PROFIT FINANCIAL CORP, 10-12G/A, 1998-02-24

PROFIT FINANCIAL CORP
10-12G/A, 1998-02-24
EDUCATIONAL SERVICES

Previous: ATEC GROUP INC, 10-K/A, 1998-02-24

Next: SEPARATE ACCOUNT VA 2LNY OF FIRST TRANSAMERICA LIFE INS CO, NSAR-U, 1998-02-24

[cad 228]<PAGE>

WADE COOK FINANCIAL CORPORATION

Document 10-12G/POS AM

Filing Date: 9/22/1997

EXHIBIT LIST

NONE FILED WITH THIS AMENDMENT

<PAGE>

TABLE OF CONTENTS

Document Sections

<TABLE>
<S> <C> <C>
ITEM 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 2. FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .13
ITEM 3. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. . .19
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS. . . . . . . . . . . . . . . . . .19
ITEM 6. EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . .21
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . .23
ITEM 8. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . .25
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . .26
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES. . . . . . . . . . . . . . .27
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED. . . . . . .27
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . .28
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . . . . .29
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS. . . . . . . . . . . .33
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS. . . . . . . . . . . . . . . . . .33
CONSOLIDATED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . F-1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . F-9
BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-23
</TABLE>

Exhibits

NONE FILED WITH THIS AMENDMENT

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

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10 POS AM

General Form for Registration of Securities
Pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934

WADE COOK FINANCIAL CORPORATION
(as successor registrant to)

PROFIT FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

NEVADA 91-1772094
(State or Other Jurisdiction of (IRS Employer)
Incorporation or Organization)

14675 Interurban Avenue South Seattle, Washington 98168
(Address of Principal Executive Offices) (Zip Code)

(206) 901-3000
(Registrant's Telephone Number, Including Area Code)

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

Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered

None None

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

Class A Common Stock $.01 par value
(Title of Class)

<PAGE>

THIS REGISTRATION STATEMENT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
("EXCHANGE ACT"). ACTUAL RESULTS OR EVENTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED OR CONTEMPLATED BY SUCH STATEMENTS AS THE RESULT OF VARIOUS FACTORS
INCLUDING, WITHOUT LIMITATION, THE RISK FACTORS DISCUSSED IN THIS REGISTRATION
STATEMENT. THE CONSIDERATIONS DISCUSSED IN THIS REGISTRATION STATEMENT ARE NOT
INTENDED TO REPRESENT A COMPLETE LIST OF THE GENERAL OR SPECIFIC RISKS THAT MAY
AFFECT THE CLASS A COMMON STOCK ("COMMON STOCK") OF PROFIT FINANCIAL CORPORATION
("PROFIT, AND, TOGETHER WITH ITS DIRECT AND INDIRECT SUBSIDIARIES, THE
"COMPANY"). IT SHOULD BE RECOGNIZED THAT OTHER RISKS MAY BE SIGNIFICANT, NOW OR
IN THE FUTURE, AND THE RISKS SET FORTH BELOW MAY AFFECT THE COMMON STOCK OF THE
COMPANY TO A GREATER EXTENT THAN INDICATED.

THE COMPANY COMPLETED A TWO-FOR-ONE STOCK SPLIT OF ITS COMMON STOCK IN
SEPTEMBER 1996. ALL SHARE AND PER SHARE INFORMATION CONTAINED HEREIN AND THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO HAVE BEEN ADJUSTED TO
REFLECT THE IMPACT OF THE STOCK SPLIT UNLESS OTHERWISE INDICATED.

RISK FACTORS

An investment in the Common Stock of the Company involves a high degree of
risk. Prospective investors should carefully consider the following factors,
together with the other information contained in this Registration Statement, in
evaluating the Company and its business before purchasing shares of Common Stock
of the Company.

Dependence on Wade B. Cook

The Company's future prospects and financial condition depend in
large part on the continued services of Wade B. Cook, the Company's founder
and the President and Chairman of the Company ("Mr. Cook"). Substantially all
of the programs, products and services provided by the Company are based on
Mr. Cook's materials and ideas. Mr. Cook has not entered into and does not
intend to enter into a non-competition agreement with the Company. Mr. Cook
has entered into an Employment Agreement dated June 24, 1997 with Wade Cook
Seminars, Inc., Profit's wholly owned subsidiary, which agreement provides
for a term of employment through June 30, 2000 and contains a non-disclosure
clause which limits Mr. Cook's disclosure of certain proprietary information
to third parties while an employee. The loss of the services of Mr. Cook
could have a material and adverse effect on the Company's business,
financial condition and results of operation. The Company does not carry key
man life insurance for Mr. Cook. See "Business" and "Certain Relationships
and Related Transactions".

Dependence on Certain Relationships

The Company derived the preponderance of its revenues in the fiscal years
ended December 31, 1996, 1995 and 1994 from sponsoring and promoting products,
seminars and services licensed from Money Chef, Inc., formerly known as USA/Wade
Cook Seminars, Inc. ("Money Chef"), and believes that it will continue to derive
the majority of its revenues in the foreseeable future from these sources. In
January 1993, the Company entered into a Product Agreement with Money Chef for
the non-exclusive right to promote and sponsor seminars, entity formation
services and products owned or controlled by Money Chef. In June, 1997, the
Company renegotiated the Product Agreement. Mr. Cook is the President of Money
Chef and is a trustee of a trust, created for the benefit of Mr. Cook's family,
that owns all of the outstanding shares of Money Chef. While there is no non-
competition agreement with either Mr. Cook or Money Chef, the Company is free to
offer, market and sell products and services, including seminars, created and
developed by others. Any factor adversely affecting the Company's relationship
with Mr. Cook or Money Chef could have a material and adverse effect on the
Company's business, financial condition and

<PAGE>

results of operation. See "Business-Dependence on Certain Relationships",
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" and "Certain Related Transactions".

Managing Growth

The Company has recently experienced rapid and dramatic growth in the
number of employees, the number of classes and seminars offered by the
Company, the scope of its operating and financial management system and the
geographic areas of its operations. This growth has resulted in a significant
increase in the level of responsibility for both existing and new management
personnel. The Company's ability to manage growth will require it to continue
to implement and improve its operational, financial and management systems
and to motivate and effectively manage an increasing number of employees. The
Company's failure to manage its growth effectively could have a material and
adverse effect on the Company.

Limited Operating History

The Company has a limited operating history, and although the Company
has experienced significant growth since the reorganization of the Company in
1995, this is not necessarily indicative of future operating results. No
assurance can be given that the Company will be able to maintain profitability
on a quarterly or annual basis in the future.

Dependence on Successful Introduction of New Programs, Products and Services

The Company's growth strategy is dependent on its ability to sell existing
programs, products and services to additional markets and on its continued
ability to successfully develop and introduce new programs, products and
services. Although the Company is currently developing new programs and
products, it may need to rely upon the willingness of authors and producers of
products and programs to sell or license them to the Company. There can be no
assurance that the Company will be able to develop or acquire rights to
additional products and programs that it seeks on acceptable terms. Further,
market conditions and the level of customer interest may be different for the
Company's current products than for new products or programs, and there can be
no assurance that the Company will be able to compete favorably with, and obtain
market acceptance for, any new products and programs. Failure of the Company to
successfully develop, acquire, introduce and market new products and programs
could have a materially adverse effect on the Company's business and future
prospects.

Dependence on Changing Economic Conditions

The Company's revenues and profitability may be significantly affected by
general economic conditions. A significant portion of the Company's revenues
are derived from individuals who, the Company believes, may adjust their
expenditures for educational seminars and materials during economic downturns.
Should the economy weaken in any future period, these individuals may not
increase or may decrease their expenditures on the type of programs, products
and services provided by the Company, which would have a material and adverse
effect on the Company's business, financial condition and results of operations.
In addition, the Company has significant investments in marketable securities
and may have significant investments in the real estate market. Any weakening
of the economy in any future period may have a material and adverse effect on
the investments held by the Company. See "Business - Real Estate and Other
Investments".

Potential Liability

The Company faces exposure to potential claims in the event that the
methods and techniques presented in its programs and products are alleged to
have resulted in significant losses to an investor using such methods and
techniques. The Company requires its customers to execute a letter acknowledging
the risks inherent in following the investment and other strategies presented by
the Company. There can be no assurances that the Company will be able to avoid
any claims asserting such liability. In addition, any such claims or litigation
could result in the diversion of the management's attention and resources, which
could have a material and adverse effect on the Company. In that regard, the
Company and certain executive officers of the Company are the object of an

<PAGE>

investigation by the Securities and Exchange Commission. The Securities and
Exchange Commission could, if it concluded that a violation of federal
securities laws has occurred or is continuing, in the exercise of its statutory
authority, cause a cease and desist order to issue against the Company covering
certain of its activities, which activities could include conducting seminars.
The SEC could also initiate proceedings that could result in civil penalties
being levied against the Company in monetary amounts ranging from $50,000 to
$500,000, per violation. Additionally, the Washington State Securities
Administrator has issued subpoenas requesting information and documents from the
Company to which the Company has responded. The Washington State Securities
Administrator has more limited powers than the SEC but could take actions which
would have a material adverse affect on the Company and its business. Finally,
the Company has the general risks of liability faced by all businesses dealing
with the general public and that have persons coming on their premises to
conduct business. Although the Company currently has general liability
insurance, there can be no assurance that insurance coverage will continue to
be available in the future on commercially reasonable terms, or at all, or that
such insurance will be adequate to cover potential liability claims or that a
loss of insurance coverage or the assertion of a liability claim or claims would
not materially adversely affect the Company's business, financial condition and
result of operations. See "Legal Proceedings"

Competition

The highly competitive market in which the Company competes is fragmented
and decentralized, with low barriers to entry. The management of the Company
believes that the Company is a leader in the financial education market and
that no single competitor accounts for a dominant market share. The Company's
competitors include other companies and individuals who promote and conduct
seminars and provide products on topics relating to investment strategies,
financial planning and personal wealth management. The Company believes that
the majority of independent training providers are small organizations, which
often provide training as one of several services or product lines or provide
limited services and product lines. There can be no assurance that the Company
will be successful in maintaining its current position in the financial
education market or continue to be successful against such competition. See
"Business-Competition".

Risk Associated with Possible Acquisitions and Other Investments

Historically, the Company has invested the majority of its excess cash in
marketable securities. The Company has also made small investments in certain
venture capital partnerships and private companies. Although the Company is
continuing to invest a significant portion of its cash flow in marketable
securities, it is also aggressively seeking alternative vehicles through which
the Company can invest cash flow from its programs, products and services and
from its existing investment portfolio. A significant portion of the assets of
the Company may be used for the acquisition of real property and ownership
interests in limited partnerships that invest in real property. The Company is
actively evaluating acquisition and other investment opportunities that fit
within the investment strategy of the Company. Depending on the investment
opportunities that become available to the Company, the Company may also seek to
expand its existing investment portfolio to include, among other things,
substantial interests in private and public companies in related and unrelated
businesses. The type of investments that the Company is seeking and investing in
involve numerous risks, including potential difficulties in the assimilation of
acquired assets, diversion of management's attention away from normal operating
activities and the diversion of the Company's resources from other investment
opportunities. The Company has limited experience in executing and implementing
such investments and no assurances can be given as to the success of the
Company in executing and implementing the investments that the Company is
currently involved with or may be involved with in the future. See "Business-
Real Estate and Other Investments".

Control by Management

As of June 24, 1997, senior management of the Company collectively owns
approximately 60.4% of the outstanding shares of Common Stock. Mr. Cook and
entities affiliated with Mr. Cook own approximately 60.1% of the outstanding
shares of Common Stock. Consequently, the senior management, and Mr. Cook in
particular, will continue to have a significant influence over the policies and
affairs of the Company and will be in a position to determine the outcome of
corporate actions requiring stockholder approval, including the election of
directors, the

<PAGE>

adoption of amendments to the Company's corporate documents and
the approval of mergers and sales of the Company's assets. See "Security
Ownership of Certain Beneficial Owners and Management".

ITEM 1. BUSINESS.

The Company - Profit and Subsidiaries

Profit Financial Corporation, a Utah corporation, (formerly Profiteer
Corporation) ("Profit") is a holding company for the common stock and other
ownership interests of a group of business entities collectively referred to
herein as the "Company". Wade Cook Seminars, Inc., a Nevada corporation,
(formerly United Support Association, Inc.) ("WCSI"), Left Coast Advertising,
Inc., a Nevada corporation, ("Left Coast"), Lighthouse Publishing Group, Inc., a
Nevada corporation ("Lighthouse Publishing"), and Profit Financial Real Estate
Management Company, Inc., a Nevada corporation, ("Profit Real Estate") are all
100% owned subsidiaries of Profit. Entity Planners International, Inc., a Nevada
corporation, ("EPI") is a 100% owned subsidiary of Profit Real Estate as is
Hotel Associates #1, Inc., a Nevada corporation, ("Hotel Associates"). Unlimited
Potential, Inc., a Nevada corporation, ("Unlimited") is a 50% owned subsidiary
of EPI. The remaining 50% of EPI is owned by Zion's Holding Company, L.L.C., a
Utah limited liability company not affiliated with EPI, Profit or the Company.
Except for Zion's Holding Company, L.L.C., all of the entities identified above
are affiliates of Mr. Cook.

Wade Cook Seminars, Inc., Profit's wholly owned subsidiary ("WCSI"), markets
and delivers a variety of seminars and workshops focused on investment
strategies, financial planning and personal wealth management and produces
and sells audio tapes, videotapes, books and other written materials designed
to teach various investment strategies and financial planning techniques. In
addition, WCSI hosts a web site on the Internet at http://www.wadecook.com as
an additional tool to recruit students and market its programs, products and
services. WCSI accounted for approximately 96% of the Company's revenues for
the fiscal year ended December 31, 1996 ("fiscal 1996").

Left Coast is engaged in the business of producing and placing advertising in
various media, primarily for WCSI. Left Coast contributed less than one per cent
of consolidated gross revenues in the year ended December 31, 1996 and less than
two % through March 31, 1997.

Lighthouse Publishing is engaged in the business of producing and publishing
books, audio and video tapes, and other written materials, primarily for Wade B.
Cook in his capacity as author of such books and materials and producer of such
tapes. Lighthouse Publishing has entered into agreements to publish "Real Estate
Money Machine", "Business Buy the Bible", "Bear Market Baloney", "Stock Market
Miracles", and "Wall Street Money Machine", all of which are books by Wade B.
Cook. Lighthouse Publishing contributed less than 12 % of consolidated gross
revenues in the year ended December 31, 1996 and one % through March 31, 1997.

Profit Real Estate was formed to engage in the business of managing and
overseeing the real estate investment portfolio of the Company. Profit Real
Estate conducts its business through its wholly owned subsidiaries EPI and
Hotel Associates, and Unlimited, EPI's 50% owned subsidiary. EPI is a general
partner in Sherlock Homes, Limited Partnership, a Nevada limited partnership
(an inactive partnership formed to invest residential real estate projects),
Rising Tide L.P., a Nevada limited partnership (the owner of the Provo
Fairfield Inn, a limited service hotel located in Provo, Utah), and
Seattle-Tacoma Executive Properties, L.P., a Nevada limited partnership (an
inactive partnership formed to hold the land and improvements constituting
Profit's corporate headquarters). Unlimited is a general partner in Reno
F.I.S. Limited Partnership, a Nevada limited partnership (formed to purchase
the Reno Fairfield Inn, located in Reno, Nevada), FSS, L. P., a Nevada
limited partnership (formed to purchase a hotel project located in Salt Lake
City, Utah). Another entitiy which is an indirect subsidiary is Park City
Hotel Partners, Limited Partnership, a Nevada limited partnership (a
partnership owning a hotel project in Park City). Profit Real Estate and its
subsidiaries contributed less than one % of consolidated gross revenues in
the year ended December 31, 1996 and one % at March 31, 1997.

The Company believes that it is well positioned to take advantage of the
increasing demand for information and training on investment strategies,
financial planning and personal wealth management. The Company also believes
that its approach to education and training offers many advantages over other
financial and investment

<PAGE>

seminars and related financial information products due to the breadth and
depth of its programs, products and services, the quality and size of its
instructor force and its strong marketing and sales team.

In 1996, the Company conducted 120 seminars in 42 cities across the
United States. Average attendance at the seminars was 81 persons. Through
June 30, 1997, the Company has conducted 103 seminars in 43 cities and the
average attendance is 70 persons per seminar. Prior to 1996, the Company did
not keep records sufficient to provide the data necessary to determine
statistics for prior periods similar to the statistics for 1996 and 1997.

The Company's principal executive office is located at 14675 Interurban
Avenue South, Seattle, Washington 98168 and its telephone number is (206)
901-3000.

Business Strategy

The Company's objective is to become the leader in offering personal
finance educational products as measured by gross revenues, profitability and
total assets of the Company. In pursuit of its objective, the Company's
strategy, in order of relative importance, is to:

Expand Program and Product Offerings. The Company is currently
developing and will continue to expand its library of programs, products and
services to increase sales to its existing customers and to attract new
customers. The Company hopes to offer a comprehensive array of programs,
products and services on almost all aspects of investment strategies,
financial planning and wealth management.

Explore Strategic Alliances. To increase sales of its programs and
products, the Company will explore opportunities for strategic alliances and
collaborative efforts with book clubs and major bookstore chains and with
providers and developers of programs and products consistent with the
strategic vision of the Company.

Strengthen Customer Base in Existing Markets. The Company has only
recently begun marketing and providing its programs, products and services in
many markets. The Company will seek to aggressively market its programs,
products and services in the newer markets to attract new customers and
increase sales to existing customers.

Explore Other Means of Advertising. To access new clients, the Company
will explore other means of advertising, including television infomercials
and advertising and newsprint advertising, to reach individuals who may be
interested in the products, programs and services offered by the Company.

Expand its Market into Smaller Cities. Historically, the Company has
marketed and provided its seminars and products to residents located in or
near cities in the United States with populations over one million. The
Company will be expanding to cities with smaller populations in the future to
broaden its market penetration.

While the Company has identified the above elements of a strategic plan,
it has not gone further to set forth in detail the steps to be taken to
implement such elements nor has it defined the scope of any planned expansion
nor developed an estimated or expected timetable for the implementation of
such expansion.

Prior Business History

Prior to May 18, 1995, the Company's educational seminar business was
conducted by United Support Association, Inc. ("USAI"), a corporation
incorporated in Nevada in 1989 that was owned by the Wade B. Cook Family Trust.
On May 18, 1995, Profit acquired all of the outstanding capital stock of USAI in
exchange for 1,880,000 shares of Profit's common stock. Profit was formed in
1979 as a Utah corporation under the name Profiteer Corporation. Prior to June
1, 1995, Profit engaged primarily in farming and ranching in Utah. USAI's name
was changed to "Wade Cook Seminars, Inc." in February 1997 due in part to the
marketing advantages of

<PAGE>

using Mr. Cook's name and associating the programs with his successful
publications.

Principal Programs, Products and Services

Substantially all of the Company's programs, products and services are
based on the financial and investment strategies of Mr. Cook. The Company has
the non-exclusive right to promote, produce and sell these programs, products
and services pursuant to the terms of a Product Agreement with Money Chef.
See "--Dependence on Certain Relationships" below. Mr. Cook has based his
programs and products on his belief that people need to: (a) increase their
wealth by increasing their cash flow; (b) learn how to minimize their
federal and state income taxes; (c) use entities, such as Nevada
corporations, family limited partnerships, living trusts, qualified pensions
and business trusts, to protect their assets; (d) be able to retire with
sufficient income from their assets to maintain a good standard of living;
and (e) be able to pass on their wealth and assets to their loved ones
without the problems of probate. The Company believes that its competitive
position and its name recognition have been greatly enhanced by the
popularity of Mr. Cook's books. Since 1996, over 300,000 copies of Mr. Cook's
books have been sold throughout the United States. The Company plans to
continue capitalizing on the popularity and exposure from such books.

Educational Seminars and Workshops

The Company promotes and sponsors a series of programs designed to meet
the educational needs of clients interested in increasing their wealth and
better managing their personal finances. The seminars provided by the Company
include the following:

Financial Clinic is a three-hour seminar explaining the various products
and services offered by WCSI and providing an introduction to investing in
the stock market. The Financial Clinic is designed to serve as an
introduction to the Wall Street Work Shop. This seminar is currently taught
nationwide eight to ten times a week. The price to attend the Financial
Clinic is $22 to $33 depending on whether the customer prepays the price of
attendance.

Wall Street Work Shop ("WSWS") is a two-day seminar teaching investors the
investment strategies set forth in Mr. Cook's books, Wall Street Money
Machine and Stock Market Miracles. Students are taught stock market basic
terminology, how to choose a brokerage firm, stock market strategies, and
how to place a trade. The students observe instructors purchasing or selling
securities from brokers as they follow the investment strategies taught in
the class. The Company also offers the seminar Youth Wall Street for younger
investors. This seminar is currently taught nationwide nine to eleven times
per week. The price to attend WSWS ranges from $2,695 to $4,695 depending on
the particular options selected by the persons or person attending the
seminar and depending on the particular discount or promotion in effect at
the time of payment.

Business Entity Skills Training ("BEST") is a one-day seminar teaching
students personal finance management strategies such as asset protection and
tax reduction using corporations, limited partnerships, qualified pensions,
and living trusts. BEST is taught immediately after the last day of each
WSWS, either in the evening or the following day. The price to attend BEST is
$995 if no other seminar is also attended. Otherwise, the price of Best is
included in the price of attending certain companion seminars.

Next Step is a two-day seminar for participants who have already attended
the WSWS. Advance stock market investments strategies are taught in a format
in which students can actively participate in making investments. Next Step
is currently taught nationwide twelve times a year. The price to attend Next
Step ranges from $1,495 to $9,995, depending on whether it is attended
separately or with other seminars offered by the Company and depending on the
particular discount or promotion in effect at the time of payment

Wealth Academy is a three-day seminar teaching wealth accumulation and
asset protection formulas using various business strategies and corporate
income tax planning to assist students in better managing their personal
finance and business activities. Wealth Academy is currently taught
nationwide six to nine times a year. The price to attend Wealth Academy
ranges from $2,495 to $7,995 depending on whether it is attended separately
or with

<PAGE>

other seminars offered by the Company and depending on the particular
discount or promotion in effect at the time of payment.

Executive Retreat is a two-day workshop designed for participants who own
or control Nevada corporations to gain a broader understanding of the
mechanics using a corporation for tax advantages, limited liability and
estate planning. The workshop is currently taught two to three times a year
at two locations. The price to attend Executive Retreat ranges from $1,495 to
$2,495 depending on whether it is attended separately or with other seminars
offered by the Company and depending on the particular discount or promotion
in effect at the time of payment.

The seminars provided by the Company accounted for approximately 52%, 53% and
30% of the Company's revenues in fiscal 1996, 1995 and 1994, respectively.
The Company typically conducts its seminars and workshops at major cities in
the United States with populations of over one million. The majority of the
Company's seminars are held in Los Angeles, California, Denver, Colorado,
Seattle, Washington, Las Vegas, Nevada, Washington, D.C., Orlando, Florida
and Dallas, Texas. The Company derived more than 10% of its revenues in
fiscal 1996 from seminars taught in the states of California, Colorado,
Washington and Nevada. On March 31, 1997, forty speakers conducted seminars
for the Company throughout the United States. Thirty-five of such speakers
were independent contractors and five were employees of the Company. The
Company provides extensive training to its speakers, including two-day,
bi-monthly workshops with an experienced trainer. Most speakers review
training tapes and attend training sessions for six months prior to becoming
"technicians" and graduate to becoming "secondary speakers" on tour. The best
of these secondary speakers eventually rise to the role of primary speaker.
Typically, the Company's speakers are required to enter into an agreement not
to compete with the Company for a period of generally three years after the
termination of their engagement with the Company.

Audio tapes, Videotapes, Books and Other Printed Materials

The Company's seminars and programs are supplemented by audio tapes, video
tapes, books and other printed materials that are licensed to the Company.
Sales of these products accounted for 22%, 20% and 17% of the revenues of the
Company for fiscal 1996, 1995 and 1994, respectively,

The books promoted and sold by the Company include Wall Street Money
Machine, Stock Market Miracles, Bear Market Baloney and Business Buy the
Bible. The Company also sells Brilliant Deductions, The Real Estate Money
Machine, 12 Special Reports, The Incorporation Handbook, How to Pick Up
Foreclosures, Owner Financing, Cook's Book on Creative Real Estate, 101 Ways
to Buy Real Estate without Cash and 555 Clean Jokes. Each of these books was
written by Mr. Cook. These books are sold at prices ranging from $4.95 to
$59.95 depending on the title and excluding shipping and handling.

The audio tapes promoted and sold by the Company include the multi-tape
audio seminars Financial Fortress Home Study and Zero to Zillions. In
addition, the Company sells single tapes that generally address the ideas and
concepts taught in its seminars. The Company's single audio tapes include:
Financial 4x4; Financial Power Pack; Paper Tigers; Unlimited Wealth; High
Performance Business Strategies; Brilliant Deductions II; Retirement
Prosperity; Money Mysteries of the Millionaires; The Power of Nevada
Corporations; Entity Structuring; Outrageous Returns; Tax Updates 1 & 2;
Double Your Money Update; Everything You Ever Wanted to Know About: Cook
University; Everything You Ever Wanted to Know About: The Wall Street
Workshop; Everything You Ever Wanted to Know About: The Real Estate Cash Flow
Boot Camp; Everything You Ever Wanted to Know About: Becoming a Travel Agent;
Income Formulas; Income Streams; Stock Market Power Strategies; Smarter
Money. Mr. Cook is the primary speaker in each of these tapes. These audio
tapes are sold at prices ranging from $33 to $1,695 depending upon the title
of the audiotape or collection of audio tapes.

The videotapes promoted and sold by the Company include the multi-tape
video versions of the Company's seminars Wall Street Workshop and Next Step,
as well as single-tape videos on Dynamic Dollars, Entity Structuring and All
About Wall Street Workshop. The Next Step videotaped seminar is sold at a
price ranging from $1,495 to $2,995. The Wall Street Work Shop Videotaped
seminar is sold at a price ranging from $1,995 to $2,995.

<PAGE>

Entity Formation Services

The Company provides information, forms packages and assistance to
individuals interested in preparing Nevada Corporations, Living Trusts,
Pension Plans, Family Limited Partnerships, Charitable Remainder Trusts and
Business Trusts. After providing its clients with information about the
various entities, the Company typically outsources the formation of the
entities to independent outside vendors for a commission. Prices for the
Company's entity formation services range from $695 to $5,995 depending on
the nature and the number of the entities purchased. The entity formation
services of the Company accounted for 14%, 20% and 45% of the Company's
revenues in fiscal 1996, 1995 and 1994, respectively.

WIN Subscriptions

Wealth Information Network ("WIN") is a subscription service provided
by the Company which can be accessed over the Internet 24 hours a day. WIN
provides detailed information on the Company's trades for each day using the
investment strategies discussed in Wall Street Money Machine and Stock Market
Miracles and taught in the Company's seminars. WIN also provides stock
information and updates on the Company's programs and products, including a
schedule of events and seminars provided by the Company. The subscription
rate for the WIN service ranges from $1,995 to $3,695 per year, depending on
the length of service, promotion offered at the time of sale, and whether a
subscriber is also an attendee at a seminar offered by the Company.
Subscription to WIN accounted for 7%, 7% and 2% of the Company's revenues in
fiscal 1996, 1995 and 1994, respectively.

Sales and Marketing

The Company creates interest and demand for its programs, products and
services through a mix of radio advertising, direct mail advertising and
telephone and Internet marketing.

Radio Advertising

The Company primarily uses radio advertising to reach potential
customers. Advertising on the radio permits the Company to consistently
advertise its programs and products to potential customers nationally.
Generally, the Company advertises on the radio offering a free audio tape
explaining certain stock market strategies and informing customers of a
financial clinic that will be presented by the Company. The radio advertising
attracts customers to the Financial Clinic seminars, which then introduce
and market the other programs, products and services provided by the
Company. The management of the Company believes that radio advertising is
crucial to maintaining the Company's current market niche and to maintaining
or increasing its revenues. Any factors that adversely affect the
availability or attractiveness of radio advertising for the Company, such as
a significant price increase in the cost of radio advertising, could have a
material and adverse effect on the Company's business, financial condition
and results of operation.

Direct Mail Marketing and Advertising

The Company markets its programs, products and services through direct
mailing to its mailing list of over 300,000 individuals, many of whom have
previously attended one of the Company's seminars or purchased the Company's
products. A centralized marketing department develops the Company's catalogs,
brochures and advertisement using desktop publishing, and electronic
pre-press technology to create the files used to produce direct full-color
film for plate-making. This capability enables the Company to make quick
improvements to its marketing materials in order to feature the latest
financial developments and address market opportunities in a timely manner.

Sales Team

The Company's sales force consists of over 180 people who are responsible
for responding to phone, e-mail, Internet and facsimile orders and inquiries
received by the Company, as well as for following up with existing

<PAGE>

clients to promote additional programs, products and services. The Company
provides its sales staff daily training to refine their sales skills and to
provide updates on the products, programs and services being offered by the
Company. The Company believes its sales force has been critical to the
Company's success in selling its products, program and services.

Internet Marketing

The Company maintains an Internet web site at http://www.wadecook.com
to market and promote its programs, products and services. The web site has
information on the Company's programs, products and services and certain
limited information on stock and investment strategies. A WIN subscriber can
access WIN through the web site. The Company believes that the Internet will
become an increasingly significant marketing channel to prospective clients
in the future.

Dependence on Certain Relationships

The Company derived the preponderance of its revenues in fiscal 1996,
1995 and 1994 from sponsoring and promoting products, seminars and services
licensed from Money Chef and believes that it will continue to derive the
majority of its revenues in the foreseeable future from these sources. In
January, 1993, the Company entered into a Product Agreement with Money Chef
for the non-exclusive rights to promote and sponsor seminars, entity
formation services and products owned or controlled by Money Chef. Mr. Cook
is the President of Money Chef and is a trustee of a trust, created for the
benefit of Mr. Cook's family, that owns all of the outstanding shares of
Money Chef. Accordingly, any factor adversely affecting the Company's
relationship with Mr. Cook or Money Chef could have a material and adverse
effect on the Company's business, financial condition and results of
operation.

Mr. Cook has granted a license to Simon & Schuster to market the
audio rights to `Wall Street Money Machine'. Further, Mr. Cook has stated
that in the future he may be willing to provide exclusive rights to the
Company with respect to intellectual property including publishing and
marketing rights thereto created by him although he is under no obligation to
do so.

On June 26, 1997, Wade Cook Seminars, Inc. renegotiated the Product
Agreement for an additional period through June 30, 2002 for a flat royalty
of 10% of gross sales. For fiscal years 1995 and 1996, Money Chef had the
right to take a royalty ranging from 10% to 50% of gross revenues however
they opted to take only 10%. Mr. Cook does not have an "outputs contract"
(i.e., a contract giving the Company the first right to license or otherwise
obtain the rights in and to all of the products Mr. Cook writes and creates)
with the Company and so the Management of the Company can not guarantee that
all future products created by Mr. Cook will be licensed by the Company under
the terms of the Product Agreement.

The Company also entered into an agreement with Mr. Cook for the
publication rights in the United States, its territories, dependencies and
possessions and the republic of the Philippines and Canada and the right to
sell copies in the open market throughout the world for the books Real Estate
Money Machine, Wall Street Money Machine, Stock Market Miracles, Bear Market
Baloney and Business Buy the Bible. Under the terms of each Agreement (all of
which agreements are substantially similar), the Company is obligated to pay
Mr. Cook 10% of the retail selling price for each book sold. Certain
additional rights in each book are to be shared equally. Such rights include:
the right to receive royalty payments for abridgment, condensation or digest
treatment, Anthology or annotation, sale to book clubs or similar
organizations, reprint, special editions and second serial and syndication
rights including reproduction in compilations, magazines, newspapers, or
books.

<PAGE>

Intellectual Property

The Company regards its seminars, workshops and other materials as
proprietary and relies primarily on a combination of statutory and common law
copyright, trademark and trade secret law, plus employee and third-party non-
disclosure agreements and other methods to protect its proprietary rights.
Notwithstanding the foregoing, a third party or parties could copy or otherwise
obtain and use the Company's materials in an unauthorized manner or use these
materials to develop programs, products and services which are substantially
similar to those of the Company. If substantial unauthorized use of the
Company's products were to occur, the Company's business and results of
operations could be materially and adversely affected. There can be no assurance
that the Company's means of protecting its proprietary rights will be adequate
or that the Company's competitors will not independently develop similar
educational materials, similar seminars, workshops and programs or delivery
methods. See "--Dependence on Certain Relationships".

Customers

The Company's customers are individuals with a broad variety of
backgrounds, who are interested in one or more of the seminar topics which are
presented by the Company. The Company is not dependent upon any single customer
for any of its businesses, and has no contracts or other agreements with any
third party pursuant to which the Company generates a material amount of its
revenues.

Competition

The highly competitive market in which the Company operates is
fragmented and decentralized, with low barriers to entry. The management
believes that the Company is among the largest competitors in the financial
education market and that no single competitor accounts for a dominant market
share. The Company's competitors include other companies and individuals who
promote and conduct seminars and provide products on topics relating to
investment, financial planning and personal wealth management. The Company
believes that the majority of independent training providers are small
organizations, which often provide training as one of several services or
product lines or provide limited services and product lines. The Company
differentiates itself from these providers based on its size, the scope and
quality of its proprietary course offerings and the number, quality and
experience of its instructors. Some of these competitors however offer
courses and products similar to the Company at lower prices. In addition,
many of the Company's competitors sponsor and conduct seminars free of charge
as a marketing tool for other business. These competitors include
stockbrokers, franchisers of business opportunities and portfolio and tax
consultants. Some competitors have greater financial and other resources than
the Company. There can be no assurance that the Company will be successful in
maintaining its current position in the financial education market or
continue to be successful against such competition.

Employees and Consultants

The Company currently employs 342 full-time employees and 10 part-time
employees. In addition, the Company has engaged the services of approximately
35 independent contractors, primarily as seminar speakers. On June 24, 1997,
the Company had 80 seminar speakers (including full time and part time
employees and consultants) 39 shipping and order fulfillment employees, 186
sales staff, 5 graphics staff, 12 marketing and advertising professionals and
70 management, legal, accounting and administrative staff. None of the
Company's employees are represented by a labor union. The Company believes
that its relationship with its employees is good.

Real Estate and Other Investments

<PAGE>

Recently, the Company began focusing on investment opportunities in real
estate related markets. Primarily through Profit Financial Real Estate
Management Company, Inc., a wholly owned subsidiary of Profit ("RE
Management"), and various other subsidiaries (together, the "Real Estate
Subsidiaries"), the Company has begun investing in real estate projects.
Typically, the Company invests in real estate limited partnerships as the
sole or as a significant limited partner, and in some cases, acts as a
general partner. Through these investments, the Company has significant
ownership interest in four hotels in various stages of development and is
aggressively evaluating several other real estate investment opportunities.
To date, the investment amounts per project have ranged from $228,000 for
less than 10% percent of a project to $3,450,000 for 100% ownership of a
project. Of the Company's hotel/motel project investments, one hotel is an
operating business, one hotel is currently under construction, and two are
investments in real property on which hotels or motels are scheduled or
planned to be constructed under the name Fairfield Inn Suites or Hampton Inn
Suites. In late 1996, the Company purchased its headquarters in the Seattle,
Washington area for approximately $3 million and spent approximately $2.5
million on tenant improvements.

The Company's strategy for fiscal 1997 is to continue to directly and
indirectly make real estate-related investments, including acquiring and
developing hotels and motels primarily in Utah, Nevada, California and
Washington. The Company is currently evaluating or negotiating its investment
in a variety of properties and plans on making up to fourteen additional real
estate related investments in fiscal 1997. Depending on the investment
opportunities that become available to the Company, the Company may also seek
to expand its existing investment portfolio in fiscal 1997 to include, among
other things, substantial interests in private and public companies in
related and unrelated businesses.

The type of investments that the Company is seeking involve numerous risks,
including potential difficulties in the assimilation of any acquired assets,
operations or businesses, diversion of management's attention away from normal
operating activities, and the diversion of the Company's resources from other
investment opportunities. The Company has limited experience in executing and
implementing such investments and no assurances can be given as to the success
of the Company in executing and implementing the investments that the Company
is currently involved with or may be involved with in the future.

ITEM 2. FINANCIAL INFORMATION.

The following table summarizes certain selected financial data and is
qualified in its entirety by the more detailed financial statements contained
elsewhere in this Registration Statement.

<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1996 1995 1994 1993** 1992**
---- ---- ---- ------ ------
AUDITED AUDITED AUDITED
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales $40,724,515 $7,567,335 $1,973,145 $727,974 $573,492
Cost of Sales 15,682,936 3,373,888 861,734 146,727 118,504
---------- --------- ------- ------- -------
Operating income (loss) 4,739,876 339,446 (22,667) 351,165 393,344
Net income(loss) per share .46 .02 (.03) .14 .20
--- --- ----- --- ---
Number of shares used in
computing net income (loss)
per share* 6,623,280 6,398,426 6,398,426 2,463,228 2,368,554

<CAPTION>
------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------------
1996 1995 1994 1993** 1992**
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents $ 635,141 $26,840 $ 1,001 $ 11,344 $ 1,590

<PAGE>

Working capital (3,890,698) (763,216) 10,663 1,792,582 2,928.527
Long-term obligations -- -- -- 466,860 476,529
Total assets 16,937,659 2,283,055 675,347 3,120,478 3,984,138
Total stockholders equity 3,702,024 528,899 405,101 2,432,059 3,606,467
</TABLE>

See Note A of Notes to Financial Statements for an explanation of the
computation of per share data.
** The 1993 and 1992 figures include results of operation of business lines
which were spun off in connection with the reorganization in 1995.This balance
sheet information is based solely on the Company's 1993 and 1992 tax returns.

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

The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements and Notes to Consolidated Financial
Statements contained elsewhere in this Registration Statement.

Overview and Outlook

Profit is a holding company that, through its subsidiary WCSI, conducts
educational investment seminars and produces and sells audio tapes, videotapes,
books and other written materials focused on investment strategies, financial
planning and personal wealth management. The Company also invests in marketable
securities, and invests in real estate related limited partnership, venture
capital limited partnerships and private companies. WCSI also hosts WIN, an
internet website that allows subscribers to log on for information related to
the stock market at http://www.wadecook.com. Two other of the Company's
subsidiaries, Left Coast Advertising, Inc. and Lighthouse Publishing Group, Inc.
conduct advertising and publishing services, respectively, for the Company. To
date, the vast majority of revenues of the Company have been derived from the
educational seminars and products related to such seminars. These seminars and
related products are almost exclusively based on products and seminars developed
by Mr. Cook and are licensed to the Company by entities owned or controlled by
Mr. Cook, or by members of his family pursuant to a Product Agreement with
Money Chef. The Company believes that the sales of seminars and products
developed by Mr. Cook will constitute the majority of revenues for the Company
for the foreseeable future. Accordingly, any factor adversely affecting Mr.
Cook or the Company's relationship with Mr. Cook or Money Chef would have a
material adverse impact on the Company's business, financial condition and
results of operation. See "Risk Factors-Dependence on Certain Relationships".

The Company is currently seeking to develop new seminars and products with
new authors so that it can diversify its seminar topics, protect its current
role as a leader in the educational investment seminar business, and attract
new customers. The Company may also seek joint ventures with other similar
seminar businesses to expand its customer and product base. However, there can
be no assurances that the Company will be successful in these endeavors. The
failure of the Company to successfully expand its customer and product base and
minimize its dependence on Mr. Cook may have a material and adverse effect upon
the Company's future business and prospects.

The Company believes that the success of the Wall Street Workshop, which
accounts for the vast majority of the Company's current revenues, is due in
part to the ability of its workshop facilitators to make demonstration trades
with stock brokers during the seminars to familiarize students with the trading
process. Typically, after discussing certain stock market strategies, the
facilitators during the seminar will phone a stockbroker of his or her choosing
and will enter actual orders to purchase or sell securities. The purpose of this
demonstration during the class is to illustrate the process of trading these
investments. An example of such a transaction is the purchase or sale of 10 call
option contracts at a price of $300 per contract to settle in three days for an
amount of $3,000.00.

In order to allow facilitators to make actual purchases or sales of
marketable securities during the course of the Wall Street Workshops, the
Company has set up sub-accounts within its own brokerage accounts and has
authorized trading limits in a range of $25,000 to $40,000 depending upon the
facilitators background, experience and length of time with the Company. After
an investment is made, many of these investments are sold

<PAGE>
by the Company's in-house traders without returning the rate of return
anticipated by the facilitators in making the investment.

The Company's need to maintain an adequate cash position in every brokerage
account, especially when every account is a margin account, sometimes requires
the Company to liquidate the investments made by its facilitators, even if they
produce losses. Historically, the losses have generally been offset by the short
term capital gains achieved by the facilitators and money managers. The Company
reported gains (losses) on trading securities of $92,711, $88,719 and $(1,616)
for the periods ending December 31, 1996, 1995 and 1994, respectively. The
financial results reported included unrealized losses of $226,264, $20,899 and
$23,180 for the same periods, respectively. However, there can be no assurances
that losses will not arise in the future. Although these sub-accounts are only
a small portion of the Company's portfolio of assets, the risk of investing in
stocks and derivatives creates the possibility of some losses for the Company.

The investment portfolio of the Company has materially increased from
1994 through 1996. The Company intends to continue to invest in its stock
market portfolio as necessary to support the trading of securities during the
Wall Street Workshops as a teaching mechanism, to use its portfolio as a tool
to train speakers for the Wall Street Workshop and to attempt to earn
investment income. The Company intends to pursue its current stock market
investment strategies. However, there can be no assurances that the condition
of the stock market will be what the management of the Company anticipates
that it will be at any given time or that the Company will be in a position
to effectively take advantage of existing market conditions. As with any
investment in the stock market, the Company may suffer significant losses
from pursuing its investment strategies.

WCSI has grown from three employees in 1989 to over 300 employees in 1997.
The increase in staffing at the Company reflects the dramatic growth in demand
for the Company's seminars and the corresponding need to increase the Company's
sales forces to adequately service the increasing customer base and to
coordinate seminars in most major cities in America. The management of the
Company believes that the historical rate of expansion of its staff in 1994,
1995 and 1996 will slow down in 1997 as the current number of employees is
sufficient for the Company's current needs.

Although the Company has historically been profitable, there can be no
assurance that the Company will maintain or increase revenues, maintain
profitability or avoid losses in any future period. The future results of
operation, both annually and from quarter to quarter, are subject to a variety
of factors applicable to the Company and the industries and markets in which it
operates.

Results of Operations

Quarterly Results

UNAUDITED BALANCE SHEET FOR THE PERIOD ENDED JUNE 30, 1997-LIQUIDITY AND CAPITAL
RESOURCES
The Company's total assets expanded to $34,297,933 at June 30, 1997
compared to $16,937,659 at December 31, 1996. The Company's total liabilities
grew to $23,749,009 from $12,618,335. Shareholders' equity at June 30, 1997
increased to $10,004,279 from $3,702,024 at December 31, 1996.

The Company experienced a substantial increase in credit card purchases and
as a result the credit card processing company the Company uses increased the
amount it requires as a hold back. Accordingly, trade and credit card
receivables increased to $4,672,567 compared to $848,282 at December 31, 1996.

The Company increased its portfolio of marketable securities to $5,993,285
compared to $3,801,039 at December 31, 1996.

The Company does not believe that inflation or other general changes in
prices has had a material effect on the financial results of the Company.

The Company does not believe its business is seasonal.

FOR THE QUARTERS ENDED MARCH 31, 1997 AND MARCH 31, 1996

Gross revenues continued to increase, due largely to the increase in the
number of seminars provided by

<PAGE>

the Company. The Company reported gross revenues for the quarter ended March
31, 1997 of $18,588,388 as compared to gross revenues of $5,575,284 for the
same period in 1996.

The cost of generating revenues was $7,550,409 for the period ended
March 31, 1997, as compared to $2,163,080 for the same period in 1996.

Gross profits, following the same trend as gross revenues, increased
during the period ended March 31, 1997 to $11,037,979 as compared to
$3,412,204 during the same period in 1996.

The net income for the Company, after taxes, was $1,326,975 for the period
ended March 31, 1997, as compared to net after-tax income of $1,007,695 for the
same period in 1996. Notwithstanding a significant increase in gross revenues,
net income remained relatively stable, due to a substantial increase in selling,
general and administrative expense, of which major components are personnel and
advertising costs.

The Company experienced unusual demands on its cash resources in the first
quarter of 1997. A substantial factor in the increased demands for cash was the
renovation and relocation into its new headquarters offices located in Tukwila,
Washington. Additionally, the Company made a substantial cash investment in the
Fairfield Inn Suites at Provo, Utah. Capital expenditures during the quarter
ended March 31, 1997 were $5,849,351. Borrowings during this period were
$1,477,610 and accounts payable increased by $3,370,404.

Annual Results

The following table provides a summary of the Company's operating results
for the years 1996, 1995 and 1994:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
---- ---- ----
AUDITED AUDITED AUDITED
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales $40,724,515 $7,567,335 $1,973,145
Cost of Sales 15,682,936 3,373,888 861,734
Operating income (loss) 4,739,876 339,446 (22,667)
Net income(loss) per share .46 .02 (.03)
Number of shares used in computing net
income (loss) per share*
6,623,280 6,398,426 6,398,426
</TABLE>

* See Note A of Notes to Financial Statements for an explanation of the
computation of per share data.

The Company has increased its gross revenues in each of the past three
years. Gross revenues of the Company were $1,973,145 in 1994, $7,567,335 in
1995 and $40,724,515 in 1996.

The rapid increase of gross revenues for the Company from 1994 to 1996 is
due to a variety of factors including, the dramatic increase in the frequency
of various seminars, the significant increase in fees for the seminars, the
establishment of the Wall Street Workshop program, the development of WIN, the
sales of the book, "Wall Street Money Machine," and the introduction of two new
seminars.

The average retail price of the seminars have generally increased 73%
from 1994 to 1995 and 25% from 1995 to 1996. Wall Street Workshop was
increased from $780 in 1994 to $1,677 in 1995 and $2,195 in 1996. Wealth
Academy increased from $1,950 in 1994 to $2,206 in 1995 to $3,286 in 1996.
The fee for the WIN internet service increased from $495 in 1994 to $1,995 in
1995 and $2,995 in 1996. The fee increase allowed the Company to focus its
resources to develop and increase market and research support for its web
site. In fiscal 1997, the Company does not anticipate any significant changes
in the fee structure for any of its programs.

<PAGE>

The Company has increased the frequency of Wall Street Workshops from two
per month in 1995 to two per week in early 1996, to five times per week in
early 1997. The Company will attempt to continue increasing the number and
frequency of seminars that the Company offers.

Net Sales. The net income for the Company for the past three fiscal years
was a net loss of $195,730 for 1994 to a net profit of $123,798 in 1995 and
$3,064,639 in 1996. This represents an increase of $319,528, or 163% from 1994
to 1995 and $2,940,841, or 2376% from 1995 to 1996. It should be noted that the
reorganization of Profit occurred on May 18, 1995, and the losses carried by
Profit for the first four and one-half months of 1995 affected the profit and
loss margin for the Company. The management of the Company anticipates strong
growth in fiscal 1997, however, there can be no assurances.

Cost of Sales. Although the direct costs of staffing the individual
seminars, workshops, or financial clinics as a percentage of net sales have
remained relatively stable over the past three years, the total cost has
increased to correspond with the rise in the number of seminars, workshops
and financial clinics provided by the Company. From 1994 to 1995, costs went
from $861,784 to $3,373,888, which is an increase of $2,512,104 or 292%, and
from 1995 to 1996, costs went from $3,373,888 to $15,682,936, which is an
increase of $12,309,048 or 365%.

A significant cost of sales to the Company are payments to Mr. Cook and
primarily his affiliate Money Chef, Inc. under various agreements to compensate
him for the use of the intellectual property owned by him or his affiliates. In
that regard, the Company accrued costs of $4,366,183, $755,550, $, and $82,923
for 1996, 1995 and 1994, respectively.

The seminar business is not generally seasonal in nature although the
Company experiences somewhat slower participation rates during July and August.

Liquidity and Capital Resources

Since the acquisition of WCSI in 1995, the Company has financed its
operations primarily through cash flow from operations. At December 31, 1996,
1995 and 1994, respectively, the Company had cash and cash equivalents of
$635,141, $26,840, $100, respectively. Total assets increased from $594,216 in
1994 to $2,283,055 in 1995 to $16,937,659 in 1996 and total liabilities
increased from $184,967 in 1994 to $1,458,352 in 1995 to $12,618,335 in 1996.
Although no assurances can be given, the Company does not anticipate any trends
which will materially increase or decrease its current level of liquidity.

In the past, the Company had the opportunity to increase its liquidity
by its investment strategies in the purchasing and selling of marketable
securities. The investment in marketable securities will need to continue for
teaching purposes with respect to each Wall Street Workshop. In addition, the
Company anticipates it will maintain or increase its current level of
investment in marketable securities in the future. The Company may channel
some of the liquidity of its investment portfolio into real estate limited
partnerships that are purchasing hotels or motels or underlying real property
to construct such hotels, to making investments in venture capital limited
partnerships or other less liquid investments or paying down underlying debt
attached to its corporate headquarters. See "Business-Real Estate and Other
Investments".

The current monthly payments for the outstanding loan for the corporate
headquarters of $50,000 per month will increase on September 1, 1997 to
$100,000 per month, until February 1, 1999. The contract allows the Company
to make lump sum prepayments on January 1, or July 1, in increments of
$100,000 but not more than $500,000. The Company may make a prepayment of
$500,000 on July 1, 1997. There is no prepayment penalty.

Except for the mortgage on its corporate headquarters, the Company
currently does not access external sources of liquidity and the management of
the Company does not currently expect to access external sources of liquidity
in the immediate future.

The Company has material commitments for its various hotel or motel
development projects. The real

<PAGE>

estate subsidiaries have long term or short term debt payments for various
hotel and motel development projects that will affect the Company's liquidity
in 1997. These include monthly payments of $10,430 and a down payment of
$25,000 for its 8.8% ownership of Park City Hotel Partners, Limited
Partnership, by WCSI; $690,000 payment for 51% ownership of FSS, Limited
Partnership; $590,000 for 51% ownership of Reno F.I.S., Limited Partnership;
$3,450,000, including payments of $1,400,000 in 1997 as well as monthly
payments of approximately $16,000 for 100% ownership of Rising Tide, Limited
Partnership. The anticipated source of revenue to meet these commitments will
be from operational revenue and investment portfolio growth. The management
of the Company believes that some revenue may be generated through income
from the limited partnerships owning the hotels/motels if occupancy increases
in late 1997 and early 1998. However, these expectations may not be met if
the investment portfolio held by the Company experiences little growth or a
diminution in value or if the existing trend of increased occupancy in
hotel/motels adversely changes.

The liquidity of the Company may be impaired in the event the underlying
loans wrapped by Rising Tide, Limited Partnership ("Rising Tide"), an indirect
subsidiary of the Company, are called by the lenders. On or about March 7, 1997
Rising Tide agreed to enter into an all-inclusive trust deed (with assignment
of rents) pursuant to which deed Rising Tide assumed the debt of East Bay
Associates, LLC (a non-affiliate) for a loan from The Bank of Utah in the
amount of approximately $791,000 and a loan from the Greater Salt Lake Business
District in the amount of approximately $788,000. The deed of trust contained
additional terms and conditions usual and customary of trust deeds. Both loans
may be accelerated at any time, which, if occured, would create a cash flow risk
for the Company and reduce the ability of the Company to continue its investment
strategies in purchasing hotels. Although there can be no assurances that the
loans will not be accelerated, the management of the Company does not anticipate
the loans will be accelerated and has structured the wrap around an assumption
package to pay off the debt. In addition, the hotel owned by Rising Tide is
operational and producing a current income stream. The income stream from Rising
Tide may be used to minimize the impact that the acceleration of the loans would
have on the liquidity of the Company.

The Company's investment program in hotels commenced in 1997 and no hotel
investment activity is included in its historical audited financial
statements and directly related managements discussions and analysis.

The major expenses for the completion of the remodeling and refurbishing
of the corporate headquarters will be completed by the summer of 1997. The
Company purchased, in cash, all the office furniture, office equipment, and
office art in past fiscal year and the first quarter of 1997. The Company
does not anticipate any significant expenses exceeding $250,000 for its
corporate headquarters in 1997.

The Company's current financial resources and estimated cash flow from
operations are expected to provide adequate capital to fund the Company's
operations, including its various real estate development projects, for the
next twelve months.

The Company has unused sources of liquid assets in a stock market
portfolio estimated at $5 million which the Company will seek to invest in
various vehicles. See "Business - Real Estate and Other Investments".

Other Matters
Inflation did not have a significant impact on the Company's operations
in fiscal 1996, 1995 and 1994.

ITEM 3. PROPERTIES.

The Company's headquarters are located in a three-story, 63,000 square
foot office building in Seattle, Washington. The Company purchased the
building in 1996, and believes that the facility is adequate for the
Company's needs for the foreseeable future. The headquarters building houses
the management and sales staff of Profit, together with its subsidiaries
WCSI, Left Coast, Lighthouse Publishing and RE Management. The headquarters
building also contains three seminar rooms at which the Company conducts
seminars for the Seattle metropolitan area. The Company leases approximately
29,000 square feet of warehouse space in Tukwila, Washington where it stores
and ships audio tapes, video tapes, books and other printed materials. The
lease for such space expires in April 2000.

<PAGE>

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of June 24, 1997 for
(i) each executive officer of the Company; (ii) each director of the Company;
(iii) all executive officers and directors of the Company as a group; and
(iv) each person known by the Company to be the beneficial owner of more than
five percent of the Common Stock:

<TABLE>
<CAPTION>
Beneficial Owner(1) Shares Beneficially % of Outstanding
Owned(2) Stock(3)
-------- --------
<S> <C> <C>
Officers and Directors:
Wade B. Cook(4).................................................... 4,138,540 60.1%
Andrew T. Rice..................................................... 0 *
Laura M. Cook(5)................................................... 4,138,540 60.1%
Cheryle Hamilton................................................... 140 *
Robert T. Hondel................................................... 20,140 *
Dr. Warren H. Chaney............................................... 0 *
John V. Childers(6)................................................ 20,140 *
Nicholas Dettman................................................... 0 *
Eric W. Marler(7).................................................. 20,500 *

All executive officers and directors of the 4,181,460 60.4%
Company as a group (9 persons).........

Non-management 5% Stockholders:(8)
Yeaman Enterprises, Inc.(6)
3098 S. Highland Drive, Suite 460
Salt Lake City, Utah 84106..................................... 741,813 13.7%
Wade B. Cook and Laura M. Cook
Family Trust(7)................................................ 2,800,000 41.9%
</TABLE>

*........Represents beneficial ownership of less than 1% of the
outstanding shares of the Common Stock

(1) Unless otherwise indicated, the address of the beneficial owner is c/o
Profit Financial Corporation, 14675 Interurban Avenue South, Seattle,
Washington 98168-4664.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to stock options and warrants currently exercisable or exercisable within
60 days are deemed to be outstanding for calculating the percentage
ownership of the person holding such options and the percentage
ownership of any group of which the holder is a member, but are not
deemed outstanding for calculating the percentage of any other person.
Except as indicated by footnote, and except for voting or investment
power held jointly with a person's spouse, the persons named in the
table have sole voting and investment power with respect to all shares
of capital stock shown beneficially owned by them.
(3) Percentage is calculated based upon 6,680,864 shares of Common Stock
outstanding on June 24, 1997.
(4) Includes (a) 938,540 shares owned by Mr. Cook, (b) 200,000 shares owned
by the Wade Cook Family Trust, a trust established for the benefit of
Mr. and Mrs. Cook's family, (c) 200,000 shares of Common Stock subject
to immediately exercisable option to exercise options held by Yeaman
Enterprises Inc., and (d) shared voting and investment power over
2,800,000 shares of Common Stock owned by the Wade B. Cook and Laura M.
Cook Family Trust, a trust established for the benefit of Mr. & Mrs.
Cook's family. Wade B. Cook and Laura M. Cook are husband and wife. All
shares held by Mr. Cook are held as community property. Mr. Cook is the
trustee of the trusts.
(5) Includes shared voting and investment power over 2,800,000 shares of
Common Stock owned by the Wade B. Cook and Laura M. Cook Family Trust,
Wade B. Cook and Laura M. Cook are husband and wife. Also includes
1,338,540 shares or options owned by Mr. Cook or by the Wade Cook Family
Trust, as to which Mrs. Cook disclaims beneficial ownership. All shares
held by Mrs. Cook are held as community property.
(6) Includes 20,000 shares subject to exercisable options.
(7) Includes 2500 shares subject to an immediately exercisable option and
200,000 shares subject to option to purchase immediately exercisable
options.
(8) These shares of Common Stock are held in a Custodial Trust Account at
Yeaman Enterprises, Inc. for the benefit of Mr. Yeaman's family.
Mr. Yeaman disclaims beneficial ownership for such shares. Includes
options to acquire 100,000 shares of common stock on July 31, 1997 and
100,000 shares on August 31, 1997

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.

The following table sets forth certain information as of June 21, 1997
concerning each of the directors, executive officers and other senior officers
of the Company:

<PAGE>

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Wade B. Cook 47 President and Chairman of the Board
Andrew T. Rice 40 Treasurer and Controller
Laura M. Cook 44 Secretary and Director
Cheryle Hamilton 45 Director of Lighthouse Publishing
Robert T. Hondel 54 General Sales Manager of WCSI
Dr. Warren H. Chaney 54 Director
John V. Childers 52 Director
Nicholas Dettman 49 Director
Eric W. Marler 39 Director
</TABLE>

Wade B. Cook has been the Chairman of the Board and the President since
June, 1995. Mr. Cook also served as Treasurer and President of WCSI since 1989.
Mr. Cook is an internationally recognized author of 15 books on finance, real
estate, asset protection and the stock market, and trainer and speaker on these
topics, and the developer of educational products on investing and personal
wealth management. Mr. Cook is the husband of Laura M. Cook.

Andrew T. Rice has been Treasurer and Controller for the Company since
June 1997. Prior to his involvement with the Company, Mr. Rice was Controller
for Cosmos Development and Administration Corp. a major real estate
development company based in Bellevue, Washington.

Laura M. Cook has been the Secretary and a member of the Board of Directors
of the Company since May 1995. Mrs. Cook has also served as an officer and
operational manager in several subsidiaries of the Company. Mrs. Cook has also
managed accounting systems for various corporations for 15 years. Mrs. Cook is
the wife of Mr. Cook.

Cheryle Hamilton has been the Director of Lighthouse Publishing since
October, 1996. From March, 1996 to February, 1997, Ms. Hamilton served as
Human Resources Director for the Company. Prior to her involvement with the
Company, Ms. Hamilton was Executive Assistant of Sunsportswear, Inc., a
clothing manufacturer located in Seattle, Washington. She also provided
intellectual, property and marketing consulting on a contract basis from 1991
to 1994.

Robert T. Hondel is the General Sales Manager of WCSI. Mr. Hondel left
retirement to join the Company. Prior to joining the Company, Mr. Hondel spent
18 years as the Director and President of the Knapp College of Business in
Tacoma, Washington.

Dr. Warren H. Chaney has served on the Board of Directors since July
1996. Since 1980, Dr. Chaney has been involved in the motion picture and
television industry as writer, director and producer for projects originating
from Paige-Brace Cinema, Ltd., Lorimar Films, TMS, Inc., Skorris Films Inc.,
Sandpiper Productions, Inc., Leading Edge Entertainment, Inc., Warren Chaney
Productions, Ind., Intercontinental Releasing Corporation, and Millennial
Entertainment.

John V. Childers has been a member of the Board of Directors since
August 1995. In addition to his duties as Director, Mr. Childers acts as a
Speaker Trainer of the Company. Prior to his association with the Company,
Mr. Childers was the Chairman and President of Ideal Travel Concepts, a
travel company with locations in Tennessee and Florida.

Nicholas Dettman has been a member of the Board of Directors since May,
1995. He is a captain of Delta Airlines, located in Atlanta, Georgia for over
30 years. He is the owner and operator of Kalowai Plantation, a orchid ranch
in Kauai, Hawaii.

Eric W. Marler has been a Director since December 1996 and has been a
speaker for the Company since September 1996. Mr. Marler also served as Chief
Financial Officer of the Company from December 1996 to June 1996. Mr. Marler
is Vice President of Cascade Management Associates LP, a firm that provides
tax consulting.

<PAGE>

Prior to his involvement with the Company, Mr. Marler practiced as a
Certified Public Accountant giving advice on income tax and profitability
planning with Martin/Grambush, P.C., an accounting firm located in Kirkland,
Washington.

Board of Directors

Directors of the Company are elected by the Company's shareholders and
hold office until the next annual meeting of shareholders and until their
successors are elected and qualified, or until their earlier resignation or
removal. The Company's officers serve at the discretion of the Board of
Directors.

No director that is an employee of the Company is compensated for services
as a member of the Board of Directors or for services on any committee of the
Board of Directors. Compensation for non-employee directors consists of a
retainer of $500 dollars per year. Compensation for all non-employee directors
also consist of a fee varying from $25 to $125 depending on the length of the
meeting for each board meeting and committee meeting attended in person or by
telephone. Directors are reimbursed for reasonable travel and out-of-pocket
expenses incurred on behalf of the Company. Each of Directors Childers, Dettman
and Chaney has received a grant of options to acquire 10,000 shares (pre-
split) of the Company's Class A common stock at $3.00 per share. All of the
Options have been exercised. This grant was a one-time dispensation in reward
for past services to the Company and is not necessarily intended to establish a
Company policy of awarding non-employee directors stock options as compensation
in part for service to the Company as a director. Notwithstanding the foregoing,
the Company does plan to implement a stock option plan which will provide for,
but not require, the grant of options to directors in the future. During the
fiscal year ending December 31, 1996, the Company did not have a compensation
committee. All matters concerning executives compensation were addressed by Mr.
Cook. The Company is planning to implement a compensation committee and an
audit committee later this year.

COMPENSATION OF DIRECTORS

The Company pays each director a fee of $3,000, payable quarterly, in
advance. In addition, the Company reimburses non-employee directors for
reasonable travel and out-of-pocket expenses incurred in connection with
their activities on behalf of the Company. Directors of the Company are
eligible for participation in the Wade Cook Financial Corporation 1997 Stock
Incentive Plan. The 1997 Stock Incentive Plan is administered by the Board
of Directors.

Involvement in Legal Proceeding

The State of Arizona commenced an administrative proceeding against Wade
B. Cook and his former businesses American Business Alliance and Monarch
Funding Corporation in February, 1989. The State of Arizona issued an
administrative order, on or about May 1989, concluding that Mr. Cook and his
businesses had violated various securities laws, including anti-fraud
provisions, and as a result, ordered them to (1) pay over $390,000 in
restitution (2) jointly and severally pay a $150,000 administrative penalty,
and (3) to cease and desist the allegedly fraudulent conduct. Mr. Cook is
currently in the process of negotiating the treatment of this proceeding.

The U.S. Securities and Exchange Commission has commenced a private
formal investigation against the Company and certain of its officers and
directors, including Mr. Cook. In addition, the Securities Division of the
State of Washington has commenced an informal investigation of Mr. Cook,
together with WCSI and the Company. The Company does not believe it or any of
its officers engaged in any inappropriate activity or violated applicable
laws. See "Legal Proceedings".

Employment Agreements

Pursuant to an Employment Agreement, dated as of June 25, 1997 and
effective as of July 1, 1997, Mr. Cook will be employed as Chief Executive
Officer and President of the Company. The Employment Agreement provides for a
three-year term in which Mr. Cook will receive an annual base salary of
$240,000 in Year 1, $265,000 in Year 2 and $290,000 in Year 3. According to
the Employment Agreement, Mr. Cook may receive additional bonuses for work as
approved by the Board of Directors of the Company. To date, no such bonuses
have been requested or approved. In addition, Mr. Cook is entitled to
reimbursement for reasonable travel and business entertainment expenses
authorized by the Company, as well as certain fringe benefits.

ITEM 6. EXECUTIVE COMPENSATION.

The following table sets forth information regarding employee
compensation paid for all services rendered to the Company in all capacities
during fiscal 1996 by the Company's Chief Executive Officer, (one current

<PAGE>

executive officer and one former executive officer). No other executive
officers of the Company received in excess of $100,000 during the last fiscal
year.

<PAGE>

<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------
Other Long Term All Other
Name and Position Year Salary Bonus (3) Compensation Compensation (1)
- ----------------- ---- ------- ----- ------------ --------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Wade B. Cook, 1996 $ 90,628 none none none $4,366,183 (2)
President and Chairman, 1995 755,550
Chief Executive Officer 1994 $ 16,000 82,993

Robert T. Hondel, 1996 $179,532 none none none none
General Sales Manager 1995 62,500

Christopher Carde (4) 1996 $223,521 none none none none
Former General Counsel, CEO 1995 51,055
and Director 1994

Margaret Huss 1996 $233,396 none none none none
Sales Representative

Barry Collett 1996 135,193 none none none none
Sales Representative
</TABLE>

(1) Certain of the Company's executive officers received personal benefits
in addition to salary and cash bonuses, including car allowances or
the use of a car owned by the Company and mortgages at market rates.
The aggregate amount of such personal benefits however, do not
exceed the lessor of $50,000 or 10% of the total of the annual
salary and bonus reported for the named executive officers.

(2) Royalties are paid by WCSI indirectly to Mr. Cook pursuant to a Product
Agreement. Amounts shown are accrued royalties payable for the year
1996. The amount actually paid to Wade B. Cook, Money Chef,
and affiliates thereof was $2,999,130. See "Certain Relationships
and Related Transactions".

(3) All employees of the Company, including Mr. Cook, have received at
least once approximately 40 shares of the Company's common stock
from time to time as a bonus in exceeding certain sales expectations.

(4) Mr. Carde's employment was terminated on May 7, 1997.

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company had a Product Agreement on January 3, 1993 with Money Chef
setting forth certain terms for the right to use the name and products. The
royalty payments paid to Money Chef under the Product Agreement ranged from 10%
to 50% of gross sales (as defined in the Product Agreement). In fiscal 1995 and
1996, the Company was generally required to pay Money Chef 10% to 30% of gross
sales, with Money Chef having the right to specify the percentage within the 10%
to 50% range that the Company must pay. Money Chef has opted to receive the
minimum amount of royalties of 10% in each of fiscal 1996 and 1995. The Company
paid royalties of $4,366,183 in 1996 and $755,550 in 1995 and $82,923 in 1994.

On June 26, 1997, Wade Cook Seminars, Inc. renegotiated the Product
Agreement for an additional period through June 30, 2002 for a flat royalty of
10% of gross sales. Mr. Cook does not have an "outputs contract" (i.e., a
contract giving the Company the first right to license or otherwise obtain the
rights in and to all of the products Mr. Cook writes and creates) with the
Company and so the Management of the Company can not guarantee that all future
products created by Mr. Cook will be licensed by the Company under the terms of
the Product Agreement.

The Company has licensed the rights to Mr. Cook's books, Real Estate
Money Machine, Wall Street Money Machine, Stock Market Miracles, Bear Market
Baloney, and Business Buy the Bible under individual Publishing Agreements
with Lighthouse Publishing Group, Inc., (a subsidiary). Under the terms of
each of the

<PAGE>

book licenses, Mr. Cook is paid a royalty of ten percent (10%) of the retail
price of each book sold. The amount of royalties paid to Mr. Cook and his
affiliates under the Publishing Agreements in 1996, 1995 and 1994 is included
in the amounts stated above as paid to him pursuant to the Product Agreement.

Evergreen Lodging, L.P., a Nevada limited partnership ("Evergreen") which
is an indirect subsidiary of the Company and so the Management of the Company
can not guarantee that all future products created by Mr. Cook will be licensed
by the Company under the terms of the Product Agreement.

WCSI has loaned approximately $875,000 to Newstart Centre, Inc., a Utah
corporation related to the Company by virtue of a 30% ownership interest therein
owned or controlled by Wade B. Cook or his affiliate. Newstart Centre, Inc. is
in the business of buying, leasing and selling motor vehicles to the general
public. The indebtedness is evidenced by seven (7) Promissory Notes (Secured)
dated February 4, April 4, May 23, June 20, July 20, July 25 (2) and October 9,
all in 1997 and each in the original principal amount of $125,000 payable to
WCSI and executed by Newstart Centre, Inc. and a Secured Loan Agreement dated
February 4, 1997 by and between WCSI and Newstart Centre, Inc. The Promissory
Notes each provide for the repayment of the loan evidenced thereby in
forty-eight (48) equal monthly installments of $3,606.88. Interest on the amount
represented by each note accrues on the unpaid principal balance at the simple
interest rate of seventeen per cent (17%) per annum. The Secured Loan Agreement
provides that the loans evidenced by the Promissory Notes is secured by a lien
in the motor vehicles owned by Newstart Centre, Inc.

Paul Cook, Mr. Cook's brother, contracts with WCSI to provide speaking
services. Paul Cook executed a loan from WCSI on June 18th, 1997 for a total of
seventy-five thousand dollars ($75,000) for a two-year period at the interest
rate of 11 percent (11%). The loan is secured by a second position on Mr. Cook's
home in Salt Lake City, Utah. The Company has paid Paul Cook $77,156 so far in
1997. The Company has paid to Paul Cook $11,746 and $3,500 in 1996 and 1995,
respectively. The Company has no records of payments to Paul Cook in 1994.
Additionally, the Company believes that "Grand Teton" is an entity owned or
controlled by Paul Cook to which the Company has paid $133,382 and $34,902 in
1997 to date and 1996, respectively.

Scott Scheuerman, who is the brother-in-law of Mr. Cook, is president of
USA Corporate Services, Inc. ("USA"), BOSS, Inc. and Acorn Corporate Services,
Inc. which are Nevada corporations operating out of Nevada. Acorn acts as
resident agent for Nevada corporations and BOSS provides corporate business
office suite services for Nevada corporations operating in Nevada. USA generally
sells Nevada corporations. The Company markets these services and sells the
processing of Nevada corporations. Clients of USA that purchased either/or both
Acorn resident agent services or BOSS services increased from 600 in 1994 to
1,120 in 1995 and 1,360 in 1996. In 1997 to date the Company has paid $550.00 to
either Acorn Corporate Services, Inc. or Boss, Inc. The Company paid $117,866
and $123,242 to either or all of these entities in 1995 and 1994, respectively.

Eric W. Marler, the former Chief Financial Officer of the Company and a
current Director and a speaker in its educational seminars, is the owner of 50%
of the issued shares of Cascade Management Associates, L.P. ("Cascade"). Cascade
has provided to WCSI the seminar speaking services of Mr. Marler for a fee of
$10,000 per month since September 1996. The Company has paid $62,515 to Cascade
so far in 1997. The Company has paid $35,555 in 1996 and has no record of
payments to Cascade in prior years.

John V. Childers, a director of the Company, contracts with WCSI through
Speaker Services, Inc., a private corporation, to train all speakers for all
events produced by WCSI. The agreement sets forth a compensation plan of one
percent (1%) of the gross of all Financial Clinic seminars, and one-half
percent (0.5%) of the gross if all Wall Street Workshops. The Company as paid
Speaker Services $231,990 so far in 1997. The Company paid

<PAGE>
$22,710 and $3,080 in 1996 and 1995, respectively. The Company has no records
of payments to this entity in 1994.

Additionally, Mr. Childers is the former president and a director of Ideal
Travel Corporation ("Ideal"), and WCSI utilized Ideal as well as other travel
agencies in the planning of its corporate travel. As a result of the corporate
working relationship between Ideal and WCSI, Mr. Cook receives fifty percent of
the commissions paid to Ideal by its suppliers for the Company's corporate
travel, which commissions are generally 10% of the cost of travel subject to
airline caps on airfare commissions. This arrangement is a carry-over from a
time when Mr. Cook was enrolled as a travel agent for Ideal Travel Corporation.
Mr. Cook or his wife Laura Cook, who is also an enrolled travel agent for Ideal
Travel Corporation. Mr. Cook or his wife Laura Cook, who is also an enrolled
travel agent and Director and Secretary of the Company, received approximately
$11,732, $5,293 and $149 in the years 1996, 1995 and 1994, respectively. Amounts
paid to them so far in 1997 are immaterial. Mr. Cook has been an enrolled travel
agent since November 16, 1993. The Company has paid $415,209 to Ideal so far in
1997. The Company paid $37,044, $162,793, and $15,563 to Ideal in the years
1996, 1995, and 1994, respectively.

Robert Hondel, a Director of the Company, executed a promissory note in the
principal amount of $300,000 in favor of WCSI on July 31, 1997. The note is
secured by a lien on Mr. Hondel's real property located in Graham, Washington
and bears interest at a rate of 10% per year per year payable in monthly
installments of $2,500 plus 50% of all monthly income received by Quantum
Marketing and its affiliates in excess of $8,000 per month beginning September
5, 1997 until paid in full.

Crossroads Northwest, LP, a limited partnership controlled by the Wade B.
Cook Family Trust owes the Company $637,401 under the terms of various oral and
written agreements under the terms of various oral and written agreements to
repay such amounts which have been borrowed for the purpose of purchasing real
estate used, in some instances, by the Cook Family.

The Company's management believes that the terms and conditions of each of
the related party transactions set forth above are at least as favorable as
might be obtained from an independent third party.

ITEM 8. LEGAL PROCEEDINGS.

The following is a description of material pending legal proceedings to
which the Company or any of its subsidiaries is a party or which any of their
properties is subject:

Investigation by the U.S. Securities and Exchange Commission

The Company and certain of its executive officers have received
subpoenas to provide certain information in the Matter of Wade Cook Seminars,
a private informal investigation by the Securities and Exchange Commission
("SEC"). The investigation relates to the possible violation of Sections
5(a), 5(c) and 17(a) of the Securities Act, Section 10(b) of the Exchange
Act and Rule 10b-5 thereunder, and Sections 203(a) and 206(1) and (2) of the
Investment Advisers Act. The SEC has stated that the investigation should
not be construed as an indication by the SEC or its staff that any
violations of law have occurred, nor should it be construed as an adverse
reflection on the merits of the securities involved or on any person or
entity. The Company does not believe it or any of its executive officers and
directors has engaged in any inappropriate activity or violated applicable
laws, and the Company intends to continue to cooperate with the
investigation. No assurance can be given as to the outcome of this
investigation.

Informal Investigations by the State of Washington

The Assistant Attorney General for the State of Washington's Department
of Financial Institutions, Securities Division commenced an informal
investigation of Mr. Cook, WCSI and the Company in September, 1996. The
Assistant U.S. Attorney for the Western District of Washington issued a
subpoena to WCSI in March 1997 for records related to an independent
contractor of the Company. Although the breadth and nature of these two
investigations are not known, the Company does not believe it or any of its
executive officers and directors has engaged in any inappropriate activity or
violated applicable laws and the Company intends to continue to cooperate
with the investigation. No assurances, however, can be given as to the
outcome of these investigations.

<PAGE>

Wade Cook Seminars, Inc. v. Charles Mellon, et al.

The Company brought a suit against defendants Robbins Research
International and Charles E. Mellon in the King County Superior Court on
September 16, 1996 and joined Anthony Robbins and Options Management, Inc. in
June 1997. The Company alleges breach by Mellon of a noncompete agreement and
unfair competition and inducement to breach the noncompete by Robbins
Research and Anthony Robbins in hiring Mellon to present a copy of the
Company's Wall Street Workshop seminar on behalf of defendants. An injunction
in favor of WCSI was granted October 9, 1996 and attorney fees were awarded
to the plaintiffs against Mr. Mellon. The trial is currently scheduled for
September 1997.

Wade B. Cook v. Anthony Robbins and Robbins Research International, Inc.

The Company brought suit in United States District Court, Western
District of Washington, against Tony Robbins and Robbins Research
International, Inc. on June 18, 1997 for damages and injunctive relief for
copyright infringement. The Company alleges Tony Robbins copied or caused to
be copied significant portions of Wall Street Money Machine, authored by
Wade B. Cook, and used these materials in a course entitled "Financial
Power."

Other Proceedings

The Company and its subsidiaries are also parties to various
administration actions and other legal proceedings arising in the ordinary
course of business, none of which is expected to materially affect the
financial position, results of operation or cash flow of the Company.

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.

Although there is currently no established trading market for shares of
Common Stock of the Company, the Company's Common Stock is quoted under the
stock symbol "PFNL" in the over-the-counter market. At June 20, 1997, there
were four market makers of the Company's Common Stock.

The following table sets forth the approximate high and low bid
quotations for the Company's Common Stock for the calendar periods indicated.
The quotations reflect inter-dealer prices retail markups, markdowns or
commissions and may not reflect actual transactions.

<TABLE>
<CAPTION>
HIGH BID LOW BID
-------- -------
<S> <C> <C>
1997
----
Quarter Ended March 31 $3.00 $2.88
April 1 to June 20 $5.25 $2.50

1996
----
Quarter Ended March 31 2.12 2.00
Quarter Ended June 30 2.62 2.25
Quarter Ended September 30 3.75 3.50
Quarter Ended December 31 3.12 2.62

1995
----
Quarter Ended March 31 1.75 1.50
Quarter Ended June 30 2.37 2.12
Quarter Ended September 30 2.50 2.25
Quarter Ended December 31 2.00 1.87

1994
----
Quarter Ended March 31 1.87 1.62
Quarter Ended June 30 1.75 1.50
Quarter Ended September 30 1.75 1.50

<PAGE>

Quarter Ended December 31 1.75 1.50
</TABLE>

The high and low bid quotation price for the Common Stock on June 20,
1997 was $5.25 and $4.63, respectively. As of June 20, 1997, the Company had
approximately 6,680,000 shares of Common Stock outstanding.

As of June 20, 1997, there were approximately 924 record holders of
Common Stock. The Company has never paid any cash dividends on its Common
Stock and does not anticipate that it will pay dividends in the foreseeable
future. Instead, the Company intends to apply any earnings to the expansion
and development of its business.

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.

On June 28, 1996, the Company authorized the sale of 16,000 shares of
its Common Stock at $3 per share to five employees for subscription notes
receivable. The five employees are Robin Anderson, Laura Howell, Patricia
Taylor, Margie Huss and Robert Hondel. In addition, on June 28, 1996, the
Company authorized 30,420 shares of its Common Stock at $2.50 per share to
Nicolas Dettman n/o Paradise Funding Corporation Profit Sharing Plan. Margie
Huss, Pat Taylor, Robin Anderson, Laura Howell, Norman Eade, Gloria
Ducoulombier and Patricia McCarty as additional employee compensation. The
stocks were issued in January 1997. Each negotiated transaction was made in
reliance on the exemption from registration provided by Section 4 (2) of the
Securities Act of 1933, as amended (the "Securities Act") as isolated
transactions to a single investor which did not involve a public offering.

On June 28, 1996, the Company issued 10,000 shares of its common Stock
at $3.00 per share to Paradise Funding. This transaction was made in reliance
on the exemption from registration provided by Section 4(2) of the Securities
Act as an isolated transaction to a single investor and it did not involve a
public offering.

On January 31, 1996, the Company issued 100,000 shares of Common Stock
to Associated Reciprocal Traders, Ltd. in payment of an agreement to purchase
20,000 Investor Relations-Advertising-Infomercial radio air time spots,
priced at $25 per ad spot, per station, for a sum total of $500,000. The
negotiated transaction was made in reliance on the exemption from
registration provided by Section 4 (2) of the Securities Act as isolated
transactions to a few limited investors which did not invoke a public
offering.

On January 1, 1995, the Company transferred its ranching operations in
Uintah County, Utah to Four Star, Inc. in exchange for all of Four Star's
outstanding common stock pursuant to a plan of reorganization under section
368(a)(1)(D) of the Internal Revenue Code. All of Four Star's stocks were
then distributed to Yeaman Enterprises, Inc. in exchange for 1,880,00 shares
of the Company's stock as part of the reorganization on April 1, 1995. The
negotiated transaction was made in reliance on the exemption from
registration provided by Section 4 (2) of the Securities Act as isolated
transactions to a single investor which did not invoke a public offering.
See "Business-Prior Business History."

ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.

The Company's authorized stock consists of 20,000,000 shares of Class A
Common Stock, par value .01 per share ("Common Stock"), and 5,000,000 shares
of Preferred Stock, par value $10 per share ("Preferred Stock"). As of June
15, 1997, there were outstanding approximately 6,680,000 shares of Common
Stock and no shares of Preferred Stock outstanding. All of the currently
outstanding shares of Common Stock are validly issued, fully paid, and
non-assessable.

On August 6, 1996, the Board of Directors declared a two-for-one stock
split on the Company's Class A Common Stock, effected in the form of a stock
dividend to shareholders of record on July 15, 1996. The number of shares
issued at September 10, 1996 after giving effect to the split was 6,650,442
common shares (3,325,211 common shares before the split). The effects of the
stock split are accounted for in all shares and per share data included in
this Registration Statement.

Common Stock

<PAGE>

The holders of Common Stock are entitled to one vote for each share on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, the holders of a majority of the stock entitled
to vote in any election of directors may elect all of the directors nominated
for election. Subject to preferences that may be applicable to any then
outstanding Preferred Stock, the holders of Common Stock will be entitled to
receive such dividends, if any, as may be declared by the Board of Directors
from time to time out of legally available funds. Upon liquidation,
dissolution, or winding up of the Company, the holders of Common Stock will
be entitled to share ratably in all assets of the Company that are legally
available for distribution, after payment of all debts and other liabilities
and subject to the prior rights of holders of any Preferred Stock then
outstanding. The holders of Common Stock have no preemptive, subscription,
redemption, or conversion rights. The rights, preferences, and privileges of
holders of Common Stock will be subject to the rights of the holders of share
of any series of Preferred Stock that the Company may issue in the future.

The authorized Preferred Stock of the Company is available for issuance
from time to time at the discretion of the Board of Directors of the Company
without stockholder approval. The Board of Directors have the authority to
prescribe, for each series of Preferred Stock it establishes, the number of
shares in that series, the consideration for such shares in that series and
the designations, powers, preferences and relative, participating, optional
or other special rights, and such qualifications, limitations or restrictions
on the shares in that series. Depending upon the rights of such Preferred
Stock, the issuance of Preferred Stock could have a material adverse affect
on the holders of Common Stock by delaying or preventing the change in
control of the Company, making removal of the present management of the
Company more difficult or resulting in restrictions upon the payment of
dividends and other distributions to the holders of Common Stock. The
management of the Company currently has no plans to issue any shares of any
class or series of its Preferred Stock.

Dividend Policy

The Company has never paid any cash dividends on its Common Stock and
does not anticipate that it will pay dividends in the foreseeable future.
Instead, the Company intends to apply any earnings to the expansion and
development of its business.

Transfer Agent and Registrar

The transfer agent and registrar for the Common Stock is National Stock
Transfer in Salt Lake City, Utah.

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company does not have any provision in its charter, by-laws, or
other contracts providing for indemnification of its officers and directors.

The Utah Business Corporation Act, however, generally provides that a
corporation may indemnify an individual made a party to a proceeding because
he is or was a director, officer, employee, fiduciary or agent of the
corporation, against any liability incurred in the proceeding if (i) the
individual's conduct was in good faith, (ii) the individual reasonably
believed that his conduct was in, or not opposed to, the corporation's best
interests, and (iii) in the case of any criminal proceeding he had no
reasonable cause to believe his conduct was unlawful; provided, however,
that (x) in the case of an action by or in the right of the corporation,
indemnification is limited to reasonable expenses incurred in connection
with the proceeding and (y) the corporation may not, unless authorized by a
court of competent jurisdiction, indemnify an individual (A) in connection
with a proceeding by or in the right of the corporation in which the
individual was adjudged liable to the corporation, or (B) in connection with
any other proceeding in which the individual is adjudged liable on the basis
that he derived an improper personal benefit. In a judicial proceeding under
the foregoing clause (y), in order to authorize indemnification the court
must determine that the individual is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances. A director or
officer is entitled to mandatory indemnification if he was successful, on
the merits or otherwise, in the defense of any proceeding, or in the defense
of any claim, issue or matter in the proceeding, against the reasonable
expenses incurred by him in connection with the proceeding or claim with
respect to which

<PAGE>

he was successful. A corporation may also indemnify and advance expenses to
an officer, employee, fiduciary or agent to a greater extent if not
inconsistent with public policy and if provided for by the articles of
incorporation, by-laws, general or specific action of its board of directors
or contract.

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The audited consolidated financial statements for the Company for the
fiscal years ended December 31, 1996, 1995 and 1994, and the report thereon
and the related financial statements, schedules and reports thereon, are set
forth below, beginning on page F-3.

The unaudited consolidated financial statements for the Company for the
quarters ended March 31, 1997 and for March 31, 1996 are set forth
immediately below. Management discussion and analysis of these quarterly
financial statements is included under "Item 2. Financial Information."
above. The notes to the financial statements beginning on page F-9 are an
integral part of these quarterly financial statements.

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
------------- ------------
<S> <C> <C>
REVENUES, NET OF RETURNS AND DISCOUNTS $ 18,588,388 $ 5,575,284

COST OF REVENUES:
Royalties to related party 1,980,913 556,750
Other cost of revenues 5,569,496 1,606,330
------------- ------------

TOTAL COST OF REVENUES 7,550,409 2,163,080
------------- ------------

GROSS PROFIT 11,037,979 3,412,204
------------- ------------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 8,760,351 2,125,619

INCOME (LOSS) FROM OPERATIONS 2,277,628 1,286,585
------------- ------------

OTHER INCOME (EXPENSES)
Dividends and interest 48,478 1,004
Gain (loss) on trading securities (157,974) 260,642
Other income (expense) 54,505 (9,868)
Loss on investment on non-marketable securities (87,500) 0
Interest expense (94,176) (4,157)
-------------- -------------

TOTAL OTHER INCOME (EXPENSES) (236,667) 247,621
-------------- -------------

INCOME (LOSS) BEFORE INCOME TAXES 2,040,961 1,534,206
-------------- -------------

PROVISION FOR INCOME TAXES 713,986 526,511
-------------- -------------

NET INCOME (LOSS) $ 1,326,975 $ 1,007,695
-------------- -------------

EARNINGS (LOSS) PER SHARE $ 0.20 $ 0.15
-------------- -------------

Weighted Average Number of Common Shares 6,623,280 6,565,461

-------------- --------------
</TABLE>

30
<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS

<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997
(Unaudited)
--------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 1,326,975
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 265,421
(Gains) losses on trading marketable securities 157,975
Losses on disposition of fixed assets
Impairment of long-lived assets
Loss on investment in non-marketable securities 87,500
Purchases of trading securities (2,996,860)
Proceeds from sale of trading securities 2,820,940
Changes in assets and liabilities:
Receivables (703,765)
Inventory (87,638)
Prepaid expenses (165,716)
Deferred taxes 125,625
Deposits 8,603
Accounts payable and accrued expenses 3,370,404
Payroll and other taxes withheld and accrued 71,219
Income taxes payable 479,619
Deferred revenue (894,984)
Due to related party 5,000
Royalties payable 409,461
-----------
TOTAL ADJUSTMENTS 2,952,804
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,279,779
-----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,849,351)
Subsidiary's investment
Return of subsidiary's investment
------------
NET CASH USED FOR INVESTING ACTIVITIES (5,849,351)
------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of subsidiary's minority interest (53,505)
Net borrowings 1,477,610

<PAGE>

<S> <C>
Issuance of common stock ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,424,105
------------

NET INCREASE (DECREASE) IN CASH (145,467)

CASH, beginning of year 635,141
-------------
CASH, end of period $ 489,674

-------------
</TABLE>

32
<PAGE>

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

On February 6, 1997, the Company engaged Miller and Company, an accounting
firm based in Santa Monica, California to act as its independent certified
public accountants and to audit the Company's financial statements for the
fiscal years ended December 31, 1995 and 1996. The Company terminated its
relationship with Smith and Company, an accounting firm based in Salt Lake City,
Utah on May 1, 1995 upon the completion of the merger of a subsidiary of the
Company with WCSI. With respect to the financial statements for the years ended
December 31, 1994, the report of Smith and Company did not contain an adverse
opinion or a disclaimer of opinion and were not modified or qualified as to
uncertainty, audit scope or accounting principles. The decision to change
accountants was recommended and approved by the Board of Directors of the
Company. There were no disagreements with Smith and Company on accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure related to the Company.

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements. Page
----
Unaudited Consolidated Balance Sheet as of June 30, 1997 F-1

Years Ended December 31, 1996, 1995 and 1994

Report of Independent Certified Public Accountants F-3

FINANCIAL STATEMENTS:
Consolidated Balance Sheets F-4
Consolidated Statements of Income and Retained Earnings F-6
Consolidated Statement of Changes in Shareholders' Equity F-7
Consolidated Cash Flow Statements F-8

Report of Independent Certified Public Accountants F-22

FINANCIAL STATEMENT SCHEDULES:
Schedule 1 - Consolidated Financial Information of
Registrant F-23

(b) Exhibits Index.

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
3.1(a)* Articles of Incorporation of Profiteer Corporation
3.1(b)* Amendment to Articles of Incorporation of Profiteer Corporation dated
September 2, 1984
3.1(c)* Amendment to the Articles of Incorporation of Profiteer Corporation
dated August 10, 1988
3.1(d)* Amendment to the Articles of incorporation of Profiteer Corporation
dated September 10, 1991
3.2* Bylaws of Profiteer Corporation
4.1* Form of Company's Class A Common Stock Certificate
10.1(a)* Product Agreement, dated January 3, 1993 between United Support
Association, Inc. as the purchaser, and Money Chef Inc., previously
known as USA/Wade Cook Seminars, Inc. as the seller.
10.1(b)* Product Agreement, dated June 25, 1997 and effective as of July 1,
1997, among Wade Cook Seminars, Inc., Money Chef and Wade B. Cook.
10.2* Agreement dated May 18, 1995 by and among Profit Financial Corporation,
Yeaman Enterprises, Inc., Four Star Ranch, Inc., United Support
Association, Inc. and Wade B. Cook.
10.3(a)* Agreement dated February 1, 1996 between Wade B. Cook and Lighthouse
Publishing Group, Inc. (for Wall Street Money
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------ -----------
<S> <C>
Machine)
10.3(b)* Amended Agreement, dated June 26, 1997 between Wade B. Cook and
Lighthouse Publishing Group, Inc. (For Wall Street Money Machine)
10.4(a)* Agreement dated January 1, 1997 between Wade B. Cook and Lighthouse
Publishing Group, Inc. (for Stock Market Miracles)
10.4(b)* Amended Agreement dated June 26, 1997 between Wade B. Cook and
Lighthouse Publishing Group, Inc. (for Stock Market Miracles)
10.5* Agreement dated March 1, 1997 between Wade B. Cook and Lighthouse
Publishing Group, Inc. (for Bear Market Baloney)
10.6* Agreement dated May 1, 1997 between Wade B. Cook and Lighthouse
Publishing Group, Inc. (for Business Buy the Bible)
10.7* Purchase and Sale Agreement, dated July 4, 1996, between United Support
Association and Seller
10.8* Employment Agreement dated June 26, 1997 by and between Wade Cook
Seminars, Inc. and Wade B. Cook.
10.9* Commercial Lease dated June 25, 1997 by and between Wade Cook Seminars,
Inc. and U.S.A. Corporate Services, Inc.
10.10* Agreement, dated November 1, 1996 between Wade B. Cook and Lighthouse
Publishing Group, Inc. (for Real Estate Money Machine)
10.11* All Inclusive Trust Deed dated March 8, 1997 for the purchase and Assumption of Certain Real Estate by
Rising Tide, LTD from East Bay Lodging Association LTD
10.12* Secured Loan Agreement and Promissory Note (Secured)between USA Wade Cook Seminars, Inc. and Newstart Centre, Inc.
16.1* Letter re: Change in Certifying Accountant
21.1* List of Profit Financial Corporation Subsidiaries
</TABLE>

* Filed previously.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to the Form 10
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated: February 20, 1998 PROFIT FINANCIAL CORPORATION

/s/ Wade B. Cook
-------------------------------
Wade B. Cook, Chairman, President,
Interim Chief Financial Officer

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS June 30, 1997
(Unaudited)
-----------------
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,609,886
Marketable securities 5,993,285
Trade and credit card receivables 4,672,567
Notes receivable, employees (current portion) 290,762
Notes receivable from officers (current portion) 14,576
Other receivables 158,536
Inventory 633,175
Prepaid expenses 286,541
Deferred royalties to related party 0
Deferred tax asset 917,904
-----------------
TOTAL CURRENT ASSETS 14,577,232
-----------------
PROPERTY & EQUIPMENT 12,847,454
-----------------
OTHER ASSETS
Non-marketable investments 1,130,091
Notes receivable, employees 2,842,699
Notes receivable from officers 261,231

F-1

<PAGE>

Due from related parties 2,611,756
Deposits 27,470
-----------------
TOTAL OTHER ASSETS 6,873,247
-----------------
TOTAL ASSETS $ 34,297,933
-----------------
-----------------
</TABLE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)

<TABLE>
<CAPTION>
LIABILITIES & EQUITY June 30, 1997
(Unaudited)
-----------------
<S> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 419,253
Accounts payable and accrued expenses 5,415,373
Margin loans in investment accounts 2,079,429
Payroll and other taxes withheld and accrued 1,022,498
Income taxes payable 4,492,798
Deferred revenue 5,919,942
Royalties payable to related party 702,279
Notes payable to related party 307,545
Notes payable to officer 45,000
-----------------
TOTAL CURRENT LIABILITIES 20,404,117
-----------------
LONG-TERM DEBT 3,344,892
-----------------
TOTAL LIABILITES 23,749,009
-----------------
MINORITY INTEREST 544,645
-----------------
SHAREHOLDERS' EQUITY
Preferred Stock, 5,000,000 shares authorized
at $10 par value, none issued and outstanding 0

Class A common stock, 20,000,000 shares
authorized at $0.01 par value, 6,680,864 shares
and 6,680,864 shares outstanding as of
June 30, 1997 and December 31, 1996, respectively 66,807

Paid-in capital 1,076,608
Prepaid advertising (500,000)
Retained earnings (deficit) 9,360,864
-----------------

F-2

<PAGE>

TOTAL SHAREHOLDERS' EQUITY 10,004,279
-----------------
TOTAL LIABILITIES, MINORITY INTEREST
AND SHAREHOLDERS' EQUITY $ 34,297,933
-----------------
</TABLE>

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

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Profit Financial Corporation
Seattle, Washington

We have audited the accompanying consolidated balance sheets of Profit
Financial Corporation and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the years ended December 31, 1996, 1995
and 1994. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Profit Financial Corporation and subsidiaries as of December 31, 1996 and
1995, and the results of their consolidated operations and their consolidated
cash flows for the years ended December 31, 1996, 1995 and 1994 in conformity
with generally accepted accounting principles.

In 1995, as described in Note-I to the financial statements, the Company
changed its method of accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of in accordance with the Statement of
Financial Accounting Standards No. 121.

As discussed in Note-A to the financial statements, there was a change in
specific subsidiaries for which consolidated financial statements are
presented.

/s/ Miller & Company
Certified Public Accountants

Santa Monica, California
25 June 1997

F-3

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
December 31,
----------------------------------
CURRENT ASSETS 1996 1995
------------- -------------
<S> <C> <C>
Cash and cash equivalents $ 635,141 $ 26,840
Marketable securities 3,801,039 349,206
Trade and credit card receivables 848,282 129,188
Notes receivable, employees(current portion) 329,060 16,452
Notes receivable from officers(current portion) 13,191 -
Other receivables 11,378 1,611
Inventory 395,743 46,139
Prepaid expenses 93,196 596
Deferred royalties to related party 48,781 -
Deferred tax asset 783,064 7,340
------------- -------------
TOTAL CURRENT ASSETS 6,958,875 577,372
------------- -------------
PROPERTY AND EQUIPMENT 7,135,205 345,011
------------- -------------

OTHER ASSETS

Non-marketable investments 522,600 1,235,100
Notes receivable, employees 1,385,742 90,452
Notes receivable from officers 236,413 -
Due from related parties 663,401 -
Deposits 35,423 35,120
------------- -------------
TOTAL OTHER ASSETS 2,843,579 1,360,672
------------- -------------
TOTAL ASSETS $ 16,937,659 $ 2,283,055
============= =============
</TABLE>

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

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
December 31,
------------------------------
CURRENT LIABILITIES 1996 1995
- ------------------- ------------ ------------
<S> <C> <C>
Current portion of long-term debt $ 660,708 $ 77,175

Accounts payable and accrued expenses 976,644 501,560
Margin loans in investment accounts 1,103,936 --
Payroll and other taxes withheld and accrued 807,414 114,090
Income taxes payable 2,075,872 95,200
Deferred revenue 5,160,999 352,325

F-4

<PAGE>

Royalties payable to related party -- 136,238
Notes payable to related party 19,000 19,000
Notes payable to officer 45,000 45,000
------------ ------------
TOTAL CURRENT LIABILITIES 10,849,573 1,340,588

LONG-TERM DEBT 1,768,762 117,764
------------ ------------

TOTAL LIABILITIES 12,618,335 1,458,352
------------ ------------

MINORITY INTEREST 617,300 295,804
------------ ------------

SHAREHOLDERS' EQUITY
Preferred stock, 5,000,000 shares authorized
at $10 par value, none issued and outstanding -- --

Class A common stock, 20,000,000 shares
authorized at $0.01 par value, 6,680,864
shares and 3,199,211 shares outstanding as of
December 31, 1996 and 1995, respectively 66,807 31,991

Paid-in capital 1,072,608 498,938
Prepaid advertising (500,000) --
Retained earnings (deficit) 3,062,609 (2,030)
------------ ------------

TOTAL SHAREHOLDERS' EQUITY 3,702,024 528,899
------------ ------------

TOTAL LIABILITIES, MINORITY INTEREST,
AND SHAREHOLDERS' EQUITY $ 16,937,659 $ 2,283,055
============ ============
</TABLE>

F-5

<PAGE>

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

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------------------
1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
REVENUES, NET OF RETURNS AND DISCOUNTS $40,724,515 $7,567,335 $1,973,145

COST OF REVENUES:
Royalties to related party 4,366,183 755,500 82,923
Speaker fees to related party 131,337 - -
Other cost of revenues 11,185,416 2,618,388 778,811
----------- ---------- ----------

TOTAL COST OF REVENUES 15,682,936 3,373,888 861,734
----------- ---------- ----------

GROSS PROFIT 25,041,579 4,193,447 1,111,411

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 20,301,703 3,755,001 1,134,078

IMPAIRMENT OF LONG-LIVED ASSETS - 99,000 -
----------- ---------- ----------

INCOME (LOSS) FROM OPERATIONS 4,739,876 339,446 (22,667)
----------- ---------- ----------

OTHER INCOME (EXPENSES)
Dividends and interest 60,028 5,547 5,668
Gain (loss) on trading securities 92,711 88,719 (1,616)
Other income 58,513 6,648 1,975
Loss on investment on non-marketable securities - (107,400) (178,200)
Loss on disposition of fixed assets (21,960) - -
Interest expense (263,285) (25,422) (8,770)
----------- ---------- ----------

TOTAL OTHER INCOME (EXPENSES) (73,993) (31,908) (180,943)
----------- ---------- ----------

INCOME (LOSS) BEFORE INCOME TAXES 4,665,883 307,538 (203,610)
----------- ---------- ----------

PROVISION FOR INCOME TAXES 1,601,244 183,740 (7,880)
----------- ---------- ----------

NET INCOME (LOSS) $ 3,064,639 $ 123,798 $ (195,730)
=========== ========== ==========

EARNINGS (LOSS) PER SHARE $ 0.46 $0.02 $(0.03)
=========== ========== ==========

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,623,280 6,398,426 6,398,426
=========== ========== ==========
</TABLE>

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

F-6

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
Class A Common Stock
----------------------------- Additional Retained Total
Paid-in Earnings Prepaid Shareholders
Shares Amount Capital (Deficit) Advertising Equity
------------ ------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances - December 31, 1994 3,199,211 $ 31,991 $ 4,093,794 $ (2,053,257) $ 2,072,528

Reorganization under
section 368(a)(1)(D)
of the Internal Revenue Code (1,880,000) (18,800) (3,578,056) 1,875,057 (1,721,799)

Issuance of common stock in
exchange for WCS stock 1,880,000 18,800 (16,800) 52,372 54,372

Net income for the year
ended December 31, 1995 123,798 123,798
------------ ------------- ------------- ------------- ----------- -------------

Balances - December 31, 1995 3,199,211 $ 31,991 $ 498,938 $ (2,030) $ 0 $ 528,899
------------ ------------- ------------- ------------- ----------- -------------

Issuance of common stock 26,000 260 77,740 78,000

Issuance of common stock in
exchange for prepaid advertising 100,000 1,000 499,000 500,000

Prepaid Advertising (500,000) (500,000)

Effect of 2 for 1 stock split 3,325,231 33,252 (33,252)

Issuance of common stock 30,422 304 75,746 76,050

Subscriptions receivable (45,564) (45,564)

Net income for the year ended
December 31, 1995 3,064,639 3,064,639
------------ ------------- ------------- ------------- ----------- -------------

Balances - December 31, 1996 6,680,864 $ 66,807 $ 1,072,608 $ 3,062,609 $ (500,000) $ 3,702,024
============ ============= ============= ============= =========== =============
</TABLE>

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

F-7

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS

<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net income (loss) $ 3,064,639 $ 123,798 $ (195,730)

Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 344,991 38,816 30,663
(Gains) losses on trading marketable securities (92,711) (88,719) 1,616
Losses on disposition of fixed assets 21,960 -- --
Impairment of long-lived assets -- 99,000 --
Loss on investment in non-marketable securities -- 107,400 178,200
Purchases of trading securities (11,290,111) (1,059,197) (7,293)
Proceeds from sale of trading securities 9,034,925 920,395 --
Changes in assets and liabilities:
Receivables (3,249,764) (144,765) (75,557)
Inventory (349,604) (4,688)
Prepaid expenses (141,381) (597) 1,861
Deferred taxes (775,724) 540 (7,880)
Deposits (303) (29,752) (2,268)
Accounts payable and accrued expenses 475,084 302,305 104,533
Payroll and other taxes withheld and accrued 693,324 60,191 11,332
Income taxes payable 1,980,672 105,200 (10,000)
Deferred revenue 4,808,674 303,133 41,312
Due to related party -- -- (22,958)
Royalties payable (136,238) 177,806 --
------------ ------------ ------------
TOTAL ADJUSTMENTS 1,323,794 787,069 243,561
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,388,433 910,866 47,831
------------ ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,729,382) (214,849) (54,051)
Subsidiary's investment (87,500) (1,113,100) --
Return of subsidiary's investment 800,000 -- --
------------ ------------ ------------
NET CASH USED FOR INVESTING ACTIVITIES (4,016,882) (1,327,949) (54,051)
------------ ------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of subsidiary's minority interest 321,496 340,904 --
Short-term borrowings -- 141,175 6,220
Repayment on short-term borrowings (193,232) (38,156) --
Issuance of common stock 108,486 -- --
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 236,750 443,923 6,220
------------ ------------ ------------

NET INCREASE IN CASH 608,301 26,840 --

CASH, beginning of year 26,840 -- --
------------ ------------ ------------

CASH, end of year $ 635,141 $ 26,840 $ --
============ ============ ============
</TABLE>

F-8

<PAGE>

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

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A - Summary of Significant Accounting Policies

Business

Profit Financial Corporation (PFC) is a holding company, whose principal
operating subsidiaries are Wade Cook Seminars, Inc. (WCS), formerly known
as United Support Association, Inc., which was acquired by PFC in 1995,
Lighthouse Publishing Group, Inc. and Left Coast Advertising, Inc. WCS
conducts educational investment and business seminars and produces video
tapes, audio tapes, and written materials designed to teach various
investment and cash flow strategies for investing in the stock market,
asset protection and asset accumulation techniques or strategies, and
entity formation for minimizing federal or state income taxes, deferral
of income and estate taxes, development of liability protection, and
elimination of the impact of probate on the transition of family owned
businesses to the public. WCS also hosts an internet website, Wealth
Information Network (WIN), which allows subscribers to log on for
information related to the stock market. Lighthouse Publishing Group,
Inc. publishes books on related topics and Left Coast Advertising, Inc.
conducts advertising for the Company. The copyrights to most seminars,
video and audio tapes, and written materials are owned and controlled by
Money Chef, Inc., formerly known as USA/Wade Cook Seminars, Inc., a
related party. As used hereafter, "Company" refers to Profit Financial
Corporation and its consolidated subsidiaries.

Prior to the acquisition of WCS, PFC had been operating in two different
businesses for over five years, namely its farming and ranching operations
in Uintah County, Utah, and its investment consulting business. On
January 1, 1995, PFC transferred its ranch operations and all related
assets and liabilities to Four Star, Inc. (Four Star) in exchange for all
of Four Star's outstanding common stock pursuant to a plan of
reorganization under the Internal Revenue Code section 368 (a)(1)(d). All
of Four Star's stocks were then distributed to Yeaman Enterprises, Inc.
(Yeaman) in exchange for 1,880,000 shares of the Company's stock as part
of the reorganization. The consolidated financial statements for the
periods presented have been restated to exclude the accounts related to
the ranch operations.

The following assets and liabilities were transferred to Four Star in the
reorganization:

<TABLE>
<S> <C>
Cash $ 5,266
Receivables 277,944
Inventories 113,445
Securities 335,333
Property and equipment 1,433,642
Accounts payable 1,588
Accrued expenses 61,257
Long-term debt 380,986
</TABLE>

F-9

<PAGE>

The condensed financial positions of PFC before and after the transfer are
as follows:

<TABLE>
<CAPTION>
December 31, 1994 Transfer January 1, 1995
----------------- ----------- ----------------
<S> <C> <C> <C>
Cash $ 5,266 $ 5,266 $ -
Receivables 277,944 277,944 -
Inventory 113,445 113,445 -
Property and Equipment 1,433,642 1,433,642 -
Investment in land 247,500 - 247,500
Investment in securities 461,333 335,333 126,000
----------- ----------- ----------
TOTAL ASSETS $ 2,539,130 $ 2,165,630 $ 373,500
=========== =========== ==========

Long-term debt $ 380,986 $ 380,986 $ -
Accounts payable 13,321 1,588 11,733
Accrued expenses 72,295 61,257 11,038
----------- ----------- ----------
TOTAL LIABILITIES 466,602 443,831 22,771
----------- ----------- ----------

Common stock 31,991 18,800 13,191
Additional paid-in capital 4,093,794 3,578,056 515,738
Retained earnings (2,053,257) (1,875,057 (178,200)
----------- ----------- ----------
TOTAL SHAREHOLDERS'
EQUITY 2,072,528 1,721,799 350,729
----------- ----------- ----------

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 2,539,130 $ 2,165,630 $ 373,500
=========== =========== ==========
</TABLE>

On April 1, 1995, PFC acquired all of the outstanding shares of common
stock of WCS for 1,880,000 shares of the common stock of PFC. The
transaction has been accounted for as pooling of interests and,
accordingly, the consolidated financial statements for the periods
presented have been restated to include the accounts of WCS. Net sales
and net income of the separate companies for the periods preceding the
acquisition were as follows:

<TABLE>
<CAPTION>
Net Sales Net Income
--------- ----------
<S> <C> <C>
Three months ended March 31, 1995 (unaudited):
PFC -- --
WCS 944,061 106,012
--------- ----------
Combined 944,061 106,012
--------- ----------
Year ended December 31, 1994:
PFC -- (178,200)
WCS 1,973,145 (17,530)
--------- ----------
Combined 1,973,145 (195,730)
--------- ----------

</TABLE>

F-10

<PAGE>

Accounting principles and consolidation policy

The accompanying consolidated financial statements include the accounts of
Profit Financial Corporation and its majority-owned subsidiaries. WCS has
a fiscal year end of January 31, and the balances as of January 31, 1997,
1996 and 1995 have been used to prepare the consolidated financial
statements as of December 31, 1996, 1995 and 1994. All significant inter-
company transactions and balances have been eliminated in the
consolidation.

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 amounts reported in the consolidated
financial statements and related notes to financial statements. Changes
in such estimates may affect amounts reported in future periods.

Cash and cash equivalents

The Company considers highly liquid investments with the original maturity
of three months or less to be

F-11

<PAGE>

cash and cash equivalents. Included in these amounts are money market
funds of $581,558, and $41,348 as of December 31, 1996 and 1995,
respectively.

Marketable securities

Brokerage accounts are used by seminar instructors during the seminars,
especially at the Wall Street Workshop, to demonstrate how to buy and
sell securities using a broker. Marketable securities consist mainly of
stocks and options. They have been categorized as trading securities and,
as a result, are stated at market value. All changes in trading
securities' fair values are reported in earnings as they occur. Realized
gains and losses on the sale of securities are determined using the
specific-identification method.

Inventory

Inventory, which consists primarily of finished goods, is valued at the
lower of cost or market. Cost is determined using the first-in, first-out
method.

Property and equipment

Property and equipment are stated at cost. Depreciation is computed using
the accelerated method over the estimated useful lives of the related
assets for both financial reporting and tax reporting purposes. Leasehold
improvements are amortized using the straight-line method over the shorter
of the estimated life of the asset or the remaining term of the lease.
Maintenance and repairs are charged to operations when incurred.
Betterments and renewals are capitalized. When property and equipment are
sold or otherwise disposed of, the asset account and related accumulated
depreciation account are relieved, and any gain or loss is included in
operations.

Revenue recognition

Tuition revenues for seminars received in advance are deferred and
recognized only when the services are rendered.

Subscription revenues for WIN (Wealth Information Network) membership
generally are received for up to one year in advance and are recorded and
presented in the financial statements as deferred revenue until earned.
Although a typical subscription binds the subscriber to prepay, the
subscription term begins when the customer receives his logon code. The
deferred revenues are recognized on a monthly basis over the term of the
contract.

If the subscriber cancels within the first twelve months of the service
period, any remaining unearned subscription revenue will be recognized
into income at the time of the cancellation because the subscription is a
binding noncancellable contract.

Other revenues are recognized when finished products are shipped to
customers or services have been rendered.

Advertising costs

Advertising costs are expensed when incurred.

Income taxes

Income taxes are provided for tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred
taxes. Deferred taxes are recognized for differences between the basis of
assets and liabilities for financial statement and income tax purposes.

Barter transactions

F-12

<PAGE>

The Company is accounting for barter credits in accordance with APB
Opinion No. 29, Accounting for Non-monetary Transactions, and EITF issue
No. 93-11, Accounting for Barter Transactions, involving barter credits
which presumes that the fair value of the non-monetary asset exchanged is
more clearly evident than the fair value of the barter credit received,
and that the barter credit should be reported at the fair value of the
non-monetary asset exchanged.

The Company purchased radio air time advertising in exchange for common
stock in December 1995. The transaction is discussed further in Note K.

Earnings per share

Earnings per share is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during each year.
Earnings per share is computed using the treasury stock method.

Note B - Common Stock Split

On August 6, 1996, the Board of Directors declared a two-for-one stock
split on the Company's Class A common stock, effected in the form of a
stock dividend to shareholders of record on July 15, 1996. The number of
shares issued at September 10, 1996 after giving effect to the split was
6,650,442 common shares (3,325,211 common shares before the split). The
effects of the stock split are accounted for in all share and per share
data included in these consolidated financial statements.

Note C - Concentration of Risks

Cash in banks, based on bank balances, exceeded federally insured limits
by $574,388 and $7,851 as of December 31, 1996 and 1995, respectively.
Receivables from four credit card companies aggregated approximately
$376,256 and $129,188 at December 31, 1996 and 1995 respectively. The
Company invests the majority of its excess cash in marketable securities.
Marketable securities are carried at fair market value, which amounted to
$3,801,039, and $349,206 as of December 31, 1996, and 1995, and accounted
for 22% and 15% of the Company's consolidated assets as of December 1996
and 1995 respectively.

The following table shows the percentage of revenues:

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Seminars 52% 53% 30%
WIN subscriptions 12% 7% 3%
Entity formation services 14% 20% 50%
Product sales 22% 20% 17%
</TABLE>

The following table shows the states from which the Company derived over
10% of its seminar revenues:

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
California 15% 27% 34%
Colorado 7% 11% --
Washington 13% 13% 38%
Nevada 2% 1% 16%
</TABLE>

Note D - Economic Dependency and Significant Risks and Uncertainties

The Company derived a majority of its revenues solely through the
sponsoring and promoting of products, seminars and services of
Money Chef, Inc. One of the co-trustees of the Cook Family Trust,
the shareholder

F-13

<PAGE>
of Money Chef, Inc., is the president of the Company. This individual
was the named defendant of a fraud charge in the State of Arizona. The
case was dismissed with prejudice on June 5, 1997.

In March 1996, the Securities and Exchange Commission (the "Commission")
entered an order directing a private investigation of the Company. The
Company's legal counsel has responded to the Commission's requests for
documents and information on behalf of the corporation. No enforcement
action has been taken, and the Commission has advised that the inquiry
should not be construed as an adverse reflection on the securities
involved or on any person or entity.

The Company has also received subpoenas from the State of Washington's
Department of Financial Institutions, Securities Division requesting
information related to PFC, WCS and the Company's president.

Note E - Related Party Transactions

The Company entered into a product agreement with Money Chef, Inc. to
obtain the rights to promote and sponsor seminars, entity formation
services and products owned and controlled by Money Chef, Inc. for
royalty payments ranging from ten to fifty percent of gross sales.
Royalty expenses totaled $4,366,183, $755,500, and $82,923 for the years
ended December 31, 1996, 1995 and 1994 respectively. $48,781 of royalties
were prepaid as of December 31, 1996 and $136,238 of royalties was owed
as of December 31, 1995. Money Chef, Inc. has opted to receive royalties
of the minimum percentage of revenue for all of the three years.

The Company obtained services from seminar speakers provided by companies
owned by officers of the Company. Total speaker fees paid to such
companies totaled $131,337 for the year ended December 31, 1996 and none
for years 1995 and 1994. There were no additional amounts due to such
companies as of December 31, 1996 and 1995.

The Company has various notes receivable from employees and officers.
Original maturity dates are from 12 months to 360 months. Annual interest
rates range from 5.45% to 12%. The manner of settlement is by salary
deduction or payment. Substantially all notes receivable are secured by
real property or personal property. The Company evaluates notes
receivables in accordance with Statement of Financial Accounting
Standards No. 114, Accounting by Creditors for Impairment of a Loan.
Statement No. 114 requires that impaired loans be measured based on the
present value of expected future cash flows discounted at the loan's
effective interest rate. Statement No. 118, Income Recognition by
Creditors for Impairment of a Loan -- Income Recognition and
Disclosures, amends Statement No. 114 to allow a creditor to use
existing methods for recognizing interest income on an impaired loan.
There is no impaired notes receivable as of December 31, 1996 and 1995.

In 1995, the Company accepted a single family home subject to a mortgage
balance of $119,825 from an employee in full settlement of a 10.5% note
receivable with an outstanding balance of $17,661. The asset was
capitalized at $137,486, and no gain or loss was charged to operations.
The employee entered into an agreement with the Company to rent the
property for a monthly rent of $1,300 through July 2000. Under the
agreement, the employee also has an option to repurchase the property
at specified amounts through July 2000. In 1996, the Company sold the
property to another employee for $137,352, and received a note bearing
8% interest per annum as consideration.

Due from related parties in the amount of $663,401 represents advances to
the following, in which the Company has no direct ownership interest:
<TABLE>
<CAPTION>
Name of Related
Parties Amount
--------------- --------------------- ---------
<S> <C>
Crossroad Northwest, LP $ 628,401
Five Star Consulting, Inc. 25,000
Total Hoteliers, LP 10,000
---------
Total $ 663,401
=========
</TABLE>
F-14

<PAGE>

Note F - Marketable Securities

The net unrealized loss in trading securities that has been included in
earnings during the period amounted to $92,711, $88,719, and $(1,616) for
the years ended December 31, 1996, 1995, and 1994 respectively.

Note G - Receivables

Following is a summary of receivables:

<TABLE>
<CAPTION>
December 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Trade and credit card receivables $ 848,282 $ 129,188
Notes receivable, employees 1,714,802 106,904
Notes receivable from officer 249,604 -
Due from related parties 663,401 -
Other 11,378 1,611
----------- --------
Total $3,487,467 $237,703
========== ========
</TABLE>

Management estimates that substantially all receivables are collectible.

Note H - Property and Equipment

The following is a summary of property and equipment:

<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1995
----------- ---------
<S> <C> <C>
Land $ 532,000 $ 27,470
Building 4,183,361 109,882
Equipment 1,270,583 218,555
Automobiles 828,604 --
Furniture and fixtures 681,425 52,793
Leasehold improvements -- 25,090
----------- ---------
7,495,973 433,790
Less: Accumulated depreciation (360,768) (88,779)
----------- ---------
Total $ 7,135,205 $ 345,011
=========== =========
</TABLE>

Depreciation expense charged to operations was $344,991, $38,816 and
$30,663 in December 31, 1996, 1995, and 1994, respectively.

Note I - Non-Marketable Investments and Accounting Changes

Non-marketable investments consists of investments in venture capital
partnerships and private companies, and 99 lots of land in a recreational
development in the County of Antrim, Michigan. The estimated non-

F-15

<PAGE>

marketable investments approximated the carrying amount at December 31,
1996 and 1995. The fair values of investments in venture capital
partnerships and private companies were estimated based on financial
condition and operating results, or other pertinent information. No
dividends were received from non-marketable investments during the years
shown.

The Company adopted Statement of Financial Accounting Standards (SFAS) No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of in 1995. The Company recorded a non-cash pre-tax
charge of $99,000 for the year ending December 31, 1995 to write-down the
carrying value of the land investment in the County of Antrim, Michigan.
The Company considers the sale prices of comparable lots in the
recreational development project as indicators of fair value.

Non-marketable investments consist of the following:

<TABLE>
<CAPTION>
1996 1995
-------- ----------
<S> <C> <C>
200,000 shares Arrow Management, Inc. $ 18,600 $ 18,600
99 Lots (land) - Michigan $148,500 $ 148,500
12% interest in 4500 South Hotel Partners, L.C. $268,000 -- --
2,187 shares Internos Productions, Inc. $ 87,500 -- --
Equity in subsidiary's investment -- -- $1,068,000
-------- ----------
Totals $522,600 $1,235,100
-------- ----------
-------- ----------
</TABLE>

Note J - Long-Term Debt

The following is a summary of long-term debt:

<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ----------
<S> <C> <C>
Unsecured note payable to unrelated party, due
in monthly installments of $11,100, bears interest
at 21% per annum $ -- $ 70,000

Unsecured note payable to unrelated party, due in
monthly installments of $1,000, bears interest at 20%
per annum -- 6,204

Automobile loan payable to a credit union assumed by
the company on behalf of an employee, due December
2003, bears interest at 9.25% per annum 36,178 --

Unsecured note payable to a related party, originally
due October 15, 1996, bears interest at 10% per annum 19,000 19,000

Unsecured note payable to a related party, originally
due October 15, 1996; bears interest at 10% per annum 45,000 45,000

Mortgage payable, secured by land and building, due in monthly
installments of principal and interest of $50,000 from
September 1, 1996 through August 1, 1997, $100,000 from
September 1, 1997 to February 1, 1999 and $555,862 on March 1,
1999, includes interest at 9% per annum 2,393,292 --

Mortgage payable, secured by land and building, due
in monthly installments of $1,067, bears interest at
10% per annum -- 118,735
------------ ----------

Total Debt $ 2,493,470 $258,939

Less: Current maturities
others (660,708) (77,175)
related parties (19,000) (19,000)
officer (45,000) (45,000)
------------ ----------

Total Long Term Debt $ 1,768,762 $ 117,764
============ ===========
</TABLE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

F-16

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note K - Long-Term Debt (continued)

The following are maturities of long-term debt for each of the next five
years:

<TABLE>
<S> <C>
1997 $ 724,708
1998 1,091,782
1999 655,498
2000 4,954
2001 5,432
Thereafter 11,096
-----------
Total $ 2,493,470
Less: Current long-term debt 724,708
-----------
$ 1,768,762
===========
</TABLE>

Note K - Prepaid Advertising

In 1995, the Company entered into an agreement with Associated Reciprocal
Traders, Ltd. (ART) to purchase from ART 20,000 Investor Relations-
Advertising-Infomercial radio air time spots, priced at $25 per ad spot,
per station, for a sum total of $500,000. In payment of the foregoing,
the Company issued 100,000 shares of common stock to ART in January 1996
at negotiated value which was greater than fair market value at $5.00 on
the date issued. The prepaid advertising is shown as a reduction of
shareholders' equity rather than as an asset.

Note L - Disclosures About Fair Value of Financial Instruments

Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards (SFAS) No. 107, Disclosures About Fair
Value of Financial Instruments, as part of a continuing process by the
FASB to improve information regarding financial instruments. The
following methods and assumptions were used to estimate the fair value of
each class of financial instruments:

Cash and cash equivalents - The carrying amount of cash and cash
equivalents approximates its fair value.

Marketable securities - The fair value of marketable securities were
estimated based on quotes obtained from brokers for those instruments.

Non-Marketable Investments - The fair value of non-marketable investments
is determined by financial positions of the investee companies and market
conditions.

Margin loans in investment accounts - The carrying amount of margin loans
approximates its fair value.

Long-Term Debt - The fair values of the Company's long-term debt either
approximates fair value or estimates using discounted cash flow analyses
based on the Company's current incremental borrowing rates for similar
types of borrowing arrangements.

The carrying amounts and fair values of the Company's financial
instruments at December 31, 1996 and 1995 are as follows:

F-17

<PAGE>

<TABLE>
<CAPTION>
1996 1995
--------------------------- ----------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 635,141 $ 635,141 $ 26,840 $ 26,840
Marketable securities 3,801,039 3,801,039 349,206 349,206
Non-marketable investments 522,600 522,600 1,235,100 1,235,100
Margin loans in investment
accounts 1,103,936 1,103,936 - -
Long-term debt 1,768,762 1,768,762 117,764 117,764
</TABLE>

The carrying amounts in the table are included in the balance sheet under
the indicated captions.

Note M - Lease and Other Commitments

Operating lease commitments are primarily for office space. Rental
expense amounted to $294,918, $109,133 and $70,314 for the years
ended December 31, 1996, 1995, and 1994 respectively. Future minimum
rental commitments are as follows:

<TABLE>
<S> <C>
1997 $ 46,098
1998 46,098
1999 46,098
2000 7,683
----------
Total $ 145,977
==========
</TABLE>

The Company entered into an employment agreement in January, 1997, with
one of its executive officers. The agreement provided for a minimum
salary plus incentive bonuses which are payable if specified management
goals are attained. The agreement also gives the officer the right to
purchase 80,000 shares at $1.50 per share through 1999 at 20,000 shares
per year. The options may be exercised within a ten year period from the
date of vesting.

The Company entered into agreements in 1996 with two contracting companies
to make improvements on its office building in Seattle, Washington. Total
commitments on future payments was approximately $375,000 as of
December 31, 1996.

F-18

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note N - Income Taxes

Provisions for income taxes in the consolidated statements of income
consist of the following components:

<TABLE>
<CAPTION>
Years ended December 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Current
Federal $ 2,321,968 $ 183,200 $ --
State -- -- --
Other States 55,000 -- --
----------- ----------- -----------
2,376,968 183,200 --
Deferred
Federal (775,724) 540 (7,880)
State -- -- --
----------- ----------- -----------
(775,724) 540 (7,880)
----------- ----------- -----------

Total income taxes $ 1,601,244 $ 183,740 $ (7,880)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the company's deferred tax assets and
liabilities are as follows:

<TABLE>
<CAPTION>
December 31,
Deferred tax assets: 1996 1995
----------- -----------
<S> <C> <C>
Unrealized gain on trading securities $ 79,192 $ 7,340
Deferred revenues 806,294 --
State income tax 19,250 --
----------- -----------
Total deferred tax assets 904,736 7,340
----------- -----------

Deferred tax liabilities:
Accelerated depreciation 61,691 --
State income tax 59,981 --
----------- -----------
Total deferred liabilities 121,672 --
----------- -----------

Net Deferred tax asset $ 783,064 $ 7,340
----------- -----------
----------- -----------
</TABLE>

F-19

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note N - Income Taxes (continued)

The reconciliation of the effective income tax rate to the Federal
statutory rate is as follows:

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Federal income tax rate 35.0% 35.0% 35.0%
Unrealized gain on trading securities 1.7 1.8 --
Deferred revenues 17.3 -- --
Accelerated depreciation (1.3) -- --
Capitalized interest (1.3) -- --
State income tax 0.4 -- --
-------- -------- --------
Effective income tax rate 51.8% 36.8% 35.0%
-------- -------- --------
-------- -------- --------
</TABLE>

Note O - Revenues and Other Cost of Revenues

<TABLE>
<CAPTION>
Seminar Product Entity WIN
Revenues Sales Formations Subscriptions Total
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996:
Revenues, net of returns & discounts $ 23,817,315 $ 10,608,421 $ 3,716,528 $ 2,582,251 $ 40,724,515

Other cost of revenues:
Cost of goods sold -- 5,017,027 -- -- 5,017,027
Credit card fees 556,663 247,942 86,864 60,353 951,822
Cost of meeting rooms 1,488,212 -- -- -- 1,488,212
Speaker fees 1,373,855 -- 764,312 -- 2,138,167
Travel 1,383,464 -- 206,724 -- 1,590,188
------------ ------------ ------------ ------------ ------------
Total $ 4,802,194 $ 5,264,969 $ 1,057,900 $ 60,353 $ 11,185,416
------------ ------------ ------------ ------------ ------------

Year ended December 31, 1995:
Revenues, net of returns & discounts $ 4,049,360 $ 1,477,200 $ 1,538,459 $ 502,316 $ 7,567,335

Other cost of revenues:
Cost of goods sold -- 1,121,336 -- -- 1,121,336
Credit card fees 90,359 32,963 34,330 11,209 168,861
Cost of meeting rooms 99,720 -- -- -- 99,720
Speaker fees 353,915 101,937 282,520 -- 738,372
Travel 357,772 -- 132,327 -- 490,099
------------ ------------ ------------ ------------ ------------
Total $ 901,766 $ 1,256,236 $ 449,177 $ 11,209 $ 2,618,388
------------ ------------ ------------ ------------ ------------

Year ended December 31, 1994:
Revenues, net of returns & discounts $ 532,422 $ 331,225 $ 1,064,670 $ 44,828 $ 1,973,145

Other cost of revenues:
Cost of goods sold -- 217,355 -- -- 217,355
Credit card fees 12,805 7,293 23,441 987 44,526
Cost of meeting rooms 14,083 -- -- -- 14,083
Speaker fees 64,279 54,017 286,986 -- 405,282
Travel 35,123 -- 62,442 -- 97,565
------------ ------------ ------------ ------------ ------------
Total $ 126,290 $ 278,665 $ 372,869 $ 987 $ 778,811
------------ ------------ ------------ ------------ ------------
</TABLE>

F-20

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note P - Dividends

The Company did not declare or pay any dividends for the years shown in
these financial statements.

Note Q - Non-Monetary Transactions

In June 1996, prior to the two-for-one stock split, the Company issued
16,000 shares of its Class A common stock at $3 per share ($1.50 per
share with effect of the stock split) to various employees for
subscription notes receivable. In addition, the Company issued 30,422
shares of its Class A common stock at $2.50 per share to various
employees as additional employee compensation.

Note R - Supplementary Disclosure of Cash Flow Information

The Company paid $263,285 and $25,422 in interest, and $100,000 and
$78,000 in income taxes, in the years ended December 31, 1996 and 1995
respectively. No interest or income taxes were paid in the year ended
December 31, 1994.

The Company purchased a three-story commercial building in July, 1996, and
relocated in January 1997. The $3,300,000 purchase was financed with a
$2,550,000 mortgage with an interest rate of 9% per annum, and a down
payment of $750,000.

F-21

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors Profit Financial Corporation Seattle, Washington

The audits referred to in our report to the Board of Directors of Profit
Financial Corporation and subsidiaries dated June 25, 1997, relating to the
consolidated financial statements of Profit Financial Corporation and
subsidiaries included the audit of schedules listed under Item 14 of Form
10-K for the years ended December 31, 1996, 1995, and 1994. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement
schedules based upon our audits.

In our opinion such financial statement schedules present fairly, in all
material respects, the information set forth therein.

/s/ Miller & Company

Certified Public Accountants

Santa Monica, California
25 June 1997

F-22

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

SCHEDULE 1 - CONDENSED FINANCIAL INFORMATION OF REGISTRANT BALANCE SHEETS

<TABLE>
<CAPTION>
ASSETS

December 31,
-----------------------------
CURRENT ASSETS 1996 1995
------------ -----------
<S> <C> <C>
Investment in subsidiary $ 110,552 $ 110,552
Investment in land 148,500 148,500
Investment in non-marketable securities 18,600 18,600
Other receivables 1,378 -
Due from subsidiary 48,013 -
------------ -----------
TOTAL ASSETS $ 327,043 $ 277,652
------------ -----------
------------ -----------
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY

December 31,
-----------------------------
CURRENT LIABILITIES 1996 1995
------------ -----------
<S> <C> <C>
Accounts payable and accrued expenses $ 22,080 $ 41,396

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

TOTAL LIABILITIES 22,080 41,396
------------ -----------

SHAREHOLDERS' EQUITY
Preferred stock -- --
Common stock 66,807 31,991
Paid-in capital 1,072,608 498,938
Prepaid advertising (500,000) --
Retained earnings (deficit) (334,452) (294,673)
------------ -----------

TOTAL SHAREHOLDERS' EQUITY 304,963 236,256
------------ -----------
TOTAL LIABILITIES, MINORITY INTEREST,
AND SHAREHOLDERS' EQUITY $ 327,043 $ 277,652
------------ -----------
------------ -----------
</TABLE>

F-23

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

SCHEDULE 1 - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)

STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
INTEREST INCOME $ 2,013 $ -- $ --

GENERAL AND ADMINISTRATIVE EXPENSES (41,792) (18,625) --

LOSS ON NON-MARKETABLE SECURITIES -- (107,400) (178,200)
IMPAIRMENT OF LONG-LIVED ASSETS -- (99,000) --

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

INCOME (LOSS) BEFORE INCOME TAXES (39,779) (225,025) (178,200)

PROVISION FOR INCOME TAXES -- -- --
--------- --------- ---------

NET LOSS $ (39,779) $(225,025) $(178,200)

ACCUMULATED DEFICIT, BEGINNING (294,673) (178,200) --

ISSUANCE OF COMMON STOCK IN
EXCHANGE FOR INVESTMENT
IN SUBSIDIARY -- 108,552 --
--------- --------- ---------

ACCUMULATED DEFICIT, ENDING $(334,452) $(294,673) $(178,200)
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-24

<PAGE>

PROFIT FINANCIAL CORPORATION AND SUBSIDIARIES

SCHEDULE 1 - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Net income (loss) $ (39,779) $(225,025) $(178,200)

Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Impairment of long-lived assets -- 99,000 --

Loss on investment in non-marketable securities -- 107,400 178,200

Changes in assets and liabilities:
Receivables (1,378) -- --
Due from subsidiary (48,013) -- --
Accounts payable and accrued expenses (19,316) 18,625 --
--------- --------- ---------
TOTAL ADJUSTMENTS (68,707) 225,025 178,200
--------- --------- ---------

NET CASH PROVIDED BY OPERATING ACTIVITIES (108,486) 225,025 178,200
--------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:

Issuance of common stock 108,486 -- --
--------- --------- ---------

NET INCREASE IN CASH -- -- --

CASH, beginning of year -- -- --
--------- --------- ---------

CASH, end of year $ -- $ -- $ --
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-25