DIVOT GOLF CORP, 10-K, 2000-03-29

DIVOT GOLF CORP
10-K, 2000-03-29
MISCELLANEOUS AMUSEMENT & RECREATION

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

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FORM 10-KSB

[X]Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1998.

[_]Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .

Commission File No. 0-24812

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Divot Golf Corporation
(Name of small business issuer as specified in its charter)

Delaware 56-1781650
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

927 Lincoln Road, Suite 200 Miami Beach, FL 33139
(Address of principal executive offices)

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(305) 538-2727

(Issuer's telephone number)

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

NONE

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

Common Stock, $.001 par value

(Title of class)

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [_] No
[X]

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

The issuer's revenues for the most recent fiscal year were $130,860.

As of March 13, 2000, the aggregate market value of the common stock held by
non-affiliates of the issuer was $15,914,102, based upon the average bid and
asked price of such common stock as of such date. As of March 13, 2000, there
were 100,779,740 shares of common stock outstanding and 0 shares of preferred
stock outstanding.

Documents Incorporated by Reference

None.

Transitional small business disclosure format Yes [_] No [X]

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DIVOT GOLF CORPORATION

FORM 10-KSB

YEAR ENDED DECEMBER 31, 1998

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TABLE OF CONTENTS

Page

----

PART I

ITEM 1. Description of Business........................................ 3

ITEM 2. Description of Property........................................ 19

ITEM 3. Legal Proceedings.............................................. 19

ITEM 4. Submission of Matters to a Vote of Security holders............ 21

PART II

ITEM 5. Market for the Common Equity and Related Stockholder Matters... 23

ITEM 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 24

ITEM 7. Financial Statements........................................... 32

ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure........................................... 32

PART III

ITEM 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of The Exchange Act.............. 33

ITEM 10. Executive Compensation......................................... 34

ITEM 11. Security Ownership of Certain Beneficial Owners and
Management..................................................... 37

ITEM 12. Certain Relationships and Related Transactions................. 37

ITEM 13. Exhibits and Reports on Form 8-K............................... 39

SIGNATURES............................................................... 42

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the information contained in this Annual Report on Form 10-KSB may
contain forward-looking statements. Such statements include, in particular,
statements about our plans, strategies and prospects under the headings
"Description of Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." You can identify forward- looking
statements by our use of forward-looking terminology such as "may," "will,"
"expect," "anticipate," "estimate," "continue" or other similar words. Although
we believe that our plans, intentions and expectations reflected in or suggested
by such forward-looking statements are reasonable, we cannot assure you that our
plans, intentions or expectations will be achieved. When considering such
forward-looking statements, you should keep in mind the following important
factors that could cause our actual results to differ materially from those
contained in any forward-looking statement:

. we have a limited operating history as an e-commerce company;

. we have a limited operating history as a company that specializes in
Internet travel distribution;

. we may not be able to complete our acquisition activity, including
acquiring the 3D animation asset from AnimInet, the stock of Wilhelmina
TravelFile.com and the GDS and ancillary contracts and related furniture
and equipment from Orbit Network, as quickly or on as favorable terms as
anticipated, if at all;

. we may not be able to hire and retain qualified employees;

. we may experience difficulties in maintaining our competitiveness if we
are unable to keep up with technological advancements;

. we may not be able to integrate our acquired assets quickly or
successfully into our existing business plan or corporate structure;

. we may not be able to meet our short-term or long-term liquidity needs
on terms favorable to us, if at all;

. we may experience technological difficulties in our delivery of
application software products;

. our operating performance and business strategy depends upon the
continued viability and growth of the Internet and the travel business;

. we compete in a highly competitive industry with low barriers to entry;
and

. we may have incorrectly assessed our potential monetary liabilities and
expenses with respect to various court proceedings in which we are
currently involved.

Given these uncertainties, we caution you not to place undue reliance on
forward-looking statements. We undertake no obligation to publicly release the
results of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances or to reflect the occurrence of
unanticipated events.

ITEM 1. DESCRIPTION OF BUSINESS

General

We were incorporated in Delaware on November 12, 1991 under the name "Longview
Golf Corporation." We changed our name to "Brassie Golf Holdings, Ltd." on
September 18, 1992, and then again, on March 29, 1993, to "Brassie Golf
Corporation." On June 2, 1998, we changed our name to "Divot Golf Corporation."
We expect to ask our stockholders to approve at our next annual meeting a
proposal to change our name to "Orbit Travel.com Corporation." Our executive
offices are located at 927 Lincoln Road, Suite 200, Miami Beach, FL 33139, and
our telephone number is (305) 538-2727.

Recent Developments

Acquisition Activity. On October 5, 1999, California-based Orbit Network, Inc.
publicly issued a press release stating that we had announced that we had signed
a definitive merger agreement to acquire California-based Orbit Network in a
stock for stock exchange. However, upon completion of our due diligence review
of Orbit Network, we and Orbit Network mutually agreed to cancel this merger
agreement and agreed to enter into the transactions we discuss below.

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We entered into a right to use agreement with Orbit Network as of November 1,
1999 pursuant to which we paid $500,000 in cash for a six-month right to use and
operate Orbit Network's Global Distribution Systems ("GDS") contracts with
Amadeus Marketing, S.A., The Sabre Group, Inc., Galileo International, L.L.C.
and WorldSpan, L.P., its services agreement with America OnLine and related
furniture and equipment. As part of this right to use agreement, we operate the
"TravelFile" website that provides travel suppliers and Internet users travel
planning services. We are entitled under the right to use agreement to retain
any revenues for a six-month period that may be generated from the GDS and
ancillary contracts. Also, as part of the right to use agreement, we paid
$100,000 (included in the $500,000 paid November 1, 1999) for an option
(exercisable in our sole and absolute discretion) to purchase Orbit Network's
rights under the GDS and ancillary contracts and related furniture and equipment
for the assumption of $5.1 million of Orbit Network debt. This purchase option
expires on May 1, 2000, unless extended by us for an additional six months. We
cannot assure you that we will exercise this purchase option or that we will
otherwise acquire the GDS and ancillary contracts and related furniture and
equipment nor can we assure you that, if we do not acquire the GDS and ancillary
contracts and related furniture and equipment, that we will be able to extend
the term of the right to use agreement. See "--Risk Factors--We may not be able
to implement our acquisition growth strategy, which would have an adverse effect
on our business and competitive position in the industry."

On November 17, 1999, our wholly owned subsidiary, OrbitTravel.com, Inc.,
entered into a joint venture agreement with Web Travel Systems, Ltd., a wholly
owned subsidiary of British Airways, pursuant to which we and Web Travel Systems
formed Bonveno.com, Ltd. We each own a 50% interest in Bonveno. Bonveno is
intended to be a European-based online travel information and reservation system
for the distribution of travel-related information and services to European
travel product providers and the traveling public. Also on November 17, 1999,
OrbitTravel entered into an operational agreement with Bonveno pursuant to which
we would provide technical support, licenses and technical maintenance, a
software development agreement pursuant to which we would develop software
applications, and a management agreement which sets forth an operational
management structure, marketing policy, content sharing and product distribution
policy for our joint venture.

On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by David Noosinow, one of our directors and executive
officers, entered into an asset purchase agreement with Mark Savoretti pursuant
to which Spartan Capital agreed to acquire the intellectual property assets
related to the TravelFile website previously owned by Orbit Network for $600,000
in cash and the issuance of 3.0 million shares of our common stock. Mr.
Savoretti, a creditor of Orbit Network, acquired these assets from Orbit Network
through a judicial foreclosure proceeding on January 13, 2000 after Orbit
Network failed to pay $771,000 owed to Mr. Savoretti. Immediately upon execution
of this asset purchase agreement, Spartan Capital Management, LLC assigned all
of its rights and obligations under the agreement to us for $10. One of the
obligations assigned is an obligation to enter into consulting agreements with
Mark Savoretti and another person, under which we would pay a total of $450,000
over three years. We thereafter acquired the intellectual property assets
related to the TravelFile website directly from Mr. Savoretti in exchange for
$60,000 in cash, a note payable in the amount of $540,000 and 3.0 million shares
of common stock, which would represent approximately 0.4% of our common stock
assuming all of the transactions and issuances described in this Annual Report
are consummated.

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we cannot assure you that we would be successful in obtaining such approval. We
cannot assure you that this acquisition will be consummated or that it will be
consummated on the terms set forth in the letter of intent. See "--Risk
Factors--We may not be able to implement our acquisition growth strategy, which
would have an adverse effect on our business and competitive position in the
industry."

On January 31, 2000, we entered into an agreement with Wilhelmina Artist
Management LLC pursuant to which we would acquire all of the outstanding common
stock of its wholly owned subsidiary, WilhelminaTravelFile.com, in exchange for
approximately 80.0 million shares of our common stock, which would represent
approximately 9.0% of our common stock assuming all of the transactions and
issuances described in this Annual Report are consummated. We believe that
Wilhelmena is one of the world's leading talent management agencies. Wilhelmina
and WilhelminaTravelFile.com have entered into an exclusive license pursuant to
which WilhelminaTravelFile would showcase Wilhelmena-provided content through an
Internet website dedicated to travel information and services. We expect that
Wilhelmena models and other celebrities would act as on-screen hosts for travel
destinations providing travel tips and inside information, offering special
promotions and branded product offerings. Unless the transaction has closed,
either party may terminate the Wilhelmina agreement at any time after February
15, 2000. We cannot assure you that we will be able to consummate this
acquisition. We currently do not have a sufficient number of authorized and
unissued shares available under our charter to consummate such an acquisition.
Although we currently expect to ask our stockholders to approve a reverse stock
split on an up to 20-for-1 basis, we cannot assure you that we would be
successful in obtaining stockholder approval for any such actions. See "--Risk
Factors--We may not be able to implement our acquisition growth strategy, which
would have an adverse effect on our business and competitive position in the
industry."

On January 9, 2000, OrbitTravel.com, our wholly owned subsidiary, executed an
exclusive content distribution agreement with AsiaGateway.com, Ltd. Under the
terms of this agreement, we were required to issue 200,000 shares of our common
stock 30 days from the execution date of this agreement. As of February 16,
2000, since we have not issued such shares, either party may terminate this
agreement. Assuming consummation of this transaction, Asiagateway.com would act
as our distribution, marketing and sales partner for the Asian region.
Asiagateway.com is a provider of commerce, community and content for the Asian
marketplace. Content produced and compiled by Asiagateway.com would be
integrated into our online travel services. Our online travel services, in turn,
would be featured in Asiagateway.com.

On February 7, 2000, OrbitTravel.com, our wholly owned subsidiary, executed a
three-year consulting services agreement and joint content agreement with
Laspata/Decaro Studio Corporation, an organization of designers and
photographers, pursuant to which Laspata/Decaro would provide us with media
consulting services regarding brand building and promotion. In addition,
Laspata/Decaro would contribute their library of destination images, photography
and other content for use within our TravelFile service. We also expect
LaSpata/Decaro to assist us in the creation of new video, multi-media, and
rich-media content for our online services. We are required to issue under the
agreement 2.5 million shares of our common stock vesting in equal annual
installments over the three-year term of the agreement, which would represent
approximately 0.3% of our common stock assuming all of the transactions and
issuances described in this Annual Report are consummated. In addition, we would
issue to Laspata/Decaro an additional 100,000 shares upon Laspata/Decaro's
completion of each of the following tasks: (1) the development and
implementation of a promotion and marketing plan; and (2) the provision of
additional proprietary content and the implementation of an agreed-upon
operations strategy.

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you that we will consummate all or part of this transaction. In addition, if our
total equity market capitalization is less than $200 million on any of the dates
that Teakwood Ventures purchases our shares of common stock, we have agreed to
proportionally reduce the per share price of the common stock to be purchased by
Teakwood Ventures. For example, if our total equity market capitalization is
$100 million on September 30, 2000, the purchase price per share would be
$0.1591 and we would consequently be required to issue 37,712,130 shares to
Teakwood Ventures. In addition, our agreement with Teakwood Ventures requires
that we appoint two directors who are nominated by Teakwood Ventures to our
board.

Since the end of 1999, we have issued or agreed to issue approximately 113.8
million shares of common stock for no cash consideration to various executive
officers, employees, consultants and other third parties. A portion of these
shares have been issued or will be issued to settle various disputes and
contingent liabilities. See "Legal Proceedings." We have issued, or expect to
issue, these shares in a series of unrelated registered and private offerings.
See also "--Risk Factors--Future issuances and sales into the market of up to an
additional 166.5 million shares of our common stock will dilute our current
stockholders and may depress the market price of our common stock."

In addition, we have offered to issue approximately 52.7 million additional
shares of our common stock to existing security holders in exchange for all of
our outstanding convertible preferred stock and convertible debt, other than the
notes that OrbitTravel.com, our wholly owned subsidiary, has issued. As of
February 25, 2000, the holders of all of our convertible preferred stock and all
of our convertible debt have accepted this offer. We currently expect to issue
these shares within 10 business days after the date we have filed this Annual
Report on Form 10-K. See also "--Risk Factors--Future issuances and sales into
the market of up to an additional 166.5 million shares of our common stock will
dilute our current stockholders and may depress the market price of our common
stock."

Since its inception on October 6, 1999, our wholly owned subsidiary,
OrbitTravel.com, has issued approximately $3.2 million of debt that is
convertible into approximately 6.4 million shares of our common stock. However,
we currently expect to exchange these notes for approximately 70.3 million
shares of our common stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."

On January 9, 2000, OrbitTravel executed a content distribution agreement with
AsiaGateway.com, Ltd. Under the terms of this agreement, we were required to
issue 200,000 shares of our common stock 30 days from the execution date of this
agreement. As of February 16, 2000, since we have not issued such shares, either
party may terminate this agreement.

We currently expect to ask our stockholders to approve a reverse stock split
on an up to 20-for-1 basis. We cannot assure you that we will be successful in
obtaining such approval. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" for a
table setting forth our expected capitalization assuming all of the transactions
and issuances described in this Annual Report are consummated and we effect a
reverse stock split on an up to 20-for-1 basis.

Our History

Golf Course Ownership, Design, and Management. By mid-1997, we owned four golf
courses and managed more than 20 others. Through April 1998, we were engaged in
acquiring, designing, developing, constructing, owning, operating and managing
private, semi-private and public golf courses in the United States.

World Golf Village. We were also focused on business opportunities in the
World Golf Village resort, a destination golf resort located near Jacksonville,
Florida. We anticipated becoming actively involved in the development of various
amenities, including a restaurant, spa, rental properties, and a laundry
facility, at the World Golf Village. We acquired one parcel of land in the World
Golf Village and various license agreements at the World Golf Village in
December 1996 and a second parcel of land in January 1998. We developed a unique
platform for sales of consumer products, called Interactive Information
Technology and Entertainment (IIT&E), via the virtual golf pro shop, a product
and service based portal with direct access to the Intranet at World Golf
Village and the Internet.

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Refocusing on Golf Related Products and Services. Due to labor and capital
intensive programs associated with golf courses and the poor operating results
of our golf course ownership, design, and management activities, we decided to
refocus our business strategy. We elected to continue our efforts in the World
Golf Village. Instead of focusing on the ownership, design and management of
golf courses, we decided to focus on developing, licensing and marketing golf-
related products and services. In July 1997, we sold the division responsible
for managing the third party-owned golf courses. In August 1997, we sold our
golf course design subsidiary. From November 1997 through April 1998, we sold
the golf courses we owned.

To implement that new strategic focus, we acquired the following golf- related
products companies in April 1998:

. Divot Golf Corporation, a designer and supplier of golf accessories, Divot
Development Corporation and Divot Corporation. Our acquisition of Divot
Golf Corporation gave us a patent on a uniquely- designed golf ball, and a
patented divot repair tool that contains a built-in ball marker and club
head face cleaner. In addition, we acquired the assets of Divot Spa WGV,
Inc.

. Miller Golf, Inc., a supplier of golf accessory products. Miller Golf
offered a wide range of logoed golf products, including bag tags, tees,
ball markers, divot tools, score cards, towels, rainwear, umbrellas, hats,
head covers, tournament prizes and awards.

. Talisman Tools Incorporated, a manufacturer of greens repair tools.
Talisman produced an upscale, divot repair tool.

Citizens Bank Loan. We acquired Miller subject to a line of credit with
Citizens Bank of Massachusetts. The credit agreement from Citizens Bank to
Miller was entered into immediately prior to our closing the purchase of Miller
and provided for a $2 million line of credit, of which approximately $0.8
million was outstanding at the time we acquired Miller. This new credit facility
was secured by Miller's assets and included a covenant prohibiting Miller from
paying more than $100,000 in dividends or intercompany advances to us (as
Miller's parent company) without Citizen Bank's consent.

In late 1998, we were contemplating another acquisition. Citizens Bank was
planning on providing financing for that acquisition and was planning on being a
minority equity holder in that to-be-acquired company. In September, Citizens
Bank orally agreed to advance $500,000 directly to us (Miller's parent company)
against the Miller line of credit to help finance the final payment due on a
promissory note held by the sellers of Miller. Subsequently, the parties
terminated the acquisition discussions. Citizens Bank then sent a notice of
default citing a breach of the covenant prohibiting an advance from Miller to us
in excess of $100,000 without the bank's permission. At that time, including the
$500,000 advance, only $1.3 million was outstanding on the Miller line of
credit. However, as a result of the purported default, Citizens Bank refused to
advance Divot or Miller any further funds under our line of credit.

By February 1999, we were substantially out of cash and unable to take any
legal action with respect to the purported default. We therefore negotiated a
forbearance agreement whereby Citizens Bank agreed to refrain from foreclosing
on Miller's assets if the loan was repaid by May 25, 1999. As part of that
forbearance agreement, Miller reaffirmed its grant of a security interest in its
assets, and we (the parent company) pledged our stock of Miller to the bank as
security for the loan.

Foreclosure and Write-off of Assets. We were unable to repay or refinance the
loan. We negotiated a sale of the assets of Miller. However, Citizens Bank
failed to accept the sale of its note to the new purchaser. In June 1999, after
Citizens Bank sold the note to other third parties, such third parties
foreclosed on our interest in Miller. Since the purported event of default and
notice of default were in 1998, we wrote off the Miller assets as of December
31, 1998.

After we acquired Talisman Tools Incorporated, a third party threatened to sue
us for patent infringement if we sold products based on the design of the repair
tool acquired in the Talisman transaction. We subsequently refused to make the
final payments due to the parties from whom we purchased Talisman. Although this
third

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party has since stopped threatening to sue us for patent infringement, the
former Talisman shareholders then sued us for failing to pay them the
consideration still due under the acquisition agreement. The molds that we
acquired from Talisman Tools were ultimately seized as part of the Miller asset
foreclosure. We have written off the investment in Talisman as of December 31,
1998. We have engaged local counsel to vigorously defend this claim and to seek
to rescind the original acquisition agreement and recover amounts we paid on the
closing date.

Certain Additional History. In or around January 1998, we determined that
Internet technology strategies developed under our IIT&E platform could increase
our growth and utilize licenses we had at the World Golf Village. IIT&E
incorporated golf and spa destination travel packages and consumer products;
products and services to be offered ranged from logo premiums, travel packages
for golf, spa, fishing and residence club share offered via the Internet, the
Intranet at the World Golf Village and a web based portal, www.divot.com, our
virtual golf pro shop.

We developed www.divot.com, the virtual golf pro shop, in association with
Hitachi PC and other strategic partners. The www.divot.com website was under
development to enable IIT&E to sell golf, spa and travel related products and
services, since we owned the parcels and the World Golf Village, along with
world class amenities, and anticipated the purchase of Miller Golf Inc. from
which the logo products would be delivered in a business-to-business e- commerce
platform. In mid-1998, we acquired the exclusive rights to golf- related content
on the www.freeride.com Internet community. We also retained the services of
Internet service provider Rare Medium to assist in the development of our
website and to serve as host of www.divot.com.

Through a press release, we announced that we would launch live at the golf
PGA Show held in January 1999 in Orlando, Florida. We had successfully initiated
a soft launch of the website at the PGA Show held in Las Vegas, Nevada in August
1998.

At our board of directors meeting in November 1998, Mr. Cellura presented
concerns regarding soft sales and potential problems in the golf industry and
slower absorption of developed amenities at the World Golf Village. Mr. Cellura
addressed our high cost of ownership of factories and land and the absence of
available capital to fund our operations. There was a proposal to refocus on
IIT&E Internet strategies, close our headquarters in Tampa, Florida, and move to
New York City where we had relationships with various Internet companies
interested in www.divot.com.

In June 1999, Mr. Cellura, reassumed the position of our CEO. Upon Mr.
Cellura's reassuming his position as CEO, funding commitments were established
to take us forward, providing for the deployment of IIT&E Internet strategies.

Our New Strategy

We have ceased our operations as a golf related products and services company
and are repositioning ourselves as a value-added services provider specializing
in business to business e-commerce applications and providing distribution
services and on-line marketing solutions to the travel industry worldwide.
Through our wholly owned subsidiary, "OrbitTravel.com," we are an independent
travel distribution and e-commerce company that specializes in assisting travel
suppliers and tourism destinations to promote, distribute and sell their
products electronically to travel buyers worldwide, via the Internet, airline
Global Distribution Systems ("GDSs"), America Online, Private Intranets and
other electronic distribution networks.

You should carefully review our "Risk Factors" beginning on page 11.

Marketing

Our target customers are travel suppliers, which include independent hotels,
leisure resorts, cruise lines, tour operators, destination marketing
organizations, entertainment venues, and tourism attractions worldwide. Our goal
is to create an on-line travel marketplace or "Travel Exchange" that allows
travel suppliers to post on-line displays of product and service offerings to a
global travel purchasing audience consisting of travel agents and travel
planning consumers.

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We believe that our existing technology and global distribution network allow
travel suppliers to cost-effectively reach a much broader, global market than
would otherwise be available to them. The primary products and services that we
provide are based on the distribution network and technology behind our branded
on-line distribution channel TravelFile, an on-line leisure travel information
and reservation service. On January 27, 2000, we acquired the intellectual
property assets related to the TravelFile website previously owned by Orbit
Network from Mark Savoretti, a creditor of Orbit Network who acquired the assets
in a judicial foreclosure proceeding, for $60,000 in cash, a note payable in the
amount of $540,000 and the issuance of 3.0 million shares of our common stock.

We believe that we have strong relationships in place and provide a range of
services to a number of leading travel industry trade and professional groups
including the Caribbean Tourism Organization, the Caribbean Coalition for
Tourism, Advanstar Publishing (publishers of Travel Agent Magazine and the
Premier Hotel & Resort Guides) and the American Society of Travel Agents.

We charge travel suppliers for access to our global distribution system and
for promotional and advertising opportunities that are available throughout the
service. We also charge travel suppliers transaction fees for referrals and
booking transactions using our e-commerce systems and for production services
associated with creating and maintaining client's on-line sales and marketing
systems.

Our marketing plan is to focus initially on establishing long-term strategic
relationships with key travel industry participants that provide access to large
groups of customers, large inventories of bookable travel products and services,
and valuable endorsements to our targeted market segments. We believe that these
relationships will provide us with the core content required to build and grow
the user community and to drive e-commerce to participating travel suppliers.

Products and Services

TravelFile, which we acquired on January 27, 2000, is an on-line leisure
travel destination information and reservation service which allows travel
suppliers to continually post and manage product and service offerings to a
global travel purchasing audience through the GDS and ancillary contracts that
we license from Orbit Network. TravelFile is a content provider for the AOL
Travel Channel.

In addition, we currently offer the following other products and services
through our right to use Orbit Network's GDS and ancillary contracts:

Caribbean Vacation Planner Online. Carribean Vacation Planner Online is an
on-line sales and marketing service for travel suppliers and destinations of the
Caribbean region. This service is produced in cooperation with the Ministers of
Tourism for each of the countries of the Caribbean region, under the auspices of
their official tourism promotion association, the Caribbean Tourism
Organization.

Bonveno. We have entered into a joint venture with Web Travel Systems, a
wholly owned subsidiary of British Airways, pursuant to which we expect to
jointly create a European-based full service on-line travel supplier branded
"Bonveno." Bonveno expects to develop and provide access for us to the European
on-line travel market by incorporating our technology to deliver worldwide
destination information and provide the ability for travel suppliers to promote
their products and services and directly accept and process on-line bookings.

WilhelminaTravelFile.com: Through our subsidiary, OrbitTravel.com, Inc., we
have arranged to acquire all the issued and outstanding stock of
WilhelminaTravelFile.com, Inc. a wholly owned subsidiary of Wilhelmina Artist
Management, LLC, which has granted WilhelminaTravelFile.com an exclusive license
to showcase Wilhelmina-provided content through an Internet Website dedicated to
travel information and services, which we anticipate will be marketed in part by
professional models and celebrity talent.

AsiaGateway.com: Our subsidiary, OrbitTravel.com, Inc., has entered into a
content distribution agreement with AsiaGateway.com, Ltd., which provides for
the integration of Asia-related Internet content

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produced and compiled by AsiaGateway.com into our online travel services, which
in turn will be prominently featured in Asiagateway.com.

Laspata/Decaro Studios: Our subsidiary, OrbitTravel.com, Inc., has entered
into a Consulting Services and Joint Content Agreement with Laspata/Decaro
Studio Corporation, which calls for the provision of media consulting services
regarding brand building and promotion, and also calls for the contribution by
Laspata/Decaro of their library of destination images, photography and other
content for use within the TravelFile service, along with the creation of new
video, multi-media, and rich-media content for our online services.

TripRequest.com. TripRequest.com is an on-line service that allows Internet
users to place an order for travel by completing an on-line "trip request" order
form. Trip requests are then posted to the TravelFile server, pursuant to which
participating travel suppliers and travel agents that pay us a subscriber fee
can access, bid on, and respond to the trip requests posted.

Custom Branded On-line Travel Products and Services. We provide travel content
and services that can be "private labeled" for distribution and integration into
a wide variety of other on-line services and e-commerce applications.

Consulting/Production Services. Our consulting and production services focus
on travel automation, data processing, e-commerce, and Internet applications. We
operate as an application service provider to the travel industry.

Other Services. As part of our evolution from a golf company to an Internet
travel business, we are developing www.divot.com, which we expect to be a portal
for the sale of golf, spa and travel-related products and services. In addition,
we own the exclusive right to provide and manage golf-related content on the
www.freeride.com Internet community. We have been exploring the development of
these golf-related services since 1998 as an ancillary part of our golf
business.

Competition

Online travel is still at a very early stage of growth and there is no single
dominant company or business model that has yet emerged as dominant in the
marketplace. We compete with the following:

. Direct competitors such as Vacations.com (formerly TravelOn),
VacationSpot.com, Destinations.com, WorldRes, Online Vacation Mall, Mark
Travel Corporation, Atlas Travel Technologies and Preview Travel;

. The major on-line travel sites such as Travelocity, Expedia, and
Preview;

. The major Internet "portals" such as Yahoo, Excite, Lycos, etc.;

. Secondary on-line travel sites such as Trip.com, OneTravel, TravelScape,
BizTravel.com, Travelbyus.com, GetThere.com, CheapFares.com,
TravelNavigator.com, ByeByeNow.com and VacationSpot.com;

. Travel agency driven distribution systems such as Vacations.com,
Uniglobe.com, Carlson Wagonlits, PositiveSpace.com, The Travel Company,
Global Vacation Group, Rosenbluth Travel and Liberty/Go Go Travel;

. Niche players in specific areas of interest such as ski, golf, spa,
lifestyle or other areas of interest such as TravelWeb, WorldRes, Ski
Travel Online.com, Golf Travel Online.com and Great Outdoors.com; and

. Global Distribution Systems (GDSs) such as SABRE, Galileo and Preview.

Technology

Our TravelFile data is stored in a proprietary data management system of
inter-related index files and memory resident indices. The data management
system operates on Compaq Digital Alphaserver machines which

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are powered by the Digital Alpha AXP processor and a Hitachi 8 Way Server. We
also maintain multiple 56Kb digital links to provide connectivity to the GDS
vendors and T1 digital links to America Online and the World Wide Web.

Currently, we support systems that operate 24 hours-a-day within a central
computer system located at our leased facility in Whitefish, Montana. The
systems incorporate the following elements:

Hardware/Network:

. Compaq Digital Alpha Server Host Platform (similar to those used by
Amazon.com and Yahoo.com.), Hitachi 8 Way Server.

. Fully RAIDed drive sets for added reliability and performance.

. Redundant power supplies.

. Load balanced servers.

. Full UPS support.

. 100Base-T and 10Base-T Ethernet.

. T1 connection to the Internet and AOL and four dedicated 56k connections to
GDS distribution partners.

. Year 2000 compliance.

Software:

. NT, Unix, and Open VMS operating systems.

. Custom code ANSI C compliant.

. Year 2000 compliance.

. C++, Java program foundation

Employees

At February 16, 2000, we have 35 full-time employees. None of our employees
belong to any unions, and we believe we have good relations with our employees.

Risk Factors

Investing in our securities involves a high degree of risk. You should
carefully consider the following factors and other information in this Annual
Report on Form 10-KSB, including our consolidated financial statements and the
related notes, before making a decision to invest in our securities. Additional
risks and uncertainties, including those generally affecting the market in which
we operate or that we currently deem immaterial, may also impair our current or
future business.

We have not filed any periodic reports required under the federal securities
laws since the third quarter of 1998.

We have not filed any periodic reports that we were required to file under the
federal securities laws since the third quarter of 1998. We cannot assure you
that claims asserting violations of federal securities laws will not be asserted
even if we file with the SEC these required reports. In addition, the SEC may
impose fines, penalties or assessments against us. We may not have sufficient
funds to pay such fines, penalties or assessments against us. We may not have
sufficient funds to pay such fines, penalties or assessments or to defend claims
against us by third parties.

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We have a history of losses and therefore cannot assure you that we will be
profitable.

We have recently experienced operating and net losses. We lost approximately
$16.0 million in 1998 and approximately $7.7 million in 1999. In the future, we
may not be able to generate sufficient revenue from operations to pay all of our
operating or other expenses. If we fail to generate sufficient cash from our
operations to pay these expenses, our management will need to identify other
sources of funds. We may not be able to borrow money or issue more shares of
common stock to meet our cash needs. Even if we can complete such financing
transactions, they may not be on terms favorable to us. If we cannot raise
sufficient capital to fund our operations, we may not be able to continue our
business and the value of our securities could decline or even become worthless.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for a more complete description of our historical results of
operations and liquidity and capital needs.

If we fail to attract and retain qualified employees, our revenues could
decrease.

Our future success depends in large part upon our ability to attract, train
and retain additional highly skilled executive-level management and creative
technical, consulting, marketing and sales personnel. The competition in the
Internet business for such personnel is intense, and we cannot be sure that we
will be successful in attracting, training and retaining such personnel. If we
fail to attract and retain qualified employees, our revenues could decrease.

Potential fluctuations in quarterly results make financial forecasting
difficult and could affect our common stock price.

As a result of our limited operating history in the Internet business and the
emerging nature of our markets, we believe that quarter-to-quarter comparisons
of results of operations are not necessarily meaningful. Also, it is difficult
to forecast quarterly results due to the difficulty in predicting the amount and
timing of client expenditures, acquisitions and employee utilization. Quarterly
results of operations may fluctuate significantly in the future as a result of a
variety of factors, many of which are outside of management's control. You
should not rely on the results of any one quarter as an indication of future
performance.

Our business depends on our network infrastructure, including our ability to
obtain sufficient network capacity.

The success of our business depends on the capacity, reliability and security
of our network infrastructure. We may need to use substantial financial,
operational and management resources to expand and adapt our network
infrastructure. We may not be able to expand or adapt our network infrastructure
to meet additional demand on a timely basis and at a commercially reasonable
cost, or at all.

Our lack of an operating history in the Internet travel business makes it
difficult for you to evaluate our business.

Prior to November 1, 1999, we were a manufacturer and seller of golf
accessories. We have only been in the Internet business and the travel business
since November 1, 1999. Our business and prospects must therefore be considered
in light of the risks and uncertainties frequently encountered by companies in
their early stages of development. These risks are further amplified by the fact
that we are operating in the new and rapidly evolving Internet services market.
You should be aware that:

. our business model and strategy is new and evolving; and

. we may not be able to successfully implement our business models and
strategies.

We cannot assure you that we will be successful in meeting these challenges
and addressing these risks and uncertainties. If we are unable to do so, our
business will not be successful.

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We may incur significant losses and generate negative operating cash flow in
the future.

We may incur significant losses and generate negative operating cash flow. We
will use significant amounts of cash as we continue to enhance our product and
service offerings. The extent to which we experience negative cash flow will
depend upon a number of factors, including the following:

. the number and size of future acquisitions and investments, if any;

. the expense and time required to integrate prior and future acquired
assets;

. the time and effort required to capture integrated marketing synergies;

. our ability to generate increased revenues and cash flow; and

. potential regulatory developments that may apply to our operations.

We may be unable to implement our acquisition growth strategy, which would have
an adverse effect on our business and competitive position in the industry.

We have entered into an agreement to acquire AnimInet's 3D animation asset and
acquire the stock of Wilhelmina TravelFile.com and have an option to purchase
Orbit Network's GDS and ancillary contracts and related furniture and equipment.
Acquiring these assets are important to our business strategy. In addition, we
are required to repay a $540,000 note due to Mark Savoretti for our acquisition
of the TravelFile intellectual property assets. If we cannot successfully
complete the acquisitions of these assets, we may not be successful in
repositioning our company as an Internet service company. We currently do not
have a sufficient number of authorized but unissued shares of common stock
available for issuance under our charter to consummate these acquisitions.
Although we currently expect to ask our stockholders to approve a reverse stock
split on an up to 20-for-1 basis, we cannot assure you that we will be
successful in obtaining such approval so that we would be able to consummate
these acquisitions.

Our business strategy includes acquiring and growing other assets that fit
within our operating model. We may not be able to complete or identify future
acquisitions or realize the anticipated results of future acquisitions. Some of
the risks that we may encounter in implementing our acquisition growth strategy
include:

. expenses and difficulties in identifying potential targets and the costs
associated with acquisitions that we fail to consummate;

. expenses, delays and difficulties of integrating acquired assets into
our existing organization;

. diversion of management's attention;

. impact on our financial condition due to the timing of the acquisition;
and

. expenses of any undisclosed or potential legal liabilities of any
acquired company.

Additionally, in pursuing acquisition opportunities, we may compete with other
companies with similar growth strategies, some of which may be larger than us
and that have greater financial and other resources. Some of these competitors
may have equity securities that trade in more liquid markets or at higher per
share prices and therefore may be able to use equity consideration more readily
than we could. Competition for acquisition targets could also result in
increased prices for acquisition targets and a diminished pool of companies
available for acquisition.

A failure to successfully integrate the assets that we have acquired or expect
to acquire could result in increased operating costs and lost revenues.

Our success depends in large part on our ability to integrate the operations
and management of the independent Internet operations and assets that we have
acquired or expect to acquire in the future. If we fail to integrate
acquisitions successfully, we could suffer increased operating costs and lost
revenues. We will have to

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<PAGE>

expend substantial managerial, operating, financial and other resources to
integrate these businesses and implement our business model. In particular, to
integrate newly acquired Internet assets successfully, we must:

. install and standardize adequate operational control systems;

. employ qualified personnel to provide technical and marketing support in
new as well as existing locations;

. eliminate redundancies in overlapping systems and personnel;

. obtain sufficient working capital to integrate newly acquired assets,
including hardware and software platforms;

. incorporate acquired technology and products into our existing service
offerings;

. implement and maintain uniform standards, procedures and policies;

. standardize marketing and sales efforts under common brand names; and

. expand our managerial, operational, technical and financial resources.

The process of consolidating and integrating acquired operations and assets
takes a significant period of time, places a significant strain on resources and
could prove to be even more expensive and time-consuming than we predict. We may
increase expenditures in order to accelerate the integration and consolidation
process with the goal of achieving longer-term revenue increases and improved
profitability. We cannot assure you that our projected long-term revenue
increases and improved profitability can or will be realized. We also cannot
assure you that our resources will be sufficient to manage the growth in our
business or that we will be successful in implementing our expansion program in
whole or in part. In addition, we cannot assure you that we will be able to
integrate additional employees into our organization or to manage combined
operations effectively.

Our growth may strain our resources, which could adversely affect our business
performance.

Our growth may strain our managerial and operational resources. A key part of
our strategy is to grow, primarily by acquiring other companies and assets. We
cannot assure you that our executive officers will be able to manage our growth
effectively. To manage future growth, our management must establish effective
operational and financial systems, procedures and controls and expand, train,
retain and manage our employee base. If our systems, procedures and controls are
inadequate to support our operations, our expansion could be halted, and we
could lose opportunities to increase our revenues. Any inability to manage
growth effectively could adversely affect our business performance.

We may not be able to generate sufficient cash flow from operations to finance
our future acquisition strategy. We may seek to raise additional funds through
public or private financing, strategic relationships or other arrangements. Such
additional funding may not be available on terms acceptable to us, or at all. We
may have to sell stock at prices lower than those paid by existing stockholders,
which would result in dilution, or we may have to sell stock or bonds with
rights superior to rights of holders of our common stock. Any debt financing
might involve restrictive covenants that would limit our operating flexibility.
If adequate funds are not available on acceptable terms, we may be unable to
develop or enhance our services and products, take advantage of future
opportunities or respond to competitive pressures.

Your securities could experience wide fluctuations in trading price and volume.

Publications indicate that the stock of Internet companies often trade at
overly inflated prices. If investor interest in these stocks declines, the price
for our common stock could drop suddenly and significantly, even if our
operating results are positive. In addition, the trading volume of Internet-
related stocks is often volatile. If the trading volume of our common stock
experiences significant changes, the price of our common stock could be
adversely affected.

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<PAGE>

Wide fluctuations in the trading price or volume of our common stock could
also be caused by:

. actual or anticipated variations in our results of operations;

. announcements of technological innovations;

. new services introduced by us or our competitors;

. changes in clients' purchasing habits;

. changes in financial estimates by financial analysts; and

. conditions and trends in the Internet industry.

Difficulties with regard to the delivery of application software products via
the Internet could adversely affect our ability to grow our business.

We believe that our business could suffer if problems arise in the delivery of
application software products via the Internet. Recent innovations have led to
an increasing market for the delivery of widely used application software
products over the Internet. We expect to offer services related to this new
market. However, the market for delivery of application software products is
relatively new and uncertain. We may not be able to generate revenues related to
this market if it cannot develop or acquire effective technology to deliver and
host products demanded by our clients. In addition, existing capabilities and
bandwidth across the industry may not be sufficient to handle the increasing
demand for application software products. Finally, we cannot assure you that we
will be able to attract application providers to our services.

We have anti-takeover provisions in our charter documents that could prevent or
delay a change in control or adversely affect the market price of our common
stock.

Our charter gives our board of directors the authority to issue up to one
million shares of preferred stock and to determine the rights and preferences of
the preferred stock without obtaining shareholder approval. The existence of
this preferred stock could make it more difficult or discourage an attempt to
obtain control of us by means of a tender offer, merger, proxy contest or
otherwise. Furthermore, the preferred stock could be issued with other rights,
including economic rights, senior to our common stock, and, therefore, issuance
of the preferred stock could have an adverse effect on the market price of our
common stock. We do not have any present plans to issue preferred stock.

In addition, our bylaws provide for staggering our board of directors into
three classes of directors. Generally, stockholders elect each director class
for a three-year term. The staggered directors' terms may affect the ability of
our stockholders to change control of us even if such a change in control would
be in your best interest. However, since all of our directors have been
appointed since the last annual meeting of stockholders, the terms of all of our
current directors expire at the next meeting of stockholders.

Some provisions of Delaware law could make it more difficult for a third party
to acquire us or hinder a change in management even if doing so would be
beneficial to our shareholders. In addition, we may in the future adopt other
measures that may have the effect of delaying, deferring or preventing an
unsolicited takeover, even if such a change in control were at a premium price
or favored by a majority of unaffiliated shareholders. These measures may be
adopted without any further vote or action by our shareholders.

We compete in a new and highly competitive market that has low barriers to
entry.

We compete in the relatively new and intensely competitive Internet business.
We expect competition to intensify as the market evolves. Many of our
competitors have longer operating histories, larger client bases, longer
relationships with clients, greater brand or name recognition and significantly
greater financial, technical, marketing and public resources. There are
relatively few barriers preventing competitors from entering the Internet
business. As a result, new market entrants pose a threat to our business. We do
not own any patented technology that precludes or inhibits competitors from
entering the information technology services market. Existing or future
competitors may develop or offer services that are comparable or superior at a
lower price, which could significantly reduce our revenues.

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Our business depends on continued growth in the use of the Internet and the use
of Internet related travel products.

Our future success is substantially dependent upon continued growth in the use
of the Internet because both companies primarily use Internet-based technology
to create solutions. To the extent that businesses do not consider the Internet
a viable commercial medium, our client base may not grow. For companies that
have historically relied upon alternative means of commerce and communications,
adoption of the Internet as a tool requires the understanding and acceptance of
a new way of doing business and exchanging information. In particular, companies
that have already invested substantial resources in other means of conducting
commerce and exchanging information may be reluctant or slow to adopt a new,
Internet-based strategy that may make their existing personnel and
infrastructure obsolete.

In addition, our business may be indirectly impacted if the number of users on
the Internet does not increase or if commerce over the Internet does not become
more accepted and widespread. The use and acceptance of the Internet may not
increase for a number of reasons, including:

. actual or perceived lack of security of information, such as credit card
numbers;

. high cost or lack of availability of access;

. congestion of traffic or other usage delays on the Internet;

. inconsistent quality of service or the lack of availability of cost-
effective, high-speed service;

. governmental regulation;

. uncertainty regarding intellectual property ownership; and

. lack of high-speed modems and other communications equipment.

Published reports have also indicated that capacity constraints caused by
growth in the use of the Internet may impede further development of the Internet
to the extent that users experience shutdowns, delays, transmission errors and
other difficulties. If the necessary infrastructure, products, services or
facilities are not developed, or if the Internet does not become a viable and
widespread commercial medium, we could suffer a significant loss of revenues.

We need to keep pace with changing communications technologies in order to
compete effectively in the Internet services market.

Our success depends on our ability to keep pace with the rapid changes
occurring in communications technologies and the new and improved devices and
services that result from these changes. Any inability to respond quickly and
cost-effectively to changing communications technologies and devices could make
existing and planned future service offerings non-competitive and may cause us
to lose significant revenues. For example, if the Internet is rendered obsolete
or less important by faster, more efficient technologies, we must be prepared to
offer non-Internet-based solutions or risk losing current and potential clients.

Government regulation and legal uncertainties could add additional costs to
doing business on the Internet, which could adversely affect our business.

There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. However, laws and regulations may be
adopted in the future that address issues relevant to the Internet business,
including user privacy, pricing and the characteristics and quality of products
and services. For example, the Telecommunications Act of 1996 sought to prohibit
transmitting various types of information and content over the Internet. Several
telecommunications companies have petitioned the FCC to regulate Internet
service providers and on-line service providers in a manner similar to long
distance telephone carriers and to impose access fees on those companies. This
could increase the cost of transmitting data over the Internet. Also, the
European Union is currently considering the adoption of new laws and regulations
that could restrict widespread use of the Internet. Moreover, it may take years
to determine the extent to which existing laws

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relating to issues such as property ownership, libel and personal privacy issues
apply to the Internet. Any new laws or regulations relating to the Internet or
the manner in which existing laws are applied to the Internet could adversely
affect our business.

After Orbit Network publicly issued a press release stating that we had
announced that we had signed a definitive merger agreement to acquire Orbit
Network, we subsequently canceled the previously announced agreement and
modified the structure of the intended transaction with Orbit Network.

On October 5, 1999, Orbit Network publicly issued a press release stating that
we had announced that we had signed a definitive merger agreement to acquire
Orbit Network in a stock for stock exchange. Upon completion of our due
diligence review of Orbit Network, we and Orbit Network mutually agreed to
cancel this previously announced agreement. Subsequently, we entered into a
right to use agreement with Orbit Network as of November 1, 1999 pursuant to
which we currently have a right to use Orbit Network's GDS and ancillary
contracts and related furniture and equipment and have an option to purchase
such contracts. In addition, we acquired the intellectual property assets
related to Orbit Network's TravelFile website from Mark Savoretti, a creditor of
Orbit Network who had acquired such intellectual property assets through a
judicial foreclosure proceeding on January 13, 2000.

Future issuances and sales into the market of up to an additional 166.5 million
shares of our common stock will dilute our current stockholders and may depress
the market price of our common stock.

As of February 16, 2000, we had approximately 13.8 million shares of our
common stock outstanding. In addition, we have agreed to issue an additional
113.8 million shares of common stock for no cash consideration to various
executive officers, employees, consultants and other third parties. A portion of
these shares have been issued or will be issued to settle various disputes. See
"Legal Proceedings." We have issued, or expect to issue, these shares in a
series of unrelated public and private offerings.

In addition, we have offered to issue approximately 52.7 million additional
shares of our common stock to existing security holders in exchange for all of
our outstanding convertible preferred stock and convertible notes, other than
the notes that OrbitTravel.com, our wholly owned subsidiary, has issued since
its inception on October 6, 1999. As of February 25, 2000, the holders of all of
our convertible preferred stock and all of our convertible debt have accepted
this offer. We currently expect to issue these shares on, or within 10 business
days after, the date we have filed this Annual Report on Form 10- KSB.

The issuance of all of these shares of common stock, particularly the shares
that we have agreed to issue for no cash consideration, will result in immediate
and severe dilution in net tangible book value to our current stockholders.
Since we currently have a shareholders' deficit, we are unable to calculate the
dilution in net tangible book value to our current stockholders. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

In addition, when we issue these shares of common stock, the market price of
our common stock could fall. These issuances also might make it more difficult
for us to sell equity or equity-related securities in the future at a time and
price that we deem appropriate or to use equity as consideration for future
acquisitions.

All of the shares that are issued in exchange for outstanding convertible
preferred stock and convertible notes are restricted but may be eligible for
resale if the holders comply with Rule 144 of the Securities Act. We believe
that all or substantially all of the holders of our convertible preferred stock
and convertible debt securities have held such securities in excess of one year.
Therefore, upon issuance of the common stock, such holders may be deemed to have
complied with Rule 144(d) of the Securities Act since their holding period for
the common stock may "tack" with their holding period for the convertible
security as permitted by Rule 144(d)(ii) of the Securities Act. Persons who have
held these securities for more than two years will be able to resell their
shares under Rule 144(k) of the Securities Act.

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Since up to 27.4% of our common stock is or will be concentrated in the hands
of our executive officers and directors, these persons may be able to directly
control our future.

Upon our issuance of an additional 166.5 million shares of common stock, our
Board of Directors and executive officers will collectively own up to 27.4% of
our common stock, assuming none of the acquisitions that we describe in this
Annual Report are consummated. Joseph R. Cellura, our chief executive officer,
will individually own approximately 15.2% of our common stock, assuming none of
the acquisitions that we describe in this Annual Report are consummated. As a
result, Mr. Cellura and our other executive officers may be able to exercise
significant influence over all matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions.
This concentration of ownership also may have the effect of delaying or
preventing a change in control of us.

We may not be able to satisfy our obligations under various settlement
agreements.

During 1998 and 1999, we agreed to settle various disputes with executive
officers, stockholders and third parties. See "Legal Proceedings." As part of
the settlement of some these disputes, we entered into settlement agreements
pursuant to which we must make substantial cash payments in the near future
totalling $636,000. We may in the future be required to pay additional amounts
in settlement or satisfaction of other pending litigations. We do not currently
have sufficient cash on hand to satisfy these obligations. We cannot assure you
that we will be able to raise sufficient capital on acceptable terms or at all
to satisfy such obligations. If we are unable to fully perform under our
settlement agreements, the counterparties may seek court action to enforce the
terms of such agreements.

Significant fluctuation in the market price of our common stock could result in
securities class action claims against us.

Significant price and value fluctuations have occurred with respect to our
common stock over the past year and often occurs with respect to the securities
of Internet-related companies. Our common stock price is likely to be volatile
in the future. In the past, following periods of downward volatility in the
market price of a company's securities, class action litigation has often been
pursued against such companies. If similar litigation were pursued against us,
it could result in substantial costs and a diversion of our management's
attention and resources.

We could be subject to successor liability with regard to liabilities of Orbit
Network.

We have acquired from Mark Savoretti, a creditor of Orbit Network, the
intellectual property assets relating to the TravelFile website formerly owned
by Orbit Network. Mr. Savoretti acquired these assets from Orbit Network in a
judicial foreclosure proceeding on January 13, 2000 after Orbit Network failed
to pay $771,000 owed to Mr. Savoretti. In addition, we have an option to acquire
Orbit Network's GDS and ancillary contracts and related furniture and equipment
as part of the right to use agreement that we entered into with Orbit Network as
of November 1, 1999. We also have entered into a non-binding letter of intent
with AnimInet to acquire AnimInet's 3D animation asset. AnimInet is a
corporation formed solely by Dean Miller, one of our executive officers. We
currently expect the stockholders of Orbit Network to individually acquire all
of AnimInet's common stock. We cannot assure you that we will not succeed to any
of the liabilities of Orbit Network.

The employment contracts with our executive officers could have the effect of
precluding or otherwise delaying a change in control of us that could be
beneficial to our stockholders.

The employment contracts with our executive officers provide for the payment
of significant severance payments in the event these officers are terminated.
For example, Mr. Cellura's employment agreement, which expires on June 24, 2006,
would require us to pay him upon termination an aggregate severance amount of up
to $2.15 million plus the remaining base salary amounts due to him under the
agreement if we terminate him without cause. Even if we are successful in
terminating Mr. Cellura's employment with cause, we would be required to pay him
$900,000. This could have the effect of precluding or otherwise delaying a
change of control

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of us that would otherwise be in the best interest of our stockholders. See
"Executive Compensation--Employment Contracts."

ITEM 2. DESCRIPTION OF PROPERTY

Our principal business office is located at 927 Lincoln Road, Suite 200, Miami
Beach, FL 33139. Our phone number is (305) 538-2727. We occupy 800 square feet
at this location at a fixed cost of $100 per month on a triple net basis.

We lease additional space at One Union Square South 10-J, New York, NY 10003.
Effective August 1, 1999, we took occupancy of less than 1,000 square feet of
newly leased office space at the above address. Additionally, on December 17,
1999, we took occupancy of less than 1,000 square feet of additional space at
the same building location. One-year leases ending July 31, 2000 and December
31, 2000 provide for rent on a monthly basis of $5,495, and $3,425,
respectively.

On December 1, 1999, we leased 6,000 square feet at 100 Second Street East in
Whitefish, Montana for a term of six months. This lease provides for monthly
rental of $7,500 during the first six months. The intellectual property assets
relating to TravelFile are located at our facility in Whitefish.

ITEM 3. LEGAL PROCEEDINGS

In connection with our February 21, 1996 Agreement in Principle with our three
Pension Fund Partners, definitive agreements were reached during the second
quarter of 1996 with regards to two of our four previously owned golf courses.
However, our efforts to interpret the Agreement in Principle and negotiate with
EPI Pension Fund regarding the two other courses were unsuccessful. On May 31,
1996, EPI Pension Fund commenced an action against us claiming breach of
contract, specific performance, a constructive trust and temporary and permanent
injunctive relief. At a hearing conducted on July 12, 1996 in the Circuit Court
in and for Hillsborough County, Florida, the court issued a preliminary
injunction which required us to transfer to EPI Pension Fund 45% of the
outstanding equity in our GLV and GMW subsidiaries whereby we retained 30% of
the outstanding equity in each of these two subsidiaries and EPI Pension Fund
owned the remaining 70%. We filed an appeal brief to this preliminary injunction
on August 14, 1996 in the 2nd District Court of Appeals for the 13th Judicial
District in and for Hillsborough County, Florida. The District Court denied this
appeal on February 11, 1997. We entered into a settlement agreement with the EPI
Pension Fund on October 15, 1997, which purported to resolve all outstanding
issues between us and the EPI Pension Fund. We failed to perform all of our
obligations under the settlement agreement. On February 10, 1998, the Circuit
Court entered an order directing us to perform fully all of our obligations
under the settlement agreement prior to February 24, 1998. At a hearing on March
26, 1998, we offered partial performance under the settlement agreement which
was t}22ent which was taken under advisement by the Circuit Court and opposing
counsel and will be ruled upon at a hearing to be scheduled in the future.

We submitted a proposed settlement to the EPI Pension Fund, with a $3,000 good
faith deposit. The terms of the proposed settlement include a down payment to be
made within 30 days of executing the settlement documents with a balloon payment
to be delivered at the end of one year. The deferred payment will be
non-interest bearing. We have requested that we be permitted to prepay the
settled amount at a discount. We do not know if the settlement will be secured.
A penalty will be imposed upon default on the proposed settlement in addition to
EPI Pension Fund's rights to enforce the original judgment of $152,000. We
cannot assure you that the proposed settlement will be accepted by the EPI
Pension Fund or that the terms will be substantially similar to those disclosed
above.

On October 22, 1998, Robert Hochstein filed a complaint in federal court
against us, Mr. Cellura and other entities controlled by Mr. Cellura alleging
that we violated various federal and state securities laws. On February 16,
2000, we and Mr. Hochstein executed a settlement pursuant to which we agreed to
pay $150,000 and to issue 850,000 shares of our common stock (of which we issued
400,000 shares in the first quarter of 1999) in settlement

19
<PAGE>

of this dispute. We issued 450,000 shares to Mr. Hochstein on February 25, 2000.
We paid him $100,000 on February 17, 2000 and have agreed to pay the additional
$50,000 by June 16, 2000. If we fail to pay the $50,000 when due or the
remaining 450,000 shares of our common stock are not freely tradeable by the
terms of the settlement agreement, we have agreed that a judgment for $575,000
may be entered into against us, Mr. Cellura and other entities controlled by Mr.
Cellura. If the price of our common stock falls below 30 cents per share for two
trading days before March 18, 2000, we have agreed to

repurchase up to 400,000 shares of our common stock which Mr. Hochstein has not
liquidated less than $0.30 per share for two trading days.

In January and May of 1999, a group of our former stockholders and employees
and stockholders and employees of various companies that we acquired in April
1998, which formerly were controlled by Mr. Cellura, our chief executive
officer, filed three lawsuits in the United States District Court for the
Southern District of New York against us, these various acquired corporations,
Mr. Cellura and several of our other executive officers and stockholders. The
complaints alleged, among other things, that (1) we had failed to issue an
aggregate of 15.0 million shares of our common stock (such number of shares is
prior to the effect of a 15-for-1 reverse stock split effected with regard to
our common stock on June 2, 1998), (2) we and our officers committed fraud in
the issuance of securities, and (3) various breaches of contract. The parties to
the lawsuit entered into a settlement agreement as of June 29, 1999 pursuant to
which the plaintiffs agreed to release the defendants from all of the claims in
the lawsuits in exchange for: (1) a note payable in the amount of $225,000; (2)
the issuance of 7.65 million shares of our common stock; and (3) the assignment
by Mr. Cellura of all of his rights, title or interest to the profits generated
from a few parcels of land in the World Golf Village. Mr. Cellura assigned these
rights to the plaintiffs on June 24, 1999. In August 1999, we instructed our
transfer agent to issue these shares, which were ultimately issued on February
29, 2000. As of February 16, 2000, we have not repaid any amounts due under the
$225,000 note payable. This note payable currently matures on March 31, 2000. We
cannot assure you that we will have sufficient funds available to repay the note
payable upon maturity or that we would be able to extend the maturity date of
the note payable. If we are not able to repay the note payable according to its
terms, we cannot assure you that the plaintiffs will not seek court action to
enforce the terms of the settlement agreement. We would incur substantial
expenses if we must defend any additional actions in connection with these
lawsuits.

In June 1999, Joseph R. Cellura, our chief executive officer, threatened to
file a lawsuit against us alleging, among other things, that: (1) Mr. Cellura
suffered substantial monetary loss in the defense of the lawsuits we refer to in
the previous paragraph; (2) Mr. Cellura suffered real and substantial damage to
his personal character as a result of the filing of these lawsuits; (3) we
failed to issue to Mr. Cellura and other stockholders in various companies
controlled by him an aggregate of 20.0 million shares of our common stock and
5.0 million options to purchase shares of our common stock (such number of
shares is prior to the effect of a 15-for-1 reverse stock split effected with
regard to our common stock on June 2, 1998); and (4) we failed to indemnify Mr.
Cellura as required by our indemnity agreement with him in connection with these
lawsuits. We and Mr. Cellura agreed to enter into a settlement agreement,
effective as of June 29, 1999, pursuant to which Mr. Cellura agreed to release
us from these claims in exchange for: (1) a note payable in the amount of
$250,000; and (2) the issuance of approximately 27.34 million shares of our
common stock. As of February 16, 2000, we have repaid $64,000 due under the
$250,000 note payable. This note payable currently matures on April 30, 2000. We
cannot assure you that we will have sufficient funds available to repay the
remaining amounts outstanding under the note payable upon maturity or that we
would be able to extend the maturity date of the note payable. If we are not
able to repay the note payable according to its terms, we cannot assure you that
Mr. Cellura will not seek court action to enforce the terms of the settlement
agreement. We would incur substantial expenses if we must defend any such court
action.

After we acquired Talisman Tools, a third party threatened to sue us for
patent infringement if we sold products based on the design of the repair tool
that we acquired in the Talisman acquisition. We subsequently refused to repay
the remaining $90,000 that we owed as part of the acquisition agreement.
Although this third party has since stopped threatening to sue us for patent
infringement, the former Talisman shareholders then sued us for failing to repay
these amounts. The molds that we acquired from Talisman were ultimately seized
as part of the Miller asset foreclosure. We have written off the investment in
Talisman as of December 31, 1998. We have engaged local counsel to vigorously
defend this claim and to seek to rescind the original acquisition

20
<PAGE>

agreement and recover amounts we paid on the closing date. Due to the inherent
uncertainties of the litigation process and the judicial system, we are not able
to predict the outcome of this litigation.

Kirk Scoggins, a holder of our convertible preferred stock, paid $97,915 on
our behalf during 1998 to satisfy some of our payroll obligations to employees.
In full satisfaction of the amounts we owe to Mr. Scoggins and other litigation
threatened by Mr. Scoggins, we entered into a settlement agreement with Mr.
Scoggins as of January 31, 2000 pursuant to which we have agreed to issue to Mr.
Scoggins approximately 4.5 million shares of our common stock and deliver to Mr.
Scoggins specific items of personal property owned by us and by Mr. Cellura.

Clifford F. Bagnall, one of our former directors and a current executive
officer, had threatened to file a lawsuit against us alleging that we owe Mr.
Bagnall amounts due under his employment contract in force while he was an
executive officer and that (1) Mr. Bagnall suffered substantial monetary loss in
the defense of the May 1999 lawsuits by the former stockholders of various
companies formerly controlled by Mr. Cellura; (2) Mr. Bagnall suffered real and
substantial damage to his personal character as a result of the filing of the
lawsuits; and (3) we failed to indemnify Mr. Bagnall as required by our
indemnity agreement with him in connection with these lawsuits. We and Mr.
Bagnall agreed to enter into a settlement agreement, effective as of January 31,
2000, pursuant to which Mr. Bagnall agreed to release us from this claim in
exchange for: (1) a note payable in the amount of $100,000; and (2) the issuance
of 5.3 million shares of our common stock. As of February 16, 2000, we have not
repaid any amounts due under the $100,000 note payable. This note payable
currently matures on May 15, 2000. We cannot assure you that we will have
sufficient funds available to repay the note payable upon maturity or that we
would be able to extend the maturity date of the note payable. If we are not
able to repay the note payable according to its terms, we cannot assure you that
Mr. Bagnall will not seek court action to enforce the terms of the settlement
agreement. We would incur substantial expenses if we must defend any such court
action.

Kenneth Craig, one of our former directors and executive officers, had
threatened to file a lawsuit against us alleging that we owe Mr. Craig amounts
due under his employment contract in force while he was an executive officer. We
and Mr. Craig agreed to enter into a separation agreement, effective as of
September 1, 1999, pursuant to which Mr. Craig agreed to release us from this
claim in exchange for: (1) a note payable in the amount of $75,000; and (2) the
issuance of 3.5 million shares of our common stock. As of February 16, 2000, we
have not repaid any amounts due under the $75,000 note payable. This note
payable currently matures on June 30, 2000. We cannot assure you that we will
have sufficient funds available to repay the note payable upon maturity or that
we would be able to extend the maturity date of the note payable. If we are not
able to repay the note payable according to its terms, we cannot assure you that
Mr. Craig will not seek court action to enforce the terms of the settlement
agreement. We would incur substantial expenses if we must defend any such court
action.

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

No matters have been submitted to a vote of the security holders since June
1998. We currently expect our board of directors to establish a March 1, 2000
record date for the purpose of determining which of our stockholders may sign a
non-unanimous written consent action in lieu of a meeting approving the
following matters:

. a proposal to change our name to OrbitTravel.com Corporation;

. a proposal to ratify the appointment of Ernst & Young LLP as independent
auditors for 1999;

. proposals to ratify the employment agreements of Messrs. Cellura,
Noosinow and Dollinger; and

. proposals to ratify all settlement agreements.

In addition, we currently expect to call a 1999 annual meeting of stockholders
at which we expect our stockholders to vote on, among other things, the
following matters:

. the election of Joseph R. Cellura, David A. Noosinow, Douglas R.
Dollinger, and two representatives of Teakwood Ventures as our
directors;

. a proposal to effect a reverse stock split of our common stock on an up
to 20-for-1 basis;

21
<PAGE>

. a proposal to ratify the terms of our letter of intent to acquire the 3D
animation asset from AnimInet; and

. a proposal to ratify the terms of our right to use agreement with Orbit
Network pursuant to which we have the right to use, and have an option to
purchase, Orbit Network's GDS and ancillary contracts and related furniture
and equipment.

We cannot assure you that each of these matters will be submitted to our
stockholders, whether at a meeting or by a written consent, or, if such
proposals are submitted, that they will be approved.

22
<PAGE>

PART II

ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information and Dividends

On February 16, 2000, we had approximately 180 stockholders of record of our
common stock. We have not declared or paid any dividend on our common stock
since our inception. We do not anticipate declaring or paying any dividends on
our common stock for the foreseeable future.

Prior to March 22, 1999, trading of our common stock had been quoted on the
Nasdaq SmallCap Market. Our common stock was de-listed from the Nasdaq SmallCap
Market as a result of our failure to meeting various listing requirements. The
following table sets forth, the quarterly range of the high and low closing
prices of the common stock as reported by the Nasdaq SmallCap Market from the
beginning of 1998 until March 22, 1999:

Closing Price
Per Share

-------------
Period or Quarter High Low
----------------- -------------

First Quarter 1998............................................ $ 9.38 $ 5.63
Second Quarter 1998........................................... 6.56 1.84
Third Quarter 1998............................................ 2.94 .69
Fourth Quarter 1998........................................... 1.06 .22
January 1, 1999 through March 22, 1999........................ .50 .13

A 1-for-15 reverse stock split was effectuated on June 16, 1998 to raise the
per share price of our common stock and to increase the number of shares
available for issuance. All dollar amounts in the above table have been revised
to reflect the reverse stock split.

Since our common stock was de-listed on March 22, 1999 from Nasdaq SmallCap
Market, our common stock has been traded over-the-counter under the symbol
"PUTT." The following table sets forth the quarterly high and low sales prices
per share of our common stock reported on the over-the-counter market since
March 23, 1999:

Closing Price
Per Share

--------------
Period or Quarter High Low
----------------- ------- ------

March 23, 1999 through March 31, 1999......................... $ .22 $.13
Second Quarter 1999........................................... .17 .09
Third Quarter 1999............................................ .14 .09
Fourth Quarter 1999........................................... .45 .09
January 1, 2000 through March 13, 2000........................ 1.13 .14

On March 13, 2000, the last reported sales price of our common stock on the
over-the-counter market was $.25 per share.

On March 13, 2000, we had 0 shares of convertible preferred stock outstanding.
This convertible preferred stock has a liquidation value of $1,000 per share.
The holders of the convertible preferred stock are entitled to 18% cumulative
dividends payable quarterly. Since the convertible preferred stock carries
rights to cumulative 18% dividends, dividends that are not paid accrue. During
1999 and 1998, we accrued $1,000,000 and $730,000, respectively, in dividends
payable. We would be required to pay these accrued dividends before any
dividends are allowed to be paid on our common stock. Our charter allows the
holders of the convertible preferred stock to convert their shares into shares
of our common stock by dividing $1,000 per share of convertible preferred stock
by the "conversion price." The "conversion price" is a formula based on the
lesser of $10.50 or 75% of the average closing price during the 10 trading-day
period prior to conversion.

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<PAGE>

We have offered to issue approximately 52.7 million shares of our common stock
to existing security holders in exchange for all of our outstanding convertible
preferred stock. As of February 25, 2000, the holders of all of our convertible
preferred stock have accepted this offer. We currently expect to issue these
shares on, or within 10 business days after, the date we have filed this Annual
Report on Form 10-KSB.

Sales of Unregistered Securities

The following sets forth all of our sales of unregistered securities during
1998 and 1999:

<TABLE>
<CAPTION>
<S> <C> <C>
Brief description of the purchaser
Date Securities and the consideration therefor
- ------------------------ ------------------------------- -------------------------------------

January 1, 1998 4,020 shares of preferred Issuance of convertible preferred
to June 30, 1998 stock stock

January 1, 1998-- 457,402 shares of common Issuance of common stock for
December 31, 1998 stock conversions
of convertible debentures

January 1, 1998-- 46,429 shares of common Conversions of preferred stock
December 31, 1998 stock

January 16, 1998 50,000 shares of common Issuance of common stock for funding
stock related to acquisition of Parcel 11
at World Golf Village

February 19, 1998 94,304 shares of common Issuance of common stock for exercise
stock of warrants under convertible
debentures.

April 3, 1998 53,333 shares of common Issuance of common stock for
stock acquisition
of Miller Golf

April 20, 1998 10,000 shares of common Issuance of common stock for
stock acquisition
of Talisman Tools

May 4, 1998 1,933 shares of common Issuance of stock for right of first
stock refusal
on possible land acquisition

July 14, 1998-- July 31, $1.5 million of our notes Issuance of notes under private
1998 placement

July 30, 1998 500,000 shares of common Issuance of common stock under
stock private placement

October 30, 1998 354,463 shares of common Issuance of common stock for
stock acquisition of possible joint venture

January 1, 1999-- 1,293,601 shares of common Conversions of preferred stock
December 31, 1999 stock

February 11, 1999 400,000 shares of common stock Issuance of common stock in
settlement of litigation

August 24, 1999 7,650,000 shares of common Issuance of common stock in
stock settlement of litigation

October 1, 1999-- $1.68 million of OrbitTravel Issuance of notes under private
December 31, 1999 convertible notes placement

</TABLE>

We believe that we took reasonable steps to ensure that each of the offerees
in these transactions were accredited investors under Rule 501 of the Securities
Act.

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

You should read the following discussion and analysis in conjunction with the
consolidated financial statements for 1997, 1998 and 1999 included in this
Annual Report on Form 10-KSB and in our Annual Report on Form 10-KSB for the
year ended December 31, 1997.

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<PAGE>

Overview and Background

By mid 1997, we owned four golf courses and managed more than 20 others.
Through April 1998, we were engaged in acquiring, designing, constructing,
operating and managing private, semi-private and public golf courses in the
United States. We were also focused on business opportunities in the World Golf
Village resort. The World Golf Village is a destination golf resort located near
Jacksonville, Florida.

Due to labor and capital intensive programs associated with golf courses and
the poor operating results of our golf course ownership, design, and management
activities, we decided to refocus our business strategy. We elected to continue
our efforts in the World Golf Village. But instead of focusing on the ownership,
design, and management of golf courses, we decided to focus on developing,
licensing, and marketing of golf-related products and services. In July 1997, we
sold the division responsible for managing the third party-owned golf courses.
In August 1997, we sold our golf course design subsidiary. From November 1997
through April 1998, we sold the golf courses we owned.

To implement our new strategic focus, in April 1998 we acquired three golf-
related products companies, Divot Golf Corporation, Miller Golf, Inc. and
Talisman Tools Incorporated. After defaulting on a newly obtained line of credit
with Citizens Bank in February 1999, third parties foreclosed on our Miller Golf
assets after Citizens Bank sold the notes to such third parties. In addition, we
wrote off the newly acquired Divot Golf and Talisman Tools assets as of December
31, 1998. As a result of our poor operating performance in the golf industry and
perceived opportunities in the e-commerce industry, we have ceased our
operations as a golf related products and services company and are repositioning
ourselves as a value added services provider specializing in e-commerce
applications and providing essential distribution services and on-line marketing
solutions to the travel industry worldwide.

Recent Developments

Acquisition Activity. On October 5, 1999, Orbit Network publicly issued a
press release stating that we had announced that we had signed a definitive
merger agreement to acquire Orbit Network in a stock for stock exchange.
However, upon completion of our due diligence review of Orbit Network, we and
Orbit Network mutually agreed to cancel this merger agreement and agreed to
enter into the transactions we discuss below.

We entered into a right to use agreement with Orbit Network as of November 1,
1999 pursuant to which we paid $500,000 in cash for a six-month right to use and
operate Orbit Network's GDS contracts with Amadeus, Sabre, Galileo and World
Span, its services agreement with AOL and related furniture and equipment. As
part of this right to use agreement,we operate the "TravelFile" website that
provides travel suppliers and Internet users travel planning services. We are
entitled under the right to use agreement to retain any revenues for a six-month
period that may be generated from the GDS and ancillary contracts. Also, as part
of the right to use agreement, we paid $100,000 (included in the $500,000 paid
on November 1, 1999) for an option (exercisable in our sole and absolute
discretion) to purchase in Orbit Network's rights under the GDS and ancillary
contracts and related furniture and equipment for the assumption of $5.1 million
of Orbit Network debt. This purchase option expires on May 1, 2000, unless
extended by us for an additional six months. We cannot assure you that we will
exercise this purchase option or that we will otherwise acquire the GDS and
ancillary contracts and related furniture and equipment nor can we assure you
that, if we do not acquire the GDS and ancillary contracts and related furniture
and equipment, that we will be able to extend the term of the right to use
agreement. See "Description of Business -- Risk Factors -- We may be unable to
implement our acquisition growth strategy, which would have an adverse effect on
our business and competitive industry."

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<PAGE>

On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by David Noosinow, one of our directors and executive
officers, entered into an asset purchase agreement with Mark Savoretti pursuant
to which Spartan Capital agreed to acquire the intellectual property assets
related to the TravelFile website previously owned by Orbit Network for $600,000
in cash and the issuance of 3.0 million shares of our common stock. Mr.
Savoretti, a creditor of Orbit Network, acquired these assets from Orbit Network
through a judicial foreclosure proceeding on January 13, 2000 after Orbit
Network failed to pay $771,000 owed to Mr. Savoretti. Immediately upon execution
of this asset purchase agreement, Spartan Capital Management, LLC assigned all
of its rights and obligations under the agreement to us for $10. One of the
obligations assigned is an obligation to enter into consulting agreements with
Mr. Savoretti and another person, under which we would pay a total of $450,000
over three years. We thereafter acquired the intellectual property assets
related to the TravelFile website directly from Mr. Savoretti in exchange for
$60,000 in cash, a note payable in the amount of $540,000 and 3.0 million shares
of common stock, which would represent approximately 0.4% of our common stock
assuming all of the transactions described in this Annual Report are
consummated.

On February 24, 2000, we executed a non-binding letter of intent to acquire
from AnimInet, Inc. intellectual property assets related to AnimInet's 3-D
Internet asset for approximately 473.9 million shares of our common stock, which
would represent approximately 52.6% of our common stock assuming all of the
transactions described in this Annual Report are consummated. These intellectual
property assets primarily include the software being developed by AnimInet to
create "Streaming Intelligent Beings," which are digital 3D computerized
personalities that would communicate directly with Internet users. AnimInet is a
corporation formed solely by Dean Miller, one of our executive officers. We
currently expect the stockholders of Orbit Network, who are each accredited
investors under Rule 501 of the Securities Act, to individually purchase all of
AnimInet's common stock. This letter of intent is subject to the execution of a
definitive agreement and customary due diligence. We currently do not have a
sufficient number of authorized and unissued shares available under our charter
to consummate such an acquisition. Although we currently expect to ask our
shareholders to approve a reverse stock split on an up to 20-for-1 basis, we
cannot assure you that we would be successful in obtaining such approval. This
letter of intent is subject to the execution of definitive agreements and
customary due diligence. We cannot assure you that this acquisition will be
consummated or that it will be consummated on the terms set forth in the letter
of intent. See "Description of Business -- Risk Factors -- We may be unable to
implement our acquisition growth strategy, which would have an adverse effect on
our business and competitive position in the industry."

26
<PAGE>

product offerings. Unless the transaction has closed, either party may terminate
the Wilhelmina agreement at any time after February 15, 2000. We cannot assure
you that we will be able to consummate this acquisition. We currently do not
have a sufficient number of authorized and unissued shares available under our
charter to consummate such an acquisition. Although we currently expect to ask
our stockholders to approve a reverse stock split on an up to 20-for-1 basis, we
cannot assure you that we would be successful in obtaining such approval. See
"Description of Business -- Risk Factors -- We may be unable to implement our
acquisition growth strategy, which would have an adverse effect on our business
and competitive position in the industry."

On January 9, 2000, OrbitTravel.com, our wholly owned subsidiary, executed a
content distribution agreement with AsiaGateway.com, Ltd. Under the terms of
this agreement, we were required to issue 200,000 shares of our common stock 30
days from the execution date of this agreement. As of February 16, 2000, since
we have not issued such shares, either party may terminate this agreement.
Assuming consummation of this transaction, Asiagateway.com would act as our
distribution, marketing and sales partner for the Asian region. Asiagateway.com
is a provider of commerce, community and content for the Asian marketplace.
Content produced and compiled by Asiagateway.com would be integrated into our
online travel services. Our online travel services, in turn, would be featured
in Asiagateway.com.

Financing Activity. On February 15, 2000, Teakwood Ventures, LLC, an
accredited investor under Rule 501 of the Securities Act, agreed to fund up to
$10 million pursuant to a funding commitment letter and subscription agreement
whereby Teakwood Ventures agreed to purchase: (1) 11,223,334 shares of our
common stock at $0.1782 per share on or before March 30, 2000; (2) 11,223,334
shares of our common stock at $0.1782 per share on or before June 30, 2000; and
(3) 18,856,065 shares of our common stock at $0.3182 per share on or before
September 30, 2000. Teakwood Ventures' agreement to purchase our common stock on
these varying dates is subject to several conditions, including the condition
that the shares to be issued to Teakwood Ventures must be freely tradeable. We
cannot assure you that these conditions will be met. Therefore, we cannot assure
you that we will consummate all or part of this transaction. In addition, if our
total equity market capitalization is less than $200 million on any of the dates
that Teakwood Ventures purchases our shares of common stock, we have agreed to
proportionally reduce the per share price of the common stock to be purchased by
Teakwood Ventures. For example, if our total equity market capitalization is
$100 million on September 30, 2000, the purchase price per share would be
$0.1591 and we would consequently be required to issue 37,712,130 shares to
Teakwood Ventures. In addition, our agreement with Teakwood Ventures requires
that we appoint two directors who are nominated by Teakwood Ventures to our
board.

Since the end of 1999, we have issued or agreed to issue approximately 113.8
million shares of common stock for no cash consideration to various executive
officers, employees, consultants and other third parties. A portion of these
shares have been issued or will be issued to settle various disputes and
contingent liabilities. See "Legal Proceedings." We have issued, or expect to
issue, these shares in a series of unrelated registered and private offerings.
See "Description of Business -- Further issuances and sales into the market of
up to an additional 166.5 million shares of our common stock will dilute our
current stockholders and may depress the market price of our common stock."

27
<PAGE>

In addition, we have offered to issue approximately 52.7 million additional
shares of our common stock to existing security holders in exchange for all of
our outstanding convertible preferred stock and convertible debt, other than the
notes that OrbitTravel.com, our wholly owned subsidiary, has issued. As of
February 25, 2000, the holders of all of our convertible preferred stock and all
of our convertible debt have accepted this offer. We currently expect to issue
these shares within 10 business days after the date we have filed this Annual
Report on Form 10-K. "See Description of Business--Risk Factors-- Further
issuances and sales into the market of up to an additional 166.5 million shares
of our common stock will dilute our current stockholders and may depress the
market price of our common stock.

On January 9, 2000, OrbitTravel executed an exclusive content distribution
agreement with AsiaGateway. Under the terms of this agreement, we were required
to issue 200,000 shares of our common stock 30 days from the execution date of
this agreement. As of February 16, 2000, since we had not issued such shares,
either party may terminate this agreement.

We currently expect to ask our stockholders to approve a reverse stock split
on a up to 20-for-1 basis. We cannot assure you that we will be successful in
obtaining such approval. See "--Liquidity and Capital Resources" for a table
setting forth our expected capitalization assuming all of the transactions and
issuances described in this Annual Report are consummated and we effect a
reverse stock split on an up to 20-for-1 basis.

Results of Operations

During 1998, we derived our revenues primarily from golf-related products and
services. As a result of our agreement with Orbit Network pursuant to which we
have licensed Orbit Network's GDS contracts since November 1, 1999, we have
derived fee revenues for use of the TravelFile website. Because of this
transition, we believe that period-to-period comparisons may not be meaningful.
The period-to-period change in each of our revenue categories is as follows:

Comparison of 1999 to 1998

Revenues. Revenues in 1998 consisted solely of the sale of golf-related
equipment and accessories. Revenues in 1999 consisted solely of the Internet
related revenues generated under Orbit Network's GDS contracts that we have
licensed under a right to use agreement from Orbit Network since November 1,
1999. Revenues decreased by $5,906,123, or 98%, from $6,036,983 in 1998 to
$130,860 in 1999. We discontinued our golf-related equipment and accessories
business in December 1998 and did not have any business operations until the
commencement of our Internet business on November 1, 1999.

Operating Expenses. Operating expenses in 1998 consisted of $3,841,147 of
golf-related costs, $6,715,625 of general and administrative expenses and
$270,844 of depreciation and amortization expense. Operating expenses in 1999
consisted of costs of Internet related revenues of $487,812, $5,951,452 of
general and administrative costs and $5,986 of depreciation and amortization
expense. Operating expenses decreased by $4,382,366, or 40%, from $10,827,616 in
1998 to $6,445,250 in 1999. This decrease was due to the fact that in 1998 we
discontinued our golf related equipment and accessories business.

Other Expenses. Other expenses in 1998 consisted of $6,958,750 of expense for
loss on investments, including the losses incurred on the foreclosures of Miller
Golf and the properties held at the World Golf Village. Interest expense and
amortization of debt discount totalled $3,471,485 and litigation settlement
expense was $740,004. In addition, we wrote off substantially all our costs
incurred in pursuit of business ventures in the golf industry. These expenses
were offset by a $523,799 gain on sale of golf course and $135,755 of interest
income. Other expenses in 1999 consisted of $982,917 related to the settlement
of litigation and $230,211 related to other costs incurred in closing the
corporate offices in Tampa, FL. In addition, interest expense totalled $167,824.

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<PAGE>

Other expenses decreased by $9,835,902, or 88%, from $11,216,294 in 1998 to
$1,380,392 in 1999. This decrease was due to the discontinuance of the golf-
related equipment and accessories business in December 1998.

Net Loss. Net loss decreased by $8,312,145, or 52%, from $16,006,927 in 1998
to $7,694,782 in 1999.

Comparison of 1998 to 1997

Revenues. Revenues in 1997 consisted of golf revenues, management and design
fees and resident membership. Revenues in 1998 consisted of the sale of golf-
related equipment and accessories. Revenues increased by $1,943,384, or 47%,
from $4,093,599 in 1997 to $6,036,983 in 1998. We discontinued our golf- related
equipment and accessories business in December 1998 and did not have any
business operations until the commencement of our Internet business on November
1, 1999.

Operating Expenses. Operating expenses in 1997 consisted of golf course
operating and related expenses of $2,384,901, general and administrative
expenses of $3,090,713 and depreciation and amortization expense of $871,222.
Operating expenses in 1998 consisted of $3,841,147 of golf-related costs,
$6,715,625 of general and administrative expenses and $270,844 of depreciation
and amortization expense. Operating expenses increased by $4,167,409, or 63%,
from $6,660,207 in 1997 to $10,827,616 in 1998. This increase was due to the
compensation expenses incurred as part of the settlements with executive
officers.

Other Expenses. Other expenses in 1997 consisted of interest expense, loss on
investments and amortization of debt discount on convertible debentures. Other
expenses in 1998 consisted of interest expense of $635,926, loss on investments,
including write downs of assets in business ventures and golf- related business
of $7,664,359 and litigation settlement expenses of $740,004. This was partially
offset by the gain of $523,799 on the sale of a golf course and interest income
of $135,755. Other expenses increased by $7,795,868, or 228%, from $3,420,426 in
1997 to $11,216,294 in 1998. This increase was due to the amortization of debt
discount on convertible debentures and the losses incurred on foreclosure and
write-off of investments in the golf-related equipment and accessories business
discontinued in December 1998.

Net Loss. Net loss increased by $10,019,893, or 167%, from $5,987,034 in
1997 to $16,006,927 in 1998.

Liquidity and Capital Resources

Capitalization. Our charter authorizes the issuance of 200.0 million shares of
common stock and 1.0 million shares of preferred stock. As of February 16, 2000,
we had approximately 13.8 million shares of common stock outstanding. In
addition, as of such date, we had approximately 5,685 shares of preferred stock
outstanding that are convertible into 42.6 million shares of common stock, $1.5
million of notes outstanding (other than the OrbitTravel notes) that are
convertible into 10.1 million shares of common stock. In addition, as of March
13, 2000, OrbitTravel had issued $3.2 million of notes convertible into 6.4
million shares. However, we currently expect to exchange these notes for
approximately 70.3 million shares of our common stock.

We have offered to issue approximately 52.7 million shares of our common stock
to existing securityholders in exchange for all of our outstanding convertible
preferred stock and convertible debt, other than the notes that OrbitTravel has
issued. As of February 25, 2000, the holders of all of our convertible preferred
stock and all of our convertible debt have accepted this offer. We currently
expect to issue these shares within 10 business days after the date we have
filed this Annual Report on Form 10-KSB.

Since the end of 1999, we have issued or agreed to issue an additional 113.8
million shares of common stock for no cash consideration to various executive
officers, employees, consultants and other third parties. A portion of these
shares have been issued or will be issued to settle various disputes. See "Legal
Proceedings." We have issued, or expect to issue, these shares in a series of
unrelated registered and private offerings. See "Description of Business--Risk
Factors--Future issuances and sales into the market of up to an additional 166.5
million shares of our common stock will dilute our current stockholders and may
depress the market price of our common stock."

On February 15, 2000, we and Teakwood Ventures, LLC, an accredited investor
under Rule 501 of the Securities Act, executed a funding commitment letter and
subscription agreement pursuant to which Teakwood

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<PAGE>

Ventures agreed to purchase: (1) 11,223,334 shares of our common stock at
$0.1782 per share on or before March 30, 2000; (2) 11,223,334 shares of our
common stock at $0.1782 per share on or before June 30, 2000; and (3) 18,856,065
shares of our common stock at $0.3182 per share on or before September 30, 2000.
Teakwood Ventures' agreement to purchase our common stock on these varying dates
is subject to several conditions, including the condition that the shares to be
issued to Teakwood Ventures must be freely tradeable. We cannot assure you that
these conditions will be met. Therefore, we cannot assure you that we will
consummate all or part of this transaction. In addition, if our total equity
market capitalization is less than $200 million on any of the dates that
Teakwood Ventures purchases our shares of common stock, we have agreed to
proportionally reduce the per share price of the common stock to be purchased by
Teakwood Ventures. For example, if our total equity market capitalization is
$100 million on September 30, 2000, the purchase price per share would be
$0.1591 and we would consequently be required to issue 37,712,130 shares to
Teakwood Ventures.

You should carefully review our consolidated financial statements and the
accompanying notes for a more complete discussion of our capitalization.

Current and Future Liquidity Needs. We have not generated net cash from
operations for any period since 1996. We have primarily financed our operations
since 1996 through private sales of equity and debt securities. As of March 13,
2000, our principal source of liquidity was approximately $197,000 in cash. We
estimate that monthly operational cash requirements are approximately $300,000.
As part of our monthly operational cash requirements, we are obligated to pay an
aggregate of approximately $92,000 to our executive officers under the terms of
their employment agreements. In addition, as discussed below, we have
significant short-term financing cash requirements. We currently do not have
sufficient funds to meet our current cash and financing needs nor do we expect
to generate sufficient cash from operations to meet these needs. We cannot
assure you that we will be able to obtain funds to finance our current cash and
financing needs on acceptable terms, if at all. In addition, any increases in
anticipated expenses would further strain our liquidity and capital resources.
We must raise additional capital from public or private equity or debt sources
in order to finance operating losses, anticipated growth and contemplated
capital expenditures. If such sources of financing are insufficient or
unavailable, we will be required to modify our operating plans in accordance
with the extent of available funding. We may not be able to raise any such
capital on acceptable terms or at all. Further, we cannot assure you that we
will be able to raise sufficient capital to continue our operations. If we
cannot continue our operations, we may be forced to discontinue our business and
liquidate our assets.

All of the notes that have been issued by OrbitTravel.com mature six months
from the date of issuance. Approximately $500,000 of these notes will mature on
March 29, 2000. We cannot assure you that we will have sufficient capital, or be
able to raise sufficient capital, to repay our obligations under these notes nor
can we assure you that we would be successful in extending the maturity dates of
these notes. All of the notes that have been issued by OrbitTravel.com are
convertible into shares of our common stock at a conversion price of $.50 per
share. However, when OrbitTravel issued these notes, we were contemplating
consummating a merger with Orbit Network. The stated conversion price of $.50
assumed that we had effected a recapitalization of our common stock in
connection with such a merger. Upon completion of our due diligence review of
Orbit Network, we and Orbit Network mutually agreed to cancel our merger
agreement and agreed to enter into the other transactions we discuss in this
Annual Report on Form 10-KSB. Consequently, in order to ensure that the
purchasers of the OrbitTravel notes receive the same proportion of our shares of
common stock that they would have received had we effected a recapitalization of
our common stock, we currently expect to offer to exchange such holders' notes
for shares of common stock based on an exchange ratio of $.0455. Thus, instead
of issuing approximately 6.4 million shares upon conversion of these notes, we
expect to exchange these notes for approximately 70.3 million shares. The
issuance of any shares of our common stock upon conversion of these OrbitTravel
notes could result in dilution in net tangible book value to our current
stockholders.

In addition, we cannot assure you that we will have sufficient capital to pay
the $636,000 that we are required to pay as of February 16, 2000 under various
settlement agreements with employees, former employees and other creditors. See
"Legal Proceedings" and "Certain Relationships and Related Party Transactions."

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<PAGE>

On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by David Noosinow, one of our directors and executive
officers, entered into an asset purchase agreement with Mark Savoretti pursuant
to which Spartan Capital agreed to acquire the intellectual property assets
related to the TravelFile website previously owned by Orbit Network for $60,000
in cash, a note payable in the amount of $540,000 and the issuance of 3.0
million shares of our common stock. Mr. Savoretti, a creditor of Orbit Network,
acquired these assets from Orbit Network through a judicial foreclosure
proceeding on January 13, 2000 after Orbit Network failed to pay $771,000 owed
to Mr. Savoretti. Immediately upon execution of this asset purchase agreement,
Spartan Capital assigned all of its rights and obligations under the agreement
to us for $10. One of the obligations assigned is an obligation to enter into
consulting agreements with Mark Savoretti and another person, under which we
would pay a total of $450,000 over three years. We thereafter acquired the
intellectual property assets related to the TravelFile website directly from Mr.
Savoretti in exchange for $60,000 in cash, a note payable in the amount of
$540,000 and 3.0 million shares of the Company's common stock, which would
represent approximately 0.4% of our common stock assuming all of the
transactions and issuances described in this Annual Report are consummated. On
the date of closing, we paid Mr. Savoretti $60,000 and executed a promissory
note in the amount of $540,000. This note is payable in cash upon the effective
date of any registration statement of ours registering any of our common stock
under the Securities Act. We cannot assure you that we will be able to raise
sufficient capital, on acceptable terms or otherwise, to satisfy our obligations
under Mr. Savoretti's note.

On February 24, 2000, we executed a non-binding letter of intent to acquire
from AnimInet, intellectual property assets related to AnimInet's 3-D Internet
asset for approximately 473.9 million shares of our common stock, which would
represent approximately 52.6% of our common stock assuming all of the
transactions and issuances described in this Annual Report are consummated.
These intellectual property assets primarily include the software being
developed by AnimInet to create "Streaming Intelligent Beings," which are
digital 3D computerized personalities that would communicate directly with
Internet users. AnimInet is a corporation formed solely by Dean Miller, one of
our executive officers. We currently expect the stockholders of Orbit Network,
who are each accredited investors under Rule 501 of the Securities Act, to
individually purchase all of AnimInet's common stock. This letter of intent is
subject to the execution of a definitive agreement and customary due diligence.
We cannot assure you that this acquisition will be consummated or that it will
be consummated on the terms set forth in the letter of intent. We currently do
not have a sufficient number of authorized and unissued shares available under
our charter to consummate such an acquisition. Although we currently expect to
ask our stockholders to approve a reverse stock split on an up to 20-for-1
basis, we cannot assure you that we would be successful in obtaining such
approval.

On January 31, 2000, we entered into an agreement with Wilhelmina Artist
Management LLC pursuant which we would acquire all of the outstanding common
stock of WilhelminaTravelFile.com in exchange for approximately 80.0 million
shares of our common stock, which would represent appproximately 9.0% of our
common stock assuming all of the transactions and issuances described in this
Annual Report are consummated. Unless the transaction has closed, either party
may terminate the Wilhelmina agreement at any time after February 15, 2000. We
cannot assure you that we will be able to consummate this acquisition. We
currently do not have a sufficient number of authorized and unissued shares
available under our charter to consummate such an acquisition. Although we
currently expect to ask our stockholders to appove a reverse stock split on an
up to 20-for-1 basis, we cannot assure you that we would be successful in
obtaining stockholder approval for any such actions.

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The following table sets forth the beneficial ownership of our common stock
assuming all of the transactions and issuances described in this Annual Report
are consummated.

Number of
Shares Owned

Number of After
Shares Owned Reverse Percent
Before Reverse Stock Split of All

Name/Category of Stockholder Stock Split of 20 to 1 Shares
- ---------------------------- -------------- ------------ -------

Current stockholders (1).................. 13,753,642 687,682 1.6%
Officers and directors (2)................ 46,797,374 2,339,869 5.3
Other future recipients................... 119,753,749 5,987,687 13.5
AnimInet.................................. 473,928,276 23,696,414 53.5
Orbit Travel noteholders (3).............. 109,890,110 5,494,506 12.4
Wilhelmina Artist......................... 80,000,000 4,000,000 9.0
Teakwood Ventures, LLC.................... 41,302,733 2,065,136 4.7
----------- ---------- ----
Total................................. 885,425,884(4) 44,271,294 100%
=========== ========== ====

- --------
(1) As of February 16, 2000. Includes 2.5 million shares issued to Mr.
Dollinger, our General Counsel, as part of the settlement of litigation in
which he served as plaintiff's counsel.

(2) Excludes 2.5 million shares issued to Mr. Dollinger as part of the
settlement of litigation in which he served as plaintiff's counsel.

(3) Assumes the exchange of all of the OrbitTravel notes based on an exchange
ratio of $.0455 per share. Includes shares of common stock that will be
offered in exchange for an additional $1.8 million of debt that we expect to
issue.

(4) We currently expect that if we exercise our option to purchase the GDS and
ancillary contracts from Orbit Network for the assumption of approximately
$5.1 million in Orbit Network debt, we will exchange that debt for
approximately 137.4 million shares of our common stock. We cannot assure you
that we will exercise our option, or if we do exercise our option, that we
will exchange the debt for shares. This number in the table excludes any
shares that may be issued in an exchange.

ITEM 7. FINANCIAL STATEMENTS

See page F-1 of the financial reported included in this Annual Report.

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

None.

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<PAGE>

PART III

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

The following table sets forth information regarding our executive officers
and directors:

Name Age Position
---- --- --------

Joseph R. Cellura.............. 45 Chairman of the Board of Directors and
Chief Executive Officer

Douglas R. Dollinger........... 44 General Counsel and Director
David A. Noosinow.............. 40 President and Director
Clifford F. Bagnall............ 45 Chief Financial Officer
Dean E. Miller................. 42 Vice President of Sales

Joseph R. Cellura has served as our Chairman of the Board of Directors and
Chief Executive Officer since June 1999. Mr. Cellura previously served as our
Chairman of the Board of Directors and Chief Executive Officer from June 1997
until February 1999. During the interim period between serving as our Chairman
of the Board of Directors and Chief Executive Officer, Mr. Cellura independently
sought different business opportunities for us. Mr. Cellura originally joined us
as a result of our acquisition of Divot Corporation and Divot Development
Corporation. Mr. Cellura had served as an executive officer, and owned a
majority interest of the common stock, of Divot Corporation since 1989 and of
Divot Development Corporation since 1994. Prior to his coming to work with the
company, Mr. Cellura had been involved in varied and progressively more
responsible positions throughout his career with extensive travel experience
throughout the USA, Europe and Asia. Mr. Cellura is recognized for his vision,
creativity, marketing, and management leadership, in addition to several
challenging turn around strategies which have provided experience and knowledge
in legal stratagem and capital markets. During the period 1976-1992, Mr. Cellura
had a successful career in investment banking and the financial industry with
Shearson & Kidder Peabody & Co. Mr. Cellura attended the University of New York.

Dean E. Miller has served as our Vice President since January 5, 2000. Mr.
Miller previously served as our President from September 1, 1999 through October
31, 1999 and as a director from August 23, 1999 through January 5, 2000. In
addition to his duties with us, Mr. Miller is the president and sole owner of
AnimInet, Inc. We have entered into an agreement to purchase AnimInet's 3D
animation asset. See "Certain Relationships and Related Transactions." Before
joining us, Mr. Miller served as Vice President of Sales and Corporate Marketing
at Hitachi PC. Before joining Hitachi PC, Mr. Miller worked in various
capacities in the personal computer industry.

Douglas R. Dollinger has served as our Corporate Counsel since December 1,
1999 and as a Director since July 1999. Before joining us, Mr. Dollinger was
engaged in the private practice of law. Mr. Dollinger received his law degree
from the City University of New York at Queens College in 1988.

David A. Noosinow has served as our Secretary, and Director, since January
5, 2000 and, since February 1, 2000 is also serving as our President. Since
January 1997, Mr. Noosinow has been the Executive Director of Spartan Capital
Management, LLC. Mr. Noosinow brings to the organization over 15 years of
experience in the financial industry. Previously, Mr. Noosinow was the sole
proprietor and executive director of Spartan Capital Management, LLC, an
investment banking consulting company. Prior to forming Spartan Capital, Mr.
Noosinow had a career in the investment banking industry as Senior Vice
President with Prudential Securities, as Vice President with CS First Boston,
and as Associate Director with Bear Stearns & Company, Inc. Mr. Noosinow holds
a Bachelor's Degree in Business Administration from Northern Arizona
University, with a major in Finance.

Clifford F. Bagnall has served as our Chief Financial Officer since October
1998. Mr. Bagnall also served as a director from September 1997 through January
5, 2000 and as our Chief Operating Officer from September 1997 through January
5, 2000. Before joining us, Mr. Bagnall served as an independent financial and
operational consultant for various public and private companies.

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<PAGE>

Each of our directors and executive officers are required to file with the
SEC, by a specified date, reports regarding his transactions involving our
common stock. To our knowledge, based solely on information furnished to us,
none of our directors and executive officers filed any such reports during 1999.
We are not aware of any transactions involving our common stock by any of our
directors or executive officers.

Our financing arrangement with Teakwood Ventures described above under
"Description of Business--Recent Developments--Financing Activity" includes a
commitment for the addition of two Teakwood appointees to our five member board
of directors.

ITEM 10. EXECUTIVE COMPENSATION

Our directors have served without compensation for their services as
directors, but have been reimbursed for expenses incurred in connection with
their duties. It is anticipated that directors will continue to serve without
compensation (other than reimbursement of expenses). Other than the employment
contracts described below, we had no standard arrangements or policies for
compensation of our executives. The Board of Directors will, from time to time,
determine the compensation of our senior management in accordance with our
prevailing financial condition as the Board shall determine and provide other
incentives to promote successful management of our business. There were no
bonus, stock option or other incentive plans in effect for any level of
management as of the end of 1998 or 1999 except for our 1998 Incentive Stock
Option Plan and 1994 Stock Option Plan and performance bonuses included in the
employment agreement of Mr. Cellura as more fully described below.

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<PAGE>

The following table sets forth information with respect to compensation paid
to each of the persons who served as our Chief Executive Officer during 1998 and
1999. No other executive officer received compensation in excess of $100,000
during 1998 or 1999.

Summary Compensation Table

Annual Securities
Compensation Underlying

---------------- Options All Other
Year Salary Bonus (#) Compensation
Name and Principal Position ---- -------- ------- ---------- -------------

Joseph R. Cellura............... 1999 $ 53,798 $ -- -- $155,362
Chief Executive Officer 1998 187,500 -- 333,333 199,000
1997 45,406 -- -- --
Jeremiah Daly................... 1999 $ -- $ -- -- $ --
Former Chief Executive Officer 1998 177,083 65,000 200,000 --
1997 18,750 -- -- --
Kenneth Craig................... 1999 $ -- $ -- -- $ 12,500
Former Chief Executive Officer 1998 -- -- -- 10,500
1997 -- -- -- --
James A. McNulty................ 1999 $ -- $ -- -- --
Former Chief Financial Officer 1998 104,323 -- 233,333 $ 48,500
1997 -- -- -- --
Clifford F. Bagnall............. 1999 $ -- $ -- -- $ 14,000
Chief Financial Officer 1998 142,552 65,000 200,000 --
1997 41,657 -- -- --

Mr. Cellura served on our Board of Directors as our Chairman and Chief
Executive Officer from June 1997 until he resigned on February 16, 1999. On
February 17, 1999, the remaining members of the Board elected Jeremiah M.
Daly, another Board member and our then President, to serve as Chairman and
Chief Executive Officer. Mr. Daly resigned from all of those positions,
including as a member of our Board, effective April 28, 1999, at which time
our Board appointed Kenneth Craig to serve as President and Chief Executive
Officer. Mr. Craig was appointed Chairman on May 6, 1999. He was succeeded as
Chairman and Chief Executive Officer by Mr. Cellura on June 24, 1999. Mr.
Craig's service to us was terminated under a separation agreement, dated
September 1, 1999, which settled his claims that we wrongfully dismissed him
from his elected offices. See "Legal Proceedings."

All stock options that we have granted since our inception have been
forfeited. At the end of 1999, there were no unexercised options or stock
appreciation rights held by our executives which were outstanding.

Employment Contracts

We have entered into employment agreements with our executive management,
including a seven-year employment agreement with Mr. Cellura that was effective
as of June 24, 1999. Under our agreement with Mr. Cellura, we have agreed to pay
him an annual base salary of at least $250,000. We have also agreed to

35
<PAGE>

reimburse Mr. Cellura approximately $9,000 per month to enable Mr. Cellura to
maintain an office and residence in New York City. In addition to these amounts,
we have agreed to pay Mr. Cellura an annual performance/incentive bonus on the
following terms:

Mr. Cellura's

Our Fiscal Year Revenue Bonus
----------------------- ------------------

$0 to $2.0 million........................................ 5% of base salary
$2.0 million to $5.0 million.............................. 15% of base salary
$5.0 million to $10.0 million............................. 30% of base salary
$10.0 million or greater.................................. 50% of base salary

In addition to these revenue-based bonuses, we have agreed to pay Mr. Cellura,
Mr. Noosinow and Mr. Dollinger an aggregate bonus, to share ratably with each
other, equal to two percent of the gross proceeds that we receive in
connection with public and private equity and debt offerings. We have also
agreed to pay Mr. Cellura, Mr. Noosinow and Mr. Dollinger an aggregate bonus,
to share ratably with each other in the event a third party acquires us, equal
to five percent of the purchase price.

The employment agreement with Mr. Cellura also provides for the issuance of
5.0 million options to purchase shares of our common stock upon our adoption of
a new stock option plan, all of which will be immediately exercisable. Mr.
Cellura's employment agreement provides anti-dilution protection to Mr. Cellura
such that in the event we ever issue any additional shares at a price less than
the exercise price then in effect for the options granted to Mr. Cellura, the
exercise price of his options will be proportionately reduced. In addition to
requiring us to record compensation expense each time the exercise price of his
options is reduced, this provision could have the effect of discouraging us from
undertaking various financing transactions in the future that may otherwise be
in your best interest.

If we terminate Mr. Cellura's employment agreement without cause at any time
during the term of his seven-year employment agreement, we are required to
fulfill the following severance obligations:

(1) we must continue to reimburse Mr. Cellura after termination of his
employment for approximately $9,000 per month to enable Mr. Cellura to
maintain an office and residence in New York City for the balance of the
term of the agreement;

(2) in the event Mr. Cellura continues after termination of his employment
to hold options, warrants or other securities convertible into our common
stock, the exercise prices of such securities will be proportionately reduced
if we issue common stock at a price lower than the exercise price then in
effect for his convertible securities;

(3) we must pay Mr. Cellura a lump sum equal to the sum of the present
value of 100% of his base salary for the balance of the term of the
employment agreement;

(4) we must pay Mr. Cellura an additional lump sum equal to $1.25
million;

(5) we must execute a UCC-1 financing statement on behalf of Mr. Cellura
enabling him to record a lien against our assets to secure payment of the
$1.25 million severance payment;

In addition, regardless of whether or not we have previously terminated Mr.
Cellura's employment, if upon expiration of Mr. Cellura's seven-year employment
term, we elect not to offer Mr. Cellura an additional five-year employment
contract, we must pay him an additional lump sum of $900,000.

We may only avoid these severance obligations if we terminate Mr. Cellura's
employment for cause. In order for us to terminate Mr. Cellura's employment
for cause, we must follow the procedures set forth in his employment
agreement. We would be required to give Mr. Cellura 90 days' prior written
notice of his termination for cause. Mr. Cellura would have 90 additional days
to elect whether or not to object to his termination. If Mr. Cellura objects,
our board would be required to convene a special meeting within 30 days, at
which Mr. Cellura would have the right to attend, to review his objection and
determine whether or not sufficient evidence exists to terminate Mr. Cellura's
employment for cause. Mr. Cellura may again object to our board's
determination by filing a request for arbitration of this matter within 30
days of the board's determination. The

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<PAGE>

arbitration would be required to take place within 60 days of notice of the
request. If Mr. Cellura objects to termination of his employment for cause, Mr.
Cellura would remain in his position as our chief executive officer, and
continue to receive amounts due to him under the employment agreement, until the
matter has been finally determined. This process could take up to 10 months.
Even if we are successful in terminating Mr. Cellura's employment for cause, if
upon expiration of Mr. Cellura's seven-year employment term, we elect not to
offer Mr. Cellura an additional five-year employment contract, we must pay him
an additional lump sum of $900,000.

In addition to our employment agreement with Mr. Cellura, we have entered into
employment agreements with each of our other executive officers. We have filed
each of these agreements as an exhibit to this Annual Report on Form 10- KSB.
Our agreements with Messrs. Noosinow and Dollinger are substantially similar to
our agreement with Mr. Cellura except as follows: (1) Mr. Noosinow's base salary
is at least $225,000 and his severance payment upon termination without cause
would be $900,000; and (2) Mr. Dollinger's base salary is at least $180,000 and
his severance payment upon termination without cause would be $900,000.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

We set forth below information regarding the beneficial ownership of our
common stock as of February 16, 2000 by each director, each executive officer,
all executive officers and directors as a group and each person known to us to
beneficially own more than 5% percent of our common stock. For purposes of this
table, we assume that the holders of all of our convertible debt and convertible
preferred stock (other than notes issued by OrbitTravel, our wholly owned
subsidiary) have accepted our offer to exchange such securities for an aggregate
of 52.7 million shares of our common stock and that we have issued all 113.8
million shares of common stock for no cash consideration to various executive
officers, employees, consultants and other third parties. See "Description of
Business--Recent Developments--Financing Activity."

Number of
Shares Percent
Beneficially of All
Name of Beneficial Owner Owned Shares (1)
- ------------------------ ------------ ---------

Joseph R. Cellura....................................... 27,333,333 15.2%
David A. Noosinow....................................... 6,000,000 3.3
Douglas R. Dollinger.................................... 6,300,000 3.5
Dean E. Miller.......................................... 4,264,041 2.4
Clifford F. Bagnall..................................... 5,400,000 3.0
All executive officers and directors
as a group (5 persons)................................. 49,297,374 27.4

- --------
(1) Assumes 180,304,765 shares outstanding.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On April 15, 1998, we acquired the issued and outstanding capital stock of
Divot Golf Subsidiary, Inc., a Florida corporation, which was wholly owned by
Mr. Cellura. Mr. Cellura is our Chairman of the Board and Chief Executive
Officer. The purchase price was $500,000, payable $300,000 in cash and the
remainder in a promissory note. We delivered to the seller a good-faith, non-
refundable deposit of $300,000 in November 1997 which was applied toward the
purchase price. The note bore interest at a rate of 6% and provided for
quarterly payments of interest only. We repaid the note in full prior to October
15, 1998. The assets of DGS included its name, patent and licensing rights and
molds for producing a divot repair tool.

On January 7, 1998, we loaned Mr. Cellura $65,388. This loan was originally
evidenced by an unsecured promissory note which bears interest at the rate of
6%. The terms of the loan require that it be repaid on or

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<PAGE>

before June 30, 1998. Mr. Cellura did not participate in the Board's decision to
approve this loan. We believe that the terms of this loan were commercially
reasonable. We forgave this note payable and recorded the $65,388 as
compensation expense. We have also made advances to Mr. Cellura and to Divot
Development Corporation, a Florida corporation which is wholly-owned by Mr.
Cellura, in the total aggregate amount of $141,500. Effective December 31, 1999,
these advances have been offset against certain accruals and payables to Mr.
Cellura or discharged as part of his settlement agreement.

In January and May of 1999, a group of our former stockholders and employees
and stockholders and employees of various companies that we acquired in April
1998, which formerly were controlled by Mr. Cellura, our chief executive
officer, filed three lawsuits in the United States District Court for the
Southern District of New York against us, these various acquired corporations,
Mr. Cellura and several of our other executive officers and stockholders. The
complaints alleged, among other things, that (1) we had failed to issue an
aggregate of 15.0 million shares of our common stock (such number of shares is
prior to the effect of a 15-for-1 reverse stock split effected with regard to
our common stock on June 2, 1998), (2) we and our officers committed fraud in
the issuance of securities, and (3) various breaches of contract. The parties to
the lawsuit entered into a settlement agreement as of June 29, 1999 pursuant to
which the plaintiffs agreed to release the defendants from all of the claims in
the lawsuits in exchange for: (1) a note payable in the amount of $225,000; (2)
the issuance of 7.65 million shares of our common stock; and (3) the assignment
by Mr. Cellura of all of his rights, title or interest to the profits generated
from a few parcels of land in the World Golf Village. Mr. Cellura assigned these
rights to the plaintiffs on June 24, 1999. We instructed our transfer agent to
issue the 7.65 million shares of our common stock in August 1999, and such
shares were ultimately issued February 29, 2000. Jeremiah Daly, our former Chief
Executive Officer, received 333,334 shares. Douglas Dollinger, a lawyer who
filed the lawsuit on behalf of the plaintiffs, received 2.5 million shares. Mr.
Dollinger currently serves as our General Counsel and is one of our directors.
As of February 16, 2000, we have not repaid any amounts due under the $225,000
note payable. This note payable currently matures on March 31, 2000. We cannot
assure you that we will have sufficient funds available to repay the note
payable upon maturity or that we would be able to extend the maturity date of
the note payable. If we are not able to repay the note payable according to its
terms, we cannot assure you that the plaintiffs will not seek court action to
enforce the terms of the settlement agreement. We would incur substantial
expenses if we must defend any additional actions in connection with these
lawsuits.

In June 1999, Joseph R. Cellura, our chief executive officer, threatened to
file a lawsuit against us alleging, among other things, that: (1) Mr. Cellura
had suffered substantial monetary loss in the defense of the lawsuits we refer
to in the previous paragraph; (2) Mr. Cellura had suffered real and substantial
damage to his personal character as a result of the filing of these lawsuits;
(3) we failed to issue to Mr. Cellura and other stockholders in various
companies controlled by him an aggregate of 20.0 million shares of our common
stock and 5.0 million options to purchase shares of our common stock (such
number of shares is prior to the effect of a 15-for-1 reverse stock split
effected with regard to our common stock on June 2, 1998); and (4) we failed to
indemnify Mr. Cellura as required by our indemnity agreement with him in
connection with these lawsuits. We and Mr. Cellura agreed to enter into a
settlement agreement, effective as of June 29, 1999, pursuant to which Mr.
Cellura agreed to release us from these claims in exchange for: (1) a note
payable in the amount of $250,000; and (2) the issuance of approximately 27.34
million shares of our common stock. As of February 16, 2000, we have repaid
$64,000 due under the $250,000 note payable. This note payable currently matures
on April 30, 2000. We cannot assure you that we will have sufficient funds
available to repay the remaining amounts outstanding under the note payable upon
maturity or that we would be able to extend the maturity date of the note
payable. If we are not able to repay the note payable according to its terms, we
cannot assure you that Mr. Cellura will not seek court action to enforce the
terms of the settlement agreement. We would incur substantial expenses if we
must defend any such court action.

Clifford F. Bagnall, one of our former directors and our current chief
financial officer, had threatened to file a lawsuit against us alleging that we
owe Mr. Bagnall amounts due under his employment contract in force while he was
an executive officer. We and Mr. Bagnall agreed to enter into a settlement
agreement, effective as of January 31, 2000, pursuant to which Mr. Bagnall
agreed to release us from this claim in exchange for: (1) a note payable in the
amount of $100,000; and (2) the issuance of 5.3 million shares of our common
stock. As of

38
<PAGE>

February 16, 2000, we have not repaid any amounts due under the $100,000 note
payable. This note payable currently matures on May 15, 2000. We cannot assure
you that we will have sufficient funds available to repay the note payable upon
maturity or that we would be able to extend the maturity date of the note
payable. If we are not able to repay the note payable according to its terms, we
cannot assure you that Mr. Bagnall will not seek court action to enforce the
terms of the settlement agreement. We would incur substantial expenses if we
must defend any such court action.

Kenneth Craig, one of our former directors and executive officers, has
threatened to file a lawsuit against us alleging that we owe Mr. Craig amounts
due under his employment contract in force while he was an executive officer. We
and Mr. Craig agreed to enter into a separation agreement, effective as of
September 1, 1999, pursuant to which Mr. Craig agreed to release us from this
claim in exchange for: (1) a note payable in the amount of $75,000; and (2) the
issuance of 3.5 million shares of our common stock. As of February 16, 2000, we
have not repaid any amounts due under the $75,000 note payable. This note
payable currently matures on June 30, 2000. We cannot assure you that we will
have sufficient funds available to repay the note payable upon maturity or that
we would be able to extend the maturity date of the note payable. If we are not
able to repay the note payable according to its terms, we cannot assure you that
Mr. Craig will not seek court action to enforce the terms of the settlement
agreement. We would incur substantial expenses if we must defend any such court
action.

On February 24, 2000, we executed a non-binding letter of intent to acquire
AnimInet's intellectual property assets related to AnimInet's 3-D Internet asset
for approximately 473.9 million shares of our common stock, which would
represent approximately 53.3% of our common stock assuming all of the
transactions and issuances described in this Annual Report are consummated.
AnimInet is a corporation formed solely by Dean Miller, one of our executive
officers. We currently expect the stockholders of Orbit Network, who are each
accredited investors under Rule 501 of the Securities Act, to individually
purchase all of AnimInet's common stock. Mr. Miller will likely receive a
portion of the cash proceeds from such an offering in exchange for the
cancellation of his shares of AnimInet common stock.

On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by David Noosinow, one of our directors and executive
officers, entered into an asset purchase agreement with Mark Savoretti pursuant
to which Spartan Capital agreed to acquire the intellectual property assets
related to the TravelFile website previously owned by Orbit Network for $600,000
in cash and the issuance of 3.0 million shares of our common stock. Mr.
Savoretti, a creditor of Orbit Network, acquired these assets from Orbit Network
through a judicial foreclosure proceeding on January 13, 2000 after Orbit
Network failed to pay approximately $770,000 owed to Mr. Savoretti. Immediately
upon execution of this asset purchase agreement, Spartan Capital Management, LLC
assigned all of its rights and obligations under the agreement to us for $10.
One of the obligations assigned is an obligation to enter into consulting
agreements with Mr. Savoretti and another person, under which we would pay a
total of $450,000 over three years. We thereafter acquired the intellectual
property assets related to the TravelFile website directly from Mr. Savoretti in
exchange for $60,000 in cash, a note payable in the amount of $540,000 and 3.0
million shares of common stock, which would represent approximately 0.4% of our
common stock assuming all of the transactions and issuances described in this
Annual Report are consummated.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

2.1(1) Stock Purchase Agreement effective as of April 20, 1998 by and among
us, Talisman Tools Incorporated and Daniel S. Shedd and Dixon Newbold
2.2(2) Stock Purchase Agreement effective as of April 15, 1998 by and among
us, Divot Golf Corporation, a Florida corporation, and Joseph R.
Cellura

2.3(3) Stock Purchase Agreement effective as of January 28, 1998 by and among
us, Miller Golf, Inc. and Robert Marchetti, Louis Katon and John
Carroll
2.4 Sale and Assignment Agreement dated as of January 27, 2000 by and among
Mark Savoretti and Spartan Capital Management, LLC

39
<PAGE>

2.5 Assignment Agreement dated as of January 27, 2000 by and among us and
Spartan Capital Management, LLC

2.6 Right to Use Agreement dated as of November 1, 1999 by and among us
and Orbit Network, Inc.
2.7 Letter of Intent dated as of February 9, 2000 by and among us and
AnimInet, Inc.
2.8 Stock Acquisition Agreement dated as of January 31, 2000 by and among
us and Wilhelmina Artist Management LLC
3.1(4) Our Certificate of Incorporation
3.2(4) Our Bylaws

3.3(5) Amendment to our Certificate of Incorporation filed July 18, 1994
4.1(6) Certificate of Designations, Preferences and Rights of our 1997
Convertible Preferred Stock dated December 29, 1997
4.2(6) Certificate of Designations, Preferences and Rights of 10,500 shares
of our 1997 Convertible Preferred Stock dated January 13, 1998
4.3 Form of Exchange Letter between us and the holders of our 1997
Convertible Preferred Stock

4.4 Funding Commitment Letter and Subscription Agreement as of February
15, 2000 by and between us and Teakwood Ventures, LLC
10.1(7) Form of Warrant issued to the Summit Stockholders dated June 30, 1995
10.2(7) Form of Warrant and Registration Rights Agreement issued to financial

advisor dated June 30, 1995
10.3(8) Agreement in Principle dated February 21, 1996 between us, Gordon
Ewart, our four golf course subsidiaries and our three pension fund
partners.

10.4(6) Form of Convertible Debenture Agreement dated November 18, 1997
between us and the signatories, with form of warrant to purchase
shares of our common stock

10.5(6) Form of Private Placement Purchase Agreement dated December 3, 1997
between us and the signatories, with form of warrant to purchase
shares of our common stock

10.6(3) Form of Private Placement Memorandum dated April 3, 1998 between us
and the signatories, with form of warrant to purchase shares of our
common stock.

10.7(10) Employment Agreement dated June 24, 1999 between us and Joseph R.

Cellura

10.8(10) Employment Agreement dated November 1, 1999 between us and Dean E.

Miller

10.9(10) Employment Agreement dated November 1, 1999 between us and David A.

Noosinow

10.10(10)Employment Agreement dated December 1, 1999 between us and Douglas R.
Dollinger
10.11(10)Intentionally Omitted
10.12(10)Intentionally Omitted

10.13(10)Form of Exchange Letter between us and the holders of our convertible
debt

10.14(10)Settlement Agreement dated as of June 24, 1999 between us and Joseph
R. Cellura

10.15(10)Separation Agreement dated as of September 1, 1999 between us and
Kenneth Craig

10.16(10)Settlement Agreement dated as of January 31, 2000 between us and
Clifford F. Bagnall

10.17(10)Settlement Agreement dated as of January 31, 2000 between us and Kirk
Scoggins

10.18(10)Memorandum of Settlement dated as of June 29, 1999 between us and the
Plaintiff Group

10.19(9) Our 1998 Incentive Stock Option Plan
10.20(10)Form of OrbitTravel.com, Inc. Convertible Note

10.21(10)Management Agreement dated November 17, 1999 between OrbitTravel.com,
Inc. and Bonveno.com Limited
10.22(10)European Specific Software Development Agreement dated November 17,
1999 between OrbitTravel.com, Inc. and Bonveno.com Limited
10.23(10)Operational Agreement dated November 17, 1999 between
OrbitTravel.com, Inc. and Bonveno.com Limited

10.24(10)Interactive Services Agreement between America Online, Inc. and Orbit
Network, Inc. dated as of May 1, 1999
10.25(10)Agreement dated as of July 1, 1996 between Applied Information
Services, Inc. and Amadeus Marketing, S.A.
10.26(10)Associate Distribution and Services Agreement dated as of April 2,
1998 between Orbit Network, Inc. and The Sabre Group, Inc.

40
<PAGE>

10.27(10)Services Display and Reservations Agreement dated as of November 24,
1998 between Orbit Network, Inc. and Galileo International, L.L.C.
10.28(10)Associate Participation Global Reference System Agreement dated as of
August 2, 1999 between Orbit Network, Inc. and WorldSpan, L.P.
10.29(10)Certificate of Incorporation of OrbitTravel.com, Inc.
10.30(10)Bylaws of OrbitTravel.com, Inc.
10.31(10)Joint Venture Agreement dated November 17, 1999 among WebTravel
Systems Limited, OrbitTravel.com, Inc. and Bonveno.com Limited
10.32(10)Form of Indemnification Agreement
10.33(10)Joint Content Distribution Agreement dated January 9, 2000 between

OrbitTravel.com, Inc. and AsiaGateway.com, Ltd.
10.34(10)Consulting Services Agreement and Joint Consent Agreement dated
February 7, 2000 by and among OrbitTravel and Laspata/Decaro Studio
Corp.

21(10) Our subsidiaries
27 Financial Data Schedule

- --------
(1) Incorporated by reference from our Current Report on Form 8-K dated April
20, 1998.

(2) Incorporated by reference from our Current Report on Form 8-K dated April
15, 1998.

(3) Incorporated by reference from our Current Report on Form 8-K dated April 8,
1998.

(4) Incorporated by reference from our Form 10 filed on December 13, 1993.
(5) Incorporated by reference from our Form 10 filed on September 15, 1994.
(6) Incorporated by reference from our Annual Report on Form 10-KSB for 1997.
(7) Incorporated by reference from our Annual Report on Form 10-K for 1995.
(8) Incorporated by reference from our Current Report on Form 8-K dated August
30, 1996.

(9) Incorporated by reference from our Registration Statement on Form S-8 filed
September 1, 1998.

(10) Incorporated by reference from our Annual Report on Form 10-KSB for 1999.

(b) Reports on Form 8-K

We filed the following Form 8-K's during the fourth quarter of 1998

Dated 10/20/1998
Dated 10/28/1998

41
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on March 29, 2000.

DIVOT GOLF CORPORATION

/s/ Joseph R. Cellura
By: ---------------------------------
Joseph R. Cellura
Chief Executive Officer

In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:

Signature Title Date
--------- ----- ----

/s/ Joseph R. Cellura Chairman of the Board of March 29, 2000
- ---------------------------- Directors and Chief Executive
Joseph R. Cellura Officer

/s/ Douglas R. Dollinger General Counsel and Director March 29, 2000
- ----------------------------------
Douglas R. Dollinger

/s/ David A. Noosinow President and Director March 29, 2000
- ----------------------------------
David A. Noosinow

/s/ Clifford F. Bagnall Chief Financial Officer March 29, 2000
- ---------------------------------- (principal accounting officer)
Clifford F. Bagnall

42
<PAGE>

INDEX

CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED

DECEMBER 31, 1999 and 1998 F-1
DECEMBER 31, 1997 and 1996 F-20

43
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Divot Golf Corporation

We have audited the accompanying consolidated balance sheets of Divot Golf
Corporation and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, shareholders' deficit and cash flows for
each of the two years in the period ended December 31, 1999. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

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

The accompanying consolidated financial statements have been prepared assuming
that the Corporation will continue as a going concern. As more fully described
in Note 1, the Corporation has incurred recurring operating losses, has pending
litigation, has a shareholders' deficit of approximately $13 million, and has a
working capital deficiency. These conditions raise substantial doubt about the
Corporation's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.

ERNST & YOUNG LLP

Raleigh, North Carolina
February 10, 2000,
except for Note 11, as to which the date is
February 29, 2000

F-1

44
<PAGE>

DIVOT GOLF CORPORATION

CONSOLIDATED BALANCE SHEET

December 31,
--------------------------
1999 1998
------------ ------------

ASSETS

Current assets:
Cash............................................. $ 174,492 $ 568
Trade accounts receivable, net................... 82,608 --
Accounts receivable from related parties......... 114,332 155,362
Prepaid expenses and other current assets........ 288,442 --
------------ ------------
Total current assets........................... 659,874 155,930
Furniture and equipment at cost:
Furniture and equipment.......................... 94,850 114,366
Less accumulated depreciation ................... (22,827) (16,843)
------------ ------------
72,023 97,523
Other assets....................................... 136,425 --
------------ ------------
Total assets................................... $ 868,322 $ 253,453
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable................................. $ 1,210,614 $ 914,216
Accrued expenses................................. 1,562,666 1,252,127
Accrued compensation and payroll................. 5,328,122 188,708
Amounts due to related parties................... 60,500 34,000
Dividends payable................................ 1,730,000 730,000
Notes payable.................................... 3,392,504 1,717,504
Notes payable to related parties................. 661,800 410,000
------------ ------------
Total current liabilities...................... 13,946,206 5,246,555
Other liabilities.................................. -- 200,000
Commitments and Contingencies (Note 10)
Shareholders' deficit:
Convertible Preferred Stock, $.001 par value; 1,000,000 shares authorized;
286,835 and 287,025 shares issued and outstanding (aggregate liquidation
preference of $5,585,000 and $5,775,000) at December 31, 1999 and 1998,

respectively.................................... 287 287
Common Stock, $.001 par value; 200,000,000 shares
authorized; 13,753,642 and 4,410,041 shares
issued and outstanding at December 31, 1999 and
1998, respectively.............................. 13,754 4,410
Additional paid-in capital....................... 42,523,558 41,722,902
Accumulated deficit.............................. (55,404,546) (46,709,764)
Convertible Preferred Stock held in treasury,
281,250 shares.................................. (210,937) (210,937)
------------ ------------
Total shareholders' deficit.................... (13,077,884) (5,193,102)
------------ ------------
Total liabilities and shareholders' deficit.... $ 868,322 $ 253,453
============ ============

See accompanying notes.

F-2

45
<PAGE>

DIVOT GOLF CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,
-------------------------
1999 1998
----------- ------------

Operating revenues:
Golf product revenues............................. $ -- $ 6,036,983
Internet related revenues......................... 130,860 --
----------- ------------
Total operating revenues........................ 130,860 6,036,983
Operating expenses:
Cost of golf product revenues..................... -- 3,841,147
Cost of internet related revenues................. 487,812 --
General and administrative expenses............... 5,951,452 6,715,625
Depreciation and amortization expense............. 5,986 270,844
----------- ------------
Total operating expenses........................ 6,445,250 10,827,616
----------- ------------
(6,314,390) (4,790,633)
Other income (expense):
Interest expense -- contractual................... (167,824) (635,926)
Amortization of debt discount on convertible
debentures....................................... -- (2,835,559)
Loss on investments............................... -- (6,958,750)
Write down of assets.............................. -- (705,609)
Gain on sale of golf course....................... -- 523,799
Interest and other income......................... 560 135,755
Litigation settlement expense..................... (982,917) (740,004)
Other expense..................................... (230,211) --
----------- ------------
(1,380,392) (11,216,294)
----------- ------------
Net loss.......................................... $(7,694,782) $(16,006,927)
----------- ------------
Basic and diluted loss per common share............. $ (1.03) $ (4.78)
=========== ============
Weighted average number of common shares
outstanding........................................ 8,469,500 3,641,700
=========== ============

See accompanying notes.

F-3

46
<PAGE>

DIVOT GOLF CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT

Convertible
Convertible Preferred
Common Stock Preferred Stock Additional Treasury Stock
------------------ ------------------ Paid-in Accumulated -------------------
Shares Amount Shares Amount Capital Deficit Shares Amount Total
---------- ------- --------- ------- ----------- ------------ -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Balance at December
31, 1997............. 2,842,167 $ 2,842 283,170 $ 283 $32,083,757 $(29,285,060) (281,250) $(210,937)$ 2,590,885
Net loss.............. -- -- -- -- -- (16,006,927) -- -- (16,006,927)

Issuance of Warrants
in connection with
issuance of debt..... -- -- -- -- 1,907,328 -- -- -- 1,907,328

Issuance of Common
Stock in connection
with a private
placement............ 551,933 552 -- -- 1,431,346 -- -- -- 1,431,898

Issuance of Preferred
Stock in connection
with acquisition..... -- -- 3,000 3 2,999,997 -- -- -- 3,000,000

Issuance of Preferred
Stock in connection
with a private
placement............ -- -- 1,020 1 1,019,999 -- -- -- 1,020,000

Accrued Preferred
Stock dividends in
arrears.............. -- -- -- -- -- (730,000) -- -- (730,000)

Preferred Stock
dividend --
conversion
discount............. -- -- -- -- 687,777 (687,777) -- -- --
Issuance of Common
Stock in connection
with Warrant
exercise............. 94,304 94 -- -- (94) -- -- -- --
Issuance of Common
Stock in connection
with conversion of
debentures........... 457,412 458 -- -- 1,058,055 -- -- -- 1,058,513

Issuance of Common
Stock in connection
with conversion of
Preferred Stock...... 46,429 46 (165) -- (46) -- -- -- --
Issuance of Common
Stock for
acquisitions......... 417,796 418 -- -- 534,783 -- -- -- 535,201
---------- ------- --------- ------ ----------- ------------ -------- --------- -------------
Balance at December
31, 1998............. 4,410,041 $ 4,410 287,025 $ 287 $41,722,902 $(46,709,764) (281,250) $(210,937) $ (5,193,102)
Net loss.............. -- -- -- -- -- (7,694,782) -- -- (7,694,782)

Issuance of Common
Stock in connection
with conversion of
Preferred Stock...... 1,293,601 1,294 (190) -- (1,294) -- -- -- --
Accrued Preferred
Stock dividends in
arrears.............. -- -- -- -- (1,000,000) -- -- (1,000,000)

Issuance of Common
Stock in connection
with settlement of
litigation........... 8,050,000 8,050 -- -- 801,950 -- -- -- 810,000
---------- ------- --------- ------ ----------- ------------ -------- --------- ------------
Balance at December
31, 1999............. 13,753,642 $13,754 286,835 $ 287 $42,523,558 $(55,404,546) (281,250) $(210,937) $(13,077,884)
========== ======= ========= ====== =========== ============ ======== ========= ============

</TABLE>

See accompanying notes.

F-4

47
<PAGE>

DIVOT GOLF CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,
-------------------------
1999 1998
----------- ------------

Operating Activities

Net loss........................................... $(7,694,782) $(16,006,927)
Adjustments to reconcile net loss to net cash used
in operating activities:
Discount on convertible debentures............... -- 2,835,559
Loss on investments ............................. -- 6,958,750
Loss on disposal of furniture and equipment...... 40,378 --
Issuance of shares in settlement of litigation... 810,000 --
Depreciation and amortization.................... 5,986 270,844
Gain on sale of golf course...................... -- (523,799)
Writedown of license, deposits and property and
equipment....................................... -- 705,609
Trade accounts receivable........................ (82,608) 352,018
Accounts receivable from related parties......... 41,030 5,181
Prepaid expenses and other assets................ (424,867) 133,780
Accounts payable................................. 296,398 625,007
Accrued expenses and other liabilities........... 110,539 743,039
Accrued compensation............................. 5,139,414 --
Amounts due to related parties................... 26,500 34,000
----------- ------------
Net cash used in operating activities.............. (1,732,012) (3,866,939)
----------- ------------
Investing Activities

Payments for intangible assets..................... -- --
Purchases of property and equipment, net........... (20,864) (2,245,966)
Change in restricted cash.......................... -- 135,019
Proceeds from sale of subsidiaries................. -- 1,875,913
----------- ------------
Net cash used in investing activities.............. (20,864) (235,034)
----------- ------------
Financing Activities

Proceeds from borrowings........................... 1,675,000 1,717,504
Payments on borrowings............................. -- (4,065,328)
Proceeds from notes payable to related parties..... 251,800 410,000
Proceeds from issuance of common stock............. -- 1,967,099
Proceeds from sale of convertible preferred stock,
net............................................... -- 4,020,000
----------- ------------
Net cash provided by financing activities.......... 1,926,800 4,049,275
----------- ------------
Increase (decrease) in cash........................ 173,924 (52,698)
Cash at beginning of year.......................... 568 53,266
----------- ------------
Cash at end of year................................ $ 174,492 $ 568
----------- ------------
Supplemental Disclosure of Cash Flow Information

Cash paid during the period for interest........... $ -- $ 463,643
=========== ============

See accompanying notes.

F-5

48
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1999

1. BUSINESS OF THE COMPANY, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES

Divot Golf Corporation ("the Company") is engaged in the development,
licensing and marketing of golf-related businesses. Additionally, the Company
plans to reposition itself by providing specialized e-commerce applications and
providing essential distribution services and on-line marketing solutions to the
travel industry worldwide.

As of December 31, 1999, the Company has a net working capital deficiency of
$13,286,332 and a shareholders' deficit of $13,077,884. The Company has had
recurring net losses, pending litigation and is not generating sufficient
revenues from its operations to fund its activities and therefore is dependent
on additional financing from external sources. These factors among others raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments relating to
the recoverability and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company is
actively working to raise additional equity and debt financing and, if
successful, management believes that the Company will have adequate resources to
continue to meet its current debt obligation, fund capital improvements and
expand and develop its businesses. There is no assurance that such additional
funding will be completed and the inability to obtain such financing would have
a material adverse effect on the Company.

Principles of Consolidation

Furniture and Equipment

Furniture and equipment is recorded at cost. Depreciation on furniture and
equipment begins when the assets are placed into service and is charged to
operations over the estimated useful lives of the assets (3 to 5 years),
utilizing the straight-line method for financial reporting purposes and
accelerated methods for tax purposes.

Other Assets

Other assets consist primarily of financing costs and an option to purchase
assets of Orbit Network, Inc. (Note 9). Costs incurred in obtaining long-term
debt obligations are capitalized at cost and amortized over the lives of the
respective loans.

Cash and Cash Equivalents

The Company considers highly liquid, short-term investments with a maturity of
three months or less when purchased to be cash equivalents.

Revenues

Revenues for product related sales, net of allowance for returns, are
recognized at the time merchandise is shipped to the customer.

Internet related revenues are derived from development of Internet services
including creating, hosting and maintaining Web sites, informational listings,
banner advertising and transactions including fees for online brochure ordering.
Certain advertising contracts include guarantees of a minimum number of
impressions. To the extent minimum guaranteed impressions are not met, the
Company defers revenue recognition until the guaranteed impression levels are
achieved. Contract terms range from one to twelve months. Revenues are
recognized ratably over the term of each contract.

F-6

49
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Based Compensation

On January 1, 1996, the company adopted Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("FAS 123"), which
requires companies to recognize as expense the fair value of all stock-based
awards on the date of grant, or continue to apply the provisions of Accounting
Principles Board Opinion No. 25 ("APB 25") and provide pro forma net income and
pro forma earnings per share disclosures for employee stock option grants as if
the fair-value-based method defined in FAS 123 had been applied. The Company has
elected to continue to apply the provisions of APB 25 and provide the pro forma
disclosure provisions of FAS 123 (See Note 7, "Stock Options").

Advertising Expense

The cost of advertising is expensed as incurred. The Company incurred $4,000
and $100,000 in advertising costs during the years ended December 31, 1999 and
1998, respectively.

Use of Estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Concentration of Credit Risk

The Company's primary financial instrument subject to potential concentration
of credit risk is trade accounts receivable which are unsecured. The Company
provides an allowance for doubtful accounts based on its analysis of potentially
uncollectible accounts. The Company's trade receivables arise principally from
the development of Internet related services. As of December 31, 1999, the
Company had no significant concentrations of credit risk with any individual
customers.

Net Loss Per Share

In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share ("FAS 128"). FAS 128
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented to conform to the FAS 128
requirements. Stock options, warrants and the convertible debentures are
considered anti-dilutive and therefore have not been included in the
computation.

Long Lived Assets

Impairment losses are recognized when expected future cash flows are less than
the assets' carrying value. Accordingly, when indicators of impairment are
present, the Company evaluates the carrying value of furniture and equipment in
relation to the operating performance and future undiscounted cash flows of the
underlying business. The Company adjusts the net book value of the underlying
assets if the sum of expected future cash flows is less than book value.

F-7

50
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Fair Value of Debt

The Company estimates that the fair value of notes payable approximates the
carrying value based upon its effective current borrowing rate for debt with
similar terms and remaining maturities. Disclosure about fair value of financial
instruments is based upon information available to management as of December 31,
1999. Although management is not aware of any factors that would significantly
affect the fair value of amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date.

Comprehensive Income

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("FAS
130"). FAS 130 requires that total comprehensive income and comprehensive income
per share be disclosed with equal prominence as net income and earnings per
share. Comprehensive income is defined as changes in stockholders' equity
exclusive of transactions with owners such as capital contributions and
dividends. The Company adopted this Standard in 1998. The Company did not report
any items of other comprehensive income in any of the years presented.

Segment Reporting

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, Disclosure about Segments of an Enterprise and
Related Information ("FAS 131"), which superceded Statement of Financial
Accounting Standards No. 14, Financial Reporting for Segments of Business
Enterprise. FAS 131 establishes standards for the public reporting of
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. Since the Company only operates in one segment, the
adoption of FAS 131 did not affect the Company's net loss or financial position.

Impact of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("FAS 133"). FAS 133 establishes a new model for
accounting for derivatives and hedging activities and supercedes several
existing standards. FAS 133, as amended by FAS 137, is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. The Company does not
expect that the adoption of FAS 133 will have a material impact on the
consolidated financial statements.

2. NOTES PAYABLE

Notes payable consists of the following at December 31:

1999 1998
---------- ----------

Unsecured convertible 7% and 9% debentures due at
various dates in 2000, principal and interest payable
at maturity, unless converted into common stock........ $1,675,000 $ --
Unsecured 7% notes payable due January 1999, principal
and interest payable at maturity....................... 1,527,500 1,527,500
Other notes payable..................................... 190,004 190,004
---------- ----------
$3,392,504 $1,717,504
========== ==========

F-8

51
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Notes payable to related parties consists of the following at December 31:

1999 1998
-------- --------

Unsecured 6% notes, with principal and interest payable on
demand..................................................... $410,000 $410,000
Unsecured 12% note to former employee due March 2000, with
principal and interest payable at maturity................. 225,000 --
Other notes payable......................................... 26,800 --
-------- --------
$661,800 $410,000
======== ========

Convertible Debentures

During November 1997, the Company issued $2,269,995 of convertible debentures
payable on December 31, 1998. The holders of the debentures are entitled to
convert the debentures into common stock of the Company at a conversion price
equal to the lesser of (i) $2.55 per share or (ii) 70% of the average closing
bid of the common stock during the last five trading days prior to conversion.
The debentures accrue interest, payable quarterly commencing March 1, 1998, at a
rate of 5% per annum. If the Company does not file a Registration Statement with
the Securities and Exchange Commission ("SEC") to register securities in a
public offering within 120 days from November 18, 1997, the interest rate shall
increase to 18% per annum. If the Effective Date of the Registration Statement
has not occurred by the 180th day after November 18, 1997, then the interest
rate shall further increase to 24% per annum until the Effective Date. The
accrued interest is convertible into common stock of the Company at the same
conversion price as the debenture principal. In any event, each holder cannot as
a result of such conversions beneficially own more than 4.99% of the then
outstanding common stock. In the event that the debenture holder proposes to
convert all or any portion of the principal and interest at a conversion price
of less than $0.05, the Company shall have the option to redeem all or any part
of the amount proposed to be converted at a redemption price of 125% of the
amount of the principal and interest proposed to be converted.

As of December 31, 1997, $1,259,346 of the debentures' principal had been
converted into shares of common stock, leaving $1,010,649 of convertible
debentures outstanding.

During the year ended December 31, 1998, the remaining $1,010,649 of the
debentures were converted into 457,412 shares of common stock, which equated to
$1,058,513 in equity, including accrued interest on discount, net of finance
fees.

During 1998, the Company issued $3 million of convertible notes. These
convertible notes were secured by a subordinated pledge of the common stock of
Miller Golf, Inc. (see Note 8), which matured on December 31, 1999, and accrued
interest at 7% per annum, payable quarterly beginning on July 1, 1998. The notes
were convertible into shares of the Company's common stock at the lesser of
$7.50 per share or 75% of the average closing bid price of the common stock
during the last five trading days prior to conversion. The convertible note
holders also received warrants to purchase 98,182 shares of common stock at
$7.50 per share. On May 31 and June 9, 1998, the holders of these convertible
debentures and warrants exchanged the debt and warrants for 3,000 shares of the
Company's 7% Cumulative Convertible Preferred Stock ("Preferred Stock") and
warrants to purchase approximately 133,000 shares of the Company's common stock
at $15.00 per share, exercisable for three years from the date of issuance.

From October through December of 1999, the Company issued $1,675,000 of 7% and
9% convertible debentures maturing at various dates through June 2000.
Immediately upon the closing of a merger transaction between OrbitTravel.com,
Inc., a wholly owned subsidiary, and the Company, the debenture holders shall
automatically convert all principal and interest into common stock of the
Company at a fixed conversion price of $.50 per common share. In the event the
merger has not occurred by the maturity date, all principal and unpaid

F-9

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

interest shall be payable on demand. If, by the maturity date, the conversion
has not taken place or the principal and interest have not been repaid, the
interest rate attributable to the principal sum shall continue to accrue
thereafter at a rate of 12% per annum. Certain debenture agreements contain
covenants which require the Company to perform a reverse split of not less than
fifteen shares of the Company's common stock for one share of common stock.
Certain debenture agreements also contain additional terms including
registration rights and default provisions.

Notes Payable

During July and August of 1998, the Company issued $1,527,500 of unsecured 7%
notes maturing in January 1999. The Company is in default on these notes as of
December 31, 1999. In connection with the issuance of the notes, the Company
issued warrants to purchase 1,222,000 shares of common stock of the Company at
$1.25 per share. The warrants are exercisable for a period of three years from
the date of issuance. The estimated fair value of these warrants, $1,793,328,
has been recorded as paid-in-capital.

3. LEASES

The Company rents office space under operating leases which expire at various
times through 2000. Total rent expense for the Company was approximately $32,000
and $388,000 for the years ended December 31, 1999 and 1998, respectively.

4. RELATED PARTY TRANSACTIONS

The Company funded expenses on behalf of certain entities affiliated through
common ownership. Accounts receivable from related parties were $114,332 and
$155,362 at December 31, 1999 and 1998, respectively. The Company expects
payment of the amount outstanding at December 31, 1999 within the next twelve
months; accordingly, the amounts are classified as current assets.

In January 2000, the Company executed three settlement agreements relating to
1999 and 1998 employment contracts with a former employee and two executives
currently employed by the Company. The Company agreed to pay $425,000 during
2000 and issue 36,133,333 shares of common stock that the Company expects to
issue in the first quarter of 2000. The Company recorded an additional $4.7
million of compensation expense in the Statement of Operations for the year
ended December 31, 1999 and has accrued $5.1 million in accrued compensation at
December 31, 1999 for these settlement agreements.

5. INCOME TAXES

Under Financial Accounting Standards Board Statement No. 109, Accounting for
Income Taxes, the liability method is used in accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

F-10

52
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Deferred income taxes reflect the net 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 liabilities and assets are as follows:

DECEMBER 31,
-------------------------
1999 1998
----------- ------------

Deferred tax liabilities:
Tax over book depreciation and amortization........ $ -- $ --
----------- ------------
$ -- $ --
=========== ============

Deferred tax assets:
Book over tax depreciation and amortization........ $ -- $ 130,000
Net operating loss carryforwards................... 11,850,000 8,000,000
Loss on forfeiture................................. 80,000 1,920,000
Legal contingency.................................. 530,000 436,000
Other.............................................. -- 4,000
----------- ------------
Total deferred tax assets............................ 12,460,000 10,490,000
=========== ============
Valuation allowance for deferred tax assets.......... (12,460,000) (10,490,000)
=========== ============
Net deferred tax assets.............................. -- --
=========== ============
Net deferred taxes $ -- $ --
=========== ============

At December 31, 1999, the Company has a net operating loss carryforward of $29
million which will begin to expire in the year 2007. Given the changes in the
business and ownership, management believes it is highly unlikely that $11.1
million of the net operating loss will be available to offset future losses. The
tax benefits of these items are reflected in the above table of deferred tax
assets and liabilities. U.S. tax rules impose limitations on the use of net
operating losses following certain changes in ownership. If a change were to
occur, the limitation could reduce the amount of these benefits that would be
available to offset future taxable income each year, starting with the year of
ownership change.

The reconciliation of income tax attributable to continuing operations
computed at the U.S. federal statutory tax rates to income tax expense is:

DECEMBER 31,
------------------------
1999 1998
----------- -----------

Income tax benefit at U.S. statutory rate........... $(1,730,000) $(5,153,000)
Amortization and write-off of goodwill.............. -- 105,000
State tax benefit, net.............................. (250,000) (736,000)
Interest expense for which no tax benefit was
provided........................................... -- 176,000
Excess compensation................................. 953,000 --
Other items......................................... 3,900 12,100
Change in valuation allowance....................... 1,023,100 5,595,900
----------- -----------
Tax expense......................................... $ -- $ --
=========== ===========

F-11

53
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. SHAREHOLDERS' DEFICIT

Effective June 2, 1998, the Company increased the number of common shares
authorized from 50 million to 200 million. During 1998, the Company issued
551,933 shares of common stock with a value of $1,431,898, of which 501,933
shares were issued to accredited investors in a private placement offering for
proceeds of $1,014,969 and 50,000 shares, with a fair value of $422,000, were
issued in connection with the issuance of notes payable. In addition, the
Company issued 417,796 shares of common stock with a value of $535,201 in
connection with acquisitions. The value of the issued stock was determined based
on the fair market value of the Company's stock on the date of the transaction.

During 1998, the Company closed on 68 units of private placement offerings of
7% Cumulative Convertible Preferred Stock ("Preferred Stock") for $1,020,000. In
addition, the Company issued 200 units of private placement offerings for
$3,000,000, in exchange for $3,000,000 of convertible debentures obtained in
1998 in order to finance the Miller acquisition (see Note 8). The Preferred
Stock was offered in units of 15 Preferred Shares, with each such share having a
liquidation value of $1,000 and 667 warrants, for a price of $15,000 per unit.

In connection with the sale and issuance of the Preferred Stock in 1998, the
Company issued warrants, exercisable immediately, to purchase 178,756 shares of
common stock of the Company at $15.00 per share for a period of three years from
the date of issuance.

The holders of the Preferred Stock are entitled to a cash dividend equal to
$180 per share payable quarterly commencing April 1, 1998, although the Company
has the option to utilize shares of its common stock, under certain conditions,
to satisfy the dividend requirement. The purchaser has the right to convert the
Preferred Stock immediately into a number of shares of the Company's common
stock equal to $1,000 per share of Preferred Stock divided by the Conversion
Price. The Conversion Price means the lesser of (1) $10.50 or (2) 75% of the
average of the closing bid price of a share of the Company's common stock during
the ten trading days prior to such conversion provided that the holder can not
as a result of such conversion beneficially own more than 4.99% of the then
outstanding common stock. In the event the Conversion Price falls below $7.50,
the Company may redeem, at $1,250 per share plus any accrued but unpaid
dividends, all (but not any part) of shares proposed to be converted. In
conjunction with the discount allowed on the conversion of the Preferred Stock
into common stock, the Company has recorded dividends of $687,777. The Preferred
Stock does not carry any voting rights. As of December 31, 1999, 393 units of
Preferred Stock had been sold. The Company recorded preferred dividends in
arrears of $1,000,000 and $730,000, or $.07 and $.16 per share of common stock,
during 1999 and 1998, respectively.

As of December 31, 1999, warrants to purchase 4,002,332 shares of the
Company's common stock were outstanding. These warrants have exercise prices
ranging from $2.55 to $36.00 per share; 66,667 warrants expire January 20, 2000
(exercise prices range from $11.25 to $22.50); 60,000 warrants expire June 30,
2000 (exercise price equals $36.00 per share); 16,667 warrants expire September
28, 2000 (exercise price equals $36.00 per share); 908,438 warrants expire
November 18, 2000 (exercise price equals $2.55 per share or 70% of the average
closing bid of the common stock during the last five trading days prior to
conversion); 1,002,742 warrants expire November 18, 2000 (exercise price equals
$5.10 per share or 70% of the average closing bid of the common stock during the
last five trading days prior to conversion); 264,000 warrants expire December 3,
2000 (exercise price equals $15.00 per share); 56,667 warrants expire January
28, 2001 (exercise price equals $3.00 per share); 181,818 warrants expire April
2, 2002 (exercise price equals $6.00 per share); and 223,333 warrants expire
January 28, 2003 (exercise prices range from $2.81 to $3.00 per share);
1,222,000 warrants expire from July 14, 2001 through July 30, 2001 (exercise
price equals $15.00 per share).

Subsequent to March 22, 1999, the Company's common stock was de-listed from
the Nasdaq SmallCap Market as a result of the Company's failure to meet various
listing requirements.

F-12

54
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Loss per Share

The following table sets forth the computation of basic and diluted earnings
per share in accordance with Statement No. 128, Earnings per Share:

December 31
-------------------------
1999 1998
----------- ------------

Numerator:
Net loss...................................... $(7,694,782) $(16,006,927)
Accrued preferred stock dividends in arrears.. (1,000,000) (730,000)
Preferred stock dividends--conversion
discount..................................... -- (687,777)
----------- ------------
Numerator for basic and dilutive earnings per
share--income available to common
stockholders................................. $(8,694,782) $(17,424,704)
Denominator:
Denominator for basic and diluted earnings per
share--weighted-average shares............... 8,469,500 3,641,700
----------- ------------
Basic and diluted loss per share.............. $ (1.03) $ (4.78)
=========== ============

The following number of potentially convertible shares of common stock related
to convertible preferred stock, convertible debentures, warrants, and stock
options are as follows at:

December 31, December 31,
1999 1998
------------ ------------

For conversion of convertible preferred stock........ 48,136,178 30,422,758
For conversion of convertible debentures............. 4,290,000 --
Outstanding warrants................................. 4,002,332 4,012,332
Outstanding stock options............................ -- 818,500
Possible future issuance under stock option plan..... 1,600,000 781,500
---------- ----------
Total shares potentially convertible............... 58,028,510 36,035,090
========== ==========

As of December 31, 1999, the Company had 128,217,848 common shares available
to be issued.

7. STOCK OPTIONS

Stock Option Plan

On June 3, 1994, the Board of Directors and the stockholders of the Company
adopted the Brassie Golf Corporation 1994 Stock Option and Restricted Stock
Purchase Plan (the "1994 Stock Option Plan") as an incentive for key employees.
The purchase price for any Stock Awards and the exercise price for any Options
may not be less than the fair market value for the common stock on the date of
grant. Unless otherwise agreed between the grantee and the Company, the Stock
Awards and Options expire 90 days after termination of the grantee's
relationship with the Company. The 1994 Stock Option Plan provides that an
aggregate of 100,000 shares be reserved for future issuance.

During April 1998, the Board of Directors and shareholders approved the
formation of the Divot Golf Corporation 1998 Stock Option Plan (the "1998 Plan")
for the purpose of attracting and retaining certain key employees of the
Company. The 1998 Plan provides that an aggregate of 1,500,000 of the Company's
authorized shares be reserved for future issuance. In the case of initial
grants, the exercise price will be fixed by the Board of Directors on the date
of grant.

F-13

55
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On May 22, 1998, the Company issued a total of 16,000 options to employees of
the Company under the 1994 Stock Option Plan. These options vest over a three
year period and have an exercise price of $2.55 per share, which approximates
the fair value of the stock price on the date of grant.

On June 15, 1998, the Company issued a total of 733,333 options with immediate
vesting to certain officers and key employees of the Company under the 1998
Plan. These options have an exercise price of $2.81 per share which equals the
fair value of the stock price on the date of grant. On September 2, 1998, the
Company issued a total of 240,000 options with immediate vesting to certain
officers and key employees of the Company under the 1998 Plan. These options
have an exercise price ranging from $1.50 to $2.81 per share, which exceeds the
fair value of the stock price on the date of grant.

On September 3, 1998, the Company issued a total of 69,167 options to
employees and consultants to the Company under the 1998 Plan. These options vest
over a three year period and have an exercise price of $2.81 per share, which
exceeds the fair value of the stock price on the date of grant.

Options Outstanding, Common Stock

Options Outstanding

----------------------
Weighted

Shares Average
Available Number Exercise
For Grant Of Shares Price
---------- ----------- ---------

Balances at December 31, 1997................ 60,383 39,617 $ 2.90
1998 Plan adopted.......................... 1,500,000 -- --
Options granted............................ (1,058,500) 1,058,500 $2.77
Options forfeited.......................... 279,617 (279,617) $2.67
Options exercised.......................... -- -- --
---------- ----------- -------
Balances at December 31, 1998................ 781,500 818,500 $2.81
---------- ----------- -------
Options granted............................ -- -- --
Options forfeited.......................... 818,500 (818,500) $2.81
Options exercised.......................... -- -- --
---------- ----------- -------
Balances at December 31, 1999................ 1,600,000 -- $ --
========== =========== =======

The weighted average fair values of options granted during 1998 were $1.63. No
options were granted during 1999. The estimated fair value of each option
granted is calculated using the Black-Scholes option-pricing model. The
weighted-average assumptions used in the model were as follows:

1998

----

Risk-free interest rate................................................... 5.11%
Expected years until exercise............................................. 3
Expected stock volatility................................................. 1.19
Dividend yield............................................................ 0%

F-14

56
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Since the stock options granted during 1998 had exercise prices which were
greater than or equal to the fair value of the common stock on the date of
grant, no compensation expense was recognized during 1998. The following table
reflects pro forma net loss had the Company elected to adopt the fair value
approach of FAS 123:

1999 1998
----------- ------------

Net loss:
As reported........................................ $(7,694,782) $(16,006,927)
Pro forma.......................................... (7,458,336) (16,243,370)
Diluted loss per share:
As reported........................................ $ (1.03) $ (4.78)
Pro forma.......................................... (1.00) (4.85)

These pro forma amounts may not be representative of future disclosures since
the estimated fair value of stock options is amortized to expense over the
vesting period, and additional options may be granted in future years.

8. LOSS ON INVESTMENTS

On April 8, 1998, the Company completed its $4.3 million acquisition of all
the issued and outstanding stock of Miller Golf, Inc. ("Miller"). This
transaction was accounted for using the purchase method of accounting with
results of operations of Miller included in the Company's operations from the
date of acquisition. The Company recorded the acquired assets and liabilities at
their estimated fair value. The excess of the purchase price over the fair value
of net assets acquired was recorded as goodwill. The Miller stock was acquired
from its shareholders for a combination of $3 million in cash, $1 million in
notes payable to the sellers and 53,333 shares of the Company's common stock
which, in the aggregate, had a fair market value of $300,000 at the date of
closing. The sellers' notes were paid in full on September 16, 1998.

Prior to the acquisition of Miller, a $2 million line of credit was entered
into between Miller and a financial institution. This line of credit was secured
by Miller's assets and included certain covenants. Miller violated a covenant
prohibiting Miller from paying more than $100,000 in dividends or intercompany
advances by advancing the company $500,000 in 1998. In 1999, the financial
institution sold the debt to a third party who foreclosed on the Company's
interest in Miller. Since the default occurred during 1998, the assets of Miller
were written off as of December 31, 1998. The Company recorded a loss of
approximately $3.8 million in connection with this foreclosure, which is
reflected in loss on investments in the 1998 consolidated financial statements.

On April 15, 1998, the Company completed its $500,000 stock acquisition of
Divot Golf Subsidiary, Inc. ("DGS"), which was accounted for using the purchase
method of accounting. Accordingly, the Company recorded the acquired assets and
liabilities at their estimated fair value. The DGS stock was acquired from its
sole shareholder, Joseph R. Cellura, who serves as Director, Chairman of the
Board, and Chief Executive Officer of the Company. The purchase price consisted
of a combination of (i) $300,000 in cash and (ii) a short term promissory note
in the principal amount of $200,000 (the "Note"). The Note provides for interest
accruing at 6% per annum, payable quarterly beginning June 30, 1998. The Note
was paid in full as of September 30, 1998. The assets of DGS included its name,
certain patent and licensing rights, and molds for producing a divot repair
tool. When Miller's assets were seized due to the foreclosure, the assets of DGS
were also seized. Therefore, the assets of DGS were written off as of December
31, 1998. Since no activity occurred in DGS prior to the seizure of its assets,
no operations have been recorded in the Company's statements of operations. The
Company recorded a loss of approximately $500,000 in connection with this
seizure of assets, which is included in the loss on write-off of investments
line item in the 1998 consolidated financial statements.

F-15

57
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On April 20, 1998, the Company completed its $136,879 acquisition of all of
the issued and outstanding stock of Talisman Tools Incorporated ("Talisman"),
which was accounted for using the purchase method of accounting. Accordingly,
the Company recorded the acquired assets and liabilities at their estimated fair
value. The Talisman stock was acquired for a combination of (i) two short-term,
non-interest bearing promissory notes in the aggregate amount of $55,000 payable
on May 20, 1998 (ii) $46,875 of the Company's common stock (10,000 shares valued
at the date of closing) and (iii) assumed notes of $35,004. Talisman is a
manufacturer of high-quality greens repair tools. The assets of Talisman
included a pending patent on the specialized divot repair tool and the
proprietary process of producing the divot repair tool. Subsequent to the
purchase, the Company was threatened to be sued for patent infringement if the
Company sold products based on the design of the repair tool that the Company
acquired as part of the Talisman acquisition. As a result, the Company ceased
making payments on the loan to the sellers of Talisman. The sellers of Talisman
sued Divot for failing to pay them consideration still due them under the
acquisition agreement. The molds that the Company acquired from Talisman were
ultimately seized as part of the Miller asset foreclosure. The assets of
Talisman were written off as of December 31, 1998. Since no activity occurred in
Talisman prior to the lawsuit and write-off of assets, no operations have been
recorded in the Company's statements of operations. The Company recorded a loss
of approximately $140,000 in connection with this write-off, which is included
in loss on investments in the 1998 consolidated financial statements.

During 1998, the Company was delinquent on two loans payable to banks which
were secured by land. During 1999, the loans were foreclosed upon and the land
was seized by the banks. Since the purported event of default was in 1998, the
Company wrote off the land as of December 31, 1998. In connection with this
foreclosure, the Company recognized a loss of approximately $1,500,000, which is
included in loss on investments in the 1998 consolidated financial statements.

The Company recorded approximately $1,000,000 as a loss on investments in the
1998 consolidated financial statements for amounts spent on possible business
ventures which were aborted during 1998 as follows:

Divot-RFG Joint Venture, L.L.C. .................................... $ 200,000
Mobilesuites........................................................ 190,000
Tour Tavern......................................................... 150,000
Honma J.V. ......................................................... 100,000
Other............................................................... 360,000
----------
$1,000,000

==========

Due to the aborted business interests during 1998, certain licenses, deposits
and fixed assets were written off in the amount of $705,609 which represents the
net book value of the assets at December 31, 1998. The loss is reflected in the
write down of assets line item in the 1998 consolidated financial statements.

9. ACQUISITION AND DISPOSITION OF ASSETS

On April 2, 1998, the Company sold its leasehold interest in the golf course
assets at The Gauntlet at Curtis Park, a wholly owned subsidiary, for $5,400,000
of which approximately $4,800,000 was used to reduce the Company's debt. The net
realized gain on the sale of the golf course was approximately $524,000.

On November 1, 1999, the Company entered into a right to use agreement with
Orbit Network, Inc. pursuant to which the Company paid $500,000 in cash for a
six-month right to use and operate Orbit Network's Global Distribution Systems
("GDS") contracts with various travel agencies and tourism organizations, its
services agreement with America OnLine and related furniture and equipment. As
part of this right to use agreement, the Company will operate the "TravelFile"
website that provides travel suppliers and Internet users travel planning

F-16

58
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

services. The Company is entitled under the right to use agreement to retain any
revenues for a six-month period that may be generated from these GDS and
ancillary contracts. Also, as part of the right to use agreement, the Company
paid $100,000 (included in $500,000 paid November 1, 1999) for the option to
purchase in its sole and absolute discretion the GDS and ancillary contracts and
related furniture and equipment for the assumption of $5.1 million of Orbit
Network debt. This purchase option expires on May 1, 2000, unless otherwise
extended.

10. COMMITMENTS AND CONTINGENCIES

The Company has employment agreements with certain of its executive officers,
the terms of which expire at various times through June 24, 2006. Such
agreements provide for minimum salary levels, as well as for incentive bonuses
which are payable if specified management goals are attained. In addition, the
Company is required to issue 18 million stock options to these executives during
2000 to purchase the Company's common stock at an exercise price equal to the
fair market value at the date of issuance. Minimum commitments for future
salaries, excluding bonuses, by year and in the aggregate consist of the
following at December 31, 1999:

2000................................................................. $ 835,000
2001................................................................. 835,000
2002................................................................. 835,000
Thereafter........................................................... 1,957,000
----------
$4,462,000

==========

In connection with the Company's February 21, 1996 Agreement in Principle with
the Company's three Pension Fund Partners, definitive agreements were reached
during the second quarter of 1996 with regards to two of the Company's four
previously owned golf courses. However, the Company's efforts to interpret the
Agreement in Principle and negotiate with EPI Pension Fund regarding the two
other courses were unsuccessful. On May 31, 1996, EPI Pension Fund commenced an
action against the Company claiming breach of contract, specific performance, a
constructive trust and temporary and permanent injunctive relief. At a hearing
conducted on July 12, 1996, the court issued a preliminary injunction which
required the Company to transfer to EPI Pension Fund 45% of the outstanding
equity in the Company's GLV and GMW subsidiaries whereby the Company retained
30% of the outstanding equity in each of these two subsidiaries and EPI Pension
Fund owned the remaining 70%. The Company filed an appeal brief to this
preliminary injunction on August 14, 1996. The court denied this appeal on
February 11, 1997. The Company entered into a settlement agreement with the EPI
Pension Fund on October 15, 1997, which intended to resolve all outstanding
issues between the Company and the EPI Pension Fund. The Company failed to
perform all of the Company's obligations under the settlement agreement. On
February 10, 1998, the court entered an order directing the Company to perform
fully all of the Company's obligations under the settlement agreement prior to
February 24, 1998. At a hearing on March 26, 1998, the Company offered partial
performance under the settlement agreement which was taken under advisement by
the court and opposing counsel and will be ruled upon at a hearing to be
scheduled in the future.

The Company submitted a proposed settlement to the EPI Pension Fund, with a
$3,000 good faith deposit. The terms of the proposed settlement include a down
payment to be made within 30 days of executing the settlement documents with a
balloon payment to be delivered at the end of one year. The deferred payment
will be non-interest bearing. The Company has requested that it be permitted to
prepay the settled amount at a discount. The Company does not know if the
settlement will be secured. A penalty will be imposed upon default on the
proposed settlement in addition to EPI Pension Fund's rights to enforce the
original judgment of $152,000. The Company cannot be assured that the proposed
settlement will be accepted by the EPI Pension Fund or that the terms will be
substantially similar to those disclosed above.

F-17

59
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company is involved in other legal proceedings as a part of its normal
course of business. Management does not believe that the ultimate resolution of
these matters will have a material impact on the Company's results of operations
or financial position in any quarterly or annual period.

11. SUBSEQUENT EVENTS

On January 9, 2000, OrbitTravel.com, the Company's wholly owned subsidiary,
executed a content distribution agreement for a term of three years with
AsiaGateway.com, Ltd. Under the terms of this agreement, the Company was
required to issue 200,000 shares of its common stock 30 days from the execution
of this agreement. As of February 16, 2000, since the Company has not issued
such shares, either party may terminate this agreement.

On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by one of the Company's directors and executive officers,
assigned to the Company its rights and obligations under an agreement dated as
of the same date pursuant to which the Company purchased the intellectual
property assets related to the TravelFile website previously owned by Orbit
Network for $60,000 in cash, a note payable due in 2000 in the amount of
$540,000, and the future issuance of 3,000,000 shares of the Company's common
stock. A creditor of Orbit Network acquired these assets from Orbit Network
through a judicial foreclosure proceeding on January 13, 2000. Under the terms
of the agreement, the Company is required to pay two independent contractors a
total of $450,000 over three years in exchange for professional consulting
services to the Company.

A holder of the Company's convertible preferred stock ("the holder") paid
$97,915 on the Company's behalf during 1998 to satisfy some of the Company's
payroll obligations to employees. In full satisfaction of the amounts the
Company owes to the holder and other litigation threatened by the holder, the
Company entered into a settlement agreement with the holder as of January 31,
2000 pursuant to which the Company has agreed to issue to the holder
approximately 4.5 million shares of the Company's common stock and deliver to
the holder specific items of personal property owned by the Company and by the
Chairman and CEO of the Company.

On January 31, 2000, the Company entered into an agreement with Wilhelmina
Artist Management LLC pursuant to which the Company would acquire all of the
outstanding common stock of its wholly owned subsidiary,
WilhelminaTravelFile.com, in exchange for approximately 80 million shares of the
Company's common stock. Unless the transaction has closed, either party may
terminate the Wilhelmina agreement at any time after February 15, 2000.

On February 7, 2000, OrbitTravel.com executed a three-year consulting services
agreement and joint content agreement with Laspata/Decaro Studio Corporation, an
organization of designers and photographers, pursuant to which Laspata/Decaro
would provide the Company with media consulting services regarding brand
building and promotion. In addition, Laspata/Decaro would contribute their
library of destination images, photography and other content for use with the
Company's TravelFile service. Under the agreement, the Company will issue 2.5
million shares of the Company's common stock vesting in equal annual
installments over the three-year term of the agreement. In addition, the Company
has verbally agreed to issue Laspata/Decaro an additional 100,000 shares upon
Laspata/Decaro's completion of each of the following tasks: (1) the development
and implementation of a promotion and marketing plan; and (2) the provision of
additional proprietary content and the implementation of an agreed-upon
operations strategy.

On February 15, 2000, an accredited investor agreed to fund up to $10 million
pursuant to a funding commitment letter and subscription agreement whereby the
investor agreed to purchase: (1) 11,223,334 shares of the Company's common stock
at $0.1782 per share on or before March 30, 2000; (2) 11,223,334 shares of the
Company's common stock at $0.1782 per share on or before June 30, 2000; and (3)
18,856,065 shares of the

F-18

60
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Company's common stock at $0.3182 per share on or before September 30, 2000. The
investor's agreement to purchase the Company common stock is subject to several
conditions, including the condition that the shares to be issued to the investor
must be freely tradeable. In addition, if the Company's total equity market
capitalization is less than $200 million on any dates that the investor
purchases the Company's common stock, the Company has agreed to proportionally
reduce the per share price of the common stock to be purchased by the investor.
The agreement also requires that the Company appoint two directors who are
nominated by the investor to the Company's board.

On February 24, 2000, the Company executed a non-binding letter of intent to
acquire from AnimInet, Inc. intellectual property assets related to AnimInet's
3-D Internet asset for approximately 473.9 million shares of the Company's
common stock. These intellectual property assets primarily include the software
being developed by AnimInet to create "Streaming Intelligent Beings," which are
digital 3D computerized personalities that would communicate directly with
Internet users. AnimInet is a corporation formed solely by one of the Company's
executive officers. This letter of intent expires on May 1, 2000.

On October 22, 1998, an individual ("the plaintiff") filed a complaint against
the Company, the Chairman and CEO of the Company and other entities controlled
by him alleging that the Company violated various federal and state securities
laws. On February 16, 2000, the Company and the plaintiff executed a settlement
pursuant to which the Company agreed to pay $150,000 during 2000 and to issue
850,000 shares of the Company's common stock in settlement of this dispute. Of
these shares, 400,000 shares were issued during 1999 and the remaining 450,000
shares were issued on February 25, 2000. If the Company fails to pay the amounts
due in 2000 or 450,000 shares of the 850,000 shares of the Company's common
stock are not freely tradeable by the terms of the settlement agreement, the
Company has agreed that a judgment for $575,000 may be entered into against the
Company, the Chairman and CEO of the Company and other entities controlled by
him. If the price of the Company's common stock falls below 30 cents per share
for two trading days before March 18, 2000, the Company has agreed to repurchase
400,000 shares of the Company's common stock for a minimum of 30 cents per
share.

In January and May of 1999, a group of former stockholders and employees
(including a former officer of the Company) and stockholders and employees of
various companies, formerly controlled by the Chairman and CEO of the Company,
filed three lawsuits against the Company, these various acquired corporations,
the Chairman and several of the Company's other executive officers and
stockholders. The complaints alleged, among other things, that (1) the Company
had failed to issue an aggregate of 15 million shares of the Company's common
stock (such number of shares is prior to the effect of a 15-for-1 reverse stock
split effected with regard to the Company's common stock on June 2, 1998), (2)
the Company and its officers had committed fraud in the issuance of securities,
and (3) various breaches of contract. The parties to the lawsuit entered into a
settlement agreement as of June 29, 1999 pursuant to which the plaintiffs agreed
to release the defendants from all of the claims in the lawsuits in exchange
for: (1) a note payable to a former officer of the Company in the amount of
$225,000; (2) the issuance of 7.65 million shares of the Company's common stock
(of which 333,334 shares were issuable to the Company's former officer); and (3)
the assignment by the Chairman of the Company of all of his rights, title or
interest to the profits generated from a few parcels of land in the World Golf
Village. The Chairman assigned these rights to the plaintiffs on June 24, 1999.
The Company ordered the 7.65 million shares to be issued in August 1999 and
those shares were delivered on February 29, 2000. As of February 10, 2000, the
Company has not repaid any amounts due under the $225,000 note payable. This
note payable currently matures on March 31, 2000.

F-19

61
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Divot Golf Corporation

We have audited the accompanying consolidated balance sheet of Divot Golf
Corporation and subsidiaries as of December 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 1997 and 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 10 to the consolidated financial statements, the
Company changed its method of accounting for two previously majority-owned
subsidiaries.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Divot Golf Corporation and subsidiaries at December 31, 1997 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1997 and 1996 in conformity with generally accepted
accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
described in Note 1, the Company has incurred recurring operating losses and has
a working capital deficiency. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.

[ERNST & YOUNG LLP]
ERNST & YOUNG LLP

Raleigh, North Carolina
January 12, 1998

F-20

62
<PAGE>

DIVOT GOLF CORPORATION

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 1997

ASSETS

Current assets:

Cash...................................................... $ 53,266
Cash -- restricted........................................ 135,019
Trade accounts receivable, net of allowance for doubtful
accounts of $150,800................................... 352,018
Accounts receivable from related parties.................. 160,543
Inventories............................................... 31,611
Prepaid expenses and other current assets................. 1,038,588
-----------
Total current assets.............................. 1,771,045
Property and equipment at cost:
Land and land improvements................................ 2,789,069
Depreciable golf course improvements...................... 828,681
Buildings................................................. 1,426,369
Furniture, machinery and equipment........................ 986,642
-----------
6,030,761

Less accumulated depreciation and amortization.............. 742,956
-----------
5,287,805

Intangible assets, net of accumulated amortization of
$270,000.................................................. 583,400
Goodwill.................................................... 331,250
-----------
Total assets...................................... $ 7,973,500
===========
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses..................... $ 772,460
Accrued interest payable.................................. 32,751
Income tax payable........................................ 181,793
Current portion of long-term debt......................... 757,023
Current maturities of capital lease obligations........... 21,510
Accrued discount on convertible debentures................ 104,037
-----------
Total current liabilities......................... 1,869,574

Long-term debt, less current portion........................ 3,477,256
Long-term capital lease obligations, less current portion... 35,785

Commitments and Contingencies
Shareholders' equity:

Convertible Preferred Stock, $.001 par value; 1,000,000
shares authorized; 283,170 shares issued and
outstanding (aggregate liquidation
preference of $1,920,000).............................. 283
Common Stock, $.001 par value; 50,000,000 shares

authorized; 42,632,503 shares issued and outstanding... 42,633
Additional paid-in capital................................ 32,043,966
Accumulated deficit....................................... (29,176,276)
Less cost of Convertible Preferred Stock held in treasury,
281,250 shares......................................... (210,937)
Foreign currency translation adjustment................... (108,784)
-----------
Total shareholders' equity........................ 2,590,885
-----------
Total liabilities and shareholders' equity........ $ 7,973,500
===========

See accompanying notes.

F-21

63
<PAGE>

DIVOT GOLF CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
--------------------------
1997 1996
----------- ------------
<S> <C> <C>

Operating revenues:

Golf revenues............................................. $ 1,833,010 $ 1,878,273
Food and beverage revenues................................ 485,737 508,911
Proshop revenues.......................................... 259,099 277,188
Membership sales and dues................................. 372,233 294,594
Resident membership fees.................................. 327,500 480,000
Management and design fees................................ 809,660 1,785,818
Other..................................................... 6,360 7,118
----------- ------------
Total operating revenues.......................... 4,093,599 5,231,902
Operating expenses:
Golf course operations.................................... 1,293,975 1,328,564
Cost of food and beverage sales........................... 195,869 203,660
Cost of proshop sales..................................... 193,886 173,812
Advertising expense....................................... 313,351 216,254
Management and design expenses............................ 701,191 1,553,821
General and administrative expenses....................... 3,090,713 2,487,003
Depreciation and amortization expense..................... 871,222 1,042,891
Write down of goodwill.................................... -- 4,050,000
----------- ------------
Total operating expenses.......................... 6,660,207 11,056,005
----------- ------------
Operating loss.............................................. (2,566,608) (5,824,103)
Other income (expense):
Interest expense -- contractual........................... (683,755) (916,301)
Interest expense -- discount on convertible debentures.... -- (1,400,000)
Amortization of debt discount on convertible debentures... (892,709) --
Loss on equity investment in subsidiaries................. (116,318) (966,579)
Loss on sale of subsidiaries.............................. (1,826,164) --
Bad debt recoveries....................................... -- 510,000
Interest income........................................... 98,520 149,266
----------- ------------
Loss before minority interest............................. (5,987,034) (8,447,717)
Minority interest expense................................. -- (68,015)
----------- ------------
Loss before income taxes.................................. (5,987,034) (8,515,732)
Provision for income taxes................................ -- (110,000)
----------- ------------
Net loss.................................................... $(5,987,034) $ (8,625,732)
=========== ============
Basic and diluted loss per common share..................... $ (.22) $ (.43)
=========== ============
Weighted average number of common shares outstanding........ 29,724,100 20,005,900
=========== ============

See accompanying notes.

F-22

64
<PAGE>

DIVOT GOLF CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

CONVERTIBLE
CONVERTIBLE PREFERRED
COMMON STOCK PREFERRED STOCK ADDITIONAL TREASURY STOCK
-------------------- ----------------- PAID-IN ACCUMULATED --------------------
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT
---------- ------- -------- ------ ----------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Balance at December 31, 1995....... 17,678,066 $17,678 375,000 $375 $21,857,456 $(13,893,582) -- $ --
Net loss........................... -- -- -- -- -- (8,625,732) -- --
Issuance of Common Stock in
connection with conversion of
convertible debentures............ 6,350,564 6,351 -- -- 2,490,434 -- -- --
Issuance of Common Stock in lieu of
compensation...................... 50,000 50 -- -- 58,545 -- -- --
Unrealized gain on investments..... -- -- -- -- -- -- -- --
Translation of foreign currency
financial statements.............. -- -- -- -- -- -- -- --
---------- ------- -------- ---- ----------- ------------ -------- ---------
Balance at December 31, 1996....... 24,078,630 $24,079 375,000 $375 $24,406,435 $(22,519,314) -- $ --
========== ======= ======== ==== =========== ============ ======== =========
Net loss........................... -- -- -- -- -- (5,987,034) -- --
Conversion of Preferred Stock
to Common Stock................... 468,750 469 (93,750) (94) (375) -- -- --
Repurchase of Preferred Stock...... -- -- -- -- -- -- (281,250) (210,937)
Issuance of Preferred Shares in
connection with a private
placement......................... -- -- 1,920 2 1,754,998 -- -- --
Preferred Stock Dividend
-- conversion discount............ -- -- -- -- 669,928 (669,928) -- --
Issuance of Common Stock
in connection with conversion
of convertible debentures......... 13,432,995 13,433 -- -- 3,423,317 -- -- --
Issuance of 30,082,268 warrants
in connection with convertible
debentures........................ -- -- -- -- 1,203,291 -- -- --
Issuance of Common Stock
in connection with the convertible
debenture agreement............... 1,652,128 1,652 -- -- 308,122 -- -- --
Issuance of Common Stock
in connection with the purchase of
Divot Spa WGV, Inc................ 3,000,000 3,000 -- -- 278,250 -- -- --
Unrealized gain on investments..... -- -- -- -- -- -- -- --
Translation of foreign currency
financial statements.............. -- -- -- -- -- -- -- --
---------- ------- -------- ---- ----------- ------------ ------- ---------
Balance at December 31, 1997....... 42,632,503 $42,633 283,170 $283 $32,043,966 $(29,176,276) (281,250) $(210,937)
========== ======= ======== ==== =========== ============ ======== ==========
</TABLE>

FOREIGN UNREALIZED
CURRENCY GAIN (LOSS)
TRANSLATION ON
ADJUSTMENT INVESTMENTS TOTAL
----------- ----------- ----------

Balance at December 31, 1995....... $(259,664) $(593) $7,721,670
Net loss........................... -- -- (8,625,732)
Issuance of Common Stock in
connection with conversion of

convertible debentures............ -- -- 2,496,785
Issuance of Common Stock in lieu of
compensation...................... -- -- 58,595
Unrealized gain on investments..... -- 356 356
Translation of foreign currency
financial statements.............. 191,617 -- 191,617
--------- ----- ----------
Balance at December 31, 1996....... $ (68,047) $(237) $1,843,291
========= ===== ==========
Net loss........................... -- -- (5,987,034)
Conversion of Preferred Stock
to Common Stock................... -- -- --
Repurchase of Preferred Stock...... -- -- (210,937)
Issuance of Preferred Shares in
connection with a private
placement......................... -- -- 1,755,000
Preferred Stock Dividend
-- conversion discount............ -- -- --
Issuance of Common Stock
in connection with conversion
of convertible debentures......... -- -- 3,436,750
Issuance of 30,082,268 warrants
in connection with convertible
debentures........................ -- -- 1,203,291
Issuance of Common Stock
in connection with the convertible
debenture agreement............... -- -- 309,774
Issuance of Common Stock
in connection with the purchase of
Divot Spa WGV, Inc................ -- -- 281,250
Unrealized gain on investments..... -- 237 237
Translation of foreign currency
financial statements.............. (40,737) -- (40,737)
--------- ----- ----------
Balance at December 31, 1997....... $(108,784) $ -- $2,590,885
========= ===== ==========

See accompanying notes.

F-23

65
<PAGE>

DIVOT GOLF CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $ (5,987,034) $ (8,625,732)

Adjustments to reconcile net loss to net cash used in
operating activities:

Loss on sales of subsidiaries............................. 1,826,164 --
Amortization of debt discount............................. 892,709 --
Loss on equity investments in subsidiaries................ 116,318 966,579
Depreciation.............................................. 520,959 535,293
Amortization.............................................. 350,263 507,598
Writedown of goodwill..................................... -- 4,050,000
Bad debt expense.......................................... 372,161 65,000
Loss on sale of marketable equity securities.............. 21,404 182
Trade accounts receivable................................. (197,388) 66,826
Accounts receivable from related parties.................. (10,543) 107,258
Inventories and other current assets...................... (953,044) (55,202)
Accounts payable and accrued expenses..................... 280,744 (368,480)
Accrued interest payable.................................. 103,774 1,024,133
Income tax payable........................................ (15,919) 197,712
------------ ------------
Net cash used in operating activities....................... (2,679,432) (1,528,833)
INVESTING ACTIVITIES
Payments for intangible assets.............................. (260,006) (571,293)
Purchases of property and equipment, net.................... (366,612) (698,630)
Change in restricted cash................................... (135,019) --
Additional investments in subsidiaries...................... 33,682 (486,770)
Proceeds from sale of marketable equity securities.......... 18,271 --
Proceeds from sale of subsidiaries.......................... 3,550,000 --
------------ ------------
Net cash provided by (used in) investing activities......... 2,840,316 (1,756,693)
FINANCING ACTIVITIES
Additions to long-term borrowings........................... 3,417,480 5,480,388
Payments on long-term borrowings and capital leases......... (4,540,608) (4,836,509)
Issuance of common stock.................................... -- 2,555,380
Payments on loans from officers and shareholders............ (1,293,895) 648,121
Proceeds from sales of convertible preferred stock.......... 1,920,000 --
Payment for stock issuance costs............................ (165,000) --
Payments made to retire preferred stock..................... (210,937) --
------------ ------------
Net cash (used in) provided by financing activities......... (872,960) 3,847,380
Effect of foreign currency exchange rate changes on cash.... (40,737) 191,617
------------ ------------
(Decrease) Increase in cash................................. (752,813) 753,471
Cash at beginning of year................................... 806,079 52,608
------------ ------------
Cash at end of year......................................... $ 53,266 $ 806,079
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for interest.................... $ 580,581 $ 938,071
============ ============
</TABLE>

See accompanying notes.

F-24

66
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. BUSINESS OF THE COMPANY, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING

POLICIES

Divot Golf Corporation ("the Company") owns and operates golf courses and
is engaged in the development, licensing and marketing of golf-related
businesses. The Company also holds certain exclusive licensing rights in the
United States and internationally.

As of December 31, 1997, the Company has a net working capital deficiency
of $98,529. The Company is not generating sufficient revenues from its
operations to fund its activities and therefore is dependent on additional
financing from external sources. Such factors raise substantial doubt about the
Company's ability to continue as a going concern. The Company secured $1.9
million of funding in a private placement transaction in December 1997. The
Company expects to raise additional amounts from private placements in 1998. If
the Company is successful in raising additional equity capital in 1998,
management believes that the Company will have adequate resources to continue to
meet its current debt obligation, fund capital improvements and expand and
develop its businesses. There is no assurance that such additional funding will
be completed and the inability to obtain such financing would have a material
adverse effect on the Company.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and all wholly and majority-owned subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation. The subsidiaries and
related percentage of ownership by the Company at December 31, 1997 are as
follows:

<TABLE>
<CAPTION>
OWNERSHIP PERCENTAGE
AT
DECEMBER 31,
---------------------
COMPANY NAME ABBREVIATION 1997 1996
- ------------ ------------ --------- ---------
<S> <C> <C> <C>

The Gauntlet at St. James, Inc. .................. St. James 100% 80%
The Gauntlet at Curtis Park, Inc. ................ Curtis Park 100 100
Brassie Golf Management Services, Inc. ........... BGMS -- 100
Summit Golf Corporation........................... Summit -- 100
Hale Irwin Golf Services, Inc. ................... HIGSI -- 100
Brassie Construction Management Services, Inc. ... BCMS 100 100
Amalgamated Equity Golf (a British Columbia
Corporation).................................... Amalgamated 100 100
Divot Properties WGV, Inc. ....................... Properties 100 100
</TABLE>

Minority interest expense in 1996 represents the 20% interest in the St.
James golf course owned by a related entity. The Company received the remaining
20% Minority interest in St. James as part of the sale of the golf course in
1997 (see Note 9, "Disposition of Assets").

The Company's 30% investments in The Gauntlet at Laurel Valley, Inc., a
golf course located in Greenville, S.C., and The Gauntlet at Myrtle West, Inc.,
a golf course located in Myrtle Beach, S.C., are accounted for using the equity
method (See Note 10 "Change in Reporting Entity").

Property and Equipment

Property and equipment is recorded at cost. Costs relating to the
acquisition and development of golf courses, including the cost of real estate,
related legal fees, construction costs, interest, and other direct costs
associated with the development of the golf courses are capitalized as part of
the cost of the course. Depreciable golf course improvements are comprised
primarily of irrigation

F-25

67
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

systems, cart paths, bridges, and other land improvements. Depreciation on
property and equipment begins when the assets are placed into service and is
charged to operations over the estimated useful lives of the assets (5 to 20
years), utilizing the straight-line method for financial reporting purposes and
accelerated methods for tax purposes. All other costs are charged to expense as
incurred.

Intangible Assets

Intangible assets consist primarily of financing costs and licensing fees.
Costs incurred in obtaining long-term debt obligations are capitalized at cost
and amortized over the lives of the respective loans. Significant additions to
financing costs during 1997 resulted primarily from costs incurred to obtain
financing on more favorable terms.

Goodwill

The Company initially records goodwill at its cost and amortizes the cost
over the estimated useful life of the asset. At the end of each accounting
period, the Company reviews the carrying value of the goodwill for possible
impairment. The Company's policy for the valuation of goodwill is to calculate
the undiscounted projected future cash flows expected to be generated over the
life of the goodwill. This amount is then compared to the carrying value of the
goodwill to determine if the asset is impaired.

The Company has classified, as goodwill, the cost in excess of the fair
value of the net assets of SPA, which was acquired through a purchase
transaction during 1997 (see Note 8, "Acquisitions", for further discussion).
Goodwill is being amortized on a straight-line basis over 15 years. Amortization
charged to continuing operations amounted to $18,092 and $255,226 in 1997 and
1996, respectively.

During 1996, the Company recorded a goodwill writedown of $4,050,000 on
Summit, leaving a remaining balance of $626,245, net of accumulated
amortization, at December 31, 1996 which reflects estimated future discounted
cash flows. The writedown is included in the accompanying statement of
operations for the year ended December 31, 1996.

In July 1997, the Company sold its golf course management division,
consisting of Brassie Golf Management Services. Inc. and Summit. The Company's
remaining goodwill associated with the Summit was written off in connection with
the sale (See Note 9, "Disposition of Assets").

Restricted Cash

Restricted cash represents escrow accounts of Curtis Park and Saint James
on behalf of certain lending institutions pursuant to loan and sale agreements,
respectively. Such amounts are to be recorded as expense when earned over the
terms of the agreements and are recoverable by the Company upon occurrence of
certain events specified in the respective escrow agreements.

Cash and Cash Equivalents

The Company considers highly liquid, short-term investments with a maturity
of three months or less when purchased to be cash equivalents.

Marketable Equity Securities

The Company's marketable equity securities are classified as
available-for-sale and carried at fair value. The ending balance of
shareholders' equity has been adjusted to reflect the net unrealized holding
gain or loss on securities classified as available-for-sale.

F-26

68
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During 1997, the Company sold all of its marketable equity securities. Net
realized gains, determined by specific identification, were not material.

The Company maintains cash and short-term investments with various
financial institutions. These financial institutions are located in different
areas of the U.S. and Canada, and Company policy is designed to limit exposure
to any one institution. The Company performs periodic evaluations of the
relative credit standing of those financial institutions utilized in the
Company's investment strategy.

Inventories

Inventories are stated at the lower of cost or market as determined using
the specific identification method.

Inventory at December 31, 1997 consists of:

Proshop merchandise......................................... $ 27,415
Food and beverage inventory................................. 4,196
--------
$ 31,611
========

Revenues

Revenues of the Company include daily golf fees, proshop merchandise sales
and food and beverage sales. Golf fees include revenue generated from green
fees, cart fees and range fees. Revenues also include sales of memberships and
annual dues charged to members and golf course management and design fees.

Golf fees, proshop merchandise sales and food and beverage sales are
recognized when received. Annual membership dues are recognized and earned
ratably over a twelve-month period. Membership dues collected in advance are
deferred as "unearned income" and recognized over the period of prepayment.
Membership fees that are non-refundable are recognized by the Company when
received. Golf course management and design fees are recognized as services are
performed.

As part of an agreement with the developer of the residential lots, the
Company receives $5,000 in membership fees for each residential lot sold in the
immediate area of the St. James golf course through November 23, 1997 (See Note
9, "Disposition of Assets").

Stock Based Compensation

On January 1, 1996, the company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which
requires companies to recognize as expense the fair value of all stock-based
awards on the date of grant, or continue to apply the provisions of Accounting
Principles Board Opinion No. 25 ("APB 25") and provide pro forma net income and
pro forma earnings per share disclosures for employee stock option grants as if
the fair-value-based method defined in SFAS 123 had been applied. The Company
has elected to continue to apply the provisions of APB 25 and provide the pro
forma disclosure provisions of SFAS 123 (See Note 7, "Stock Options").

Advertising Expense

The cost of advertising is expensed as incurred. The Company incurred
$313,000 and $216,000 in advertising costs during the years ended December 31,
1997 and 1996, respectively.

F-27

69
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Use of Estimates

Concentration of Credit Risk

The Company's primary financial instrument subject to potential
concentration of credit risk is trade accounts receivable which are unsecured.
The Company provides an allowance for doubtful accounts based on its analysis of
potentially uncollectible accounts. The Company's trade receivables arise
principally from its golf course management operations. As of December 31, 1997,
the Company had no significant concentrations of credit risk with any individual
customers.

Foreign and Domestic Operations

Net (loss) income from the Company's foreign subsidiary (Amalgamated) was
approximately $(201,000) and $339,000 for the years ended December 31, 1997 and
1996, respectively. Net loss from domestic operations was approximately
$5,786,000 and $8,965,000, respectively, for the same periods.

Translation of Foreign Currencies

Foreign currency transactions and financial statements of Amalgamated are
translated from the local currency, Canadian dollars, into U.S. dollars at the
current exchange rates except for revenues, costs and expenses which are
translated at average exchange rates. Adjustments resulting from translations of
financial statements are reflected as a separate component of shareholders'
equity.

Net Loss Per Share

In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements. Stock
options, warrants and the five percent convertible debentures are considered
anti-dilutive and therefore have not been included in the computation.

Long Lived Assets

In 1996, the Company adopted FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
Under the provisions of the Statement, impairment losses are recognized when
expected future cash flows are less than the assets' carrying value.
Accordingly, when indicators of impairment are present, the Company evaluates
the carrying value of property and equipment and intangibles in relation to the
operating performance and future undiscounted cash flows of the underlying
business. The Company adjusts the net book value of the underlying assets if the
sum of expected future cash flows is less than book value. Based on the
application of the Statement, goodwill was adjusted to its estimated fair value
which resulted in a write-down of $4,050,000 in 1996.

F-28

70
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Fair Value of Debt

The Company estimates that the fair value of notes payable approximates the
carrying value based upon its effective current borrowing rate for debt with
similar terms and remaining maturities. Disclosure about fair value of financial
instruments is based upon information available to management as of December 31,
1997. Although management is not aware of any factors that would significantly
affect the fair value of amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date.

Impact of Recently Issued Accounting Standards

In 1997, the FASB issued Statements No. 130, "Reporting Comprehensive
Income" ("SFAS 130") and No. 131, "Disclosures About Statements of an Enterprise
and Related Information" ("SFAS 131"), which are both effective for fiscal years
beginning after December 15, 1997. SFAS 130 addresses reporting amounts of other
comprehensive income and SFAS 131 addresses reporting segment information. The
Company does not believe that the adoption of these new standards will have a
material impact on its financial statements.

2. LONG-TERM DEBT

Long-term debt with financial institutions and other third parties at
December 31, 1997 consists of the following:

Loan to Curtis Park from bank, payable in monthly payments

of $26,124, which includes principal and interest
beginning December 1, 1997 with remaining principal and
interest due October 1, 2007; collateralized by leasehold
interest in land and land improvements. Interest is
payable monthly at 8.37% per annum........................ $3,276,753
Unsecured convertible 5% debentures due December 31, 1998,
unless converted into common stock, interest payable
quarterly and incrementally based upon conversions with
the balance due, if any, at maturity, net of unamortized
discount of $620,356...................................... 390,293
Unsecured operating term loan from bank, with interest at
10.75%, payable in monthly installments of $16,723, which
includes principal and interest, through January 1999..... 220,366
Other notes payable......................................... 346,867
----------
4,234,279

Less current portion........................................ 757,023
----------
$3,477,256
==========

Principal maturities of all the indebtedness detailed above during each of
the following five years and thereafter are as follows:

1998........................................................ $ 757,023
1999........................................................ 77,455
2000........................................................ 242,850
2001........................................................ 47,422
2002........................................................ 51,607
Thereafter.................................................. 3,057,922
----------
$4,234,279
==========

CONVERTIBLE DEBENTURE EXCHANGE

During March 1996, the Company issued $5.5 million in six percent
convertible debentures to finance the operations of the Company. During 1996,
the holders of the debentures converted $2,034,262 of the debt into 6,350,564
shares which equated to $2,496,785 in equity, net of financing fees. Through
March 1, 1998, the six percent debentures were convertible into shares of common
stock at discounts ranging from 15%-35% of its current market value. The Company
recorded $1.4 million in interest expense during 1996 to reflect the discounts
upon conversion of the

F-29

71
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company's common stock. As of December 31, 1996, $3,465,738 of convertible
debentures were outstanding.

From January through October 1997, the holders of the debentures converted
$1,195,743 of the debt into 4,972,107 shares which equated to $1,573,308 in
equity, net of financing fees. During November 1997, the remaining $2,269,995 of
outstanding debentures were transferred to new debenture holders in a third
party transaction. Simultaneously, the Company retired the 1996 debenture
agreements and replaced them with new debenture agreements containing new terms.

The new debentures are payable on December 31, 1998. Through December 31,
1998, the holders of the debentures are entitled to convert the debentures into
common stock of the Company at a conversion price equal to the lesser of (1)
$0.17 per share or (2) 70% of the average closing bid of the common stock during
the last five trading days prior to conversion. The debentures accrue interest,
payable quarterly commencing March 1, 1998, at a rate of 5% per annum. If the
Company does not file a Registration Statement with the SEC to register
securities in a public offering within 120 days from November 18, 1997, the
interest rate shall increase to 18% per annum. If the Effective Date of the
Registration Statement has not occurred by the 180th day after November 18,
1997, then the interest rate shall further increase to 24% per annum until the
Effective Date. The accrued interest is convertible into common stock of the
Company at the same conversion price as the debenture principal. In any event,
each holder cannot as a result of such conversions beneficially own more than
4.99% of the then outstanding common stock. In the event that the debenture
holder proposes to convert all or any portion of the principal and interest at a
conversion price of less than $0.05, the Company shall have the option to redeem
all or any part of the amount proposed to be converted at a redemption price of
125% of the amount of the principal and interest proposed to be converted. In
conjunction with these debenture agreements, the Company incurred issuance costs
totaling $27,000. These issuance costs are being amortized as a component of
interest expense over the term of the debentures.

From November through December 1997, $1,259,346 of the debentures'
principal had been converted into 8,460,888 shares of common stock, which
equated to $1,863,442 in equity, net of financing fees. As of December 31, 1997,
$1,010,649 of convertible debentures were outstanding.

In connection with the sale of the debenture agreements, the Company issued
(1) warrants to purchase 15,041,134 shares of common stock of the Company at the
lesser of $0.17 per share of 70% of the average closing bid price of the common
stock during the last five trading days prior to exercise, (2) warrants to
purchase 15,041,134 shares of common stock of the Company at the lesser of $0.34
per share of 70% of the average closing bid price of the common stock during the
last five trading days prior to exercise and (3) 1,672,128 shares of common
stock. The warrants are exercisable for a period of three years from the date of
issuance. The estimated value of these warrants and common stock, $1,513,065,
has been recorded as additional paid-in capital.

3. LEASES

The Company leases certain equipment used in the daily operations of the
Company under capital leases which are included in furniture, machinery and
equipment. Leased equipment under capital leases included in furniture,
machinery and equipment at December 31, 1997 consists of the following:

Equipment................................................... $69,683
Less accumulated amortization............................... 5,203
-------
$64,480
=======

F-30

72
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The accumulated amortization with respect to these capitalized leases is
included in "accumulated depreciation and amortization" in the accompanying
balance sheet. Amortization expense is included in depreciation and amortization
expense in the accompanying statement of operations.

Future minimum lease payments, by year and in the aggregate, under capital
leases, consist of the following at December 31, 1997:

1998........................................................ $ 28,228
1999........................................................ 25,236
2000........................................................ 16,148

--------
Total minimum lease payments................................ 69,612
Amounts representing interest............................... (12,317)
--------
57,295

Less current portion........................................ (21,510)
--------
$ 35,785
========

The Company also rents certain facilities, land and equipment under
operating leases which expire at various times through 2027. Total rent expense
for the Company was approximately $283,200 and $207,500, for the years ended
December 31, 1997 and 1996, respectively.

Future minimum lease payments, by year and in the aggregate, under
operating leases consist of the following at December 31, 1997:

1998........................................................ $ 272,200
1999........................................................ 284,674
2000........................................................ 242,428
2001........................................................ 187,356
2002........................................................ 180,566
Thereafter.................................................. 600,000
----------
$1,767,224
==========

4. RELATED PARTY TRANSACTIONS

The Company funded expenses on behalf of certain entities affiliated
through common ownership. Accounts receivable from related parties were $160,543
at December 31, 1997. The Company expects payment of the amount outstanding at
December 31, 1997 within the next twelve months; accordingly, the amounts are
classified as short-term assets.

The Company provided management services to related parties resulting in
approximately $77,000 and $190,000 in management fee revenue for the years ended
December 31, 1997 and 1996, respectively.

5. INCOME TAXES

Under Financial Accounting Standards Board Statement No. 109, "Accounting
for Income Taxes," the liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income

F-31

73
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

tax purposes. Significant components of the Company's deferred tax liabilities
and assets at December 31, 1997 are as follows:

Deferred tax liabilities:

Tax over book depreciation and amortization............... $ --
-----------
$ --
===========
Deferred tax assets:

Book over tax depreciation and amortization............... $ 130,000
Net operating loss carryforwards.......................... 4,400,000
Bad debt allowance........................................ 60,000
Other..................................................... 4,700
-----------
Total deferred tax assets................................... 4,594,700
Valuation allowance for deferred tax assets................. (4,594,700)
-----------
Net deferred tax assets..................................... --
===========
Net deferred taxes.......................................... $ --
===========

At December 31, 1997 the Company has a net operating loss carryforward of
$11,000,000 which will begin to expire in the year 2007. The tax benefits of
these items are reflected in the above table of deferred tax assets and
liabilities. U.S. tax rules impose limitations on the use of net operating
losses following certain changes in ownership. If a change were to occur, the
limitation could reduce the amount of these benefits that would be available to
offset future taxable income each year, starting with the year of ownership
change.

The reconciliation of income tax attributable to continuing operations
computed at the U.S. federal statutory tax rates to income tax expense is:

DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>

Income tax benefit at U.S. statutory rate.............. $(2,040,000) $(2,895,000)
Amortization and write-off of goodwill................. -- 1,722,000
State tax benefit, net................................. (360,000) (492,000)
Equity income.......................................... 47,000 326,000
Interest expense for which no tax benefit was

provided............................................. 357,000 648,000
Impact of foreign losses for which a current tax
benefit is not available............................. 80,000 --
Impact of sale of stock in subsidiaries................ 460,000 --
Other items............................................ 141,000 438,300
Change in valuation allowance.......................... 1,315,000 252,700
Foreign tax............................................ -- 110,000
----------- -----------
Tax expense............................................ $ -- $ 110,000
=========== ===========
</TABLE>

F-32

74
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. SHAREHOLDERS' EQUITY

During 1996, the Company issued 50,000 shares of common stock with a value
of $58,595 in lieu of compensation for consulting services performed. The value
of the issued stock was based on the fair market value of the Company's common
stock on the date that the consulting services were performed and reflects the
value of services received. The Company recognized $58,595 in compensation
expense related to the transaction.

During December 1997, the Company closed on a private placement offering of
7% Cumulative Convertible Preferred Stock ("Preferred Stock") for $1.92 million.
The Preferred Stock was offered in units of 15 Preferred Shares, with each such
share having a liquidation value of $1,000, and 10,000 warrants, for a price of
$15,000 per unit.

The holders of the Preferred Stock are entitled to a cash dividend equal to
$70 per share payable quarterly commencing April 1, 1998, although the Company
has the option to utilize shares of its common stock, under certain conditions,
to satisfy the dividend requirement. If the Company has not filed a Registration
Statement with the SEC to register securities in a public offering within 180
days of issuance, the Preferred Stock shall accrue dividends at an annual rate
of $180 per share. The purchaser has the right to convert the Preferred Stock
immediately into a number of shares of the Company's common stock equal to
$1,000 per share converted divided by the Conversion Price. The Conversion Price
means the lesser of (1) $0.70 or (2) 75% of the average of the closing bid price
of a share of the Company's common stock during the ten trading days prior to
such conversion provided that the holder can not as a result of such conversion
beneficially own more than 4.99% of the then outstanding common stock. In the
event the Conversion Price falls below $0.50, the Company may redeem, at $1,250
per share plus any accrued but unpaid dividends, all (but not any part) of
shares proposed to be converted. In conjunction with the discount allowed on the
conversion of the Preferred Stock into common stock, the Company has recorded
dividends of $669,928. The Preferred Stock does not carry any voting rights. As
of December 31, 1997, 128 units of Preferred Stock had been sold while no
conversions of shares of the Company's common stock had taken place.

In connection with the sale and issuance of the Preferred Stock, the
Company issued warrants, exercisable immediately, to purchase 1,280,000 shares
of common stock of the Company at $1.00 per share for a period of three years
from the date of issuance. The Company incurred approximately $165,000 in
additional costs related to the issuance of the Preferred Stock, which are
offset against additional paid-in capital in the consolidated statements of
shareholders' equity.

As of December 31, 1997, warrants to purchase 33,550,268 shares of the
Company's common stock were outstanding. These warrants have exercise prices
ranging from $.17 to $3.25 per share; 100,000 warrants expire September 28, 1998
(exercise price equals $2.40 per share); 238,000 warrants expire November 17,
1998 (exercise price equals $2.40 per share); 50,000 warrants expire December 5,
1998; (exercise price equals $1.00 per share); 150,000 warrants expire June 30,
1999 (exercise price equals $2.00 per share); 1,400,000 warrants expire June 30,
2000 (exercise prices range from $2.40 to $3.25 per share), 250,000 warrants
expire September 28, 2000 (exercise price equals $2.40 per share); 15,041,134
warrants expire November 18, 2000 (exercise price equals the lesser of $0.17 per
share or 70% of the average closing bid of the common stock during the last five
trading days prior to conversion); 15,041,134 warrants expire November 18, 2000
(exercise price equals the lesser of $0.34 per share or 70% of the average
closing bid of the common stock during the last five trading days prior to
conversion); and 1,280,000 warrants expire December 3, 2000 (exercise price
equals $1.00 per share).

F-33

75
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Loss per Share

The following table sets forth the computation of basic and diluted
earnings per share in accordance with Statement No. 128, Earnings per Share:

<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1997 1996
----------- -----------
<S> <C> <C>

Numerator:

Net loss............................................. $(5,987,034) $(8,625,732)
Preferred stock dividends -- conversion discount..... (669,928) --
----------- -----------
Numerator for basic and dilutive earnings per share--

income available to common stockholders........... $(6,656,962) $(8,625,732)

Denominator:

Denominator for basic and diluted earnings per

share -- weighted-average shares.................. 29,724,100 20,005,900
----------- -----------
Basic and diluted loss per share..................... $ (.22) $ (.43)
=========== ===========

</TABLE>

The following number of potentially convertible shares of common stock
related to convertible preferred stock, convertible debentures, warrants, and
stock options are as follows at December 31, 1997:

For conversion of convertible preferred stock.......... 4,873,096
For conversion of convertible debentures............... 5,944,994
Outstanding warrants................................... 33,550,268
Outstanding stock options.............................. 594,261
Possible future issuance under stock option plan....... 905,739
----------
Total shares potentially convertible................. 45,868,358

==========

As of December 31, 1997, the Company had only 7,367,497 common shares
available to be issued.

7. STOCK OPTIONS

On June 3, 1994, the Board of Directors and the stockholders of the Company
adopted the Divot Golf Corporation 1994 Stock Option and Restricted Stock
Purchase Plan (the "Stock Option Plan") as an incentive for key employees. The
purchase price for any Stock Awards and the exercise price for any Options may
not be less than the fair market value for the common stock on the date of
grant. Unless otherwise agreed between the grantee and the Company, the Stock
Awards and Options expire 90 days after termination of the grantee's
relationship with the

F-34

76
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company. Because no options were issued during the years ended December 31, 1997
and 1996, no pro forma disclosures are required under SFAS 123.

Options Outstanding, Common Stock
<TABLE>
<CAPTION>

OPTIONS OUTSTANDING
SHARES --------------------------
AVAILABLE NUMBER PRICE
FOR GRANT OF SHARES PER SHARE
--------- --------- --------------
<S> <C> <C> <C>

Balances at December 31, 1995......................... 217,475 1,282,525 $2.00 to $3.80
Options granted..................................... -- -- --
Options canceled.................................... 47,000 (47,000) --
Options exercised................................... -- -- --
--------- --------- --------------
Balances at December 31, 1996......................... 264,475 1,235,525 $2.00 to $3.80
--------- --------- --------------
Options granted..................................... -- -- --
Options canceled.................................... 641,264 (641,264) --
Options exercised................................... -- -- --
--------- --------- --------------
Balances at December 31, 1997......................... 905,739 594,261 $2.00 to $3.80
========= ========= ==============
</TABLE>

8. ACQUISITIONS

On December 26, 1997, the Company acquired from a related party certain
licensing and development rights on Parcel 11-A of the World Golf Village, the
Spa Tournament Championship development program, and the Spa Products and
Catalog from Divot Spa WGV, Inc., for approximately $356,000. The purchase price
of which approximately $331,000 and $25,000 has been allocated to goodwill and
licensing fees, respectively, consisted of 3,000,000 shares of the Company's
common stock and cash of $75,000. No expense was recorded during 1997 in
connection with this goodwill. The goodwill will be amortized using the straight
line method over a period of 15 years.

On December 28, 1997, the Company executed a letter of intent with Lady
Fairway Golf to purchase 100% of the outstanding stock of Lady Fairway Golf. In
connection with this agreement, the Company paid a nonrefundable deposit of
$100,000 which is included in the other assets of the Company's consolidated
balance sheet at December 31, 1997. The Company contemplates closing this
transaction in the first quarter 1998.

F-35

77
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. DISPOSITION OF ASSETS

During the year ended December 31, 1997, the Company disposed of three
subsidiaries and substantially all of the assets of St. James in three separate
transactions for an aggregate amount of approximately $3,800,000 ($3,550,000 in
cash and $250,000 in accounts receivable). In addition, the Company is entitled
to receive a certain percentage of future contract revenue of Hale Irwin Golf
Services, Inc. The Company recognized a loss of $1,826,164 in connection with
the disposition of these subsidiaries. This loss is reflected in the statement
of operations. The operating results of the subsidiaries were included in the
consolidated statements of operations of the Company from the dates of
acquisition through the dates of disposition. The proceeds from the sale and
related gain (loss) are recorded as follows:

<TABLE>
<CAPTION>
PROCEEDS
FROM SALE GAIN/(LOSS)
---------- -----------

Brassie Golf Management Services, Inc. and Summit Golf

Corporation............................................... $ 850,000 $ 125,000
The Gauntlet at St. James................................... 2,950,000 (1,931,875)
Hale Irwin Golf Services, Inc............................... -- (19,289)
---------- -----------
$3,800,000 $(1,826,164)
========== ===========

</TABLE>

10. CHANGE IN REPORTING ENTITY

In 1995, the Company consolidated two 75% owned subsidiaries, The Gauntlet
at Laurel Valley and The Gauntlet at Myrtle West in accordance with Financial
Accounting Standards Board Statement 94. In 1996, the Company transferred 45% of
the ownership interest in the subsidiaries to the minority shareholder to comply
with a mandatory injunction issued by the 13th Circuit Court of Hillsborough
County of Florida. Accordingly, the financial statements for 1996 have been
restated to reflect the Company's ownership in the subsidiaries under the equity
method of accounting. In 1996, the Company recognized a loss of $310,888 on the
transference of the interest in the subsidiaries. The Company's interest in the
net losses of these entities is recorded at 75% up until the date of
transference and at 30% thereafter.

Due to the recurring operating losses and working capital deficiencies of
the entities, the Company assessed the net realizable value of these investments
at December 31, 1996 to be -0-. Therefore, on the Company's assessment, a
write-down of $116,318 and $505,691 was recorded in 1997 and 1996, respectively
to reflect the net realizable value of these investments. The write-down is
included in the loss on equity investment in subsidiaries line item on the
Company's 1997 and 1996 statement of operations.

The components of the line item, Loss on equity investment in subsidiaries,
as reported in the consolidated statements of operations are as follows:
<TABLE>
<CAPTION>

1996 1997
-------- --------
<S> <C> <C>

Pro rata share of net loss.................................. $310,888 $ --
Write-down to carrying value ............................... 505,691 116,318
Reserve for ongoing litigation.............................. 150,000 --
-------- --------
Loss on equity investment in subsidiaries................... $966,579 $116,318
======== ========
</TABLE>

F-36

78
<PAGE>

DIVOT GOLF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES

The Company has employment agreements with its executive officers, the
terms of which expire at various times through September 3, 2004. Such
agreements provide for minimum salary levels, as well as for incentive bonuses
which are payable if specified management goals are attained. Minimum
commitments for future salaries, excluding bonuses, by year and in the aggregate
consist of the following at December 31, 1997:

1998........................................................ $ 650,000
1999........................................................ 650,000
2000........................................................ 591,667
2001........................................................ 475,000
2002........................................................ 454,167
Thereafter.................................................. 375,000
----------
$3,195,834
==========

The Company, in the ordinary course of business, is the subject of, or
party to, various pending or threatened claims and litigation. In the opinion of
management, settlement of such claims and litigation will not have a material
effect on the Company's operations or financial position.

F-37

79
<PAGE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 568
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 155,930
<PP&E> 114,366
<DEPRECIATION> 16,843
<TOTAL-ASSETS> 253,453
<CURRENT-LIABILITIES> 5,246,555
<BONDS> 0
0
287
<COMMON> 4,410
<OTHER-SE> 5,188,405
<TOTAL-LIABILITY-AND-EQUITY> 253,453
<SALES> 6,036,983
<TOTAL-REVENUES> 6,036,983
<CGS> 0
<TOTAL-COSTS> 10,827,616
<OTHER-EXPENSES> 10,580,368
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 635,926
<INCOME-PRETAX> (16,006,927)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,006,927)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,006,927)
<EPS-BASIC> (4.78)
<EPS-DILUTED> (4.78)

</TABLE>