GOLDEN BEAR GOLF INC, PRER14C, 2000-06-09

GOLDEN BEAR GOLF INC
PRER14C, 2000-06-09
MISCELLANEOUS AMUSEMENT & RECREATION

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SCHEDULE 14C INFORMATION

INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934

Check the appropriate box:

[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
[ ] Definitive Information Statement

GOLDEN BEAR GOLF, INC.
(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

[ ] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.

(1) Title of each class of securities to which transaction
applies: Class A Common Stock, Par Value $.01 Per Share

(2) Aggregate number of securities to which transaction applies:
2,504,962

(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): $.75

(4) Proposed maximum aggregate value of transaction: $1,878,722

(5) Total fee paid: $376

[X] Fee paid previously with preliminary materials.

[X] Check box if any part of the fee is offset as provided by Rule 0-11 (a)
(2) and identify the filing for which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid: $376

(2) Form, Schedule or Registration No.: Schedule 13E-3

(3) Filing Party: Golden Bear Golf, Inc.

(4) Date Filed: April 12, 2000

<PAGE>

INFORMATION STATEMENT

GOLDEN BEAR GOLF, INC.

We are sending this Information Statement on to the holders of
record of our Class A Common Stock as of , 2000 in connection with the
merger of GB Golf Corp., one of our wholly-owned subsidiaries, with and into
Golden Bear Golf, Inc., with Golden Bear as the surviving corporation of the
merger. On , 2000, we consummated the merger pursuant to the terms of an
Agreement and Plan of Merger dated as of , 2000 by and among GB Golf and
us. We entered into the merger agreement pursuant to the terms of a court
approved settlement agreement.

On , 2000, the owners of our outstanding Class B Common Stock
converted all of their shares of Class B Common Stock into shares of our Class
A Common Stock and approved the merger by written consent in lieu of a meeting.
The approval of the merger by those shareholders was sufficient to approve the
merger under the provisions of the Florida Business Corporation Act and our
Articles of Incorporation and Bylaws. No action by the other holders of our
Class A Common Stock is required to approve or consummate the merger, and we
are not seeking any approval from you. We do not require and will not seek the
approval of the settlement agreement or the merger by non-affiliated
shareholders.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT REQUIRED TO SEND US A
PROXY.

Pursuant to the terms of the merger agreement, holders of our Class A
Common Stock are entitled to receive 1 share of Class A common stock of the
surviving corporation for every 114,000 shares of our Class A Common Stock they
held on the effective date of the merger. However, because we will not issue
any fractional shares of the surviving corporation stock in the merger, any
holder of less than 114,000 shares of our Class A Common Stock on the effective
date will receive, in lieu of any fractional shares of the surviving
corporation stock, a cash amount equal to $0.75 per share of Class A Common
Stock held before the merger. We have received an opinion from our financial
advisor that the terms of the merger are fair to you from a financial point of
view. As provided by the terms of the court approved settlement agreement, we
have structured the merger so that only the former holders of our Class B
Common Stock will continue to hold shares of stock in the surviving
corporation.

In order to receive your cash payment for your shares after the merger,
you must deliver a properly completed Letter of Transmittal together with the
certificates representing your shares of Class A Common Stock to First Union
National Bank, as paying agent, by mail, hand delivery, or overnight courier in
the manner set forth in the Letter of Transmittal.

This Information Statement also constitutes your notice of the
availability to you of appraisal rights pursuant to Section 607.1302 of the
Florida Business Corporation Act. If you do not wish to accept the cash payment
you are entitled to receive in the merger, you have the right, if properly
perfected, to seek a judicial appraisal of the "fair value" of your shares of
Class A Common Stock, which could be less than or greater than the cash payment
you would otherwise receive pursuant to the terms of the merger.

This Information Statement also forms a part of a Schedule 13e-3 that we
have filed with the Securities and Exchange Commission with respect to the
merger.

ALL OF OUR DIRECTORS, OTHER THAN MR. NICKLAUS, WHO DID NOT VOTE, APPROVED
THE MERGER.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

The date of this Information Statement is .
<PAGE>

TABLE OF CONTENTS

PAGE
-----
SUMMARY TERM SHEET ...................................................... i
FORWARD LOOKING STATEMENTS .............................................. 1
INTRODUCTION ............................................................ 1
SPECIAL FACTORS ......................................................... 2
Background and Purpose of the Merger .................................. 2
Determination of the Board of Directors; Fairness of the Transaction .. 4
Opinion of Financial Advisor .......................................... 7
THE MERGER .............................................................. 12
The Merger ............................................................ 12
Effective Time ........................................................ 12
Articles of Incorporation and Bylaws .................................. 12
Directors and Officers ................................................ 12
Conversion of Securities .............................................. 12
Closing of Stock Transfer Records ..................................... 13
Surrender of Stock Certificates ....................................... 13
Payment for Shares .................................................... 13
Conditions ............................................................ 13
Expenses .............................................................. 13
Source and Amount of Funds ............................................ 14
Material Federal Income Tax Consequences .............................. 14
Accounting Treatment .................................................. 15
INTERESTS OF CERTAIN PERSONS IN OUR SECURITIES AND THE MERGER ........... 16
APPRAISAL RIGHTS ........................................................ 16
PLANS FOR GOLDEN BEAR AND GB GOLF FOLLOWING THE MERGER .................. 18
MARKET PRICE AND DIVIDEND INFORMATION ................................... 20
SELECTED FINANCIAL DATA ................................................. 21
SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION ...................... 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS .......................... 23
INFORMATION REGARDING GOLDEN BEAR ....................................... 30
Business .............................................................. 30
Properties ............................................................ 35
Management ............................................................ 36
Legal Proceedings ..................................................... 37
INFORMATION REGARDING GB GOLF ........................................... 38
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .......................... 38
INDEX TO FINANCIAL STATEMENTS ........................................... F-1
AGREEMENT AND PLAN OF MERGER ............................................ A-1
OPINION OF MORGAN STANLEY & CO. INCORPORATED ............................ B-1
SELECTED PROVISIONS OF THE FLORIDA BUSINESS CORPORATION ACT ............. C-1

<PAGE>

SUMMARY TERM SHEET

Companies.................. Golden Bear Golf, Inc., a Florida corporation,
and GB Golf Corp., a Florida corporation and a
wholly-owned subsidiary of Golden Bear. SEE
"INFORMATION REGARDING GOLDEN BEAR" and
"INFORMATION REGARDING GB GOLF."

Purpose.................... We are effecting the merger to comply with the
terms of a court-approved settlement agreement so
that the holders of our Class A Common Stock other
than holders affiliated with Jack W. Nicklaus, our
Chairman, will receive cash for their securities.
SEE "SPECIAL FACTORS--BACKGROUND AND PURPOSE OF
THE MERGER."

Transaction................ A statutory merger of GB Golf with and into
Golden Bear under the Florida Business Corporation
Act. Golden Bear will survive the merger. SEE "THE
MERGER" and "APPENDIX A--AGREEMENT AND PLAN OF
MERGER."

Consideration.............. Each issued and outstanding share of Golden
Bear's Class A Common Stock will be converted into
approximately 0.00000877 of a share of the Class A
Common Stock of the surviving corporation of the
merger. However, no fractional shares will be
issued and cash will be paid in lieu of fractional
shares. If you would otherwise receive a
fractional share as a result of the merger you
will instead receive $0.75 for each share of Class
A Common Stock you owned on the effective date of
the merger. SEE "THE MERGER."

Fairness Opinion........... We have received an opinion from Morgan Stanley
& Co. Incorporated, our financial advisor, that
the $0.75 cash consideration that we will pay to
you in the merger is fair from a financial point
of view to the holders of our Class A Common
Stock, other than Mr. Nicklaus and his affiliates.
SEE "SPECIAL FACTORS--OPINION OF FINANCIAL
ADVISOR" and "APPENDIX B--OPINION OF MORGAN
STANLEY & CO. INCORPORATED."

Source and Amount of
Funds and Expenses......... We estimate that we will pay approximately $1.9
million to holders of our Class A Common Stock who
will receive cash in the merger. We will fund
these amounts from cash on hand. SEE "SPECIAL
FACTORS--BACKGROUND AND PURPOSE OF THE MERGER" and
"THE MERGER--SOURCE AND AMOUNT OF FUNDS." We will
pay all expenses incurred in the merger. SEE "THE
MERGER--EXPENSES."

Effect..................... As a result of the merger you will receive cash
in the amount of $0.75 for each share of Class A
Common Stock you held on the effective date of the
merger and Golden Bear will revert to private
ownership. Holders of our Class A Common Stock who
are affiliated with Mr. Nicklaus will continue to
hold shares of stock in the surviving corporation
of the merger, and those shares will represent
100% of the outstanding equity interests of the
surviving corporation after the merger. SEE "THE
MERGER" and "PLANS FOR GOLDEN BEAR AND GB GOLF
FOLLOWING THE MERGER."

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<PAGE>

Shareholder Approval....... The Nicklaus-affiliated shareholders converted
all of their shares of our Class B Common Stock
into shares of our Class A Common Stock on ,
2000 and approved the merger by written consent in
lieu of a meeting as permitted by Florida law.
Their shares represented % of the vote
entitled to vote on the merger and accordingly no
further action by our shareholders is required to
approve the merger. We are not seeking your proxy
or your approval of the merger. SEE "SPECIAL
FACTORS--BACKGROUND AND PURPOSE TO THE MERGER."

Appraisal Rights........... Pursuant to the terms of the settlement
agreement, we have agreed to provide you with
appraisal rights with respect to your Class A
Common Stock under the applicable sections of the
Florida Business Corporation Act. If you properly
perfect these rights these provisions will permit
you to have the "fair value" of your Class A
Common Stock judicially determined and paid to you
instead of the $0.75 per share paid in the merger.
In order to perfect your rights you must fully
comply with the statutory procedures of Florida
law. SEE "APPRAISAL RIGHTS" and "APPENDIX
C--SELECTED PROVISIONS OF THE FLORIDA BUSINESS
CORPORATION ACT."

Conditions to the Merger... It was a condition to the merger that the merger
and the settlement agreement be approved by the
United States District Court for the Southern
District of Florida. The Court approved the merger
and settlement agreement on March 28, 2000. The
merger was also subject to other customary
conditions. SEE "THE MERGER" and "APPENDIX
A--AGREEMENT AND PLAN OF MERGER."

ii
<PAGE>

FORWARD LOOKING STATEMENTS

This Information Statement contains forward-looking statements. These
forward-looking statements are based largely on our expectations and are
subject to a number of risks and uncertainties, including but not limited to,
those risks associated with:

/bullet/ the outcomes of the pending lawsuits against us and the resolution
of potential claims by and outstanding issues with vendors, course owners
and developers including the outcome and costs associated with the
on-going Securities and Exchange Commission investigation;
/bullet/ economic conditions generally;
/bullet/ changes in interest rates, and the availability, cost and terms
of financing;
/bullet/ competition;
/bullet/ risks associated with licensing activities including the risks
associated with the operations of our licensees;
/bullet/ changes in business strategy or development plans; and
/bullet/ other factors discussed elsewhere in this Information Statement
and in the documents that we file with the Securities and Exchange
Commission.

Many of these factors are beyond our control. Our actual results could
differ materially from any forward-looking statements. In light of these risks
and uncertainties, we can not assure you that the forward- looking information
contained in this Information Statement will, in fact, occur. We do not
undertake any obligation to revise these forward-looking statements to reflect
future events or circumstances and other factors discussed elsewhere in this
report and the documents we file with the Securities and Exchange Commission.

INTRODUCTION

Since its formation, Golden Bear, together with our wholly-owned
subsidiaries, has been engaged in the development, marketing and management of
golf-related businesses including the licensing, distribution and sale of
golf-related consumer products, the operation of golf instructional schools and
the licensing of golf practice and instruction facilities. Through our various
operating units, we have provided products and services primarily under the
NICKLAUS, JACK NICKLAUS and GOLDEN BEAR brand names.

Golden Bear was formed on June 7, 1996 to enter into an exchange agreement
that we consummated on August 1, 1996, simultaneously with the closing of our
initial public offering of our Class A Common Stock. Parties to the exchange
agreement included a number of our affiliates as well as Golden Bear
International, Inc., a privately owned company controlled by Jack Nicklaus,
Chairman of our Board of Directors. Pursuant to the exchange agreement, we
acquired all of the outstanding common stock of the other constituent companies
of the reorganization (except Golden Bear International) in exchange for shares
of our Class A and Class B Common Stock. In addition, we acquired specified
assets and assumed specified liabilities of Golden Bear International in
exchange for shares of our Class B Common Stock. We accounted for the
transaction on a historical cost basis in a manner similar to a pooling of
interests as we and the constituent companies to the reorganization had common
stockholders and management. We have no equity interest in Golden Bear
International.

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<PAGE>

During 1998, we sold our wholly-owned subsidiary Golden Bear Golf Centers,
Inc. and discontinued the construction operations conducted by our wholly-owned
subsidiary Paragon Construction International, Inc. As a consequence of the
termination of these activities, our remaining businesses include:

/bullet/ licensing of branded products under the names
/bullet/ NICKLAUS,
/bullet/ JACK NICKLAUS and
/bullet/ GOLDEN BEAR
/bullet/ operating the NICKLAUS FLICK GAME IMPROVEMENT, and
/bullet/ generating marketing fees related to Mr. Nicklaus' personal
endorsements.

In addition, on December 18, 1998, we entered into an agreement with Weitz
Golf International LLC, a newly formed construction company, pursuant to which
we provide marketing assistance in connection with the construction activities
Weitz Golf offers. To date, we have not generated any revenues from these
activities.

As of May 4, 2000, we had 2,744,962 shares of our Class A Common Stock and
2,760,000 shares of our Class B Common Stock issued and outstanding. As a
consequence of the conversion of our Class B Common Stock into Class A Common
Stock in connection with the merger, as of , 2000 we had shares of
Class A Common Stock and no shares of Class B Common Stock issued and
outstanding. Our Class A Common Stock is traded on the NASD's OTC Bulletin
Board under the symbol "JACK." On December 23, 1999, the last trading day prior
to our announcement of the terms of the settlement and merger, the last
reported sales price of our Class A Common Stock was $0.50. On , 2000, the
last reported sales price of our Class A Common Stock was $ .

SPECIAL FACTORS

BACKGROUND AND PURPOSE OF THE MERGER

Based on a comprehensive review of construction projects of our
wholly-owned subsidiary, Paragon Construction International, Inc. it was
necessary for us to restate the financial statements for the year ended
December 31, 1997 that we had previously filed with the Securities and Exchange
Commission. Following our announcement that our financial statements needed to
be restated, a number of class action complaints were filed against us and
certain of our present and former officers and directors and the former
president of one of our subsidiaries. One of the class action complaints also
named Arthur Andersen LLP, our certified public accountants ("Andersen"), as a
defendant. Those class actions were transferred to Judge Daniel T. K. Hurley of
the United States District Court for the Southern District of Florida and that
court entered an order consolidating the actions, designating class
representatives and appointing class counsel pursuant to the provisions of the
Private Securities Litigation Reform Act.

On December 24, 1998, the plaintiffs filed their first Consolidated Class
Action Complaint, naming as defendants Golden Bear, Jack W. Nicklaus, Richard
P. Bellinger, Jack P. Bates, Stephen S. Winslett, John Boyd, and Andersen. The
Consolidated Complaint alleged claims for violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The Consolidated Complaint asserted claims on behalf of a class
consisting of all persons, excluding the defendants and certain related persons
and entities, who purchased shares of our Class A Common Stock during the
period from April 30, 1997 through and including July 27, 1998.

On December 22, 1999, the parties entered into a settlement agreement
relating to the consolidated actions. In connection with the settlement, the
plaintiffs filed a motion to allow the filing

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of their Second Amended Consolidated Complaint on behalf of a class of all
persons, excluding the defendants, who purchased shares of our Class A Common
Stock from the date of our public offering, August 1, 1996, through and
including July 27, 1998. The Amended Consolidated Complaint included
allegations of securities law violations under Sections 11, 12(2) and 15 of the
Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 and Rule 10b-5, as well as common law claims.

Under the terms of the settlement agreement, we established a settlement
fund in the amount of $3.5 million to settle the class action litigation. We
were responsible for contributing $2.5 million to the settlement fund; this
amount was provided by our insurer. Pursuant to the settlement agreement,
Andersen also agreed to contribute $1 million to the settlement fund.
Additionally, we agreed to take the steps necessary to effectuate the
transaction which is the subject of this Information Statement resulting in
consideration payable to the public holders of shares of our Class A Common
Stock of $0.75 in cash per share. As approved by the Court, plaintiffs' counsel
will receive 30% of the settlement fund, payable out of the fund, and $125,250
payable by the Company, or an aggregate of $1,175,250 in legal fees from all
sources.

In connection with our entry into the settlement agreement, we also
entered into a settlement with Andersen to resolve our claims against it. We
had previously advised Andersen of our belief that Andersen violated its duty
of care in connection with the professional services it provided to us and that
our losses, in part, resulted from that failure of due care. Andersen
vigorously denied a failure of due care on its part and vigorously denied that
any of our losses resulted from anything Andersen did or failed to do.
Notwithstanding the foregoing, in order to avoid protracted litigation, the
parties entered into a settlement. Pursuant to the settlement, Andersen agreed
to pay us $3.8 million in cash and waive approximately $750,000 in receivables
due to Andersen from us. Andersen's payment to us of $3.8 million in cash is in
addition to Andersen's $1 million contribution to the settlement fund. Pursuant
to the terms of the settlement, plaintiffs' counsel will receive approximately
$1,175,250 in legal fees.

The terms and conditions of the settlement agreement including the amount
of the settlement fund and the amount to be paid to the public shareholders in
redemption and cancellation of their shares in the merger were the result of
arms-length negotiations between the parties. The settlement was reached after
months of discovery and negotiations. Plaintiffs' counsel stated that the
decision to settle and the terms of settlement were reached after determining
that the parties whose actions resulted in the restatement were not a likely
source of recovery due to collectibility issues and that it would be very
difficult to establish scienter against those parties who have sufficient
resources. Further, the insurance coverage available was a $5 million "wasting"
policy, a policy reduced by amounts paid as legal fees to defend the action and
a policy which was, in any event, not available for intentional actions as
might prove to be the case of those individuals whose actions resulted in the
restatement. Plaintiffs' counsel stated in their court filings that concerns
regarding our financial condition also contributed to the decision to settle
the case. As stated by plaintiffs' counsel, it was unrealistic to expect a
payment approximating market losses or damages given our financial condition
and potential coverage issues. Further, as stated by plaintiffs' counsel, since
we were essentially insolvent, a "going private" transaction which achieved the
high end of any realistic evaluation of our common stock was preferable to
continued litigation and a potential bankruptcy. Plaintiffs' counsel concluded
that the settlement fund together with the cancellation and redemption of their
shares in connection with the merger would permit the public shareholders to
directly participate in the cash held by us, would eliminate their future
exposure to risk, and was in the best interest of the public shareholders.

On January 13, 2000 the United States District Court for the Southern
District of Florida granted preliminary approval of the settlement and on March
28, 2000, the court approved the terms of the settlement and entered a final
order and judgment. The court, in its order, adjudged that the settlement
agreement is fair, reasonable and adequate to the class.

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The purpose of the merger transaction is to comply with the terms of the
settlement agreement requiring that holders of our Class A Common Stock other
than the former holders of our Class B Common Stock receive cash for their
securities.

DETERMINATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE TRANSACTION

On November 1, 1999, the Board of Directors was advised by counsel on the
status of the class action litigation and the terms of a proposed settlement.
At that meeting, Morgan Stanley made a presentation to the Board on possible
valuations of the Company and issues relating to valuation. Industry wide
issues were reviewed as well as the limited liquidity of the stock. Also
considered were potential issues with respect to the dependence on key
individuals for golf instruction revenues and an individual licensee whose
financial condition was problematic for continued licensing royalties.

On December 20, 1999 our Board of Directors held a special meeting at
which Morgan Stanley & Co. Incorporated, our financial advisor, made a
presentation concerning the fairness of the cash consideration to be received
by the public shareholders of Class A Common Stock in the merger and delivered
their oral opinion that the amount of the cash consideration to be offered in
the merger as provided for in the settlement agreement was fair from a
financial point of view to those of our shareholders who will receive cash in
the merger. Following Morgan Stanley's presentation and the delivery of their
oral opinion all of our directors (other than Mr. Nicklaus who was not in
attendance and did not vote) determined that the terms of the settlement and
the contemplated merger are procedurally and substantively fair to holders of
our Class A Common Stock and approved the terms of the merger and the merger
agreement. In order to avoid any appearance of impropriety or undue influence,
Mr. Nicklaus did not attend the meeting and did not participate in the vote on
the settlement or merger. However, he did attend prior meetings leading up to
resolution of the matters and did join in the settlements of both the class
action litigation and the claim against Andersen. Mr. Nicklaus has indicated
that, for the reasons stated by the Board, it is his belief that the merger is
procedurally and substantively fair to our public shareholders. GB Golf, which
is our wholly-owned subsidiary formed solely for the purpose of effecting the
merger, has also made a determination based on such factors that the merger is
both procedurally and substantively fair to our public shareholders.

In reaching its conclusion that the merger is procedurally and
substantively fair to, and in the best interests of, our public shareholders,
the Board of Directors, Mr. Nicklaus and GB Golf considered, among other
factors, the following factors which it considered to be positive factors
supporting its determination that the merger is substantively and procedurally
fair to, and in the best interests of, our public shareholders:

/bullet/ the presentations by and the written opinion of the investment
banking firm of Morgan Stanley delivered to the Board of Directors
confirming that the $0.75 per share to be received by our public
shareholders was fair to them from a financial point of view. The full
text of the written opinion of Morgan Stanley which sets forth assumptions
made, matters considered and limitations on the review undertaken in
connection with its opinion, is attached hereto as Appendix B and is
incorporated herein by reference. We urge you to read that opinion in its
entirety. See "--Opinion of Financial Advisor." The Board of Directors
adopted the conclusions of Morgan Stanley in its determination that the
merger is fair to our public shareholders. In its review of the analyses
performed by Morgan Stanley, the Board of

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Directors did not place greater weight on any one of the separate
analyses, but rather relied upon the summary and conclusions of Morgan
Stanley that the analyses, taken as a whole, supported the conclusion that
the $0.75 per share to be received by our public shareholders is fair to
them from a financial point of view. Based on Morgan Stanley's expertise
and experience in the evaluation of businesses in connection with
transactions similar to the merger, its familiarity with our business,
financial condition, results of operations and prospects, and its analyses
and presentations related to the fairness opinion, the Board of Directors
believes that Morgan Stanley's opinion as to the fairness of the cash
consideration to be received by our public shareholders was correct.

/bullet/ the negotiation and terms and conditions of the settlement
agreement, including the terms and conditions of the merger agreement. In
particular, the Board of Directors considered that:
/bullet/ the terms of the settlement and the merger were the result of
arms-length negotiations with the plaintiffs in the class action
litigation, who are themselves holders of Class A Common Stock and will
receive cash in the merger,
/bullet/ the plaintiffs in the class action litigation believed that the
buy-out of the public shareholders at $0.75 per share was in the best
interests of those shareholders, since it would permit them to
participate directly in the settlement funds that we would receive from
Andersen, which funds would otherwise have been a corporate asset of
ours, and that the redemption of their securities would end their
exposure to our business and operational risks on a going-forward
basis,
/bullet/ the fact that the terms of the class action litigation
settlement, which included the terms on which the publicly held shares
would be redeemed and canceled, would be independently approved by the
federal judge of the U.S. District Court for the Southern District of
Florida after notice and hearing,
/bullet/ the fact that the terms of the settlement agreement and the
merger agreement provide that any holder of Class A Common Stock could
dissent from the merger and, at our expense, pursue appraisal rights
and be paid the judicially determined "fair value" of that
shareholder's shares of Class A Common Stock, and the fact that those
provisions of the settlement agreement and the merger agreement were
included for the benefit of the public shareholders of the Class A
Common Stock notwithstanding the fact that, under Florida law, they
would otherwise have had no right to seek such an appraisal for their
shares. See "Appraisal Rights", and

/bullet/ the fact that the settlement and the merger were approved by all
of our independent outside directors

/bullet/ the fact that, since August 1999, the trading price of the Class A
Common Stock had generally been at or below $0.75 per share, and that the
trading price of the Class A Common Stock from the date of our initial
public offering in August 1996 consistently trended downward, exacerbated
in part by the delisting of the Class A Common Stock from the Nasdaq
National Market System in July 1998.

/bullet/ the relatively inconsistent and frequently low level of trading of
the Class A Common Stock on the over-the-counter bulletin board.

/bullet/ the amount of the cash consideration payable to holders of Class A
Common Stock in the merger in light of our financial condition, results of
operations, prospects and businesses, including the fact that the $0.75
per share cash consideration payable in the merger was substantially in
excess of the ($3.03) fully diluted per share book value of the Class A
Common Stock and Class B Common Stock at September 30, 1999, and the fact
that the book value per share of the Class A Common Stock and Class B
Common Stock had continued to decline in the period following September
30, 1999.

/bullet/ the fact that our obligations are greater than our available cash
and, that, we must rely on and will be utilizing our cash flow from
operations, if any, to pay our liabilities as they come due.

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<PAGE>

/bullet/ Our lack of equity capital, large liabilities and lack of
meaningful business alternatives.

The Board of Directors also considered, among other facts, the following
factors which it considered to be negative factors in determining that the
merger is fair to the holders of our Class A Common Stock who will receive cash
in the merger:

/bullet/ actual or potential conflicts of interest to which Mr. Nicklaus
and his affiliates may be subject in connection with the merger. However,
the Board of Directors believed that these conflicts were mitigated by the
arms-length negotiations of the terms of the settlement agreement with the
plaintiffs in the class action litigation and the fact that, in order to
avoid any appearance of impropriety or undue influence, Mr. Nicklaus did
not attend the meeting at which the settlement and the merger were
approved or participate in the vote approving these matters.

/bullet/ The fact that, under Florida law, the approval of our public
shareholders would not be required to effect the merger and that we did
not intend to seek the approval of those shareholders. The Board of
Directors believed, however, that these factors were mitigated by the fact
that, under the terms of the settlement agreement and the merger
agreement, holders of Class A Common Stock would have available to them
dissenter's appraisal rights with respect to the merger, notwithstanding
that they otherwise would not have been entitled to those rights under
Florida law.

Our Board of Directors did not find it practicable to, and did not,
quantify or otherwise attempt to assign relative weights to the specific
factors considered in reaching its determination that the terms of the merger
are fair to holders of our Class A Common Stock. Our Board of Directors did not
retain any unaffiliated representative to act solely on behalf of unaffiliated
security holders for purposes of negotiating the terms of the settlement
agreement or the merger. However, a non-employee director designated by the
Board did meet with counsel for the plaintiffs in the class action litigation
who negotiated on behalf of the non-Nicklaus affiliated shareholders. These
discussions concerned, among other things, the possible value of Golden Bear
including the methodologies used to value our assets, the extent of Golden
Bear's liabilities, the impossibility of quantifying those liabilities and
uncertainties and the impact it might have on our future. Plaintiffs' counsel
independently employed consultants and met with Morgan Stanley in connection
with counsels' participation in the negotiations which resulted in the
settlement agreement and the consideration to be paid to non-Nicklaus
affiliated shareholders in the merger. We did not, directly or indirectly,
receive any information from the consultants employed by plaintiffs' counsel.

The structure of the merger was presented to us as an integral part of the
overall settlement of the class action litigation. Plaintiffs' counsel required
that we pay cash to our public shareholders in exchange for their shares of
Class A Common Stock since that structure would permit the plaintiffs to
participate directly in the cash settlement paid by Andersen, cash which would
otherwise have been a corporate asset. Further, the cash redemption would end
their exposure to our business and operational risks on a going forward basis.
Because the structure of the merger was presented as an integral part of the
overall settlement, the Board of Directors did not pursue alternative means to
accomplish the purposes of the transaction. However, the Board considered that
it was unlikely that we could be sold to a third party because of uncertainties
with respect to our ongoing liabilities. A liquidation bankruptcy filing was
also discussed but believed to jeopardize shareholder value based on the risks
and uncertainties inherent in such scenarios.

We believe that our method of arriving at the value of the cash
consideration to be received in the merger by public shareholders of our Class
A Common Stock is procedurally fair to them. As noted above, the value of the
cash consideration was determined in arms-length negotiations with plaintiffs'
counsel. Additionally, pursuant to the order of the United States District
Court for the Southern District of Florida granting preliminary approval of the
settlement agreement, on January 13, 2000 notice was given to all class members
of the settlement and the terms of the settlement agreement, including the
amount of the cash consideration that they would receive in the

6
<PAGE>

merger. The notice further specified that all class members would be provided
with an opportunity to present any objections that they may have to the
settlement or the terms of the settlement agreement at a hearing before the
court prior to the court's approval of the settlement. Furthermore, as noted
above, after the hearing, the court, in its order, adjudged that the settlement
agreement was fair, reasonable and adequate to the class, and the merger will
be consummated in order to comply with the court's order. Furthermore, under
the terms of the settlement agreement and the merger agreement, any holder of
Class A Common Stock that will receive cash in the merger, may elect to pursue,
at our expense, dissenter's appraisal rights with respect to the merger and
have the "fair value" of his or her shares judicially determined and paid by
us. We granted holders of Class A Common Stock that will receive cash in the
merger these rights notwithstanding the fact that, under Florida law, they
would not otherwise be entitled to them.

As a result of the merger we will be a private company owned entirely by
Mr. Nicklaus and his family members. As a consequence of the merger, the
Nicklaus affiliated shareholders will receive all of the potential benefits
that result from owning our entire equity interest, and non-Nicklaus affiliated
shareholders will receive none of those benefits. These benefits include:

/bullet/ absolute discretion with regard to our future conduct and
business,
/bullet/ the benefits of any profits we generate,
/bullet/ any increase in our value, and
/bullet/ the benefits, if any, of the realization of our net operating
loss (NOL) carryover.

Similarly, Nicklaus affiliated shareholders will bear the risk of any decrease
in our value and liability for any future claims made against us, and
non-Nicklaus affiliated shareholders will bear none of those risks.

Although Morgan Stanley & Co. valued our NOL carryover at between $600,000
to $700,000, or $0.11 to $0.13 per share, Morgan Stanley noted that the NOL
carryover is not transferable, may only be utilized by the existing company and
that any benefit from the NOL carryover can only be derived if significant
earnings in the entity are generated in the future. Accordingly, we do not
believe it is possible to quantify the aggregate benefit that our Nicklaus
affiliated shareholders may receive from the NOL carryover as a result of
owning 100% of Golden Bear after the merger.

Our Class A Common Stock is currently registered under the Securities
Exchange Act of 1934, which requires that we furnish certain information to our
shareholders and to the SEC and comply with the SEC's proxy rules in connection
with meetings of our shareholders. The SEC will terminate the registration of
our Class A Common Stock upon our application to the SEC if our Class A Common
Stock is not listed on a national securities exchange and if there are fewer
than 300 holders of record of the Class A Common Stock. We intend to terminate
the registration of our Class A Common Stock under the Securities Exchange Act
of 1934, which would substantially reduce the information that we must furnish
to our shareholders and to the SEC. It would also render certain provisions of
the Securities Exchange Act inapplicable to us, including:

/bullet/ requirements that we file periodic reports and financial
statements with the SEC,
/bullet/ requirements of the SEC's Rule 13e-3 with respect to "going
private" transactions,
/bullet/ requirements that our officers, directors and ten-percent
shareholders file certain reports concerning their ownership of our equity
securities and
/bullet/ provisions that we may recapture any profit that those officers,
directors and stockholders realize through purchases and sales of our
equity securities within any six-month period.

We believe that returning to private ownership will eliminate the
substantial general and administrative costs attendant to our status as a
reporting company under the Securities Exchange Act of 1934. In addition to the
time our management spends and the legal, accounting and other expenses we
incur in the preparation of our annual and other periodic reports are
considerable. These costs include:

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<PAGE>

/bullet/ the preparation and review of our periodic reports to the SEC,
/bullet/ legal and accounting fees relating to those reports,
/bullet/ the annual fees we pay our transfer agent,
/bullet/ directors' fees and
/bullet/ costs associated with communications with shareholders.

Additionally, we believe that required public disclosures under the Securities
Exchange Act of 1934 may give our competitors certain information and insights
about our operations which may help them compete against us.

OPINION OF FINANCIAL ADVISOR

The full text of the written opinion of Morgan Stanley, which sets forth
the assumptions made, matters considered and limitations of the reviews
undertaken, is attached as Appendix B and is incorporated herein by reference.
A copy of the opinion is also available for inspection at our executive
offices. We urge you to read the opinion carefully in its entirety. Morgan
Stanley's opinion is directed only to the fairness of the merger price to you,
from a financial point of view, and does not address any other aspect of the
transaction. The following discussion is qualified in its entirety by reference
to the full text of the opinion.

INTRODUCTION

Morgan Stanley acted as our financial advisor in connection with the
settlement agreement and the merger, and assisted our Board in its examination
of the fairness, from a financial point of view, of the consideration to be
paid to the holders of our Class A Common Stock that will receive cash in the
merger. Morgan Stanley is one of the nation's largest investment banking and
financial advisory firms and has provided valuation and financial advisory
services to clients for over 60 years. The Board of Directors selected Morgan
Stanley as our financial advisor based upon their experience, ability and
reputation.

On December 20, 1999, Morgan Stanley delivered its oral opinion to our
Board to the effect that, as of that date, the consideration to be paid by us
to the holders of our Class A Common Stock that will receive cash in the merger
is fair, from a financial point of view.

In arriving at its fairness opinion, Morgan Stanley reviewed, among other
items, the following information concerning us: our public financial statements
included in our Annual Reports on SEC Form 10- K for the fiscal years ended
December 31, 1998, 1997 and 1996 and our quarterly reports on SEC Form 10-Q for
the periods ended March 31, June 30 and September 30, 1999; and certain other
internal operating reports and cash flow schedules prepared by our management.
Morgan Stanley also reviewed our historical stock market prices and trading
volume and the terms of the settlement agreement.

Morgan Stanley also reviewed industry and financial information, which
included, among other items, financial and stock market data relating to
publicly held companies and trading indexes which Morgan Stanley deemed
relevant for comparative purposes to us, and selected minority buy-out or
"going private" transactions which have occurred since May 1996. All industry
information and data on public companies and trading indexes used in Morgan
Stanley's analysis were obtained from regularly published industry and
investment sources. In addition, Morgan Stanley held discussions with our
senior management regarding past, current, and projected operations. Morgan
Stanley also took into account its assessment of general economic, market and
financial conditions, as well as its experience in securities and business
valuation, in general, and with respect to similar transactions, in particular.
Morgan Stanley also met independently with the attorneys representing the
plaintiffs in the class action litigation and considered the views of class
counsel in connection with rendering its opinion.

In performing its analysis and rendering its opinion with respect to the
merger, Morgan Stanley relied upon the accuracy and completeness of all
information provided to it, whether obtained from

8
<PAGE>

public or private sources, including our management, and did not attempt to
independently verify any such information. Morgan Stanley noted that nothing
came to its attention in the course of its analysis to make Morgan Stanley
believe that it is not reasonable to rely on the information described above,
including the schedules and reports of our management. Morgan Stanley's opinion
further assumes that information supplied and representations made by our
management regarding us and the background and terms of the merger are
substantially accurate. Morgan Stanley's opinion is necessarily based upon
market, economic, financial and other conditions as they existed and could be
evaluated as of December 20, 1999. We did not place any limitation upon Morgan
Stanley with respect to the procedures followed or factors considered in
rendering its opinion.

SUMMARY

In preparing its opinion to our Board, Morgan Stanley performed a variety
of financial and comparative analyses regarding our valuation including (i) a
"sum-of-the-parts" valuation of five identified "pockets of value" and (ii) a
review of recent minority buy-out or "going private" transactions. In addition,
Morgan Stanley conducted other studies, analyses and investigations as it
deemed appropriate for purposes of its opinion.

"SUM-OF-THE-PARTS" ANALYSIS. Morgan Stanley performed a theoretical
"sum-of-the-parts" analysis of five identified "pockets of value," calculating
the value of each "pocket" using a methodology Morgan Stanley deemed
appropriate. The five "pockets of value" identified were our:

/bullet/ existing and ongoing business,
/bullet/ costs associated with liquidating our discontinued operations,
/bullet/ net operating loss carryover as it may be applied to our future
earnings,
/bullet/ referral fees that we may receive from Weitz Golf, and
/bullet/ proceeds from our settlement with Andersen.

ONGOING BUSINESS. Morgan Stanley valued our ongoing business using a
comparable company analysis and a discounted cash flow analysis. In the
comparable company analysis, Morgan Stanley selected a set of publicly traded
companies based on comparability to us. Although none of the companies selected
was exactly similar to us, these companies share many of our operating
characteristics and are affected by many of the same economic forces. The value
of our ongoing business was derived from the rate at which those companies are
capitalized in the market. Using publicly available information, Morgan Stanley
analyzed historical financial performance, stock prices and resulting valuation
multiples for the following golf-related companies: Ashworth, Cutter & Buck,
Hartmax, Sport-Haley, Family Golf Centers, Calloway Golf, Adams Golf, Teardrop
Golf, Coastcast, Aldila, Golf Trust of America and National Golf Properties.

Morgan Stanley compared our projected financial performance for the year
2000 with the projected financial performance of the comparable companies for
the year 2000. Comparative statistics revealed per share ratios of price to
projected year 2000 earnings of from 2.2x to 14.9x, with a mean of 8.0x for
apparel companies, 10.4x for golf equipment companies and a total mean of 9.2x.

Based upon a ratio of 7.0x to 8.0x and management estimates of our year
2000 earnings, Morgan Stanley valued our ongoing business at approximately $3.2
million to $3.7 million, or $0.58 to $0.67 per share.

Morgan Stanley also performed a discounted cash flow analysis of the
projected free cash flows of our ongoing business. Free cash flow was defined
as cash that is available to either reinvest in new business or to distribute
to investors. The projected free cash flows are discounted to the present at a
rate which reflects the relative risk associated with these flows as well as
the rates of return which investors could expect to realize on alternate
investment opportunities.

Our projected free cash flows were based on projected revenues, net
income, working capital and capital expenditure requirements over the next five
years. Morgan Stanley discounted the resulting

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<PAGE>

projected free cash flows at weighted average rates of 13% to 14%. The discount
range reflects among other things, industry risks, our relatively small
capitalization and the current rates of return required by equity and debt
investors generally. The analysis resulted in a control price or the price a
fully informed buyer would pay for all of our common stock, without
consideration of risks associated with our contingent liabilities. The analysis
yielded an aggregate control price range of $5.2 million to $5.6 million or
$0.99 to $1.02 per share.

Taking into consideration both the comparable companies analysis and the
discounted cash flow analysis, Morgan Stanley valued our ongoing business at
$4.0 to $4.5 million. This "consensus value" was the result of a judgment and
is a premium to the trading value from the comparable company analysis and a
discount to the theoretical intrinsic value from the discounted cash flow
analysis.

Further, as indicated, the foregoing did not take into consideration or
deduct any amounts for future potential liabilities or unasserted claims based
on the fact that such liabilities are at this time impossible to quantify.
While Golden Bear has accrued for all known estimable liabilities in accordance
with generally accepted accounting principles, no reserve or accrual has been
provided for inestimable contingent liabilities. The liabilities include
creditors' claims and project owner claims as well as costs and liabilities
associated with the SEC investigation. Actions can be brought against us at any
time prior to the expiration of the applicable statute of limitations and we
will continue to be subject to all claims and liabilities that may be properly
asserted in the future.

DISCONTINUED OPERATIONS. Morgan Stanley valued the liquidation costs of
our discontinued operations by calculating the net present value of the net
negative cash outflows over the next five years from the liquidation of the
assets and the repayment of the liabilities of our discontinued operations. The
liquidation cash inflows (outflows) by category were as follows (amounts in
thousands):

<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 TOTAL
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Equipment creditors ................. $ (23) $ (489) $ (489) $ (311) $ (304) $ (1,617)
Subcontractors and vendors .......... (1,544) (1,980) (547) (537) (824) (5,431)
Project owners ...................... 453 (486) (484) (296) (2,496) (3,308)
-------- -------- -------- -------- -------- ---------
Total liquidation payments ........... $ (1,114) $ (2,954) $ (1,520) $ (1,143) $ (3,624) $ (10,356)
======== ======== ======== ======== ======== =========
</TABLE>

For this purpose, Morgan Stanley used the same discount rates of 13% to 14% as
for our ongoing business, and, using these rates, Morgan Stanley calculated an
implied net negative valuation of $7.0 million to $7.5 million for the
liquidation costs associated with our discontinued operations, or $(1.27) to
$(1.36) per share.

NET OPERATING LOSSES. Morgan Stanley valued our Net Operating Loss ("NOL")
carryover by discounting the amount of our NOL carryover to present value at
discount rates of 14% to 15%. In addition to the factors outlined above, the
higher discount rates for our NOL carryover reflects Morgan Stanley's judgement
that our NOL carryover would be of benefit primarily to equity holders and
consequently require a higher level of financial return. Assuming management's
base case projection of taxable earning and range of long-term growth rates
from 3% to 5%, the discounted valuation analysis yielded a valuation of our NOL
carryover of $600,000 to $700,000, or $0.11 to $0.13 per share. However, it was
noted that the NOL carryover is not transferable, may only be utilized by the
existing company and that any benefit from the NOL carryover can only be
derived if significant earnings in the entity are generated in the future.

WEITZ GOLF. Morgan Stanley valued the stream of payments we expect to
receive from Weitz Golf in connection with our relationship with Weitz Golf by
discounting the expected payment stream to present value. Morgan Stanley
applied discount rates ranging from 19% to 20% to reflect the higher rate of
risk related to non-control investments in start-up companies, the higher risks
associated with the construction business and to reflect the fact that no
significant payments are expected until 2001.

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<PAGE>

These discount rates implied a present valuation of the payments of $1.7
million to $2.0 million, or $0.31 to $0.37 per share. However, it was noted
that to date, there were no cumulative net profits from the operations of Weitz
Golf and there is no assurance that net profits will be generated in the
future.

CLAIMS AGAINST ANDERSEN. Morgan Stanley valued the proceeds that we would
realize from the settlement of our claims against Andersen at their cash value
after giving effect to anticipated transaction and legal costs and payables.
These claims were valued at $4.0 million, or $0.73 per share.

Adding together the "sum-of-the-parts" as described above, Morgan Stanley
concluded that our total valuation was between $2.8 million and $4.2 million,
or $0.51 to $0.76 per share, before considering and without taking into account
our contingent liabilities. Based upon the "sum-of-the-parts" analysis, it is
Morgan Stanley's opinion that the valuation implied by the cash merger
consideration is fair from a financial point of view.

COMPARABLE TRANSACTIONS ANALYSIS. Morgan Stanley also reviewed 38 publicly
announced minority buy-out or "going private" transactions that had been
completed or were in the process of completion from May 1996 through the date
of their presentation to the Board. The median premium that was offered over
the trading price of the subject company before the announcement date of the
acquisition was 21.8%. The cash merger consideration of $0.75 per share
represents a premium of approximately 50% over the trading price of our Class A
Common Stock prior to the announcement of the merger. During the first quarter
of 2000, our Class A Common Stock reached a high bid quotation of approximately
$0.81 on one day (January 12, 2000). The average bid during the quarter was
$0.61. Based on the comparable transactions analysis, it is Morgan Stanley's
view that the valuation implied by the merger consideration is fair from a
financial point of view.

The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the process
underlying Morgan Stanley's fairness opinion. In arriving at its fairness
opinion, Morgan Stanley considered the results of all such analyses taken as a
whole. Furthermore, in arriving at its fairness opinion, Morgan Stanley did not
attribute any particular weight to any analysis or factor considered by it, but
rather made qualitative judgments as to the significance and relevance of each
analysis and factor. No company or transaction used in the above analyses as a
comparison is identical to us or the merger. The analyses were prepared solely
for purposes of Morgan Stanley providing its opinion to our Board as to the
fairness of the consideration to be received by the holders of our Class A
Common Stock that will receive cash in the merger from a financial point of
view, and do not purport to be appraisals or necessarily reflect the prices at
which businesses or securities actually may be sold. Analyses based upon
forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Such analyses are based upon numerous factors or events beyond
our control, its advisors or any other person, and are inherently uncertain.
Actual future results may be materially different from those forecasts.
Further, as indicated, the amounts discussed were before consideration of and
without reduction for amounts attributable to our contingent liabilities. The
impact of such contingent liabilities are not currently quantifiable but could
have a material adverse impact on us and our future results.

FEE AND OTHER INFORMATION

Our Board of Directors retained Morgan Stanley under an engagement letter
dated May 13, 1999. As compensation for its services as financial advisor to us
in connection with the settlement and the merger, we agreed to pay Morgan
Stanley a fee of $150,000. No portion of the fee payable to Morgan Stanley was
contingent upon the conclusion reached in its opinion. In addition, we have
agreed to reimburse Morgan Stanley for its reasonable out-of-pocket expenses,
including the fees and expenses of its legal counsel, and to indemnify Morgan
Stanley against certain liabilities, including liabilities under the federal
securities laws, relating to, arising out of or in connection with its
engagement.

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<PAGE>

THE MERGER

The following discussion is a summary of the material provisions of the
merger. This summary and all other discussions of the terms of the merger and
the merger agreement included elsewhere in this Information Statement are
qualified in their entirety by reference to the full text of the merger
agreement, a copy of which is attached hereto as Appendix A and incorporated in
this Information Statement by reference.

THE MERGER

Pursuant to the merger agreement, upon our filing of Articles of Merger
with the Florida Secretary of State, we merged with GB Golf in accordance with
the applicable provisions of the Florida Business Corporation Act. The merger
will have the effects specified under Section 607.1106 of the Florida Business
Corporation Act. GB Golf does not have any assets or conduct any business other
than as may be necessary for it to satisfy its obligations under the merger
agreement.

EFFECTIVE TIME

The merger became effective upon the filing of the Articles of Merger in
accordance with Florida law.

ARTICLES OF INCORPORATION AND BYLAWS

The merger agreement provides that the Articles of Incorporation and
Bylaws of Golden Bear immediately prior to the merger will be the Articles of
Incorporation and Bylaws of the surviving corporation.

DIRECTORS AND OFFICERS

The merger agreement provides that the members of GB Golf's Board of
Directors immediately prior to the merger will be the members of the Board of
Directors of the surviving corporation after the merger, until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation, or removal in accordance with the Articles of Incorporation and
the Bylaws of the surviving corporation. Additionally, the officers of GB Golf
immediately prior to the merger will be officers of the surviving corporation
after the merger, until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation and the Bylaws of the surviving
corporation. Our current outside directors will not continue to serve as
directors of the surviving corporation after the merger.

CONVERSION OF SECURITIES

The merger agreement provides that, at the effective time of the merger
each share of our Class A Common Stock outstanding immediately prior to merger,
other than those held by GB Golf or any of its subsidiaries will, without any
action on the part of any holder thereof, be automatically converted into
approximately .00000877 of a share of the Class A common stock of the surviving
corporation. However, no fractional shares will be issued in the merger and,
accordingly, any shareholder who is entitled to receive less than 1 share of
surviving corporation common stock (i.e. any shareholder owning less than
114,000 shares of Class A Common Stock on the effective date of the merger)
will instead receive cash in the amount of $0.75 (without interest thereon) for
each share of our Class A Common Stock outstanding on the date of the merger,
subject only to the right to seek an appraisal of their shares granted herein.

As a result of the merger, if you have not perfected your appraisal rights
under the Florida Business Corporation Act, you will cease to have any rights
with respect to your shares, except the right to receive the cash payment due
to you upon surrender of your share certificates as described below under the
caption "The Merger--Surrender of Stock Certificates."

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<PAGE>

In accordance with the terms of the settlement, the exchange ratio for the
merger was selected to insure that the former holders of our Class B Common
Stock will not receive cash in the merger.

CLOSING OF STOCK TRANSFER RECORDS

We will make no transfers of shares of our Class A Common Stock on our
stock transfer books after the close of business on the day prior to the date
of the merger.

SURRENDER OF STOCK CERTIFICATES

We have appointed First Union National Bank as paying agent to process the
surrender of Class A Common Stock certificates and to make the cash payments
provided for by the merger agreement. Pursuant to the settlement agreement, we
will make the settlement fund available to the paying agent in order to pay the
cash amounts due to the holders of our Class A Common Stock.

A Letter of Transmittal will be provided to you with instructions for use
in effecting the surrender of your stock certificates in exchange for the cash
payment due to you pursuant to the merger. In order to receive your cash
payment you must complete the Letter of Transmittal (or a facsimile thereof)
and deliver it with your stock certificate and any other documentation required
by the Letter of Transmittal to the paying agent in the manner set forth in the
Letter of Transmittal.

Upon your surrender of your stock certificate to the paying agent together
with a duly executed Letter of Transmittal and any other documentation required
by the Letter of Transmittal, the paying agent will pay you the cash payment
due to you under the terms of the merger.

YOU WILL CHOOSE THE METHOD BY WHICH YOU DELIVER YOUR LETTER OF
TRANSMITTAL, STOCK CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS TO THE PAYING
AGENT, AND THAT DELIVERY WILL BE AT YOUR RISK. IF YOU SEND YOUR LETTER OF
TRANSMITTAL, STOCK CERTIFICATES AND OTHER DOCUMENTS BY MAIL, WE RECOMMEND THAT
YOU SEND THEM BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED.

YOU SHOULD NOT MAIL YOUR STOCK CERTIFICATES TO THE PAYING AGENT WITHOUT
THE LETTER OF TRANSMITTAL.

PAYMENT FOR SHARES

Pursuant to the settlement agreement, we have established an escrow
account at First Union National Bank, the paying agent for the merger, with
sufficient funds to complete the merger transaction.

CONDITIONS

Our obligations to effect the merger were subject to the satisfaction or
waiver, prior to the effective date of the merger, of the following:

/bullet/ no statute or rule or injunction shall prevent the merger,
/bullet/ all governmental approvals required to consummate the merger have
been received, and
/bullet/ the settlement agreement shall have received the final approval of
the United States District Court for the Southern District of Florida.

EXPENSES

We estimate that we will pay approximately $1.9 million to holders of our
Class A Common Stock as consideration for the merger. The merger agreement
provides that we will also bear all expenses incurred in connection with the
merger. We will pay the paying agent reasonable and customary compensation for
its services and will reimburse the paying agent for its reasonable out-of-
pocket expenses.

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<PAGE>

We estimate that the amounts required and the expenses we will incur in
connection with the merger are as follows:

Aggregate merger consideration ...................... $ 1,878,722
Legal fees and expenses(1) .......................... 200,000
Other professional fees and expenses ................ 180,000
Printing, mailing and distribution expenses ......... 100,000
Paying agent fees and expenses ...................... 8,000
SEC filing fees ..................................... 376
Miscellaneous fees and expenses ..................... 132,902
-----------
Total ............................................... $ 2,500,000
===========

----------------
(1) Including fees paid to plaintiffs' counsel in connection with the agreement
in the settlement to effect the merger transaction, but not the fees paid
in connection with the overall settlement or the establishment or the
settlement fund.

SOURCE AND AMOUNT OF FUNDS

We will provide all amounts required to make the cash payments to the
holders of our Class A Common Stock, whether pursuant to the merger or in
connection with their exercise of dissenters' appraisal rights. We will fund
these amounts from cash on hand which includes the amounts received on the
settlement of our claims against others. See "Legal Proceedings."

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

The following is a general summary of the material United States federal
income tax consequences of the merger to persons who are holders of our Class A
Common Stock (including the consequences of their receipt of any cash amounts
pursuant to the exercise of appraisal rights). This summary is for your general
information only and deals only with holders who hold their shares of Class A
Common Stock as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986. Your tax treatment will vary depending upon your
particular situation, and this summary does not purport to deal with all
aspects of taxation that may be relevant to you in light of your particular
investment or tax circumstances, or to certain shareholders that are subject to
special treatment under the federal income tax laws, including, without
limitation:

/bullet/ life insurance companies,
/bullet/ certain financial institutions,
/bullet/ broker-dealers,
/bullet/ shareholders holding our Class A Common Stock
/bullet/ as part of a conversion transaction,
/bullet/ as part of a hedge or hedging transaction, or
/bullet/ as a position in a straddle for tax purposes,
/bullet/ tax-exempt organizations,
/bullet/ foreign corporations,
/bullet/ foreign partnerships and
/bullet/ persons who are not citizens or residents of the United States.

In addition, this discussion may not apply to you if you received your shares
of Class A Common Stock pursuant to the exercise of employee stock options or
otherwise as compensation.

We do not intend to seek a ruling from the Internal Revenue Service with
respect to any of these tax consequences, and we can not assure you that future
changes in applicable law or administration and judicial interpretations
thereof will not adversely affect the tax consequences discussed herein or

14
<PAGE>

that there will not be differences of opinion as to the interpretation of
applicable law. In addition, the summary below does not consider the effect of
any foreign, state, local or other tax laws that may be applicable to you.

WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO YOU, INCLUDING THE APPLICATION AND EFFECT OF
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.

The receipt by you of cash in cancellation of your Class A Common Stock
pursuant to the merger (or any cash amounts you received pursuant to the
exercise of your appraisal rights) will be a taxable transaction for federal
income tax purposes. In general, for federal income tax purposes, you will
recognize gain or loss equal to the difference between your adjusted tax basis
in your Class A Common Stock converted in the merger and the amount of cash you
receive for those shares. You must determine your gain or loss separately for
each "block" of your Class A Common Stock that is converted to cash in the
merger. For these purposes we use the term "block" to mean all shares of Class
A Common Stock that you acquired at the same cost in a single transaction.

Your gain or loss generally will be capital gain or loss and will be
long-term gain or loss if, on the date of the merger, you have held your shares
for more than one year. Net capital gain recognized by an individual upon the
sale of, or otherwise attributable to, a capital asset that has been held for
more than one year will generally be subject to tax at a rate not to exceed
20%. Capital gain recognized from the sale of, or otherwise attributable to, a
capital asset held for one year or less will be subject to tax at the ordinary
income tax rates. In addition, if you are a corporate taxpayer, the capital
gain you recognize will continue to be subject to tax at the ordinary corporate
income tax rates applicable to you. The deductibility of capital losses is
subject to certain limitations.

Our payment to you in connection with the merger may be subject to "backup
withholding" at a 31% rate. Backup withholding generally applies if you:

/bullet/ fail to furnish us with your social security number or other
taxpayer identification number,
/bullet/ furnish us with an incorrect identification number,
/bullet/ fail to report interest or dividends properly, or
/bullet/ under certain circumstances, fail to provide a certified
statement, signed under penalties of perjury, that:
/bullet/ the identification number you provided is your correct number and
/bullet/ you are not subject to backup withholding.

Backup withholding is not an additional tax but merely an advance tax payment,
for which you may obtain a refund to the extent it results in an overpayment of
tax. Any amounts that we withhold from you under the backup withholding rules
generally will be allowed as a refund or a credit against your United States
federal income tax liability, if you furnish the required information to the
IRS. You should know that, in addition to backup withholding, certain penalties
apply for failure to furnish us with correct information and for failure to
include the reportable payments in your income.

This discussion of backup withholding may not apply to shares of Class A
Common Stock that you acquired pursuant to certain compensation arrangements
with us. Additionally, certain persons generally are exempt from backup
withholding, including corporations and financial institutions. We urge you to
consult with your own tax advisor as to your qualifications for exemption from
backup withholding and the procedure for obtaining that exemption.

ACCOUNTING TREATMENT

The merger will be accounted for (under generally accepted accounting
principles) as a purchase of the Class A Common Stock from non-Nicklaus
affiliated shareholders by the surviving company. This means that the
historical cost basis of our assets and liabilities will be carried forward
with the aggregate cost, including expenses, of the stock purchase being
accounted for as a charge to shareholder's equity.

15
<PAGE>

INTERESTS OF CERTAIN PERSONS IN OUR SECURITIES AND THE MERGER

On , 2000, Jack Nicklaus and members of his family converted all of
the shares of our Class B Common Stock that they beneficially owned into an
equal number of shares of our Class A Common Stock. As of , 2000 those
shareholders beneficially owned, in the aggregate shares of our Class A
Common Stock constituting approximately % of our Class A Common Stock and
no shares of our Class B Common Stock. Pursuant to the terms of the merger, the
shares of Class A Common Stock held by Mr. Nicklaus and his family will remain
outstanding and will, following the merger, constitute 100% of the outstanding
capital stock.

To our knowledge there are no contracts, arrangements, understandings or
relationships in connection with the merger or our Class A Common Stock other
than the merger agreement, the settlement agreement, the order of the United
States District Court for the Southern District of Florida approving the
settlement and our agreement with the paying agent.

For a discussion of certain transactions between us and our affiliates see
"Certain Relationships and Related Transactions" below.

APPRAISAL RIGHTS

Pursuant to the terms of the settlement agreement, we have agreed to make
available to each holder of our Class A Common Stock who does not wish to
receive the cash payment to which he or she would otherwise be entitled under
the terms of the merger, appraisal rights consistent with the provisions of
Section 607.1320 of the Florida Business Corporation Act. If you wish to
dissent from the merger and you properly perfect your appraisal rights you will
be entitled to have the "fair value" of your shares of Class A Common Stock
judicially determined as of the day prior to the date on which the former
holders of our Class B Common Stock converted their shares into our Class A
Common Stock and authorized us to consummate the merger. We will then pay you
that judicially determined "fair value" in exchange for your shares.

In order to perfect your appraisal rights, you must fully comply with the
statutory procedures of Sections 607.1301, 607.1302 and 607.1320 of the Florida
Business Corporation Act summarized below. Those sections are attached as
Appendix C to this Information Statement. We urge you to read those sections in
their entirety and to consult with your legal advisors. We caution you that the
failure on your part to adhere strictly to the requirements of Florida law in
any regard will result in the forfeiture of your appraisal rights.

To exercise your appraisal rights, you must file with us a written notice
of your election to dissent within twenty days from the date of this
Information Statement. YOU WILL FORFEIT YOUR APPRAISAL RIGHTS IF YOU DO NOT
FILE YOUR ELECTION TO DISSENT WITHIN THE TWENTY-DAY PERIOD.

Your election to dissent must state:

/bullet/ your name and address,
/bullet/ the number shares as to which you dissent and
/bullet/ a demand for payment of the fair value of your shares.

If you file an election to dissent:

/bullet/ you must deposit the certificate(s) representing your shares with
us when you file your election,
/bullet/ you will be entitled only to payment pursuant to the procedure set
forth in the Florida Business Corporation Act and
/bullet/ you will not be entitled to vote or to exercise any other rights
of a shareholder of Golden Bear.

You may withdraw your notice of election at any time before we make an
offer to purchase your shares as described below. If you withdraw your notice
of election, you will lose your right to pursue appraisal rights, and you will
again have the rights you had prior to the filing of your notice of election.

16
<PAGE>

If you make a demand to us as described in this section:

/bullet/ we may restrict the transfer of your shares from the date youfile
your election,
/bullet/ within ten days after the period in which you may file your notice
of election to dissent expires, we will make a written offer to you to pay
for your shares at a specified price that we deem to be the fair value of
those shares and
/bullet/ we will deliver to you with our offer our:
/bullet/ balance sheet as of the latest available date and
/bullet/ profit and loss statement for the twelve-month period ended on
the date of the balance sheet that we provide you.

We intend to offer to purchase the shares held by any shareholder that
properly perfects his or her appraisal rights for an amount equal to $0.75 per
share, which is the same amount that we have agreed to pay to shareholders
pursuant to the terms of the merger agreement.

After we make our offer to you, you will have thirty days to accept it. If
you accept it within that thirty-day period we will pay you for your shares
within ninety days of the date of our offer. When we pay you the agreed value
you will cease to have any further interest in your shares.

If we do not offer to purchase your shares, or if you do not accept our
offer within thirty days from the day we make it, then you will have sixty days
from the effective date of the merger to demand that we file an action in any
court of competent jurisdiction in Palm Beach County, Florida, to determine the
fair value of your shares. We will have thirty days from the day we receive
your demand to initiate the action. We may also commence the action on our own
initiative at any time within the sixty-day period described above. If we do
not initiate the action within the above-prescribed period, you may do so in
our name.

The court may appoint one or more appraisers to receive evidence and
recommend a decision on the question of fair value. If you have properly
perfected your appraisal rights you will be made a party to the proceedings as
an action against your shares, regardless of where you reside. We will serve
you with a copy of the initial pleading, and, if you are a proper party to the
proceeding, you will be entitled to a judgment against us for the amount of the
fair value of your shares. If the court decides, in its discretion, you will
also be entitled to an allowance for interest at any rate that the court may
find fair and equitable. We will pay you the amount found to be due to you
within ten days after the final determination of the proceedings, at which time
you will cease to have any interest in your shares.

The costs and expenses of the proceeding are determined by the court. The
expenses will include reasonable compensation for, and expenses of, any
appraisers, but will generally exclude the fees and expenses of counsel for,
and experts employed by, any party. Generally, the costs and expenses of the
proceeding will be assessed against us. However, if we make an offer to pay for
your shares and the court finds that your refusal to accept our offer was
arbitrary, vexatious or not in good faith, all or any part of those costs and
expenses may be apportioned and assessed against you and any other dissenting
shareholders who rejected our offer.

If the court determines that the value of your shares materially exceeds
the amount that we offered to pay for your shares then the court may, in its
discretion, award to you a sum that the court determines to be reasonable
compensation to any expert that you employed in the proceeding.

Your successful assertion of your appraisal rights is dependent upon your
compliance with all of the requirements described above. If you do not comply
with any of those requirements you may fail to perfect your appraisal rights
and lose the opportunity to be paid for your shares in an appraisal.

BECAUSE OF THE COMPLEXITY OF THE PROVISIONS OF THE FLORIDA LAW RELATING TO
DISSENTERS' APPRAISAL RIGHTS WE URGE YOU TO CONSULT YOUR OWN LEGAL ADVISER IF
YOU ARE CONSIDERING DISSENTING FROM THE OFFER.

17
<PAGE>

PLANS FOR GOLDEN BEAR AND GB GOLF FOLLOWING THE MERGER

In the future, we expect to carry on our ongoing business and to continue
to attempt to increase our revenues, decrease costs associated with litigation
and public company reporting and resolve outstanding business issues. As a
result of the merger we will be a private company owned entirely by Mr.
Nicklaus and his family members. As a consequence of the merger, the Nicklaus
affiliated shareholders will receive all of the potential benefits that result
from owning our entire equity interest and non-Nicklaus affiliated shareholders
will receive none of those benefits. These benefits include:

Similarly, Nicklaus affiliated shareholders will bear the risk of any decrease
in our value and liability for any future claims made against us and
non-Nicklaus affiliated shareholders will bear none of those risks.

We believe that reverting to private ownership will eliminate the
substantial general and administrative costs attendant to our status as a
reporting company under the Securities Exchange Act of 1934. In addition to the
time our management spends and the legal, accounting and other expenses we
incur in the preparation of our annual and other periodic reports are
considerable. These costs include:

18
<PAGE>

These costs do not include the salaries and time of our employees who devote
attention to these matters. Additionally, we believe that required public
disclosures under the Securities Exchange Act of 1934 may give our competitors
certain information and insights about our operations which may help them
compete against us.

Except as disclosed in this section and elsewhere in this Information
Statement we have no other present plans or proposals that relate to or would
result in:

/bullet/ the acquisition by any person of more of our securities, or the
disposition of any of our securities,
/bullet/ any extraordinary corporate transaction involving us, such as a
merger, reorganization, liquidation or sale or transfer of a material
amount of our assets,
/bullet/ any material change in our present dividend policy or
indebtedness or capitalization,
/bullet/ any other material change in our corporate structure or business or
/bullet/ any change in our Articles of Incorporation or Bylaws or any other
actions which may impede the acquisition of control of us by any person.

GB Golf's directors immediately prior to the effective time of the merger
will be the directors of the surviving company of the merger. Additionally, the
executive officers of GB Golf immediately prior to the effective time will be
the officers of the surviving company after the merger until their successors
are duly elected or appointed and qualified. Our outside directors will no
longer serve as directors of the surviving company.

19
<PAGE>

MARKET PRICE AND DIVIDEND INFORMATION

We issued our Class A Common Stock, in our initial public offering on
August 1, 1996. Our Class A Common Stock was traded on the NASDAQ Stock Market
under the symbol "JACK" until July 28, 1998, at which time the NASD suspended
trading of our stock. Effective on August 18, 1998, the NASD delisted our stock
from trading on the NASDAQ Stock Market. Our Class A Common Stock resumed
trading on the over-the-counter bulletin board under the symbol "JACK"
effective on August 20, 1998. The following table sets forth (i) for the period
from January 1, 1998 to July 28, 1998, the high and low sales prices per share
of the Class A Common Stock as reported by the NASDAQ Stock Market and (ii) for
the period from August 20, 1998 through June 6, 2000, the high and low bid
quotation per share of our Class A Common Stock.

<TABLE>
<CAPTION>
2000 1999 1998
----------------------- ---------------------- --------------------
HIGH LOW HIGH LOW HIGH LOW
---------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
First Quarter ................................. $0 13/16 $0 1/2 $3 1/2 $0 9/16 $10 1/8 $6 1/4
Second Quarter (through June 6, 2000) ......... 0 3/4 0 17/32 1 1/2 0 3/4 9 1/2 5
Third Quarter(1) .............................. 1 1/4 0 5/8 5 3/8 0 3/4
Fourth Quarter ................................ 0 15/16 0 7/16 1 1/4 0 3/8

<FN>
----------------
(1) For the period from July 28, 1999 until August 20, 1999 the NASD suspended
trading in our Class A Common Stock and, accordingly, no sales were
reported during that period.
</FN>
</TABLE>

During the first quarter of 2000, our Class A Common Stock reached a high
bid quotation of approximately $0.81 on one day (January 12, 2000). The average
bid during the quarter was $0.61.

As of the close of business on May 4, 2000, 2,744,962 shares of our Class
A Common Stock were outstanding and we had approximately 606 registered
shareholders of record.

All of the outstanding shares of our Class B Common Stock prior to
conversion on , 2000 were beneficially owned by members of the family of
Jack Nicklaus, Chairman of our Board of Directors, which includes: (i) Jack
Nicklaus, Barbara Nicklaus and their estates, guardians, conservators,
committees or attorneys-in-fact; (ii) each lineal descendant of Jack Nicklaus
and Barbara Nicklaus and their respective guardians, conservators, committees
or attorneys-in-fact; (iii) each entity controlled by such family members; and
(iv) each trustee, in its capacity, as such, of each trust established for the
benefit of such family members.

We have not declared any cash dividends on our Class A Common Stock or
Class B Common Stock since our initial public offering. Moreover, we currently
intend to retain any earnings to finance the operations our business and do not
anticipate paying any cash dividends in the foreseeable future.

20
<PAGE>

SELECTED FINANCIAL DATA

The selected financial data set forth below was derived from the unaudited
financial statements as of and for the three-month period ended March 31, 2000
and the audited financial statements as of and for the respective years ended
December 31, and should be read in conjunction with"Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements, including the Notes thereto, included in this Information
Statement. In the opinion of our management, our unaudited financial statements
as of and for the three month period ended March 31, 2000 contain all
adjustments necessary for a fair presentation of our financial position and
results of operations at that date and for that period. Financial results for
the three months ended March 31, 2000 are not necessarily indicative of the
results that may be expected for the full fiscal year. In 1998, we sold our
Golden Bear Golf Centers subsidiary and discontinued our Paragon subsidiary's
construction operations. Accordingly, we have reclassified those operations and
the financial activities associated with them as discontinued operations.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
MARCH 31, ----------------------------------------------------------
2000 1999 1998 1997 1996 1995
---------- --------- ------------ ------------ ------------ ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Total revenues ........................................... $ 2,606 11,238 $ 11,385 $ 12,873 $ 10,792 $9,604
------- ------ --------- --------- -------- ------
Operating costs and expenses:
Operating expenses ...................................... 1,844 6,923 7,722 7,691 6,458 6,366
Compensation recorded on sale of shares
to management(1) ...................................... -- -- -- -- 3,000 --
Corporate administration ................................ 1,051 4,031 3,394 3,458 2,598 2,486
Depreciation and amortization ........................... 57 270 319 417 221 134
------- ------ --------- --------- -------- ------
Total operating costs and expenses .................... 2,952 11,225 11,435 11,566 12,277 8,986
------- ------ --------- --------- -------- ------
Operating income (loss) .................................. (346) 14 (50) 1,307 (1,485) 618
------- ------ --------- --------- -------- ------
Other income (expense) ................................... (73) 4,654 (595) (194) 188 (1)
------- ------ --------- --------- -------- -------
Income (loss) from continuing operations before
income taxes ............................................ (419) 4,668 (645) 1,113 (1,297) 617
Provision for income taxes ............................... 12 49 191 57 81 --
------- ------ --------- --------- -------- ------
Income (loss) from continuing operations ................. (431) 4,619 (836) 1,056 (1,378) 617
Gain on sale of business segment ......................... -- -- 969 -- -- --
Income (loss) from discontinued operations, net .......... 101 3,195 (30,585) (25,755) (1,053) 617
------- ------ --------- --------- -------- ------
Net income (loss) ..................................... $ (330) $7,814 $ (30,452) $ (24,699) $ (2,431) $1,234
======= ====== ========= ========= ======== ======
Earnings per share--basic and diluted:
Income (loss) from continuing operations ................ $ (0.08) $ 0.84 $ (0.15) $ 0.19 $ (0.34) $ 0.21
Income (loss) from discontinued operations, net ......... 0.02 0.58 (5.38) (4.68) (0.26) 0.20
------- ------ --------- --------- -------- ------
Net income (loss) per share ........................... $ (0.06) $ 1.42 $ (5.53) $ (4.49) $ (0.60) $ 0.41
======= ====== ========= ========= ======== ======
Pro forma earnings per share--basic and diluted(2):
Income (loss) from continuing operations ................ $ (0.31) $ 0.26
Income (loss) from discontinued operations, net ......... (0.26) 0.20
-------- ------
Net income (loss) per share ........................... $ (0.57) $ 0.46
======== ======
Weighted average common shares outstanding ............... 5,505 5,505 5,505 5,505 4,040 3,000
======= ====== ========= ========= ======== ======
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31,
AT MARCH 31, ------------------------------------------------------------
2000(3) 1999(3) 1998 1997 1996 1995
------------- ------------ ------------- ------------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Working capital (deficit) .............. $ 3,504 $ (2,883) $ (17,105) $ (12,442) $20,593 $ 368
Total assets ........................... 6,561 6,783 5,884 28,898 39,829 2,681
Long-term debt ......................... 2,461 2,484 2,606 256 -- --
Shareholders' equity (deficit) ......... (9,406) (9,076) (16,890) 13,561 38,254 1,030

<FN>
--------------
(1) Represents compensation deemed to have been received by certain executives
in connection with their purchase of shares in Golf Centers.
(2) Pro forma earnings per share assumes pro forma income tax benefits of
$127,000 and $135,000 included for the years ended December 31, 1996 and
1995, respectively, to show the effects on our operations as if the
relevant entities comprising us had been C Corporations for income tax
purposes for all of the years presented.
(3) See discussion regarding liquidity and shareholders' deficit in the notes
to financial statements included elsewhere in this Information Statement.
</FN>
</TABLE>

21
<PAGE>

SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following selected unaudited pro forma financial information presents
the condensed balance sheet of the Company as if the merger had occurred at
March 31, 2000, adjusting for and giving effect to the repurchase of 2,504,962
shares of Class A Common Stock and other related costs and the payment of
accrued legal and filing fees associated with the merger. You should read this
together with the financial statements and accompanying notes of the Company
included elsewhere in this Information Statement. The pro forma amounts in the
table below are presented for your information and do not necessarily indicate
what the financial position of the Company would have been had the merger
occurred at March 31, 2000 or what the financial position of the Company will
be after the merger.

<TABLE>
<CAPTION>
AT MARCH 31, 2000
-----------------------------------------------------
ADJUSTMENTS-
INCREASE
HISTORICAL (DECREASE) PRO FORMA
--------------- ---------------- ----------------
<S> <C> <C> <C>
Unaudited pro forma total assets .................. $ 6,560,938 $ (2,500,000) $ 4,060,938
Unaudited pro forma total liabilities ............. 15,967,018 (320,413) 15,646,605
Unaudited pro forma shareholder's deficit ......... (9,406,080) (2,179,587) (11,585,667)
Unaudited pro forma total liabilities and
shareholder's deficit ........................... $ 6,560,938 (2,500,000) $ 4,060,938
</TABLE>

22
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of our financial condition and results of
operations for the years ended December 31, 1999, 1998 and 1997 and the three
months ended March 31, 2000 and 1999. This discussion and analysis should be
read in conjunction with the Selected Financial Data and the accompanying
Consolidated Financial Statements, and the related Notes thereto, which are
included elsewhere in this Information Statement.

OVERVIEW

We sold the stock of our wholly-owned Golf Centers subsidiary on July 20,
1998 and formally approved the discontinuance of the construction operations
conducted by our subsidiary, Paragon Construction International, Inc., on
October 26, 1998. Accordingly, the operations and financial activity associated
with such businesses have been reclassified as discontinued operations. We are
focused on our core businesses, which include the licensing of NICKLAUS, JACK
NICKLAUS and GOLDEN BEAR branded products throughout the world, the operation
of the NICKLAUS FLICK GAME IMPROVEMENT and managing the personal endorsement
services provided by Jack Nicklaus. In addition, we continue to be involved in
golf course construction through an agreement we entered into on December 18,
1998 with Weitz Golf International LLC, a construction company focused on
building golf courses and clubhouses nationally and internationally. Under the
terms of the agreement, Golden Bear, Golden Bear International and Jack
Nicklaus will provide certain technical and marketing assistance in connection
with the construction services offered by Weitz Golf, which include general
contracting, design-build and construction management. The principal markets
targeted for these services are developers and designers in the golf industry.
Pursuant to the terms of the agreement, we are entitled to receive fees based
on the cumulative profitability of Weitz Golf's operations and we will not
offer construction services directly during the term of the agreement. We are
entitled to receive 40% of the cumulative net profits, as defined, earned by
Weitz Golf pursuant to the contracts it enters into during the term of the
agreement. There were no cumulative net profits from the operations of Weitz
Golf through December 31, 1999.

Based on our comprehensive review during 1998 of our Paragon subsidiary's
construction projects, it was necessary for us to restate certain financial
statements we had previously filed with the SEC. In connection with the
restatement of our financial statements included in our Annual Report on Form
10-K for the year ended December 31, 1997 and our Quarterly Report on Form 10-Q
for the three months ended March 31, 1998, numerous class action lawsuits were
filed against us and certain of our current and former officers and directors,
asserting various claims under the federal securities laws. On December 22,
1999, the parties to such lawsuits entered into a settlement agreement. Under
the terms of the settlement agreement, we established a settlement fund in the
amount of $3.5 million to settle the class action litigation. We contributed
$2.5 million to the settlement fund, which amount was funded by our insurer.
Pursuant to the settlement agreement, Andersen also contributed $1.0 million to
the settlement fund. In addition, we have taken the steps to acquire all the
shares held by public shareholders at a cash price of $0.75 per share. The
price for the publicly held shares was the result of negotiations between us
and attorneys for the class action plaintiffs and has the approval of a
committee of independent directors. An investment banking firm provided an
opinion that the consideration to be received by holders of our Common Stock,
other than Jack Nicklaus and his family, pursuant to the settlement agreement,
is fair from a financial point of view to such holders. The settlement
agreement was approved by the United States District Court during a final
hearing on March 28, 2000.

The SEC has also advised us that it is conducting a private investigation
to determine whether Golden Bear or certain of our current or former officers,
directors and employees have engaged in conduct in violation of certain
provisions of the Securities Exchange Act of 1934 and the rules and regulations
thereunder. We believe that such investigation is focused principally on the
recognition of additional costs and losses associated with the review of
Paragon construction projects and our public

23
<PAGE>

statements and accounting systems with respect thereto. We are cooperating in
such investigation. However, we are unable to predict the outcome or the
additional expense which may be incurred in connection with the investigation.

DISCONTINUED OPERATIONS

GOLDEN BEAR GOLF CENTERS, INC.

In 1998, we sold the stock of our wholly-owned Golf Centers subsidiary. In
connection with the sale, we entered into a licensing agreement with the
purchaser granting such purchaser the right to continue operating the acquired
golf centers under the GOLDEN BEAR GOLF CENTER brand name. We retained our
licensing and franchising rights with respect to being able to offer franchise
opportunities to outside parties for the operation of golf instruction and
practice facilities. In this regard, Golf Centers distributed certain of its
assets and liabilities to us prior to the closing of the sale. All of the
financial activities associated with the operations that were sold have been
classified as discontinued operations.

PARAGON CONSTRUCTION INTERNATIONAL, INC.

In 1998, our Board of Directors approved the discontinuance of the
construction operations conducted by Paragon. All such projects have been
completed or terminated and we are no longer actively involved in pursuing
construction projects independent of our agreement with Weitz Golf. Paragon had
been involved in providing comprehensive golf course and other resort-related
construction services, including project management, shaping, renovation and
golf course construction. The financial activity and operations associated with
Paragon have been classified as discontinued operations. With respect to the
construction operations formerly conducted by Paragon, we have entered into
agreements to settle certain of the claims asserted against us related to
certain of our former construction projects. Such claims involved certain
project owners, as well as construction vendors and subcontractors associated
with Paragon's discontinued construction operations.

At March 31, 2000, Paragon's assets consisted of cash of $93,279 and
construction equipment carried at a net book value of $131,778 which was
subsequently sold in May, 2000. Paragon's liabilities at March 31, 2000
consisted of accounts payable in the amount of $1,376,252, accrued expenses of
$342,764 and accrued taxes of $1,635,259, and notes payable and accrued
interest in the amount of $6,073,683. Approximately $5.1 million of such
liabilities are due within twelve months. The balance (approximately $4.3
million) is due over the next five years. The principal source of payment of
Paragon's liabilities is cash generated by continuing operations. In addition
to the pending lawsuits described under "Information Regarding Golden
Bear--Legal Proceedings", Paragon's potential future liabilities include
warranty or breach of contract claims that could be made by golf course owners
or developers relating to terminated golf course construction projects. We have
accrued for known claims, but no reserve has been established for any
unasserted claims as management does not believe that such claims are
inestimable at this time.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1999

Total revenues were $2.6 million during the three months ended March 31,
2000, compared to $2.8 million for the comparable period of 1999. The $0.2
million decrease in total revenues during the current quarterly period was
attributable to a reduction of $0.4 million in golf instruction revenues,
offset in part by increased revenue of $0.2 million from licensing and other
revenue. Golf instruction revenues decreased during the three months ended
March 31, 2000 due primarily to lower occupancy at the NICKLAUS FLICK GAME
IMPROVEMENT'S retail golf programs.

Operating expenses were $1.8 million and $1.9 million for the three months
ended March 31, 2000 and 1999, respectively. Corporate administration expenses
were $1.1 million and $1.4 million for the

24
<PAGE>

three months ended March 31, 2000 and 1999, respectively. The $0.3 million
decrease in such administrative expenses for the current quarterly period was
attributable to decreased expenses of $0.1 million for employee related costs
and $0.2 million of legal fees in connection with the SEC investigation.
Charges for depreciation and amortization expense were approximately $0.1
million for the three months ended March 31, 2000 and 1999.

We incurred net operating losses of $0.3 million and $0.5 million during
the three months ended March 31, 2000 and 1999, respectively. The operating
loss incurred for the current quarterly period was primarily attributable to
legal costs of $0.6 million incurred in connection with the SEC investigation.

Other expense of approximately $0.1 million for the three months ended
March 31, 2000 was comprised of legal fees of $135,000 incurred in connection
with the merger, offset in part by $67,000 of interest income earned on cash
balances held by us as a consequence of settlement proceeds received from
Andersen.

Although we have sufficient net operating loss carryforwards and other tax
benefits to absorb substantially all of our Federal income tax liabilities,
certain of our operations are subject to state and foreign income taxes. The
provision for income taxes for the three months ended March 31, 2000 and 1999
was comprised of amounts incurred with respect to state and foreign income
taxes.

The income from discontinued operations of $0.1 million, for the three
months ended March 31, 2000 was primarily the result of a favorable settlement
with a former Paragon vendor.

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

Total revenues were $11.2 million during the year ended December 31, 1999,
compared to $11.4 million for the comparable period of 1998. The $0.2 million
decrease in total revenues during the current year was attributable to
decreases in revenue of $0.5 million from tuition and $0.3 million from related
party management fees. These decreases were offset in part by increases of $0.4
million from licensing and other revenue and $0.2 million from income of JNAI.

During 1999, licensing and other revenue increased by $0.4 million. This
increase was due to an increase of $0.5 million from golf center licensing
revenue, partially offset by a decrease of $0.1 million from marketing and
endorsement revenue. Income from the operations of JNAI increased by $0.2
million during the current year.

Revenues attributable to our golf instruction operations decreased by $0.4
million during the year ended December 31, 1999. The decline in golf
instruction revenue is primarily attributable to lower enrollment in the
executive instruction programs, which target high-end corporate outing type
functions, partially offset by an increase in enrollment for resort instruction
programs, which target consumers that have significant disposable income.

Operating expenses were $6.9 million and $7.7 million for fiscal 1999 and
1998, respectively. As a percentage of total revenues, operating expenses were
62% and 68% during the years ended December 31, 1999 and 1998, respectively.
During 1999, operating expense decreased by $0.8 million. This decrease was
primarily attributable to a lower cost of sales of $0.5 million for the golf
instruction division and lower operating expenses of $0.3 million for the
marketing division.

Corporate administration expenses were $4.0 million and $3.4 million for
the years ended December 31, 1999 and 1998, respectively. Although we effected
a reduction in our ongoing overhead costs in connection with the discontinuance
of Golf Centers and Paragon, such reductions were offset by increased costs
incurred for legal and professional fees associated with the shareholder claims
and the SEC investigation. Legal related expenses for these matters totaled
$1,207,229 and $299,323 during the years ended December 31, 1999 and 1998,
respectively.

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<PAGE>

Charges for depreciation and amortization expense were approximately $0.3
million for fiscal 1999 and 1998.

We had a net operating income of approximately $14,000 during the year
ended December 31, 1999, compared to an operating loss of $50,000 during the
prior year.

We earned interest income of $0.1 million during the year ended December
31, 1999, primarily comprised of earnings on cash reserves. For the comparable
period of the prior year, interest income was not material to our results of
operations. Interest expense for fiscal 1999 decreased to $23,780 compared to
$0.4 million for fiscal 1998, due primarily to decreased levels of indebtedness
outstanding under our revolving credit facility and short-term credit facility
during the current year.

Other income of $4.6 million for the year ended December 31, 1999 includes
amounts due to us related to a favorable settlement of a dispute involving our
independent certified public accountants. For the comparable period of the
prior year our other expense of $0.2 million was due primarily to the
termination of a joint venture arrangement.

We have sufficient net operating loss carryforwards and other tax benefits
to absorb substantially all of our Federal income tax liabilities, however,
certain of our operations are subject to state and foreign income taxes. The
tax provision for 1999 and 1998 comprised amounts incurred with respect to
state and foreign income taxes.

The income from discontinued operations, for the year ended December 31,
1999, is primarily the result of a favorable settlement with regard to
litigation involving Paragon's insurance carrier that had provided certain
performance and payment bonds for several of Paragon's construction projects.
In addition, we reached settlements with regard to our claims with certain
project vendors and owners.

YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

Total revenues were $11.4 million during the year ended December 31, 1998,
compared to $12.9 million for the comparable period of 1997. The $1.5 million
decrease in total revenues during 1998 was attributable to reductions in
revenue from related party commissions of $1.3 million, licensing activities of
$1 million and in the income from the operations of JNAI of $0.4 million,
offset in part by increased revenue from our golf instruction operations of
$1.2 million. We received $1.3 million in related party commissions during 1997
under a design services marketing agreement with Golden Bear International that
was terminated effective January 1, 1998. The costs and expenses associated
with providing the marketing services required under the agreement were also
terminated.

Licensing and other revenues decreased by $1.0 million during 1998, due
primarily to our foreign operations in the Far East and other geographical
areas that experienced volatile markets and downturns in their general economic
conditions that unfavorably impacted the retail sales and operations of our
customers in those regions. Income from the operations of JNAI decreased by
$0.4 million during 1998 due to the volatility and downturn in general economic
conditions in the Far East, where the majority of JNAI's customers are located.
Revenues attributable to our golf instruction operations increased by $1.2
million during the year ended December 31, 1998, due primarily to expansion of
our executive golf program which targets the high-end corporate outing type
functions, along with a new source of revenues from a premium priced program
offered exclusively to women, which was introduced during 1998.

We incurred a net operating loss of approximately $50,000 during the year
ended December 31, 1998, compared to generating operating income of $1.3
million during the prior year. The $1.4 million decrease in operating income
for 1998 was primarily attributable to a reduction in revenues which was not
offset by a commensurate decrease in operating expenses. Operating expenses
were $7.7 million for fiscal 1998 and 1997, and as a percentage of total
revenues, such expenses were 67.8% and 59.7% during the years ended December
31, 1998 and 1997, respectively. Contributing to the increase in

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<PAGE>

operating expenses as a percentage of total revenues were increased levels of
costs incurred during 1998 associated with the provision for bad debts,
advertising costs and commissions incurred in connection with the expansion of
the golf instruction operations and certain other promotional activities.

Corporate administration expenses were $3.4 million and $3.5 million for
the years ended December 31, 1998 and 1997, respectively. The reduction in
ongoing overhead costs were due to the sale of Golf Centers and discontinuance
of the construction operations of Paragon. Charges for depreciation and
amortization expense were approximately $0.3 million and $0.4 million for
fiscal 1998 and 1997, respectively.

Interest income during the year ended December 31, 1998 was not material
to our results of operations. Interest income of $0.1 million for the
comparable period of the prior year was comprised primarily of earnings on the
unexpended proceeds from our initial public offering which were invested in
short-term commercial paper instruments and repurchase agreements. Interest
expense for fiscal 1998 increased to $0.4 million compared to $0.1 million for
fiscal 1997, due primarily to increased levels of indebtedness outstanding
under our revolving credit facility and short-term credit facility during 1998.
Other expenses of $0.2 million for the years ended December 31, 1998 and 1997
were comprised primarily of the losses associated with a joint venture
arrangement in which we had invested capital and participated in the operating
results of such venture.

Although we have sufficient net operating loss carryforwards and other tax
benefits to absorb substantially all of our Federal income tax liabilities,
certain of our operations are subject to state and foreign income taxes. The
provision for income taxes of $0.2 million and $0.1 million for the years ended
December 31, 1998 and 1997, respectively, are comprised of amounts incurred
with respect to state and foreign income taxes.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2000 and December 31, 1999, we had a working capital
deficit of $3.5 million and $2.9 million, respectively, and cash and cash
equivalents of $4.7 million and $1.4 million, respectively. This working
capital deficit impedes our ability to obtain financing. While the working
capital deficit has no impact on our ongoing operations, it has made financing
from financial institutions virtually unobtainable, requiring us to fund our
liabilities solely from cash flow from operations which may not be sufficient
for such purpose.

The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Primarily as a
result of losses, previously incurred by our Paragon subsidiary, we have
incurred operating losses which have resulted in a shareholders' deficit of
approximately $9.4 million and a working capital deficiency of approximately
$3.5 million at March 31, 2000. The circumstances surrounding the losses
previously incurred by Paragon have resulted in substantial claims and
litigation against us. Management's actions in regard to these matters included
discontinuing our construction operations in 1998 and reducing ongoing
expenses.

We have significant payment obligations which arose out of the activities
in prior periods which are currently due or will be due and payable within the
next twelve months. We intend to use the cash currently on hand and the cash
generated by our continuing operations to pay these obligations as they come
due. However, since the date of our financial statements, Family Golf Centers,
Inc., a licensee from whom we expected significant revenues, defaulted in its
payments to us under our license agreement and has filed for bankruptcy
protection further negatively impacting our cash flow and cash available for
payment of our liabilities. In connection with our settlement of the class
action lawsuit brought by shareholders, we agreed to take the steps necessary
to acquire all the shares held by public shareholders at a cash price of $0.75
per share. The price for the publicly held shares was the result of
negotiations between us and attorneys for the class action plaintiffs and has
the approval

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<PAGE>

of a committee of independent directors. An investment banking firm provided an
opinion, that the consideration to be received by holders of our Common Stock,
other than Jack Nicklaus and his family, pursuant to the repurchase of the
shares from the public shareholders through the use of cash on hand and the net
proceeds.of settlements. We received approximately $3.8 million of cash in
connection with the settlement of our claim against our auditor. Approximately
$1.9 million of that amount was deposited into an escrow on April 5, 2000 to
fund the redemption and cancellation of our publicly held shares of our Class A
Common Stock pursuant to the merger. After payment of expenses (including the
payment of Morgan Stanley's fees and legal fees), approximately $1.3 million of
the settlement proceeds are expected to be available for payment of our
liabilities.

The Company's financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts and the
amounts and classification of liabilities that might be necessary should we be
unable to continue as a going concern. Our continuation as a going concern and
future working capital requirements are dependent on our ability to
successfully complete negotiations involving Paragon and on our ability to
achieve and maintain profitable operations and cash flow in the future. This
will largely depend on the success of our licensees, sales of branded products
and the success and profitability of our golf schools. While we believe that
such objectives are attainable, there is no assurance that we will be
successful in realizing these objectives, or that we will generate sufficient
cash flow from operations to meet our future working capital requirements. To
the extent that capital requirements exceed available capital, we will be
required to seek alternative sources of financing to fund its operations. We
have no existing credit facility and there is no assurance that alternative
financing will be available, if at all, on satisfactory terms. If we are unable
to obtain satisfactory alternative financing, we may be required to delay or
reduce our expenditures, sell additional assets to meet our obligations, seek
to renegotiate the terms of our obligations, curtail our operations or seek
bankruptcy relief. There can be no assurance that any source of funds or other
actions taken by us will provide sufficient capital so as to enable us to
remain a going concern.

CURRENCY FLUCTUATIONS

Although substantially all of our contracts are denominated in United
States dollars, fluctuations in the value of foreign currencies relative to the
United States dollar could impact our results of operations. A substantial
portion of the revenues of our overseas licensees are generated in foreign
currencies and accordingly, fluctuations in the value of these currencies
relative to the United States dollar could adversely affect our profitability.
Royalty payments received by us or by JNAI relating to foreign licensing
arrangements are converted to United States dollars based on the exchange rate
at the time of payment.

Our JNAI joint venture has entered into futures contracts to hedge its
anticipated receipt of a portion of the royalty payments denominated in
Japanese yen. Apart from these futures contracts on the part of JNAI which were
not material to our results of operations, we do not currently engage in
hedging activities with respect to currency fluctuations, but may do so in the
future.

INFLATION

We do not believe that the relatively moderate rates of inflation
experienced in the United States over the last three years have had a
significant effect on our revenues or profitability. Although higher rates of
inflation have been experienced in a number of foreign countries in which we do
business, we do not believe that such rates have had a material effect on our
revenues or profitability.

RECENT ACCOUNTING PRONOUNCEMENT

In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements," ("SAB No. 101") which requires
implementation by June 30, 2000. As a result, we commenced a review of our
revenue recognition policies for conformity with SAB No. 101. We believe our
revenue recognition policies comply with the guidance provided in SAB No. 101.
SAB

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<PAGE>

No. 101 generally provides that up-front payments, whether or not they are
refundable, should be deferred as revenue and recognized over the license
period. Our management believes the impact of adopting SAB No. 101 will not
have a material impact upon our results of operations or financial position.

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or a liability measured at its
fair value. SFAS 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. In June 1999, the FASB issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities--
Deferral of the effective date of FASB Statement No. 133." SFAS 137 deferred
the effective date of SFAS 133 to fiscal years beginning after June 15, 2000.
Our management believes the impact of adopting this statement will not have a
material impact upon our results of operations or financial position.

MARKET RISK

We are exposed to the impact of interest rate changes. Such exposure to
market risk is inherent in certain of our financial instruments which arise
from transactions entered into in the normal course of business. We are subject
to interest rate risk on our outstanding note payable to a shareholder and on
any future financing requirements. The amount outstanding totals $2.4 million
and bears interest at the Wall Street Journal prime rate of 8.83% at March 31,
2000. Our current fixed rate indebtedness consists of certain capital lease
obligations requiring monthly payments of principal and interest, with terms
maturing through 2002.

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<PAGE>

INFORMATION REGARDING GOLDEN BEAR

BUSINESS

GENERAL. Golden Bear, together with our wholly owned subsidiaries, is
engaged in the development, marketing and management of golf-related businesses
including:

/bullet/ the licensing, distribution and sale of golf-related consumer
products,
/bullet/ the operation of golf instructional schools and
/bullet/ the licensing of golf practice and instruction facilities.

Through our various operating units, we have provided products and
services in over 40 countries, primarily under the NICKLAUS, JACK NICKLAUS and
GOLDEN BEAR brand names. We were formed on June 7, 1996 to enter into an
exchange agreement which we consummated on August 1, 1996 simultaneously with
the closing of our initial public offering of our Class A Common Stock. Parties
to the plan of reorganization included, among others, our affiliates, Golden
Bear Golf Centers, Inc., Paragon Construction International, Inc. and Golden
Bear International, Inc., a privately owned company controlled by Jack
Nicklaus. Pursuant to the exchange agreement, we acquired all of the
outstanding common stock of Golden Bear Golf Centers and Paragon in exchange
for shares of our Class A and Class B Common Stock. In addition, we acquired
certain assets and assumed certain liabilities of Golden Bear International in
exchange for shares of our Class B Common Stock. We accounted for the
transaction on a historical cost basis in a manner similar to a pooling of
interests as Golden Bear, Golden Bear Golf Centers and Paragon had common
stockholders and management. We have no equity interest in Golden Bear
International. During 1998, we sold Golden Bear Golf Centers and discontinued
Paragon's construction operations. Accordingly, the operations and financial
activity associated with such businesses have been reclassified as discontinued
operations. Our continuing businesses include:

/bullet/ the licensing of NICKLAUS, JACK NICKLAUS and GOLDEN BEAR branded
products throughout the world,
/bullet/ the operation of the NICKLAUS FLICK GAME IMPROVEMENT and
/bullet/ the generation of marketing fees related to Jack Nicklaus' personal
endorsements.

In addition, on December 18, 1998, we entered into a joint venture
agreement with Weitz Golf, a newly formed construction company, pursuant to
which we will provide marketing assistance in connection with the construction
activities offered by Weitz Golf.

Our principal executive offices are located at 11780 U.S. Highway One,
North Palm Beach, Florida 33408 and our telephone number is (561) 626-3900.

LICENSING. We manage Jack Nicklaus' brands and marketing relationships.
Our activities include the licensing and marketing of a wide variety of Jack
Nicklaus branded consumer products and services, primarily under the NICKLAUS,
JACK NICKLAUS, and GOLDEN BEAR brand names. We currently license these Jack
Nicklaus brands to more than 15 companies that distribute products in over 25
countries. The largest markets for our branded products currently are:

/bullet/ the United States,
/bullet/ Korea and
/bullet/ Japan.

Our licensed product categories include:

/bullet/ men's and women's sportswear,
/bullet/ men's tailored clothing,
/bullet/ neckwear,

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<PAGE>

/bullet/ luggage,
/bullet/ socks,
/bullet/ head wear,
/bullet/ belts,
/bullet/ small leather goods,
/bullet/ eyewear,
/bullet/ furniture,
/bullet/ calendars and
/bullet/ various forms of artwork and commemoratives.

Our licensing of apparel in the Far East is conducted exclusively through
Jack Nicklaus Apparel International, a joint venture with an affiliate of
Hartmarx Corporation. This joint venture has in turn entered into separate
licensing arrangements through partnerships relating to Japan and the rest of
Asia. Pursuant to such arrangements, the joint venture receives from 3% to 5%
of royalty fees from the Japan partnership's Nicklaus' product sales and
approximately 4% to 5% of royalty fees from the rest of Asia partnership's
Nicklaus' product sales.

The following table sets forth our principal licensees and products:

<TABLE>
<CAPTION>
LICENSED LICENSEE
LICENSEE PRODUCTS BRANDS TERRITORIES SINCE
--------------------------- --------------------------------- --------------- --------------- ---------
<S> <C> <C> <C> <C>
Hart, Schaffner & Marx, Slacks, sportscoats, blazers, JACK NICKLAUS United States 1969
a business unit of woven dress shirts
Hartmarx Corporation

Trans-Apparel Group, Men's and women's shirts, NICKLAUS North America 1990
a business unit of slacks, shorts, blazers, socks, GOLDEN BEAR Europe
Hartmarx Corporation sweatshirts, outerwear,
rainwear, headwear

The Rockport Corporation Casual and dress shoes, JACK NICKLAUS Worldwide 1992
golf shoes GOLDEN BEAR

Brookville Corporation Neckwear NICKLAUS United States 1995

Drexel Heritage, Inc. Furniture NICKLAUS North America 1997

Jack Nicklaus Apparel Men's and womens' JACK NICKLAUS Japan 1973
International ("JNAI"): sportswear and accessories NICKLAUS Southeast Asia
Partnership with Hartmarx GOLDEN BEAR Australia
Corporation South Africa
South America

JNAI/FE: Men's and womens' JACK NICKLAUS Thailand
Partnership between JNAI sportswear and accessories NICKLAUS Indonesia
and Kosugi GOLDEN BEAR Korea
Sangyo to license Jack Malaysia
Nicklaus brands in Asia Singapore
Philippines

JNJ: Men's, womens' and JACK NICKLAUS Japan 1995
Partnership between JNAI children's sportswear, hats, NICKLAUS
and Kosugi ties, gloves, belts, luggage, GOLDEN BEAR
Sangyo to serve as master casual and business bags MUIRFIELD
apparel licensee in Japan and eyewear
</TABLE>

GOLF CENTERS AND ACADEMIES. We license our GOLDEN BEAR GOLF CENTERS, JACK
NICKLAUS GOLF CENTERS and JACK NICKLAUS ACADEMY OF GOLF programs to licensees
which operate golf practice and

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<PAGE>

instruction facilities. These programs are designed to provide golf practice
opportunities, affordable golf instruction and related recreational activities
at such facilities. As of the beginning of 1998, we had one unaffiliated
licensee that operated seven GOLDEN BEAR GOLF CENTERS. On July 20, 1998, we
sold Golden Bear Golf Centers, which owned and operated a total of 14 golf
center facilities under the GOLDEN BEAR GOLF CENTERS brand name, to this
licensee. In connection with the sale, we entered into a licensing agreement
with this licensee granting it the right to continue operating the acquired
golf centers under the GOLDEN BEAR GOLF CENTERS brand name. The licensing terms
associated with the original seven facilities operated by this licensee were
merged into the agreement governing the 14 acquired centers, pursuant to which
we were entitled to receive minimum annual licensing fees in the aggregate of
$795,000 payable in equal quarterly installments, along with certain additional
incentive compensation based on the achievement of certain defined target
annual revenue levels by the licensed facilities. Pursuant to the agreement, in
the year ended December 31, 1999, the licensee paid us $795,000. Subsequent to
December 31, 1999, the licensee defaulted in its payments and we elected to
terminate the agreement. Subsequently, the licensee filed for bankruptcy.
Accordingly, no future payments may be received from the licensee. We are aware
that the licensee has experienced financial difficulties during 1999 and there
is no assurance that we will continue to receive licensing fees under the
agreement.

Set forth below is a list of our existing domestic licensees and the
location of the golf practice and instruction facilities operated by them.

LICENSEE GROUP LOCATION OF FACILITIES
--------------------------- ------------------------------------------
Family Golf Centers, Inc. Henrietta, NY Pittsburgh, PA
Farmingdale, NY Dayton, OH
Elmsford, NY Columbus, OH
Douglaston, NY Royal Oak, MI
Liverpool, NY Plymouth, MI
Williamsville, NY College Park, MD
Tom's River, NJ Lake Park, FL
Wayne, NJ Fort Lauderdale, FL
Pittsburgh, PA El Segundo, CA
Moreno Valley, CA Carrollton, TX
Beaverton, OR

KRIM & Associates, LLC Albany, NY

We have also entered into license agreements for the development and
operation of golf center facilities outside of the United States under the
brand names JACK NICKLAUS GOLF CENTER and JACK NICKLAUS ACADEMY OF GOLF. The
latter generally provides more substantial practice facilities and practice
golf holes on a larger site. In some territories, we have granted a master
license for a country or region that gives the master licensee the exclusive
right within defined territories to own, operate or sublicense to others the
right to own and operate golf centers and golf academies in the territory. In
other cases, we have granted a site specific license giving the site licensee
the right to open a single golf center or golf academy at a specific location.
We generally have granted our foreign licensees an exclusive radius around the
site of each facility. Our foreign licensees currently have eight operating
facilities located in Japan, England, Spain and Australia. We intend to
continue to support our existing licensee network.

MARKETING. We have developed two types of "marketing partnerships" with
selected companies worldwide. These partnerships involve either Mr. Nicklaus'
personal endorsement and use of his likeness or arrangements that utilize our
brand name and our golf expertise to promote the customer's

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<PAGE>

products and provide access to high-end golf consumers. We have established
such marketing partnerships involving Mr. Nicklaus' personal endorsement with,
among others:

/bullet/ Lincoln-Mercury, a division of Ford Motor Company,
/bullet/ Textron,
/bullet/ Golf Magazine and
/bullet/ Maxfli.

These partnerships generally increase our exposure and reinforce the image
of Mr. Nicklaus in our target markets. We receive a percentage of all revenues
Mr. Nicklaus receives for his personal endorsement services that we obtain
through our marketing efforts. Our percentage is equal to:

/bullet/ 30% of all such revenues under any contract or arrangement
existing as of our reorganization on August 1, 1996 or any renewal thereof
and
/bullet/ no less than 20% of all such revenues received under any new
contract or arrangement.

We receive 100% of any revenues associated with strategic marketing
alliances. We have established marketing alliances with companies such as:

/bullet/ VISA,
/bullet/ Pepsi and
/bullet/ Citigroup.

Our marketing and licensing strategy is to:

/bullet/ expand the worldwide sales of our products;
/bullet/ selectively expand our licensed product lines;
/bullet/ work with existing licensees to maximize brand advertising and
promotional exposure and
/bullet/ develop new licensing relationships for product categories that
are appropriate for Jack Nicklaus brands.

There is no assurance that these strategies will be successful or our
objectives achieved.

NICKLAUS FLICK GAME IMPROVEMENT. We operate golf schools principally under
the NICKLAUS FLICK GAME IMPROVEMENT brand name. Jack Nicklaus and Jim Flick, a
world renowned instructor, collaborated to develop a program that has been
recognized by major golf publications for its leadership role in the golf
instruction industry since the school's inception in 1991. We have developed a
proprietary teaching methodology that includes instruction workbooks and also
utilizes computerized video technology to provide enhanced swing analysis. The
NFGI offers more than 130 golf instruction programs including several specialty
programs targeted at women, corporations and special alumni groups. NFGI
currently operates as an independent contractor at four resort clubs located in
the United States and Mexico. The target market for the NFGI retail schools is
consumers who have significant disposable income. We started a moderately
priced golf school program under the NICKLAUS FLICK FAULTS & CURES brand name
in 1997 and commenced operation of a premium priced golf school exclusively for
women under the program name of FOR WOMEN ONLY in 1998. We currently market
retail schools principally through:

/bullet/ direct response media advertising;
/bullet/ direct mail programs targeted at NFGI graduates and high net
worth golfers;
/bullet/ word-of-mouth referrals and
/bullet/ telemarketing.

The NFGI teaching faculty currently is comprised of 30 teaching
professionals selected by Jim Flick. Most of the instructors are independent
contractors and their agreements with NFGI are negotiated annually. In addition
to its regular one, two and three-day consumer packages, NFGI

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<PAGE>

provides businesses and corporations a wide range of program alternatives,
including three-day executive golf programs, one-day golf outings, charity golf
events and hospitality programs at select professional tour events. These
corporate programs, which operate under the brand name NICKLAUS FLICK EXECUTIVE
GOLF, are designed specifically for corporations.

OTHER OPERATIONS.

Weitz Golf International. We entered into an agreement with Weitz Golf, a
construction company focused on building golf courses and clubhouses nationally
and internationally. Under the terms of the agreement, Golden Bear, Golden Bear
International and Jack Nicklaus will provide certain technical and marketing
assistance in connection with the construction services offered by Weitz Golf,
which offers general contracting, design-build and construction management. The
principal markets targeted for these services are developers and designers in
the golf industry. Under the agreement, we are entitled to receive fees based
upon the cumulative profitability of Weitz Golf's operations and agreed to no
longer offer construction services directly during the term of the agreement.

Jack Nicklaus International Golf Club. The Jack Nicklaus International
Golf Club was founded in 1995 to provide additional benefits to members of
Nicklaus designed golf courses. The Golf Club is a proprietary membership club
that offers its members an opportunity to obtain a variety of member services,
including golf playing privileges at prestigious private clubs worldwide that
feature a Nicklaus designed golf course. Membership in the Golf Club is
restricted to members of the golf clubs that agree to participate in the
program. There currently are approximately 100 participating clubs. Members
enjoy reciprocal playing and guest privileges at each of the participating
clubs. As of March 31, 2000, JNIGC had 367 individual members and 534 club
members whose fee is paid by a private club. The individual members pay an
annual retail membership fee of $295. The private club pays an annual fee that
is discounted and varies from $100 to $195 per person.

COMPETITION. Our competition varies among our business lines. The consumer
markets for goods and services in which our marketing and licensing operations
compete are extremely competitive. Our products and services compete against a
mix of established brand name consumer products and services, products and
services licensed or endorsed by sports and entertainment celebrities, private-
label products and generic products that have not established a distinct brand
identity. Our competitors have substantially greater resources, brand awareness
and market visibility than we do and include brand names such as Calloway,
Ashworh, Cutter & Buck, Nike and Titleist. Competition in these products and
services is primarily centered on styling, quality, price, brand recognition
and service, as well as the ability of those products and services to satisfy
the various subjective requirements of golfers, including the "look and feel"
of the products and the level of acceptance the product or service receives
from both professional and other golfers. New product introductions and/or price
reductions by competitors continue to generate increased marketplace
competition. We believe that the rise in the popularity of golf and golf-related
consumer products has resulted in a widespread increase of competitors in our
industry and an oversupply of high-end golf-related consumer products. We also
believe that this increase in competitors and oversupply has resulted in the
saturation of the market for many of the high-end golf-related products and
services we license.

In order for us to remain competitive in these marketplaces, we must
effectively maintain and promote the unique brand image of our services and our
licensed products and establish strong marketing relationships with
manufacturers and distributors of products which enhance that brand image. We
and our licensees compete with a number of manufacturers and marketers of
sporting goods, recreational products, apparel and other consumer products and
services. Many of these competitors have substantially greater resources that
us and our licensees. In addition, these competitors have recognized brand
names and broader and more established distribution networks and may be able to
enter the emerging e-commerce marketplace more quickly or more efficiently than
us or our licensees. These markets also face competition from other leisure and
recreational activities, and sales of leisure and recreational products and
services are affected by changes in consumer preferences, which are subjective,
difficult to predict and subject to rapid and unanticipated changes.

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<PAGE>

EMPLOYEES. At March 31, 2000 we had 40 employees. We have no collective
bargaining agreements covering any of our employees, have not experienced any
material labor disruption and are unaware of any efforts or plans to organize
our employees. We consider our relations with our employees to be satisfactory.

INTELLECTUAL PROPERTY RIGHTS. We license the NICKLAUS, JACK NICKLAUS and
GOLDEN BEAR brand names from Golden Bear International. The public
identification of these brands, which we believe are well recognized and well
regarded by consumers, has been historically developed the public
identification of these brands through their association with the personal
rights of Jack Nicklaus as a living individual to commercialize his personality
under common law and various statutes enacted in certain domestic states and
foreign countries. We have obtained the exclusive royalty-free rights from
Golden Bear International to utilize and license the major trademarks and
service marks that have been previously developed under common law, including
marks previously registered in the United States and various foreign countries
in which we and our licensees currently sell products or services. Subject to
the approval of Golden Bear International, we also have the right to obtain the
registration of additional trademarks and service marks for the future
expansion of our businesses. Additionally, we have the right to utilize certain
customer lists, trade secrets, know-how, and certain copyrighted materials
necessary or useful in the conduct of our business, including certain
intellectual property.

GOVERNMENTAL REGULATION. Our former golf center operations and our golf
course construction activities were subject to various federal, state, local
and foreign laws and regulations designed to protect the environment from waste
emissions, the handling, treatment and disposal of solid and hazardous wastes
and the remediation of contaminates associated with the use and disposal of
hazardous substances. Although we believe that we are and have been in
substantial compliance with all such laws, ordinances and regulations
applicable to these operations, there may be environmental liabilities or
conditions associated with such activities of which we are not aware.
Accordingly, we can not assure you that future compliance with such
requirements will not have a material adverse effect on our financial
condition.

We are also subject to the Federal Occupational Safety and Health Act and
other laws and regulations affecting the safety and health of employees.
Further, we are subject to the Fair Labor Standards Act and various state laws
governing such matters as minimum wage requirements, overtime and other working
conditions and citizenship requirements. We are also subject to foreign
immigration, labor, safety and environmental laws in those jurisdictions where
it performs services.

PROPERTIES

Our principal executive and administrative offices are located in North
Palm Beach, Florida in approximately 11,000 square feet of space leased under
an agreement with a term that expires in 2007. We consider our executive and
administrative offices to be adequate and suitable for our current needs.

35
<PAGE>

MANAGEMENT

The following table sets forth certain information with respect to our
directors and executive officers. A summary of the background and experience of
each of these individuals is set forth after the table. The executive officers
serve at the discretion of our Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------ ----- ---------------------------------------------------
<S> <C> <C>
Jack W. Nicklaus 60 Chairman of the Board
Stephen S. Winslett 48 Senior Vice President, Chief Operating Officer and
Chief Financial Officer
Roger E. Birk 69 Director
Richard F. Chapdelaine 75 Director
John F. McGovern 53 Director
</TABLE>

JACK W. NICKLAUS has served as Chairman of our Board of Directors since
our inception. Mr. Nicklaus founded Golden Bear International, our predecessor,
in 1970 and has served as Chairman of its Board since inception. His
competitive career has spanned five decades, and includes 100 professional
tournament victories worldwide and a record 20 major-championship titles. He is
the only player in history to have won each of the game's majors at least twice
(six Masters, five PGA Championships, four U.S. Opens, three British Opens and
two U.S. Amateurs). Mr. Nicklaus has twice been named Golfer of the Century, in
1988 by GOLF magazine and in 1996 by GOLF MONTHLY (UK). He was also named
winner of the PGA Tour Player of the Year Award, has been the Tour's leading
money-winner eight times and runner-up six times. He has played on six Ryder
Cup teams, captained two other Ryder Cup teams, and in December 1998 served as
captain of the U.S. team in the President's Cup. In addition, Mr. Nicklaus has
been involved in the design of 166 courses in 26 countries. He was named Golf
Course Architect of the Year in 1993 by GOLFWORLD magazine and four of his most
recent designs were ranked in GOLF DIGEST'S list of the Best New Courses in
1998.

STEPHEN S. WINSLETT joined us in October 1997 as Senior Vice President and
Chief Financial Officer. In October 1998, Mr. Winslett was also appointed our
Chief Operating Officer after the resignation of our President and Chief
Executive Officer. In this capacity, Mr. Winslett is responsible for all of our
operational activities and financial matters. Prior to his employment with us,
Mr. Winslett was Vice President of Finance and Administration for the North
American operations of The Albert Fisher Group PLC, a multinational corporation
listed on the London Stock Exchange.

ROGER E. BIRK, a private investor, has served as a member of our Board of
Directors since October 1996. Mr. Birk served as the President of the Federal
National Mortgage Association ("Fannie Mae") from 1987 to 1992 and is currently
one of its Board members. Prior to his tenure at Fannie Mae, Mr. Birk served as
Chairman and a member of the Board of the International Securities Clearing
Corporation. He also served as Chairman of the Board and Chief Executive
Officer of Merrill Lynch & Company, Inc. from 1981 to 1984 and was named
Chairman Emeritus in 1985. In addition to Fannie Mae, Mr. Birk currently serves
on the Board of Directors of Penske Corporation, Wellpoint Health Networks,
Inc., and is a life trustee of the University of Notre Dame.

RICHARD F. CHAPDELAINE has served as a member of our Board of Directors
since October 1996. In 1966, Mr. Chapdelaine founded Chapdelaine & Company, a
New York-based securities firm where he currently serves as Chairman of the
Board. Mr. Chapdelaine is also Chairman of the Board of Chapdelaine Corporate
Securities & Company, serves on the Board of Directors of Long Island Savings
Bank and is a former Board member of St. Francis Hospital.

JOHN F. MCGOVERN has served as a member of our Board of Directors since
October 1996. Mr. McGovern is currently a principal in Aurora Capitol, LLC
located in Atlanta, Georgia. Mr. McGovern also serves as member of the Board of
Directors of Hvide Marine Towing, a Ft. Lauderdale, Florida based company.
Until November 1999, Mr. McGovern served as the Executive Vice President of
Finance and Chief Financial Officer of Georgia-Pacific Corporation.

36
<PAGE>

LEGAL PROCEEDINGS

In August 1995, Paragon brought an arbitration claim against a customer
for breach of contract. Paragon alleges it has properly completed the
construction relating to the renovation of the customer's golf course and is
seeking final payment of retainage and related amounts due, together with
additional damages, totaling approximately $350,000. Simultaneous to this claim
of arbitration, the customer filed a counterclaim of arbitration against
Paragon and Golden Bear International for alleged construction defects in the
renovation of its golf course. Although the customer claimed its damages are in
excess of $3.0 million, the initial claim submitted by the customer in
arbitration was for $750,000. On June 2, 2000 Paragon and Golden Bear
International entered into a settlement agreement with respect to this matter.
Under the terms of the settlement, Paragon and Golden Bear International will
each pay the customer $250,000. Each party's payment is covered by its
insurance. As the ultimate outcome of this matter was not determinable at that
time, no provision for loss regarding this matter had been established at March
31, 2000.

Based on a comprehensive review we conducted of Paragon's construction
projects, it was necessary for us to restate certain financial statements we
had previously filed with the SEC. Following our announcement that our
financial statements needed to be restated, a number of class action complaints
were filed against us and certain of our present and former officers and
directors and the former president of one of our subsidiaries. One of the class
action complaints also named Andersen as a defendant. Those class actions were
transferred to the United States District Court for the Southern District of
Florida and that court entered an order consolidating the actions, designating
class representatives and appointing class counsel pursuant to the provisions
of the Private Securities Litigation Reform Act.

On December 24, 1998, plaintiffs filed the first Consolidated Class Action
Complaint, naming as defendants Golden Bear, Jack W. Nicklaus, Richard P.
Bellinger, Jack P. Bates, Stephen S. Winslett, John Boyd and Andersen. The
Consolidated Complaint alleged claims for violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The Consolidated Complaint asserted claims on behalf of a class
consisting of all persons, excluding the defendants and certain related persons
or entities, who purchased shares of our Class A Common Stock during the period
from April 30, 1997 through and including July 27, 1998.

On December 22, 1999, the parties entered into a settlement agreement
relating to the consolidated actions. In connection with the settlement,
plaintiffs filed a motion to allow the filing of their Second Amended
Consolidated Complaint on behalf of a class of all persons, excluding the
defendants, who purchased shares of our Class A Common Stock from the date of
our public offering, August 1, 1996, through and including July 27, 1998. The
Amended Consolidated Complaint includes allegations of securities law
violations under Sections 11, 12(2) and 15 of the Securities Act of 1933,
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder, as well as common law claims.

Under the terms of the settlement agreement, we established a settlement
fund in the amount of $3.5 million to settle the class action litigation. We
contributed $2.5 million to the settlement fund, this amount was funded by our
insurance carrier. Pursuant to the settlement agreement, Andersen also
contributed $1.0 million to the settlement fund. In addition, we agreed to take
the steps necessary to effectuate the terms of the merger described in this
Information Statement which will result in consideration payable to the public
holders of our Class A Common Stock of $0.75 in cash per share. The price for
the publicly held shares was the result of negotiations between us and
attorneys for the class action plaintiffs and has the approval of a committee
of independent directors. Morgan Stanley provided an opinion, that the
consideration to be received by holders of our Common Stock, other than Jack
Nicklaus and his family, pursuant to the settlement agreement is fair from a
financial point of view to such holders. The settlement agreement was approved
by the United States District Court at a final hearing on March 28, 2000. In
connection with our execution of the settlement agreement, we also entered into
an agreement with Andersen resolving our claims against it relating to services

37
<PAGE>

provided by Andersen. Pursuant to that agreement, Andersen paid us $3.8 million
in cash and waived approximately $750,000 of receivables associated with work
rendered by it for us.

The SEC has also advised us that it is conducting a private investigation
to determine whether we or certain of our current or former officers, directors
and employees have engaged in conduct in violation of certain provisions of the
Securities Exchange Act of 1934 and the rules and regulations thereunder. We
believe that the investigation is focused principally on the recognition of
additional costs and losses associated with Paragon's former construction
projects and our public statements and accounting systems with respect thereto.
We are cooperating in the investigation. However, we are unable to predict the
outcome or the additional expenses which may be incurred in connection with the
investigation.

We are also a party to various other legal proceedings which have arisen
in the ordinary course of our business. The ultimate outcome of these matters
cannot be predicted with certainty and these legal proceedings could result in
additional losses that could have a material adverse effect on the Company's
financial position or results of operation.

INFORMATION REGARDING GB GOLF

GB Golf is a Florida corporation that we incorporated on January 12, 2000.
It is a wholly-owned subsidiary. GB Golf does not have any assets or conduct
any business other than as may be necessary for it to satisfy its obligations
under the merger agreement. Stephen S. Winslett is the sole officer and
director of GB Golf. GB Golf's principal executive offices are located at 11780
U.S. Highway One, North Palm Beach, Florida 33408 and its telephone number is
(561) 626-3900.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

GOLDEN BEAR INTERNATIONAL. Golden Bear, Golden Bear International and Jack
Nicklaus (collectively, the "Company Affiliates") have an agreement with an
unaffiliated party, Weitz Golf, pursuant to which the Company Affiliates
provide technical and marketing assistance in connection with the construction
services offered by Weitz Golf, which include general contracting, design-build
and construction management. Under the agreement, we no longer offer
construction services independently during the term of the agreement which
expires on December 31, 2007. We are entitled to receive 40% of the cumulative
net profits, as defined, received by Weitz Golf pursuant to the contracts it
enters into during the term of the agreement. There were no cumulative net
profits from the operations of Weitz Golf during the three months ended March
31, 2000.

Pursuant to the terms of a personal services management agreement, Golden
Bear International and Jack Nicklaus have retained us as the exclusive manager
and representative to market the personal endorsement services of Mr. Nicklaus,
under which we are generally entitled to approximately 20% to 30% of the
personal endorsement fees received by Mr. Nicklaus. During the three months
ended March 31, 2000 and 1999, we earned management fees attributable to
providing such services of $52,994 and $89,700, respectively. At March 31,
2000, we had a net amount due from Golden Bear International of $52,046, which
was comprised primarily of the management fees attributable to such personal
endorsement services performed by Mr. Nicklaus.

We have an office staff sharing agreement with Golden Bear International
that provides for the sharing of the services of certain specifically
identified office staff and personnel that can effectively serve the needs of
both organizations. During the three months ended March 31, 2000 and 1999,
payroll and related costs associated with such shared employees totaling $6,900
and $9,000, respectively, were allocated to Golden Bear International.

In 1998, Jack Nicklaus advanced $2.4 million to us evidenced by an
unsecured five-year promissory note. The loan proceeds were used by us in
connection with the settlement of certain claims associated with a golf course
development.

38
<PAGE>

NICKLAUS GOLF EQUIPMENT COMPANY, L.C. In the ordinary course of business,
we purchase golf equipment manufactured by Nicklaus Golf Equipment Company,
L.C., a privately owned company in which Jack Nicklaus has a 50% equity
interest. Such equipment is purchased primarily for promotional programs
associated with our NICKLAUS FLICK GAME IMPROVEMENT. Prior to the sale of our
Golf Centers subsidiary, such equipment was also purchased for resale in the
pro shops of our golf centers. During the three months ended March 31, 2000 and
1999, we purchased such golf equipment at an aggregate cost of $9,112 and
$10,490, respectively.

EXECUTIVE SPORTS INTERNATIONAL. During the three months ended March 31,
2000 and 1999, we procured certain printing and graphic services totaling
$18,352 and $120, respectively, from Executive Sports International, a
privately held company owned in part by a member of the Nicklaus family. In
1999, we entered into a marketing and support agreement with Executive Sports
International in connection with the promotion, marketing, sale and operation
of NICKLAUS FLICK GAME IMPROVEMENT'S programs and other group golf school and
clinic programs. Under the marketing and support agreement, Executive Sports
International earned a management fee of $45,000, commissions of $15,000 and
was reimbursed for expenses of $4,517 during the three months ended March 31,
2000.

39
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
FINANCIAL STATEMENTS OF GOLDEN BEAR GOLF, INC.:
Report of Independent Certified Public Accountants ..................... F-2
Consolidated Balance Sheets as of December 31, 1999 and 1998 ........... F-3
Consolidated Statements of Operations
for the Years Ended December 31, 1999, 1998 and 1997 .................. F-4
Consolidated Statements of Shareholders' Equity (Deficit)
for the Years Ended December 31, 1999, 1998 and 1997 .................. F-5
Consolidated Statements of Cash Flows
for the Years Ended December 31, 1999, 1998 and 1997 .................. F-6
Notes to Consolidated Financial Statements ............................. F-7

FINANCIAL STATEMENT SCHEDULE OF GOLDEN BEAR GOLF, INC.:
Schedule II--Valuation and Qualifying Accounts
for the Years Ended December 31, 1999, 1998 and 1997 .................. F-28

FINANCIAL STATEMENTS OF JACK NICKLAUS APPAREL INTERNATIONAL:
Report of Independent Certified Public Accountants ..................... F-29
Balance Sheet as of November 30, 1999 .................................. F-30
Statement of Operations for the Year Ended November 30, 1999 ........... F-31
Statement of Partners' Equity for the Year Ended November 30, 1999 ..... F-32
Statement of Cash Flows for the Year Ended November 30, 1999 ........... F-33
Notes to Financial Statements .......................................... F-34

FINANCIAL STATEMENTS OF GOLDEN BEAR GOLF, INC.:
Consolidated Condensed Balance Sheets
as of March 31, 2000 (Unaudited) and December 31, 1999 ................ F-38
Consolidated Condensed Statements of Operations (Unaudited)
for the Three Months Ended March 31, 2000 and 1999 .................... F-39
Consolidated Condensed Statements of Cash Flows (Unaudited)
for the Three Months Ended March 31, 2000 and 1999 .................... F-40
Notes to Consolidated Condensed Financial Statements (Unaudited) ....... F-41
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Golden Bear Golf, Inc.:

We have audited the accompanying consolidated balance sheets of Golden
Bear Golf, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, shareholders' equity (deficit)
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and the schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Golden Bear
Golf, Inc. and subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 7 to the consolidated financial statements, primarily as a result of
losses and costs previously incurred at its construction subsidiary, Paragon
Construction International, Inc., the Company incurred significant losses from
operations which resulted in a working capital and shareholders' deficiency at
December 31, 1999 and raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
described in Note 7. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for the purpose of complying
with the Securities and Exchange Commission's rules and is not part of the
basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

West Palm Beach, Florida,
March 28, 2000.

F-2
<PAGE>

GOLDEN BEAR GOLF, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................................... $ 1,397,027 $ 1,168,118
Accounts receivable, net of allowances of $195,748 in 1999 and
$280,688 in 1998.............................................. 398,241 1,626,783
Due from International ......................................... 58,826 41,812
Prepaid expenses and other current assets ...................... 3,898,718 226,806
------------- -------------
Total current assets ......................................... 5,752,812 3,063,519
PROPERTY AND EQUIPMENT, net ..................................... 428,855 706,361
OTHER ASSETS, net ............................................... 601,349 438,983
NET NON-CURRENT ASSETS OF DISCONTINUED
OPERATIONS ..................................................... -- 1,675,550
------------- -------------
Total assets ................................................. $ 6,783,016 $ 5,884,413
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ............................................... $ 1,188,860 $ 2,083,702
Accrued liabilities ............................................ 1,096,858 1,145,550
Deferred revenue ............................................... 1,095,301 1,275,042
Current portion of notes payable and capital leases ............ 121,565 111,140
Net current liabilities of discontinued operations ............. 5,133,611 15,552,968
------------- -------------
Total current liabilities .................................... 8,636,195 20,168,402
------------- -------------
NET NON-CURRENT LIABILITIES OF DISCONTINUED
OPERATIONS ..................................................... 4,738,500 --
NOTES PAYABLE AND CAPITAL LEASES,
net of current portion ......................................... 2,484,494 2,606,441
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS' DEFICIT:
Preferred stock, $.01 par value, 20,000,000 shares authorized,
no shares issued and outstanding ............................. -- --
Common stock--
Class A, $.01 par value, 70,000,000 shares authorized,
2,744,962 shares issued and outstanding ..................... 27,450 27,450
Class B, $.01 par value, 10,000,000 shares authorized,
2,760,000 shares issued and outstanding ..................... 27,600 27,600
Additional paid-in capital ..................................... 40,856,943 40,856,943
Accumulated deficit ............................................ (49,988,166) (57,802,423)
------------- -------------
Total shareholders' deficit .................................. (9,076,173) (16,890,430)
------------- -------------
Total liabilities and shareholders' deficit .................. $ 6,783,016 $ 5,884,413
============= =============
</TABLE>

The accompanying notes to the consolidated financial statements
are an integral part of these balance sheets.

F-3
<PAGE>

GOLDEN BEAR GOLF, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1999 1998 1997
------------- ---------------- ----------------
<S> <C> <C> <C>
REVENUES
Golf instruction revenues ............................... $5,339,284 $ 5,805,416 $ 4,604,638
Licensing and other revenues ............................ 4,680,195 4,297,232 5,316,387
Income from operations of JNAI .......................... 951,392 710,643 1,080,892
Related party commissions and fees ...................... 267,550 571,749 1,870,735
----------- ------------- -------------
Total revenues ........................................ 11,238,421 11,385,040 12,872,652
----------- ------------- -------------
OPERATING COSTS AND EXPENSES:
Operating expenses ...................................... 6,923,078 7,721,909 7,691,115
Corporate administration ................................ 4,031,742 3,393,675 3,457,733
Depreciation and amortization ........................... 270,048 319,449 416,910
----------- ------------- -------------
Total operating costs and expenses .................... 11,224,868 11,435,033 11,565,758
----------- ------------- -------------
Operating income (loss) ............................... 13,553 (49,993) 1,306,894
----------- ------------- -------------
OTHER INCOME (EXPENSE):
Interest income ......................................... 108,845 45,096 110,695
Interest expense ........................................ (23,781) (398,556) (91,032)
Other ................................................... 4,569,233 (242,089) (213,821)
----------- ------------- -------------
Total other income (expense) .......................... 4,654,297 (595,549) (194,158)
----------- ------------- -------------
Income (loss) from continuing operations before
income taxes ....................................... 4,667,850 (645,542) 1,112,736
PROVISION FOR INCOME TAXES ............................... 48,768 190,716 56,230
----------- ------------- -------------
Income (loss) from continuing operations .............. 4,619,082 (836,258) 1,056,506
Gain on sale of business segment ........................ -- 969,405 --
Income (loss) from discontinued operations, net ......... 3,195,175 (30,584,872) (25,755,308)
----------- ------------- -------------
Net income (loss) ..................................... $7,814,257 $ (30,451,725) $ (24,698,802)
=========== ============= =============
EARNINGS PER SHARE--BASIC AND DILUTED:
Income (loss) from continuing operations ................ $ 0.84 $ (0.15) $ 0.19
Income (loss) from discontinued operations, net ......... 0.58 (5.38) (4.68)
----------- ------------- -------------
Net income (loss) per share ........................... $ 1.42 $ (5.53) $ (4.49)
=========== ============= =============
Weighted average common shares outstanding ............... 5,504,962 5,504,962 5,505,200
=========== ============= =============
</TABLE>

The accompanying notes to the consolidated financial statements
are an integral part of these statements.

F-4
<PAGE>

GOLDEN BEAR GOLF, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
CLASS A CLASS B ADDITIONAL
COMMON COMMON PAID-IN ACCUMULATED
STOCK STOCK CAPITAL DEFICIT TOTAL
----------- --------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 ......... $27,448 $27,600 $40,850,358 $ (2,651,896) $ 38,253,510
Repurchase and retirement of
common stock ...................... (30) -- (43,783) -- (43,813)
Exercise of stock options .......... 32 -- 50,368 -- 50,400
Net loss ........................... -- -- -- (24,698,802) (24,698,802)
------- ------- ----------- ------------- -------------
BALANCE, December 31, 1997 ......... 27,450 27,600 40,856,943 (27,350,698) 13,561,295
Net loss ........................... -- -- -- (30,451,725) (30,451,725)
------- ------- ----------- ------------- -------------
BALANCE, December 31, 1998 ......... 27,450 27,600 40,856,943 (57,802,423) (16,890,430)
Net income ......................... -- -- -- 7,814,257 7,814,257
------- ------- ----------- ------------- -------------
BALANCE, December 31, 1999 ......... $27,450 $27,600 $40,856,943 $ (49,988,166) $ (9,076,173)
======= ======= =========== ============= =============
</TABLE>

The accompanying notes to the consolidated financial statements
are an integral part of these statements.

F-5
<PAGE>

GOLDEN BEAR GOLF, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1999 1998 1997
--------------- ----------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ..................................................... $ 7,814,257 $ (30,451,725) $ (24,698,802)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Loss on disposal of assets .......................................... 29,160 -- --
Depreciation and amortization ....................................... 270,048 319,449 416,910
Provision for uncollectible accounts ................................ 109,835 384,995 80,250
Net (income) loss from discontinued operations ...................... (3,195,175) 29,615,467 25,755,308
Changes in assets and liabilities:
Accounts receivable ................................................. 1,118,707 (510,011) (132,590)
Due from International .............................................. (17,014) 115,886 685,537
Prepaid expenses and other current assets ........................... (3,671,912) 77,309 (177,935)
Other assets ........................................................ (162,366) 107,836 (227,234)
Accounts payable .................................................... (894,842) 1,185,738 131,914
Accrued liabilities ................................................. (48,692) 435,052 264,530
Deferred revenue .................................................... (179,741) 615,226 296,576
------------ ------------- -------------
Net cash provided by operating activities ........................... 1,172,265 1,895,222 2,394,464
------------ ------------- -------------
NET CASH USED IN DISCONTINUED OPERATIONS: .............................. (810,132) (16,388,357) (17,151,881)
------------ ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .................................................. (21,702) (88,053) (116,542)
Proceeds from sale of property and equipment .......................... -- 131,310 --
Proceeds from sale of business segment ................................ -- 21,505,622 --
------------ ------------- -------------
Net cash provided by (used in) investing activities ................. (21,702) 21,548,879 (116,542)
------------ ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable--shareholder ............................... -- 2,400,000 --
Proceeds from short-term credit facility .............................. -- 5,000,000 --
Repayment of short-term credit facility ............................... -- (5,000,000) --
Proceeds from subordinated short-term loan--shareholder ............... -- 850,000 --
Repayment of subordinated short-term loan--shareholder ................ -- (850,000) --
(Repayment of) proceeds from revolving credit facility, net ........... -- (8,872,410) 8,872,410
Payments on capital lease obligations ................................. (111,522) (90,519) (77,079)
Proceeds from exercise of stock options ............................... -- -- 50,400
Repurchase and retirement of common stock ............................. -- -- (43,813)
------------ ------------- -------------
Net cash (used in) provided by financing activities ................. (111,522) (6,562,929) 8,801,918
------------ ------------- -------------
Net increase (decrease) in cash and cash equivalents ................ 228,909 492,815 (6,072,041)
CASH AND CASH EQUIVALENTS, beginning of year ........................... 1,168,118 675,303 6,747,344
------------ ------------- -------------
CASH AND CASH EQUIVALENTS, end of year ................................. $ 1,397,027 $ 1,168,118 $ 675,303
============ ============= =============
SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING
AND INVESTING ACTIVITIES:
Acquisitions of office furniture and equipment accounted for as capital
lease obligations ................................................... $ -- $ -- $ 485,179
Discontinued operations:
Notes payable, capital lease and other obligations issued in
connection with the acquisition of golf centers .................... $ -- $ -- $ 3,074,000
Acquisitions of computer equipment and office furniture accounted
for as capital lease obligations ................................... $ -- $ 666,279 $ --
Notes payable and capital lease obligations issued in connection with
acquisition of construction equipment .............................. $ -- $ 2,161,221 $ 2,706,716
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ............................................... $ 562,937 $ 1,951,500 $ 938,012
Cash paid for income taxes ........................................... $ 106,656 $ 140,186 $ 376,485
</TABLE>

The accompanying notes to the consolidated financial statements
are an integral part of these statements.

F-6
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

The accompanying Consolidated Financial Statements include the accounts of
Golden Bear Golf, Inc. and its subsidiaries ("Golden Bear" or the "Company").
All significant intercompany accounts and transactions have been eliminated. In
order to maintain consistency and comparability between periods presented,
certain amounts have been reclassified from the previously reported financial
statements in order to conform to the financial statement presentation of the
current year. The Company sold its wholly-owned subsidiary, Golden Bear Golf
Centers, Inc. ("Golf Centers") on July 20, 1998 and formally approved the
discontinuance of the construction operations conducted by its wholly-owned
subsidiary, Paragon Construction International, Inc. ("Paragon") on October 26,
1998. Accordingly, the operations and financial activity associated with such
businesses have been reclassified as discontinued operations. With the
disposition of such operations, the Company is focused on its core businesses,
which include the licensing of NICKLAUS, JACK NICKLAUS and GOLDEN BEAR branded
products throughout the world, the operation of the NICKLAUS FLICK GAME
IMPROVEMENT and managing the personal endorsement services provided by Jack
Nicklaus.

Golden Bear was formed on June 7, 1996 to enter into an exchange agreement
which was consummated on August 1, 1996 upon the closing of an initial public
offering of Golden Bear's Class A Common Stock. Parties to the plan of
reorganization included, among others, Golden Bear's affiliates, Golf Centers,
Paragon (collectively, the "Constituent Companies") and Golden Bear
International, Inc. ("International"), a privately owned company controlled by
Jack Nicklaus. Pursuant to the exchange agreement, Golden Bear acquired all of
the outstanding common stock of the Constituent Companies in exchange for an
aggregate of 1,668,000 shares of its Class A and Class B Common Stock. In
addition, Golden Bear acquired certain assets and assumed certain liabilities
of International in exchange for 1,332,000 shares of Class B Common Stock. The
transaction was accounted for on a historical cost basis in a manner similar to
a pooling of interests as Golden Bear and the Constituent Companies had common
stockholders and management. International is primarily involved in golf course
design and consulting, along with the development of residential communities
and daily fee golf courses.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are comprised primarily of funds on deposit in
interest bearing accounts with various banks with maturities of less than
ninety days.

ACCOUNTS RECEIVABLE AND REVENUE RECOGNITION

Golf instruction revenues are recognized concurrent with the time the
services are rendered. Licensing revenues are recognized over the terms of the
underlying licensing agreements, generally from five to ten years. Revenues
attributable to strategic marketing agreements are recognized over the
respective contract periods as the goods and services required thereunder are
provided. The Company's golf center licensing arrangements generally have
initial terms of three to five years, with options to renew. Licensing fees are
derived from the establishment of franchised golf center facilities and
accordingly, such revenues are recognized when substantially all of the
services required under the development agreements have been performed. The
Company also earns royalty fees by providing assistance with marketing,
training and other operational issues to its franchised golf centers. Such

F-7
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

royalty fees are based upon licensees' adjusted gross revenues, as defined, and
are recognized as revenues when earned. In this regard, the Company has a
significant agreement with one licensee covering 21 golf center facilities, for
which the Company is entitled to receive minimum annual licensing fees of
$795,000. Pursuant to the agreement, the Company received licensing fees of
$795,000 from this licensee during the year ended December 31, 1999 and
accordingly, the Company recognized licensing fees in this amount. This
licensing agreement has a term that expires on December 31, 2008, although the
licensee may elect to terminate the agreement effective December 31, 2000.
During 1999, the licensee experienced financial difficulties and there is no
assurance that the Company will continue to receive the licensing fees under
the agreement.

Related party management fees are attributable to the personal endorsement
services provided by Jack Nicklaus and are recognized as revenue when Jack
Nicklaus becomes entitled to receive such fees. The Company is generally
entitled to approximately 20% to 30% of all such endorsement revenues received
by Jack Nicklaus. See Note 13.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided for
on the straight-line method over the estimated useful lives of the assets
generally ranging from three to seven years. Expenditures for major additions
and improvements are capitalized, while minor replacements, maintenance and
repairs are charged to expense as incurred. When property is retired or
otherwise disposed of, the cost and accumulated depreciation are removed from
the accounts and any resulting gain or loss is recognized currently. The
Company periodically evaluates whether events and circumstances have occurred
that may warrant revision of the estimated useful life of its property and
equipment or whether the remaining balance of its property and equipment should
be evaluated for possible impairment. The Company uses an estimate of the
related undiscounted cash flows over the remaining life of the property and
equipment in measuring their recoverability.

DEFERRED REVENUE

Deferred revenue includes fees collected in excess of amounts earned under
the Company's marketing, licensing and royalty agreements as well as fees
collected in advance for the Company's golf instruction operations.

USE OF ESTIMATES

The preparation of consolidated 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. Significant estimates made by management include the
allowance for doubtful accounts receivable, the estimated useful lives and
realizability of the Company's long-lived assets, amounts owed under consulting
agreement (See Note 12), and recorded amounts for claims and assessments
against the Company. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company accounts for its financial instruments in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures
About Fair Value of Financial Instruments."

F-8
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Cash and cash equivalents, accounts receivable, prepaid expenses and other
current assets, accounts payable, accrued liabilities, deferred revenue and
capital leases are reflected in the accompanying Consolidated Financial
Statements at cost which approximates fair value. The carrying value of fixed
rate indebtedness at December 31, 1999 was $206,059 which approximates the
estimated fair value. The estimated fair value of such indebtedness was
determined based on the expected future payments discounted at risk adjusted
rates for debt of similar terms and remaining maturities.

INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". Accordingly, deferred income taxes have been
provided for to show the effect of temporary differences between the tax basis
of assets and liabilities and their reported amounts in the consolidated
financial statements. The Company files a consolidated Federal income tax
return that includes the operations of the Company and its subsidiaries. A
valuation allowance was established to offset the Company's net deferred tax
assets as of December 31, 1999 and 1998 because management currently believes
that the future realization of such deferred tax assets is not more likely than
not. See Notes 7 and 9.

EARNINGS (LOSS) PER SHARE

Income (loss) per share in the accompanying Consolidated Statements of
Operations is computed by dividing the net income (loss) by the weighted
average common shares outstanding for the respective years. Diluted earnings
per share as computed under SFAS No. 128 includes the effects of common stock
equivalents, including the dilutive effect of all outstanding stock options
using the treasury stock method. Diluted earnings per share is the same as
basic earnings per share in the accompanying Consolidated Statements of
Operations. Options to purchase 181,175, 222,675 and 670,150 shares of common
stock were not included in computing earnings per share for the years ended
December 31, 1999, 1998 and 1997, respectively, because their effects were
anti-dilutive for the respective years.

ACCOUNTING PRONOUNCEMENTS

Comprehensive income is defined as the change in equity during the
financial reporting period of a business enterprise resulting from non-owner
sources. During the years ended December 31, 1999, 1998 and 1997, the Company
did not have any changes in its equity resulting from such non-owner sources,
and accordingly, comprehensive income as set forth by SFAS No. 130 was equal to
the net income (loss) amounts presented for the respective years in the
accompanying Consolidated Statements of Operations.

The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or a liability
measured at its fair value. SFAS No. 133, which requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. The FASB issued SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities--Deferral of the effective
date of FASB Statement No. 133." SFAS No. 137 deferred the effective date of
SFAS

F-9
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

No. 133 to fiscal years beginning after June 15, 2000. Management believes the
impact of adopting this statement will not have a material impact upon the
Company's results of operations of financial position.

2. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------- ---------------
<S> <C> <C>
Computer equipment ..................................... $ 816,034 $ 795,625
Telephone and other office equipment ................... 285,295 431,118
Furniture and fixtures ................................. 204,582 540,831
Leasehold improvements ................................. 36,893 116,104
---------- ------------
1,342,804 1,883,678
Less accumulated depreciation and amortization ......... (913,949) (1,177,317)
---------- ------------
$ 428,855 $ 706,361
========== ============
</TABLE>

3. OTHER ASSETS

Other assets consist of the following:

DECEMBER 31,
-------------------------
1999 1998
----------- -----------
Investment in JNAI ......... $533,805 $357,139
Other ...................... 67,544 81,844
-------- --------
$601,349 $438,983
======== ========

4. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

DECEMBER 31,
-----------------------------
1999 1998
------------- -------------
Payroll and related costs ......... $ 393,407 $ 601,879
Professional fees ................. 405,868 260,707
State income taxes ................ 10,000 165,693
Other ............................. 287,583 117,271
---------- ----------
$1,096,858 $1,145,550
========== ==========

F-10
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. NOTES PAYABLE AND CAPITAL LEASES

Notes payable and capital leases consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1999 1998
------------- -------------
<S> <C> <C>
Capital lease obligations secured by furniture and equipment, with
principal and interest at 9% payable monthly, maturing through
June, 2002(1) ................................................... $ 206,059 $ 317,581

Note payable to shareholder, with interest at The Wall Street
Journal Prime Rate (8.50% at December 31, 1999) payable
monthly, entire principal due in July, 2003(2) .................. 2,400,000 2,400,000
---------- ----------
2,606,059 2,717,581
Less current portion ............................................. (121,565) (111,140)
---------- ----------
$2,484,494 $2,606,441
========== ==========
</TABLE>

----------------
(1) The Company acquired certain office furniture and phone systems equipment
by entering into financing arrangements that were accounted for as capital
leases. These capital lease obligations have initial terms of five years
and require monthly payments representing principal and interest.

(2) In July 1998, the Company issued an unsecured promissory note for $2.4
million payable to Jack Nicklaus, the principal stockholder of the Company
and Chairman of the Company's Board of Directors. The proceeds of the note
were used in connection with the settlement of certain claims associated
with a golf course development project.

The following table sets forth the future minimum lease payments under
capital lease obligations, together with the present value of the net minimum
lease payments as of December 31, 1999.

<TABLE>
<CAPTION>
CAPITAL LEASE
OBLIGATIONS
--------------
<S> <C>
Years Ending December 31:
2000 ......................................... $ 135,212
2001 ......................................... 81,829
2002 ......................................... 7,252
---------
Total minimum payments ....................... 224,293
Less amount representing interest(1) ......... (18,234)
---------
Present value of minimum payments ............ $ 206,059
=========
</TABLE>

----------------
(1) Represents amount necessary to reduce the net minimum payments to present
value calculated at the Company's estimated incremental borrowing rate at
the inception of the respective obligations.

6. COMMON STOCK

The shares of Class A Common Stock and Class B Common Stock are identical
in all respects, except for voting rights and certain conversion rights and
transfer restrictions in respect of the shares of the Class B Common Stock.
Each share of Class A Common Stock entitles the holder to one vote on each
matter submitted to a vote of Golden Bear's shareholders and each share of
Class B Common Stock entitles the holder to ten votes on each such matter,
including the election of directors. Neither the Class A Common Stock nor the
Class B Common Stock have cumulative voting rights.

Holders of Class A Common Stock and Class B Common Stock are entitled to
receive dividends at the same rate if and when declared by the Board of
Directors out of funds legally available

F-11
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. COMMON STOCK--(CONTINUED)

therefore, subject to the dividend and liquidation rights of any Preferred
Stock that may be issued and outstanding. There are certain restrictions with
respect to the transfer of Class B Common Stock. All of the shares of Class B
Common Stock are held by Nicklaus family members or by entities controlled by
or established for the benefit of such members ("Nicklaus Family Members"). If
a holder of Class B Common Stock transfers such shares, whether by sale,
assignment, gift, bequest, appointment or otherwise, to a person other than a
Nicklaus Family Member, such shares will be converted automatically into shares
of Class A Common Stock.

Class A Common Stock has no conversion rights. Class B Common Stock is
convertible into unregistered shares of Class A Common Stock, in whole or in
part, at any time and from time to time at the option of the holder, on the
basis of one share of Class A Common Stock for each share of Class B Common
Stock converted.

In the event of liquidation, after payment of the debts and other
liabilities of Golden Bear and after making provision for the holders of
Preferred Stock, if any, the remaining assets of the Company will be
distributable ratably among the holders of the Class A Common Stock and Class B
Common Stock treated as a single class. Upon the merger or consolidation of
Golden Bear, holders of Class A Common Stock and Class B Common Stock each are
entitled to receive equal per share payments or distributions, except that in
any transaction in which shares of capital stock are distributed, such shares
may differ as to voting rights to the extent and only to the extent that the
voting rights of the Class A Common Stock and Class B Common Stock differ at
that time.

The company has agreed to take the steps necessary to acquire all the
shares held by public shareholders subsequent to December 31, 1999 (See Note
12).

7. SHAREHOLDERS' DEFICIT AND LIQUIDITY

The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Primarily as a
result of losses and costs, previously incurred by the Company's Paragon
subsidiary, the Company has incurred operating losses which have resulted in a
shareholders' deficit of approximately $9.1 million and a working capital
deficiency of approximately $2.9 million at December 31, 1999. The
circumstances surrounding the losses previously incurred by Paragon have
resulted in substantial claims and litigation against the Company (See Note
12). Management's actions in regard to these matters included discontinuing the
Company's construction operations in 1998 and reducing ongoing expenses.

The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern and future working capital requirements are dependent on the Company's
ability to successfully complete such negotiations involving Paragon and on its
ability to achieve and maintain profitable operations in the future. Management
of the Company believes that such objectives are attainable. However, there is
no assurance that the Company will be successful in realizing these objectives,
or that the Company will generate sufficient cash flow from operations to meet
its future working capital requirements. To the extent that capital
requirements exceed available capital, the Company will be required to seek
alternative sources of financing to fund its operations. The

F-12
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. SHAREHOLDERS' DEFICIT AND LIQUIDITY--(CONTINUED)

Company has no existing credit facility and there is no assurance that
alternative financing will be available, if at all, on satisfactory terms. If
the Company is unable to obtain satisfactory alternative financing, the Company
may be required to delay or reduce its future expenditures, sell additional
assets to meet its obligations, seek to renegotiate the terms of its
obligations or curtail its operations. There can be no assurance that any
source of funds or other actions taken by the Company will provide sufficient
capital so as to enable the Company to remain a going concern.

8. OPERATIONS OF JNAI

The apparel licensing activities of the Company in the Far East are
conducted through Jack Nicklaus Apparel International ("JNAI") and its various
partnerships. The Company serves as a 50% general partner and is generally
entitled to receive 50% of the cash distributions of the various partnerships'
operations. The Company's investment in JNAI is recorded on the equity method.

The joint venture agreement provides that JNAI shall continue until
December 31, 2000, unless otherwise terminated prior to that date by the mutual
consent of both partners or by operation of law. However, the termination date
set forth in the joint venture agreement can be extended by mutual consent of
both partners. Upon termination of JNAI, its net remaining assets are to be
distributed to its two partners in the manner set forth in the joint venture
agreement, which generally provides for distributions of equal amounts. As of
March 29, 2000, the joint venture agreement has not been extended beyond
December 31, 2000.

The following is a condensed summary of the operating results of JNAI:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED NOVEMBER 30,
------------------------------------------------
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Licensing revenues ................... $ 2,644,833 $ 2,052,410 $ 2,927,236
Operating expenses and other ......... 404,448 439,576 755,052
Provision for income taxes ........... 337,601 191,548 10,400
----------- ----------- -----------
Net income ........................... $ 1,902,784 $ 1,421,286 $ 2,161,784
=========== =========== ===========
</TABLE>

F-13
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. INCOME TAXES

The components of the provision for income taxes for the respective fiscal
years consists of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Current:
State ................................ $ 10,000 $ 175,629 $ 32,091
Foreign .............................. 38,768 15,087 24,139
Deferred:
Federal .............................. (2,894,959) (8,191,023) (8,244,808)
State ................................ -- 116,520 (635,288)
Change in valuation allowance ......... 2,894,959 8,074,503 8,880,096
------------ ------------ ------------
Provision for income taxes ............ $ 48,768 $ 190,716 $ 56,230
============ ============ ============
</TABLE>

A reconciliation of the difference between the expected provision for
income taxes on continuing operations using the statutory Federal tax rate and
the Company's actual provision is presented below:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------
1999 1998 1997
-------------- --------------- ------------
<S> <C> <C> <C>
Provision using statutory Federal rate ......... $ 1,587,069 $ (219,484) $ 378,330
Non-deductible expenses ........................ 92,658 31,710 54,404
State income taxes ............................. 10,000 175,629 32,091
Foreign income taxes ........................... 38,768 15,087 24,139
Change in valuation allowance .................. (1,679,727) 187,774 (432,734)
------------ ----------- ----------
$ 48,768 $ 190,716 $ 56,230
============ =========== ==========
</TABLE>

F-14
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. INCOME TAXES--(CONTINUED)

The net deferred income tax asset is comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
Deferred income tax assets:
Allowance for doubtful accounts ......................... $ 66,554 $ 2,878,753
Tax basis capitalized costs ............................. -- 132,413
Tax basis in property and equipment
in excess of book basis ............................... 82,533 82,533
Accruals not currently deductible ....................... 229,304 71,114
Net operating loss carryforwards ........................ 19,234,307 13,914,507
Foreign tax credit carryforwards ......................... 851,149 497,094
------------- -------------
20,463,847 17,576,414
------------- -------------
Deferred income tax liabilities:
Book basis in intangible assets over tax basis .......... -- 7,526
Book basis of investment in JNAI over tax basis ......... 100,000 100,000
Deferred revenue ........................................ (24,735) (24,735)
------------- -------------
75,265 82,791
------------- -------------
Net deferred income tax asset ............................ 20,388,582 17,493,623
Valuation allowance ...................................... (20,388,582) (17,493,623)
------------- -------------
$ -- $ --
============= =============
</TABLE>

At December 31, 1999, the Company had available a Federal net operating
loss carryforward of approximately $33.1 million which expires in the year
2018, along with a foreign tax credit carryforward of $851,149 which expires in
2008.

In assessing the realizability of deferred tax assets, management must
consider whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. At December 31, 1999 and 1998, the
Company provided a full valuation allowance to reserve for the net deferred tax
asset balances because management currently believes that the future
realization of such deferred tax assets is not more likely than not.

10. STOCK OPTIONS

A total of 675,000 shares of the Company's Class A Common Stock may be
issued under the Golden Bear 1996 Stock Option Plan ("Option Plan"), which was
adopted in July 1996. Options under the Option Plan are granted at an exercise
price equal to the fair market value of the Class A Common Stock at the date of
grant and generally have a term of ten years from the date of grant. Such
options generally become fully vested five years from the grant date although
certain options granted to employees on December 31, 1997 at an exercise price
of $8.00 per share were exercisable one year after the date of grant and the
options granted to Jack Nicklaus pursuant to his employment agreement with the
Company vest immediately upon being granted.

F-15
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. STOCK OPTIONS--(CONTINUED)

A summary of stock option transactions for the fiscal years ended December
31, 1999, 1998 and 1997 is set forth in the table below:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1999 1998 1997
------------------------- -------------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------------ ---------- ------------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year..... 222,675 $ 11.64 670,150 $ 12.61 383,688 $ 16.00
Options granted ................... -- -- 20,000 4.00 383,150 9.92
Options exercised ................. -- -- -- -- (3,150) 16.00
Options canceled/forfeited ........ (41,500) 14.62 (467,475) 12.71 (93,538) 15.36
------- -------- -------
Outstanding, end of year .......... 181,175 10.96 222,675 11.64 670,150 12.61
======= ======== =======
Exercisable at year-end ........... 107,968 $ 10.72 91,935 $ 10.71 122,600 $ 13.28
======= ======== =======
Available for future grants ....... 469,863 428,363 --
======= ======== =======
</TABLE>

The following table summarizes information about outstanding and
exercisable stock options at December 31, 1999:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
---------------------------------------- ----------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
EXERCISE PRICE OR CONTRACTUAL EXERCISE EXERCISE
RANGE OF EXERCISE PRICES SHARES LIFE (YEARS) PRICE SHARES PRICE
--------------------------- ---------- -------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
$ 4.00 ................. 20,000 8.58 $ 4.00 500 $ 4.00
8.00 ................. 23,875 8.00 8.00 18,348 8.00
10.88 - 12.75 ......... 107,300 6.99 11.46 89,120 11.32
16.00 ................. 30,000 6.59 16.00 -- --
------- -------
181,175 7.24 10.93 107,968 10.72
======= =======
</TABLE>

In connection with his employment agreement with the Company, Jack
Nicklaus is entitled to receive options to purchase 65,000 shares of Class A
Common Stock each year for a period of four years, commencing on August 1,
1997. Such options, which are issued with an exercise price equal to the fair
market value of the Class A Common Stock on the date of grant, are immediately
exercisable upon grant and expire in 2006. The options that Mr. Nicklaus was
entitled to receive on August 1, 1999 and 1998 were waived and deferred pending
the resolution of certain shareholder claims. See Note 12.

The Option Plan also provides for options to be granted to each
non-employee director of Golden Bear on the first business day following the
annual meeting of shareholders of the Company. Each non-employee director is
granted options for the purchase of 1,000 shares of Class A Common Stock with
an exercise price equal to the fair market value of the Class A Common Stock on
the date of grant, which expire 10 years from the date of grant. No options
were granted to non-employee directors during 1999 or 1998.

F-16
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. STOCK OPTIONS--(CONTINUED)

The Option Plan is administered by the Compensation Committee of the
Company's Board of Directors which is authorized to determine the provisions of
future grants, including selecting the recipients, exercise price, terms and
vesting schedules for such options.

The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" in accounting for stock-based
compensation arrangements whereby no compensation costs attributable to stock
options is deducted in determining net income (loss). Had compensation costs
for the Company's Option Plan been determined pursuant to SFAS No. 123,
"Accounting for Stock-Based Compensation", the Company's net loss and net loss
per share would have changed accordingly. Using the Black-Scholes option
pricing model for all options granted, the Company's pro forma net income
(loss), pro forma net income (loss) per share and pro forma weighted average
fair value of options granted, with related assumptions, are as follows for the
years ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1999 1998
-------------- -----------------
<S> <C> <C>
Pro forma net income (loss) ...................................... $ 7,591,250 $ (31,096,020)
Pro forma net income (loss) per share--
basic and diluted ............................................... $ 1.38 $ (5.65)
Pro forma weighted average fair value of options granted ......... -- 2.95
Risk-free interest rate .......................................... -- 7.0%
Expected lives ................................................... -- 10 years
Expected volatility .............................................. -- 55.0%
Expected quarterly dividend rate ................................. -- 0.0%
</TABLE>

11. RETIREMENT SAVINGS PLAN

The Company participates in a retirement savings plan ("Savings Plan")
sponsored by International. The Savings Plan operates as a defined contribution
plan and is qualified under Section 401(k) of the Internal Revenue Code. The
Savings Plan covers all employees who have completed one year of service. The
Company matches the employees' contributions, up to a maximum of $1,500 per
employee per Savings Plan year. A participant's individual contribution is
limited to the maximum amount for such year under the Internal Revenue Code.
Discretionary contributions can also be made to the Savings Plan. All employees
who have completed one year of service and are employed at year-end are
eligible for this contribution. Company contributions to the Savings Plan were
$31,911, $29,068 and $59,535 during the years ended December 31, 1999, 1998 and
1997, respectively.

12. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases its corporate executive and administrative office
facilities along with certain office equipment. The rent expense incurred under
these leases was approximately $0.7 million, $0.7 million and $0.8 million
during the years ended December 31, 1999, 1998 and 1997, respectively.

F-17
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

Future minimum lease payments required under noncancelable operating lease
obligations are as follows:

MINIMUM
LEASE PAYMENTS
---------------
Years Ending December 31:
2000 .................... $ 706,567
2001 .................... 706,567
2002 .................... 685,594
2003 .................... 668,088
2004 .................... 668,088
Thereafter .............. 1,057,806
-----------
$ 4,492,710
===========

CLAIMS AND ASSESSMENTS

In August 1995, Paragon brought an arbitration claim against a customer
for breach of contract. Paragon alleges it has properly completed the
construction relating to the renovation of the customer's golf course and is
seeking final payment of retainage and related amounts due, together with
additional damages, totaling approximately $350,000. Simultaneous to this claim
of arbitration, the customer filed a counterclaim of arbitration against
Paragon for alleged construction defects in the renovation of its golf course.
Although the customer now claims its damages are in excess of $3.0 million, the
initial claim submitted by the customer in arbitration was for $750,000. The
Company intends to vigorously defend this claim, but the ultimate outcome of
this matter is not determinable at this time. Accordingly, no provision for
loss regarding this matter had been established at December 31, 1999. The
ultimate disposition of this matter is not expected to have a material effect
on the Company's financial position or results of operations.

In connection with the discontinuance of the construction business
conducted by Paragon and the winding down of such operations, the Company has
been named in numerous legal actions involving claims for damages and other
amounts due to certain project owners, construction vendors and subcontractors.
While the Company has entered into settlement negotiations with several
claimants, the ultimate outcome of such negotiations is not determinable at
this time. Certain of these claims, if determined adversely to the Company in
the aggregate, could have a material adverse effect on the Company's financial
position and results of operations. In 1998, the Company conducted a
comprehensive review of Paragon's construction projects, focusing on the status
of the projects, the costs required to fully complete the jobs and the
anticipated profitability or losses of such projects. Attention was also
directed toward determining contract requirements and the related estimated
costs of fulfilling those requirements.

As a result of the review, the Company found evidence that former
management of Paragon deliberately falsified records, misrepresented the status
of construction projects and made false statements about Paragon's revenues,
costs and profits to the Company's executive management and Board of Directors.

Based on the results of the review, it was necessary for the Company to
recognize additional costs and losses incurred on certain construction
projects, resulting in the restatement of the Company's

F-18
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

financial statements included in its Annual Report on Form 10-K for the year
ended December 31, 1997 and its Quarterly Report on Form 10-Q for the three
months ended March 31, 1998, as previously filed with the Securities and
Exchange Commission.

As a result of the foregoing review and restatement of the Company's
financial statements, numerous purported class action lawsuits have been filed
against the Company and certain current and former officers and directors of
the Company, asserting various claims under the federal securities laws. On
July 28, 1998, individuals purporting to be shareholders of the Company filed a
class action lawsuit in the United States District Court for the Southern
District of Florida against the Company and certain of the Company's present
and former officers and directors.

Since the filing of this matter, nine additional lawsuits have been filed
against the Company and certain of its present and former officers and
directors. Eight of these lawsuits were filed in the United States District
Court for the Southern District of Florida and one was filed in the United
States District Court for the Eastern District of New York, though the court in
New York has entered an order transferring this action to the Southern District
of Florida. The District Court in Florida entered an order consolidating all of
the actions originally filed in the Southern District of Florida and all
similar actions which are transferred to or subsequently filed in the Southern
District of Florida and directed the plaintiffs to file a consolidated
complaint.

On December 24, 1998, plaintiffs filed their First Consolidated Class
Action Complaint ("Consolidated Complaint") on behalf of themselves and all
others who purchased common stock of the Company from April 30, 1997 through
July 27, 1998, with the exception of the defendants and certain related or
affiliated persons or entities. The defendants named in the Consolidated
Complaint are Golden Bear Golf, Inc., Jack W. Nicklaus, Richard P. Bellinger,
Jack P. Bates, Stephen S. Winslett, John Boyd and Andersen. The Consolidated
Complaint alleges that during the purported class period, the defendants
violated Section 10(b) and Rule 10b-5 promulgated thereunder and Section 20(a)
of the Securities Exchange Act of 1934 by making misrepresentations or
omissions of material fact in publicly filed documents and in other alleged
public statements relating to the Company's financial condition and that of its
wholly-owned subsidiary, Paragon Construction International, Inc. The
plaintiffs are seeking an unspecified amount of damages, interest, costs and
attorneys' fees.

On December 22, 1999, the parties entered into a Settlement Agreement
relating to the consolidated actions. The Settlement Agreement was approved by
the United States District Court during the final hearing on March 28,2000. In
connection with the settlement, the plaintiffs filed a motion to allow the
filing of their Second Amended Consolidated Complaint on behalf of a class of
all persons, excluding the defendants, who purchased shares of the Company's
Class A Common Stock from the date of the Company's public offering, August 1,
1996 through and including July 27, 1998. The Amended Consolidated Complaint
includes allegations of securities law violations under Sections 11, 12(2) and
15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities
Act and Rule 10b-5, as well as common law claims. Under the terms of the
Settlement Agreement, the Company has established a settlement fund in the
amount of $3.5 million to settle the class action litigation. The Company
contributed $2.5 million to the settlement fund, this amount was funded by the
Company's insurance carrier. Pursuant to the Settlement Agreement, Andersen
also contributed $1.0 million to the settlement fund.

In connection with the Company's entry into the Settlement Agreement, the
Company also entered into a settlement with Andersen to settle the Company's
claims against it. The Company had

F-19
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

previously advised Andersen of the belief that Andersen violated its duty of
care in connection with the professional services it provided the Company and
that the Company's losses, in part, resulted from the failure of due care.
Andersen has vigorously denied a failure of due care on its part and has
vigorously denied that any of the Company's losses resulted from anything
Andersen did or failed to do. Notwithstanding their position, in order to avoid
protracted litigation in which their position would be fully developed and
resolved, the Company entered into a settlement agreement with Andersen.
Pursuant to the settlement, Andersen agreed to pay the Company $3.8 million in
cash and waive approximately $750,000 in receivables due to Andersen from the
Company. The Company has included $4.6 million in Other Income for the year
ended December 31, 1999.

In addition, the Company has agreed to take the steps necessary to acquire
all the shares held by public shareholders at a cash price of $0.75 per share.
The price for the publicly held shares was the result of negotiations between
the Company and attorneys for the class action plaintiffs and has the approval
of a committee of independent directors. An investment banking firm provided an
opinion, that the consideration to be received by holders of the Company's
Common Stock, other than Jack Nicklaus and his family, pursuant to the
Settlement Agreement is fair from a financial point of view to such holders.

The Company has not given effect to the proposed repurchase of the
outstanding shares held by the public shareholders in the accompanying
financial statements. The following unaudited financial information gives pro
forma effect to the proposed repurchase had it occurred as of December 31,
1999:

AS OF DECEMBER 31,
1999
------------------
Unaudited pro forma total assets .................. $ 4,594,134
Unaudited pro forma total liabilities ............. 15,674,277
--------------
Unaudited pro forma shareholder's deficit ......... $ (11,080,143)
==============

The Securities and Exchange Commission is conducting a private
investigation to determine whether the Company or certain of its current or
former officers, directors and employees have engaged in conduct in violation
of certain provisions of the Exchange Act and the rules and regulations
thereunder. The Company believes that such investigation is focused principally
on the recognition of additional costs and losses associated with the review of
Paragon construction projects and the Company's public statements and
accounting systems with respect thereto. The Company is cooperating in such
investigation.

The Company is also a party to various other legal proceedings that have
arisen in the ordinary course of its business. The ultimate outcome of these
matters cannot be predicted with certainty and these legal proceedings could
result in additional losses that may have a material adverse effect on the
Company's financial position or results of operations.

CONSTRUCTION CONTRACT WARRANTIES

F-20
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

effective for a period of one year from the completion date of the respective
projects. The Company's management does not expect the costs associated with
corrective action or penalties incurred pursuant to these warranties, if any,
to have a material impact on its results of operations.

COMMITMENT UNDER CONSULTING AGREEMENT

In connection with the sale of Golf Centers, the Company retained certain
continuing obligations under a consulting agreement associated with one of the
golf centers that were included in the sale. Under the terms of the agreement,
the Company is obligated to pay consulting fees in the amount of $50,000 per
year, payable monthly in arrears over the remaining term of the agreement,
subject to certain termination options on the part of the Company if the golf
center does not achieve and maintain certain performance criteria. In addition,
the Company is obligated to pay bonus compensation of up to an additional
$25,000 per year, to the extent that the golf center achieves certain target
operating profit margins, as set forth in the agreement.

At December 31, 1999, the remaining term of the consulting agreement was
approximately 17 years. However, the Company is entitled to terminate the
agreement and its obligations thereunder, in the event that the golf center
achieves less than 90% of its targeted annual profitability, as defined in the
agreement. The targeted profitability levels are based on the average
performance over each two-year period, starting one year after the April 1997
date that the golf center opened for business. The Company has recorded a
liability for the estimated amount of its obligation under this agreement.

13. RELATED PARTY TRANSACTIONS

The balances included in the accompanying Consolidated Balance Sheets
under the caption "Due from International" consists of the net amounts owed to
Golden Bear Golf, Inc. and its subsidiaries. At December 31, 1999 and 1998, the
Company had net amounts due from International of $58,826 and $41,812,
respectively. The net amounts due at December 31, 1999 and 1998 were comprised
primarily of related party management fees attributable to personal endorsement
services performed by Jack Nicklaus.

In 1997, the Company had a design services agreement with International
pursuant to which the Company had marketed golf course designs for Nicklaus
Design, a division of International. Under the design services marketing
agreement, the Company generally had been entitled to 10% of the gross design
fees collected by Nicklaus Design for its role in marketing such design
services. The Company earned related party commissions in this capacity of
approximately $1.3 million during fiscal 1997. Effective January 1, 1998, the
design services marketing agreement was terminated in connection with an
organizational realignment, pursuant to which International assumed certain
financial obligations of the Company to employees and third parties formerly
involved in the design marketing function.

In 1998, the Company, International and Jack Nicklaus (collectively, the
"Company Affiliates") entered into an agreement with Weitz Golf International
LLC ("Weitz Golf"), pursuant to which the Company Affiliates agreed to provide
certain technical and marketing assistance in connection with the construction
services offered by Weitz Golf, which include general contracting, design-build
and construction management. Under the agreement, the Company agreed to no
longer offer construction services independently during the term of the
agreement which expires on December 31, 2007. The

F-21
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. RELATED PARTY TRANSACTIONS--(CONTINUED)

Company is entitled to receive 40% of the cumulative net profits, as defined,
received by Weitz Golf pursuant to the contracts it enters into during the term
of the agreement. There were no cumulative net profits from the operations of
Weitz Golf through December 31, 1999.

Pursuant to the terms of a personal services management agreement,
International and Jack Nicklaus have retained the Company as the exclusive
manager and representative to market the personal endorsement services of Jack
Nicklaus, under which the Company is generally entitled to approximately 20% to
30% of the personal endorsement fees received by Mr. Nicklaus. During fiscal
1999, 1998 and 1997, the Company earned related party management fees
attributable to providing such services of $217,550, $571,749 and $565,905,
respectively.

Under the terms of an office sharing agreement, the Company had subleased
its corporate office facilities from International for the period from August
1, 1996 through July 31, 1997. The rent expense incurred under such sublease
for the seven months ended July 31, 1997 was $358,755. Effective August 1,
1997, the Company entered into a separate lease agreement for its corporate
office facilities directly with the owner of such facilities.

In addition, the Company had maintained certain office space in Singapore
through October 31, 1997 that was shared with International. During the ten
months ended October 31, 1997, a total of $239,000 of costs associated with
maintaining such facilities was allocated to International. The Company
subsequently terminated this lease effective April 1, 1998 and closed the
office that it had previously maintained in Singapore.

The Company has an office staff sharing agreement with International that
provides for sharing services of certain specifically identified office staff
and personnel that can effectively serve the needs of both organizations. This
agreement was established effective with the reorganization of the Company on
August 1, 1996. During the years ended December 31, 1999, 1998 and 1997,
payroll and related costs associated with such shared employees were allocated
to International in the amounts of $32,850, $111,000 and $458,964,
respectively.

During fiscal 1997, the Company paid a $100,000 investment banking fee to
International for services rendered by Golden Bear Financial Services, a
division of International, in connection with negotiating the $10 million
revolving credit facility that the Company obtained during the year. The fee
was equal to 1% of the total facility commitment.

F-22
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. RELATED PARTY TRANSACTIONS--(CONTINUED)

An analysis of the activity in "Due from International" is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------
1999 1998 1997
------------- ------------ ---------------
<S> <C> <C> <C>
Balance at beginning of year ..................... $ 41,812 $ 157,698 $ 843,235
Related party commissions and fees ............... 217,550 571,749 1,870,735
Reimbursement for shared employees ............... 32,850 111,000 458,964
Reimbursement for Singapore office costs ......... -- -- 239,000
Sublease of corporate office facilities .......... -- -- (358,755)
Investment banking fee ........................... -- -- (100,000)
Payments received ................................ (233,386) (798,635) (2,795,481)
---------- ---------- ------------
Balance at end of year ........................... $ 58,826 $ 41,812 $ 157,698
========== ========== ============
</TABLE>

In the ordinary course of business, the Company purchases golf equipment
manufactured by Nicklaus Golf Equipment Company, L.C., a privately owned
company in which Jack Nicklaus has a 50% equity interest. Such equipment is
currently purchased primarily for promotional programs associated with the
Company's NICKLAUS FLICK GAME IMPROVEMENT. Prior to the sale of the Company's
Golf Centers subsidiary, such equipment was also purchased for resale in the
pro shops of the Company's golf centers. During fiscal 1999, 1998 and 1997, the
Company purchased such golf equipment at a cost of $21,312, $163,691 and
$405,205, respectively.

During the years ended December 31, 1999, 1998 and 1997, the Company
procured certain printing and graphic services totaling $90,647, $93,243 and
$125,101, respectively, from Executive Sports International ("ESI"), a
privately held company owned in part by a member of the Nicklaus family. In
1999, the Company entered into a marketing and support agreement with ESI in
connection with the promotion, marketing, sale and operation of NICKLAUS FLICK
GAME IMPROVEMENT'S Executive Golf Programs and other group golf school and
clinic programs. Under the marketing and support agreement, ESI earned a
management fee of $87,000, commissions of $90,925 and was reimbursed for
student travel and amenities of $49,000 during 1999.

In 1998, Jack Nicklaus advanced $2.4 million to the Company evidenced by
an unsecured five-year promissory note. The loan proceeds were used by the
Company in connection with the settlement of certain claims associated with a
golf course development project. Jack Nicklaus also advanced the Company
$850,000 pursuant to the terms of a subordinated short-term loan which was used
as bridge financing for the Company pending the closing of the sale of Golf
Centers. The Company repaid all such advances under the subordinated short-term
loan in August 1998, using proceeds from the sale of Golf Centers.

On April 15, 1999, the Company entered into a settlement agreement with a
former customer of Paragon. Paragon had been engaged by this customer (the
"Developer") to construct a golf course located in San Jose, California
("California Project") and one located in Orlando, Florida ("Florida Project").
Nicklaus Design, a division of International, designed both of the golf course
projects. In addition, the Florida Project is owned by a partnership controlled
by the Developer in which International has a 25% limited partner interest.
After Paragon was unable to complete these projects, Paragon and the owners of
the projects entered into a Settlement Agreement and Release of Claims.
Subsequent to and notwithstanding the terms of this settlement, issues arose
regarding responsibility

F-23
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. RELATED PARTY TRANSACTIONS--(CONTINUED)

for certain cost overruns that were incurred in connection with the
construction of the golf courses. Based upon an assessment of the potential
risks and costs of litigation, the Company agreed to a revised settlement
pursuant to which Paragon agreed to pay the Developer certain of the amounts at
issue.

With regard to the California Project, Paragon issued to the Developer a
promissory note in the amount of $785,436 bearing interest at an annual rate of
10%, payable in quarterly installments of principal and interest over three
years. With regard to the Florida Project, Paragon issued to the Developer a
promissory note in the amount of $496,171 bearing interest at an annual rate of
10%, payable in quarterly installments of principal and interest over five
years. International guaranteed these notes. In connection with the settlement,
International agreed to credit any payments to which it would otherwise be
entitled to for the design services performed by Nicklaus Design at these two
projects, against the respective notes payable to be issued by Paragon to the
Developer. During 1999, Paragon paid $63,223 and $189,622 to the Developer
related to the Florida Project and California Project, respectively. During
1999, Paragon paid a total of $11,000 in interest pursuant to such obligations
due to International.

14. DISCONTINUED OPERATIONS

GOLDEN BEAR GOLF CENTERS

The Company sold the stock of its wholly-owned Golf Centers subsidiary on
July 20, 1998. In connection with the sale, the Company entered into a
licensing agreement with the purchaser granting such purchaser the right to
continue operating the acquired golf centers under the GOLDEN BEAR GOLF CENTER
brand name. The Company retained its licensing and franchising rights with
respect to being able to offer franchise opportunities to outside parties for
the operation of golf instruction and practice facilities. In this regard, Golf
Centers distributed certain of its assets and liabilities to the Company prior
to the closing of the sale. All of the financial activities associated with the
operations that were sold have been classified as discontinued operations.

PARAGON CONSTRUCTION INTERNATIONAL, INC.

On October 26, 1998, the Company's Board of Directors approved the
discontinuance of the Company's golf course construction operations conducted
by its Paragon subsidiary. All such projects have been completed and the
Company is no longer actively involved in pursuing construction projects
independent of its agreement with Weitz Golf. See Note 13. Paragon had been
involved in providing comprehensive golf course and other resort-related
construction services, including project management, shaping, renovation and
golf course construction.

The financial activities associated with Paragon have been classified as
discontinued operations in the accompanying Consolidated Financial Statements.
The results of operations attributable to Paragon are included in the
accompanying Consolidated Statements of Operations as a component of the line
item captioned, "Income (loss) from discontinued operations, net." The income
(loss) from such operations was $3,037,172, $(26,521,886) and $(17,326,058) for
the years ended December 31, 1999, 1998 and 1997, respectively. The net income
for the current year is primarily attributable to a favorable settlement with
regard to litigation involving the Company's insurance carrier that previously
provided certain construction related bonds for several of Paragon's
construction projects.

F-24
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. DISCONTINUED OPERATIONS--(CONTINUED)

In addition, the Company reached favorable settlements with regard to its
claims against certain project owners. In connection with a settlement with
Paragon's bonding company, Jack Nicklaus individually guaranteed payment of a
note payable which has a remaining balance of $850,000 as of December 31, 1999.

The components of the net liabilities associated with Paragon's
discontinued operations included in the accompanying Consolidated Balance
Sheets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1999 1998
------------- --------------
<S> <C> <C>
Current assets ....................................... $ 60,844 $ 1,932,478
Property and equipment, net .......................... 131,999 1,675,550
----------- ------------
Total assets ....................................... 192,843 3,608,028
----------- ------------
Current liabilities .................................. 5,194,455 17,485,446
Notes payable and capital leases ..................... 4,870,499 --
----------- ------------
Total liabilities .................................. 10,064,954 17,485,446
----------- ------------
Net liabilities of discontinued operations ......... $ 9,872,111 $ 13,877,418
=========== ============
</TABLE>

15. SEGMENT REPORTING

All of the Company's revenue generating activities are conducted by one
operating segment encompassing the licensing of NICKLAUS, JACK NICKLAUS and
GOLDEN BEAR branded products throughout the world, the operation of the
NICKLAUS FLICK GAME IMPROVEMENT and the generation of marketing fees related to
Jack Nicklaus' personal endorsements. As the Company operates and tracks its
results in one operating segment, certain segment disclosure requirements are
not applicable.

16. INTERNATIONAL OPERATIONS

The Company derives a portion of its revenues from foreign sources,
primarily through the apparel licensing activities of its JNAI unconsolidated
joint venture and through certain of its golf centers licensing operations.
Although JNAI conducts its operations in the United States, substantially all
of its revenues are received from licensees located in the Asia Pacific region,
primarily Japan and Korea. All of the revenues of JNAI's licensees are
generated in foreign currencies. The licensees pay their license fees to JNAI
denominated in their respective functional currencies which are then converted
to U.S. dollars based on the exchange rate on the date of payment. Fluctuations
in the foreign currency values of these currencies relative to the U.S. dollar
could have a material adverse effect on the Company's future profitability.
Furthermore, the Company is engaged in significant business activities in Japan
and Asia. To the extent that markets in these geographic areas are volatile and
unfavorably impact the Company's customers, such events could have an adverse
effect on the Company's operations in the region going forward.

The Company has several licensees that operate golf center facilities
under the tradenames JACK NICKLAUS GOLF CENTER and JACK NICKLAUS ACADEMY OF
GOLF that are located in the Pacific Rim and Europe. Such licensees generally
remit their licensing fees, which are based on a percentage of their revenues,
to the Company denominated in their respective local currencies. Certain
information with

F-25
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

16. INTERNATIONAL OPERATIONS--(CONTINUED)

respect to the Company's net investment in, and net equity in the earnings of
JNAI, along with the foreign operations of its golf centers licensing
activities is set forth below.

<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------
1999 1998 1997
-------------- ------------ --------------
<S> <C> <C> <C>
Assets .................................... $ 541,019 $ 411,870 $ 289,496
=========== ========= ===========
Revenues .................................. $ 1,183,308 $ 832,647 $ 1,080,892
=========== ========= ===========
Contribution to operating income before
Allocation of corporate overhead ......... $ 1,183,308 $ 767,312 $ 1,080,892
=========== ========= ===========
</TABLE>

17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Summarized quarterly financial information for the years ended December
31, 1999 and 1998 is presented below.

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1999 1999 1999 1999
-------------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Total revenues ....................... $ 2,843,331 $ 3,829,319 $ 1,871,571 $ 2,694,200
Operating income (loss) .............. (519,089) 454,706 (293,887) 371,823
Income (loss) from
continuing operations ............... (558,716) 439,728 (106,125) 4,844,195
Income (loss) from
discontinued operations ............. -- 201,235 234,146 2,759,794
Net income (loss) .................... (558,716) 640,963 128,021 7,603,989
Earnings per share--basic and diluted:
Income (loss) from
continuing operations ............... $ (0.10) $ 0.08 $ (0.02) $ 0.88
Income (loss) from
discontinued operations ............. -- 0.04 0.04 0.50
----------- ----------- ----------- -----------
Net income (loss) per share .......... $ (0.10) $ 0.12 $ 0.02 $ 1.38
=========== =========== =========== ===========
</TABLE>

F-26
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)--(CONTINUED)

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1998 1998 1998 1998
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total revenues ....................... $ 2,981,085 $ 3,290,741 $ 2,457,879 $ 2,655,335
Operating income (loss) .............. (111,922) 572,718 (583,471) 72,682
Income (loss) from
continuing operations ............... (301,556) 192,758 (829,160) 101,700
Loss from discontinued
operations, net ..................... (6,957,403) (9,768,636) (8,401,979) (4,487,449)
Net (loss) ........................... (7,258,959) (9,575,878) (9,231,139) (4,385,749)
Earnings per share--basic and diluted:
Income (loss) from
continuing operations ............... $ (0.06) $ 0.04 $ (0.15) $ 0.02
Loss from discontinued
operations, net ..................... (1.26) (1.78) (1.53) (0.82)
------------ ------------ ------------ ------------
Net loss per share ................... $ (1.32) $ (1.74) $ (1.68) $ (0.80)
============ ============ ============ ============
</TABLE>

18. SUBSEQUENT EVENT

On March 28, 2000, the United States District Court approved the
Settlement Agreement related to the Company's shareholder lawsuits. See Note
12.

F-27
<PAGE>

GOLDEN BEAR GOLF, INC.

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
------------ -------------
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND AMOUNTS END
DESCRIPTION OF YEAR EXPENSES WRITTEN OFF OF YEAR
------------------------------------------------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1997:
Allowance for uncollectible accounts ....... ......... $ 151,563 $ 80,250 $ 179,313 $ 52,500
Valuation allowance for deferred Tax assets ......... 539,000 8,880,116 -- 9,419,116

Year Ended December 31, 1998:
Allowance for uncollectible accounts ....... ......... $ 52,500 $ 384,995 $ 156,807 $ 280,688
Valuation allowance for deferred Tax assets ......... 9,419,116 8,074,507 -- 17,493,623

Year Ended December 31, 1999: .........................
Allowance for uncollectible accounts ....... ......... $ 280,688 $ 109,835 $ 194,775 $ 195,748
Valuation allowance for deferred Tax assets ......... 17,493,623 2,894,959 -- 20,388,582
</TABLE>

F-28
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Joint Venture Partners of Jack Nicklaus Apparel International:

We have audited the accompanying balance sheet of Jack Nicklaus Apparel
International as of November 30, 1999 and the related statements of operations,
partners' equity and cash flows for the fiscal 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 auditing standards generally
accepted in the 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 financial position of Jack Nicklaus Apparel
International as of November 30, 1999 and the results of its operations and its
cash flows for the fiscal year then ended, in conformity with accepted
accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

West Palm Beach, Florida,
March 28, 2000.

F-29
<PAGE>

JACK NICKLAUS APPAREL INTERNATIONAL

BALANCE SHEET

AS OF NOVEMBER 30, 1999

ASSETS
CURRENT ASSETS:
Cash ............................................ $ 100,400
Accounts receivable ............................. 1,438,141
-----------
Total current assets ........................... 1,538,541
INVESTMENT IN AFFILIATED COMPANY ................. 49,863
-----------
Total assets ................................... $ 1,588,404
===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................ $ 42,462
Accrued commissions ............................. 232,078
Accrued income taxes ............................ 188,119
Accrued liabilities ............................. 44,166
Deferred revenue ................................ 13,627
-----------
Total current liabilities ...................... 520,452
COMMITMENTS AND CONTINGENCIES (Note 4)
PARTNERS' EQUITY ................................. 1,067,952
-----------
Total liabilities and partners' equity ......... $ 1,588,404
===========

The accompanying notes to the financial statements are an integral part of
this statement.

F-30
<PAGE>

JACK NICKLAUS APPAREL INTERNATIONAL

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED NOVEMBER 30, 1999

REVENUES ........................................... $2,644,833
OPERATING EXPENSES ................................. 404,448
----------
Income before provision for income taxes ......... 2,240,385
PROVISION FOR INCOME TAXES ......................... 337,601
----------
Net income ....................................... $1,902,784
==========

The accompanying notes to the financial statements are an integral part of
this statement.

F-31
<PAGE>

JACK NICKLAUS APPAREL INTERNATIONAL

STATEMENT OF PARTNERS' EQUITY

FOR THE YEAR ENDED NOVEMBER 30, 1999

BALANCE, November 30, 1998 ......... $ 714,288
Net income ......................... 1,902,784
Distributions to partners .......... (1,549,120)
------------
BALANCE, November 30, 1999 ......... $ 1,067,952
============

The accompanying notes to the financial statements are an integral part of
this statement.

F-32
<PAGE>

JACK NICKLAUS APPAREL INTERNATIONAL

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED NOVEMBER 30, 1999

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................... $ 1,902,784
Changes in assets and liabilities:
Accounts receivable ................................ (656,142)
Accounts payable ................................... (2,867)
Accrued commissions ................................ 75,123
Accrued income taxes ............................... 127,602
Accrued liabilities ................................ 44,166
Deferred revenue ................................... 13,627
------------
Net cash provided by operating activities ......... 1,504,293

CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ............................ (1,549,120)
------------
Net decrease in cash .............................. (44,827)
CASH, beginning of year ............................... 145,227
------------
CASH, end of year ..................................... $ 100,400
============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest .............................. $ --
============
Cash paid for income taxes .......................... $ 257,041
============

The accompanying notes to the financial statements are an integral part of this
statement.

F-33
<PAGE>

JACK NICKLAUS APPAREL INTERNATIONAL

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

Jack Nicklaus Apparel International ("JNAI") is a joint venture between
Golden Bear Apparel International, Inc. and another company. The joint venture
was formed on March 29, 1983 for the purpose of securing licensees and entering
into license agreements for the use of the name and likeness of Jack Nicklaus,
including the facsimile signature of JACK NICKLAUS and the GOLDEN BEAR
trademarks in connection with the manufacture, advertisement, promotion and
sale of wearing apparel and other products throughout the world, except the
United States, Mexico and Puerto Rico. JNAI licenses the JACK NICKLAUS and
GOLDEN BEAR trademarks under a sublicense agreement with Golden Bear Golf,
Inc., which owns all of the issued and outstanding capital stock of Golden Bear
Apparel International, Inc.

The joint venture agreement provides that any capital contributions
required by JNAI be made in equal amounts by each of its two partners.
Additionally, substantially all items of net income earned or net losses
incurred by JNAI are allocated to its two partners in equal shares. JNAI may
set aside reasonable cash reserves for working capital purposes and for the
payment of the expenses of the venture along with other obligations and
contingencies. However, all remaining funds of JNAI are required to be
distributed at least annually to the partners. Neither partner of JNAI may
assign or otherwise transfer any of its interest in JNAI without the consent of
the other partner.

The joint venture agreement provides that JNAI shall continue until
December 31, 2000, unless otherwise terminated prior to that date by the mutual
consent of both partners or by operation of law. However, the termination date
set forth in the joint venture agreement can be extended by mutual consent of
both partners. As of March 28, 2000, the joint venture agreement has not been
extended beyond December 31, 2000. Upon termination of JNAI, its net remaining
assets are to be distributed to its two partners in the manner set forth in the
joint venture agreement, which generally provides for distributions of equal
amounts.

Although JNAI conducts its operations in the United States, substantially
all of its revenues are received from licensees located in the Asia Pacific
region, primarily Japan and Korea. All of the revenues of JNAI's licensees are
generated in foreign currencies. The licensees pay their license fees to JNAI
denominated in their respective functional currencies which are then converted
to U.S. dollars based on the exchange rate on the date of payment. Although
foreign currency fluctuations have not been significant historically,
fluctuations in the values of these currencies relative to the U.S. dollar
could have a material adverse effect on JNAI's future profitability. To the
extent that the Asia Pacific markets are volatile and unfavorably impact JNAI's
customers, such events could have an adverse effect on JNAI's operations in
future periods.

CASH

Cash is comprised of funds on deposit in a non-interest bearing checking
account.

ACCOUNTS RECEIVABLE AND REVENUE RECOGNITION

Revenues are recognized based on the licensing agreements with licensees,
which generally provide that JNAI is entitled to a percentage of the sales of
qualifying apparel and other products as reported by the licensees. JNAI
collects its licensing fees from customers based on various predetermined
intervals of time throughout its fiscal year, as set forth in the respective
agreements with its licensees.

F-34
<PAGE>

JACK NICKLAUS APPAREL INTERNATIONAL

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

CONCENTRATION OF CREDIT RISK

JNAI's credit risks consist primarily of accounts receivable with its two
primary licensees, JNJ, Inc.("JNJ")and Kolon, Inc ("Kolon"). The Company
performs periodic credit evaluations of its customers' financial condition and
provides allowances for doubtful accounts as required based upon factors
surrounding the credit risk of specific customers, historical trends and other
information. JNJ and Kolon represented $1.3 million and $1.1 million,
respectively, of JNAI's revenues for the fiscal year ended November 30, 1999.
Amounts due from JNJ and Kolon, totaled $0.7 million and $0.7 million,
respectively, as of November 30, 1999.

ACCRUED COMMISSIONS

Accrued commissions are payable to an officer of JNAI in lieu of fixed
compensation for certain marketing and other promotional services performed on
behalf of JNAI. Such commissions are based on 33.3% of operating profits as
defined.

INCOME TAXES

For Federal income tax purposes, JNAI is treated as a partnership and
accordingly, the components of its taxable income or loss are allocated to the
two partners in accordance with the joint venture agreement, which generally
provides that such items are to be allocated in equal amounts to each partner.
As such, JNAI as an entity is not subject to Federal income taxes. However,
JNAI's licensees typically deduct amounts attributable to foreign income taxes
payable to their respective foreign taxing authorities from the licensing fees
otherwise due to JNAI. The partners of JNAI receive a pro-rata credit for such
foreign taxes paid against their taxable income for U.S. Federal income tax
purposes.

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. Significant estimates made by management include estimates of
collectability of accounts receivable. Actual results could differ from those
estimates.

FOREIGN EXCHANGE INSTRUMENTS

JNAI is exposed to the impact of foreign currency fluctuations. Such
exposure to market risk is inherent in certain of JNAI's financial instruments
which arise from transactions entered into in the normal course of business.
JNAI has significant operations in Asia and as a result, its financial
performance could be affected by significant fluctuations in foreign exchange
rates. To mitigate potential adverse trends, JNAI has historically entered into
various hedging contracts to protect the value of its earned royalty payments
denominated in Japanese Yen. JNAI's policy is to enter into such foreign
currency hedging transactions only to the extent considered necessary to
protect the values of such royalties. JNAI does not enter into foreign currency
transactions for speculative purposes.

The Company's accounting policies for these instruments are based on the
Company's designation of such instruments as hedging transactions. The criteria
the Company uses for designating an

F-35
<PAGE>

JACK NICKLAUS APPAREL INTERNATIONAL

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

instrument as a hedge include the instrument's effectiveness in risk reduction
and one-to-one matching of derivative instruments to underlying transactions.
Gains and losses on currency forward contracts that are designated and
effective as hedges of anticipated transactions, for which a firm commitment
has been attained, are deferred and recognized in income in the same period
that the underlying transactions are settled. Gains and losses on currency
forward contracts that are designated and effective as hedges of existing
transactions are recognized in income in the same period as losses and gains on
the underlying transactions are recognized and generally offset. Gains and
losses on any instruments not meeting the above criteria would be recognized in
income in the applicable period.

In November 1999, the partners of JNAI, entered into currency forward
contracts on behalf of JNAI. The notional amounts were $433,541 maturing in
January 2000 and $295,626 maturing in February 2000. In December 1999, the
partners of JNAI entered into currency forward contracts in amounts of $465,224
and $332,683 maturing in July 2000 and August 2000, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures
About Fair Value of Financial Instruments," requires disclosure of the fair
value of certain financial instruments. Cash, accounts receivable, accounts
payable and accrued liabilities are stated at cost which approximates fair
value.

ACCOUNTING PRONOUNCEMENT

Comprehensive income is defined as the change in equity during the
financial reporting period of a business enterprise resulting from non-owner
sources. During the year ended November 30, 1999, the Company did not have any
changes in its equity resulting from such non-owner sources. Accordingly,
comprehensive income as set forth by SFAS No. 130 was equal to the net income
(loss) amounts presented for the accompanying Statement of Operations.

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or a liability measured at its
fair value. SFAS 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. In June 1999, the FASB issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the effective date of FASB Statement No. 133." SFAS 137 deferred
the effective date of SFAS 133 to fiscal years beginning after June 15, 2000.
Management believes the impact of adopting this statement will not have a
material impact upon the Company's results of operations of financial position.

2. INVESTMENT IN AFFILIATED COMPANY

JNAI has a 30% equity interest in certain operations of JNJ, Inc. ("JNJ"),
which receives specific royalties from other licensees of JNAI in exchange for
providing certain marketing and advertising services. JNAI's net equity
earnings in the operations of JNJ for the fiscal year ended November 30, 1999
were not material to the results of its operations.

F-36
<PAGE>

JACK NICKLAUS APPAREL INTERNATIONAL

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. RELATED PARTY TRANSACTIONS

Certain administrative functions are performed for JNAI by its partners
for which no amounts are charged to JNAI. Additionally, certain administrative
expenses of JNAI are paid directly by the partners. Management does not believe
the costs related to the administrative functions or administrative expenses
are material to the financial position or results of operations of JNAI.

4. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the nature of JNAI's operations may
result in claims for damages. In the opinion of management, there are no
pending legal proceedings that would have a material effect on JNAI's financial
position or results of operations.

F-37
<PAGE>

GOLDEN BEAR GOLF, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------- ----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................................... $ 4,744,752 $ 1,397,027
Accounts receivable, net ....................................... 850,271 398,241
Due from International ......................................... 52,046 58,826
Prepaid expenses and other current assets ...................... 187,475 3,898,718
------------- -------------
Total current assets ......................................... 5,834,544 5,752,812
PROPERTY AND EQUIPMENT, net ..................................... 380,048 428,855
OTHER ASSETS .................................................... 346,346 601,349
------------- -------------
Total assets ................................................. $ 6,560,938 $ 6,783,016
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ............................................... $ 729,465 $ 1,188,860
Accrued liabilities ............................................ 1,541,399 1,096,858
Deferred revenue ............................................... 1,916,673 1,095,301
Current portion of capital leases .............................. 115,485 121,565
Net current liabilities of discontinued operations ............. 5,035,373 5,133,611
------------- -------------
Total current liabilities .................................... 9,338,395 8,636,195
------------- -------------
NET NON-CURRENT LIABILITIES OF
DISCONTINUED OPERATIONS ....................................... 4,167,528 4,738,500
NOTE PAYABLE AND CAPITAL LEASES, net of current portion ......... 2,461,095 2,484,494
------------- -------------
COMMITMENTS AND CONTINGENCIES (Note 3)
SHAREHOLDERS' DEFICIT:
Preferred stock, $.01 par value, 20,000,000 shares authorized,
no shares issued and outstanding ............................. -- --
Common stock--
Class A, $.01 par value, 70,000,000 shares authorized,
2,744,962 shares issued and outstanding ..................... 27,450 27,450
Class B, $.01 par value, 10,000,000 shares authorized,
2,760,000 shares issued and outstanding ..................... 27,600 27,600
Additional paid-in capital ..................................... 40,856,943 40,856,943
Accumulated deficit ............................................ (50,318,073) (49,988,166)
------------- -------------
Total shareholders' deficit .................................. (9,406,080) (9,076,173)
------------- -------------
Total liabilities and shareholders' deficit .................. $ 6,560,938 $ 6,783,016
============= =============
</TABLE>

The accompanying notes to consolidated condensed financial statements
are an integral part of these balance sheets.

F-38
<PAGE>

GOLDEN BEAR GOLF, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
-----------------------------
2000 1999
------------- -------------
<S> <C> <C>
REVENUES:
Golf instruction revenues ............................................ $1,095,038 $1,452,938
Licensing and other revenues ......................................... 1,300,196 1,123,516
Income from operations of JNAI ....................................... 157,522 177,177
Related party management fees ........................................ 52,994 89,700
---------- ----------
Total revenues ..................................................... 2,605,750 2,843,331
---------- ----------
OPERATING COSTS AND EXPENSES:
Operating expenses ................................................... 1,843,666 1,851,874
Corporate administration ............................................. 1,051,209 1,430,070
Depreciation and amortization ........................................ 56,937 80,476
---------- ----------
Total operating costs and expenses ................................. 2,951,812 3,362,420
---------- ----------
Operating loss ..................................................... (346,062) (519,089)
---------- ----------
OTHER INCOME (EXPENSE):
Interest income ...................................................... 66,563 9,541
Interest expense ..................................................... (4,324) (6,853)
Other ................................................................ (134,770) 8,094
---------- ----------
Total other income (expense) ....................................... (72,531) 10,782
---------- ----------
Loss from continuing operations before income taxes ................ (418,593) (508,307)
PROVISION FOR INCOME TAXES ............................................ 11,948 50,409
---------- ----------
Loss from continuing operations .................................... (430,541) (558,716)
INCOME FROM DISCONTINUED OPERATIONS ................................... 100,634 --
---------- ----------
Net loss ........................................................... $ (329,907) $ (558,716)
========== ==========
EARNINGS PER SHARE--BASIC AND DILUTED:
Loss from continuing operations ...................................... $ (0.08) $ (0.10)
Income from discontinued operations .................................. 0.02 --
========== ==========
Net loss per share ................................................. $ (0.06) $ (0.10)
========== ==========
Weighted average common shares outstanding--basic and diluted ......... 5,504,962 5,504,962
========== ==========
</TABLE>

The accompanying notes to consolidated condensed financial statements
are an integral part of these statements.

F-39
<PAGE>

GOLDEN BEAR GOLF, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
---------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .............................................. $ (329,907) $ (558,716)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization ........................ 56,937 80,476
Provision for uncollectible accounts ................. 198,750 48,900
Income from discontinued operations .................. (100,634) --
Changes in assets and liabilities:
Accounts receivable ................................. (650,780) (700,921)
Due from International .............................. 6,779 (31,827)
Prepaid expenses and other current assets ........... 3,711,243 (61,254)
Other assets ........................................ 255,003 63,023
Accounts payable .................................... (459,395) (350,765)
Accrued liabilities ................................. 444,541 809,833
Deferred revenue .................................... 821,372 727,314
----------- -----------
Net cash provided by operating activities .......... 3,953,909 26,063
----------- -----------
NET CASH PROVIDED BY (USED IN)
DISCONTINUED OPERATIONS: ............................. (568,576) 264,251
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures, net ............................. (8,130) (1,264)
----------- -----------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Payments on capital lease obligations ................. (29,478) (26,950)
----------- -----------
Net increase in cash and cash equivalents .......... 3,347,725 262,100
CASH AND CASH EQUIVALENTS, beginning of period ......... 1,397,027 1,168,118
----------- -----------
CASH AND CASH EQUIVALENTS, end of period ............... $ 4,744,752 $ 1,430,218
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ................................ $ 109,681 $ 55,332
Cash paid for income taxes ............................ $ 6,646 $ 9,909
</TABLE>

The accompanying notes to consolidated condensed financial statements
are an integral part of these statements.

F-40
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

The accompanying unaudited Consolidated Condensed Financial Statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the audited
Consolidated Financial Statements and Notes thereto included in Golden Bear
Golf, Inc.'s (the "Company") Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, as filed with the Securities and Exchange Commission.

The results of operations and cash flows for the three months ended March
31, 2000 are not necessarily indicative of the results of operations or cash
flows which may be reported for the remainder of fiscal 2000.

In 1998, the Company discontinued the construction operations conducted by
its wholly-owned subsidiary, Paragon Construction International, Inc.
("Paragon"). Accordingly, the operations and financial activity associated with
Paragon has been classified as discontinued operations.

INCOME TAXES

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes".
Accordingly, deferred income taxes have been provided for to show the effect of
temporary differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements. The Company files a consolidated
Federal income tax return which includes the operations of the Company and its
subsidiaries. A valuation allowance was established to offset the Company's net
deferred tax assets as of March 31, 2000 and December 31, 1999 because
management does not currently believe that the future realization of such
deferred tax assets is more likely than not.

LOSS PER SHARE

Loss per share in the accompanying Consolidated Condensed Statements of
Operations is computed by dividing the net loss by the weighted average common
shares outstanding for the respective periods. Diluted earnings per share as
computed under SFAS No. 128 includes the effects of common stock equivalents,
including the dilutive effect of all outstanding stock options using the
treasury stock method. Diluted earnings per share is the same as basic earnings
per share in the accompanying Consolidated Condensed Statements of Operations.
Options to purchase 181,175 and 222,675 shares of common stock were not
included in computing earnings per share for the three months ended March 31,
2000 and 1999, respectively, because their effects were anti-dilutive for the
respective periods.

COMPREHENSIVE INCOME

Comprehensive income is defined as the change in equity during the
financial reporting period of a business enterprise resulting from non-owner
sources. During the three months ended March 31,

F-41
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

2000 and 1999, the Company did not have any changes in its equity resulting
from such non-owner sources, and accordingly, comprehensive income (loss) as
set forth by SFAS No. 130 was equal to the net loss amounts presented for the
respective periods in the accompanying Consolidated Condensed Statements of
Operations.

DERIVATIVE FINANCIAL INSTRUMENTS

2. NOTE PAYABLE AND CAPITAL LEASES

Note payable and capital leases consist of the following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------- -------------
<S> <C> <C>
Capital lease obligations secured by furniture and equipment, with
principal and interest at 9% payable monthly, maturing through
June, 2002 ...................................................... $ 176,580 $ 206,059
Note payable to shareholder, with interest at The Wall Street
Journal Prime Rate (8.83% at March 31, 2000) payable monthly,
entire principal due in July, 2003(1) ........................... 2,400,000 2,400,000
---------- ----------
2,576,580 2,606,059
Less current portion ............................................. (115,485) (121,565)
---------- ----------
$2,461,095 $2,484,494
========== ==========
</TABLE>

----------------
(1) In July 1998, the Company issued an unsecured promissory note for $2.4
million payable to Jack Nicklaus, the principal stockholder of the Company
and Chairman of the Company's Board of Directors. The proceeds of the note
were used in connection with the settlement of certain claims associated
with a golf course development project.

3. COMMITMENTS AND CONTINGENCIES

F-42
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED)

3. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

customer filed a counterclaim of arbitration against Paragon for alleged
construction defects in the renovation of its golf course. Although the
customer now claims its damages are in excess of $3.0 million, the initial
claim submitted by the customer in arbitration was for $750,000. The Company
intends to vigorously defend this claim, but because the ultimate outcome of
this matter is not currently determinable, no provision for loss regarding this
matter had been established at March 31, 2000. The ultimate outcome of this
matter cannot be predicted with certainty and legal proceedings could result in
losses that may have a material adverse effect on the Company's financial
position or results of operations.

In 1998, the Company conducted a comprehensive review of Paragon's
construction projects, focusing on the status of the projects, the costs
required to fully complete the jobs and the anticipated profitability or losses
of such projects. Attention was also directed toward determining contract
requirements and the related estimated costs of fulfilling those requirements.
As a result of the review, the Company found evidence that former management of
Paragon deliberately falsified records, misrepresented the status of
construction projects and made false statements about Paragon's revenues, costs
and profits to the Company's executive management and Board of Directors. Based
on the results of the review, it was necessary for the Company to recognize
additional costs and losses incurred on certain construction projects,
resulting in the restatement of the Company's financial statements included in
its Annual Report on Form 10-K for the year ended December 31, 1997 and its
Quarterly Report on Form 10-Q for the three months ended March 31, 1998, as
previously filed with the Securities and Exchange Commission.

As a result of the foregoing review and restatement of the Company's
financial statements, numerous class action lawsuits were filed against the
Company and certain current and former officers and directors of the Company,
asserting various claims under the federal securities laws. On July 28, 1998,
shareholders filed a class action lawsuit in the United States District Court
for the Southern District of Florida against the Company and certain of the
Company's present and former officers and directors.

Subsequently, nine additional lawsuits were filed against the Company and
certain of its present and former officers and directors. Eight of these
lawsuits were filed in the United States District Court for the Southern
District of Florida and one was filed in the United States District Court for
the Eastern District of New York, though the court in New York has entered an
order transferring this action to the Southern District of Florida. The
District Court in Florida entered an order consolidating all of the actions
originally filed in the Southern District of Florida and all similar actions
which are transferred to or subsequently filed in the Southern District of
Florida and directed the plaintiffs to file a consolidated complaint.

F-43
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED)

3. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

The defendants named in the action were Golden Bear Golf, Inc., Jack W.
Nicklaus, Richard P. Bellinger, Jack P. Bates, Stephen S. Winslett, John Boyd
and Arthur Andersen LLP ("Andersen"). The plaintiffs sought an unspecified
amount of damages, interest, costs and attorneys' fees. In the Second Amended
Consolidated Complaint on behalf of a class of all persons, excluding the
defendants, who purchased shares of the Company's Class A Common Stock from the
date of the Company's public offering, August 1, 1996 through and including
July 27, 1998, the plaintiffs alleged securities law violations under Sections
11, 12(2) and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the
Securities Act and Rule 10b-5, as well as common law claims.

On December 22, 1999, the parties entered into a Settlement Agreement
relating to the consolidated actions. The Settlement Agreement was approved by
the United States District Court during a final hearing on March 28, 2000.
Under the terms of the Settlement Agreement, the Company established a
settlement fund in the amount of $3.5 million to settle the class action
litigation. The Company contributed $2.5 million to the settlement fund, with
funds provided by the Company's insurance carrier. Pursuant to the Settlement
Agreement, Andersen also contributed $1.0 million to the settlement fund.

In connection with the Company's entry into the Settlement Agreement, the
Company also entered into a settlement with Andersen to settle the Company's
claims against it. The Company had previously advised Andersen of the belief
that Andersen violated its duty of care in connection with the professional
services it provided the Company and that the Company's losses, in part,
resulted from the failure of due care. Andersen has vigorously denied a failure
of due care on its part and has vigorously denied that any of the Company's
losses resulted from anything Andersen did or failed to do. Notwithstanding its
position, in order to avoid protracted litigation in which their position would
be fully developed and resolved, Andersen entered into a settlement agreement
with the Company. Pursuant to the settlement, Andersen agreed to pay the
Company $3.8 million in cash and waive approximately $750,000 in receivables
due to Andersen from the Company. The Company received $3.8 million during the
quarter ended March 31, 2000.

In accordance with the settlement agreement, the Company has agreed to
take the steps necessary to acquire all the shares held by public shareholders
at a cash price of $0.75 per share. The price for the publicly held shares was
the result of negotiations between the Company and attorneys for the class
action plaintiffs and has the approval of a committee of independent directors.
An investment banking firm provided an opinion that the consideration to be
received by holders of the Company's Common Stock, other than Jack Nicklaus and
his family, pursuant to the Settlement Agreement is fair from a financial point
of view to such holders.

Unaudited pro forma total assets .................. $ 4,060,938
Unaudited pro forma total liabilities ............. 15,646,605
-------------
Unaudited pro forma shareholder's deficit ......... $ (11,585,667)
=============

F-44
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED)

3. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

The Company is also a party to various other legal proceedings that have
arisen in the ordinary course of its business. The ultimate outcome of these
matters cannot be predicted with certainty. The foregoing legal proceedings
could result in losses that may have a material adverse effect on the Company's
financial position or results of operations.

CONSTRUCTION CONTRACT WARRANTIES

Paragon's construction contracts generally provided for warranties that
obligated Paragon to remedy certain construction defects that may arise in the
ordinary course of providing such construction services. Such warranties, which
are customary in the construction industry, are usually effective for a period
of one year from the completion date of the respective projects. The Company's
management does not expect the costs associated with corrective action incurred
pursuant to these warranties, if any, to have a material impact on its results
of operations.

4. SHAREHOLDERS' DEFICIT AND LIQUIDITY

The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Primarily as a
result of losses and costs, previously incurred by the Company's Paragon
subsidiary, the Company has incurred operating losses which have resulted in a
shareholders' deficit of approximately $9.4 million and a working capital
deficiency of approximately $3.5 million at March 31, 2000. The circumstances
surrounding the losses previously incurred by Paragon have resulted in
substantial claims and litigation against the Company. Management's actions in
regard to these matters included discontinuing the Company's construction
operations in 1998 and reducing ongoing expenses.

The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern and future working capital requirements are dependent on the Company's
ability to successfully complete negotiations of claims and issues involving
Paragon and on its ability to achieve and maintain profitable operations in the
future. Management of the Company believes that such objectives are attainable.
However, there is no assurance that the Company will be successful in realizing
these objectives, or that the Company will generate sufficient cash flow from
operations to meet its future working capital requirements. Pursuant to the
terms of the settlement agreement, the Company is committed to take steps to
repurchase and redeem its publicly held shares for a price of $0.75 per share
(an aggregate of approximately $1.9 million). To the extent that capital
requirements exceed available capital, the Company will be required to seek
alternative sources of financing to fund

F-45
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED)

4. SHAREHOLDERS' DEFICIT AND LIQUIDITY--(CONTINUED)

its operations. The Company has no existing credit facility and there is no
assurance that alternative financing will be available, if at all, on
satisfactory terms. If the Company is unable to obtain satisfactory alternative
financing, the Company may be required to delay or reduce its future
expenditures, sell additional assets to meet its obligations, seek to
renegotiate the terms of its obligations or curtail its operations. There can
be no assurance that any source of funds or other actions taken by the Company
will provide sufficient capital so as to enable the Company to remain a going
concern.

5. OPERATIONS OF JNAI

The joint venture agreement provides that JNAI shall continue until
December 31, 2000, unless otherwise terminated prior to that date by the mutual
consent of both partners or by operation of law. However, the termination date
set forth in the joint venture agreement can be extended by mutual consent of
both partners. Upon termination of JNAI, its net remaining assets are to be
distributed to its two partners in the manner set forth in the joint venture
agreement, which generally provides for distributions of equal amounts. As of
May 9, 2000, the joint venture agreement has not been extended beyond December
31, 2000.

The following is a condensed summary of the operating results of JNAI:

FOR THE THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
------------ ------------
Licensing revenues ................... $ 468,567 $ 518,649
Operating expenses and other ......... 90,622 67,224
Provision for income taxes ........... 62,900 97,071
--------- ---------
Net income ........................... $ 315,045 $ 354,354
========= =========

6. RELATED PARTY TRANSACTIONS

Effective December 18, 1998, the Company, Jack Nicklaus and Golden Bear
International, Inc. ("International"), a privately owned company controlled by
Jack Nicklaus, entered into an agreement with Weitz Golf International LLC
("Weitz Golf"), pursuant to which the Company, Jack Nicklaus and International
will provide certain technical and marketing assistance in connection with the
construction services offered by Weitz Golf, which include general contracting,
design-build and construction management. Under the agreement, the Company
agreed to no longer offer construction services independently during the term
of the agreement which expires on December 31, 2007. The Company is entitled to
receive 40% of the cumulative net profits, as defined, received by Weitz Golf
pursuant to the contracts it enters into during the term of the agreement.
There were no cumulative net profits from the operations of Weitz Golf during
the three months ended March 31, 2000.

F-46
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED)

6. RELATED PARTY TRANSACTIONS--(CONTINUED)

Pursuant to the terms of a personal services management agreement,
International and Jack Nicklaus have retained the Company as the exclusive
manager and representative to market the personal endorsement services of Jack
Nicklaus, under which the Company is generally entitled to approximately 20% to
30% of the personal endorsement fees received by Mr. Nicklaus. During the three
months ended March 31, 2000 and 1999, the Company earned management fees
attributable to providing such services of $52,994 and $89,700, respectively.
At March 31, 2000, the Company had a net amount due from International of
$52,046, which was comprised primarily of the management fees attributable to
such personal endorsement services performed by Mr. Nicklaus.

The Company has an office staff sharing agreement with International which
provides for the sharing of the services of certain specifically identified
office staff and personnel that can effectively serve the needs of both
organizations. During the three months ended March 31, 2000 and 1999, payroll
and related costs associated with such shared employees totaling $6,900 and
$9,000, respectively, were allocated to International.

During the three months ended March 31, 2000 and 1999, the Company paid
Executive Sports International, a privately held company owned in part by a
member of the Nicklaus family, $18,352 and $120 respectively, for certain
printing and graphics services. In 1999, the Company entered into a marketing
and support agreement with ESI in connection with the promotion, marketing,
sale and operation of the NICKLAUS FLICK GAME IMPROVEMENT'S programs. Under the
marketing and support agreement, ESI earned a management fee of $45,000,
commissions of $15,000, and was reimbursed for travel and amenities of $4,517
during the three months ended March 31, 2000.

In the ordinary course of business, the Company purchases golf equipment
manufactured by Nicklaus Golf Equipment Company, L.C., a privately owned
company in which Jack Nicklaus has a 50% equity interest. Such equipment is
currently purchased primarily for promotional programs associated with the
Company's NICKLAUS FLICK GAME IMPROVEMENT. Prior to the sale of the Company's
Golf Centers subsidiary, such equipment was also purchased for resale in the
pro shops of the Company's golf centers. During the three months ended March
31, 2000 and 1999, the Company purchased such golf equipment at a cost of
$9,112 and $10,490, respectively.

7. DISCONTINUED OPERATIONS

PARAGON CONSTRUCTION INTERNATIONAL, INC.

On October 26, 1998, the Company formally approved the discontinuance of
the golf course construction operations conducted by its Paragon subsidiary.
Substantially all such projects have been completed and the Company is no
longer actively involved in pursuing construction projects independent of its
agreement with Weitz Golf. Paragon had been involved in providing comprehensive
golf course and other resort-related construction services, including project
management, shaping, renovation and golf course construction.

F-47
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED)

7. DISCONTINUED OPERATIONS--(CONTINUED)

The financial activities associated with Paragon have been classified as
discontinued operations in the accompanying Consolidated Condensed Financial
Statements. Income attributable to the operations of Paragon $100,634 for the
three months ended March 31, 2000 is included in the accompanying Consolidated
Condensed Statements of Operations as a component of the line item captioned,
"Income from discontinued operations."

The components of the net liabilities associated with Paragon's
discontinued operations included in the accompanying Consolidated Balance
Sheets consist of the following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------- -------------
<S> <C> <C>
Current assets ....................................... $ 93,279 $ 60,844
Property and equipment, net .......................... 131,778 131,999
---------- ----------
Total assets ....................................... 225,057 192,843
---------- ----------
Accounts payable ..................................... 1,376,252 1,461,810
Accrued expenses ..................................... 342,764 372,860
Accrued tax .......................................... 1,635,259 1,594,233
Current portion of notes payable ..................... 1,774,377 1,765,552
---------- ----------
Total current liabilities .......................... 5,128,652 5,194,455
Notes payable and capital leases ..................... 4,299,306 4,870,499
---------- ----------
Total liabilities .................................. 9,427,958 10,064,954
---------- ----------
Net liabilities of discontinued operations ......... $9,202,901 $9,872,111
========== ==========
</TABLE>

The long-term liabilities of Paragon's discontinued operations included in
the accompanying Consolidated Balance Sheets consist of notes payable. The
following table sets forth the future payments due under the notes payable
obligations:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------------- ---------------
<S> <C> <C>
2000 ......................... $ 1,379,728 $ 1,739,021
2001 ......................... 1,628,731 1,695,451
2002 ......................... 1,258,280 1,317,659
2003 ......................... 828,837 893,633
2004 ......................... 935,581 918,495
Thereafter ................... 42,525 71,792
------------ ------------
6,073,683 6,636,051
Less current portion ......... (1,774,377) (1,765,552)
------------ ------------
$ 4,299,306 $ 4,870,499
============ ============
</TABLE>

8. SEGMENT REPORTING

With the discontinuance of the construction operations conducted by its
Paragon subsidiary, the Company effectively consolidated all of its remaining
operations into one operating segment.

F-48
<PAGE>

GOLDEN BEAR GOLF, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED)

8. SEGMENT REPORTING--(CONTINUED)

Accordingly, all of the Company's revenue generating activities are now
conducted by one operating segment encompassing the licensing of NICKLAUS, JACK
NICKLAUS and GOLDEN BEAR branded products throughout the world, the operation
of the NICKLAUS FLICK GAME IMPROVEMENT and the generation of marketing fees
related to Jack Nicklaus' personal endorsements. As the Company operates and
tracks its results in one operating segment, certain segment disclosure
requirements are not applicable.

9. SUBSEQUENT EVENTS

On April 17, 2000, the Company terminated a licensing agreement with one
licensee covering 21 golf center facilities, based upon the failure of the
licensee to make required payments. Pursuant to the agreement, the Company had
been entitled to receive minimum annual licensing fees of $795,000. The
licensee defaulted on its payment to the Company for the quarterly minimum fees
which were due on January 1, 2000 and April 1, 2000, as required under its
licensing agreement. On May 4, 2000, the licensee announced that it filed
voluntary petitions with the U.S. Bankruptcy Court to reorganize under Chapter
11 of the U.S. Bankruptcy Code. The Company will not earn any future revenue
associated with this licensing agreement and has fully reserved the current
outstanding receivable amount of $198,750.

Pursuant to the terms of the settlement of the class action litigation
brought against the Company, on April 5, 2000 the Company transferred $1.9
million into an escrow account. These funds are to be paid to the Company's
public shareholders in cancellation and redemption of their shares.

F-49
<PAGE>

APPENDIX A

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of January 12, 2000 (the
"Agreement"), by and between Golden Bear Golf, Inc., a Florida corporation
("Golden Bear"), and GB Golf Corp., a Florida corporation ("GB Golf").

W I T N E S S E T H:

WHEREAS, Golden Bear was named as a defendant in certain class action
lawsuits filed against it and certain of its present and former officers and
directors and the former president of one of its subsidiaries, which lawsuits
were subsequently consolidated into a single action (the "Consolidated Action")
before the United States District Court for the Southern District of Florida
(the "Court");

WHEREAS, the Board of Directors of Golden Bear has determined that it is
in the best interest of Golden Bear and its shareholders for Golden Bear to
effect the settlement of the Consolidated Action;

WHEREAS, on December 22, 1999, the parties to the Action entered into a
settlement agreement relating to the Consolidated Action, pursuant to which
Golden Bear agreed to effect a corporate transaction in which the shareholders
of Golden Bear, other than Jack Nicklaus or his family and other than the
holder of any Dissenting Shares (as defined in Section 2.3 below), will receive
the cash sum of $0.75 per share in exchange for the shares of the Class A
Common Stock of Golden Bear (the "Class A Common Stock");

WHEREAS, Golden Bear is entering into this Agreement in order to comply
with the terms of the settlement agreement so that holders of Class A Common
Stock, other than Jack Nicklaus or his family and other than the holder of any
Dissenting Shares, will receive cash for their securities in accordance with
the terms of the settlement agreement;

WHEREAS, the Board of Directors of Golden Bear has determined that it is
in the best interest of Golden Bear and its shareholders to effect the
corporate transaction contemplated by the settlement agreement through the
merger of GB Golf with and into Golden Bear (the "Merger") with Golden Bear as
the surviving corporation of the Merger (the "Surviving Corporation");

WHEREAS, pursuant to this Agreement in the Merger (a) each outstanding
share of the Class A Common Stock of Golden Bear (the "Class A Common Stock")
will be converted automatically into approximately .00000877 of a share of the
Class A Common Stock of the Surviving Corporation (the "Surviving Corporation
Stock"), with any shareholder who is not entitled to receive at least one whole
share of Surviving Corporation Stock as a result of the Merger receiving cash
in lieu of fractional shares and (b) all of the outstanding shares of the
common stock of GB Golf ("GB Golf Common Stock") outstanding immediately prior
to the Merger will be canceled;

WHEREAS, GB Golf is a wholly-owned subsidiary of Golden Bear organized for
the sole purpose of consummating the Merger;

WHEREAS, Golden Bear and GB Golf are entering into this Agreement to set
forth the terms and conditions of the Merger; and

WHEREAS, the respective obligations of the parties to effect the Merger
are subject to the condition that the settlement agreement shall have received
the final approval of the Court;

A-1
<PAGE>

NOW, THEREFORE, in consideration of the mutual promises herein contained
and intending to be legally bound, the parties hereto agree as follows:

1. MERGER

1.1 THE MERGER.

(a) GENERALLY. On the Effective Date (as defined in Section 1.2 below), GB
Golf will be merged with and into Golden Bear under the terms of this Agreement
and in accordance with the provisions of the Florida Business Corporation Act
(the "FBCA"), and the separate corporate existence of GB Golf will cease and
Golden Bear shall continue as the Surviving Corporation. The Merger shall have
the effects as provided by the FBCA.

(b) ARTICLES OF INCORPORATION AND BY-LAWS. The articles of incorporation
of Golden Bear as in effect immediately prior to the Merger shall be the
articles of incorporation of the Surviving Corporation (the "Articles of
Incorporation"). The By-laws of Golden Bear in effect immediately prior to the
Merger shall be the By-laws of the Surviving Corporation (the "By-laws").

(c) BOARD OF DIRECTORS AND EXECUTIVE OFFICERS. After the Merger, the Board
of Directors and executive officers of the Surviving Corporation shall be
identical to the Board of Directors and executive officers of GB Golf
immediately prior to the Effective Date. The directors and executive officers
of the Surviving Corporation shall hold office subject to the Articles of
Incorporation and By-laws and until their respective successors have been
elected and qualified.

1.2 Effective Date. Subject to the satisfaction or waiver of the
conditions precedent set forth in Section 3 of this Agreement, the parties
shall cause the Merger to become effective as soon as practicable following the
satisfaction or waiver of such conditions by filing Articles of Merger (the
"Articles of Merger") with the Secretary of State of the State of Florida with
respect to the Merger. The date on which the Articles of Merger are so filed
or, if so provided by the Court in its approval of the settlement agreement, at
such other time as is permissible in accordance with the FBCA and specified in
the Articles of Merger, shall for all purposes hereunder be the effective date
of the Merger (the "Effective Date").

2. CONVERSION OF STOCK; DISSENTING SHARES

2.1 Cancellation of Class A Common Stock. On the Effective Date and as a
result of the Merger, each issued and outstanding share of Class A Common
Stock, other than Dissenting Shares, shall, by virtue of the Merger and without
further action by the holder thereof, cease to be an issued and outstanding
share of Class A Common Stock and shall become and be converted into an amount
of a fully paid and non-assessable share of Surviving Corporation Stock
equaling the quotient of 1 divided by 114,000.

2.2 Cancellation of GB Golf Common Stock. On the Effective Date and as a
result of the Merger, each share of the common stock, par value $.01 per share
of GB Golf issued and outstanding immediately prior to the Effective Date,
shall be canceled and extinguished without any payment or other consideration
made with respect thereto and such shares will be deemed to be authorized but
unissued shares of the Surviving Corporation.

2.3 Dissenting Shares. The holder of any Dissenting Share shall have the
rights, subject to the limitations, provided by applicable law. A "Dissenting
Share" shall mean any share of Class A Common Stock for which the holder
thereof has perfected the right to seek appraisal rights under Florida law.

2.4 Stock Certificates.

(a) At or after the Effective Date, holders of a certificate or
certificates formerly evidencing issued and outstanding shares of Class A
Common Stock (other than holders of any Dissenting

A-2
<PAGE>

Shares) shall be required to exchange their existing certificates for one or
more certificates representing the number of shares of Surviving Corporation
Stock or cash, as applicable, into which such shares were converted by virtue
of the Merger. Subject to the terms and conditions hereof, at or prior to the
Effective Time, the Surviving Corporation shall appoint an exchange agent to
effect the exchange of shares of Class A Common Stock for shares of Surviving
Corporation Stock or cash, as the case may be, in accordance with the
provisions of this Section 2 (the "Exchange Agent") and shall deposit, or cause
to be deposited, with the Exchange Agent certificates representing shares of
Surviving Corporation Stock and cash for conversion of shares of Class A Common
Stock in accordance with the provisions of this Section 2 (such certificates,
together with any dividends or distributions with respect thereto, being herein
referred to as the "Exchange Fund"). As soon as practicable after the Effective
Date, the Surviving Corporation shall deliver to each record holder of Class A
Common Stock a form of letter of transmittal which, among other matters, shall
specify how such shareholder shall receive the shares of Surviving Corporation
Stock or cash, as applicable, payable as a result of the Merger. Commencing
immediately after the Effective Time and until the appointment of the Exchange
Agent shall be terminated, as soon as practicable after surrender to the
Exchange Agent of a properly executed letter of transmittal and any
certificates which immediately prior to the Effective Date shall have
represented any then issued and outstanding shares of Class A Common Stock, the
Exchange Agent shall cause to be distributed to the person in whose name such
Class A Common Stock shall have been registered either (i) certificates
registered in the name of such person representing the shares of Surviving
Corporation Stock into which such shares of Class A Common Stock shall have
been converted on the Effective Date or (ii) a check payable to such person
representing the payment of cash in lieu of fractional shares determined in
accordance with Section 2.5 hereof. After the appointment of the Exchange Agent
shall be terminated, any such holder may surrender any such executed letter of
transmittal and certificate to the Surviving Corporation subject to any
applicable escheat laws and unclaimed property laws. Notwithstanding the
foregoing provisions of this Section 2.4, risk of loss and title to such
certificates formerly representing shares of Class A Common Stock shall pass
only upon proper delivery of such certificates to the Exchange Agent, and
neither the Exchange Agent nor any party hereto shall be liable to a holder of
shares of Class A Common Stock for any Surviving Corporation Stock or dividends
or distributions thereon delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law or to a transferee
pursuant to Section 2.6 hereof.

(b) No dividends or other distributions declared after the Effective Date
with respect to shares of Class A Common Stock and payable to the holders of
record thereof after the Effective Date shall be paid with respect to Class A
Common Stock converted into Surviving Corporation Stock in the Merger until
such properly executed letter of transmittal and any unsurrendered certificates
representing such shares of Class A Common Stock are surrendered as provided
herein. Upon the surrender of such letter of transmittal and any such
outstanding certificates, however, there shall be paid to the record holder of
the certificates of Surviving Corporation Stock issued in exchange for the
shares of Class A Common Stock (but not with respect to any fractional shares
of Surviving Corporation Stock for which cash is to be paid in lieu thereof),
the aggregate amount of dividends and distributions, if any, which theretofore
became payable in respect of the shares of Surviving Corporation Stock into
which such Class A Common Stock is converted, subject in any case to any
applicable escheat laws and unclaimed property laws. No interest shall be
payable on or in respect of the payment of such dividends or cash in lieu of
fractional shares on surrender of outstanding certificates.

(c) The Surviving Corporation and the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Class A Common Stock such amounts as the
Surviving Corporation or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the United States Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state, local
or foreign tax law applicable to the making of such payment. To the extent that
amounts are so withheld by the Surviving Corporation or the Exchange Agent,
such withheld amounts shall be treated for all purposes

A-3
<PAGE>

of this Agreement as having been paid to the holders of the shares of Class A
Common Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or the Exchange Agent.

(d) No party to this Agreement shall be liable to any person or entity in
respect of any amounts paid or delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.

(e) In the event any certificate or certificates formerly representing
shares of Class A Common Stock shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such certificate
or certificates to be lost, stolen or destroyed, and if required by the
Surviving Corporation and the Exchange Agent, the posting by such person of a
bond in such amount as the Surviving Corporation may reasonably require as
indemnity against any claim that may be made against it with respect to such
certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed certificate the consideration deliverable in respect thereof as
determined in accordance with this Article 2.

2.5 Cash in Lieu of Fractional Shares. Notwithstanding any other provision
of this Agreement to the contrary, no certificates or script representing
fractional shares of Surviving Corporation Stock shall be issued upon the
conversion of shares of Class A Common Stock in the Merger unless the
beneficial owner of such Class A Common Stock immediately prior to the
Effective Date would otherwise be entitled to receive at least one whole share
of Surviving Corporation Stock upon conversion of all shares of Class A Common
Stock beneficially owned by such person immediately prior to the Effective
Date. In lieu of any fractional shares, there shall be paid to each beneficial
owner of shares of Class A Common Stock who is not entitled to receive at least
one whole share of Surviving Corporation Stock in accordance with this Section
2 an amount in cash (without interest) equal to $0.75 per share of Class A
Common Stock. Other than fractional shares issued to a holder of at least one
whole share of Surviving Corporation Stock in accordance with the preceding
sentence, no dividend or distribution of the Surviving Corporation shall relate
to any fractional share otherwise issuable pursuant to the terms hereof and
such fractional share interests will not entitle the owner thereof to vote or
to any rights of a shareholder of the Surviving Corporation.

2.6 Issuance Other Than to Record Owner. If any cash or certificate
representing shares of Surviving Corporation Stock is to be paid to or issued
in a name other than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition of the payment or issuance
thereof that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer to the person designated to receive such
shares and that the person requesting such exchange shall pay to the Surviving
Corporation any transfer or other taxes required by reason of the issuance of a
certificate representing shares of Surviving Corporation Stock, or the payment
of cash in lieu of fractional shares, in any name other than that of the
registered holder of the certificate surrendered, Surviving Corporation Stock.

2.7 No Further Transfers of Class A Common Stock. After the Effective
Date, there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Class A Common Stock which
were outstanding immediately prior to the Effective Date. If, after the
Effective Date, certificates formerly representing such shares are presented to
the Surviving Corporation, they shall be canceled and exchanged for cash or
certificates representing the shares of Surviving Corporation Stock, as the
case may be, to which the holder thereof is entitled, as provided in this
Section 2, subject, however, to any applicable escheat laws and unclaimed
property laws.

2.8 Cancellation of Options. Pursuant to the Merger, at the Effective
Date, each outstanding option to purchase shares of Class A Common Stock under
Golden Bear's stock option plans shall be canceled and extinguished without any
payment or other consideration made with respect thereto.

2.9 Sole Rights; Continuity of Rights and Preference. On the Effective
Date, the each beneficial owner of shares of Class A Common Stock outstanding
immediately prior to the Effective

A-4
<PAGE>

Date shall cease to have any rights with respect to such shares of Class A
Common Stock and their sole rights on and following the Effective Date shall be
with respect to the shares of Surviving Corporation Stock or cash, as the case
may be, into which their shares of Class A Common Stock shall have been
converted by virtue of the Merger, or to perfect such alternative rights, if
any, as they may have as a holder of Dissenting Shares as provided under
Florida law.

3. CONDITIONS. The obligations of the parties hereto to consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of each of the following conditions:

3.1 Court Approval. All approvals, waivers and authorizations of, filings
and registrations with, and notifications to, the Court required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all applicable waiting periods shall have expired.

3.2 Information Statement. An Information Statement relating to the Merger
(the "Information Statement") conforming with the rules and regulations of the
Securities and Exchange Commission (the "SEC") shall have been declared
effective by the SEC under the Securities Exchange Act of 1934, as amended and
no stop order suspending the effectiveness of the Information Statement shall
have been issued by the SEC and no proceeding for that purpose shall have been
initiated by the SEC and not concluded or withdrawn.

3.3 No Injunction or Proceeding. No preliminary or permanent injunction,
temporary restraining order or other decree of a court, legislature or other
agency or instrumentality of federal, state or local government (a
"Governmental Entity") shall be in effect, no statute, rule or regulation shall
have been enacted by a Governmental Entity and no action, suit or proceeding by
any Governmental Entity shall have been instituted or threatened, which
prohibits the consummation of the Merger or materially challenges the
transactions contemplated hereby.

3.4 Consents. Other than filing the Articles of Merger, all consents,
approvals and authorizations of and filings with Governmental Entities,
required for the consummation of the transactions contemplated hereby, shall
have been obtained or effected or filed.

3.5 Other Approvals. All other consents and approvals and the satisfaction
of all other requirements that are necessary for the consummation of the Merger
and other transactions contemplated by this Agreement shall have been obtained.

3.6 Deposit of Exchange Fund. Golden Bear shall have deposited, or shall
have caused to be deposited, with the Exchange Agent all certificates and cash
amounts necessary to be included in the Exchange Fund.

4. TERMINATION; AMENDMENT

4.1 Termination of Agreement. This Agreement may be terminated by Golden
Bear at any time before the Effective Date in the event that the satisfaction
of any of the conditions set forth in Section 3 is or becomes impossible (other
than as a result of failure of Golden Bear to comply with its obligations under
this Agreement or the settlement agreement). Such termination shall be effected
by written authorization of the Board of Directors of Golden Bear whereupon
this Agreement shall be terminated and there shall be no liability hereunder on
account of such termination on the part of Golden Bear, GB Golf or their
respective directors, officers, employees, agents or shareholders.

4.2 Amendment. This Agreement may be amended or modified in any respect at
any time by mutual written agreement of the parties; provided, however, that if
such amendment or modification is subsequent to the approval of the settlement
agreement by the Court, any such subsequent amendment or modification shall be
approved by the Court.

5. MISCELLANEOUS

5.1 Successors. This Agreement shall be binding on the respective
successors of the Golden Bear and GB Golf.

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5.2 Counterparts. This Agreement may be executed in one or more
counterparts.

5.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.

5.4 No Third Party Beneficiaries. Except as provided in Article 2, nothing
in this Agreement is intended to confer upon any person or entity not a party
to this Agreement any rights or remedies under or by reason of this Agreement.

IN WITNESS WHEREOF, the Boards of Directors of the parties hereto have
approved this Agreement and the duly authorized officers of each have executed
this Agreement on their behalf as of the date first above written.

GOLDEN BEAR GOLF, INC.

By /s/ STEPHEN S. WINSLETT
--------------------------------------
Stephen S. Winslett
Senior Vice President, Chief Financial
Officer and Chief Operating Officer

GB GOLF CORP.

By /s/ STEPHEN S. WINSLETT
--------------------------------------
Stephen S. Winslett
President

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APPENDIX B

MORGAN STANLEY DEAN WITTER

1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000

March 27, 2000

Special Committee of the Board of Directors
Golden Bear Golf, Inc.
12870 U.S. Highway #1
North Palm Beach, CA 10877

Members of the Special Committee of the Board:

We understand that Golden Bear Golf, Inc. ("GBG" or the "Company") and Silvio
Pietroluongo, on behalf of himself and all others similarly situated, ("Class
Action Plaintiff") propose to enter into an Stipulation of Settlement
(substantially in the form of the draft dated February 14, 2000) (the
"Settlement Agreement"), which provides, among other things, for the
commencement by the Company of a corporate transaction in which the public
shareholders, other than Jack Nicklaus and his family, will receive the cash
sum of $0.75 per share in exchange for their shares of common stock, par value
$0.01 per share (the "Common Stock"), of the Company. The terms and conditions
of this arrangement are more fully set forth in the Settlement Agreement.

You have asked for our opinion as to whether the consideration to be received
by the holders of shares of Common Stock, other than Jack Nicklaus and his
family, pursuant to the Settlement Agreement is fair from a financial point of
view to such holders.

For purposes of the opinion set forth herein, we have:

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<S> <C>
(i) reviewed certain publicly available financial statements and other information of the Company;

(ii) reviewed certain internal financial statements and other financial and operating data concerning the
Company prepared by the management of the Company;

(iii) analyzed certain financial projections prepared by the management of the Company;

(iv) discussed the past and current operations and financial condition and the prospects of the Company
with senior executives of the Company;

(v) reviewed the reported prices and trading activity for the Common Stock;

(vi) compared the financial performance of the Company and the prices and trading activity of the
Common Stock with that of certain other comparable publicly-traded companies and their securities;

(vii) reviewed the financial terms, to the extent publicly available, of certain comparable transactions;

(viii) participated in discussions among representatives of the Company and the Class Action Plaintiff and
their legal advisors;
</TABLE>

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<TABLE>
<S> <C>
(ix) reviewed a draft dated February 14, 2000 of the Settlement Agreement and certain related
documents; and

(x) performed such other analyses as we have deemed appropriate.
</TABLE>

We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. We
have not made any independent valuation or appraisal of the assets or
liabilities of the Company, nor have we been furnished with any such
appraisals. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.

In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of the Company
or any of its assets. We have acted as financial advisor to the Special
Committee of the Board of Directors of the Company in connection with this
transaction and will receive a fee for our services.

It is understood that this letter is for the information of the Special
Committee of the Board of Directors of the Company only, and may not be used
for any other purpose without our prior written consent.

Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Common Stock, other
than Jack Nicklaus and his family, pursuant to the Settlement Agreement is fair
from a financial point of view to such holders.

Very truly yours,

MORGAN STANLEY & CO. INCORPORATED

By: /s/ PAUL J. TAUBMAN
------------------------------------
Paul J. Taubman
Managing Director

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APPENDIX C

SELECTED PROVISIONS OF THE FLORIDA BUSINESS CORPORATION ACT

607.1301 DISSENTERS' RIGHTS; DEFINITIONS.--

The following definitions apply to ss. 607.1302 and 607.1320:

(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.

(2) "Fair value," with respect to a dissenter's shares, means the value of the
shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.

(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to s. 607.1104, the day prior to the date on which a copy of
the plan of merger was mailed to each shareholder of record of the subsidiary
corporation.

607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.--

(1) Any shareholder of a corporation has the right to dissent from, and obtain
payment of the fair value of his or her shares in the event of, any of the
following corporate actions:

(a) Consummation of a plan of merger to which the corporation is a party:

1. If the shareholder is entitled to vote on the merger, or

2. If the corporation is a subsidiary that is merged with its parent
under s. 607.1104, and the shareholders would have been entitled to
vote on action taken, except for the applicability of s. 607.1104;

(b) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to the
shareholders within 1 year after the date of sale;

(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;

(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:

1. Altering or abolishing any preemptive rights attached to any of his
or her shares;

2. Altering or abolishing the voting rights pertaining to any of his or
her shares, except as such rights may be affected by the voting rights
of new shares then being authorized of any existing or new class or
series of shares;

3. Effecting an exchange, cancellation, or reclassification of any of his
or her shares, when such exchange, cancellation, or reclassification
would alter or abolish the shareholder's

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voting rights or alter his or her percentage of equity in the
corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;

4. Reducing the stated redemption price of any of the shareholder's
redeemable shares, altering or abolishing any provision relating to
any sinking fund for the redemption or purchase of any of his or her
shares, or making any of his or her shares subject to redemption when
they are not otherwise redeemable;

5. Making noncumulative, in whole or in part, dividends of any of the
shareholder's preferred shares which had theretofore been cumulative;

6. Reducing the stated dividend preference of any of the shareholder's
preferred shares; or

7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary
liquidation; or

(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his or her shares.

(2) A shareholder dissenting from any amendment specified in paragraph (1)(e)
has the right to dissent only as to those of his or her shares which are
adversely affected by the amendment.

(3) A shareholder may dissent as to less than all the shares registered in his
or her name. In that event, the shareholder's rights shall be determined as if
the shares as to which he or she has dissented and his or her other shares were
registered in the names of different shareholders.

(4) Unless the articles of incorporation otherwise provide, this section does
not apply with respect to a plan of merger or share exchange or a proposed sale
or exchange of property, to the holders of shares of any class or series which,
on the record date fixed to determine the shareholders entitled to vote at the
meeting of shareholders at which such action is to be acted upon or to consent
to any such action without a meeting, were either registered on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc., or held of record by not fewer than 2,000 shareholders.

(5) A shareholder entitled to dissent and obtain payment for his or her shares
under this section may not challenge the corporate action creating his or her
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.

607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.--

(1)(a) If a proposed corporate action creating dissenters' rights under s.
607.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights and be accompanied by a copy of /section/ 607.1301, 607.1302, and
607.1320. A shareholder who wishes to assert dissenters' rights shall:

1. Deliver to the corporation before the vote is taken written notice of
the shareholder's intent to demand payment for his or her shares if
the proposed action is effectuated, and

2. Not vote his or her shares in favor of the proposed action. A proxy or
vote against the proposed action does not constitute such a notice of
intent to demand payment.

(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of /section/ 607.1301, 607.1302, and 607.1320 to each
shareholder simultaneously with any request for the shareholder's written
consent or, if such a request is not made, within 10 days after the date the
corporation received written consents without a meeting from the requisite
number of shareholders necessary to authorize the action.

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(2) Within 10 days after the shareholders' authorization date, the corporation
shall give written notice of such authorization or consent or adoption of the
plan of merger, as the case may be, to each shareholder who filed a notice of
intent to demand payment for his or her shares pursuant to paragraph (1)(a) or,
in the case of action authorized by written consent, to each shareholder,
excepting any who voted for, or consented in writing to, the proposed action.

(3) Within 20 days after the giving of notice to him or her, any shareholder
who elects to dissent shall file with the corporation a notice of such
election, stating the shareholder's name and address, the number, classes, and
series of shares as to which he or she dissents, and a demand for payment of
the fair value of his or her shares. Any shareholder failing to file such
election to dissent within the period set forth shall be bound by the terms of
the proposed corporate action. Any shareholder filing an election to dissent
shall deposit his or her certificates for certificated shares with the
corporation simultaneously with the filing of the election to dissent. The
corporation may restrict the transfer of uncertificated shares from the date
the shareholder's election to dissent is filed with the corporation.

(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall
not be entitled to vote or to exercise any other rights of a shareholder. A
notice of election may be withdrawn in writing by the shareholder at any time
before an offer is made by the corporation, as provided in subsection (5), to
pay for his or her shares. After such offer, no such notice of election may be
withdrawn unless the corporation consents thereto. However, the right of such
shareholder to be paid the fair value of his or her shares shall cease, and the
shareholder shall be reinstated to have all his or her rights as a shareholder
as of the filing of his or her notice of election, including any intervening
preemptive rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by
the board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been taken in
the interim, if:

(a) Such demand is withdrawn as provided in this section;

(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;

(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or

(d) A court of competent jurisdiction determines that such shareholder is
not entitled to the relief provided by this section.

(5) Within 10 days after the expiration of the period in which shareholders may
file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value
for such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:

(a) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and

(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was not
in existence throughout such 12-month period, for the portion thereof during
which it was in existence.

(6) If within 30 days after the making of such offer any shareholder accepts
the same, payment for his or her shares shall be made within 90 days after the
making of such offer or the consummation of the

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proposed action, whichever is later. Upon payment of the agreed value, the
dissenting shareholder shall cease to have any interest in such shares.

(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30
days thereafter, then the corporation, within 30 days after receipt of written
demand from any dissenting shareholder given within 60 days after the date on
which such corporate action was effected, shall, or at its election at any time
within such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his or her shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a
copy of the initial pleading in such proceeding upon each dissenting
shareholder who is a resident of this state in the manner provided by law for
the service of a summons and complaint and upon each nonresident dissenting
shareholder either by registered or certified mail and publication or in such
other manner as is permitted by law. The jurisdiction of the court is plenary
and exclusive. All shareholders who are proper parties to the proceeding are
entitled to judgment against the corporation for the amount of the fair value
of their shares. The court may, if it so elects, appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value. The appraisers shall have such power and authority as is specified in
the order of their appointment or an amendment thereof. The corporation shall
pay each dissenting shareholder the amount found to be due him or her within 10
days after final determination of the proceedings. Upon payment of the
judgment, the dissenting shareholder shall cease to have any interest in such
shares.

(8) The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court.

(9) The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the
shares, if the court finds that the action of such shareholders in failing to
accept such offer was arbitrary, vexatious, or not in good faith. Such expenses
shall include reasonable compensation for, and reasonable expenses of, the
appraisers, but shall exclude the fees and expenses of counsel for, and experts
employed by, any party. If the fair value of the shares, as determined,
materially exceeds the amount which the corporation offered to pay therefor or
if no offer was made, the court in its discretion may award to any shareholder
who is a party to the proceeding such sum as the court determines to be
reasonable compensation to any attorney or expert employed by the shareholder
in the proceeding.

(10) Shares acquired by a corporation pursuant to payment of the agreed value
thereof or pursuant to payment of the judgment entered therefor, as provided in
this section, may be held and disposed of by such corporation as authorized but
unissued shares of the corporation, except that, in the case of a merger, they
may be held and disposed of as the plan of merger otherwise provides. The
shares of the surviving corporation into which the shares of such dissenting
shareholders would have been converted had they assented to the merger shall
have the status of authorized but unissued shares of the surviving corporation.

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