Paulson Corporation is continuing discussions with B&G-Bud Jones regarding a business combination.

As part of Paulson's quarterly financial statement, released yesterday, it included the following paragraphs:

On Jan. 31, 2001, the company announced that it had
entered into a letter of intent with Etablissments
Bourgogne et Grasset and its subsidiary, The Bud Jones
Co. (collectively "B&G"), under which B&G would have
entered into a combination with the company.

After a definitive agreement had not been executed by
April 30, 2001, Paul-Son sent a demand letter to B&G
seeking a $1 million Termination Fee pursuant to the
letter of intent. B&G responded denying Paul-Son's claim
for the $1 million Termination Fee and making certain
unspecified claims against Paul-Son. Paul-Son thereafter
commenced arbitration proceedings under the rules of
the American Arbitration Association on May 11, 2001.

Subsequently, the parties agreed to stay the arbitration
proceeding, with each side reserving all rights. The
parties thereafter renewed confidential negotiations,
which continue to this date. Although no assurance can
be given that the parties will enter into a definitive
agreement, and both sides have reserved all rights
should no definitive agreement be reached, the parties
continue to work on the negotiation of a potential
transaction. Paul-Son has no current intention to
comment further on the status of negotiations with B&G
unless or until a definitive agreement is reached or
unless negotiations are terminated or until other
circumstances arise that, in Paul-Son's sole discretion,
merit further public comment.