The net deferred income tax liability is classified as follows:

Realization of the deferred tax asset is dependent on the Company's ability to generate taxable earnings in the future. The Company believes it will generate taxable income in the NOL carryforward period. As such management believes that it is more likely than not that its deferred tax assets other than the deferred tax asset attributable to Pinnacle will be fully realized. A full valuation allowance has been established for the equity in loss of Pinnacle's tax asset as the realization of the deferred tax asset is dependent on generating sufficient taxable income in Pinnacle in future periods. It is more unlikely than not that Pinnacle will realize the tax benefit. The Company has net operating loss carryforwards totaling approximately $5.0 million, which begin expiring in 2012 through 2021.

7. LONG-TERM DEBT

At December 31, 2002 and 2003, long-term debt consisted of the following:

F-20