An affiliate, Alpine Leasing Company, was expanded to include a few of our clients. During 1976 its capitalization was increased significantly, as were its financing activities. We are also very appreciative of the time Mr. Paul Hower, Vice President of California Canadian Bank, has provided to Aurora. The bank has recently Approved a substantial increase to our line of credit. With a new administration in Washington in 1977, we feel that further changes in the tax laws will be forthcoming. It is our considered opinion that we must expand into the agriculture industry where it will be difficult for the government to take away all the tax advantages without destroying the industry. We feel ownership in real estate is imperative, to hedge against inflation. Real estate properly purchased and managed has proven to be a good investment regardless of the tax saving consequences. We will continue to devote our energies to seeking out investment opportunities for ourselves and our investors. We are pleased with the many clients and friends that we work with and are very grateful for your support and understanding. We are confident that 1977 will be another successful year for Aurora and our investors. Happy New Year to you all. Aurora Capital Corporation, L. M. Smith Chairman of the Board M. B. Peperzak President lld -5-