is classified as current and included in other current  assets in
     the accompanying  consolidated  balance sheets. The Company has recorded no
     valuation   allowance  to  offset  the  net  deferred  tax  assets  because
     management believes that it is more likely than not that sufficient taxable
     income  will be  generated  in the  foreseeable  future to realize  the net
     deferred tax assets.



                                      F-18

<PAGE>


8.    STOCKHOLDERS' EQUITY:
      --------------------

     Treasury  Stock and Common Stock Options - On January 1, 2001, the Board of
     Directors  granted to the  officers  of the  Company  options  to  purchase
     750,000  shares of treasury  stock at $.20 per share  through  December 31,
     2003. On July 1, 2001, the Board of Directors  granted key employees of the
     Company  options to purchase  460,000  shares of treasury stock at $.30 per
     share with 153,333  shares  expiring on December 31, 2001 and the remaining
     306,667 shares expiring on December 31, 2002. On January 1, 2000, the Board
     of  Directors  granted to the  officers of the Company  options to purchase
     600,000  shares of treasury  stock at $0.25 per share through  December 31,
     2000. On January 1, 1999, the Board of Directors granted to the officers of
     the Company options to purchase 600,000 shares of treasury stock at $0.1859
     per share through December 31, 1999. The exercise price of these grants was
     equal to the market price of the common stock at the date of grant.

     During fiscal 2001,  2000, and 1999,  the Company  issued  600,000  shares,
     600,000  shares,  and 300,000 shares from treasury to its officers for cash
     proceeds  of  $150,000,  $112,000,  and  $67,000  in  conjunction  with the
     officer's  exercise of their options to purchase the treasury  stock of the
     Company.  During the year ended  November  30,  1999,  the  officers of the
     Company purchased  185,287 shares from the Company's  treasury at $0.16 for
     gross proceeds of $30,000, which represented the market price of the shares
     on the day the shares were purchased.

     The Company acquired from non-affiliated stockholders 834,006 shares of its
     common stock at an average  price of $.32 per share during  fiscal 2001 and
     did not purchase any such shares during fiscal 2000.  The Company  acquired
     from  non-affiliate  stockholders  119,239  shares of its  common  stock at
     prices ranging from $.15 to $.20 per share during fiscal 1999.

                                      F-19

<PAGE>


       The following table summarizes information on stock option activity:
<TABLE>
                                                                                             Weighted
                                                                                              Average
                                                                     Exercise Price       Exercise Price
                                               Number of Shares         Per Share            Per Share
                                               -----------------    ------------------    ----------------
                                               -----------------    ------------------    ----------------
<S>                                             <C>                <C>                  <C>
             Outstanding at December 1,
                 1998                                600,000        $      .2228          $      .2228
                     Granted                         600,000               .1859                 .1859
                     Exercised                      (300,000)              .2228                 .2228
                     Expired                        (300,000)              .2228                 .2228
                                               -------------        ------------          ------------

             Outstanding at November 30,
                 1999                                600,000               .1859                 .1859
                     Granted                         600,000               .2500                 .2500
                     Exercised                      (600,000)              .1859                 .1859
                                               -------------        ------------          ------------

             Outstanding at November 30,
                 2000                                600,000               .25                   .25
                     Granted                       1,210,000            .20 - .30                .23
                     Exercised                      (600,000)              .25                   .25
                                               -------------        -----------           ----------

             Outstanding at November 30,
                 2001                              1,210,000        $    .20 - .30        $      .23
                                               =============        ==============        ==========
</TABLE>


     The following information  summarizes stock options outstanding at November
     30, 2001:
<TABLE>
                           Outstanding                                          Exercisable
-------------------------------------------------------------------   ---------------------------------
-------------------------------------------------------------------   ---------------------------------
                                         Weighted Average
                                 ----------------------------------
 Exercise          Number           Remaining          Exercise           Number           Weighted
                                   Contractual                                             Average
   Price        Outstanding      Life in Months         Price          Exercisable      Exercise Price
------------   ---------------   ----------------   ---------------   ---------------   ---------------
------------   ---------------   ----------------   ---------------------------------------------------
<S>             <C>             <C>                  <C>                <C>             <C>

   $.20           750,000              25                $.20            750,000             $.20
   $.30           460,000               9                $.30            460,000             $.30
</TABLE>


     The weighted  average fair value of options  granted  during the year ended
     November 30, 2001, 2000, and 1999 was $.10,  $.07, and $.04,  respectively.
     The exercise  price of all the options  granted in 2001 exceeded the market
     price of the stock on grant  date.  The  exercise  price of all the options
     granted in 2000 and 1999  equaled  the  market  price of the stock on grant
     date.

                                      F-20

<PAGE>


     SFAS No.  123  requires  the  Company  to  provide  pro  forma  information
     regarding net income and net income per share as if compensation  costs for
     the Company's stock option plans and other stock awards had been determined
     in accordance with the fair value based method  prescribed in SFAS No. 123.
     The Company  estimates the fair value of each stock award at the grant date
     by  using  the  Black-Scholes   option-pricing  model  with  the  following
     weighted-average assumptions:
<TABLE>
                                                                    2001                 2000                  1999
                                                              -----------------     ----------------     -----------------
                                                              -----------------     ----------------     -----------------
<S>                                                             <C>                     <C>             <C>
               Dividend yield                                          0%                 0%                    0%
               Volatility                                            110%                 63%                  69%
               Risk free interest rate                               6.0%                6.0%                 4.5%
               Expected life                                     1.75 years             1 year                1 year
</TABLE>

       Under the accounting provisions of SFAS No. 123, the Company's net income
       per share would have been adjusted to the following pro forma amounts for
       the years ended November 30:
<TABLE>
                                                                   2001                  2000                  1999
                                                             ------------------     ----------------     -----------------
                                                             ------------------     ----------------     -----------------
<S>                                                           <C>                   <C>                 <C>
          Net income:
              As reported                                    $      365,000         $    378,000         $       488,000
              Pro forma                                             241,000              338,000                 456,000

          Basic and diluted net income per common share:
              As reported                                    $          .04         $        .04         $           .05
              Pro forma                                                 .02                  .03                     .05
</TABLE>


9.  EMPLOYEE BENEFITS:
    -----------------

     Profit Sharing Plan - The Company  maintains a participant  noncontributory
     profit-sharing plan (the "Plan") for the benefit of all full-time employees
     of the Company  who are at least 18 years of age.  Interests  vest  ratably
     after two years and are fully vested after seven years.  The Plan is funded
     by  the  Company's  contribution   determined  annually  by  the  Board  of
     Directors.  Contributions to the Plan were approximately $50,000,  $42,000,
     and $68,000 for the years ended November 30, 2001, 2000, and 1999.

                                     F-21

<PAGE>


     401(k) Plan - The Company has adopted a Section 401(k) profit sharing plan,
     which is available  for  employees who are at least 18 years of age and who
     have  completed one year of service with the Company.  Participants  in the
     plan may  contribute  up to 15% of their  compensation,  subject to certain
     limitations.   Under  the  plan,   the  Company   may  make   discretionary
     contributions  to be  determined  on a  year-to-year  basis  and  may  make
     discretionary matching  contributions.  Company matching contributions vest
     ratably over 6 years.  For the years ended  November 30,  2001,  2000,  and
     1999, the Company contributed approximately $35,000, $40,000, and $31,000.

10. SIGNIFICANT SUPPLIERS:
    ---------------------

     During fiscal 2001, the Company purchased approximately 16% of its products
     from one manufacturer. During 2000, the Company purchased approximately 19%
     and 10% of its products from two manufacturers and approximately 21% of its
     products  from one  manufacturer  in 1999.  The products  purchased  can be
     obtained  from  other  competing  manufacturers  but not as a  consolidated
     product group.

11. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    -------------------------------------------------

     Excluded from the statement of cash flows for the years ended  November 30,
     2000 and 1999 were the effects of certain  noncash  investing and financing
     activities including the purchase of equipment in 2000 and 1999 of $216,000
     and $162,000 with third party financing. In 2001, the Company had a sale of
     property for a note receivable of $53,000.

     The following  table  summarizes the net cash used in conjunction  with the
     1999 WPS acquisition:
<TABLE>

                                                                                1999
                                                                         --------------------
                                                                         --------------------
<S>                                                                     <C>

               Working capital, other than cash acquired                 $         997,000
               Property and equipment                                              178,000
               Deferred tax assets                                                 163,000
               Goodwill                                                          1,534,000
               Non-compete agreement                                               150,000
               Acquired debt and long-term obligations                          (1,643,000)
                                                                         -----------------

                                                                         $       1,379,000
</TABLE>


     Cash payments for interest were  $394,000,  $461,000,  and $202,000 for the
     years ended  November 30, 2001,  2000,  and 1999.  Cash payments for income
     taxes were  $250,000,  $455,000,  and $234,000 for the years ended November
     30, 2001, 2000, and 1999.

                                      F-22

<PAGE>


12.  PROPERTY HELD FOR SALE:
     ----------------------

     Effective February 18, 2000, the Company leased a new warehouse facility in
     Casper,  Wyoming  and  consequently  moved out of its owned  facility  also
     located in Casper,  Wyoming.  At November 30, 2000,  this  property,  which
     consists of land and office and warehouse  space,  has a carrying  value of
     $51,000 (cost of $143,000 less accumulated  depreciation of $92,000) and is
     included in other  current  assets on the  Company's  consolidated  balance
     sheet at November 30, 2000.  The Company  sold the property  during  fiscal
     2001 for $58,000 of which  $5,000 was  received  in cash and the  remaining
     $53,000 was received as a note  receivable.  This  transaction  generated a
     gain net of commissions and other related expenses of approximately $2,000.



                                      F-23

<PAGE>



















                           HIA, Inc. and Subsidiaries

                        Consolidated Financial Statements
                               For the Years Ended
                        November 30, 2001, 2000 and 1999