Edgar Filing: LCS GOLF INC

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

(Mark One)

/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2003

/ / 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 0-30420

LCS GOLF, INC.
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(Exact Name of Registrant as Specified in its Charter)

Delaware 11-3200338
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization

3 Tennis Court Road, Mahopac, New York 10541
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(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (845) 621-3945
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Securities registered pursuant to Section 12(b) of the Act:

None

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

Common Stock, par value $0.001 per share

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
----- -----

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. /x/

State the issuer's revenues for its most recent fiscal year: The issuer's
revenues for the fiscal year ended February 28, 2003 were $31,908.

The aggregate market value of the voting stock held by non-affiliates of the
Registrant computed by reference to the price at which the stock was sold on
July 3, 2003 was approximately $3,929,614. Solely for the purposes of this
calculation, shares held by directors and officers of the Registrant have been
excluded. Such exclusion should not be deemed a determination or an admission by
the Registrant that such individuals are, in fact, affiliates of the Registrant.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: At July 3, 2003, there were
outstanding 49,120,176 shares of the Registrant's Common Stock, $0.001 par
value.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format (check one):

Yes / / No /x/

PART I

Item 1. DESCRIPTION OF BUSINESS
-------------------------------
Business Development.

We were incorporated in the State of Delaware on October 8, 1997 as
Linkun Enterprise, Inc. to design and distribute golf clubs and golf related
products. On October 27, 1997, we changed our name to LCS Golf, Inc.

On October 28, 1997, LCS Golf, Inc. a New York Corporation (hereinafter
"LCS New York") was merged into our Company and we were the surviving company.
Pursuant to the merger, we exchanged 980,904 shares of our common stock for all
of the issued and outstanding shares of LCS New York on a one-share for
one-share basis.

We entered into this transaction to obtain the name LCS Golf, Inc. and
because LCS New York had public shareholders. Prior to this transaction, neither
we nor our officers and directors had any affiliation with LCS Golf, Inc. New
York.

On May 1, 1998, we acquired Golf Universe, Inc., ("Golf Universe") from
Rene Von Richtofen. Golf Universe, which became our wholly owned subsidiary, was
incorporated in the state of Florida on October 23, 1996. We acquired all of the
outstanding stock in Golf Universe in exchange for the following consideration:

o 400,000 shares of our common stock,
o A promissory note for $100,000, which we paid prior to February 28,
1999, and
o Expenses of $16,750 associated with the transaction.

We entered into this transaction to acquire Golf Universe's plans for
development of a golf related website. Prior to this transaction, neither we nor
our officers or directors had any affiliation with Golf Universe.

On November 17, 1998, we entered into a stock purchase agreement with
Milton Besen who owned all of the issued and outstanding common stock of Mr. B
III, Inc. ("B III"). B III was incorporated in the state of Florida on September
3, 1996. In this transaction we exchanged 150,000 shares of our common stock and
paid $250,000 to Mr. Besen for all of the issued and outstanding shares of B
III. In completing the transaction we also issued an additional 150,000 shares
of our common stock to Mr. Besen for expenses related to the acquisition. B III
became our wholly owned subsidiary. We entered into this transaction to acquire
B III's manufacturing facilities, which we ceased operating in November 1999. We
abandoned the facilities and equipment shortly thereafter and incurred a
$1,321,000 write-off in connection therewith, of which $1,269,000 related to
goodwill, for the fiscal year ended February 28, 2001. Prior to this
transaction, neither we nor our officers and directors had any affiliation with
B III. Mr. Besen assisted us in operating B III for approximately six months
after the completion of the transaction.

On January 26, 1999, we entered into a common stock purchase
agreement with Alex Bruni, the owner of 100% of the issued and outstanding
shares of PlayGolfNow. PlayGolfNow was incorporated on November 27, 1998 in the
state of New York. We acquired the shares of PlayGolfNow in exchange for:

o 350,000 shares of our common stock issued to Mr. Bruni, and
o An option issued to Mr. Bruni to purchase an additional 200,000
shares of our common stock at a purchase price of $0.50 per share that
terminated on January 25, 2001 without exercise.

PlayGolfNow then became our wholly owned subsidiary into which we
subsequently merged Golf Universe. We entered into this transaction to acquire
PlayGolfNow's golf membership discount program, consisting of a network, through
an agreement with Golf Digest, of independent golf courses, driving ranges, and
pro shops offering discounted rates to PlayGolfNow's members. We ceased offering
this program in May 2000.

Prior to this transaction, neither we nor our officers and directors
had any affiliation with PlayGolfNow. Upon the consummation of our acquisition
of PlayGolfNow, Mr. Bruni became our chief operating officer, a position he
currently holds.

On February 15, 1999, we entered into a common stock purchase agreement
with Leigh Ann Colguhoun, the owner of 100% of the issued and outstanding shares
of Golfpromo, Inc. ("Golfpromo"). Golfpromo was incorporated in the state of
Florida on February 10, 1999. We acquired the shares of Golfpromo in exchange
for 350,000 shares of our common stock. Golfpromo then became our wholly owned
subsidiary. We entered into this transaction to acquire Golfpromo's mailing
database list of golfers. Prior to this transaction, neither we nor our officers
and directors had any affiliation with Golfpromo. Upon the completion of our
acquisition of Golfpromo we retained Eric Reinsten, Ms. Colguhun's husband, to
assist us in compiling our database of golfers. Mr. Reinsten left our employ in
December 2000.

On August 27, 1999, we incorporated iFusion Corp. ("iFusion") as our
wholly owned subsidiary, to provide Internet and traditional marketing services.

Business of the Issuer.

Until approximately December 2001, when, except as noted below, we
suspended all of our operations due to a lack of capital created, among other
things, by a substantial negative cash flow, we offered information over the
Internet through our four wholly owned subsidiaries:

o PlayGolfNow
o iFusion.com
o Golf Promo
o Targetmails.com

We continued to rent out our database until March 2002 for minimal
income and we have generated no income since then.

Internet Operations:

PlayGolfNow.com

PlayGolfNow.com had been operational from March of 1999 through
December 2001, when we suspended almost all operations. It delivered
information and details on golf courses and golf related businesses as well as
other golf related data and information. The PlayGolfNow site offered an online
pro shop, where golf-related products and services were sold through third party
vendors. The website offered products and services from major golf equipment
manufacturers, apparel designers, and other golf related manufacturers. We
received commissions when site visitors purchased products, reserved tee times,
and made travel plans online.

iFusion.com

iFusion.com was an Internet marketing company that provided the
following services:

o creative and concept development;
o national marketing program implementation and management;
o corporate and package development; and
o sweepstaking, and couponing;

iFusion generated revenues from monthly retainers, subcontract work,
and per project work. It ceased operation in December 2001.

Targetmails.com, a website that was operated by iFusion, utilized our
database of golfers. Additionally, we had databases of individuals associated
with the travel, healthcare, and investment industries. These databases have not
been kept current.

Golfpromo.net and Golfuniverse.com were used principally as links to
our other web sites.

B III, Inc.

We formerly designed and manufactured consumer products through B III.
As noted above, we have ceased our manufacturing operations and incurred a
write-off relating to these operations during the fiscal year ended February 28,
2001.

Current Operations

We are investigating the possibility of acquiring or affiliating with a
revenue generating business that would have an interest in wanting to affiliate
with us. Although we have had preliminary discussions we have reached no
agreement with any such business and cannot assure you that we will. Any such
acquisition or affiliation will also most likely require significant financing.
We currently have no commitments for any financing and may be unable to raise
needed cash on terms acceptable to us if at all. Financings may be on terms that
will be dilutive or potentially dilutive to our stockholders. Further, our weak
financial condition could restrict our ability to acquire or affiliate with a
business partner as well as prevent us from establishing a source of financing.
If we are unable to resume our operations and/or obtain a revenue generating
business partner and the financing required to support these activities by
September 2003, we will most likely cease all activities.

During the past three months independant parties have advanced funds to
us which, as of the date of this filing, approximate $230,000. These loans bears
no interest and are repayable on demand. They will be converible into our common
stock at the rate of $0.03 per share after we have amended our certificate of
incorporation to increase the number of shares of common stock we are authorized
to issue. We have used these funds to repay certain indebtedness and for
professional fees.

Employees

We have two part-time employees, our two executive officers. We are
currently accruing our president's salary.

Agreements

On February 16, 2000, we entered into a series of related agreements
with Traffix, Inc. (formerly known as Quintel Communications, Inc. and
hereinafter referred to as "Traffix"), including a loan agreement to borrow
$500,000 from Traffix in the form of a convertible promissory note. The
promissory note was collateralized by our databases. The note bears interest at
a variable rate not to exceed 14% and was due on demand any time after August
16, 2000. Traffix has the right to convert the note into our common stock and
certain registration rights relating thereto. As of the date here of, it has not
exercised these rights.

On the same date, we entered into a marketing and licensing agreement
with Traffix. As consideration for providing marketing services for a period of
two years, we issued options, valued at approximately $139,000 using the
Black-Scholes Option Pricing Model, to purchase 200,000 shares of our common
stock. The model enables us to estimate the fair value of stock options granted
because it takes into account, as of the grant date of the option; i) the
exercise price; ii) the expected life of the option; iii) the current price of
the underlying common stock; iv) the stock's expected volatility; v) the
expected dividends; and vi) the risk free interest rate for the expected term of
the option. These options expired without exercise.

Under the licensing agreement, Traffix acquired a license to use our
database for a payment of $5,000 per month. Traffix has indicated to us that it
has no interest in using our database and, accordingly, we have received no
licensing fees from Traffix and do not anticipate that we will receive any fees
in the future.

We are in default under the loan agreement. On August 8, 2000, we
entered into a forbearance agreement and amendment of our security agreement
with Traffix. Traffix acknowledged receipt of a $50,000 payment against the
principal balance of $500,000 due on the convertible note, funded personally by
Michael Mitchell, our President and CEO. The related note was amended to provide
for payment upon written demand. If there is a default under the terms of the
forbearance agreement or the note, the interest rate will equal the prime rate
as defined in the note plus 4% not to exceed 14%. Until payment of all amounts
due under the note are made, the first amendment to the security agreement
required us to pay 50% of the collections received for accounts receivable
outstanding as of August 10, 2000, and 25% of collections for all new accounts
receivable, within five days of receipt of the receivables. Payment is to be
credited against amounts due under the note, first to interest, then to
principal. Traffix was also to receive 50% of all other cash receipts including
additional loans, cash equivalents and marketable securities generated by us
from any source until payment in full of the amounts due under the note. The
security agreement filed February 22, 2000 was amended to include all of our
accounts and all securities or guarantees held by us in respect of the accounts
and all account proceeds. In addition, Dr. Mitchell executed and delivered a
guarantee on August 8, 2000 of up to $250,000 on the note (of which $237,500 has
been paid against this guaranty as of the date hereof).

On August 8, 2000, Traffix agreed to forbear from demanding payment of
the note or commencing any action against us as long as it received at least
$10,000.00 per month in payment of principal and interest on the note, or
collections of the accounts receivable or from the guarantor, and we generated
gross revenues of at least $75,000.00 per calendar month from the normal conduct
of business. On May 16, 2001, the parties entered into an amendment to the
forbearance agreement whereby we agreed to a payment schedule of approximately
$10,000 per month to repay the promissory note and Traffix agreed not to take
any actions with respect thereto. Any payments made by us to fulfill this
obligation have been made by Dr. Mitchell and are included in the amount paid by
him against his guarantee noted in the prior paragraph. As of the date hereof
the note remains in default and we owe an aggregate of approximately $262,500
excluding any accrued interest thereon.

On August 8, 2000, American Warrant Partners, LLC ("AWP") invested
$300,000 in our Company. We issued an 8% convertible subordinated promissory
note to AWP with a maturity date for the principal of August 8, 2002. The note
is convertible into our common stock at $0.25 per share, subject to adjustment,
that resulted in a beneficial conversion charge of approximately $201,000, which
was expensed immediately since the note was convertible at anytime. Interest is
payable on a quarterly basis commencing September 30, 2000. We also issued to
AWP a warrant expiring on August 8, 2005 to purchase up to 600,000 shares of our
common stock at the exercise price of $0.40 per share. The value of this warrant
at grant date, utilizing the Black-Scholes option-pricing model, was
approximately $99,000. The assumptions used in determining the value was an
expected volatility of 227%, an average interest rate of 6.06% per annum and an
expected holding period of five years. The value of this warrant is being
amortized over five years or shorter if exercised. In addition, we entered into
a registration rights agreement in which we promised to register the shares with
the Securities and Exchange Commission as soon as reasonably practicable, but in
no event later than September 15, 2000 and are subject to penalties because the
Registration Statement was not declared effective by November 15, 2000. The
penalties are that for each 30-day period that the Registration Statement is not
declared effective, the conversion price of $0.25 of the convertible note and
the warrant exercise price of $0.40 will each be reduced by 2% until the
exercise price reaches $0.05. In addition, the interest rate on the convertible
note will increase 2% for each 30-day period, not to exceed 15%. To date, no
such Registration Statement has been filed. Certain of our officers and
directors agreed to a lock-up provision restricting their right to sell,
transfer, pledge or hypothecate or otherwise encumber their shares until the
earlier of the one year anniversary of the agreement, the effective date of the
Registration Statement, or until we raise $1,000,000 in equity or debt
financing. We also agreed that without prior written consent, until the earlier
of 85% of the principal balance and interest is paid or converted to common
stock, or 180 days from the date of the warrant agreement, we will not offer to
sell or sell any of our common stock at a price per share (or conversion or
exercise price per share) less than the average closing price per share of our
common stock as quoted by the OTC Electronic Bulletin Board on the five days
immediately prior to the close of the transaction. We also agreed to recommend
and use our best efforts to elect a designee and representative of A W P as a
member of the Board of Directors until the later of one year from the date of
the agreement or until such time we receive $1,000,000 in equity or debt
financing. AWP does not currently have a designee on our board of directors.

On May 16, 2001, the Company and AWP entered into an Amendment Waiver
and Consent with respect to the promissory note, warrant and registration
statement, whereby the conversion price and exercise price of the promissory
note and warrant, respectively, were amended to the lower of $0.12 per share or
80% of the closing bid price per share of the Common Stock as quoted on the
NASDAQ OTC Bulletin Board on the date immediately preceding the date of exercise
or conversion and we further agreed to file a registration statement covering
such underlying common stock no later than 60 days after June 15, 2001, and to
the issuance of $200,000 in convertible debentures (collectively with the
$300,000 8% note hereinafter referred to as the "Notes"). In consideration
therefor AWP agreed to waive any penalty provisions with respect to the filing
of the registration statement and consent to the issuance of common stock below
the then applicable conversion or exercise price of the promissory note and
warrant.

On June 28, 2002, we entered into an Agreement and Release (the
"Agreement") with AWP and Private Capital Group, LLC ("PCG"), the holders of the
Notes. Pursuant to the Agreement, AWP and PCG converted $200,000 of the
principal of the Notes at a price of $0.04 per share for an aggregate of 5
million shares of our common stock. If the price of our common stock does not
reach $0.50 per share and remain at that level or higher for 30 trading days
thereafter, with an average trading volume of 150,000 shares per day during this
period, within 120 days after our merger with an operating company, then we
shall be obligated to issue an aggregate of an additional 6 million shares of
our common stock to AWP and PCG. If we do not merge with an operating company
within 30 days after the date of the Agreement, AWP and PCG have the option to
receive immediate repayment of the remaining $300,000 balance on the Notes or
the additional 6 million shares of our common stock. Also pursuant to the
Agreement, AWP has exercised the warrants it received in connection with the
issuance of the Notes on a cashless basis into 512,900 shares of our common
stock. In addition, pursuant to the Agreement, 800,000 shares of our common
stock belonging to Dr. Mitchell that had been held in escrow as security for the
Notes have been released to him. We issued an aggregate of 6 million additional
shares of our common stock to affiliates of AWP on November 26, 2002.

On May 28, 2002 we entered into a loan agreement with an unaffiliated
party pursuant to which we borrowed $75,000. The loan bore no interest and was
repayable by July 23, 2002. We issued 200,000 shares of our common stock to the
lender. The loan agreement provided that if the loan was not repaid by the due
date, we would be obligated to issue 10,000 shares of our common stock to the
lender for each day that the loan remained unpaid.

On or about May 1, 2003, we repaid the $75,000 loan to the lender and
agreed to issue him one million shares of our common stock as soon as we amend
our certificate of incorporation to increase the number of shares we are
authorized to issue, which will then permit us to issue these shares. We also
agreed to issue him an additional 100,000 shares in the event that we fail to
commence the procedure to effect this ammendment prior to six months after the
repayment of the loan, and granted him certain "piggy-back" registration rights
with respect to his shares. The lender released to Dr. Mitchell 2 million shares
of our common stock owned by Dr. Mitchell that he was holding as collateral for
the repayment of the loan. In addition, the lender, Dr. Mitchell and LCS
exchanged general releases.

Debt in Default

The AWP loan of $300,000 placed us in default of the forbearance
agreement that we signed with Traffix because we did not remit 50% of the loan
proceeds to Traffix as required under the agreement. On August 30, 2000, Dr.
Mitchell agreed to fund two payments of $50,000 each towards principal and
interest on the Traffix loan, which he subsequently did. These amounts are
included in the amounts noted above that Dr. Mitchell has paid to Traffix
against his guarantee. We also agreed to increase from 25% to 50% of receipts
from new accounts receivable that are payable to Traffix under the amended
security agreement.

Intellectual Property.

Through our acquisition of B III, we own the patent, serial number
29/073.138, for a product sold under the label "Adorables," that is an animal
pillow with a pouch. We have not sought trademark registration of the
"Adorables" name with the U.S. Patent & Trademark Office and are not marketing
this product.

PlayGolfNow registered the following domain names:

o skiuniverse.com
o Golfpromo.net
o universe-online.com
o iFusionco.com
o ifusionco.net
o PlayGolfNow.com
o junior-golf.com
o targetmails.com
o myplaygolfnow.com
o WallStreetGolf.com
o freeis4me.com
o lcsgolf.com
o golfuniverse-online.com

As of the date hereof PlayGolfNow has lost all of these domain names
except iFusionco.com and targetmails.com. During our past fiscal year, A&J
Marketing, Inc., a company owned by Mr. Bruni, acquired the Golfpromo.net and
PlayGolfNow.com domain names after we had lost our right to these names because
we were unable to pay the fees needed to retain these rights. A&J Marketing
subsequently opened websites using these names and is now operating the
websites. We generated approximately $31,908 in revenue from websites using
these domain names before we lost them and the websites were shut down because
we were unable to pay the hosting fees. targetmails.com. is listed in the name
of A&J Marketing, who is currently paying the hosting fees for this site, but we
own the domain name.

Risk Factors That May Affect Future Results

We currently have no revenue generating operations. The following
discussion highlights the most material of the risks we currently face.

WE ARE IN DEFAULT OF A SENIOR SECURED LOAN, WHICH MAY PREVENT US FROM
AFFILIATING WITH A REVENUE GENERATING BUSINESS.

Our failure to remit 50% of the cash proceeds from the AWP transaction
to Traffix resulted in one of a number of defaults under the forbearance
agreement with Traffix. If Traffix elects to pursue its remedies under the
forbearance agreement and we are unable to reach a resolution with Traffix
acceptable to us, we may be unable to affiliate with a revenue generating
business because, among other things, Traffix's actions may prevent us from
obtaining needed financing. Even if we do reach an amicable resolution with
Traffix, which we have no reason to believe such resolution is possible, and
affiliate with a revenue generating business, our efforts to satisfy continuing
obligations under the Traffix agreements will significantly adversely impact any
cash flow we may generate in the future if we continue to be required to remit
50% from new accounts receivable until Traffix is paid in full. See also Notes E
through G to our audited consolidated financial statements for the year ended
February 28, 2003 for information relating to additional defaults by us on our
outstanding indebtedness.

OUR FINANCIAL CONDITION IS EXTREMELY WEAK AND WE MAY BE UNABLE TO CONTINUE AS A
GOING CONCERN.

Our operations have been dependent upon short-term borrowing and other
funding resources. From March 1, 1999 through February 28, 2003, our president
made net advances of approximately $930,707, of which $41,144 was advanced
during our fiscal year ended February 28,2003, $260,024 was advanced during our
fiscal year ended February 28,2002 and $359,566 was advanced during our fiscal
year ended February 28,2001. Our independent auditors' report on our
consolidated financial statements for the year ended February 28, 2003 includes
language reflecting that substantial doubt exists as to our ability to continue
as a going concern. Our financial statements show an accumulated deficit of
approximately $20,545,582. We expect to continue to incur net losses and
negative cash flow for the foreseeable future and, unless we are able to resume
operations and/or acquire or affiliate with a business that generates revenue
and obtain financing necessary to support these activities by September 2003, we
will most likely be forced to cease all activities. In addition, any cash flow
that we may generate will be significantly reduced because we must remit 50% of
all accounts receivable we may collect to Traffix. Accordingly, any purchaser of
our securities should be prepared to lose his entire investment.

THE LOSS OF OUR CHIEF EXECUTIVE OFFICER WITHOUT AN ADEQUATE REPLACEMENT
WOULD REQUIRE US TO TERMINATE ALL ACTIVITIES.

Dr. Michael Mitchell, our president and chief executive officer, is one
of only two remaining employees and the only one who devotes any material time
to our matters. If Dr. Mitchell leaves the Company or is otherwise unable to act
as our Chief Executive Officer, we will be required to terminate all activities
unless we are able to find an adequate replacement, which we believe is most
unlikely.

Item 2. DESCRIPTION OF PROPERTY

We do not own any real property. On June 12, 2001, we entered into a
lease for office space located at 7109 Fairway Drive, Suite 100, Palm Beach,
Florida 33417, which we no longer occupy. We defaulted on the lease for these
premises and on December 16, 2003, Fairway One LLC entered a default judgment
against us for $169,370.62. We currently utilize space in the residence of Dr.
Mitchell, at 3 Tennis Court Road, Mahopac, New York 10541 for no rental.

Item 3. LEGAL PROCEEDINGS

On May 1, 2002, Daniel W. Gorman filed a complaint in the Circuit Court
for the Fifteenth Judicial Circuit, Palm Beach County, Florida naming LCS, Dr.
Mitchell, Alex Bruni and two other individuals as defendants. The title of the
action is Daniel W. Gorman v LCS Golf Inc., Michael D. Mitchell, Alex Bruni,
Scott Eurich, and Michele Haas. The complaint alleges breach of a contract. It
also claims entitlement to relief under theories of quantum meruit for work
done, tortious interference with contract, misrepresentation and conspiracy.
Although the ad damnum clause in the complaint contains no specific amount as a
damage demand, the body of the complaint contains allegations of losses of
$1,625,000 plus securities and other compensation in amounts not susceptible of
conversion to dollar figures.

We have served an answer denying the material allegations of the
complaint, including a denial that the alleged contract was ever signed by us,
alleging instead that the purported signature of Mr. Bruni was forged on the
document. Other affirmative defenses put forth include the failure to serve the
complaint timely, failure to prosecute the action, fraud on the part of the
plaintiff in inducing any dealings with us, and the execution by the plaintiff
of a stipulation of discontinuance with prejudice on May 9, 2002.

The pleading stage of the action has just closed. No discovery has
begun and the action is at a preliminary stage. Accordingly, it is too early to
comment on the merits of any claims or defenses but we believe that we have
meritorious defenses to this action. See "Recent Sales of Unregistered
Securities" under Item 5 for information relating to shares of our common stock
that we issued to Mr. Gorman for marketing services.

On or about August 28, 2002, Fairway One, L.L.C. the lessor of the
premises we formerly occupied in Palm Beach Florida, commenced litigation in the
Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County,
Florida against us for damages resulting from our breach of the lease on these
premises. On December 16, 2002, the plaintiff entered a default judgment against
us for $169,370.62. The name of the case is Fairway One, L.L. v. LCS Golf, Inc.,
Case No. CA '02 - 10450AD.

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

None.

PART II

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

Market Information.

From mid-1998 through the date hereof our common stock has traded on
the NASDAQ Over-The-Counter Bulletin Board, except as indicated below, and/or
the National Quotation Bureau "Pink Sheets" under the symbol "LCSG." The
following chart sets forth the high and low bid prices for each quarter from
January 1, 2001 to the latest practicable date.

2001 Quarter High Low
------------ ----- -----
January 1 - March 31 $ 0.56 $ 0.14
April 1 - June 30 $ 0.35 $ 0.08
July 1 - September 30 $ 0.16 $ 0.05
October 1 - December 31 $ 0.10 $ 0.05

2002 Quarter
------------
January 1 - March 31 $ 0.37 $ 0.03
April 1 - June 30 $ 0.51 $ 0.04
July 1 - September 30 $ 0.10 $ 0.04
October 1 - December 31 $ 0.05 $ 0.01

2003 Quarter
------------
January 1 - March 31 $ 0.04 $ 0.01
April 1 - June 30 $ 0.085 $ 0.081

On July 3, 2003, the high bid price was $0.095 and the low bid price
was $0.085 per shares. On January 19, 2000, we were de-listed from the Over the
Counter Bulletin Board for failure to comply with the new listing standards set
forth by the NASD before our phase-in date. During this time, our stock was
quoted in the National Quotation Bureau pink sheets. On February 16, 2001 we
were relisted on the NASDAQ OTC Bulletin Board.

No prediction can be made as to the effect, if any, that future sales
of shares of common stock or the availability of common stock for future sale
will have on the market price of the common stock prevailing from time-to-time.
Sales of substantial amounts of common stock on the public market could
adversely affect the prevailing market price of the common stock.

Holders

As of July 3, 2003, there were 459 registered holders of our common
stock, including shares held in street name.

Dividends

We have not paid a cash dividend on our common stock since the arrival
of our current management, and we do not plan to declare any cash dividends in
the foreseeable future. We anticipate that should any funds ever become
available for dividend payments, they will be reinvested in our business. The
payment of dividends may be made at the discretion of our Board of Directors and
will depend upon, among other things, our operations, capital requirements, and
overall financial condition.

Recent Sales of Unregistered Securities

We issued the following securities in reliance upon the exemption
provided in Section 4(2) of the Securities Act. We believe that this exemption
was available in each of the following transactions, as they did not involve a
public offering. No commissions were paid in these transactions.

On May 21, 2002 we issued 250,000 shares of our common stock to Mr.
Gorman for marketing services.

On May 28, 2002, we issued 200,000 shares of our common stock in
connection with a $75,000 loan made to us.

On June 30, 2002, pursuant to the Agreement with AWP and PCG, we issued
an aggregate of 5,512,951 shares of our common stock to AWP and PCG upon
conversion of a portion of their notes and exercise of certain warrants. We
issued an aggregate of 6 million additional shares of our common stock to
affiliates of AWP on November 26, 2002.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Except for historical information, the discussion in this report
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and
the Private Litigation Reform Act of 1995 that involve risks and uncertainties.
These forward-looking statements include, among others, those statements
including the words "expects," "anticipates," "intends," "believes" and other
similar language. Our actual results could differ materially from those
discussed herein. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this report. Factors that could
cause or contribute to such differences include, but are no limited, the risks
discussed in "Risk Factors" above.

OVERVIEW

We are a holding company that until December 31, 2001 operated as a
provider of outsourcing of permission e-mail marketing technologies and
services. We provided permission email direct marketing services through
Golfpromo.net and Targetmails.com., Internet and direct marketing services
through Ifusionco.com. and PlayGolfNow.com, Golf ecommerce news and information
through a vertical golf portal and discounts on golf services.

We have terminated all of our revenue generating operations and
released all but two of our employees, our two executive officers. We continue
to accrue the salary for one of these officers under his employment agreement.
We are investigating the possibility of acquiring or otherwise affiliating with
a revenue generating business but, although we have had preliminary discussions,
we have reached no agreement with any such business and cannot assure you that
we will. Any such acquisition or affiliation will also most likely require
significant financing. We currently have no commitments for any financing and
may be unable to raise needed cash on terms acceptable to us if at all. If we
are unable to resume our operations and/or obtain a revenue generating business
partner and the financing required to support these activities by September
2003, we will most likely cease all activities.

RESULTS OF OPERATIONS

TWELVE MONTHS ENDED FEBRUARY 28, 2003 AND FEBRUARY 28, 2002

Revenues

Our revenues for the 12 months ended February 28, 2003 were $31,908 on
a consolidated basis as compared to $242,806 for the prior 12 months ended
February 28, 2002. This decrease resulted from the suspension of all of our
revenue generating operations.

Cost of Revenue

Cost of revenues was -0- for the 12 months ended February 28, 2003 as
compared to $69,946 for the prior 12 months ended February 28, 2002. This
decrease resulted from the suspension of all of our revenue generating
operations.

Selling, General and Administrative

Selling, general and administrative expenses were $601,755 for the year
ended February 28, 2003 compared to $3,757,834 for the year ended February 28,
2002. This decrease resulted from the suspension of all of our revenue
generating operations.

Interest Expense

Interest expense consists of interest on debt obligations. Interest
expense was $682,341 for the twelve months ending February 28, 2003 compared to
$746,213 for the year ending February 28, 2002.

Income Taxes

No provision for federal or state income taxes was recorded as we have
incurred net operating losses since inception through February 28, 2003. The tax
benefit of the net operating losses has been reduced by a 100% valuation
allowance.

Liquidity and Capital Resources.

Over the 24 months prior to March 31, 2002, we continuously reduced our
operations and as of that date suspended almost all of our revenue generating
operations because the income generated by our business was not sufficient to
sustain these operations. During our last fiscal year, we incurred a loss of
$1,252,188 and negative cash flow from operations of $114,332. We are
investigating the possibility of acquiring or otherwise affiliating with a
revenue generating business but, although we have had preliminary discussions,
we have reached no agreement with any such business and cannot assure you that
we will. Any such acquisition or affiliation will also most likely require
significant financing. We currently have no commitments for any financing and
may be unable to raise needed cash on terms acceptable to us if at all.
Financings may be on terms that will be dilutive or potentially dilutive to our
stockholders. Further, our weak financial condition could restrict our ability
to acquire or affiliate with a business partner as well as prevent us from
establishing a source of financing. If we are unable to resume our operations
and/or obtain a revenue generating business partner and the financing required
to support these activities by September 2003, we will most likely cease all
operations.

During the past three months independent parties have advanced funds to
us which, as of the date of this filing, approximate $230,000. These loans bears
no interest and are repayable on demand. They will be converible into our common
stock at the rate of $0.03 per share after we have amended our certificate of
incorporation to increase the number of shares of common stock we are authorized
to issue. We have used these funds to repay certain indebtedness and for
professional fees.

On June 28, 2002, we entered into an Agreement and Release with certain
debtholders. In connection therewith, at July 28, 2002, beceause we had not
completed a merger with an operating company as of that date, we became
obligated to issue 6 million shares of our common stock to the debthoder, which
we did on November 26, 2002.

We continue to have a significant working capital deficiency and to
generate substantial losses.

Item 7. FINANCIAL STATEMENTS

Reference is made to the Financial Statements referred to in the
accompanying Index, setting forth the consolidated financial statements of LCS
Golf, Inc. and subsidiaries, which are included at the end of this Form 10-KSB
begining on page F-1.

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors and Executive Officers

Set forth below are our directors and executive officers, their
respective names and ages, positions with us, principal occupations and business
experiences during at least the past five years and the dates of the
commencement of each individual's term as a director and/or officer.

Name Age Position
---- --- --------
Dr. Michael Mitchell 49 President, CEO and sole Director

Alex Bruni 44 Chief Operating and Financial Officer

Dr. Michael Mitchell has been our President, Chief Executive Officer
and Chairman of the Board of Directors since 1994. He obtained a degree in
biology from Jacksonville University in 1976. In 1980 he obtained his M.D.
degree from the University of Dominica. From 1985 through the end of 1999, he
was a physician at Greenwich Village Pediatrics. He is board certified in
pediatrics and has memberships in the Academy of Pediatrics and the New York
County Medical Society. Dr. Mitchell does not devote his full attention to our
activities. He is currently employed by Riverside Pediatrics in Croton on
Hudson, New York were he practices pediatric medicine on a part time basis.

Alex Bruni has served as our Chief Operating Officer since 1999. He
obtained a BBA in Accounting and a MS in Taxation from Hofstra University. From
1988 through 1998 Mr. Bruni worked at American Express as the Director of
International Taxes, managing a staff of five tax accountants while also
managing and planning American Express international operations. From March 1998
through February 1999 Mr. Bruni was the President of PlayGolfNow, Inc., which
was acquired by the Company in 1999. Mr. Bruni currently owns and operates A&J
Marketing, Inc, an Internet marketing company he established approximately two
years ago and that acquired certain of our websites and domain names. He devotes
only minimal time to our activities.

Family Relationships.

There are no family relationships between our two executive officers.

ITEM 10. EXECUTIVE COMPENSATION.

We paid no cash compensation to our executive officers during our
fiscal years ended February 28, 2002 and February 28, 2003, but on June 27, 2001
we issued 1,800,000 shares of our common stock to Dr. Mitchell that we valued at
$360,000 and 500,000 shares of our common stock to Mr. Bruni that we valued at
$100,000 for services rendered by them to us. On March 22, 2002 we issued an
additional 250,000 shares of our common stock to Mr. Bruni valued at $10,000
for services rendered by him to us.

Employment Agreements.

On June 1, 1998, we entered into an employment agreement with Dr.
Mitchell for his services as our President and Chief Executive Officer. The
agreement is for a term of five years. We may terminate it for cause 90 days
after a written notice by our board of directors has been provided. We may
terminate the agreement without cause on at least three months notice to Dr.
Mitchell. Dr. Mitchell's duties include all those customary for such positions,
as well as any duties reasonably imposed or removed from such customary duties
under our discretion. Dr. Mitchell is to perform such services at least 20 hours
per week. As consideration for these services, we have agreed to pay Dr.
Mitchell an annual salary of $260,000, payable in weekly installments of $5,000.
This salary is to be increased each year by at least 4% percent during the term
of the agreement. Since we were unable to pay Dr. Mitchell pursuant to the terms
of his agreement with us, we issued 2,000,000 restricted shares of our common
stock to Dr. Mitchell in January 1999. Such shares had a market value of
$1,925,000 at the time of issuance, based on the trading price of free-trading
shares of the same class. Because Dr. Mitchell's shares were restricted and
illiquid, we determined that these securities were equivalent in value to the
amounts owed to Dr. Mitchell under the terms of his employment agreement through
December 31, 1998. Dr. Mitchell did not receive cash compensation pursuant to
the terms of his employment agreement during the fiscal years ended February 28,
2002 and February 28, 2003 because the Company operated at a loss and did not
have sufficient cash flow to make these payments. We accrued such compensation
in the amount of approximately $301,000 for our fiscal year ended February 28,
2003 and $289,000 for our fiscal year ended February 28, 2002, in our financial
statements. As noted above, this amount increases each year by 4%.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information with respect to the
beneficial ownership of our common stock by (a) each person known to us to be
the beneficial owner of more than five percent of our common stock, and (b)
directors and executive officers both individually and as a group, as of July 3,
2003. Unless otherwise indicated, we believe that the beneficial owner had sole
voting and investment power over such shares.

Number of Shares
Names Beneficially Owned Percent of Class
------------------- ------------------ ----------------
Dr. Michael Mitchell 5,918,309 (1) 12.05
President, CEO and
sole Director

Alex Bruni 1,100,000 2.24
Chief Operating and
Financial Officer

All Executive Officers and 7,018,309 14.29
Directors as a group (2 people)

----------------------
(1) This amount includes 200,000 shares issued to Lynn Mitchell, Dr. Mitchell's
wife. Dr. Mitchell disclaims beneficial ownership of these shares.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

See Item 10. Executive Compensation for information relating to shares
of our common stock we issued to Dr. Mitchell and Mr. Bruni for services
rendered by them to us.

As of the end of our February 28, 2003 fiscal year Dr. Mitchell had
loaned an aggregate of $930,707 to us of which approximately $40,000, $260,000
and $359,000 had been advanced during our 2003, 2002 and 2001 fiscal years,
respectively. During our fiscal year ended February 28, 2002, Mr. Bruni loaned
us $26,500. During our fiscal year ended February 28, 2003, Mr. Bruni loaned us
approximately $10,000. These loans are not reflected in any written agreement
but we are accruing interest on them at annual rates ranging between 8% and 10%.

On March 22, 2002, we issued 500,000 shares of our common stock to each
of two of our former directors, which we valued at $0.04 per share.

During our past fiscal year, A&J Marketing, Inc., a company owned by
Mr. Bruni, acquired the Golfpromo.net and PlayGolfNow.com domain names after we
had lost our right to these names because we were unable to pay the fees needed
to retain these rights. A&J Marketing subsequently opened websites using these
names and is now operating these websites. We generated approximately $32,000 in
revenue from websites using these domain names before we lost them and the
websites were shut down because we were unable to pay the hosting fees.
targetmails.com. is listed in the name of A&J Marketing, who is currently paying
the hosting fees for this site, but we own the domain name.

Other than those described above, we have no material transactions
which involved or are planned to involve a direct or indirect interest of a
director, nominee, executive officer, 5% shareholder or any family of such
parties.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

2.1 Linkun Holding Company (as filed in the Form 10-SB filing on 12/9/99).

2.2 LCS Golf, Inc. Merger (as filed in the Form 10-SB filing on 12/9/99).

2.3 Golf Universe, Inc. (as filed in the Form 10-SB filing on 12/9/99).

2.4 Mr. B III, Inc. (as filed in the Form 10-SB filing on 12/9/99).

2.5 GolfPromo, Inc. (as filed in the Form 10-SB filing on 12/9/99).

2.6 PlayGolfNow, Inc. (as filed in the Form 10-SB filing on 12/9/99).

3.1 Articles of Incorporation (as filed in the Form 10-SB filing on 12/9/99).

3.2 By-laws (as filed in the Form 10-SB filing on 12/9/99).

10.1 Namath Agreement (as filed in the Form 10-SB/A filing on 4/12/00).

10.2A Traffix Loan Agreement (as filed in the Form 10-SB/A filing on 4/12/00).

10.2B Traffix Convertible Promissory Note (as filed in the Form 10-SB/A filing
on 4/12/00).

10.2C Traffix Security Agreement (as filed in the Form 10-SB/A filing on
4/12/00).

10.2D Traffix License Agreement (as filed in the Form 10-SB/A filing on
4/12/00).

10.2E Traffix Marketing Agreement (as filed in the Form 10-SB/A filing on
4/12/00).

10.2F Traffix Registration Rights Agreement (as filed in the Form 10-SB/A filing
on 4/12/00).

10.2G Traffix Forbearance Agreement, dated as of August 8, 2000.

10.2H Traffix Amendment #1 to the Security Agreement, dated as of August 8,
2000.

10.2I Guaranty signed as of August 7, 2000 by Michael Mitchell for the
timely repayment of the obligations of LCS Golf under the
promissory note dated as of February 16, 2000 between Traffix and
LCS Golf.

10.3A Agreement dated as of August 10, 2000 between American Warrant Partners
LLC and LCS Golf (as filed in Amendment No. 1 to Form 10-SB on 9/8/00.

10.3B Registration Rights Agreement between American Warrant Partners LLC and
LCS Golf (as filed in Post-effective Amendment No. 1 to Form 10-SB on
9/8/00).

10.3C American Warrant Partners LLC warrant for up to 600,000 shares of common
stock expiring August 8, 2005 (as filed in Post-effective Amendment No. 1
to Form 10-SB on 9/8/00).

10.3D American Warrant Partners LLC 8% Subordinated Convertible Promissory
note (as filed in Post-effective Amendment No. 1 to Form 10-SB on
9/8/00).

10.3E Subscription Agreement for the purchase of Convertible Debentures.

10.3F Form of Convertible Debenture.

10.3G Guarantee Agreement dated as of May 24, 2001 between Michael Mitchell and
Private Equity Group LLC.

10.3H Stock Pledge Agreement dated as of May 24, 2001 between Michael
Mitchell and Private Equity Group, LLC.

21 Subsidiaries of the Registrant (as filed in the Form 10-SB/A filing
on 4/12/00).

99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002

99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.

Item 14. Controls and Procedures

Our management, which is comprised of our Chief Executive Officer and
Chief Financial Officer, have conducted an evaluation of the effectiveness of
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
on that evaluation, they have concluded that our disclosure controls and
procedures are effective in ensuring that all material information required to
be filed in this Annual Report on Form 10-KSB has been made known to them in a
timely fashion since they are our only employees and we are inactive. There have
been no significant changes in internal controls, or in other factors that could
significantly affect internal controls, subsequent to the date they completed
their evaluation.

Item 15. Principal Accountant Fees and Services

(1) Audit Fees

The aggregate fees billed for professional services rendered by our independent
auditors for the audit of our annual financial statements and review of our
financial statements included in our quarterly reports or services that are
normally provided by the independent auditors in connection with statutory and
regulatory filings or engagements were $41,000 for the fiscal year ended
February 28, 2003 and $50,000 for the fiscal year ended February 28, 2002.

(2) Audit-Related Fees

During our last two fiscal years our independent auditors did not perform any
assurance and related services that were reasonably related to the performance
or review of our financial statements for which we were billed except as may
have been included in the fees set forth in Paragraph (1) above.

(3) Tax Fees

Our independent auditors did not provide us with any tax compliance, tax advice
or tax planning services during our last two fiscal years and, accordingly, did
not bill us for such services during these years.

(4) All Other Fees

During our last two fiscal years our independent auditors did not provide us
with any products and did not provide us with or bill us any fees for services
other than those set forth in Paragraph (1) above.

(5) This Paragraph is not applicable since we do not have an audit committee.

SIGNATURES

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

Dated: July 3, 2003 LCS Golf, Inc.

By: /s/ Dr. Michael Mitchell
------------------------
Dr. Michael Mitchell
President, Chief Executive
Officer and sole Director

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 dates indicated.

Signature Title Date

/s/ Dr. Michael Mitchell President, Chief Executive July 3, 2003
------------------------ Officer and sole Director,
Dr. Michael Mitchell (Principal Executive Officer)

/s/ Alex Bruni Chief Operating and Financial Officer, July 3, 2003
------------------------- (Principal Financial and
Alex Bruni Accounting Officer)

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of LCS Golf, Inc. (the "Registrant") on
Form 10-KSB for the annual period ending February 28, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Michael
Mitchell, sole of Director, President, and Chief Executive Officer of the
Registrant, certify, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
that:

1. I have reviewed this annual report on Form 10-KSB of the Registrant;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annuals
report;

3. Based on my knowledge, the financial statements, and other financial

information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

4. The Registrant's other certifying officer and I are responsible for

establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to record,
process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's internal
controls; and

6. The Registrant's other certifying officer and I have indicated in this

annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

July 3, 2003

Michael Mitchell, Chief Executive Officer

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of LCS Golf, Inc. (the "Registrant") on
Form 10-kSB for the annual period ending February 28, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Alex
Bruni, Chief Financial Officer of the Registrant, certify, pursuant to
Section302 of the Sarbanes-Oxley Act of 2002, that:

1. I have reviewed this annual report on Form 10-KSB of the Registrant;

3. Based on my knowledge, the financial statements, and other financial

4. The Registrant's other certifying officer and I are responsible for

establishing and maintaining disclosure controls and procedures (as defined
inExchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's internal
controls; and

6. The Registrant's other certifying officer and I have indicated in this

July 3, 2003

Alex Bruni, Chief Financial Officer

LCS GOLF, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2003 and 2002

LCS GOLF, INC. AND SUBSIDIARIES

Contents

Page

Consolidated Financial Statements

Independent auditors' report F-1

Balance sheet as of February 28, 2003 F-2

Statements of operations for the years ended February 28, 2003 and 2002 F-3

Statements of changes in capital deficit for the years ended February 28, 2003 and 2002 F-4

Statements of cash flows for the years ended February 28, 2003 and 2002 F-5

Notes to financial statements F-6

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
LCS Golf, Inc.

We have audited the accompanying consolidated balance sheet of LCS Golf, Inc.
and subsidiaries as of February 28, 2003 and the related consolidated statements
of operations, changes in capital deficit and cash flows for the years ended
February 28, 2003 and 2002. 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements enumerated above present fairly, in all
material respects, the consolidated financial position of LCS Golf, Inc. and
subsidiaries as of February 28, 2003, and the consolidated results of their
operations and their consolidated cash flows for the years ended February 28,
2003 and 2002 in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A (3), the
Company has a capital deficit, a working capital deficiency, has incurred
recurring losses from operations, is in default of certain indebtedness and has
had to rely on loans from its majority stockholder and others. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding this matter are also described in Note A
[3]. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

Eisner LLP

New York, New York
June 18, 2003

LCS GOLF, INC. AND SUBSIDIARIES

Consolidated Balance Sheet
February 28, 2003

ASSETS $ 0
===============
LIABILITIES
Current liabilities:
Cash overdraft $ 23,300
Accounts payable 618,135
Accrued expenses 2,796,442
Liabilities to be paid with Common Stock 98,250
Debt in default 262,500
Debt not in compliance with terms 301,445
Note payable 100,000
Loans from stockholder/president 930,707
Other current liabilities 53,902
---------------

Total current liabilities 5,184,681
---------------

Commitments (Notes E and I)

CAPITAL DEFICIT
Common stock - $.001 par value, 50,000,000 shares authorized; 49,120,176 shares
issued and outstanding; 2,620,000 shares issuable 49,120
Additional paid-in capital 15,311,781
Accumulated deficit (20,545,582)
---------------

Total capital deficit (5,184,681)
---------------

$ 0
===============
See independent auditors' report and notes to financial statements

F-2

LCS GOLF, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Year Ended February 28,
2003 2002
---- ----

Revenues $ 31,908 $ 242,806
Cost of revenues 69,946
--------------- ---------------

31,908 172,860
--------------- ---------------

Operating expenses:
Selling, general and administrative expenses 601,755 3,757,834
--------------- ---------------

Loss from operations (569,847) (3,584,974)

Other income (expense):
Interest expense (682,341) (746,213)
--------------- ---------------

Net loss $ (1,252,188) $ (4,331,187)
=============== ===============

Net loss per share - basic and diluted $ (0.03) $ (0.17)
====== ======

Weighted average number of shares outstanding 39,594,996 25,226,746
========== ==========

See independent auditors' report and notes to financial statements

F-3

LCS GOLF, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Capital Deficit

Additional Total
Common Shares Paid-in Accumulated Capital
Shares Amount Capital Deficit Deficit
------ ------ ------- ------- -------

Balance - February 28, 2001 20,282,225 $ 20,282 $ 12,423,420 $ (14,962,207) $ (2,518,505)
Issuance of common stock for services 7,125,000 7,125 1,404,074 1,411,199
Beneficial conversion feature associated with
the issuance of convertible debt 439,000 439,000
Net loss for the year ended February 28, 2002 (4,331,187) (4,331,187)
------------- ---------- --------------- ---------------- ----------------
Balance - February 28, 2002 27,407,225 27,407 14,266,494 (19,293,394) (4,999,493)
Issuance of common stock for services 10,000,000 10,000 455,000 465,000
Conversion of convertible promissory notes 5,000,000 5,000 195,000 200,000
Additional share issued - convertible
prommisory notes 6,000,000 6,000 389,362 395,362
Shares issued upon cashless exercise of warrants 512,951 513 513
Shares issued in connection with bridge loan 200,000 200 5,925 6,125
Net loss for the year ended
February 28, 2003 (1,252,188) (1,252,188)
------------- ---------- --------------- ---------------- ---------------

Balance - February 28, 2003 49,120,176 $ 49,120 $ 15,311,781 $ (20,545,582) $ (5,184,681)
============= ========== =============== ================ ===============

See independent auditors' report and notes to financial statements
F-4

LCS GOLF, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Year Ended February 28,
2003 2002
==== ====
Cash flows from operating activities:

Net loss $ (1,252,188) $ (4,331,187)
Adjustments to reconcile net loss to net cash used in operating activities:
Non cash impairment charge 34,827
Depreciation and amortization 6,917 44,099
Issuance of common stock for services 75,000 1,404,074
Financing charge - noncash 402,000 439,000
Amortization of deferred financing costs 24,700 44,833
Expenses to be paid with common stock 304,000
Provisions for doubtful accounts 39,106
Changes in:
Accounts receivable 496 33,363
Prepaid and other current assets 16,453
Deferred financing costs 26,110 (17,000)
Security deposits 9,293 8,707
Accounts payable and accrued expenses 556,536 1,553,577
Other current liabilities 1,977 47,925
--------------- ---------------

Net cash used in operating activities (114,332) (413,050)
--------------- ---------------

Cash flows from investing activities:
Purchase of fixed assets (13,610)
--------------- ---------------

Cash flows from financing activities:
Cash overdraft 8,178 15,122
Proceeds from bridge note 75,000
Proceeds from convertible debt 200,000
Repayment of debt in default (10,000) (50,000)
Proceeds from stockholder/president loans 41,154 352,362
Repayment of stockholder/president loans (92,338)
--------------- ---------------
Net cash provided by financing activities 114,332 425,146
--------------- ---------------

Net increase (decrease) in cash 0 (1,514)
Cash - beginning of year 0 1,514
--------------- ---------------

Cash - end of year $ 0 $ 0
=============== ===============

Supplementary disclosures of cash paid during the year for:
Interest $ 0 $ 0
Income taxes 0 0
Other non cash activity during the year for:
Liabilities paid with common stock 390,000 0
Debt converted into common stock 200,000 0

See independent auditors' report and notes to financial statements
F-5

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] The Company:

On October 28, 1997, LCS Golf, Inc. (the "Company"), an inactive New
York corporation, was merged in a reverse merger transaction into an
inactive Delaware corporation with the same name ("LCS Delaware") in
exchange for 980,904 shares of LCS Delaware's common stock. The Company
paid $50,000 as a finder's fee in connection with the merger which was
charged to expense. In addition, 3,916,360 shares with a value of
$25,000 were issued to certain existing shareholders of the Company for
services rendered in connection with the merger. For financial
accounting purposes, the merger on October 28, 1997 has been treated as
the acquisition of LCS Delaware by the Company in the form of a
recapitalization. Therefore, no value has been ascribed to the common
stock held by the LCS Delaware shareholders.

The Company was formed under the laws of the State of New York on March
8, 1994. On October 26, 1994, the Company commenced business operations
with the purchase of substantially all of the assets and the assumption
of specific liabilities of Bert Dargie Golf, Inc., a Tennessee
corporation engaged in the business of designing, assembling and
marketing golf clubs and related accessories.

In August 1996, the Company conveyed, assigned, transferred and
delivered substantially all of its business assets to Dargie Golf Co.
(the "Purchaser") in exchange for the: i) cancellation of the remaining
debt owed to the Purchaser arising from the October 26, 1994 purchase,
ii) sale by Herbert A. Dargie III of his 5 percent ownership interest
in the Company to the Company and, iii) the assumption of certain
liabilities of the Company by the Purchaser.

The Company was engaged in the acquisition and operation of companies
which provide products and services to the golf playing public and
marketing the database information obtained from its websites. These
products and services included discounted green fees and other
services, and a golf website (http://www.golfuniverse.com) which
provides various golf-related hyperlinks to other golf websites and
golf course previews. As of February 28, 2003, the Company has very
limited operations.

The Company formerly designed and manufactured consumer products, but
ceased its manufacturing operations in November of 1999. These products
consisted of specialty pillows which LCS Golf planned to sell on its
websites. LCS Golf had outsourced its manufacturing operations to
produce the Company's line of products utilizing its machinery and
equipment. During the years ended February 28, 2003 and 2002, the
manufacturing segment was idle due to the Company's decision not to
allocate funds to this segment and to concentrate all of its resources
in its database and Internet marketing business.

As of February 28, 2003, the Company has lost most of its websites and
domain names, and its database has become obsolete. Some of these
websites and domain names are being used by a company owned by the
Company's Chief Operating Officer. It is unlikely that the Company will
be able to recover any of these websites and/or domain names and the
Company may not be able to adequately update its database. Accordingly,
it is unlikely that the Company will be able to resume its prior
operations.

The Company generated minimal revenues in fiscal 2003 and currently has
no revenue generating operations.

[2] Principles of consolidation:

The consolidated financial statements include the accounts of LCS Golf,
Inc. and its subsidiaries: Play Golf Now, Inc.; Golfpromo, Inc.; Golf
Universe, Inc.; Ifusion Corp. and Mr. B III, Inc. (inactive), all of
which are wholly owned. All material intercompany accounts and
transactions have been eliminated in consolidation.

[3] Basis of presentation:

The accompanying financial statements have been prepared on a going
concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.

F-6

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

[3] Basis of presentation: (continued)

Through February 28, 2003, the Company has not been able to generate
significant revenues from its operations to cover its costs and
operating expenses and has incurred significant recurring losses. In
addition, the Company has a significant working capital deficiency and
a capital deficit and is in default of certain indebtedness. Although
the Company has been able to issue its common stock for a significant
portion of its expenses and has had to rely on loans from its major
stockholder/president and others, it is not known whether the Company
will be able to continue this practice. It is also not known if the
Company will be able to meet its operating expense requirements.

These circumstances raise substantial doubt about the Company's ability
to continue as a going concern. If the Company is not able to raise
sufficient additional capital or debt financing, the Company will be
forced to cease operations. In addition, the Company is investigating
potential merger candidates that have or may be able to generate
additional capital or obtain debt financing. No assurances can be given
to the success of these plans. The financial statements do not include
any adjustments that might result from the outcome of these
uncertainties.

Subsequent to February 28, 2003, the Company has obtained approximately
$230,000 (see Note L) from third parties through the issuance of
noninterest bearing convertible promissory demand notes.

Certain accounts have been reclassified for comparative purposes.

[4] Deferred income taxes:

Deferred income taxes are reported using the asset and liability
method. Deferred tax assets are recognized for deductible temporary
differences and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

F-7

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

[5] Advertising costs:

The Company expenses its advertising costs when incurred.

Advertising costs were approximately $500 for the year ended February
28, 2003 and $1,000 for the year ended February 28, 2002.

[6] Loss per share:

Loss per share has been computed by dividing the net loss by the
weighted average number of common shares outstanding during each
period. The effect of outstanding potential common shares, including
stock options, warrants and convertible debt is not included in the per
share calculations as it would be anti-dilutive.

[7] Use of estimates:

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

[8] Revenue recognition:

(a) Advertising revenue:

Advertising revenue is derived from third-party advertising on
the Company's websites. This is comprised of banner
advertising and newsletter marketing. Advertising revenue is
recognized in the period that the advertisement is displayed.
Revenue related to barter transactions is not recognized
unless the fair value of the advertising is determinable based
upon the Company's sales of similar advertising space for
which it was paid in cash.

(b) Merchandise revenue:

Merchandise revenue is derived principally from the sale of
specialty pillows, and is recognized once the product has been
shipped and payment is assured.

E-mail distribution revenue is derived from delivering
permission e-mail for third-parties to use the Company's and
other mailing lists. E-mail distribution revenue is recognized
when the e-mail is delivered.

F-8

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

[9] Revenue recognition: (continued)

(d) Marketing revenue:

Marketing revenue is derived from providing marketing services and
related marketing materials to third parties. Marketing revenue is
recognized once the service is completed.

(e) Commission income:

Commission income is derived from e-commerce transactions generated
through the Company's websites for third-party products. Commission
revenue is recognized once the product has been shipped and payment is
assured.

NOTE B - INCOME TAXES

At February 28, 2003, the Company has available for federal income tax purposes,
net operating loss carryforwards of approximately $15,225,000 expiring through
2023 which generated a deferred tax asset of approximately $6,090,000. The
difference between the cumulative net losses for financial reporting purposes
and the net operating loss carryforwards for tax purposes is primarily due to
accrued expenses which are not currently deductible for tax purposes, which
generated a deferred tax asset of approximately $545,000. The Company provided
a valuation allowance against these deferred tax assets of approximately
$6,635,000 since the likelihood of realization cannot be determined.

The difference between the statutory tax rate of 34 percent and the Company's
effective tax rate of 0 percent is due to the 100 percent valuation allowance
against net deferred tax assets.

Section 382 of the Internal Revenue Code contains provisions which may limit the
loss carryforwards available if significant changes occur in stockholder
ownership interests. Management believes that such limitations apply to the
February 28, 1999 cummulative net operating loss of approximately $5,592,000.
Accordingly, the Company will be subject to an annual limitation of
approximately $395,000 on the utilization of its February 28, 1999 net operating
loss. The utilization of the net operating loss carryforwards could be subject
to further limitations based upon the shares issued subsequent to February 28,
1999.

The Company has not filed its prior years' income tax returns for years
subsequent to February 28, 1998.

NOTE C - LOANS FROM STOCKHOLDER/PRESIDENT

Loans from the major stockholder/president are payable on demand with interest
at 10% a year. These loans are unsecured. At February 28, 2003, the net advances
from the major stockholder/president were approximately $931,000. The Company
has recorded interest expense of approximately $90,000 and $67,000 for the years
ended February 28, 2003 and 2002, respectively, on this indebtedness.

F-9

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE D - EQUIPMENT

Depreciation expense for the years ended February 28, 2003 and 2002 was $6,917
and $16,020, respectively.

NOTE E - DEBT IN DEFAULT

On February 16, 2000, the Company borrowed from Traffix, Inc. (formerly Quintel
Communications, Inc.) ("Traffix"), an internet marketing and development
company, $500,000 in the form of a convertible promissory note ("Note"). The
Note was due on demand at any time after August 16, 2000 and is convertible into
500,000 shares of common stock of the Company at any time prior to repayment.
Any shares issued by the Company will have registration and piggyback
registration rights and are subject to anti-dilution adjustments in certain
cases. If any additional shares are issued under the anti-dilution provisions,
the Company will have a one-time repurchase right at a $1.00 per share during
the twelve-month period following the date of conversion of the Note. The Note
was without interest until the earlier of August 17, 2000 or an event of default
under the Note. Interest is being charged at prime plus 4%, not to exceed 14%.
The Note may be prepaid at anytime after giving 15 days prior written notice.
The Note is collateralized by the Company's database and all related records,
contract rights and intangibles which have been delivered to the lender and must
be updated upon request, until the obligation has been paid.

The Company entered into a ten-year licensing agreement with Traffix for the use
of the Company's database for a monthly payment of $5,000. During the years
ended February 28, 2003 and 2002, no such payments were made.

On the same date, the Company also entered into a two-year marketing agreement
with Traffix to develop programs to market products and services and send
promotional e-mails to the visitors and customers of the Company's websites.
Traffix is to pay the Company $.25 for each individual who "opts in" to be
registered with Traffix at its site. Revenues generated from these programs
(less direct "out-of-pocket" costs, including royalties, cost of producing the
marketing materials and other expense directly related to the programs) is to be
divided equally and distributed quarterly less any required reserves. There have
been no revenues recognized from these programs.

F-10

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE E - DEBT IN DEFAULT (CONTINUED)

In connection with the marketing agreement, the Company issued two-year options
to purchase 100,000 shares of the Company's common stock at $1.00 a share and
100,000 shares at $2.00 per share. The value of these options at grant date,
utilizing the Black-Scholes option-pricing model, was $139,000. The assumptions
used in determining the value was an expected volatility of 155%, an average
interest rate of 6.68% per annum and an expected holding period of two years.
The estimated value of these options was expensed in the year ended February 28,
2001. These options are subject to certain anti-dilution provisions and provide
registration rights for the underlying shares. The agreement can be terminated
in the event of a default under the agreement by either party which is not
corrected within 30 days after notice is given.

On August 8, 2000, following certain disagreements concerning Traffix's use of
the Company's database, the Company entered into a Forbearance Agreement and
amended the security agreement with Traffix. The Company made a $50,000 payment
against the $500,000 convertible note which was funded personally by its major
stockholder/president. The Note was amended to provide for payment on demand.
The amended security agreement requires the Company to remit to Traffix, 50% of
collections on the outstanding accounts receivable as of August 10, 2000 and 25%
of all subsequent accounts receivable collected, within five days. Payments are
to be credited first to interest and then to principal. Traffix is also to
receive 50% of all other cash receipts, including additional loans, until the
Note is paid. The amended security agreement also includes all accounts of the
Company and all security, or guarantees held with respect to the accounts and
all account proceeds. In addition, the Company's major stockholder/president
personally guaranteed up to $250,000 of the Note of which $237,500, (including
the two payments of $50,000 each discussed below) has been paid against this
guaranty.

Due to the above amendment, Traffix agreed not to demand payment on the Note or
commence any action against the Company, as long as it receives payments for
interest and principal of at least $10,000 per month or collection of the
Company's accounts receivable or money from the guarantor, the Company's major
stockholder/president, and the Company generates gross revenues of at least
$75,000 per month.

On August 8, 2000, the Company received $300,000 from American Warrant Partners,
LLC ("AWP") evidenced by an 8% convertible subordinated promissory note (see
below). The Company did not remit 50% of the cash proceeds of this note, as
required by the Forbearance Agreement, which put the Company into default under
its agreement with Traffix. The Company has not obtained a waiver of the
default, however, the major stockholder/president personally made two payments
of $50,000 each towards the principal and interest on the Traffix Note. The
Company recorded these payments as a loan from its stockholder/president. In
addition, the Company agreed to remit 50% (formerly 25%) of cash received from
new accounts receivable.

On May 16, 2001, the Company entered into an agreement with Traffix, Inc. which
amended the aforementioned Forbearance Agreement dated August 8, 2000. The
Company agreed to pay $10,000 on signing. Upon the closing of the AWP financing
(see Note G), Traffix was to be paid an additional $10,000. Commencing on June
1, 2001, the Company agreed to a payment schedule of a minimum of $10,000 per
month. Since May 16, 2001 the Company has not made all of the required $10,000
monthly payments to Traffix, as called for by the amended Forebearance
Agreement. As a result, as of February 28, 2003, the Company is in default of
its amended Forbearance Agreement with Traffix.

F-11

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE F - DEBT NOT IN COMPLIANCE WITH TERMS

[1] On August 8, 2000, AWP loaned the Company $300,000 evidenced by an
8% convertible subordinated promissory note with a maturity date of
August 8, 2002. The note is convertible, at the option of AWP, into
common stock at $.25 per share (market price on the date of the
agreement of $.4375 per share), subject to adjustment, which resulted
in a discount of the note of approximately $201,000. This discount was
immediately recognized as interest expense due to the ability of AWP to
convert the note at any time. Interest is payable quarterly commencing
on September 30, 2000. The Company also issued a five-year warrant
expiring on August 8, 2005 to purchase 600,000 shares of common stock,
exercisable at $.40 per share, subject to adjustment, to be exercised
in whole or in part. The value of this warrant at grant date, utilizing
the Black-Scholes option-pricing model, was approximately $260,000. The
assumptions used in determining the value was an expected volatility of
227%, an average interest rate of 6.06% per annum and an expected
holding period of five years. The allocated value of the warrant is
$99,000. This amount is to be amortized over the life of the two-year
note, or shorter if exercised earlier. Based upon the values ascribed
to the convertibility feature of the note and the warrant, the Company
has recorded additional interest expense of approximately $228,000
during the year ended February 28, 2001. The Company also entered into
a registration rights agreement whereby a Registration Statement for
the shares is to be filed as soon as reasonably practicable but not
later than September 15, 2000. The Company did not file the
Registration Statement by September 15, 2000 and since a Registration
Statement was not declared effective by November 15, 2000, the terms of
the agreement are that for each 30-day period that the Registration
Statement is not declared effective, the conversion price of $0.25 of
the convertible note and the warrant exercise price of $0.40 will each
be reduced by 2% per 30-day period, until the exercise price reaches
$0.05. Pursuant to this provision, at Feburary 28, 2002, the reduced
conversion price and the exercise prices were each $0.05 respectively.
In addition, the interest rate on the convertible note will increase 2%
for each 30-day period, not to exceed 15%. Pursuant to this provision,
the Company has recorded interest expense of $24,000 for the year ended
February 28, 2002 and $11,000 for the year ended February 28, 2001. As
of February 28, 2001, the interest rate was 15%. Certain officers and
directors agreed to a lock-up agreement restricting their right to
sell, transfer, pledge or hypothecate or otherwise encumber their
shares until the earlier of 1) the one year anniversary of the
agreement, 2) the effective date of the Registration Statement or 3)
until the Company raises $1,000,000 in equity or debt financing. The
Company agreed to recommend and use its best efforts to elect a
representative of AWP to the Board of Directors until one year from the
date of the agreement or until the Company raises $1,000,000 in equity
or debt financing.

On May 16, 2001, the Company entered into an amendment, waiver and
consent relating to the 8% convertible subordinated promissory note,
warrant, and registration rights agreement revising the conversion
price of the promissory note and the exercise price of the warrant to
the lower of $0.12 or 80% of the current market price on the date
immediately preceding the date of the exercise or conversion. The
Company is required to register the underlying common stock in a
registration statement to be filed in connection with a proposed new
investment no later than 60 days from June 15, 2001, in consideration
for which, AWP has agreed to waive any penalty provisions with respect
to the filing of the registration statement and consent to the issuance
of common stock below the then applicable conversion or exercise price
of the promissory note and warrant relating to the financing received
on May 24, 2001.

F-12

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE F - DEBT NOT IN COMPLIANCE WITH TERMS (CONTINUED)

[1] (continued)

Pursuant to this amendment of the Conversion and Exercise price, the
Company recorded a charge of approximately $239,000 during the quarter
ended May 31, 2001, which represents the beneficial conversion feature
resulting from the difference between the fair market value of the
shares at the effective date of the amendment and the effective
conversion rate of the note.

[2] On May 24, 2001, the Company entered into an agreement with Private
Capital Group, LLC ("PCG") (an entity related to AWP) for the sale of
$200,000 of 8% convertible debentures with Private Capital Group, LLC
("PCG") ( an entity related to American Warrant Partners) which can be
converted at any time by the holder or will automatically convert into
common stock in five years, at the lower of $0.12 per share or 80% of
the market price as defined. The $200,000 Note has been personally
guaranteed by the Company's major stockholder/president with 750,000 of
his shares of the Company's stock being held in escrow. The Company
also agreed to file a registration statement for the shares but no
later than sixty calendar days from June 15, 2001. The Company did not
file the registration statement within the sixty-day period. The
lenders waived this noncompliance. At February 28, 2002, the Company
had received $175,000 of proceeds from this note. The Company has
recorded a charge of $175,000 for the year ended February 28, 2002. The
charge represents the beneficial conversion feature resulting from the
difference between the fair market value of the shares at the date of
issuance of the debt and the effective conversion rate for the
convertible debentures.

On January 31, 2002, the Company was notified that it was in default of its
convertible debentures agreements with Private Capital Group, LLC ("PCG") and
its 8% convertible subordinated promissory note to American Warrant.

The Company has not paid the interest due on the promissory note, which American
Warrant considers to be an event of default under the note. This default was not
cured within twenty calendar days therefore, the principal and accrued interest
are payable immediately.

On June 28, 2002, the Company entered into an Agreement and Release with AWP and
PCG, the holders of the Company's 8% convertible promissory notes. The
Agreement and Release addresses the Company's noncompliance with the terms of
the 8% convertible promissory notes.

Pursuant to the Agreement and Release, AWP and PCG in the aggregate converted
$200,000 of the 8% convertible promissory notes at a price of $0.04 per share,
as adjusted, for an aggregate of 5,000,000 shares of the Company's common
stock. Should the price of the Company's stock not reach and remain at $0.50 per
share for a minimum period of thirty trading days within 120 days of a merger
with an operating company, at an average volume of 150,000 shares per day, then
the Company will issue a total of an additional 6,000,000 shares of its common
stock to AWP and PCG. Since a merger with an operating company did not occur
within thirty days of the aforementioned agreement and release, AWP and PCG have
the option to receive immediate repayment of their notes or to receive the
additional 6,000,000 shares of common stock. On November 26, 2002, the Company
issued the aforementioned 6,000,000 shares of common stock to AWP and PCG.

Also pursuant to the Agreement and Release described above, AWP exercised the
warrants that were issued in conjunction with the 8% convertible promissory
notes. These warrants were exercised on a cashless basis into 512,951 shares of
the Company's common stock.

The 800,000 shares that had been held in escrow as security for the promissory
notes were released and returned to the Company's president and chief executive
officer.

NOTE G - Bridge Note

On May 28, 2002, the Company entered into a loan agreement with a third party
for $75,000. In conjunction with this loan the Company also granted the third
party 200,000 shares of the Company's common stock. The Company's president,
chief executive officer and principal stockholder has personally pledged
2,000,000 shares of the Company's common stock as collateral for the loan. The
Company defaulted on the aforementioned loan when it was not able to make the
required repayment of $75,000 on June 11, 2002. Pursuant to the loan agreement,
the Company is required to issue 10,000 shares of the Company's Common Stock
("Penalty Shares") to the third party for each day the loan is past due. As of
February 28,2003, the Company is obligated to issue 2,620,000 shares of its
common stock and for the year ended February 28,2003, the Company has recorded
$98,000 in interest expense, related to these penalty shares.

The Company is only authorized to issue 50 million shares of common stock of
which 49,120,176 are currently issued and outstanding. Accordingly, the Company
will be unable to issue these additional shares to the lender unless it amends
its Certificate of Incorporation to permit it to increase the number of shares
of common stock that it is authorized to issue. Such an amendment will require
shareholder approval, which the Company cannot assure will be obstained. The
Company's failure to issue these additional shares to the lender could subject
the Company to substantial liability.

NOTE H - ISSUANCE OF COMMON STOCK

In June 2001, the Company issued approximately 6,400,000 shares of common stock
in payment of $1,287,250 due employees and consultants. Of these shares,
1,800,000 shares were issued to the major stockholder/president of the Company.

In March 2002, the Company issued 9,750,000 shares of common stock to employees,
directors and consultants for services performed in fiscal year 2002. The
Company valued these shares at $0.04 per share and recorded a charge of $390,000
in the 2002 statement of operations. Of these shares, 250,000 were issued to the
Company's chief operating officer.

In May 2002, the Company issued 250,000 shares of common stock for services
rendered to the Company valued at $75,000.

F-13

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE I - COMMITMENTS

[1] Employment agreements:

On June 1, 1998, the Company entered into a five year employment
agreement with its president which provides for a minimum annual salary
of $260,000 with annual increases of not less than four percent.
Compensation under this agreement was $301,000 and $289,000 for the
years ended February 28, 2003 and 2002, respectively. As of February
28, 2003, the Company has included in accrued expenses $1,182,000 of
unpaid salary.

[2] Consulting agreement:

On June 12, 2001, the Company entered into a consulting agreement with
PCG for a period of twelve months commencing on May 24, 2001. Pursuant
to the agreement, as compensation the Company is to pay $26,000 to the
Group in shares of its common stock as shall equal the lesser of $0.12
per share or 80% of the market price, as defined.

[3] Lease:

In June 2001, the Company entered into a three-year lease for office
space in Florida. As of February 28, 2003, the Company had vacated its
office space in Florida. In December of 2002 a judgement was issued
against the Company in a case brought by the Company's former landlord.
As a result of this judgement the Company has accrued $160,000 as of
February 28, 2003.

The Company's other locations were leased space on a month-to-month
basis. Rent expense was $41,000 for the year ended February 28, 2002.
Office facilities were provided to the Company by its president without
charge, for the year ended February 28, 2003.

F-14

LCS GOLF, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
February 28, 2003 and 2002

NOTE J - CAPITAL DEFICIT

During the year ended February 28, 1999, the Company sold, under Regulation D of
the Federal Securities Act, 200,000 units at $.10 a unit. Each unit consists of
one share of the Company's common stock and two common stock warrants. Each
warrant is for the purchase of seven shares of common stock at $.35 a share. At
February 28, 2003, 50 warrants remain outstanding.

NOTE K - SEGMENTS

The Company operates in one business segment; the marketing of database
information obtained from its website and others.

NOTE L - SUBSEQUENT EVENTS

On May 1, 2003 a complaint naming the Company and its two officers was filed by
a third party in Palm Beach County, Florida. The complaint alleges a breach of
contract and contains allegations of losses of $1,625,000 plus securities and
other compensation. The Company has served an answer denying the allegations of
the complaint and believes that the complaint has no merit.

On May 1, 2003 the Company repaid a $75,000 loan from a third party. In addition
the Company has agreed to issue 1 million shares of its common stock in full
settlement of the default provisions under the note. (see Note G). In order to
issue these shares the Company must amend its certificate of incorporation to
increase the number of shares it is authorized to issue. The Company has also
agreed to issue an additional 100,000 shares of common stock to the third party
if the certificate of incorporation is not amended in six months. The third
party will also receive piggyback registration rights with respect to the
aforementioned shares. Concurrent with the repayment of the loan the third party
has also released 2 million shares of the Company's stock to the Company's major
stockholder/president that the third party had been holding as collateral for
the loan.

During the first quarter of fiscal 2004 the Company issued $230,000 of non
interest bearing convertible promissory notes payable on demand and convertible
at $0.03 per share.

F-15