UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

    (Mark One)

[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
         OF 1934 [Fee Required]

         For the fiscal year ended December 31, 1999 or

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 [No Fee Required]



               For the transition period from ________ to _______



Commission file number             1-14088
                               --------------------------


                            Gibbs Construction, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                 Texas                                    75-2095676
---------------------------------------------      -----------------------------
(State or other jurisdiction of incorporation      (I.R.S. Employer
               or organization)                    Identification No.)


     1855 Wall Street, Garland, TX                            75041
----------------------------------------           -----------------------------
(Address of principal executive offices)                    (Zip Code)


Issuer's telephone number: (972) 278-3433
                           --------------

Securities registered under Section 12(b) of the Exchange Act:

Title of each class                                     Name of each exchange
                                                        on which registered

 Common Stock                                         Boston Stock Exchange
-------------------------------------------      -------------------------------
 Warrants to purchase Common Stock                    Boston Stock Exchange

-------------------------------------------      -------------------------------


    Securities registered under Section 12(g) of the Exchange Act;

                                (Title of class)
--------------------------------------------------------------------------------

                                  Common Stock
--------------------------------------------------------------------------------
                        Warrants to purchase Common Stock

         Indicate by check and mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]

         Indicate by check mark if there is no disclosure of delinquent filers
in pursuant to Item 405 of Regulation S-K is not contained in this form, 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 Form
10-K or any amendment to this Form 10-K. Yes [ ] No [X]

         State issuer's revenues for its most recent fiscal year.  $53,366,171

         State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
asked price, as of a specified date within 60 days prior to the date of filing
$1,866,875 As of March 16, 2000.

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 4,060,000



<PAGE>


Item 1.   Business

General

         Danny and Tony Gibbs, the Company's two executives, acquired Gibbs
Construction, Inc. (Gibbs Construction, Inc. is referred to herein as the
"Company" unless the context indicates otherwise) in 1985 and began to conduct
their construction business from that entity. The Company headquarters are
located in Garland, Texas, a suburb of Dallas. The Company is a full service,
national, commercial construction company. The Company's clients are principally
national retail chains that are engaged in aggressive expansion programs
although the Company has begun to construct small hotels. These programs usually
call for the erection of stand-alone facilities or "power centers," which
typically have stores that range in size from 10,000 to 75,000 square feet. Some
of the Company's clients include Best Buy, Oshmans Super Sports, Barnes & Noble,
Office Max, Petstuff, Just for Feet, Copy Max and Petsmart.

         In July of 1996, the Company sold the assets of its wholly owned
subsidiary, Bronco Bowl Holding, Inc. which operated a 136,000 square foot
complex, the Bronco Bowl, on approximately twenty acres near downtown Dallas.
The Company acquired the property in 1994 and performed extensive renovations on
the complex, opening it in January of 1996. Because of operating losses, the
Company sold the facility later in 1996.

         Effective January 18, 2000, the Company and two of its principal
stockholders, Danny and Tony Gibbs, entered into a joint control and escrow
agreement whereby one of the Company's principal sureties agreed to provide
funds to complete contract obligations. This agreement followed a request by the
Company for financial assistance because of the Company's lack of cash flow to
make certain payments relative to five bonded construction contracts. As part of
the agreement, the Company agreed to grant the surety a security interest in
certain Company assets, and Danny and Tony Gibbs granted the surety a security
interest in their ownership of 2,000,000 shares of the Company's stock. Two of
the five bonded contracts, which relate to the construction of small hotels, had
resulted in major losses and the five contracts resulted in losses of
approximately $5,000,000. Primarily because of those losses, the Company
anticipates filing for protection under Chapter 11 of the United State
Bankruptcy Code.

Construction Operations

         The Company acts as a general contractor for both "ground up" and
interior "finish out" construction. "Ground up" construction involves the
construction of a building's shell, that is, construction of the building's
floor, wall, and ceiling. "Finish out" comprises electrical work, erection of
walls, painting, demolition, air conditioning and heating systems and plumbing,
among other activities. The Company focuses on the higher margin activities
involved in "finish out" work, subcontracting lower margin work to other
contractors. In 1999, approximately 65% of the Company's revenues were derived
from "ground up" work and 35% from "finish out" work.

         The Company utilizes its own personnel throughout a project while
trying to minimize any subcontract labor. Personnel are sometimes flown to the
city where the construction occurs, but normally personnel and equipment are
transported by trucks and trailers to the construction site. The Company rents
corporate apartment housing when necessary, housing three or four persons per
apartment.

         The Company transports Company owned small tools and equipment to the
construction site via Company owned trucks. The Company leases or rents
particularly heavy equipment such as hoists, cranes and personnel lifts from
local equipment suppliers when necessary for use on particular projects. Most
jobs, including out of state jobs, can be organized within seven to ten days
after award of the contract.

Marketing of the Construction Business

         In 1999, the Company's construction business focuses on a clientele of
publicly held companies or companies anticipating to become publicly held which
have the necessary funds appropriated for construction programs on a nation-wide
basis. The specifically targeted companies are national retail chains that
conduct operations in stand-alone facilities or "power-centers". These national
retail companies are frequently engaged in aggressive expansion programs, which
often require the construction of ten to fifty units of 10,000 to 100,000 square
feet per year on a nation-wide basis. In addition, these retail chains often
remodel a large number of existing outlets for which the Company bid. However,
in 1998 the Company began to bid on non-retail projects, including the small
hotels referred to above.


<PAGE>

         The Company usually experiences some work slowdown in the first quarter
of each calendar year due, in the opinion of management, to a slowing of the
bidding process during the holiday season.

         The Company does not engage in a formal marketing or selling program
for the construction business. Most work comes by referral or reputation with a
large amount of repeat business from existing customers. During 1999,
approximately 40% of the Company business was repeat business from existing
clients.

         Most clients which have stores under construction have revenues which
are directly affected by the opening date of the store. It is critical for the
Company to further establish and maintain a dependable reputation within the
industry to meet completion schedules. To date, the Company has never had to
delay the expected completion date of a project. After completion of the first
project for a new client, the Company is able to develop a continuing
relationship with its clients by demonstrating the Company's other advantages
such as: the ability to work throughout the United States regardless of the
client's targeted area of expansion; more consistent service and product due to
familiarity with the client construction and operational needs; more centralized
communication since numerous projects could be discussed at one time; and
greater control over the construction schedule due to the use of the Company's
own crews.

         The Company does not engage in heavy construction and provides neither
engineering nor architectural services. Only a small portion of its business
comes from construction in shopping malls or finish out of commercial office
buildings. None of its business is derived from work provided to governmental
agencies.

         In 1999, the Company was engaged in over 120 projects for approximately
40 different clients. Two clients, Office Max (17%) and Just for Feet (18%),
accounted for approximately 35% of the Company's revenues during 1999. One
shopping center development amounted to approximately 20% of the Company's
revenues. In 1999 Just for Feet filed for protection under the United States
Bankruptcy Code.

Contracting Process

         Almost all of the Company's projects are competitively bid on a fixed
price basis. The Company presently obtains approximately 85% of all of its work
on a competitive bid basis. The Company utilizes an estimating process whereby
the project manager reviews every division and line item of the project. Unit
costs are then applied to each line item. This approach not only allows the
project manager to become extremely familiar with the details of the project but
also gives a good indication as to whether subcontractor prices are consistent
with market conditions.

Competition

         The Company believes that its construction business competes on price,
reputation for quality, timeliness, familiarity with retail construction, the
availability of aggregate materials.

         The market for construction services, particularly services to national
retail chains, is highly competitive. While the vast majority of the Company's
competitors are smaller and may not be as well capitalized, several of the
Company's competitors are larger, better known and have substantially greater
marketing, financial, personnel and other resources, including established
reputations and working relationships, than the Company. There can be no
assurance that the Company's services will continue to be competitive in the
market place.

Government Regulation

         The Company's business is subject to a variety of state and local
governmental regulations and licensing requirements relating to construction
activities. Prior to commencing work on a construction project, the Company is
required to obtain building permits and, in some jurisdictions, state and local
authorities require the Company to obtain demonstrating knowledge of
construction, building, fire and safety codes. In order to complete a project
and obtain a certificate of occupancy, the Company is required to obtain the
approval of local authorities confirming compliance with these requirements.

         The Company has general contractor licenses in numerous large states
and major metropolitan areas.

<PAGE>

Insurance and Bonding

         The Company maintains general liability and excess liability insurance
covering its construction equipment in amounts consistent with industry
practices. Management believes its insurance programs are adequate. Worker's
compensation insurance covering the leased employees is provided through the
employee leasing company from which the Company leases employees.

         Although not required by most clients, occasionally the Company is
required to provide various types of surety bonds guaranteeing its performance
under certain contracts. The Company's ability to obtain surety bonds depends
upon its capitalization, working capital, past performance, management expertise
and other factors. Surety companies consider such factors in light of the amount
of surety bonds then outstanding for the Company and their current underwriting
standards, which may change from time to time.

Construction Employees

         The Company leases all of its field employees through an employee
leasing company. The Company has utilized the same employee leasing company for
more than five years. By doing so, the Company is able to relieve itself from
administration surrounding employment practices. In particular, the Company
believes that the employee leasing company is able to find more favorable
workers compensation insurance than it would otherwise be able to find as well
as develop and administer Company safety programs.

         At March 15, 2000, the field operations of the Company were conducted
by 8 superintendents and 35 tradesmen. A field superintendent is assigned to
each project with the responsibility to oversee the day to day progress on the
project. The field superintendent reports directly to the project manager.

         In addition to Danny and Tony Gibbs, the Company employs in the
construction business six persons, including one project managers, 3 project
assistants, one project accountant, and one accounting clerks. The project
managers typically run three to four projects at a time and are responsible for
the overall coordination and scheduling of each project as well as
communications with the client.

Item 2. Properties.

         The Company owns a 10,000 square foot office and warehouse facility in
Garland, Texas. Offices presently occupy approximately 6,000 square feet. Of
that space, the Company completed in March of 1996 and an additional 2,500
square feet that enabled the Company to have space for additional project
managers and four staff members capable of supporting operations. These assets
now secure the Company's surety. See "Item 1. Business - General."

         As of March 15, 2000, the Company owned 9 trucks and 5 trailers. The
Company also owned two tractors, two fork lifts and six scissor lifts. This type
of equipment is used on almost all jobs, and any additional equipment or
machinery required for a job is rented on an as needed basis. The Company has
very little inventory. That which does exist primarily consists of left over or
unused material which can be used on the next project.

Item 3. Legal Proceedings

         The Company is involved in a number of legal proceedings. Several of
these matters involve alleged non-performance by the Company and, in the opinion
of management arise in the ordinary course of business. Several additional suits
are on accounts and relate to disputes arising out of the Company's financial
difficulties.

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

         None

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Maters.

         The Company's common stock is listed on the NASDAQ Small Cap Market and
is traded under the symbol GBSE. The stock is also listed for trading on the
Boston Stock Exchange.

         On March 30, 2000, the Boston Stock Exchange and the NASDAQ Small Cap
Market stopped trading on the exchanges.

<PAGE>

         The Company completed its initial public offering in January of 1996
and trading commenced on January 12, 1996. The following table set forth the
high and low bid and cash prices of the Company's Common Stock for each calendar
quarter in 1999 and 1998:

1999                                Ask                            Bid
                            High           Low             High          Low

First Quarter                1.96875      1.53125          1.875         1.375
Second Quarter               1.51325      1.125            1.46875       1.00
Third Quarter                1.75         1.093875         1.6875        1.00
Fourth Quarter               1.625        0.5              1.5625        0.40625

1998                                Ask                            Bid
                            High          Low              High          Low

First Quarter                2.125        1.125            1.9375        1.00
Second Quarter               2.625        1.125            2.0625        1.9375
Third Quarter                2.25         2.0625           1.9375        1.5625
Fourth Quarter               2.00         1.50             2.0625        1.4375



         As of March 15, 2000, there were approximately 800 holders of record of
the Company's common stock, according to the records provided by the transfer
agent.

Item 6. Selected Financial Data.

         The following table summarizes certain selected financial of the
Company for each of the years in the five year period ended December 31, 1998.
The selected financial data should be read in conjunction with (i) The Company's
Consolidated Financial Statements and Notes thereto as set forth in Item 14
below, and (ii) "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Item 7 below.

<TABLE>
<CAPTION>
                                      1999              1998             1997         1996        1995(1)
<S>                              <C>             <C>                <C>           <C>           <C>
Net sales                        $53,366,171     $54,496,848        $47,993,287   $47,438,930   $33,336,120
Income (loss)
  from continuing operation      $(8,950,262)        465,707            584,900       546,383     1,592,835
Income (loss) per share
  from continuing operation      $     (2.23)          $0.12              $0.14         $0.14        $ 0.53
Total Assets                      $7,470,947     $13,132,346        $12,617,916   $12,733,026   $11,291,394
Long-term obligations                326,976         408,402            210,232       563,254       945,057
  Cash Dividends                           -               -                  -             -             -
</TABLE>


(1)  Prior to October 1, 1995, the Company was taxed as a subchapter S
corporation under the Internal Revenue Code of 1986. Income, Income, per share
and Total Assets reflect amounts that would have been accrued had the Company
taxed other than as a subchapter S corporation.

Item 7. Management's Discussion And Analysis Of Financial Condition And
        Results Of Operations.

Overview

         The Company is presently operating under an agreement with one of its
sureties relating to five small hotels that the Company contracted to construct
which resulted in approximately $5,000,000 in losses. The Company accrued an
additional $2,000,000 in bad debt expense relating to receivables that may not
be collected. The Company's financial resources are not sufficient to finance
these losses and the Company will file for protection under Chapter 11 of the
United States Bankruptcy Code.

<PAGE>

Results of Operations - 1999 Compared with 1998

         Revenues for 1999 were essentially unchanged from 1998, $53,366,171 in
1999 compared to $54,496,848 in 1998. Gross profit was positive in 1998 and
negative in 1999 principally because of approximately $5,000,000 in losses
incurred in connection with the construction of hotels referred to above. The
loss was also affected by a large contract which failed to pay for extensive
change orders causing a significant reduction in gross profit on the contract.
Finally, the bankruptcy of Just for Feet significantly diminished gross profit
because in 1998 the client provided significant gross margin on contracts.

         General and administrative costs were $2,759,871 in 1999 compared to
$1,687,147 in 1998. The increase relates $800,000 in liquidated damages that may
be charged against the Company, $450,000 in litigation expenses in excess of
charges to projects and $325,000 in legal expenses. In addition, in 1999 the
Company increased its bad debt expense to $2,508,138 from $842,758 in the
earlier year.

         The Company also expensed an income tax asset of $1,523,840 in 1999
which it had previously set up as a result of losses in prior years.

         Accordingly, the Company Net loss in 1999 was $8,950,262 compared to a
profit of $465,707 in 1998.

Results of Operations - 1998 Compared with 1997

         Revenues from continuing operations between 1998 and 1997 increased
approximately 13.6% to $54,496,848 in 1998 compared to $47,993,287 in 1997. The
increase is principally attributable to expanding the Company's operations
beyond retail construction to small hotels.

         Gross profits for 1998 increased to $3,282,871 in 1998 or approximately
6.0% of revenues compared to $2,439,086 or 5.1% of revenue in 1997. The Company
enjoyed particularly strong gross margins in the fourth quarter from its
construction on several retail construction projects.

         Operating income from continuing operations, however, decreased to
$752,966 in 1998 from $1,070,089 in 1997. The decrease resulted from an increase
in 1998 in General and Administrative expenses principally because the Company
wrote off $842,758, of which $637,632 was written off in the fourth quarter of
1998. In addition, the Company accrued $166,670 in 1998 in litigation expense
compared to $62,213 in 1997 related to collection of aforesaid receivables.

         The effect of these increases in General and Administrative Expense was
to reduce 1998 income before taxes to approximately $731,772 in 1998 compared to
$891,100 in 1997, and net income in 1998 to $465,707 compared to $584,900 in
1997.

Liquidity and Capital Resources

         The Company is insolvent and will shortly file for protection under
Chapter 11 of the United States Bankruptcy Code. It is possible that a
proceeding under Chapter 11 could be converted into a Chapter 7 and the Company
liquidated.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable

Item 8. Financial Statements and Supplementary Data.

         The response to this item is submitted as a separate section of this
Form 10-K. See "Item 14. Exhibits, Financial Statements and Reports on Form
8-K."

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

         None

                                    PART III

Item 10.  Directors, Executive Officers, Promoters and Control Persons;
          Compliance With section 16(a) of the Exchange Act.

Executive Officers and Directors

         The directors and executive officers of the Company, and their
respective ages and positions held with the Company, are as follows:

<PAGE>


Name                        Age                         Position
--------------------------------------------------------------------------------
Danny Gibbs                  43                 President/Secretary Director
Tony Gibbs                   39              Vice-President/Treasurer, Director
Dennis T. Mitchell           50                         Director
L.W. Reynolds                64                         Director

         Danny Gibbs has served as president, general manager and a director of
the Company since the Company's inception in 1984. Mr. Gibbs has acted as the
Company's Chief Financial Officer throughout the Company's existence. Mr. Gibbs
is a principal and large equity owner of Team Technical Services, Inc. In 1999
Team Technical Services, Inc. filed for protection under Chapter 7 of the United
States Bankruptcy Act. See "Item 13. Certain Relationships and Related
Transactions." Mr. Gibbs received a Bachelor of Arts degree in History with a
minor in Architecture from Texas Tech University.

         Tony Gibbs has served as vice president and a director of the Company
since the Company's inception in 1984. From 1983 to 1984, Mr. Gibbs formed a
construction company which provided construction services to the residential
industry and the commercial industry. Mr. Gibbs is a principal and large equity
owner of Team Technical Services, Inc. In 1999 Team Technical Services, Inc.
filed for protection under Chapter 7 of the United States Bankruptcy Act. See
"Item 13. Certain Relationships and Related Transactions." Mr. Gibbs received a
Bachelor of Science degree in Accounting with a minor in Architecture from Texas
Tech University

         Dennis T. Mitchell, a licensed professional architect, is president of
AIG, Inc., an architectural firm Mr. Mitchell formed in 1969 which is primarily
engaged in the design, documentation and execution of commercial construction.
AIG, Inc. provides architectural service to a variety of retail, industrial and
governmental entities, including Barnes & Noble, Lil Things, and Eckerds. Mr.
Mitchell is a member of several national and local architectural professional
organizations and a graduate of the University of Texas at Arlington.

         L. W. Reynolds is president of Reynolds Financial and Management
Services, Inc., a financial and management consulting firm that provides
services to the real estate, wholesale distribution, retail, environmental
services, assisted living and construction industries. Mr. Reynolds formed the
firm in 1990. He is also chairman of Elder Living Centers, Inc., a Company Mr.
Reynolds formed in 1996 that develops and finances assisted living facilities in
New Mexico and Texas. Also in 1996, Mr. Reynolds formed Davis Covenant
Corporation, a general contractor engaged in the development of apartments and
assisted living facilities and asbestos statement. Mr. Reynolds, a certified
public accountant, worked for Peat Marwick Mitchell and Company from 1959 to
1966 and the Maloof Companies from 1966 through 1984, becoming an Executive Vice
President and Chief Financial Officer in 1980. From 1984 to 1986, he was
President and Chief Executive Officer of American Federal Savings and Loan
Association and from 1986 through 1989 was Vice President of Market Development
for Public Service Company of New Mexico. Mr. Reynolds is a graduate of McMurry
University and holds a Masters of Business Administration from the University of
Texas at Austin.

         Danny Gibbs and Tony Gibbs are brothers.

         Each director will hold office until the next Annual Meeting of
Shareholders and until such time as his successor is elected and qualified,
subject to prior removal by the shareholders of the Company in accordance with
the Bylaws of the Company. The officers of the Company serve at the discretion
of the Board of Directors of the Company.

Committees of the Board of Directors

         The Company's Board of Directors will establish an Audit Committee and
a Compensation Committee, each consisting of at least two directors, none of
whom will be an officer or employee of the Company. The duties of the Audit
Committee will be to recommend to the entire Board of Directors the selection of
independent certified public accountants to perform an audit of the financial
statements of the Company, to review the activities and report of the
independent certified public accountants, and to report the results of such
review to the entire Board of Directors. The Audit Committee will also monitor
the internal controls of the Company. The duties of the Compensation Committee
will be to provide a general review of the Company's compensation and benefit
plans to ensure that they meet corporate objectives and to administer or oversee
the Company's 1995 Incentive Stock Option Plan and other benefit plans. In
addition, the Compensation Committee will review the compensation of officers of
the Company and the recommendations of the Chief Executive Officer on (i)
compensation of all employees of the Company and (ii) adopting and changing
major Company compensation policies and practices. Except with respect to the
administration of the 1995 Incentive stock option plan, the Compensation
Committee will report its recommendations to the entire Board of Directors for
approval.

<PAGE>


Item 11. Executive Compensation.

         The following table sets forth certain information concerning the
compensation of the chief executive officer of the Company and the other
executive officers of the Company whose total annual salary and bonus exceeded
$100,000, for the fiscal years ended December 31, 1998, 1997, and 1996.

<TABLE>
<CAPTION>
                           Summary Compensation Table

Name and                                               Annual Compensation (1)            All Other
Principal Position                    Fiscal Year         Salary     Bonus (2)          Compensation
----------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>                   <C>                    <C>
Danny Gibbs                               1999          $114,000
 Chief Executive Officer                  1998           119,000                                    -
                                          1997           133,000                                    -

Tony Gibbs                                1999         $  99,000             -                      -
 Vice President                           1998           104,000             -                      -
                                          1997           123,000                                    -
</TABLE>
------------------

(1) The Company provides certain perquisites and personal benefits to its
executive officers, the aggregate amount to either does not exceed $60,000.

Executive Director Compensation

         Directors of the Company are entitled to receive from the Company fees
and reimbursement of expenses for their services as directors. Under the
Company's standard arrangement for compensation of directors, outside are
entitled to receive a fee for each Board meeting attended of $500. In addition,
directors will be reimbursed for their ordinary and necessary expenses incurred
in attending meetings of the Board of Directors or a committee thereof.
Directors of the Company, whether or not employees of the Company, will also be
entitled to receive options to acquire shares of Common Stock under the
Company's Stock Option Plans.

         In connection with certain actions taken by the Company, Messrs. Danny
R. Gibbs and Tony G. Gibbs relinquished a total of 1,000,000 shares of Common
Stock to the Company and acquired the right to acquire for $0.10 per share
2,000,000 shares of stock if either Danny R. Gibbs or Tony G. Gibbs are
terminated without their consent or if 20% of the Company is acquired by those
other than Danny R. Gibbs or Tony G. Gibbs.

Benefit Plans

         1995 Incentive Stock Option Plan

         The Company's 1995 Incentive Stock Option Plan was approved by the
Board of Directors and shareholders of the Company on August 15, 1995 to provide
for the grant of incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986 as amended to officers and employees of the
Company and subsidiaries of the Company. A total of 200,000 shares of Common
Stock has been authorized and reserved for issuance under the 1995 Incentive
Stock Option Plan, subject to adjustment to reflect changes in the Company's
capitalization in the case of a stock split, stock dividend or similar event.
The 1995 Incentive Stock Option Plan is administered by the Compensation
Committee, which consists of the Company's two "Outside Directors." Outside
Directors shall mean only those directors of the Company or a subsidiary of the
Company who are not regular salaried employees of either the Company or a
subsidiary as of the date the option is granted. The Compensation Committee has
the sole authority to interpret the 1995 Incentive Stock Option Plan, to
determine the persons to whom options will be granted, to determine the basis
upon which the options will be granted, and to determine the exercise price,
duration and other terms of options to be granted under the 1995 Incentive Stock
Option Plan; provided that, (i) the exercise price of each option granted under
the 1995 Incentive Stock Option Plan may not be less than the fair market value
of the Common Stock on the day of the grant of the option, (ii) the exercise
price must be paid in cash and or stock upon exercise of the option, (iii) no
option may be exercisable for more than 10 years after the date of grant, and
(iv) no option is transferable other than by will or the laws of descent and
distribution. No option is exercisable after an optionee ceases to be employed
by the Company or a subsidiary of the Company, subject to the right of the
Compensation Committee to extend the exercise period for not more than 90 days
following the date of termination of an optionee's employment. An optionee who
was a director or advisor may exercise his option at any time within 90 days
after such optionee's status as a director or advisor terminates to the extent
he was entitled to exercise such option at the date of termination of his
status. If an optionee's employment is terminated by reason of disability, the
Compensation Committee has the authority to extend the exercise period for not
more than one year following the date of termination of the optionee's
employment or service as an advisor or director. If an optionee dies and shall
hold options not fully exercised, such options may be exercised in whole or in
part within one year of the optionee's death by the executors or administrators
of the optionee's estate or by the optionee's heirs. The vesting period, if any,
specified for each option will be accelerated upon the occurrence of a change of
control or threatened change of control of the Company.

<PAGE>


         Outside Directors Stock Option Plan

         The Outside Directors Stock Option Plan was approved by the Board of
Directors and shareholders of the Company on August 15, 1995. A total of 50,000
shares of Common Stock has been authorized and reserved for issuance under the
Outside Directors Stock Option Plan, subject to adjustment to reflect changes in
the Company's capitalization in the case of a stock split, stock dividend or
similar event. The Outside Directors Stock Option Plan is administered by the
Stock Option Committee which consists of Danny Gibbs and Tony Gibbs. The Stock
Option Committee has the sole authority to interpret the Outside Directors Stock
Option Plan, to determine the persons to whom options will be granted, to
determine the basis upon which the options will be granted, and to determine the
exercise price, duration and other terms of options to be granted under the
Outside Directors Stock Option Plan; provided that, (i) the exercise price of
each option granted under the Plan may not be less than the fair market value of
the Common Stock on the day of the grant of the option, (ii) the exercise price
must be paid in cash and or stock upon exercise of the option, (iii) no option
may be exercisable for more than 10 years after the date of grant, and (iv) no
option is transferable other than by will or the laws of descent and
distribution. If an optionee's status as an Outside Director is terminated for
any reason other than death, the optionee may exercise his option at any time
within 90 days after such termination to the extent it was then exercisable. If
an optionee dies while an Outside Director and shall not have fully exercised
options granted under the Outside Directors Stock Option Plan, such options may
be exercised in whole or in part within six months of the optionee's death by
the executors or administrators of the optionee's estate or by the optionee's
heirs. The vesting period, if any, specified for each option will be accelerated
upon the occurrence of a change of control or threatened change of control of
the Company.

         Options under the Outside Directors Stock Option Plan are granted only
to Outside Directors selected by the Committee. Outside Directors shall mean
only those directors of the Company or a subsidiary of the Company who are not
regular salaried employees of either the Company or a subsidiary as of the date
the option is granted. As of the date of this Prospectus, none of the Common
Stock reserved for issuance in either the Outside Directors Stock Plan or the
1995 Incentive Stock Option Plan had been issued.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of the Company as of March 15, 1999 by
(i) each person known by the Company to be a beneficial owner of more than 5% of
the outstanding shares of Common Stock, (ii) each director of the Company, and
(iii) all directors and executive officers of the Company as a group. Unless
otherwise noted, each beneficial owner named below has sole investment and
voting power with respect to the Common Stock shown below as beneficially owned
by him.

                                                              Shares Owned
Name and Address of                                     Number of       Percent
Beneficial Owner                                     Shares Owned       Owned
-----------------------------------------------------------------------------
Danny Gibbs(1)(2)(3)                                     1,000,000       25.0%
Tony Gibbs                                               1,000,000       25.0%
All directors and officers(1)(2)(3)
as a group (6 persons)                                   2,000,000       50.0%
-----------------
(1) The address for Danny Gibbs and Tony Gibbs is 1855 Wall Street, Garland, TX
    75041.
(2) In connection with certain actions taken by the Company, Messrs. Danny R.
    Gibbs and Tony G. Gibbs relinquished a total of 1,000,000 shares of Common
    Stock to the Company and acquired the right to acquire for $0.10 per share
    2,000,000 shares of stock if either Danny R. Gibbs or Tony G. Gibbs are
    terminated without their consent if 20% of the Company is acquired by those
    other than Danny R. Gibbs or Tony G. Gibbs.
(3) In January 2000 Messrs. Danny and Tony Gibbs pledged all of their stock to
    Liberty Mutual in connection with Liberty Mutual's joint control agreement.
    See "Item 1- Business."

Item 13. Certain Relationships And Related Transactions

         As part of the termination of the Company's election to be taxed as a
Subchapter S Corporation, the Company accrued $749,255 to be distributed to
Danny Gibbs and Tony Gibbs for payment of income taxes owed for the Company's
operations. At December 31, 1999, $79,325 remained to be paid, a decrease of
$318,415 in 1999.

         In 1997 Messrs. Danny and Tony Gibbs formed Team Technical Services,
Inc. and in 1998 formed Tri-Tech, Inc which engaged in electrical and roofing
contracting services. In 1999 Mr. Danny Gibbs formed a residential real estate
development company, Regal Homes, Inc. Team Technical Services filed for
protection under Chapter 7 of the United States Bankruptcy Code in 1999. In
connection with services rendered to the Company, the Company paid Team
Technical Services and Tri Tech, Inc. $1,799,576, $2,068,365 and $75,775 during
the years ended December 31, 1999, 1998 and 1997, respectively. At December 31,
1999, 1998, and 1997, the Company owed Team Technical Services, Inc. and
Tri-Tech, Inc. $786, $164,342 and $53,412, respectively.

         In 1999 Tri Tech and Regal Homes purchased approximately $130,000 of
materials on a Company account. This amount was accrued and offset against a
payable to Messrs. Danny and Tony Gibbs.

         In 1999, Vratsinas Construction Company, Inc. filed a lawsuit against
the Company, Team Technical Services and Messrs. Danny R. Gibbs and Tony G.
Gibbs relating to certain services provided by Team Technical Services and
alleging breach of contract. Management of the Company believes that any
recovery against the Company pursuant to this litigation is remote. The
litigation asserts a claim of approximately $1,400,000.

         In 1999, Pinion Construction, Inc. filed a similar claim against Team
Technical Services, the Company and Messrs. Danny R. Gibbs and Tony G. Gibbs
upon similar theories, asserting approximately $1,540,000 in damages. Management
of the Company believes that any recovery against the Company is remote.




<PAGE>


Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K.

(a) Financial Statements

         The following financial statements are included herewith:

                                                                           Page

    Report of Independent Certified Public Accountants                     F-1
    Consolidated Balance Sheets                                            F-2
    Consolidated Statements of Operations                                  F-4
    Consolidated Statements of Stockholders' Equity                        F-5
    Consolidated Statements of Cash Flows                                  F-6
    Notes to Consolidated Financial Statements                             F-8

(b) Reports on Form 8-K

         None

(c) Exhibits

3.1      Restated Articles of Incorporation, as amended (incorporated by
         reference from a similarly numbered exhibit filed with the Company's
         Registration Statement No. 33-97308-D)

3.2      Bylaws (incorporated by reference from a similarly numbered exhibit
         filed with the Company's Registration Statement No. 33-97308-D)

4.1      Form of Warrant Agreement Covering Redeemable Common Stock Purchase
         Warrants (incorporated by reference from a similarly numbered exhibit
         filed with the Company's Registration Statement No. 33-97308-D)

10.1     Revised form of Representative's Warrant and Registration Rights
         Agreement (incorporated by reference from a similarly numbered exhibit
         filed with the Company's Registration Statement No. 33-97308-D)

10.2     Copy of 1995 Incentive Stock Option Plan (incorporated by reference
         from a similarly numbered exhibit filed with the Company's Registration
         Statement No. 33-97308-D)

10.3     Copy of Outside Director Stock Option Plan (incorporated by reference
         from a similarly numbered exhibit filed with the Company's Registration
         Statement No. 33-97308-D)

10.4     Copy of Warrant Agreement between the Company and Can Am Capital
         (incorporated by reference from a similarly numbered exhibit filed with
         the Company's Registration Statement No. 33-97308-D)

10.5     Copy of Note and Security Agreement between the Company and Bronco Bowl
         Holding, Inc. (incorporated by reference from a similarly numbered
         exhibit filed with the Company's Registration Statement No. 33-97308-D)

10.6     Diversified Employee Leasing, Inc. Client Service Agreement
         (incorporated by reference from a similarly numbered exhibit filed with
         the Company's Registration Statement No. 33-97308-D)

23.1     Consent of Killman, Murrell & Company, P.C. (filed herewith)

24.1     Power of Attorney

27.1     Financial Data Schedule


<PAGE>





                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS

                                                                        Page

Report of Independent Certified Public Accountants                      F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998            F-3

Consolidated Statements of Operations for Each of the
    Years in the Three Year Period Ended December 31, 1999              F-5

Consolidated Statements of Stockholders' (Deficit) Equity for
    Each of the Years in the Three Year Period
    Ended December 31, 1999                                             F-6

Consolidated Statements of Cash Flows for Each of the Years in
    the Three Year Period Ended December 31, 1999                       F-7

Notes to Consolidated Financial Statements                              F-9































                                       F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
Gibbs Construction, Inc. and Subsidiary
Garland, Texas

We have audited the accompanying consolidated balance sheets of Gibbs
Construction, Inc. and Subsidiary as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' (deficit) equity
and cash flows for each of the years in the three year period ended December 31,
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 audit.

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

We were unable to obtain a discussion or evaluation from one of seventeen firms
of attorneys who were acting as the Company's legal counsel on pending or
threatened litigation described in Note 8 to the consolidated financial
statements.

In our opinion, except for the effects of such adjustments, if any, as might
have been determined to be necessary had we been able to obtain a discussion or
evaluation of pending or threatened litigation from the Company's outside legal
counsel as discussed in the preceding paragraph, the consolidated financial
statements referred to in the first paragraph present fairly, in all material
respects, the financial position of Gibbs Construction, Inc. and Subsidiary as
of December 31, 1999 and 1998, and the results of their operations and cash
flows for each of the years in the three year period ended December 31, 1999, in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $8,950,262 for the year ended December 31,
1999, and, as of that date, had a working capital deficiency of $7,149,451 and
net stockholders' deficit of $6,473,672. As described more fully in Note 16 to
the financial statements, the Company is experiencing extreme financial
difficulty due to large losses on numerous construction contracts. The balance
of the funding of those construction projects was assumed by the Company's
bonding surety on January 18, 2000. The Company is not aware of any alternate
sources of capital to finance future operations. Those conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

KILLMAN, MURRELL & COMPANY, P.C.
Dallas, Texas
March 17, 2000

                                       F-2
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1999 AND 1998

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                  1999                   1998
                                                                             -------------          -------------

CURRENT ASSETS
<S>                                                                          <C>                     <C>
    Cash                                                                     $   624,130             $ 1,066,665
    Temporary Investments - Note 9                                                   129                  99,768
    Note Receivable                                                              139,300                       -
    Accounts Receivable
        Trade - net of allowance for doubtful
            accounts of $1,233,393 and $725,000,
            in 1999 and1998, respectively                                      5,276,100               7,313,519
        Costs and Estimated Earnings in Excess of

            Billings on Uncompleted Contracts - Note 2                           310,085               2,134,170
    Prepaid Expenses                                                             104,866                 107,549
    Deferred Tax Asset - Note 11                                                       -                 350,000
                                                                                ---------           ------------

            TOTAL CURRENT ASSETS                                               6,454,610              11,071,671
                                                                              ----------             -----------

LAND, BUILDINGS AND EQUIPMENT - Note 3                                         1,489,686               1,341,939
        Less Accumulated Depreciation                                           (782,717)               (657,394)
                                                                              ----------            ------------

            NET LAND, BUILDINGS AND EQUIPMENT                                    706,969                 684,545
                                                                              ----------            ------------

OTHER ASSETS

    Receivables From Affiliates and Employees                                     26,779                 202,290
    Deferred Tax Asset - Note 11                                                       -               1,173,840
    Real Estate Investments                                                      282,589                       -
                                                                               ---------             -----------

            TOTAL OTHER ASSETS                                                   309,368               1,376,130
                                                                             -----------             -----------

            TOTAL ASSETS                                                      $7,470,947             $13,132,346
                                                                              ==========             ===========
</TABLE>












                          The accompanying notes are an
            integral part of these consolidated financial statements.
                                   (Continued)

                                       F-3
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                   (Continued)

                           DECEMBER 31, 1999 AND 1998

                 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

<TABLE>
<CAPTION>
                                                                                1999                      1998
                                                                          ---------------             ------------

CURRENT LIABILITIES
<S>                                                                         <C>                     <C>
    Notes Payable - Note4                                                   $    219,309            $    150,000
    Current Installments of Long-Term Debt - Note 5                              178,226                 193,260
    Current Installment of Capital Lease Obligation - Note 6                      15,472                       -
    Accounts Payable                                                           8,442,710               7,975,704
    Accrued Liabilities on Loss Jobs                                           2,163,809                       -
    Accrued Expenses - Note 10                                                 2,173,907                 794,765
    Billings in Excess of Costs and Estimated Earnings on
        Uncompleted Contracts - Note 2                                           331,303                 832,447
    Payable to Stockholders                                                       79,325                 397,740
                                                                             -----------            ------------

            TOTAL CURRENT LIABILITIES                                         13,604,061              10,343,916

LONG-TERM DEBT - Excluding
    Current Installments - Note 5                                                326,976                 408,402

CAPITAL LEASE OBLIGATION - Excluding
    Current Installments - Note 6                                                 13,582                       -
                                                                                 -------                      --

            TOTAL LIABILITIES                                                 13,944,619              10,752,318
                                                                             -----------             -----------

CONTINGENCIES - Notes 6, 7, 8, and 16                                                 -                       -

STOCKHOLDERS' (DEFICIT) EQUITY  - Note 14 and 16
    Common Stock of $.01 Par Value.  Authorized
        15,000,000 Shares; Issued and Outstanding
        4,060,000 and 4,000,000 Shares, in 1999

        and 1998, respectively                                                    40,600                  40,000
    Additional Paid-In-Capital                                                 5,003,234               4,907,272
    Retained Deficit                                                         (11,517,506)             (2,567,244)
                                                                             -----------            ------------

            TOTAL STOCKHOLDERS' (DEFICIT) EQUITY                              (6,473,672)              2,380,028
                                                                             -----------            ------------

            TOTAL LIABILITIES AND
                STOCKHOLDERS' (DEFICIT) EQUITY                               $ 7,470,947             $13,132,346
                                                                             ===========             ===========
</TABLE>





                          The accompanying notes are an
            integral part of these consolidated financial statements.
                                       F-4

<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                           1999                  1998                   1997
                                                     ---------------       ---------------      ----------------

<S>                                                    <C>                   <C>                   <C>
CONSTRUCTION REVENUE                                   $53,366,171           $54,496,848           $47,993,287

COST OF CONSTRUCTION, including accrued
    costs on loss jobs of $2,163,809 in 1999            55,487,878            51,213,977            45,554,241
                                                       -----------           -----------           -----------

    GROSS (LOSS) PROFIT                                 (2,121,707)            3,282,871             2,439,046
                                                       -----------          ------------          ------------

GENERAL AND ADMINISTRATIVE

    EXPENSES                                             2,759,871             1,687,147             1,288,997
                                                       -----------          ------------          ------------

BAD DEBT EXPENSE                                         2,508,138               842,758                79,960
                                                        ----------          ------------         -------------

            (LOSS) INCOME BEFORE
                OTHER INCOME (EXPENSE)                  (7,389,716)              752,966             1,070,089

OTHER INCOME (EXPENSE)

    Gain on Disposal of

        Equipment                                            5,000                 5,000                 9,140
    Gain (Loss) on Temporary
        Investments Transactions                            78,682               (39,782)              (62,157)
    Interest Income                                         72,122               157,795                23,566
    Interest Expense                                      (206,832)             (144,207)             (155,347)
    Other                                                   37,524                    -                  5,809
                                                       -----------     ----------------         --------------

            (LOSS) INCOME BEFORE
                INCOME TAXES                            (7,403,220)              731,772               891,100

INCOME TAX (EXPENSE) - Note 11
        Current                                            (23,202)              (13,365)                    -
        Deferred                                        (1,523,840)             (252,700)             (306,200)
                                                       -----------          ------------          ------------

            TOTAL INCOME TAX (EXPENSE)                  (1,547,042)             (266,065)             (306,200)
                                                       -----------          ------------          ------------

            NET (LOSS) INCOME                          $(8,950,262)         $    465,707          $    584,900
                                                       ===========          ============          ============


BASIC (LOSS) EARNINGS PER SHARE                     $        (2.23)      $          0.12          $       0.14
                                                    ==============        ==============          ============

WEIGHTED AVERAGE NUMBER
    OF COMMON SHARES
    OUTSTANDING                                          4,018,462             4,000,000             4,000,000
                                                         =========           ===========            ==========
</TABLE>





                          The accompanying notes are an
            integral part of these consolidated financial statements.
                                       F-5
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                             Common Stock
                                               ---------------------------------------
                                                    Number                     Paid-In        Retained
                                                of Shares        Amount        Capital             Deficit               Total
                                               -------------------------------------------------------------------------------


<S>                                               <C>            <C>            <C>            <C>             <C>
BALANCE, DECEMBER 31, 1996                        4,000,000      $40,000        $4,907,272     $ (3,617,851)   $  1,329,421

    1997 Net Income                                       -            -                 -           584,900         584,900
                                             --------------   ----------    --------------    --------------   -------------

BALANCE, DECEMBER 31, 1997                        4,000,000       40,000         4,907,272       (3,032,951)      1,914,321

    1998 Net Income                                       -            -                 -           465,707         465,707
                                             --------------   ----------    --------------    --------------   -------------

BALANCE, DECEMBER 31, 1998                        4,000,000       40,000         4,907,272       (2,567,244)      2,380,028

    Common Shares Issued for

        Services Rendered                            60,000          600            95,962                -          96,562

    1999 Net Loss                                         -            -                 -       (8,950,262)     (8,950,262)
                                                     ------        -----            ------      -----------     -----------

BALANCE, DECEMBER 31, 1999                        4,060,000      $40,600        $5,003,234     $(11,517,506)    $(6,473,672)
                                                  =========      =======        ==========     ============     ===========
</TABLE>
























                          The accompanying notes are an
            integral part of these consolidated financial statements.
                                       F-6
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                                      1999                  1998                1997
                                                                ---------------       ---------------       -------------

<S>                                                               <C>                 <C>                     <C>
CASH FLOW FROM OPERATING
    ACTIVITIES
    Net (Loss) Income                                             $(8,950,262)        $    465,707            $584,900
    Adjustments to Reconcile Net (Loss)
        Income to Net Cash From
        Operating Activities
            Depreciation and Amortization                             194,592              163,420             159,400
            (Gain) on Disposal
                of Equipment                                           (5,000)              (5,000)             (9,140)
            (Gain) Loss on Temporary
                Investments Transactions                              (78,682)              39,782              62,157
            Deferred Taxes                                          1,523,840              252,700             306,200
            Increase in Allowance for Doubtful
Accounts, Net of Recoveries                                           887,945              725,000                   -
            Receivables from Employees and
                Affiliates Expensed                                   105,482                    -                   -
            Issuance of Common Stock for Services                      96,562                    -                   -
        Changes in Current Assets and Liabilities

            Accounts Receivable                                     1,010,174             (376,074)            933,837
            Billings Related to Cost and Earnings
                on Uncompleted Contracts                            1,322,941             (839,812)           (627,394)
            Prepaid Expenses                                            2,683              (25,240)            (62,933)
            Accounts Payable                                        2,630,815              493,229            (565,465)
            Accrued Expenses                                        1,379,142              109,043             (34,027)
    Purchase of Temporary Investments                             (17,770,782)          (2,514,475)           (302,327)
    Proceeds From Sale of Temporary Investments                    17,949,103            2,517,458              99,140
    Purchase of Real Estate Investments                              (282,589)                   -                   -
                                                                    ---------              -------                  --

               NET CASH FLOW PROVIDED
                BY OPERATING ACTIVITIES                                15,964            1,005,738             544,348
                                                                -------------          -----------            --------

CASH FLOW FROM INVESTING ACTIVITIES

    Purchase of Equipment                                            (181,212)            (288,348)            (48,101)
    Proceeds from Sale of Equipment                                    18,718                8,924              30,936
    Change in Receivables from Affiliates
        and Employees                                                  70,029              (84,250)            117,203
                                                                  -----------           ----------            --------

            NET CASH FLOW  (USED) PROVIDED
                BY  INVESTING ACTIVITIES                              (92,465)            (363,674)            100,038
                                                                 ------------         ------------            --------
</TABLE>



                                   (Continued)
                          The accompanying notes are an
            integral part of these consolidated financial statements.
                                       F-7

<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                                     1999                1998                1997
                                                                -------------       -------------        ------------

<S>                                                               <C>                <C>                   <C>
CASH FLOW FROM FINANCING ACTIVITIES
    Proceeds from Note Borrowings                                 $ 326,336          $   534,134           $212,277
    Repayments of Note Borrowings                                  (353,487)            (523,473)          (558,973)
    Repayments of Capital Lease Obligations                         (20,468)                   -                  -
    Changes in Stockholder Payable                                 (318,415)             (24,505)            16,190
                                                                  ---------          -----------          ---------

            NET CASH FLOW (USED)
               BY FINANCING ACTIVITIES                             (366,034)             (13,844)          (330,506)
                                                                  ---------          -----------           --------

NET (DECREASE) INCREASE IN CASH                                    (442,535)             628,220            313,880

CASH AT THE BEGINNING OF THE PERIOD                               1,066,665              438,445            124,565
                                                                 ----------          -----------           --------

CASH AT THE END OF THE PERIOD                                     $ 624,130           $1,066,665           $438,445
                                                                  =========           ==========           ========

SUPPLEMENTAL DISCLOSURES OF CASH
    FLOW INFORMATION

        Cash Paid During  the Year For:
            Interest Expense                                      $ 206,833          $   144,207           $155,347
                                                                  =========          ===========           ========
            Income Taxes                                         $   23,202         $     13,365       $          -
                                                                 ==========         ============       ============

SUPPLEMENTAL SCHEDULE OF NONCASH
    INVESTING AND FINANCING ACTIVITIES:

        Increase in Capital Lease Obligations                    $   49,522       $            -       $          -
        Assets Purchased through Capital Lease                      (49,522)                   -                  -
                                                                 ----------      --------------        -----------

                                                              $           -       $            -        $         -
                                                              =============       ==============        ===========
</TABLE>














                          The accompanying notes are an
            integral part of these consolidated financial statements.

                                       F-8
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    General

    Gibbs Construction, Inc. (the "Company"), is a full service, national
    commercial construction company located in Garland, Texas. The Company
    operates throughout the United States and Puerto Rico, providing
    construction services principally to national retail store chains, hotels,
    and other miscellaneous construction projects.

    Subsidiary and Principles of Consolidation

    The consolidated financial statements include the accounts of Gibbs
    Construction, Inc. and its wholly owned inactive subsidiary, Bronco Bowl
    Holding, Inc. All significant intercompany balances and transactions have
    been eliminated in consolidation.

    Temporary Investments

    The Company has entered into numerous account agreements with stockbrokers
    and participates in an active trading program in equity securities listed on
    nationally recognized stock exchanges. The fair value for temporary
    investment securities are based on quoted market prices.

    Revenue Recognition

    Revenues from construction contracts are recognized on the
    percentage-of-completion method, measured by the percentage of total direct
    job costs incurred to date to estimated total direct job costs for each
    contract. This method is used because management considers expended direct
    job costs to be the best available measure of progress on contracts.

    Contract costs include all direct material, labor and sub-contract costs and
    those indirect costs related to contract performance, such as indirect
    labor, supplies, tools and repair costs. General and administrative costs
    are charged to expense as incurred. Provisions for estimated losses on
    uncompleted contracts are made in the period in which such losses are
    determined. Changes in job performance, job conditions, and estimated
    profitability, including those arising from contract penalty provisions and
    final contract settlements, may result in revisions to costs and income and
    are recognized in the period in which the revisions are determined.

    The asset "costs and estimated earnings in excess of billings on uncompleted
    contracts," represents revenues recognized in excess of amounts billed. The
    liability "billings in excess of costs and estimated earnings on uncompleted
    contracts," represents billings in excess of revenues recognized.

    Receivables and payables related to construction contracts are generally
    expected to be paid in less than one year.

                                   (Continued)

                                       F-9
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998, and 1997

                                   (Continued)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

    Accounts Receivable

    Accounts receivable consists of amounts due on open customer accounts,
    contract balances billed, retain- age, and sundry accounts receivable. The
    Company uses the allowance method to account for uncollectible accounts
    receivable. The allowance for doubtful accounts is based on management's
    analysis of possible bad debts. Management has determined an allowance for
    doubtful accounts of $1,233,393 and $725,000 for the years ended December
    31, 1999 and 1998, respectively. Bad debt expense was recorded in the
    amounts of $2,508,138, $842,758, and $79,960, respectively for the years
    ended December 31, 1999, 1998, and 1997.

    Activity related to the allowance for doubtful accounts is as follows:

<TABLE>
<CAPTION>
                                                                            1999                 1998
                                                                       -------------         ------------

<S>                                                                      <C>                 <C>
             Balance-Beginning of Year                                   $   725,000         $          -
                Provision for Doubtful Accounts Receivable                 1,117,344              725,000
                Accounts Receivable Written Off                             (379,552)                   -
                Recoveries of Previously Written Off
                 Accounts Receivable                                        (229,399)                   -
                                                                           ----------           ---------

            Balance-End of Year                                           $1,233,393             $725,000
                                                                          ==========             ========
</TABLE>

    Advertising Costs

    The Company has the policy of expensing advertising costs as incurred. Total
    advertising costs charged to expenses was $213,416, $61,833, and $1,531 for
    the years ended December 31, 1999, 1998, and 1997, respectively.

    Buildings and Equipment

    Depreciation of buildings and equipment is provided principally on the
    straight-line method using estimated useful lives ranging from five to
    twenty-five years.

    Major renewals and betterments are added to the property accounts while the
    cost of repairs and maintenance is charged to operating expenses in the
    period incurred. Cost of assets retired or otherwise disposed of and the
    applicable accumulated depreciation are removed from the accounts, and the
    resultant gain or loss, if any, is reflected in operations.

                                   (Continued)

                                      F-10
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

    Federal Income Taxes

    The Company accounts for income taxes, pursuant to the provisions of
    Statement of Financial Accounting Standards No. 109, "Accounting for Income
    Taxes" (SFAS No. 109), which requires recognition of deferred tax
    liabilities and assets for the expected future tax consequences of events
    that have been included in the financial statements or tax returns. Under
    this method, deferred tax liabilities and assets are determined based on the
    difference between the financial statement and tax basis of assets and
    liabilities using enacted tax rates in effect for the year in which the
    differences are expected to reverse.

    Pension and Employee Benefit Plans

    The Company has established a flexible benefits plan for its employees. The
    purpose of this plan is to provide eligible employees a choice between cash
    and specified welfare benefits.

    The Company has established a deferred contribution profit sharing plan
    (401(k) Plan), covering substantially all employees. This plan allows both
    the Company and eligible employees to contribute to the plan. No significant
    contributions were made to the plan by the Company in 1999, 1998, or 1997.

    Use of Estimates

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

    The Company recognizes revenues from fixed-price construction contracts
    using the percentage-of-completion method, measured by the percentage of
    cost incurred to date to management's estimated total cost for each
    contract. That method is used because management considers total cost to be
    the best available measure of progress on the contracts. Because of the
    inherent uncertainties in estimating costs, it is at least reasonably
    possible that the estimates used will change within the near term.

    Cash Flows

    The Company considers cash to be cash equivalents for purposes of preparing
    the statements of cash flows.

    Basic Earnings Per Share

    Basic earnings (loss) per share was computed using the weighted average
    outstanding common shares for the applicable periods. The diluted earnings
    (loss) per share is the same as basic since inclusion of the stock warrants
    in the computation would have been anti-dilutive.

                                   (Continued)

                                      F-11

<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

    Accounting for Long-Lived Assets

    The Company has adopted Statement of Financial Accounting Standards No. 121,
    "Accounting For The Impairment Of Long-Lived Assets And For Long-Lived
    Assets To Be Disposed Of". The Company reviews long-lived assets, certain
    identifiable assets and any goodwill related to those assets for impairment
    whenever circumstances and situations change such that there is an
    indication that the carrying amounts may not be recoverable. At December 31,
    1999, the Company believes that there has been no impairment of its
    long-lived assets.

NOTE 2: COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

    Excess costs and billings are as follows:

<TABLE>
<CAPTION>
                                                                               1999                  1998
                                                                          --------------       ---------------

<S>                                                                         <C>                    <C>
    Costs Incurred on Uncompleted Contracts                                 $43,297,977            $35,513,827
    Estimated (Losses) Earnings                                              (1,268,127)             3,488,583
                                                                            -----------           ------------

                                                                             42,029,850             39,002,410

    Less Billings to Date                                                    42,051,068             37,700,687
                                                                             ----------            -----------

                                                                          $     (21,218)           $ 1,301,723
                                                                          =============            ===========
</TABLE>

    The above amounts are included in the accompanying balance sheets as
    follows:

<TABLE>
<CAPTION>
                                                                               1999                  1998
                                                                           --------------        -------------
    Costs and Estimated Earnings in Excess of
<S>                                                                        <C>                     <C>
        Billings on Uncompleted Contracts                                  $    310,085            $ 2,134,170

    Billings in Excess of Costs and Estimated

        Earnings on Uncompleted Contracts                                      (331,303)              (832,447)
                                                                           ------------           ------------

                                                                          $     (21,218)           $ 1,301,723
                                                                          =============            ===========
</TABLE>










                                      F-12
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 3: LAND, BUILDINGS AND EQUIPMENT

    Land, buildings and equipment are as follows:

<TABLE>
<CAPTION>
                                                                                1999                   1998
                                                                            ------------          ------------
<S>                                                                          <C>                  <C>
        Land                                                                 $   48,255           $     48,255
        Buildings and Improvements                                              227,214                227,214
        Vehicles and Trailers                                                   698,120                603,857
        Construction Equipment                                                  342,098                292,576
        Office Equipment and Furniture                                          173,999                170,037
                                                                               --------           ------------

                                                                              1,489,686              1,341,939

                Less Accumulated Depreciation                                  (782,717)              (657,394)
                                                                              ---------           ------------

                   NET LAND, BUILDINGS AND
                       EQUIPMENT                                            $   706,969           $    684,545
                                                                            ===========           ============
</TABLE>

NOTE 4: NOTES PAYABLE

    A summary of notes payable follows:

<TABLE>
<CAPTION>
                                                                               1999                      1998
                                                                            ------------              --------
<S>                                                                        <C>                        <C>
        10% note payable to an individual, unsecured,
            due January 17, 1999                                           $          -               $150,000

        8.5% note payable to an individual, due
            on demand, secured by second
            lien deed of trust                                                   39,309                      -

        10% note payable to a bank, monthly interest
            payments payable through August 26, 2000
            when principal is due.  Secured by deed
            of trust                                                            180,000                      -
                                                                               --------               --------

                                                                               $219,309               $150,000
                                                                               ========               ========
</TABLE>










                                      F-13
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 5: LONG-TERM DEBT

    A summary of long-term debt follows:
<TABLE>
<CAPTION>
                                                                            1999                     1998
                                                                        -----------             -------------
<S>                                                                     <C>                         <C>
        4.9%note payable to a credit corporation,
            payable in monthly installments of $546
            including interest, due June 1, 1999,
            secured by equipment                                        $         -                 $2,687

        9.5%note payable to a credit corporation,
            payable in monthly installments of $653
            including interest, due August 4, 2001,
            secured by vehicle                                               11,482                 17,896

        9.65% note payable to a bank, payable in
            monthly installments of $807 including
            interest, due July 8, 1999, secured by
            vehicle                                                               -                  5,472

        9.9% note payable to a credit corporation,
            payable in installments of $469 including
            interest, due January 2, 2001, secured by
            vehicle                                                           5,656                 10,796

        10.0% note payable to a credit corporation,
            payable in monthly installments of $533
            including interest, due August 30, 1999,
            secured by equipment                                                  -                  5,140

        9.5%note payable to a credit corporation,
            payable in monthly installments of $628
            including interest, due August 4, 1999,
            secured by vehicle                                                    -                 21,696

        9.5%note payable to a credit corporation,
            payable in monthly installments of $339
            including interest, due April 16, 2002,
            secured by vehicle                                                8,219                 11,594

        12.5% notes payable to a bank, payable in
            monthly installments of $836 including
            interest, due June 15, 2002 unsecured                            21,524                      -

        9.29% note payable to a bank, payable in
            monthly installments of $836 including
            interest, due August 13, 2004, secured by
            vehicle                                                          37,870                      -
</TABLE>

                                   (Continued)

                                      F-14

<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 5: LONG-TERM DEBT (Continued)

<TABLE>
<CAPTION>
                                                                            1999                      1998
                                                                       -------------              ------------
<S>                                                                            <C>                     <C>
        9.5% note payable to a credit corporation, payable
            in monthly installments of $339 including interest,
            due April 16, 2002, secured by vehicle                             $  8,202                $11,570

        9.5% note payable to a credit corporation, payable
            in monthly installments of $633 including interest,
            due June 26, 2000, secured by vehicle                                 4,076                 10,857

        9.5% note payable to a credit corporation, payable
            in monthly installments of $648 including interest,
            due October 20, 2000, secured by vehicle                              5,849                 12,708

        9.55% note payable to a bank, payable in
            monthly installments of $428 including
            interest, due August 25, 1999, secured by
            vehicle                                                                   -                  3,301

        9.5% note payable to a credit corporation,
            payable in monthly installments of $655
            including interest, due January 15, 1999,
            secured by vehicle                                                        -                    766

        9.95% note payable to a credit corporation,
            payable in monthly installments of $643
            including interest, due December 1, 2000,
            secured by vehicle                                                    6,149                 12,883

        11.25% note payable to a credit corporation,
            payable in monthly installments of $765
            including interest, due April 9, 2002,
            secured by vehicle                                                   38,564                      -

        9.5%note payable to a credit corporation,
            payable in monthly installments of $1,676
            including interest, due September 17, 2002,
            secured by equipment                                                 48,506                 63,241

        9.5%note payable to a credit corporation,
            payable in monthly installments of $1,212
            including interest, due June 25, 2002,
            secured by equipment                                                 27,183                 34,809

        9.75% note payable to a bank, payable in
            monthly installments of $5,834 plus
            interest, due April 30, 2003, secured by
            deed of trust                                                       233,320                303,328
</TABLE>
                                   (Continued)

                                      F-15
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 5: LONG-TERM DEBT (Continued)

<TABLE>
<CAPTION>
                                                                                1999                      1998
                                                                           -------------              -----------
<S>                                                                           <C>                     <C>
        10.75% note payable to a credit corporation,
            payable in monthly installments of $1,022
            including interest, due July 8, 2001,
            secured by vehicle                                                $  16,919               $ 27,556

        11.9% note payable to a credit corporation,
            payable in monthly installments of $642
            including interest, due October 1, 2001,
            secured by vehicle                                                   12,110                 17,983

        12.75% note payable to a credit corporation,
            payable in monthly installments of $964
            including interest, due November 20, 2001,
            secured by vehicle                                                   19,573                 27,379
                                                                              ---------              ---------
                                                                                505,202                601,662
                Less Current Installments                                       178,226                193,260
                                                                               --------               --------

                                                                               $326,976               $408,402
                                                                               ========               ========
</TABLE>

    Aggregate maturities of long-term debt for the five years ending December
    31, 2004, are as follows:

               2000                                                $178,226
               2001                                                 153,808
               2002                                                 134,438
               2003                                                  32,269
               2004                                                   6,461
                                                                 ----------

                                                                   $505,202

NOTE 6: LEASE OBLIGATIONS

    The Company leases certain construction equipment under a 36 month capital
    lease obligation consisting of the following:

                Equipment                                            $49,522
                Less Accumulated Depreciation                         (9,904)
                                                                     -------

                                                                     $39,618

                                   (Continued)

                                      F-16
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 6: LEASE OBLIGATIONS (Continued)

    Future minimum lease payments under capital lease obligation as of December
    31, 1999 are as follows:

                  Year Ending
                  December 31,

                   2000                                                 $18,756
                   2001                                                  12,504

                   Total Minimum Lease Payment                           31,260
                   Less Amount Representing Interest                     (2,206)
                                                                        -------

                   Present Value of Minimum Lease                       $29,054
                                                                        =======

    The Company leases equipment under operating leases that expire over the
    next two years. The following is a schedule by year of future minimum rental
    payments required under these operating leases as of December 31, 1999:

                  Year Ending
                  December 31,

                   2000                                                 $11,865
                   2001                                                     574
                                                                       --------

                                                                        $12,439

    For the years ended December 31, 1999, 1998, and 1997, the operating lease
    payments aggregated $17,175, $20,263, and $14,984, respectively.

NOTE 7: MAJOR CUSTOMERS AND RISK CONCENTRATION

    In 1999, the Company derived approximately 68% of its revenue from five (5)
    customers, In 1998, the Company derived approximately 58% of its revenue
    from five (5) customers, and in 1997, the Company derived approximately 59%
    of its revenue from six (6) customers.

    The following customers exceeded 10% of total revenues for their respective
    years:

<TABLE>
<CAPTION>
                                                               1999              1998              1997
                                                            ---------------------------------------------
<S>                                                             <C>                <C>              <C>
            Rockwall Market Center                              20.0%                 -                 -
            Just for Feet                                       17.6%              21.9%            14.8%
            Office Max                                          17.0%              12.1%            14.6%
            Oshman's                                               -                  -             12.1%
</TABLE>


                                   (Continued)
                                      F-17
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 7: MAJOR CUSTOMERS AND RISK CONCENTRATION (Continued)

    At December 31, 1999, the Company had deposits aggregating $1,062,349 with a
    bank. Such deposits exceed the Federal Deposit Insurance Corporation's
    insurance coverage.

    The carrying amounts of accounts receivable, accounts payable, notes
    payable, and long term debt approximate their fair values.


NOTE 8: LITIGATION  AND CONTINGENCIES

    The Company, its two principal shareholders, the Company's bonding surety
    and construction project owners are defendants in numerous lawsuits
    initiated by material suppliers and/or subcontractors for work performed
    and/or material supplied and for liquidated damages on certain contracts
    which specified completion dates. The Company's management and outside legal
    counsel has estimated the potential loss exposure to be approximately
    $1,092,000. This amount was accrued as a liability of the Company and
    charged against operations for the year ended December 31, 1999.

    The Company's Subsidiary is a defendant in two lawsuits related to equipment
    leases that were assumed by the purchaser of the Bronco Bowl in 1996. The
    purchaser subsequently filed for bankruptcy protection thereby exposing the
    Company and its Subsidiary to approximately $161,000 in lease liabilities,
    which were recognized as an expense in the statement of operations for the
    year ended December 31, 1999.

    As part of the audit process, the independent certified public accountants,
    selected as auditors by the Company, sent correspondence to seventeen (17)
    legal firms requesting discussion and evaluation regarding pending or
    threatened litigation involving the Company and its Subsidiary. All legal
    firms with the exception of one firm provided the requested discussions and
    evaluations. The legal firm not responding to the request billed the Company
    $86,075 subsequent to December 31, 1999, and the Company objected to the
    amount billed. The primary legal service provided by this firm was in
    connection with the Company's negotiations with its bond surety. The
    Company's management is not able to determine the amount of any liabilities
    associated with pending or threatened litigation for which this firm was
    representing the Company.

    The Company has entered into guarantee arrangements on contracts in the
    ordinary course of business. The guarantee period is generally one year.
    Cost of repairs on guarantee arrangements cannot be reasonably estimated.
    Warranty costs incurred for the years ended December 31, 1999, 1998, and
    1997 were $50,839, $5,317, and $31,314, respectively.

                                      F-18
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 9: TEMPORARY INVESTMENTS

    The Company participates in trading publicly traded equity securities. The
    temporary investment securities were as follows:

<TABLE>
<CAPTION>
                                                                           Gross             Gross
                                                                         Unrealized        Unrealized              Fair
             Balance Sheet Date                         Cost                Gains            Losses               Value
        -----------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                <C>              <C>                  <C>
        December 31, 1997                             $214,322            $1,415           $73,204            $142,533

        December 31, 1998                             $118,318         $       -           $18,550            $ 99,768

        December 31, 1999                           $      129         $       -        $        -           $     129
</TABLE>

    The gross unrealized gains and losses, set forth above, have been included
    in the applicable statement of operations.

NOTE 10:    ACCRUED EXPENSES

    Accrued Expenses were comprised of the following:

<TABLE>
<CAPTION>
                                                                1999               1998
                                                            ------------      ------------
<S>                                                           <C>             <C>
        Accrued Litigation Claims                             $1,253,000      $          -
        Sales Tax                                                919,641           679,794
        Salaries                                                       -            74,041
        State Taxes                                                    -            38,000
        Other                                                      1,266             2,930
                                                            ------------         ---------

                                                              $2,173,907          $794,765
                                                              ==========          ========
</TABLE>

NOTE 11:    INCOME TAXES

    Total income tax benefit (expense) is less than the amount computed by
    multiplying earnings before income taxes by the statutory Federal income tax
    rate. The reason for these differences and the related tax effects are:
<TABLE>
<CAPTION>
                                                             1999                 1998                1997
                                                         ------------         ----------           -------

<S>                                                          <C>                <C>                 <C>
        Tax Benefit (Expense) at Statutory Rates (34%)       $ 2,517,095        $(248,802)          $(302,974)
        Valuation Allowance of Deferred Tax Asset             (4,029,616)               -                   -
        Differences Resulting From Nondeductible
                Expenses and Other                               (34,521)         (17,263)             (3,226)
                                                             -----------       ----------          ----------

                TOTAL INCOME TAX (EXPENSE)                   $(1,547,042)       $(266,065)          $(306,200)
                                                             ===========        =========           =========
</TABLE>

                                   (Continued)
                                      F-19
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 11:    INCOME TAXES (Continued)

    The Company's total deferred tax assets, deferred tax liabilities, and
    deferred tax asset valuation allowances at December 31, 1999 and 1998, are
    as follows:

<TABLE>
<CAPTION>
                                                              1999             1998
                                                         --------------   -----------
<S>                                                         <C>            <C>
            Total Deferred Tax Assets                       $4,062,688     $1,561,084
            Less Valuation Allowance                        (4,029,616)             -
                                                            ----------          -----

            Net Deferred Assets                                 33,072      1,561,084
            Deferred Tax Liabilities                           (33,072)       (37,244)
                                                          ------------   ------------

                                                          $          -     $1,523,840
                                                          ============     ==========
</TABLE>


    The deferred tax assets have been recorded based on a net operating loss
    carryforward from sale of discontinued operations and loss from discontinued
    and continuing operations. Due to excessive losses from operations, the
    Company anticipates that it will file for protection from its creditors
    under Chapter 11 of the Federal Bankruptcy Code; therefore, it has
    determined that there is less than a 50% probability that future taxable
    income will be sufficient to fully realize the deferred tax assets. The
    Company has determined that a deferred tax asset valuation allowance of
    $4,029,616 is needed at December 31, 1999.

    The types of temporary differences that give rise to significant portions of
    deferred income taxes and the tax effects of those temporary differences
    included in the deferred income taxes balances are presented below:

<TABLE>
<CAPTION>
                                                                    1999                                  1998
                                                      -------------------------------    ----------------------------------
                                                         Current         Noncurrent           Current            Noncurrent
<S>                                                   <C>                 <C>                 <C>               <C>
        Allowance for Doubtful Accounts               $           -       $  419,354          $          -      $   246,500
        Net Operating Loss Carryforward                           -        3,564,450               350,000          899,612
        Excess of tax basis over financial
             basis of interest accrued but not
             paid to stockholders                                 -           70,825                     -           53,118
        Excess of tax basis over financial
             basis of security loss reserve                       -            6,886                     -            6,886
        Excess of financial basis over tax
             basis of property and equipment                      -          (33,072)                    -          (34,082)
        Valuation Allowance                                       -       (4,029,616)                    -                -
        Other                                                     -            1,173                     -            1,806
                                                      -------------    -------------              --------       ----------

             Net deferred tax asset                   $           -    $           -              $350,000       $1,173,840
                                                      =============    =============              ========       ==========
</TABLE>

    For financial accounting and federal tax return purposes, the Company has
    approximately $11,266,000 and $10,395,000, respectively, of net operating
    loss carryforwards as of December 31, 1999, which will expire beginning
    2011.

                                      F-20
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 12:  RELATED PARTY TRANSACTIONS

    The Company does business with two (2) subcontractors that are related
    through common ownership of its two (2) principal shareholders of the
    Company and a key employee of the Company. One of these subcontractors filed
    for bankruptcy on December 6, 2000.

    Payments made to these related parties for subcontractor services were
    $1,799,576 and $2,068,365 during the years ended December 31, 1999 and 1998,
    respectively. Amounts due the related parties was $164,342 at December 31,
    1998. Amounts due from/to these related parties at December 31, 1999 were
    netted against amounts payable to the principal shareholders.

    The Company is also affiliated with a real estate company through common
    ownership that builds single family dwellings. There were no payments to
    this affiliate during the years ending December 31, 1999 and 1998. Amounts
    due from/to this affiliate at December 31, 1999 were noted against amounts
    payable to the principal shareholders.

NOTE 13:    STOCK OPTIONS PLANS AND WARRANTS

    In September, 1995, the Company established the "1995 Incentive Stock Option
    Plan" (the "Plan") to encourage ownership in the Company's common stock by
    certain officers, directors, employees and advisors. The Company has
    reserved two hundred thousand (200,000) authorized but unissued shares of
    common stock, $.01 par value for issuance in connection with its plan. The
    Plan will be administered by the Compensation Committee appointed by the
    Board of Directors. In making any determination as to persons to whom
    Options shall be granted and as to the number of shares to be covered by
    such Options, the Compensation Committee shall take into account the duties
    and responsibilities of the respective officers, directors, employees, or
    advisors, their current and potential contributions to the success of the
    Company and such other factors as the Compensation Committee shall deem
    relevant in connection with accomplishing the purpose of the Plan. No
    options have been granted under the Plan as of December 31, 1999.

    In September 1995, the Company established the "Outside Directors Stock
    Option Plan" (the "Directors Plan") which is to provide incentives for
    Directors to promote the success of the Company and to remain as Outside
    Directors. The Company has reserved fifty thousand (50,000) authorized but
    unissued shares of common stock, $.01 par value for purposes of the
    Directors Plan. The Directors Plan will be administrated by the Stock Option
    Committee ("Options Committee") appointed by the Board of Directors. In
    making any determination as to Outside Directors to whom Options shall be
    granted, and as to the number of shares to be covered by such Options, the
    Options Committee shall take into account the duties and responsibilities of
    the respective Outside Directors, their current and potential contributions
    to the success of the Company, the time devoted by such Outside Directors to
    matters pertaining to the Company, and such other factors as the Options
    Committee shall deem relevant in connection with accomplishing the purpose
    of the Plan. No options have been granted under the Directors Plan as of
    December 31, 1999.

                                      F-21
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 13:    STOCK OPTIONS PLANS AND WARRANTS (CONTINUED)

    In September 1995, the Company entered into a warrant agreement with its
    financial consultant which allows the purchase of 150,000 authorized and
    unissued shares of common stock, $.01 par value at a price equal to 120% of
    the public offering price, exercisable for a four year (4) period commencing
    one year from the effective date of the public offering.

    The Company has previously issued warrants to purchase 30,000 shares of
    common stock, exercisable prior to December 31, 2000 to Can Am Capital, LLC.
    The purchase price of these shares is $5.00.

    On October 4, 1996, the Company entered into a warrant agreement with Danny
    R. Gibbs and Tony G. Gibbswhich allowed these individuals to purchase
    2,000,000 shares of the Company $.01 par value common stock for $.10 per
    share in the event that either individual is terminated from employment or
    from an executive position with the Company without the individuals consent
    in writing, or a stockholder or a group of stockholders, other than the two
    (2) individuals, become beneficial owners of at least twenty-five percent
    (25%) of the issued and outstanding shares of common stock of the Company as
    indicated on a schedule 13D filed under the Securities Exchange Act of 1934.

NOTE 14:    BUSINESS SEGMENT REPORTING

    The Company has two (2) primary business segments which are:

        - Construction

        - Securities Trading

    The following summarizes the operation by business segment:

<TABLE>
<CAPTION>
                                                         1999                  1998                    1997
                                                     -------------        --------------           -------------
<S>                                                         <C>                   <C>                <C>
    REVENUES
        Construction                                        $53,366,171           $54,496,848        $47,993,287

    OPERATING (LOSS) PROFIT
        Construction                                        $(2,121,707)           $3,282,871         $2,439,046
        Securities Trading                                      $78,682              $(39,782)          $(62,157)

    CAPITAL EXPENDITURES
        Construction                                           $230,734              $288,348            $48,101

    DEPRECIATION
        Construction                                           $194,592              $163,420           $159,400

    IDENTIFIABLE ASSETS
        Construction                                         $7,470,818           $13,032,578        $12,475,383
        Securities Trading                                         $129               $99,768           $142,533
</TABLE>


                                      F-22
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 15:    QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                        Income (Loss) Before            Net Income     Net Income (Loss)
            1999                    Revenues                Income Taxes                    (Loss)              Per Share
        ----------               ------------         ------------------------          --------------      -----------------
<S>                             <C>                          <C>                       <C>                       <C>
        December                $  6,891,523                 $(7,912,225)              $(9,262,165)              $(2.31)
        September                 16,144,549                      95,301                    39,199                  .01
        June                      16,725,803                     217,659                   143,309                  .04
        March                     13,604,296                     196,045                   129,395                  .03

           1998
        ----------
        December                 $17,691,628               $     473,742               $   308,792              $   .08
        September                 13,520,229                      82,671                    36,156                  .01
        June                      11,821,015                     128,914                    90,089                  .02
        March                     11,463,976                      46,445                    30,670                  .01
</TABLE>


NOTE 16:    SUBSEQUENT EVENT AND GOING CONCERN

    In the latter part of 1998 and early 1999, the Company contracted to
    construct several hotels in the Southeast United States (approximately
    $9,836,000 in construction revenue, of which, $5,031,000 was recognized in
    1998). These construction projects were bonded by the Company's primary
    bonding surety. During 1999, losses relating to these projects began to
    mount and by December the Company realized it would not have sufficient cash
    resources to finish construction on the remaining hotel projects. In
    addition the Company was nearing completion of the largest retail project
    (construction price of $11,286,422) it had undertaken to date, and the owner
    discontinued approval of change orders and funding for the project. This
    project was bonded by the Company's surety. In the fourth quarter 1999, the
    Company's bonding surety notified the Company that it would no longer
    provide completion and payment bonds for the Company's construction
    projects. Given these events, the Company began a series of negotiations
    with its bonding surety in December 1999, which resulted in a written
    agreement in January 2000, whereby the bonding surety would provide funds to
    finish certain projects and required the Company to terminate construction
    on other projects. As of March 20, 2000, the Company's bonding surety had
    made payments to subcontractors, suppliers and other claimants in the amount
    of $2,675,738. In addition to the problems associated with these projects,
    the Company's largest and most profitable retail customer, Just For Feet,
    filed for bankruptcy in November 1999, leaving the Company with $306,000 of
    worthless accounts receivables and the loss of its most profitable client,
    which accounted for 17.6% and 21.9% of the Company's total revenues in 1999
    and 1998, respectively.

    Going forward, the Company is actively seeking another company with which to
    combine its operations. Discussions were initiated with an Atlanta, Georgia
    company in December 1999. That company is a family of Corporations and
    LLC(s) whose operations involve construction services and is a minority
    designated and owned business. Discussions (which are continuing) around a
    plan whereby a "reverse merger" would occur utilizing a pooling of assets or
    a stock acquisition by Gibbs. Management of Gibbs would be consolidated with
    that company. A change of control by tax definition would not occur under
    the terms as contemplated in the current discussions; however, there would
    be a change of control in management.

                                   (Continued)

                                      F-23
<PAGE>

                     GIBBS CONSTRUCTION, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 and 1997

                                   (Continued)

NOTE 16:    SUBSEQUENT EVENT AND GOING CONCERN (CONTINUED)

    In conjunction with the pending merger as discussed above, in the near
    future the Company anticipates that it will file for protection from its
    creditors under Chapter 11 of the Federal Bankruptcy Code, which will allow
    it time to reorganize itself; thereby, allowing the Company to continue its
    operations.

    The Company's management is unable to determine the ultimate effect of the
    Company's seeking protection form its creditors using Chapter 11 of the
    Federal Bankruptcy Code and has not completed its merger negotiations;
    therefore, these financial statements are presented on the basis that the
    Company is a going concern. Going concern contemplates the realization of
    assets and the satisfaction of liabilities in the normal course of business
    over a reasonable length of time.

                                      F-24
<PAGE>




                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                                  Gibbs Construction, Inc.

                                             By:  -----------------------------
                                                  Danny R. Gibbs, President and
                                                  Chief Financial Officer

                                           Date:  March 31, 2000

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

Signature                                  Title                 Date

                                           Director              March 31, 2000
------------------------------------
Danny R. Gibbs


                                           Director              March 31, 2000
------------------------------------
Tony G. Gibbs


                                           Director              March 31, 2000
------------------------------------
Dennis T. Mitchell


                                           Director              March 31, 2000
------------------------------------
L. W. Reynolds