Edgar Filing: GWIN INC

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

[X] Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the fiscal period ended July 31, 2004

[ ] 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: 000-24520

GWIN, INC.
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(Exact name of registrant as specified in its charter)

Delaware 04-302177
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

5092 South Jones Blvd.
Las Vegas, Nevada 89118
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(Address of principal executive offices) (Zip Code)

(702) 967-6000
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(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

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

Common Stock, $.0001 Par Value
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(Title of Class)

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B (Section 229.405 of this Chapter) is not contained
herein, and will not be contained, to the best of 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. [ ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of October 01, 2004 was approximately $7,837,500 based
upon the closing price per share of the Common Stock of $0.11 on that date.

The number of shares outstanding of the issuer's classes of Common Stock as of
October 1, 2004: Common Stock, $.0001 Par Value 83,290,496 shares

TABLE OF CONTENTS

Page

PART I ................................................................. 3

Item 1. Description of Business ....................................... 3

Item 2. Description of Properties ..................................... 8

Item 3. Legal Proceedings ............................................. 8

Item 4. Submission of Matters to a Vote of Security Holders ........... 9

PART II ................................................................ 9

Item 5. Market for Common Equity and Related Stockholder Matters ...... 9

Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 10

Item 7. Financial Statements .......................................... F-1

Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ........................... 15

Item 8A. Controls and Procedures ....................................... 15

Item 8B. Other Information ............................................. 15

PART III ............................................................... 16

Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act .... 16

Item 10. Executive Compensation ........................................ 19

Item 11. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters..................... 21

Item 12. Certain Relationships and Related Transactions ................ 22

Item 13. Exhibits ...................................................... 24

Item 14. Principal Accountant Fees and Services ........................ 26

SIGNATURES ............................................................. 28

PART I

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

GWIN, Inc (the "Company") is headquartered in Las Vegas, Nevada. The
Company provides sports handicapping analysis and advice to sports bettors
worldwide through our wholly-owned subsidiary, Global SportsEDGE, Inc. Global
SportsEDGE provides professional handicapping advice on professional football
games played by the National Football League ("NFL"), professional
basketball games played by the National Basketball Association, college
football and basketball games, professional major-league baseball,
hockey, NASCAR, and golf via television, radio and the internet.

CORPORATE INFORMATION

We were originally incorporated in Nevada in 1986. We reincorporated in
Massachusetts in 1987 and reincorporated in Delaware under the name of IMSCO
Technologies, Inc. in 1996. From July 1992 to August 1999, we were engaged in
the research and development of electrostatic separation technologies. In
late 1999, we ceased our operations and shifted our focus toward the strategic
acquisition of an operating business. To that end, in July 2001, we acquired
our sports handicapping business, which we operate through our wholly-owned
subsidiary, Global SportsEDGE, Inc., a Delaware corporation. As a result of
the reorganization:

In 2001, as a result of a reverse merger, all of our former directors and
officers resigned and were replaced by new directors and officers;

We amended our certificate of incorporation to (a)effect a one-for-four
reverse stock split of our common stock; (b) change our name to Global Sports
& Entertainment, Inc.; and (c) increase our authorized capital to 50,000,000
shares of common stock and 5,000,000 shares of preferred stock;

We issued an additional 14,845,241 shares of our common stock to the
stockholders of the acquired company, after giving effect to the
conversion of our Series B preferred stock and the one-for-four reverse
split of our common stock;

We issued options and warrants to purchase a total of 4,570,121 shares
of our common stock to replace options and warrants held by the stockholders
of the acquired company; and

We raised $1,500,000 in a private placement sale of 64,000 shares of our
Series C convertible preferred stock and warrants to purchase an additional
64,000 shares of Series C Convertible Preferred Stock. In April 2003 all of
the holders of the Series C Convertible Preferred Stock converted their shares
into 10,000,000 shares of Common Stock. The warrants were exchanged for new
warrants to purchase shares of common stock. Each warrant entitles the holder
to purchase 31.25 shares of common stock at a price of $1.00 per share.

Effective August 22, 2002, we changed our name to GWIN, Inc. in order to
avoid both consumer confusion and potential and actual litigation with another
Delaware company with a similar name, Global Sports, Inc. The Board of
Directors also approved a change in our Fiscal Year from a calendar year to
one beginning August 1 and ending July 31. That change was effective July 31,
2002.

During August 2001 and October 2002, the Company raised a total of
$1,200,000 in convertible debt in a private placement with Newmarket plc. The
debt carried a 5% interest rate and was convertible into 9,230,769 shares of
the Company's common stock and warrants to purchase 3,000,000 common shares at
$0.13 per share. As part of the transaction with Newmarket plc, the Company
issued to Newmarket options to purchase 1,500,000 common shares at $0.50 per
share.

Effective on June 10, 2003, the Company's shareholders approved an
amendment to the Company's Articles of Incorporation increasing the number
of authorized shares of common stock from 50,000,000 to 100,000,000.

During October 2002, the Company entered into an agreement with Falcon
Capital pursuant to which Falcon Capital was to raise up to $3,000,000 by
selling 20,000,000 shares of the Company's common stock in a private
placement. The Total raised as of July 31, 2003 was $2,470,899.

During December 2003, the Company entered into an agreement with Falcon
Capital pursuant to which Falcon Capital was to raise up to $3,000,000 by
selling up to 40,000,000 shares of the Company's common stock in a private
placement. The total raised as of July 31, 2004 was $1,426,716.

Effective on March 1, 2004, the Company's shareholders approved an
amendment to the Company's Articles of Incorporation increasing the number
of authorized shares of common stock from 100,000,000 to 150,000,000.

The Company is engaged in a highly seasonal business, with the majority
of sales related to football and basketball handicapping. Due to this
seasonality, quarterly results may vary materially between the football and
basketball seasons (concentrated in the first and second fiscal quarters) and
the remainder of the year (the third and fourth fiscal quarters).

THE GAMING AND SPORTS HANDICAPPING MARKET

Our services are intended to assist fans of the games and teams we cover
in analyzing the prospects of their favored teams throughout the season, and
for sports bettors who wish to use our analysis in determining their wagers on
specific teams and/or games. We believe that our handicappers have superior
experience, knowledge and/or skill and that purchasing our handicappers'
analysis and advice allows our customers to increase their odds of winning.

We believe that there is a market for our sports handicapping information
and analysis wherever there is a market for sports wagering and that the size
of the market for our sports handicapping information and analysis is related
to the market for sports wagering. In the United States, wagering on sporting
events, other than pari-mutuel betting, is currently legal only in the State
of Nevada. According to a 1999 report by the National Gambling Impact Study
Commission, sports wagering reached $2.3 billion in Nevada's sports books in
1998. Estimates of the scope of other sports betting in the United States
range from $80 billion to $380 billion annually. We believe that the
proliferation of cable and satellite television, which has increased the
viewing access to sporting events worldwide, has also increased viewers'
interest in sports betting.

OUR BUSINESS MODEL

Our business model is centered around the handicappers featured on the
Company's television show "Wayne Allyn Root's Winning EDGE" ("WinningEDGE").
The show is anchored by Mr. Wayne Allyn Root, our Chairman and Chief Executive

Officer. Mr. Root has been employed in the handicapping industry for the past
16 years. Prior to founding the Company, Mr. Root was a leading revenue
generator for National Sports Service, a competitor of our Company and an
industry leader. Joining Mr. Root on the show are his hand selected experts in
the sports handicapping field, including Mr. Alec McMordie who has won 30
handicapping championships over the past ten years, Mr. Chet Coppick, an Emmy
award winning sportscaster and Mr. Randy White, a former NFL player and a
member of the NFL Hall of Fame. For the 2004 football season Ron Meyers former
AFC Coach of the Year has joined our team of handicappers. The celebrity of
our handicappers combined with a national television platform allows us to
attract highly qualified account representatives to our Company. These account
representatives are then able to convert incoming telephone leads into
completed sales, as described further below.

MARKETING AND SALES

We generate revenues from (a) the direct sale of our handicapping advice;
and, (b) from selling advertising "sponsorship" time on our various media
properties including our television program, our radio program, and our
Internet web site, www.winningedge.com. Interest in our service is derived
primarily from three different sources in addition to word-of-mouth and repeat
customers: television, radio, and the Internet. The Company's primary
promotional vehicle is the WinningEDGE television program. This lively,
30-minute, professionally produced television show is broadcast nationally on
Saturday mornings throughout the football season, generally September through
December. During the 2004-2005 NFL season, the WinningEDGE airs nationwide on
Spike TV and reaches an approximate viewing audience of 86 million potential
viewers at a "prime", 10 am est/pst pre-game time spot. The show stars and is
hosted by Mr. Root and showcases our team of professional handicappers. In
addition to the television show, the Company also produces a radio show by the
same name, "Wayne Allyn Root's WinningEDGE". The hour long radio show is also
hosted by Mr. Root and stars most of the same cast of handicappers as the
television show. The show airs on a number of radio stations in local markets.
Like the television show, the radio program provides analysis of upcoming
games and promotes the various handicappers' services.

We also sell our handicapping analysis, or "picks," on our website
www.WinningEDGE.com, and develop customer interest through other television,
radio and print advertisements. Our primary service is the handicapping
analysis and advice of our professional handicappers. This may be sold as one
pick from one handicapper for one game, or a series of picks for a series of
games played in one sport, a series of events in one season, a series of
different events for different sports during a season, or a series of picks
from different handicappers for one or many games in one or many sports. The
cost varies based on the event, the sport, the number of picks and the
handicapper.

Once a potential customer has decided to purchase our picks, the customer
calls a toll-free number listed on our website or displayed on our programs or
in our advertising. Unique telephone numbers are assigned to each of our
handicappers and to each advertising source, to assist us with identifying
which promotional sources generate the highest revenue. An account
representative receives the call, and offers the customer various picks, which
the customer can purchase individually or in packages, such as a series of
games, sports, or an entire season. Our representatives encourage package
sales, which generate higher revenues. Once the customer has selected the
individual pick or package, the customer pays us for the services via credit
card, check, or cash. Most sales are completed using a credit card. Upon

verified receipt of payment the customer then receives the selected pick(s) or
package(s).

During the football and college basketball seasons, which combined,
extend from September to March, we maintain a staff of approximately 45 sales
representatives at our sales office located in Las Vegas, Nevada.

Our account representatives have a comprehensive knowledge of sports and
the business of sports handicapping and sports betting, although they
themselves do not conduct any of the handicapping analysis. We train our
sales representatives thoroughly and randomly monitor calls for quality
assurance. We believe that our sales force is among the most experienced and
professional in our industry. The customer can chose to receive the picks via
a telephone recorded message with the use of a PIN number, via email or
directly from his account representative. Our account representatives, also
referred to as sales representatives, are compensated on a commission basis,
with total commissions averaging approximately 28% of our gross sales. In
addition, sales managers may also receive a small percentage (1-3%) of gross
sales achieved by their sales representatives including bonuses paid when
sales exceed predetermined sales targets. We sell the analysis and picks of
our professional handicappers in a variety of packages and at various prices.
Our prices vary by handicapper and by the packages and picks offered by each
handicapper, with higher prices for the picks considered by our handicappers
to have better odds of beating the spread for a particular game.

Customers may also purchase picks directly from our website, without
interaction with account representatives. Visitors to this site can purchase
unique packages of picks offered only on our website.

OUR STRATEGY

Our goal is to become the leading provider of sports handicapping
information and advice first in the United States and then, in the World. Our
strategy includes the following key elements:

A. Expand our business to cover additional sports and services and new
geographic markets. We currently provide handicapping analysis and advice
primarily for football, basketball and baseball in the United States. We have
also begun to cover minor U.S. betting sports such as NASCAR and golf. Our
overall goal is to form strategic alliances to expand our services globally to
cover soccer, cricket, rugby and other heavily wagered sports in Europe and
Asia, where wagering on sporting events is widespread.

B. Establish a Global Brand Name. We plan to vigorously promote our
handicappers and the WinningEDGE brand name and related website. We believe
that by hiring only the most insightful handicappers in each field that we
enter, and paying close attention to customer service, we can continue to grow
a satisfied and loyal customer base and establish our brands as the leading
handicapping services in the world.

C. Build Strategic Alliances with Key Business Partners. We intend to
continue developing strategic relationships with leading sports information
and sports wagering providers and pay per view cable and satellite providers.
We believe that we can enhance our brand recognition through advertising and
co-marketing arrangements with leading television, radio and Internet sports
information and entertainment providers.

D. Provide media content through new television and radio production/
programming targeting retail "how to" videos, commercial television

programming, and interactive television. The Company has the ability to
provide quality programming utilizing the Company's established brand names
and personalities together with our expertise in producing quality
programming.

E. Expand Advertising Sales. In addition to the sale of handicapping
analysis and advice, we also generate revenues by the sale of advertising
exposure on all of our media properties: television, radio, and the Internet.
We intend to continue to increase these revenues by selling additional
sponsorship and advertising opportunities. As we continue to establish our
media properties we believe this will become an ever larger percentage of our
total revenues.

COMPETITION

We face competition from numerous operations that sell sports
handicapping information through television, print media, direct mail, the
Internet, and telemarketing. While we believe that we feature the leading
handicappers in the country, some of our competitors have longer operating
histories, significantly greater financial and marketing resources, greater
name recognition and larger user and membership bases.

Our industry is characterized by a large number of small, privately held
companies and sole proprietorships, and information regarding capitalization,
revenues and market share of these companies is not available. We are unaware
of any independent reporting service which may supply information of this
nature regarding businesses operating in our industry. We believe that our
principal competitor is National Sports Service, Inc., which has a business
model very similar to ours and airs the Proline sports handicapping program
on the USA Network. Other major competitors include vegasinsider.com, a
well-known provider of sports gaming information, and formerly a subsidiary of
Sportsline.com, which is a leading online sports information site.

Our primary method of competing with these businesses is employing
handicappers who are well-known and have an established reputation and success
rate, as well as by the promotion of our brand name and services and the
successful use of our proprietary database of actual and potential customers.

INTELLECTUAL PROPERTY

We regard the professional reputations of our expert handicappers, and
the methodologies they employ, as important to our ability to maintain and
grow our business. We generally enter into sports personality agreements with
our handicappers to obtain rights to use their name, likeness and services in
connection with our business. Most, but not all, are exclusive agreements.
The enforceability of these agreements may be limited in some jurisdictions
and, without additional employment agreements, we cannot prevent our
handicappers from terminating their relationships with us.

We have acquired and own the registered trademark, "The WinningEdge". We
also own the Internet domain name www.WinningEDGE.com, www.TheWinningedge.com
as well as over a dozen other domain names that are pertinent to our business
and industry. We believe that our trade names and other proprietary rights
are important to our brand-building efforts and our marketing concept.
However, we may not be able to enforce our intellectual property rights, which
may cause us to pay significant costs due to litigation, and, if unsuccessful,
may result in a reduction in our ability to remain competitive in our
industry.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

Gaming activities are subject to extensive statutory and regulatory
control by both state and federal authorities, and are likely to be
significantly affected by any changes in the political climate and economic or
regulatory policies. We do not engage in gaming and do not accept or place
wagers. The marketing and sale of our handicapping information and analysis
is not currently subject to direct government control, other than regulations
applicable to businesses generally. However, we believe that demand for our
services is related to availability of legal gaming activities. Significant
new restrictions on wagering on sporting events could have a negative impact
on our sales of handicapping information.

All 50 states currently have statutes or regulations restricting or
prohibiting gaming activities. In most states it is illegal for anyone either
to accept or make a wager, although there are exceptions that vary by state,
such as exceptions for pari-mutuel betting in many states. The Federal
Interstate Wire Act contains provisions that make it a crime for anyone in the
business of gaming to use an interstate or international telephone line to
transmit information assisting in the placing of wagers, unless the wagering
is legal in the jurisdictions from which and into which the transmission is
made. Other federal laws also impact gaming activities and further
legislation is being considered in Congress and individual states. However,
none of these regulations currently affects or applies directly to our
business and operations, and we are not aware of any legislation which applies
directly to our business becoming effective in the immediate future.

EMPLOYEES

We have 16 full-time employees, including one of our four handicappers.
We also have three handicappers under sports personality agreements. The
fourth handicapper, Mr. Root, is a full-time employee and serves as the Chief
Executive Officer of the Company. In addition, we have approximately 45
commission-based telemarketing sales representatives in our Las Vegas sales
office during the peak football and basketball seasons. Our employees are not
represented by any collective bargaining agreement and we have never had a
work stoppage.

CUSTOMERS

None of our customers comprises more than 1% of our revenues.

ITEM 2. DESCRIPTION OF PROPERTIES

We currently lease approximately 7,536 square feet of office space for
our corporate headquarters and sales office in Las Vegas, Nevada, under a
lease that expires on January 22, 2007, with an option to extend the term of
the lease for an additional three years. Our lease for our Las Vegas facility
requires monthly base rental payments of $11,520.

ITEM 3. LEGAL PROCEEDINGS

At July 31, 2004 the company did not have any ongoing litigation.

From time to time, we may become involved in litigation relating to
claims arising in the ordinary course of business.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock has traded on the Over-The-Counter ("OTC") Bulletin
Board under the symbol "GWNI" since September 6, 2002. From September 7, 2001
to September 5, 2002, our common stock traded on the OTC Bulletin Board under
the symbol "GWIN". From August 28, 2001 to September 6, 2001, our common
stock traded on the OTC Bulletin Board under the symbol "GSPE" and prior to
August 28, 2001 our common stock traded on the OTC Bulletin Board under the
symbol "IMSO." The following table shows the high and low bid prices of our
common stock for the periods indicated as reported by the OTC Bulletin Board.

The table below sets forth for the periods indicated the high and low bid
prices per share of our Common Stock, as reported by the OTC Bulletin Board.
Quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.

HIGH LOW

Fiscal Year ended July 31, 2004
Fourth Quarter .................... $ .22 .10
Third Quarter ..................... $ .33 .12
Second Quarter .................... $ .28 .08
First Quarter ..................... $ .37 .22

Fiscal Year ended July 31, 2003
Fourth Quarter .................... $ .41 .21
Third Quarter ..................... $ .40 .13
Second Quarter .................... $ .45 .16
First Quarter ..................... $ .54 .29

We consider our common stock to be thinly traded and any reported sale
prices may not be a true market-based valuation of our common stock. On
October 1, 2004 the closing price of our common stock, as reported on the
Over-The-Counter Bulletin Board, was $0.11. There were approximately 500
holders of record of the Company's common stock.

We have not paid any cash dividends since our inception and do not
contemplate paying dividends in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of our business.

RECENT SALES OF UNREGISTERED SECURITIES

During the three months ended July 31, 2004, we sold the following
securities that were not registered under the Securities Act of 1933, as
amended:

During the three-month period we sold 4,023,750 restricted shares of
common stock at a price of $.08 per share to 6 persons living outside of the
United States, in reliance on the exemption provided by Regulation S
promulgated under the Securities Act of 1933, as amended. The shares are
being sold to investors introduced by a Netherlands investment banking firm
which we paid a fee of 12% of the principal amount of the shares sold. We

also issued to the investment banker 500,000 restricted shares of common stock
in reliance on Section 4(2) of the Securities Act.

On July 31, 2004, we issued 2,700,000 restricted shares of common stock
to Wayne Allyn Root, our CEO, pursuant to his employment agreements dated July
31, 2003 and July 31, 2004. In the 2003 agreement we agreed to issue a total
of 2,100,000 shares which vest at the rate of 700,000 shares per year with the
second 700,000 shares vesting on July 31, 2004. In the 2004 agreement we
agreed to issue a total of 4,000,000 shares with the first 2,000,000 shares
vesting immediately. These shares were issued pursuant to the exemption
provided by Section 4(2) of the Securities Act of 1933, as amended, and the
appropriate restrictive legend was placed on the certificate.

On July 31, 2004, we issued 1,000,000 restricted shares of common stock
to Douglas Miller, our CEO, pursuant to his employment agreement dated July
31, 2004. In the agreement we agreed to issue a total of 2,000,000 shares
with the first 1,000,000 shares vesting immediately. These shares were issued
pursuant to the exemption provided by Section 4(2) of the Securities Act of
1933, as amended, and the appropriate restrictive legend was placed on the
certificate.

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

THIS ANNUAL REPORT ON FORM 10-KSB CONTAINS "FORWARD-LOOKING STATEMENTS,"
WHICH ARE BASED ON OUR CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND
PROJECTIONS ABOUT OUR BUSINESS AND OUR INDUSTRY. WORDS SUCH AS "BELIEVE,"
"ANTICIPATE," "EXPECT," "INTEND," "PLAN," "WILL," "MAY," AND OTHER SIMILAR
EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. IN ADDITION, ANY STATEMENTS
THAT REFER TO EXPECTATIONS, PROJECTIONS OR OTHER CHARACTERIZATIONS OF FUTURE
EVENTS OR CIRCUMSTANCES ARE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE
INCLUDE, BUT ARE NOT LIMITED TO, WHETHER OR NOT OUR PRODUCTS ARE ACCEPTED BY
THE MARKETPLACE AND THE PACE OF ANY SUCH ACCEPTANCE, OUR ABILITY TO OBTAIN
FINANCING TO MAINTAIN OUR OPERATIONS, CHANGING ECONOMIC CONDITIONS AND OTHER
FACTORS, SOME OF WHICH WILL BE OUTSIDE OUR CONTROL. YOU ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH RELATE ONLY
TO EVENTS AS OF THE DATE ON WHICH THE STATEMENTS ARE MADE. WE UNDERTAKE NO
OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES THAT ARISE AFTER THE DATE HEREOF. YOU SHOULD REFER TO
AND CAREFULLY REVIEW THE INFORMATION IN FUTURE DOCUMENTS WE FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION.

RESULTS OF OPERATIONS

COMPARISON OF THE YEAR ENDED JULY 31, 2004 TO THE YEAR ENDED JULY 31,
2003.

The Company showed significant improvement in both operating results and
overall net loss for the year ended July 31, 2004 compared to the year ended
July 31, 2003.

The operating losses for the year ended July 31, 2004, and the year ended
July 31, 2003 were $654,049 and $2,501,866 respectively. As seen in the
analysis of individual components below, this decrease is primarily
attributable to a substantially lower overall operating cost structure
combined with continuing overall revenue growth.

Our net losses for the year ended July 31, 2004, and the year ended July
31, 2003 were $1,903,284 and $7,141,561 respectively. The net loss used in the
per share calculations for the year ended July 31, 2004, and the year ended
July 31, 2003 were $1,903,284 and $8,940,132, respectively. The company
benefited from overall reductions in operating expenses and significant
reductions in non-cash cost of financing due to not having anti-dilution
charges and series "C" preferred share conversion costs in the year ended July
31, 2004.

Revenue from sales of sports handicapping information and advertising
combined for the year ended July 31, 2004, and the year ended July 31, 2003
were $6,080,787 and $5,926,916, respectively. Of these amounts, the
advertising revenues for these same periods was $710,836 and $206,334,
respectively and revenues from sports handicapping information was $5,369,951
and $5,720,582 respectively. The increase in advertising revenues is
primarily due to an increased volume of advertising sales on the Company's
television and radio programs and its web site. The change in handicapping
information revenues is directly related to, and is more than offset by the
savings of $509,788 in advertising expenses discussed below.

Handicapping fee expenses for the year ended July 31, 2004, and the year
ended July 31, 2003 were $558,210 and $654,425, respectively. This line item
is a commission based on a percentage of handicapping information sales, and
the decline is attributed to a decrease in salesroom revenues.

Advertising expenses for the years ended July 31, 2004 and 2003 were
$1,832,644 and $2,342,432, respectively. The lower advertising expense for the
current period is due to better airtime pricing and a more targeted
advertising campaign. Specifically, the company eliminated broadcasts in areas
that did not produce a reasonable return in the previous years, based upon
managements analysis of revenue-per-market.

Commission expenses for the year ended July 31, 2004 and the year ended
July 31, 2003 were $1,689,861 and $1,813,078, respectively. The lower
Commission Expense is due to adjustments to the commission rates for salesroom
management and staff and lower salesroom sales.

Salaries and wage expenses for the year ended July 31, 2004 and the year
ended July 31, 2003 were $1,192,840 and $1,196,759 respectively. Salaries and
wages remained flat for the year due primarily to wage increase restrictions.

Professional fees for the year ended July 31, 2004, and the year ended
July 31, 2003 were $195,243 and $532,354, respectively. The savings in
professional fees is primarily due to not having any ongoing litigation.

General and administrative expenses for the year ended July 31, 2004, and
the year ended July 31, 2003 were $1,222,124 and $1,624,464, respectively.
These savings are a direct result of cost containment efforts undertaken in
the 2004 fiscal year. Specifically, the Company negotiated better pricing on
major costs such as telephone expense, credit card processing fees, and health
insurance costs.

The non-recurring charge of $-0- and $40,000 for the years ended July 31,
2004 and 2003, respectively, represents costs associated with the rescission
of a planned share exchange transaction.

COMPARISON OF THE YEAR ENDED JULY 31, 2003 TO THE SEVEN MONTH PERIOD
ENDED JULY 31, 2002 AND YEAR ENDED DECEMBER 31, 2001

Our business is highly seasonal and the seven months ended July 31, 2002
exclude virtually all of the college and professional football season. This
has historically been the period in which a substantial part of annual
revenues are generated. Therefore, comparisons of twelve month periods to the
seven months ended July 31, 2002, may not be effective.

Our net loss for the year ended July 31, 2003, the seven month period
ended July 31, 2002 and the year ended December 31, 2001 were $7,141,561,
$2,075,443 and $5,527,352, respectively. The net loss used in loss per share
calculation in 2003 and 2001 were further increased by an imputed non-cash
dividend on our Series C Preferred Shares of $1,798,571 in 2003 and
$1,092,000 in 2001. The net loss used in the per share calculations for the
year ended July 31, 2003, the seven month period ended July 31, 2002 and the
year ended December 31, 2001 were $8,940,132, $2,075,443 and $6,619,352,
respectively.

Revenue from sales of sports handicapping information and analysis for
the year ended July 31, 2003, the seven month period ended July 31, 2002 and
the year ended December 31, 2001 were $$5,720,582, $2,765,233 and $3,083,314
respectively. Revenue from advertising agreements for these same periods was
$206,334, $261,998 and $157,168, respectively. This increase in revenue is a
result of the continued effective marketing efforts and repeat business.

Handicappers' fees for the year ended July 1, 2003, the seven month
period ended July 31, 2002 and the year ended December 31, 2001 were $654,425,
$264,257 and $424,002, respectively. These changes are in line with the
changes in revenue from sales of sports handicapping information.

Advertising expenses for the year ended July 31, 2003, the seven month
period ended July 31, 2002 and the year ended December 31, 2001 were
$2,342,432, $194,755 and $2,160,245, respectively. The seven months ended July
31, 2002 were very low because the bulk of our advertising comes during the
football season (September to December). The 2003 year is only slightly
higher than the 2001 year, even though revenues are up significantly, because
we are becoming more effective in our use of advertising.

Professional fees for the year ended July 31, 2003, the seven month
period ended July 31, 2002 and the year ended December 31, 2001 were
$532,354, $868,148 and $556,201, respectively. These fees were especially
high in the seven month period ended July 31, 2002 because of fees paid in
connection with efforts to raise investment capital and the process of
settling all of the ongoing litigation.

General and administrative expenses for the year ended July 31, 2003, the
seven month period ended July 31, 2002 and the year ended December 31, 2001
were $1,624,464, $864,629 and $1,238,880, respectively. These increases are
as a result of the growth of our revenues offset by cost containment efforts
undertaken in the 4th quarter of the 2003 fiscal year.

The non-recurring charge of $40,000 for the year ended July 31, 2003,
$608,525 for the seven month period ended July 31, 2002 and $866,453 for the
year ended December 31, 2001 represent costs associated with a contemplated
merger transaction. This transaction was rescinded and agreement was reached
for payments of $90,000 and issuance of shares and warrants in exchange for
mutual releases from further claims in connection with this transaction. We
provided approximately $1,153,000 for the costs of these settlements.

The operating loss for the year ended July 31, 2003, the seven month
period ended July 31, 2002 and the year ended December 31, 2001 were
$2,501,866, $1,371,117 and $4,637,370, respectively. The net operating loss
declined from $4,637,370 in the year ended December 31, 2001 to $1,371,117 for
the seven months ended July 31, 2002, primarily because the revenues on a
monthly basis grew approximately 60% and there was a significant decrease in
advertising expense and a lesser decrease in compensation and general and
administrative expense. The net operating loss increased from $1,371,117 for
the seven months ended July 31, 2002 to $2,501,866 for the year ended July 31,
2003. Even though the revenue continue to grow on a monthly basis, there were
significant increases in advertising expense, compensation expense and general
and administrative expense. In order to reduce the operating loss in the
current fiscal year, management is attempting to increase its advertising
revenue and to bring its advertising expense and compensation expense more in
line with its revenue from handicapping fees.

LIQUIDITY AND CAPITAL RESOURCES

Our working capital deficit as of July 31, 2004, was $1,243,175. Of that
amount, approximately $312,000 represents revenues from sales which will not
be recognized until after July 31, 2004.

We believe that the Company may need additional financing to supplement
cash flow deficiencies from operations. If needed the Company believes it has
the ability to secure additional debenture financing and/or private equity
placements to supplement cash flow needs of the company.

SUMMARY OF CASH FLOWS FOR THE TWELVE MONTHS ENDED JULY 31, 2004

GWIN's cash increased approximately $18,654 during the twelve months
ended July 31, 2004. The increase was a result of the operating loss of
$1,903,284 which was offset in part by the $1,438,548 in proceeds from the
issuance of equity.

OPERATING ACTIVITIES

Net cash used in operating activities decreased from $2,808,985 in the
twelve months ended July 31, 2003 to $1,583,906 in the twelve months ended
July 31, 2004. The primary reason for the decline was the large decline in
the net loss from $7,141,561 in the year ended July 31, 2003 to $1,903,284 in
the year ended July 31, 2004. Operating income was negatively impacted in the
twelve months ended July 31, 2004 by compensation and advertising costs.

INVESTING ACTIVITIES

Net cash used in investing activities increased from $40,792 during the
twelve months ended July 31, 2003 to $98,652 during the twelve months ended
July 31, 2004, due to the purchase of computer equipment essentially to
enhance operational efficiency.

FINANCING ACTIVITIES

Net cash provided by financing activities decreased from $2,945,805
during the twelve months ended January 31, 2003 to $1,701,212 during the
twelve months ended January 31, 2004. Included in the amount for the twelve
months ended July 31, 2004, $1,438,548 was received from the sale of common
stock.

SEASONALITY

Our business is highly seasonal. Because football and basketball are the
most popular sports for wagering, the demand for handicapping analysis of
these sports is substantially higher than for other sporting events. As a
result, approximately 80% of our sales occur in the first and second quarters
of our fiscal year. Because of these factors, our quarterly operating results
are difficult to predict and are likely to vary in the future. We expect this
seasonality to continue for the foreseeable future. If we are ultimately
successful in pursuing our strategy to expand our handicapping services to
cover other sports that are popular internationally, such as soccer and
cricket, we may reduce the seasonality of our business. However, there can be
no assurance that future seasonal fluctuations will not adversely affect the
business or results of operations.

ITEM 7. FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of GWIN, Inc.

We have audited the accompanying consolidated balance sheet of GWIN, Inc. and
subsidiaries as of July 31, 2004, and the related consolidated statements of
operations, cash flows and stockholders' deficit for the year then ended.
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 audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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
audit provides a reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly in
all material respects the consolidated financial position of GWIN, Inc. and
subsidiaries as of July 31, 2004, and the consolidated results of their
operations and their cash flows for the year then ended, in conformity with
U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the company will continue as a going concern. As discussed in Note 3 to
the consolidated financial statements, the Company has experienced losses from
operations, and has a working capital deficiency and accumulated deficit that
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 3.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

/s/MOORE STEPHENS, P.C.
Certified Public Accountants.

Cranford, New Jersey
September 11, 2004

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
GWIN, Inc.

We have audited the accompanying consolidated statements of operations, cash
flows and stockholders' deficit for the year ended July 31, 2003. 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 audit.

In our opinion the consolidated statements of operations, cash flows and
stockholders' deficit for the year ended July 31, 2003 referred to above
present fairly in all material respects the consolidated results of their
operations and their cash flows for the year ended July 31, 2003, in
conformity with U.S. generally accepted accounting principles.

/s/DEMETRIUS & COMPANY, L.L.C.

Wayne, New Jersey
November 6, 2003

F-2

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

GWIN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

ASSETS

July 31, 2004
-------------
Current assets:
Cash $ 439,468
Accounts Receivable 37,494
Prepaid Expenses 28,886
------------

Total current assets 505,848
------------

Property & equipment (net) 104,927
Equipment held under capital leases (net) 6,720
Deposits & other assets 322,177
------------
Total assets $ 939,672
============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Current portion of long-term debt, less
unamortized discount of $4,228 $ 735,312
Accounts payable - related parties 44,141
Notes payable - related parties 222,207
Deferred revenue 312,191
Accounts payable 435,172
------------
Total current liabilities 1,749,023
------------

Long term debt, less unamortized discount
of $58,338 219,195
------------
Total liabilities 1,968,218
------------

Stockholders' deficit:

Preferred stock - $0.0001 par value; 5,000,000
shares authorized; 0 shares issued & outstanding
Common stock - $0.0001 par value; 150,000,000
shares authorized; 83,290,496 shares issued &
outstanding 8,332
Additional paid in capital 24,730,867
Accumulated deficit (25,701,078)
Prepaid Expenses - Related parties (66,667)
------------
Total stockholders' deficit (1,028,546)
------------
Total liabilities and stockholders' deficit $ 939,672
============

F-3

GWIN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended July 31
----------------------------
2004 2003
------------ -----------

Net revenue - services $ 5,369,951 $ 5,720,582
Revenues - advertising 710,836 206,334
------------ -----------
Total revenues 6,080,787 5,926,916
------------ -----------
Handicapping fees 223,216 304,425
Handicapping fees - related party 334,994 350,000
Advertising expense 1,832,644 2,342,432
Commissions 1,689,861 1,813,078
Salaries & wages 1,192,840 1,196,759
Professional fees 195,243 532,354
General & administrative 1,222,124 1,624,464
Non-recurring charges -- 40,000
Depreciation expense 43,914 225,270
------------ -----------
Total operating expense 6,734,836 8,428,782
------------ -----------
Operating (loss) (654,049) (2,501,866)

Non-cash financing costs (288,739) (775,212)
Interest (expense), including amortization
of debt discount (544,131) (636,999)
Other non-cash costs of financing (354,143) (2,701,676)
Interest (expense) - related parties (62,222) (525,808)
------------ -----------
Net (loss) (1,903,284) (7,141,561)
------------ -----------
Imputed non-cash dividend on Series C
Preferred Stock 0 (1,798,571)
------------ -----------
Net (loss) used in per share calculation $ (1,903,284) $(8,940,132)
============ ===========
Basic and diluted (loss) per share
of common stock $ (0.03) $ (0.31)

Basic weighted shares of common
stock outstanding 66,578,296 28,444,000
============ ===========

F-4

GWIN, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Deficit
For the Years Ended July 31, 2004 and 2003

Preferred Common
Stock Shares Total
--------- --------- Pre-paid Stock
No. of No. of Paid-In Expense Accumulated holders'
Shares Amount Shares Amount Capital Related Party Deficit Deficit
--------- ------ ---------- ------ ----------- ------------- ------------ -----------

Balance - August 1, 2002 64,000 $ 6 21,285,703 $2,128 $12,044,468 $ (186,657) $(14,857,662) $(2,997,733)
Interest expense from
issuance of debentures 889,052 - - 889,052
Recorded value of warrants
issued with debentures 332,310 - 332,310
Imputed non-cash dividend
on series C preferred
stock 1,798,571 - (1,798,791) -
Issuance of warrants for
services 239,648 - 239,648
Issuance of common stock
for services - debt
discount 600,000 60 59,940 - - 60,000
Issuance of common stock
and warrants for
redemption of
preferred stock (64,000) (6) 9,999,999 1,000 1,380,630 - - 1,381,630
Issuance of common stock
for cash 16,483,633 1,648 2,410,045 - - 2,411,693
Issuance of common stock
for payment for services,
settlements and penalty
shares 3,806,157 382 1,322,028 - - 1,322,410
Employee stock options 6,200 - - 6,200
Issuance of common
stock for financing 200,000 20 57,980 - - 58,000
Net (loss) for the year
ended July 31, 2003 - - - - - 60,000 (7,141,561) (7,081,561)
--------- ------ ---------- ------ ----------- ----------- ------------ -----------
Balance - July 31, 2003 0 $ 0 52,375,492 $5,238 $20,540,872 $ (126,667) $(23,797,794) $(3,378,351)

Issuance of stock to
retire debentures 13,601,843 1,296 2,015,285 - - (3,378,351)
Issuance of stock for
services 1,682,143 237 299,401 - - 299,638
Issuance of stock for
cash 15,631,018 1,561 1,436,987 - - 1,438,548
Issuance of warrants - - 79,572 - - 79,572
Interest expense from
issuance of debenture 358,750 - - 358,750
Net (loss) for the
year ended
July 31, 2004 - - - 60,000 (1,903,284) (1,843,284)
--------- ------ ---------- ------ ----------- ----------- ------------ -----------
Balance - July 31, 2004 0 $ 0 83,290,496 8,332 $24,730,867 $ 66,667 $(25,701,078) $(1,208,546)
========= ====== ========== ====== =========== =========== ============ ===========

F-5

GWIN, INC. AND SUBSIDARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended July 31,
--------------------------
2004 2003
----------- -----------
Cash flows - operating activities:
Net (loss) $(1,903,284) $(7,141,561)
Adjustments to reconcile net (loss) to net
cash used in operations:
Depreciation 43,914 225,269
Services paid with warrants 0 1,293,444
Services & settlements paid with common
stock and warrants 299,638 1,124,616
Interest expense - issuance of convertible debt 358,750 329,558
Amortization of prepaid expenses - related
parties 60,000 0
Interest expense - issuance of common stock 145,691 0
Interest expense - amortization of debt discount 161,379 819,373
Effect of redemption of preferred stock 0 1,381,625

Decrease (increase) in:
Accounts receivable (21) (27,464)
Prepaid expenses (3,539) 110,187
Other assets (301,227) 204,131
Increase (decrease) in:
Deferred revenue (203,236) 119,593
Accounts payable (157,410) (256,602)
Accounts payable - related parties 44,141 223,847
Other current liabilities (128,702) (1,215,001)
----------- -----------
Total adjustments 319,378 4,332,576
----------- -----------
Total cash (used in) operating activities $(1,583,906) $(2,808,985)
----------- -----------
Cash flows - investing activities:
Purchase of fixed assets (98,652) (40,792)
----------- -----------
Total cash (used) in investing activities (98,652) (40,792)
----------- -----------
Cash flows - financing activities:
Proceeds from issuance of debt 575,000 25,000
Proceeds from issuance of notes payable -
related parties 0 950,000
Payments on long-term debt & lease obligations (312,336) (440,889)
Redemption of Preferred Stock 0 0
Proceeds from issuance of common stock 1,438,548 2,411,694
----------- -----------
Total cash provided by financing activities 1,701,212 2,945,805
----------- -----------
Net (decrease) in cash 18,654 96,028
Cash - beginning of the year 420,814 324,786
----------- -----------
Cash - end of the year $ 439,468 $ 420,814
=========== ===========

F-6

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING & FINANCING ACTIVITIES

For the twelve months ended July 31, 2004 and 2003, the Company paid $0 for
taxes and $121,165 for interest and $0 for taxes and $57,790 for interest,
respectively. The Company issued stock and warrants in payment for
professional services and settlement costs. For the twelve months ended July
31, 2004 and 2003, the Company issued 1,682,432 shares of common stock and
358,000 warrants and 2,006,157 shares of common stock and 2,298,633 warrants,
respectively.

F-7

GWIN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[1] ORGANIZATION AND CHANGES IN CONTROL OF COMPANY

Prior to July 11, 2001, the corporation was known as IMSCO Technologies, Inc.
["IMSCO" or the "Company"]. On July 11, 2001, Global Sports & Entertainment,
Inc., a Delaware corporation ["Global Sports"], completed a reverse
acquisition of the Company in which the Company acquired all of the
outstanding shares of Global Sports stock in exchange for a controlling
interest in IMSCO [the "Reorganization"]. As the Company was a public shell,
the transaction is shown as a recapitalization of the accounting acquirer,
Global Sports.

On August 27, 2001, Global Sports changed its name to Global SportsEDGE, Inc.
["EDGE"] and the Company changed its name to Global Sports & Entertainment,
Inc. [the "Company" or "Global"]. The Company also initiated a reverse stock
split of 1:4 and increased the number of authorized common shares to
50,000,000. All share numbers have been changed to reflect the reverse stock
split.

On August 22, 2002 the Company changed its name from Global Sports &
Entertainment, Inc. to GWIN, Inc. [the "Company" or "GWIN"] to settle a
lawsuit brought by the management of an unrelated corporation named Global
Sports, Inc.

The Company's Board of Directors approved an increase in the Company's
authorized shares from 50,000,000 to 100,000,000 on June 10, 2003 and a Form
14-C was filed on July 15, 2003 with majority stockholder approval. A
Definitive Information Statement Notice was mailed to the stockholders on
August 10, 2003. In February 2004, the board with majority shareholder
approval increased the authorized shares from 100,000,000 to 150,000,000.

The Company is engaged in a highly seasonal business, with the majority of
sales related to football and basketball handicapping. Due to this
seasonality, quarterly results may vary materially between the football and
basketball seasons [concentrated in the first and second fiscal quarters] and
the remainder of the year[the third and fourth fiscal quarters].

[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION -

The consolidated financial statements include the accounts of the Company and
its subsidiary, EDGE, as well as several inactive subsidiaries. All
significant inter-company accounts and transactions have been eliminated in
consolidation.

REVENUE RECOGNITION -

Our service contracts with clients vary substantially in length from a single
sporting event to entire seasons. We recognize the revenue from service
contracts ratably, as the services are rendered in proportion to the total
services to be provided under the contracts. It is important to note that
while revenue from service contracts is deferred and recognized as the service
is delivered, the bulk of the costs associated with generating that revenue
including advertising, commissions, and handicapping fees are expensed in the

F-8

quarter that the service contract is generated. On July 31, 2004, the Company
had received approximately $107,190 in payment for handicapping services not
rendered by that date. This amount is recorded as a current liability.

Revenue from advertising agreements is recognized ratably over the period of
the agreements. As of July 31, 2004 deferred revenue from advertising
agreements was approximately $205,000. This amount is recorded as a current
liability.

OPERATING COSTS & EXPENSES -

Handicappers' fees and sales representatives' compensation and related
expenses are charged to operations as incurred.

USE OF ESTIMATES -

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

CASH AND CASH EQUIVALENTS -

The Company considers all highly liquid investments, with a maturity of three
months or less when purchased, to be cash equivalents. At July 31, 2004, the
Company did not have any cash equivalents. Cash is deposited in federally
insured bank accounts.

PROPERTY AND EQUIPMENT AND DEPRECIATION -

Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, which
range from 3 to 5 years.

Routine maintenance and repair costs are charged to expense as incurred and
renewals and improvements that extend the useful life of the assets are
capitalized. Upon sale or retirement, the cost and related accumulated
depreciation are eliminated from the respective accounts and any resulting
gain or loss is reported as income or expense.

BASIC AND DILUTED LOSS PER COMMON SHARE -

Loss per common share is computed by dividing net loss available to common
stockholders by the weighted-average number of common shares outstanding
during the period. In the Company's present position diluted loss per share
is the same as basic loss per share. Securities that could potentially dilute
EPS in the future include the issuance of common stock in settlement of notes
payable and the exercise of stock options and warrants. For the year ended
July 31, 2004 and the year ended July 31, 2003 the number of common stock
equivalents excluded from the calculation, because they were anti-dilutive,
was 19,581,095 and 26,221,003, respectively.

F-9

STOCK OPTIONS AND SIMILAR EQUITY INSTRUMENTS -

The Company has adopted the disclosure requirements of SFAS No. 123,
"Accounting for Stock-Based Compensation," for stock options and similar
equity instruments [collectively "Options"] issued to employees and directors.
However, the Company will continue to apply the intrinsic value based method
of accounting for options issued to employees prescribed by Accounting
Principles Board ["APB"] Opinion No.25, "Accounting for Stock Issued to
Employees" rather than the fair value based method of accounting prescribed by
SFAS No. 123. SFAS No. 123 also applies to transactions in which an entity
issues its equity instruments to acquire goods and services from
non-employees. Those transactions must be accounted for based on the fair
value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.

BENEFICIAL CONVERSION FEATURES -

The Company has sold certain convertible debentures with a beneficial
conversion feature [See Note 8] representing a 50% imputed discount. The value
of such features is recorded by the Company as interest expense of $89,848 and
$13,764 for the year ended July 31, 2004, and the year ended July 31, 2003,
respectively.

ADVERTISING EXPENSES -

The Company expenses advertising costs as incurred. Total advertising costs
for the Year Ended July 31, 2004, and the Year Ended July 31, 2003 amounted to
approximately $1,832,644 and $2,342,432 respectively.

INCOME TAXES -

Pursuant to SFAS No. 109, "Accounting for Income Taxes," income tax expense
[or benefit] for the year is the sum of deferred tax expense [or benefit] and
income taxes currently payable [or refundable]. Deferred tax expense [or
benefit] is the change during the year in a company's deferred tax liabilities
and assets. Deferred tax liabilities and assets are determined based on
differences between financial reporting and tax bases of assets and
liabilities, and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse.

[3] GOING CONCERN

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate the continuation of
the Company as a going concern and realization of assets and settlement of
liabilities and commitments in the normal course of business. For the year
ended July 31, 2004, the Company has a loss from operations of approximately
$654,000, a working capital deficiency of approximately $1,243,000 and an
accumulated deficit of approximately $25,970,000. These conditions raise
doubt about the Company's ability to continue as a going concern. Consistent
with its original business plan, management plans to secure additional
financing through equity issuances. The financial statements do not include
any adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence. The Company
plans to continue revenue growth and cost containment with the goal of
profitability, though management believes that it has the ability to raise
additional capital through private equity placements and/or debentures to meet
cash flow shortfalls.

F-10

[4] CONCENTRATIONS OF CREDIT RISKS

The Company places its cash and cash equivalents with high credit quality
institutions to limit its credit exposure. At July 31, 2004 the Company had
approximately $366,000 in a financial institution that is subject to normal
credit risk beyond insured amounts. The Company routinely assesses the credit
worthiness of its customers before a sale takes place and believes its credit
risk exposure is limited. The Company performs ongoing credit evaluations of
its customers but does not require collateral or other security as a condition
of service.

[5] PROPERTY AND EQUIPMENT

The following details the composition of property and equipment:

Accumulated
At July 31, 2004 Cost Depreciation Net
-------- ------------ --------

Television Studio Set $157,727 $153,449 $ 4,278
Office equipment & other 392,367 291,718 100,649
-------- -------- --------
TOTALS $550,094 $445,167 $104,927
======== ======== ========

Depreciation expense, excluding assets under capital lease obligations, for
the Year Ended July 31, 2004, and the Year Ended July 31, 2003 amounted to
$30,498 and $100,098 respectively.

[6] DEPOSITS AND OTHER ASSETS

Deposits and other assets comprised the following:

July 31, 2004
-------------
Deposits with credit card processors $304,072
Security deposit on leased premises 18,105
--------
Total $322,177
========

F-11

[7] LONG - TERM DEBT

Long - term debt is as follows:

July 31, 2004
-------------
Convertible Debentures (5%) due August 31, 2004 $ 200,000
Convertible Note (13%) 229,000
Convertible Debentures (5%) due June 23, 2005 300,000
Convertible Debentures (10%) due February 1, 2006 25,000
Convertible Debentures (5%) due June 7, 2007 250,000
Capital leases 13,073
----------
Total $1,017,073

Less unamortized debt discount (4,228)
Less current portion of debt discount (735,312)
----------
277,533
Less - unamortized debt discount (58,338)
----------
TOTAL LONG - TERM DEBT $ 219,195
==========

Long-term debt at July 31, 2004 matures as follows:

Year ended July 31
2005 300,000
2006 25,000
2007 250,000
Thereafter --
--------
TOTAL $575,000
========

The 16% Convertible Note (in the original principal balance amount of
$750,000, of which $ 229,000 is due in the year ending July 31, 2005) may, at
the discretion of the Company, be repaid by the issuance of common stock.

[8] RELATED PARTY NOTES & ACCOUNTS PAYABLE

Related party notes and accounts payable are as follows:

July 31, 2004
-------------
Unsecured standby credit facility from Newmarket
Investments, plc (16%), at July 31, 2004 $155,515
Payable on demand (12%), Wayne A. Root 50,000
--------
$205,515
Less - unamortized debt discount 0
--------
Total Notes $205,515
--------
Accrued interest on Related Party Notes 16,692
Handicapping fee payable to Wayne A. Root 44,141
--------
TOTAL NOTES & ACCOUNTS PAYABLE - RELATED PARTIES $266,348
========

F-12

[9] STOCKHOLDERS' DEFICIT

During the year ended July 31 2004 the following securities activity occurred:

COMMON STOCK AND WARRANTS - We issued 30,915,004 shares of Common Stock.
Included in this amount are 11,961,218 shares to redeem debt. The Company
issued 2,020,625 shares of Common Stock as payment for services. The Company
issued 1,302,143 shares to the investment firm handling the equity placement,
and issued 15,631,018 shares in new equity funding. The Company issued
1,509,367 warrant shares in connection with issuing new debentures in the
amount $575,000.

The Company is authorized to grant 3,000,000 options under the equity
incentive plan filed in a Form SB-2 Registration Statement filed on February
25, 2003. Included in this amount, the Company has granted 1,500,000 options
to Newmarket Investments, plc ("Newmarket") As of July 31, 2004, 1,500,000 of
the options have been issued to Newmarket with a $0.50 per share strike price
and a three year life.

CONVERTIBLE PREFERRED STOCK - In 2001, the Company sold 64,000 units
consisting of one share of Series C Convertible Preferred stock and one
warrant exercisable at $1.00 for an additional share of Series C stock for a
price of $1,500,000. The base conversion rate was adjusted in the quarter
ended October 31, 2001 and the resulting 50% imputed discount of $1,092,000
was charged to retained earnings (deficit) in a manner analogous to a
dividend. In the quarter ended October 31, 2002, there was an additional
adjustment to the conversion rate resulting from anti-dilution provisions in
the purchase agreement. The resulting 30% imputed discount of $318,714 was
charged to retained earnings (deficit) in a manner analogous to a dividend.
In April 2003 all of the Series C Convertible Preferred stockholders converted
their shares into 10,000,000 common shares. An imputed non-cash dividend
charge of $921,428 was recorded for the anti-dilution adjustment.

At July 31, 2004 there was no convertible preferred stock outstanding.

CONVERTIBLE DEBENTURES - In September 2002, we issued a convertible debenture
for $25,000 which can be converted into 50,000 shares of common stock and
warrants to purchase 50,000 shares of common stock at $1.25 per share. In
January, 2003 we entered into an agreement in principal with several
accredited investors from Europe to purchase 10% convertible debentures for an
aggregate face value of $190,026. In April 2003 the Company reached an
agreement with these investors to issue them 1,266,840 common shares in lieu
of the 10% convertible debentures contemplated under the earlier agreement.
In September, 2002, we entered into an agreement with Newmarket, an existing
convertible debenture holder, which provided that Newmarket invest an
additional $700,000 in the Company by amending the existing $500,000
convertible debenture held by Newmarket to reflect a principal amount of
$1,200,000. The anti-dilution provisions on the combined $1,200,000
convertible debenture provide that 5,802,199 additional shares be issued upon
conversion. The total Newmarket convertible debenture shares upon conversion
will be 9,230,769. In addition, the Company agreed to exchange an existing
warrant held by Newmarket to acquire 1,000,000 shares of common stock at $1.00
per share for a warrant to acquire 3,000,000 shares of common stock at $0.13
per share. This warrant expires on August 31, 2005. The costs associated with
the issuance of the new warrants and the adjustment of the conversion rate on
the $1,200,000 principal amount are reported as non-cash financing costs of

F-13

$708,360 in the financial statements for the Year Ended July 31, 2003. The CEO
of Newmarket is a former Director of the Company. At July 31, 2004 the entire
Newmarket convertible debt was converted into restricted common stock.

OPTIONS AND WARRANTS AT JULY 31, 2004

STOCK OPTIONS Weighted-Average
Shares Exercise Price
--------- --------------
Outstanding at July 31, 2003 3,484,987 $1.22
Granted 0 0
Exercised 0 0
Canceled 0 0
--------- -----

OUTSTANDING AT JULY 31, 2004 3,484,987 $1.22
========= =====

EXERCISABLE AT JULY 31, 2004 3,484,987 $1.22
========= =====

The following table summarizes information about stock options at July 31,
2004:

Weighted Average Outstanding and Exercisable Stock Options

Remaining Weighted-Average
Exercise Prices Shares Contractual Life Exercise Price
--------------- ---------- ---------------- ----------------
$0.01 - $1.50 3,298,522 1 year $0.89
$6.00 - $7.50 186,465 2 years $7.04

The Black-Scholes option valuation model was developed for use in estimating
the fair value of options. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility.

WARRANTS Weighted-Average
Shares Exercise Price
--------- --------------

Outstanding at July 31, 2003 12,360,880 $ .74
Granted 1,509,367 .11
Exercised (1,690,000) .14
Canceled (2,817,500) 1.15
----------- -----
OUTSTANDING AT JULY 31, 2004 9,362,747 $ .53
----------- -----
EXERCISABLE AT JULY 31, 2004 9,362,747 $ .53
----------- -----

F-14

The following table summarizes information about warrants at July 31, 2004:

Weighted Average Outstanding and Exercisable Warrants

Remaining Weighted-Average
Exercise Prices Warrants Contractual Life Exercise Price
--------------- --------- ---------------- ----------------

$0.01 - $1.00 6,608,085 3 years $0.32
$1.01 - $2.00 2,754,662 1 year $1.35

The Black-Scholes option valuation model was developed for use in estimating
the fair value of warrants. In addition, warrant valuation models require the
input of highly subjective assumptions including the expected stock price
volatility.

On June 18, 2002, stockholders of the Company approved an Equity Incentive
Plan (the "Plan"). Under the Plan, a sub-committee of the Board of Directors
is authorized to grant, at its discretion, options to purchase shares of
common stock at a set price greater than market price as of the date of the
grant. The Company has reserved 3,000,000 shares for issuance under the Plan.
At July 31, 2003, one option granting the right to purchase 1,500,000 of these
shares at $0.50 per share was issued to Newmarket Investments, plc, a creditor
of the Company. The Company issued 310,000 options to employees to purchase
shares at $0.27 per share expiring July 31, 2006. As of July 31, 2004, there
were 1,190,000 options available to be granted under the Plan.

At July 31, 2004 the Company had a total of 6,733,334 shares underlying its
convertible debentures and these shares are included in the fully diluted
shares outstanding of 102,871,564.

PRO FORMA DISCLOSURE OF THE COMPENSATION COST FOR STOCK OPTION PLANS

As permitted under SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company has elected to continue to measure stock-based compensation using
the intrinsic value approach under APB Opinion No. 25, the former standard. If
the former standard for measurement is elected, SFAS No. 123 requires
supplemental disclosure to show the effects of using the new measurement
criteria.

Had compensation cost for stock options been determined based on the fair
value at the grant date for awards for the year ended July 31, 2004, and the
year ended July 31, 2003 consistent with the provisions of SFAS No. 123, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated below:

Year ended Year ended
July 31, 2004 July 31, 2003
---------------- ----------------
Net (loss) - as reported $(1,903,284) $(8,940,132)
Net(loss) pro forma $(1,903,284) $(8,994,075)
Basic earnings per share - as reported $ (.03) $ (.31)
Diluted earnings per share - as reported $ (.03) $ (.31)
Basic earnings per share - pro forma $ (.03) $ (.32)
Diluted earnings per share - pro forma $ (.03) $ (.32)

F-15

[10] PROVISION FOR INCOME TAXES

At July 31, 2004, the Company had generated tax operating losses (assuming all
operating loss carry-forwards will be available) that total approximately
$15,900,000. Such loss carry-forwards will expire at various dates through
2024. At July 31, 2004, based on the amount of operating loss carry-forwards,
the Company would have had a deferred tax asset of approximately $5,400,000.
Because of the uncertainty that the Company will generate income in the future
sufficient to fully or partially utilize these carry-forwards, a valuation
allowance of $5,400,000 has been established. This allowance includes an
increase of $650,000 related to operations during the year ended July 31,
2004. Accordingly, no net deferred tax asset is reflected in these financial
statements.

The Company has issued equity securities at various times since inception. A
change in ownership, as defined by Section 382 of the Internal Revenue Code,
caused by such issuances of equity would limit the availability of these
losses to offset future taxable income, if any. Management believes that
there has been no such change of ownership and that all generated tax
operating losses remain available to offset future taxable income, if any.

As part of a previous reverse acquisition, the Company acquired net operating
losses of approximately $10,640,000. Pursuant to Section 382 of the Internal
Revenue Code, utilization of these losses will be limited to approximately
$255,000 subject to a maximum annual utilization of approximately $15,000 per
year through 2021. At July 31, 2004, the Company would have a deferred tax
asset of approximately $87,000 from these acquired losses.

Because of the uncertainty that the Company would generate income in the
future sufficient to fully or partially utilize these carry-forwards, a
valuation allowance of approximately $87,000 has been established. This
allowance includes a decrease of approximately $5,000 related to the
expiration of acquired operating losses. Accordingly, no net deferred tax
asset is reflected in these financial statements.

[11] NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS

The Company does not anticipate the adoption of recently issued accounting
pronouncements to have a significant on the Company's results of operations,
financial position or cash flows.

[12] COMMITMENTS AND CONTINGENCIES

CAPITAL LEASES

The Company is the lessee of office and computer equipment under four (4)
capital leases expiring within the next two (2) years. These capital leases
are collateralized by the related assets. The liabilities under capital
leases are recorded at the present value of the net future minimum lease
payments and the assets are recorded at the purchase price which approximates
fair market value on the date of the purchase.

Following is a summary of property held under capital leases:

Accumulated
Cost Depreciation Net
At July 31, 2004 -------- ------------ ------
Office Fixtures and Equipment $336,460 $329,740 $6,720

F-16

Depreciation of assets under capital leases charged to expense for the Year
Ended July 31, 2004 and the Year Ended July 31, 2003 was $31,650 and $125,171
respectively.

Minimum future lease payments under capital leases are included as a component
of long-term debt (see note 7). Payments for each of the next two fiscal years
and in the aggregate are:

2005 10,540
2006 2,533
Thereafter --
-------
Total Minimum Lease Payments $13,073
Less: Amount Representing Interest (233)
-------
$12,840

Present Value of Net Minimum Lease Payments $12,840
Less: Current Portion (10,307)
-------
LONG-TERM PORTION $ 2,533

OPERATING LEASES - At July 31, 2004, the Company has two operating leases for
office space that expire in January 2006 and include an option for renewal for
an additional three (3) years. The leases have monthly payment obligations of
$1,837 and $9,659, increasing annually, based on the CPI.

Approximate minimum future rental payments under non-cancelable operating
leases having remaining terms in excess of one year as of July 31, 2004 are as
follows:

Year ending Operating
July 31, Leases
------------ ---------
2005 $124,531
2006 128,267
2007 144,125
Thereafter 0
--------
Total $396,923
========

Rent expense for the year ended July 31, 2004 and the year ended July 31, 2003
was approximately $134,500 and $155,000, respectively, and was charged to
operations.

[13] LEGAL MATTERS

In the normal course of business, the Company is exposed to a number of
asserted and unasserted potential claims. The Company has no current
litigation.

F-17

[14] FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosure About Fair Value of Financial Instruments," requires
disclosing fair value, to the extent practicable, for financial instruments
which are recognized or unrecognized in the balance sheet. The fair value of
the financial instruments disclosed herein is not necessarily representative
of the amount that could be realized or settled, nor does the fair value
amount consider the tax consequences of realization or settlement.

In assessing the fair value of these financial instruments, the Company used a
variety of methods and assumptions, which were based on estimates of market
conditions and risks existing at that time. For certain instruments, including
cash and cash equivalents, related party and trade and notes payable, it was
assumed that the carrying amount approximated fair value for the majority of
these instruments because of their short maturities.

The fair value of long-term debt is based upon current rates at which the
Company could borrow funds with similar remaining maturities. It was assumed
that the carrying amount approximated fair value for these instruments.

F-18

ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

ITEM 8A. CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
have evaluated the effectiveness of the design and operation of our disclosure
controls and procedures within 90 days of the filing date of this annual
report, and, based upon their evaluation, our principal executive officer and
principal financial officer have concluded that these controls and procedures
are effective. There were no significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation.

Disclosure controls and procedures are our controls and other procedures
that are designed to ensure that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file under the Exchange Act is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.

ITEM 8B. OTHER INFORMATION.

None.

PART III

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

EXECUTIVE OFFICERS AND DIRECTORS

Set forth below is certain information concerning our executive officers
and directors, including their age as of October 1, 2004. Our directors serve
for a term of Two years or until their successors are elected and qualified.
Our officers serve at the discretion of our board of directors. There are no
family relationships among our Directors and Officers.

NAME AGE TITLE
---- --- -----

Wayne Allyn Root 42 Chairman of the Board and Chief Executive
Officer

Douglas R. Miller 58 President, Chief Operating Officer,
Secretary and Director

Jeff Johnson 46 Chief Financial Officer

Robert Seale 62 Director, Audit committee(chair)

Roger Aspey-Kent 60 Director

Timothy Michael Whalley 54 Director

Roger L. Harrison 61 Director

WAYNE ALLYN ROOT has served as our Chief Executive Officer and Chairman
of our Board of Directors since our reorganization in July 2001. From 1999 to
2001, Mr. Root served as Chairman and Chief Executive Officer of our
subsidiary, Global Sports Edge, Inc. From 1990 to 1999, Mr. Root served as a
sports handicapper for National Sports Service. Mr. Root holds a B.A. from
Columbia University. Mr. Root does not hold a directorship in any other
public company.

DOUGLAS R.MILLER has served as our President, Chief Operating Officer,
Secretary and a director since our reorganization in July 2001. Mr. Miller has
also served as our Chief Financial Officer from November 2001 to April 2003.
From 1999 to 2001, Mr. Miller served as President of our subsidiary, Global
Sports Edge, Inc. From 1998 to 1999, Mr. Miller was the Chief Financial
Officer of Body Code International, an apparel manufacturer. Mr. Miller holds
a B.A. degree in economics from the University of Nebraska, and an MBA degree
from Stanford University. Mr. Miller does not hold a directorship in any other
public company.

JEFF JOHNSON has served as Chief Financial Officer of the Company since
May 2003. From 1995 to 2002 Mr. Johnson was the Chief Financial Officer for
KNPR Radio. Mr. Johnson was the Chief Financial Officer for Display Ad for 3
years and prior to that Mr. Johnson was with the national public accounting
firms of Laventhal & Horwath and Coopers and Lybrand. Mr. Johnson does not
hold a directorship in any public company.

ROGER ASPEY-KENT has been a member of the Board of Directors since
January 1, 2004. He is currently an executive director of a property

development company based in Cyprus and also a non-executive director of a
technology systems company based in London. He is an executive partner of
Falcon Capital which is in the venture capital business operating in various
locations throughout Europe. From 1985 until 1990 he worked in general
management of Credit Commercial de France, in London. From 1980 until 1985 he
worked as a senior associate director of Societe Generale, Merchant Banking.
While at Societe Generale he served as senior corporate finance advisor for
equity strategy and he was responsible for corporate syndications in London
and Southeast Asia and for aerospace business development in Asia. From 1963
until 1967 he worked as a corporate finance executive at Lazard Brothers & Co.
Ltd in London where he was responsible for corporate finance activity in
developing markets. Mr. Aspey-Kent currently serves as a director of EIG
Technology Ltd and Marrakesh Properties Ltd.

ROBERT L. SEALE has been a member of the Board of Directors since January
1, 2004. Currently, Mr. Seale is a Principle with GIF Services, Inc., a
Manager of Managers program managing the portfolios of state and local
governments. From January 1999 until December 2002, Mr. Seale served as
Managing Director of Gabelli Fixed Income, LLC where he was responsible for
managing the $2.0 billion portfolio under management as a senior executive.
From 1991 until 1999 he served as the Nevada State Treasurer where he was
responsible for investing the State's $2.1 billion portfolio, managing the $28
billion cash flow, and debt issuance. From 1981 until 1990 he was the
Managing Partner for Pangborn & Co. CPA's in Reno, Nevada. He graduated with
a Bachelor of Science in Accountancy from California State Polytechnic
University in 1964.

TIMOTHY MICHAEL WHALLEY has been a member of the Board of Directors since
January 1, 2004. Mr. Whalley has served as a director and independent
consultant of Pierpont, Monroe & Co. in London since 2000. Pierpont, Monroe &
Co. is an international banking consultancy specializing in structured and
trade finance related assignments for corporate and financial institution
clients. From 1997 until 1999 he served as General Manager Banking Division
of Standard Bank London where his responsibilities included Global Head of
Trade Finance and being a member of the credit and country risk committees.
From 1993 until 1998, Mr. Whalley served as a member of the Board of the
African Export-Import Bank, Cairo. From 1995 until 1997 he served as Head of
Trade Finance for the Sumitomo Bank Ltd. From 1978 through 1995 he held
various positions with Standard Chartered Bank. During the last two years he
served as General Manager, Trade and Project Finance. Mr. Whalley received a
BA degree in International Relations from the University of Sussex in 1971.

ROGER L. HARRISON has been a member of the Board of Directors since
January 15, 2004. Since the early 1980's Mr. Harrison has been involved in
creating, producing and directing films. Since 1999 he has been working on
twenty-three projects, three of which are currently considered "hot": Cousins
(Jerry Lee Lewis, Mickey Gilley, Jimmy Swaggart biopic); The Las Vegas
Showgirls Meet the Furry Hamsters from Hell (a Mel Brooks-type spoof); and a
documentary on capitalism and the republic form of democracy called "The
Perfect Incubator." He is also on the creative team for Sony's upcoming
feature film Police Woman, starring Queen Latifah. Prior to his involvement
with films, Mr. Harrison worked for approximately fourteen years in the
securities industry as an account executive with seven years at Merrill Lynch,
three years as Regional Manager with E.F. Hutton & Co., and four years with
A.G. Edwards. His first film project was The Chosen which he produced during
1981-1983. The Chosen was the winner of the Christopher Award; best film and
best actor (Rod Steiger) at the Montreal Film Festival; and the New York Film
Critics, best screenplay and best director awards.

Our Board of Directors held four (4) meetings during the fiscal year
ended July 31, 2004. Each Director attended at least 75% of the aggregate
number of meetings held by the Board of Directors during the time each such
Director was a member of the Board.

DIRECTOR COMPENSATION

Commencing in February 2004, our non-employee directors receive $1,000
for each meeting of our Board of Directors they attend in person. These fees
may be paid in cash or with restricted shares of common stock at the
discretion of the Company. These fees were paid in restricted common stock
for the meeting held in February 2004. We also reimburse our directors for
out-of-pocket expenses incurred to attend meetings of the board.

Our executive officers hold office until the next annual meeting of
directors. There are no known arrangements or understandings between any
director or executive officer and any other person pursuant to which any of
the above-named executive officers or directors was selected as an officer or
director.

COMMITTEES

We have two standing committees: the audit committee and the
compensation committee.

AUDIT COMMITTEE

Our current Audit Committee was formed during February 2004. It attends
to and reports to our Board of Directors with respect to matters regarding our
independent public accountants, including, without limitation: annual review
of their charter; approving the firm to be engaged as our independent public
accountants for the next fiscal year; reviewing with our independent public
accountants the scope and results of their audit and any related management
letter; consulting with our independent public accountants and our management
with regard to our accounting methods and adequacy of our internal accounting
controls; approving the professional services rendered by our independent
public accountants; reviewing the independence, management consulting services
and fees of our independent public accountants; inquiring about significant
risks or exposures and methods to minimize such risk; ensuring effective use
of audit resources; and preparing and supervising the Securities and Exchange
Commission reporting requirements. Our Audit Committee currently consists of
Robert L. Seale, Roger Aspey-Kent, and Timothy Michael Whalley.

COMPENSATION COMMITTEE

Our Compensation Committee was formed during February 2004 to attend to
and report to our Board of Directors with respect to the appropriate
compensation of our directors and executive officers and is responsible for
administering all of our employee benefit plans. The Compensation Committee
currently consists of Robert L. Seale and Roger L. Harrison.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to us during our most recent fiscal year, and Forms 5 and amendments
thereto furnished to us with respect to our most recent fiscal year and
certain representations, no persons who were either a director, officer, or
beneficial owner of more than 10% of our common stock, failed to file on a
timely basis reports required by Section 16(a) of the Exchange Act during the
most recent fiscal year.

CODE OF ETHICS

The Board of Directors adopted a Code of Ethics in October 2004, which
applies to all of the Company's Executive Officers, Directors and employees.
A copy of the Code of Ethics is attached to this Annual Report as Exhibit 14.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth information regarding the executive
compensation for the Company's CEO and President during the fiscal years
ended July 31, 2004 and July 31, 2003 and each other officer(s) who had
total annual salary and bonus in excess of $100,000 during such years.

SUMMARY COMPENSATION TABLE

Long-Term Compensation
----------------------------
Annual Compensation Awards Payouts Awards Payouts
---------------------------------- ----------------------------
Securi-
ties
Re- Under- All
stricted lying LTIP Other
Stock Options/ Payout Compen-
Name and Principal Position Year Salary Bonus Awards SARs(#) ($) sation
--------------------------- ---- ------ --------- --------- ------- ------ ------

Wayne Allyn Root; Chairman & 2004 $175,000 $334,994(1) 4,000,000
Chief Executive Officer 2003 $175,000 $350,000 1,400,000

Douglas R. Miller; President 2004 $175,000 -- 1,500,000
2003 $175,000 -- --

Hollis Barnhart; Vice 2004 $150,000 $ 58,395 --
President- Sales 2003 $150,000 $123,929 300,000
____________________

(1) Bonus Compensation for Mr. Root in 2004 includes $44,141 earned but not paid from
handicapping fees.

The following table sets forth information concerning option exercises
and option holdings for the year ended July 31, 2004 with respect to our Chief
Executive Officer and each of our other executive officers:

AGGREGATE OPTION EXERCISES IN FISCAL YEAR ENDED
JULY 31, 2004 AND OPTION VALUES AS OF JULY 31, 2004

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
EXERCISE EXPIRATION OPTIONS AT JULY 31, 2003 AT JULY 31, 2003
NAME PRICE DATE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- -------- ---------- ----------- ------------- ----------- -------------

Douglas R. Miller $1.41 May 2005 106,551 -- -- --

EMPLOYMENT AGREEMENTS

On July 31, 2004, the Company entered into a four-year employment
agreement with Wayne Allyn Root pursuant to which Mr. Root is serving as the
Company's Chief Executive Officer and Chairman of the Board of Directors. His
compensation includes: (a) a base salary of $175,000 per year. (b)
handicapping fees during the first year equal to 10% of Mr. Root's
handicapping fees received by the Company, (d) a restricted stock grant in the
amount of 4,000,000 shares of the Company's common stock where the stock vests
at the rate of 2,000,000 shares at signing and 666,666 shares vesting on July
31, 2005, 666,667 vesting July 31, 2006 and 666,667 vesting July 31, 2007; (e)
compensation in the event of a change in ownership or control of the Company,
either friendly or hostile, which includes a minimum annual base salary of
$250,000, the handicapping fee of 12% versus the 10% described above, and the
ceiling will be removed, and all unvested shares will immediately vest; and
other employee benefits provided to senior executives of the Company. The
agreement also includes an agreement to indemnify Mr. Root, non-compete
provisions and a provision regarding payments in the event of termination of
Mr. Root's employment.

On July 31, 2004, the Company entered into a three-year employment
agreement with Doug Miller pursuant to which Mr. Miller is serving as the
Company's President and serving on the Board of Directors. His compensation
includes: (a) a base salary of $195,000 per year. (b) a restricted stock grant
in the amount of 2,000,000 shares of the Company's common stock where the
stock vests at the rate of 1,000,000 shares at signing and 500,000 shares
vesting on July 31, 2005, and 500,000 vesting July 31, 2006; (e) compensation
in the event of a change in ownership or control of the Company, either
friendly or hostile, which includes a minimum annual base salary of $250,000,
and all unvested shares will immediately vest; and other employee benefits
provided to senior executives of the Company. The agreement also includes an
agreement to indemnify Mr. Miller, non-compete provisions and a provision
regarding payments in the event of termination of Mr. Miller's employment.

EQUITY INCENTIVE PLAN

On June 14, 2002, the Board approved a resolution adopting and approving
an Equity Incentive Plan (the "Plan"), reserving 3,000,000 shares of common
stock for issuance under the Plan. On June 18, 2002, the consenting
stockholders signed a consent, whereby they approved the adoption of the Plan.
Under the Plan, options may be issued to directors, officers, key employees,
consultants, agents, advisors, and independent contractors who are in a
position to contribute materially to the prosperity of GWIN. The Plan provides
for the issuance of both incentive stock options, or ISOs, and non-qualified
stock options, or NQSOs. ISOs are issued to employees and NQSOs are generally
issued to non-employees. The number of shares that are subject to ISOs is
limited to the discretion of the Board.

Our board administers the Plan but may delegate such administration to a
committee, which shall consist of at least two members of the board. The board
or the committee has the authority to determine the number of options to be
granted, when the options may be exercised and the exercise price of the
options, provided that the exercise price may never be less than the fair
market value of the shares of the common stock on the date the option is
granted, or 110% in the case of any employee who owns more than 10% of the
combined voting power or value of all classes of stock. Options may be granted
for terms not exceeding ten years from the date of the grant, except for

options granted to persons holding in excess of 10% of the common stock, in
which case the options may be granted for a term not to exceed five years from
the date of the grant.

The board believes that the Plan will provide greater flexibility in
structuring compensation arrangements with management, consultants and
employees, and will provide an equity incentive for those who are awarded
shares under the Plan. The issuance of common stock as an award under the Plan
may have a financially dilutive effect depending on the price paid for such
shares, and an absolute dilutive effect due to the increase in issued and
outstanding shares.

At July 31, 2004, 1,810,000 options were outstanding.

During the fiscal year ended July 31, 2004, the Company granted no
options.

Equity Compensation Plan Information

Number of
securities to be
issued upon Number of
exercise of Weighted average securities
outstanding exercise price of remaining
options, warrants outstanding options, available for
Plan category and rights warrants and rights future issuance
------------- ------------------ ------------------- ---------------
(a) (b) (c)

Equity compensation
plans approved by security
holders 3,000,000 Common $0.46 1,190,000 Common

Equity compensation
plans not approved by
security holders None N/A None

Total 3,000,000 Common $0.46 1,190,000 Common

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number and percentage of shares of our
$.0001 value common stock owned beneficially, as of July 31, 2004, by any
person, who is known by us to be the beneficial owner of 5% or more of such
common stock, by all Directors and Executive Officers individually, and by all
Directors and Executive Officers as a group. Information as to beneficial
ownership is based upon statements furnished to us by such persons.

Amount of
Name and Address Beneficial Percentage
of Beneficial Owner (1) Ownership of Class
------------------- -------------- ----------

Wayne Allyn Root 8,647,262 (2) 10.4%

Douglas R. Miller 4,192,370 (3) 5.0%

Roger Aspey-Kent 703,000 (4) *

Timothy Michael Whalley 845,000 (5) 1.0%

Robert L. Seale 20,000 *

Roger L. Harrison 20,000 *

Jeff Johnson -0- -0-

Hollis Barnhart 300,000 *

All Officers and Directors 14,727,632 17.6%
as a group (8 persons)
_______________

* Less than one percent.

(1) Unless otherwise noted, the address for each of the named beneficial
owners is 5092 South Jones Blvd., Las Vegas, Nevada 89188.

(2) Does not include 2,000,000 shares which will vest as follows: 666,666
shares on July 31, 2005, 666,667 shares on July 31, 2006 and 666,667
shares on July 31, 2007.

(3) Includes 1,036,568 shares held directly by Mr. Miller; and 3,155,802
shares held in the name of the Kerlee Intervivos Trust of which Mr.
Miller is a beneficiary. Does not include 1,000,000 shares which will
vest as a restricted stock grant in the amount of 500,000 shares
vesting on July 31, 2005, and 500,000 vesting July 31, 2006.

(4) Includes 345,000 shares held directly by Roger Aspey-Kent and 358,000
shares underlying currently exercisable warrants.

(5) Includes 620,000 shares held directly by Mr. Whalley and 225,000
shares underlying currently exercisable warrants.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In September 2002, we entered into an agreement with Newmarket
Investments, plc ("Newmarket"), an existing convertible debenture holder,
which provided that Newmarket invest an additional $700,000 in the Company by
amending the existing $500,000 convertible debenture held by Newmarket to
reflect a principal amount of $1,200,000. The anti-dilution provisions on
the combined $1,200,000 convertible debenture provide that 5,802,199
additional shares be issued upon conversion. The total Newmarket convertible
debenture shares upon conversion was 9,230,769. Newmarket elected to convert
the entire debenture into restricted stock of the company in the second
quarter of 2004. In addition, the Company agreed to exchange an existing
warrant held by Newmarket to acquire 1,000,000 shares of common stock at $1.00

per share for a warrant to acquire 3,000,000 shares of common stock at $0.13
per share. This Warrant expires on August 31, 2005. Newmarket also extended
an unsecured standby credit facility of $250,000 with a 16% annual interest
rate, and payable on March 31, 2003. In January 2004 the Company extended the
note with Newmarket to include payments of $13,000 per month until paid in
full. At July 31, 2004, the Company had an outstanding balance including
interest of $155,515. In connection with these transactions, we also issued
to Newmarket a three-year option to purchase 1,500,000 shares at a price per
share of $0.50. The option expires July 31, 2006. The CEO of Newmarket is a
former director of the Company.

In 2001, the Company sold 64,000 units consisting of one share of Series
C Convertible Preferred stock and one warrant exercisable at $1.00 for an
additional share of Series C stock for a price of $1,500,000. The base
conversion rate was adjusted in the quarter ended October 31, 2001. In the
quarter ended October 31, 2002, there was an additional adjustment to the
conversion rate resulting from anti-dilution provisions in the purchase
agreement. In April 2003 all of the Series C Convertible Preferred
stockholders converted their shares to 10,000,000 Common shares and 1,910,000
warrants at $1.00 per share that expired July 10, 2004. Approximately
one-third of these shares were issued to Mr. Keating and affiliates of Mr.
Keating.

In connection with the reorganization and sale of Series C preferred
stock in July 2001, Keating Investments, LLC received a placement fee of
$150,000 for services rendered in connection with the private placement of our
Series C preferred stock. Timothy J. Keating, a former Director of our
company from December 2002 until October 8, 2003,and our former President and
Chief Executive Officer, is the Managing Member and President of Keating
Investments, LLC. This fee represents 10% of the amount of gross proceeds from
the placement.

On September 4, 2001, we sold to Keating Partners, L.P., for an aggregate
purchase price of $200,000, a total of 400,000 shares of our common stock,
together with a warrant to purchase an additional 400,000 shares at an
exercise price of $1.00 per share expiring on August 31, 2004. This
transaction triggered the anti-dilution adjustment provisions of our Series C
preferred stock, of which 36,694 shares are beneficially owned by Mr. Keating,
resulting in an adjustment in the conversion rate for the Series C preferred
stock from 31.25 to 46.875 shares of common stock for every one share of
Series C preferred stock. Mr. Keating was a director of the Company from
August 1999 until August 2003.

In September 2001, we entered into a 4-year financial advisory agreement
with Keating Investments, LLC. In consideration for the services to be
rendered pursuant to this agreement, we issued Keating Investments, LLC a
warrant to purchase 600,000 shares of our common stock at an exercise price of
$0.10 per share, exercisable until September 10, 2006. The cost of this
agreement has been recorded at $240,000 and is being charged to operations
over 48 months. In March the Company negotiated a settlement of stock in
exchange for the outstanding warrants and consulting services to the Company.

In November 2001, we borrowed money from and entered into note payable
agreements with Mr. Root, an officer and director, and Mr. Keating, a former
director, for $50,000 each which accrue interest at 12% annually. At July
31, 2004, we had a principal balance owed to Mr. Root of $50,000 under the
agreement with accrued interest of $16,692. In May of 2004 Mr. Keating elected
to receive common shares as payment in full on his $50,000 note.

In May 2004 the Company issued 1,190,625 shares of restricted common
stock to Wayne A. Root, CEO, and 200,000 shares to an assignee of Mr. Root as
payment of $111,250 payable resulting from accrued handicapping commissions
due.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

The following exhibits are filed as part of this annual report:

(a) EXHIBITS.

Number Description

2. Agreement and Plan of Reorganization dated July 6, 2001
between Global Sports & Entertainment, Inc. and Turfclub.com,
Inc. (1)

3.1 Certificate of Incorporation of GWIN, as amended (1)

3.2 Bylaws of GWIN (5)

4.1 Certificate of Designations of Series C Preferred Stock and
Series C Stock Purchase Agreement (1)

4.2 Form of Indenture representing 5% Convertible Debentures (1)

4.3 Form of Indenture representing 13% Convertible Debentures (4)

4.4 Form of Common Stock Purchase Warrant included with 5%
Convertible Debenture Units (4)

10.1 Financial Advisory Agreement dated September 10, 2001 between
the GWIN and Keating Investments, LLC (1)

10.2 Executive Services Agreement dated December 6, 1999 between
GWIN and Mr. Miller (1)

10.3 Executive Services Agreement dated December 6, 1999 between GWIN
and Mr. Root (1)

10.4 Sports Personality Agreement dated March 2, 2000 between GWIN
and Mr. Root (1)

10.5 Term sheet with British Bloodstock Agency, dated August 21,
2002 (4)

10.6 Agreement describing voting agreement between Mr. Manner and Mr.
Root regarding Mr. Keating's board rights (2)

10.7 Common Stock Purchase Warrant issued to Keating Investments,
LLC (1)

10.8 Debenture Purchase Agreement dated September 19, 2001 between
GWIN and Mr. Root (1)

10.9 5% Convertible Debenture dated September 19, 2001 issued to Wayne
Allyn Root (1)

10.11 Common Stock Purchase Warrant issued to Mr. Root (1)

10.12 Debenture Purchase Agreement dated August 31, 2001 between GWIN
and Mr. Manner (1)

10.13 5% Convertible Debenture dated September 19, 2001 issued to Mr.
Manner (1)

10.14 Common Stock Purchase Warrant issued to Mr. Manner (1)

10.15 Common Stock Purchase Warrant dated September 4, 2001 between
GWIN and Keating Partners, L.P. (1)

10.16 Common Stock Purchase Warrant issued to Keating Partners, L.P.(1)

10.17 Promissory Note dated October 23, 2000 issued to Mr. Root (1)

10.18 Letter Agreement dated July 5, 2001 between GWIN and Keating
Investments, LLC (1)

10.19 Series C Preferred Stock Purchase Agreement dated July 10, 2001
between Trilium Holdings Ltd. and the Company (1)

10.20 Promissory Note dated November 12, 2001 issued to Mr. Keating.(3)

10.21 Promissory Note dated November 12, 2001 issued to Mr. Root.(3)

10.22 Securities Purchase Agreement dated June 29, 2002 between
Laurus Master Fund, Ltd. and GWIN (4)

10.23 2002 Equity Incentive Plan (6)

10.24 Employment Agreement with Wayne Allyn Root dated July 31, 2003 (8)

10.25 Employment Agreement with Douglas R. Miller dated July 31, 2004 -
Filed herewith electronically

10.26 Employment Agreement with Wayne Allyn Root dated July 31, 2004 -
Filed herewith electronically

14 Code of Ethics - Filed herewith electronically

21.1 List of Subsidiaries (4)

31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 - Filed herewith
electronically

31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 - Filed herewith
electronically

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 - Filed herewith electronically

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 - Filed herewith electronically

----------------------

(1) Incorporated by reference to the similarly described exhibit included with
the registrant's Quarterly Report for quarter ended September 30, 2001 filed
with the SEC on November 19, 2001.

(2) Described in Exhibit 2.1

(3) Incorporated by reference to the similarly described exhibit included with
the registrant's Annual Report for the year ended December 31, 2001 filed with
the SEC on April 1, 2002 and amended on May 15, 2002.

(4) Incorporated by reference to the similarly described exhibit included with
the registrant's registration statement on Form SB-2, 333-99599, filed on
September 13, 2002.

(5) Unavailable in electronic format, but will be mailed upon request free of
charge.

(6) Incorporated by reference to the Registrants Definitive Information
Statement filed with the SEC on July 21, 2002.

(7) Incorporated by reference to GWIN, Inc. annual report on Form 10-K for the
year ended July 31, 2002, as filed with the SEC on October 28, 2002.

(8) Incorporated by reference to GWIN, Inc. annual report on Form 10-KSB for
the year ended July 31, 2003, as filed with the SEC on November 10, 2003.

(b) REPORTS ON FORM 8-K

None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

The aggregate fees billed by Moore Stephens, P.C. for professional
services related to the audit of the Company's consolidated financial
statements for the fiscal year ended July 31, 2004 were $40,000.

AUDIT RELATED FEES

The aggregate fees billed by Moore Stephens P.C. for audit related
services for the fiscal years ended July 31, 2004 and 2003 were $17,000 and
$21,000, respectively.

The aggregate fees billed by Demetrius & Co. for audit related services
for the fiscal years ended July 31, 2004 and 2003 were $12,000 and $10,000,
respectively.

TAX SERVICES

The aggregate fees billed by Moore Stephens P.C. for tax services for the
fiscal years ended July 31, 2004 and 2003 were $1,800 and $26,000,
respectively.

ALL OTHER SERVICES

There were no fees billed by Moore Stephens P.C. for other services for
the fiscal years ended July 31, 2004 and 2003.

The aggregate fees billed by Demetrius & Co. for other services for the
fiscal years ended July 31, 2004 and 2003 were $1,200 and $1,200,
respectively.

SIGNATURES

In accordance with Section 13 of the Exchange Act, the Registrant caused
this Report to be signed on its behalf by the undersigned, there unto duly
authorized on November 1, 2004

GWIN, INC.

By: /s/ Wayne Allyn Root
-----------------------------------------
Wayne Allyn Root, Chief Executive Officer

In accordance with the requirements of Section 13 of the Exchange Act,
this Report has been signed below by the following persons on behalf of the
Registrant on November 1, 2004 and in the capacities indicated.

/s/ Wayne Allyn Root
-----------------------------------------------------
Wayne Allyn Root, Chairman, Chief Executive Officer
(Principal Executive Officer)

/s/ Jeff Johnson
-----------------------------------------------------
Jeff Johnson, Chief Financial Officer
(Principal Financial and Accounting Officer)

/s/ Douglas Miller
-----------------------------------------------------
Douglas Miller, Director

/s/ Robert Seale
-----------------------------------------------------
Robert Seale, Director

/s/ Roger Aspey-Kent
-----------------------------------------------------
Roger Aspey-Kent, Director

/s/ Timothy Whalley
------------------------------------------------------
Timothy Whalley, Director

/s/ Roger Harrison
------------------------------------------------------
Roger Harrison, Director