HYNES & HOWES INSURANCE COUNSELORS, INC.
                          Notes to Financial Statements
                           September 30, 1998 and 1997


Note 5.  Capital Stock

         Hynes & Howes Insurance Counselors, Inc. is authorized to issue
         100,000,000 shares of no par value common stock.  Shares outstanding at
         September 30, 1998 and 1997 were 11,222,699 shares.

                                                     Number of Shares
                                                       September 30,
                                                 1998                 1997

         Number of shares issued           11,260,675           11,260,675
             Less Treasury Stock               37,976               37,976

Balance outstanding at end of year         11,222,699           11,222,699



Note 6. Paid-In-Capital

         During the year ended September 30, 1973, a stockholder purchased
         shares of stock in the Company and later gave the Company a check for
         $100, stating that he wanted it to be put into Paid-in-Capital.  He
         received no shares of stock for the $100.

Note 7. Earnings Per Share

         Earnings per share were computed by dividing the net income (loss) by
         the weighted average number of shares outstanding during the respective
         years.

         The average number of shares outstanding for each of the three years
         ended September 30, 1998 were 11,222,699.  This is the number of shares
         used in computing the earnings per share.

Note 8. Stock Held in Escrow

         At September 30, 1998 and 1997 there were 3,546,000 shares of the
         Company's common stock held in trust.  Those shares were owned by the
         Frank B. Howes Trust and by directors or former directors of the
         Company.  The Trust agreement was required by the Commissioner of
         Insurance of the State of Iowa in order to gain approval of the
         Company's stock issue of April, 1971.  Under terms of this agreement
         these shares were to be released after a period of five years or when
         the Company attains certain profitable goals for three consecutive
         years and upon written approval from the Commissioner of Insurance of
         the State of Iowa.  It is also required that should the Company
         dissolve during this period that the pro-rated distribution of assets
         to stockholders would be done on a basis which would pay these
         shareholders less per share than would be distributable to the
         shareholders of the new issue.  The Company's earnings to date have not
         been sufficient to qualify for the release of these shares held in
         escrow.  The condition requiring that these shares be held in escrow
         for five years has been fulfilled, however, the Commissioner of
         Insurance of the State of Iowa has not granted the written approval for
         the release of these shares at this time.  The shares will continue to
         be held in escrow until written approval for their release is granted
         by the Commissioner.