SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    Form 10-K

               [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended October 31, 1999

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _______ to _______

                         Commission file number 0-17430

                               DANZER CORPORATION

             (Exact name of registrant as specified in its charter)

                  New York                                  13-3431486
       (State of other jurisdiction of                      (IRS Employer
        incorporation or organization)                      Identification No.)

        17500 York Road                                     21740
        Hagerstown, Maryland                                (Zip Code)
        (Address of principal executive offices)

                                 (301) 582-2000
              (Registrant's telephone number, including area code)

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

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

                        Common Stock ($0.0001 par value)

                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                           YES _X_                   NO  ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of the Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of October 31, 1999, the aggregate market value of the Company's common stock
held by non-affiliates of the registrant, based on the average bid and ask
price, was approximately $1,055,300.

As of December 31,1999 the registrant had 18,717,848 shares of common stock
outstanding.



                                     PAGE 1
<PAGE>

                                     PART I

ITEM 1.  BUSINESS.

In addition to historical information, this annual report on Form 10-K contains
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ materially. Factors that might cause or contribute to
such differences include, but are not limited to, those discussed in the section
entitled "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations." Readers should carefully review the risks described
in this and other documents that the Company files from time to time with the
Securities and Exchange Commission, including the quarterly reports on Form 10-Q
to be filed by the Company in 2000. Readers are cautioned not to place undue
reliance on the forward-looking statements, which speak only to the date of this
Annual Report on Form 10-K. The Company undertakes no obligation to publicly
release any revisions to the forward-looking statements or reflect events or
circumstances after the date of this document.

General:
-------

In fiscal 1998, the shareholders of Global Environmental Corp. ("Global")
authorized Global to change its name to Danzer Corporation ("Danzer" or the
"Company"), which name change was effected in fiscal 1999. In November 1999, the
Company also changed its trading symbol on the Over The Counter Bulletin Board
from "GLEN" to "DNZR". Danzer, through its wholly owned subsidiary, Danzer
Industries, Inc. ("DII"), fabricates metal parts and truck bodies for the
service and utility markets.

History and Development of Business:

Danzer, formerly named Affiliated National, Inc., was incorporated in New York
in 1987 under the name Global Environmental Corp. In January 1988, Danzer
completed an initial underwritten public offering of 400,000 units for an
offering price of $1.00 per unit. Each unit consisted of one share of common
stock, three Class A Warrants and three Class B Warrants.

In August 1988, Danzer acquired all of the outstanding capital stock of Global
Holdings. In June 1988, Global Holdings purchased all of the outstanding capital
stock of DII from its sole shareholder. DII is located in Hagerstown, Maryland
and has the ability to produce and install a wide range of custom designed and
engineered fabricated metal products.

In November 1988, Global Holdings' newly incorporated subsidiary, Texcon,
purchased certain assets from a manufacturing concern (Texcon Inc., a South
Carolina corporation), located in Greenville, SC. The assets acquired consisted
of contracts to produce engineering and design services for pollution control
systems as well as assets used in air monitoring and testing.

In December 1988, Global Holdings' newly incorporated subsidiary, Rage, acquired
substantially all of the assets of Rage Engineering, Inc., located in
Plumsteadville, PA. Rage designed and assembled pneumatic handling systems used
in the processing of bulk materials in manufacturing and pollution control
processes.

In August 1993, the Company acquired the assets of Morrison Industries L.P., a
manufacturer of specialized utility truck bodies and moved these assets to its
manufacturing facilities. The Company began production of the Morrison bodies in
December 1993. Prior to this date, the Company produced its own proprietary
truck bodies.

In October 1994, the Company's Texcon subsidiary was closed. All Texcon products
and systems were then marketed under Rage and/or Global Environmental Corp.

In June 1996, the Company sold Rage Inc. to William V. Rice in exchange for
517,000 shares of Danzer and cancellation of his employment agreement and a cash
payment by the Company.


<PAGE>

In August 1997, the Company decided that the future of Danzer was in the metal
fabrication business as it related to the manufacture and distribution of truck
bodies for the service and utility market. A strategic direction was established
that called for the phase out of all business that was not associated with truck
bodies by the end of the first quarter of fiscal year 1998.

In November 1997, the Company sold the Airline product line to Rage, Inc. for
$413,000, with $150,000 paid at closing and the remaining $263,000 taken in the
form of a 6% promissory note secured by the Airline assets and maturing May 19,
2001. At December 31, 1999, Rage had made $85,000 in principle payments pursuant
to the Note, but is in default on its obligations, failing to make the November
15, 1999 payment on time.

In the fiscal second quarter of 1998, Danzer shipped the last orders for
Schindler Elevator, an elevator manufacturer. For the year ended October 31,
1998, the Company booked approximately $304,000, or 4% of sales, to Schindler,
and further recorded sales of approximately $1.1 million, or 13% of sales, in
fiscal year 1997. Despite this loss of revenue, the Company believes the
benefits of eliminating this relationship will far outweigh the costs, as it
will allow the Company to focus on its core business, thereby allowing it to
better compete through a higher level of service and increased manufacturing
efficiencies.

Effective December 16, 1998, the Company agreed to pay $200,000 to repurchase an
outstanding 5% gross royalty interest on all Morrison truck bodies sold. The
royalty was originally retained by the entity that sold Morrison Industries,
L.P. to Danzer in August 1993. Included in the total consideration of the
transaction was approximately $65,000 in amounts owed by Danzer for past due
royalty payments. Danzer paid $50,000 up front and became obligated on the
balance pursuant to a $150,000 promissory note bearing interest at 7.75% and due
on or before December 15, 1999. In December 1999, Danzer paid off the balance of
the note.

Substantial business developments:

o    During the first quarter of fiscal 1994, the Company entered into a joint
     venture agreement with Cadema Corporation. During the term of the joint
     venture terminating December 31, 1998 (unless otherwise extended), the
     joint venture has the right to contract for the design and installation of
     air pollution control equipment in the Company's name in all areas of the
     world outside the United States and its territories. The joint venture has
     expired and no future operations are expected.

o    In September 1994, Danzer completed a private offering of 7,550 shares of
     10% Cumulative Convertible Senior Preferred Stock (the `10% Preferred') at
     $100 per share. Each share of the 10% Preferred was converted into 200
     shares of common stock.

o    On December 31, 1994, Renaissance Capital Partners, Ltd. (`Renaissance')
     exchanged $1,600,000 principal amount of the Company's 12.5% Convertible
     Debentures for 16,000 shares of the Company's Series B Cumulative
     Convertible Senior Preferred Stock ("Series B Preferred") at $100 per
     share. The Company also issued Renaissance a 10% Term Note in the principal
     amount of $211,635 due December 31, 1997 representing interest accrued on
     the Convertible Debentures through September 30, 1994. Each Series B
     Preferred share was convertible into 200 shares of common stock.

o    In August 1995, the Company issued 1,200,000 shares through a private
     placement for $300,000. 1,000,000 shares were issued to R. W. Snyder and
     200,000 shares were issued to Renaissance.

o    During fiscal 1996 and 1997, the holders of the 10% Preferred and the
     Series B Preferred converted their shares and accrued dividends to common
     stock at a conversion rate of $0.25 per share.

o    In March 1997, Renaissance loaned the Company $150,000 in the form of a 10%
     Convertible Promissory Note ("Note"), convertible into common stock at
     $0.25 per share. The note provided that Renaissance would convert the
     entire principal into 600,000 shares of common stock upon the Company
     obtaining a loan secured by a lien on the land and improvements owned by
     Danzer under terms acceptable to Renaissance.


<PAGE>

o    Effective August 1997, Duncan-Smith Co. ("DSC") loaned DII $650,000
     pursuant to an 11% Promissory Note ("DSC Note") secured by a lien on all
     real property and improvements owned by DII, including the manufacturing
     facility in Hagerstown, MD. To effectuate the DSC Note, Fremont Financial
     Corporation (now known and hereafter referred to as "Finova"), the
     Company's working capital lender, agreed to subordinate its previously
     senior position in the Company's real property and improvements, including
     the manufacturing facility in Hagerstown, Maryland, to the DSC Note.

o    Contemporaneous with the closing of the DSC Note, Renaissance, in
     accordance with the provisions of its Note, converted the entire note into
     600,000 shares of common stock.

o    In August 1997, the Company made a strategic decision to focus solely on
     the manufacturing of truck bodies and accessories for the service and
     utility markets. Management believes this renewed focus will allow the
     Company to maximize shareholder value by eliminating non-synergistic
     operations, increasing manufacturing efficiencies, streamlining capital
     resources, reducing overall cost structure and enabling the Company to
     better compete in its core business.

o    In November 1997, the Airline product line was sold to Rage Inc. By the end
     of the 1998 fiscal second quarter, the Company had ceased fulfilling the
     Schindler account. Schindler made up approximately 13% of the Company's
     sales in fiscal 1997, or about $1.1 million, and approximately 4% of the
     Company's sales in fiscal 1998, or about $304,000. The Company believes the
     loss of revenue from Airline and Schindler will be more than offset by the
     Company's ability to compete better by providing a higher level of service,
     and from production efficiencies gained by concentrating on a single
     product line.

o    At the annual Shareholder's meeting held December 1997, the Company elected
     a new Board of Directors consisting of Goodhue W. Smith, III, Chairman of
     the Board, Stephen C. Davis, Russell G. Cleveland and William L. Pryor,
     III.

o    In December 1997, R.W. Schuster retired as President and CEO of the
     Company. Stephen C. Davis, a member of the Company's Board of Directors,
     took over as interim CEO and agreed to lead the search for a new President
     and CEO.

o    In December 1997, Renaissance agreed to loan the Company $150,000 pursuant
     to a 10% promissory note secured by substantially all of the assets of the
     Company. All interest and principal due under the note was payable on or
     before September 30, 1998. At October 31, 1998, the Company was in default
     on the obligation. In February 1999, Renaissance converted the entire
     $150,000 principal balance owed on the Note, plus $17,531.80 in accrued
     interest owed at the date of conversion, into 1,675,318 shares of the
     Company's common stock, a rate of $0.10 per share.

o    In March 1998, the Company hired Mr. M.E. Williams as President and CEO.
     Mr. Williams has over 30 years of experience in manufacturing and 7 years
     of truck body manufacturing experience. Mr. Williams became a director of
     the Company in April 1999. Also in fiscal 1999, William L. Pryor, III
     resigned from the Board.

o    In January 1999, due to a change in timing of purchase orders from the
     Company's major customer, as well as a decrease in overall orders to be
     shipped pursuant to those purchase orders, the Company sought to
     renegotiate with its mortgage holders and also obtain additional financing.
     On January 25, 1999, the owners of the DSC Note agreed to defer receipt of
     the principal portion of quarterly payments due on the DSC Note for the
     quarters ending February 15, 1999 and May 15, 1999. In exchange for this
     agreement, the Company increased the interest rate on the DSC Note to 13%
     until such time as the Company could catch up with the normal principal
     repayment schedule. In addition, the Company secured a $25,000 loan from
     its majority shareholder, Renaissance Capital Partners, Ltd., in exchange
     for a 13% promissory note due on or before December 31, 1999.


<PAGE>

o    Effective January 21, 2000, the Company and Banc of America Commercial
     Finance Corporation ("BOACFC") entered into a loan agreement whereby BOACFC
     agreed to lend the Company $600,000 pursuant to a 5 year term loan and
     arrange a $1.75 million working capital credit facility (the "BOACFC
     Loan"). Upon closing, the BOACFC Loan replaced the Company's facility with
     Finova and paid off the DSC Note in full.

Description of the Business:

Danzer is a holding company and through DII, its sole operating subsidiary,
engages in the manufacturing and marketing of specialized truck bodies,
platform/stake bodies, and toolboxes for the service and utility markets. The
DII business can be broken down into two general categories: private label
products which are sold directly to the Company's largest customer; and
proprietary products which are marketed under the Company's Morrison brand,
which are sold through the Company's internal sales force to a network of
value-added distributors throughout the East Coast. Sales of the private label
products to the Company's primary customer represent the largest portion of the
Company's business, accounting for over 60% of sales in fiscal 1999.

The truck body market is large and growing. The National Truck and Equipment
Association believes 400,000 commercial truck bodies were manufactured in 1996,
while the truck equipment market had 4% industry growth in 1996 and 1997, which
growth is expected to continue through the year 2000.

Management believes the service and utility portion of the commercial truck body
market may be growing at a faster rate based on information from the American
Institute of Service Body Manufacturers. In addition, we believe downstream
users such as cable, utility and media service providers are making and will
continue to make large capital investments in their own infrastructures to
ensure their ability to compete in newly deregulated markets. These factors are
the primary reasons why the Company shifted its strategy in 1997 to focus solely
on the service and utility truck body market.

Manufacturing Capabilities:

The Company's manufacturing activities are located at DII's operating facility
in Hagerstown, Maryland where the Company produces truck bodies for sale under
the Morrison trademark as well as bodies built to order for other original
equipment truck manufacturers. The standard body sizes are 96, 108 and 132
inches in length and are painted with a finish paint or primer depending on
customer requirements. The Company outsources certain small parts such as door
cables, door gaskets, hinges and locks. The equipment used at the DII facility
enables the Company to fabricate certain metal products up to 1/2 inches thick.
Materials used include aluminum, stainless steel, and mild steel in both sheet
and plate. The finished bodies are shipped to customers for installation on
truck body chassis. DII offers heliarc and MIG welding, brazing, forming,
assembly, and painting services to its customers, and also maintains in-house
design and engineering capabilities.

Government Regulation:

The Company is subject to regulation by federal, state, and local agencies that
have jurisdiction over areas such as environmental and fire hazard control
issues and regulate the work place to insure safe working conditions for the
Company's employees. These regulatory bodies could take actions that would have
a material adverse affect upon the Company's ability to do business. The
business of the Company does not subject it to any special regulatory authority.


<PAGE>

Competition:

There are a significant number of companies engaged in the manufacture of
service truck bodies in the United States. While many of these companies are
relatively small and do not possess the Company's technical capacity, a number
of its competitors are much larger and possess equal or greater technical and
financial resources. Four such competitors are: Knapheide Manufacturing Co.,
Omaha Standard, Inc., Reading Body Works, Inc., and Stahl, a Scott Fetzer Co.,
which is a wholly owned subsidiary of Berkshire Hathaway, Inc. The Company
competes with others in its industry through price and service, with price being
the most important factor, and offers truck bodies made to the individually
specified requirements of its customers.

Marketing:

The Company's manufacturing operation generally markets to customers within the
Eastern United States. The Company sells its private label products direct and
markets its proprietary Morrison products to a network of value-added
distributors who in turn sell to municipalities, utility companies, cable
companies, phone companies and contractors. In fiscal 1999, the Company sold its
products to 575 different distributors. The Company's internal sales force
consists of three individuals who have exclusive territories and are paid
commissions based on sales achieved by them in their respective selling areas.
Company representatives attend regional and national trade shows on a consistent
basis, and the Company also advertises regularly in trade journals and other
related publications.

Principal Customers:

During the fiscal year ended October 31, 1999, the Company had one customer that
represented 10% or more of total net sales: Mobile Tool International, a truck
body supplier. In the year ended October 31, 1999, the Company had sales of $4.2
million to Mobile Tool, or approximately 63% of total revenue booked for the
year.

Manufacturing and Facilities:

The Company purchases its raw materials from numerous suppliers and has not had
any difficulty in obtaining components or raw materials. DII purchases
domestically produced and imported sheet metal from a number of distributors and
is not dependent upon any particular source of supply. The Company bears the
risks of its products and systems not conforming to customer specifications, but
in most cases, defects and deficiencies are correctable. Management believes
that the Company's existing manufacturing and office facilities are adequate to
meet its present needs and anticipated growth.

Employees:

As of October 31, 1999, Danzer had approximately 74 employees. Of these
employees, 22 are involved in sales, administration and engineering, and 52 are
in manufacturing of Danzer's products. Danzer has a contract through January
2002 with United Brotherhood of Carpenters and Joiners of America and believes
its employee relations are satisfactory.

Patents and Proprietary Technology:

The Company does not rely on any patents, registered trademarks, or special
licenses to give it a competitive advantage. The Morrison brand name does have
brand recognition in our served markets. The Company's position in its industry
depends mainly on its ability to offer competitive pricing. The Company did not
incur, during any of its last three fiscal years, and does not contemplate
incurring, any material research and development expenses.




<PAGE>

Insurance:

The Company carries a broad range of insurance coverage which management
considers sufficient to provide acceptable levels of financial resources to
protect the employees, assets, and operations of the Company that may be
negatively affected in the event of a loss. The Company does not currently
maintain, and in the future may not choose to or may not be able to obtain,
coverage for liabilities arising from environmental damage, professional design
deficiencies or other circumstances which could arise as a result of the type of
business in which the Company engages. To date, the Company has not had
difficulty in obtaining insurance. However, if the Company should be unable to
obtain adequate insurance or should decide to operate without insurance, a
partially or completely uninsured claim against the Company, if successful and
of sufficient magnitude, could have a material adverse affect upon the Company's
business or its financial condition.

Seasonality:

The Company's business has not generally been seasonal in the past. However, the
Company has historically experienced a reduced flow of orders during late
November, December and early January. No seasonal modification of the Company's
production schedule or staffing is required under normal business circumstances.

Warranties:

In connection with most contracts for manufacture the Company warrants its
product to be free from defects in material and workmanship and performance
under normal use and service for a period of twelve months after shipment. The
obligation of the Company is generally limited to the repair or replacement of
the defective product.

Backlog:

At October 31, 1999, the Company's backlog was approximately $567,000 versus
$1,453,000 at October 31,1998. The October 31, 1999 backlog is expected to be
filled within the 2000 fiscal year.

Export Sales:

No sales of goods were exported to foreign countries during the fiscal years
ended October 31, 1999 or 1998.

ITEM 2.  PROPERTIES

DII owns its principal manufacturing facility that is located in an 80,000
square foot plant on an eleven acre site in Hagerstown, Maryland, near the
intersection of two major interstate highways. Approximately 75,000 square feet
are used in manufacturing and 5,000 square feet are used as office space. This
property secures the BOACFC Loan.

The Company believes that its property, plant and equipment are well maintained
and adequate for its requirements. The Company also believes that all of its
assets are adequately covered by insurance.

ITEM 3.  LEGAL PROCEEDINGS

None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



<PAGE>

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                   STOCKHOLDER MATTERS

Danzer's common stock was listed on the National Association of Security Dealers
Automated Quotations System (NASDAQ) under the symbol "GLEN" until September 29,
1993 at which time the Company was "delisted". Danzer's common stock is
currently traded on the Over-the-Counter Electronic Bulletin Board under the
symbol "DNZR". The following table sets forth the high and low bid quotations
for the common stock for the fiscal quarters indicated.

Fiscal 1998

                                       High                    Low

First Quarter                       $ 0.1875                  $ 0.0625
Second Quarter                      $ 0.1600                  $ 0.0850
Third Quarter                       $ 0.1563                  $ 0.0950
Fourth Quarter                      $ 0.1200                  $ 0.0850

Fiscal 1999

                                       High                    Low

First Quarter                       $ 0.1600                  $ 0.0850
Second Quarter                      $ 0.1000                  $ 0.0850
Third Quarter                       $ 0.1600                  $ 0.0850
Fourth Quarter                      $ 0.0938                  $ 0.0600


The above quotations reflect inter-dealer prices, and may not include retail
mark-up, mark down or commissions and may not necessarily represent actual
transactions.

At October 31, 1999, there were approximately 830 holders of record of Danzer's
common stock. Most of the shares of the common stock are held in street name for
an unknown number of beneficial owners. To date Danzer has not paid a cash
dividend on its common stock. The payment and amount of any future cash
dividends would be restricted by the Company's lender and will necessarily
depend upon conditions such as the Company's earnings, financial condition,
working capital requirements and other factors.

ITEM 6.  SELECTED FINANCIAL DATA.

The following table sets forth certain selected consolidated financial
information concerning the Company. This information is not covered by the
independent auditor's report. For further information, see the accompanying
Consolidated Financial Statements of Danzer Corporation and subsidiary for the
years ended October 31, 1999, 1998, 1997, 1996 and 1995, and the information set
forth in Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations", and in Item 8, "Financial Statements and
Supplementary data" below.

The following information is a summary of the consolidated financial statements
of the Company included elsewhere and should be read in connection with such
consolidated financial statements.

<TABLE>
<CAPTION>
Operating Data:                                                        Year Ended October 31,
---------------                                                        ----------------------
                                                         (Amounts in thousands, except per share data)


                                                     1999     1998     1997     1996    1995
                                                     ----     ----     ----     ----    ----
<S>                                                  <C>      <C>      <C>       <C>    <C>
Net sales                                            $6,580   $7,605   $8,762    $8,154 $7,528

Income (loss) from operations                           478      391  (   226) (    420) ( 275)

Income (loss) from continuing operations                294      175  (   323) (    502) ( 543)
<PAGE>

Income (loss) from discontinued operations                -        -        -  (    210)   154

Income (loss) from sale of  Rage Inc.                     -        -        -  (    215)     -

Net Income (loss)                                       294      175  (   323) (    928) ( 389)

Net  income  (loss)  per share and  fully-diluted
Net  income  (loss) per share
attributable to common shareholders;

Continuing Operations                                  0.02     0.01    (0.02)    (0.32) (0.32)
Discontinued Operations                                   -        -        -     (0.09)  0.06
Loss on Disposal                                          -        -        -     (0.09)     -
Total                                                  0.02     0.01    (0.02)    (0.50) (0.26)

Weighted average number of shares
 Outstanding                                         16,754   15,775   13,601     2,340  2,370
</TABLE>

<TABLE>
<CAPTION>
Balance Sheet Data:                                           As of October 31
-------------------                         ------------------------------------------------

                                                1999            1998       1997        1996          1995
                                                ----            ----       ----        ----          ----
<S>                                         <C>             <C>         <C>       <C>            <C>
Working capital (deficiency)                $(201,954)      $(263,665)  $132,578  $(401,536)     $360,594

Total assets                                3,300,996       3,558,497  3,723,463  4,306,496     3,891,158

Long-term debt, including
    current portion                         1,768,003       2,065,149  2,177,145  1,888,907     1,786,628

Stockholders' equity (deficiency)             714,567         247,055     71,815    207,056       560,487
</TABLE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

The following discussion and analysis of the financial condition and results of
operations of the Company should be read in conjunction with the audited
financial statements and related notes of the Company included elsewhere in this
report. This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other parts of this Annual Report on Form 10-K contain
forward-looking statements that involve risks and uncertainties. The Company's
ability to increase sales depends on many factors not within the Company's
control including planned capital expenditures by end users, general economic
conditions and pricing policies by competitors. Additionally, the Company is
dependent on sales to one purchaser that represented 63% of total sales in the
twelve month period ending October 31,1999. The Company's decision to focus
exclusively on truck body sales also increases the risk of selling to only one
industry segment.

The preparation of financial statements in conformity with generally accepted
accounting principles requires Management to make estimates and assumptions that
affected the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. As a
result, the actual results realized by the Company could differ materially from
the results discussed in or contemplated by the forward-looking statements made
herein. Words or phrases such as "will," "expect," "believe," "intend,"
"estimates," "project," "plan" or similar expressions are intended to identify
forward-looking statements. Readers are cautioned not to place undue reliance on
the forward-looking statements made in this Annual Report on Form 10-K.

<PAGE>

Results of Operations

Fiscal 1999 Compared to Fiscal 1998

For the twelve month period ending October 31,1999 the Company reported sales of
$6,580,000. This represented a $1,026,000 decrease, or 13.5%, from the
$7,605,000 in sales recorded for the 1998 fiscal year. The primary reason for
this decrease was a reduction in the number of truck bodies sold to the
Company's largest customer. The Company believes that sales to its largest
customer will increase in fiscal 2000 from fiscal 1999 levels.

Truck body sales on the Company's proprietary line of Morrison products
increased $822,000, or 29.8%, to $2,422,000 for the 1999 fiscal year, versus
Morrison sales of $1,600,000 for the twelve month period ended October 31, 1998.
This increase was a result of continued growth in our served markets, a more
focused marketing approach that expanded the number of distributors carrying our
products from 530 to 575 and an expansion of the Morrison product line. A
platform/stake body and a line of toolboxes was introduced as new Morrison
products during the 1999 fiscal year that generated $156,000 in sales.
Management believes it can obtain substantial sales growth in fiscal 2000 from
the growth inherent in the Company's served market, as well as from additional
product offerings.

The fourth quarter generated adjusting entries to the financial statements of
approximately $422,000. These adjustments are partially due to the Company's
reduction in its bad debt reserve and other accounting accruals which were
reduced as a result of internal control policies and a better overall
understanding of the Company's needs in the markets it serves. Management will
continue to implement programs to reduce costs and enhance operating efficiency
in the 2000 fiscal year.

As the Company began operating for fiscal year 1999, management had as two of
its most important goals to improve manufacturing controls within the plant and
build Morrison sales volumes by $1 million in an effort to reduce Danzer's
dependence on its largest customer. The manufacturing objective was achieved
through the hiring of Mr. Rudy Temple, the Company's new Director of Operations.
Mr. Temple brings over 20 years of manufacturing experience and executive
management skills to the Company.

Although Morrison sales volume did not increase by $1 million, additional
efforts spent by CEO Mel Williams to sell to large accounts, together with new
products and a new incentive program for marketing personnel allowed the Company
to increase its Morrison volume from $1.6 million to $2.4 million. Although the
Company had hired a national sales manager in 1998 and anticipated expanding its
sales force in fiscal 1999, the national sales manager was ultimately dismissed
and the slowdown in units sold to the Company's largest customer caused Danzer
to put its plan to expand the sales force on hold. Today, the Company maintains
its force of three commissioned sales agents. In fiscal 2000, the Company plans
to publish all new product literature, expand its advertising, participate in
the major NTEA trade show in February 2000 and refine the positioning and makeup
of its sales force. We are also planning to implement a price increase early in
fiscal year ending October 31, 2000.

Gross profits for the twelve months ended October 31, 1999 totaled $1,471,912, a
24% decrease in comparison to the gross profit of $1,941,020 achieved for the
1998 fiscal year. Gross profit margins also declined from approximately 25% in
fiscal 1998 to 22% in fiscal 1999 primarily as a result of the lost revenue from
our biggest customer plus slightly higher material and labor content on the
Morrison product line.

The Company dramatically decreased its selling, general and administrative
expenses in fiscal year 1999. In comparison to the Company's 1998 results,
selling, general and administrative expenses were $993,495, a 36% decrease from
the $1,550,205 in like expense experienced for the twelve months ended October
31, 1998. This reduction resulted primarily from the elimination of a portion of
the Company's administrative work force in response to the change in timing of
purchase orders from Danzer's largest customer, together with reduced volumes of
units ordered from that customer, in the first two quarters of 1999. In addition
to streamlining the administrative work force and operations in general, the
Company was more efficient in the second two quarters of 1999, once production
became more in line with historical results.

<PAGE>

Interest expense increased by $27,277 to $227,803, a rise of over 14%, for the
twelve months ended October 31, 1999 in comparison to fiscal year 1998. This
increase was the result of a negotiated change to the DSC Note, together with a
$25,000 loan advanced by Renaissance, the Company's majority shareholder, in an
effort to help the Company's cash flow during the second quarter.

In the period ending October 31, 1998 the Company reported a loss from
discontinued operations of $30,380 due to the sale of the Airline product line
and winding down of the Schindler Elevator business, while no such losses were
taken in fiscal 1999. For the twelve-month period ending October 31, 1999 the
Company reported net income of $294,170 versus net income of $175,240 in the
twelve months ending October 31, 1998, which profit increases were largely
attributable to the Company's improving efficiency in reducing selling, general
and administrative expenses.

Fiscal 1998 Compared to Fiscal 1997

Revenues are down $1.2 million in comparison to fiscal year 1997. Revenues
declined $3 million in fiscal 1998 due to the sale of the Airline product line
in November 1997 and the decision to stop servicing the Schindler Elevator
account. These decisions were made according to management's strategic plan to
focus the business entirely on the service and utility truck body market. The
loss of revenues was partially offset by a $1.8 million increase in new and
replacement truck sales to the Company's primary customer, Mobile Tool
International. The sales for the Company's branded line, Morrison, remained
unchanged from fiscal year 1997 at $1.6 million in revenue.

Management implemented a plan to increase the brand awareness of Morrison during
fiscal year 1998. The objective of the plan was to generate an additional $1
million in revenue during fiscal 1999. This plan included the hiring of a Chief
Executive Officer with truck industry experience, and providing additional sales
coverage and product awareness. A national sales manager was hired in February
1998 and M.E. Williams was named the CEO in March 1998.

Due to the sale of the Airline product line and the discontinuance of the
Schindler Elevator account, the Company freed up additional manufacturing
capacity at its Danzer facility allowing it to produce additional truck bodies
for Mobile Tool International. This increased volume on the Mobile Tool account
also helped increase gross margins on the Morrison account, which rose to
approximately 34%. As a whole, the Company experienced an additional $436,000 in
gross profit over fiscal 1997 that more than offset the margins lost due to the
sale of the Airline product line and the discontinuance of the Schindler
Elevator account.

Selling, general and administrative expenses were $182,000 lower for the year
ended October 31, 1998 in comparison to the 1997 fiscal year, of which
approximately $100,000 in cost savings were realized due to the elimination of
support salaries and benefits associated with the sale of Airline product line.
The Company's provision for bad debt expense was also reduced from $305,000 to
$44,000 because of aggressive efforts to collect Airline accounts receivable
together with the implementation of a new credit policy for new accounts. Legal
expenses were $25,000 lower due to the Company's decision to change law firms,
and consulting fees were lower by $40,000 due to the Company's decision to stop
a Total Quality Manufacturing ("TQM") program. Management felt that any benefits
from the TQM program were far outweighed by the associated costs of continuing
it. Partially offsetting these lower costs was $60,000 in recruitment and
relocation expenses incurred during the fiscal year to hire a new Chief
Executive Officer and a new Chief Financial Officer.

Interest expense for fiscal 1998 was $200,526, which was relatively unchanged
from interest expense of $201,627 for fiscal 1997.



<PAGE>

Liquidity and Capital Resources

Cash flow from operations decreased in fiscal year 1999 to a positive $259,352
versus a positive $630,794 in fiscal year 1998. This reduction was the result of
lower accounts receivable, accounts payable and accrued expenses, as well as
higher inventories. The lower accounts receivable balance was due to lower
fourth quarter sales and improved collections over fiscal 1998. Lower accounts
payable was due to lower purchases resulting from lower revenues. Accrued
expenses were lower due to fourth quarter adjustments as a result of higher
reserves maintained at the end of fiscal 1998. Higher inventories were required
to support the higher backlog of Morrison products. The Company paid down the
note payable to Morrison Liquidation Corporation for the buyout of the royalty
agreement to $72,223 from $150,000.

During the twelve month period ending October 31, 1999 the Company slightly
increased its working capital position. At the end of the October 31, 1998, the
Company had a deficiency of $264,000. This number decreased slightly to a
deficiency of $201,954 at October 31, 1999.

Although the Company continues to make good strides, in fiscal 1999 the debt to
equity ratio ended the year over 240% and the Company continued to rely on its
working capital line and insider financing to support its operations. If this
situation persists in fiscal 2000, the Company could still be viewed as having a
weakened financial condition due to the presence of debt in relation to
shareholders' equity, which could force the Company to again turn to its working
capital lender or others for additional capital. Management believes, however,
that if operations continue on a normal basis, the Company will have adequate
cash resources to meet its operating needs and financial obligations as they
come due.

Investing activities utilized $57,745 in cash for fiscal 1999. Capital
expenditures were made to purchase a new paint booth that enables the painting
of larger bodies and to purchase additional production equipment to produce the
Company's newest product, the Morrison platform/stake body. Previously, the
Company would have had to oustsource the painting activity on the larger bodies,
and Management believes the added painting capabilities will lead to enhanced
operating efficiencies going forward.

In January 1999, due to a change in timing of purchase orders from the Company's
major customer, as well as a decrease in overall orders to be shipped pursuant
to those purchase orders, the Company sought to renegotiate with its mortgage
holders and also obtain additional financing. On January 25, 1999, the owners of
the DSC Note agreed to defer receipt of the principal portion of quarterly
payments due on the DSC Note for the quarters ending February 15, 1999 and May
15, 1999. In exchange for this agreement, the Company increased the interest
rate on the DSC Note to 13% until such time as the Company could catch up with
the normal principal repayment schedule. In addition, the Company secured a
$25,000 loan from its majority shareholder, Renaissance Capital Partners, Ltd.,
in exchange for a 13% promissory note due on or before December 31, 1999.

Effective January 21, 2000, the Company and Banc of America Commercial Finance
Corporation ("BOACFC") entered into a loan agreement whereby BOACFC agreed to
lend the Company $600,000 pursuant to a 7 year term loan and arrange a $1.15
million working capital credit facility (the "BOACFC Loan"). Upon closing, the
BOACFC Loan replaced the Company's facility with Finova and paid off the DSC
Note in full. The note with Renaissance remains outstanding and is in default.
Renaissance has waived its rights to utilize default remedies on a limited basis
through February 29, 2000, and Management intends to repay the Renaissance
indebtedness in full using the proceeds of the BOACFC Loan on or before February
29, 2000.

After closing the BOACFC Loan, the outstanding balance on the facility was
approximately $1,000,000. DII had available borrowing under its agreement of
approximately $132,000 at January 21, 2000.

In light of the Company's backlog at October 31, 1999, its projected cash flow
from operations, the market for the Company's products, its reliance on a single
customer for over 60% of its sales, and the amount of debt on the balance sheet,
it is anticipated that the Company may need increased sales, an increase in its
profit margin and/or an infusion of capital in order to sustain its operations.
The Company's ability to meet certain interest and principal payments, as well
as its working capital needs to execute its backlog and generate sales volume
during fiscal 2000, will be dependent upon the success of the Company's efforts
to increase sales volume and attain profitability on new product lines.

<PAGE>


Year 2000 Compliance

Many computer software systems in use today cannot process date-related
information from and after January 1, 2000. The Company has taken steps to
review and modify their computer systems as necessary and be prepared for the
Year 2000. In addition, the Company has inquired of its major service providers
if they are in the process of reviewing their systems with the same goals. The
majority of all providers have represented that they are either taking the
necessary steps to be prepared or are currently prepared for the Year 2000.
Should any of the computer systems employed by the major service providers fail
to process this type of information properly, that could have a negative impact
on the Company's operations. In fiscal 1999, the Company spent approximately
$7,500 on consulting and other fees to review the Company's systems for Y2K
compliance and upgrade systems or provide remedial services as necessary.
Management believes it will be able to handle the total Year 2000 transition
without material adverse effects on its business operations or financial
condition. At the date of this filing, the Company had not experienced any Y2K
related difficulties with its computer systems.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See "Index to Consolidated Financial Statements on page F- below.

ITEM 9.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth information with respect to all of the directors
of the Company.

                                    Position with                      Director
Name                       Age      Company                            Since

Goodhue W. Smith, III      51       Director                           1997

Russell Cleveland          62       Director                           1991

M.E. Williams              60       Director                           1999

Stephen C. Davis           52       Director                           1997

<PAGE>

Russell Cleveland, a chartered financial analyst, became director of the Company
on April 26, 1991. Mr. Cleveland has for the past eight years been a director,
officer and shareholder of Renaissance Capital Group, Inc., which is the
managing general partner of Renaissance, a business development company pursuant
to the Investment Company Act of 1940. Mr. Cleveland currently serves on the
Board of Directors of Feminique Corporation, Bentley Pharmaceuticals, Inc.,
Technology Research Corp. and Tutogen Medical, Inc. Mr. Cleveland is the
Renaissance designee to the Board of Directors. See "Item 13- Certain
Relationships and Related Transactions" herein.

M.E. Williams is the President and Chief Executive Officer of Danzer. Mr.
Williams has over 30 years of experience in manufacturing and 7 years of truck
body manufacturing experience. He was hired as President and Chief Executive
Officer in March 1998 and replaced Mr. William L. Pryor, III as a member of the
Company's Board of Directors in 1999.

Goodhue W. Smith III founded Duncan-Smith Co., an investment banking firm in San
Antonio, Texas, in 1978 and has since such time served as its Secretary and
Treasurer. Mr. Smith is also Director of Citizens National Bank of Milam County,
and Ray Ellison Mortgage Acceptance Co.

Stephen C. Davis spent more than 28 years with Snyder General Corporation and
one of its predecessor companies, The Singer Company. Mr. Davis holds a BS
degree from Tarkio College and an MBA from Lindewood College. Mr. Davis is
currently an independent consultant.


Executive Officers

The Company's executive officers are appointed by the Board of Directors and
hold office at the pleasure of the Board until successors are appointed and have
qualified.

Compliance with Section 16 (a) of the Securities Exchange Act of 1934 Section 16
(a) of the Securities Exchange Act of 1934 requires the Company's directors,
executive officers, and persons who own more than ten percent of the Company's
Common Stock ("10% Shareholders") to file reports of Ownership and reports of
changes in ownership of the Company's Common Stock with the Securities Exchange
Commission ("SEC"). Officers, Directors and Shareholders are required by SEC
regulation to furnish the Company with copies of all forms they file under
Section 16 (a). Based solely on its review of the copies of such forms received
by it with respect to its fiscal year ended October 31, 1999 and written
representations from certain reporting persons that no other reports were
required to those persons, the Company believes that all Section 16 (a) filing
requirements applicable to its officers, directors and 10% Shareholders were
complied with.

ITEM 11.     EXECUTIVE COMPENSATION

Summary and Compensation Table

         The following table sets forth certain information concerning the
compensation paid or accrued by the Company for services rendered during the
Company's fiscal year ended October 31, 1999 and 1998 by the named officers.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
                                            Annual ($) Compensation
                                    -------------------------------------------             Common
Name and Principal         Fiscal   Salary  Other Annual       All Other             Stock Options
       Position            Year       ($)   Compensation(1)   Compensation               (Shares)
-------------------------------------------------------------------------------------------------
<S>                        <C>      <C>              <C>               <C>                   <C>
Rudolph W. Schuster (2)    1998     $ 14,000         0                 0                     0
Former President

Steven C. Davis (3)        1998     $      0         0                 0                      0
Interim CEO
<PAGE>

M.E. (Mel) Williams (4)    1998     $105,000         0                 0                757,500
CEO                        1999     $105,000       $8,386              0                      0

Terry Moore (5)            1998     $ 64,000         0                 0                192,000
CFO                        1999     $ 69,000       $7,667              0                      0

Kirby McLaughlin (6)       1998     $ 60,000         0                 0                180,000
Vice President of          1999     $ 65,000       $7,188              0                      0
Engineering
</TABLE>

(1)  Represents cash bonuses paid for fiscal 1999.

(2)  Mr. Schuster received a severance payment of $14,000 and also obtained
     warrants on 100,000 shares of the Company's common stock upon resignation.
     The warrants are exercisable at $0.25 per share on or before March 2001.

(3)  Mr. Davis received no direct compensation while acting as the Company's
     interim CEO. Mr. Davis' employer, Snyder Capital Corporation ("Snyder"),
     did receive $3,000 monthly for consulting services provided by Mr. Davis to
     the Company from April 1998 through October 1998. In addition, the Company
     paid Snyder an additional $500 per day during the period Mr. Davis served
     as Interim CEO. The total compensation paid to Snyder for Interim CEO
     services in 1998 was approximately $20,000. In March 1998, Mr. Davis
     stepped down as Interim CEO in favor of Mr. Williams. In the 1999 fiscal
     year, the Company discontinued its consulting arrangement with Snyder and
     Mr. Davis. Mr. Davis is no longer employed by Snyder, but remains on the
     Company's Board of Directors.

(4)  157,500 of Mr. William's options are exercisable at $0.10 per share at any
     time on or before November 2001. 600,000 of Mr. William's options are
     exercisable at $0.10 per share on or before April 2004, but are not
     exercisable until April 2000. In the event Mr. Williams is not CEO in April
     2000, the options will not vest.

(5)  Mr. Moore's options are exercisable at $0.10 per share. 96,000 options
     expire October 2001 and 96,000 options expire November 2001.

(6)  Mr. McLaughlin's options are exercisable at $0.10 per share. 90,000 options
     expire October 2001 and 90,000 options expire November 2001.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal year end
Option/SAR Values

The Company had 1,569,500 options outstanding at October 31, 1999. 230,000
options expire June 2000 and are exercisable at $1.27 per share, 210,000 options
expire March 2001 and are exercisable at $0.48 per share, 529,500 options are
exercisable at $0.10 per share and expire in October and November 2001 and
600,000 options are exercisable at $0.10 per share and expire April 2004.

The Company maintains a Stock Option Plan (the "Plan") under which options of
purchase 800,000 shares of the Company's Common Stock, par value $.0001 per
share, have been reserved. Pursuant to the Plan, the Company is permitted to
issue incentive stock options ("Incentive Stock Options") and non-qualified
stock options ("Non-Qualified Stock Options") to employees or directors of the
Company; provided, however, that no incentive Stock Options shall be granted to
a non-employee director. Incentive Stock Options under the Plan are intended to
qualify for the tax treatment accord under Section 422A of the Internal Code of
1986, as amended (the "Code). Non-Qualified Options under the plan are intended
to be options which do not qualify for the tax treatment accorded under Section
422A of the Code.

All directors and key employees of the Company and its subsidiaries are eligible
to participate in the Plan. The Plan is administered by the Board of Directors
of the Company which, to the extent it determines, may delegate its power with
respect to the administration of the Plan to a compensation advisory committee
consisting of not less than three members, at least of whom two shall be
directors for the Company.

<PAGE>

Under the Plan, Incentive Stock Options to purchase shares of the Company's
Common Stock may not be granted for less than 100 percent of fair market value
of the Common Stock on the date the Incentive Stock Option is granted; provided,
however, that in the case of an Incentive Stock Option granted to any person
then owning 10 percent of the voting power of all classes of the Company's
stock, the Purchase Price per share of all classes of the Company's stock, the
Purchase Price per share subject to the Incentive Stock Option may not be less
than 110 percent of the fair market value of the stock on the date of the grant
of the option. The option price per share with respect to each Non-Qualified
Stock Option granted under the Plan is to be determined by the Board of
Directors, but may not be less than 85% of the fair market value of the Common
Stock on the date the Non-Qualified Stock Option is granted.

Options under the Plan may not have a term of more than 10 years; provided,
however, that an Incentive Stock Option granted to a person then owing more than
10 percent of the voting power of all classes of the Company's stock may not be
exercised more than 5 years after the date such option is granted. In addition,
the aggregate fair market value, determined at the time the options granted, of
the stock with respect to which Incentive Stock Options are exercised for the
first time by an employee in any calendar year under the Plan may not exceed
$100,00.

Compensation of Directors

Directors who are not employees of the Company are entitled to a board meeting
attendance fee of $750 plus reimbursement of expenses. The directors waived all
of these fees for the year ending October 31, 1999.

Goodhue W. Smith, III who was elected as Chairman of the Board at the Company's
December 15, 1997 Board meeting as a requirement under financing provided by
Duncan-Smith Co., of which Mr. Smith is an officer and director, is to be paid
$1,500 per month as compensation. Mr. Smith did not receive any fees in the year
ended October 31, 1999.

Stephen C. Davis was elected to the Board of Directors at the Company's December
15, 1997 annual meeting of Shareholders. Mr. Davis was a director of Snyder at
October 31, 1998. Mr. Davis provided certain consulting services for Danzer and
DII from November 1997 through March 1998. Neither Mr. Davis nor Snyder received
any compensation during the year ended October 31, 1999 for director services.

Employment Agreements

None.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


The following table sets forth, as of October 31, 1999 information concerning
the shares of the Company's Common Stock beneficially owned by (a) each person
or group known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Common Stock, (b) each director and nominee, and (c)
all directors and officers as a group. The outstanding voting securities of the
Company as of the record date consisted of 17,588,348 shares of common stock.
Except as otherwise indicated, each person named or included in a group has sole
voting and investment power with respect to his or its shares of Common Stock.

<PAGE>

<TABLE>
<CAPTION>
Name and Address of Beneficial         Amount and Nature of                Percent
Owner or Identity of Group             Beneficial Ownership               of Class (1)
--------------------------             --------------------               ------------
<S>                                              <C>                               <C>
Renaissance Capital Partners, Ltd.               11,719,110                        62.6%
8080 N. Central Expressway,
Suite 210, LB 59
Dallas, TX  75206-1857

Richard W. Snyder                                 2,046,667 (2)                    10.9%
c/o Snyder Capital Corporation
3219 McKinney Ave.
Dallas, TX 75204

Russell G. Cleveland                             11,807,110 (3)                    63.1%
c/o Renaissance Capital Group, Inc.
8080 N. Central Expressway,
Suite 210, LB 59
Dallas, TX  75206-1857

Goodhue W. Smith, III                               650,000 (4)                     3.5%
c/o Duncan-Smith Co.
311 Third
San Antonio, Texas  78205
</TABLE>

(1)  Common Stock which is not outstanding but which a person has a right to
acquire with 60 days of the record date are considered as Common stock
outstanding for purposes of computing the percentage of Common Stock owned by
such person, but such Common stock is not deemed outstanding for purposes of
computing the percentage of Common Stock owned by any other person. The number
of shares used to compute percentage ownership were the shares outstanding at
December 31, 1999, which shares equaled 18,717,848.

(2)  Includes 100,000 shares of common stock issuable upon exercise of warrants
granted to Mr. Snyder. The warrants are exercisable at $0.50 per share on or
before November 1999.

(3)  Mr. Cleveland owns 88,000 shares individually. Mr. Cleveland is a director,
officer and principal shareholder of Renaissance Capital Group Inc., the
managing general partner of Renaissance Capital Partners, Ltd., and may be
deemed to share voting and investment control over such shares.

(4)  Duncan-Smith Co. owns warrants to purchase 650,000 shares of the Company's
common stock at $0.25 per share on or before August 2002. Mr. Smith is a
principal of Duncan-Smith Co. and may be deemed to share voting and investment
control over such shares.

Changes in Control

Renaissance Capital Partners, Ltd. acquired control of the company on December
31, 1994, pursuant to a Purchase Agreement with the Company (the "Purchase
Agreement") under which Renaissance exchanged $1,600,000 principal amount of the
Company's 12.5% Convertible Debentures (the "Debentures") for 16,000 shares of
the Company's Series B Preferred Stock. The Company also issued Renaissance a
10% Term Note originally due December 31, 1997 in the principal amount of
$211,635.40 (representing interest on the Debentures accrued through September
30, 1994) and paid Renaissance $50,000 (representing interest on the Debentures
from October 1, 1994 through December 31, 1994). At October 31, 1996,
Renaissance converted all of its Preferred Stock, accumulated dividends,
accumulated interest and note payable to common stock at a conversion rate of
$0.25 per share.

<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On December 31, 1994, Renaissance exchanged its Convertible Debenture for 16,000
shares of the Company's Series B Preferred Stock. The Company also issued
Renaissance a 10% Term Note due December 31, 1996 in the principal amount of
approximately $211,635 for unpaid accrued interest on the Debentures and paid
Renaissance $50,000 (representing interest on the Debentures from October 1,
1994 through December 31, 1994). See Item 12 - "PRINCIPAL SHAREHOLDERS - Changes
in Control".

On October 31, 1996, Renaissance converted all of its Preferred Stock,
accumulated dividends, accumulated interest and note payable to common stock at
a conversion rate of $0.25 per share.

On August 1, 1997, the Company entered into a loan agreement with Duncan-Smith
Co., Trustee, for purposes of executing the DSC Note. Terms of the $650,000 loan
included an interest rate of 11% with payments due quarterly and a final
notoriety on June 15, 2002. Duncan-Smith Co. received a cash fee of $32,500 and
a warrant to purchase 650,000 shares of common stock at $0.25 per share with an
expiration date of August 2002. Subsequently, Goodhue W. Smith, III, a director
and officer of Duncan-Smith Co., was elected Chairman of the Board. In February
1999, Duncan-Smith Co. agreed to temporarily defer principal repayments on the
DSC Note for February and May 1999. In consideration, the Company agreed to
increase the interest rate to 13% until the Company could catch up on the
original payment schedule. Effective January 21, 2000, the Company entered into
the BOACFC Loan and paid down the DSC Note in full.

In December 1997, Renaissance agreed to loan the Company $150,000 pursuant to a
10% promissory note secured by substantially all of the assets of the Company.
In February 1999, Renaissance converted the entire $150,000 principal balance on
the note, plus $17,532 in accrued interest, into 1,675,318 shares of the
Company's common stock, a rate of $0.10 per share.

In February 1999, and in conjunction with the agreement by the DSC Note Holders
to defer principal repayments to the Company, Renaissance lent Danzer $25,000
pursuant to a 13% promissory note maturing December 31, 1999. All principal and
accrued interest was outstanding subsequent to December 31, 1999. Effective
January 12, 2000, Renaissance agreed to waive its default rights through
February 29, 2000 on a limited basis, and in expectation of full payment out of
proceeds from the BOACFC Loan.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                  ON FORM 8-K.

(a) Documents filed as part of this Annual Report on Form
     10-K:

         (1) Financial Statements.
             --------------------

         See "Index to Consolidated Financial Statements and Financial Statement
         Schedules" on page F-1 herein.

         (2)  Financial  Statement  Schedules  Required to be Filed by Item 8 on
         this Form.

                  None

         (3) Exhibits.
             --------


<PAGE>
<TABLE>
<CAPTION>
                                                                       Incorporated by Reference
         Exhibit No.       Description                                 or Filed Herewith
         ----------        -----------------------------------         -----------------
<S>      <C>               <C>                                         <C>
         3(i)(a)           Certificate of Incorporation as             Incorporated by reference to
                           amended through   August 18, 1994           Exhibit 3(i) to Registrant's Form
                                                                       10-Q for the period ended July 31,
                                                                       1994

         3(i)(b)           Certificate of Amendment to Certificate     Incorporated by reference  to
                           of Incorporation filed December 30, 1994    Exhibit 4.1 to Registrant's Form 8-
                                                                       K dated December 31, 1994

         3(ii)             By Laws                                     Incorporated by reference to
                                                                       Exhibit 3.3 to the Registration
                                                                       Statement on Form S-18 (No.33-
                                                                       18636-NY) (the "Registration
                                                                       Statement").

         4(a)              Stock Certificate                           Incorporated by reference to
                                                                       Exhibit 4.1 to the Registration
                                                                       Statement.

         4(b)              Certificate of                              Incorporated by reference to
                           Amendment to Certificate                    Exhibit 4 of Registrant's Form
                           of Incorporation filed                      10-Q for the period ended
                           August 18, 1994 (with terms of              July 31, 1994.
                           10% Senior Preferred Stock)

         4(c)              Certificate of                              Incorporated by reference to
                           Amendment to Certificate                    Exhibit 4.1 to Registrant's Form
                           of Incorporation filed                      8-K dated December 31, 1994.
                           December 30, 1994 (with terms
                           of Series B Senior Preferred Stock)

         10(a)             Employment                                  Incorporated by reference to
                           Agreement dated                             Exhibit 10(c) to Form 10-K
                           April 16, 1991, between                     Report dated January 28, 1993.
                           Global Environmental Corp.
                           and William V. Rice

         10(b)             Global                                      Incorporated by reference to
                           Environmental Corp.                         Exhibit 10(j) to the October
                           Stock Option Plan                           31, 1990 Form 10-K.

         10(c)             Mortgage Note and                           Incorporated by reference to
                           Mortgage Agreement                          Exhibit 10(k) to the October
                           dated April 3, 1990 of Global               31, 1990 Form 10-K.
                           Environmental Corp.
                           with Continental Bank

         10(d)             Convertible                                 Incorporated by reference to
                           Debenture Agreement                         Exhibit 10(c) to Form 10-K
                           in the amount of                            Report dated January 28, 1993.
                           $1,250,000 dated April 25, 1991
                           between Global Environmental
                           Corp. and Renaissance Capital
                           Partners, Ltd.

         10(e)             First Amendment                             Incorporated by reference to
                           dated December 30,                          Exhibit (10j) to Form 10-K
                           1992 to Convertible                         Report dated January 28, 1993.
                           Debenture Agreement in the amount of
                           $1,250,000 dated April 25, 1991
                           between Gobal Environmental Corp.
                           and Renaissance Capital Partners, Ltd.
<PAGE>


         10(f)             Convertible                                 Incorporated by reference to
                           Debenture Agreement                         Exhibit (10k) to Form 10-K
                           in the amount of                            Report dated January 28, 1993.
                           $350,000 dated December 30, 1992
                           between Global Environmental Corp.
                           and Renaissance Capital Partners, Ltd. II

         10(g)             Loan and Security                           Incorporated by reference to
                           Agreement dated                             Exhibit 10(h) to Form 10-K Report
                           May 28, 1993 between                        dated January 28, 1994.
                           Danzer Metal Works Co.
                           and Fremont Financial Corporation

         10(h)             Asset purchase                              Incorporated by reference to
                           agreement dated                             Exhibit 10() to Form 10-K Report
                           August 25, 1993 between                     dated January 28, 1994.
                           Morrison Industries L.P.
                           and Global Environmental Corp.

         10(I)             Joint Venture                               Incorporated by reference to
                           Agreement dated                             Exhibit 10(j) to Form 10-K Report
                           December 31, 1993                           dated January 28, 1994.
                           between Global Environmental
                           Corp. and Cadema Corporation.

         10(j)             Equipment Purchase and                      Incorporated by reference to
                           Security Agreement dated                    Exhibit 10(k) to Form 10-K Report
                           September 17, 1993                          dated January 28, 1994.
                           between U.S. Amada, Ltd.
                           and The Danzer Metal Works Co.

         10(k)             Equipment Purchase and                      Incorporated by reference to
                           Security Agreement dated                    Exhibit 10(l) to Form 10-K Report
                           September 17, 1993                          dated January 28, 1994.
                           between U.S. Amada, Ltd.
                           and The Danzer Metal Works Co.

         10(l)             Equipment Purchase and                      Incorporated by reference to
                           Security Agreement dated                    Exhibit 10(m) to Form 10-K
                           September 17, 1993                          Report dated January 28, 1994
                           between U.S. Amada, Ltd.
                           and The Danzer Metal Works Co.

         10(m)             Purchase Agreement                          Incorporated by reference to
                           dated December 31,                          Exhibit 99.1 to Registrant's Form
                           1994 between Global                         8-K dated December 31, 1994.
                           Environmental Corp. and
                           Renaissance Capital
                           Partners, Ltd. to exchange
                           $1,600,000 of Convertible
                           Debentures for 16,000 Series B
                           Cumulative Convertible Senior
                           Preferred Stock.
<PAGE>

         10(n)             10% Term Note in                            Incorporated by reference to
                           principal amount of                         Exhibit 10(n) to Registrant's Form
                           $211,635 due December 31, 1997.             8-K dated December 31, 1994

         10(o)             Loan and Security Agreement                 Incorporated by reference to
                           dated June 23, 1995 between                 Exhibit 10(o) to Form 10-K
                           Danzer Metal Works Co.                      dated April 1, 1996
                           and Fremont Financial Corporation

         10(p)             Mortgage Note and                           Incorporated by reference to
                           Mortgage Agreement                          Exhibit 10(p) to Form 10-K
                           dated January 25, 1996 of Global            dated April 1, 1996
                           Environmental Corp.
                           with Midlantic Bank

         10(q)             Loan and Security Agreement                 Incorporated by reference to
                           dated May 1, 1996,  between                 Exhibit 10(q) to Form 10-K dated
                           Danzer Industries, Inc                      July 7, 1997
                           and Fremont Financial Corporation

         10( r)            Common Stock Purchase Agreement             Incorporated by reference to
                           between William V. Rice and the             Exhibit 10(r) Form 10-K dated
                           Company dated May 21, 1996                  dated July 7, 1997

         10(s)             Asset Purchase Agreement dated              Filed here herewith as Exhibit
                           November 14, 1997                           10(s)

         21                List of Subsidiaries                        Incorporated by reference to
                                                                       Exhibit 22 to the October
                                                                       31, 1989 Form 10-K.

         (b)               Reports on Form 8-K
                           Change of Auditors Form 8-K was filed during the last
                           quarter of the fiscal year ended October 31, 1999
</TABLE>


<PAGE>
               Report of Independent Certified Public Accountants

Board of Directors
Danzer Corporation

We have audited the accompanying consolidated balance sheet of Danzer
Corporation and subsidiaries as of October 31, 1999, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Danzer Corporation as of
October 31, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/ Linton, Shafer & Company, P.A.
Frederick, Maryland
January 13, 2000


<PAGE>



                        Danzer Corporation and Subsidiary
                           Consolidated Balance Sheets

                            October 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                           1999               1998
                                                                                           ----               ----
<S>                                                                                         <C>                 <C>
 Assets

 Current assets

     Accounts receivable, net of allowances                                                 $  828,812          $  957,208
     Inventories                                                                               594,698             481,862
     Prepaid expenses and other current assets                                                  52,240              75,404
                                                                                               -------             ------
          Total current assets                                                               1,475,750           1,514,474

 Property, plant and equipment, at cost, net                                                 1,664,072           1,841,513
 Other assets, including intangibles                                                           161,174             202,510
                                                                                           -----------       -------------
  Total assets                                                                             $ 3,300,996         $ 3,558,497
                                                                                           ============        ===========

 Liabilities and stockholders' equity
 Current liabilities
     Current portion of long-term debt                                                      $  859,278          $  531,846
     Accounts payable                                                                          390,903             658,757
     Accrued salaries and wages                                                                173,481             167,292
     Accrued expenses, other                                                                   254,042             420,244
                                                                                           -----------        ------------
          Total current liabilities                                                          1,677,704           1,778,139

 Long-term debt, net of current portion                                                        908,725           1,533,303
                                                                                    ------------------        ------------
          Total liabilities                                                                  2,586,429           3,311,442

 Commitments and contingencies, see accompanying notes

 Stockholders' equity
 Common stock, par value $.0001 per share;  20,000,000
  shares authorized, 17,588,348 shares outstanding in 1999
  and 15,870,272 shares outstanding in 1998                                                      1,761               1,587
 Preferred stock, $.001 par value, 5,000,000 shares authorized;
  Class of 10% Cumulative Convertible Senior Preferred Stock,
    10,500 shares authorized, no shares issued or outstanding                                        -                   -
  Series B Cumulative Convertible Senior Preferred Stock, 16,000 shares
    authorized, no shares issued or outstanding                                                      -                   -
 Additional paid-in capital                                                                  5,220,971           5,047,803
 Accumulated deficit                                                                        (4,508,165)         (4,802,335)
 Less: Treasury stock, at cost, 95,579 shares in 1999 and 1998                                       -                   -
                                                                                           -----------        ------------
 Total stockholders' equity                                                                    714,567             247,055
                                                                                           -----------        ------------
 Total liabilities and stockholders' equity                                                $ 3,300,996         $ 3,558,497
                                                                                           ===========         ===========
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                      F-2
<PAGE>

                        Danzer Corporation and Subsidiary
                 Consolidated Statement of Stockholders' Equity

               For the Years Ended October 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>

                                                                             1999              1998               1997
                                                                             ----              ----               ----
<S>                                                                            <C>               <C>                <C>
 Common Shares: Balance, beginning of year                                     $   1,587         $   1,587          $   1,382
      Conversion of 10% preferred shares and related
        accrued dividends into common stock (0 in 1999;
        0 in 1998; 1,971,669 in 1997)                                                  -                 -                197
      Conversion of Renaissance note and accrued interest into common stock
        (1,675,318 in 1999; 0 in 1998; 600,000 in 1997)                              167                 -                 60
      Cancellation of treasury shares (0 in 1999; 0 in 1998;
        517,000 in 1997)                                                               -                 -                (52)
      Shares issued under stock  incentive plan (72,628 in 1999; 0 in 1998; 0 in
        1997)                                                                          7                 -                  -

 Balance, October 31                                                          $   1,761         $   1,587          $    1,587
                                                                              ==========        ==========         ==========

 Preferred Shares: Balance, beginning of year                                 $       -          $      -          $  399,044
      Conversion of 10% preferred shares and related
        Accrued dividends into common stock (0 in 1999;
        0 in 1998; 4,550 in 1997)                                                     -                 -            (399,044)
                                                                              ----------         ---------          ---------
 Balance, October 31                                                          $       -          $      -           $       -
                                                                              ==========         =========          =========

 Treasury Shares:  Balance, beginning of year                                 $       -          $      -           $ (93,060)
      Cancellation of treasury shares (0 in 1999; 0 in 1998;
        517,000 in 1997)
                                                                                      -                 -              93,060
                                                                              ----------         ---------          ---------
 Balance, October 31                                                           $      -          $      -           $      -
                                                                              ==========         =========          =========

 Additional paid-in capital:  Balance, beginning of year                    $ 5,047,803       $ 5,047,803        $ 4,554,102
      Conversion of 10% preferred shares and related
        accrued dividends into common stock                                           -                 -            436,769
      Conversion of Renaissance note and accrued interest
        into common stock                                                        167,364                -            149,940
      Cancellation of treasury shares                                                  -                -            (93,008)
      Shares issued under stock incentive plan                                     5,804                -                  -
                                                                              ----------        ----------         ----------
 Balance, October 31                                                         $ 5,220,971      $ 5,047,803        $ 5,047,803
                                                                            ============      ===========        ===========

 Accumulated deficit:  Balance, beginning of year                           $ (4,802,335)     $(4,977,575)       $(4,654,412)
 Net income (loss)                                                               294,170          175,240           (323,163)
                                                                              ----------        ----------         ----------

 Balance, October 31                                                        $(4,508,165)      $(4,802,335)       $(4,977,575)
                                                                           ============       ============       ============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-3
<PAGE>

                        Danzer Corporation and Subsidiary
                      Consolidated Statement of Operations

               For the Years Ended October 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                                          1999               1998                1997
                                                                          ----               ----                ----
<S>                                                                      <C>                 <C>                <C>
 Net sales                                                               $ 6,579,607         $ 7,605,129        $ 8,762,518

 Cost of goods sold                                                        5,107,695           5,664,109          7,257,056
                                                                      --------------     ---------------     --------------
      Gross profit                                                         1,471,912           1,941,020          1,505,462

 Selling, general and administrative expenses                                993,495           1,550,205          1,731,530
                                                                      --------------     ---------------     --------------

      Income (loss) from operations                                          478,417             390,815          (226,068)

 Other income (expense)
      Interest expense                                                      (227,803)           (200,526)          (201,627)
      Interest income                                                         30,106               2,922                  -
      Other income (expense)                                                  13,450             (17,971)           104,532
                                                                      --------------     ---------------     --------------
        Total other income (expense)                                        (184,247)           (215,575)           (97,095)
                                                                      --------------     ---------------     --------------

 Net income (loss)                                                        $  294,170          $  175,240        $  (323,163)
                                                                          ==========         ===========        ============

 Basic earnings (loss) per share                                           $    0.02           $    0.01         $    (0.02)
                                                                          ==========         ===========        ============

 Shares used in computation of earnings per share                         16,753,670          15,774,693         13,601,270
                                                                          ==========         ===========        ============
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                      F-4



<PAGE>



                        Danzer Corporation and Subsidiary
                      Consolidated Statement of Cash Flows

               For the Years Ended October 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                                          1999               1998               1997
                                                                          ----               ----               ----
<S>                                                                        <C>                <C>              <C>
 Cash flows from operating activities:
      Net Income (loss)                                                    $  294,170         $  175,240       $  (323,163)
      Adjustments to reconcile net income (loss) to net
        cash provided by (used in) operating activities:
          Depreciation and amortization                                       305,983            255,792           194,988
          Provision for bad debts                                             (34,443)            44,160           305,387
      Gain on disposition of equipment                                              -            (17,578)                -
      Changes in operating assets and liabilities:
        Accounts receivable                                                   148,664            418,502          (288,918)
        Inventories                                                         (112,836)            181,127           128,769
        Prepaid expenses                                                     (34,934)            (38,239)           38,552
        Other assets, net                                                     72,273            (160,000)          (53,757)
        Accounts payable                                                    (267,854)           (201,007)         (477,353)
        Accrued salaries and wages                                            12,000              (6,311)           25,796
        Accrued expenses, other                                             (123,671)            (20,892)           97,576
                                                                        ------------         -----------        ----------
      Net cash provided by (used in) operating activities                    259,352             630,794          (352,123)


 Cash flows from investing activities:
      Purchase of property, plant and equipment                              (57,745)           (104,562)          (67,190)
      Proceeds from sale of equipment                                              -              94,000                 -
                                                                        ------------         -----------        ----------
 Net cash used in investing activities                                       (57,745)            (10,562)          (67,190)

 Cash flows from financing activities:
      Deferred financing costs                                               (10,000)                 -                  -
      Net borrowings (payments) on revolving loan                           (105,436)          (614,388)            63,624
      Proceeds from issuance of long-term debt                               150,000            150,000            800,000
      Payments of long-term debt                                            (236,171)          (224,777)          (425,386)
                                                                        ------------         -----------        ----------
 Net cash provided by (used in) financing activities                        (201,607)          (689,165)           438,238
                                                                        ------------         -----------        ----------
 Net increase (decrease) in cash                                                   -            (68,933)            18,925
 Cash, beginning of year                                                           -             68,933             50,008
                                                                        ------------         -----------        ----------
 Cash, end of year                                                          $      -           $      -         $   68,933
                                                                        ============         ===========        ==========
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                      F-5


<PAGE>



                        Danzer Corporation and Subsidiary
                Consolidated Statement of Cash Flows (Continued)
               For the Years Ended October 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
<S>                                                                       <C>                <C>                <C>
 Supplemental disclosures of cash flows information:

 Cash paid for interest                                                   $  223,790         $  187,906         $  179,988
                                                                          ===========        ===========        ==========


 Non-cash financing activities:
    Conversion of convertible debt to common stock                        $        -           $      -         $  150,000
    Cancellation of treasury shares                                                -                  -             93,060
    Conversion of 10% and Series B Preferred Shares
      and related accrued dividends and Renaissance term
      note and related accrued interest to common stock                            -                  -            436,966
    Long-term debt incurred for the purchase of property,
      Plant and equipment                                                    (19,461)          (577,169)                 -
    Conversion of note payable and accrued interest to
      Renaissance to common stock                                            167,531                  -                  -
    Issuance of common stock as part of stock incentive
      Program                                                                  5,811                  -                  -

 Non-cash investing activities:
    Satisfaction of mortgage payable and culmination of
    Previous sale of related property held under
      Agreement of sale                                                            -                  -           (344,127)
    Purchase of property, plant and equipment via
      financing arrangements                                                  19,461            577,169                  -

 Non-cash operating activities:
     Conversion of account receivable to note receivable                       8,000                  -                  -
</TABLE>



    The accompanying notes are an integral part of these financial statements


                                      F-6


<PAGE>


                        Danzer Corporation and Subsidiary

                   Notes to Consolidated Financial Statements

Note 1.  Description of Business and Change of Name

Danzer Corporation (the "Company"), formerly named Global Environmental Corp.,
was incorporated on October 6, 1987. Effective August 1, 1988, the Company
acquired all of the issued and outstanding common shares of Global Environmental
Holdings, Inc. ("Global Holdings"). On October 7, 1999, the Company changed its
name from Global Environmental Corp. to Danzer Corporation.

Danzer Industries, Inc. ("DII"), a wholly-owned subsidiary of Global Holdings,
fabricates metal parts and truck bodies for the service and utility markets. In
1997 and early 1998 DII also designed, manufactured and installed other types of
fabricated metal products. DII's revenues represent virtually 100% of the
Company's revenues and are generated throughout the Eastern and Midwestern
United States. DII owns a manufacturing facility located in Hagerstown,
Maryland.

In a strategic plan developed in 1997, the Company determined that its future
was in the metal fabrication business as it related to the manufacture and
distribution of truck bodies. A strategic direction was established that called
for the phase out of all business that was not associated with truck bodies.
That change in focus was completed on October 7, 1999 with the change in the
Company's name from Global Environmental Corp. to Danzer Corporation.

Note 2.  Summary of Significant Accounting Policies

The accompanying consolidated financial statements present the accounts of
Danzer Corporation and its wholly-owned subsidiary. The entities are
collectively referred to herein as the "Company." All significant intercompany
transactions and balances have been eliminated in consolidation.

The Company uses the equity method of accounting for a 49% owned interest in a
joint venture. The original investment is recorded at cost, adjusted for the
Company's share of undistributed earnings or losses. The operations of the joint
venture are presently immaterial.

Revenue Recognition

Revenues from the manufacture of utility truck bodies and sheet metal products
and fabrications are generally recognized when products are shipped to the
customer.

Fair Value of Financial Investments

The Company believes that the carrying value of its financial instruments, such
as long-term debt (all of which are held for purposes other than trading) are
approximately equal to their fair values.


                                      F-7
<PAGE>

Note 2.  Significant Accounting Policies (continued)

Concentration of Credit Risk

The Company maintains cash balances at a bank, which at various times throughout
the year, exceeded the Federal Deposit Insurance Corporation (FDIC) limit. The
Company performs an ongoing credit evaluation of its customers' financial
condition, and credit is extended to customers on an unsecured basis. Estimated
credit losses are provided for currently through the allowance for doubtful
accounts and actual credit losses are charged to the allowance when incurred.

Use of Estimates

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

Accounts Receivable

Accounts receivable are earned in the normal course of business and are
unsecured.

The allowance for doubtful accounts is established through charges to earnings
in the form of a charge to bad debt expense. Accounts that are determined to be
uncollectible are charged against the allowance account. Management makes
periodic assessments of the adequacy of the allowance that requires the Company
to recognize additions or reductions to the allowance. It is reasonably possible
that factors may change significantly and, therefore, affect management's
determination of the allowance for doubtful accounts in the near term. The
following schedule details the changes in the accounts receivable reserve
account:


<TABLE>
<CAPTION>
                                                                     1999            1998              1997
                                                                     ----            ----              ----
<S>                                                                 <C>             <C>             <C>
  Accounts receivable reserve, beginning                            $ 168,266       $  346,000      $   52,613
     Write-offs during the fiscal year                                (58,823)        (221,894)        (12,000)
     Provision estimate for uncollectible accounts                     35,600           44,160         305,387
     Adjustment of reserve                                            (70,043)               -               -
                                                                    ---------        ---------       ---------
  Accounts receivable reserve, ending                               $  75,000        $ 168,266       $ 346,000
                                                                    =========        =========       =========
</TABLE>



                                      F-8
<PAGE>


Note 2.  Summary of Significant Accounting Policies (continued)

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market.
Work-in-process and finished goods include purchased materials, direct labor and
allocated overhead. At October 31, 1999 and 1998 inventory is comprised of the
following components:

<TABLE>
<CAPTION>
                                                                            1999                 1998
                                                                            ----                 ----
<S>                                                                        <C>                   <C>
       Raw materials, supplies and component parts                         $ 364,397             $ 411,288
       Work-in-process                                                        39,548                18,060
       Finished goods                                                        190,753                52,514
                                                                          ----------            ----------
                                                                           $ 594,698             $ 481,862
                                                                           =========             =========
</TABLE>

Property, Plant and Equipment

Property, plant and equipment are stated at cost and are depreciated on the
straight-line method over the following estimated useful lives:

         Building and improvements                               10 to 30 years
         Equipment                                                3 to 20 years

Details of property, plant and equipment were as follows:

<TABLE>
<CAPTION>
                                                                          1999                1998
                                                                          ----                ----
<S>                                                                      <C>                 <C>
        Land                                                             $    25,797         $    25,797
        Building and improvements                                          1,440,527           1,440,527
        Equipment                                                          2,475,269           2,398,063
                                                                          ----------          ----------
                                                                           3,941,593           3,864,387
        Less accumulated depreciation                                     (2,277,521)         (2,022,874)
                                                                          ----------          ----------
          Property, plant and equipment, net                             $ 1,664,072        $  1,841,513
                                                                         ===========         ===========
</TABLE>

Depreciation expense of property, plant and equipment for the years ended
October 31, 1999, 1998 and 1997 included in continuing operations was $254,647,
$244,452 and $194,988, respectively.

Intangible Assets

During 1999, DII completed the purchase of the rights to the Morrison line of
truck bodies as more fully explained in Note 8. The purchase was recorded as an
intangible asset included in Other, non-current, assets on the balance sheet.
The Company is amortizing the rights using the straight line method over a
4-year period. Accumulated amortization at October 31, 1999 was $40,000.


                                      F-9
<PAGE>

Note 2.  Summary of Significant Accounting Policies (continued)

Impairment of Long-Lived Assets

In accordance with Statement of Financial Accounting Standards Number 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of," the Company evaluates the carrying value of long-lived assets
whenever significant events or changes in circumstances indicate the carrying
value of these assets may be impaired. The Company evaluates potential
impairment of long-lived assets by comparing the carrying value of the assets to
the expected net future cash flows resulting from the use of the assets.
Management believes that no impairment of long-lived assets has occurred.

Major Customers

The following is a list of the Company's customers that represent 10% or more of
consolidated net sales:

<TABLE>
<CAPTION>
                                                                   1999              1998              1997
                                                                   ----              ----              ----
<S>                                                                   <C>              <C>              <C>
         Elevator manufacturer                                        0%               4%               13%
         Truck body manufacturer                                     63%              55%               41%
</TABLE>

As of October 31, 1999 and 1998, the amounts due from the truck body
manufacturer, which were collected subsequent to October 31, 1999 and 1998, were
approximately $332,000 and $607,000, respectively.

Earnings Per Share

The Company adopted Statement of Financial Accounting Standards No. 128 ("SFAS
128"), "Earnings Per Share", beginning the fourth quarter of 1998. All prior
period earnings per common share were recomputed to conform to the provisions of
SFAS 128. The recomputations did not result in any restatements of earnings per
share previously reported.

Basic earnings per share amounts are computed based on net income (loss),
reduced by dividends earned on preferred stock outstanding and divided by the
weighted average number of shares outstanding. The weighted average number of
shares used in the computation were approximately 16,754,000 in 1999, 15,775,000
in 1998, 13,601,000 in 1997.

Diluted earnings per share amounts are based on the weighted average number of
shares calculated for basic earnings per share purposes increased by the number
of shares that would be outstanding assuming exercise of outstanding stock
options and warrants (Note 7). Since the exercise of outstanding stock options
and warrants would be anti-dilutive and would result in a similar calculation as
basic earnings per share, diluted earnings per share have not been presented.


                                      F-10
<PAGE>

Note 2.  Summary of Significant Accounting Policies (continued)

Recently Issued Accounting Standards

In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting and Reporting for Derivative Instruments." This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
This Statement is required to be adopted for fiscal years beginning after June
15, 2000. The adoption of this Statement is not expected to have a material
effect on the Company.

Note 3.  Financing Arrangements

During the first quarter of fiscal 1994, the Company entered into a Joint
Venture agreement (the "Agreement") with Cadema Corporation ("Cadema"). The
Agreement was capitalized by Cadema with $350,000 in cash and by the Company
with $1,000 in cash. The Agreement's principal objective is to provide the
partners with current income by contracting for the design and installation of
air pollution control equipment in its name in all areas of the world outside
the United States and its territories. The term of the Agreement expired
December 31, 1998. Income or loss from the Agreement is allocated 51% to Cadema
and 49% to the Company. The Agreement allows the Company, subject to certain
conditions, to acquire Cadema's interest in the joint venture for 875,000 shares
of the Company's common stock or $350,000 in cash or an amount equal to Cadema's
capital account, whichever is greater, subject to certain antidilution
provisions. The Agreement also allows for quarterly distributions of income and
capital to the joint venture partners. The Company had borrowed approximately
$350,000 from the joint venture as of October 31, 1998 (Note 5). Due to the
strategic focus of the Company towards the fabrication and production of truck
bodies and accessories, and not air pollution equipment, it is not anticipated
that the Agreement will provide significant revenue or earnings for the Company
in the future. In addition, management is presently negotiating with the other
party to the Agreement with respect to payment by the Company of the loan due to
the other party.

In September 1994, the Company completed a 10% Cumulative Convertible Senior
Preferred Stock offering whereby 7,550 shares were issued. The Company realized
$662,150 of net proceeds, after placement fees and expenses of approximately
$93,000. The funds were used to expand the Company's Morrison product line and
provide working capital for overall business activity. During 1996 and 1997,
these shares and related accrued dividends were converted to common stock.

In March 1997, the Company received $150,000 from Renaissance Capital Group,
Inc. ("Renaissance") in the form of convertible debt. During 1997, this debt was
converted into 600,000 shares of common stock.

                                      F-11
<PAGE>


Note 3.  Financing Arrangements (continued)

On August 1, 1997, DII borrowed $650,000 from a private company. A portion of
the net proceeds of $603,000 was used to pay-off certain term debt ($174,000)
owed to Fremont Financial Corporation ("Fremont"), with the remainder ($429,000)
available for working capital purposes. The Company also entered into an
agreement with Fremont redefining the method of determining the Company's
borrowings from Fremont and extending the term of its agreement with Fremont
(Notes 3 and 4).

In November 1997, the Company completed the sale of an operating division and
its associated assets (inventory, property and equipment and customer lists) for
proceeds of $413,000. The Company did not realize a significant gain or loss on
this transaction. In addition, sales attributed to this division in fiscal 1997
approximated $2.6 million.

In December 1997, the Company received $150,000 from Renaissance in the form of
a promissory note (the "Note"). The Note bears interest at 10% per annum and was
payable at maturity (September 30, 1998) along with the principal balance. In
April 1999, $150,000 of this Note and the related accrued interest was converted
to approximately 1,675,000 shares of Company common stock.

Note 4.  Note Payable

Effective May 28, 1993, DII entered into a loan and security agreement (the
"Agreement") with Fremont, comprised of a revolving credit facility (the
"Facility") and an equipment term loan (the "Term Loan"). The Agreement was most
recently amended on May 1, 1997, extending the term of the loan to January 31,
1999 and from year to year thereafter. In 1999, the due date of the loan was
extended to January 31, 2000. The amount available under the Facility is based
on a defined percentage of eligible accounts receivable and inventory. The
Company had drawn $285,965 at October 31, 1999 and $391,401 at October 31, 1998.
The maximum amount available under the Facility is $1,400,000. The Term Loan was
repaid in full in 1997. Borrowings under the Agreement accrue interest at prime
plus 3.5% (12.0% and11.5% at October 31, 1999 and 1998, respectively).

Under the terms of the Agreement, borrowings are collateralized by DII's
accounts receivable, inventory and equipment and a junior lien on DII's real
estate. The Agreement provides for certain restrictions including, but not
limited to, the Company's ability to: a) sell, lease, transfer, exchange or
otherwise dispose of any assets except in the ordinary course of business; b)
enter into any merger, consolidation, or acquisition of any other business
organization; c) guaranty or otherwise become in any way liable with respect to
the obligations of any third party; or d) change its ownership by greater than
10%. The Agreement also restricts: payment of compensation and loans and
advances to executives, officers, directors and certain others; capital
expenditures to a specified level; and distributions to DII's Parent. For the
year ended October 31, 1998, DII was in violation of certain covenants and
received a waiver through November 1, 1999 for such non-compliance. Subsequent
to October 31, 1999 the Company received notification from Fremont that the
Agreement will not be extended at January 31, 2000, the Note 4. Note Payable
(continued)

                                      F-12
<PAGE>


expiration of the current term. DII has signed a commitment with a separate
financing institution to refinance and consolidate the Fremont loan and other
outstanding debt. Closing on the refinancing is expected in January 2000. In
accordance with SFAS 6, "Classification of Short-Term Obligations Expected to be
Refinanced," the short-term portions of the refinanced principal amounts have
been classified as if the notes have been refinanced at October 31, 1999. The
new lending agreement provides a $600,000 term loan and a revolving loan based
on certain accounts receivable. The interest rate on the new agreement is the
Prime Rate plus 2.25%. The term loan is due in monthly installments over 7
years.

Note 5.  Long-term Debt

At October  31,  1999 and 1998,  consolidated  long-term  debt  consists  of the
following:

<TABLE>
<CAPTION>
                                                                                          1999                1998
                                                                                          ----                ----
<S>                                                                                      <C>                 <C>
Revolving note payable to Fremont Financial, due January 31, 2000 (see Note 4)           $285,965            $391,401

Note payable to joint  venture;  interest-free,  principal was due on December
31, 1998 (See Note 3)                                                                     345,000             345,000

Equipment loans payable;  monthly payments currently  aggregating $2,339 through
March 2004, including interest at 7.86% to 11.25%; collateralized by
certain equipment                                                                          84,443              82,335

Term loans payable to US Amada,  Ltd.;  monthly payments  currently  aggregating
$12,668 including interest at 10%; loans due January 2005; collateralized by
equipment                                                                                 505,002             589,034

Promissory note payable to Duncan-Smith  Co.,  Trustee in the original amount of
$650,000;  original note stated quarterly payments of $41,903 including interest
at 11.0% through May 2002;  principal  payments were  suspended in 1999 due to a
lack of cash availability; interest rate revised to 13.0% with varying principal
payments; collateralized by Deed of Trust on land of DII; a
principal of Duncan-Smith is also a shareholder and director of the Company               450,370             507,379

Promissory note payable to Renaissance;  including  interest at 13%; principal
and accrued interest due in full on December 31, 1999                                      25,000                   -

Promissory note payable to Renaissance; unpaid principal of $150,000 and accrued
interest of approximately $17,500 was converted into common stock in
April 1999                                                                                      -             150,000

Morrison  Liquidation  buyout of royalty  agreement (Note 8); entire principal
becomes due December 1999; interest rate on the buyout is 7.75%                            72,223                   -
                                                                                        ---------           ---------
                                                                                        1,768,003           2,065,149
Less: current portion of long-term debt                                                 (859,278)           (531,846)
                                                                                        ---------           ---------
         Total long-term debt                                                           $ 908,725          $1,533,303
                                                                                        =========          ==========
</TABLE>


                                      F-13

<PAGE>

Note 5.  Long-term Debt (continued)

Maturities on long-term debt are as follows for the years ended October 31:

                  2000                                         $859,278
                  2001                                          205,796
                  2002                                          227,019
                  2003                                          237,023
                  2004                                          111,453

The President of the managing General Partner of Renaissance is also a Director
of the Company. Interest expense incurred with respect to certain Renaissance
convertible debt (Note 2) was approximately $15,000, $12,000 and $6,000 in 1999,
1998 and 1997, respectively.

A principal of Duncan-Smith Co. is also a shareholder in and Director of the
Company. Interest expense incurred with respect to the $650,000 promissory note
was approximately $61,000, $61,000 and $20,000 in 1999, 1998 and 1997.

Note 6.  Income Taxes

The Company files a consolidated income tax return for Federal tax purposes. The
Company, Global Holdings and DII each file separate state income tax returns.
The Company accounts for income taxes in compliance with SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, deferred tax assets and
liabilities are recorded for any temporary differences between the financial
statement and tax bases of assets and liabilities, using the enacted tax rates
and laws expected to be in effect when the taxes are actually paid or recovered.

Total income tax expense (benefit) from continuing operations amounted to $0 in
each of 1999, 1998, and 1997 (effective tax rates of 0%, in each of the three
years) compared to an income tax expense (benefit) of $100,000, $60,000, and
($110,000), respectively, computed by applying the statutory rate of 34.0% to
income (loss) from continuing operations. These differences are accounted for as
follows (in 000's, except percentages):

<TABLE>
<CAPTION>
                                                                                               Percent of Pretax
                                                    1999            1998            1997             Income
                                                -------------- --------------- --------------- -------------------
<S>                                                      <C>              <C>          <C>                    <C>
Computed "expected" tax                                  $100             $60          ($110)                 34%
-----------------------------------------------
Decrease  in tax  due to  valuation  allowance
provided for deferred tax assets                        (100)             (60)           110                 (34%)
----------------------------------------------- -------------- --------------- --------------- -------------------
                                                         $ -              $ -            $ -                 0.0%
                                                ============== =============== =============== ===================
</TABLE>

Deferred income tax assets (liabilities) result from differences in the
recognition of revenues and expenses for income tax and financial reporting
purposes.


                                      F-14
<PAGE>

Note 6.  Income Taxes (continued)

The net deferred tax assets at October 31, 1999 and 1998 include the following:

<TABLE>
<CAPTION>
                                                                            1999              1998
                                                                            ----              ----
<S>                                                                         <C>                <C>
      Deferred tax assets                                                   $1,494,000         $1,624,000
      Deferred tax liability                                                  (200,000)          (214,000)
      Valuation allowance for net deferred tax assets                       (1,294,000)        (1,410,000)
                                                                           -----------        -----------
                                                                               $     -             $    -
                                                                               =======             ======
</TABLE>


The Company has recorded a valuation allowance for its entire net deferred tax
asset at October 31, 1999 and 1998 since management believes that it is more
likely than not that the deferred tax asset will not be fully realized.

The tax effect of major temporary differences that gave rise to the Company's
net deferred tax assets at October 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                       1999            1998
                                                                       ----            ----
<S>                                                                   <C>              <C>
         Net operating loss carryforwards                             $1,440,000       $1,534,000
         Allowance for doubtful accounts                                  30,000           67,000
         Accrued expenses                                                 24,000           23,000
         Depreciation                                                   (200,000)        (214,000)
                                                                    ------------      -----------
                  Net deferred tax asset                              $1,294,000       $1,410,000
                                                                      ==========       ==========
</TABLE>


As of October 31, 1999, the Company has available Federal net operating loss
carryforwards of approximately $3,600,000 that may be applied against future
Federal taxable income. These carryforwards expire at various dates through
fiscal 2019.

Note 7.  Stockholders' Equity

On May 7, 1990, the Company's stockholders approved a stock option plan to issue
both "qualified" and "non-qualified" stock options. Under the Plan, 800,000
options to purchase shares of the Company's common stock may be issued at the
discretion of the Company's Board of Directors. The option price per share is
determined by the Company's Board of Directors, but in no case will the price be
less than 85% of the fair value of the common stock on the date of grant.
Options under the Plan will have a term of not more than ten years with
accelerated termination upon the occurrence of certain events.

In April 1998, the Company granted 600,000 stock options, exercisable at $.10
per share, to its President. The options vest over two years and expire in April
2004. No options have been exercised as of October 31, 1999.

In September 1998, the Company adopted a qualified incentive stock option plan
under Section 422 of the Internal Revenue Code. Options granted under the Plan
will be granted at prices not less than fair value of the Company's stock at the
date of grant, have a term not more than ten years and have other restrictions
as determined by statute.


                                      F-15
<PAGE>


Note 7.  Stockholders' Equity (continued)

In September 1998, the Company granted a total of 604,500 stock options,
exercisable at $.10 per share, to certain employees. The options expire November
2001. No options were exercised as of October 31, 1999. However, 75,000 options
expired as result of a voluntary termination.

Compensation expense that would have been recorded with respect to stock options
and warrants issued in accordance with the basis of fair value pursuant to SFAS
No. 123, if the Company had so elected, would have been approximately $0 in
1999, $45,000 (less than $.01 per share) in 1998 and immaterial for 1997.

As of and for the year ended October 31, 1999, there were no stock options
issued; 1,129,500 options were outstanding and 75,000 options terminated. As of
October 31, 1998, there were 1,204,500 options issued and outstanding and 25,000
options were terminated. As of October 31, 1997, 25,000 options were outstanding
but no options were granted or terminated. No options were exercised during
1999, 1998 or 1997.

During 1994, the Company completed a private placement offering by selling 7,550
shares of its 10,500 authorized shares of 10% Cumulative Convertible Senior
Preferred Stock (the "10% Senior Preferred Stock") at a stated value of $100 per
share. The Company raised $662,150, net of placement fees of $92,850 as a result
of the offering. Commencing September 30, 1994, dividends were cumulative,
payable quarterly in arrears at an annual rate of $10 per share. Total dividends
declared and/or accrued were $75,504 in 1996. The 10% Senior Preferred Stock was
voting and convertible into the Company's Common Stock. Effective April 30,
1995, the Company registered the shares of common stock issuable upon conversion
of the Senior Preferred Stock under the Securities Act of 1933. During 1997 and
1996, all such preferred shares and related accrued dividends were converted to
common stock at a conversion rate of $.25 per share.

In 1997, the Company converted $150,000 of convertible debt issued in 1997 and
payable to Renaissance into 600,000 shares of common stock. In April 1999, the
Company converted $150,000 of the Renaissance note payable (Notes 3 and 5) and
related accrued interest into approximately 1,675,000 shares of Company common
stock.

The Company issued warrants to purchase common stock to several parties. The
following table summarizes the outstanding warrants for the year ended October
31, 1999 and 1998:



                                      F-16
<PAGE>


Note 7.  Stockholders' Equity (continued)

<TABLE>
<CAPTION>
                                        Outstanding                             Warrants            Outstanding
                                         Warrants                          Expired in Fiscal         Warrants
                                     October 31, 1998     Exercise Price          Year           October 31, 1999
                                   ---------------------- ---------------- ------------------- ----------------------
<S>                                              <C>                 <C>                    <C>              <C>
Consulting agreement, effective                  100,000             $.50                   0                100,000
November 2, 1994, expiring                                     subject to
November 1, 1999                                               adjustment

Former President, upon                           200,000             $.50             200,000                      0
resignation in 1996, expiring in
August 1999
Financing agreement, effective                   650,000             $.25                   0                650,000
August 1997, expiring August 2002                              subject to
                                                               adjustment

Former President, upon                           100,000             $.25                   0                100,000
resignation in March 1998,                                     subject to
expiring in March 2001                                         adjustment
</TABLE>


Note 8.  Commitments and Contingencies

The Company leases certain equipment under operating leases expiring at various
times through July 2001. Rent expense was approximately $65,000, $85,000 and
$86,000 for the years ended October 31, 1999, 1998 and 1997, respectively. The
following is a schedule of future minimum rental payments under operating leases
as of October 31, 1999:

                           2000                                 $21,000
                           2001                                  13,000

Certain of the Company's employees are currently represented by the United
Brotherhood of Carpenters and Joiners of America, Local Union No. 340 whose
contract is in effect to February 2003. The contract contains provisions that
affect compensation to be paid to employees included in the Union.

During 1998, the Company implemented an incentive bonus plan (the "plan") for
certain members of management. The plan provides for annual incentives
calculated as a percentage of the individual employee's salary. The expense for
1999 and 1998 amounted to approximately $33,000 and $28,000, respectively.

Danzer has a contributory defined benefit pension plan covering all eligible
employees who have elected to participate in the Plan. It is the Company's
policy to fund pension costs as determined by the Plan's actuary. The weighted
average discount rate and expected rate of return on long-term assets used in
determining the actuarial present value of the projected benefit obligation were
7% each for the Plan's year ended December 31, 1998. The actuarial information
included below, which is as of January 1, 1999, is for the Plan's fiscal year
ended December 31, 1998, and is the most recent available information.

                                      F-17
<PAGE>

Note 8.  Commitments and Contingencies (continued)

Pension expense for the year ended December 31, 1998, was as follows:

<TABLE>
<CAPTION>
<S>                                                                             <C>
         Benefits earned (service cost)                                         $  4,186
         Interest expense on projected benefit obligation                         25,706
         Actual return on Plan assets                                             (7,802)
         Other items                                                             (16,860)
                                                                                 --------
                  Total pension expense                                         $  5,230
                                                                                ========
</TABLE>


A summary of the status of the Plan as of December 31, 1998 is as follows:

<TABLE>
<CAPTION>
<S>                                                                            <C>
         Projected benefit obligation:
             Vested                                                            $(397,127)
             Non-vested                                                                -
                                                                        ----------------
                                                                                (397,127)

         Plan assets at fair value                                               359,816
                                                                              ----------
         Funded status                                                           (37,311)
         Unrecognized net actuarial loss                                         (36,587)
         Deferred transition gain                                                 55,396
                                                                              ----------
         Accrued pension cost                                                  $ (18,502)
                                                                               ==========
</TABLE>


The Company also has a defined contribution 401(k) plan which permits voluntary
employee contributions up to 15% of compensation and which provides Company
matching contributions of 25% to 50% of employee contributions not to exceed 6%
of employee compensation. 401(k) plan expense for each of the years ended
October 31, 1999, 1998 and 1997 was approximately $7,000, $6,000 and $8,000,
respectively

On August 25, 1993, the Company entered into a royalty agreement structured as
an asset sale and purchase agreement (the "Agreement") with Morrison Industries,
L.P., DIP, a Delaware Limited Partnership, (the "Seller"), to buy certain
"Intangible" and "Tangible" assets of the Seller, as defined. In consideration
of the sale, the Company was required to pay monthly to the Seller, 5% of
"Qualified Revenues" as defined, during years 1 through 5 of the Agreement and 2
1/2% of Qualified Revenues, up to $2,000,000 and 5% of Qualified Revenues in
excess of $2,000,000 during years 6 through 10 of the Agreement. In addition,
the Agreement stipulated certain annual and quarterly minimum sales levels and
requires the Seller to enter into a non-compete agreement indefinitely. During
1998, the Company entered into an agreement to buyout the remaining obligations
of the original agreement. This buyout agreement releases the Company from the
payment of any future royalties and other requirements. The Company is required
to pay $200,000 in consideration for the buyout, to be paid $50,000 in March
1999, monthly installments of $11,111 from April 1999 through November 1999 and
the remaining unpaid balance in December 1999. The $200,000 payable at October
31, 1998 is included in "accrued expenses, other" in the accompanying
consolidated balance sheet. The $200,000 will be amortized over the remaining
five years of the original agreement through 2003. At October 31, 1999, the
$120,000 unamortized portion is included in "other assets" in the accompanying


                                      F-18
<PAGE>

Note 8.  Commitments and Contingencies (continued)

balance sheets. Royalty expense for 1999, 1998 and 1997 was $40,000 $54,000 and
$100,000, respectively.

The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "Year 2000" problem
is pervasive and complex, as many computer systems will be affected in some way
by the rollover of the two-digit year value to 00. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. The "Year 2000" issue creates risk for the Company from unforeseen
problems in its own computer systems and from third parties with whom the
Company conducts business.

The Company has updated its accounting software and operating system with
software and systems that are represented to be "Year 2000" compliant. The
Company analyzed its remaining computer systems to identify any potential "Year
2000" issues and will take appropriate corrective action based on the results of
such analysis. Management has not yet determined the cost related to achieving
"Year 2000" compliance. Management believes, based on its available information,
that it will be able to manage its total "Year 2000" transition without any
material adverse effects on its business operations or financial condition.
Through the date of this report, the Company has not experienced any significant
system problems related to "Year 2000."

Note 9.  Related Parties

During 1999 and 1998, the Company paid a total of $39,000 and $54,000,
respectively, in management fees to two companies, principals of which are
Directors of the Company.

Note 10.  Material End of Year Adjustments

Operating results in the fourth quarter of fiscal year 1999 include material end
of year adjustments that result in $(5,127) of Selling, General and
Administrative expenses in the fourth quarter. The significant changes causing
the material adjustment include Management's assessment of the collectibility of
accounts receivable in relation to the recorded allowance, revisions of certain
estimates related to legal fees and other costs and adjustments of recorded
balances based on more complete information.

Note 11.  Parent Company Financial Statements

The financial statements of the Parent Company (Danzer Corporation) include
assets comprised of investments in and advances to subsidiaries. All of the
Company's common and preferred stock and certain amounts of long-term debt and
accrued expenses are also recorded on the

                                      F-19
<PAGE>

Note 11.  Parent Company Financial Statements (continued)

Company's balance sheet. Substantially all of the Company's equity relates to
its investment in its subsidiary.

The Company's only significant source of revenue and cash available to pay
interest and principal on debt and corporate overhead results from management
fees charged to its subsidiary. Such management fees are limited due to the lack
of profitability and positive cash flow of its subsidiary as well as certain
restrictions on the ability of its subsidiary to pay distributions or dividends
to the Company. Therefore, available cash to pay interest and principal on debt
and/or dividends on common stock is severely constrained.


                                      F-20
<PAGE>


                                   SIGNATURES

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

                                  DANZER CORP.

                                    By:     /s/ M. E. Williams
                                            ------------------
                                            M. E. Williams
                                            President, Chief Executive Officer
                                            and Director

February 14, 2000



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

February 14, 2000
                                    By:     /s/ Terry Moore
                                            -----------------------------------
                                            Terry Moore
                                            Chief Financial Officer

February 14, 2000
                                    By:     /s/ Goodhue Smith
                                            -----------------------------------
                                            Goodhue Smith, Director

February 14, 2000
                                    By:     /s/ Russell G. Cleveland
                                            -----------------------------------
                                            Russell G. Cleveland, Director

February 14, 2000
                                    By:     /s/  Stephen C. Davis
                                            -----------------------------------
                                            Stephen C. Davis, Director