FAMILY GOLF CENTERS INC, SB-2/A, 1996-06-12

FAMILY GOLF CENTERS INC
SB-2/A, 1996-06-12
MEMBERSHIP SPORTS & RECREATION CLUBS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1996
REGISTRATION NO. 333-4541

- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------

AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
FAMILY GOLF CENTERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 7999 11-3223246
(State or jurisdiction
of incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
</TABLE>
----------------
FAMILY GOLF CENTERS, INC.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-1666
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

<TABLE>
<CAPTION>
<S> <C>
COPIES TO:
KENNETH R. KOCH, ESQUIRE PAUL JACOBS, ESQUIRE FULBRIGHT
SQUADRON, ELLENOFF, PLESENT & SHEINFELD, LLP & JAWORSKI L.L.P.
551 FIFTH AVENUE 666 FIFTH AVENUE
NEW YORK, NEW YORK 10176 NEW YORK, NEW YORK 10103
(212) 661-6500 (212) 318-3000
(212) 697-6686 (FAX) (212) 752-5958 (FAX)

</TABLE>

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------

<PAGE>

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
ITEM NUMBER OF FORM SB-2 LOCATION OR CAPTION IN PROSPECTUS
----------------------------------------------------- ----------------------------------------------------
FRONT OF REGISTRATION STATEMENT AND OUTSIDE FRONT
<S> <C> <C>
1. Cover Page of Prospectus Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus Inside Front Cover Page; Outside Back Cover Page
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security-Holders Principal Stockholders
8. Plan of Distribution Outside Front Cover Page; Underwriting
9. Legal Proceedings Business--Legal Proceedings
10. Directors, Executive Officers, Promoters and Control
Persons Management--Executive Officers and Directors
11. Security Ownership of Certain Beneficial Owners and
Management Principal Stockholders
Outside Front Cover Page; Description of Capital
12. Description of Securities Stock
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities Description of Capital Stock; Part II
Management's Discussion and Analysis of Financial
15. Organization Within Last Five Years Condition and Results of Operations
16. Description of Business Business
17. Management's Discussion and Analysis or Plan of Management's Discussion and Analysis of Financial
Operation Condition and Results of Operations
18. Description of Property Business--Properties
19. Certain Relationships and Related Transactions Certain Relationships and Related Transactions
Market for Common Stock and Related Stockholder
20. Matters Dividend Policy; Description of Capital Stock
21. Executive Compensation Management--Executive Compensation
22. Financial Statements Financial Statements
Changes in and Disagreement with Accountants on
23. Accounting and Financial Disclosure Not Applicable
24. Indemnification of Directors and Officers Description of Capital Stock; Part II
25. Other Expenses of Issuance and
Distribution Part II
26. Recent Sales of Unregistered Securities Part II
27. Exhibits Part II; Exhibits
28. Undertakings Part II
</TABLE>

<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.

SUBJECT TO COMPLETION, DATED JUNE 12, 1996

PROSPECTUS

2,000,000 SHARES

[FAMILY GOLF LOGO]

FAMILY GOLF CENTERS, INC.

COMMON STOCK

All of the 2,000,000 shares of common stock, par value $0.01 per share
(the "Common Stock"), offered hereby (the "Offering"), are being sold by
Family Golf Centers, Inc. (the "Company"). The Common Stock is quoted on the
Nasdaq National Market under the symbol "FGCI." On June 11, 1996, the last
sale price of the Common Stock as reported by the Nasdaq National Market was
$27 1/8 per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREIN FOR A DISCUSSION OF
CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
---------------- ------------------ -----------------
<S> <C> <C> <C>
Per Share ..... $ $ $
Total(3) ...... $ $ $
</TABLE>

(1) The Company and certain stockholders of the Company have agreed to
indemnify the several underwriters identified elsewhere herein (the
"Underwriters") against certain liabilities, including liabilities
under the Securities Act of 1933, as amended (the "Securities Act").
See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at
.

(3) Certain stockholders of the Company (the "Selling Stockholders") have
granted the Underwriters a 30-day option to purchase up to 300,000
additional shares of Common Stock on the same terms and conditions as
set forth above, solely to cover over-allotments, if any. If the
Underwriters exercise this option in full, the total Price to Public,
Underwriting Discount, Proceeds to Company and proceeds to the Selling
Stockholders will be $ , $ , $ and $ , respectively. See
"Principal Stockholders" and "Underwriting."

The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if issued to and accepted by the Underwriters and
subject to approval of certain legal matters by counsel for the Underwriters.
It is expected that delivery of the Common Stock will be made against payment
therefor on or about , 1996, in New York, New York.

JEFFERIES & COMPANY, INC.

HAMPSHIRE SECURITIES CORPORATION

, 1996

<PAGE>

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes that the Underwriters' over-allotment option is not
exercised. As used in this Prospectus, the term "Company" means, unless the
context requires otherwise, Family Golf Centers, Inc. and its subsidiaries.
Prospective investors are urged to read this Prospectus in its entirety.

THE COMPANY

Family Golf Centers, Inc. operates golf centers designed to provide a wide
variety of practice opportunities, including facilities for driving,
chipping, putting, pitching and sand play. In addition, the Company's golf
centers typically offer golf lessons instructed by PGA-certified golf
professionals, full-line pro shops and other amenities to encourage family
participation. The Company currently owns, leases or manages 24 golf
facilities, comprised of 17 golf centers and seven combination golf center
and golf course facilities located in ten states. Of the golf centers, seven
are currently operated under the name "Golden Bear Golf Centers," licensed
from Jack Nicklaus' licensing company, Golden Bear Golf Centers, Inc. Of the
seven combination golf center and golf course facilities, six include par-3
golf courses, generally designed to facilitate the practice of golf, and one
includes a regulation 18-hole golf course. The Company has experienced
significant recent growth, primarily through the acquisition or opening of 20
facilities since the Company's initial public offering in November 1994. The
Company's total revenue increased from $1.9 million in 1992 to $12.4 million
for the year ended December 31, 1995. During the same period, the Company's
net income increased from a net loss of $22,000 to a net profit of $1.1
million.

According to the National Golf Foundation (the "NGF"), there were
approximately 25 million golfers in the United States in 1995. According to
the Golf Range and Recreational Association, there are currently between
1,900 and 2,300 stand-alone driving ranges in the United States. The NGF
estimates that in 1993 92% of all stand-alone driving ranges were managed by
owner-operators. The Company believes that many of these owner-operated
ranges are managed by individuals who may lack the experience, expertise and
financial resources to compete effectively. The Company believes this highly
fragmented industry presents numerous opportunities for the Company to
acquire, upgrade and renovate golf centers and driving ranges.

The Company believes that it attracts customers to its golf centers
primarily due to the quality, convenience and comfort of its facilities and
their appeal to the whole family. The Company's golf centers are designed
around a driving range with target greens, bunkers and traps to simulate golf
course conditions. The ranges are lighted to permit night play and the
hitting tees are enclosed or sheltered from above and from the rear in a
climate-controlled environment and, in three cases, all or a portion of the
range is enclosed under an air inflated dome to permit all-weather play.
There are approximately 80 to 100 hitting tees in facilities with the
two-tier design and approximately 30 to 60 hitting tees at smaller golf
centers. In addition to the driving range, the Company's golf centers include
a number of amenities designed to appeal to golfers and their families, such
as a 4,000-6,000 square foot clubhouse (including a full-line pro shop,
locker facilities, a restaurant or snack bar and video games), PGA-certified
golf instructors, landscaped 18-hole miniature golf courses and a short game
practice area (with putting green and sand traps). The Company's pro shops
are stocked with clubs, bags, shoes, apparel, videos and related accessories
from a number of suppliers, including brand name manufacturers such as
Karsten Manufacturing Corporation (Ping), Callaway Golf Company, Tommy Armour
Golf, Wilson Golf Company,

<PAGE>

Mizuno Golf Company, Spalding Sports Worldwide, Titleist and Footjoy
Worldwide (Division of American Brands, Inc.), Ashworth Clothing Company and
Nicklaus Golf Equipment Company.

The Company was incorporated in the State of Delaware on July 13, 1994.
The Company operates through its wholly-owned subsidiaries, the first of
which was incorporated on March 27, 1991. The Company's principal executive
offices are located at 225 Broadhollow Road, Melville, New York 11747 and its
telephone number is (516) 694-1666 and its World Wide Web address is
http://www.familygolf.com.

THE OFFERING

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<CAPTION>
<S> <C>
Common Stock offered by the Company ...................2,000,000shares
Common Stock to be outstanding after the Offering .... 10,598,025shares(1)
Use of proceeds ....................................... To repay approximately $5.0 million of bank
indebtedness, for the acquisition, leasing,
development and improvement of golf facilities and
for general working capital purposes. See "Use of
Proceeds."
Nasdaq National Market symbol ......................... FGCI
</TABLE>

(1) Does not include 760,705 shares of Common Stock issuable upon exercise
of outstanding options and warrants. See "Description of Capital
Stock--Outstanding Options and Warrants."

<PAGE>

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA AND OTHER DATA

The following table presents, for the periods and dates indicated, summary
historical and pro forma financial data and other data of the Company. The
pro forma statements of operations data for the year ended December 31, 1995
and for the three months ended March 31, 1996 give effect to the acquisitions
of Pelham Enterprises, Inc., the Hiland Park Golf Course, RFC Enterprises,
Inc., Upper Hembree Partners, L.P., The Practice Tee, Inc. ("TPT"), Golf
Masters Limited Partnership and Air Dome Limited Partnership (collectively,
"Valley View"), Owl's Creek Golf Center, Inc., Flemington Golf and Sports
Center, LLC and associated land, 202 Golf Associates, Inc. ("Yorktown
Heights"), Indian River Golf-O-Rama, Inc. ("Indian River"), K.G. Golf, Inc.
("Fairfield"), Catalina Golf Center ("Tucson"), Tree Court Golf &
Recreational Complex, Inc. ("St. Louis") and Golf & Sports Center of the Palm
Beaches, Inc. and W.A.G.N. Partners (collectively, "West Palm Beach'') as if
they had been consummated as of January 1, 1995. The pro forma as adjusted
statement of operations data for the three months ended March 31, 1996 also
give effect to the sale of 198,206 shares of Common Stock offered hereby by
the Company at an assumed offering price of $27 1/8 per share and the
application of the estimated net proceeds therefrom to repay bank
indebtedness of $5.0 million as described under "Use of Proceeds" as if such
transaction had occurred as of January 1, 1996. The pro forma condensed balance
sheet as of March 31, 1996 gives effect to the acquisition of Yorktown Heights,
Indian River, Fairfield, Tucson, St. Louis and West Palm Beach as if they had
occurred on March 31, 1996. The pro forma as adjusted balance sheet at March
31, 1996 also gives effect to the sale of 2,000,000 shares of Common Stock
offered hereby by the Company at an assumed offering price of $27 1/8 per
share and the application of 5.0 million of the estimated net proceeds therefrom
to repay bank indebtedness as described under "Use of Proceeds." This
information should be read in conjunction with "Capitalization," "Selected
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," Pro Forma Unaudited Condensed Financial Information
and the Company's Financial Statements and the notes thereto, each included
elsewhere herein. The pro forma data set forth below is not necessarily
indicative of what the actual results of operations would have been had the
transactions occurred at the dates referred to above, nor do they purport to
indicate the results of future operations.
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
---------------------------------------------------
PRO
HISTORICAL FORMA
---------------------------------------- ---------
1992 1993 1994 1995 1995
-------- --------- -------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue ........................ $1,887 $2,632 $6,362 $12,432 $18,979
Operating expenses ................... 1,128 2,247 4,215 6,614 12,750
Cost of merchandise sold ............. 320 459 750 1,779 2,222
Selling, general and administrative
expenses ............................ 351 615 548 1,242 2,576
-------- --------- -------- --------- ---------
Operating income (loss) .............. 88 (689) 849 2,797 1,431
Interest expense ..................... (111) (192) (313) (939) (2,188)
Other income ......................... 1 106 16 66 76
-------- --------- -------- --------- ---------
Income (loss) before income taxes,
minority interest and extraordinary
item ................................ (22) (775) 552 1,924 (681)
Income tax expense (benefit) ......... -- -- (65) 669 246
-------- --------- -------- --------- ---------
Income (loss) before minority
interest and extraordinary item .... (22) (775) 617 1,255 (435)
Minority interest in (income) loss .. -- 12 (129) -- --
Extraordinary item (net of tax
effect) ............................. -- -- -- 181 --
-------- --------- -------- --------- ---------
Net income (loss) .................... $ (22) $ (763) $ 488 $ 1,074 $ (435)
======== ========= ======== ========= =========
Net income (loss) per share before
extraordinary item .................. $(0.23) $ 0.13 $ 0.24 $ (0.08)
Extraordinary item ................... -- -- (.04) --
--------- -------- --------- ---------
Net income (loss) per share .......... $(0.23) $ 0.13 $ 0.20 $ (0.08)
========= ======== ========= =========
Weighted average number of common
shares outstanding .................. 3,272 3,636 5,271 5,637
========= ======== ========= =========

[TABLE RESTUBBED FROM ABOVE]

THREE MONTHS
ENDED MARCH 31,
--------------------------------------------
PRO PRO FORMA AS
HISTORICAL FORMA ADJUSTED
------------------ --------- -------------
1995 1996 1996 1996
-------- -------- --------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<C> <C> <C> <C>
<S>
STATEMENT OF OPERATIONS DATA:
Total revenue ........................ $1,782 $3,362 $3,973 $3,973
Operating expenses ................... 1,061 2,252 2,755 2,755
Cost of merchandise sold ............. 295 457 523 523
Selling, general and administrative
expenses ............................ 352 643 743 743
-------- -------- --------- -------------
Operating income (loss) .............. 74 10 (48) (48)
Interest expense ..................... (92) (100) (176) (51)
Other income ......................... 22 197 125 125
-------- -------- --------- -------------
Income (loss) before income taxes,
minority interest and extraordinary
item ................................ 4 107 (99) (26)
Income tax expense (benefit) ......... 2 38 (36) (9)
-------- -------- --------- -------------
Income (loss) before minority
interest and extraordinary item .... 2 69 (63) (17)
Minority interest in (income) loss .. -- -- -- --
Extraordinary item (net of tax
effect) ............................. -- -- -- --
-------- -------- --------- -------------
Net income (loss) .................... $ 2 $ 69 $ (63) $ (17)
======== ======== ========= =============
Net income (loss) per share before
extraordinary item .................. $ 0.00 $ 0.01 $(0.01) $ 0.00
Extraordinary item ................... -- -- -- --
-------- -------- --------- -------------
Net income (loss) per share .......... $ 0.00 $ 0.01 $(0.01) $ 0.00
======== ======== ========= =============
Weighted average number of common
shares outstanding .................. 4,938 8,648 8,779 8,977
======== ======== ========= =============

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1995 AT MARCH 31, 1996
-------------------- -----------------------------------------
PRO FORMA AS
HISTORICAL HISTORICAL PRO FORMA ADJUSTED(1)
-------------------- ------------ ----------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ............. $23,121 $11,147 $ 7,532 $ 52,485
Working capital ....................... 20,598 12,950 4,373 54,326
Total assets .......................... 61,582 63,130 68,800 113,753
Short-term borrowings ................. 5,000
Total long-term debt, including
current maturities ................... 8,193 8,752 8,752 8,752
Total stockholders' equity ............ 49,388 51,986 52,586 102,539
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
------------------------------ --------------
1992 1993 1994 1995 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Facilities open at beginning of
period .............................. 0 1 2 5 5 14
Facilities built during period ...... 1 1 2 1 1 1
Facilities or management contracts
acquired during period .............. 0 0 1 8 0 3
------ ------ ------ ------ ------ ------
Facilities open at end of period .... 1 2 5 14 6 18(2)
====== ====== ====== ====== ====== ======
</TABLE>

(1) Assumes that as of March 31, 1996 the sale by the Company of 2,000,000
shares of Common Stock in the Offering at an assumed offering price of
$27 1/8 per share and the application of the estimated net proceeds
therefrom to repay indebtedness of $5.0 million as set forth in "Use of
Proceeds" had occurred.

(2) Subsequent to March 31, 1996, the Company acquired six golf facilities.

<PAGE>

RISK FACTORS

Prospective investors should carefully consider the specific factors set
forth below, as well as the other information included in this Prospectus,
before deciding to invest in the Common Stock offered hereby. This Prospectus
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from the results discussed
in the forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in "Risk
Factors," as well as those discussed elsewhere in this Prospectus.

LIMITED OPERATING HISTORY

The Company opened its first golf center in March 1992 and, accordingly,
has only a limited history of operations. The Company generated net income of
approximately $488,000 during the year ended December 31, 1994, approximately
$1.1 million during the year ended December 31, 1995 and approximately
$69,000 for the three months ended March 31, 1996. However, the Company
experienced losses prior to 1994 and there can be no assurance that the
Company will operate profitably in the future or that recent results of
operations will be indicative of future results. See "Risk Factors--Expansion
Strategy" and Pro Forma Unaudited Condensed Statement of Operations.

EXPANSION STRATEGY

The Company's ability to significantly increase revenue, net income and
operating cash flow over time depends in large part upon its success in
acquiring or leasing and constructing additional golf facilities at suitable
locations upon satisfactory terms. There can be no assurance that suitable
golf facility acquisition or lease opportunities will be available or that
the Company will be able to consummate acquisition or leasing transactions on
satisfactory terms. The acquisition of golf facilities may become more
expensive in the future to the extent that demand and competition increases.
The likelihood of the success of the Company must be considered in light of
the problems, expenses, difficulties, complications and delays frequently
encountered in connection with the construction and opening of new golf
facilities. See "Risk Factors--Additional Financing Requirements," "Risk
Factors--Dependence Upon Key Employee; Recruitment of Additional Personnel,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."

To successfully implement its expansion strategy, the Company must
integrate acquired or newly- opened golf facilities into its existing
operations. As the Company grows, there can be no assurance that additional
golf facilities can be readily assimilated into the Company's operating
structure. Inability to efficiently integrate golf facilities could have a
material adverse effect on the Company's financial condition and results of
operations. In addition, a number of the golf facilities which the Company
has acquired have, and golf facilities it may acquire in the future may have,
experienced losses. On a pro forma basis, as adjusted to give effect to the
acquisitions consummated after January 1, 1995 as if they had occurred as of
January 1, 1995, the Company had a net loss before extraordinary item of
$435,000 (as compared to income before extraordinary item of $1.3 million on
a historical basis) for the year ended December 31, 1995 and a net loss of
$63,000 (as compared to net income of $69,000 on a historical basis) for the
three months ended March 31, 1996. There can be no assurance that golf
facilities recently acquired by the Company or those that the Company may
acquire in the future will operate profitably and will not adversely affect
the Company's results of operations. See "Business" and Pro Forma Unaudited
Condensed Statement of Operations.

TERMINATION OF LEASES

Although after giving effect to renewal options none of the Company's
leases for its golf centers or facilities is expected to expire until 2007,
the leases may be terminated prior to their scheduled expiration should the
Company default in its obligations thereunder. Such obligations include the
Company's timely payment of rent and maintenance of adequate insurance
coverage. The termination of any of the Company's leases could have an
adverse effect on the Company. If any of the Company's leases were to be
terminated, there can be no assurance that the Company would be able to enter
into leases for comparable properties on favorable terms, or at all. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<PAGE>

TERMINATION OF MANAGEMENT AGREEMENTS

The Company's management agreement with the City of New York (the "City")
for the Douglaston, New York golf center, which expires on December 31, 2006,
is terminable by the City at will. During the year ended December 31, 1995,
the management agreement accounted for 17% of the Company's total revenue.
Pursuant to the management agreement, as of March 31, 1996 the Company had
made approximately $2.3 million of capital improvements to the Douglaston
center. If the management agreement is terminated, the City may retain, and
is not obligated to pay the Company for the value of, such capital
improvements. Unless reimbursed, for accounting purposes the Company would
immediately have to write off the undepreciated value of these capital
improvements and the goodwill related to its purchase of the limited
partners' minority interest (the "Minority Interest") in Alley Pond
Associates, L.P., which are currently being depreciated and amortized over
the life of the management agreement. Accordingly, termination of the
management agreement with the City could have a material adverse effect on
the Company. See "Business--Properties."

The Company's management agreement with the City of El Segundo for the El
Segundo golf facility terminates on June 30, 1998, unless earlier terminated
by either party, with or without cause, as of the end of any operating year
during the term of the agreement, upon at least 90 days prior written notice.
Termination of the management agreement with the City of El Segundo may have
an adverse effect on the Company. See "Business--Properties."

GOLDEN BEAR LICENSE

The Company operates seven of its golf centers, and intends to operate at
least one additional golf center, under the name "Golden Bear Golf Center"
pursuant to a non-exclusive license agreement (the "License Agreement"),
expiring August 2002, with Golden Bear Golf Centers, Inc. (the "Licensor").
The License Agreement is terminable by the Licensor prior to August 2002
under certain circumstances, including if the current directors of the
Company at any time constitute less than 50% of the Company's directors. In
September 1995, the Company agreed to cure an alleged default of the License
Agreement (principally by making certain capital improvements by November
1996). Failure by the Company to take the agreed upon actions by such date
could result in the termination of the License Agreement. Termination of the
License Agreement could adversely affect the Company's Golden Bear Golf
Centers and, possibly, the Company. The value of the "Golden Bear" name is
dependent, in part, upon the continued popularity of Jack Nicklaus.
Accordingly, the occurrence of any event which diminishes the reputation of
Mr. Nicklaus and the related "Golden Bear" symbol could adversely affect the
Company's Golden Bear Golf Centers. See "Risk Factors--Competition" and
"Business--Golden Bear License."

COMPETITION

The golf center industry is highly competitive and includes competition
from other golf centers, traditional golf ranges, golf courses and other
recreational pursuits. The Company may face imitation and other forms of
competition and the Company cannot prevent or restrain others from utilizing
a similar operational strategy. Many of the Company's competitors and
potential competitors have considerably greater financial and other
resources, experience and customer recognition than does the Company. Until
September 1995, the Company had the exclusive right to open Golden Bear Golf
Centers in certain territories. As a result of a change in the License
Agreement in September 1995, the Licensor now is permitted to establish, or
license others to establish, "Golden Bear" golf centers that compete with the
Company's golf centers, including its Golden Bear Golf Centers. Golden Bear
Golf, Inc., an affiliate of the Licensor, has recently publicly indicated
that it intends to focus its efforts on the direct ownership and operation of
golf facilities through the acquisition or development of additional golf
centers and to pursue new licensees and enter into additional territorial
development agreements only in locations and territories where it and its
affiliates do not intend to acquire or develop their own facilities. There
can be no assurance that such competition will not adversely affect the
Company's ability to acquire additional properties. See
"Business--Competition."

VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS

Historically, the second and third quarters of the year have accounted for
a greater portion of the Company's operating revenue than have the first and
fourth quarters of the year. This is primarily due to an outdoor playing
season limited by inclement weather. Although most of the Company's driving
ranges are designed to be all-weather facilities (including the domed
facilities), and although the Company has recently expanded its operations
into territories where inclement weather may have less of an impact than

<PAGE>

in the Northeast, portions of the Company's facilities, including the
miniature golf courses, are outdoors and vulnerable to weather conditions.
Also, golfers are less inclined to practice when weather conditions limit
their ability to play golf on outdoor courses. This seasonal pattern, as well
as the timing of new center openings and acquisitions, may cause the
Company's results of operations to vary significantly from quarter to
quarter. Accordingly, period-to-period comparisons are not necessarily
meaningful and should not be relied on as indicative of future results. In
addition, variability in the Company's results of operations could cause the
Company's stock price to fluctuate following the release of interim results
of operations or other information and may have a material adverse effect on
the Company and its stock price. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

ADDITIONAL FINANCING REQUIREMENTS

As of March 31, 1996, the Company had working capital of approximately
$13.0 million. The Company anticipates, based on its currently proposed
expansion plans and assumptions relating to its operations, that the net
proceeds of the Offering, together with availability under its primary credit
facility and cash flow from operations, will be sufficient to permit the
Company to conduct its operations and to carry on its contemplated expansion
over at least the next 12 months. The Company also anticipates that it may
need to raise substantial additional equity capital in the future to continue
its longer term expansion plans. There can be no assurance that the Company
will be able to obtain additional financing on favorable terms or at all. See
"Use of Proceeds," "Capitalization" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

ENVIRONMENTAL REGULATION

Operations at the Company's golf facilities involve the use and limited
storage of various hazardous materials such as pesticides, herbicides, motor
oil, gasoline and paint. Under various federal, state and local laws,
ordinances and regulations, an owner or operator of real property is
generally liable for the costs of removal or remediation of hazardous
substances that are released on or in its property regardless of whether the
property owner or operator knew of, or was responsible for, the release of
hazardous materials. The Company has not been informed by any governmental
authority of any non-compliance or violation of any environmental laws,
ordinances or regulations and the Company believes that it is in substantial
compliance with all such laws, ordinances and regulations applicable to its
properties or operations. However, the Company is aware of one notice of
violation issued by the New York Department of Environmental Conservation
(the "DEC") against the owner of the land leased by the Company in Elmsford,
New York alleging that certain hazardous materials were placed on the site.
The owner has taken remedial action and the Company does not believe it will
be affected by the alleged violation. To date, the Company has not incurred
material costs of remediation in relation to any of its golf facilities and
the Company knows of no material environmental liability to which it may
become subject. Although the Company usually hires environmental consultants
to conduct environmental studies, including invasive procedures such as soil
sampling or ground water analysis on golf facilities it owns, operates or
intends to acquire, in some cases only limited invasive procedures are
conducted on such properties. Even when invasive procedures are used,
environmental studies may fail to discover all potential environmental
problems. Accordingly, there may be potential environmental liabilities or
conditions of which the Company is not aware. See "Business--Governmental
Regulation."

DEPENDENCE UPON KEY EMPLOYEE; RECRUITMENT OF ADDITIONAL PERSONNEL

The Company is heavily dependent on the services of Dominic Chang, its
Chairman of the Board, President and Chief Executive Officer. The loss of the
services of Mr. Chang could materially adversely affect the Company. Mr.
Chang has entered into an employment agreement with the Company which
terminates on December 31, 1999. See "Management--Employment Agreements." The
Company owns, and is the sole beneficiary of, key person life insurance in
the amount of $1.5 million on the life of Mr. Chang. The Company will also be
required to hire additional personnel and PGA-certified professionals to
staff the golf centers it intends to acquire, lease or construct. There can
be no assurance that the Company will be able to attract and retain qualified
personnel. See "Business--Operations," "Business-- Employees" and
"Management."

<PAGE>

DILUTION

Purchasers in the Offering will experience immediate and substantial
dilution of $17.46 in net tangible book value per share of the Common Stock.

CONTROL BY CURRENT STOCKHOLDER

Following the completion of the Offering, Dominic Chang will beneficially
own 2,822,750 shares of Common Stock, constituting approximately 26.6% of the
outstanding shares (or if the Underwriters' over-allotment option is
exercised in full, Mr. Chang will beneficially own 2,699,334 shares of Common
Stock, constituting approximately 25.4% of the outstanding shares). Mr. Chang
will, therefore, be able to exercise significant influence with respect to
the election of the directors of the Company and all matters submitted to a
vote of the stockholders of the Company, including the acquisition or
disposition of material assets. See "Management" and "Principal
Stockholders."

DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING

The amount spent by consumers on discretionary items, such as family and
entertainment activities like those offered by the Company's golf facilities,
have historically been dependent upon levels of discretionary income, which
may be adversely affected by general economic conditions. A decrease in
consumer spending on golf could have an adverse effect on the Company's
financial condition and results of operations.

BROAD DISCRETION IN USE OF PROCEEDS

The Company intends to use substantially all of the net proceeds of the
Offering for the acquisition, leasing, development and improvement of golf
facilities and for general working capital purposes. Accordingly, the Company
will have broad discretion as to the application of such proceeds. An
investor will not have the opportunity to evaluate the economic, financial
and other relevant information which will be utilized by the Company in
determining the application of such proceeds in the acquisition, leasing,
development and improvement of golf facilities. See "Use of Proceeds."

DIVIDEND POLICY

The Company has not paid any cash dividends on the Common Stock since
inception and does not intend to pay any dividends to its stockholders in the
foreseeable future. The Company currently intends to reinvest earnings, if
any, in the development and expansion of its business. See "Dividend Policy."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

The sale, or availability for sale, of substantial amounts of Common Stock
in the public market subsequent to the Offering pursuant to Rule 144 under
the Securities Act ("Rule 144") or otherwise could materially adversely
affect the market price of the Common Stock and could impair the Company's
ability to raise additional capital through the sale of its equity securities
or debt financing. In general, under Rule 144 as currently in effect, a
person (or persons whose shares are aggregated), including a person who may
be deemed to be an "affiliate" of the Company as that term is defined under
the Securities Act, would be entitled to sell within any three month period a
number of shares beneficially owned for at least two years that does not
exceed the greater of (i) 1% of the then outstanding shares of Common Stock,
or (ii) the average weekly trading volume in the Common Stock during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain requirements as to the manner of sale, notice and the availability of
current public information about the Company. However, a person who is not
deemed to have been an affiliate of the Company during the 90 days preceding
a sale by such person and who has beneficially owned shares of Common Stock
for at least three years may sell such shares without regard to the volume,
manner of sale or notice requirements of Rule 144.

Of the 10,598,025 shares of Common Stock outstanding after the Offering,
6,980,075 shares will be freely tradeable without restrictions following
completion of the Offering, unless held by "affiliates" of

<PAGE>

the Company who are subject to certain volume limitations and manner of sale
restrictions, and 3,617,950 will be "restricted securities" as that term is
defined in Rule 144. The two-year holding period for substantially all of the
"restricted securities" will have been met by November 1996 and such
securities may, subject to the agreements described below, be sold without
registration under the Securities Act, subject to volume limitations and
other restrictions. The holders of 3,161,950 shares of Common Stock (not
including those shares to be sold if the Underwriters' over-allotment option
is exercised) and the holders of options to purchase up to 169,000 shares of
Common Stock will remain subject to an agreement entered into, in connection
with the Company's public offering in December 1995 (the "Secondary
Offering"), pursuant to which they cannot publicly sell or otherwise dispose
of any securities of the Company until December 13, 1996 without the prior
written consent of Jefferies & Company, Inc. ("Jefferies"). Mr. Chang has
pledged 361,750 shares of Common Stock to two banks to secure personal loans,
and may in the future pledge additional shares to secure additional personal
loans, which shares are not, or would not be, subject to such agreements.

The holders of warrants to purchase up to 300,000 shares of Common Stock
issued to the representatives of the underwriters and their designees in the
Secondary Offering have certain demand and "piggyback" registration rights
commencing in December 1996. The holder of warrants to purchase up to 70,000
shares of Common Stock issued to a consultant have certain "piggyback"
registration rights and certain demand registration rights commencing one
month after the closing of the Offering. In addition, as of the date of this
Prospectus, the holders of an aggregate of 247,100 shares of Common Stock
(including 76,584 shares to be registered and sold if the Underwriters'
over-allotment option is exercised in full) have certain "piggyback"
registration rights, which commence on various dates in 1996. Of these
247,100 shares, approximately 64,351 are held in escrow, and will be
released, subject to certain conditions, on various dates in 1996 and 1997.
See "Description of Capital Stock--Outstanding Options and Warrants."

PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER, BY-LAW
AND CONTRACTUAL PROVISIONS

The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 2,000,000 shares of preferred stock, par value $.10
per share. The preferred stock may be issued in one or more series, the terms
of which may be determined at the time of issuance by the Board of Directors,
without further action by stockholders. Although no preferred stock is
currently outstanding and the Company currently has no plans for the issuance
of any preferred stock, there can be no assurance that the Company will not
do so in the future. The ability of the Board of Directors to issue preferred
stock could have the effect of delaying, deferring or preventing a change of
control of the Company or the removal of existing management and, as a
result, could prevent the stockholders of the Company from being paid a
premium over the market value for their shares of Common Stock. The Company's
By-Laws contain provisions requiring advance notice of stockholder proposals
and imposing certain procedural restrictions on stockholders wishing to call
a special meeting of stockholders. In addition, the License Agreement may be
terminated by the Licensor if the current members of the Company's Board of
Directors do not constitute at least 50% of the Company's Board of Directors.
Such provisions could discourage possible future attempts to gain control of
the Company (which attempts, if stockholders were offered a premium over the
market value of their Common Stock, might be viewed as beneficial to
stockholders). See "Business--Golden Bear License" and "Description of
Capital Stock."

<PAGE>

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
2,000,000 shares of Common Stock being offered by the Company are estimated
to be approximately $50.0 million, after deducting underwriting discounts and
estimated offering expenses payable by the Company, based upon an assumed
offering price of $27 1/8 per share. Approximately $5.0 million of the net
proceeds will be used to repay indebtedness outstanding under the Company's
revolving line of credit with Chemical Bank, which, as of June 10, 1996,
bears interest at prime plus 1.5%. Such indebtedness was incurred to purchase
the Tucson, Arizona, Fairfield, Ohio and St. Louis, Missouri golf centers and
a portion of the West Palm Beach, Florida golf center. See
"Business--Recently Opened or Acquired Facilities." The Company intends to
use the balance of the net proceeds of the Offering for the acquisition,
leasing, development and improvement of golf facilities and for general
working capital purposes.

Pending the uses described above, the net proceeds from the Offering will
be invested in investment-grade, short-term, interest-bearing securities. The
Company will not receive any proceeds from the sale of Common Stock by the
Selling Stockholders in connection with any exercise of the Underwriters'
over-allotment option.

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "FGCI." The following table sets forth, for the periods indicated,
the high and low last sale prices for the Common Stock as reported by the
Nasdaq National Market.

<TABLE>
<CAPTION>
STOCK PRICE
-------------------
HIGH LOW
---------- -------
<S> <C> <C>
CALENDAR YEAR 1994:
Fourth Quarter (from November 17, 1994
through
December 31, 1994) .......................... $ 7 1/4 $ 5 3/4
CALENDAR YEAR 1995:
First Quarter ................................ $ 7 7/8 $ 6
Second Quarter ............................... 11 5 1/2
Third Quarter ................................ 19 5/8 10 1/4
Fourth Quarter ............................... 19 12 3/4
CALENDAR YEAR 1996:
First Quarter ................................ $27 3/4 $17 1/8
Second Quarter (through June 11, 1996) ...... 29 3/4 25 5/8
---------- -------
</TABLE>

On June 11, 1996, the last reported sale price for the Company's Common
Stock on the Nasdaq National Market was $27 1/8 per share. As of June 7,
1996, there were 92 stockholders of record of the Common Stock.

DIVIDEND POLICY

The Company has neither declared nor paid dividends on its Common Stock
and does not intend to declare or pay any dividends in the foreseeable
future. The Company currently intends to retain earnings, if any, for the
development and expansion of its business. The declaration of dividends in
the future will be at the election of the Board of Directors and will depend
upon the earnings, capital requirements and financial position of the
Company, general economic conditions and other pertinent factors.

<PAGE>

CAPITALIZATION

The following table sets forth, at March 31, 1996, the actual short-term
debt and capitalization of the Company, and the pro forma short-term debt and
capitalization of the Company as if the acquisitions of Yorktown Heights,
Indian River, Fairfield, Tucson, St. Louis and West Palm Beach had been
consummated as of such date and as adjusted to give effect to the sale of
2,000,000 shares of Common Stock offered hereby by the Company at an assumed
offering price of $27 1/8 per share. This table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations," Pro Forma Unaudited Condensed Balance Sheet and notes thereto
and the Company's Financial Statements and notes thereto, each included
elsewhere herein.

<TABLE>
<CAPTION>
AT MARCH 31, 1996
-------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
--------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term obligations and short-term debt $ 1,523 $ 6,523 $ 1,523
========= =========== =============
Long-term obligations ........................................ $ 7,229 $ 7,229 $ 7,229
Stockholders' equity (1):
Preferred stock, $0.10 par value, 1,000,000 shares
authorized; as adjusted, 2,000,000 shares authorized (2),
none outstanding ........................................... -- -- --
Common stock, $0.01 par value, 10,000,000 shares authorized;
as adjusted, 50,000,000 shares authorized (2), 8,489,325
issued and outstanding (8,520,225 pro forma, 10,520,225 pro
forma as adjusted) ......................................... 85 85 105
Additional paid-in capital .................................. 50,909 51,509 101,442
Retained earnings ........................................... 1,027 1,027 1,027
Treasury stock .............................................. (35) (35) (35)
----------- -------------
Total stockholders' equity ................................. 51,986 52,586 102,539
--------- ----------- -------------
Total capitalization ...................................... $60,738 $66,338 $111,291
========= =========== =============
</TABLE>

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

(1) Does not include any shares issuable upon exercise of outstanding stock
options or warrants.

(2) Gives effect to the increase in the Company's authorized number of
shares of preferred stock from 1,000,000 to 2,000,000 and the increase
in the authorized number of shares of Common Stock from 10,000,000 to
50,000,000 subsequent to March 31, 1996.

<PAGE>

SELECTED FINANCIAL DATA

The following table presents, for the periods and dates indicated, summary
historical and pro forma financial data and other data of the Company. The
pro forma condensed statements of operations data for the year ended December
31, 1995 and the three months ended March 31, 1996 give effect to the
acquisitions of Pelham Enterprises, Inc., the Hiland Park Golf Course, RFC
Enterprises, Inc., Upper Hembree Partners, L.P., TPT, Valley View, Owl's Creek
Golf Centers, Inc., Flemington Golf and Sports Center, LLC and associated land,
Yorktown Heights, Indian River, Fairfield, Tucson, St. Louis and West Palm Beach
as if they had been consummated as of January 1, 1995. The pro forma as adjusted
statement of operations data for the three months ended March 31, 1996 also
give effect to the sale of 198,206 shares of Common Stock offered hereby by
the Company at an assumed offering price of $27 1/8 per share and the
application of the estimated net proceeds therefrom to repay bank
indebtedness of $5.0 million as described under "Use of Proceeds" as if such
transaction had occurred as of January 1, 1996. The pro forma condensed balance
sheet as of March 31, 1996 gives effect to the acquisition of Yorktown Heights,
Indian River, Fairfield, Tucson, St. Louis and West Palm Beach as if they had
occurred on March 31, 1996. The pro forma as adjusted balance sheet at March
31, 1996 also gives effect to the sale of 2,000,000 shares of Common Stock
offered hereby by the Company at an assumed offering price of $27 1/8 per
share and the application of $5.0 million of the estimated net proceeds
therefrom to repay bank indebtedness as described under "Use of Proceeds." This
information should be read in conjunction with "Capitalization," "Selected
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," Pro Forma Unaudited Condensed Financial Information
and the Company's Financial Statements and the notes thereto, each included
elsewhere herein. The pro forma data set forth below is not necessarily
indicative of what the actual results of operations would have been had the
transactions occurred at the dates referred to above, nor do they purport to
indicate the results of future operations.

[TABLE RESTUBBED FROM ABOVE]

THREE MONTHS
ENDED MARCH 31,
-----------------------------------------------
PRO PRO FORMA AS
HISTORICAL FORMA ADJUSTED
------------------ --------- -------------
1995 1996 1996 1996
-------- -------- --------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<C> <C> <C> <C>
<S>
STATEMENT OF OPERATIONS DATA:
Total revenue ........................ $1,782 $3,362 $3,973 $3,973
Operating expenses ................... 1,061 2,252 2,755 2,755
Cost of merchandise sold ............. 295 457 523 523
Selling, general and administrative
expenses ............................ 352 643 743 743
-------- -------- --------- -------------
Operating income (loss) .............. 74 10 (48) (48)
Interest expense ..................... (92) (100) (176) (51)
Other income ......................... 22 197 125 125
-------- -------- --------- -------------
Income (loss) before income taxes,
minority interest and extraordinary
item ................................ 4 107 (99) (26)
Income tax expense (benefit) ......... 2 38 (36) (9)
-------- -------- --------- -------------
Income (loss) before minority
interest and extraordinary item .... 2 69 (63) (17)
Minority interest in (income) loss .. -- -- -- --
Extraordinary item (net of tax
effect) ............................. -- -- -- --
-------- -------- --------- -------------
Net income (loss) .................... $ 2 $ 69 $ (63) $ (17)
======== ======== ========= =============
Net income (loss) per share before
extraordinary item .................. $ 0.00 $ 0.01 $(0.01) $ 0.00
Extraordinary item ................... -- -- -- --
-------- -------- --------- -------------
Net income (loss) per share .......... $ 0.00 $ 0.01 $(0.01) $ 0.00
======== ======== ========= =============
Weighted average number of common
shares outstanding .................. 4,938 8,648 8,779 8,977
======== ======== ========= =============

<PAGE>

</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995 AT MARCH 31, 1996
-------------------- -----------------------------------------
PRO FORMA AS
HISTORICAL HISTORICAL PRO FORMA ADJUSTED(1)
-------------------- ------------ ----------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ......................... $23,121 $11,147 $ 7,532 $ 52,485
Working capital ................................... 20,598 12,950 4,373 54,326
Total assets ...................................... 61,582 63,130 68,800 113,753
Short-term borrowings ............................. 5,000
Total long-term debt, including current maturities 8,193 8,752 8,752 8,752
Total stockholders' equity ........................ 49,388 51,986 52,586 102,539
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
------------------------------ --------------
1992 1993 1994 1995 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Facilities open at beginning of period .... 0 1 2 5 5 14
Facilities built during period ............. 1 1 2 1 1 1
Facilities or management contracts acquired
during period ............................. 0 0 1 8 0 3
------ ------ ------ ------ ------ ------
Facilities open at end of period ........... 1 2 5 14 6 18(2)
====== ====== ====== ====== ====== ======
</TABLE>

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

(2) Subsequent to March 31, 1996, the Company acquired six golf facilities.

<PAGE>

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

The following discussion and analysis should be read in conjunction with
the Company's Financial Statements and the notes thereto appearing elsewhere
in this Prospectus. This Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are
not limited to, those discussed in "Risk Factors," as well as those discussed
elsewhere in this Prospectus.

GENERAL

The Company's strategy is to grow revenue and net income by (i) increasing
the number of golf centers it owns, leases or manages by (a) identifying and
acquiring well-located ranges that have the potential for improvement under
better management and with improved or expanded facilities, including the
addition of enclosed hitting areas, full-line pro shops, miniature golf
courses and other amenities and (b) building new centers in locations where
suitable acquisition opportunities are not available and (ii) seeking to
realize economies of scale through centralized purchasing, accounting,
management information and cash management systems. The Company currently
owns, leases or manages 24 golf facilities, comprised of 17 golf centers and
seven combination golf center and golf course facilities. Of the seven
combination golf center and golf course facilities, six include par-3 golf
courses, generally designed to facilitate the practice of golf, and one
includes a regulation 18-hole golf course. The following table sets forth
certain information as to the Company's golf facilities:

<TABLE>
<CAPTION>
OWNED LEASED MANAGED TOTAL

<S> <C> <C> <C> <C>
Owned Leased Managed Total
--------- ---------- ----------- ---------
AT JANUARY 1, 1992 ............................................. - - - 0
Facilities built during 1992 .................................. - 1 - 1
Facilities or management contracts acquired during 1992 ...... - - - 0
--------- ---------- ----------- ---------
AT JANUARY 1, 1993 ............................................. - 1 - 1
Facilities built during 1993 .................................. - 1 - 1
Facilities or management contracts acquired during 1993 ...... - - - 0
--------- ---------- ----------- ---------
AT JANUARY 1, 1994 ............................................. - 2 - 2
Facilities built during 1994 .................................. - 1 1 2
Facilities or management contracts acquired during 1994 ...... - 1 - 1
--------- ---------- ----------- ---------
AT JANUARY 1, 1995 ............................................. - 4 1 5
Facilities built during 1995 .................................. - 1 - 1
Facilities or management contracts acquired during 1995 ...... 6 1 1 8
--------- ---------- ----------- ---------
AT JANUARY 1, 1996 ............................................. 6 6 2 14
Facilities built during the first three months of 1996 ....... - 1 - 1
Facilities or management contracts acquired during the first
three months of 1996 ......................................... 2 1 - 3
Facilities or management contracts acquired after
March 31, 1996 ............................................... 3 3 - 6
--------- ---------- ----------- ---------
AT JUNE 11, 1996 ............................................... 11 11 2 24
========= ========== =========== =========
</TABLE>

The Company's golf facilities have opened at varying times over the past
several years. As a result of changes in the number of golf centers open from
period to period, the seasonality of operations, the completion of the
Company's initial public offering in November 1994 (the "IPO") and the
Secondary Offering in December 1995, results of operations for any particular
period may not be indicative of the results of operations in the future.

Most of the Company's revenues from its golf centers are derived from
selling tokens for use in automated range-ball dispensing machines, pro shop
merchandise sales, charging for rounds of miniature golf, golf lessons and
management fees. The Company also derives revenues at its golf centers from
food

<PAGE>

and beverage sales, video games and the use of batting cages. The Company
derives revenues from its golf courses from club membership fees, fees for
rounds of golf and golf lessons, pro shop merchandise sales and from food and
beverage sales at the clubhouse. See "Business--The Golf Centers."

RESULTS OF OPERATIONS

The following table sets forth selected operations data of the Company
expressed as a percentage of total revenue (except for operating expenses
which is expressed as a percentage of operating revenue and cost of
merchandise sold which is expressed as a percentage of merchandise sales) for
the periods indicated below:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
----------------------------- ----------------
1993 1994 1995 1995 1996
--------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Operating revenues ................. 75.7% 84.0% 78.8% 76.3% 80.0%
Merchandise sales .................. 24.3 16.0 21.2 23.7 20.0
Total revenue ...................... 100.0 100.0 100.0 100.0 100.0
Operating expenses ................. 112.8 78.9 67.5 78.0 83.7
Cost of merchandise sold ........... 71.7 73.5 67.5 69.9 68.1
Selling, general and administrative
expenses .......................... 23.4 8.6 10.0 19.8 19.1
Income (loss) from operations ..... (26.2) 13.3 22.5 4.2 0.3
Interest expense ................... (7.3) (4.9) (7.6) (5.2) (3.0)
Other income ....................... 4.0 0.3 0.6 1.2 5.9
Income (loss) before income taxes,
minority interest and
extraordinary item ................ (29.5) 8.7 15.5 0.2 3.2
Income tax expense (benefit) ...... -- (1.0) 5.4 0.1 1.1
Income (loss) before minority
interest and extraordinary item .. (29.5) 9.7 10.1 0.1 2.1
Minority interest in (income) loss 0.5 (2.0) -- -- --
Extraordinary item (net of tax
effect) ........................... -- -- (1.5) -- --
Net income (loss) .................. (29.0)% 7.7% 8.6% 0.1% 2.1%
</TABLE>

Three Months Ended March 31, 1996 Compared to Three Months Ended March 31,
1995

Results for the three months ended March 31, 1996 reflect the operations
of nine golf centers (Farmingdale, Elmsford and Syracuse, New York, Wayne,
New Jersey, Greenville, South Carolina, Duluth, Georgia, El Segundo and
Gilroy, California and Valley View, Ohio) for the full period, operations of
the Douglaston, New York and Alpharetta, Georgia golf centers (which were
undergoing renovation for one month) and the Henrietta, New York and Mesa,
Arizona golf centers for approximately two months, operations of the
Richmond, Virginia golf center (which was undergoing renovation for two
months) and the Virginia Beach, Virginia golf center for approximately one
month, operations of the Flemington, New Jersey golf center for less than one
month, and the pro shop and food service operations only of the Utica and
Queensbury, New York facilities. Results for the three months ended March 31,
1995 reflect the operations of the Farmingdale, Wayne and Elmsford golf
centers for the full period, operations of the indoor portion of the Syracuse
golf center for approximately two and one-half months, operations of the
Douglaston golf center for approximately half of the period, and pro shop
revenues only for the Utica golf center. As a result of the change in the
number of golf centers open from period to period, the comparison between the
1996 and 1995 periods may not necessarily be meaningful.

Total revenue for the three months ended March 31, 1996 was $3.4 million
as compared to $1.8 million for the same period in 1995, an increase of $1.6
million (89.0%). Total revenue for the four golf centers operating for the
three months ended March 31, 1996 and 1995 (Farmingdale, Wayne, Elmsford

<PAGE>

and Syracuse) decreased 12.5% to $1.4 million in the 1996 period from $1.6
million in the 1995 period. The overall increase in revenue is attributable
to having additional golf centers in operation during the 1996 period, as
described above, partially offset by a decrease in revenue at those
facilities open in both periods caused by severe winter conditions in the
Northeast region in 1996, relative to milder winter conditions in 1995.

Operating revenues, consisting of all sales except merchandise sales,
amounted to $2.7 million for the three months ended March 31, 1996, as
compared to $1.4 million for the comparable 1995 period, an increase of $1.3
million (98.0%). The increase in operating revenues was primarily
attributable to having additional golf centers in operation during the 1996
period.

Merchandise sales, consisting of golf clubs, balls, bags, gloves, videos,
apparel and related accessories, amounted to $671,000 for the three months
ended March 31, 1996 as compared to $422,000 for the comparable 1995 period,
an increase of $249,000 (59.0%). The increase in merchandise sales was
primarily due to the contribution of new locations added during 1995.

Operating expenses, consisting of operating wages and employee costs, land
rent, depreciation of golf driving range facilities and equipment, utilities
and all other facility operating costs, increased to $2.3 million (83.7% of
operating revenue) in the 1996 period from $1.1 million (78.0% of operating
revenue) in the 1995 period, an increase of $1.2 million (112.0%). The
increase in operating expenses was primarily due to the operating costs of
locations that were not operated by the Company during the 1995 period.
Operating expenses as a percentage of operating revenues increased to 83.7%
in 1996 from 78.0% in 1995 primarily due to a decrease in revenues as a
result of severe winter conditions in 1996 relative to 1995.

The cost of merchandise sold increased to $457,000 (68.1% of merchandise
sales) in the 1996 period from $295,000 (69.9% of merchandise sales) in the
comparable 1995 period. The overall increase in this cost of $162,000 (54.9%)
was primarily due to the higher level of merchandise sales. The decrease in
this cost as a percentage of merchandise sales was due to improved buying
techniques and volume discounts.

Selling, general and administrative expenses for the three months ended
March 31, 1996 amounted to $643,000 (19.1% of total revenue) compared to
$352,000 (19.8% of total revenue) in the comparable 1995 period, an increase
of $291,000 (83.0%), primarily due to the expenses associated with operating
additional golf centers.

Interest expense increased to $100,000 for the three months ended March
31, 1996 from $92,000 in the comparable 1995 period. Other income, primarily
interest income, increased to $197,000 in the 1996 period from $22,000 in the
1995 period. The increase in interest income is attributable to the receipt
and investment of proceeds from the Secondary Offering.

The Company had income before income taxes for the three months ended
March 31, 1996 of $107,000 as compared to income of $4,000 in the comparable
1995 period. Net income for the three months ended March 31, 1996 amounted to
$69,000 as compared to $2,000 for the comparable 1995 period.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Results for the year ended December 31, 1995 reflect the operations of the
Farmingdale and Elmsford, New York and the Wayne, New Jersey golf centers for
the full period, operations of the Douglaston, New York golf center (which
was undergoing renovation and was operating in a limited capacity for
approximately four of the 12 months), operations of the Syracuse, New York
golf center for approximately 12 months (although the outdoor portion of the
golf center was open for only six months), operations of the Utica, New York
golf center for approximately nine months, operations of the Greenville,
South Carolina golf center and the Queensbury, New York golf facility for
approximately eight months each, operations of the Richmond, Virginia and
Duluth and Alpharetta, Georgia golf centers for approximately five months,
four months and five months, respectively, and operations of El Segundo and
Gilroy, California and Valley View, Ohio for two months each. Results for the
year ended December 31, 1994 reflect the operations of the Farmingdale and
Wayne golf centers for the full period, operations of the Douglaston golf
center (which was undergoing renovation and was operating in a

<PAGE>

limited capacity for four months) and operations of the Elmsford golf center
for approximately five months. As a result of the change in the number of
facilities open from period to period, the comparison between 1995 and 1994
periods may not necessarily be meaningful. Revenue from the Farmingdale and
Wayne golf centers, which were the only golf centers open and not undergoing
substantial renovations for the full December 31, 1994 and 1995 periods,
increased from $3.7 million to $4.1 million during such periods, an increase
of 10.8%.

Total revenue for the year ended December 31, 1995 was $12.4 million as
compared to $6.4 million in 1994, an increase of $6.0 million (93.8%). The
overall increase in revenue was primarily attributable to having additional
golf centers in operation during the 1995 period.

Operating revenues amounted to $9.8 million as compared to $5.3 million,
an increase of $4.5 million (84.9%) for this period. The increase in
operating revenues was primarily attributable to having additional golf
centers in operation during the 1995 period.

Merchandise sales amounted to $2.6 million for 1995 as compared to $1.0
million for 1994. The increase in merchandise sales of $1.6 million (160.0%)
was due to the contribution of new locations to the 1995 period and the
increased emphasis placed by the Company on improving pro shop sales in the
1995 period, improved purchasing procedures and increased promotion.

Operating expenses increased to $6.6 million in 1995 from $4.2 million in
1994. The overall increase of $2.4 million (57.1%) was primarily due to the
operating costs of locations that were not open for all or part of 1994.
However, operating expenses as a percentage of operating revenues declined to
67.5% in 1995 from 78.9% in 1994 primarily due to the substantial increase in
revenues and relatively low corresponding incremental increases in certain
fixed or partially fixed costs, such as rent.

The cost of merchandise sold increased to $1.8 million (67.5% of
merchandise sales) in 1995 from $750,000 (73.5% of merchandise sales) in
1994. The overall increase in this cost of $1.05 million (140.0%) was
primarily due to the higher level of merchandise sales. The decrease in this
cost as a percentage of merchandise sales was due to improved buying
techniques and volume discounts.

Selling, general and administrative expenses in 1995 amounted to $1.2
million (10.0% of total revenue) as compared to $548,000 (8.6% of total
revenue) in 1994, an increase of $652,000 (119.0%), primarily due to an
increase in corporate staff, advertising and other expenses resulting from
the increase in the number of golf centers operating during 1995.

Interest expense increased to $939,000 in 1995 from $313,000 in 1994. The
increase was attributable to increased borrowings to fund the Company's
expansion, as well as a higher prime lending rate during 1995 as compared to
1994.

The Company had income, before income tax expense (benefit), an
extraordinary item and the Minority Interest, of $1.9 million for 1995 as
compared to $552,000 in 1994. The Company recognized an extraordinary charge
of $181,000 (net of taxes) in the fourth quarter of 1995. This extraordinary
item reflects the write-off of debt acquisition costs, net of income taxes,
arising from the repayment of certain bank debt using the proceeds of the
Secondary Offering. The Minority Interest in 1994 represents limited
partnership interests in Alley Pond Associates, L.P., a partnership which
operated the Douglaston, New York golf center. The Minority Interest was
acquired by the Company in December 1994. Net income, after income tax
expense (benefit), the extraordinary item and the Minority Interest, rose to
$1.1 million in 1995 as compared to $488,000 in 1994.

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

Results for 1994 reflect the operations of the Farmingdale, New York and
Wayne, New Jersey golf centers for the full year, operations of the
Douglaston, New York golf center (which was operating in a limited capacity
for approximately five months of the year) and operations of the Elmsford,
New York golf center for approximately five months of 1994. Results for 1993
reflect the operations of the Farmingdale golf center for the full year and
approximately five months of operations of the Wayne golf center. As a result
of the change in the number of golf centers open from period to period, the
comparison between 1994 and 1993 may not necessarily be meaningful.

<PAGE>

Total revenue for 1994 was $6.4 million as compared to $2.6 million for
1993, an increase of 141.7%. Operating revenues for 1994 amounted to $5.3
million as compared to $2.0 million for 1993. The overall increase in revenue
was primarily attributable to having additional golf centers in operation
during 1994, as described above, partially offset by the impact of severe
winter weather in the first three months of 1994.

Merchandise sales amounted to $1.0 million for 1994 as compared to
$639,000 for 1993. The increase in merchandise sales of $381,000 (59.6%) was
primarily due to strong pro shop sales at the Wayne golf center in 1994 and
the new locations added during 1994.

Operating expenses increased to $4.2 million in 1994 from $2.2 million in
1993. The increase of $2.0 million (87.6%) was primarily due to the
operations of the Wayne, Elmsford and Douglaston golf centers, which were not
open for most of 1993. However, operating expenses as a percentage of
operating revenues declined to 78.9% in 1994 from 112.8% in 1993 due to the
substantial increase in revenue and relatively low corresponding incremental
increases in certain fixed or partially fixed costs, such as rent. In 1993,
pre-opening expenses for the Wayne center, which had a delayed opening in
August of that year, resulted in a higher percentage of operating expenses to
operating revenues.

Cost of merchandise sold for 1994 increased to $750,000, representing
73.5% of merchandise sales in 1994 from $459,000, representing 71.7% of
merchandise sales in 1993. The increase of $291,000 was primarily due to the
higher merchandise sales, as well as a slight increase in the average cost of
goods sold. No single factor accounted for the change in gross margins from
1993 to 1994. Gross margins on merchandise sales were affected by local price
competition and the product mix of sales.

Selling, general and administrative expenses in 1994 amounted to $548,000
(8.6% of total revenue) as compared to $615,000 (23.4% of total revenue) in
1993, a decrease of $67,000, primarily due to the re-allocation of personnel
from corporate staff in 1993 to new operating locations in 1994. Interest
expense increased to $313,000 in 1994 from $192,000 in 1993. The increase was
attributable to borrowings to fund the Wayne, Elmsford and Douglaston golf
centers ($2.25 million, $2.5 million and $250,000, respectively), and
increases in the prime lending rate upon which most of the Company's bank
loans are based.

In 1994, the Company had net income of $617,000 before the Minority
Interest as compared to a loss of $775,000 in 1993. After giving effect to
the Minority Interest, the Company had net income of $488,000 for 1994 as
compared to a loss of $763,000 for 1993. A portion of the proceeds of the
IPO, which was completed on November 23, 1994, was used to purchase the
Minority Interest in December 1994.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1996, the Company had working capital of $13.0 million
compared to $20.6 million at December 31, 1995, which decrease was
principally due to the acquisition of golf facilities and capital
expenditures during the three months ended March 31, 1996.

The cash requirements of funding the Company's expansion have historically
exceeded cash flow from operations. Accordingly, the Company has satisfied
its capital needs primarily through debt and equity financings. The Company
currently anticipates that it will continue to satisfy its capital needs
through additional debt or equity financing until the Company has established
an adequate number of profitable golf centers to support its growth through
internal cash flow.

The Company's outstanding indebtedness as of June 10, 1996 of $13.75
million bears interest at fixed and variable rates currently ranging from
5.25% to 10.5%. The Company has an agreement with TaipeiBank, New York Agency
for a construction loan of up to $1.7 million for the development of the golf
facility at Henrietta, New York. This loan bears interest at the prime rate
plus 2% per annum, and is due May 14, 1997. As of June 10, 1996, the Company
had drawn down an aggregate amount of $1.5 million under this loan.

The Company has a $5.0 million revolving line of credit with Chemical
Bank. As of June 10, 1996, the Company had drawn down the entire $5.0 million
under this line of credit. Amounts outstanding under this credit line, as of
June 10, 1996, bear interest at prime plus 1.5%. After the application of the
net proceeds of the Offering, the Company will have no amounts outstanding
under this line of credit.

<PAGE>

The Company anticipates making substantial additional expenditures in
connection with the acquisition and opening of new golf facilities and
capital improvements to existing facilities. Golf center opening expenditures
primarily relate to projected golf center construction and opening costs,
associated marketing activities and the addition of personnel. From time to
time, the Company acquires, rather than leases, the land on which its golf
centers are located, which entails additional expenditures. Based on the
Company's experience with its existing golf centers, the Company believes
that the cost of opening or acquiring a golf center generally will not exceed
$3.5 million (exclusive of land costs). However, there can be no assurance
that golf center opening or acquisition costs will not exceed $3.5 million.
Golf center acquisition costs vary substantially depending on the location
and status of the acquired property (i.e., whether significant capital
improvements are necessary) and whether the Company acquires or leases the
related land. Land acquisition costs vary substantially depending on a number
of factors, including principally location. To the extent that the Company
acquires any golf courses, the Company may be required to make capital
improvements to these courses, depending again upon the location and status
of the acquired property. The cost of golf course acquisitions depends, to a
large extent, upon the price of the land and may substantially exceed the
anticipated cost of golf center acquisitions. The Company intends to make
capital improvements, estimated to aggregate approximately $3.5 million over
the next 12 months, including $3.0 million on recently acquired facilities.
The Company intends to utilize substantially all the net proceeds of the
Offering in connection with the acquisition and opening of golf facilities.
See "Use of Proceeds." In addition, in connection with the acquisition of
TPT, up to $2.0 million of additional purchase price will be payable if
certain operating income targets are achieved in 1996 and 1997. See "Business
- -- Recently Opened or Acquired Facilities -- The El Segundo and Gilroy Golf
Facilities" for a description of such contingent payments.

The Company believes that the net proceeds from the Offering, cash flow
from operations and its revolving credit facility with its primary lender
will be sufficient to finance the Company's currently contemplated expansion
plans for at least the next 12 months.

Management does not believe that recently issued accounting standards will
have a material impact on the Company's financial statements when adopted by
the Company.

EFFECT OF RECENTLY ACQUIRED FACILITIES

On a pro forma basis, as adjusted to give effect to acquisitions
consummated after January 1, 1995 as if they had occurred as of January 1,
1995, the Company had a net loss before extraordinary item of $435,000 (as
compared to income before extraordinary item of $1.3 million on a historical
basis) for the year ended December 31, 1995 and a net loss of $63,000 (as
compared to net income of $69,000 on a historical basis) for the three months
ended March 31, 1996. Although the recently acquired facilities have
adversely affected income on a pro forma basis, the Company believes that it
will be able to (i) enhance revenues at such facilities by adding amenities
including enclosed hitting areas, token-based automated range-ball dispensing
machines, full-line pro shops, miniature golf courses and par-3 golf courses
and (ii) reduce expenses by economies of scale achieved through centralized
purchasing, accounting, management information systems and cash management.
There can be no assurance, however, that the Company will be able to improve
the performance of newly-acquired facilities. See "Risk Factors--Expansion
Strategy."

The Company expects to spend approximately $3.0 million over the next 12
months on recently acquired facilities for capital improvements. Of such
amount, the Company expects that approximately $1.0 million will be used at
the Duluth, Georgia facility to build a par-3 golf course, shelter the
driving range, add a miniature golf course and expand the clubhouse to add a
pro shop. An aggregate of approximately $2.0 million is expected to be used
for facility improvements at the Valley View, Ohio, Greenville, South
Carolina, Glen Allen, Virginia, Alpharetta, Georgia, Virginia Beach,
Virginia, Mesa, Arizona, Flemington, New Jersey, Yorktown Heights, New York
golf centers.

SEASONALITY

Historically, the second and third quarters have accounted for a greater
portion of the Company's operating income than have the first and fourth
quarters of the year. This is primarily due to an outdoor

<PAGE>

playing season limited by inclement weather. Although most of the Company's
facilities are designed to be all-weather, portions of the facilities, such
as miniature golf courses which are outdoors, tend to be vulnerable to
weather conditions. One of the Company's golf centers and one golf course are
closed during a portion of the winter. Also, golfers are less inclined to
practice when weather conditions limit their ability to play golf on outdoor
courses. The Company believes that its recent expansion of operations into
areas (Arizona, California, Florida, Georgia, Virginia) where inclement
weather may have less of an impact on the outdoor playing season than in the
Northeast may mitigate to some extent this seasonal pattern. Nonetheless,
this seasonal pattern, as well as the timing of new golf facility
acquisitions and openings, may cause the Company's results of operations to
vary significantly from quarter-to-quarter. Accordingly, period-to-period
comparisons are not necessarily meaningful and should not be relied on as
indicative of future results.

INFLATION

There was no significant impact on the Company's operations as a result of
inflation during 1993, 1994, 1995 or the three months ended March 31, 1996.

<PAGE>

BUSINESS

GENERAL

The Company operates golf centers designed to provide a wide variety of
practice opportunities, including facilities for driving, chipping, putting,
pitching and sand play. In addition, the Company's golf centers typically
offer golf lessons instructed by PGA-certified golf professionals, full-line
pro shops and other amenities to encourage family participation. The Company
currently owns, leases or manages 24 golf facilities, comprised of 17 golf
centers and seven combination golf center golf course facilities located in
ten states. Of the golf centers, seven are currently operated under the name
"Golden Bear Golf Centers." Of the seven combination golf center and golf
course facilities, six include par-3 golf courses, generally designed to
facilitate the practice of golf, and one includes a regulation 18-hole golf
course. The Company has experienced significant recent growth, primarily
through the opening or acquisition of 20 facilities since the IPO in November
1994. The Company's total revenue increased from $1.9 million in 1992 to
$12.4 million for the year ended December 31, 1995. During the same period,
the Company's net income increased from a net loss of $22,000 to a net profit
of $1.1 million.

The Company believes that it attracts customers to its golf centers
primarily due to the quality, convenience and comfort of its facilities and
their appeal to the whole family. The Company's golf centers are designed
around a driving range with target greens, bunkers and traps to simulate golf
course conditions. The ranges are lighted to permit night play, the hitting
tees are enclosed or sheltered from above and from the rear in a
climate-controlled environment and, in three cases, all or a portion of the
range is enclosed under an air inflated dome to permit all-weather play.
There are approximately 80 to 100 hitting tees in facilities with the
two-tier design and approximately 30 to 60 hitting tees at smaller golf
centers. In addition to the driving range, the Company's golf centers include
a number of amenities designed to appeal to golfers and their families, such
as a 4,000-6,000 square foot clubhouse (including a full-line pro shop,
locker facilities, a restaurant or snack bar and video games), PGA-certified
golf instructors, landscaped 18-hole miniature golf courses and a short game
practice area (including putting green and sand traps). The Company's pro
shops are stocked with clubs, bags, shoes, apparel, videos and related
accessories from a number of suppliers, including brand name manufacturers
such as Karsten Manufacturing Corporation (Ping), Callaway Golf Company,
Tommy Armour Golf, Wilson Golf Company, Mizuno Golf Company, Spalding Sports
Worldwide, Titleist and Footjoy Worldwide (Division of American Brands,
Inc.), Ashworth Clothing Company and Nicklaus Golf Equipment Company.

INDUSTRY OVERVIEW

According to the NGF, there were approximately 25 million golfers in the
United States in 1995. The average age of the golf driving range user was
37.1 years old, with an average household income of $55,700 per year. Those
with household income in excess of $75,000 (approximately 35% of all
stand-alone range users), were the most likely to visit a stand-alone range,
visiting 3.7 times more frequently than those with household income of less
than $30,000 (19% of all stand-alone range users) and 1.5 times more
frequently than those with household incomes between $30,000 and $75,000 (46%
of all stand-alone range users).

According to the Golf Range and Recreational Association there are
currently between 1,900 and 2,300 stand-alone driving ranges in the United
States. Most of the Company's golf centers, the smallest of which has 20 tee
stations, are larger than those generally found in the industry. The average
number of tee stations per range in the industry in 1993, as estimated by the
NGF, was 40, with 50% of all stand-alone ranges offering 35 or fewer tee
stations. Large stand-alone ranges, defined as ranges with more than 50 tee
stations, accounted for approximately 21% of all facilities. The stand-alone
range industry is highly fragmented. The NGF estimates that in 1993 92% of
stand-alone ranges were managed by owner- operators. The Company believes
that many of these owner-operated ranges are managed by individuals who may
lack the experience, expertise and financial resources to compete
effectively.

BUSINESS STRATEGY

The Company's business strategy is to grow revenue and net income by (i)
increasing the number of golf centers it owns, leases or manages through (a)
identifying and acquiring well-located ranges that have

<PAGE>

the potential for improvement under better management and with improved or
expanded facilities, including the addition of enclosed hitting areas,
full-line pro shops, miniature golf courses and other amenities and (b)
building new centers in locations where suitable acquisition opportunities
are not available and (ii) seeking to realize economies of scale through
centralized purchasing, accounting, management information systems and cash
management.

Acquire Existing Ranges and Centers. The Company believes the highly
fragmented driving range industry presents numerous opportunities for it to
acquire, upgrade and renovate golf centers and driving ranges. The Company's
acquisition strategy is to target well-located, underperforming stand-alone
ranges or golf centers in stable communities with favorable demographics,
generally in close proximity to upscale urban and suburban areas which
generally contain the highest concentration of golfers. The Company
anticipates that it will purchase the land and facilities of the properties
it acquires but may from time to time enter into long-term leases or
contracts to manage sites where the Company determines ownership to be
uneconomical or where the facilities are not for sale, such as those owned by
municipalities. In determining which facilities may be suitable acquisition
candidates, management conducts demographic and competitive analyses and
considers such factors as ease of access, visibility from major thoroughfares
and potential for improvement in revenue and operating cash flow through
capital improvements. The Company has three full-time acquisition and
development professionals who are responsible for strategic planning and
project management. These professionals work together with various outside
consultants who are familiar with the Company's demographic requirements and
are knowledgeable about the current opportunities in the various real estate
markets.

After taking operating control of an acquired range, the Company may
commence various capital improvements to conform the acquired range to the
Company's individually tailored development plan for that site. Capital
improvements may include increasing the number of tee stations, sheltering
the hitting stations or enclosing the driving range, installing lights to
permit night play, adding or expanding pro shop and clubhouse facilities and
constructing miniature golf courses and other amenities to encourage family
participation. The Company trains the staff of newly acquired golf centers in
accordance with the standards of existing facilities, and directs the general
manager of the site to report to one of the Company's five Regional Managers.
The Company also usually installs operational controls, including a
token-based system for dispensing range balls, centralized cash management
and management information systems, which allow the Company to centrally
track the operations of each facility from its headquarter offices.

Develop New Centers. In locations where suitable acquisition opportunities
are not available or where the Company determines ownership is not
economically feasible, the Company intends to lease land on which it will
build new golf centers similar to those currently operated by the Company. To
date, the Company has built five of its facilities. Based upon its
experience, the Company anticipates that under normal conditions construction
of a facility will take approximately four months to complete and can be
achieved at a total cost of less than $3.5 million, exclusive of the cost of
land. However, there can be no assurance that the Company will be able to
continue to construct its facilities in such time periods or for such cost.
The Company has the expertise and the personnel to act as its own general
contractor and intends to subcontract the construction of its centers to
third parties.

Economies of Scale. The Company believes that by virtue of its size, the
Company will continue to take advantage of quantity discounts on equipment
and golf merchandise sold through its pro shops. All accounting, insurance,
cash management, finance and human resource functions are monitored centrally
at the Company's headquarters. In markets where the Company has or attains a
substantial presence, the Company believes that it will be able to take
advantage of various advertising media to promote attendance at its
facilities.

The Company believes that the net proceeds from the Offering and its
revolving credit facility with its primary lender will afford the Company
greater financial flexibility and access to capital resources to pursue its
business strategy.

<PAGE>

GOLF FACILITIES

The Company currently owns, leases or manages 24 golf facilities in ten
states. Set forth below is information concerning each of them:

<TABLE>
<CAPTION>
SIZE OF
PROPERTY MINIATURE
(APPROXIMATE PGA CERTIFIED PRO GOLF
LOCATION OF FACILITY TYPE OF FACILITY ACRES) INSTRUCTORS SHOP COURSES
- -------------------- ---------------------------- ------------- ------------- ------ -----------
<S> <C> <C> <C> <C> <C>
FARMINGDALE, NY GOLDEN BEAR GOLF CENTER 13 X X ONE
WAYNE, NJ GOLDEN BEAR GOLF CENTER 16 X X TWO
DOUGLASTON, NY GOLDEN BEAR GOLF CENTER 12 X X ONE
ELMSFORD, NY GOLDEN BEAR GOLF CENTER 27 X X TWO
UTICA, NY FAMILY GOLF CENTER 18 X X ONE
CLAY, NY GOLDEN BEAR GOLF CENTER 23 X X ONE
(NEAR SYRACUSE)
QUEENSBURY, NY FAMILY GOLF CENTER AND 200 X X --
(NEAR ALBANY) 18-HOLE GOLF COURSE
GREENVILLE, SC FAMILY GOLF CENTER 24 X X ONE(3)
GLEN ALLEN, VA FAMILY GOLF CENTER 10 X X ONE
(NEAR RICHMOND)
DULUTH, GA FAMILY GOLF CENTER(4) 56 X X ONE(3)
(NEAR ATLANTA)
ALPHARETTA, GA FAMILY GOLF CENTER 26 X X TWO
(NEAR ATLANTA)
EL SEGUNDO, CA GOLDEN BEAR GOLF CENTER AND 28 X X --
PAR-3 GOLF COURSE
GILROY, CA FAMILY GOLF CENTER AND PAR-3 36 X X --
GOLF COURSE
VALLEY VIEW, OH FAMILY GOLF CENTER 19 X X ONE(3)
(NEAR CLEVELAND)
HENRIETTA, NY GOLDEN BEAR GOLF CENTER 28 X X ONE(3)
MESA, AZ FAMILY GOLF CENTER AND PAR-3 39 X X --
GOLF COURSE
VIRGINIA BEACH, VA FAMILY GOLF CENTER AND PAR-3 81 X X --
GOLF COURSE
FLEMINGTON, NJ FAMILY GOLF CENTER 17 X X TWO
YORKTOWN HEIGHTS, NY FAMILY GOLF CENTER 14 X X --
INDIAN RIVER, VA FAMILY GOLF CENTER 14 X X ONE
(NEAR NORFOLK)
TUCSON, AZ FAMILY GOLF CENTER 18 X X(3) ONE(3)
FAIRFIELD, OH FAMILY GOLF CENTER 24 X X ONE
(NEAR CINCINNATI)
ST. LOUIS, MO FAMILY GOLF CENTER AND PAR-3 42 X X ONE
GOLF COURSE
WEST PALM BEACH, FL FAMILY GOLF CENTER AND PAR-3 32 X X ONE
Golf Course

[TABLE RESTUBBED FROM ABOVE]
NO. OF OWNED, DATE OPENED
HITTING LEASED OR OR
LOCATION OF FACILITY TYPE OF FACILITY TEES MANAGED ACQUIRED(1)
- -------------------- ---------------------------- --------- ------------ ------------
<S> <C> <C> <C> <C>
FARMINGDALE, NY GOLDEN BEAR GOLF CENTER 80 LEASED MARCH 1992
WAYNE, NJ GOLDEN BEAR GOLF CENTER 80 LEASED JULY 1993
DOUGLASTON, NY GOLDEN BEAR GOLF CENTER 70 MANAGED(2) DEC. 1993
ELMSFORD, NY GOLDEN BEAR GOLF CENTER 80 LEASED JULY 1994
UTICA, NY FAMILY GOLF CENTER 60 LEASED DEC. 1994
CLAY, NY GOLDEN BEAR GOLF CENTER 132 LEASED JAN. 1995
(NEAR SYRACUSE)
QUEENSBURY, NY FAMILY GOLF CENTER AND 40 OWNED MAY 1995
(NEAR ALBANY) 18-HOLE GOLF COURSE
GREENVILLE, SC FAMILY GOLF CENTER 100 OWNED MAY 1995
GLEN ALLEN, VA FAMILY GOLF CENTER 50 OWNED AUG. 1995
(NEAR RICHMOND)
DULUTH, GA FAMILY GOLF CENTER(4) 60 OWNED AUG. 1995
(NEAR ATLANTA)
ALPHARETTA, GA FAMILY GOLF CENTER 60 OWNED AUG. 1995
(NEAR ATLANTA)
EL SEGUNDO, CA GOLDEN BEAR GOLF CENTER AND 58 MANAGED(5) NOV. 1995
PAR-3 GOLF COURSE
GILROY, CA FAMILY GOLF CENTER AND PAR-3 20 LEASED NOV. 1995
GOLF COURSE
VALLEY VIEW, OH FAMILY GOLF CENTER 130(6) OWNED/ LEASED NOV. 1995
(NEAR CLEVELAND)
HENRIETTA, NY GOLDEN BEAR GOLF CENTER 132(7) LEASED JAN. 1996
MESA, AZ FAMILY GOLF CENTER AND PAR-3 80 OWNED FEB. 1996
GOLF COURSE
VIRGINIA BEACH, VA FAMILY GOLF CENTER AND PAR-3 36 LEASED MARCH 1996
GOLF COURSE
FLEMINGTON, NJ FAMILY GOLF CENTER 67 OWNED MARCH 1996
YORKTOWN HEIGHTS, NY FAMILY GOLF CENTER 54 OWNED APRIL 1996
INDIAN RIVER, VA FAMILY GOLF CENTER 60 LEASED MAY 1996
(NEAR NORFOLK)
TUCSON, AZ FAMILY GOLF CENTER 50 OWNED JUNE 1996
FAIRFIELD, OH FAMILY GOLF CENTER 68 LEASED JUNE 1996
(NEAR CINCINNATI)
ST. LOUIS, MO FAMILY GOLF CENTER AND PAR-3 100 LEASED JUNE 1996
GOLF COURSE
WEST PALM BEACH, FL FAMILY GOLF CENTER AND PAR-3 40 OWNED JUNE 1996
Golf Course

</TABLE>

- ------------
(1) Represents the first month that the facility generated revenue for the
Company.

(2) The Company manages the facility pursuant to a management contract with
the City of New York. The management agreement terminates on December
31, 2006, but is terminable by the City of New York at will.

(3) Under development.

(4) The Company has commenced construction of an par-3 executive golf
course adjacent to its golf center which it intends to have completed
by November 1996.

(5) The Company manages the facility pursuant to a management agreement
with the City of El Segundo, California. The management agreement
terminates on June 30, 1998 but is terminable earlier by either party,
with or without cause, at the end of each operating year during the
term of the management agreement, upon at least 90 days prior written
notice.

(6) The Company owns a 5-acre parcel which includes an enclosed dome with
50 hitting tees and leases the adjacent 14-acre parcel on which it is
constructing an outdoor driving range consisting of 80 hitting tees, a
miniature golf course and short game practice area.

(7) In January 1996, the Company opened the domed portion of this golf
center which encloses 50 hitting tees. The Company has commenced
construction of an outdoor driving range consisting of 82 hitting tees,
a minature golf course and short game practice area.

<PAGE>

The Golf Centers

The Company's typical golf center is designed around a driving range
landscaped with target greens, bunkers and traps to simulate golf course
conditions. The Company's larger centers, such as the ones in Elmsford,
Syracuse, Henrietta and Farmingdale, New York and Wayne, New Jersey include
approximately 80 to 100 hitting tees in a two-tier design. Smaller golf
centers include approximately 30 to 60 hitting tees. The ranges are generally
open from 8:00 a.m. to 11:00 p.m. and are lighted to permit night play. The
hitting tees are enclosed or sheltered from above and from the rear in a
climate-controlled environment and, in three cases, all or a portion of the
range is enclosed under an air inflated dome, to permit all-weather play.
Tokens are sold to driving range customers at each of the Company's golf
centers. These tokens are deposited by customers in machines which dispense
precise amounts of golf balls, thus allowing the Company to monitor closely
its cash receipts for buckets of balls and provides inventory assessment
information.

In addition to the driving range, the Company's golf centers generally
include a 4,000-6,000 square foot clubhouse, including a full-line pro shop
and locker facilities, landscaped 18-hole miniature golf courses, and a short
game practice area (with putting green and sand traps) and PGA-certified golf
instructors. As part of the Company's strategy to encourage family
participation, the Company's golf centers include amenities such as miniature
golf courses, restaurants and snack bars (three of which are operated by
Friendly Ice Cream Corporation under the "Friendly's" name), video games and
batting cages.

Most of the Company's recently acquired golf centers are undergoing or
expected to undergo capital improvement programs to add certain amenities.
Golf center design is affected by the size, shape and other characteristics
of available site locations, weather patterns, zoning requirements,
availability of capital and market conditions.

The Company's pro shops are stocked with clubs, bags, shoes, apparel,
videos and related accessories from a number of suppliers, including brand
name manufacturers such as Karsten Manufacturing Corporation (Ping), Callaway
Golf Company, Tommy Armour Golf, Wilson Golf Company, Mizuno Golf Company,
Spalding Sports Worldwide, Titleist and Footjoy Worldwide (Division of
American Brands, Inc.), Ashworth Clothing Company and Nicklaus Golf Equipment
Company. Each pro shop is staffed with at least one sales person and one of
the Company's PGA-certified instructors.

The Golf Courses

Since the IPO in November 1994, the Company has acquired one regulation
18-hole golf course (Queensbury, New York) and six par-3 practice golf
courses (Mesa, Arizona, Virginia Beach, Virginia, El Segundo and Gilroy,
California, St. Louis, Missouri and West Palm Beach, Florida). The Company
has commenced construction of a par-3 golf course, adjacent to a driving
range at its Duluth, Georgia facility.

The 200-acre, 18-hole regulation golf course at Queensbury, New York,
known as the Hiland Golf Club, has a restaurant and catering facility to
accommodate large parties and weddings, a clubhouse, a full-line pro shop, a
driving range and PGA-certified golf instructors on site.

Each of the par-3 golf courses at Mesa, Arizona, St. Louis, Missouri and
West Palm Beach, Florida has a clubhouse, a full-line pro shop and a driving
range. The par-3 golf course in Virginia Beach, Virginia known as the "Owl's
Creek Golf Course," has a clubhouse, a pro shop, a driving range and a
putting course. Each of these golf courses have PGA-certified golf
instructors on site.

Each of the par-3 practice golf courses in California, one of which is
part of a Golden Bear Golf Center, has a clubhouse, a pro shop, a driving
range and PGA-certified golf instructors on site.

The Company's strategy is to acquire golf courses in areas where it owns
or operates or, intends to own or operate, golf centers so that it has
available a golf course on which to: (i) train its golf instructors so that
they may become PGA-certified and (ii) provide full golf packages and
complete instruction to driving range customers.

<PAGE>

OPERATIONS

The Company currently has golf facilities located in five regions (the New
York City region, the Northern region, the Southeast region, Mid-Atlantic
region and the Western region), each of which is managed by a Regional
Manager. Each golf facility has a general manager who reports to a Vice
President-Regional Manager, one to two assistant managers, a head golf
professional, up to four PGA-certified professionals who instruct golfers,
approximately five full-time staff members and approximately 13 to 20
part-time employees, depending on the season.

Day-to-day responsibility for operation of the Company's golf centers
resides with the general managers. General managers have overall
administrative responsibility for golf center operations, including the
driving range, miniature golf courses, short game practice area, pro shop and
snack bar concession, as well as the condition of the facilities. In
addition, general managers work with the Vice President-Regional Managers to
prepare monthly and annual budgets and marketing plans.

The Company places great importance on recruiting and training skilled
personnel. A majority of the golf instructors are PGA-certified. In addition,
a majority of the general managers have managed or were assistant managers at
other golf centers or courses prior to being hired by the Company. Regional
managers and general managers, as well as other management personnel, are
provided performance incentives such as stock options and bonuses.

The Company emphasizes customer service. Employees undergo a comprehensive
training program where they are instructed, among other things, to be
courteous, wear standardized clothing and display a professional attitude.
The Company believes that excellent customer service is second in importance
only to the quality of the golf facilities.

By virtue of operating a number of golf facilities, the Company believes
it achieves economies of scale not available to smaller operators. Typically,
the Company can acquire artificial turf, range balls, pro shop merchandise
and other golf center supplies and equipment at lower prices than could an
individual operator. The Company can also purchase insurance coverage at a
lower premium rate than would be charged for an individual golf center. The
Company's corporate policies relating to personnel, labor, cash management
and budgets are formulated at the Company's headquarters and provided to each
of the Company's golf facilities. The Company's accounting, legal, insurance
and finance functions and management information systems are also
centralized. This centralization enables personnel at a golf center to focus
on matters relating to the performance of the particular golf center.

Management information services are important to the successful operation
of the Company's golf centers. The Company's management information system
provides for a centralized purchasing program, financial performance and
other key operating data for all golf facilities. This system allows the
Company to review data on a regular basis and enables the identification of
potential problems.

The Company advertises in newspapers and on radio and cable television and
uses direct mailings and other promotions, including sponsoring certain
charitable events, holding contests and giving free clinics and equipment
demonstrations, to increase consumer awareness of its golf facilities. The
Company incurred advertising expenses of $73,000 and $207,000 for the years
ended December 31, 1994 and 1995, respectively. The Company believes
advertising plays an important role in attracting golfers to its facilities
and, in this connection, recently hired a director of marketing to direct the
Company's marketing efforts. Pursuant to the License Agreement, the Licensor
retains the right to approve advertising and other material using the "Golden
Bear" name and logo.

RECENTLY OPENED OR ACQUIRED FACILITIES

Since the IPO in November 1994, the Company has opened or acquired 20 golf
facilities, including one regulation 18-hole golf course and six combination
golf center and par-3 golf course facilities. The newly opened or acquired
centers are located in Syracuse, Henrietta, Yorktown Heights and Utica, New
York, Flemington, New Jersey, Greenville, South Carolina, Glen Allen,
Virginia (near Richmond), Indian River, Virginia, (near Norfolk), Alpharetta
and Duluth, Georgia (both of which are near Atlanta) Tucson, Arizona, and
Valley View (near Cleveland), and Fairfield (near Cincinnati), Ohio. The
regulation golf

<PAGE>

course is located in Queensbury, New York, the par-3 golf course is located
in Virginia Beach, Virginia and the combination golf center and par-3 golf
course facilities are located in Mesa, Arizona, El Segundo and Gilroy,
California, St. Louis, Missouri and West Palm Beach, Florida. The Company has
commenced construction of a par-3 golf course on land adjacent to the Duluth,
Georgia golf center which it intends to have completed by November 1996.

The consideration paid by the Company to acquire each golf facility has
been based on a number of factors, including appraisals of the acquired
facility, the location and demographics of the facility and the Company's
evaluation of the prospects of improving the facility's performance. None of
the proceeds of the Offering are being used to finance any of the
acquisitions described below.

The Syracuse Golf Center

On October 18, 1994, the Company entered into a long-term lease for
approximately 23 acres of vacant land in Clay, New York (near Syracuse). The
Company immediately commenced construction of a Golden Bear Golf Center
consisting of an indoor domed driving range, an outdoor driving range, a
miniature golf course, pro shop, clubhouse and restaurant. The Company
completed and opened the domed driving range in January 1995 and the outdoor
range and other amenities in July 1995.

The Utica Golf Center

On December 7, 1994, the Company entered into a long-term lease for
approximately 18 acres of land in Utica, New York on which there was an
existing golf center. The Utica golf center was opened in March 1995.

The Greenville Golf Center

On May 1, 1995, the Company acquired Pelham Enterprises, Inc. ("Pelham"),
an entity that owned a 24-acre golf center in Greenville, South Carolina. The
purchase price consisted of: (i) $512,000 in cash to satisfy certain debts of
Pelham, all of which was derived from the Company's line of credit with
Chemical Bank, (ii) a promissory note in favor of the sole stockholder of
Pelham in the principal amount of $230,727 and (iii) 90,000 shares of Common
Stock of the Company, which as of May 1, 1995 had an aggregate market value
of $573,750, based on the last sale price of $6 3/8 per share as reported by
the Nasdaq National Market. The note and the $818,000 mortgage of the land
upon which the Greenville golf center is located, which bore interest at the
prime rate and 7.5% (as of May 1, 1995), respectively, were repaid using a
portion of the net proceeds of the Secondary Offering.

The Queensbury Golf Facility

On May 16, 1995, the Company acquired certain assets located in
Queensbury, New York, from Evergreen Bank, N.A. for $3.75 million in cash, of
which $750,000 was derived from the Company's line of credit with its primary
lender and $3.0 million was loaned to the Company by Orix USA Corporation and
secured by a mortgage on the property on which the Queensbury golf facility
is located. The acquired assets included (i) all of the real property used
and operated as the "Hiland Golf Club," consisting of a 200-acre, 18-hole
regulation golf course and clubhouse and (ii) certain equipment, fixtures and
personal property used in connection with the operation of Hiland Golf Club,
including the use of the name "Hiland Golf Club."

The Glen Allen Golf Center

On August 25, 1995, the Company consummated the purchase of RFC
Enterprises, Inc. ("RFC"), an entity that owned a golf center located on 10
acres in Glen Allen, Virginia (near Richmond). The purchase price consisted
of: (i) $454,000 in cash to satisfy certain debts of RFC, of which $4,000 was
derived from the Company's working capital and $450,000 was derived from the
Company's line of credit with its primary lender and (ii) 7,500 shares of
Common Stock of the Company (3,750 of which have been placed in escrow for
one year to satisfy indemnification claims of the Company, if any) which as
of August 25, 1995 had an aggregate market value of $131,250, based on the
last sale price of $17 1/2 per share as reported

<PAGE>

by the Nasdaq National Market. At August 25, 1995, the land upon which the
Richmond golf center is located was subject to a $170,000 mortgage, due
December 12, 1996, and bearing interest at 10% per annum. The mortgage was
repaid with a portion of the net proceeds from the Secondary Offering. Under
certain circumstances, the Company may have to pay additional consideration
if the market price of the Company's Common Stock is less than $10.00 per
share on August 25, 1997.

The Duluth Golf Center

On August 28, 1995, the Company consummated the purchase of 56 acres of
land in Duluth, Georgia (near Atlanta) on which it has begun construction of
a par-3 golf course adjacent to the existing driving range, which it intends
to complete by November 1996. The purchase price consisted of: (i) $500,000
in cash, all of which was derived from the Company's line of credit with its
primary lender, (ii) a mortgage note in the principal amount of $1.6 million,
bearing interest at the prime rate, payable on August 28, 2000, and (iii) a
promissory note in the principal amount of $1.0 million, due on August 28,
1997 in cash or Common Stock, at the Company's option, and bearing interest
at 8% per annum.

The Alpharetta Golf Center

On September 28, 1995, the Company consummated the purchase from Upper
Hembree Partners, L.P. of 26 acres of land in Alpharetta, Georgia (near
Atlanta) on which there is an existing golf center. The purchase price
consisted of: (i) 85,000 shares of the Common Stock of the Company (which as
of September 28, 1995 had an aggregate market value of approximately $1.52
million, based on the last sale price of $17 7/8 per share as reported by the
Nasdaq National Market), (ii) an option to purchase up to 8,500 shares of the
Company's Common Stock (which was subsequently reduced to an option for 8,280
shares of Common Stock, in accordance with the terms of the purchase
agreement) at an exercise price of $25.00 per share and (iii) $53,000 in
cash, all of which was derived from the Company's working capital. The option
expires on September 28, 2000. At September 28, 1995, the property was
subject to a $1.8 million mortgage, due November 1, 1996, and bearing
interest at 9.8% per annum. The Company also loaned the seller $35,000, which
loan was repaid in February 1996 by the transfer by the seller to the Company
of 2,200 shares of Common Stock, in accordance with the terms of the purchase
agreement.

The Valley View Golf Center

On November 8, 1995, the Company consummated the purchase from Golf
Masters Limited Partnership and Air Dome Limited Partnership of a five-acre
property in Valley View, Ohio (near Cleveland) (the "Valley View Golf
Center") on which there is a domed indoor driving range. The purchase price
consisted of: (i) 101,800 shares of the Common Stock of the Company, (33,934
of which have been placed in escrow for one year to satisfy indemnification
claims of the Company, if any), which as of November 8, 1995 had an aggregate
market value of approximately $1.4 million, based on the last sale price of
$14.00 per share as reported by the Nasdaq National Market, (ii) an option to
purchase up to 10,000 shares of the Company's Common Stock at an exercise
price of $25.00 per share and (iii) $299,000 in cash, all of which was
derived from funds made available to the Company by its primary lender. The
option expires on November 8, 2000. At November 1, 1995, the property was
subject to a $342,000 mortgage, due September 1997, and bearing interest at
the greater of 8% per annum and 1% over National City Bank's base rate. The
mortgage was repaid using a portion of the net proceeds of the Secondary
Offering. On November 8, 1995, the Company entered into a 15-year lease with
two five-year renewal options for 14 acres of land adjacent to the five-acre
Valley View property. The Company has commenced construction of an outdoor
driving range, miniature golf course and short game practice area on such
leased property.

The El Segundo and Gilroy Golf Facilities

On November 8, 1995, the Company acquired TPT. TPT operates a combination
Golden Bear Golf Center and golf course facility in El Segundo, California
and a combination golf center and par-3 golf course facility in Gilroy,
California pursuant to a management contract and a lease, respectively. The
purchase price consisted of $4.0 million (payable in the form of a note which
became due and was paid

<PAGE>

upon the closing of the Secondary Offering) and up to $2.0 million of
additional purchase price payable upon the achievement of certain operating
income targets. The contingent purchase price in respect of the year ending
December 31, 1996 will be determined by multiplying $1.0 million by the
lesser of (i) 1.0 and (ii) the number obtained by dividing the OIBITA (as
defined below) during such year by $500,000 (the "1996 Multiplier"). The
contingent purchase price in respect of the year ending December 31, 1997
will be determined by multiplying $1.0 million by the lesser of (i) 1.0 and
(ii) the number obtained by dividing the OIBITA during such year by $1.0
million (the "1997 Multiplier"). If the 1997 Multiplier is higher than the
1996 Multiplier, then the former TPT shareholders will also be entitled to
receive an amount equal to (a) the amount which they would have been entitled
to receive in respect of 1996 if the 1996 Multiplier had been as high as the
1997 Multiplier less (b) the contingent amount, if any, that they received in
respect of 1996.

For purposes of the preceding paragraph, "OIBITA" for any year shall mean
the operating income before interest, taxes and depreciation or amortization,
determined in accordance with generally accepted accounting principles
consistently applied, generated by all golf facilities owned by the Company
and located west of the Mississippi River. Dominic Chang and Krishnan Thampi,
officers and directors of the Company, owned 65% and 5% of TPT, respectively,
and received 65% and 5% of the consideration, respectively, from the
acquisition of TPT. The Company received an opinion from the investment
banking firm of Houlihan Lokey Howard & Zukin ("Houlihan Lokey") that the
consideration to be paid by the Company for TPT was fair from a financial
point of view. The acquisition of TPT was approved unanimously by the
disinterested members of the Company's Board of Directors. In addition to the
opinion of Houlihan Lokey, such Board members also considered a number of
factors, including (i) the elimination of potential conflicts of interest,
(ii) the opportunity to expand operations to the West Coast, (iii) the
location and prospects of the golf facilities operated by TPT, (iv) the cost
of establishing golf facilities comparable to those operated by TPT, (v) the
operating history of TPT compared with the operating history of the Company's
East Coast facilities at a comparable stage of development, (vi) the
potential improvement in TPT's performance due to the elimination of
duplicative administrative expenses, (vii) TPT's current financial condition
and (viii) the opportunity to acquire TPT for less than the Company believed
it would pay if it exercised its option to purchase TPT in 1998. Such option
gave the Company the right to acquire TPT, commencing on January 1, 1998 or
earlier if TPT had at least $1.0 million of net income, for 12.5 times TPT's
after tax income, payable in Common Stock. See "Certain Relationships and
Related Transactions."

The Henrietta Golf Center

On October 10, 1995, the Company entered into a 25-year lease with three
five-year renewal options for 28 acres of land in Henrietta, New York on
which the Company is constructing a Golden Bear Golf Center. Pursuant to the
lease, the rental cost will be $110,000 per year for the first five years of
the lease, $125,000 per year for the sixth through tenth year of the lease
and thereafter would increase 15% every five years. The Company opened the
domed portion of the golf center in January 1996.

The Mesa Golf Center

On February 20, 1996, the Company consummated the purchase from Rowley
Properties Limited Partnership, an Arizona limited partnership, of a 39-acre
parcel of property in Mesa, Arizona on which there is an existing golf
recreational facility, including a par-3 golf course.

The Virginia Beach Golf Facility

On March 6, 1996, the Company acquired from Owl's Creek Golf Center, Inc.
its long-term leasehold interests in an 81-acre parcel of property in
Virginia Beach, Virginia on which there is an existing golf recreational
facility, including a par-3 golf course.

The Flemington Golf Center

On March 7, 1996, the Company consummated the purchase from Flemington
Equities VII of a 17-acre parcel of property in Flemington, New Jersey on
which there is an existing golf recreational

<PAGE>

facility. Concurrently, the Company consummated the purchase from Flemington
Golf and Sports Center, LLC of certain equipment, fixtures and other property
used in connection with the operation of this golf center.

The Yorktown Heights Golf Center

On April 8, 1996, the Company consummated the purchase from 202 Golf
Associates, Inc., of approximately 14 acres of land in Yorktown Heights, New
York on which there is an existing golf recreational facility. The Company
intends to build a miniature golf course and batting cages on this property.

The Indian River Golf Center

On May 20, 1996, the Company consummated the purchase from Indian River
Golf-O-Rama, Inc. of its long-term leasehold interests in a 14-acre parcel of
property in Indian River, Virginia (near Norfolk) on which there is an
existing golf recreational facility.

The Fairfield Golf Center

On June 7, 1996, the Company consummated the purchase from three
individuals of K.G. Golf, Inc., an entity that has a long term leasehold
interest in a 24-acre parcel of property in Fairfield, Ohio (near Cincinnati)
on which there is an existing golf recreational facility.

The Tucson Golf Center

On June 7, 1996, the Company consummated the purchase from four
individuals of an 18-acre parcel of property in Tucson, Arizona on which
there is an existing golf recreational facility.

The St. Louis Golf Center

On June 7, 1996, the Company consummated the purchase from Tree Court Golf
& Recreational Complex, Inc. of its long-term leasehold interests in a
42-acre parcel of property in St. Louis, Missouri on which there is an
existing golf recreational facility, including a par-3 golf course.

The West Palm Beach Golf Center

On June 10, 1996, the Company consummated the purchase from W.A.G.N.
Partners of a 32-acre parcel of property in West Palm Beach, Florida on which
there is an existing golf recreational facility, including a par-3 golf
course.

The Company acquired the Mesa, Arizona, the Virginia Beach, Virginia, the
Indian River, Virginia, the Yorktown Heights, New York, the Flemington, New
Jersey, the Tucson, Arizona, the Fairfield, Ohio, the St. Louis, Missouri and
the West Palm Beach, Florida golf facilities for the aggregate purchase price
of approximately $18.1 million, consisting of cash, Common Stock (based on
the value of the Common Stock as reported by the Nasdaq National Market on
the date of the respective acquisition), notes or assumption of liabilities,
or a combination thereof. All of these acquisitions were consummated after
the Secondary Offering was completed in December 1995.

OTHER POTENTIAL SITES

On November 21, 1995, the Company was orally advised by the City of
Seattle, Washington that it had selected the Company's bid to negotiate a
20-year lease with the City for a 40-acre parcel of land located in downtown
Seattle. The Company intends to construct and operate a Golden Bear Golf
Center on this property, including an 80 station two-tier design driving
range, par-3 golf course, miniature golf course and clubhouse with a
full-line pro shop and restaurant. The lease is subject to the successful
negotiation and execution of definitive agreements with the City of Seattle
and the Company's right to

<PAGE>

develop this golf facility as a Golden Bear Golf Center is subject to
negotiation and execution of definitive agreements with the Licensor. There
can be no assurance that a lease with the City of Seattle or an agreement
with the Licensor will be executed with respect to the location.

The Company has engaged in negotiations to purchase, for approximately
$4.8 million in cash, 35 acres of land in Fairfield, Connecticut, on which
the Company intends to build a golf center. Although the Company had entered
into a letter of intent relating to this transaction, this letter of intent
expired while the Company was awaiting the results of an environmental study
of the property being conducted by an environmental consulting firm. If the
environmental report is satisfactory, the Company intends to continue such
negotiations. Although the Company is conducting the environmental study
referred to above and continues to discuss the possibility of acquiring the
land, the owner of the property has no obligation to sell it to the Company
and there can be no assurance that this purchase will be consummated on the
terms contemplated by the original letter of intent or at all.

The Company continually seeks to acquire or lease new golf facilities and
has had discussions with a number of parties as to the acquisition or lease
of golf facilities or land. Except as described above, the Company has no
commitments or agreements to acquire or lease golf facilities or land.

GOLDEN BEAR LICENSE

Under the License Agreement, the Company is licensed to use the trademark
"Golden Bear" and related trademarks and tradenames in the operation of
certain of its golf facilities. The License Agreement expires in August 2002,
subject to earlier termination under certain circumstances. Unless terminated
by written notice 90 days prior to the end of its initial term or renewal
term, as the case may be, it will be automatically extended for additional
five-year periods. The License Agreement is also terminable if the current
directors of the Company, at any time, constitute less than 50% of the
Company's directors.

The Company paid the Licensor a one-time fee of up to $25,000 facility
development fee for each Golden Bear Golf Center and, in most cases, pays the
Licensor an ongoing royalty fee ranging between 3% and 5% of Adjusted Gross
Revenues, as defined in the License Agreement, subject to a minimum
guaranteed royalty of at least $50,000 per year per site. For two of the
sites, the Company pays a fixed annual fee ranging between $35,000 and
$45,000, however, at one of such sites this amount is subject to increase for
increases in the consumer price index. The value of the "Golden Bear" name is
dependent, in part, upon the continued popularity of Jack Nicklaus.
Accordingly, the occurrence of any event which diminishes the reputation of
Mr. Nicklaus and the related "Golden Bear" symbol could adversely affect the
Company's Golden Bear Golf Centers.

On September 13, 1995, following discussion between the Company and the
Licensor, the Company's exclusive rights to open Golden Bear Golf Centers in
defined territories were terminated and the Company gained the right to
develop golf centers under its own name in such territories. The Company has
no right to open additional Golden Bear Golf Centers. In September 1995, the
Licensor also agreed to the Company's proposal to cure an alleged default
under the License Agreement (principally by making certain capital
improvements to its Golden Bear Golf Centers by November 1996). Failure by
the Company to take the agreed upon actions by such date could result in
termination of the License Agreement. Termination of the License Agreement
could adversely affect the Company's Golden Bear Golf Centers and, possibly,
the Company.

Most of the Company's recently acquired golf centers are not intended to
be Golden Bear Golf Centers. Golf centers operated by the Company under names
other than "Golden Bear" do not have the benefit of the goodwill generated by
such name and, accordingly, may not perform as well as Golden Bear Golf
Centers. The Company believes that the disadvantages of operating golf
centers under another name would be at least partially offset by the
elimination of the obligation to pay royalties and other fees for the use of
the "Golden Bear" name as well as the elimination of certain capital and
operating expenditures required by the Licensor.

COMPETITION

<PAGE>

other forms of competition and the Company cannot prevent or restrain others
from utilizing a similar operational strategy. Until September 1995, the
Company had the exclusive right to open Golden Bear Golf Centers in certain
territories. As a result of a recent change in the License Agreement, the
Licensor now is permitted to establish, or license others to establish,
Golden Bear Golf Centers that compete with the Company's golf centers,
including its Golden Bear Golf Centers. Golden Bear Golf, Inc., an affiliate
of the Licensor, has recently publicly indicated that it intends to focus its
efforts on the direct ownership and operation of golf facilities through the
acquisition or development of additional golf centers and to pursue new
licensees and enter into additional territorial development agreements only
in locations and territories where it and its affiliates do not intend to
acquire or develop their own facilities. The Company's pro shop business
faces competition from pro shops at golf courses and other golf centers,
specialty retailers devoted to golf equipment and apparel, sporting goods
stores and department stores. One advantage that the Company's pro shops have
over certain of its competitors is that the customer may try golf clubs on
the driving ranges before purchasing them. Many of the Company's competitors
and potential competitors have considerably greater financial and other
resources, experience and customer recognition than does the Company.

EMPLOYEES

As of April 30, 1996, the Company had 406 employees, of which 169 were
full-time employees and 237 of which were part-time employees. Each golf
center is staffed with approximately 10 full-time employees, including up to
four full-time PGA-certified professionals who instruct golfers of all skill
levels, and approximately 13 to 20 part-time employees depending on the
season. None of the employees are represented by a collective bargaining
agreement. The Company has never experienced a strike or work stoppage. The
Company believes that its relationship with its employees is good.

GOVERNMENTAL REGULATION

Operations at the Company's golf facilities involve the use and limited
storage of various hazardous materials such as pesticides, herbicides, motor
oil, paint and gasoline. Under various federal, state and local laws,
ordinances and regulations (which are administered, in the case of federal
laws and regulations, primarily by the United States Environmental Protection
Agency), an owner or operator of real property is generally liable for the
costs of removal or remediation of hazardous substances that are released on
or in its property regardless of whether the property owner or operator knew
of, or was responsible for, the release of hazardous materials. The Company
has not been informed by any governmental authority or instrumentality of any
non-compliance or violation of any environmental laws, ordinances or
regulations. However, the Company is aware of one notice of violation issued
by the DEC against the owner of the land leased by the Company in Elmsford,
New York alleging that certain hazardous materials were placed on the site.
The owner has taken remedial action and the Company does not believe it will
be affected by the alleged violation. To date, the Company has not incurred
material costs of remediation in relation to any of its golf facilities and
the Company knows of no material environmental liability to which it may
become subject. Although the Company usually hires environmental consultants
to conduct environmental studies, including invasive procedures such as soil
sampling or ground water analysis, on golf facilities it owns, operates or
intends to acquire, in some cases only limited invasive procedures are
conducted on such properties. Even when invasive procedures are used,
environmental studies may fail to discover all potential environmental
problems. Accordingly, there may be potential environmental liabilities or
conditions of which the Company is not aware.

The Company is subject to the Fair Labor Standards Act and various state
laws governing such matters as minimum wage requirements, overtime and other
working conditions and citizenship requirements. The restaurants at the
Company's golf facilities in Queensbury, New York, Virginia Beach, Virginia
and Gilroy, El Segundo, California serve alcoholic beverages and are subject
to certain state "dram-shop" laws, which provide a person injured by an
intoxicated individual the right to recover damages from an establishment
that wrongfully served such beverages to the intoxicated individual.

PROPERTIES

The Company maintains its executive offices in approximately 5,292 square
feet of space in Melville, New York pursuant to a lease expiring in October
1999. The Company owns the land, subject to

<PAGE>

mortgages, on which its Queensbury, New York golf course (approximately 200
acres), its Yorktown Heights, New York golf center (approximately 14 acres),
its Flemington, New Jersey golf center (approximately 17 acres), its
Greenville, South Carolina golf center (approximately 24 acres), its Duluth,
Georgia (near Atlanta) golf center (approximately 56 acres), its Alpharetta,
Georgia (near Atlanta) golf center (approximately 26 acres), its Glen Allen,
Virginia (near Richmond) golf center (approximately 10 acres), its Mesa,
Arizona golf center (approximately 39 acres), its Valley View, Ohio (near
Cleveland) golf center (approximately five acres), its Tucson, Arizona golf
center (approximately 18 acres) and its West Palm Beach, Florida golf center
(approximately 32 acres) are located. The Company also leases the land on
which ten of its golf facilities are located as well as the land adjacent to
its Valley View, Ohio golf center on which it has commenced construction of
additional golf facilities. None of such leases are with affiliates of the
Company.

After giving effect to renewal options, none of the Company's current
leases for its golf centers or facilities is scheduled to expire until 2007.
However, the leases may be terminated prior to their scheduled expiration
should the Company default in its obligations thereunder. The termination of
any of the Company's leases could have an adverse effect on the Company. If
any of the Company's leases were to be terminated, there can be no assurance
that the Company would be able to enter into leases for comparable properties
on favorable terms, or at all.

The Company manages the Douglaston, New York golf center pursuant to a
management agreement with the City of New York, which provides for annual
payments to the City of the greater of $900,000 or 50% of the revenues from
this golf center. The City owns the land on which such facility is located.
The Company's management agreement with the City terminates on December 31,
2006, but is terminable by the City at will.

The Company manages the El Segundo, California golf course and golf center
pursuant to a management agreement with the City of El Segundo which provides
for monthly payments to the Company of $10,417, subject to annual adjustments
based on the Consumer Price Index, and an annual bonus based on the
facility's annual gross revenue, which bonus may not exceed the total amount
of monthly fees for such operating year. The City of El Segundo owns the land
on which the facility is located. Such management agreement terminates on
June 30, 1998, unless earlier terminated by either party, with or without
cause, as of the end of any operating year during the term of the agreement,
upon at least 90 days prior written notice.

LEGAL PROCEEDINGS

The Company knows of no material litigation or proceeding pending,
threatened or contemplated to which the Company is or may become a party.

<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the
executive officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- ----- --------------------------------------------------
<S> <C> <C>
Dominic Chang(1)(2) .. 46 Chairman of the Board, President and Chief
Executive Officer
Krishnan P. Thampi ... 47 Chief Financial Officer, Chief Operating Officer,
Executive Vice President, Secretary, Treasurer and
Director
Richard W. Hasslinger 46 Vice President--Regional Manager
Garrett J. Kelleher .. 59 Vice President--Finance
Robert J. Krause ...... 50 Vice President--Strategic Planning and Development
Rodger P. Potocki .... 52 Vice President--Regional Manager
Margaret Santorufo ... 30 Controller
James Ganley(1)(3) ... 60 Director
Jimmy C.M. Hsu(2) .... 46 Director
Yupin Wang(1)(2)(3) .. 63 Director
</TABLE>

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

(1) Member of Audit Committee

(2) Member of Compensation Committee

(3) Member of Stock Option Committee

Dominic Chang has been the Chairman of the Board, President and Chief
Executive Officer of the Company and its predecessors since 1991. From 1989
to 1992, Mr. Chang was a Senior Vice President and Sector Executive for
Corporate Real Estate and General Services for The Bank of New York. He was
responsible for the acquisition, management and disposition of The Bank of
New York's properties worldwide, facilities design and construction, security
and centralized administrative services. Mr. Chang previously had over 15
years banking experience with Bankers Trust and Irving Trust Company. He has
a Masters Degree in Industrial Engineering from New York University and a
Bachelors Degree from the State University of New York at Stonybrook.

Krishnan P. Thampi has been the Chief Financial Officer, Executive Vice
President, Chief Operating Officer, Secretary and Treasurer of the Company
and its predecessors since 1992. He became a director of the Company in 1994.
From 1989 to 1992, he was a Senior Vice President for Administrative Services
at The Bank of New York. From 1988 to 1989, he was a Senior Vice President
for Systems Services at Irving Trust Company. He also performed controller
and personnel management functions while at Irving Trust Company. Mr. Thampi
has a Masters Degree in Business Administration from Columbia University and
a Bachelors Degree in Engineering from McGill University.

Richard W. Hasslinger joined the Company's predecessor in November 1992 as
a Site Manager and has been Vice President-Regional Manager for the New York
City region since January 1995. From May 1992 to November 1992, he served as
a consultant to the Company. From May 1988 until May 1992, he was Vice
President and Division Head for Facilities Management at The Bank of New
York. His responsibilities there included leasing and acquisitions, design
and construction, and property management. From 1973 to 1988, he managed
several operational activities at Irving Trust Company. Mr. Hasslinger has a
Bachelors Degree in Business Administration from Hope College.

Garrett J. Kelleher, a certified public accountant, joined the Company's
predecessor in July 1993 as a Site Manager and served as Controller from
January 1994 to June 1995. He has been the Vice President--Finance since July
1995. From 1980 to September 1990, Mr. Kelleher was Group Controller for Bank
Operations at The Bank of New York. He has held a variety of accounting and
financial

<PAGE>

management positions at The Bank of New York, and previously in public
accounting. Mr. Kelleher acted as an independent consultant from September
1990 to July 1993. Mr. Kelleher has a Masters Degree in Finance from St.
Johns University and a Bachelors Degree in Business Administration from
Manhattan College.

Robert J. Krause joined the Company's predecessor in June 1993 and served
as a Site Manager until January 1995, when he became the Vice
President--Strategic Planning and Development. From 1983 to 1993, Mr. Krause
was Vice President of Administrative Services for The Bank of New York. From
1978 to 1983, he held product development, marketing and strategic planning
responsibilities at Irving Trust Company. Mr. Krause has a Bachelors Degree
in Electrical Engineering from the University of Oklahoma.

Rodger P. Potocki was the Northern District Director for the Company from
September 1994 until he was appointed Vice President--Regional Manager,
Northern Region, in February 1995. From October 1979 to September 1994, he
was Executive Vice President of Oneida County Industrial Development
Corporation, a non-profit development corporation ("Oneida Industrial"). At
Oneida Industrial, Mr. Potocki was responsible for new investment and job
creation projects in Oneida County, New York, and implemented New York
State's first direct loan fund for new businesses. Previously, he served as
Director of Planning and Development for the City of Rome, New York. Mr.
Potocki has a Masters Degree in Political Science from the Graduate School of
Public Affairs in Albany, New York and a Bachelors Degree from Syracuse
University.

Margaret M. Santorufo joined the Company as Controller in June 1995. From
January 1990, until she joined the Company in 1995, she was an audit
supervisor with Richard A. Eisner & Company, L.L.P. Ms. Santorufo received a
Bachelors Degree in Accounting from St. John's University.

James Ganley has been a director of the Company since 1994. From October
1988 until his retirement in 1990, Mr. Ganley was a Senior Executive Vice
President of The Bank of New York. Mr. Ganley was a member of the Senior
Management Steering Committee at The Bank of New York and was directly
responsible for the merger of the systems, products and operations of The
Bank of New York with Irving Trust Company. Prior to 1988, Mr. Ganley had
held various executive positions at Irving Trust Company and was Group
Executive responsible for Banking Operation activities, which comprised 13
divisions. He was also a member of Irving Trust Company's Senior Executive
Management Committee. Mr. Ganley received a Bachelors Degree in Economics
from New York University and was a participant in Harvard University's
program for management development.

Jimmy C.M. Hsu has been a director of the Company since 1994. Mr. Hsu is
currently the Vice Chairman and a director of Russ Berrie and Company, Inc.
("Russ Berrie"), a New York Stock Exchange listed company which manufactures
and distributes toys and gifts to retail stores. Mr. Hsu joined Russ Berrie
in 1979 as Vice President, Far East Operations. In 1987, he was appointed
Senior Vice President and Director of World-Wide Marketing of Russ Berrie. In
1991, he was elected to the board of Russ Berrie and was appointed the
position of Executive Vice President. In 1995, Mr. Hsu became Vice Chairman
of Russ Berrie.

Yupin Wang has been a director of the Company since 1994. Mr. Wang is
currently the President of W W International, a worldwide management
consulting firm. Prior to establishing W W International in 1992, Mr. Wang
was a member of the executive management team of International Business
Machines Corp. ("IBM") from 1962 to 1992. He had held various positions at
IBM, including Director of Marketing Operations, Director of Marketing
Strategy and Director of Customer Satisfaction. As Director of Customer
Satisfaction, he established IBM's Customer Satisfaction Management System,
which contributed to IBM Rochester winning the Malcolm Baldrige Award. Mr.
Wang received a Bachelors Degree in Economics from National Taiwan University
and Masters Degrees from Oklahoma State University and New York University.

Directors are currently elected annually. Vacancies and newly-created
directorships resulting from any increase in the number of authorized
directors will be filled by a majority vote of the directors then in office.
Officers are elected by, and serve at the pleasure of, the Board of
Directors.

<PAGE>

The Company's employee directors do not receive any additional
compensation for their services as directors. Non-employee directors do not
receive a fee for serving as such, but are reimbursed for expenses. However,
each non-employee director received options to purchase 5,000 shares of
Common Stock upon adoption of the 1994 Stock Option Plan and receives
additional options annually. See "Stock Option Plans" below.

EXECUTIVE COMPENSATION

The following table sets forth the annual and long-term compensation for
services in all capacities paid to Dominic Chang, the Company's Chairman of
the Board, President and Chief Executive Officer, during 1993, 1994 and 1995.
No executive officer received compensation exceeding $100,000 during 1993,
1994 or 1995.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ------------------------------------------
NAME AND RESTRICTED SECURITIES LONG-TERM
PRINCIPAL OTHER ANNUAL STOCK UNDERLYING INCENTIVE PLAN ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
- ----------------- ------ --------- ------- -------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C>
DOMINIC CHANG, 1993 $65,000 -- $ 9,000(1) -- -- -- --
Chairman of the 1994 $65,000 -- $ 9,000(1)(2) -- -- -- --
Board, Chief 1995 $65,000 -- $ 9,000(1) -- 10,000(3) -- --
Executive
Officer and
President
</TABLE>

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

(1) Represents amounts paid to lease a car used by Mr. Chang.

(2) Does not include a distribution of $310,000 made to reimburse Mr. Chang
for federal and state income taxes payable by him based on
undistributed earnings of the Company's subsidiaries which elected to
be treated as S Corporations pursuant to Section 1362(a) of the
Internal Revenue Code, through the date of the Company's initial public
offering of its securities.

(3) Stock options to purchase 10,000 shares of Common Stock were granted in
March 1995 at $6.75 per share (the fair market value of the Common
Stock on the date of such grant); these options became exercisable in
March 1996.

The following table sets forth certain information concerning options
granted to the Chief Executive Officer during the fiscal year ended December
31, 1995.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE
NAME GRANTED(1) FISCAL YEAR ($/SHARE) EXPIRATION DATE
- -------------- ------------ --------------- ------------- ---------------
<S><C>
DOMINIC CHANG 10,000 6.5% $6.75 MARCH 8, 2005
</TABLE>

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

(1) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant.

<PAGE>

AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED DECEMBER 31, 1995
AND FISCAL YEAR END OPTION VALUES

The following table sets forth certain information concerning the number
and value of securities underlying exercisable and unexercisable stock
options as of the fiscal year ended December 31, 1995 by the Chief Executive
Officer. No options were exercised by the Chief Executive Officer during the
fiscal year ended December 31, 1995.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END (1)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- ------------- --------------- ------------- ---------------
<S><C>
DOMINIC CHANG -- 10,000 -- $115,000
</TABLE>

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

(1) The value of unexercised options is determined by multiplying the
number of options held by the difference between the closing price of
the Common Stock of $18.25 at December 31, 1995, as reported by the
Nasdaq National Market and the exercise price of the options granted.

STOCK OPTION PLANS

On July 19, 1994, the Board of Directors of the Company and stockholders
of the Company adopted the Company's 1994 Stock Option Plan (the "Plan"). The
Plan provides for the grant of options to purchase up to 300,000 shares of
Common Stock to employees, officers, directors and consultants of the
Company. Options may be either "incentive stock options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
or non-qualified options. Incentive stock options may be granted only to
employees of the Company, while non-qualified options may be issued to
non-employee directors, consultants and others, as well as to employees of
the Company. On March 6, 1996, the Board of Directors of the Company adopted,
and on June 7, 1996, the stockholders approved, the Company's 1996 Stock
Incentive Plan (the "New Plan"). The New Plan is identical to the Plan,
except that the New Plan provides (i) for the grant of options to purchase up
to 500,000 shares of Common Stock and (ii) an automatic grant of
non-qualified stock options to purchase 10,000 shares to each non-employee
director upon his election or appointment to the Board of Directors and
annual grants (commencing on the date the New Plan was approved by
stockholders) to each non-employee director of non-qualified stock options to
purchase 10,000 shares of Common Stock at the fair market value of the Common
Stock on the date of the grant.

The Plan is administered by the Stock Option Committee, which determines,
among other things, those individuals who receive options, the time period
during which the options may be partially or fully exercised, the number of
shares of Common Stock issuable upon the exercise of each option and the
option exercise price. The Plan also provided for an automatic grant of
non-qualified stock options to purchase 5,000 shares of Common Stock to each
non-employee director upon his election or appointment to the Board of
Directors and annual grants of non-qualified stock options to purchase 2,000
shares of Common Stock at the fair market value of the Common Stock on the
date of such grant. Effective on June 7, 1996, such automatic grants ceased
and were replaced by the automatic grants under the New Plan.

The exercise price per share of Common Stock subject to an incentive
option may not be less than the fair market value per share of Common Stock
on the date the option is granted. The per share exercise price of the Common
Stock subject to a non-qualified option may be established by the Board of
Directors. The aggregate fair market value (determined as of the date the
option is granted) of Common Stock for which any person may be granted
incentive stock options which first become exercisable in any calendar year
may not exceed $100,000. No person who owns, directly or indirectly, at the
time of the granting of an incentive stock option to such person, 10% or more
of the total combined voting power of all classes of stock of the Company (a
"10% Stockholder") shall be eligible to receive any incentive stock options
under the Plan unless the exercise price is at least 110% of the fair market
value of the shares of Common Stock subject to the option, determined on the
date of grant. Non-qualified options are not subject to such limitation.

<PAGE>

No stock option may be transferred by an optionee other than by will or
the laws of descent and distribution, and, during the lifetime of an
optionee, the option will be exercisable only by the optionee. In the event
of termination of employment other than by death or disability, the optionee
will have no more than three months after such termination during which the
optionee shall be entitled to exercise the option, unless otherwise
determined by the Stock Option Committee. Upon termination of employment of
an optionee by reason of death or permanent disability, such optionee's
options remain exercisable for one year thereafter to the extent such options
were exercisable on the date of such termination.

Options under the Plan must be issued within 10 years from the effective
date of the Plan which is July 19, 1994. Incentive stock options granted
under the Plan cannot be exercised more than 10 years from the date of grant.
Incentive stock options issued to a 10% Stockholder are limited to five-year
terms. All options granted under the Plan provide for the payment of the
exercise price in cash or by delivery to the Company of shares of Common
Stock already owned by the optionee having a fair market value equal to the
exercise price of the options being exercised, or by a combination of such
methods. Therefore, an optionee may be able to tender shares of Common Stock
to purchase additional shares of Common Stock and may theoretically exercise
all of such optionee's stock options with no additional investment other than
the purchase of the original shares.

Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by the Company become available again for issuance
under the Plan.

To date, options to purchase 294,000 shares of Common Stock have been
granted under the Plan (of which options to purchase 25,075 shares have been
exercised), and options to purchase 30,000 shares of Common Stock have been
granted under the New Plan. In addition, on March 8, 1995, Messrs. Chang and
Thampi were each granted options outside of the Plan to purchase 10,000
shares of Common Stock at $6.75 per share (the fair market value of the
Common Stock on the date of such grant) in connection with an amendment to
their respective employment agreements. These options became exercisable in
March 1996. In addition, on March 7, 1996, various employees of the Company
were granted options outside of both the Plan and the New Plan to purchase an
aggregate of 53,500 shares of Common Stock at $19.875 (the fair market value
of the Common Stock on the date of such grant), which options vest ratably
over three years.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements, each expiring on
December 31, 1999, with each of Mr. Chang and Mr. Thampi, pursuant to which
each will devote at least 95% of his business time to the affairs of the
Company. Pursuant to his employment agreement, Mr. Chang received a base
salary of $65,000 in 1995 and will receive a base salary of $120,000 in 1996,
$140,000 in each of 1997 and 1998, and $160,000 in 1999. Such base salaries
are subject to additional increase within the discretion of the Board of
Directors which will take into account, among other things, the performance
of the Company and the performance, duties and responsibilities of Mr. Chang.
Mr. Chang will also receive use of a Company-leased automobile. The
employment agreement also provides that Mr. Chang will not compete with the
Company for two years after the termination of his employment.

Pursuant to his employment agreement, Mr. Thampi received a base salary of
$60,000 in 1995 and will receive a base salary of $100,000 in 1996, $120,000
in each of 1997 and 1998 and $140,000 in 1999. Such base salaries are subject
to additional increase within the discretion of the Board of Directors which
will take into account, among other things, the performance of the Company
and the performance, duties and responsibilities of Mr. Thampi. Mr. Thampi
will also receive use of a Company-leased automobile. The employment
agreement also provides that Mr. Thampi will not compete with the Company for
two years after the termination of his employment.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information as of May 1, 1996
regarding the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to own beneficially more than 5% of the Company's
Common Stock, (ii) each director and the chief executive officer of the
Company and (iii) all directors and executive officers of the Company as a
group. Except as otherwise indicated and subject to community property laws
where applicable, the persons named in the table below have sole voting and
dispositive power with respect to the shares of Common Stock shown as
beneficially owned by them.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF THE COMMON STOCK OF COMMON STOCK
BEFORE THE OFFERING AFTER THE OFFERING(1)
--------------------------------- -------------------------------------
PERCENTAGE OF PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING OUTSTANDING
OF BENEFICIAL OWNER NUMBER SHARES NUMBER SHARES
- ------------------------------ ---------------- --------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Dominic Chang (2) ............. 2,822,750(5) 32.8% 2,822,750(5)(6) 26.6%
Janus Capital Corporation (3) 1,015,875 11.8% 1,015,875 9.6%
George Soros (4) .............. 500,000 5.8% 500,000 4.7%
Jimmy C.M. Hsu (2) ............ 191,084(7)(8) 2.2% 191,084(7)(8)(9) 1.8%
Krishnan P. Thampi (2) ........ 181,950(10) 2.1% 181,950(10)(11) 1.7%
James Ganley (2) .............. 15,834(8) * 15,834(8) *
Yupin Wang (2) ................ 7,334(8) * 7,334(8) *
All directors and executive
officers of the Company
as a group (ten persons) .... 3,233,286(5)(7) 37.3% 3,233,286(5)(7) 27.8%
(10)(12) (10)(12)(13)
</TABLE>

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

*Less than 1%.

(1) If the Underwriters' over-allotment option is exercised in full, the
Selling Stockholders, who are Dominic Chang, Jimmy C. M. Hsu, Krishnan P.
Thampi, Upper Hembree Partners, L.P. and Air Dome Limited Partnership, will
sell an aggregate of 300,000 shares of Common Stock. Following are the
positions, offices or other material relationship (other than as a
stockholder) which each of the Selling Stockholders has had within the past
three years with the Company: Dominic Chang (officer/director); Jimmy C.M.
Hsu (director); Krishnan P. Thampi (officer/director); Upper Hembree
Partners, L.P. (the seller of the Alpharetta Golf Center in September 1995);
Air Dome Limited Partnership (one of the sellers of the Valley View Golf
Center in November 1995). Prior to the Offering, Upper Hembree Partners, L.P.
beneficially owned 91,080 shares of Common Stock (1.1% of the outstanding
Common Stock), which amount includes 8,280 shares of Common Stock issuable
upon exercise of options which are currently exercisable. Prior to the
Offering, Air Dome Limited Partnership beneficially owned 86,800 shares of
Common Stock (1.0% of the outstanding Common Stock), which amount includes
10,000 shares of Common Stock issuable upon exercise of options which are
currently exercisable. If the Underwriters' over-allotment option is
exercised in full, (i) Upper Hembree Partners, L.P. will sell 33,718 shares
of Common Stock and after the Offering will beneficially own 57,362 shares of
Common Stock, representing 0.5% of the outstanding Common Stock, and (ii) Air
Dome Limited Partnership will sell 42,866 shares of Common Stock and after
the Offering will beneficially own 43,934 shares of Common Stock,
representing 0.4% of the outstanding Common Stock. See "Underwriting."

(2) The address of such stockholder is: c/o Family Golf Centers, Inc., 225
Broadhollow Road, Melville, New York 11747.

<PAGE>

(3) The address of Janus Capital Corporation ("JCC"), Janus Enterprise Fund
("JEF") and Mr. Thomas H. Bailey is: 100 Fillmore Street, Suite 300, Denver,
Colorado 80206. Information regarding the aggregate number of shares of
Common Stock beneficially owned by JCC, a registered investment advisor, JEF,
an investment company, and Mr. Thomas H. Bailey and their investment and
voting power with respect to such shares is based on the information as
reported in the Schedule 13G filed by these persons, dated January 9, 1996.
Mr. Thomas H. Bailey owns approximately 12.2% of JCC and may be deemed to
exercise control over JCC as a result. As a result of JCC's role of advisor
to various entities, including JEF, JCC may be deemed to be the beneficial
owner of the 1,015,875 shares of Common Stock held by such accounts managed
by it, including JEF. Mr. Bailey and JCC do not have the right to receive
dividends from, or the proceeds from the sale of, any such shares owned by
the accounts managed by JCC and each disclaims beneficial ownership of the
shares held by the accounts JCC manages (including JEF).

(4) George Soros ("Soros") holds these shares of Common Stock in his capacity
as the sole proprietor of the investment advisory firm, Soros Fund Management
("SFM"), which holds the shares for the account of Quantum Partners, LDC
("Quantum"), a Cayman Islands company. The address of Soros and SFM is: 888
Seventh Avenue, 33rd Floor, New York, New York 10106. Certain information
regarding the number of shares of Common Stock beneficially owned by Soros
and Quantum and their investment and voting power with respect to such shares
is based on the information as reported in the Schedule 13D filed by these
persons, dated December 20, 1995.

(5) Includes 1,000 shares of Common Stock owned by Mr. Chang's children.
Includes 10,000 shares of Common Stock issuable upon exercise of options
which are currently exercisable. Of such shares, 174,000 are pledged to
United Orient Bank and 187,750 are pledged to Chemical Bank, each to secure a
personal loan to Mr. Chang.

(6) If the Underwriters' over-allotment option is exercised in full, Mr. Chang
will sell 123,416 shares of Common Stock and after the Offering will
beneficially own 2,699,334 shares of Common Stock, representing 25.4% of the
outstanding Common Stock.

(7) Does not include 66,250 shares of Common Stock beneficially owned by Mr.
Hsu's brother. Mr. Hsu disclaims beneficial ownership of his brother's
shares.

(8) Includes 2,334 shares of Common Stock issuable upon exercise of options
which are currently exercisable.

(9) If the Underwriters' over-allotment option is exercised in full, Mr. Hsu
will sell 50,000 shares of Common Stock and after the Offering will
beneficially own 141,084 shares of Common Stock, representing 1.3% of the
outstanding Common Stock.

(10) Includes 45,000 shares of Common Stock issuable upon exercise of options
which are currently exercisable.

(11) If the Underwriters' over-allotment option is exercised in full,
Mr. Thampi will sell 50,000 shares of Common Stock and after the Offering will
beneficially own 131,950 shares of Common Stock, representing 1.2% of the
outstanding Common Stock.

(12) Includes 16,336 shares of Common Stock issuable upon exercise of options
which are currently exercisable.

(13) If the Underwriters' over-allotment option is exercised in full, three of
the group of ten directors and executive officers of the Company will sell an
aggregate of 223,416 shares of Common Stock. Assuming such exercise, after
the Offering the directors and executive officers of the Company as a group
will beneficially own 3,009,870 shares of Common Stock, representing 28.2% of
the outstanding Common Stock.

<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to an Exchange Agreement dated as of September 11, 1994, among
the Company and Dominic Chang, the Chairman of the Board, President, Chief
Executive Officer and a principal stockholder of the Company, Krishnan
Thampi, the Chief Financial Officer, Executive Vice President, Chief
Operating Officer, Secretary, Treasurer and a director and principal
stockholder of the Company, Jimmy C.M. Hsu, a director and principal
stockholder of the Company, John Chen and Tommy Hsu (collectively, the
"Predecessor Holders"), upon the closing of the IPO, the Company received all
of the issued and outstanding shares of the following corporations
(collectively, the "Subsidiary Shares"): Skycon Construction Co., Inc., which
is the general contractor of the Company's golf centers; Orient Associates
International, Inc., which leases the land upon which the Company's golf
centers are located and is the party which owns the license to the "Golden
Bear" trademarks; Skydrive Co., Inc., Skydrive Greenburgh Co., Inc. and
Skydrive Willowbrook NJ, Inc., each of which operates one of the Company's
golf centers; and Skydrive Alley Pond Company, Inc., which was the general
partner of the partnership that operated the Douglaston golf center. The
Predecessor Holders received an aggregate of 3,445,000 shares of Common Stock
in exchange for the Subsidiary Shares, for which they had paid an aggregate
of $2.4 million (approximately $.70 per share of Common Stock). In connection
with the initial organization of the Company, Mr. Chang purchased 5,000
shares of Common Stock for nominal consideration in July 1994.

In February 1994, Messrs. Chang and Thampi acquired interests in TPT of
65% and 5%, respectively, for nominal cash consideration plus Mr. Chang's
agreement to obtain up to $4.5 million of bank loans for TPT and to guarantee
such bank loans, if necessary. The remaining 30% was owned by two individuals
not affiliated with the Company (although one of such individuals became an
employee of the Company subsequent to the acquisition of TPT). Also in
February 1994, the predecessor of the Company assigned to TPT its rights
under the License Agreement for the establishment of Golden Bear Golf Centers
in California. The Company guaranteed TPT's obligations to the Licensor in
connection with the assignment. By agreement dated October 25, 1994, TPT's
stockholders granted the Company the option, exercisable on January 1, 1998
or earlier if TPT had at least $1.0 million of income, to acquire TPT for a
price payable in Common Stock equal to 12.5 times the net after tax income of
TPT during the full 12 months immediately preceding the exercise of such
option. In November 1995, the Company acquired TPT for $4.0 million (payable
in the form of a note which became due and was paid at the closing of the
Secondary Offering) and up to $2.0 million of additional purchase price
payable upon the achievement of certain operating income targets. The terms
of the acquisition were determined by negotiations involving Messrs. Chang
and Thampi and the non-affiliated stockholders of TPT and the transaction was
subject to certain conditions (which were satisfied on November 8, 1995),
including approval by all of the directors of the Company, other than Messrs.
Chang and Thampi and receipt of an opinion from an investment banking firm
that the consideration to be paid by the Company for TPT was fair from a
financial point of view. The Company received an opinion from the investment
banking firm of Houlihan Lokey that the consideration to be paid by the
Company for TPT was fair from a financial point of view. Houlihan Lokey has
been engaged in the business of providing financial advisory services since
1970. They specialize in the valuation of businesses and properties, with
substantial experience in the valuation of securities of recreational
companies. In addition to such opinion, such Board members also considered a
number of factors in approving the acquisition of TPT, including (i) the
elimination of potential conflicts of interest, (ii) the opportunity to
expand operations to the West Coast, (iii) the location and prospects of the
golf facilities operated by TPT, (iv) the cost of establishing golf
facilities comparable to those operated by TPT, (v) the operating history of
TPT compared with the operating history of the Company's East Coast
facilities at a comparable stage of development, (vi) the potential
improvement in TPT's performance due to the elimination of duplicative
administrative expenses, (vii) TPT's current financial condition and (viii)
the opportunity to acquire TPT for less than the Company believed it would
pay if it exercised its option to purchase TPT in 1998. For a description of
the terms of the acquisition, including amounts received by Messrs. Chang and
Thampi, see "Business--Recently Opened or Acquired Facilities."

Mr. Chang, either individually or with his wife, was the guarantor or
co-borrower of $3.7 million, $1.46 million and $1.46 million of the Company's
indebtedness, as of December 31, 1994, December 31,

<PAGE>

1995 and March 31, 1996, respectively. In addition, a company ("Hsing Lung")
which owns and operates a dairy farm in New York and has been owned by Mr.
Chang since 1986, was a co-borrower with the predecessor of the Company of a
loan that had an outstanding balance of $2.5 million as of December 31, 1994
and no outstanding balance as of December 31, 1995. Mr. Chang granted
security interests in certain of his personal assets, including Hsing Lung
and his Common Stock, to secure his obligations under certain of such
guarantees.

Neither Mr. Chang nor any other officer of the Company is obligated to
provide any additional guaranty or financial assistance to the Company in the
future.

The Company was indebted to Mr. Chang and Mr. Thampi in the amounts of
$330,000 and $125,000, respectively, as of December 31, 1994. As of December
31, 1995, the Company was not indebted to either of Mr. Chang or Mr. Thampi.
The amounts outstanding as of December 31, 1994 were paid in full by the
Company on November 30, 1995. Such loans were due on demand and, except for
the $310,000 described below, bore interest at LIBOR (6.5% at December 31,
1994 and 6.8% at November 30, 1995). Interest on such loans aggregated
$40,000 and $16,000 for the years ended December 31, 1994 and 1995,
respectively. In addition, from September 1, 1994 through November 21, 1994,
Hsing Lung made non-interest bearing loans to the Company in the aggregate
amount of $88,000, which the Company repaid on December 16, 1994.

The amount due to Mr. Chang as of December 31, 1994 of $330,000 includes
$310,000, representing a distribution payable to Mr. Chang to pay federal and
state income taxes owed by Mr. Chang in respect of the earnings of certain of
the Company's subsidiaries operated under Subchapter S of the Internal
Revenue Code of 1986, as amended, until the closing of the IPO.

The Company believes that each of the foregoing transactions were
completed on terms at least as favorable to the Company as those which could
have been obtained from an unaffiliated party.

<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following description of the Company's capital stock and selected
provisions of its Certificate of Incorporation and By-Laws is a summary and
is qualified in its entirety by reference to the Company's Certificate of
Incorporation and By-Laws, copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus is a part.

COMMON STOCK

The Company is authorized to issue up to 50,000,000 shares of Common
Stock, par value $.01 per share, of which 8,598,025 shares are outstanding as
of the date hereof. Holders of Common Stock are entitled to one vote for each
share held of record on each matter submitted to a vote of stockholders.
There is no cumulative voting for election of directors. Subject to the prior
rights of any series of preferred stock which may from time to time be
outstanding, if any, holders of Common Stock are entitled to receive ratably,
dividends when, as, and if declared by the Board of Directors out of funds
legally available therefor and, upon the liquidation, dissolution or winding
up of the Company, are entitled to share ratably in all assets remaining
after payment of liabilities and payment of accrued dividends and liquidation
preferences on the preferred stock, if any. Holders of Common Stock have no
preemptive rights and have no rights to convert their Common Stock into any
other securities. The outstanding Common Stock is validly authorized and
issued, fully paid and nonassessable.

PREFERRED STOCK

The Company is authorized to issue up to 2,000,000 shares of preferred
stock, par value $.10 per share. The preferred stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by
the Board of Directors, without further action by stockholders, and may
include voting rights (including the right to vote as a series on particular
matters), preferences as to dividends and liquidation, conversion rights,
redemption rights and sinking fund provisions. The issuance of any such
preferred stock could adversely affect the rights of the holders of Common
Stock and, therefore, reduce the value of the Common Stock. The ability of
the Board of Directors to issue preferred stock could discourage, delay or
prevent a takeover of the Company. See "Risk Factors--Preferred Stock;
Possible Anti-Takeover Effects of Certain Charter, By-Law and Contractual
Provisions."

DELAWARE ANTI-TAKEOVER LAW

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"), an anti-takeover law. In general,
Section 203 prohibits a Delaware corporation, the stock of which generally is
publicly traded or held of record by more than 2,000 stockholders, from
engaging, in certain circumstances, in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For purposes of
Section 203, a "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder,
and an "interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock. Section 203 could prohibit or delay a merger,
takeover or other change in control of the Company and therefore could
discourage attempts to acquire the Company.

CERTAIN BY-LAW PROVISIONS

The Company's By-Laws provide that special meetings of the stockholders
may only be called by the Chairman of the Board of Directors, if any, the
Chief Executive Officer, the Secretary of the Company or a majority of the
Board of Directors or by stockholders who own in the aggregate 66 2/3 % of
the outstanding stock of all classes entitled to vote at such meeting. The
By-Laws also provide that stockholder action can be taken only at an annual
or special meeting of stockholders, prohibit stockholder action by written
consent in lieu of a meeting and require an advance notice procedure for
stockholders to make nominations of candidates for election as directors. The
foregoing provisions could have the

<PAGE>

effect of delaying until the next stockholders' meeting stockholder actions
which are favored by the holders of a majority of the outstanding voting
securities of the Company. The By-Laws require the affirmative vote of 80% of
the Board of Directors to amend or repeal any of the provisions described in
this paragraph.

OUTSTANDING OPTIONS AND WARRANTS

The Company has outstanding options to purchase up to an aggregate of
390,705 shares of Common Stock at prices ranging from $3.50 to $27.50 per
share, with a weighted average price per share of $12.48. Of such options,
options to purchase 372,425 shares of Common Stock expire on various dates in
2004 through 2006, subject to earlier expiration if the Company's employment
of the optionee terminates and options to purchase 18,280 shares of Common
Stock issued in connection with the acquisition of various golf facilities
expire in 2000. In addition, options to purchase 20,000 shares of Common
Stock have been issued to certain executive officers, which expire in 2005.
See "Management -- Stock Option Plans." The Company has outstanding warrants
issued to the representatives of the underwriters of the Secondary Offering
at the closing thereof, expiring on December 18, 2000, to purchase 300,000
shares of Common Stock at $20.25 per share, and warrants issued on March 7,
1996 to Monness, Crespi, Hardt & Co. for consulting services to be rendered
over a three-year period, expiring on March 7, 1997, to purchase 70,000
shares of Common Stock at $19.875 per share.

TRANSFER AGENT

Continental Stock Transfer & Trust Company, New York, New York is the
Transfer Agent for the Company's Common Stock.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a company will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
for liability for (i) any breach of their duty of loyalty to the company or
its stockholders, (ii) acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law, (iii) unlawful payment
of dividends or unlawful stock repurchases or redemptions as provided in
Section 174 of the Delaware General Corporation Law or (iv) any transaction
from which the director derived an improper personal benefit.

The Company's Certificate of Incorporation provides that the Company shall
indemnify its officers, directors, employees and other agents to the fullest
extent permitted by Delaware law.

The Company maintains a policy of insurance under which the directors and
officers of the Company are insured, subject to the limits of the policy,
against certain losses arising from claims made against such directors and
officers by reason of any acts or omissions covered under such policy in
their respective capacities as directors or officers, including liabilities
under the Securities Act. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.

<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell an aggregate of 2,000,000 shares of
Common Stock to the Underwriters named below (the "Underwriters"), for whom
Jefferies & Company, Inc. and Hampshire Securities Corporation are acting as
the representatives (the "Representatives"), and the Underwriters have
severally agreed to purchase, the number of shares of Common Stock set forth
opposite their respective names in the table below at the price set forth on
the cover page of this Prospectus.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- --------------------------------- -----------
<S> <C>
Jefferies & Company, Inc. ........
Hampshire Securities Corporation
-----------
Total ........................ 2,000,000
===========

</TABLE>

The Underwriting Agreement provides that the obligation of the
Underwriters to purchase the shares of Common Stock is subject to certain
conditions. The Underwriters are committed to purchase all of the shares of
the Common Stock (other than those covered by the over-allotment option
described below), if any are purchased.

The Underwriters propose to offer the Common Stock to the public initially
at the public offering price set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of $ per share to certain other dealers. After the Offering,
the public offering price, the concession to selected dealers and the
reallowance to other dealers may be changed by the Representatives.

In the Secondary Offering, the Company granted Jefferies the right, at its
option, for a period ending in December 1998, to have a representative attend
all meetings of the Board of Directors of the Company and receive
reimbursement for all expenses incurred in attending such meetings. Such
agreement remains in effect.

The Selling Stockholders have granted to the Underwriters an option,
exercisable for 30 days from the date of this Prospectus, to purchase up to
300,000 additional shares of Common Stock at the public offering price, less
the underwriting discount. To the extent such option is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
additional shares of Common Stock proportionate to such Underwriter's initial
commitment as indicated in the preceding table. The Underwriters may exercise
such right of purchase only for the purpose of covering over-allotments, if
any, made in connection with the sale of the shares of Common Stock.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under
the Securities Act, or will contribute to payments the Underwriters may be
required to make in respect thereof.

In the Secondary Offering, the directors and officers of the Company
agreed with the underwriters of such offering not to publicly sell or
otherwise dispose of any shares of Common Stock or securities exercisable for
or convertible into shares of Common Stock ("Securities") until December 13,
1996, except in the case of Common Stock pledged or to be pledged by Dominic
Chang to secure personal loans, without the prior written consent of
Jefferies. Such agreements remain in effect and, after the Offering, will
cover 3,161,950 shares of Common Stock or 29.8% of the then outstanding
Common Stock (or, if the Underwriters' over-allotment option is exercised in
full, 2,938,534 shares of Common Stock or 27.7% of the then outstanding
Common Stock). See "Risk Factors--Shares Eligible for Future Sale;
Registration Rights."

<PAGE>

The Company has agreed with the Underwriters not to offer, issue or sell
any Securities for a period of six months from the date of this Prospectus,
subject to certain limited exceptions, without the consent of Jefferies.

Certain of the Underwriters and selling group members that currently act
as market markers for the Common Stock may engage in "passive market making"
in the Common Stock on the Nasdaq Stock Market in accordance with Rule 10b-6A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Rule 10b-6A permits, upon the satisfaction of certain conditions,
underwriters and selling group members participating in a distribution that
are also market makers in the security being distributed to engage in limited
market making transactions during the period when Rule 10b-6 under the
Exchange Act would otherwise prohibit such activity. Rule 10b-6A prohibits
underwriters and selling group members engaged in passive market making
generally from entering a bid or effecting a purchase at a price that exceeds
the highest bid for those securities on the Nasdaq Stock Market by a market
maker that is not participating in the distribution. Under Rule 10b-6A each
underwriter or selling group member engaged in passive market making is
subject to a daily net purchase limitation equal to 30% of such entity's
average daily trading volume during the two full consecutive calendar months
immediately preceding the date of the filing of the registration statement
under the Securities Act pertaining to the security to be distributed.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby and certain
other legal matters will be passed upon for the Company and the Selling
Stockholders by Squadron, Ellenoff, Plesent & Sheinfeld, LLP, New York, New
York. Certain legal matters in connection with the Offering will be passed
upon for the Underwriters by Fulbright & Jaworski L.L.P., New York, New York.

EXPERTS

The consolidated financial statements of the Company as at December 31,
1994 and December 31, 1995 and for each of the years in the three year period
ended December 31, 1995 have been audited by Richard A. Eisner & Company,
LLP, independent auditors, as indicated in their report with respect thereto,
and are included herein in reliance upon such report given upon the authority
of said firm as experts in accounting and auditing. The financial statements
of the Hiland Park Golf Course at April 30, 1995 and for the eleven month
period then ended, which are included in this Prospectus, have been included
herein in reliance upon the report of Silverstein, Loftus & Ross, CPAs, P.C.,
independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing. The
financial statements of Pelham Enterprises, Inc. at December 31, 1994 and for
the year then ended, which are included in this Prospectus, have been
included herein in reliance upon the report of Bradshaw, Gordon &
Clinkscales, P.A., independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing. The financial statements of RFC Enterprises, Inc. at
December 31, 1994 and for the year then ended, which are included in this
Prospectus, have been included herein in reliance upon the report of
Drunagel, Johnson, Rutherford & Wilkins, P.C., independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm
as experts in accounting and auditing. The financial statements of Upper
Hembree Partners, L.P. at December 31, 1994 and for the two years then ended,
which are included in this Prospectus, have been included herein in reliance
upon the report of Ernest T. Northrup, independent certified public
accountant, appearing elsewhere herein, and upon the authority of said firm
as experts in accounting and auditing. The financial statements of The
Practice Tee, Inc. at December 31, 1994 and for the period February 8, 1994
(inception) to December 31, 1994, which are included in this Prospectus, have
been included herein in reliance upon the report of Robert Del Riego,
independent certified public accountant, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing. The
financial statements of Golf Masters Limited Partnership at December 31, 1994
and for the year then ended, and Air Dome Limited Partnership at December 31,
1994 and for the year then ended, which are included in this Prospectus, have
been included herein in reliance upon the reports of Sewell & Co., Inc.,
independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing. The
financial statements of Owl's Creek Golf Center, Inc. at December 31, 1995,
and for the year then ended which are included in this Prospectus, have been
included herein in reliance upon the report of Anne E. Gorry, independent
certified public accountant, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing. The financial
statements of Flemington Golf and Sports Center, LLC at

<PAGE>

December 31, 1995 and for the year then ended, which are included in this
Prospectus, have been included herein in reliance upon the report of
Ehrenkrantz and Company, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing. The financial statements of 202 Golf Associates,
Inc. at December 31, 1995 and for the year then ended, which are included in
this Prospectus, have been included herein in reliance upon the report of
Mangini, Traeger & Company, P.C., independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing. The financial statements of Indian River
Golf-O-Rama, Inc. at December 31, 1995 and for the year then ended, which are
included in this Prospectus, have been included herein in reliance upon the
report of Shanholt Glassman Hoffman Klein & Co., P.C., independent certified
public accountants, appearing elsewhere herein, and upon the authority of
said firm as experts in accounting and auditing. The financial statements of
Golf and Sports Center of the Palm Beaches, Inc. at December 31, 1995 and for
the year then ended, and W.A.G.N. Partners at December 31, 1995 and for the
year then ended, which are included in this Prospectus, have been included
herein in reliance upon the reports of Charles W. Cairnes, Jr. P.A.,
independent certified public accountant, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing. The
financial statements of Catalina Golf Center at December 31, 1995 and for the
year then ended which are included in this Prospectus, have been included
herein in reliance upon the report of Robert Decker, C.P.A., independent
certified public accountant, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing. The financial
statements of K.G. Golf, Inc. at December 31, 1995 and for the year then
ended, which are included in this Prospectus, have been included herein in
reliance upon the report of Goffena & Baker, C.P.A., independent certified
public accountants, appearing elsewhere herein, and upon the authority of
said firm as experts in accounting and auditing. The financial statements of
Tree Court Golf & Recreational Complex, Inc., at December 31, 1995 and for
the year then ended, which are included in this Prospectus, have been
included herein in reliance upon the report of BDO Seidman, LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy statements, and
other information with the Commission. Such reports, proxy statements, and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, Suite 1300, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission, Room 1024, 450
Fifth Street, N.W. Washington, D.C. 20549 at prescribed rates. In addition,
copies of such reports, proxy statements, and other information concerning
the Company may also be inspected and copied at the library of the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006, upon which the
Common Stock of the Company is traded. The Commission maintains a World Wide
Web site on the Internet at http:// www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission.

The Company has filed with the Commission a Registration Statement on Form
SB-2 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act, with respect to the
Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information with respect to the Company and the Common Stock,
reference is hereby made to the Registration Statement and the documents
incorporated herein by reference, which may be examined without charge at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549. Copies thereof may be obtained
from the Commission upon payment of the prescribed fees. Statements contained
in this Prospectus or in any document incorporated herein by reference as to
the contents of any contract or document referred to herein are not
necessarily complete, and in each instance reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement
or such other document, each such statement being qualified in all respects
by such reference.

<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PRO FORMA:
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
Pro Forma Unaudited Condensed Balance Sheet as of March 31, 1996 ......................... F-6
Notes to Pro Forma Unaudited Condensed Balance Sheet ..................................... F-8
Pro Forma Unaudited Condensed Statements of Operations for the Year Ended
December 31, 1995 and for the Three Months Ended March 31, 1996 ......................... F-9
Pro Forma Unaudited Condensed Statement of Operations for the
Year Ended December 31, 1995 ............................................................ F-10
Notes to Pro Forma Unaudited Condensed Statement of Operations for the Year Ended
December 31, 1995 ....................................................................... F-12
Pro Forma Unaudited Condensed Statement of Operations for the
Three Months Ended March 31, 1996 ....................................................... F-13
Notes to Pro Forma Unaudited Condensed Statement of Operations for the Three Months
Ended March 31, 1996 .................................................................... F-14
HISTORICAL:
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
Report of Independent Auditors ........................................................... F-15
Consolidated Balance Sheets as at December 31, 1994, December 31, 1995 and
March 31, 1996 (Unaudited) .............................................................. F-16
Consolidated Statements of Operations for the Years Ended December 31, 1993,
December 31, 1994 and December 31, 1995 and for the Three Months Ended March 31, 1995
(Unaudited) and March 31, 1996 (Unaudited) ............................................... F-17
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
December 31, 1993, December 31, 1994 and December 31, 1995 and for the Three Months
Ended March 31, 1996 (Unaudited) ........................................................ F-18
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993,
December 31, 1994 and December 31, 1995 and for the Three Months Ended
March 31, 1995 (Unaudited) and March 31, 1996 (Unaudited) ............................... F-19
Notes to Financial Statements ............................................................ F-20
OWL'S CREEK GOLF CENTER, INC.
Independent Auditor's Report ............................................................. F-32
Balance Sheet as of December 31, 1995 .................................................... F-33
Statement of Operations and Retained Earnings (Deficit) for the Year Ended
December 31, 1995 ....................................................................... F-34
Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-37
Notes to Financial Statements ............................................................ F-38
Statement of Operations for the Period from January 1, 1996 to March 5, 1996 ............ F-40
FLEMINGTON GOLF AND SPORTS CENTER, LLC
Independent Auditors' Report ............................................................. F-42

F-1

<PAGE>

PAGE
---------
Balance Sheet as of December 31, 1995 .................................................... F-43
Statement of Operations and Members' Deficit as of December 31, 1995 ..................... F-44
Statement of Cash Flows as of December 31, 1995 .......................................... F-45
Notes to Financial Statements ............................................................ F-46
202 GOLF ASSOCIATES, INC.
Independent Auditors' Report ............................................................. F-49
Balance Sheet as of December 31, 1995 .................................................... F-50
Statement of Operations & Shareholders' Deficit for the Year Ended
December 31, 1995 ....................................................................... F-51
Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-52
Notes to Financial Statements ............................................................ F-53
Balance Sheet as of March 31, 1995 ....................................................... F-55
Statement of Operations for the Three Months Ended March 31, 1996 ........................ F-56
Statement of Cash Flows for the Three Months Ended March 31, 1996 ........................ F-57
Notes to Financial Statements ............................................................ F-58
INDIAN RIVER GOLF-O-RAMA, INC.
Independent Auditors' Report ............................................................. F-59
Balance Sheets as of December 31, 1995 and December 31, 1994 ............................. F-60
Statement of Changes in Shareholder's Equity for the Years Ended December 31, 1995
and 1994 ................................................................................ F-61
Statement of Cash Flows for the Years Ended December 31, 1995 and 1994 .................. F-62
Statements of Operations for the Years Ended December 31, 1995 and 1994 ................. F-63
Notes to Financial Statements ............................................................ F-64
Balance Sheet as of March 31, 1996 ....................................................... F-66
Statements of Operations for the Period January 1, 1996 to March 31, 1996 ............... F-67
Statement of Cash Flows for the Three Months Ended March 31, 1996 ........................ F-68
Notes to Financial Statements ............................................................ F-69
CATALINA GOLF CENTER
Independent Auditor's Report ............................................................. F-70
Balance Sheet as of December 31, 1995 .................................................... F-71
Statement of Income and Proprietor's Capital for the Year Ended December 31, 1995 ....... F-72
Statement of Cash Flow for the Year Ended December 31, 1995 .............................. F-73
Notes to Financial Statements ............................................................ F-74
Balance Sheet as of March 31, 1996 ....................................................... F-77
Income Statement for the Period January 1, 1996 to March 31, 1996 ........................ F-78
Statement of Cash Flows for the Period Ended March 31, 1996 .............................. F-79
Notes to Financial Statements ............................................................ F-80

F-2

<PAGE>
PAGE
---------
K.G. GOLF, INC.
Independent Auditors' Report ............................................................. F-81
Balance Sheet as of December 31, 1995 .................................................... F-82
Income Statement for the Year Ended December 31, 1995 .................................... F-83
Statement of Retained Earnings for the Year Ended December 31, 1995 ...................... F-83
Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-84
Notes to Financial Statements ............................................................ F-85
Balance Sheet as of March 31, 1996 ....................................................... F-87
Income Statement for the Three Months Ended March 31, 1996 ............................... F-88
Statement of Cash Flows for the Three Months Ended March 31, 1996 ........................ F-89
Notes to Financial Statements ............................................................ F-90
TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
Independent Auditors' Report ............................................................. F-91
Balance Sheet as of December 31, 1995 .................................................... F-92
Statement of Operations for the Year Ended December 31, 1995 ............................. F-93
Statement of Stockholders' Deficit ....................................................... F-94
Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-95
Summary of Accounting Policies ........................................................... F-96
Notes to Financial Statements ............................................................ F-97
Balance Sheet as of March 31, 1996 ....................................................... F-99
Statement of Operations for the Three Months Ended March 31, 1996 ........................ F-100
Statement of Cash Flows for the Three Months Ended March 31, 1996 ........................ F-101
Notes to Financial Statements ............................................................ F-102
GOLF AND SPORTS CENTER OF THE PALM BEACHES, INC.
Independent Auditor's Report ............................................................. F-103
Balance Sheet as of December 31, 1995 .................................................... F-104
Statement of Loss and Accumulated Deficit for the Year Ended December 31, 1995 .......... F-105
Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-106
Notes to Financial Statements ............................................................ F-107
Balance Sheet as of March 31, 1996 ....................................................... F-108
Statement of Operations for the Three Months Ended March 31, 1996 ........................ F-109
W.A.G.N. PARTNERS
Independent Auditor's Report ............................................................. F-110
Balance Sheet as of December 31, 1995 .................................................... F-111
Statement of Loss and Partners' Capital for the Year Ended December 31, 1995 ............ F-112
Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-113
Notes to Financial Statements ............................................................ F-114

F-3

<PAGE>

PAGE
---------
PELHAM ENTERPRISES, INC.
Independent Auditors' Report ........................................................... F-115
Balance Sheets at December 31, 1994 and April 30, 1995 ................................. F-116
Statements of Income and Retained Earnings for the Year Ended December 31, 1994 and for
the Four Months Ended April 30, 1995 ................................................... F-117
Statements of Cash Flows for the Year Ended December 31, 1994 and for the Four Months
Ended April 30, 1995 .................................................................. F-118
Notes to Financial Statements .......................................................... F-119
HILAND PARK GOLF COURSE
Independent Auditors' Report ........................................................... F-121
Balance Sheet at April 30, 1995 ........................................................ F-122
Statement of Income for the Eleven Months Ended April 30, 1995 ......................... F-123
Statement of Equity for the Eleven Months Ended April 30, 1995 ......................... F-124
Statement of Cash Flows for the Eleven Months Ended April 30, 1995 ..................... F-125
Notes to Financial Statements .......................................................... F-127
RFC ENTERPRISES, INC.
Independent Auditors' Report ........................................................... F-129
Balance Sheet at December 31, 1994 ..................................................... F-130
Statement of Income and Accumulated Deficit for the Year Ended December 31, 1994 ....... F-131
Statement of Cash Flows for the Year Ended December 31, 1994 ........................... F-132
Notes to Financial Statements .......................................................... F-133
Balance Sheet at July 31, 1995 ......................................................... F-136
Statement of Income and Accumulated Deficit for the Seven Months Ended July 31, 1995 ... F-137
Statement of Cash Flows for the Seven Months Ended July 31, 1995 ....................... F-138
Notes to Financial Statements .......................................................... F-139
UPPER HEMBREE PARTNERS, L.P.
Independent Accountant's Report ........................................................ F-142
Balance Sheets at December 31, 1994 and July 31, 1995 .................................. F-143
Statements of Income for the Years Ended December 31, 1993, December 31, 1994 and the
Seven Months Ended July 31, 1995 ...................................................... F-144
Statements of Changes in Partners' Capital for the Years Ended December 31, 1993,
December 31, 1994 and the Seven Months Ended July 31, 1995 ............................ F-145
Statements of Cash Flows for the Years Ended December 31, 1993, December 31, 1994 and
the Seven Months Ended July 31, 1995 .................................................. F-146
Notes to Financial Statements .......................................................... F-147
THE PRACTICE TEE, INC.
Independent Auditors' Report ........................................................... F-152
Consolidated Balance Sheet at December 31, 1994 ........................................ F-153
Consolidated Statement of Operations and Accumulated Deficit for the Period February 8,
1994 (Inception) to December 31, 1994 ................................................. F-154

F-4

<PAGE>

PAGE
---------
Consolidated Statement of Cash Flow for the Period February 8, 1994 (Inception) to
December 31, 1994 ..................................................................... F-155
Notes to Financial Statements .......................................................... F-156
Consolidated Balance Sheet at September 30, 1995 ....................................... F-159
Consolidated Statement of Operations and Accumulated Deficit for the Nine Months Ended
September 30, 1995 ..................................................................... F-160
GOLF MASTERS LIMITED PARTNERSHIP
Independent Auditors' Report ........................................................... F-161
Balance Sheets at December 31, 1994 and September 30, 1995 ............................. F-162
Statements of Changes in Partners' Capital for the Year Ended December 31, 1994 and the
Nine Months Ended September 30, 1995 .................................................. F-164
Statements of Income and Expense for the Year Ended December 31, 1994 and for the Nine
Months Ended September 30, 1995 ........................................................ F-165
Statements of Cash Flows for the Year Ended December 31, 1994 and for the Nine Months
Ended September 30, 1995 .............................................................. F-166
Notes to Financial Statements .......................................................... F-167
AIR DOME LIMITED PARTNERSHIP
Independent Auditors' Report ........................................................... F-170
Balance Sheet at December 31, 1994 ..................................................... F-171
Statement of Changes in Partners' Capital for the Year Ended December 31, 1994 ......... F-172
Statement of Income and Expense for the Year Ended December 31, 1994 ................... F-173
Statement of Cash Flows for the Year Ended December 31, 1994 ........................... F-174
Notes to Financial Statements .......................................................... F-175
Balance Sheet at September 30, 1995 .................................................... F-176
Statement of Changes in Partners' Capital for the Nine Months Ended September 30, 1995 . F-177
Statement of Income and Expense for the Nine Months Ended September 30, 1995 ........... F-178
Statement of Cash Flows for the Nine Months Ended September 30, 1995 ................... F-179
Notes to Financial Statements .......................................................... F-180
</TABLE>

F-5

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
AS OF MARCH 31, 1996

The following pro forma condensed balance sheet reflects the transactions
indicated below as if they had occurred on March 31, 1996: (1) the acquisitions
(the "Acquisitions") of 202 Golf Associates, Inc. ("Yorktown Heights"),
Indian River Golf-O-Rama, Inc. ("Indian River"), K.G. Golf Inc.
("Fairfield"), Catalina Golf Center ("Tucson"), Tree Court Golf &
Recreational Complex, Inc. ("St. Louis") and Golf & Sports Center of the Palm
Beaches, Inc. and W.A.G.N. Partners (collectively, "West Palm Beach") and (2)
the Acquisitions and assumed repayment of $5.0 million of indebtedness
incurred in connection with the Acquisitions, from the estimated net proceeds
from the sale of 198,206 shares of Common Stock of the Company at an assumed
offering price per share of $27 1/8 . The Acquisitions are accounted for as
purchases in accordance with Accounting Principles Board Opinion No. 16. In
the opinion of management of Family Golf Centers, Inc. and its subsidiaries
(the "Company"), all adjustments necessary to present fairly such pro forma
condensed balance sheet have been made.

The pro forma condensed balance sheet should be read in conjunction with
the notes thereto, the financial statements of the Company, Yorktown Heights,
Indian River, Fairfield, Tuscon, St. Louis and West Palm Beach and the
related notes thereto and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," each included elsewhere in
this Prospectus. The pro forma condensed balance sheet is not necessarily
indicative of what the actual financial position would have been had the
transactions occurred at March 31, 1996, nor does it purport to represent the
future financial position of the Company.

F-6

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
MARCH 31, 1996
(IN THOUSANDS)

THE YORKTOWN INDIAN WEST PRO FORMA
COMPANY HEIGHTS RIVER FAIRFIELD TUCSON ST. LOUIS PALM BEACH ADJUSTMENTS
------- -------- ------ --------- ------ --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS .............. $11,147 $ 5 $(3,620)(A)
INVENTORIES ............................ 3,019 106
PREPAID EXPENSES ....................... 2,358 2
------- -------- ------ --------- ------ --------- ---------- -----------
TOTAL CURRENT ASSETS .................. 16,524 113 (3,620)

PROPERTY AND EQUIPMENT .................. 44,027 $2,100 $1,549 $ 993 $569 $609 $3,506 (149)(A)
LOAN ACQUISITION COSTS .................. 222
DEFERRED TAX BENEFIT .................... 116
OTHER ASSETS ............................ 1,567
EXCESS OF COST OVER FAIR VALUE OF ASSETS 674
------- -------- ------ --------- ------ --------- ---------- -----------
TOTAL ................................. $63,130 $2,100 $1,549 $1,106 $569 $609 $3,506 $ (3,769)
======= ======== ====== ========= ====== ========= ========== ===========

LIABILITIES
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 2,051 $ 70
CURRENT PORTION OF LONG-TERM
OBLIGATIONS ........................... 1,523 $ 5,000
------- -------- ------ --------- ------ --------- ---------- -----------
TOTAL CURRENT LIABILITIES ............. 3,574 70 5,000

LONG-TERM OBLIGATIONS (LESS CURRENT
PORTION) ............................... 7,229
DEFERRED RENT ........................... 103
OTHER LIABILITIES ....................... 238
------- -------- ------ --------- ------ --------- ---------- -----------
TOTAL LIABILITIES ..................... 11,144 70 5,000

COMMON STOCK ............................ 85
ADDITIONAL PAID-IN CAPITAL .............. 50,909 600
RETAINED EARNINGS ....................... 1,027
TREASURY STOCK .......................... (35)
NET ASSETS ACQUIRED ..................... $2,100 $1,549 $1,036 $569 $609 $3,506 (9,369)(A)
------- -------- ------ --------- ------ --------- ---------- -----------
TOTAL STOCKHOLDERS' EQUITY ............ 51,986 2,100 1,549 1,036 569 609 3,506 (8,769)
------- -------- ------ --------- ------ --------- ---------- -----------
TOTAL ................................. $63,130 $2,100 $1,549 $1,106 $569 $609 $3,506 $ (3,769)
======= ======== ====== ========= ====== ========= ========== ===========

[TABLE CONTINUED FROM ABOVE]

PRO FORMA
PRO FORMA REFLECTING
REFLECTING THE ACQUISITIONS
THE PRO FORMA AND REPAYMENT OF
ACQUISITIONS(1) ADJUSTMENTS DEBT(2)
----------------- ----------- ----------------
<C> <C> <C>

$ 7,532 $ 7,532
3,125 3,125
2,360 2,360
----------------- ----------- ----------------
13,017 13,017

53,204 53,204
222 222
116 116
1,567 1,567
674 674
----------------- ----------- ----------------
$68,800 $68,800
================= =========== ================

$ 2,121 $ 2,121

(A) 6,523 $(5,000)(B) 1,523
----------------- ----------- ----------------
8,644 (5,000) 3,644

7,229 7,229
103 103
238 238
----------------- ----------- ----------------
16,214 (5,000) 11,214
----------------- ----------- ----------------

85 2 (B) 87
51,509 4,998 (B) 56,507
1,027 1,027
(35) (35)
-- --
----------------- ----------- ----------------
52,586 5,000 57,586
----------------- ----------- ----------------
$68,800 $ -- $68,800
================= =========== ================

</TABLE>

F-7

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(A) To reflect the acquisition of Yorktown Heights, Indian River, Fairfield,
Tucson, St. Louis and West Palm Beach after March 31, 1996 as follows:

<TABLE>
<CAPTION>
ADJUSTMENT BOOK VALUE
TO FAIR OF NET
VALUE ASSETS ASSETS COMMON DEBT
COMPANY ACQUIRED ACQUIRED STOCK ISSUED CASH
- ---------------- ------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
Yorktown Heights $ 100 $2,100 $600 $1,600
Indian River ... (149) 1,549 1,400
Fairfield ....... 434 1,036 $1,470
Tucson .......... 531 569 1,100
St. Louis ....... 691 609 1,300
West Palm Beach (1,756) 3,506 1,130 620
------------ ------------ -------- -------- --------
$ (149) $9,369 $600 $5,000 $3,620
============ ============ ======== ======== ========
</TABLE>

(B) Reflects the sale of 198,206 shares of Common Stock of the Company at an
assumed offering price of $27 1/8 , the net proceeds of which will be used to
repay indebtedness of $5,000.

F-8

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND FOR THE THREE MONTHS ENDED MARCH 31, 1996

The following pro forma condensed statements of operations reflect the
transactions indicated below as if such transactions had occurred on January
1, 1995: (1) the acquisitions of Pelham Enterprises, Inc., the Hiland Park
Golf Course, RFC Enterprises, Inc., Upper Hembree Partners, L.P., The
Practice Tee, Inc. (''TPT'') Golf Masters Limited Partnership and Air Dome
Limited Partnership (collectively, "Valley View"), Owl's Creek Golf Center,
Inc., ("Virginia Beach"), Flemington Golf and Sports Center, LLC
("Flemington") and associated land, Yorktown Heights, Indian River,
Fairfield, Tucson, St. Louis and West Palm Beach (collectively, the "Acquired
Companies") acquired during 1995 and 1996 as if the Acquired Companies had
been acquired on January 1, 1995 and (2) the acquisition of the Acquired
Companies and the assumed repayment of $5.0 million of indebtedness incurred
in connection with the acquisitions of the Acquired Companies from the net
proceeds of the sale of 198,206 shares of Common Stock of the Company at an
assumed offering price per share of $27 1/8 . The acquisitions of the
Acquired Companies except TPT have been accounted for as purchases in
accordance with Accounting Principles Board Opinion No. 16. Since TPT has
been acquired from related parties, the acquisition has been recorded using
historical basis. In the opinion of management of the Company, all
adjustments necessary to present fairly such pro forma statements of
operations have been made.

These pro forma condensed statements of operations should be read in
conjunction with the notes thereto, the financial statements of the Company
and the Acquired Companies and the related notes thereto and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," each included elsewhere in this Prospectus. The pro forma
condensed statements of operations are not necessarily indicative of what the
actual results of operations would have been had the transactions occurred at
January 1, 1995, or January 1, 1996 nor do they purport to indicate the
results of future operations.

F-9

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
ACQUIRED COMPANIES
---------------------------------------------
HILAND UPPER
PELHAM PARK RFC HEMBREE
THE ENTERPRISES, GOLF ENTERPRISES PARTNERS,
COMPANY INC.(A) COURSE(A) INC.(A) L.P.(A)
------- ------------ ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Operating revenues ................... $ 9,795 $117 $ 100 $363 $386
Merchandise sales .................... 2,637 150 17
------- ------------ ------- ----------- ---------
Total revenue ....................... 12,432 267 117 363 386
------- ------------ ------- ----------- ---------
Operating expenses ................... 6,614 87 297 234 317
Cost of merchandise sold ............. 1,779 111 152
Selling, general and administrative
expenses ............................ 1,242 39 44 110 46
------- ------------ ------- ----------- ---------
Operating income (loss) .............. 2,797 30 (376) 19 23
Interest expense ..................... 939 16 61 112
Other (income) expense ............... (66) (6)
------- ------------ ------- ----------- ---------
Income (loss) before income taxes and
extraordinary item .................. 1,924 14 (376) (42) (83)
Income tax expense (benefit) ......... 669
------- ------------ ------- ----------- ---------
INCOME (LOSS) before extraordinary
item ................................ $ 1,255 $ 14 $(376) $(42) $(83)
======= ============ ======= =========== =========
Income (loss) per share before
extraordinary item .................. $ 0.24
=======
Weighted average shares outstanding . 5,271
=======
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
VALLEY VIRGINIA YORKTOWN
TPT(A) VIEW(A) BEACH(B) FLEMINGTON(B) HEIGHTS(B)
------ ------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Operating revenues ................... $ 244 $ 668 $616 $ 501 $ 388
Merchandise sales .................... 44 92
------ ------ -------- ----------- ---------
Total revenue ....................... 244 712 708 501 388
------ ------ -------- ----------- ---------
Operating expenses ................... 86 395 404 900 393
Cost of merchandise sold ............. 36 72
Selling, general and administrative
expenses ............................ 264 404 119 101
------ ------ -------- ----------- ---------
Operating income (loss) .............. (106) (123) 113 (399) (106)
Interest expense ..................... 3 34 192 128 164
Other (income) expense ............... (1) (2) 2 2,448
------ ------ -------- ----------- ---------
Income (loss) before income taxes and
extraordinary item .................. (108) (155) (81) (2,975) (270)
Income tax expense (benefit) ......... 1
------ ------ -------- ----------- ---------
INCOME (LOSS) before extraordinary
item ................................ $(109) $(155) $(81) $(2,975) $(270)
====== ====== ======== =========== =========
Income (loss) per share before
extraordinary item ..................
Weighted average shares outstanding .
</TABLE>

(a) Represents operations from January 1, 1995 through date of
acquisition.

(b) Represents operations for the year ended December 31, 1995.

F-10

<PAGE>

<TABLE>
<CAPTION>
ACQUIRED COMPANIES
--------------------------------------------------------------
INDIAN WEST PALM
RIVER(B) FAIRFIELD(B) TUCSON(B) ST. LOUIS(B) BEACH(B)
-------- ------------ --------- ------------ -------------
<S> <C> <C> <C> <C>
$ 510 $791 $ 156 $ 443 $ 863
98
-------- ------------ --------- ------------ -------------
608 791 156 443 863
-------- ------------ --------- ------------ -------------
607 800 214 544 1,029

161 33
-------- ------------ --------- ------------ -------------
(232) (9) (91) (101) (166)
104 132 77 182
(5) 2
-------- ------------ --------- ------------ -------------

(232) (113) (218) (180) (348)

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

$(232) $(113) $(218) $(180) $ (348)
======== ============ ========= ============ =============

</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
PRO FORMA
REFLECTING THE
PRO FORMA ACQUIRED
REFLECTING THE COMPANIES AND
PRO FORMA ACQUIRED PRO FORMA REPAYMENT OF
ADJUSTMENTS COMPANIES(1) ADJUSTMENTS DEBT(2)
------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
$15,941 $15,941
3,038 3,038
------------- -------------- ------------- ---------------
18,979 18,979
------------- -------------- ------------- ---------------
$ (171)(A) 12,750 12,750

2,222 2,222

13 (A) 2,576 2,576
------------- -------------- ------------- ---------------
158 1,431 1,431
44 (A) 2,188 $(500)(D) 1,688
(2,448)(A) (76) (76)
------------- -------------- ------------- ---------------

2,562 (681) 500 (181)
(916)(B) (246) 180 (D) (66)
------------- -------------- ------------- ---------------

$ 3,478 $ (435) $320 $ (115)
============= ============== ============= ===============

$ (0.08) $ (.02)
============= ============== ===============
366 (C) 5,637 198 (D) 5,835
============= ============== ============= ===============
</TABLE>

F-11

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(in thousands, except share and per share data)

(A) Expense adjustments for the period ended December 31, 1995 to reflect
the acquisition of the Acquired Companies as if the acquisitions had
taken place at the beginning of the period:

<TABLE>
<CAPTION>
IMPAIRMENT
INTEREST DEPRECIATION AMORTIZATION IN VALUE OF
COMPANY DATE ACQUIRED ADJUSTMENT(1) ADJUSTMENT OF GOODWILL ASSETS
- ------------------------------ --------------- ------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Pelham Enterprises, Inc. ..... April 1995 $ (30) $ 12
Hiland Park Golf Course ...... May 1995 (212) 14
RFC Enterprises, Inc. ......... August 1995 9 (33) $8
Upper Hembree Partners, L.P. . August 1995 (4) (108)
TPT ........................... November 1995 26
Valley View ................... November 1995 (56)
Virginia Beach ................ March 1996 12 22
Flemington .................... March 1996 39 $(2,448)
Yorktown Heights .............. April 1996 4 5
Indian River .................. May 1996 140 (4)
Fairfield ..................... June 1996 36 25
Tucson ........................ June 1996 (22)
St. Louis ..................... June 1996 53 34
West Palm Beach ............... June 1996 (7) (77)
------------- -------------- -------------- ------------
$ 44 $(171) $13 $(2,448)
============= ============== ============== ============
</TABLE>

(1) Assumes average rate of borrowing at 10%.

(B) To reflect the income tax effect arising from the losses of the
Acquired Companies.

(D) To reflect the reduction of interest expense assuming that the net
proceeds of $5,000 from the sale of 198,206 shares of Common Stock of the
Company at an assumed offering price of $27 1/8 has been applied to the
repayment of indebtedness at the beginning of the year and the related income
tax effect.

F-12

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
ACQUIRED COMPANIES
----------------------------------------------------------------------------

WEST
THE VIRGINIA FLEMINGTON YORKTOWN INDIAN FAIRFIELD TUCSON ST. LOUIS PALM
COMPANY BEACH(A) (B) HEIGHTS(C) RIVER(C) (C) (C) (C) BEACH(C)
------- -------- ---------- -------- ------ --------- ------ --------- ------
<S> <C>
Operating revenues . $2,691 $ 35 $ 74 $54 $ 52 $ 39 $ 63 $221
Merchandise sales .. 671 2 3 68
------- -------- ---------- -------- ------ --------- ------ --------- ------
Total revenue ...... 3,362 37 74 57 120 39 63 221
------- -------- ---------- -------- ------ --------- ------ --------- ------
Operating expenses . 2,252 39 $ 25 88 40 61 11 77 191
Cost of merchandise
sold ............... 457 2 3 61
Selling, general and
administrative
expenses ........... 643 27 22 8 10 26 7
------- -------- ---------- -------- ------ --------- ------ --------- ------
Operating income
(loss)............. 10 (31) (25) (36) 6 (12) 2 (14) 23
Interest expense ... 100 34 26 24 40 22
Other income
(expense) .......... 197 (14) 3
------- -------- ---------- -------- ------ --------- ------ --------- ------
Income before Income
taxes .............. 107 (79) (25) (59) 6 (36) (38) (36) 23
Income tax expense
(benefit) .......... 38
------- -------- ---------- -------- ------ --------- ------ --------- ------
Net income (loss) ... $ 69 $(79) $(25) $(59) $6 $(36) $(38) $(36) $ 23
======= ======== ========== ======== ====== ========= ====== ========= ======
Net income
(loss) per share ... 0.01
Weighted average =======
shares outstanding 8,648
=======

[TABLE CONTINUED FROM ABOVE]

PRO FORMA
REFLECTING
THE
PRO FORMA ACQUISITIONS
REFLECTING AND
PRO FORMA THE PRO FORMA REPAYMENT OF
ADJUSTMENTS ACQUISITIONS(1) ADJUSTMENTS DEBT(2)
- ----------- ------------- ----------- ------------

$3,229 $3,229
744 744
- ----------- ------------- ----------- ------------
3,973 3,973
- ----------- ------------- ----------- ------------
$ (29) 2,755 2,755

523 523

743 743
- ----------- ------------- ----------- ------------
29 (48) (48)
(70) (A) 176 $ (125) (D) 51

(61) (A) 125 125
- ----------- ------------- ----------- ------------

38 (99) 125 (26)
(74) (B) (36) 45 (D) (9)
- ----------- ------------- ----------- ------------
$ 112 $ (63) $ 80 $ (17)
=========== ============= =========== ============
$(0.01) $(0.00)
============= ============
131 (C) 8,779 198 (D) 8,977
========== ============= =========== ============

</TABLE>

(a) Represents operations from January 1, 1996 through date of acquisition.

(b) Represents estimated operations from January 1, 1996 through date of
acquisition.

F-13

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(A) Expense adjustments for the period ended March 31, 1996 to reflect
the acquisition of the Acquired Companies as if the acquisitions had
taken place at the begining of the period:
<TABLE>
<CAPTION>
OTHER
DATE INTEREST EXPENSE DEPRECIATION (INCOME)
COMPANY ACQUIRED ADJUSTMENT (1) ADJUSTMENT EXPENSE OTHER
- ----------------- ------------ ---------------- -------------- --------- -------
<S><C>
Virginia Beach .. March 1996 $ 34 $ (9) $15 $14
Flemington ....... March 1996
Yorktown Heights April 1996 26 20
Indian River ..... May 1996 (1) 17
Fairfield ........ June 1996 11 6
Tucson ........... June 1996 (12)
St. Louis ........ June 1996 11 8
West Palm Beach . June 1996 (20) (19) 9
---------------- -------------- --------- -------
$ 50 $(15) $61 $14
================ ============== ========= =======
</TABLE>

(1) Assumes average rate of borrowing at 10%

(B) To reflect the income tax effect arising from the losses of the
Acquired Companies.

(D) To reflect the reduction of interest expense assuming that the net
proceeds of $5,000 from the sale of 198,206 shares of Common Stock of
the Company at an assumed offering price of $27 1/8 has been applied
to the repayment of indebtedness at the beginning of the year and the
related income tax effect.

F-14

<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Family Golf Centers, Inc.
Melville, New York

We have audited the accompanying consolidated balance sheets of Family
Golf Centers, Inc. and subsidiaries as at December 31, 1994 and December 31,
1995 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1995. 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 audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements enumerated above present fairly,
in all material respects, the financial position of Family Golf Centers, Inc.
and subsidiaries at December 31, 1994 and December 31, 1995 and the results
of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995 in conformity with generally
accepted accounting principles.

Richard A. Eisner & Company, LLP
New York, New York
March 15, 1996

F-15

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

DECEMBER 31, MARCH 31,
-------------------- 1996
1994 1995
--------- ---------
<S><C>
(UNAUDITED)
ASSETS
(NOTE F)
Current assets:
Cash and cash equivalents (Notes A[3] and A[11]) ......... $ 2,296 $23,121 $11,147
Inventories (Note A[4]) ................................... 462 1,941 3,019
Prepaid expenses and other current assets (Note D) ....... 222 999 2,358
Deferred tax asset (Note J) ............................... 65
--------- --------- -----------
Total current assets ..................................... 3,045 26,061 16,524
Property, plant and equipment (net of accumulated
depreciation of $733, $1,336 and $1,634 at December 31,
1994, December 31, 1995 and March 31, 1996, respectively)
(Notes A[5], B and C) ..................................... 11,726 33,330 44,027
Loan acquisition costs (net of accumulated amortization of
$105, $12 and $25 at December 31, 1994, December 31, 1995
and March 31, 1996, respectively) ......................... 376 234 222
Deferred tax asset (Note J) ................................ 116 116
Other assets ............................................... 519 1,205 1,567
Excess of cost over fair value of assets acquired (Note B). 411 636 674
--------- --------- -----------
TOTAL .................................................... $16,077 $61,582 $63,130
========= ========= ===========
LIABILITIES
Current liabilities:
Accounts payable, accrued expenses and other current
liabilities .............................................. $ 1,720 $ 3,044 $ 2,051
Income taxes payable (Note J) ............................. 569
Current portion of long-term obligations (Note G) ........ 1,074 1,850 1,523
Due to Officers (Note F) .................................. 455
--------- --------- -----------
Total current liabilities ................................ 3,249 5,463 3,574
Long-term obligations (less current portion) (Note G) ..... 5,254 6,343 7,229
Deferred rent (Note E) ..................................... 187 116 103
Other liabilities .......................................... 153 272 238
--------- --------- -----------
Total liabilities ........................................ 8,843 12,194 11,144
--------- --------- -----------
Commitments, contingencies and other matters
(Notes E and H)

STOCKHOLDERS' EQUITY
Preferred stock -- authorized 1,000,000 shares, none
outstanding
Common stock authorized 10,000,000 shares, $.01 par value;
4,830,000, 8,318,045 and 8,489,325 shares outstanding at
December 31, 1994, December 31, 1995 and March 31, 1996,
respectively (Notes B and I) .............................. 48 83 85
Additional paid-in capital (Note H[4]) ..................... 7,302 48,347 50,909
Retained earnings (Deficit) ................................ (116) 958 1,027
Treasury stock ............................................. (35)
--------- --------- -----------
Total stockholders' equity ............................... 7,234 49,388 51,986
--------- --------- -----------
TOTAL .................................................... $16,077 $61,582 $63,130
========= ========= ===========
</TABLE>

The accompanying notes to financial statements
are an integral part hereof.

F-16

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- --------- --------- ---------
(UNAUDITED)
<S><C>
Operating revenues ......................... $1,993 $5,342 $ 9,795 $1,360 $2,691
Merchandise sales .......................... 639 1,020 2,637 422 671
-------- -------- --------- --------- ---------
Total revenue ............................ 2,632 6,362 12,432 1,782 3,362
-------- -------- --------- --------- ---------
Operating expenses ......................... 2,247 4,215 6,614 1,061 2,252
Cost of merchandise sold ................... 459 750 1,779 295 457
Selling, general and administrative
expenses. ................................. 615 548 1,242 352 643
-------- -------- --------- --------- ---------
Total expenses ........................... 3,321 5,513 9,635 1,708 3,352
-------- -------- --------- --------- ---------
Operating income (loss) .................... (689) 849 2,797 74 10
Interest expense ........................... (192) (313) (939) (92) (100)
Other income (including insurance proceeds
of $104 in 1993) .......................... 106 16 66 22 197
-------- -------- --------- --------- ---------
Income (loss) before income taxes, minority
interest and extraordinary item ........... (775) 552 1,924 4 107
Income tax expense (benefit) (Notes A[8]
and J) .................................... -- (65) 669 2 38
-------- -------- --------- --------- ---------
Income (loss) before minority interest and
extraordinary item ........................ (775) 617 1,255 2 69
Minority interest in income (loss) ........ 12 (129) -- -- --
Extraordinary charge -- early
extinguishment of debt (net of tax effect) -- -- (181) -- --
-------- -------- --------- --------- ---------
NET INCOME (LOSS) .......................... $ (763) $ 488 $ 1,074 $ 2 $ 69
======== ======== ========= ========= =========
Net income (loss) per share before
extraordinary item (Note A[9]) ............ $ (.23) $ .13 $ .24 $ .00 $ .01
Extraordinary item ......................... (.04)
-------- -------- --------- --------- ---------
Net income (loss) per share ................ $ (.23) $ .13 $ .20 $ .00 $ .01
======== ======== ========= ========= =========
Weighted average shares outstanding ....... 3,272 3,636 5,271 4,938 8,648
======== ======== ========= ========= =========
</TABLE>

The accompanying notes to financial statements
are an integral part hereof.

F-17

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

CAPITAL STOCK
(PAR VALUE $.01)
---------------------
NUMBER OF ADDITIONAL RETAINED
SHARES PAID-IN TREASURY EARNINGS
ISSUED AMOUNT CAPITAL STOCK (DEFICIT) TOTAL
----------- -------- ------------ ---------- ---------- ---------
<S><C>
Balance -- January 1, 1993 ............... 110 $ 292 $ (23) $ 269
Conversion of debt to capital ............ 500 500
Issuance of stock ........................ 55 1,122 1,122
Net (loss) for the year .................. (763) (763)
----------- -------- ------------ ---------- ---------- ---------
Balance -- December 31, 1993 ............. 165 1,914 (786) 1,128
Issuance of stock ........................ 5,055
Issuance of warrants in connection with
bridge loan ............................. 18 18
Conversion of debt to capital ............ 500 500
Recapitalization ......................... 3,444,780 $34 (216) 182 0
Net proceeds from public offering ....... 1,380,000 14 5,396 5,410
S corporation distribution to
stockholders ............................ (310) (310)
Net income for the year .................. 488 488
----------- -------- ------------ ---------- ---------- ---------
Balance -- December 31, 1994 ............. 4,830,000 48 7,302 (116) 7,234
Issuance of stock (Note B) ............... 284,300 3 2,732 2,735
Net proceeds from public offering ....... 3,135,000 31 43,702 43,733
Public offering expenses ................. (1,317) (1,317)
Exercise of warrants ..................... 64,950 1 307 308
Exercise of employee options ............. 3,795 13 13
Preferential distribution to stockholders
of The Practice Tee, Inc. (Note H) ..... (4,392) (4,392)
Net income for the year .................. 1,074 1,074
----------- -------- ------------ ---------- ---------- ---------
Balance -- December 31, 1995 ............. 8,318,045 83 48,347 958 49,388
Issuance of stock ........................ 150,000 2 2,238 2,240
Issuance of warrants ..................... 245 245
Exercise of employee options ............. 21,280 79 79
Treasury Stock in exchange for note
receivable (2,200 shares) ............... $(35) (35)
Net income for the period ................ 69 69
----------- -------- ------------ ---------- ---------- ---------
Balance--March 31, 1996 (Unaudited) ..... 8,489,325 $85 $50,909 $(35) $1,027 $51,986
=========== ======== ============ ========== ========== =========
</TABLE>

The accompanying notes to financial statements
are an integral part hereof.

F-18

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- ---------- --------- ----------
<S><C>
Cash flows from operating activities:
Net income (loss) ........................................... $ (763) $ 488 $ 1,074 $ 2 $ 69
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................. 260 564 739 173 251
Deferred tax asset ........................................ (65) (51)
Extraordinary charge -- early extinguishment of debt --
loan acquisition cost write-off .......................... 302
Minority interest in net income (loss) .................... (12) 129
(Increase) in inventories ................................. (31) (289) (1,478) (430) (1,079)
(Increase) in prepaid expenses and other current assets .. (13) (124) (778) (513) (1,313)
(Increase) in other assets ................................ (80) (181) (749) (65) (205)
Increase (Decrease) in accounts payable and accrued
expenses ................................................. 405 239 655 444 (1,352)
Increase (Decrease) in deferred rent ...................... 209 (21) (71) (18) (12)
Increase (Decrease) in other liabilities .................. 25 123 119 (9) (35)
Increase (Decrease) in income taxes payable ............... 569 (569)
--------- --------- ---------- --------- ----------
Net cash provided by (used in) operating activities ...... 0 863 331 (416) (4,245)
--------- --------- ---------- --------- ----------
Cash flows from investing activities:
Acquisitions of property and equipment ...................... (4,287) (5,092) (15,213) (1,584) (6,668)
(Increase) in security deposits ............................. (26) (37) (100)
Acquisition of limited partnership minority interest ....... (1,280)
Acquisition of goodwill ..................................... (259)
--------- --------- ---------- --------- ----------
Net cash (used in) investing activities ................... (4,313) (6,409) (15,472) (1,684) (6,668)
--------- --------- ---------- --------- ----------
Cash flows from financing activities:
(Increase) Decrease in loan acquisition costs ............... (213) (246) 31
Increase (Decrease) in loans payable to stockholders ....... 75 25 (231)
Increase (Decrease) in due to officers ...................... (63) (95) (455) 479
Proceeds from loans -- bank and others ...................... 3,555 4,497 17,916
Repayment of loans -- bank and others ....................... (812) (2,185) (19,594) (302) (1,141)
Proceeds from issuance of bridge financing and warrants .... 499
Repayment of bridge financing ............................... (499)
Net proceeds from issuance of common stock .................. 1,872 5,410 42,416
Preferential distribution to stockholders of The Practice
Tee, Inc. .................................................. (4,392)
Proceeds from the exercise of warrants and options . . ..... 321 80
--------- --------- ---------- --------- ----------
Net cash provided by (used in) financing activities ...... 4,627 7,439 35,966 (23) (1,061)
--------- --------- ---------- --------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........ 314 1,893 20,825 (2,123) (11,974)
Cash and cash equivalents -- beginning of period ............ 89 403 2,296 2,296 23,121
--------- --------- ---------- --------- ----------
CASH AND CASH EQUIVALENTS -- END OF PERIOD ................... $ 403 $ 2,296 $ 23,121 $ 173 $ 11,147
========= ========= ========== ========= ==========
Supplemental and noncash disclosures:
Acquisition of property in exchange for common stock ....... $ 2,734 $ 2,241
Acquisition of property subject to mortgage and notes ...... 1,700
Treasury stock in exchange for note receivable .............. 35
Issuance of warrants ........................................ 245
Conversion of amounts due to stockholders to common stock .. $ 500
Property additions accrued but not paid ..................... $ 207 662 669 359
Accrual of S corporation distribution to stockholders ...... 310
Interest paid ............................................... 276 476 1,296 225
Taxes paid .................................................. 53 954
</TABLE>

The accompanying notes to financial statements
are an integral part hereof.

F-19

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO MARCH 31, 1996 AND THREE MONTHS
ENDED MARCH 31, 1995 AND MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(NOTE A) -- THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

[1] THE COMPANY:

Through an agreement with Golden Bear Golf Centers, Inc. ("GBGC"), the
Company is a non-exclusive licensee for Golden Bear Golf Centers in certain
territories. The license agreement is terminable by GBGC under certain
conditions. (See Note H[3].)

[2] PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of Family Golf
Centers, Inc. ("FGCI") and as of December 31, 1994, its wholly owned
subsidiaries, Orient Associates International, Inc. ("OAI"), Skydrive Co.,
Inc., Skydrive Willowbrook NJ, Inc., Skydrive Greenburgh Co., Inc., Skycon
Construction Co., Inc., Skydrive Alley Pond Company, Inc. ("Skydrive Alley
Pond"), (collectively, the "Operating Companies"), (the Operating Companies
and FGCI together, the "Company"). In addition, as of December 31, 1995 the
consolidated financial statements also include Hiland Family Golf Centers,
Inc., Pelham Family Golf Center, Inc., Alpharetta Family Golf Centers, Inc.,
Peachtree Family Golf Centers, Inc., Richmond Family Golf Centers, Inc.,
Valley View Family Golf Centers, Inc. and The Practice Tee, Inc., which were
formed in 1995 to acquire certain new golf facilities. In addition, as of
March 31, 1996, the consolidated financial statements also include Mesa
Family Golf Centers, Inc., Virginia Beach Family Golf Centers, Inc., and
Flemington Family Golf Centers, Inc., which were formed in 1996 to acquire
certain new golf facilities. All significant intercompany transactions and
accounts have been eliminated.

Upon the closing of the Company's initial public offering in November
1994, pursuant to an exchange agreement, FGCI acquired all of the outstanding
common stock of the Operating Companies, in exchange for 3,445,000 shares of
common stock of FGCI. The consolidated financial statements include the
results of the Operating Companies for all periods presented as the Operating
Companies were previously related through common ownership. The exchange
transaction is accounted for in a manner similar to a pooling of interests
and there was no change in the bases of the entities combined.

[3] CASH EQUIVALENTS:

The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents.

[4] INVENTORIES:

Inventory consists of merchandise for sale in the pro shop at each
facility and food and beverage in the restaurants and is valued at the lower
of cost on a first-in, first-out basis or market.

[5] PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment is stated at cost. Depreciation and
amortization of the respective assets is computed using the straight-line
method over their estimated lives or the term of the lease, including
expected renewal options, if shorter. Leasehold improvements are amortized
using the straight-line method over the remaining life of the lease,
including expected renewal options.

F-20

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE A) -- THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(Continued)
[6] PRE-OPENING COSTS:

Costs associated with the opening of a new location are deferred and
amortized over one year.

Pre-opening costs consists of primarily employee recruitment and training
costs as well as pre-opening marketing expenditures.

[7] LOAN ACQUISITION COSTS:

Loan acquisition costs incurred in connection with debt financing are
amortized over the life of the applicable loan weighted in accordance with
the amount of debt outstanding.

[8] INCOME TAXES:

Certain of the Operating Companies elected to be treated as S corporations
pursuant to Section 1362(a) of the Internal Revenue Code for federal and
state income tax purposes. As a result of this election, the income of such
Operating Companies was taxed directly to the individual stockholders. Upon
the closing of the public offering in November, 1994, the Company became a C
corporation and adopted Statement of Accounting Standards No. 109,
"Accounting for Income Taxes" which requires the use of the liability method
of accounting for income taxes.

[9] NET INCOME (LOSS) PER SHARE:

Net income (loss) per share is computed using the weighted average number
of shares outstanding during the period as adjusted for the exchange ratio
for shares issued in the reorganization of the Company. The effect of
outstanding options and warrants is computed, if dilutive, using the
"treasury stock" method. In accordance with Securities and Exchange
Commission requirements, common shares, options and warrants issued in
certain of the Operating Companies during the twelve-month period prior to
the filing of the initial public offering have been included in the
calculation as if they were outstanding for all periods prior to the
offering.

[10] USE OF ESTIMATES:

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

[11] CONCENTRATION OF CREDIT RISK:

Financial instruments which potentially subject the Company to significant
concentrations of credit risk consist principally of temporary cash
investments. The Company places its temporary cash investments with high
credit qualified financial institutions and, by policy, limits the amount of
credit exposure to any one financial institution.

[12] RECENTLY ISSUED ACCOUNTING STANDARDS:

A recently issued accounting standard regarding impairments of long-lived
assets ("FAS 121") has not been adopted early by the Company. FAS 121
requires entities to review long-lived assets and certain identifiable
intangibles to be held and used, for impairment whenever changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The impact of the adoption of this standard on financial
position and results of operations is not expected to be material.

F-21

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE A) -- THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(Continued)
[13] STOCK BASED COMPENSATION:

The Company accounts for stock based compensation including stock options
under the basis of Accounting Principles Board Opinion No. 25 and will
continue to do so in the future. The requirements of FAS 123 on stock based
compensation will require additional disclosures commencing in 1996. Stock
options issued in the quarter ended March 31, 1996 were not material and
accordingly, no additional disclosure has been presented.

[14] UNAUDITED FINANCIAL STATEMENTS:

The financial statements as of March 31, 1996 and for the three months
ended March 31, 1996 and March 31, 1995 are unaudited and are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996. In the opinion of management, the financial statements include all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the Company's financial position and results of operations.

[15] INTERIM FINANCIAL REPORTING:

Pursuant to APB Opinion No. 28, Interim Financial Reporting, certain
accounting principles and practices followed for annual reporting are
modified for interim reporting purposes, so that the reported results for
these interim periods better relate to the results of operations for the
annual periods. Therefore, certain costs and expenses other than merchandise
cost are allocated among interim periods based on an estimate of benefit
received or activity associated with the periods.

(NOTE B) -- ACQUISITION OF GOLF FACILITIES:

In April 1995, the Company acquired Pelham Enterprises, Inc. ("Pelham"),
an existing golf driving range. Pursuant to the purchase agreement, the
Company acquired the outstanding shares of Pelham Enterprises, Inc. for (i)
90,000 shares of FGCI common stock valued at $430 (ii) satisfaction of the
loan from the sole stockholder to Pelham of $512 and (iii) a promissory note
in favor of the sole stockholder for $230 in exchange for pro shop inventory
and other assets. In connection with the issuance of common stock, the
Company registered 45,000 shares in connection with the public offering in
December 1995 and has agreed to certain registration rights for the remaining
45,000 shares. Pelham's assets included land which was subject to an $818
mortgage. A portion of the purchase price for the acquisition ($512) was
financed with borrowings under a line of credit from Chemical Bank at an
interest rate of prime plus 1.5%, which was subsequently repaid with a
portion of the net proceeds of a public offering.

In May 1995, the Company acquired Hiland Park Golf Course ("Hiland"), a
distressed property which was in foreclosure, consisting of a golf course,
restaurant and catering facility. The purchase price for the assets was
$3,750. The Company financed a portion of the purchase price of Hiland with a
$3,000 loan from Orix USA Corp. at an interest rate of LIBOR plus 3.5%
(capped at 10.5%) and with borrowings under a line of credit from Chemical
Bank at an interest rate of prime plus 1.5%, which was subsequently repaid
with a portion of the net proceeds of a public offering.

In August 1995, the Company acquired RFC Enterprises, Inc. ("RFC"), an
existing golf center in Glen Allen, Virginia (near Richmond), in exchange for
7,500 shares of common stock valued at $96 and $454 in cash. RFC's assets
include land which is subject to a $170 mortgage. In connection with the
issuance of common stock, the Company has agreed that, if such common stock
does not have a current market price (as defined) of at least $10.00 per
share on August 25, 1997, the Company will, subject to adjustment under
certain circumstances, make up the difference between $10.00 per share and
such current market price in cash, stock or a combination thereof.

F-22

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE B) -- ACQUISITION OF GOLF FACILITIES: (Continued)
In August 1995, the Company purchased: (i) land in Duluth, Georgia (near
Atlanta) on which it intends to construct an executive golf course and (ii)
an existing driving range ("Peachtree"). The purchase price consisted of $500
in cash, a mortgage note in the amount of $1,600 bearing interest at the
prime rate payable on August 28, 2000 and a promissory note in the amount of
$1,000 which bears interest at 8% per annum payable on August 28, 1997 in
cash or common stock of the Company, at the Company's option.

In September 1995, the Company acquired an existing driving range
("McDivots") in Alpharetta, Georgia (near Atlanta) in exchange for 85,000
shares of common stock and an option to purchase up to 8,500 shares of the
common stock at an exercise price of $25.00 per share expiring in September
2000. The property is subject to a mortgage of $1,800.

In November 1995, the Company acquired a 5 acre property in Valley View,
Ohio ("Valley View") on which there is a domed indoor driving range. The
purchase price consisted of: (i) 101,800 shares of common stock and, (ii) an
option to purchase up to 10,000 shares of the Company's common stock at an
exercise price of $25.00 per share and (iii) cash. The property was subject
to a mortgage, due September 1997 and bearing interest at the greater of 8%
and 1% over National City Bank's base rate.

In November 1995, the Company acquired The Practice Tee, Inc. ("TPT"). TPT
operates a combination Golden Bear Golf Center and golf course facility in El
Segundo, California and a combination golf center and par-3 golf course
facility in Gilroy, California. The purchase price consisted of $4,000 and up
to $2,000 payable upon the achievement of certain operating targets.
<TABLE>
<CAPTION>

PELHAM HILAND RFC
-------- -------- -------
<S><C>
Property, plant and equipment . .......... $1,840 $3,850 $ 747
Other current assets ..................... 250
Excess of cost over fair value ........... 259
-------- -------- -------
Total assets ......................... 2,090 3,850 1,006
Assumption of mortgage payable ........... (818) (170)
Assumption of other liabilities .......... (246)
-------- -------- -------
Net assets acquired ...................... $1,272 $3,850 $ 590
======== ======== =======
Fair value of stock issued ............... $ 430 $ 96
Loan from selling stockholder ............ 512
Promissory note from selling stockholder 230
Mortgage from Orix USA Corp .............. $3,000
Borrowings from Chemical Bank ............ 750 451
Other liabilities ........................ 43
Acquisition costs ........................ 100 100
-------- -------- -------
$1,272 $3,850 $ 590
======== ======== =======

(RESTUBBED TABLE CONTINUED FROM ABOVE)

PEACHTREE MCDIVOTS VALLEY VIEW
----------- ---------- -------------
Property, plant and equipment . .......... $900 $ 3,140 $1,895
Other current assets .....................
Excess of cost over fair value ...........
----------- ---------- -------------
Total assets ......................... 900 3,140 1,895
Assumption of mortgage payable ........... (342)
Assumption of other liabilities .......... (1,813) (185)
----------- ---------- -------------
Net assets acquired ...................... $900 $ 1,327 $1,368
=========== ========== =============
Fair value of stock issued ............... $ 1,140 $1,069
Loan from selling stockholder ............
Promissory note from selling stockholder $900
Mortgage from Orix USA Corp ..............
Borrowings from Chemical Bank ............ 53 299
Other liabilities ........................ 105
Acquisition costs ........................ 29
----------- ---------- -------------
$900 $ 1,327 $1,368
=========== ========== =============
</TABLE>

In February and March 1996, the Company acquired a combination golf center
and par-3 golf course in Mesa, Arizona ("Mesa"), a combination golf center
and par-3 golf course located in Virginia Beach, Virginia ("Virginia Beach")
and a driving range, miniature golf course, batting cages, a pro shop and a
club house located in Flemington, New Jersey ("Flemington") and associated
land. The aggregate purchase price of these three properties was
approximately $8,500, consisting of cash, common stock of the Company or
notes, or a combination thereof.

In April 1996, the Company acquired an existing golf recreational practice
facility in Yorktown Heights, New York.

In May 1996, the Company consummated the purchase of a long-term leasehold
interest for property located in Indian River, Virginia on which there is an
existing golf recreational facility.

F-23

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE B) -- ACQUISITION OF GOLF FACILITIES: (Continued)
In June 1996, the Company consummated the purchases of leasehold
interests for properties located in Fairfield, Ohio and St. Louis, Missouri
on which there are existing golf recreational practice facilities and
acquired existing golf recreational facilities in Tucson, Arizona and West
Palm Beach, Florida.

The aggregate purchase price of the properties acquired in April 1996, May
1996 and June 1996 was approximately $9,220, consisting of cash, common stock
of the Company or notes, or a combination thereof.

The operating results of Pelham, Hiland, RFC, Peachtree, McDivots, TPT and
Valley View are included in the Company's results of operations for the year
ended December 31, 1995 from the date of acquisitions. The results of Mesa,
Virginia Beach and Flemington are included in the Company's results of
operations for the three months ended March 31, 1996 from the date of
acquisitions. These acquisitions were accounted for by the purchase method of
accounting.

The following pro forma information for the years ended December 31, 1995
and December 31, 1994 assumes that the acquisition of Pelham, Hiland, RFC,
McDivots, Valley View and TPT had taken place at the beginning of each of
those years and that the excess cost over the fair value of assets acquired
for RFC is being amortized over 20 years. The operations of the existing
driving range in Peachtree were not material to the operations of the
Company.

YEAR ENDED
DECEMBER 31,
--------------------
1995 1994
--------- ---------
Total revenue .......................... $14,522 $10,902
Net income (loss) ...................... $ 472 $ (481)
Net income (loss) per share (Note A[9]) $ .09 $ (0.11)

The following pro forma information for the year ended December 31, 1995
and for the three months ended March 31, 1996 assumes that, in addition to
those acquisitions noted above, the acquisitions of Virginia Beach,
Flemington, Yorktown Heights, Indian River, Fairfield, Tucson, St. Louis and
West Palm Beach had taken place at the beginning of 1995 and that the excess
of cost over the fair value of assets acquired is being amortized over 20
years. The operations of Mesa were not material to the operations of the
Company.

YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 MARCH 31, 1996
----------------- ------------------
Total revenue ................... $18,979 $3,973
Net (loss) ...................... $ (435) $ (63)
Net (loss) per share (Note A[9]) $ (.08) $ (.01)

F-24

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE C) -- PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment are summarized as follows:
<TABLE>
<CAPTION>

DECEMBER 31, MARCH 31,
-------------------- 1996
1994 1995
--------- ---------
<S><C>
Golf driving range facilities ................ $ 5,123 $23,564 $29,431
Leasehold improvements ....................... 5,317 7,248 9,519
Machinery and equipment ...................... 827 1,617 2,077
Furniture and fixtures and computer equipment 70 219 750
Construction in progress ..................... 1,122 2,018 3,884
--------- --------- -----------
Total ...................................... 12,459 34,666 45,661
Accumulated depreciation and amortization ... 733 1,336 1,634
--------- --------- -----------
Balance .................................... $11,726 $33,330 $44,027
========= ========= ===========
</TABLE>

Substantially all of the Company's property, plant and equipment is
pledged as collateral for various loans (see Note G). Interest of $55, $150
and $387 has been capitalized during the years ended December 31, 1993,
December 31, 1994 and December 31, 1995, respectively, which amounts are
included in property, plant and equipment. Similarly $52 and $117 was
capitalized for the three months ended March 31, 1995 and March 31, 1996,
respectively.

(NOTE D) -- PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of the following:

DECEMBER 31, MARCH 31,
-------------- 1996
1994 1995
------ ------
Prepaid insurance ........................... $115 $276 $ 92
Prepaid taxes ............................... 3 58 451
Preopening expenses ......................... 173 502
Accounts receivable and interest receivable 6 177 438
Accounts receivable -- employees ............ 6 29 83
Other receivables and prepaids .............. 92 286 792
------ ------ -----------
Total ....................................... $222 $999 $2,358
====== ====== ===========

(NOTE E) -- LEASING ARRANGEMENTS:

Operating leases, which expire at various dates through 2038, are for land
at the facilities and for office space and, in some cases, are subject to
annual increases based on changes in the Consumer Price Index.

Future minimum lease payments, including expected renewal options, under
operating lease agreements that have initial or remaining noncancellable
lease terms in excess of one year are as follows:

DECEMBER 31, MARCH 31,
1995 1996
-------------- -----------
1996 .......................... $ 1,497
1997 .......................... 1,759 $ 1,532
1998 .......................... 1,831 1,800
1999 .......................... 1,898 1,867
2000 .......................... 1,927 1,930
2001 .......................... 1,967
Thereafter .................... 56,116 56,384
-------------- -----------
Total minimum lease payments $65,028 $65,480
============== ===========

F-25

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE E) -- LEASING ARRANGEMENTS: (Continued)
Operating lease rent expense for the years ended December 31, 1993,
December 31, 1994 and December 31, 1995 was $670, $1,372 and $1,527,
respectively, and for the three months ended March 31, 1995 and March 31,
1996 was $253 and $396, respectively.

Pursuant to certain of the Company's land leases, rent expense charged to
operations differs from rent paid because of the effect of free rent periods
and scheduled rent increases. Accordingly, the Company has recorded deferred
rent payable of $187, $116 and $103 at December 31, 1994, December 31, 1995
and March 31, 1996, respectively. Rent expense is calculated by allocating
total rental payments, including those attributable to scheduled rent
increases, on a straight-line basis, over the lease term.

(NOTE F) -- DUE TO RELATED PARTIES:

The Company was indebted to the Chief Executive Officer ("CEO") and the
Chief Financial Officer ("CFO") for loans in the aggregate amount of $455 at
December 31, 1994, due on demand and were paid off during 1995. The loans
bear interest at LIBOR (6.5% at December 31, 1994). Interest on such loans
aggregated $40 and $16 for the years ended December 31, 1995 and December 31,
1994, respectively.

(NOTE G) -- DEBT:

[1] SHORT-TERM BORROWING:

At March 31, 1996, the Company has a revolving line of credit of $5,000,
expiring on June 30, 1996, bearing interest at prime plus 1.5%. The line is
collateralized by certain properties of the Company.

F-26

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE G) -- DEBT: (Continued)
[2] LONG-TERM OBLIGATIONS CONSIST OF THE FOLLOWING:
<TABLE>
<CAPTION>

DECEMBER 31,
------------------
MARCH 31,
1994 1995 1996
-------- -------- -----------
<S><C>
Small business term loan bearing interest at 7.45%, payable in
monthly installments through April 2002 ............................. $ 595 $ 529
Construction term loan for up to $1,700 bearing interest at the prime
rate plus 2%, payable in monthly installments through May 1997
(10.5% at March 31, 1996) ........................................... 1,457 $1,454
Mortgage payable bearing interest at LIBOR plus 3.5% (capped at
10.5%), interest only first year and payable in monthly installments
through May 2000 .................................................... 3,000 3,000
Promissory note due April 1996 bearing interest at bank's prime rate
(8.5% at March 31, 1996) ............................................ 231
Promissory note due August 1997 bearing interest payable monthly at
8% .................................................................. 998 998
Mortgage payable due August 2000 bearing interest payable monthly at
bank's prime rate (8.5% at March 31, 1996) .......................... 1,600 1,600
Mortgage payable bearing interest at the bank's prime rate plus 1%
payable in monthly installments through September 1997 (9.5% at
March 31, 1996) ..................................................... 341
Mortgage payable bearing interest at 9.8%, payable in monthly
installments through November 1996 .................................. 37
Mortgage payable due March 7, 2001 bearing interest at 5.25% ........ 1,700
Term loan bearing interest at the prime rate (8.5% at December 31,
1994) plus 2.5%, payable in varying monthly installments through May
1998 ................................................................ 71
Construction term loan for $2,500 bearing interest at the bank's
prime rate (8.5% at December 31, 1994) plus 2%, payable in monthly
installments through December 1999 .................................. 2,500
One-year revolving working capital line of credit expiring April 2,
1995, bearing interest at the bank's prime rate (8.5% at December
31, 1994) plus 1% ................................................... 250
Term loan bearing interest at the prime rate (8.5% at December 31,
1994) plus 4.5% payable in monthly installments beginning March 1995
through March 1998 .................................................. 250
Construction term loan bearing interest at the bank's prime rate
(8.5% at December 31, 1994) plus 3.5%, payable in monthly
installments through December 1999. First year interest only ....... 816
Term loan bearing interest at 5.8%, payable on April 17, 1995 ....... 100
Construction loan bearing interest at the bank's prime rate (8.75% at
December 31, 1994) plus 1.75%, payable in monthly installments
through May 1, 1998 ................................................. 1,746
-------- -------- -----------
Total .............................................................. 6,328 8,193 8,752
Less current portion ................................................. 1,074 1,850 1,523
-------- -------- -----------
Noncurrent portion ................................................... $5,254 $6,343 $7,229
======== ======== ===========
</TABLE>

F-27

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE G) -- DEBT: (Continued)
The above loans are collateralized by certain assets of the Company
including the Hiland golf club, golf driving range facilities, leasehold
improvements, machinery and equipment and other assets. The construction term
loan outstanding at December 31, 1995 and March 31, 1996 is personally
guaranteed by the CEO.

In August 1994, FGCI received the proceeds of bridge loans in the amount
of $499, bearing interest at 10% per annum. In connection with the issuance
of the loans payable, FGCI issued five year warrants to purchase 24,950
shares of common stock at a price of $3.50 per share, which were valued at
approximately $18. The issuance of such warrants resulted in a debt discount.
The warrants are immediately exercisable. The bridge loan was repaid with a
portion of the net proceeds of the initial public offering.

The long-term portion of the Company's debt at December 31, 1995 and March
31, 1996 is payable as follows:

DECEMBER 31, MARCH 31,
1995 1996
-------------- -----------
1997 ........ $1,477
1998 ........ 152 $1,070
1999 ........ 159 72
2000 ........ 1,765 72
2001 ........ 173 3,372
2002 ........ 72
Thereafter . 2,617 2,571
-------------- -----------
Total ..... $6,343 $7,229
============== ===========

(NOTE H) -- COMMITMENTS AND CONTINGENCIES:

[1] EMPLOYMENT AGREEMENTS:

The Company has employment agreements, as amended, expiring on December
31, 1999 with the CEO and the CFO, who are also stockholders of the Company,
which provide for aggregate annual base salaries of $220 in 1996, $260 in
1997 and 1998 and $300 in 1999.

[2] ALLEY POND AGREEMENT:

The Company has an agreement to manage a family golf center which is owned
by the City of New York.

The license agreement provides for the payment of fees to New York City,
of the greater of $900 or up to 50% of gross revenues (as defined), on an
annual basis. The Company will be obligated, as part of its license
agreement, to make improvements to the existing property of at least $1,200
and at December 31, 1995 this requirement has been met. Such improvements
will belong to the City of New York at the end of the license period, which
expires on December 31, 2006 or upon earlier termination. The agreement is
terminable at will by the City of New York.

[3] LICENSE AGREEMENT:

Pursuant to its license agreement with GBGC, the Company paid a one-time
facility development fee for each Golden Bear golf center. In addition, the
Company is required to pay annual royalty fees for each Golden Bear golf
center it operates based on Adjusted Gross Revenues ("AGR") as defined, equal
to 3%

F-28

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE H) -- COMMITMENTS AND CONTINGENCIES: (Continued)
[3] LICENSE AGREEMENT: (CONTINUED)

of AGR less than $2,000 plus 4% of AGR between $2,000 and $3,000, plus 5% of
AGR over $3,000. The minimum royalty fee for each Golden Bear golf center
shall not be less than $50 per year. The annual royalty fee for the Alley
Pond golf center is $40 for years 1 and 2, $45 for year 3, $50 for year 4 and
beginning in year 5 shall be at the above stated percentages of AGR with a
minimum annual royalty of $50.

On September 13, 1995 the Company's exclusive rights to open Golden Bear
Golf Centers in defined territories were terminated and the restrictions on
the Company's right to develop golf centers under its own name in such
territories were removed.

Royalty fees incurred for the years ended December 31, 1993, December 31,
1994 and December 31, 1995 amounted to $70, $120 and $184, respectively. Such
fees for the three months ended March 31, 1995 and March 31, 1996 were $27
and $64, respectively. All of such fees have been charged to operations.

[4] PURCHASE OF TPT AND RELATED PARTY TRANSACTIONS:

As stated in Note B, in November 1995, the Company acquired TPT. Prior to
the acquisition, the CEO and the CFO of the Company individually owned, in
aggregate, 70% of the shares of TPT. The purchase price of $4,000 plus excess
of cost over fair value of assets acquired was considered a preferential
distribution to certain stockholders. The purchase price included a
contingent payment up to $2.0 million, payable upon the achievement of
certain operating income targets. The contingent purchase price in respect of
the year ending December 31, 1996 will be determined by multiplying $1.0
million by the lesser of (i) 1.0 and (ii) the number obtained by dividing the
OIBITA (as defined below) during such year by $500 (the "1996 Multiplier").
The contingent purchase price in respect of the year ending December 31, 1997
will be determined by multiplying $1.0 million by the lesser of (i) 1.0 and
(ii) the number obtained by dividing the OIBITA during such year by $1.0
million (the "1997 Multiplier"). If the 1997 Multiplier is higher than the
1996 Multiplier, then the former TPT shareholders will also be entitled to
receive an amount equal to (a) the amount which they would have been entitled
to receive in respect of 1996 if the 1996 Multiplier had been as high as the
1997 Multiplier less (b) the contingent amount, if any that they received in
respect of 1996.

For purposes of this computation, OIBITA for any year shall mean the
operating income before interest, taxes and depreciation or amortization,
determined in accordance with generally accepted accounting principles
consistently applied, generated by all golf facilities owned by the Company
and located west of the Mississippi River.

Under an existing agreement with TPT, the Company had an option to acquire
TPT (the "TPT Option") for a price equal to 12.5 times the net after tax
income of TPT during the full 12 months immediately preceding the exercise of
such option. Such price was payable in shares of the Company's common stock.
The TPT Option may have been exercised at any time commencing on the earlier
of (i) January 1, 1998 or (ii) the date on which TPT has after-tax income of
at least $1,000 over a twelve-month period until the expiration date of such
option on December 31, 2003.

See Notes F and G for other related party transactions.

[5] OTHER COMMITMENTS:

At December 31, 1995 and March 31, 1996, the Company had letters of credit
outstanding totaling $500 and $500, respectively.

F-29

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE I) -- STOCKHOLDERS' EQUITY:

STOCK OPTION PLAN:

In July 1994, the Company adopted the 1994 Stock Option Plan (the "Plan").
Under the Plan, which provides for the issuance of either incentive stock
options or nonqualified options, the maximum number of shares of common stock
for which options may be granted is 300,000 shares. In 1994, stock options to
purchase 154,000 shares of common stock were granted at $3.50 per share.
Through December 31, 1995, the Company has issued additional options to
purchase 140,000 shares of common stock at prices ranging from $6.00 to
$14.875 per share. The options are exercisable in varying installments and
have a term of ten years. During 1995 and as of March 31, 1996, 3,795 and
21,280 options were exercised at an average exercise price of $3.50 and
$3.60, respectively.

In addition, on March 8, 1995, certain key employees were granted options
outside of the Plan to purchase an aggregate of 20,000 shares of common stock
at $6.75 per share (market value at the date of grant) pursuant to employment
agreements. These options are exercisable commencing in March 1996 through
March 2005.

On March 6, 1996, the Board of Directors of the Company, adopted, subject
to stockholder approval at the Annual Meeting, the Company's 1996 Stock
Incentive Plan (the "New Plan"). The New Plan is identical to the Plan,
except that the New Plan provides (i) for the grant of options to purchase up
to 500,000 shares of Common Stock and (ii) an automatic grant of
non-qualified stock options to purchase 10,000 shares to each non-employee
director upon his election or appointment to the Board of Directors and
annual grants (commencing on the date of the Annual Meeting if the New Plan
is approved) to each non-employee director of non-qualified stock options to
purchase 10,000 shares of Common Stock at the fair market value of the Common
Stock on the date of the grant.

In March 1996, certain employees were granted options outside of the Plan
to purchase an aggregate of 53,500 shares of common stock at $19.875 (market
value at the date of grant).

WARRANTS:

In connection with the initial public offering in November 1994, the
Company issued warrants to the representatives of the underwriters to
purchase 120,000 shares of common stock at $5.50 per share exercisable
through November 1999, of which 40,000 warrants to purchase shares were
exercised in connection with a public offering in December 1995. In April
1996, the remaining 80,000 warrants were exercised.

In connection with the public offering in December 1995, the Company has
granted warrants to the representatives of the underwriters to purchase from
the Company up to 300,000 shares of common stock at $20.25 per share
exercisable through December 2000.

In March 1996 the Company granted warrants to a consultant to purchase an
aggregate of 70,000 shares of common stock at $19.875 per share (market value
at the date of grant) pursuant to a three-year consulting agreement,
exercisable through March 1997.

F-30

<PAGE>

FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(NOTE J) -- INCOME TAXES:

The provision (benefit) for income taxes consists of the following:

THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
---------------- --------------
1994 1995 1995 1996
-------- ------ ------ ------
Current ..................... $ (65) $720 $2 $43
Deferred .................... (65) (51) -- (5)
-------- ------ ------ ------
(130) 669 2 38
Less valuation allowance ... (65)
-------- ------ ------ ------
Total provision (benefit) $ (65) $669 $2 $38
======== ====== ====== ======

At December 31, 1994, the Company had available net operating loss
carryforwards of approximately $180 for federal income tax purposes, which
were utilized in the year ended December 31, 1995. Temporary differences
arise due to differences between reporting for financial statement purposes
and for federal income tax purposes relating primarily to deferred rent
expense and depreciation methods.

The deferred tax assets (liabilities) are recorded as follows:

YEAR ENDED
DECEMBER 31, MARCH 31,
-------------- -----------
1994 1995 1996
------ ------ -----------
Deferred rent ...................... $ 65 $46 $41
Tax basis of assets over book basis 70 75
Net operating loss carryforward ... 65 -- --
------ ------ -----------
130 116 116
Less valuation allowance ........... 65 -- --
------ ------ -----------
Net deferred tax asset ............. $ 65 $116 $116
====== ====== ===========

Expected tax expense (benefit) based on the statutory rate is reconciled
with the actual expense as follows:
<TABLE>
<CAPTION>

PERCENT OF
PRE-TAX
EARNINGS (LOSS)
DECEMBER 31, MARCH 31,
------------------- ----------------
1994 1995 1995 1996
--------- -------- ------- -------
<S><C>
Expected tax expense ......................................... 34.0% 34.0% 34.0% 34.0%
Increase (reduction) in taxes resulting from:
Income attributable to S corporation ........................ (45.0)
State income tax (benefit) .................................. (2.0) 7.6 6.0 6.0
Decrease in valuation allowance in use of net operating loss (7.7)
Other ....................................................... 1.0 1.1 10.0 (4.0)
--------- -------- ------- -------
(12.0)% 35.0 % 50.0% 36.0%
========= ======== ======= =======
</TABLE>

F-31

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Officers and Directors
Owl's Creek Golf Center, Inc.
Virginia Beach, Virginia

I have audited the accompanying balance sheet of Owl's Creek Golf Center,
Inc. as of December 31, 1995, and the related statements of operations,
retained earnings, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based
on my audit.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Owl's Creek Golf Center,
Inc. as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted
accounting principles.
ANNE E. GORRY P.C.

February 12, 1996
Virginia Beach, Virginia

F-32

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>

1995
-------------
<S><C>
ASSETS
Current assets:
Cash on hand ...................................................................... $ 700
Cash in banks ..................................................................... 13,154
Utility deposits .................................................................. 2,231
-------------
16,085
-------------
Inventory (Note 1):
Maintenance supplies and parts ................................................... 7,724
Merchandise and snack bar ........................................................ 25,143
Range balls ...................................................................... 3,581
Gas and oil ...................................................................... 300
-------------
36,748
Prepaid expenses .................................................................. 21,564
-------------
Total current assets ........................................................... 74,397
-------------
Property & equipment (Note 1):
Golf course ....................................................................... 1,220,308
Cart paths ........................................................................ 208,741
Buildings ......................................................................... 391,258
Irrigation system ................................................................. 192,761
Parking lot ....................................................................... 195,798
Fences and landscaping ............................................................ 3,835
Bridges ........................................................................... 39,828
Equipment -- trucks, signs and fixtures ........................................... 338,361
Underground gas tanks ............................................................. 15,936
Golf clubs for rent ............................................................... 965
-------------
2,607,791
Less accumulated depreciation ..................................................... 746,809
-------------
1,860,982
-------------
Other assets:
Unamortized loan cost ............................................................ 19,488
Deferred interest expense ........................................................ 1,366
-------------
20,854
-------------
Total assets ................................................................... $ 1,956,233
=============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable .................................................................. $ 28,345
Payroll & sales taxes ............................................................. 1,718
Accrued interest payable .......................................................... 8,218
Notes payable to stockholders ..................................................... 498,056
Current portion of long term liabilities .......................................... 1,593,585
-------------
Total current liabilities ...................................................... 2,129,922
-------------
Long-term liabilities:
Banks (Note 2) .................................................................... 70,266
-------------
Total long-term liabilities .................................................... 70,266
-------------
Stockholders' equity:
Capital stock -- $1 par value; 5,000 shares authorized, 1,252 issued and
outstanding ....................................................................... 1,252
Additional paid-in capital ........................................................ 1,250,748
Retained earnings (deficit) ....................................................... (1,495,955)
-------------
Total stockholders' equity (deficit) ........................................... (243,955)
-------------
Total liabilities and stockholders' equity (deficit) ......................... $ 1,956,233
=============
</TABLE>

The accompanying notes are an integral part of these financial statements.
See accountant's report.

F-33

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 1995

1995
---------
Income:
Sales -- pro shop ............... $ 92,137
Less -- cost of sales ........... 72,437
---------
Gross profit on pro shop sales 19,700
---------
Sales -- snack bar .............. 64,913
Less -- cost of sales ........... 30,466
---------
Gross profit on snack bar sales 34,447
---------
Green fees ...................... 272,174
Cart rentals .................... 134,526
Driving range ................... 75,014
Club and pullcart rentals ...... 11,684
Membership fees ................. 9,960
Tournament income ............... 42,122
Lessons ......................... 3,345
Hole sponsor .................... 1,350
Club repair ..................... 1,140
---------
Total operating income ...... 605,462
---------
Operating expenses:
Salaries:
Pro shop ....................... 22,837
Concessions .................... 10,551
Golf pros ...................... 41,482
Carts, attendants, starters ... 17,649
Range .......................... 15,400
Course maintenance ............. 66,482
---------
174,401
---------
Payroll tax .................... 15,380
---------
Pro shop:
Utilities ..................... 3,720
Supplies ...................... 5,955
Clubhouse maintenance ......... 1,435
Cash -- over or short ......... (420)
---------
10,690
---------
Concessions:
Utilities ..................... 3,483
Supplies ...................... 441
Repairs and maintenance ...... 40
Cash -- over or short ......... 401
---------
4,365
---------

The accompanying notes are an integral part of these financial statements.
See accountant's report

F-34

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) --(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995

1995
--------
Course operations:
Score cards .................... $ 896
Supplies ....................... 488
Range repair and maintenance .. 4,106
Range balls .................... 5,304
Carts -- gas and oil ........... 735
Carts -- repairs and
maintenance .................... 540
Cart rental .................... 35,973
Utilities ...................... 4,434
--------
52,476
--------
Course maintenance:
Golf course repair ............. 738
Chemicals ...................... 5,144
Equipment rental ............... 520
Equipment repair ............... 7,037
Fertilizer & lime .............. 4,908
Gas and oil .................... 4,828
Sand and top dressing .......... 105
Supplies ....................... 1,605
Water system repairs ........... 603
Educational .................... 35
Utilities ...................... 7,960
--------
33,483
--------
General expenses:
Accounting and legal ........... 6,000
Advertising .................... 6,824
Bad debts ...................... 3,923
Bank charges ................... 214
Contributions .................. 136
Cox cable ...................... 320
Credit card discount ........... 2,533
Dues and subscriptions ......... 573
Insurance -- general ........... 21,865
Insurance -- group ............. 2,817
Medical ........................ 298
Miscellaneous .................. 109
Office expense ................. 306
Personal property tax .......... 3,362
Pest control ................... 492
Postage, UPS, freight .......... 490
Real estate taxes .............. 9,431

The accompanying notes are an integral part of these financial statements.
See accountant's report

F-35

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) --(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995

1995
-------------
Refunds ..................................... $ 237
Rent -- land ................................ 43,000
Rent -- equipment ........................... 559
Security systems ............................ 525
Seminars and meetings ....................... 588
Supplies .................................... 157
Taxes and licenses .......................... 2,986
Telephone ................................... 3,533
Trade show .................................. 800
Trash removal ............................... 1,216
Amortization ................................ 6,519
Depreciation ................................ 82,974
-------------
202,787
-------------
Total operating expenses ................. 493,582
-------------
Net gain from operations .................... 111,880
-------------
Other income (loss):
Sales tax discount .......................... 362
Disposal of equipment ....................... (6,228)
Insurance claims ............................ 2,813
Putting course rent ......................... 1,720
Commissions, telephone and cigarettes ...... 200
-------------
(1,133)
-------------
Other expenses:
Interest .................................... 192,072
-------------
Net (loss) ................................... (81,325)
Retained earnings (deficit) beginning of year (1,426,484)
Prior period adjustments (Note 6) ............ 11,854
-------------
Retained earnings (deficit) end of year ..... $(1,495,955)
=============

The accompanying notes are an integral part of these financial statements.
See accountant's report

F-36

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>

1995
-----------
<S><C>
Cash flows provided from operating activities:
Net (loss) ...................................................................... $ (81,325)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization .................................................. 89,493
Loss on sale of property and equipment ......................................... 6,228
Decrease in trade accounts receivable .......................................... 3,540
Decrease in utility deposit .................................................... 1,100
Decrease in inventories ........................................................ 8,570
Increase in prepaid expenses and other assets .................................. (2,516)
Decrease in accounts payable ................................................... (8,948)
Increase in accrued liabilities ................................................ 8,521
-----------
Net cash provided by operating activities .................................... 24,663
-----------
Cash flows from investing activities:
Purchase of property and equipment .............................................. (20,231)
Deferred interest ............................................................... (2,583)
-----------
Net cash provided (used) by investing activities ............................. (22,814)
-----------
Cash flows from financing activities:
Proceeds from long-term debt .................................................... 18,552
Proceeds from stockholders ...................................................... 106,250
Repayment of long-term debt ..................................................... (120,962)
-----------
Net cash provided (used) by financing activities ............................. 3,840
-----------
Net increase in cash ......................................................... 5,689
Cash at beginning of year .................................................... 8,165
-----------
Cash at end of year .......................................................... $ 13,854
===========
Supplemental disclosure of cash flow information:
Interest payments .............................................................. $ 183,854
===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
See accountant's report

F-37

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Purpose

Owl's Creek Golf Center, Inc. was formed in 1985 under the laws of the
Commonwealth of Virginia for the purpose of developing and operating Owl's
Creek Golf Course.

Method of Accounting

The financial statements have been prepared using the accrued basis of
accounting in accordance with generally accepted accounting principles.

Inventory

Inventories of parts, maintenance supplies, gas, oil, merchandise and
snack bar supplies are stated at the lower of cost or market.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed
using MACRS over useful lives ranging from 15 to 31.5 years for buildings and
land improvements and 5 to 15 years for other property and equipment.

Income Taxes

The shareholders have elected to be taxed as an S-Corporation. Net income
or loss is passed through to shareholders. Therefore, there is no provision
for income taxes reflected in these financial statements.

Other Assets

Loan costs for bank loans are being amortized over 15 years.

NOTE 2 -- NOTES PAYABLE
<TABLE>
<CAPTION>

BANKS CURRENT LONG-TERM TOTAL
- ----------------------------------------------------------------- ------------ ----------- ------------
<S><C>
Central Fidelity -- secured by deed of trust and deed of trust
note on improvements. Payments of $6,000.00 principal, and prime
plus one and one-half percent (1 1/2 %) interest are due on the
first of each month for 32 months leaving a balance of
$1,545,761 at December 12, 1995. Central Fidelity has agreed to
extend this note for three months considering the pending sale.
In the event the assets of the corporation are not sold, Central
Fidelity has agreed to continue with the same terms for 36
months. ......................................................... $1,545,761 $ -- $1,545,761
Resource Bank -- note dated May 27, 1993. Interest rate is prime
plus one percent, with principal payments of $3,500 per month
plus interest beginning June 27, 1993. .......................... 42,000 64,442 106,442
Associates Commercial Corporation -- secured by one (1) Toro
Groundsmaster 325-D. Payments of $961.42 are due May through
October for 1995, 1996 and 1997. Liability $11,648 less deferred
interest ........................................................ 5,824 5,824 11,648
------------ ----------- ------------
$1,593,585 $70,266 $1,663,851
============ =========== ============
</TABLE>

See accountant's report.

F-38

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
December 31, 1995

NOTE 3 -- RELATED PARTY TRANSACTIONS

Merchandise

Inventory is bought and sold at cost between Owl's Creek Golf Center and
Hells Point Golf Course, a golf course owned in part by some of the officers
of the company.

NOTE 4 -- COMMITMENTS

Deed of Lease between Owl's Creek Golf Center, Inc. and City of Virginia
Beach, Virginia, for the 30.681 (plus or minus) acre tract of land on which
the golf center has been constructed. The lease term is for forty years
commencing April 1, 1987. In 1995 the due date was moved to August 1st for
the remaining years of the lease. The rent was prorated and paid at $1,500
per month for these four months. Schedule of annual rent is as follows:

1st 10 years $10,000 for 1st 2 years
$18,000 for last 8 years
2nd 10 years $22,000 yearly
3rd 10 years $25,000 yearly
4th 10 years $30,000 yearly

Deed of Lease between Owl's Creek Golf Center, Inc. and Robert H.
Braithwaite, Jr. and Nancy F. Braithwaite for the 41 (plus or minus) acre
tract of land on which the golf center has been constructed. The lease term
is for forty years commencing March 20, 1987. Schedule of annual rent is as
follows:

1st 10 years $15,000 for 1st 2 years
$25,000 for last 8 years
2nd 10 years $30,000 yearly
3rd 10 years $35,000 yearly
4th 10 years $40,000 yearly

NOTE 5 -- RENTALS UNDER OPERATING LEASES

The annual requirements to meet the lease commitment with Eastern Golf
Car, Inc. for 50 golf carts as of December 31, 1995, are as follows:

YEAR ENDING
DECEMBER 31,
- ------------------------------------
1996 .............................. $ 35,974
1997 .............................. 35,974
1998 .............................. 35,973
1999 .............................. 35,973
2000 .............................. 35,973
---------
Total minimum payments required $179,867
=========

NOTE 6 -- PRIOR PERIOD ADJUSTMENTS

Errors in accruals of prior year expenses have been corrected.

NOTE 7

The Company is under negotiations with an unrelated third party to sell
the assets of the company during February, 1996.

See accountant's report.

F-39

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE PERIOD FROM JANUARY 1, 1996 TO MARCH 5, 1996

Income:
Sales -- pro shop ............... $ 2,270
Less -- cost of sales ........... 1,785
--------
Gross profit on pro shop sales 485
--------
Sales -- snack bar .............. 3,179
Less -- cost of sales ........... 1,492
--------
Gross profit on snack bar sales 1,687
--------
Green fees ...................... 14,914
Cart rentals .................... 7,551
Driving range ................... 5,100
Club and pullcart rentals ...... 392
Membership fees ................. 750
Tournament income ............... 3,278
Lessons ......................... 33
Club repair ..................... 51
--------
Total operating income ...... 34,241
--------
Operating expenses:
Salaries:
Pro shop ....................... 4,531
Concessions .................... 451
Golf pros ...................... 8,095
Carts, attendants, starters ... 1,849
Range .......................... 1,623
Course maintenance ............. 13,813
--------
30,362
--------
Payroll tax .................... 3,061
--------
Pro shop:
Utilities ..................... 1,119
Supplies ...................... 351
Clubhouse maintenance ......... 638
Cash -- over or short ......... (82)
--------
2,026
--------
Concessions:
Utilities ..................... 342
Supplies ...................... 17
Repairs and maintenance ...... 225
Cash -- over or short ......... 13
--------
597
--------

(Continued)

F-40

<PAGE>

OWL'S CREEK GOLF CENTER, INC.
STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD FROM JANUARY 1, 1996 TO MARCH 5, 1996

Course maintenance and operations:
Equipment repair ................. $ 239
Fertilizer & lime ................ 1,078
Gas and oil ...................... 350
Supplies ......................... 225
Repairs and Maintenance .......... 107
Utilities ........................ 278
----------
2,277
----------
General expenses:
Accounting and legal ............. 3,950
Advertising ...................... 68
Bad debts ........................ 70
Credit card discount ............. 190
Insurance -- general ............. 787
Insurance -- group ............... 1,143
Medical .......................... 27
Miscellaneous .................... 257
Other expense .................... 13,923
Pest control ..................... 171
Postage, UPS, freight ............ 84
Rent -- land ..................... 7,167
Security systems ................. 75
Taxes and licenses ............... 99
Telephone ........................ 1,163
Trash removal .................... 193
Amortization ..................... 447
Depreciation ..................... 10,712
----------
40,526
----------
Total operating expenses ..... 78,849
----------
Net (loss) from operations ...... (44,608)
----------
Other expenses:
Interest ......................... 34,645
----------
Net (loss) ........................ $(79,253)
==========

F-41

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Members
Flemington Golf and Sports Center, LLC
Flemington, New Jersey

We have audited the accompanying balance sheet of Flemington Golf and
Sports Center, LLC as of December 31, 1995, and the related statements of
operations and members' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.

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

In our opinion, the financial statements referred to above present farily,
in all material respects, the financial position of Flemington Golf and
Sports Center, LLC as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company suffered recurring losses from operations
and has a net members' deficiency, which raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Ehrenkrantz and Company
Certified Public Accountants

February 28, 1996
(Except for Note 8, as to which
the date is March 7, 1996)
Roseland, New Jersey

F-42

<PAGE>

FLEMINGTON GOLF AND SPORTS CENTER, LLC
BALANCE SHEET
DECEMBER 31, 1995

ASSETS
Current Assets
Cash ................................. $ 715
----------
Total Current Assets ................. $ 715
Building and Equipment, at fair value 1,600,000
------------
$1,600,715
============
LIABILITIES AND MEMBERS' DEFICIT
Current Liabilities
Bank loans payable ................... $516,397
Note payable ......................... 744,152
Accounts payable and accrued expenses 521,583
Due to related parties ............... 107,814 $1,889,946
----------
Members' Deficit ...................... (289,231)
------------
$1,600,715
============

See notes to financial statements.

F-43

<PAGE>

FLEMINGTON GOLF AND SPORTS CENTER, LLC
STATEMENT OF OPERATIONS AND MEMBERS' DEFICIT
DECEMBER 31, 1995

Sales ............................. $ 500,657
Cost of Sales ..................... 486,053
-----------
Gross Profit ...................... $ 14,604
Operating Expenses ................ 413,381
-------------
Loss from Operations .............. (398,777)
Other Deductions
Impairment of facility ........... 2,448,045
Interest expense ................. 128,190 2,576,235
----------- -------------
Net Loss .......................... (2,975,012)
Members' Equity, beginning of year 2,696,408
-------------
(278,604)
Withdrawals ....................... 10,627
-------------
Members' Deficit, end of year .... $ (289,231)
=============

See notes to financial statements.

F-44

<PAGE>

FLEMINGTON GOLF AND SPORTS CENTER, LLC
STATEMENT OF CASH FLOWS
DECEMBER 31, 1995
<TABLE>
<CAPTION>

<S><C>
Cash Flows from Operating Activities
Net loss ................................................ $(2,975,012)
Adjustments to reconcile net loss to net cash provided
by operating activities
Impairment of facility ................................. 2,448,045
Depreciation and amortization .......................... 46,771
Decrease in operating assets
Inventories ........................................... 201,069
Increase in operating liabilities
Accounts payable and accrued expenses ................. 286,621
--------------
Net cash provided by operating activities ............. $ 7,494
Cash Flows from Investing Activities
Purchase of property and equipment ...................... (50,822)
--------------
Net cash used in investing activities ................. (50,822)
Cash Flows from Financing Activities
Repayment of bank loans ................................. (59,018)
Repayments of notes payable ............................. (46,828)
Withdrawals by members .................................. (10,625)
Borrowings from related parties ......................... 98,660
--------------
Net cash used in financing activities ................. (17,811)
----------
Net decrease in cash ..................................... (61,139)
Cash, beginning of year .................................. 61,854
----------
Cash, end of year ........................................ $ 715
==========
</TABLE>

See notes to financial statements.

F-45

<PAGE>

FLEMINGTON GOLF AND SPORTS CENTER, LLC
NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activity

The Company is a New Jersey limited liability company in the business of
operating and managing a golf and sports center.

Income Taxes

The Company is treated as a partnership for Federal income tax purposes.
Consequently, Federal income taxes are not payable by, or provided for the
Company. Members are taxed individually on their share of the Company's
earnings or losses. The Company's net income or loss is allocated among the
members in accordance with the operating agreement of the Company. The
financial statements do not reflect a provision for income taxes.

Estimates

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

NOTE 2 -- IMPAIRMENT OF FACILITY

The Company has adopted Statement of Financial Accounting Standards No.
121 (Accounting for the impairment of long-lived assets and for long-lived
assets to be disposed of).

If the sum of the expected future cash flows is lesser than the carrying
amount of the asset, an impairment loss is recognized. The expected future
cash flows of the property, plant and equipment would be $1,600,000 compared
to the carrying amount of the asset of $4,048,045, resulting in an impairment
loss of $2,448,055 (see below).

On February 1, 1996, the Company received and accepted a letter of intent
from a public company, offering to acquire all of the assets and ownership
interests of the Flemington Golf and Sports Center. The consideration to be
paid consists of 100,000 shares of the acquiror's common stock, which has an
approximate fair market value of $2,000,000 at the balance sheet date. The
stock is deemed to be "restricted securities" as such term is defined under
Rule 144 of the Securities Act of 1933 and such shares can only be sold in
accordance with the provisions of this Rule including a holding period.

Management of the Company has advised that arrangements have been made
with a brokerage firm to immediately purchase the restricted stock at a
discount of 20% which would result in a payment to the Company of $1,600,000.

NOTE 3 -- CONTINGENCIES

Going Concern

As shown in the accompanying financial statement, the Company incurred a
net loss of $2,975,012 during the year ended December 31, 1995, and as of
that date, the Company's current liabilities exceeded its current assets by
$1,889,231 and its total liabilities exceeded its total assets by $289,231.
In addition, the Company has sustained significant operating losses since
inception.

Those factors, as well as the uncertain condition that the Company faces
regarding its loan agreements create an uncertainty about the Company's
ability to continue as a going concern.

F-46

<PAGE>

FLEMINGTON GOLF AND SPORTS CENTER, LLC
NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 3 -- CONTINGENCIES (Continued)
Management of the Company has accepted a letter of intent to sell the assets
(as discussed in Note 2), however, the ability of the company to continue as
a going concern is dependent on the successful completion of the sale and a
possible guarantee by the members to fund any shortfall of funds in order to
provide full payment to all the creditors. The financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.

NOTE 4 -- BANK LOANS PAYABLE

The obligations consist of the following:

Note payable, Valley National Bank, requiring monthly payments
of $44,167 plus interest at 1 1/2 % over the base commercial
lending rate of the bank. The loan matures May 18, 1998. The
loan is collateralized by the inventory and personally
guaranteed by the members and is in default at this date. (a) . $383,333
Note payable, Valley National Bank, requiring monthly payments
of $2,381 plus interest at 1 1/2 % over the base commercial
lending rate of the bank. The loan is collateralized by the
members and is in default at this date. (a) .................... 133,064
----------
$516,397
==========

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

(a) There is currently pending litigation filed against the Company and
other defendants by Valley National Bank (because of loan covenant
violations). At present, no answer has been filed, however, it is
anticipated that the revenues from the proposed sale will resolve the
litigation.

NOTE 5 -- NOTE PAYABLE

The Company is obligated to a company affiliated with the
land-owner, requiring monthly payments of $9,496 to be applied
first to interest at 7 1/2 % per annum and the balance to
principal. The note matures on May 1, 1998 and is
collateralized by all assets of the Company (excluding the
inventory) and is in default at this date. ..................... $744,152
=========

NOTE 6 -- RELATED PARTY TRANSACTIONS

The company has purchased and sold merchandise from a related party on
open account and at no mark-up. Purchases for the year amounted to $9,932 and
sales for the year were $32,784.

F-47

<PAGE>

FLEMINGTON GOLF AND SPORTS CENTER, LLC
NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 7 -- LEASE COMMITMENTS

The Company is obligated under a ten year lease which terminates April 30,
2003. Rent expense for the year was $102,000. Under the negotiated terms of
the pending sale, the landlord will release the Company from this obligation
(see Note 2). Rental payments under the lease are as follows:

1996 ......... $102,000
1997 ......... 102,000
1998 ......... 102,000
1999 ......... 102,000
2000 ......... 102,000
Thereafter .. 238,000
----------
$748,000
==========

NOTE 8 -- SUBSEQUENT EVENT

In March 1996, the Company successfully completed the sale of all the
assets to a public company (see Note 2).

F-48

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
202 Golf Associates, Inc.
Yorktown Heights, New York

We have audited the balance sheet of 202 Golf Associates, Inc. as of
December 31, 1995 and the related statements of operations, changes in
shareholders' deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.

In our opinion, the aforementioned financial statements present fairly the
financial position of 202 Golf Associates, Inc. at December 31, 1995 and the
results of its operations, changes in shareholders' deficit and cash flows
for the year ended December 31, 1995 in conformity with generally accepted
accounting principles.
MANGINI, TRAEGER & COMPANY, P.C.

April 8, 1996
Armonk, New York

F-49

<PAGE>

202 GOLF ASSOCIATES, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>

ASSETS
<S><C>
Current Assets:
Cash ....................................................................... $ 166,833
Construction bid bonds ..................................................... 41,710
------------
208,543
------------
Property and equipment -- net of accumulated depreciation of $147,916 ...... 2,130,220
Deferred charges -- net of accumulated amortization of $54,879 ............. 198,266
Deposits .................................................................... 2,900
------------
2,331,386
------------
Total Assets ............................................................ $2,539,929
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Current portion of long term debt .......................................... $ 72,675
Accounts payable ........................................................... 47,856
------------
120,531
Long term debt, net of current portion ...................................... 2,445,472
Shareholders' loans payable ................................................. 504,807
------------
3,070,810
------------
Shareholders' Deficit:
Common stock -- no par value, 200 shares authorized, issued and outstanding 1,000
Accumulated deficit (of which $76,256 was accumulated during the
development stage) ........................................................ (402,831)
------------
(401,831)
Less: treasury stock, at cost .............................................. (129,050)
------------
(530,881)
------------
Total Liabilities and Shareholders' Deficit ............................. $2,539,929
============
</TABLE>

The accompanying notes are an integral part of this statement.

F-50

<PAGE>

202 GOLF ASSOCIATES, INC.
STATEMENT OF OPERATIONS & SHAREHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995

Revenues ......................................... $ 388,261
Cost of sales .................................... 88,768
-----------
Gross Profit ................................. 299,493
-----------
Operating Expenses:
Salaries ........................................ 59,181
Payroll taxes ................................... 6,046
Equipment lease ................................. 50,538
Telephone and utilities ......................... 28,367
Landscaping maintenance ......................... 8,785
Depreciation and amortization ................... 185,742
Advertising and marketing ....................... 26,620
Professional fees ............................... 5,011
Office expense and utilities .................... 21,302
Insurance ....................................... 27,892
Interest expense ................................ 172,790
Vehicle expense ................................. 2,071
Miscellaneous ................................... 3,622
Property taxes .................................. 27,725
State taxes ..................................... 376
-----------
626,068
-----------
Net Loss ..................................... (326,575)
Deficit accumulated during the development stage (76,256)
-----------
Accumulated Deficit -- Ending .................... $(402,831)
===========

The accompanying notes are an integral part of this statement.

F-51

<PAGE>

202 GOLF ASSOCIATES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>

<S><C>
Cash Flows From Operating Activities:
Net loss .................................................................. $(326,575)
Adjustments to reconcile net loss to net cash used by operating
activities:
Amortization ............................................................ 50,629
Depreciation ............................................................ 135,113
Decrease in prepaid expenses ............................................. 6,150
Increase in accounts payable ............................................. 6,125
------------
Net Cash Used by Operating Activities ................................. (128,558)
------------
Cash Flows From Investing Activities:
Increase in bonds receivable .............................................. (41,710)
Acquisition of fixed assets ............................................... (67,301)
Decrease in deferred charges .............................................. 1,871
------------
Net Cash Used by Investing Activities ................................. (107,140)
------------
Cash Flows From Financing Activities:
Proceeds of shareholder loans ............................................. 302,903
Payments on long term debt ................................................ (70,903)
------------
Net Cash Provided by Financing Activities ............................. 232,000
------------
Net decrease in cash ....................................................... (3,698)
------------
Cash at beginning of period ........................................... 170,531
------------
Cash at end of period ...................................................... $ 166,833
============
Cash paid for interest ..................................................... $ 172,790
============
Cash paid for taxes ........................................................ $ 376
============
</TABLE>

The accompanying notes are an integral part of this statement.

F-52

<PAGE>

202 GOLF ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995

NOTE A -- ORGANIZATION

The Company was formed in January, 1992. Operations of the golf driving
range began upon the completion of construction in December of 1994. Prior to
that time operations were devoted primarily to raising capital, obtaining
financing, constructing the facility, advertising, and administrative
functions.

NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Property and Equipment

Property and equipment are carried at cost. Depreciation is charged to
expense over the estimated useful lives of the assets using straight-line and
accelerated methods.

Deferred Charges

Deferred charges are comprised of organization costs and financing costs
and are being amortized using the straight-line method over five years.
Amortization charged to operations was $50,629 for the period.

Income Taxes

The financial statements do not include a provision for income taxes
because the company has elected S corporation status for federal and state
purposes. Instead, its earnings and losses are included in the shareholders'
personal income tax returns.

Concentration of Credit Risk

The Company maintains cash balances at financial institutions which may
exceed federally insured amounts of $100,000. At the balance sheet date this
excess was $106,758.

NOTE C -- PROPERTY AND EQUIPMENT

The following is a summary of property and equipment, at cost, less
accumulated depreciation:

Land and improvements ......... $ 824,742
Buildings and improvements ... 1,314,278
Machinery and equipment ...... 127,951
Furniture and fixtures ........ 11,165
-----------
2,278,136
Less: accumulated depreciation 147,916
-----------
$2,130,220
===========

The useful lives of properly and equipment for computing depreciation are:

Land and improvements .........10-15 years
Buildings and improvements ... 20-30 years
Machinery and equipment ...... 3-5 years
Furniture and fixtures ........ 7 years

Depreciation charged to expense for the period was $135,113.

F-53

<PAGE>

202 GOLF ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
December 31, 1995

NOTE D -- LONG-TERM DEBT

The following is a summary of notes and mortgages payable as of December
31, 1995.
<TABLE>
<CAPTION>
<S><C>
Mortgage payable to bank with a fixed monthly payment of $4,596 plus interest at
2% above the banks prime lending rate on the unpaid balance; personally
guaranteed by all shareholders. The loan is due and payable in full in December
1999. .......................................................................... $1,444,843
Mortgage payable to shareholders, dated May 1994 with no stated terms for
principal or interest payments. This mortgage is subordinate to the bank
mortgage. Additional funds will be provided when required. ..................... 1,000,000
Note payable to former shareholders for the purchase of treasury stock for 100%
of the shareholders interest, bearing an interest rate of 9%; payable as
follows:
A principal installment in the sum of $5,325, together with accrued interest
of $4,675 payable on June 1, 1995.
The remaining principal balance is to be paid in equal monthly installments
of $2,083. ................................................................... 73,304
------------
2,518,147
Less: current portion ........................................................... 72,675
------------
Long-term debt, net of current portion .......................................... $2,445,472
============
</TABLE>

NOTE E -- TREASURY STOCK

In October 1994, the Company entered into an agreement to purchase all of
the stock of certain shareholders for a total of $129,050.

F-54

<PAGE>

202 GOLF ASSOCIATES, INC.
BALANCE SHEET

MARCH 31, 1996
--------------
ASSETS
Current Assets
Cash ........................................ $ 146,833
Construction bid bonds ...................... 41,710
--------------
Total current assets ........................ 188,543
Property and equipment ....................... 2,096,442
Deferred charges ............................. 189,290
Deposits ..................................... 2,900
--------------
Total Assets ............................. $2,477,175
==============

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Current portion of long term debt ........... $ 72,675
Accounts payable ............................ 58,056
--------------
Total current liabilities ................... 130,731
Long term debt (net of current portion) ..... 2,431,684
Shareholders' loans payable .................. 504,807
--------------
Total Liabilities ........................ 3,067,222
--------------
Shareholders Deficit
Common stock ................................ 1,000
Accumulated deficit ......................... (461,997)
--------------
Less: Treasury Stock ......................... (129,050)
--------------
Total Shareholders' Deficit .................. (590,047)
--------------
Total Liabilities and Shareholders
Deficit ..................................... $2,477,175
==============

F-55

<PAGE>

202 GOLF ASSOCIATES, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996

Revenues ....................... $ 77,254
Cost of sales .................. 12,806
----------
Gross Profit ............... 64,448
----------
Operating Expenses:
Salaries ...................... 18,137
Payroll taxes ................. 2,193
Equipment lease ............... 12,827
Telephone and utilities ...... 5,974
Landscaping maintenance ...... 799
Depreciation and amortization 42,754
Advertising and marketing .... 4,868
Professional fees ............. 132
Office expense and utilities . 2,893
Insurance ..................... 711
Interest expense .............. 26,359
Miscellaneous ................. 392
Property taxes ................ 5,575
----------
123,614
----------
Net Loss ................... $(59,166)
==========

F-56

<PAGE>

202 GOLF ASSOCIATES, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
<S><C>

Cash Flows From Operating Activities:
Net loss .................................................................. $(59,166)
Adjustments to reconcile net loss to net cash used by operating
activities:
Amortization ............................................................ 8,976
Depreciation ............................................................ 33,778
Increase in accounts payable ............................................. 10,200
Net Cash Used by Operating Activities ................................. (6,212)
-----------
Cash Flows From Financing Activities:
Payments on long term debt ................................................ (13,788)
-----------
Net Cash (Used in) Financing Activities ............................... (13,788)
-----------
Net decrease in cash ....................................................... (20,000)
-----------
Cash at beginning of period ........................................... 166,833
Cash at end of period ...................................................... $146,833
===========
Cash paid for interest ..................................................... $ 26,359
===========
</TABLE>

F-57

<PAGE>

202 GOLF ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1996

NOTE A -- ORGANIZATION

NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Property and Equipment

Property and equipment are carried at cost. Depreciation is charged to
expense over the estimated useful lives of the assets using straight-line and
accelerated methods.

Deferred Charges

Deferred charges are comprised of organization costs and financing costs
and are being amortized using the straight-line method over five years.

Income Taxes

Concentration of Credit Risk

The Company maintains cash balances at financial institutions which may
exceed federally insured amounts of $100,000.

NOTE C -- INTERIM FINANCIAL STATEMENTS

The financial statements as of March 31, 1996 and for the three months
then ended are unaudited and are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. In the opinion of
management, the financial statements include all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the
Partnership's financial position and results of operations.

F-58

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholder of Indian River Golf-O-Rama, Inc.

We have audited the accompanying balance sheet of Indian River
Golf-O-Rama, Inc. (an "S" Corporation) as of December 31, 1995 and 1994, and
the related statements of operations, changes in shareholder's equity and
cash flows for the years then ended. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Indian River Golf-O-Rama,
Inc. as of December 31, 1995 and 1994, and the results of its operations and
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
SHANHOLT GLASSMAN HOFFMAN
KLEIN & CO., P.C.

New York, New York
February 7, 1996

F-59

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
(AN "S" CORPORATION)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>

1995 1994
------------- ------------
<S><C>
ASSETS
CURRENT ASSETS
Cash ............................................ $ 234 $ --
Inventory ....................................... 29,867 33,683
Prepaid expenses ................................ 7,369 7,342
Other receivable ................................ 3,985 --
Due from affiliate .............................. 85,150 76,400
Deposits ........................................ -- 4,000
------------- ------------
TOTAL CURRENT ASSETS .......................... 126,605 121,425
------------- ------------
Building, improvements and equipment
Cost of building, improvements and equipment ... 2,181,203 2,153,807
Less
Accumulated depreciation ....................... 632,323 434,812
------------- ------------
NET BUILDING, IMPROVEMENTS AND EQUIPMENT ..... 1,548,880 1,718,995
------------- ------------
OTHER ASSETS
Deposits ........................................ 300 300
------------- ------------
TOTAL ASSETS .................................. $ 1,675,785 $1,840,720
============= ============
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Bank overdraft .................................. $ 8,149 $ 9,802
Accounts payable and accrued expenses ........... 31,412 23,490
Deferred income ................................. 9,000 7,500
Building lease .................................. -- 19,922
Equipment lease ................................. 1,590 --
Due to affiliate ................................ 96,248 30,406
Due to Lenrich Associates ....................... 225,042 181,514
------------- ------------
TOTAL CURRENT LIABILITIES ..................... 371,441 272,634
------------- ------------
CONTINGENCIES
SHAREHOLDER'S EQUITY
Common stock, no par value 5,000 shares
authorized
100 shares issued and outstanding .............. 2,465,974 2,498,074
Retained deficit ................................ (1,161,630) (929,988)
------------- ------------
TOTAL SHAREHOLDER'S EQUITY .................... 1,304,344 1,568,086
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY ... $ 1,675,785 $1,840,720
============= ============
</TABLE>

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

F-60

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
(AN "S" CORPORATION)
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994

RETAINED
TOTAL COMMON STOCK DEFICIT
------------ ------------ -------------
BALANCE--JANUARY 1, 1994 $1,798,222 $2,498,074 $ (699,852)
Net loss for the year ended
December 31, 1994 ......... (230,136) -- (230,136)
------------ ------------ -------------
BALANCE--DECEMBER 31, 1994 1,568,086 2,498,074 (929,988)
Net loss for the year ended
December 31, 1995 ......... (231,642) -- (231,642)
Distribution to shareholder (32,100) (32,100) --
------------ ------------ -------------
BALANCE--DECEMBER 31, 1995 $1,304,344 $2,465,974 $(1,161,630)
============ ============ =============

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

F-61

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
(AN "S" CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED
<TABLE>
<CAPTION>

DECEMBER 31,
---------------------------
1995 1994
------------ -------------
<S><C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ................................................ $(231,642) $ (230,136)
Adjustments to reconcile net loss to net cash provided
by
operating activities:
Depreciation .......................................... 197,511 193,245
Increase in deferred income ........................... 1,500 7,500
Equipment sale ........................................ (16,500) --
(Increase) decrease in inventory ...................... 3,816 (3,063)
Increase in prepaid expenses .......................... (27) (2,938)
Increase in other receivable .......................... (3,985) --
(Increase) decrease in deposits ....................... 4,000 (300)
Increase in accounts payable and accrued expenses .... 7,922 10,869
Increase in due to Lenrich Associates
(rent and real estate taxes) ......................... 43,528 76,814
------------ -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........... 6,123 51,991
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment ......................... 16,500 --
Purchase of equipment ................................... (10,482) (45,889)
Advance and repayments--affiliates ...................... (8,750) (1,122)
------------ -------------
NET CASH USED BY INVESTING ACTIVITIES ................ (2,732) (47,011)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholders' distribution .............................. (32,100) --
Additional common stock proceeds ........................ -- 1,470,204
Repayment of equipment lease ............................ (15,324) --
Repayment of building lease ............................. (19,922) (31,306)
Advances and repayments--affiliates ..................... 65,842 (1,443,798)
------------ -------------
NET CASH USED BY FINANCING ACTIVITIES ................ (1,504) (4,900)
------------ -------------
NET INCREASE IN CASH ..................................... 1,887 80
Net cash overdraft--beginning of year .................... (9,802) (9,882)
------------ -------------
NET CASH OVERDRAFT--END OF YEAR .......................... $ (7,915) $ 9,802
============ =============
</TABLE>

SUPPLEMENT CASH FLOWS INFORMATION

No taxes were paid in 1995 and 1994. Interest expense totalled $642 and $130
in 1995 and 1994, respectively.

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

As described in Note 3B, the Corporation entered into an equipment lease.
Consequently, equipment and equipment lease obligations each increased by
$16,914.

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

F-62

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
(AN "S" CORPORATION)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED

DECEMBER 31,
-------------------------
1995 1994
------------ -----------
REVENUES
Driving range (net of discounts) .. $ 493,192 $ 469,247
Pro shop; food; batting; other .... 98,472 72,405
Equipment sale ..................... 16,500 --
------------ -----------
Total revenues .................... 608,164 541,652
------------ -----------
EXPENSES
Cost of pro shop goods and food ... 71,744 52,270
Payroll ............................ 165,724 144,670
Payroll taxes ...................... 14,337 13,403
Golf supplies ...................... 29,622 34,651
Golf professionals ................. 1,470 4,576
Advertising ........................ 84,881 85,374
Equipment rental ................... 4,578 10,956
Repairs, maintenance and supplies . 47,179 45,347
Landscaping ........................ 125 3,322
Sales and personal property taxes . 21,900 21,222
Real estate taxes .................. 25,630 25,913
Insurance .......................... 28,461 22,255
Utilities .......................... 22,874 18,442
Telephone .......................... 9,472 8,621
Other maintenance .................. 3,523 2,810
Accounting ......................... 9,691 10,825
Consulting and engineer ............ 9,321 521
Rent ............................... 56,898 50,900
Office ............................. 4,522 4,170
Payroll preparation ................ 3,689 3,864
Fees and permits ................... 3,478 2,701
Travel and entertainment ........... 14,493 4,661
Bank charges ....................... 5,264 5,511
Miscellaneous ...................... 3,419 1,558
------------ -----------
TOTAL EXPENSES BEFORE DEPRECIATION 642,295 578,543
------------ -----------
Loss before depreciation ............ (34,131) (36,891)
Less
Depreciation ....................... 197,511 193,245
------------ -----------
NET LOSS ............................ $(231,642) $(230,136)
============ ===========

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

F-63

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994

NOTE 1. ORGANIZATION

Indian River Golf-O-Rama, Inc. (the "Corporation") is a corporation that
was formed on January 31, 1992 for the purpose of operating a golf driving
range located in Virginia Beach, VA. In addition to the driving range, the
Corporation operates a pro shop, snack bar, mini-golf course and batting
cages.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION

The Corporation's policy is to prepare its financial statements on the
accrual basis of accounting.

B. REVENUE RECOGNITION

Membership dues are recorded as driving range revenue in the applicable
membership period. Dues received in advance for subsequent years are
reflected as deferred income. All other revenues are recognized as income
when received.

C. INVENTORIES

Inventories are stated at the lower of cost or market determined by the
first-in, first-out method. Inventories consist of the Corporation's prop
shop items as well as snack bar food.

D. DEPRECIATION

Building and improvements are depreciated over 40 years on a straight-line
method and equipment over a 10 year straight-line period. The Corporation
depreciates its tractor (see Note 3B) over a 5 year straight line period.

E. INCOME TAXES

The Corporation has elected to be taxed as an "S" Corporation under the
provisions of the Internal Revenue Code. Under such provision, the
Corporation does not pay federal or state corporate income taxes. Therefore,
no provisions for federal or state income taxes have been made. The
shareholder of the Corporation is to report his share of the Corporation's
loss to the extent allowable on his personal income tax return.

NOTE 3. LEASE PAYABLE

A. BUILDING LEASE

The Corporation is the lessee of certain trailer buildings under a capital
lease which matured in June, 1995. The asset and liability under the lease
was recorded at the minimum lease payments. The Corporation paid $19,922 and
$31,306 for 1995 and 1994, respectively, under this lease obligation.

The asset is being depreciated over 31 1/2 years. Depreciation expense for
the years ended December 31, 1995 and 1994 totalled approximately $3,500 per
annum.

B. EQUIPMENT LEASE

The Corporation is the lessee of a tractor under a capital lease. The
asset and liability under the lease was recorded at the minimum lease
payments. The Corporation paid approximately $15,500 of the obligation in
1995, and expects to remit the remaining balance of $1,590 during 1996.

The asset is being depreciated over 5 years. Depreciation expense for the
year ended December 31, 1995 totalled approximately $1,700.

F-64

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994--(Continued)

NOTE 4. RELATED PARTY TRANSACTION

A. AFFILIATE ADVANCES

The Corporation has made unsecured, short-term, non-interest bearing
advances from an entity which is owned by the shareholder. These advances
totalled $96,248 and $30,406 at December 31, 1995 and 1994, respectively.

B. MINIMUM LEASE PAYMENTS

The Corporation has entered into a lease agreement (the "Agreement") for
the driving range premises, dated May 1, 1992, with Lenrich Associates, which
is owned by the shareholder. The Agreement requires fixed lease payments in
the amount of $39,000 per annum, payable in monthly installments. Commencing
in the third year of the lease, the Corporation is required to remit
additional rent, as defined in the Agreement.

The Corporation has not paid all of its lease obligations as described
above. Additionally, Lenrich Associates has paid the Corporation's real
estate taxes.

Unpaid rent and real estate tax obligations totalled $225,042 and $181,514
at December 31, 1995 and 1994, respectively.

Minimum annual lease payments for the next five years, excluding
additional rent, are as follows:

YEAR ENDING
DECEMBER 31, AMOUNT
- -------------- ---------
1996 ......... $ 39,000
1997 ......... 39,000
1998 ......... 39,000
1999 ......... 39,000
2000 ......... 39,000
---------
$195,000
=========

Additional rent totalled approximately $17,900 and $11,900 for the years
ended December 31, 1995 and 1994, respectively.

NOTE 5. CONTINGENCIES

A. ENVIRONMENTAL

The Corporation discovered an unknown substance on its property and
retained an environmental engineering firm to test this substance. It is not
possible to predict, at this time, the extent of the Corporation's liability,
if any, in conjunction with the aforementioned unknown substance.

B. OTHER

As shown in the accompanying financial statements, the Corporation has
been incurring net operating losses and had working capital deficiencies at
December 31, 1995 and 1994. The Corporation's shareholder intends to
contribute additional capital to the Corporation to repay its rent and real
estate tax obligations (reference is made to Note 4(B)). The financial
statements do not include any adjustments that might be necessary should the
above mentioned additional capital not be contributed to the Corporation.

F-65

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
BALANCE SHEET

MARCH 31, 1996
--------------
ASSETS
Current Assets
Cash ........................................ $ 2,200
Inventory ................................... 29,195
Prepaid expenses ............................ 7,369
Other receivables ........................... 3,985
Due from affiliate .......................... 85,150
--------------
Total Current Assets ..................... 127,899
Building, improvements and equipment
Cost of building, improvements and equipment 2,181,203
Less
Accumulated depreciation ................... 681,701
--------------
Net building, improvements and equipment 1,499,502
Other assets
Deposits .................................... 300
--------------
Total assets ............................. $ 1,627,701
==============

LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities:
Bank overdraft
Accounts payable and accrued expenses ...... $ 8,710
Deferred income .............................
Equipment lease .............................
Due to affiliate ............................ 96,248
Due to Lenrich Associates ................... 225,042
--------------
Total current liabilities ................ 330,000
--------------
Shareholders equity
Common stock ................................ 2,465,974
Retained deficit ............................ (1,168,273)
--------------
Total shareholder's equity ............... 1,297,701
--------------
Total liabilities and shareholder's
equity ...................................... $ 1,627,701
==============

F-66

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
(AN "S" CORPORATION)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996

REVENUES
Driving range (net of discounts) $52,470
Pro shop; food; batting; other . 4,719
---------
Total revenues ................. 57,189
---------
EXPENSES
Cost of pro shop goods and food 2,836
Payroll ......................... 15,547
Golf professionals .............. 9,308
Advertising ..................... 942
Repairs, maintenance and
supplies ....................... 710
Insurance ....................... 3,280
Utilities ....................... 5,346
Telephone ....................... 1,980
Legal & Accounting .............. 150
Office .......................... 46
Travel and entertainment ........ 703
Bank charges .................... 1,495
Miscellaneous ................... 8,203
---------
TOTAL EXPENSES BEFORE
DEPRECIATION .................. 50,546
---------
NET INCOME ...................... $ 6,643
=========

F-67

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
(AN "S" CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
<S><C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ...................................................................... $ (6,643)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation ................................................................ 49,378
Decrease in deferred income ................................................. (9,000)
Decrease in inventory ....................................................... 672
Decrease in accounts payable and accrued expenses ........................... (22,702)
----------
NET CASH PROVIDED BY OPERATING ACTIVITIES .................................. 11,705
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of equipment lease .................................................. (1,590)
NET CASH (USED IN) FINANCING ACTIVITIES .................................... (1,590)

NET INCREASE IN CASH ........................................................... 10,115

Net cash overdraft--beginning of period ........................................ (7,915)

NET CASH--END OF PERIOD ........................................................ $ 2,200
==========
</TABLE>

F-68

<PAGE>

INDIAN RIVER GOLF-O-RAMA, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 1. ORGANIZATION

Indian River Golf-O-Rama, Inc. (the "Corporation") is a Corporation that
was formed on January 31, 1992 for the purpose of operating a golf driving
range located in Virginia Beach, VA. In addition to the driving range, the
Corporation operates a pro shop, snack bar, mini-golf and batting cages.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION

The Corporation's policy is to prepare its financial statements on the
accrual basis of accounting.

B. REVENUE RECOGNITION

C. INVENTORIES

Inventories are stated at the lower of cost or market determined by the
first-in, first-out method. Inventories consist of the Corporation's pro shop
items as well as snack bar food.

D. DEPRECIATION

Building and improvements are depreciated over 40 years on a straight-line
method and equipment over a 10-year straight-line period. The Corporation
depreciates its tractor over a 5-year straight-line period.

E. INCOME TAXES

The Corporation has elected to be taxed as an "S" Corporation under the
provisions of the Internal Revenue code. Under such provision, the
Corporation does not pay federal or state corporate income taxes. Therefore,
no provisions for federal or state income taxes have been made. The
shareholder of the Corporation is to report his share of the Corporation's
loss to the extent allowable on his personal income tax return.

NOTE 3. INTERIM FINANCIAL STATEMENTS

The financial statements as of March 31, 1996 and for the three months
then ended are unaudited and are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. In the opinion of
management, the financial statements include all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the Company's
financial position and results of operations.

F-69

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Owner
Catalina Golf Center

We have audited the accompanying balance sheet of Catalina Golf Center, as
of December 31, 1995, the related statements of income and proprietor's
capital and cash flows for the year then ended. These financial statements
are the responsibility of the management of Catalina Golf Center. Our
responsibility is to express an opinion on these financial statements based
on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Catalina Golf Center, as
of December 31, 1995, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.

ROBERT DECKER,
C.P.A.

Tucson, Arizona
June 6, 1996

F-70

<PAGE>

CATALINA GOLF CENTER
BALANCE SHEET
DECEMBER 31, 1995

ASSETS
CURRENT ASSETS
Cash ....................................... $ 4,657
Inventory .................................. 1,523
-----------
TOTAL CURRENT ASSETS ...................... 6,180
PROPERTY AND EQUIPMENT
Property and equipment, net ................ 573,037
OTHER ASSETS
Loan origination fees, net ................. 32,204
-----------
TOTAL ASSETS .............................. $ 611,421
===========
LIABILITIES AND PROPRIETOR'S CAPITAL
CURRENT LIABILITIES
Notes payable .............................. $ 722,120
Street assessment payable .................. 44,267
Property taxes payable ..................... 43,126
Accrued payroll and payroll taxes .......... 6,248
Accounts payable ........................... 103,106
Accrued interest ........................... 53,574
Litigation payable ......................... 363,091
-----------
TOTAL CURRENT LIABILITIES ................. 1,335,532
PROPRIETOR'S CAPITAL (DEFICIT) .............. (724,111)
-----------
TOTAL LIABILITIES AND PROPRIETOR'S CAPITAL $ 611,421
===========

See notes to financial statements

F-71

<PAGE>

CATALINA GOLF CENTER
STATEMENT OF INCOME AND PROPRIETOR'S CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S><C>

REVENUE
Sales .............................................................................. $ 156,515
-----------
COSTS AND EXPENSES
Salaries and benefits .............................................................. 51,682
Taxes .............................................................................. 45,071
Utilities .......................................................................... 24,847
Landscaping ........................................................................ 16,471
Depreciation and amortization ...................................................... 36,394
Commissions ........................................................................ 18,392
Operational and golf supplies ...................................................... 36,439
Repairs and maintenance ............................................................ 3,434
General and administrative ......................................................... 8,895
Advertising and promotion .......................................................... 5,453
-----------
TOTAL COSTS AND EXPENSES .......................................................... 247,078
-----------
OPERATING LOSS .................................................................. (90,563)
-----------
OTHER INCOME (EXPENSE)
Interest expense ................................................................... (132,398)
Rental income ...................................................................... 4,500
-----------
TOTAL OTHER INCOME (EXPENSE) ...................................................... (127,898)
-----------
LOSS BEFORE EXTRAORDINARY ITEM ...................................................... (218,461)
-----------
EXTRAORDINARY ITEM (Note 6)
Litigation judgment against owner related to original agreement to build golf
center ............................................................................. (363,091)
-----------
NET LOSS ......................................................................... (581,552)
PROPRIETOR'S CAPITAL (DEFICIT) -- BEGINNING OF YEAR ................................. (190,609)
Capital contributed ................................................................ 48,050
-----------
PROPRIETOR'S CAPITAL (DEFICIT) -- END OF YEAR ....................................... $(724,111)
===========
</TABLE>

See notes to financial statements

F-72

<PAGE>

CATALINA GOLF CENTER
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S><C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................... $(581,552)
Adjustments to reconcile net loss to net cash from operating
activities:
Extraordinary item .................................................... 363,091
Depreciation and amortization ......................................... 36,394
Decrease in current assets:
Inventory ............................................................ 477
Increase in current liabilities:
Property taxes payable ............................................... 43,126
Accrued payroll and payroll taxes .................................... 6,248
Accounts payable ..................................................... 56,528
Accrued interest ..................................................... 40,241
------------
Net cash used in operating activities ............................... (35,447)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on street assessment .......................................... (984)
Capital contributions .................................................. 48,050
Payment for loan origination fees ...................................... (10,000)
------------
Net cash provided by financing activities ........................... 37,066
------------
NET INCREASE IN CASH .................................................... 1,619
CASH -- BEGINNING OF YEAR ............................................... 3,038
------------
CASH -- END OF YEAR ..................................................... $ 4,657
============
SUPPLEMENTAL DISCLOSURES
Operating activities reflect the following cash payments:
Interest .............................................................. $ 92,157
============
</TABLE>

See notes to financial statements

F-73

<PAGE>

CATALINA GOLF CENTER
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization:

Catalina Golf Center (the "Business"), is a proprietorship owned by Ruth
Perillo. The proprietorship owns and operates a golf driving range located in
Tucson, Arizona. Ruth Perillo's other personal assets have not been included
in these financial statements.

Basis of Accounting:

These financial statements reflect the accrual method of accounting.

Income Taxes:

No provision for income taxes has been made in these statements. All
income taxes are paid for by Ruth Perillo at the personal level.

Inventory:

Inventory consists of golf balls, related golf supplies and soft drinks
for sale and is stated at lower of cost or market on the FIFO basis.

Property and Equipment:

Property and equipment is carried at cost. The cost of property and
equipment is depreciated over the estimated useful lives of the related
assets. Depreciation is computed using the straight-line method for financial
reporting purposes and on the accelerated cost recovery system method for
income tax purposes. The estimated useful lives of the assets for purposes of
computing depreciation are as follows:

Building and improvements .... 40 years
Furniture and equipment ...... 5 years

Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.

Loan Origination Fees:

Costs of obtaining the development loan have been capitalized and are
being amortized over the life of the loan. During 1995, the Business incurred
a $10,000 fee to extend the loan for one year. Amortization expense was
$17,048 for the year ended December 31, 1995.

Accounts payable reserve:

In the normal course of business there arises various commitments and
contingent liabilities with various vendors. Since the Business is a sole
proprietorship, the liabilities of the owner and the Business become
difficult to separate. Management has estimated a reserve of $50,000 for such
liabilities which are included in accounts payable. The amount of reserve is
reflected in prior years earnings.

Statement of Cash Flows:

For purposes of the statement of cash flows, the Business considers all
highly liquid debt instruments purchased with a maturity of three months or
less, to be cash equivalents. There were no cash equivalents at December 31,
1995.

F-74

<PAGE>

CATALINA GOLF CENTER
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

NOTE 2 -- FUTURE FINANCING

As shown in the accompanying financial statements, the Business incurred a
net loss of $581,552 for the year ended December 31, 1995. The Business
continues to operate at a negative cash flow and finance charges and accounts
payable deficiencies continue to increase. Those factors, as well as the
litigation judgment placed against the Business owner and the Business
owner's inability to contribute additional capital, create an uncertainty
about the Business' ability to continue operations. Unless the Business
obtains significant additional financing, the Business will be unable to
continue operations in the near future. The financial statements do not
include any adjustments that might be necessary if the Business is unable to
continue as a going concern.

NOTE 3 -- PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

Building and improvements $539,169
Furniture and equipment .. 10,785
Land ...................... 65,000
----------
614,954
Accumulated depreciation . (41,917)
----------
Net property and equipment $573,037
==========

Depreciation expense was $19,346 for the year ended December 31, 1995.

NOTE 4 -- LAND

The land upon which the Business operates is owned as follows:

Ruth Perillo ......27%
Lyn Perillo ....... 24%
Glenn Perillo ..... 24%
Oscar Ramirez ..... 25%
-------
100%
=======

The land has been recorded at the lower of cost or market. For the year
ended December 31, 1995, the Business is under no obligation to make lease
payments to the other owners for usage of the land.

F-75

<PAGE>

CATALINA GOLF CENTER
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

NOTE 5 -- NOTES PAYABLE

Notes payable consists of the following at December 31, 1995:
<TABLE>
<CAPTION>
<S><C>

Note payable dated June 10, 1993, interest at 16% due monthly on
outstanding balance, originally matured June 1995, extended for
one year until June 10, 1996, secured by Business land, building
and improvements, property and equipment and by the assignment of
rents, income and receipts of the Business. The note is in
default and interest has been paid through October, 1995 ........ $500,000
Note payable to King & Frisch, P.C., Employees Profit Sharing
Plan, interest at 15%, original principal of $61,000, accrued
interest of $11,120 applied to the note, secured by deed of trust
on the Business land. The note is in default and is past due,
interest has been paid through September, 1994 ................... 72,120
Note payable to William D. King, interest at 13.5%, original
principal loaned of $200,000, secured by deed of trust on the
Business land. The note is in default and is past due, interest
has been paid through August, 1995 ............................... 150,000
----------
Total notes payable ............................................... $722,120
==========
</TABLE>

The owner of the Business has secured other loans with the land on which
the golf driving range operates.

NOTE 6 -- LITIGATION

The owner of the Business and other related parties were defendants in a
lawsuit in connection with the original agreement to build the Business. The
judgment was awarded in favor of the plaintiffs on their claims for breach of
contract, breach of fiduciary duty, breach of duty of good faith and fair
dealing, and racketeering in September, 1995. The judgment awarded was
$300,000 in compensatory damages and $63,091 in plaintiffs' legal fees, cost
of suit fees and jury fees. The judgment bears interest at 10% per annum from
the date of judgment until paid. The owner and other related parties are
filing an appeal to the Appellate Court. The land upon which the Business
operates is only subject to the owner's equity.

F-76

<PAGE>

CATALINA GOLF CENTER
BALANCE SHEET
MARCH 31, 1996

ASSETS
CURRENT ASSETS:
Checking account .............. $ 6,841.80
Petty cash .................... 250.00
Inventory ..................... 1,523.00
-------------
TOTAL CURRENT ASSETS ...... $ 8,614.80
PROPERTY AND EQUIPMENT:
Land .......................... $ 65,000.00
Property improvements ......... 539,169.21
Furniture and equipment ...... 10,785.00
Accumulated depreciation ..... (46,316.00)
-------------
TOTAL PROPERTY AND
EQUIPMENT ..................... $568,638.21
OTHER ASSETS:
Finance fees .................. $ 66,073.59
Accum amort -- Finance fees .. (39,174.00)
-------------
TOTAL OTHER ASSETS ......... $ 26,899.59
-------------
TOTAL ASSETS ............... $604,152.60

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable ........... $ 98,484.54
Property taxes payable ..... 43,125.69
Street assessment payable .. 44,266.80
PAYROLL TAXES PAYABLE ...... 5,766.07
OTHER ACCRUED EXPENSES ..... 451,597.59
---------------
TOTAL CURRENT LIABILITIES . $ 643,240.69
NON-CURRENT LIABILITIES:
LONG-TERM DEBT NET OF CURRENT $ 722,120.20
---------------
TOTAL NON-CURRENT
LIABILITIES .............. $ 722,120.20
EQUITY:
Capital .................... $(724,111.28)
Capital contribution ....... 1,200.00
NET INCOME (LOSS) .......... (38,297.01)
---------------
TOTAL EQUITY .............. $(761,208.29)
---------------
TOTAL LIABILITIES AND
EQUITY ................... $604,152.60
============

F-77

<PAGE>

CATALINA GOLF CENTER
INCOME STATEMENT
FOR THE PERIOD(S)

JANUARY 1, 1996
TO MARCH 31,
1996 ACTUAL $
---------------
SALES:
Sales ......................... $ 38,775.48
---------------
TOTAL SALES .................. 38,775.48
COST OF SALES:
BEGINNING INVENTORY ........... 1,523.00
Golf supplies ................. 453.99
Beverages ..................... 812.55
Outside services .............. 1,100.50
Equipment rental .............. 315.57
Landscaping ................... 375.80
Wages ......................... 8,410.00
ENDING INVENTORY .............. (1,523.00)
---------------
TOTAL COST OF SALES .......... 11,468.41
---------------
GROSS PROFIT ................. 27,307.07
SELLING EXPENSES:
Commissions ................... 1,564.50
---------------
TOTAL SELLING EXPENSES ....... 1,564.50
GENERAL AND ADMINISTRATIVE:
Auto expense .................. 637.10
Amortization .................. 5,304.00
Bank service charges .......... 80.08
Bookkeeping fees .............. 559.00
Depreciation expense .......... 4,399.00
Utilities ..................... 357.33
Insurance--General ............ 46.00
Interest expense .............. 39,520.00
License and fees .............. 75.00
Miscellaneous expense ......... 17.00
Office expense ................ 240.92
Postage expense ............... 35.42
Repairs and maintenance ....... 208.97
Security ...................... 50.00
Taxes--Real estate ............ 11,045.41
Taxes--Payroll ................ 346.92
Telephone ..................... 662.43
Bad debts ..................... 455.00
---------------
TOTAL GENERAL AND
ADMINISTRATIVE .............. 64,039.58
---------------
NET OPERATING INCOME (LOSS) .. (38,297.01)
NET INCOME (LOSS) BEFORE TAX . $(38,297.01)
---------------
NET INCOME (LOSS) ............ $(38,297.01)
===============

F-78

<PAGE>

CATALINA GOLF CENTER
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
<S><C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................. $(38,297)
Adjustments to reconcile net loss to net cash from operating
activities:
Extraordinary item ................................................... --
Depreciation and amortization ....................................... 9,703
Decrease in current assets:
Inventory ............................................................
Increase (decrease) in current liabilities:
Accrued payroll and payroll taxes .................................... (482)
Accounts payable .................................................... (4,622)
Accrued expenses .................................................... 34,933
-----------
Net cash provided by operating activities ........................ 1,235
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions ................................................ 1,200
-----------
Net cash provided by financing activities ........................ 1,200
-----------
NET INCREASE IN CASH ................................................... 2,435
CASH -- BEGINNING OF PERIOD ............................................ 4,657
-----------
CASH -- END OF PERIOD .................................................. $ 7,092
===========
</TABLE>

F-79

<PAGE>

CATALINA GOLF CENTER
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization:

Catalina Golf Center, (the Business), is a proprietorship owned by Ruth
Perillo. The proprietorship owns and operates a golf driving range located in
Tucson, Arizona. Ruth Perillo's other personal assets have not been included
in these financial statements.

Basis of Accounting:

These financial statements reflect the accrual method of accounting.

Income Taxes:

No provision for income taxes has been made in these statements. All
income taxes are paid for by Ruth Perillo at the personal level.

Inventory:

Inventory consists of golf balls, related golf supplies and soft drinks
for sale and is stated at lower of cost or market on the FIFO basis.

Property and Equipment:

Building and improvements ...40 years
Furniture and equipment ..... 5 years

Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.

Loan Origination Fees:

Costs of obtaining the development loan have been capitalized and are
being amortized over the life of the loan.

Statement of Cash Flows:

NOTE 2 -- INTERIM FINANCIAL STATEMENTS

The financial statements as of March 31, 1996 and for the three months
then ended are unaudited and are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. In the opinion of
management, the financial statements include all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the Business'
financial position and results of operations.

F-80

PAGE>

Independent Auditors' Report

To the Board of Directors and
Stockholders of K.G. Golf, Inc.

We have audited the accompanying balance sheet of K.G. Golf, Inc. (an Ohio
Corporation) as of December 31, 1995, and the related statements of income,
retained earnings, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of K.G. Golf, Inc. as of
December 31, 1995 and the results of operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

Goffena & Baker, CPA
Fairfield, Ohio
June 6, 1996

F-81

<PAGE>

K.G. GOLF, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S><C>

ASSETS
CURRENT ASSETS
Cash ............................................................ $ 8,497
Accounts Receivable ............................................. 465
Inventory ....................................................... 94,184
---------
TOTAL CURRENT ASSETS ........................................... $ 103,146
PROPERTY AND EQUIPMENT
Furniture and Fixtures (Net of Accumulated Depreciation of
$31,742) ........................................................ $ 29,708
Equipment (Net of Accumulated Depreciation of $39,192) ......... 41,733
Leasehold Improvements (Net of Accumulated Depreciation of
$122,861) ...................................................... 955,240
---------
TOTAL PROPERTY AND EQUIPMENT ................................... 1,026,681
OTHER ASSETS
Organization Costs .............................................. $ 370
Deposits ........................................................ 900
---------
TOTAL OTHER ASSETS ............................................. 1,270
-----------
TOTAL ASSETS ..................................................... $1,131,097
===========

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable ....................................... $ 56,935
Payroll Taxes Withheld ................................. 765
Accrued Expenses ....................................... 12,991
Sales Tax Payable ...................................... 2,353
Note Payable--Bank ..................................... 850,000
-----------
TOTAL CURRENT LIABILITIES ............................. $ 923,044
LONG TERM DEBT
Notes payable--Officer ................................. 483,625
STOCKHOLDERS' EQUITY
Common Stock--750 shares authorized, 300 shares issued
and outstanding ....................................... $ 75,000
Retained Earnings ...................................... (350,572)
-----------
TOTAL STOCKHOLDERS' EQUITY ............................ (275,572)
-----------
TOTAL LIABILITIES AND EQUITY ............................ $1,131,097
===========
</TABLE>

The Accompanying Notes are an integral part of the Financial Statements.

F-82

<PAGE>

K.G. GOLF, INC.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
<S> <C> <C>
SALES ....................................... $ 79,182
COST OF SALES ............................... 283,712
---------
GROSS PROFIT ................................ $ 507,470
OPERATING EXPENSES
Wages and Payroll Tax ...................... $189,719
Interest ................................... 103,851
Rent ....................................... 65,680
Depreciation ............................... 60,636
Other Operating ............................ 200,513
--------
Total Operating Expenses ................. 620,399
---------
NET (LOSS) .................................. $(112,929)
=========
</TABLE>

K.G. GOLF, INC.
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995

BEGINNING BALANCE, JANUARY 1, 1995 $(237,643)
Net (Loss) for the year ended ... (112,929)
------------
ENDING BALANCE, DECEMBER 31, 1995 $(350,572)
============

The Accompanying Notes are an integral part of the Financial Statements.

F-83

<PAGE>

K.G. GOLF, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S><C>

CASH FLOWS FROM OPERATING EXPENSES:
Net Loss ........................................................... $(112,929)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating
Activities:
Depreciation and Amortization ..................................... $61,079
Shareholder Interest not requiring cash ........................... 26,250
Decrease in Account Receivable .................................... 830
Decrease in Inventory ............................................. 4,737
Increase in Accounts Payable ...................................... 20,534
(Decrease) in Payroll Tax Withholding ............................. (237)
(Decrease) in Accrued Expenses .................................... (1,351)
(Decrease) in Sales Tax Payable ................................... (103)
(Decrease) in Accrued Interest .................................... (6,222) 105,517
--------- ------------
Net Cash Used by Operating Activities ........................... $ (7,412)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment ................................. (15,397)
CASH FLOWS FROM FINANCING ACTIVITIES ............................... -0-
NET CASH (DECREASE) IN CASH BALANCE ................................ (22,809)
CASH, JANUARY 1, 1995 .............................................. 31,306
------------
CASH, DECEMBER 31, 1995 ............................................ $ 8,497
============
SUPPLEMENTAL INFORMATION:
Cash Flows from operating activities include interest paid of
$77,601.
</TABLE>

The Accompanying Notes are an integral part of the Financial Statements.

F-84

<PAGE>

K.G. GOLF, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business

K.G. Golf, Inc. (the "Company") was incorporated on September 30, 1991 and
operates a golf center consisting of a driving range, a golf supply shop, a
putt-putt center and golf instruction. The center is located in Fairfield,
Ohio.

Accounts Receivable

The Company does not sell on open account. Thus, trade receivables are
minor.

Inventory

Inventories are maintained through a perpetual inventory system. A
physical inventory is taken as of year end for financial statement purposes
and perpetual inventory quantities are adjusted to physical inventory counts.
Inventory on hand at December 31, 1995 was valued at the lower of cost or
market.

Property and Equipment

Physical assets are recorded at their original cost or at their fair
market value at the date of their contribution to the business, if lower.
Major additions and betterments are added to the property accounts while
maintenance and repairs which do not appreciably extend the useful lives of
the related assets are expensed when incurred. Management has not recorded
salvage value as it believes there will be negligible value to these assets
at the end of their useful lives.

Depreciation expense is computed for financial statement purposes using
the straight-line depreciation method over the anticipated useful lives of
owned assets. Leasehold improvements are amortized over the estimated useful
life of each property being leased.

Income Taxes

The Company has elected to be taxed under the provision of Subchapter S of
the Internal Revenue Code. Under those provisions, the Company does not pay
corporate income taxes on its taxable income (loss). Instead, the
stockholders are liable for individual income taxes on their respective
shares of the Company's net operating income (loss) in their individual
income tax returns. Therefore, no income tax expense appears on these
financial statements.

Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with original maturities of three months or
less to be cash equivalents.

F-85

<PAGE>

K.G. GOLF, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995

RELATED PARTY TRANSACTIONS

A note, dated October 31, 1992, was signed by each of the three
shareholders. The total amount due is $375,000. The notes are due October 31,
1997. Interest is payable annually at 7% on the unpaid balance. The notes are
unsecured, but are subordinated to a revolving line of credit to Fifth Third
Bank. Interest has accrued unpaid on the notes since 1992 and currently total
$83,125.

An additional $8,500 was loaned to the Company by each shareholder
totalling $25,500. This amount is unsecured and non-interest bearing.

The total of all amounts due shareholders is as stated on the balance
sheet of $483,625.

NOTE PAYABLE -- BANK

A note is payable to Fifth Third Bank in the amount of $850,000. Interest
accrues at the bank's "Prime Rate" and shall vary as changes are announced.
Interest is payable quarterly beginning March 27, 1996. Principal is due at
$4,000 per month for seven months beginning March 27, 1996, then $2,000 per
month for two months, then the entire balance is due on December 27, 1996.
The note is secured by Company assets and various securities held in Trust
and it is cross collateralized to other K.G. Golf, Inc. notes.

GROUND LEASE AGREEMENT

The Company entered into a ground lease agreement on October 17, 1991 for
the property on which the facility currently operates in Fairfield, Ohio. The
agreement details a primary term of five years beginning with the opening of
the facility. During this period, monthly rent is equal to 15% of gross
income collected by the lessee from the Fairfield operation, except for the
pro shop, which is 7 1/2 % of gross income. There is a minimum annual rental
of $48,000. The lessee will owe the lessor 35% of any sublease income, if
applicable, for the facility. There are three consecutive five year options
to renew the lease beginning after the end of the primary term. The minimum
annual rental will be adjusted for inflation during this period.

Future minimum rental payments required as of December 31, 1995 are as
follows:

1996 ..... $48,000
1997 ..... $40,000

F-86

<PAGE>

K.G. GOLF, INC.
BALANCE SHEET
MARCH 31, 1996
<TABLE>
<CAPTION>
<S><C>

ASSETS

CURRENT
Cash .................................................. $ 4,469
Accounts Receivable ................................... 2,255
Inventory ............................................. 106,024
---------
TOTAL CURRENT ASSETS ................................ $ 112,748
PROPERTY AND EQUIPMENT
Furniture and Fixtures (Net of Accumulated
Depreciation) ........................................ $ 39,652
Equipment (Net of Accumulated Depreciation) .......... 52,060
Leasehold Improvements (Net of Accumulated
Depreciation) ........................................ 901,699
TOTAL PROPERTY AND EQUIPMENT ........................ 993,411
-----------
TOTAL ASSETS ........................................... $1,106,159
===========

LIABILITIES AND EQUITY

CURRENT LIABILITIES
Accounts Payable ....................................... $ 113,599
Sales Tax Payable ...................................... 1,477
-----------
TOTAL CURRENT LIABILITIES ............................ $ 115,233
LONG TERM DEBT
Notes Payable .......................................... 1,302,480
STOCKHOLDERS' EQUITY
Common Stock--750 shares authorized, 300 shares issued
and outstanding ....................................... $ 75,000
Retained Earnings ...................................... (386,554)
TOTAL STOCKHOLDERS' EQUITY ........................... (311,554)
-----------
TOTAL LIABILITIES AND EQUITY ............................ $1,106,159
===========
</TABLE>

F-87

<PAGE>

K.G. GOLF, INC.
INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1996

SALES ..................... $119,991 $
COST OF SALES ............. 52,387
---------- ----------
GROSS PROFIT .............. 67,604 $
OPERATING EXPENSES
Wages and Payroll Tax ... 17,933
Interest ................. 24,453
Rent ..................... 8,804
Depreciation ............. 20,256
Other Operating .......... 32,140
----------
Total Operating Expenses 103,586
----------
NET (LOSS) ................ $(35,982)
==========

The Accompanying Notes are an integral part of the Financial Statements.

F-88

<PAGE>

K.G. GOLF, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
<S><C>

CASH FLOWS FROM OPERATING EXPENSES:
Net (Loss) .................................................................................................... $ (35,982)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Depreciation and Amortization ................................................................................ 33,640
Shareholder Interest not requiring cash ...................................................................... 18,953
Increase in Account Receivable ............................................................................... (1,789)
Increase in Inventory ........................................................................................ (11,841)
Increase in Accounts Payable ................................................................................. 86,019
(Decrease) in Payroll Tax Withholding ........................................................................ (608)
(Decrease) in Accrued Expenses ............................................................................... (5,319)
(Decrease) in Sales Tax Payable .............................................................................. (876)
-----------
Net Cash provided by Operating Activities ................................................................... 82,197
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in Deposits .......................................................................................... 900
-----------
Net cash provided by investing activities ..................................................................... 900
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of Notes Payable--Bank .............................................................................. (850,000)
Borrowings from Shareholders .................................................................................. 762,875
Net cash (used in) financing activities ..................................................................... (87,125)
===========
NET CASH (DECREASE) IN CASH BALANCE ........................................................................... (4,028)
CASH, JANUARY 1, 1996 ......................................................................................... 8,497
-----------
CASH, MARCH 31, 1996 .......................................................................................... $ 4,469
===========
SUPPLEMENTAL INFORMATION:
Cash Flows from operating activities include Interest Paid of $5,500
</TABLE>

F-89

<PAGE>

K.G. GOLF, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business

K.G. Golf was incorporated on September 30, 1991. They operate a Golf
Center consisting of a driving range, a golf supply shop, a putt-putt center
and golf instruction. The center is located in Fairfield, Ohio.

Accounts Receivable

The Company does not sell on open account. Thus, trade receivables are
minor.

Inventory

Property and Equipment

Income Taxes

Estimates

Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with original maturities of three months or
less to be cash equivalents.

NOTE B -- INTERIM FINANCIAL STATEMENTS

The financial statements as of March 31, 1996 and for the three months
then ended are unaudited and are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. In the opinion of
management, the financial statements include all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the Company's
financial position and results of operations.

F-90

<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors
Tree Court Golf &
Recreational Complex, Inc.
St. Louis, Missouri

We have audited the accompanying balance sheet of Tree Court Golf &
Recreational Complex, Inc. (an S Corporation) as of December 31, 1995 and the
related statements of operations, stockholders' deficit and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Tree Court Golf &
Recreational Complex, Inc. as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

BDO Seidman, LLP

St. Louis, Missouri
June 5, 1996

F-91

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
<S><C>

DECEMBER 31,
1995
--------------
ASSETS
Leasehold Improvements and Equipment (Notes 2 and 6) ................ $ 927,308
Less accumulated depreciation ...................................... (301,523)
--------------
625,785
Cash ................................................................ 3,004
Due From Employees .................................................. 2,250
Organization Costs, net of accumulated amortization of $7,721 ...... 4,470
Deposits ............................................................ 12,700
--------------
$ 648,209
==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Notes Payable -- other (Note 5) ..................................... $ 555,557
Notes Payable -- related parties (Note 4) ........................... 548,500
Accounts Payable and Accrued Expenses (Note 3) ...................... 184,118
Unearned Revenue .................................................... 3,000
--------------
Total Liabilities ................................................... 1,291,175
==============
STOCKHOLDERS' DEFICIT
Common stock, $1 par -- shares authorized, 30,000; outstanding,
1,500 .............................................................. 1,500
Additional paid-in capital ......................................... 148,500
Accumulated deficit ................................................ (792,966)
--------------
Total Stockholders' Deficit ......................................... (642,966)
--------------
$ 648,209
==============
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-92

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
STATEMENT OF OPERATIONS

YEAR ENDING
DECEMBER 31,
1995
--------------
Revenue .............. $ 443,341
Cost of Revenue ...... 238,013
--------------
Gross Profit ......... 205,328
Operating Expenses .. 306,490
--------------
Loss from Operations (101,162)
--------------
Other Expense
Interest expense ... (76,839)
Miscellaneous ....... (2,438)
--------------
(79,277)
--------------
Net Loss ............. $(180,439)
==============

See accompanying summary of accounting policies and notes to financial
statements.

F-93

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
<S><C>

ADDITIONAL
COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT DEFICIT
-------- ------------ ------------- ---------------
Balance, January 1, 1995 . $1,500 $148,500 $(612,527) $(462,527)
Net loss .................. -- -- (180,439) (180,439)
-------- ------------ ------------- ---------------
Balance, December 31, 1995 $1,500 $148,500 $(792,966) $(642,966)
======== ============ ============= ===============
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-94

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
<S><C>
YEAR ENDING
DECEMBER 31,
1995
--------------
Operating Activities
Net loss ...................................................................... $(180,439)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization ................................................ 86,299
Change in assets and liabilities:
Due from employees .......................................................... (850)
Accounts payable and accrued expenses ....................................... 95,494
Unearned revenue ............................................................ 3,000
--------------
Cash Provided by Operating Activities .......................................... 3,504
--------------
Financing Activities
Principal payments on notes payable ........................................... (7,537)
Proceeds from issuance of note payable ........................................ 6,000
--------------
Cash Used in Financing Activities .............................................. (1,537)
--------------
Net Increase in Cash ........................................................... 1,967
Cash, beginning of year ........................................................ 1,037
--------------
Cash, end of year .............................................................. $ 3,004
==============
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-95

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
SUMMARY OF ACCOUNTING POLICIES

LEASEHOLD IMPROVEMENTS, EQUIPMENT AND DEPRECATION

Leasehold improvements and equipment are carried at cost. Leased equipment
acquired under capital leases is recorded at the present value of the future
minimum lease payments. Depreciation is computed using accelerated methods
over the useful life as determined by industry standards.

Leasehold improvements are depreciated over the lesser of their estimated
useful lives or the lease term.

ORGANIZATION COSTS AND AMORTIZATION

Organizations costs are carried at cost and are comprised of pre-opening
expenditures. Amortization is computed using the straight-line method over 60
months.

INCOME TAXES

The Company has elected to be taxed under Subchapter S of the Internal
Revenue Code. Accordingly, the current taxable income of the Company is
taxable to the stockholders who are responsible for the payment of taxes
thereon.

ACCOUNTING ESTIMATES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies. The
carrying amounts of notes payable to stockholders and the bank approximate
their fair values.

F-96

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
NOTES TO FINANCIAL STATEMENTS

1. BUSINESS

The Company operates a family recreation center in St. Louis, Missouri
that offers a lighted golf driving range, an 18 hole miniature golf course
and a 9 hole executive golf course.

2. PROPERTY AND EQUIPMENT

The Company leased land in 1991 to develop the recreation center.
Development cost of the amenities and their associated financing costs were
capitalized during the construction period. Leasehold improvements and
equipment at December 31, 1995 consist of the following:

1995
------------
Leasehold improvements . $ 318,155
Miniature golf course .. 181,014
Building ................ 311,641
Equipment (Note 6) ...... 116,498
------------
927,308
Accumulated depreciation (301,523 )
------------
$ 625,785
============

3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

At December 31, 1995, accounts payable and accrued expenses consist of the
following:

1995
----------
Real estate taxes ........ $ 62,689
Accrued interest (Note 4) 53,917
Other .................... 67,513
----------
$184,119
==========

4. NOTES PAYABLE TO RELATED PARTIES

The Company has entered into unsecured notes payable agreements with each
of the stockholders and a related party totalling $548,500 at December 31,
1995. These notes payable are due upon demand and have an interest rate of
7%. Accrued interest on these notes payable at December 31, 1995 is $48,250.

5. NOTES PAYABLE--OTHER

Notes payable consist of the following at December 31:
<TABLE>
<CAPTION>
<S><C>

1995
----------
Note payable to bank with quarterly interest only payments.
Interest computed at the corporate base rate plus 1/2 % (9 1/4
% at December 31, 1995); due December 1, 1996, collateralized
by stockholder's personal residence ........................... $285,683
Notes payable to U.S. Small Business Administration (disaster
loans) with monthly principal and interest payments totalling
$1,177 to be paid over 30 years. Interest is at 4% per annum;
collateralized by stockholder's personal residence and assets
of the Company ................................................ 241,500
Capital leases (see Note 6) .................................... 24,822
Other .......................................................... 3,552
----------
$555,557
==========
</TABLE>

F-97

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Maturities of notes payable are as follows:

1996 ........ $301,964
1997 ........ 13,892
1998 ........ 12,417
1999 ........ 5,126
2000 ........ 5,335
Thereafter . 216,823
----------
$555,557
==========

6. LEASES

The Company conducts its operations on leased property which is accounted
for as an operating lease. The lease requires monthly payments of $2,000
through February 28, 1997. The Company has four, five-year renewal options
which can be exercised at the Company's discretion. The lease also provides
for a purchase option at any time during the lease term at fair market value.
This lease requires the Company to pay all maintenance, real estate taxes,
insurance and utility costs.

The Company also leases various equipment which is accounted for as a
capital lease. Monthly lease payments of $862 extend through 1998.

Rental expense, for operating leases, charged to operations was $22,564 in
1995.

As of December 31, 1995, future net minimum lease payments under capital
leases and future minimum rental payments required under operating leases
that have initial or remaining noncancellable terms in excess of one year are
as follows:

CAPITAL OPERATING
LEASES LEASES
--------- -----------
1996 ................................... $10,344 $24,000
1997 ................................... 10,344 4,000
1998 ................................... 6,068 --
--------- -----------
Total minimum lease payments ........... 26,756 28,000
Less amounts representing interest .... (1,934) --
--------- -----------
Present value of minimum lease payments $24,822 $28,000
========= ===========

7. SUBSEQUENT EVENT

On June 1, 1996, the Company entered into a letter of intent with Family
Golf Centers, Inc. to sell the leasehold improvements and equipment for
$1,300,000. This letter of intent does not include the sale of any other
assets, i.e., cash and receivables, or the assumptions of any liabilities.
This transaction is expected to close on June 7, 1996.

8. SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid $41,350 for interest during 1995. The Company also had in
1995 non-cash activity of $9,655 relating to capital leases.

F-98

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
BALANCE SHEET
MARCH 31, 1996
UNAUDITED

Current Assets:
Cash ................................... $ 4,527
Employee advances ...................... 2,250
-----------
6,777
Property & Equipment:
Buildings .............................. 311,641
Leasehold improvements ................. 289,280
Miniature golf ......................... 181,014
Machinery & equipment .................. 116,498
Capitalized interest ................... 28,875
-----------
927,308
Less accumulated depreciation .......... (318,597)
-----------
608,711
Other Assets:
Organization costs ..................... 3,861
Deposits ............................... 12,700
-----------
16,561
-----------
Total Assets ........................... $ 632,049
===========
Current Liabilities:
Accounts payable ....................... 162,482
Accrued expenses ....................... 7,120
Unearned revenue ....................... 3,000
Current maturities of long-term debt .. 886,464
-----------
1,059,066
Long-term Debt, less current maturities 251,454
Total Liabilities ...................... 1,310,520
Common Stock ........................... 1,500
Additional Paid-in Capital ............. 148,500
Stockholders' Deficit .................. (828,471)
-----------
Total Liabilities and Equity ........... $ 632,049
===========

F-99

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
UNAUDITED

Revenue ..................... $ 63,281
Cost of Revenue ............. 13,139
----------
Gross Profit ................ 50,142
Operating Expenses .......... 46,167
----------
Income from Operations ..... 3,975
Other Income (Expense)
Interest expense ............ (21,795)
Depreciation & amortization (17,684)
----------
(39,479)
----------
Net Loss .................... $(35,504)
==========

F-100

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996
UNAUDITED
<TABLE>
<CAPTION>
<S><C>

Operating Activities
Net loss ...................................................................... $(35,504)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization ................................................ 17,683
Change in assets and liabilities:
Accounts payable and accrued expenses ....................................... (14,517)
-----------
Cash (used in) Operating Activities ............................................ (32,338)
-----------
Financing Activities
Proceeds from issuance of note payable ........................................ 33,861
-----------
Cash Provided by Financing Activities .......................................... 33,861
-----------
Net Increase in Cash ........................................................... 1,523
Cash, beginning of Period ...................................................... 3,004
-----------
Cash, end of Period ............................................................ $ 4,527
===========
</TABLE>

F-101

<PAGE>

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE A -- SUMMARY OF ACCOUNTING POLICIES

LEASEHOLD IMPROVEMENTS, EQUIPMENT AND DEPRECIATION

Leasehold improvements are depreciated over the lesser of their estimated
useful lives or the lease term.

ORGANIZATION COSTS AND AMORTIZATION

Organizations costs are carried at cost and are comprised of pre-opening
expenditures. Amortization is computed using the straight-line method over 60
months.

INCOME TAXES

ACCOUNTING ESTIMATES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE B -- INTERIM FINANCIAL STATEMENTS

F-102

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Golf and Sports Center of the Palm Beaches, Inc.

I have audited the accompanying balance sheet of Golf and Sports Center of
the Palm Beaches, Inc. as of December 31, 1995, and the related statements of
loss, accumulated deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based
on my audit.

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Golf and Sports Center of
the Palm Beaches, Inc. as of December 31, 1995, and the results of its
operations and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Charles W. Cairnes Jr. P.A.
Palm Beach Gardens, Florida

June 8, 1996

F-103

<PAGE>

GOLF AND SPORTS CENTER OF THE PALM BEACHES, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S><C>

ASSETS
CURRENT ASSETS:
Cash ..................................................................... $ 4,629
Inventory ................................................................ 10,761
Prepaid insurance ........................................................ 7,447
Employee advances ........................................................ 2,623
-----------
Total .................................................................. 25,460
UTILITY DEPOSITS .......................................................... 7,895
$ 33,355
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable trade ................................................... $ 36,512
Taxes payable ............................................................ 7,169
Unearned income .......................................................... 33,908
-----------
Total .................................................................. 77,589
DUE TO W.A.G.N. Partners .................................................. 76,369
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 1,000 shares authorized, 200 shares issued
and outstanding ......................................................... 200
Paid in capital in excess of par value ................................... 9,800
Accumulated deficit ...................................................... (130,603)
-----------
Total shareholders' equity ............................................. (120,603)
-----------
$ 33,355
===========
</TABLE>

Read the accountants' report and the Notes to Financial Statements.

F-104

<PAGE>

GOLF AND SPORTS CENTER OF THE PALM BEACHES, INC.
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995

Revenues ............................... $ 862,871
Cost of Revenues ....................... 154,694
-----------
Gross Profit .......................... 708,177
Operating Expenses ..................... 711,291
-----------
Net loss .............................. (3,114)
Accumulated Deficit -- January 1, 1995 (127,489)
Accumulated Deficit -- December 31,
1995 .................................. $(130,603)
===========

Read the accountants' report and the Notes to Financial Statements.

F-105

<PAGE>

GOLF AND SPORTS CENTER OF THE PALM BEACHES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S><C>

Cash Flows from Operating Activities
Net loss .................................................................... $ (3,114)
Adjustments to reconcile net income to net cash used by operating
activities:
(Increase) decrease in:
Inventory ................................................................. 2,310
Prepaid insurance ......................................................... 838
Employee advances ......................................................... (2,100)
Increase (decrease) in:
Accounts payable .......................................................... (4,119)
Taxes payable ............................................................. 1,152
Unearned income ........................................................... (10,440)
Due to W.A.G.N. ........................................................... 15,954
----------
Net cash used by operating activities ....................................... 481
----------
Net Increase in Cash ........................................................ 481
Cash -- Beginning of year ................................................... 4,148
----------
Cash -- End of year ......................................................... $ 4,629
==========
</TABLE>

Read the accountants' report and the Notes to Financial Statements.

F-106

<PAGE>

GOLF AND SPORTS CENTER OF THE PALM BEACHES, INC.
NOTES TO THE FINANCIAL STATEMENTS
As of and for the Year ended December 31, 1995

1. FORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Formation

Golf & Sports Center of the Palm Beaches, Inc. (the "Company"), was formed
on March 12, 1990 to lease an executive public golf course in West Palm
Beach, Florida. The Company has entered into a lease with W.A.G.N. Partners
to operate and manage the golf course.

Basis of Accounting

The Company's policy is to prepare its financial statements on the accrual
basis of accounting; consequently, revenue is recognized when earned and
expenses are recognized when the obligation is incurred. Golf membership
income is recorded as income over the months in which it is earned.

Inventories

Inventories consist of merchandise for resale stated at the lower of cost
or market. The cost is determined by the first-in, first-out (FIFO) method.

Federal Income Taxes

The Company has made an election to be treated as an S Corporation whereby
profits and losses are passed directly to the shareholders for inclusion in
their personal income tax returns. Accordingly, no provision for income taxes
is made in these statements.

2. RELATED PARTY TRANSACTIONS

A related partnership, W.A.G.N. Partners, has leased the golf course to
the Company for a base rent of $277,000 per annum. There is a provision in
the lease that if the lessee is unable to pay rent the lessor can defer the
rent. The lessee has not been able to pay any rent as of December 31, 1995
and does not appear to be able to in the future so no rent expense has been
accrued.

3. BUSINESS CONDITION

The Company has experienced net losses and used cash in operating
activities since 1990. Loans from W.A.G.N. Partners have provided the
financial support necessary for the Company to satisfy its obligations
through 1995. The partners have indicated that they do not intend to continue
to provide financial support to fund the Company's 1996 projected cash flow
deficiency.

As of June 1, 1996 W.A.G.N. Partners has found a buyer and intends to
liquidate. The financial statements do not include any adjustments relating
to the recoverability of recorded asset amounts or the amounts of liabilities
that might be necessary should the Company be unable to continue as a going
concern.

F-107

<PAGE>

GOLF & SPORTS CENTER OF THE PALM BEACHES, INC.
BALANCE SHEET
MARCH 31, 1996
<TABLE>
<CAPTION>
<S><C>

ASSETS
Current Assets
Cash .................................................................... $ 6,380.25
Inventory ............................................................... 10,194.10
Due from WAGN ........................................................... 11,000.00
Employee advances ....................................................... 2,298.00
--------------
Total Current Assets ................................................. 29.872.35
Other assets
Utility deposits ........................................................ 7,895.00
--------------
Total other assets ................................................... 7,895.00
--------------
Total assets ......................................................... $ 37,767.35
==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable ........................................................ $ 29,586.43
Sales tax payable ....................................................... 4,919.78
Federal payroll taxes ................................................... 1,350.64
FUTA payable ............................................................ 611.64
SUTA payroll taxes ...................................................... 4,128.58
Unearned membership rev. ................................................ 24,909.88
Unearned bag storage rev. ............................................... 484.88
Unredeemed gift certif .................................................. 20,413.08
Due to WAGN ............................................................. 75,314.41
--------------
Total curent liabilities ............................................. 161,719.32
Shareholders' Equity .....................................................
Common stock, $1.00 par value, 1,000 shares authorized, 200 shares
issued
and outstanding ........................................................ 200.00
Additional paid-in capital .............................................. 9,800.00
Accumulated deficit ..................................................... (133,951.97)
--------------
Total shareholders' equity ........................................... (123,951.97)
--------------
Total liabilities and shareholders' equity ........................... $ 37,767.35
==============
</TABLE>

Read independent accountant's compilation report.

F-108

<PAGE>

GOLF & SPORTS CENTER OF THE PALM BEACHES, INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)

Revenue .................................... $220,867
Cost of Sales .............................. 35,665
----------
Gross Profit .............................. 185,202
Operating Expenses ......................... 154,921
Selling, General & Administrative Expenses 7,356
Net Income ................................ $ 22,925
==========

F-109

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Partners of
W.A.G.N. Partners

I have audited the accompanying balance sheet of W.A.G.N. Partners (a
partnership) as of December 31, 1995, and the related statements of loss,
partners' capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based
on my audit.

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of W.A.G.N. Partners as of
December 31, 1995, and the results of its operations and cash flows for the
year then ended in conformity with generally accepted accounting principles.

Charles W. Cairnes Jr. P.A.
Palm Beach Gardens, Florida

June 8, 1996

F-110

<PAGE>

W.A.G.N. PARTNERS
BALANCE SHEET
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S><C>

ASSETS

CURRENT ASSETS:
Cash .................................................. $ 5,446
------------
Total .............................................. 5,446
PROPERTY AND EQUIPMENT, at cost
Land .................................................. $ 700,000
Buildings and improvements ............................ 3,238,196
Machinery and equipment ............................... 71,863
Furniture and fixtures ................................ 171,287
-----------
4,181,346
Less accumulated depreciation ......................... (644,880)
-----------
3,536,466
DUE FROM GOLF & SPORTS CENTER OF THE PALM BEACHES, INC. 76,369
OTHER ASSETS, net of ($30,878) accumulated amortization 47,450
------------
$3,665,731
============
LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
Mortgage payable ...................................... $1,609,643
Accrued interest ...................................... 41,773
Taxes payable ......................................... 21,527
------------
Total .............................................. 1,672,943
LOANS FROM PARTNERS .................................... 711,258
PARTNERS' CAPITAL ...................................... 1,281,530
------------
$3,665,731
============
</TABLE>

Read the accountants' report and the Notes to Financial Statements.

F-111

<PAGE>

W.A.G.N. PARTNERS
STATEMENT OF LOSS AND PARTNERS' CAPITAL
For the Year Ended December 31, 1995

AMORTIZATION .............................. $ 5,087
PROFESSIONAL FEES ......................... 13,444
INTEREST EXPENSE .......................... 182,309
TAXES ..................................... 21,527
DEPRECIATION .............................. 122,655
-----------
Net loss .............................. (345,022)
Add: Partners' Capital -- January 1, 1995 1,626,552
PARTNERS' CAPITAL -- December 31, 1995 ... $1,281,530
===========

Read the accountants' report and the Notes to Financial Statements.

F-112

<PAGE>

W.A.G.N. PARTNERS
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S><C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss .................................................................... $(345,022)
Adjustments to reconcile net income to net cash used by operating
activities:
Depreciation ............................................................... 122,655
Amortization ............................................................... 5,087
(Increase) decrease in:
Due from Golf and Sports .................................................. (15,954)
Increase (decrease) in:
Accrued interest .......................................................... 41,773
Taxes payable ............................................................. (234)
------------
Net cash used by operating activities ....................................... (191,695)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ......................................... (2,969)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage payable .............................................. (62,787)
Proceeds from loans from partners .......................................... 262,781
------------
Net cash provided by financing activities ................................... 199,994
------------
NET INCREASE IN CASH ........................................................ 5,330
Cash -- Beginning of year ................................................... 116
------------
Cash -- End of year ......................................................... $ 5,446
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest ..................................... $ 140,536
</TABLE>

Read the accountants' report and the Notes to Financial Statements.

F-113

<PAGE>

W.A.G.N. PARTNERS
NOTES TO THE FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1995

1. FORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Formation

W.A.G.N. Partners, a Florida partnership (the "Partnership"), was formed
on January 1, 1990 to purchase an executive public golf course in West Palm
Beach, Florida. The Partnership has engaged a related corporation, Golf and
Sports Center of the Palm Beaches, Inc., to operate and manage the course.

Federal Income Taxes

The Partnership itself is not a taxpaying entity for purposes of Federal
income taxes. Federal income taxes on each partner are computed on total
income from all sources; accordingly, no provision for income taxes is made
in these statements.

Depreciation

Depreciation is calculated using the straight-line method over the useful
lives of the assets.

2. RELATED PARTY TRANSACTIONS:

A related corporation, Golf and Sports Center of the Palm Beaches, Inc.,
has leased the golf course from the Partnership for a base rent of $277,000
per annum. There is a provision in the lease that if the lessee is unable to
pay rent the lessor can defer the rent. The lessee has not been able to pay
any rent as of December 31, 1995 and does not appear to be able to in the
future so no rent income has been accrued.

3. MORTGAGE PAYABLE:

The First United Bank has started foreclosure proceedings against the
property so the entire amount of the mortgage and the accrued interest are
current liabilities.

4. BUSINESS CONDITION

The Partnership has experienced net losses and used cash in operating
activities since 1990. Capital calls to the partners and loans from the
partners have provided the financial support necessary for the Partnership to
satisfy its obligations through 1995. The partners have indicated that they
do not intend to continue to provide financial support to fund the
Partnership's 1996 projected cash flow deficiency.

As of June 1, 1996 the Partnership has found a buyer and intends to
liquidate. The financial statements do not include any adjustments relating
to the recoverability of recorded asset amounts or the amounts of liabilities
that might be necessary should the Partnership be unable to continue as a
going concern.

F-114

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Stockholder
Pelham Enterprises, Inc.
Greenville, South Carolina

We have audited the accompanying balance sheet of Pelham Enterprises, Inc.
as of December 31, 1994, and the related statements of income and retained
earnings and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Pelham Enterprises, Inc.
at December 31, 1994, and the results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting
principles.

Bradshaw, Gordon & Clinkscales, P.A.
Greenville, South Carolina
April 25, 1995

F-115

<PAGE>

PELHAM ENTERPRISES, INC.
BALANCE SHEETS
DECEMBER 31, 1994 AND APRIL 30, 1995

ASSETS

APRIL 30,
DECEMBER 31, 1995
1994 (UNAUDITED)
-------------- -----------
CURRENT ASSETS:
Cash ............................. $ 12,183 $ 5,289
Inventory ........................ 226,360 225,534
Prepaid expenses ................. 5,452 2,504
-------------- -----------
Total current assets ............ 243,995 233,327
-------------- -----------
PROPERTY AND EQUIPMENT:
Land ............................. 779,564 779,564
Building and amusement facilities 752,135 754,684
-------------- -----------
1,531,699 1,534,248
Less: Accumulated depreciation .. 303,146 316,480
-------------- -----------
Net property and equipment ..... 1,228,553 1,217,768
-------------- -----------
TOTAL ASSETS ...................... $ 1,472,548 $1,451,095
============== ===========

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:
Accounts payable ............................. $ 18,741 $ 618
Sales tax and admissions tax payable ........ 2,954 --
Right-of-way deposit ......................... 19,100 24,000
Current portion of note payable .............. 33,596 34,800
------------ -----------
Total Current Liabilities ................... 74,391 59,418
Due to shareholder ............................ 511,591 511,591
LONG-TERM LIABILITY:
Note payable, less current portion ........... 789,890 780,305
------------ -----------
TOTAL LIABILITIES ............................. 1,375,872 1,351,314
------------ -----------
STOCKHOLDER'S EQUITY:
Common stock, no par value; 1,000 shares
authorized; 750 shares issued and
outstanding .................................. 52,300 52,300
Retained earnings ............................ 44,376 47,481
------------ -----------
Total stockholder's equity .................. 96,676 99,781
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ... $1,472,548 $1,451,095
============ ===========

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

F-116

<PAGE>

PELHAM ENTERPRISES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
AND THE FOUR MONTHS ENDED APRIL 30, 1995

APRIL 30,
DECEMBER 31, 1995
1994 (UNAUDITED)
-------------- -----------
REVENUES:
Driving range ............................... $303,970 $100,254
Batting cages ............................... 43,742 16,378
Golf instruction ............................ 23,157 287
Putting green ............................... 2,964
Golf pro shop ............................... 389,344 149,544
-------------- -----------
Net Revenues .............................. 763,177 266,463
-------------- -----------
COST OF REVENUES--GOLF PRO SHOP:
Inventory at beginning of year .............. 153,272 226,360
Purchases ................................... 349,545 109,837
-------------- -----------
Cost of goods available for sale ......... 502,817 336,197
Less: Inventory at end of year .............. 226,360 225,534
-------------- -----------
Total cost of revenues .................... 276,457 110,663
-------------- -----------
GROSS PROFIT ................................. 486,720 155,800
-------------- -----------
GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries and wages .......................... 110,723 32,488
Driving range supplies ...................... 29,831 12,812
Utilities ................................... 17,689 5,999
Turf maintenance ............................ 13,176 2,259
Repairs and maintenance ..................... 26,409 10,889
Club repair costs ........................... 6,010 1,904
Operating supplies .......................... 13,488 1,541
Payroll taxes ............................... 10,543 3,177
Taxes and licenses .......................... 16,277 444
Professional fees ........................... 13,853 17,178
Advertising ................................. 22,142 6,456
Insurance ................................... 20,885 5,198
Equipment rental ............................ 13,678 2,945
Travel ...................................... 7,290 4,166
Telephone ................................... 2,034 1,027
Office supplies ............................. 1,053 390
Miscellaneous ............................... 6,976 4,267
Depreciation ................................ 41,620 13,333
-------------- -----------
Total general and administrative expenses 373,677 126,473
-------------- -----------
INCOME FROM OPERATIONS ....................... 113,043 29,327
-------------- -----------
OTHER EXPENSES:
Interest expense ............................ 66,490 16,222
Abandonment of putting greens ............... 44,721
-------------- -----------
Total other expenses ...................... 111,211 16,222
-------------- -----------
NET INCOME ................................... 1,832 13,105
RETAINED EARNINGS, Beginning of year ........ 51,044 44,376
DIVIDENDS .................................... (8,500) (10,000)
-------------- -----------
RETAINED EARNINGS, End of year ............... $ 44,376 $ 47,481
============== ===========

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

F-117

<PAGE>

PELHAM ENTERPRISES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994 AND
FOR THE FOUR MONTHS ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
<S><C>

APRIL 30,
DECEMBER 31, 1994
1995 (UNAUDITED)
-------------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................... $ 1,832 $ 13,105
Adjustments to reconcile net income to net cash provided by (used
by) operating activities:
Depreciation ....................................................... 41,620 13,333
Loss on abandonment of putting greens .............................. 44,721 --
Increase (decrease) in inventory ................................... (73,088) 826
Increase (decrease) in prepaid expenses ............................ (5,452) 2,948
Decrease in accounts payable ....................................... (22,844) (18,123)
Increase in other liabilities ...................................... 19,627 1,946
-------------- -----------

NET CASH PROVIDED BY OPERATING ACTIVITIES ............................ 6,416 14,035
-------------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets ............................................ (12,915) (2,549)
-------------- -----------

NET CASH USED BY INVESTING ACTIVITIES ................................ (12,915) (2,549)
-------------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable .......................................... (835,259) (8,380)
Loans from stockholders ............................................. 5,000 --
Proceeds from borrowings ............................................ 845,000 --
Dividends paid ...................................................... (8,500) (10,000)
-------------- -----------

NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES .................. 6,241 (18,380)
-------------- -----------

DECREASE IN CASH ..................................................... (258) (6,894)

CASH, Beginning of year .............................................. 12,441 12,183
-------------- -----------

CASH, End of year .................................................... $ 12,183 $ 5,289
============== ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes ....................................................... $ -0- $ -0-
============== ===========
Interest ........................................................... $ 66,490 $ 16,222
============== ===========
</TABLE>

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

F-118

<PAGE>

PELHAM ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994

Pelham Enterprises, Inc. operates an entertainment facility under the name
of Pelham Tees. The facility is open to the public and features a golf pro
shop and driving range and batting cages. During 1994, the Company ceased
operating its putting greens.

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Property and Equipment:

Property and equipment are stated at cost, less accumulated depreciation.
Maintenance and repair costs are charged directly to expense accounts as
incurred.

When property and equipment are disposed of, the applicable cost and
accumulated depreciation are removed from the related asset and accumulated
depreciation accounts. The resulting gain or loss is included in operations.

The cost of property and equipment is depreciated over the estimated
useful lives of the assets using straight-line and accelerated depreciation
methods. The same lives and rates are used for book and tax purposes. The
estimated useful lives of the assets are as follows:

Buildings ........... 31.5 years
All other assets ... 7 years

Inventory:

Inventory is stated at the lower of cost, determined by the first-in,
first-out (FIFO) method, or market. Inventory consists of items purchased for
resale in the golf pro shop.

Income Taxes:

The Company, with the consent of its shareholder, has elected under the
Internal Revenue Code to be an S corporation. In lieu of corporation income
taxes, the shareholders of an S corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability
for income taxes has been included in these financial statements.

NOTE 2--DUE TO SHAREHOLDER

The amount owed to the sole shareholder is non-interest bearing. The
amount cannot be repaid without the permission of the bank described in Note
3.

NOTE 3--NOTE PAYABLE
<TABLE>
<CAPTION>
<S><C>

APRIL 30,
DECEMBER 31, 1995
1994 (UNAUDITED)
-------------- -----------
7.5% note payable to a bank; maturing April 1997; monthly
payments of $7,854, including principal and interest;
secured by a mortgage on all real property of the
Company and the guarantee of the shareholder ............ $823,486 $815,105
Less: Current portion .................................... 33,596 34,800
-------------- -----------
$789,890 $780,305
============== ===========
Schedule of maturities due fiscal year ending April 30,
1996 ..................................................... $ 34,800
1997 ..................................................... 780,305
==============
$815,105
==============
</TABLE>

F-119

<PAGE>

PELHAM ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The Company was subject to certain covenants relating to the $815,105
note payable. Under the terms of the note agreement, the Company is required
to maintain specific insurance coverages and debt service ratios and to
provide the bank with periodic financial information. At December 31, 1994
and April 30, 1995, respectively, the Company was in compliance with the
covenants.

NOTE 4--SUBSEQUENT EVENTS

In 1994, the Company received $19,100 from the State of South Carolina as
a deposit for a portion of the Company's land the state needed for highway
right-of-way. The Company appealed the amount the state was willing to pay
for the land, and in 1995 settled with the state for a total of $24,000.

In May 1995, Family Golf Centers, Inc. (FGCI) purchased 100% of the
Company's issued and outstanding common stock from the Company's sole
shareholder. The Company's stock was converted into FGCI stock, and the
Company's separate identity ceased.

F-120

<PAGE>

INDEPENDENT AUDITOR'S REPORT

Board of Directors
Family Golf Centers, Inc.
225 Broadhollow Road
Melville, NY 11747

We have audited the accompanying Balance Sheet of Hiland Park Golf Course
(an operating component of Newmark Investments, Inc., a wholly owned
subsidiary of Evergreen Bank, N.A.) as of April 30, 1995 and the related
Statements of Income, Equity, and Cash Flows for the eleven months then
ended. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based
on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hiland Park Golf Course
as of April 30, 1995 and the results of its operations and its cash flows for
the eleven months then ended in conformity with generally accepted accounting
principles.

July 12, 1995
Queensbury, New York
Silverstein, Loftus & Ross, CPAs, P.C.

F-121

<PAGE>

HILAND PARK GOLF COURSE
QUEENSBURY, NEW YORK
BALANCE SHEET
APRIL 30, 1995

ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...... $ 2,170
Accounts receivable ............. 34,409
Inventory (A) ................... 64,679
------------
TOTAL CURRENT ASSETS .......... 101,258
PROPERTY AND EQUIPMENT: (A)
Leasehold improvements .......... 1,480
Furniture and fixtures .......... 4,908
Machinery and equipment ......... 104,702
Dishes, glassware, silverware .. 18,062
Real and personal property ..... 3,650,000
------------
TOTAL ......................... 3,779,152
Accumulated Depreciation ........ 92,131
------------
NET PROPERTY AND EQUIPMENT ... 3,687,021
------------
TOTAL ASSETS .................. $3,788,279
============
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Cash overdraft .................. $ 64,774
Accounts payable ................ 55,790
Accrued expenses ................ 20,295
Gift certificates payable ...... 8,831
Customer deposits ............... 35,557
Sales tax payable ............... 228
Deferred revenue (B) ............ 165,887
------------
TOTAL CURRENT LIABILITIES .... 351,362
EQUITY:
Equity (A) ...................... $3,436,917
------------
TOTAL LIABILITIES AND EQUITY $3,788,279
============

See Notes to Financial Statements

F-122

<PAGE>

HILAND PARK GOLF COURSE
QUEENSBURY, NEW YORK
STATEMENT OF INCOME
FOR THE ELEVEN MONTHS ENDED APRIL 30, 1995

SALES:
Member dues (C) ............ $ 27,447
Greens and tournament fees 409,763
Range fees ................. 17,346
Merchandise sales .......... 98,478
Cart rentals ............... 137,002
Food and beverage sales ... 710,377
Comedy club admission ..... 22,739
Miscellaneous .............. 12,803
------------
TOTAL SALES .............. $1,435,955
------------
COST OF SALES:
Inventory--beginning ....... 0
Purchases--pro shop ........ 132,046
Purchases--food and
beverage ................... 285,211
Range balls ................ 1,048
Entertainment .............. 64,244
------------
TOTAL .................... 482,549
LESS: inventory--ending ... 64,679
------------
TOTAL COST OF SALES ..... 417,870
------------
GROSS PROFIT ON SALES ... 1,018,085
OPERATING EXPENSES .......... 1,537,327
------------
NET (LOSS) ............... $ (519,242)
============

See Notes to Financial Statements

F-123

<PAGE>

HILAND PARK GOLF COURSE
QUEENSBURY, NEW YORK
STATEMENT OF EQUITY
FOR THE ELEVEN MONTHS ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
<S><C>

TOTAL
-----------
Balance--June 1, 1994 ................................................... $ 0
Add:
Cash contributions by Evergreen Bank, N.A. and Newmark Investments,
Inc., its wholly owned subsidiary (A) ................................. 204,453
Contribution of Assets by Evergreen Bank, N.A. and Newmark Investments,
Inc., its wholly owned subsidiary (A) ................................. 3,751,706
Less:
Net (loss) for the eleven months ended April 30, 1995 .................. (519,242)
-----------
Balance--April 30, 1995 ................................................. $3,436,917
===========
</TABLE>

See Notes to Financial Statements

F-124

<PAGE>

HILAND PARK GOLF COURSE
QUEENSBURY, NEW YORK
STATEMENT OF CASH FLOWS
FOR THE ELEVEN MONTHS ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
<S><C>

CASH PROVIDED BY (USED FOR):
Operating Activities:
Net (loss) ............................................................ $(519,242)
Items not affecting cash:
Depreciation ......................................................... 92,131
Accounts receivable ................................................... (34,409)
Inventory ............................................................. (64,679)
Accounts payable ...................................................... 55,790
Accrued expenses ...................................................... 20,295
Customer deposits ..................................................... 35,557
Deferred revenue ...................................................... 165,887
Other current liabilities ............................................. 9,059
------------
NET OPERATING ACTIVITIES ............................................. (239,611)
------------
INVESTING ACTIVITIES:
Additions To Property and Equipment ................................... (27,446)
------------
NET INVESTING ACTIVITIES ............................................. (27,446)
FINANCING ACTIVITIES:
Cash Overdraft ......................................................... 64,774
Cash Contributed by Evergreen Bank, N.A. and Newmark Investments, Inc. 204,453
------------
NET FINANCING ACTIVITIES ............................................. 269,227
------------
INCREASE IN CASH ....................................................... 2,170
CASH AND CASH EQUIVALENTS:
Beginning of Period ................................................... 0
------------
End of Period ......................................................... $ 2,170
============
</TABLE>

See Notes to Financial Statements

F-125

<PAGE>

HILAND PARK GOLF COURSE
QUEENSBURY, NEW YORK
STATEMENT OF CASH FLOWS
FOR THE ELEVEN MONTHS ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
<S><C>

NON-CASH INVESTING ACTIVITIES:
Contribution of assets by Evergreen Bank, N.A. and
Newmark
Investments, Inc. .................................... $(3,751,706)
Increase in Equity ..................................... 3,751,706
--------------
NET CASH TRANSACTION ................................ 0
==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest .............................................. $ 0
Income taxes .......................................... 0
DISCLOSURE OF ACCOUNTING POLICY:
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months
or less to be cash equivalents.
</TABLE>

See Notes to Financial Statements

F-126

<PAGE>

HILAND PARK GOLF COURSE
QUEENSBURY, NEW YORK
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1995

(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Hiland Park Golf Course
is presented to assist in understanding the operation's financial statements.
The financial statements and notes are representations of management, which
is responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.

Business Activity

Hiland Park Golf Course is an operating component of Evergreen Bank, N.A.
(Evergreen) and Newmark Investments, Inc. (Newmark), a wholly owned
subsidiary of Evergreen. The business operations include a golf course,
driving range, pro shop, and restaurant and banquet facilities.

On June 1, 1994, Evergreen obtained possession of the assets of Hiland
Park, Inc. and several related entities through foreclosure proceedings.
Evergreen retained title to all the assets obtained through the foreclosure
and assigned the business operations to Newmark. At the date of foreclosure,
the assets of Hiland Park, Inc. were valued at their fair value of
$3,650,000, using the purchase method of accounting in accordance with APB
Opinion No. 16 and were contributed by Evergreen to the Hiland Park Golf
Course. These financial statements present the activity of Hiland Park Golf
Course for the eleven month period beginning June 1, 1994, the date of
foreclosure, through April 30, 1995.

Evergreen and Newmark invested cash and property and equipment and paid
certain expenses directly to facilitate the running of the operations. These
amounts are included in these financial statements as increases to equity.

These financial statements were prepared using the accounting and other
internal records of Evergreen and Newmark. These financial statements are
only indicative of the ongoing operations of Hiland Park Golf Course under
the oversight and funding from both Evergreen and Newmark.

Inventory

Inventory is stated at the lower of cost (average value) or market value.

Property and Equipment

Property and equipment are carried at cost. Depreciation of property and
equipment is computed using straight-line or accelerated methods at rates
based on the estimated useful lives.

Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.

Certain assets used at the Hiland Park Golf Course, including restaurant
equipment, furniture and fixtures are the subject of a dispute between the
owner prior to foreclosure and Evergreen Bank, N.A. as to who actually owns
the assets. No value has been placed on these assets.

Income Taxes

Income from Hiland Park Golf Course is combined with the income and
expenses of Newmark Investments, Inc. from other sources and reported in the
corporation's federal and state tax returns. Hiland Golf Course is not a
taxpaying entity for the purposes of federal and state income taxes, and
thus, no income taxes have been recorded in the statements.

(B) DEFERRED REVENUE

Deferred revenue at April 30, 1995, in the amount of $165,887, represents
golf club member dues received prior to April 30, 1995, prorated for the
months of May through November 1995.

F-127

<PAGE>

HILAND PARK GOLF COURSE
QUEENSBURY, NEW YORK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Prior to foreclosure in May 1994, the prior owner had received a
substantial amount of member dues for the 1994 golf season. Member dues for
the period June 1, 1994 through April 30, 1995, does not reflect any
proration of annual dues paid prior to foreclosure for months after
foreclosure. Management estimates that total membership dues for the year
ended April 30, 1995 should be $135,000.

(D) SUBSEQUENT EVENTS

On May 16, 1995, the golf course operation, related land, buildings,
equipment, furniture and fixtures were sold by Evergreen Bank, N.A. to Family
Golf Centers, Inc.

F-128

<PAGE>

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Stockholders
RFC Enterprises, Inc.
Glen Allen, Virginia 23060

We have audited the accompanying balance sheet of RFC Enterprises, Inc.,
Glen Allen, Virginia (an S corporation) as of December 31, 1994, and the
related statements of income and accumulated deficit, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of RFC Enterprises, Inc. as
of December 31, 1994, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.

Drunagel, Johnson, Rutherford & Wilkins, P.C.
Warrenton, Virginia
August 8, 1995

F-129

<PAGE>

RFC ENTERPRISES, INC.
Glen Allen, Virginia

BALANCE SHEET
AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
<S><C>

ASSETS

CURRENT ASSETS:
Cash ..................................................................... $ 22,603
Accounts receivable--Banc Marc ........................................... 3,336
-----------
TOTAL CURRENT ASSETS .................................................... 25,939
-----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land ..................................................................... 257,319
Office furniture, fixtures and equipment ................................. 134,163
Recreational facilities and buildings .................................... 594,216
Transportation equipment ................................................. 20,041
-----------
1,005,739
Less: Accumulated depreciation ........................................... 258,555
-----------
PROPERTY, PLANT AND EQUIPMENT--NET ...................................... 747,184
-----------
OTHER ASSETS:
Loan costs ............................................................... 11,577
Less: Accumulated amortization ........................................... 5,095
-----------
TOTAL OTHER ASSETS ...................................................... 6,482
-----------
$ 779,605
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable--trade .................................................. $ 26,538
Notes payable--due currently ............................................. 235,111
Accrued interest ......................................................... 12,492
Accrued expenses ......................................................... 6,365
-----------
TOTAL CURRENT LIABILITIES ............................................... 280,506
-----------
DEFERRED LIABILITIES:
Notes payable ............................................................ 642,426
-----------
TOTAL LIABILITIES ....................................................... 922,932
-----------
STOCKHOLDERS' DEFICIT:
Common stock, $1 par value, 5,000 shares authorized; 100 shares issued
and outstanding ......................................................... 100
Additional paid in capital ............................................... 19,909
Accumulated deficit ...................................................... (163,336)
-----------
TOTAL STOCKHOLDERS' DEFICIT ............................................. (143,327)
-----------
$ 779,605
===========
</TABLE>

See Notes to Financial Statements

F-130

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
YEAR ENDED DECEMBER 31, 1994

REVENUES:
Net sales ........................... $ 643,666
-----------
COST AND EXPENSES:
Cost of sales ....................... 124,458
Advertising and promotion ........... 38,229
Insurance ........................... 22,087
Interest ............................ 97,432
Depreciation ........................ 68,692
Repairs and maintenance ............. 41,065
Utilities and telephone ............. 19,197
Taxes ............................... 25,313
Salaries ............................ 209,700
Other expenses ...................... 34,444
Loss on disposition of assets ...... 24,927
-----------
TOTAL COST AND EXPENSES ........... 705,544
-----------
NET LOSS .......................... (61,878)
ACCUMULATED DEFICIT--BEGINNING OF
YEAR ................................ (79,130)
Less: Dividends ...................... (22,328)
-----------
ACCUMULATED DEFICIT--END OF YEAR . $(163,336)
===========

See Accompanying Notes to Financial Statements

F-131

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
<S><C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................................ $(61,878)
-----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation ................................................................... 68,692
Loss on sale of fixed asset .................................................... 24,927
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable .......................................................... (700)
Increase (decrease) in:
Accounts payable ............................................................. 13,989
Accrued expenses ............................................................. 1,358
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................................... 46,388
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets ........................................................ (86,439)
Proceeds from sale of fixed assets .............................................. 5,000
-----------
NET CASH (USED) BY INVESTING ACTIVITIES ..................................... (81,439)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable ..................................................... 72,500
Principal payments on notes payable ............................................. (29,039)
Additional loan cost ............................................................ (1,699)
-----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ................................... 41,762
-----------
NET INCREASE IN CASH ............................................................. 6,711
-----------

CASH AT BEGINNING OF YEAR ................................................... 15,892
-----------
CASH AT END OF YEAR ......................................................... $ 22,603
===========
</TABLE>

See Accompanying Notes to Financial Statements

F-132

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accounting policies of a company are the principles of accounting and
the methods of applying those principles which management feels are most
appropriate in preparing their financial reports. The policies adopted can
significantly affect a company's reported results of operations. To
facilitate an understanding of the data presented in the financial
statements, the significant accounting policies are summarized below:

The Company's primary line of business is operating a family recreation
center. Facilities available to the public include an arcade, miniature golf
course, golf driving range and baseball batting cages. The Company has
recreational facilities and an office in Glen Allen, Virginia.

Property and equipment are recorded at cost less applicable depreciation.
For recreational facilities and buildings, depreciation is calculated on the
straight-line method based upon estimated useful lives ranging from 15 years
to 31 1/2 years. For office furniture, fixtures and equipment, and
transportation equipment, depreciation is calculated using accelerated
methods based upon estimated useful lives ranging from 5 to 7 years.

The Company, with the consent of its shareholders, has elected to have its
income taxed under Section 1372 of the Internal Revenue Code, which provides
that, in lieu of corporation income taxes, the shareholders are taxed on
their proportionate share of the company's taxable income. Therefore, no
provision or liability for federal income taxes is included in these
financial statements.

Points and loan fees are capitalized and amortized over the loan term.

2. FIXED ASSETS:

A schedule of office furniture, fixtures and recreational facilities and
transportation equipment at December 31, 1994 is presented below:

ACCUMULATED
COST DEPRECIATION
---------- --------------
Office furniture, fixtures and equipment $134,163 $ 55,940
Recreational facilities and buildings ... 594,216 186,774
Transportation equipment ................. 20,041 15,841
---------- --------------
$748,420 $258,555
========== ==============

Cost of maintenance and repairs is charged to expense as incurred.

3. LONG-TERM DEBT AND ASSETS PLEDGED:

A summary of long-term debt outstanding at December 31, 1994 is set forth
below in the following tabulation:

F-133

<PAGE>

3. LONG-TERM DEBT AND ASSETS PLEDGED: (Continued)
<TABLE>
<CAPTION>
<S><C>

Note payable to S.H. Guza Company, monthly payments of $2,098.92, due until
maturity on December 12, 1996 with interest at 10% annually, secured
by land and improvements at 11000 Washington Highway, Glen Allen,
Virginia ............................................................. $175,631
Note payable to Ellis Financial Corporation, original amount $100,000
dated November 20, 1992, monthly payments of $2,548.00 required until
maturity at November 20, 1995, interest at 18% annually, secured by
second deed of trust for land and improvements at 11000 Washington
Highway, Glen Allen, Virginia ........................................ 87,625
Note payable to Ellis Financial Corporation, original amount $50,000
dated November 16, 1993, monthly payments of $1,272.80, due until
maturity at November 20, 1996, interest at 18% annually, secured by
second deed of trust for land and improvements at 11000 Washington
Highway, Glen Allen, Virginia ........................................ 50,000
Note payable to Susan Stockstill dated August 1992, original amount
$270,575, monthly payments of $3,575.67, due until maturity at August
2002, interest at 10% annually ....................................... 251,451
Demand note payable to Mary Margaret Mathews for advances made during
1993 and 1994, interest payable periodically at 10% annually ......... 52,500
Note payable to Susan Stockstill for advances made during 1993 and
1994, interest at 10% annually ....................................... 34,000
Note payable to Ellis Financial Corporation dated February 15, 1994,
interest only payable monthly until maturity at February 15, 1997,
interest at 18% annually ............................................. 25,000
Installment notes payable to Lease Card .............................. 5,406
----------
877,537
Less: Current maturities on long-term debt ........................... 235,111
----------
$642,426
==========
</TABLE>

The following is a schedule by years of future debt payments as of
December 31, 1994:

YEAR ENDING DECEMBER 31:
- ------------------------
1995 $235,111
1996 255,755
1997 197,068
1998 25,076
1999 27,702
Thereafter 136,825
----------
$877,537
==========

F-134

<PAGE>

4. LEASED ASSETS AND LEASE COMMITMENTS:

The Company leases adjacent property which enhances road front visibility
and serves as a covered picnic area. The monthly rent is $500 on a month to
month basis.

On November 15, 1993, the Company entered an agreement related to coin
operated amusement machines. The vendor purchases, installs and maintains
coin operated amusement games in the arcade. Tokens are sold by the Company
and proceeds are collected weekly and payment made to the coin machine
vendor. Certain minimum revenues are stipulated and machine location
adjustments can be made. The term of the agreement is 60 months with certain
renewal options. The minimum rent due is not available since amounts due
fluctuate with volume.

5. FINANCIAL INSTRUMENT DISCLOSURE:

The Company maintains its cash account in a Virginia financial
institution. The cash balance is insured by the FDIC up to $100,000 and all
funds are within the FDIC insurance provided.

6. SUPPLEMENTARY STATEMENT OF CASH FLOWS INFORMATION:

Cash paid for:
Interest ........................................................... $92,159
Noncash investing activities:
Noncash distributions to shareholders by note receivable reduction $22,328

F-135

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
BALANCE SHEET
(UNAUDITED)
JULY 31, 1995
<TABLE>
<CAPTION>
<S><C>

ASSETS
CURRENT ASSETS:
Cash ..................................................................... $ 10,127
Accounts receivable--Banc Marc ........................................... 2,570
Prepaid insurance ........................................................ 920
Notes Receivable--Shareholder ............................................ 29,460
-----------
TOTAL CURRENT ASSETS ................................................... 43,077
-----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land ..................................................................... 257,319
Office furniture, fixtures and equipment ................................. 139,663
Recreational facilities and buildings .................................... 596,813
-----------
993,795
Less: Accumulated depreciation ........................................... 277,304
-----------
PROPERTY, PLANT AND EQUIPMENT--NET ..................................... 716,491
-----------
OTHER ASSETS:
Loan costs ............................................................... 11,577
Less: Accumulated amortization ........................................... 7,715
-----------
TOTAL OTHER ASSETS ..................................................... 3,862
-----------
$ 763,430
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable--trade .................................................. $ 130,660
Notes payable--due currently ............................................. 213,270
Accrued expenses ......................................................... 4,599
-----------
TOTAL CURRENT LIABILITIES .............................................. 348,529
-----------
DEFERRED LIABILITIES:
Notes payable ............................................................ 607,936
-----------
TOTAL LIABILITIES ...................................................... 956,465
-----------
STOCKHOLDERS' DEFICIT:
Common stock, $1 par value, 5,000 shares authorized; 100 shares issued
and outstanding .......................................................... 100
Additional paid in capital ............................................... 19,909
Accumulated deficit ...................................................... (213,044)
-----------
TOTAL STOCKHOLDERS' DEFICIT ............................................ (193,035)
-----------
$ 763,430
===========
</TABLE>

F-136

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
(UNAUDITED)
SEVEN MONTHS ENDED JULY 31, 1995

REVENUES
Net sales .............................. $363,593
----------
COST AND EXPENSES:
Cost of sales .......................... 89,379
Advertising and promotion .............. 27,055
Insurance .............................. 5,844
Interest ............................... 60,723
Depreciation ........................... 36,771
Repairs and maintenance ................ 30,189
Utilities and telephone ................ 13,750
Taxes .................................. 10,745
Salaries ............................... 105,798
Other expenses ......................... 24,996
----------
TOTAL COST AND EXPENSES .............. 405,250
----------
NET LOSS ............................. 41,657
ACCUMULATED DEFICIT--BEGINNING OF PERIOD 163,336
Less: Dividends ......................... 8,051
----------
ACCUMULATED DEFICIT--END OF PERIOD .. $213,044
==========

F-137

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
STATEMENT OF CASH FLOWS
(UNAUDITED)
SEVEN MONTHS ENDED JULY 31, 1995
<TABLE>
<CAPTION>
<S><C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ...................................................................... $(41,657)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation ................................................................ 36,771
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable--trade ................................................ 766
Prepaid assets ............................................................ (920)
Other receivables ......................................................... (29,460)
Increase (decrease) in:
Accounts payable .......................................................... 104,122
Accrued expenses .......................................................... (14,258)
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................................ 55,364
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of recreational facilities ........................................... (3,458)
-----------
NET CASH (USED) BY INVESTING ACTIVITIES .................................. (3,458)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable ........................................... (56,331)
Cash distributions to shareholders ............................................ (8,051)
-----------
NET CASH (USED) BY FINANCING ACTIVITIES .................................. (64,382)
-----------
NET DECREASE IN CASH ............................................................ (12,476)
-----------
CASH AT BEGINNING OF PERIOD .............................................. 22,603
-----------
CASH AT END OF PERIOD .................................................... $ 10,127
===========
</TABLE>

F-138

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company, with the consent of its shareholders, has elected to have its
income taxed under Section 1372 of the Internal Revenue Code, which provides
that, in lieu of corporation income taxes, the shareholders are taxed on
their proportionate share of the Company's taxable income. Therefore, no
provision or liability for federal income taxes is included in these
financial statements.

Loan Fees--Points and loan fees are capitalized and amortized over the
loan term.

2. FIXED ASSETS:

A schedule of office furniture, fixtures and recreational facilities at
July 31, 1995 is presented below:

ACCUMULATED
COST DEPRECIATION
---------- --------------
Office furniture, fixtures and equipment $139,663 $ 71,695
Recreational facilities and buildings ... 596,813 205,609
---------- --------------
$736,476 $277,304
========== ==============

Cost of maintenance and repairs is charged to expense as incurred.

F-139

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. LONG-TERM DEBT AND ASSETS PLEDGED:

A summary of long-term debt outstanding at July 31, 1995 is set forth
below in the following tabulation:
<TABLE>
<CAPTION>
<S><C>

Note payable to Security Bank Corporation, monthly payments of $1,939.84,
due until maturity at December 21, 1997, interest computed monthly at 2 1/2
% above Wall Street Journal published rate, secured by security agreement
on machinery and equipment owned by RFC Enterprises, Incorporated and deed
of trust on property owned by shareholders in Louisa County ................ $182,345
Note payable to S. H. Guza Company, monthly payments of $2,098.92, due until
maturity on December 12, 1996 with interest at 10% annually, secured by
land and improvements at 11000 Washington Highway, Glen Allen, Virginia ... 171,071
Note payable to Ellis Financial Corporation, original amount $100,000 dated
November 20, 1992, monthly payments of $2,548.00 required until maturity at
November 20, 1995, interest at 18% annually, secured by second deed of
trust for land and improvements at 11000 Washington Highway, Glen Allen,
Virginia ................................................................... 86,391
Note payable to Ellis Financial Corporation, original amount $50,000 dated
November 16, 1993, monthly payments of $1,272.80, due until maturity at
November 20, 1996, interest at 18% annually, secured by second deed of
trust for land and improvements at 11000 Washington Highway, Glen Allen,
Virginia ................................................................... 41,176
Note payable to Susan Stockstill dated August 1992, original amount
$270,575, monthly payments of $3,575.67, due until maturity at August 2002,
interest at 10% annually ................................................... 245,559
Demand note payable to Mary Margaret Mathews for advances made during 1993
and 1994, interest payable periodically at 10% annually .................... 42,500
Note payable to Susan Stockstill for advances made during 1993 and 1994,
interest at 10% annually ................................................... 23,500
Note payable to Ellis Financial Corporation dated February 15, 1994,
interest only payable monthly until maturity at February 15, 1997, interest
at 18% annually ............................................................ 25,000
Installment notes payable to Lease Card ..................................... 3,664
----------
821,206
Less: Current maturities on long-term debt .................................. 213,270
----------
$607,936
==========
</TABLE>

F-140

<PAGE>

RFC ENTERPRISES, INC.
GLEN ALLEN, VIRGINIA
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. LONG-TERM DEBT AND ASSETS PLEDGED: (Continued)
The following is a schedule by years of future debt payments as of July
31, 1995:

PERIOD ENDING JULY 31:
- ----------------------
1996 ............. $213,270
1997 ............. 265,127
1998 ............. 157,995
1999 ............. 24,276
2000 ............. 26,704
2001 and
thereafter ....... 133,834
----------
$821,206
==========

4. LEASED ASSETS AND LEASE COMMITMENTS:

The Company leases adjacent property which enhances road front visibility
and serves as a covered picnic area. The monthly rent is $500.

On November 15, 1993, the Company entered an agreement related to coin
operated amusement machines. The vendor purchases, installs and maintains
coin operated amusement games in the arcade. Tokens are sold by the Company
and proceeds are collected weekly and payment made to coin machine vendor.
Certain minimum revenues are stipulated and machine location adjustments can
be made. The term of the agreement is 60 months with certain renewal options.
The minimum rent due is not available since amounts due fluctuate with
volume.

5. FINANCIAL INSTRUMENT DISCLOSURE:

The Company maintains its cash account in a Virginia financial
institution. The cash balance is insured by the FDIC up to $100,000 and all
funds are within the FDIC insurance provided.

6. SUPPLEMENTARY STATEMENT OF CASH FLOWS INFORMATION:

Cash paid for:
Interest ............................................... $67,381
Noncash investing activities:
Noncash distributions to shareholders by note
receivable reduction-vehicle distributed .............. $ 3,544

F-141

<PAGE>

To the Partners
UPPER HEMBREE PARTNERS, L.P.
(a Georgia limited partnership)
1360 Upper Hembree Road
Roswell, Georgia 30076

INDEPENDENT ACCOUNTANT'S REPORT

I have audited the accompanying balance sheet of UPPER HEMBREE PARTNERS,
L.P. (a Georgia limited partnership) as of December 31, 1994 and the related
statements of income, partners' capital, and cash flows for the years ended
December 31, 1994 and December 31, 1993, respectively. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based
on my audits.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of UPPER HEMBREE PARTNERS,
L.P. (a Georgia limited partnership) as of December 31, 1994 and the results
of its operations and its cash flows for the years ended December 31, 1994
and December 31, 1993, respectively, in conformity with generally accepted
accounting principles.

We previously audited and reported on the financial statements of UPPER
HEMBREE PARTNERS, LP as of December 31, 1994 and for the year then ended in
our report dated September 7, 1995. That audit and those financial statements
have been updated by this report to include comparative prior year
information as to income and cash flows for the year ended December 31, 1993.
No change to the previously issued financial statements has resulted.

Ernest T. Northrup
Certified Public Accountant
September 7, 1995

F-142

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
BALANCE SHEETS
<TABLE>
<CAPTION>
<S><C>

DECEMBER 31, JULY 31,
1994 1995
-------------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash in bank .................................................... $ 11,607 $ 18,742
Cash--change funds .............................................. 1,500 1,400
Miscellaneous account receivable (Note 2) ....................... -- 704
Inventory (Note 2) .............................................. 2,500 500
Prepaid expenses ................................................ 3,561 10,518
-------------- ------------
Total current assets .......................................... 19,168 31,864
-------------- ------------
FIXED ASSETS (Note 1):
Land ............................................................ 2,605,573 2,605,573
Land improvements ............................................... 835,787 829,154
Furniture and fixtures .......................................... 34,765 37,208
Machinery and equipment ......................................... 652,342 667,922
Buildings and structures ........................................ 275,551 280,911
Less: accumulated depreciation .................................. (540,149) (659,648)
-------------- ------------
Fixed assets--net ............................................. 3,863,869 3,761,120
-------------- ------------
OTHER ASSETS:
Intangible assets (Note 1) ...................................... 29,052 29,052
Less: accumulated amortization .................................. (13,762) (18,302)
Utility deposit ................................................. 5,500 5,500
-------------- ------------
Other assets--net ............................................. 20,790 16,250
-------------- ------------
Total Assets .................................................. $3,903,827 $3,809,234
============== ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable ................................................ $ 22,145 $ 20,336
Accrued property taxes .......................................... 24,836 17,105
Accrued interest payable ........................................ 15,791 15,966
Other accrued liabilities ....................................... 3,789 12,801
Installment notes and capitalized leases--current portion (Note
4) .............................................................. 8,214 7,054
Notes payable to banks--current portion (Note 3) ................ 107,100 130,173
-------------- ------------
Total current liabilities ..................................... 181,875 203,435
-------------- ------------
LONG-TERM LIABILITIES:
Notes payable to banks--long-term portion (Note 3) ............. 1,792,423 1,756,470
Installment notes and capitalized leases--long-term portion
(Note 4) ....................................................... 1,632 4,468
General partners' preference loan (Note 6) ...................... 290,000 290,000
-------------- ------------
Total long-term liabilities ................................... 2,084,055 2,050,938
-------------- ------------
PARTNERS' CAPITAL 1,637,897 1,554,861
Total Liabilities and Partners' Capital ....................... $3,903,827 $3,809,234
============== ============
</TABLE>

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

F-143

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
<S><C>

DECEMBER 31, FOR THE YEAR ENDED FOR THE SEVEN MONTHS ENDED
1993 DECEMBER 31, 1994 JULY 31, 1995 (UNAUDITED)
-------------- ------------------ --------------------------
REVENUES:
Sports park sales ................... $ 636,250 $ 672,759 $385,998
Miscellaneous income ................ 2,841 4,516 5,625
Interest income ..................... 4 2,405 --
-------------- ------------------ --------------------------
Total revenues ..................... 639,095 679,680 391,623
-------------- ------------------ --------------------------
DIRECT COSTS:
Driving range and golfing activities 43,594 68,608 32,173
Batting cages ....................... 782 4,829 381
Pro shop ............................ 12,263 19,748 1,687
Food and beverage ................... 16,728 32,012 12,356
Video arcade ........................ 0 7,934 812
Other direct costs .................. 68,661 7,318 2,743
-------------- ------------------ --------------------------
Total direct costs ................. 142,028 140,449 50,152
-------------- ------------------ --------------------------

GENERAL AND ADMINISTRATIVE EXPENSE:
Employee and personnel expense ..... 272,850 266,256 90,596
Advertising ......................... 28,182 36,145 9,969
Contributions ....................... 659 1,296 275
Dues and subscriptions .............. 655 3,277 780
Entertainment ....................... 356 0 0
Insurance ........................... 34,412 34,374 14,717
Office supplies ..................... 3,730 2,248 872
Professional fees ................... 9,229 23,678 14,048
Repairs and maintenance ............. 23,010 20,283 8,964
Taxes--property ..................... 9,702 49,701 14,000
Telephone ........................... 7,194 4,879 4,440
Utilities ........................... 34,239 46,837 19,438
Other general and administrative ... 16,387 11,735 10,673
-------------- ------------------ --------------------------
Total general and administrative .. 440,605 500,709 188,772
-------------- ------------------ --------------------------
Operating income .................. 56,462 38,522 152,699

NONOPERATING EXPENSE:
Amortization ........................ 19,874 20,148 4,540
Depreciation ........................ 179,221 194,055 119,499
Interest ............................ 212,685 162,262 111,697
Penalties ........................... 718 48
-------------- ------------------ --------------------------
Total nonoperating expense ......... 412,498 376,513 235,736
-------------- ------------------ --------------------------
NET INCOME (LOSS) .................... $(356,036) $(337,991) $(83,037)
============== ================== ==========================
</TABLE>

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

F-144

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1993, DECEMBER 31, 1994
AND THE SEVEN MONTHS ENDED JULY 31, 1995
<TABLE>
<CAPTION>
<S><C>

GENERAL LIMITED
TOTAL PARTNERS PARTNERS
------------ ----------- ------------
BALANCE--January 1, 1993 ...................... $1,317,071 $ 154,037 $1,163,034
Net loss--1993 ............................... (356,036) (178,018) (178,018)
------------ ----------- ------------
BALANCE--January 1, 1994 ...................... $ 961,035 $ (23,981) $ 985,016
Capitalization of Partners' loans and accrued
interest (Note 6) ........................... 764,853 379,860 384,993
Partners' capital contribution ............... 250,000 250,000
Net loss--1994 ............................... (337,991) (152,096) (185,895)
------------ ----------- ------------
BALANCE--December 31, 1994 .................... $1,637,897 $ 203,783 $1,434,114
Net loss--seven months ended July 31, 1995 .. (83,037) (37,367) (45,670)
------------ ----------- ------------
Balance--July 31, 1995 ....................... $1,554,860 $ 166,416 $1,388,444
============ =========== ============
</TABLE>

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

F-145

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, DECEMBER 31, 1994
AND THE SEVEN MONTHS ENDED JULY 31, 1995
<TABLE>
<CAPTION>
<S><C>

DECEMBER 31, DECEMBER 31, JULY 31,
1993 1994 1995
-------------- -------------- -----------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers .......................... $ 639,095 $ 679,680 $ 390,919
Cash paid to suppliers and employees .................. (588,040) (622,928) (244,408)
Interest paid ......................................... (144,965) (149,386) (111,522)
-------------- -------------- -----------
Net cash provided by (used in) operating activities . (93,910) (92,634) 34,989
-------------- -------------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets .............................. (61,178) (175,071) (16,750)
-------------- -------------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from partners' preference loans .............. 193,200 35,000
Partners' capital contribution ........................ 0 250,000
Proceeds from short and long-term borrowings ......... 11,550 81,721 56,970
Repayment of partners' loans .......................... (8,200) 0 0
Principal repayments on short and long-term borrowings (58,710) (75,193) (68,174)
Loan costs incurred ................................... 0 (6,573)
-------------- -------------- -----------
Net cash provided by (used in) financing activities . 137,840 284,955 (11,204)
-------------- -------------- -----------

NET INCREASE IN CASH ................................... (17,248) 17,250 7,035

CASH BALANCE--beginning ................................ 13,105 (4,143) 13,107
-------------- -------------- -----------

CASH BALANCE--ending ................................... $ (4,143) $ 13,107 $ 20,142
============== ============== ===========
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY (USED) IN OPERATING ACTIVITIES:
Net income (loss) ..................................... (356,036) $(337,991) $ (83,037)
Adjustments:
Depreciation and amortization ........................ 199,095 214,203 124,039
Add back 1994 capitalized interest on partners' loans 0 17,533 (704)
Net increase in miscellaneous accounts receivable
Net increase in inventory and prepaid expenses ...... (968) (1,383) (4,957)
Net increase (decrease) in accounts payable and
accrued liabilities ................................... (3,721) 19,661 (527)
Net increase (decrease) in accrued interest ......... 67,720 (4,657) 175
-------------- -------------- -----------
Net cash provided by (used) in operating activities .. (93,910) $ (92,634) $ 34,989
============== ============== ===========
</TABLE>

DISCLOSURE IN FINANCIAL STATEMENTS OF NONCASH FINANCING ACTIVITY

CAPITALIZATION OF LOANS PAYABLE TO PARTNERS

See Note 6 in Notes to Financial Statements concerning capitalization of
$764,853 of partner loans and accrued interest on March 31, 1994.

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

F-146

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995 AND DECEMBER 31, 1994

1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Organization

UPPER HEMBREE PARTNERS, L.P. (the "PARTNERSHIP") was formed on December
20, 1990 for the purpose of owning and operating a 26 acre golf driving
range, including ancillary operations such as golf lessons, miniature golf,
batting cages, video arcade, snack bar, etc., in Fulton County, Georgia. The
PARTNERSHIP consists of five general and 31 limited partners as of December
31, 1994. It filed as a limited partnership under the laws of the state of
Georgia on December 11, 1991.

Method of Accounting

The financial statements are prepared, and the books are maintained, on
the accrual method of accounting.

Allocation of Net Income (Loss) and Partner Distributions

The Partnership Agreement was amended and restated on March 31, 1994.
Under the amended agreement, profits and losses are allocated 45 percent to
the general partners and 55 percent to the limited partners. Distributions of
available cash flow from operations or the sale or refinance of the business
are distributed at the discretion of the general partners and in accordance
with the Partnership Agreement. The Agreement calls for three classes of
distribution priority and, thereafter, 45 percent to general partners and 55
percent to limited partners in proportion to their respective ownership
percentages.

Fixed Assets and Depreciation

All property is stated at cost. Depreciation is provided using
straight-line methods of computation over the estimated useful lives of the
assets, as follows:

Furniture and fixtures ..... 5 years
Machinery and equipment .... 5 years
Buildings and structures ... 25 years
Land improvements ........... 15 years

All land, buildings, structures, and improvements are pledged as
collateral on the note payable to bank (see Note 3).

Intangible Assets

Intangible assets consist of organization costs and deferred loan costs.
These assets are being amortized on the straight-line method, as follows:

Organization costs .... 5 years (60 months)
Deferred loan costs ... 2 years (24 months)

Income Taxes

UPPER HEMBREE PARTNERS, LP is organized under the laws of the state of
Georgia as a limited partnership and qualifies to file as a partnership
organization under Federal and state income tax law. Accordingly, no income
taxes are payable by the partnership entity and each partner is required to
report his pro rata share of partnership income or loss.

F-147

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
No current or deferred income taxes are recognized for this entity.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the PARTNERSHIP has
reflected cash flows and changes only with respect to cash on deposit. There
are no cash equivalents for the PARTNERSHIP.

2. INVENTORY

Inventory is minor and incidental in nature. It relates to the snack bar
and pro shop operations. Inventories are stated at the lower of cost or net
realizable value.

In March, 1995, the PARTNERSHIP divested itself of direct ownership and
management of the pro shop, by selling its then-existing inventory and
entering into a month-to-month management agreement with an individual who
continued to run the pro shop on the premises.

3. NOTES PAYABLE TO BANKS

The PARTNERSHIP'S notes payable to banks consist of the following:
<TABLE>
<CAPTION>
<S><C>

DECEMBER 31, JULY 31,
1994 1995
-------------- ------------
Term-balloon note payable to a commercial bank, dated
November 14, 1994, fixed interest rate of 9.8 percent,
payable over a two year term in equal monthly installments
of $19,859, principal and interest included, with remaining
principal of $1,755,450 due in a balloon payment on November
1, 1996, collateralized by land, buildings, and structures
of the PARTNERSHIP and by the personal guarantee of a
general partner ............................................. $1,849,523 $1,816,643
Floating line of credit payable to a commercial bank,
interest rate
9.75 percent at December 31, 1994 and prime plus one percent
at July 31, 1995 (see renewal on August 31, 1995 under
subsequent events, Note 7), guaranteed by the personal
guarantee of two general partners ........................... 50,000 70,000
-------------- ------------
Total .................................................... 1,899,523 1,886,643
Less current maturities:
Term-balloon ................................................ 57,100 60,173
Line of credit .............................................. 50,000 70,000
-------------- ------------
Total current ............................................ 107,100 130,173
-------------- ------------
Total long-term maturities ............................... $1,792,423 $1,756,470
============== ============
Maturity of long-term debt:
1996 (due November 1, 1996) ................................. $1,792,423 $1,756,470
</TABLE>

F-148

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. INSTALLMENT NOTES AND CAPITALIZED LEASES

The installment notes and capitalized leases represent equipment financing
arrangements, requiring monthly payments of principal and interest (finance
charge) over terms that extend as far as July 1998. There were two such
arrangements in force at December 31, 1994. Monthly payment obligations
ranged from $200 to $430 during the period under audit and until the final
term date. Current and long-term principal maturities at December 31, 1994
were as follows:
<TABLE>
<CAPTION>
<S><C>

DECEMBER 31, JULY 31,
1994 1995
-------------- ----------
Total principal balance outstanding under installment notes
and capitalized leases ....................................... $9,846 $11,522
Less current maturities (due within one year) ................. 8,214 7,054
-------------- ----------
Total long-term maturities ................................ $1,632 $ 4,468
============== ==========
</TABLE>

The equipment financed under these arrangements is pledged as collateral
on the various outstanding obligations.

5. OTHER ACCRUED LIABILITIES

Other accrued liabilities consists of accrued salaries, accrued payroll
taxes, sales taxes payable and (at July 31, 1995) an insurance note payable.

The insurance note payable at July 31, 1995 represents a premium financing
arrangement for the currently in-force general and liability insurance
policy. The note is payable in monthly amounts of $1,614 over a remaining
term of three months.

6. RELATED PARTY TRANSACTIONS

General Partners' Preference Loans

As of each respective balance sheet date, $290,000 was owed to the five
general partners for monies advanced by them to the PARTNERSHIP. These loans
are non-interest bearing and, under the terms of the Partnership Agreement,
are considered to represent a priority distribution upon the eventual sale or
refinance of the PARTNERSHIP.

Capitalization of Loans Payable to Partners

As of March 31, 1994, in connection with adopting an amended Partnership
Agreement (see Note 1), partners' loans in the amount of $606,000 plus
accrued interest of $158,853 were capitalized into the partners' capital
accounts. These loans had been made by both general and limited partners
during 1992 and had accrued interest at the rate of 12 percent. Interest on
these loans was $17,533 for the year ended December 31, 1994. After
capitalizing this indebtedness, no further interest was accrued. See
Statement of Changes in Partners' Capital.

Limited Partner as Employee

Effective March 31, 1994, one of the limited partners was employed on a
full-time basis as general manager of the sports park operation. This partner
was paid wages of $22,500 during 1994 and $17,500 during the seven months
ended July 31, 1995.

F-149

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. RELATED PARTY TRANSACTIONS (Continued)
Account Payable to General Partner

At December 31, 1994, $973 was owed for a miscellaneous piece of sporting
equipment obtained for the PARTNERSHIP by a general partner. The equipment
originally cost $3,791. This account payable had no specific repayment terms.
The sum of $2,818 was repaid to the general partner during 1994 and the
account was fully retired during 1995.

7. COMMITMENTS, CONTINGENCIES, AND OPERATING LEASES

Commitments and Contingencies

The PARTNERSHIP was contractually obligated to the extent of approximately
$5,000 at December 31, 1994 and $6,800 at July 31, 1995 for various
cancelable and noncancelable service and maintenance agreements and a
name-licensing agreement. These obligations are not reflected in these
financial statements because the exact amount of the liability has not been
precisely fixed and determined.

OPERATING LEASES

The PARTNERSHIP had entered into various operating lease agreements for
telephone equipment and credit card equipment. Future minimum commitments
under these leases for each of the next five years as of December 31, 1994
and July 31, 1995, respectively, are as follows:

DECEMBER 31, JULY 31,
1995 1995
-------------- ----------
Year ending in 1995 $ 792 $ --
Year ending in 1996 715 869
Year ending in 1997 609
Year ending in 1998 318

-------------- ----------
Total .......... $1,507 $1,796
============== ==========

Rent expense under operating leases was approximately $1,900 during 1994
and $850 during the seven months ended July 31, 1995.

8. SUBSEQUENT EVENTS

Renewal of Line of Credit

The line of credit note payable (see Note 3) was renewed on August 31,
1995 with a maturity date of September 30, 1995. Under the renewed note
agreement, the credit limit was $70,000, interest rate was 9.75 percent, and
the note was guaranteed by the personal guarantee of two general partners.

F-150

<PAGE>

UPPER HEMBREE PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
D/B/A MCDIVOT'S SPORTS PARK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. SUBSEQUENT EVENTS (Continued)
Sale of Partnership Assets

Effective August 1, 1995, the PARTNERSHIP entered into an intent agreement
to sell all of the assets and the business operations of UPPER HEMBREE
PARTNERS, L.P. to an unrelated purchaser, with the closing of the sale to be
prior to the end of September, 1995. The consideration for the sale would
satisfy all outstanding liabilities of the PARTNERSHIP and, in addition,
would result in final liquidating distributions of net proceeds to all
partners under the terms of the Partnership Agreement dated March 31, 1994
(see Note 1).

9. UNAUDITED FINANCIAL STATEMENTS

The financial statements as of July 31, 1995 and for the nine months ended
July 31, 1995 are unaudited and are not necessarily indicative of the results
that may be expected for the year ending December 31, 1995. In the opinion of
management, the financial statements include all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the Company's
financial position and results of operations.

F-151

<PAGE>

INDEPENDENT AUDITOR'S REPORT

Board of Directors
The Practice Tee, Inc.
El Segundo, California

I have audited the accompanying consolidated balance sheet of The Practice
Tee, Inc. and subsidiary as of December 31, 1994 and the related consolidated
statement of operations and accumulated deficit, and cash flows for the
period from February 8, 1994 (inception) to December 31, 1994. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based
on my audit.

I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
from 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. I believe that my audit provides a
reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Practice Tee, Inc.
and subsidiary as of December 31, 1994, and the results of its operations and
its cash flows for the period then ended in conformity with generally
accepted accounting principles.

Robert Del Riego
Manhattan Beach, California
September 14, 1995

F-152

<PAGE>

THE PRACTICE TEE, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
<S><C>

ASSETS
Current Assets
Cash ......................................................................... $ 16,514
Cash--payroll fund (restricted) .............................................. 9,950
Accounts receivable .......................................................... 36,671
Inventory .................................................................... 971
Prepaid expenses ............................................................. 2,073
-----------
Total Current Assets ....................................................... 66,179
Property, Plant and Equipment
Computer equipment ........................................................... 10,148
Office equipment ............................................................. 372
Allowance for depreciation ................................................... (4,132)
-----------
Total Property, Plant and Equipment ........................................ 6,388
Other Assets
Organization costs, net ...................................................... 4,128
-----------
Total Assets ............................................................... $ 76,695
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable ............................................................. $ 7,066
License fees payable ......................................................... 17,500
Accrued expenses ............................................................. 37,054
Franchise tax payable ........................................................ 800
Accrued rent ................................................................. 7,800
Accrued commissions .......................................................... 6,602
Deposits--payroll fund ....................................................... 9,950
-----------
Total Current Liabilities .................................................. 86,772
Loans payable--shareholder ..................................................... 201,191
Stockholders' Equity
Capital stock, no par value, 100,000 shares authorized, 10,000 shares issued
and outstanding ............................................................ 1,000
Accumulated deficit .......................................................... (212,268)
-----------
Total Stockholders' Equity ................................................. (211,268)
-----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ................................... $ 76,695
===========
</TABLE>

See accountant's report and notes to financial statements.

F-153

<PAGE>

THE PRACTICE TEE, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FEBRUARY 8, 1994 (INCEPTION) TO DECEMBER 31, 1994

Revenues:
Management fees ......................... $ 101,974
Sublicensee fees ........................ 9,382
Beer & wine sales ....................... 18,862
-----------
Total Revenues ........................ 130,218
Cost of Sales ............................. 7,346
-----------
Gross Profit .............................. 122,872
General and Administrative:
Salaries and wages ...................... 175,153
Travel and entertainment ................ 16,546
Rent .................................... 20,053
Commissions ............................. 6,602
Licensing fees .......................... 17,500
Site development ........................ 7,736
Other general & administrative expenses . 78,098
-----------
Total General & Administrative ........ 321,688
-----------
Income (Loss) From Operations ............. (198,816)
Other Income (Expense):
Interest income ......................... 308
Interest expense ........................ (12,160)
-----------
Total Other Income (Expense) .......... (11,852)
-----------
Income (Loss) Before Income Taxes ........ (210,668)
Income Taxes .............................. 1,600
-----------
Net Income (Loss) and Accumulated Deficit $(212,268)
===========

See accountant's report and notes to financial statements.

F-154

<PAGE>

THE PRACTICE TEE, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOW
FEBRUARY 8, 1994 (INCEPTION) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
<S><C>

Cash Flows from Operating Activities:
Net Income ..................................................................... $(212,268)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ................................................ 4,958
Increase (decrease) in cash resulting from changes in:
Accounts receivable ......................................................... (36,671)
Inventory ................................................................... (971)
Prepaid expenses ............................................................ (2,073)
Accounts payable ............................................................ 7,066
License fees payable ........................................................ 17,500
Accrued expenses ............................................................ 37,054
Franchise tax payable ....................................................... 800
Accrued rent ................................................................ 7,800
Accrued commissions ......................................................... 6,602
------------
Net cash used in operating activities ....................................... (170,203)
------------
Cash Flows from Investing Activities:
Purchase of equipment .......................................................... (10,520)
Organization costs ............................................................. (4,954)
------------
Net cash used in investing activities ....................................... (15,474)
------------
Cash Flows from Financing Activities:
Proceeds from issuance of capital stock ........................................ 1,000
Loans from shareholder ......................................................... 201,191
------------
Net cash from financing activities .......................................... 202,191
------------
Net Increase in Cash ............................................................. 16,514
Cash at Beginning of Period ...................................................... 0
------------
Cash at End of Period ............................................................ $ 16,514
============

Supplemental Cash Flow Information:
Cash paid (refunded) during the year for:
Income taxes .................................................................. $ 800
Interest ...................................................................... 0
</TABLE>

See accountant's report and notes to financial statements.

F-155

<PAGE>

THE PRACTICE TEE, INC. & SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994

NOTE A--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

[1] THE COMPANY:

The Company was formed in February, 1994 for the purpose of constructing
and operating golf learning centers and golf courses in the western United
States.

The Company presently manages golf courses in El Segundo and Gilroy,
California.

Through an assignment agreement with Orient Associates International, Inc.
and Golden Bear Golf Centers, Inc. ("GBGC") the Company is a licensee for a
Golden Bear Golf Center in California. The license agreement is terminable by
GBGC under certain conditions.

Through agreements with the City of El Segundo ("The City"), The Practice
Tee, Inc. ("TPT") manages a golf course located in that city ("The Lakes at
El Segundo") and TPT El Segundo, Inc. owns and operates the liquor concession
in the facility's restaurant. These agreements are for a period of five years
and are terminable by either party under certain conditions expiring June 30,
1998.

[2] PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of TPT and its
wholly owned subsidiary TPT El Segundo, Inc. All significant intercompany
transactions have been eliminated.

[3] INVENTORIES:

Inventories consist of beer and wine for sale at the El Segundo facility
and is stated on a first in first out basis.

[4] PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment are stated at cost. Depreciation is computed
using the double declining balance method over an estimated useful life of
five years. Depreciation expense for the year ended December 31, 1994
amounted to $4,132.

[5] ORGANIZATION COSTS:

Organization costs are being amortized over five years using the straight
line method. Amortization expense for the year ended December 31, 1994 was
$826.

[6] INCOME TAXES:

The Company has adopted Statement of Accounting Standards No. 109,
"Accounting for Income Taxes" which requires the use of the liability method
of accounting for income taxes.

For income tax purposes, TPT uses the cash method to compute taxable
income. TPT El Segundo, Inc. reports on the accrual basis for income tax
purposes. The Companies file separate tax returns. The tax returns as filed
by the Companies reported combined losses of $171,000 for the year ended
December 31, 1994. These losses may be carried forward to offset future
taxable income.

NOTE B--CASH--RESTRICTED:

As part of the management agreement between TPT and the City of El
Segundo, TPT El Segundo, Inc. pays the salaries and wages of the operating
staff of The Lakes of El Segundo golf course. The City reimburses the Company
for such payments. These funds are held in a separate account and their use
is restricted to the payment of operating salaries, wages, payroll taxes and
related administrative costs.

The liability shown as "Deposits--payroll fund" represents the balance of
these restricted funds as of December 31, 1994.

F-156

<PAGE>

THE PRACTICE TEE, INC. & SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE C--LOANS PAYABLE--SHAREHOLDER:

Pursuant to a shareholder agreement with the Company, one of the
shareholders has committed to lending the Company up to $400,000 for working
capital requirements. As of December 31, 1994, these loans totaled $201,191.
There is no stated interest rate on this debt. The Company has recorded
interest expense of $12,160 on these loans using an interest rate of eight
percent. The agreement specifies payments of principal and interest based on
the Company's cash availability.

In 1995, the shareholder loaned $125,000 of his commitment to the Company.
This debt falls under a separate agreement which specifies a two year term
and an interest rate of 10.5% to be paid monthly.

NOTE D--LEASING ARRANGEMENTS:

Operating leases, which expire at various dates through 1997, are for
office and restaurant space, and office equipment.

Future minimum lease payments under operating lease agreements that have
initial or remaining noncancelable lease terms in excess of one year are as
follows:

Year Ending December 31,

1995 .......................... $ 37,365
1996 .......................... 37,365
1997 .......................... 32,918
1998 .......................... 18,000
1999 .......................... 4,500
---------
Total minimum lease payments $130,148
=========

NOTE E--STOCKHOLDERS' EQUITY:

Stock Option:

The president of the Company, who is a shareholder, has been granted a
stock option which allows him to acquire 5% of the Company's outstanding
stock from the majority shareholder at a price specified in the agreement.
The option expires in February, 1999. If the option is not exercised by that
time, an alternate shareholder has the right to exercise the option until May
of 1999.

NOTE F--COMMITMENTS AND CONTINGENCIES:

[1] EMPLOYMENT AGREEMENT:

The shareholders agreement provides for the president of the Company, who
is also a shareholder, to receive an annual salary of $100,000.

[2] PROPOSED ACQUISITION OF GLOBAL GOLF/GAVILAN, INC. BY THE PRACTICE TEE,
INC.

The Company has agreed in principle to acquire Global Golf/Gavilan for
nominal consideration.

[3] PROPOSED ACQUISITION OF COMPANY BY FAMILY GOLF CENTERS, INC.:

The Company has agreed in principle to be acquired by Family Golf Centers,
Inc. ("FGCI").

[4] OPERATING ARRANGEMENT:

The Company operates a golf course in Gilroy, California for Global
Golf/Gavilan and retains 87.5% of the net profits of such golf course. The
income from this operation for the year ended December 31, 1994 was $14,653
and is included in management fee income.

F-157

<PAGE>

THE PRACTICE TEE, INC. & SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE F--COMMITMENTS AND CONTINGENCIES: (Continued)
[5] SUBLICENSE AGREEMENT:

In consideration for excluding Moreno Valley from the territory covered by
the GBI/GBGC agreement, GBGC pays the Company one half of the licensing fees
GBGC receives from the Moreno Valley facility. Total sublicense fees recorded
for the year ended December 31, 1994 were $9,382.

[6] LOSS CONTINGENCY:

Potential Legal Action:

A former employee has asserted a claim against the Company alleging
harassment and discrimination during her employment. To date, no formal
complaint has been filed. The former employee made a settlement demand of
$50,000 which was rejected by the Company. The Company disputes the
allegations and intends a vigorous defense. No estimate of the possible loss
or range of loss has been made.

NOTE G--ECONOMIC DEPENDENCY

The Company receives a substantial portion of its revenues from activities
pursuant to agreements with the City of El Segundo. If these agreements were
to be terminated prematurely, there would be a materially adverse effect on
the Company.

F-158

<PAGE>

THE PRACTICE TEE, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S><C>

ASSETS
Current Assets:
Cash ......................................................................... $ 27,703
Cash--payroll fund (restricted) .............................................. 4,197
Accounts receivable .......................................................... 92,721
Inventory .................................................................... 1,017
Prepaid expenses ............................................................. 60,239
-----------
Total Current Assets ........................................................ 185,877
Property, Plant and Equipment:
Computer equipment ........................................................... 13,408
Office equipment ............................................................. 2,204
Allowance for depreciation ................................................... (6,154)
-----------
Total Property, Plant and Equipment ......................................... 9,458
Other Assets:
Organization costs, net ...................................................... 3,385
-----------
TOTAL ASSETS ................................................................ $ 198,720
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable ............................................................. $ 20,753
Accrued expenses ............................................................. 114,501
Accrued rent ................................................................. 12,000
Accrued commissions .......................................................... 14,193
Deposits--payroll fund ....................................................... 4,197
-----------
Total Current Liabilities ................................................... 165,644
Loans payable--shareholder ..................................................... 301,191
Stockholders' Equity:
Capital stock, no par value, 100,000 shares authorized, 10,000 shares issued
and outstanding ............................................................ 1,000
Accumulated deficit .......................................................... (269,115)
-----------
Total Stockholders' Equity .................................................. (268,115)
-----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY .................................... $ 198,720
===========
</TABLE>

F-159

<PAGE>

THE PRACTICE TEE, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)

Revenues:
Management fees ........................ $ 151,920
Sublicensee fees ....................... 15,000
Beer and wine sales .................... 36,492
-----------
Total Revenues ....................... 203,412
Cost of Sales ............................ 13,594
-----------
Gross Profit ............................. 189,818
General and Administrative:
Salaries and wages ..................... 99,634
Travel and entertainment ............... 22,078
Rent ................................... 22,591
Commissions ............................ 12,772
Licensing fees ......................... 26,250
Site development ....................... 3,368
Other general and administrative
expenses ............................. 36,951
-----------
Total General and Administrative ..... 223,644
-----------
Income (Loss) From Operations ............ (33,826)
Other Income (Expense):
Interest income ........................ 286
Interest expense ....................... (23,307)
-----------
Total Other Income (Expense) ......... (23,021)
-----------
Income (Loss) Before Income Taxes ....... (56,847)
Income Taxes ............................. --
-----------
Net Income (Loss) ........................ (56,847)
Accumulated Deficit, December 31, 1994 .. (212,268)
-----------
Accumulated Deficit, June 30, 1995 ...... $(269,115)
===========

F-160

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Golf Masters Limited Partnership,

We have audited the accompanying balance sheet of Golf Masters Limited
Partnership (an Ohio partnership) as of December 31, 1994, and the related
statements of income, changes in partners' capital, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Golf Masters Limited
Partnership as of December 31, 1994, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
Respectfully submitted,

Sewell & Co., Inc.
Certified Public Accountants

Cleveland, Ohio
November 2, 1995

This report contains nine pages.

F-161

<PAGE>

GOLF MASTERS LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
<S><C>

DECEMBER 31, SEPTEMBER 30,
ASSETS 1994 1995
- --------------------------------------------------- --------------- ---------------
(UNAUDITED)
CURRENT ASSETS
Cash on hand and on deposit ....................... $ 48,632.85 $ 3,976.43
Accounts receivable--Trade ........................ 84,205.42 74,875.30
Accounts receivable--Employees .................... 200.00
Inventory ......................................... 24,909.24 22,039.74
Prepaid insurance ................................. 4,091.38 3,215.05
--------------- ---------------
Total Current Assets ............................. $ 162,038.89 $ 104,106.52
PROPERTY AND EQUIPMENT
Land .............................................. $ 500,000.00 $ 500,000.00
Leasehold improvements ............................ 592,034.89 596,280.82
Range equipment ................................... 67,595.36 67,595.36
Computers and office equipment .................... 39,745.55 40,157.50
Furniture and fixtures ............................ 59,119.40 59,119.40
--------------- ---------------
Total ............................................ $1,258,495.20 1,263,153.08
Less depreciation provision ....................... 67,025.61 102,108.51
--------------- ---------------
Remaining Value .................................. 1,191,469.59 1,161,044.57
OTHER ASSETS
Deposits .......................................... $ 1,273.14 $ 1,273.14
Organization and start-up costs--Net of
accumulated amortization of $118,794.21 and
$167,391.87 at
December 31, 1994 and September 30, 1995 ........ 205,189.83 156,592.17
--------------- ---------------
Total Other Assets ............................... 206,462.97 157,865.31
--------------- ---------------
TOTAL ASSETS ....................................... $1,559,971.45 $1,423,016.40
=============== ===============
</TABLE>

The appended notes are an integral part of this financial statement.

F-162

<PAGE>

EXHIBIT A

GOLF MASTERS LIMITED PARTNERSHIP

BALANCE SHEETS

LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
<S><C>

DECEMBER 31, SEPTEMBER 30,
1994 1995
--------------- ---------------
(UNAUDITED)
CURRENT LIABILITIES
Accounts payable--Trade .................. $ 68,387.17 $ 102,406.72
Notes payable--Current portion ........... 93,170.29 278,537.77
Withheld and accrued payroll taxes ...... 3,526.43 1,211.48
Accrued payroll .......................... 14,417.78 5,355.86
Accrued sales tax ........................ 1,016.35
Accrued real estate interest ............. 3,237.97 3,237.97
Deferred lesson income ................... 291,689.16 244,401.91
--------------- ---------------
Total Current Liabilities ............... $ 475,445.15 $ 635,151.71

LONG-TERM LIABILITIES
Notes payable--Deferred portion .......... $ 529,491.18 $ 334,495.55
Loan payable--Golf Masters, Inc. ........ 135,465.44 169,411.59
Loan payable--Air Dome Limited
Partnership .............................. 615.11
--------------- ---------------
Total Long-term Liabilities ............. 665,571.73 503,907.14
PARTNERS' CAPITAL ......................... 418,954.57 283,957.55
--------------- ---------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL .. $1,559,971.45 $1,423,016.40
=============== ===============
</TABLE>

The appended notes are an integral part of this financial statement.

F-163

<PAGE>

EXHIBIT B

GOLF MASTERS LIMITED PARTNERSHIP

STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1994

Partners' capital--January 1, 1994 .................... $ 535,047.72
Prior period adjustment (Note 8) ..................... (7,636.88)
--------------
Partners' capital--January 1, 1994, as restated ...... $ 527,410.84
Partners' contributions .............................. 92,733.00
Net loss for the year ended December 31, 1994 ....... (201,189.27)
--------------
PARTNERS' CAPITAL--DECEMBER 31, 1994 .................. $ 418,954.57
Net loss for the nine months ended September 30, 1995 (134,997.02)
--------------
PARTNERS' CAPITAL--SEPTEMBER 30, 1995 (UNAUDITED) .... $ 283,957.55
==============

The appended notes are an integral part of this financial statement.

F-164

<PAGE>

EXHIBIT C

GOLF MASTERS LIMITED PARTNERSHIP

STATEMENTS OF INCOME AND EXPENSE
FOR THE YEAR ENDED DECEMBER 31, 1994 AND FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1995

DECEMBER 31, SEPTEMBER 30,
1994 1995
--------------- ---------------
REVENUES (UNAUDITED)
Sales--Merchandise ........... $ 58,705.56 $ 40,786.00
Cost of sales ................ 35,439.84 31,247.00
--------------- ---------------
Gross Profit ................ $ 23,265.72 $ 9,539.00
OTHER OPERATING INCOME
Lessons ...................... $ 459,658.01 $ 338,258.00
Memberships .................. 111,477.63 66,049.00
Practice range ............... 208,677.33 160,372.00
--------------- ---------------
Total Other Operating Income 779,812.97 564,679.00
--------------- ---------------
NET REVENUES .................. $ 803,078.69 $ 574,218.00
OPERATING EXPENSE
Advertising .................. 55,417.32 46,906.44
Contributions ................ 120.00 30.00
Depreciation ................. 46,008.75 35,082.90
Employee benefits ............ 17,615.55 13,890.12
Insurance .................... 9,124.00 10,546.33
Interest expense ............. 59,549.19 37,078.33
Maintenance .................. 19,888.55 17,698.65
Miscellaneous expense ........ 2,924.82 --
Office expense ............... 36,194.24 14,841.30
Practice range expense ...... 9,758.51 --
Professional fees ............ 15,999.65 24,051.48
Rent ......................... 56,849.24 45,000.00
Salaries and wages ........... 329,125.27 213,138.06
Selling expense .............. 118,968.48 95,162.18
Taxes--Payroll ............... 49,177.20 37,454.43
Taxes--Other ................. 10,311.40 8,154.57
Telephone .................... 20,056.83 9,639.78
Utilities .................... 83,237.10 53,433.08
--------------- ---------------
Total Operating Expense .... 940,326.10 662,107.65
--------------- ---------------
NET LOSS FROM OPERATIONS ..... $(137,247.41) $ (87,889.65)
OTHER INCOME (EXPENSE)
Interest income .............. $ 854.95 $ 1,490.29
Amortization ................. (64,796.81) (48,597.66)
--------------- ---------------
Total Other Income (Expense) (63,941.86) (47,107.37)
--------------- ---------------
NET LOSS ...................... $(201,189.27) $(134,997.02)
=============== ===============

The appended notes are an integral part of this financial statement.

F-165

<PAGE>

EXHIBIT D

GOLF MASTERS LIMITED PARTNERSHIP

STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S><C>

FOR THE YEAR FOR THE NINE
ENDED DECEMBER MONTHS ENDED
31, 1994 SEPTEMBER 30, 1995
----------------- ------------------
OPERATIONS:
Net loss ................................................ $(201,189.27) $(134,997.02)
Adjustments needed to reconcile to net cash provided
by operations:
Depreciation ............................................ 46,008.75 35,082.90
Amortization ............................................ 64,796.81 48,597.66
Change in current assets and liabilities net of
purchased amounts:
Decrease in accounts receivable ........................ 28,211.08 9,530.12
Decrease in prepaid expenses ........................... 8,994.13 876.33
Increase in deposits ................................... (773.14) --
Decrease in inventory .................................. 8,602.05 2,869.50
Decrease in accounts payable--Trade .................... (42,222.13) 34,019.55
Increase in accrued expenses ........................... 204.25 (12,393.22)
Decrease in accrued interest ........................... (3,056.48) --
Increase (Decrease) in deferred income ................. 8,811.91 (47,287.25)
----------------- ------------------
Net Cash Flow From Operations ......................... $ (81,612.04) $ (63,701.43)
INVESTING ACTIVITIES
Inflows: ................................................ $ 0.00 $ 0.00
Outflows:
Purchase of equipment for cash ......................... (10,552.70) (4,657.88)
Leasehold improvements ................................. (20,775.64) --
Payments to contractors ................................ (53,753.57) --
----------------- ------------------
Net Investing Outflows ................................ (85,081.91) (4,657.88)
FINANCING ACTIVITIES
Inflows:
Cash contributed by partners ........................... $ 92,733.00
Loans from affiliated companies--net ................... 152,993.93 $ 218,698.52
Outflows:
Long-term debt repaid .................................. (83,768.34) (194,995.63)
----------------- ------------------
Net Financing Inflows ................................. 161,958.59 23,702.89
----------------- ------------------
Decrease in cash and cash equivalents .................... $ (4,735.36) $ (44,656.42)
Beginning cash and cash equivalents ...................... 53,368.21 48,632.85
----------------- ------------------
ENDING CASH AND CASH EQUIVALENTS ......................... $ 48,632.85 $ 3,976.43
================= ==================
Supplemental Disclosure of Cash Flow Information
Cash paid for interest .................................. $ 62,605.67 $ 37,078.33
</TABLE>

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

For purposes of the statement of cash flows, the Partnership considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be equivalents.

The appended notes are an integral part of this financial statement.

F-166

<PAGE>

GOLF MASTERS LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1994

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization -- The limited partnership was organized in 1992 and issued a
confidential private placement memorandum pursuant to which a total offering
of $540,000 was consummated for the purpose of leasing, and operating an
indoor, year-round, golf learning center and practice facility in Valley
View, Ohio.

Accounts Receivable -- Management has determined that all receivables are
collectable. No provision for uncollectable amounts has been recorded.

Inventories -- The inventory is valued at lower of cost or market using
the first-in, first-out (FIFO) method.

Property and Equipment -- are carried at cost. Depreciation is computed on
the straight-line basis for financial statement purposes and on the modified
accelerated cost recovery system for federal income tax purposes.
Depreciation is computed over the estimated useful life of the assets as
follows:

Leasehold improvements ............10-30 years
Range equipment ................... 10 years
Computers and office equipment ... 7-10 years
Furniture and fixtures ............ 10 years

Organization and Start-up Costs -- have been capitalized and are being
amortized over a five year period using the straight-line method.

Federal Income Taxes -- the partners are taxed on their proportionate
share of the Partnership's taxable income. Therefore, no provision or
liability for federal income taxes has been included in the financial
statements.

Accounting Method and Revenue Recognition -- The financial statements are
prepared on the accrual basis of accounting.

Deferred lesson income represents the portion of the lesson programs sold
that the students have not completed as of the balance sheet date.

Lesson income represents the portion of the lesson programs sold that the
students have completed or that have been forfeited based on the student
contract time limitations of either one year or six months.

NOTE 2--LEASES WITH COMPANY AS LESSEE

The partnership entered into a lease with ORIX Leasing Company for the use
of telephone equipment. The lease meets the criteria of a capital lease and,
accordingly, has been recorded as such.

NOTE 3--NOTES PAYABLE
<TABLE>
<CAPTION>
<S><C>

CURRENT DEFERRED TOTAL
------------ ------------- -------------
Note payable -- Independence Bank (Term
Loan) ...................................... $84,705.96 $197,646.91 $282,352.87
Note Payable -- JSN Holdings (Mortgage) .... 5,991.01 331,225.90 337,216.91
Capital lease -- ORIX Leasing ............... 2,473.32 618.37 3,091.69
------------ ------------- -------------
Total ..................................... $93,170.29 $529,491.18 $622,661.47
============ ============= =============
</TABLE>

Independence Bank (Term Loan) consists of $360,000.00 note with principal
payments of $7,058.83 for fifty-one consecutive months with interest computed
at a rate of 1.5% above the bank prime rate. The note is collateralized by
accounts receivable, inventory and equipment of the partnership, a second
mortgage on the condominium owned by Bruce and Kathleen Ferris and the
personal guarantee of Louie J. Zeitler and Bruce and Kathleen Ferris.

F-167

<PAGE>

GOLF MASTERS LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

JSN Holdings (Mortgage) consists of a $350,000.00 note with payments of
$2,927.54, per month including interest at a rate of 8% or 1% above the
National City Bank prime rate, whichever is greater. The note is amortized
over a 20 year life with a balloon payment after five years. The note is
collateralized by land. On May 10, 1995, the payment will increase to
$3,359.33 per month with an interest rate of 10%.

Long-term liabilities will mature as follows:

1995 . $ 93,170.29
1996 . 93,304.89
1997 . 407,951.30
1998 . 28,234.99

NOTE 4--LEASING ARRANGEMENTS -- RELATED PARTY

The partnership is currently renegotiating the lease for their facility
with Air Dome Limited Partnership. The terms of the proposed lease are as
follows:

1995 .........$5,000.00 per month
1996 ......... 7,500.00 per month
1997-2009 .... 14,040.15 per month

The partnership will have the option to purchase the building at the end
of the lease based on fair market value.

Golf Masters Limited Partnership and Airdome Limited Partnership have
substantially the same individuals as limited partners.

NOTE 5--MANAGEMENT AGREEMENT

Under the management agreement the partnership agrees to pay Bruce Ferris
5% of gross revenues collected from the operation of the facility. The
initial term of the agreement is for ten years and shall automatically renew
year to year thereafter.

NOTE 6--LOANS -- AFFILIATED COMPANIES

Golf Masters Inc. (the general partner) repaid its loan to Golf Master
Limited Partnership of $17,528.49 and loaned an additional $135,465.44 during
1994. The interest on the loan is computed at a rate of 9%.

Air Dome Limited Partnership loaned Golf Masters Limited Partnership
$615.11 in 1993.

It is anticipated that these loans will not be repaid within one year and
therefore are listed as long-term liabilities on the balance sheet.

NOTE 7--TAX ABATEMENTS

The partnership was granted a tax abatement on real estate and personal
property taxes from the Ohio Department of Development and the Village of
Valley View for the period of three years commencing January 1, 1993.

F-168

<PAGE>

GOLF MASTERS LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8--PRIOR PERIOD ADJUSTMENTS

The December 31, 1993 financial statements were not audited or reviewed by
an independent accountant. As a result of the examination of the balance
sheet amounts at January 1, 1994, it was determined that partners' capital
needed to be restated at December 31, 1993. Therefore, the following
adjustment was made to the beginning balance of partners' capital at January
1, 1994:

Adjust Accounts payable for:

Utilities ........................................... $8,458.91
Telephone ........................................... (822.03)
-----------
Net decrease in partners' capital at December 31, 1994 $7,636.88
===========

NOTE 9--UNAUDITED FINANCIAL STATEMENTS

The financial statements as of September 30, 1995 and for the nine months
ended September 30, 1995 and September 30, 1994 are unaudited and are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1995. In the opinion of management, the financial
statements include all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of the Company's financial position and
results of operations.

F-169

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Airdome Limited Partnership,

We have audited the accompanying balance sheet of Airdome Limited
Partnership (an Ohio partnership) as of December 31, 1994, and the related
statements of income, changes in partners' capital, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Airdome Limited
Partnership as of December 31, 1994, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
Respectfully submitted,

Sewell & Co., Inc.
Certified Public Accountants

Cleveland, Ohio
November 2, 1995
This report contains seven pages.

F-170

<PAGE>

EXHIBIT A
AIRDOME LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31, 1994
<TABLE>
<CAPTION>
<S><C>

ASSETS
CURRENT ASSETS
Cash on deposit ................................... $ 2,531.54
PROPERTY
Building .......................................... $1,134,467.10
Less depreciation provision ....................... 105,175.25
---------------
Remaining value .................................. 1,029,291.85
OTHER ASSETS
Loan receivable -- Golf Masters Limited
Partnership ....................................... 615.11
---------------
TOTAL ASSETS ....................................... $1,032,438.50
===============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Loan payable -- General partner ................... $ 2,970.98
PARTNERS' CAPITAL .................................. 1,029,467.52
---------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL ............ $1,032,438.50
===============
</TABLE>

The appended notes are an integral part of this financial statement.

F-171

<PAGE>

EXHIBIT B

AIRDOME LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1994

Partners' capital -- January 1, 1994 ......... $1,076,510.63
Net loss for the year ended December 31, 1994 (14,391.76)
Distributions to partners' .................... (32,651.35)
---------------
Partners' capital -- December 31, 1994 ....... $1,029,467.52
===============

The appended notes are an integral part of this financial statement.

F-172

<PAGE>

EXHIBIT C

AIRDOME LIMITED PARTNERSHIP
STATEMENT OF INCOME AND EXPENSE
FOR THE YEAR ENDED DECEMBER 31, 1994

INCOME
Rental Income ............ $ 56,849.24
OPERATING EXPENSE
Depreciation ............. $ 70,427.25
Professional fees ........ 900.00
Bank charges ............. 19.16
--------------
Total Operating Expense 71,346.41
--------------
NET LOSS FROM OPERATIONS . $(14,497.17)
OTHER INCOME
Interest ................. 105.41
--------------
NET LOSS .................. $(14,391.76)
==============

The appended notes are an integral part of this financial statement.

F-173

<PAGE>

EXHIBIT D

AIRDOME LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994

OPERATIONS
Net loss .............................................. $(14,391.76)
Adjustments needed to reconcile to net cash provided
by operations:
Depreciation .......................................... 70,427.25
--------------
Net Cash Flow From Operations ........................ $ 56,035.49
INVESTING ACTIVITIES
Inflows: .............................................. $ 0.00
Outflows:
Cash payments of use tax on building construction ... (36,202.10)
--------------
Net Investing Outflows .............................. (36,202.10)
FINANCING ACTIVITIES
Inflows: .............................................. $ 0.00
Outflows:
Distributions to partners ............................ (29,680.37)
--------------
Net Financing Outflows .............................. (29,680.37)
--------------
Decrease in cash and cash equivalents .................. $ (9,846.98)
Beginning cash and cash equivalents .................... 12,378.52
--------------
Ending cash and cash equivalents ....................... $ 2,531.54
==============

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

A distribution to the general partner of $2,970.98 was recorded in the
financial statements without a cash payment, therefore a loan from the
general partner was created in the same amount.

The appended notes are an integral part of this financial statement.

F-174

<PAGE>

AIRDOME LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1994

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization--The limited partnership was organized in 1992 and issued a
confidential private placement memorandum pursuant to which a total offering
of $990,000 was consummated for the purpose of constructing and leasing an
airdome structure in Valley View, Ohio.

Property--Buildings are carried at cost. Depreciation is computed on the
straight-line basis for financial statement purposes and on the modified
accelerated cost recovery system for federal income tax purposes.
Depreciation is computed over the estimated useful life of the assets as
follows:

ORIGINAL COST LIFE
--------------- ------------
Building:
Structure .................... $603,765.00 31.5 years
Airdome fabric and components 530,702.10 10.0 years

Federal Income Taxes--The partners are taxed on their proportionate share
of the Partnership's taxable income. Therefore, no provision or liability for
federal income taxes has been included in the financial statements.

Accounting Method--The financial statements are prepared on the accrual
basis of accounting.

NOTE 2--LEASING ARRANGEMENTS--RELATED PARTY

The partnership is currently renegotiating the lease of the facility with
Golf Masters Limited Partnership. The terms of the proposed leases are as
follows:

1995 .........$5,000.00 per month
1996 ......... $7,500.00 per month
1997-2009 .... $14,040.15 per month

Golf Masters Limited Partnership has the option to purchase the building
at the end of the lease based on fair market value.

Airdome Limited Partnership and Golf Masters Limited Partnership have
substantially the same individuals as limited partners.

NOTE 3--TAX ABATEMENTS

The partnership was granted a tax abatement on real estate taxes from the
Ohio Department of Development and the Village of Valley View for the period
of three years commencing January 1, 1993.

NOTE 4--LOANS--AFFILIATED COMPANIES

Air Dome Limited Partnership loaned Golf Masters Limited Partnership
$615.11 in 1993.

It is anticipated that this loan will not be repaid within one year and
has been listed in the other assets section of the balance sheet.

F-175

<PAGE>

AIRDOME LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1995

ASSETS
CURRENT ASSETS:
Cash on deposit ...................................... $ 1,685.61
Accounts receivable -- Golf Masters Limited
Partnership .......................................... 45,000.00
---------------
Total Current Assets ................................ $ 46,685.61
PROPERTY:
Building ............................................. $1,134,467.10
Less depreciation provision .......................... (157,995.68)
---------------
Remaining Value ..................................... 976,471.42
OTHER ASSETS:
Loan receivable -- Golf Masters Limited Partnership . 615.11
---------------
TOTAL ASSETS .......................................... $1,023,772.14
===============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Loan payable -- General partner ...................... $ 2,970.98
PARTNERS' CAPITAL ..................................... 1,020,801.16
---------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL ............... $1,023,772.14
===============

The appended notes are an integral part of this financial statement.

F-176

<PAGE>

AIRDOME LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

Partners' capital--January 1, 1995 ................... $1,029,467.52
Net loss for the nine months ended September 30, 1995 (8,666.36)
---------------
Partners' capital--September 30, 1995 ................ $1,020,801.16
===============

The appended notes are an integral part of this financial statement.

F-177

<PAGE>

AIRDOME LIMITED PARTNERSHIP
STATEMENT OF INCOME AND EXPENSE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

INCOME
Rental Income ............ $45,000.00
OPERATING EXPENSE
Depreciation ............. $52,820.43
Professional fees ........ 900.00
-------------
Total Operating Expense 53,720.43
-------------
NET LOSS FROM OPERATIONS . $(8,720.43)
OTHER INCOME
Interest ................. 54.07
-------------
NET LOSS .................. $(8,666.36)
=============

The appended notes are an integral part of this financial statement.

F-178

<PAGE>

AIRDOME LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
<S><C>

OPERATIONS
Net loss .......................................................... $ (8,666.36)
Adjustments needed to reconcile to net cash provided by
operations:
Depreciation ..................................................... 52,820.43
Change in current assets and liabilities net of purchase amounts:
Increase in accounts receivable .................................. (45,000.00)
-------------
Net Cash Flow From Operations ................................... $ (845.93)
INVESTING ACTIVITIES
None: ............................................................. 0.00
FINANCING ACTIVITIES
None: ............................................................. 0.00
-------------
Decrease in cash and cash equivalents .............................. $ (845.93)
Beginning cash and cash equivalents ................................ 2,531.54
-------------
Ending cash and cash equivalents ................................... $ 1,685.61
=============
</TABLE>

The appended notes are an integral part of this financial statement.

F-179

<PAGE>

AIRDOME LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1995

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORIGINAL COST LIFE
--------------- -------------
Building:
Structure .................... $603,765.00 31.5 years
Airdome fabric and components 530,702.10 10.0 years

Accounting Method--The financial statements are prepared on the accrual
basis of accounting.

NOTE 2--LEASING ARRANGEMENTS--RELATED PARTY

The partnership is currently renegotiating the lease of the facility with
Golf Masters Limited Partnership. The terms of the proposed lease are as
follows:

1995 ..........$5,000.00 per month
1996 .......... $7,500.00 per month
1997-2009 ..... $14,040.15 per month

Golf Masters Limited Partnership has the option to purchase the building
at the end of the lease based on fair market value.

Airdome Limited Partnership and Golf Masters Limited Partnership have
substantially the same individuals as limited partners.

NOTE 3--TAX ABATEMENTS

The partnership was granted a tax abatement on real estate taxes from the
Ohio Department of Development and the Village of Valley View for the period
of three years commencing January 1, 1993.

NOTE 4--LOANS--AFFILIATED COMPANIES

Air Dome Limited Partnership loaned Golf Masters Limited Partnership
$615.11 in 1993.

It is anticipated that this loan will not be repaid within one year and
has been listed in the other asset section of the balance sheet.

NOTE 5--INTERIM FINANCIAL STATEMENTS

The financial statements as of September 30, 1995 and for the nine months
then ended are unaudited and are not necessarily indicative of the results
that may be expected for the year ending December 31, 1995. In the opinion of
management, the financial statements include all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the
Partnership's financial position and results of operations.

F-180

<PAGE>

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY
OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER
OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary ......................... 3
Risk Factors ............................... 7
Use of Proceeds ............................ 12
Price Range of Common Stock ................ 12
Dividend Policy ............................ 12
Capitalization ............................. 13
Selected Financial Data .................... 14
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................ 16
Business ................................... 23
Management ................................. 35
Principal Stockholders ..................... 40
Certain Relationships and Related
Transactions .............................. 42
Description of Capital Stock ............... 44
Underwriting ............................... 46
Legal Matters .............................. 47
Experts .................................... 47
Available Information ...................... 48
Index to Financial Statements .............. F-1
</TABLE>

2,000,000 SHARES

[FAMILY GOLF LOGO]

FAMILY GOLF CENTERS, INC.
COMMON STOCK
PROSPECTUS
JEFFERIES & COMPANY, INC.
HAMPSHIRE SECURITIES
CORPORATION

, 1996

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Delaware General Corporation Law, Section 102(b)(7), enables a corporation
in its original certificate of incorporation, or an amendment thereto validly
approved by stockholders, to eliminate or limit personal liability of members
of its Board of Directors for violations of a director's fiduciary duty of
care. However, the elimination or limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith,
intentional misconduct or a knowing violation of a law, the payment of a
dividend or approval of a stock repurchase which is deemed illegal or an
improper personal benefit is obtained. The Company's Certificate of
Incorporation includes the following language:

No director of the Corporation shall be liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision does not eliminate the liability of
the director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of Title 8 of the Delaware code, or (iv) for any
transaction from which the director derived an improper personal benefit.

Article Eighth of the Certificate of Incorporation of the Company permits
indemnification of, and advancement of expenses to, among others, officers
and directors of the Corporation. Such Article provides as follows:

"(a) Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director,
officer, employee, or agent of the Corporation or any of its direct or
indirect subsidiaries or is or was serving at the request of the Corporation
as a director, officer, employee, or agent of any other corporation or of a
partnership, joint venture, trust, or other enterprise, including service
with respect to an employee benefit plan (hereinafter an "indemnitee"),
whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee, or agent or in any other capacity
while serving as a director, officer, employee, or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability, and loss (including attorney's fees, judgments, fines, excise or
other taxes assessed with respect to an employee benefit plan, penalties, and
amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith, and such indemnification shall continue
as to an indemnitee who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the indemnitee's heirs, executors,
and administrators; provided, however, that, except as provided in paragraph
(c) of this Article Eighth with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.

(b) The right to indemnification conferred in paragraph (a) of this
Article Eighth shall include the right to be paid by the Corporation the
expenses incurred in defending for which such right to indemnification is
applicable in advance of its final disposition (hereinafter an "advancement
of expenses"); provided, however, that, if the Delaware General Corporation
Law requires, an advancement of expenses incurred by an indemnitee in his or
her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf
of such indemnitee, to repay all amounts so advanced if it shall ultimately
be determined by final judicial decision from which there is not further to
appeal (hereinafter a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Article Eighth or
otherwise.

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(c) The rights to indemnification and to the advancement of expenses
conferred in paragraphs (a) and (b) of this Article Eighth shall be contract
rights. If a claim under paragraph (a) or (b) of this Article Eighth is not
paid in full by the Corporation within sixty days after a written claim has
been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole
or in part in any such suit, or in a suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking,
the indemnitee shall be entitled to be paid also the expense of prosecuting
or defending such suit. In (i) any suit brought by the indemnitee to enforce
a right to indemnification hereunder (but not in a suit brought by an
indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware Corporation Law, and (ii) any suit
by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the Coporation shall be entitled to recover such
expenses upon a final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of
the indemnitee is proper in the circumstances because the indemnitee has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders) that
the indemnitee has not met such applicable standard of conduct, shall create
a presumption that the indemnitee has not met the applicable standard of
conduct or, in the case of such a suit brought by the indemnitee, be a
defense to such suit. In any suit brought by the indemnitee to enforce a
right to indemnification or to an advancement of expenses hereunder, or by
the Corporation to recover an advancement of expenses pursuant to the terms
of an undertaking, the burden of proving that the indemnitee is not entitled
to be indemnified, or to such advancement of expenses, under this Article
Eighth or otherwise, shall be on the Corporation.

(d) The rights to indemnification and to the advancement of expenses
conferred in this Article Eighth shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, this
certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors, or otherwise.

(e) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee, or agent of the Corporation or
another corporation, partnership, joint venture, trust, or other enterprise
against any expense, liability, or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability, or
loss under the Delaware General Corporation Law.

(f) The Corporation's obligation, if any, to indemnify any person who was
or is serving as a director, officer, employee, or agent of any direct or
indirect subsidiary of the Corporation or, at the request of the Corporation,
of any other corporation or of a partnership, joint venture, trust, or other
enterprise shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint venture,
trust, or other enterprise.

(g) Any repeal or modification of the foregoing provisions of this Article
Eighth shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification."

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<PAGE>

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is an itemization of all expenses incurred or expected to be
incurred by the Company in connecton with the issuance and distribution of
the securities being offered hereby (items marked with an asterisk (*)
represent estimated expenses):

SEC Registration Fee .................. $ 22,081.73
Legal Fees and Expenses ............... 150,000.00*
Blue Sky Fees (including counsel fees) 25,000.00*
NASD Filing Fees ...................... 7,113.00
Nasdaq National Market Fee ............ 17,500.00
Accounting Fees and Expenses .......... 100,000.00*
Transfer Agent and Registrar Fees .... 5,000.00*
Printing and Engraving Expenses ...... 100,000.00*
Miscellaneous ......................... 73,305.27*
-------------
Total ............................... $ 500,000.00
=============

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

Set forth below in chronological order is information regarding the number
of shares of Common Stock sold by the Company, since inception, the
consideration received by the Company for such shares, and information
relating to the section of the Securities Act of 1933, as amended (the
"Securities Act"), or rule of the Securities and Exchange Commission under
which exemption from registration was claimed. None of these securities was
registered under the Securities Act. No sales of securities involved the use
of an underwriter and no commissions were paid in connection with the sale of
any securities.

In July 1994, the Company issued 5,000 shares of Common Stock to Dominic
Chang, the Chairman of the Board, President and Chief Executive Officer of
the Company, for nominal consideration in connection with the initial
organization of the Company.

On August 15, 1994 the Company borrowed $499,000 from six individuals,
each of whom represented that he was an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act, pursuant to a
series of promissory notes. Such promissory notes bore interest at a rate of
10% per annum and were due and paid in full upon the closing of the Company's
initial public offering. In connection with such loans, the Company issued a
series of Common Stock Purchase Warrants entitling the individuals to
purchase an aggregate of 24,950 shares of the Company's common stock, at a
price of $3.50 per share, any time prior to August 14, 1999, which warrants
were exercised in connection with the Secondary Offering and the 24,950
shares underlying such warrants were registered and sold in the Secondary
Offering.

Pursuant to an Exchange Agreement, dated as of September 11, 1994, between
the Company Dominic Chang, Krishnan P. Thampi, John Chen, Jimmy C.M. Hsu and
Tommy Hsu, upon the closing of the initial public offering of the Company,
the Company received all of the issued and outstanding shares of stock of
Orient Associates International, Inc., Skycon Construction Company, Inc.,
Skydrive Company, Inc., Skydrive Greenburgh Co., Inc., Skydrive Willowbrook
NJ, Inc. and Skydrive Alley Pond Company, Inc., in exchange for an aggregate
of 3,445,000 shares of the Company's common stock.

On March 8, 1995 Dominic Chang and Krishnan Thampi were each granted
options outside of the 1994 Stock Option Plan ("Plan") to purchase 10,000
shares of Common Stock at $6.75 per share in connection with amendments to
their respective employment agreements.

In connection with the Company's acquisition on May 1, 1995 of the entity
which owned the golf center in Greenville, South Carolina, the Company issued
90,000 shares of Common Stock to the selling stockholder of such entity. See
"Business--Recently Opened or Acquired Facilities."

In connection with the acquisition on August 25, 1995 by the Company of
the entity which owned the golf center in Glen Allen, Virginia (near
Richmond), 7,500 shares of Common Stock of the Company were issued to the two
selling shareholders. See "Business--Recently Opened or Acquired Facilities."

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<PAGE>

In connection with the acquisition by the Company of the golf center in
Alpharetta, Georgia, which closed on September 28, 1995, 85,000 shares of
Common Stock and an option to purchase up to 8,500 shares of Common Stock of
the Company (subsequently reduced to 8,280 shares in accordance with the
purchase contract) (at an exercise price of $25.00 per share and exercisable
until September 28, 2000) were issued to the seller. See "Business--Recently
Opened or Acquired Facilities."

In connection with the acquisition by the Company of the golf center in
Valley View, Ohio, which closed November 8, 1995, 101,800 shares of Common
Stock and an option to purchase up to 10,000 shares of Common Stock (at an
exercise price of $25.00 per share and exercisable until November 8, 2000)
were issued to the sellers. See "Business--Recently Opened or Acquired
Facilities."

In connection with the acquisition by the Company of the golf center in
Virginia Beach, Virginia, which closed on March 6, 1996, 50,000 shares of
Common Stock were issued to the seller. See "Business -- Recently Opened or
Acquired Facilities."

In connection with the acquisition by the Company of the golf center in
Flemington, New Jersey, which closed on March 7, 1996, 100,000 shares of
Common Stock were issued to the seller. See "Business -- Recently Opened or
Acquired Facilities."

In connection with the acquisition by the Company of the golf center in
Yorktown Heights, New York, which closed on April 8, 1996, 30,900 shares of
Common Stock were issued to the seller. See "Business -- Recently Opened or
Acquired Facilities."

In connection with the entry by the Company into a consulting agreement
dated as of March 7, 1996, warrants to purchase up to 70,000 shares of Common
Stock (at an exercise price of $19.875 per share and exercisable until March
7, 1997) were issued to the consultant.

As of June 10, 1996, options to purchase 294,000 shares of Common Stock
have been granted under the Plan, options to purchase 30,000 shares of Common
Stock have been granted under the New Plan and options to purchase 53,500
shares of Common Stock have been granted outside of both the Plan and the New
Plan at prices ranging from $3.50 to $27.50 per share.

Each of the foregoing transactions was exempt from registration under the
Securities Act by virtue of the provisions of Section 4(2) and/or Section
3(b) of the Securities Act. None of such transactions involved any general
solicitation. Each purchaser of the securities described above has
represented that such purchaser understands that the securities acquired may
not be sold or otherwise transferred absent registration under the Securities
Act or the availability of an exemption from the registration requirements of
the Securities Act, and each certificate evidencing the securities owned by
each purchaser bears or will bear upon issuance a legend to that effect.

ITEM 27. EXHIBITS

The following exhibits are filed herewith:
<TABLE>

EXHIBIT NO. DESCRIPTION
- --------------- -------------------------------------------------------------------------------------------------
<S> <C>
1.1++++ Form of Underwriting Agreement.
3.1 Certificate of Incorporation, as amended.
3.2++++ By-laws, as amended.
4.1***** Pages 7 and 8 of the Certificate of Incorporation defining rights of security holders.
4.2***** Pages 1, 3, 4, 6 and 9 of the By-laws defining rights of security holders.

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EXHIBIT NO. DESCRIPTION
- --------------- -------------------------------------------------------------------------------------------------
5.1 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP.
Agreement to Exchange, dated as of September 11, 1994, by and among Family Golf Centers, Inc. and
10.1* Dominic Chang, Jimmy C.M. Hsu, Krishnan Thampi, Tommy Hsu, and John Chen.
Purchase Agreement, dated as of September 11, 1994, by and among Family Golf Centers, Inc. and
10.2* Golf Range, Inc. and Abbington Holdings, Inc.
Option Agreement by and among Ken Simonds, William Schickler III, Dominic Chang, Krishnan Thampi,
10.3* The Practice Tee, Inc. and Family Golf Centers, Inc.
Employment Agreement, dated as of September 11, 1994, between Family Golf Centers, Inc. and
10.4* Dominic Chang.
Amendment No. 1, dated March 8, 1995 to the Employment Agreement, dated as of September 11, 1994,
10.4.1***** between Family Golf Centers, Inc. and Dominic Chang, filed as Exhibit 10.4.
Employment Agreement, dated as of September 11, 1994, between Family Golf Centers, Inc. and
10.5* Krishnan Thampi.
Amendment No. 1, dated March 8, 1995 to the Employment Agreement, dated as of September 11, 1994,
10.5.1***** between Family Golf Centers, Inc. and Krishnan P. Thampi, filed as Exhibit 10.5.
Agreement, dated as of August 12, 1992 by and between Golden Bear International, Inc. and Orient
Associates International, Inc., as amended by an Assignment and Amendment entered into February
16, 1994, by and among Golden Bear International, Inc., Golden Bear Golf Centers, Inc. and Orient
Associates International, Inc., as further amended by an Assignment and Assumption by and among
10.6* Golden Bear Golf Centers, Inc., Orient Associates International, Inc. and The Practice Tee, Inc.
Amendment entered into November 9, 1994 to Agreement dated as of August 12, 1992, by and between
10.6.1** Golden Bear International, Inc. and Orient Associates International, Inc.
Amendment entered into December 2, 1994 to Agreement dated as of August 12, 1992, by and between
10.6.2***** Golden Bear International, Inc. and Orient Associates International, Inc., filed as Exhibit 10.6.
License Agreement, dated September 14, 1994, between Orient Associates International, Inc. and
10.7* City of New York Parks & Recreation Department.
10.8++++ Family Golf Centers, Inc. 1996 Stock Incentive Plan.
10.9* Family Golf Centers, Inc. 1994 Stock Option Plan.
Purchase Agreement, dated March 6, 1996 between Owl's Creek Golf Center, Inc. and Virginia Beach
10.10++ Family Golf Centers, Inc., a wholly owned subsidiary of Family Golf Centers, Inc.
Escrow Agreement dated March 6, 1996 among Family Golf Centers, Inc., Owl's Creek Golf Center,
10.11++ Inc. and Continental Stock Transfer & Trust Company.
Registration Rights Agreement, dated March 6, 1996, between Family Golf Centers, Inc. and certain
10.12++ stockholders of Owl's Creek Golf Center, Inc. listed on Schedule 1 thereto.
Deed of Assignment dated February 27, 1996 between Owl's Creek Golf Center, Inc. and Virginia
10.13++ Beach Family Golf Centers, Inc. and the City of Virginia Beach, Virginia.
Deed of Assignment dated March 1, 1996 between Owl's Creek Center, Inc. and Virginia Beach Family
10.14++ Golf Centers, Inc.

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EXHIBIT NO. DESCRIPTION
- --------------- -------------------------------------------------------------------------------------------------
Building Loan Contract and Building Loan Mortgage, dated October 20, 1994, between Orient
10.15* Associates International, Inc., as Borrower, and Grand Pacific Finance Corp., as Lender.
Deed for Improvements, dated as of March 1, 1996, between Owl's Creek Golf Center, Inc. and
10.16++ Virginia Beach Family Golf Centers, Inc.
Collateral Note and Security Agreements, dated September 28, 1994 and September 30, 1994, between
10.17** Bank of New York, as Lender, and Skydrive Co., Inc., as Borrower.
Purchase and Sale Contract, dated May 1, 1995, between Evergreen Bank, N.A. f/k/a The First
10.18*** National Bank of Glens Falls and Family Golf Centers, Inc.
Mortgage and Security Agreement, dated May 15, 1995 between Family Golf Centers, Inc., as
10.19*** Mortgagor and Orix USA Corporation, as Mortgagee.
Purchase Money Note, dated May 15, 1995, made by Family Golf Centers, Inc. in favor of Orix USA
10.20*** Corporation in the principal amount of $3,000,000.
Statement of Purpose for an Extension of Credit Secured by Margin Stock, dated April 28, 1995,
10.21*** between Family Golf Centers, Inc. and Chemical Bank.
Promissory Note, dated May 4, 1995, made by Family Golf Centers, Inc. in favor of Chemical Bank
10.22*** in the principal amount of $850,000.
Registration Rights Agreement, dated April 28, 1995 between Kenneth Gurley and Family Golf
10.23***** Centers, Inc.
Bill of Sale, dated as of March 6, 1996, between Owl's Creek Golf Center, Inc. and Virginia Beach
10.24++ Family Golf Centers, Inc.
Purchase Agreement, dated March 7, 1996, between Flemington Equities VII and Flemington Family
10.25++ Golf Centers, Inc., a wholly-owned subsidiary of Family Golf Centers, Inc.
Warrant to purchase 80,000 shares of Common Stock, dated November 23, 1994, issued to Hampshire
10.26***** Securities Corporation by Family Golf Centers, Inc.
10.27++ Guaranty dated March 7, 1996, by Family Golf Centers, Inc., in favor of Flemington Equities VII.
10.28***** Form of Representatives' Warrants.
TPT/FGC Purchase Agreement, dated as of September 28, 1995, between Family Golf Centers, Inc.,
10.29***** Dominic Chang, Krishnan Thampi, Ken Simonds and William Schickler III.
Registration Rights Agreement, dated August 24, 1995 between Thomas Matthews, J.L. Matthews, Jr.
10.30***** and Family Golf Centers, Inc.
Purchase Contract, dated September 28, 1995, between Upper Hembree Partners, L.P., each of the
general partners of Upper Hembree Partners, L.P. and Alpharetta Family Golf Centers, Inc., a
10.31**** wholly owned subsidiary of Family Golf Centers, Inc.
Escrow Agreement, dated September 28, 1995, between Family Golf Centers, Inc., Upper Hembree
10.32**** Partners, L.P. and Continental Stock Transfer & Trust Company.
Stock Option Agreement, dated September 28, 1995, between Family Golf Centers, Inc. and Upper
10.33**** Hembree Partners, L.P.
Registration Rights Agreement, dated September 28, 1995, between Family Golf Centers, Inc. and
10.34**** Upper Hembree Partners, L.P.

II-6

<PAGE>

EXHIBIT NO. DESCRIPTION
- --------------- -------------------------------------------------------------------------------------------------
Form of Promissory Note, dated September 28, 1995, in the principal amount of $35,000 made by
10.35**** Upper Hembree Partners, L.P. in favor of Family Golf Centers, Inc.
Assignment & Assumption Agreement, dated October 16, 1995, between Upper Hembree Partners, L.P.,
10.36**** Alpharetta Family Golf Centers, Inc. and Bank South.
Renewal Promissory Note, dated November 14, 1994, in the principal amount of $1,860,770.07 made
10.37**** by Upper Hembree Partners, L.P. in favor of Bank South, N.A.
10.38**** Form of Guaranty Agreement from Dominic Chang in favor of Bank South.
10.39**** Form of Guaranty Agreement from Family Golf Centers, Inc. in favor of Bank South.
Promissory Note, dated November 8, 1995, in the principal amount of $4,000,000 made by Family
Golf Centers, Inc. in favor of Dominic Chang, as the representative of the shareholders of The
10.40****** Practice Tee, Inc.
Purchase Agreement, dated as of November 8, 1995 by and between Golf Masters Limited Partnership
and Air Dome Limited Partnership, as Sellers, each of the general partners of Sellers and Valley
10.41****** View Family Golf Centers, Inc., a wholly owned subsidiary of Family Golf Centers, Inc.
Escrow Agreement, dated as of November 8, 1995, among Family Golf Centers, Inc., Golf Masters
10.42****** Limited Partnership, Air Dome Limited Partnership and Continental Stock Transfer & Trust Company.
Registration Rights Agreement, dated as of November 8, 1995, between Golf Masters Limited
10.43****** Partnership, Air Dome Limited Partnership and Family Golf Centers, Inc.
Stock Option Agreement, dated as of November 8, 1995, among Family Golf Centers, Inc., Golf
10.44****** Masters Limited Partnership and Air Dome Limited Partnership.
Purchase Agreement, dated March 7, 1996, between Flemington Golf and Sports Center, LLC and
10.45++ Flemington Family Golf Centers, Inc., a wholly-owned subsidiary of Family Golf Centers, Inc.
Mortgage Note, dated March 7, 1996, in the principal amount of $1,700,000 made by Flemington
10.46++ Family Golf Centers, Inc. in favor of Flemington Equities VII and related Mortgage Deed.
Cash Escrow Agreement, dated March 7, 1996 among Flemington Family Golf Centers, Inc., Flemington
10.47++ Golf and Sports Center, LLC and Continental Stock Transfer and Trust Company.
Purchase Agreement, dated April 8, 1996 among 202 Golf Associates, Inc., Family Golf Centers,
Inc. and Yorktown Family Golf Centers, Inc., a wholly owned subsidiary of Family Golf Centers,
10.48++ Inc.
Escrow Agreement dated April 8, 1996 among Family Golf Centers, Inc., 202 Golf Associates, Inc.,
10.49++ Yorktown Family Golf Centers, Inc. and Continental Stock Transfer & Trust Company.
Registration Rights Agreement, dated April 8, 1996, between Family Golf Centers, Inc. and 202
10.50++ Golf Associates, Inc.
Assignment and Assumption Agreement, dated April 8, 1996 between 202 Golf Associates, Inc. and
10.51++ Yorktown Family Golf Centers, Inc.
10.52++ Bill of Sale dated April 8, 1996 by 202 Golf Associates, Inc.
Indenture, dated April 8, 1996 between 202 Golf Associates, Inc. and Yorktown Family Golf
10.53++ Centers, Inc.

II-7

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EXHIBIT NO. DESCRIPTION
- --------------- -------------------------------------------------------------------------------------------------
Form of Warrants to purchase an aggregate of 70,000 shares of Common Stock, dated as of March 7,
10.54++++ 1996, issued to Monness, Crespi & Hardt & Co. by Family Golf Centers, Inc.
Purchase Agreement, dated May 20, 1996 among Indian River Golf-O-Rama, Inc., Indian River Family
10.55+++ Golf Centers, Inc. and Lenrich Associates, L.L.C.
Purchase Agreement, dated June 7, 1996, among Ruth Perillo, Lynn Perillo, Glen Perillo and Oscar
Ramirez, as sellers, and Tucson Family Golf Centers, Inc., a wholly owned subsidiary of Family
10.56 Golf Centers, Inc.
Stock Purchase Agreement, dated June 7, 1996, among Joseph E. Wolf, Kenneth R. Gibbons and
10.57 Richard Johnson, as sellers, K.G. Golf, Inc. and Family Golf Centers, Inc.
Assignment and Assumption of Lease, dated June 7, 1996, by and between Tree Court Golf &
Recreational Complex, Inc. and St. Louis Family Golf Centers, Inc., a wholly owned subsidiary of
10.58 Family Golf Centers, Inc.
Purchase Agreement, dated June 10, 1996, by and between W.A.G.N. Partners and West Palm Beach
10.59 Family Golf Centers, Inc., a wholly owned subsidiary of Family Golf Centers, Inc.
11.1 Statement re: Computation of Earnings Per Share.
21.1 Subsidiaries of the Company.
Consent of Richard A. Eisner & Company, LLP. Consent of Charles W. Cairnes, Jr. P.A. Consent of
Robert Decker, C.P.A. Consent of Goffena & Baker C.P.A. Consent of BDO Seidman, LLP. Consent of
Shanholt Glassman Hoffman Klein & Co., P.C. Consent of Anne E. Gorry. Consent of Ehrenkrantz and
Company. Consent of Mangini, Traeger & Company, P.C. Consent of Silverstein, Loftus & Ross, CPAs,
P.C. Consent of Bradshaw, Gordon & Clinkscales, P.A. Consent of Drunagel, Johnson, Rutherford &
Wilkins, P.C. Consent of Ernest T. Northrup. Consent of Robert Del Riego. Consent of Sewell &
23.1 Co., Inc.
Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP (contained in the Opinion filed as
23.2 Exhibit 5.1).
23.3 Consent of Houlihan Lokey Howard & Zukin.
24.1++++ Power of Attorney.
99.1+ Opinion of Houlihan Lokey Howard & Zukin.
</TABLE>

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

* Incorporated by reference to the Company's Registration Statement on
Form SB-2 dated September 12, 1994 (Registration No. 33-83910).

** Incorporated by reference to the Pre-Effective Amendment No. 2 to
the Company's Registration Statement on Form SB-2 dated November 10,
1994 (Registration No. 33-83910).

*** Incorporated by reference to the Company's Current Report on Form
8-K/A (Amendment No. 1), dated June 6, 1995.

**** Incorporated by reference to the Company's Current Report on Form
8-K, dated October 11, 1995.

***** Incorporated by reference to the Company's Registration Statement
(Registration No. 33-97686) filed on October 3, 1995.

******Incorporated by reference to Amendment No. 1 to the Company's
Registration Statement (Registration No. 33-97686) filed on November
9, 1995.

+ Incorporated by reference to Amendment No. 2 to the Company's
Registration Statement (Registration No. 33-97686) filed on November
29, 1995.

++ Incorporated by reference to the Company's Current Report on Form
8-K/A (Amendment No. 1), dated May 20, 1996 amending the Reports on
Form 8-K dated March 6, 1996 and April 8, 1996.

+++ Incorporated by reference to the Company's Current Report on Form
8-K, filed on June 4, 1996.

++++ Previously filed in the Registration Statement filed on May 24,
1996.

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ITEM 28. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(b) The Registrant hereby undertakes that it will:

(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1) or (4) or 497(h)
under the Securities Act as part of this registration statement as of the
time the Commission declared it effective.

(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and the offering of the securities at that time as the initial
bona fide offering of those securities.

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<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing this Amendment on Form SB-2 and authorized
this Registration Statement to be signed on its behalf by the undersigned, in
the City of Melville, State of New York on June 12, 1996

FAMILY GOLF CENTERS, INC.

By: /s/ Dominic Chang
-------------------------------
Dominic Chang
Chairman of the Board,
President, and Chief Executive
Officer

In accordance with the requirements of the Securities Act of 1933, this to
the Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>

SIGNATURE TITLE DATE
- ------------------------ ---------------------------------------- ---------------
<S> <C> <C>
/s/ Dominic Chang Chairman of the Board, President and
------------------------ Chief Executive Officer (Principal
Dominic Chang Executive Officer) June 12, 1996
* Chief Financial Officer and Director
------------------------ (Principal Financial and Accounting
Krishnan P. Thampi Officer) June 12, 1996
*
------------------------
James Ganley Director June 12, 1996
*
------------------------
Jimmy C.M. Hsu Director June 12, 1996
*
------------------------
Yupin Wang Director June 12, 1996

*By:/s/ Dominic Chang
------------------------
Dominic Chang
Attorney-In-Fact

</TABLE>

II-10

CERTIFICATE OF INCORPORATION
OF
FAMILY GOLF CENTERS, INC.

FIRST. The name of the corporation is Family Golf Centers, Inc.

SECOND. The address, including street, number, city and county of the
Corporation's registered office in the State of Delaware is 15 East North
Street, in the City of Dover, County of Kent. The name of its registered agent
at such address is National Corporate Research Ltd.

THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware ("DGCL").

<PAGE>

FOURTH. A. The aggregate number of shares which the Corporation shall
have authority to issue is 11,000,000 of which 1,000,000 shares of the par
value of $.10 per share shall be designated "Preferred Shares" and 10,000,000
shares of the par value of $.01 per share shall be designated "Common Shares."

B. Authority is hereby expressly granted to the Board of Directors of the
Corporation (or a committee thereof designated by the Board of Directors
pursuant to the by-laws of the Corporation, as amended from time to time (the
"By-Laws")) to issue the Preferred Shares from time to time as Preferred Shares
of any series and to declare and pay dividends thereon in accordance with the
terms thereof and, in connection with the creation of each such series, to fix
by the resolution or resolutions providing for the issue of shares thereof,
the number of shares of such series, and the designations, powers,
preferences, and rights (including voting rights), and the qualifications,
limitations, and restrictions, of such series, to the fullest extent now or
hereafter permitted by the laws of the State of Delaware.

- 2 -

<PAGE>

FIFTH. A. The name and mailing address of the incorporator is Vincent J.
Pasquariello, Esq., Squadron, Ellenoff, Plesent, Sheinfeld & Sorkin, 551 Fifth
Avenue, New York, New York 10176.

B. The powers of the incorporator are to terminate upon the filing
of this Certificate of Incorporation. The name and mailing address of the person
who is to serve as a director until the first annual meeting of stockholders or
until his respective successor has been elected and qualified is as follows:

Name Mailing Address
Dominic Chang c/o Family Golf Centers, Inc.
225 Broadhollow Road
Melville, New York 11747

SIXTH. Election of directors need not be by written ballot.

- 3 -

<PAGE>

SEVENTH. The Board of Directors is authorized to adopt, amend, or repeal
By-Laws of the Corporation except as and to the extent provided in the
By-Laws.

EIGHTH. A. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director,
officer, employee, or agent of the Corporation or any of its direct or
indirect subsidiaries or is or was serving at the request of the Corporation
as a director, officer, employee, or agent of any other corporation or of a
partnership, joint venture, trust, or other enterprise, including service with
respect to an employee benefit plan (hereinafter an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee, or agent or in any other capacity while serving
as a director, officer, employee, or agent shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the DGCL, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader

- 4 -

<PAGE>

indemnification rights than permitted prior thereto), against all expense,
liability, and loss (including attorneys' fees, judgment, fines, excise or
other taxes assessed with respect to an employee benefit plan, penalties, and
amounts paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith, and such indemnification shall continue as to an
indemnitee who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the indemnitee's heirs, executors, and
administrators; provided, however, that, except as provided in Paragraph C of
this Article EIGHTH with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.

B. The right to indemnification conferred in Paragraph A of this Article
EIGHTH shall include the right to be paid by the Corporation the expenses
incurred in defending any proceeding for which such right to indemnification
is applicable in advance of its final disposition (hereinafter an "advancement
of expenses"); provided, however, that, if the DGCL requires, an advancement
of expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay
all amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Article EIGHTH or otherwise.

- 5 -

<PAGE>

C. The rights to indemnification and to the advancement of expenses
conferred in Paragraphs A and B of this Article EIGHTH shall be contract
rights. If a claim under Paragraph A or B of this Article EIGHTH is not paid
in fill by the Corporation within sixty days alter a written claim has been
received by the Corporation, except in the case of a claim for an advancement
of expenses, in which case the applicable period shall be 20 days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successfUl in whole or in part in
any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In (i) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought by an indemnitee
to enforce a right to an advancement of expenses) it shall be a defense that
the indemnitee has not met any applicable standard for indemnification set
forth in the DGCL, and (ii) any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon a final
adjudication that the indemnitee has not met any applicable standard for
indemnification set forth in the DGCL. Neither the failure of the Corporation
(including its Board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the DGCL, nor an actual determination by the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) that the
indemnitee has not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the

- 6 -

<PAGE>

applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee
to enforce a right to indemnification or to an advancement of expenses
hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article EIGHTH or otherwise, shall be on the
Corporation.

D. The rights to indemnification and to the advancement of expenses
conferred in this Article EIGHTH shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, this
Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors, or otherwise.

E. The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee, or agent of the Corporation or
another corporation, partnership, joint venture, trust, or other enterprise
against any expense, liability, or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability, or
loss under the DGCL.

F. The Corporation's obligation, if any, to indemnify any person who was
or is serving as a director, officer, employee, or agent of any direct or
indirect subsidiary of the Corporation or, at the request of the Corporation,
of any other corporation or of a partnership, joint venture, trust, or other
enterprise shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint venture,
trust, or other enterprise.

G. Any repeal or modification of the foregoing provisions of this Article
SEVENTH shall not adversely affect any right or protection hereunder of

- 7 -

<PAGE>

any person in respect of any act or omission occurring prior to the time of such
repeal or modification.

NINTH. No director of the Corporation shall be liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty
as a director, provided that this provision does not eliminate the liability
of the director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of Title 8 of the Delaware Code, or (iv) for any action from
which the director derived an improper personal benefit. For purposes of the
prior sentence, the term "damages" shall, to the extent permitted by law,
include without limitation, any judgment, fine, amount paid in settlement,
penalty, punitive damages, excise or other tax assessed with respect to an
employee benefit plan, or expense of any nature (including, without
limitation, counsel fees and disbursements). Each person who serves as a
director of the Corporation while this Article NINTH is in effect shall be
deemed to be doing so in reliance on the provisions of this Article NINTH,
and neither the amendment or repeal of this Article NINTH, nor the adoption
of any provision of this Certificate of Incorporation inconsistent with this
Article NINTH, shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for, arising out of, based upon,
or in connection with any acts or omissions of such director occurring prior
to such amendment, repeal, or adoption of an inconsistent provision. The
provisions of this Article NINTH are cumulative and shall be in addition to
and independent of any and all other limitations on or eliminations of the
eliminations of the liabilities of directors of the Corporation, as such,
whether such limitations

- 8 -

<PAGE>

or eliminations arise under or are created by any law, rule, regulation,
By-law, agreement, vote of stockholders or disinterested directors, or
otherwise.

TENTH. Whenever a compromise or arangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a way of
the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as consequence of such compromise or
arrangement, the said compromise or cement and the said reorganization shall,
if sanctioned by the court to which the said application has been made, be
binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.

- 9 -

<PAGE>

CERTIFICATE OF AMENDMENT

OF THE

CERTIFICATE OF INCORPORATION

FAMILY GOLF CENTERS, INC.

FAMILY GOLF CENTERS, INC., a Delaware corporation (the "Corporation")
does hereby certify pursuant to Section 242 of the General Corporation Law of
the State of Delaware, as follows:

FIRST: That the Board of Directors of the Corporation, by
unanimous written consent pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware (the "DGCL"), adopted
resolutions setting forth the amendment to the Certificate of
Incorporation of the Corporation set forth below, declaring said
amendment to be advisable and submitting it to the stockholders of
the Corporation entitled to vote thereon for consideration thereof.

SECOND: That, the holders of the majority of the outstanding
stock of the Corporation entitled to vote thereon, being the holders
of outstanding stock of the Corporation having not less than the
minimum number of votes that is necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon are
present and voted, voted in favor of the adoption of the amendment to
the Certificate of Incorporation of the Corporation set forth below.

THIRD: That the amendment to the Certificate of Incorporation
of the Corporation set forth below was duly adopted in accordance
with the provisions of Section 242 of the DGCL.

RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by deleting paragraph (A) of Article "FOURTH" and replacing it in its
entirety with the following:

"A. The aggregate number of shares which the
Company shall have authority to issue is 52,000,000, of
which 2,000,000 shares of the par value of $.10 per
share shall be designated "Preferred Stock" and
50,000,000 shares of the par value of $.01 per share
shall be designated "Common Stock.";

<PAGE>

IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed by its President, Dominic Chang, and attested by Krishnan P. Thampi,
its secretary, on this 7th day of June, 1996.

FAMILY GOLF CENTERS, INC.

By: /s/ Dominic Chang
Name: Dominic Chang
Title: President

By: /s/ Krishnan P. Thampi
Name: Krishnan P. Thampi
Title: Secretary

- 2 -

June 12, 1996

Family Golf Centers, Inc.
225 Broadhollow Road
Melville, New York 11747

Ladies and Gentlemen:

You have requested our opinion, as counsel for Family Golf Centers,
Inc., a Delaware corporation (the "Company"), in connection with the
Registration Statement on Form SB-2 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act"), for the registration of
2,000,000 shares (or upon the exercise of the Underwriters' Over-Allotment
Option, up to 2,300,000 shares) of common stock, par value $.01 per share, of
the Company (the "Common Stock"), of which 2,000,000 shares are being sold by
the Company and, if the Underwriters' Over-Allotment Option is exercised in
full, 300,000 are being sold by certain stockholders of the Company ("Selling
Stockholders").

We have examined such records and documents and made such examinations
of law as we have deemed relevant in connection with this opinion. It is our
opinion that when there has been compliance with the Act and the applicable
state securities laws, the shares of Common Stock to be sold by the Company and,
as may be required, by the Selling Stockholders, when issued (in the case of the
shares of Common Stock to be sold by the Company), delivered, and paid for in
the manner described in the form of Underwriting Agreement filed as Exhibit 1.1
to the Registration Statement will be legally issued, fully paid and
nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Registration Statement. In so doing, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the Act
or

<PAGE>

Family Golf Centers, Inc.
June 12, 1996
Page 2

the rules and regulations of the Securities and Exchange Commission promulgated
thereunder.

Very truly yours,

Squadron, Ellenoff, Plesent &
Sheinfeld, LLP

PURCHASE AGREEMENT

by and between

RUTH PERILLO, LYNN PERILLO, GLEN PERILLO AND OSCAR RAMIREZ

Seller,

and

TUCSON FAMILY GOLF CENTERS, INC.,

Purchaser

PREMISES:

8325 East Golf Links Road,
Tuscon, Arizona

<PAGE>

PURCHASE AGREEMENT

PURCHASE AGREEMENT, made as of the 10th day of June, 1996 (this
"Agreement"), by and between RUTH PERILLO, LYNN PERILLO, GLEN PERILLO and
OSCAR RAMIREZ, each having an address c/o Charles King, Esq., 6245 East
Broadway, Suite 510, Tuscon, Arizona 85711 ("Seller"), and TUSCON FAMILY GOLF
CENTERS, INC., a Delaware corporation having an address at 225 Broadhollow
Road, Suite 106E, Melville, New York 11747 ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller is the owner of certain real property located at
8325 East Golf Links Road, Tuscon, Arizona (tax code no. ###-##-####) and more
particularly described on Exhibit A attached hereto and made a part hereof
(the "Land") and the buildings and improvements located on the Land (the
"Improvements" and, together with the Land, the "Premises");
WHEREAS, Seller operates a driving range and related facilities
at the Premises under the name "Catalina Driving Range" (the "Business"); and
WHEREAS, Seller wants to sell the Premises to Purchaser, and
Purchaser wants to purchase the Premises from Seller, on the terms, and
subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS, the
terms and conditions set forth herein, and other good and valuable
consideration, the mutual receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree to the foregoing and as follows:

1. Agreement to Sell and Purchase.

1.1 Property to be Purchased by Purchaser. Seller
agrees to sell and convey to Purchaser, and Purchaser agrees to purchase and
acquire from Seller, upon the terms and conditions hereinafter set forth, all
of Seller's

<PAGE>

right, title and interest in and to the following property (collectively, the
"Property"):

1.1.1 the Premises;

1.1.2 the easements, rights of way, appurtenances and
other rights and benefits of Seller in and to the Premises, including without
limitation, all of Seller's interest in any air rights, water rights and
irrigation rights;

1.1.3 all furnishings, fixtures, machinery, equipment,
vehicles and personalty attached or appurtenant to or used in connection with
the Premises that are owned by Seller, and all inventories, supplies, sales,
marketing and instructional materials of every kind and description relating to
the Business, wherever located, including without limitation, the items
described on Exhibit B attached hereto and made a part hereof (the "Personal
Property");

1.1.4 the files, books, notices and other correspondence
from any governmental agencies, and other records used or employed by Seller or
its affiliates in connection with the ownership and/or operation of the Premises
and the Business (collectively, the "Records");

1.1.5 any consents, authorizations, variances, waivers,
licenses, certificates, permits and approvals held by or granted to Seller in
connection with the ownership of the Premises (collectively, the "Permits");

1.1.6 the contracts, leases and other agreements of or
relating to the Business described on Exhibit C attached hereto and made a part
hereof (the "Contracts");

1.1.7 any manufacturers' and vendors' warranties and
guarantees, except to the extent the same relate solely to any Retained Assets
or Retained Liabilities (as hereinafter defined) (the "Claims"); and

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<PAGE>

1.1.8 any other properties and assets of every kind and
nature, real or personal, tangible or intangible, relating in any way whatsoever
to the Premises or the Business, except to the extent the same relate solely to
the Retained Assets or Retained Liabilities.

1.2 Assets to be Retained by Seller. Anything herein to the
contrary notwithstanding, Seller shall not sell, and Purchaser shall not
acquire, the following assets of Seller (the "Retained Assets"):

1.2.1 all trade accounts receivable arising out of the
sale of goods or services prior to the Closing Date (as hereinafter defined);

1.2.2 any rights of Seller with respect to insurance
policies owned by Seller or for which Seller is the named insured;

1.2.3 all cash, funds in bank accounts and cash
equivalents existing as of the Closing Date; and

1.2.4 any patents, trademarks, trademark registrations,
copyrights, copyright registrations, trade names and all registrations thereof
and all applications for any of the foregoing, whether issued or pending, if
any, and all goodwill associated with any of the foregoing (the "Intangible
Assets").

1.3 Assumption of Certain Liabilities. Purchaser shall assume
and agree to pay and discharge when due all liabilities and obligations of
Seller under the Contracts to the extent the same arise from and after the
Closing Date (the "Assumed Liabilities").

1.4 Liabilities to be Retained by Purchaser. Seller shall
retain, and Purchaser shall not assume, perform, discharge or pay, and shall
not be responsible for, any and all liabilities or obligations of any nature
whatsoever in connection with or relating to the Property, Seller or the

- 3 -

<PAGE>

Business or any predecessor owner of the Property or the Business other than
the Assumed Liabilities (collectively, the "Retained Liabilities").

2. Consideration.

2.1 In consideration for the Property, Purchaser shall pay to
Seller the sum of One Million One Hundred Thousand and 00/100 Dollars
($1,100,000.00), subject to adjustment as hereinafter provided, payable in
cash, certified or bank check or wire transfer as follows:

2.1.1 One Million Fifty Thousand and 00/100 Dollars
($1,050,000.00) to Seller on the Closing Date; and

2.1.2 Fifty Thousand and 00/100 Dollars ($50,000.00) to
Fidelity National Title Company ("Escrow Agent") on the Closing Date, to be
held in escrow as set forth below and as further set forth in a separate
escrow agreement to be entered into among Seller, Purchaser and Escrow Agent.
In the event that the Pima County Flood Control District does not obtain on or
before September 15, 1996 all approvals necessary to enter into a license
agreement with Purchaser relating to land adjacent to the Premises and on
which a fence erected by Seller is located, then Purchaser shall have the
right to demand that Seller, at its sole cost and expense, relocate the fence
onto the Premises as directed by Purchaser. In such event, the escrowed funds
shall serve as security for Seller's obligation to perform such work, and
Escrow Agent shall not release any of such funds to Seller unless and until
Seller has (a) completed such work and (b) provided reasonably satisfactory
evidence to Purchaser and Escrow Agent that all such work has been paid for in
full. If such work has not been completed and/or paid for within sixty (60)
days after Purchaser's demand therefor, Purchaser shall have the right to
cause such work to be completed and paid for out of the escrowed funds. In the
event that all of the above-referenced approvals are obtained, Escrow Agent
may release the

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<PAGE>

escrowed funds to Seller upon demand therefor by Seller, subject to the next
sentence. Escrow Agent shall give copies of all demands for all or any portion
of the escrowed funds to the party not demanding same and shall not release
all or any portion of the escrowed funds until five (5) business days after
such demand was so given by Escrow Agent.

2.2 It is agreed that no portion of the consideration paid by
Purchaser hereunder shall be allocated toward items of personal property or
any property other than the Premises conveyed hereunder.

3. Title; Permitted Exceptions.

3.1 Seller will convey the Property to Purchaser, free and
clear of any and all liens, charges, encumbrances, mortgages, pledges,
security interests, easements, agreements and other interests and adverse
claims (collectively, "Encumbrances"), other than the matters set forth in
Exhibit D attached hereto and made a part hereof (the "Permitted Exceptions").

3.2 Seller shall provide at its sole cost and expense at
Closing an Extended Owners Title Policy (ALTA) issued by Fidelity National
Title Insurance Company insuring that Purchaser has acquired fee simple
absolute title to the Premises subject only to the Permitted Exceptions.

4. Apportionments.

4.1 The following items shall be apportioned as of 11:59 PM of
the day immediately preceding the Closing Date:

4.1.1 real estate taxes, on the basis of the fiscal year for
which the same are levied, imposed or assessed, subject to Section 4.2 hereof;

4.1.2 charges for water, sewer rents, electricity, steam, gas
and telephone, which are not metered; provided that if the consumption of any
of such utilities is measured by meters, at the Closing (as hereinafter

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<PAGE>

defined) Seller shall furnish a current reading of each meter; and further
provided that if there is not a meter or if the current bill for any of such
utilities has not been issued prior to the Closing Date, the charges therefore
shall be adjusted at the Closing on the basis of the charges for the prior
period for which bills were issued and shall be further adjusted when the
bills for the current period are issued;

4.1.3 utility deposits, to the extent actually assigned to
Purchaser;

4.1.4 fuel, if any, at Seller's cost therefore (as determined
by Seller's fuel supplier); and

4.1.5 amounts paid or payable under the Contracts.

4.2 If the Closing shall occur before the real estate tax rate
is fixed, the apportionment of real estate taxes shall be based upon the tax
rate for the next preceding year applied to the latest assessed valuation.

4.3 If on the Closing Date the Premises shall be affected by
any special or other assessment for public improvements or otherwise which is
or may become payable by Seller in annual installments, of which the first
installment is then a charge or lien, or has been paid, then, for the purposes
of this Agreement, all the unpaid installments of such assessment, including
those which are to become due and payable after the Closing, shall be deemed
to be due and payable and to be liens upon the Premises and shall be paid and
discharged by Seller upon the Closing.

- 6 -

<PAGE>

4.4 Seller and Purchaser shall maintain and make available to
each other any books or records necessary for the adjustment of any item
pursuant to this Article. The provisions of this Section 4.4 shall survive the
Closing.

5. The Closing.

5.1 The closing of the transaction provided for in this
Agreement (the "Closing") shall take place simultaneously with the esxecution
and delivery of this Agreement (the actual date of the Closing being referred
to herein as the "Closing Date") through an escrow with the title agent.

5.2 At the Closing, Seller shall deliver or cause to be
delivered to Purchaser physical possession of the Property (receipt of which
may be actual or constructive) and the following:

5.2.1 a full warranty deed with covenants against grantor's
acts, duly executed and acknowledged by Seller, in proper statutory form for
recording, so as to convey to Purchaser fee simple title to the Premises,
subject to and in accordance with the provisions of this Agreement (the
"Deed");

5.2.2 a bill of sale conveying, transferring and selling to
Purchaser all right, title and interest of Seller in and to all of the
Personal Property, which bill of sale shall contain a warranty that such
property is free and clear of all Encumbrances other than the Permitted
Exceptions, duly executed and acknowledged by Seller;

5.2.3 an assignment and assumption agreement (the "Assignment
and Assumption Agreement") assigning to Purchaser all of Seller's right, title
and interest in and to the Contracts, the Permits and the Claims, duly
executed and acknowledged by Seller;

- 7 -

<PAGE>

5.2.4 a settlement statement (the "Settlement Statement")
setting forth the amounts paid by or on behalf of and/or credited to each of
Purchaser and Seller pursuant to this Agreement;

5.2.5 an owner's affidavit of title;

5.2.6 a Certificate or Certificates of Occupancy for all
Improvements;

5.2.7 original counterparts of each of the Contracts;

5.2.8 any transfer tax or other return required by any
applicable governmental authority in connection with the sale of the Property,
duly executed and acknowledged by Seller;

5.2.9 an affidavit (the "FIRPTA Affidavit") duly executed and
acknowledged by Seller pursuant to Section 1445 (b)(2) of the Internal Revenue
Code of 1986, as amended, stating that Seller is not a foreign person within
the meaning of such provision;

5.2.10 keys to all locks relating to the Property,
appropriately labeled;

5.2.11 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Seller to Purchaser
pursuant to any of the other provisions of this Agreement; and

5.2.12 such other documents as may be reasonably required by
Purchaser's counsel in connection with this transaction.

5.3 At the Closing, Purchaser shall deliver or cause to be
delivered to Seller the following:

5.3.1 the cash consideration referred to in Section 2 hereof;

5.3.2 the Assignment and Assumption Agreement, duly executed
and acknowledged by Purchaser;

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<PAGE>

5.3.3 the Settlement Statement, duly executed and
acknowledged by Purchaser;

5.3.4 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Purchaser to Seller; and

5.3.5 such other documents as may be reasonably required by
Seller's counsel in connection with this transaction.

6. Representations and Warranties.

6.1 Each of the individuals comprising Seller hereby jointly
and severally represents and warrants to Purchaser as of the date hereof and
as of the Closing Date as follows:

6.1.1 Due Authorization and Execution; Effect of Agreement.
This Agreement has been duly and validly executed and delivered by Seller and
constitutes the valid and binding obligation of Seller, enforceable in
accordance with its terms. The execution, delivery and performance by Seller
of this Agreement and the consummation by Seller of the transactions
contemplated hereby will not, with or without the giving of notice or the
lapse of time, or both, (a) violate any provision of any law, rule or
regulation to which Seller is subject; (b) violate any order, judgment or
decree applicable to Seller; or (c) conflict with or result in a breach of or
a default under any term or condition of any agreement or other instrument to
which Seller is a party or by which it or its assets may be bound, except in
each case, for violations, conflicts, breaches or defaults which in the
aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.

6.1.2 Consents. No consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory authority or any
third party is required in connection with the execution, delivery and

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<PAGE>

performance by Seller of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been obtained.

6.1.3 Compliance with Applicable Laws. Seller is not engaging
in any activity or omitting to take any action as a result of which Seller is
in violation of any law, rule, regulation, ordinance, statute, order,
injunction or decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to the Property or the Business, and
neither the execution and delivery by Seller of this Agreement or of any of
the other agreements and instruments to be executed and delivered by it
pursuant hereto, the performance by Seller of its obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby will result in any such violation. Seller is in compliance with all
material requirements imposed in writing by any insurance carrier of Seller to
the extent such carrier is an insurer or indemnitor of the Property. The
Premises are not subject to any notice of violation of law, municipal
ordinance, orders or requirements issued by any building department or other
governmental agency or subdivision having jurisdiction.

6.1.4 Permits. All Permits required by any federal, state, or
local law, rule or regulation and necessary for the operation of the Property
and the Business as currently being conducted have been obtained and are
currently in effect. No registrations, filings, applications, notices,
transfers, consents, approvals, orders, qualifications, waivers or other
actions of any kind are required by virtue of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby (a)
to avoid the loss of any Permit or the violation of any law, regulation, order
or other requirement of law, or (b) to enable Purchaser to continue the
operation of the Property as presently conducted after the Closing. The
current use and

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<PAGE>

occupation of any portion of the Property does not violate any of, and, where
applicable, is in material compliance with, the Permits, any applicable deed
restrictions or other covenants, restrictions or agreements including without
limitation, any of the Permitted Exceptions, site plan approvals, zoning or
subdivision regulations or urban redevelopment plans applicable to the
Premises.

6.1.5 Title to Assets. Seller has good and marketable title
to the Property free and clear of all Encumbrances other than the Permitted
Exceptions.

6.1.6 Contracts. Except as set forth on Exhibit C, Seller is
not a party to any leases, contracts, orders or agreements relating to the
Property or the Business (written or otherwise) (collectively, "Contracts").
Exhibits C sets forth a full and complete description of the Contracts
described therein, and none of such Contracts have been amended or modified
except as reflected on said Exhibits. Seller is not holding any security
deposits under any of said Contracts. Each of the Contracts are in full force
and effect and no party under any such Contract, including Seller, is in
default, or has sent or received notice of default, in any respect of any such
Contract.

6.1.7 Condition of the Improvements. There are no material
structural or mechanical defects in the Improvements, and there are no leaks
in any roof on any Improvement.

6.1.8 Condition of Personal Property. The Personal Property is
in good operating condition and repair, ordinary wear and tear excepted, and is
adequate, suitable and sufficient to meet the needs of and to operate the
Property as currently conducted.

6.1.9 Environmental Matters.

6.1.9.1 As used in this Agreement "Hazardous Material"
shall mean: (i) any "hazardous substance" as now defined pursuant to

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the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), 42 U.S.C. [section] 9601(33); (ii) any
"pollutant or contaminant" as defined in 42 U.S.C. [section] 9601(33); (iii)
any material now defined as "hazardous waste" pursuant to 40 C.F.R. Part 261;
(iv) any petroleum, including crude oil and any fraction thereof; (v) natural
or synthetic gas usable for fuel; (vi) any "hazardous chemical" as defined
pursuant to 29 C.F.R. Part 1910; (vii) any asbestos, asbestos containing
material, polychlorinated biphenyl ("PCB"), or isomer of dioxin, or any
material or thing containing or composed of such substance or substances; and
(viii) any other pollutant, contaminant, chemical, or industrial or hazardous,
toxic or dangerous waste, substance or material, defined or regulated as such
in (or for purposes of any Environmental Law (as hereinafter defined) and any
other toxic, reactive or flammable chemicals.

6.1.9.2 There is no Hazardous Material at, under or on
the Premises and there is no ambient air, surface water, groundwater or land
contamination within, under, originating from or relating to the Premises.
Seller has not, and has not caused to be, manufactured, processed,
distributed, used, treated, stored, disposed of, transported or handled any
Hazardous Material at, on or under the Premises.

6.1.9.3 Seller has no obligation or liability imposed or
based upon any provision under any foreign, federal, state or local law, rule,
or regulation or common law, or under any code, order, decree, judgment or
injunction applicable to Seller or the Property or any notice, or request for
information issued, promulgated, approved or entered thereunder, or under the
common law, or any tort, nuisance or absolute liability theory, relating to
public health or safety, worker health or safety, or pollution, damage to or
protection to the environment, including without limitation, laws relating to
emissions, discharges, releases or threatened releases of Hazardous

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<PAGE>

Material into the environment (including without limitation, ambient air,
surface water, groundwater, land surface or subsurface), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
generation, disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes (hereinafter
collectively referred to as "Environmental Laws").

6.1.9.4 Seller has not been subject to any civil, criminal
or administrative action, suit, claim, hearing, notice of violation,
investigation, inquiry or proceeding for failure to comply with, or received
notice of any violation or potential liability under the Environmental Laws in
respect of the Premises.

6.1.9.5 The Premises are not (a) listed or proposed for
listing on the National Priority List or (b) listed on the Comprehensive
Environmental Response, Compensation, Liability Information System List
("CERCLIS") promulgated pursuant to CERCLA, 42 U.S.C. [section] 9601(9), or any
comparable list maintained by any foreign, state or local government authority.

6.1.9.6 There are no underground storage tanks at the
Premises and Seller further warrants and represents that any prior use and
operation of underground storage tanks has been in compliance with all
Environmental Laws.

6.1.10 Tax Proceedings. There are no proceedings pending
regarding the reduction of real estate taxes or assessments in respect of the
Premises.

6.1.11 Utilities. All water, storm and sanitary sewer, gas,
electricity, telephone and other utilities adequately service the Premises,
enter the Premises through lands as to which valid public or private easements
exist that will inure to the benefit of Purchaser and the Premises are
furnished

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<PAGE>

by facilities of public utilities and the cost of installation of such
utilities has been fully paid.

6.1.12 Access. To the best of Seller's knowledge, there are no
federal, state, county, municipal or other governmental plans to change the
highway or road system in the vicinity of the Premises which could materially
restrict or change access from any such highway or road to the Premises or any
pending or threatened condemnation or eminent domain proceedings relating to
or affecting the Premises. All roads bounding the Premises are public roads
and the Deed is the only instrument necessary to convey to Purchaser full
access to and the right to use such roads freely as well as to convey all
rights appurtenant to the Premises in such roads.

6.1.13 Insurance Requirements. All requirements or
recommendations by any insurer or by any board of fire underwriters or similar
body in respect of the Property have been satisfied.

6.1.14 Litigation. There is no action or proceeding (zoning or
otherwise) or governmental investigation pending, or, to the best of Seller's
knowledge, threatened against, or relating to, Seller (insofar as it relates
to the Premises or the Business), the Premises, the Business or the
transactions contemplated by this Agreement, nor is there any basis for any
such action, proceeding or investigation.

6.1.15 Assessments. There are no special or other assessments
for public improvements or otherwise now affecting the Premises nor does
Seller know of (a) any pending or threatened special assessments affecting the
Premises or (b) any contemplated improvements affecting the Premises that may
result in special assessments affecting the Premises.

6.1.16 Employee Agreements. There are no union or employment
contracts or agreements (written or oral) involving employees of

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<PAGE>

Seller or its affiliates affecting the Property or the Business which will
survive the Closing. All employees of Seller will have been terminated as of
the Closing Date.

6.1.17 Work at the Premises. No services, material or work have
been supplied to the Premises for which payment has not been made in full.

6.1.18 Financial Condition. Seller has delivered to Purchaser
true and correct copies of audited financial statements consisting of balance
sheets and income statements of Seller as of December 31, 1995. Each such
balance sheet presents fairly the financial condition, assets and liabilities
of Seller as of its date; each such statement of income presents fairly the
results of operations of Seller for the period indicated. The financial
statements referred to in this Section are in accordance with the books and
records of Seller. Since December 31, 1995: (a) there has at no time been a
material adverse change in the financial condition, results of operations,
businesses, properties, assets, liabilities or future prospects of Seller, the
Property or Business; (b) the Business has been conducted in all respects only
in the ordinary course; and (c) Seller has not suffered an extraordinary loss
(whether or not covered by insurance) or waived any right of substantial
value.

6.1.19 Full Disclosure. To the best knowledge of Seller, none of
the information supplied by Seller herein or in the exhibits hereto contains any
untrue statement of a material fact or omits to state a material fact required
to be stated herein or necessary in order to make the statements herein, in
light of the circumstances under which they are made, not misleading.

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<PAGE>

6.2 Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as of the date hereof and as of the
Closing Date as follows:

6.2.1 Organization; Power and Authority. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.

6.2.2 Due Authorization and Execution; Effect of Agreement. The
execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action required to be taken on the
part of Purchaser. This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes the valid and binding obligation of
Purchaser, enforceable in accordance with its terms. The execution, delivery
and performance by Purchaser of this Agreement and the consummation by
Purchaser of the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both, (a) violate any provision
of any law, rule or regulation to which Purchaser is subject; (b) violate any
order, judgment or decree applicable to Purchaser; or (c) conflict with or
result in a breach of or a default under any term or condition of Purchaser's
Certificate of Incorporation or By-Laws or any agreement or other instrument
to which Purchaser is a party or by which it or its assets may be bound,
except in each case, for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.

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<PAGE>

6.3 Survival. It shall be a condition to each party's
obligation to close hereunder that the representations and warranties of the
parties made in this Article 6 and the factual matters represented to Seller's
knowledge shall be true and correct as of the Closing Date. The
representations and warranties of the parties made in this Article 6 shall
survive the Closing.

7. Further Assurances. At any time and from time to time after
the Closing Date, Seller shall, at the request of Purchaser, execute and
deliver any further instruments or documents and take all such further action
as Purchaser may reasonably request in order to transfer into the name of
Purchaser any and all Property contemplated to be sold pursuant to this
Agreement and to further consummate the transactions contemplated by this
Agreement. This Article shall survive the Closing.

8. Brokers. Seller and Purchaser warrant and represent to each
other that they dealt with no broker, finder or similar agent or party who or
which might be entitled to a commission or compensation on account of
introducing the parties, the negotiation or execution of this Agreement and/or
the closing of the transaction provided for herein, other than Terramar
Properties and Tuscon Realty Trust (the "Brokers"). Purchaser and Seller
hereby respectively agree to indemnify and hold harmless the other party from
and against all loss, liability, damage and expense (including, without
limitation, attorneys' fees) imposed upon or incurred by the other party by
reason of any claim for commissions or other compensation for bringing about
this transaction by any broker, finder or similar agent or party other than
the Brokers who claims to have dealt with the indemnifying party in connection
with this transaction. Seller agrees to pay Broker any commissions due the
Brokers in connection with this transaction pursuant to a separate agreement
or agreements

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<PAGE>

between Seller and the Brokers. The provisions of this Article shall survive the
Closing or any termination of this Agreement.

9. "As Is". Purchaser represents that it has inspected the
Property and is familiar with the physical condition thereof, and that it
agrees to accept the Property "as is", in its condition at the date of this
Agreement.

10. Costs and Fees. Documentary stamps for the Deed, deed transfer or
conveyancing taxes, if any, shall be payable by Seller, and in no event be
payable by Purchaser. Seller shall also pay the expenses incurred in
connection with (a) the examination of title, (b) the issuance of a policy of
title insurance for Purchaser, and (c) a survey of the Property. Any other
similar costs not expressly provided for elsewhere in this Agreement shall be
divided and borne in accordance with the usual practices in the jurisdiction
where the Premises are located. The provisions of this Article shall survive
the Closing.

11. Indemnification.

11.1 Subject to the further provisions of this Article, Seller
shall protect, defend, hold harmless and indemnify Purchaser, its officers,
directors, shareholders, employees, agents and affiliates, and their
respective successors and assigns, from, against and in respect of any and all
losses, liabilities, deficiencies, penalties, fines, costs, damages and
expenses whatsoever (including without limitation, reasonable professional
fees and costs of investigation, litigation, settlement, and judgment and
interest) ("Losses") that may be suffered or incurred by any of them arising
from or by reason of (i) any Retained Liability or other liability or
obligation of Seller which is not an Assumed Liability; (ii) the breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement; and (iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses

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<PAGE>

(including without limitation, interest, penalties, reasonable legal fees and
accounting fees) incident to the foregoing and the enforcement of the
provisions of this Section 11.1.

11.2 Subject to the further provisions of this Article,
Purchaser shall protect, defend, hold harmless and indemnify Seller, its
partners, employees and agents, and its successors and assigns from, against
and in respect of any and all Losses that may be suffered or incurred by any
of them arising from or by reason of (i) any of the Assumed Liabilities on and
after the Closing Date, (ii) the breach of any representation, warranty,
covenant or agreement of Purchaser contained in this Agreement or in any
document or other writing delivered pursuant to this Agreement; and (iii) any
and all actions, suits, proceedings, claims, demands, assessments, judgments,
costs and expenses (including without limitation, interest, penalties,
reasonable legal fees and accounting fees) incident to the foregoing and the
enforcement of the provisions of this Section 11.2.

11.3 Whenever a party hereto (such party and each of its affiliates
which is entitled to indemnification pursuant to any provision of this
Agreement, an "Indemnified Party") shall learn after the Closing of a claim
that, if allowed (whether voluntarily or by judicial or quasi-judicial tribunal
or agency), would give rise to an obligation of another party (the "Indemnifying
Party") to indemnify the Indemnified Party under any provision of this
Agreement, before paying the same or agreeing thereto, the Indemnified Party
shall promptly notify the Indemnifying Party in writing of all such facts within
the Indemnified Party's knowledge with respect to such claim and the amount
thereof (a "Notice of Claim"). If, prior to the expiration of fifteen (15) days
from the mailing of a Notice of Claim, the Indemnifying Party shall request, in
writing, that such claim not be paid, the Indemnified Party shall not pay the

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<PAGE>

same, provided the Indemnifying Party proceeds promptly, at its or their own
expense (including employment of counsel reasonably satisfactory to the
Indemnified Party), to settle, compromise or litigate, in good faith, such
claim. After notice from the Indemnifying Party requesting the Indemnified
Party not to pay such claim and the Indemnifying Party's assumption of the
defense of such claim at its or their expense, the Indemnifying Party shall
not be liable to the Indemnified Party for any legal or other expense
subsequently incurred by the Indemnified Party in connection with the defense
thereof. However, the Indemnified Party shall have the right to participate at
its expense and with counsel of its choice in such settlement, compromise or
litigation. The Indemnified Party shall not be required to refrain from paying
any claim which has matured by a court judgment or decree, unless an appeal is
duly taken therefrom and execution thereof has been stayed, nor shall the
Indemnified Party be required to refrain from paying any claim where the delay
in paying such claim would result in the foreclosure of a lien upon any of the
property or assets then held by the Indemnified Party. The failure to provide
a timely Notice of Claim as provided in this Section 11.3 shall not excuse the
Indemnifying Party from its or their continuing obligations hereunder;
however, the Indemnified Party's claim shall be reduced by any damages to the
Indemnifying Party resulting from the Indemnified Party's delay or failure to
provide a Notice of Claim as provided in this Section 11.3.

11.4 For purposes of this Article, any assertion of fact and/or
law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to this Agreement or make
operational an indemnification obligation hereunder, shall, on the date that
such assertion is made, immediately invoke the Indemnifying Party's obligation
to protect,

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<PAGE>

defend, hold harmless and indemnify the Indemnified Party pursuant to this
Article.

12. Notices. All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to
give to the other hereunder shall be in writing and shall be delivered by
hand, overnight express carrier, or sent by registered or certified mail,
return receipt requested, postage prepaid, in either event, addressed to the
parties at their respective addresses first above set forth. A copy of any
Notice given by Seller to Purchaser shall simultaneously be given in either
manner provided above to Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551
Fifth Avenue, New York, New York 10176, Attention: Alan Schacter, Esq. A copy
of any Notice given by Purchaser to Seller shall simultaneously be given in
either manner provided above to Charles King, Esq., 6245 East Broadway,
Tuscon, Arizona 85711. Notices given in the manner aforesaid shall be deemed
to have been given three (3) business days after the day so mailed, the day
after delivery to any overnight express carrier and on the day so delivered by
hand. Either party shall have the right to change its address(es) for the
receipt of Notices by giving Notice to the other party in either manner
aforesaid. Any Notice required or permitted to be given by either party may be
given by that party's attorney.

13. Miscellaneous.

13.1 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns. Each of the
individuals comprising Seller shall be jointly and severally liable for each
and every covenant, agreement, obligation, representation and warranty of
Seller hereunder.

13.2 This Agreement shall be governed by, interpreted under
and construed and enforced in accordance with, the laws of the State of New
York.

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<PAGE>

13.3 The captions or article headings in this Agreement are for
convenience only and do not constitute part of this Agreement.

13.4 This Agreement has been fully negotiated by the parties
and rules of construction construing ambiguities against the party responsible
for drafting agreements shall not apply.

13.5 It is agreed that, except where otherwise expressly
provided in particular Articles or Sections of this Agreement, none of the
provisions of this Agreement shall survive the Closing.

13.6 This Agreement (including the Exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.

13.7 This Agreement may not be modified, changed, supplemented
or terminated, nor may any obligations hereunder be waived, except by written
instrument signed by the party to be charged or by its agent duly authorized
in writing or as otherwise expressly permitted herein.

13.8 No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding
breach thereof or of any other agreement or provision herein contained. No
extension of the time for performance of any obligations or acts shall be
deemed an extension of the time for performance of any other obligations or
acts.

13.9 This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which taken together shall constitute but one and the
same original.

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<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.

/s/ Ruth Perillo
--------------------------
RUTH PERILLO

/s/ Lynn Perillo
--------------------------
LYNN PERILLO

/s/ Glen Perillo
--------------------------
GLEN PERILLO

/s/ Oscar Ramirez Perillo
--------------------------
OSCAR RAMIREZ PERILLO

TUSCON FAMILY GOLF CENTERS, INC.

By: /s/ Robert Krause
-----------------------
Name: Robert Krause
Title: Vice President

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<PAGE>

INDEX OF EXHIBITS AND SCHEDULES

EXHIBIT A LEGAL DESCRIPTION (not included)
EXHIBIT B PERSONAL PROPERTY
EXHIBIT C CONTRACTS
EXHIBIT D PERMITTED EXCEPTIONS

<PAGE>

EXHIBIT "B"
INVENTORY CATALINA GOLF RANGE

Outside of Building
1. Plastic golf club washer with stand.
2. Reel Mower.
3. 27 Bag stands metal.
4. 19 White plastic chairs.
5. 2 White plastic tables.
6. 10 Plastic large garbage cans.
7. 11 Target poles with flags.
8. Lester electrical battery charger.
9. Western 5 Section Ball Picker without baskets WK-71100.
10. Western Twister II Ball Washer WL1530T2.
11. Wittek Commercial Tire Picker Ball Picker #71300 Senior Ball Picker.
12. 1968 Volkswagen, VIN #118909987.
13. 1988 E-Z Go Electric Golf Cart.
14. 40 Wood T Station Dividers.
15. 6,000 Golf Balls.
16. E-Z Broadcast Spreader.

Office:
17. Desk.
18. Chair.
19. File Cabinet metal, 4-drawer.
20. Wood Cabinet 2.

<PAGE>

Lobby:
21. Sharp Cash Register ER2540.
22. Digital Time Recorder.
23. Front Desk Counter Top.
24. Golf Club Racks.
25. 60 Large Ball Baskets.
26. 40 Medium Ball Baskets.
27. 13 Small Ball Baskets.

<PAGE>

EXHIBIT C

CONTRACTS

Month to month lease to Wright-Away Club Repair dated November 15, 1995 for
$350 plus 35 of gross sales each month.

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<PAGE>

Exhibit D

Permitted Exceptions

A. Regulations, conditions and restrictions governing use of ground water
pursuant to Arizona Revised Statutes 45-101 et. Seq.

1a. 1996 taxes, a lien not yet due and payable.

1b. Any action, by Pima County Assessor and/or Treasurer, altering the current
or prior tax assessment, subsequent to the date of the Policy of Title
Insurance.

2. Reservations contained in Patent from the United States of America,
recorded in Book 190 of Deeds, Page 407.

3. Established and/or existing roads, roadways, highways, rights-of-way and
easements therefor.

4. Water rights, claims or title to water, whether or not shown by the public
record.

5. The unrecorded lease between CATALINA GOLF CENTER, as Lessor and
WRIGHT-AWAY CLUB REPAIR, as Lessee.

6. Any adverse claim to any portion of said land which has been created by
artificial means or which is accretion, alluvion, dereliction or avulsion.

7. Covenants, conditions, restrictions, and easements (deleting therefrom, if
any, restrictions indicating any preference, limitation or discrimination
based on race, color, religion, sex, handicap, familial status or national
origin) in instrument recorded in docket 6, Page 450.

8. Covenants, conditions, restrictions and assessments (deleting therefrom,
if any, restrictions indicating any preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial
status or national origin) in instrument recorded in Docket 2048, Page 330.

9. An Easement for drainageway and rights incident thereto as set forth in
instrument recorded in Docket 2117, Page 35.

10. An Easement for sewer lines and rights incident thereto as set forth in
instrument recorded in docket 2230, Page 76.

11. An Easement for sewer lines and rights incident thereto as set forth in
instrument recorded in Docket 2256, Page 144.

12. An Easement for sewer lines and rights incident thereto as set forth in
instrument recorded in Docket 5900, Page 1028.

13. An Easement for sewer lines and rights incident thereto as set forth in
instrument recorded in Docket 8420, Page 307.

14. An Easement for drainageway and rights incident thereto as set forth in
instrument recorded in Docket 8420, Page 315.

15. An Easement for water pipes or mains and rights incident thereto as set
forth in instrument recorded in Docket 8638, Page 547.

16. Terms and conditions of license for fence and landscaping as set forth in
instrument recorded in Docket 8924, Page 749.

17. A one foot wide No Vehicular Access Agreement as set forth in Docket 8940,
Page 977.

18. An Easement for electric and communication lines and system and rights
incident thereto as set forth in instrument recorded in Docket 9598,
Page 345.

STOCK PURCHASE AGREEMENT

by and between

JOSEPH E. WOLF, KENNETH R. GIBBONS AND RICHARD JOHNSON,

Seller,

K.G. GOLF, INC.

Acquired Corporation,

and

FAMILY GOLF CENTERS, INC.,

Purchaser

<PAGE>

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT, made as of the 7th day of June, 1996
(this "Agreement"), by and between JOSEPH E. WOLF, having an address at 27351
Oak Knoll Drive, Bonita Springs, Florida 33923, KENNETH R. GIBBONS, having an
address at 45 Annie Lou Drive, Hamilton, Ohio 45013 and RICHARD JOHNSON,
having an address at 27250 Ibis Cove Court, Naples, Florida 33939
(collectively, "Seller"), K.G. GOLF, INC., an Ohio corporation having an
address at 6400 Dixie Highway, Fairfield, Ohio ("Acquired Corporation"), and
FAMILY GOLF CENTERS, INC., a Delaware corporation having an address at 225
Broadhollow Road, Suite 106E, Melville, New York 11747 ("Purchaser").

W I T N E S S E T H :

WHEREAS, Seller is the owner of all of the outstanding shares of
capital stock of Acquired Corporation (the "Stock"); and

WHEREAS, Seller wants to sell to Purchaser, and Purchaser wants
to purchase from Seller, the Stock on the terms, and subject to the
conditions, set forth herein.

NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS, the
terms and conditions set forth herein, and other good and valuable
consideration, the mutual receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree to the foregoing and as follows:

1. Agreement to Sell and Purchase. Seller shall sell, assign,
transfer, and convey to Purchaser at the Closing all of the outstanding shares
of capital stock of Acquired Corporation. Seller shall deliver at the Closing
certificates representing such shares duly endorsed in blank or accompanied by
stock powers duly endorsed in blank, in each case in proper form for transfer,
and with all stock transfer and any other required documentary stamps affixed
thereto.

<PAGE>

2. Purchase Price. In consideration for the Stock, Purchaser
shall pay to Seller the sum of One Million Four Hundred Thousand and 00/100
Dollars ($1,400,000.00) (the "Purchase Price"), subject to adjustment as
hereinafter provided, payable in cash, certified or bank check or wire
transfer on the Closing Date. The Purchase Price shall be allocated among the
individuals comprising Seller in accordance with the table below:

Name of Seller Portion of Purchase Price
--------------- -------------------------
Joseph E. Wolf 1/3
Kenneth R. Gibbons 1/3
Richard Johnson 1/3

3. Apportionments.

3.1 The parties hereto agree that (i) all operating expenses of
Acquired Corporation (i.e., cost of goods sold, rent, advertising,
collections, fees, hired services, insurance, miscellaneous expenses, postage,
repairs and maintenance, supplies, taxes, utilities, wages and interest on
indebtedness, but specifically not including professional fees and expenses,
travel and lodging or depreciation), and (ii) all income of Acquired
Corporation, including accounts receivable, shall be apportioned between
Seller and Purchaser as of May 1, 1996 (the "Effective Date") based on the
portion of each such expense or revenue attributable to the period falling on
or before the Effective Date on the one hand, which Seller shall bear the
responsibility and benefit of, and the portion of each such expense or revenue
attributable to the period falling after the Effective Date, on the other
hand, which Purchaser shall bear the responsibility and benefit of (the
"Adjustment"); provided, however, that Purchaser shall receive a credit for
the amount by which the accounts payable as of the Effective Date ($83,816)
exceeds $70,000, or $13,816. The net Adjustment will be paid by the party
owing the same to the other in cash

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or by certified or official bank check or wire transfer at Closing. The
expenses and liabilities for which Seller shall be liable pursuant to this
Section shall be referred to herein as "Retained Liabilities").

3.2 To the extent that any of the prorations made upon the
Closing Date pursuant to this Article are based upon estimates of payments to
be made and/or expenses to be incurred by Purchaser subsequent to the
Effective Date, or either party discovers any errors in or omissions in
respect of the Adjustment, Seller and Purchaser agree to adjust such
prorations promptly upon receipt by Seller or Purchaser, as the case may be,
of such payments or of bills or other documentation setting forth the actual
amount of such expenses.

3.3 Seller and Purchaser shall maintain and make available to
each other any books or records necessary for the adjustment of any item
pursuant to this Article. The provisions of this Article 3 shall survive the
Closing.

4. The Closing. The closing of the transaction provided for in
this Agreement (the "Closing") shall take place simultaneously with the
execution and delivery of this Agreement (the actual date of the Closing being
referred to herein as the "Closing Date"), at the offices of Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New York
10176, or at such other place as may be mutually agreed to by Seller and
Purchaser.

5. Representations and Warranties.

5.1 Each Seller hereby jointly and severally represents and
warrants to Purchaser as of the date hereof and as of the Closing Date as
follows:

5.1.1 Organization and Qualification. Acquired Corporation
does not own any interest in any corporation or other enterprise. Acquired
Corporation is a corporation duly organized, validly existing, and in

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good standing under the laws of its jurisdiction of incorporation, with all
requisite power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and tribunals, to own, lease, license,
and use its properties and assets and to carry on the business in which it is
now engaged and the business in which it contemplates engaging. Acquired
Corporation is duly qualified to transact the business in which it is engaged
and is in good standing as a foreign corporation in every jurisdiction in
which its ownership, leasing, licensing, or use of property or assets or the
conduct of its business makes such qualification necessary.

5.1.2 Capitalization. The authorized capital stock of
Acquired Corporation consists of 750 shares of common stock, no par value per
share, of which 300 shares are outstanding. Each of such outstanding shares of
Acquired Corporation is validly authorized, validly issued, fully paid and
nonassessable, has not been issued and is not owned or held in violation of
any preemptive right of stockholders, and is owned of record and beneficially
by each of the individual comprising Seller in accordance with the following
table:

Name of Seller Number of Shares
-------------- ----------------
Joseph E. Wolf 100
Kenneth R. Gibbons 100
Richard Johnson 100

free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts. There is
no commitment, plan, or arrangement to issue, and no outstanding option,
warrant, or other right calling for the issuance of, any share of capital
stock of Acquired Corporation or any security or other instrument convertible
into, exercisable for, or exchangeable

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for capital stock of Acquired Corporation. There is outstanding no security or
other instrument convertible into or exchangeable for capital stock of
Acquired Corporation. All indebtedness of Acquired Corporation to Seller shall
be deemed satisfied in connection with the Closing. The individuals comprising
Seller are the only officers and directors of Acquired Corporation, and each
of them hereby resign as officers and directors of Acquired Corporation.

5.1.3 Financial Condition. Acquired Corporation has
delivered to the Purchaser true and correct copies of the following, initialled
by the chief executive officer of Acquired Corporation: an audited balance sheet
of Acquired Corporation as of December 31, 1995; an unaudited balance sheet of
Acquired Corporation as of April 30, 1996 (the "Closing Balance Sheet"); an
unaudited profit and loss statement for January 1 through May 14, 1996 (the
"Profit and Loss Statement"). Each of the above-referenced balance sheets
presents fairly the financial condition, assets, liabilities, and
stockholders' equity of Acquired Corporation as of its date and the Profit and
Loss Statement presents fairly the results of operations of Acquired
Corporation for the period indicated and presents fairly the information
purported to be shown therein. The financial statements referred to in this
Section 5.1.3 have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved and
are in accordance with the books and records of Acquired Corporation. Since
December 31, 1995:

5.1.3.1 There has at no time been a material adverse
change in the financial condition, results of operations, business, properties,
assets or liabilities of Acquired Corporation.

5.1.3.2 Acquired Corporation has not authorized,
declared, paid, or effected any dividend or liquidating or other
distribution in

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respect of its capital stock or any direct or indirect redemption,
purchase, or other acquisition of any stock of Acquired Corporation.

5.1.3.3 The operations and business of Acquired
Corporation have been conducted in all respects only in the ordinary course.

5.1.3.4 Acquired Corporation has not suffered an
extraordinary loss (whether or not covered by insurance) or waived any right of
substantial value.

5.1.3.5 Acquired Corporation has not paid or incurred
any tax, other liability, or expense resulting from the preparation of, or the
transactions contemplated by, this Agreement, it being understood that Seller
shall have paid or will pay all such taxes (including stock transfer taxes
resulting from this Agreement or the transactions contemplated hereby),
liabilities, and expenses.

5.1.4 Tax and Other Liabilities. Acquired Corporation has
no liability of any nature, accrued or contingent, including without limitation
liabilities for federal, state, local, or foreign taxes and penalties,
interest, and additions to tax ("Taxes") and liabilities to customers or
suppliers, other than the following:

5.1.4.1 Liabilities for which full provision has been
made on the Closing Balance Sheet and the notes thereto as of April 30, 1996
(the "Closing Balance Sheet Date") referred to in Section 5.1.3; and

5.1.4.2 Other liabilities arising since the Last
Balance Sheet Date and prior to the Closing in the ordinary course of business
(which shall not include liabilities to customers on account of defective
products or services) which are not inconsistent with the representations and
warranties of any Seller or any other provision of this Agreement.

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<PAGE>

Without limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Closing Balance Sheet are sufficient for all
accrued and unpaid Taxes of Acquired Corporation, whether or not due and
payable and whether or not disputed, under tax laws, as in effect on the
Closing Balance Sheet Date or now in effect, for the period ended on such date
and for all fiscal periods prior thereto. The execution, delivery, and
performance of this Agreement by Acquired Corporation will not cause any Taxes
to be payable (other than by Seller) or cause any lien, charge, or encumbrance
to secure any Taxes to be created either immediately or upon the nonpayment of
any Tax (other than on the properties or assets of Seller). Acquired
Corporation has filed all federal, state, local, and foreign tax returns
required to be filed by it; has delivered to the Purchaser a true and correct
copy of each such return which was filed in the past five (5) years,
initialled by the chief executive officer of Acquired Corporation; has paid
all Taxes, assessments, and other governmental charges payable or remittable
by it or levied upon it or its properties, assets, income, or franchises which
are due and payable; and has delivered to the Purchaser a true and correct
copy, so initialled, of any report as to adjustments received by it from any
taxing authority during the past five (5) years and a statement, so
initialled, as to any litigation, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in prospect with respect
to any such report or the subject matter of such report. Acquired Corporation
has at all times been and validly maintained its status as a Subchapter S
corporation in accordance with all applicable laws and regulations.

5.1.5 Litigation and Claims. To the best knowledge of
Seller, there is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, threatened, or in

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prospect (or any basis therefor known to Acquired Corporation or any Seller)
with respect to Acquired Corporation, any Seller, or any of its or his
respective businesses, properties, or assets. Acquired Corporation is not
affected by any present or threatened strike or other labor disturbance nor to
the knowledge of any Seller is any union attempting to represent any employee
of Acquired Corporation as collective bargaining agent. To the best knowledge
of Seller, Acquired Corporation is not in material violation of, or in default
with respect to, any law, rule, regulation, order, judgment, or decree; nor is
Acquired Corporation or any Seller required to take any action in order to
avoid such violation or default.

5.1.6 The Lease. Attached hereto as Exhibit A is a true
and correct copy of the Ground Lease Agreement, dated October 17, 1991 and
letter dated October 18, 1991 modifying such lease (as so amended, the "Lease"),
between Michael and Juanita Kocheck (together, "Landlord") and Acquired
Corporation. The Lease is in full force and effect, has not been modified or
amended in any way except as stated above and neither Landlord nor Acquired
Corporation is in default, or sent or received any notice of default, in
respect of the Lease. No event has occurred or circumstance exists which, with
the giving of notice or the passage of time, or both, would constitute a
default under the Lease. Neither Acquired Corporation nor Landlord has
exercised any right or option, or stated its intent, to terminate or cancel
the Lease. Acquired Corporation has not assigned, transferred or conveyed the
Lease or any interest therein, or granted any right or option with respect
thereto, to any party other than Purchaser. The initial term of the Lease will
expire on October 17, 1997.

5.1.7 Properties. Acquired Corporation does not have any
interest in any real property other than under the Lease. Acquired Corporation

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has good title to all other properties and assets used in its business or
owned by it, free and clear of all liens, mortgages, security interests,
pledges, charges, and encumbrances.

5.1.7.1 All accounts and notes receivable reflected on
the Closing Balance Sheet, or arising since the Closing Balance Sheet Date, have
been collected, or are and will be good and collectible, in each case at the
aggregate recorded amounts thereof without right of recourse, defense,
deduction, return of goods, counterclaim, offset, or set off on the part of the
obligor.

5.1.7.2 All inventory is merchantable and fit for the
particular purposes for which it is intended.

5.1.7.3 Attached as Exhibit B is a true and complete
list of all properties and assets owned by Acquired Corporation or leased or
licensed by Acquired Corporation from or to a third party, including with
respect to such properties and assets owned by Acquired Corporation a statement
of cost, book value and (except for land) reserve for depreciation of each item
for tax purposes, and net book value of each item for financial reporting
purposes, and, with respect to such properties and assets leased or licensed by
Acquired Corporation, a description of such lease or license. All such
properties and assets (including Intangibles) owned by Acquired Corporation are
reflected on the Closing Balance Sheet (except for acquisitions subsequent to
the Closing Balance Sheet Date and prior to the Closing which are either noted
in Exhibits B or C). To the best knowledge of Seller, all real and other
tangible properties and assets owned, leased, or licensed by Acquired
Corporation are in good and usable condition (reasonable wear and tear which is
not such as to
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affect adversely the operation of the business of Acquired Corporation
excepted).

5.1.7.4 No real property owned, leased, or licensed by
Acquired Corporation lies in an area which is, or to the knowledge of Acquired
Corporation or any Seller will be, subject to zoning, use, or building code
restrictions which would prohibit, and no state of facts relating to the actions
or inaction of another person or entity or his or its ownership, leasing,
licensing, or use of any real or personal property exists or to the best
knowledge of Seller will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the business in
which Acquired Corporation is now engaged.

5.1.7.5 The real and other properties and assets
(including Intangibles) owned by Acquired Corporation or leased or licensed by
Acquired Corporation from a third party constitute all such properties and
assets which are necessary to the business of Acquired Corporation as presently
conducted.

5.1.8 Corporate Instruments. Acquired Corporation has
furnished to the Purchaser (a) the articles of incorporation (or other charter
document) and code of regulations of Acquired Corporation and all amendments
thereto, as presently in effect, certified by the Secretary of the
corporation. The stock ledgers and stock transfer books and the minute book
records of Acquired Corporation relating to all issuances and transfers of
stock by Acquired Corporation and all proceedings of the stockholders and the
Board of Directors and committees thereof of Acquired Corporation since its
incorporation made available to the Purchaser's counsel are the original stock
ledgers and stock transfer books and minute book records of Acquired
Corporation or exact

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copies thereof. Acquired Corporation is not in violation or breach of, or in
default with respect to, any term of its articles of incorporation (or other
charter document) or code of regulations. Acquired Corporation is not a member
of a customer or user organization or of a trade association.

5.1.9 Employees. Acquired Corporation does not have or
contribute to any pension, profit-sharing, option, other incentive plan, or
any other type of Employee Benefit Plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or
have any obligation to or customary arrangement with employees for bonuses,
incentive compensation, vacations, severance pay, insurance, or other
benefits. Acquired Corporation does not have any obligation to provide
post-retirement medical benefits or life insurance coverage to any present or
former employees. Acquired Corporation neither currently contributes to or
since September 16, 1980 has effectuated either a complete or partial
withdrawal from any multi-employer Pension Plan within the meaning of Section
3(37) of ERISA. There are no union or employment contracts or agreements
(written or oral) involving employees of Acquired Corporation. All employees
of Acquired Corporation will have been terminated as of the Closing Date.

5.1.10 Patents, Trademarks, Et Cetera. Acquired Corporation does
not own or have pending, or is licensed under, any patent, patent application,
trademark, trademark application, trade name, service mark, copyright,
franchise, or other intangible property or asset (all of the foregoing being
herein called "Intangibles"). Acquired Corporation has not infringed, is
infringing, or has received notice of infringement with asserted Intangibles of
others.

5.1.11 Authority to Sell. Acquired Corporation and Seller have
all requisite power and authority to execute, deliver, and perform this

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Agreement. All necessary corporate proceedings of Acquired Corporation have
been duly taken to authorize the execution, delivery, and performance of this
Agreement by Acquired Corporation. This Agreement has been duly authorized,
executed, and delivered by Acquired Corporation, has been duly executed and
delivered by Seller, constitutes the legal, valid, and binding obligation of
Acquired Corporation and Seller, and is enforceable as to them in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal
is required by Acquired Corporation or any Seller for the execution, delivery,
or performance of this Agreement by Acquired Corporation or any Seller. No
consent of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which Acquired Corporation or any Seller is a
party, or to which it or he or any of its or his respective businesses,
properties, or assets are subject, is required for the execution, delivery, or
performance of this Agreement; and the execution, delivery, and performance of
this Agreement will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under, entitle any party to rights
and privileges that such party was not receiving or entitled to receive
immediately before this Agreement was executed under, or create any obligation
on the part of Acquired Corporation that it was not paying or obligated to pay
immediately before this Agreement was executed under, any term of any such
contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the certificate
of incorporation (or other charter document) or by-laws of Acquired
Corporation or violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or

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decree binding on Acquired Corporation or any Seller or to which it or he or
any of its or his respective businesses, properties, or assets are subject.
Upon the Closing, Purchaser will have good title to all the capital stock of
Acquired Corporation, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting trusts.

5.1.12 Exemption from Registration. The offer, sale, and
delivery of the Stock as contemplated by this Agreement constitute exempted
transactions under the Securities Act of 1934 (as amended, the "Securities
Act"), and registration of such shares under the Securities Act is not
required in connection with any such offer, sale, or delivery of such shares.

5.1.13 Contracts. Except for the Lease and except as set forth
on Exhibit C attached hereto and made a part hereof, Acquired Corporation is
not a party to any leases, contracts, orders or agreements (written or
otherwise) (collectively, "Contracts"). Exhibit C sets forth a full and
complete description of the Contracts described therein, and none of such
Contracts have been amended or modified except as reflected on said Exhibit.
Acquired Corporation is not holding any security deposits under any of said
Contracts. Each of the Contracts are in full force and effect and no party
under any such Contract, including Acquired Corporation is in default, or has
sent or received notice of default, in any respect of any such Contract.

5.1.14 Condition of the Improvements. To the best knowledge of
Seller, there are no material structural or mechanical defects in the
improvements located on the land covered by the Lease, and there are no leaks
in any roof on any such improvement.

5.1.15 Environmental Matters.

5.1.15.1 As used in this Agreement "Hazardous Material"
shall mean: (i) any "hazardous substance" as now defined pursuant to the

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Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. [section] 9601(33); (ii) any "pollutant or contaminant" as
defined in 42 U.S.C. [section\ 9601(33); (iii) any material now defined as
"hazardous waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including
crude oil and any fraction thereof; (v) natural or synthetic gas usable for
fuel; (vi) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910;
(vii) any asbestos, asbestos containing material, polychlorinated biphenyl
("PCB"), or isomer of dioxin, or any material or thing containing or composed of
such substance or substances; and (viii) any other pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of any Environmental
Law (as hereinafter defined) and any other toxic, reactive or flammable
chemicals.

5.1.15.2 Except as may be disclosed in the Environmental
Site Assessment Update, dated August 31, 1991, prepared by The H.C. Nutting
Company (the "Environmental Report"), to the best knowledge of Seller, there is
no Hazardous Material at, under or on the premises covered by the Lease (the
"Premises") and there is no ambient air, surface water, groundwater or land
contamination within, under, originating from or relating to the Premises.
Acquired Corporation has not, and has not caused to be, manufactured, processed,
distributed, used, treated, stored, disposed of, transported or handled any
Hazardous Material at, on or under the Premises in violation of Environmental
Law.

5.1.15.3 Acquired Corporation has no obligation or
liability imposed or based upon any provision under any foreign, federal, state
or local law, rule, or regulation or common law, or under any code,

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order, decree, judgment or injunction applicable to Acquired Corporation or the
Premises or any notice, or request for information issued, promulgated, approved
or entered thereunder, or under the common law, or any tort, nuisance or
absolute liability theory, relating to public health or safety, worker health or
safety, or pollution, damage to or protection to the environment, including
without limitation, laws relating to emissions, discharges, releases or
threatened releases of Hazardous Material into the environment (including
without limitation, ambient air, surface water, groundwater, land
surface or subsurface), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, generation, disposal, transport or
handling of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes (hereinafter collectively referred to as
"Environmental Laws").

5.1.15.4 Acquired Corporation has not been subject to
any civil, criminal or administrative action, suit, claim, hearing, notice of
violation, investigation, inquiry or proceeding for failure to comply with, or
received notice of any violation or potential liability under the Environmental
Laws in respect of the Premises.

5.1.15.5 The Premises are not (a) listed or to the best
knowledge of Seller proposed for listing on the National Priority List or (b)
listed on the Comprehensive Environmental Response, Compensation, Liability
Information System List ("CERCLIS") promulgated pursuant to CERCLA, 42 U.S.C.
[section] 9601(9), or any comparable list maintained by any foreign, state
or local government authority.

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5.1.15.6 Except as may be disclosed in the Environmental
Report, to the best knowledge of Seller, there are no underground storage tanks
at the Premises.

5.1.16 Tax Proceedings. To the best knowledge of Seller, there
are no proceedings pending regarding the reduction of real estate taxes or
assessments in respect of the Premises.

5.1.17 Utilities. All water, storm and sanitary sewer, gas,
electricity, telephone and other utilities adequately service the Premises,
enter the Premises through lands as to which valid public or private easements
exist that will inure to the benefit of Purchaser and the Premises are
furnished by facilities of public utilities and the cost of installation of
such utilities has been fully paid.

5.1.18 Access. To the best of Seller's knowledge, there are no
federal, state, county, municipal or other governmental plans to change the
highway or road system in the vicinity of the Premises which could materially
restrict or change access from any such highway or road to the Premises or any
pending or threatened condemnation or eminent domain proceedings relating to
or affecting the Premises. All roads bounding the Premises are public roads.

5.1.19 Insurance. Seller has delivered to Purchaser or its
counsel true and correct copies of all insurance policies carried by Seller or
Acquired Corporation for the benefit of Acquired Corporation or relating to
the Premises. All such policies have been fully paid for and are and have at
all times since their commencement date been in full force and effect. Seller
or Acquired Corporation have at all times since the formation of Acquired
Corporation maintained such policies or substantially similar policies in
effect. All requirements or recommendations by any insurer or by any board of

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fire underwriters or similar body in respect of the Premises have been
satisfied.

5.1.20 Work at the Premises. No services, material or work
have been supplied to the Premises for which payment has not been made in
full.

5.1.21 Full Disclosure. To the best knowledge of Seller, none
of the information supplied by Seller herein or in the exhibits hereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein or necessary in order to make the statements
herein, in light of the circumstances under which they are made, not
misleading.

5.2 Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as of the date hereof and as of the
Closing Date as follows:

5.2.1 Organization; Power and Authority. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.

5.2.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action required to be taken on the
part of Purchaser. This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes the valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except to the extent that
such enforceability (a) may be limited by bankruptcy, insolvency, or other
similar

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laws relating to creditors' rights generally, and (b) is subject to general
principles of equity. The execution, delivery and performance by Purchaser of
this Agreement and the consummation by Purchaser of the transactions
contemplated hereby will not, with or without the giving of notice or the
lapse of time, or both, (i) violate any provision of any law, rule or
regulation to which Purchaser is subject; (ii) violate any order, judgment or
decree applicable to Purchaser; or (iii) conflict with or result in a breach
of or a default under any term or condition of Purchaser's Certificate of
Incorporation or By-Laws or any agreement or other instrument to which
Purchaser is a party or by which it or its assets may be bound, except in each
case, for violations, conflicts, breaches or defaults which in the aggregate
would not materially hinder or impair the consummation of the transactions
contemplated hereby.

5.3 Survival. It shall be a condition to each party's
obligation to close hereunder that the representations and warranties of the
parties made in this Article 5 and the factual matters represented to Seller's
knowledge shall be true and correct as of the Closing Date. The
representations and warranties of the parties made in this Article 5 shall
survive the Closing.

6. Further Assurances. At any time and from time to time after
the Closing Date, each of the parties hereto shall, at the request of any of
the others, execute and deliver any further instruments or documents and take
all such further action as may be reasonably requested in order to further
consummate the transactions contemplated by this Agreement. This Article 6
shall survive the Closing.

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7. Brokers. Seller and Purchaser warrant and represent to each
other that they dealt with no broker, finder or similar agent or party who or
which might be entitled to a commission or compensation on account of
introducing the parties, the negotiation or execution of this Agreement and/or
the closing of the transaction provided for herein other than Joe Graham,
d/b/a Blue Sky Commercial ("Broker"). Purchaser and Seller hereby respectively
agree to indemnify and hold harmless the other party from and against all
loss, liability, damage and expense (including, without limitation, attorneys'
fees) imposed upon or incurred by the other party by reason of any claim for
commissions or other compensation for bringing about this transaction by any
broker, finder or similar agent or party who claims to have dealt with the
indemnifying party in connection with this transaction other than Broker.
Seller agrees to pay Broker any commissions due Broker in connection with this
transaction pursuant to a separate agreement between Seller and Broker. The
provisions of this Article shall survive the Closing or any termination of
this Agreement.

8. Indemnification.

8.1 Subject to the further provisions of this Article, Seller
shall protect, defend, hold harmless and indemnify Purchaser, its officers,
directors, shareholders, employees, agents and affiliates, and their
respective successors and assigns, from, against and in respect of any and all
losses, liabilities, deficiencies, penalties, fines, costs, damages and
expenses whatsoever (including without limitation, reasonable professional
fees and costs of investigation, litigation, settlement, and judgment and
interest) ("Losses") that may be suffered or incurred by any of them arising
from or by reason of (i) any Retained Liability; (ii) the breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement or in any document

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<PAGE>

or other writing delivered pursuant to this Agreement; and (iv) any and all
actions, suits, proceedings, claims, demands, assessments, judgments, costs
and expenses (including without limitation, interest, penalties, reasonable
legal fees and accounting fees) incident to the foregoing and the enforcement
of the provisions of this Section 8.1.

8.2 Subject to the further provisions of this Article,
Purchaser shall protect, defend, hold harmless and indemnify each Seller, and
their respective partners, employees and agents, and its successors and
assigns from, against and in respect of any and all Losses that may be
suffered or incurred by any of them arising from or by reason of (i) the
breach of any representation, warranty, covenant or agreement of Purchaser
contained in this Agreement or in any document or other writing delivered
pursuant to this Agreement; and (ii) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses (including without
limitation, interest, penalties, reasonable legal fees and accounting fees)
incident to the foregoing and the enforcement of the provisions of this
Section 8.2.

8.3 Whenever a party hereto (such party and each of its
affiliates which is entitled to indemnification pursuant to any provision of
this Agreement, an "Indemnified Party") shall learn after the Closing of a
claim that, if allowed (whether voluntarily or by judicial or quasi-judicial
tribunal or agency), would give rise to an obligation of another party (the
"Indemnifying Party") to indemnify the Indemnified Party under any provision
of this Agreement, before paying the same or agreeing thereto, the Indemnified
Party shall promptly notify the Indemnifying Party in writing of all such
facts within the Indemnified Party's knowledge with respect to such claim and
the amount thereof (a "Notice of Claim"). If, prior to the expiration of
fifteen (15) days from the mailing of a Notice of Claim, the Indemnifying
Party shall request, in

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<PAGE>

writing, that such claim not be paid, the Indemnified Party shall not pay the
same, provided the Indemnifying Party proceeds promptly, at its or their own
expense (including employment of counsel reasonably satisfactory to the
Indemnified Party), to settle, compromise or litigate, in good faith, such
claim. After notice from the Indemnifying Party requesting the Indemnified
Party not to pay such claim and the Indemnifying Party's assumption of the
defense of such claim at its or their expense, the Indemnifying Party shall
not be liable to the Indemnified Party for any legal or other expense
subsequently incurred by the Indemnified Party in connection with the defense
thereof. However, the Indemnified Party shall have the right to participate at
its expense and with counsel of its choice in such settlement, compromise or
litigation. The Indemnified Party shall not be required to refrain from paying
any claim which has matured by a court judgment or decree, unless an appeal is
duly taken therefrom and execution thereof has been stayed, nor shall the
Indemnified Party be required to refrain from paying any claim where the delay
in paying such claim would result in the foreclosure of a lien upon any of the
property or assets then held by the Indemnified Party. The failure to provide
a timely Notice of Claim as provided in this Section 14.3 shall not excuse the
Indemnifying Party from its or their continuing obligations hereunder;
however, the Indemnified Party's claim shall be reduced by any damages to the
Indemnifying Party resulting from the Indemnified Party's delay or failure to
provide a Notice of Claim as provided in this Section 14.3.

8.4 For purposes of this Article, any assertion of fact and/or
law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to this Agreement or make
operational an indemnification obligation hereunder, shall, on the date that
such assertion is made, immediately invoke the Indemnifying Party's obligation
to protect,

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<PAGE>

defend, hold harmless and indemnify the Indemnified Party pursuant to this
Article.

9. Release by Stockholders. Each Seller fully and unconditionally
releases and discharges all claims and causes of action which
he or his heirs, personal representatives, successors, or assigns ever had,
now have, or hereafter may have against Purchaser, Acquired Corporation and,
when acting as such, their respective officers, directors, employees, counsel,
agents, and stockholders, in each case past, present, or as they may exist at
any time after the date of this Agreement, and each person, if any, who
controls, controlled, or will control any of them within the meaning of
Section 15 of the Securities Act, except claims and causes of action arising
out of, based upon, or in connection with this Agreement.

10. Name of Acquired Corporation. Purchaser agrees to change
the name of Acquired Corporation promptly after the Closing Date and further
agrees not to use any of the names"K.G. Golf, Inc.", "Ken Gibbons Golf and
Learning Center" or "Ken Gibbons" in the operation of the business of Acquired
Corporation.

11. Tax Election. Seller and Purchaser hereby agree to make an
election under Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended, to treat, for tax purposes, the stock sale contemplated hereby as a
liquidation of Acquired Corporation. Purchaser shall indemnify and hold
harmless Seller from and against any additional Taxes and reasonable expenses
(including accounting and legal fees and expenses) payable by Seller solely as
a result of having made such election. The parties shall cooperate in filing
any and all forms necessary in connection with said election on a timely basis
and in calculating any such additional Taxes. The provisions of this Article
shall survive the Closing.

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<PAGE>

12. Notices.

12.1 All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to
give to the other hereunder shall be in writing and shall be delivered by
hand, overnight express carrier, or sent by registered or certified mail,
return receipt requested, postage prepaid, in either event, addressed to the
parties at their respective addresses first above set forth. A copy of any
Notice given by Seller to Purchaser shall simultaneously be given in either
manner provided above to Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551
Fifth Avenue, New York, New York 10176, Attention: Alan Schacter, Esq. A copy
of any Notice given by Purchaser to Seller shall simultaneously be given in
either manner provided above to Parrish, Fryman & Marcum, L.P.A., 704 First
National Bank Building, PO Box 747, Hamilton, Ohio 45012-0747, Attention: Lee
H. Parrish, Esq. Notices given in the manner aforesaid shall be deemed to have
been given three (3) business days after the day so mailed, the day after
delivery to any overnight express carrier and on the day so delivered by hand.
Either party shall have the right to change its address(es) for the receipt of
Notices by giving Notice to the other party in either manner aforesaid. Any
Notice required or permitted to be given by either party may be given by that
party's attorney.

13. Miscellaneous.

13.1 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns. The agreements,
obligations, representations and warranties of "Seller" hereunder shall be
deemed to be the joint and several agreements, obligations, representations
and warranties of each of the parties comprising Seller hereunder.

13.2 This Agreement shall be governed by, interpreted under and
construed and enforced in accordance with, the laws of the State of New York.

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<PAGE>

13.3 The captions or article headings in this Agreement are
for convenience only and do not constitute part of this Agreement.

13.4 This Agreement has been fully negotiated by the parties
and rules of construction construing ambiguities against the party responsible
for drafting agreements shall not apply.

13.5 It is agreed that, except where otherwise expressly
provided in particular Articles or Sections of this Agreement, none of the
provisions of this Agreement shall survive the Closing.

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<PAGE>

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.

/s/ JOSEPH E. WOLF
------------------------------
JOSEPH E. WOLF

/s/ KENNETH R. GIBBONS
------------------------------
KENNETH R. GIBBONS

/s/ RICHARD JOHNSON
------------------------------
RICHARD JOHNSON

K.G. GOLF, INC.

By: /s/ KENNETH R. GIBBONS
_________________________
Name: Kenneth R. Gibbons
Title: President

FAMILY GOLF CENTERS, INC.

By: /s/ ROBERT KRAUSE
_________________________
Name: Robert Krause
Title: Vice President

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<PAGE>

INDEX OF EXHIBITS AND SCHEDULES

EXHIBIT A THE LEASE (not included)
EXHIBIT B PERSONAL PROPERTY (not included)
EXHIBIT C CONTRACTS (not included)

ASSIGNMENT AND ASSUMPTION OF LEASE

ASSIGNMENT AND ASSUMPTION OF LEASE, made as of the 7th day of
June, 1996 (this "Agreement"), by and between TREE COURT GOLF & RECREATIONAL
COMPLEX, INC., a Missouri corporation having an address at 3717 Tree Court
Industrial Boulevard, St. Louis, Missouri 63122 ("Assignor"), and ST. LOUIS
FAMILY GOLF CENTERS, INC., a Delaware corporation having an address at 225
Broadhollow Road, Suite 106E, Melville, New York 11747 ("Assignee").

W I T N E S S E T H :

WHEREAS, by Commercial Lease, dated November 15, 1991, as
amended by Addendum to Leasehold dated November 19, 1991 and Addendum No. Two
to Lease Agreement dated March 7, 1996 (the "Lease"), by and between Marshall
Road Partnership, as landlord ("Landlord") and Assignor, as tenant, Assignor
leased approximately 41.83 acres of land located in St. Louis County, Missouri
as more particularly described in the Lease (the "Premises"); and

WHEREAS, Assignor desires to assign to Assignee its entire
interest as tenant under the Lease and Assignee desires to accept such
assignment and assume Assignor's obligations under the Lease on the terms and
conditions hereinafter set forth.

1. Assignment and Assumption. Effective as of June 1, 1996 (the
"Effective Date") Assignor assigns, sets over and transfers to Assignee all
right, title and interest of Assignor in and to the Premises and the Lease,
and Assignee assumes and agrees to perform any and all of the obligations to
be performed by the tenant under the Lease (as if Assignee executed the Lease
originally as tenant thereunder) accruing from and after the Effective Date.
Assignee further agrees to be bound by and fully responsible for all of the
covenants, agreements, terms, provisions, and conditions of Assignor or tenant
under the Lease to be performed by Assignor from and after the Effective Date.
Assignee agrees that the obligations assumed hereunder and agreements
contained herein shall benefit Landlord and its successors and assigns as well
as Assignor. Upon the full execution and delivery of this Agreement, Assignor
shall deliver possession of the Premises to Assignee, broom clean and free of
all tenancies or rights of possession.

2. Bill of Sale. Assignor does hereby sell, assign, transfer
and convey to Assignee, and Assignee does hereby purchase and acquire from
Assignor, all of Assignor's right, title and interest in and to the following
property (collectively, the "Property"):

2.1 all furnishings, fixtures, machinery, equipment, vehicles
and personalty attached or appurtenant to or used in connection with the
Premises that are owned by Assignor, and all inventories, supplies, sales,
marketing and instructional materials of every kind and description relating
to the business conducted at the Premises (the "Business"), wherever located,
including without limitation, the items described on Exhibit B attached hereto
and made a part hereof (the "Personal Property");

<PAGE>

2.2 the files, books, notices and other correspondence from
any governmental agencies, and other records used or employed by Assignor or
its affiliates in connection with the ownership and/or operation of the
Premises (collectively, the "Records");

2.3 any consents, authorizations, variances, waivers,
licenses, certificates, permits and approvals held by or granted to Assignor
in connection with the ownership of the Premises (collectively, the
"Permits");

2.4 the contracts, leases and other agreements of or relating
to the operation of the Business described on Exhibit C attached hereto and
made a part hereof (the "Contracts");

2.5 any manufacturers' and vendors' warranties and
guarantees,
except to the extent the same relate solely to any Retained Assets or Retained
Liabilities (as hereinafter defined) (the "Claims"); and

2.6 any other properties and assets of every kind and nature,
real or personal, tangible or intangible, relating in any way whatsoever to
the Premises or the Business, except to the extent the same relate solely to
the Retained Assets or Retained Liabilities.

3. Assets to be Retained by Assignor. Anything herein to the
contrary notwithstanding, Assignor shall not sell, and Assignee shall not
acquire, the following assets of Assignor (the "Retained Assets"):

3.1 any rights of Assignor with respect to insurance policies
owned by Assignor or for which Assignor is the named insured;

3.2 all cash, funds in bank accounts and cash equivalents
existing as of the the date hereof; and

3.3 any patents, trademarks, trademark registrations,
copyrights, copyright registrations, trade names and all registrations thereof
and all applications for any of the foregoing, whether issued or pending, if
any, and all goodwill associated with any of the foregoing (the "Intangible
Assets").

4. Assumption of Certain Liabilities. Assignee shall assume
and agree to pay and discharge when due all liabilities and obligations of
Assignor under the Lease and the Contracts to the extent the same arise from
and after the date hereof (the "Assumed Liabilities"). Assignor shall retain,
and Assignee shall not assume, perform, discharge or pay, and shall not be
responsible for, any and all liabilities or obligations of any nature
whatsoever in connection with or relating to the Premises or the Property,
Assignor or the Business or any predecessor owner of the Lease, the Property
or the Business other than the Assumed Liabilities (collectively, the
"Retained Liabilities").

5. Consideration.

5.1 In consideration for the Assignment of the Lease,
Assignee
shall pay to Assignor the sum of One Million Three Hundred Thousand and 00/100
Dollars ($1,300,000.00), subject to adjustment as hereinafter provided,
payable in cash, certified or bank check or wire transfer.

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<PAGE>

5.2 It is agreed that no portion of the consideration paid by
Assignee hereunder shall be allocated toward items of personal property or any
property other than the Lease assigned hereunder.

6. Apportionments.

6.1 The parties hereto agree that (i) rent under the Lease
and all other operating expenses of Assignor relating to the Premises (i.e.,
cost of goods sold, advertising, collections, fees, hired services, insurance,
miscellaneous expenses, postage, repairs and maintenance, supplies, taxes,
utilities, wages and interest on indebtedness, but specifically not including
professional fees and expenses, travel and lodging or depreciation), and (ii)
all income of Assignor, including accounts receivable, shall be apportioned
between Assignor and Assignee as of June 1, 1996 (the "Effective Date") based
on the portion of each such expense or revenue attributable to the period
falling on or before the Effective Date on the one hand, which Assignor shall
bear the responsibility and benefit of, and the portion of each such expense
or revenue attributable to the period falling after the Effective Date, on the
other hand, which Assignee shall bear the responsibility and benefit of (the
"Adjustment"). The net Adjustment will be paid by the party owing the same to
the other in cash or by certified or official bank check or wire transfer. The
expenses and liabilities for which Assignor shall be liable pursuant to this
Section shall be included within the meaning of the term "Retained
Liabilities".

6.2 To the extent that any of the prorations made pursuant to
this Article are based upon estimates of payments to be made and/or expenses
to be incurred by Assignee subsequent to the Effective Date, or either party
discovers any errors in or omissions in respect of the Adjustment, Assignor
and Assignee agree to adjust such prorations promptly upon receipt by Assignor
or Assignee, as the case may be, of such payments or of bills or other
documentation setting forth the actual amount of such expenses.

6.3 Assignor and Assignee shall maintain and make available
to each other any books or records necessary for the adjustment of any item
pursuant to this Article. The provisions of this Article shall survive the
closing of the transactions described herein (the "Closing").

7. Representations and Warranties of Assignor. Assignor hereby
represents and warrants to Assignee as follows:

7.1 Due Authorization and Execution; Effect of Agreement.
This Agreement has been duly and validly executed and delivered by Assignor and
constitutes the valid and binding obligation of Assignor, enforceable in
accordance with its terms. The execution, delivery and performance by Assignor
of this Agreement and the consummation by Assignor of the transactions
contemplated hereby will not, with or without the giving of notice or the
lapse of time, or both, (a) violate any provision of any law, rule or
regulation to which Assignor is subject; (b) violate any order, judgment or
decree applicable to Assignor; or (c) conflict with or result in a breach of
or a default under any term or condition of any agreement or other instrument
to which Assignor is a party or by which it or its assets may be bound, except
in each case, for violations, conflicts, breaches or defaults which in the
aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.

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<PAGE>

7.2 Consents. No consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory authority or any
third party is required in connection with the execution, delivery and
performance by Assignor of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been obtained.

7.3 Compliance with Applicable Laws. Assignor is not engaging
in any activity or omitting to take any action as a result of which Assignor
is in violation of any law, rule, regulation, ordinance, statute, order,
injunction or decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to the Premises or the Business, and
neither the execution and delivery by Assignor of this Agreement or of any of
the other agreements and instruments to be executed and delivered by it
pursuant hereto, the performance by Assignor of its obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby will result in any such violation. Assignor is in compliance with all
material requirements imposed in writing by any insurance carrier of Assignor
to the extent such carrier is an insurer or indemnitor of the Premises. The
Premises are not subject to any notice of violation of law, municipal
ordinance, orders or requirements issued by any building department or other
governmental agency or subdivision having jurisdiction.

7.4 Permits. All Permits required by any federal, state, or
local law, rule or regulation and necessary for the operation of the Premises
and the Business as currently being conducted have been obtained and are
currently in effect. No registrations, filings, applications, notices,
transfers, consents, approvals, orders, qualifications, waivers or other
actions of any kind are required by virtue of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby (a)
to avoid the loss of any Permit or the violation of any law, regulation, order
or other requirement of law, or (b) to enable Assignee to continue the
operation of the Premises as presently conducted after the Closing. The
current use and occupation of any portion of the Premises does not violate any
of, and, where applicable, is in material compliance with, the Permits, any
applicable deed restrictions or other covenants, restrictions or agreements
including without limitation, any of the Permitted Exceptions, site plan
approvals, zoning or subdivision regulations or urban redevelopment plans
applicable to the Premises.

7.5 The Lease. Attached hereto as Exhibit A is a true and
correct copy of the Lease. The Lease is in full force and effect, has not been
modified or amended in any way except as stated above and neither Landlord nor
Assignor is in default, or sent or received any notice of default, in respect
of the Lease. No event has occurred or circumstance exists which, with the
giving of notice or the passage of time, or both, would constitute a default
under the Lease. Neither Assignor nor Landlord has exercised any right or
option, or stated its intent, to terminate or cancel the Lease. Assignor has
not assigned, transferred or conveyed the Lease or any interest therein, or
granted any right or option with respect thereto, to any party other than
Assignee. The initial term of the Lease will expire on February 28, 1997.
There is no security deposit being held under the Lease.

7.6 Title to the Lease and Property. The Lease and the
Property are free and clear of any and all liens, charges, encumbrances,

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mortgages, pledges, security interests, easements, agreements and other
interests and adverse claims (collectively, "Encumbrances"), other than the
matters set forth in Exhibit C attached hereto and made a part hereof (the
"Permitted Exceptions").

7.7 Contracts. Except for the Lease, Assignor is not a party
to any leases, contracts, orders or agreements relating to the Premises, the
Property or the Business (written or otherwise).

7.8 Condition of the Improvements. There are no material
structural or mechanical defects in the Improvements, and there are no leaks
in any roof on any Improvement.

7.9 Condition of Personal Property. The Personal Property is
in good operating condition and repair, ordinary wear and tear excepted, and
is adequate, suitable and sufficient to meet the needs of and to operate the
Premises and the Property as currently conducted.

7.10 Environmental Matters.

7.10.1 As used in this Agreement "Hazardous Material"
shall mean: (i) any "hazardous substance" as now defined pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. ss. 9601(33); (ii) any "pollutant or contaminant" as
defined in 42 U.S.C. ss. 9601(33); (iii) any material now defined as
"hazardous waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum,
including crude oil and any fraction thereof; (v) natural or synthetic gas
usable for fuel; (vi) any "hazardous chemical" as defined pursuant to 29
C.F.R. Part 1910; (vii) any asbestos, asbestos containing material,
polychlorinated biphenyl ("PCB"), or isomer of dioxin, or any material or
thing containing or composed of such substance or substances; and (viii) any
other pollutant, contaminant, chemical, or industrial or hazardous, toxic or
dangerous waste, substance or material, defined or regulated as such in (or
for purposes of any Environmental Law (as hereinafter defined) and any other
toxic, reactive or flammable chemicals.

7.10.2 To the knowledge, information and belief of
Assignor, there is no Hazardous Material at, under or on the Premises and
there is no ambient air, surface water, groundwater or land contamination
within, under, originating from or relating to the Premises. Assignor has not,
and has not caused to be, manufactured, processed, distributed, used, treated,
stored, disposed of, transported or handled any Hazardous Material at, on or
under the Premises.

7.10.3 Assignor has no obligation or liability imposed
or based upon any provision under any foreign, federal, state or local law,
rule, or regulation or common law, or under any code, order, decree, judgment
or injunction applicable to Assignor or the Premises or any notice, or request
for information issued, promulgated, approved or entered thereunder, or under
the common law, or any tort, nuisance or absolute liability theory, relating
to public health or safety, worker health or safety, or pollution, damage to
or protection to the environment, including without limitation, laws relating
to emissions, discharges, releases or threatened releases of Hazardous
Material into the environment (including without limitation, ambient air,
surface water, groundwater, land surface or subsurface), or otherwise relating
to the

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<PAGE>

manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes (hereinafter collectively
referred to as "Environmental Laws").

7.10.4 Assignor has not been subject to any civil,
criminal or administrative action, suit, claim, hearing, notice of violation,
investigation, inquiry or proceeding for failure to comply with, or received
notice of any violation or potential liability under the Environmental Laws in
respect of the Premises.

7.10.5 The Premises are not (a) listed or proposed for
listing on the National Priority List or (b) listed on the Comprehensive
Environmental Response, Compensation, Liability Information System List
("CERCLIS") promulgated pursuant to CERCLA, 42 U.S.C. ss. 9601(9), or any
comparable list maintained by any foreign, state or local government authority.

7.10.6 To the knowledge, information and belief of
Assignor, there are no underground storage tanks at the Premises and Assignor
further warrants and represents that any prior use and operation of
underground storage tanks has been in compliance with all Environmental Laws.

7.11 Tax Proceedings. There are no proceedings pending
regarding the reduction of real estate taxes or assessments in respect of the
Premises, except as otherwise set forth in Article VI of Addendum No. Two of
the Lease.

7.12 Utilities. All water, storm and sanitary sewer, gas,
electricity, telephone and other utilities adequately service the Premises,
enter the Premises through lands as to which valid public or private easements
exist that will inure to the benefit of Assignee and the Premises are
furnished by facilities of public utilities and the cost of installation of
such utilities has been fully paid.

7.13 Access. To the best of Assignor's knowledge, there are
no federal, state, county, municipal or other governmental plans to change the
highway or road system in the vicinity of the Premises which could materially
restrict or change access from any such highway or road to the Premises except
as provided in Section 4 of the Lease, or any pending or threatened
condemnation or eminent domain proceedings relating to or affecting the
Premises.

7.14 Insurance Requirements. All requirements or
recommendations by any insurer or by any board of fire underwriters or similar
body in respect of the Premises have been satisfied.

7.15 Litigation. There is no action or proceeding (zoning or
otherwise) or governmental investigation pending, or, to the best of
Assignor's knowledge, threatened against, or relating to, Assignor (insofar as
it relates to the Premises or the Business), the Premises, the Business or the
transactions contemplated by this Agreement, nor is there any basis for any
such action, proceeding or investigation.

7.16 Assessments. There are no special or other assessments
for public improvements or otherwise now affecting the Premises nor does
Assignor

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<PAGE>

know of (a) any pending or threatened special assessments affecting the
Premises or (b) any contemplated improvements affecting the Premises that may
result in special assessments affecting the Premises.

7.17 Employee Agreements. There are no union or employment
contracts or agreements (written or oral) involving employees of Assignor or
its affiliates affecting the Premises or the Business which will survive the
Closing. All employees of Assignor will have been terminated as of the Closing
Date.

7.18 Work at the Premises. No services, material or work
have been supplied to the Premises for which payment has not been made in full.

7.19 Financial Condition. Assignor has delivered to Assignee
true and correct copies of audited financial statements consisting of balance
sheets and income statements of Assignor as of December 31, 1995. Such balance
sheet presents fairly the financial condition, assets and liabilities of
Assignor as of its date; such statement of income presents fairly the results
of operations of Assignor for the period indicated. The financial statements
referred to in this Section are in accordance with the books and records of
Assignor. Since December 31, 1995: (a) there has at no time been a material
adverse change in the financial condition, results of operations, businesses,
properties, assets, liabilities or future prospects of Assignor, the Premises,
the Property or Business; (b) the Business has been conducted in all respects
only in the ordinary course; and (c) Assignor has not suffered an
extraordinary loss (whether or not covered by insurance) or waived any right
of substantial value.

7.20 Full Disclosure. To the best knowledge of Assignor, none
of the information supplied by Assignor herein or in the exhibits hereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein or necessary in order to make the statements
herein, in light of the circumstances under which they are made, not
misleading.

8. Representations and Warranties of Assignee. Assignee hereby
represents and warrants to Assignor as follows:

8.1 Organization; Power and Authority. Assignee is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.

8.2 Due Authorization and Execution; Effect of Agreement. The
execution, delivery and performance by Assignee of this Agreement and the
consummation by Assignee of the transactions contemplated hereby have been
duly authorized by all necessary corporate action required to be taken on the
part of Assignee. This Agreement has been duly and validly executed and
delivered by Assignee and constitutes the valid and binding obligation of
Assignee, enforceable in accordance with its terms. The execution, delivery
and performance by Assignee of this Agreement and the consummation by Assignee
of the transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, (a) violate any provision of any law,
rule

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<PAGE>

or regulation to which Assignee is subject; (b) violate any order, judgment or
decree applicable to Assignee; or (c) conflict with or result in a breach of
or a default under any term or condition of Assignee's Certificate of
Incorporation or By-Laws or any agreement or other instrument to which
Assignee is a party or by which it or its assets may be bound, except in each
case, for violations, conflicts, breaches or defaults which in the aggregate
would not materially hinder or impair the consummation of the transactions
contemplated hereby.

9. Survival. The representations and warranties of the parties
made in Articles 7 and 8 shall survive the Closing.

10. Further Assurances. At any time and from time to time
after the date hereof, either party shall, at the request of the other party,
execute and deliver any further instruments or documents and take all such
further action as the requesting party may reasonably request in order to
transfer into the name of Assignee the Lease and any and all Property
contemplated to be sold pursuant to this Agreement and to further consummate
the transactions contemplated by this Agreement. This Article shall survive
the Closing.

11. Brokers. Assignor and Assignee warrant and represent to each
other that they dealt with no broker, finder or similar agent or party who or
which might be entitled to a commission or compensation on account of
introducing the parties, the negotiation or execution of this Agreement and/or
the closing of the transaction provided for herein, other than CB Commercial
Real Estate Group, Inc. (the "Broker"). Assignee and Assignor hereby
respectively agree to indemnify and hold harmless the other party from and
against all loss, liability, damage and expense (including, without
limitation, attorneys' fees) imposed upon or incurred by the other party by
reason of any claim for commissions or other compensation for bringing about
this transaction by any broker, finder or similar agent or party other than
the Broker who claims to have dealt with the indemnifying party in connection
with this transaction. Assignor agrees to pay the Broker any commissions due
the Broker in connection with this transaction pursuant to a separate
agreement between Assignor and the Broker. The provisions of this Article
shall survive the Closing or any termination of this Agreement.

12. "As Is". Assignee represents that it has inspected the
Premises and the Property and is familiar with the physical condition thereof,
and that it agrees to accept the Premises and the Property "as is", in its
condition at the date of this Agreement.

13. Costs and Fees. Assignee shall pay the costs and expenses
incurred in connection with the preparation of the audited balance sheet
referred to in Section 7.19 hereof. Documentary stamps for the Deed, deed
transfer or conveyancing taxes, if any, shall be payable by Assignor, and in
no event be payable by Assignee. Assignor shall also pay the expenses incurred
in connection with (a) the examination of title, (b) the issuance of a policy
of title insurance for Assignee, (c) a survey of the Premises and (d) an ASTM
Phase I environmental survey of the Premises. Any other similar costs not
expressly provided for elsewhere in this Agreement shall be divided and borne
in accordance with the usual practices in the jurisdiction where the Premises
are located. The provisions of this Article shall survive the Closing.

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<PAGE>

14. Indemnification.

14.1 Subject to the further provisions of this Article,
Assignor shall protect, defend, hold harmless and indemnify Assignee, its
officers, directors, shareholders, employees, agents and affiliates, and their
respective successors and assigns, from, against and in respect of any and all
losses, liabilities, deficiencies, penalties, fines, costs, damages and
expenses whatsoever (including without limitation, reasonable professional
fees and costs of investigation, litigation, settlement, and judgment and
interest) ("Losses") that may be suffered or incurred by any of them arising
from or by reason of (i) any Retained Liability or other liability or
obligation of Assignor which is not an Assumed Liability; (ii) the breach of
any representation, warranty, covenant or agreement of Assignor contained in
this Agreement or in any document or other writing delivered pursuant to this
Agreement; and (iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to
the foregoing and the enforcement of the provisions of this Section 11.1.

14.2 Subject to the further provisions of this Article,
Assignee shall protect, defend, hold harmless and indemnify Assignor, its
partners, employees and agents, and its successors and assigns from, against
and in respect of any and all Losses that may be suffered or incurred by any
of them arising from or by reason of (i) any of the Assumed Liabilities on and
after the date hereof, (ii) the breach of any representation, warranty,
covenant or agreement of Assignee contained in this Agreement or in any
document or other writing delivered pursuant to this Agreement; and (iii) any
and all actions, suits, proceedings, claims, demands, assessments, judgments,
costs and expenses (including without limitation, interest, penalties,
reasonable legal fees and accounting fees) incident to the foregoing and the
enforcement of the provisions of this Section 11.2.

14.3 Whenever a party hereto (such party and each of its
affiliates which is entitled to indemnification pursuant to any provision of
this Agreement, an "Indemnified Party") shall learn after the Closing of a
claim that, if allowed (whether voluntarily or by judicial or quasi-judicial
tribunal or agency), would give rise to an obligation of another party (the
"Indemnifying Party") to indemnify the Indemnified Party under any provision
of this Agreement, before paying the same or agreeing thereto, the Indemnified
Party shall promptly notify the Indemnifying Party in writing of all such
facts within the Indemnified Party's knowledge with respect to such claim and
the amount thereof (a "Notice of Claim"). If, prior to the expiration of
fifteen (15) days from the mailing of a Notice of Claim, the Indemnifying
Party shall request, in writing, that such claim not be paid, the Indemnified
Party shall not pay the same, provided the Indemnifying Party proceeds
promptly, at its or their own expense (including employment of counsel
reasonably satisfactory to the Indemnified Party), to settle, compromise or
litigate, in good faith, such claim. After notice from the Indemnifying Party
requesting the Indemnified Party not to pay such claim and the Indemnifying
Party's assumption of the defense of such claim at its or their expense, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
or other expense subsequently incurred by the Indemnified Party in connection
with the defense thereof. However, the Indemnified Party shall have the right
to participate at its expense and with counsel of its choice in such
settlement, compromise or

- 9 -

<PAGE>

litigation. The Indemnified Party shall not be required to refrain from paying
any claim which has matured by a court judgment or decree, unless an appeal is
duly taken therefrom and execution thereof has been stayed, nor shall the
Indemnified Party be required to refrain from paying any claim where the delay
in paying such claim would result in the foreclosure of a lien upon any of the
property or assets then held by the Indemnified Party. The failure to provide
a timely Notice of Claim as provided in this Section 11.3 shall not excuse the
Indemnifying Party from its or their continuing obligations hereunder;
however, the Indemnified Party's claim shall be reduced by any damages to the
Indemnifying Party resulting from the Indemnified Party's delay or failure to
provide a Notice of Claim as provided in this Section 11.3.

14.4 For purposes of this Article, any assertion of fact
and/or law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to this Agreement or make
operational an indemnification obligation hereunder, shall, on the date that
such assertion is made, immediately invoke the Indemnifying Party's obligation
to protect, defend, hold harmless and indemnify the Indemnified Party pursuant
to this Article.

14.5 The obligation of the Assignor under Section 14.1 hereof
shall be satisfied first from the Escrowed Funds (as defined in the Cash
Escrow Agreement, dated as of the date hereof, among Assignor, Assignee and
Continental Stock Transfer & Trust Company), and, if the Escrowed Funds are
inadequate to provide indemnification to Purchaser, then from Assignor
directly.

15. Notices. All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to
give to the other hereunder shall be in writing and shall be delivered by
hand, overnight express carrier, or sent by registered or certified mail,
return receipt requested, postage prepaid, in either event, addressed to the
parties at their respective addresses first above set forth. A copy of any
Notice given by Assignor to Assignee shall simultaneously be given in either
manner provided above to Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551
Fifth Avenue, New York, New York 10176, Attention: Alan Schacter, Esq. A copy
of any Notice given by Assignee to Assignor shall simultaneously be given in
either manner provided above to Klutho, Cody & Kilo, P.C., 5840 Oakland
Avenue, St. Louis, Missouri 63110, Attention: Dan J. Kazanas, Esq. Notices
given in the manner aforesaid shall be deemed to have been given three (3)
business days after the day so mailed, the day after delivery to any overnight
express carrier and on the day so delivered by hand. Either party shall have
the right to change its address(es) for the receipt of Notices by giving
Notice to the other party in either manner aforesaid. Any Notice required or
permitted to be given by either party may be given by that party's attorney.

16. Miscellaneous.

16.1 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns.

16.2 This Agreement shall be governed by, interpreted under
and construed and enforced in accordance with, the laws of the State of
Missouri.

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<PAGE>

16.3 The captions or article headings in this Agreement are
for convenience only and do not constitute part of this Agreement.

16.4 This Agreement has been fully negotiated by the parties
and rules of construction construing ambiguities against the party responsible
for drafting agreements shall not apply.

16.5 It is agreed that, except where otherwise expressly
provided in particular Articles or Sections of this Agreement, none of the
provisions of this Agreement shall survive the Closing.

16.6 This Agreement (including the Exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.

16.7 This Agreement may not be modified, changed,
supplemented or terminated, nor may any obligations hereunder be waived,
except by written instrument signed by the party to be charged or by its agent
duly authorized in writing or as otherwise expressly permitted herein.

16.8 No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding
breach thereof or of any other agreement or provision herein contained. No
extension of the time for performance of any obligations or acts shall be
deemed an extension of the time for performance of any other obligations or
acts.

16.9 This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which taken together shall constitute but one and the
same original.

16.10 Either party may cause this Agreement to be recorded
in the appropriate public office.

IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.

TREE COURT GOLF & RECREATIONAL COMPLEX, INC.

By: /s/ George Tampras
----------------------------
Name: George Tampras
Title: President

ST. LOUIS FAMILY GOLF CENTERS, INC.

By: /s/ Robert Krause
---------------------------
Name: Robert Krause
Title: Vice President

- 11 -

<PAGE>

STATE OF MISSOURI )
)ss.:
COUNTY OF ST. LOUIS )

On the 7th day of June, 1996, personally came George Tampras, to
me known, who being by me duly sworn, did depose and say that he is the
President of TREE COURT GOLF & RECREATIONAL COMPLEX, INC., the corporation
described in and which executed the foregoing instrument, and that he signed
his name thereto by order of the Board of Directors of said corporation.

/s/ Dan J. Kazanas
------------------------------------
Notary Public

STATE OF NEW YORK )
)ss.:
COUNTY OF SUFFOLK )

On the 7th day of June, 1996, before me personally came
Robert Krause, to me known, who being by me duly sworn, did depose and say
that he is the Vice President of ST. LOUIS FAMILY GOLF
CENTERS, INC., the corporation described in and which executed the foregoing
instrument, and that he signed his name thereto by order of the Board of
Directors of said corporation.

/s/ Barbara M. Wright
------------------------------------
Notary Public

<PAGE>

INDEX OF EXHIBITS AND SCHEDULES

EXHIBIT A LEASE (not included)
EXHIBIT B PERSONAL PROPERTY
EXHIBIT C PERMITTED EXCEPTIONS

- 13 -

<PAGE>

EXHIBIT B

PERSONAL PROPERTY

Ford Tractor
Rolls Royce Golf Court
Yamaha Golf Cart
Cushman Truckster Jr.
Top Dresser
Spreader
Greens Mower
Jacobson Turfcat
Flail Deck
Rotary Deck
1985 Ford Pickup Truck
Ball Trailor
2 Lawn Boy Push Mowers
2 Weed Eaters
1 Blower
Ryan Aerator
Slicer - Verticutter
2 Air Circulators
Gas Grill
Ball Washer
Hand Tools

All office and snack shop furniture and equipment, other than (i)meat slicer,
(ii) couch and (iii) warmer.

- 14 -

<PAGE>

EXHIBIT C

* * * *

6. Taxes for the calendar year 1996 and all subsequent years.

7. Building lines and easements recorded in Plat Book 341 page 100.

8. Easement for ingress and egress in a private roadway over a portion of
property described herein to John L. Hubb and wife recorded in Book 2102
page 554.

9. Easement for private roads recorded in Book 2561 page 458, Book 2503 page
454 and Book 4133 page 480.

10. Easement(s) to Union Electric Light and Power Company recorded in Book 1162
page 55.

11. Easement(s) to Union Electric Company recorded in Book 5023 page 374, Book
5365 page 21, Book 6757 page 427, Book 2731 page 389, Book 3300 page 538
and Book 3388 page 496.

12. Easement(s) to Metropolitan St. Louis Sewer District recorded in Book 7610
page 671 and Book 7610 page 763.

13. Storm sewer and storm water discharge easement recorded in Book 7661
page 18.

14. Easement(s) to The Metropolitan St. Louis Sewer District recorded in
Book 8857.

Commitment No. 207408
This commitment is invalid unless the insuring
Provisions and Schedules A and B are attached. MCC/ [GRAPHIC
Schedule B SECTION 2 - Page 1 of 2 Revision _____ OMITTED]

<PAGE>

page 2482.

15. Building lines and easements recorded in Plat Book 341 page 100.

16. Cross Access Easement for ingress and egress as created by plat recorded
in Plat Book 230 page 69.

17. Settlement Agreement recorded in Book 8738 page 261.

18. Conditional Use Permit recorded in Book 9585 page 882.

19. Notice of unrecorded lease by and between Marshall Road Partnership (Lessor)
and Tree Court Golf & Recreational Complex, Inc. (Lessee) dated November 19,
1991, for a term of Five (5) years with renewal periods as setout in deed
recorded in Book 10132 page 1653 and Book 10132 page 1638.

21. Easement Agreement recorded in Book 10756 page 1109.

22. Access Easement recorded in Book 10756 page 1145.

23. Sewer and Storewater Easement recorded in Book 10756 page 1156.

Commitment No. 207408
This commitment is invalid unless the insuring
Provisions and Schedules A and B are attached. MCC\ [GRAPHIC
Schedule B SECTION 2 - Page 2 of 2 Revision __ OMITTED]

PURCHASE AGREEMENT

by and between

W.A.G.N. PARTNERS

Seller,

and

WEST PALM BEACH FAMILY GOLF CENTERS, INC.,

Purchaser

PURCHASE AGREEMENT

PURCHASE AGREEMENT, made as of the 10th day of June 1996
(this "Agreement"), by and between W.A.G.N. PARTNERS, a Florida
general partnership, having an address at 5850 Belvedere Roads,
West Palm Beach, Florida 33413 and each of the General Partners
thereof as named herein (collectively, the "Seller"), and WEST
PALM BEACH FAMILY GOLF CENTERS, INC., a Delaware corporation
having an address at 225 Broadhollow Road, Suite 106E, Melville,
New York 11747 ("Purchaser").

W I T N E S S E T H :

WHEREAS, Seller is (i) the fee simple owner of certain
real property located in the City of West Palm Beach, County of
Palm Beach and State of Florida and more particularly described
on Exhibit A attached hereto and made a part hereof (the "Land")
and (ii) the owner of the buildings and improvements located on
the Land (the "Improvements" and, together with the Land, the
"Premises");
WHEREAS, Seller operates a driving range and related
facilities at the Premises under the name "Golf and Sport Center
of West Palm Beach" (the "Business"); and
WHEREAS, Seller wants to sell the Premises to Purchaser,
and Purchaser wants to purchase the Premises from Seller, on the
terms, and subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS,
the terms and conditions set forth herein, and other good and
valuable consideration, the mutual receipt and sufficiency of

which are hereby acknowledged, the parties hereby agree to the
foregoing and as follows:
1. Agreement to Sell and Purchase.
1.1 Assets to be Purchased by Purchaser. Seller
agrees to sell and convey to Purchaser, and Purchaser agrees to
purchase and acquire from Seller, upon the terms and conditions
hereinafter set forth, all of Seller's right, title and interest
in and to the following property (collectively, the "Property"):
1.1.1 the Land,
1.1.2 the Improvements;
1.1.3 the easements, rights of way,
appurtenances and other rights and benefits of Seller in and to
the Premises, including without limitation, all of Seller's
interest in any air rights, water rights and irrigation rights;
1.1.4 all furnishings, fixtures, machinery,
equipment, vehicles and personalty attached or appurtenant to or
used in connection with the Premises that are owned by Seller,
and all inventories, supplies, sales, marketing and instructional
materials of every kind and description relating to the Business,
wherever located, including without limitation, the items
described on Exhibit B attached hereto and made a part hereof
(the "Personal Property");
1.1.5 the files, books, notices and other
correspondence from any governmental agencies, and other records
used or employed by Seller or its affiliates in connection with
the ownership and/or operation of the Premises and the Business
(collectively, the "Records");

- 2 -

1.1.6 any consents, authorizations,
variances, waivers, licenses, certificates, permits and approvals
held by or granted to Seller in connection with the ownership of
the Premises (collectively, the "Permits");
1.1.7 the contracts, leases, orders and
other agreements of or relating to the Business described on
Exhibit C-1 attached hereto and made a part hereof (the "Assumed
Contracts");
1.1.8 any monetary and non-monetary claims
against third parties including, without limitation, unliquidated
rights under manufacturers' and vendors' warranties and
guarantees, except to the extent the same relate solely to any
Retained Assets or Retained Liabilities (as hereinafter defined)
(the "Claims"); and
1.1.9 any other properties and assets of
every kind and nature, real or personal, tangible or intangible,
relating in any way whatsoever to the Premises or the Business,
except to the extent the same relate solely to the Retained
Assets or Retained Liabilities.
1.2 Assets to be Retained by Seller. Anything
herein to the contrary notwithstanding, Seller shall not sell,
and Purchaser shall not acquire, the following assets of Seller
(the "Retained Assets"):
1.2.1 all trade accounts receivable arising
out of the sale of goods or services prior to the Closing Date
(as hereinafter defined);

- 3 -

1.2.2 all claims of Seller for refunds or
credits with respect to federal, state or local income taxes or
foreign income taxes of whatever nature or taxable period
involved;
1.2.3 any rights of Seller with respect to
insurance policies owned by Seller or for which Seller is the
named insured;
1.2.4 all cash, funds in bank accounts and
cash equivalents existing as of the Closing Date;
1.2.5 all properties and assets that are
the subject of any Contracts (as hereinafter defined) that are
not Assumed Contracts;
1.2.6 any patents, trademarks, trademark
registrations, copyrights, copyright registrations, trade names
and all registrations thereof and all applications for any of the
foregoing, whether issued or pending, if any, and all goodwill
associated with any of the foregoing (the "Intangible Assets");
and
1.2.7 the contracts, leases, orders and
other agreements of or relating to the Business described on
Exhibit C-2 attached hereto and made a part hereof (the "Retained
Contracts").
1.3 Assumption of Certain Liabilities. Purchaser
shall assume and agree to pay and discharge when due the
following liabilities of Seller to the extent the same arise from
and after the Closing Date (the "Assumed Liabilities")

- 4 -

1.3.1 all liabilities and obligations of
Seller under the Assumed Contracts; and
1.3.2 the trade accounts payable arising prior
to the Closing Date and listed on Exhibit D attached hereto and
made a part hereof.
1.4 Liabilities to be Retained by Purchaser.
Seller shall retain, and Purchaser shall not assume, perform,
discharge or pay, and shall not be responsible for, any and all
liabilities or obligations of any nature whatsoever in connection
with or relating to the Property, Seller or the Business or any
predecessor owner of the Property or the Business other than the
Assumed Liabilities (collectively, the "Retained Liabilities").
2. Purchase Price. In consideration for the Property,
Purchaser shall pay to Seller the sum of One Million Seven
Hundred Fifty Thousand and 00/100 Dollars ($1,750,000.00) (the
"Purchase Price"), subject to adjustment as hereinafter provided,
payable in cash, certified or bank check or wire transfer on the
Closing Date.
3. Title; Permitted Exceptions.
3.1 Seller will convey the Property to Purchaser,
free and clear of any and all liens, charges, encumbrances,
mortgages, pledges, security interests, easements, agreements and
other interests and adverse claims (collectively,
"Encumbrances"), other than the matters set forth in Exhibit E
attached hereto and made a part hereof (the "Permitted
Exceptions").

- 5 -

3.2 Purchaser may order an examination of title
from a title company licensed or authorized to issue title
insurance in the State of Florida ("Title Company"), and shall
cause a copy of any title report to be forwarded to Seller's
attorney upon receipt.
3.3 If a search of the title discloses judgments,
bankruptcies or other returns against other persons having names
the same as or similar to that of Seller, Seller will on request
deliver to the Title Company or Purchaser an affidavit showing
that such judgments, bankruptcies or other returns are not
against Seller, in form sufficient to permit deletion of such
exception from the title policy.
4. Apportionments.
4.1 The following items shall be apportioned as of
11:59 PM of the day immediately preceding the Closing Date:
4.1.1 real estate taxes, on the basis of
the fiscal year for which the same are levied, imposed or
assessed, subject to Section 4.3 hereof;
4.1.2 charges for water, sewer rents,
electricity, steam, gas and telephone, which are not metered;
provided that if the consumption of any of such utilities is
measured by meters, at the Closing (as hereinafter defined)
Seller shall furnish a current reading of each meter; and further
provided that if there is not a meter or if the current bill for
any of such utilities has not been issued prior to the Closing
Date, the charges therefore shall be adjusted at the Closing on
the basis of the charges for the prior period for which bills

- 6 -

were issued and shall be further adjusted when the bills for the
current period are issued;
4.1.3 fuel, if any, at Seller's cost
therefore (as determined by Seller's fuel supplier); and
4.1.4 amounts paid or payable under the
Assumed Contracts.
4.2 If the Closing shall occur before the real
estate tax rate is fixed, the apportionment of real estate taxes
shall be based upon the tax rate for the next preceding year
applied to the latest assessed valuation.
4.3 If on the Closing Date the Premises shall be
affected by any special or other assessment for public
improvements or otherwise which is or may become payable by
Seller in annual installments, of which the first installment is
then a charge or lien, or has been paid, then, for the purposes
of this Agreement, all the unpaid installments of such
assessment, including those which are to become due and payable
after the Closing, shall be deemed to be due and payable and to
be liens upon the Premises and shall be paid and discharged by
Seller upon the Closing.
4.4 Seller and Purchaser shall maintain and make
available to each other any books or records necessary for the
adjustment of any item pursuant to part B of this Article. The
provisions of this Section 4.4 shall survive the Closing.
5. The Closing.
5.1 The closing of the transaction provided for in
this Agreement (the "Closing") shall take place on June 10,

- 7 -

1996, or as soon as practical after the conditions set forth in
Section 5.2 hereof have been satisfied or waived by Purchaser if
the same have not been satisfied or waived by Purchaser prior to
such date (the actual date of the Closing being referred to
herein as the "Closing Date"). At the request of Purchaser, the
Closing shall be effected through an escrow with Purchaser's
local counsel or Title Company.
5.2 The obligation of Purchaser to complete the
Closing is subject to the fulfillment on or prior to the Closing
Date of the following conditions, any one or more of which may be
waived by it in its sole discretion:
5.2.1 Purchaser shall have completed and be
satisfied with its due diligence studies of the Property and the
Business. If Purchaser is dissatisfied, in its sole and absolute
discretion, with any aspect of such due diligence studies,
Purchaser shall have the right, at any time prior to the Closing,
to terminate this Agreement by written notice to Seller,
whereupon this Agreement shall have no further force or effect
and the parties shall have no further obligations to or recourse
against each other, except as provided in Article 9 hereof;
5.2.2 the representations and warranties of
Seller contained in this Agreement shall be true and correct on
and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date;
5.2.3 Seller shall have performed and
complied with all covenants and agreements required by this

- 8 -

Agreement to be performed or complied with by Seller on or prior
to the Closing Date;
5.2.4 all consents, Permits and approvals
from any governmental or regulatory body or from parties to any
contracts or other agreements which may be required in connection
with the performance by Seller of this Agreement shall have been
obtained; and
5.2.5 no action, suit or proceeding shall
have been instituted before any court or governmental or
regulatory body to restrain or prevent the carrying out of the
transactions contemplated hereby or to seek damages in connection
with such transactions, or which has or may have any adverse
effect on Purchaser, the Business or the Property.
5.3 The obligation of Seller to complete the
Closing is subject to the fulfillment on or prior to the Closing
Date of the following conditions, any one or more of which may be
waived by it in its sole discretion:
5.3.1 the representations and warranties of
Purchaser contained in this Agreement shall be true and correct
on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date;
5.3.2 Purchaser shall have performed and
complied with all covenants and agreements required by this
Agreement to be performed or complied with by Purchaser on or
prior to the Closing Date;
5.3.3 all consents, Permits and approvals
from any governmental or regulatory body or from parties to any

- 9 -

contracts or other agreements which may be required in connection
with the performance by Purchaser of this Agreement shall have
been obtained; and
5.3.4 no action, suit or proceeding shall
have been instituted before any court or governmental or
regulatory body to restrain or prevent the carrying out of the
transactions contemplated hereby or to seek damages in connection
with such transactions.
5.4 At the Closing, Seller shall deliver or cause
to be delivered to Purchaser physical possession of the Property
(receipt of which may be actual or constructive) and the
following:
5.4.1 a full general warranty deed with
common law covenants (the "Deed"), duly executed and acknowledged
by Seller, in proper statutory form for recording, so as to
convey to Purchaser fee simple title to the Improvements, subject
to and in accordance with the provisions of this Agreement;
5.4.2 a general warranty bill of sale (the
"Bill of Sale") conveying, transferring and selling to Purchaser
good and marketable title in and to all of the Personal Property,
which bill of sale shall contain a warranty that such property is
free and clear of all Encumbrances other than the Permitted
Exceptions, duly executed and acknowledged by Seller;
5.4.3 an assignment and assumption
agreement (the "Contract Assignment and Assumption Agreement")
assigning to Purchaser all of Seller's right, title and interest

- 10 -

in and to the Assumed Contracts, the Permits, the Records and the
Claims, duly executed and acknowledged by Seller;
5.4.4 a settlement statement (the
"Settlement Statement") setting forth the amounts paid by or on
behalf of and/or credited to each of Purchaser and Seller
pursuant to this Agreement;
5.4.5 an owner's affidavit of title
acceptable to the Title Company (the "Title Affidavit");
5.4.6 a certificate or certificates of
occupancy for all Improvements (the "Certificate of Occupancy");
5.4.7 original counterparts of each of the
Assumed Contracts;
5.4.8 a certificate, dated as of the
Closing Date, duly executed and acknowledged by Seller, stating
that the conditions set forth in Sections 5.2.2, 5.2.3 and 5.2.4
hereof have been satisfied;
5.4.9 any transfer tax or other return required
by any applicable governmental authority in connection with the
sale of the Property, duly executed and acknowledged by Seller;
5.4.10 an affidavit (the "FIRPTA Affidavit")
duly executed and acknowledged by Seller pursuant to Section 1445
(b)(2) of the Internal Revenue Code of 1986, as amended, stating
that Seller is not a foreign person within the meaning of such
provision;
5.4.11 keys to all locks relating to the
Property, appropriately labeled;

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5.4.12 copies of Seller's operating statements
consisting of balance sheets and income statements for the period
of January 1, 1996 to the Closing Date (the "Interim Operating
Statement")
5.4.13 all other instruments and documents to
be executed, acknowledged where appropriate and/or delivered by
Seller to Purchaser pursuant to any of the other provisions of
this Agreement; and
5.4.14 such other documents as may be
reasonably required by Purchaser's counsel in connection with
this transaction.
5.5 At the Closing, Purchaser shall deliver to
Seller the following:
5.5.1 the Purchase Price;
5.5.2 the Bill of Sale, duly executed and
acknowledged by Purchaser;
5.5.3 the Contract Assignment and Assumption
Agreement, duly executed and acknowledged by Purchaser;
5.5.4 the Settlement Statement, duly executed
and acknowledged by Purchaser;
5.5.5 a certificate, dated as of the Closing
Date, duly executed and acknowledged by Purchaser, stating that
the conditions set forth in Sections 5.3.1, 5.3.2 and 5.3.3
hereof have been satisfied;
5.5.6 all other instruments and documents to
be executed, acknowledged where appropriate and/or delivered by
Purchaser to Seller; and

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5.5.7 such other documents as may be
reasonably required by Seller's counsel in connection with this
transaction.
6. Representations and Warranties.
6.1 Seller and each of the General Partners
thereof, jointly and severally, represent and warrant to
Purchaser as of the date hereof and as of the Closing Date as
follows:
6.1.1 Organization; Power and Authority.
Seller is a general partnership duly organized, validly existing
and in good standing under the laws of the State of Florida, and
has all requisite power and authority to carry on its business as
it is now being conducted, to execute, deliver and perform its
obligations under this Agreement and to consummate the
transactions contemplated hereby.
6.1.2 Due Authorization and Execution;
Effect of Agreement. The execution, delivery and performance by
Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by all
necessary action required to be taken on the part of Seller.
This Agreement has been duly and validly executed and delivered
by Seller and constitutes the valid and binding obligation of
Seller, enforceable in accordance with its terms, except to the
extent that such enforceability (a) may be limited by bankruptcy,
insolvency, or other similar laws relating to creditors' rights
generally, and (b) is subject to general principles of equity.
The execution, delivery and performance by Seller of this

- 13 -

Agreement and the consummation by Seller of the transactions
contemplated hereby do not and will not, with or without the
giving of notice or the lapse of time, or both, (i) violate any
provision of any law, rule or regulation to which Seller is
subject; (ii) violate any order, judgment or decree applicable to
Seller; or (iii) conflict with, result in a breach of or a
default under, any term or condition of Seller's partnership
agreement or any agreement or other instrument to which Seller is
a party or by which it or its assets may be bound, except in each
case, for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby.
6.1.3 Consents. No consent, approval or
authorization of, exemption by, or filing with, any governmental
or regulatory authority or any third party is required in
connection with the execution, delivery and performance by Seller
of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been,
or by the Closing Date will be, obtained.
6.1.4 Compliance with Applicable Laws.
Seller is not engaging in any activity or omitting to take any
action as a result of which Seller is in violation of any law,
rule, regulation, ordinance, statute, order, injunction or
decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to the Property or the
Business, and neither the execution and delivery by Seller of
this Agreement or of any of the other agreements and instruments

- 14 -

to be executed and delivered by it pursuant hereto, the
performance by Seller of its obligations hereunder or thereunder
or the consummation of the transactions contemplated hereby or
thereby will result in any such violation. Seller is in
compliance with all material requirements imposed in writing by
any insurance carrier of Seller to the extent such carrier is an
insurer or indemnitor of the Property. The Premises are not
subject to any notice of violation of law, municipal ordinance,
orders or requirements issued by any building department or other
governmental agency or subdivision having jurisdiction.
6.1.5 Permits. All Permits required by any
federal, state, or local law, rule or regulation and necessary
for the operation of the Property and the Business as currently
being conducted have been obtained and are currently in effect.
No registrations, filings, applications, notices, transfers,
consents, approvals, orders, qualifications, waivers or other
actions of any kind are required by virtue of the execution and
delivery of this Agreement or the consummation of the
transactions contemplated hereby (i) to avoid the loss of any
Permit or the violation of any law, regulation, order or other
requirement of law, or (ii) to enable Purchaser to continue the
operation of the Property and the Business as presently conducted
after the Closing. The current use and occupation of any portion
of the Property does not violate any of, and, where applicable,
is in material compliance with, the Permits, any applicable deed
restrictions or other covenants, restrictions or agreements
including without limitation, any of the Permitted Exceptions,

- 15 -

site plan approvals, zoning or subdivision regulations or urban
redevelopment plans applicable to the Premises.
6.1.6 Title to Assets. Seller has good and
marketable title to the Property free and clear of all
Encumbrances other than the Permitted Exceptions.
6.1.7 Contracts. Except as set forth on
Exhibits C-1 and C-2, Seller is not a party to any leases,
contracts, orders or agreements relating to the Property or the
Business (written or otherwise) (collectively, "Contracts").
Exhibits C-1 and C-2 sets forth a full and complete description
of the Contracts described therein, and none of such Contracts
have been amended or modified except as reflected on said
Exhibits. Seller is not holding any security deposits under any
of said Contracts. Each of the Assumed Contracts are in full
force and effect and no party under any such Assumed Contract,
including Seller, is in default, or has sent or received notice
of default, in any respect of any such Assumed Contract. Seller
has terminated or cancelled all of the Contracts other than the
Assumed Contracts, including without limitation those described
on Exhibit C-2.
6.1.8 Condition of the Improvements. There
are no material structural or mechanical defects in the
Improvements, and there are no leaks in any roof on any
Improvement.
6.1.9 Condition of Personal Property. The
Personal Property is in good operating condition and repair,
ordinary wear and tear excepted, and is and as of the Closing

- 16 -

Date will be adequate, suitable and sufficient to meet the needs
of and to operate the Business as currently conducted.
6.1.10 Environmental Matters.
6.1.10.1 As used in this Agreement
"Hazardous Material" shall mean: (i) any "hazardous substance"
as now defined pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), 42
U.S.C. Section 9601(33); (ii) any "pollutant or contaminant" as defined
in 42 U.S.C. Section 9601(33); (iii) any material now defined as
"hazardous waste" pursuant to 40 C.F.R. Part 261; (iv) any
petroleum, including crude oil and any fraction thereof; (v)
natural or synthetic gas usable for fuel; (vi) any "hazardous
chemical" as defined pursuant to 29 C.F.R. Part 1910; (vii) any
asbestos, asbestos containing material, polychlorinated biphenyl
("PCB"), or isomer of dioxin, or any material or thing containing
or composed of such substance or substances; and (viii) any other
pollutant, contaminant, chemical, or industrial or hazardous,
toxic or dangerous waste, substance or material, defined or
regulated as such in (or for purposes of any Environmental Law
(as hereinafter defined) and any other toxic, reactive or
flammable chemicals.
6.1.10.2 There is no Hazardous Material
at, under or on the Premises and there is no ambient air, surface
water, groundwater or land contamination within, under,
originating from or relating to the Premises. Seller has not,
and has not caused to be, manufactured, processed, distributed,

- 17 -

used, treated, stored, disposed of, transported or handled any
Hazardous Material at, on or under the Premises.
6.1.10.3 Seller has no obligation or
liability imposed or based upon any provision under any foreign,
federal, state or local law, rule, or regulation or common law,
or under any code, order, decree, judgment or injunction
applicable to Seller or the Property or any notice, or request
for information issued, promulgated, approved or entered
thereunder, or under the common law, or any tort, nuisance or
absolute liability theory, relating to public health or safety,
worker health or safety, or pollution, damage to or protection to
the environment, including without limitation, laws relating to
emissions, discharges, releases or threatened releases of
Hazardous Material into the environment (including without
limitation, ambient air, surface water, groundwater, land surface
or subsurface), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes
(hereinafter collectively referred to as "Environmental Laws").
6.1.10.4 Seller has not been subject to
any civil, criminal or administrative action, suit, claim,
hearing, notice of violation, investigation, inquiry or
proceeding for failure to comply with, or received notice of any
violation or potential liability under the Environmental Laws in
respect of the Premises.

- 18 -

6.1.10.5 The Premises are not (a) listed
or proposed for listing on the National Priority List or (b)
listed on the Comprehensive Environmental Response, Compensation,
Liability Information System List ("CERCLIS") promulgated
pursuant to CERCLA, 42 U.S.C. Section 9601(9), or any comparable list
maintained by any foreign, state or local government authority.
6.1.10.6 There are no underground storage
tanks at the Premises and Seller further warrants and represents
that any prior use and operation of underground storage tanks has
been in compliance with all Environmental Laws.
6.1.11 Tax Proceedings. There are no
proceedings pending regarding the reduction of real estate taxes
or assessments in respect of the Premises. The Seller has filed
with the appropriate governmental agencies all tax returns
(federal, state and local) required to be filed by it, and all
taxes shown to be due and payable on said returns or on any
assessments received by it, and all other taxes (federal, state
and local) due and payable on or before the date of this
Agreement have been determined and paid.
6.1.12 Utilities. All water, storm and
sanitary sewer, gas, electricity, telephone and other utilities
adequately service the Premises, enter the Premises through lands
as to which valid public or private easements exist that will
inure to the benefit of Purchaser and the Premises are furnished
by facilities of public utilities and the cost of installation of
such utilities has been fully paid.

- 19 -

6.1.13 Access. To the best of Seller's
knowledge, there are no federal, state, county, municipal or
other governmental plans to change the highway or road system in
the vicinity of the Premises which could materially restrict or
change access from any such highway or road to the Premises or
any pending or threatened condemnation or eminent domain
proceedings relating to or affecting the Premises. All roads
bounding the Premises are public roads and the Deed is the only
instrument necessary to convey to Purchaser full access to and
the right to use such roads freely as well as to convey all
rights appurtenant to the Premises in such roads.
6.1.14 Insurance Requirements. All
requirements or recommendations by any insurer or by any board of
fire underwriters or similar body in respect of the Property have
been satisfied.
6.1.15 Litigation. There is no action or
proceeding (zoning or otherwise) or governmental investigation
pending, or, to the best of Seller's knowledge, threatened
against, or relating to, Seller (insofar as it relates to the
Premises or the Business), the Premises, the Business or the
transactions contemplated by this Agreement, nor is there any
basis for any such action, proceeding or investigation.
6.1.16 Assessments. There are no special or
other assessments for public improvements or otherwise now
affecting the Premises nor does Seller know of (a) any pending or
threatened special assessments affecting the Premises or (b) any

- 20 -

contemplated improvements affecting the Premises that may result
in special assessments affecting the Premises.
6.1.17 Employee Agreements. There are no
union or employment contracts or agreements (written or oral)
involving employees of Seller or its affiliates affecting the
Property or the Business which will survive the Closing. All
employees of Seller will have been terminated as of the Closing
Date.
6.1.18 Work at the Premises. No services,
material or work have been supplied to the Premises for which
payment has not been made in full.
6.1.19 Financial Condition. Seller has
delivered to Purchaser true and correct copies of the following:
audited financial statements consisting of balance sheets and
income statements of Seller as of December 31, 1994 and December
31, 1995. Each such balance sheet presents fairly the financial
condition, assets and liabilities of Seller as of its date; each
such statement of income presents fairly the results of
operations of Seller for the period indicated. The financial
statements referred to in this Section 6.1.20 are in accordance
with the books and records of Seller. Since December 31, 1995:
(i) there has at no time been a material adverse change in the
financial condition, results of operations, businesses,
properties, assets, liabilities or future prospects of Seller,
the Property or Business; (ii) the Business has been conducted in
all respects only in the ordinary course; and (iii) Seller has
not suffered an extraordinary loss (whether or not covered by

- 21 -

insurance) or waived any right of substantial value. Except as
and only to the extent reflected or reserved against in the
balance sheet of the Seller at December 31, 1995, and except for
obligations incurred in the ordinary course of business since
that date, the Seller has no material debts, liabilities or other
obligations (including, without limitation, obligations for
federal, state or local taxes or other governmental assessments
or penalties, and obligations and advances, directly or
indirectly, to Seller), absolute or contingent, due or to become
due, and Seller does not know or have reasonable grounds for
knowing the basis for any assertion against the Seller of any
liability (including any tax liability) of any nature or in any
amount not reflected on or reserved against in the balance sheet
of the Seller at December 31, 1995.
6.1.20 Full Disclosure. To the best
knowledge of Seller, none of the information supplied by Seller
herein or in the exhibits hereto contains any untrue statement of
a material fact or omits to state a material fact required to be
stated herein or necessary in order to make the statements
herein, in light of the circumstances under which they are made,
not misleading.
6.2 Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to Seller as of the date
hereof and as of the Closing Date as follows:
6.2.1 Organization; Power and Authority.
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has

- 22 -

all requisite power and authority to carry on its business as it
is now being conducted, to execute, deliver and perform its
obligations under this Agreement and to consummate the
transactions contemplated hereby.
6.2.2 Due Authorization and Execution;
Effect of Agreement. The execution, delivery and performance by
Purchaser of this Agreement and the consummation by Purchaser of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action required to be taken on the part
of Purchaser. This Agreement has been duly and validly executed
and delivered by Purchaser and constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its
terms, except to the extent that such enforceability (a) may be
limited by bankruptcy, insolvency, or other similar laws relating
to creditors' rights generally, and (b) is subject to general
principles of equity. The execution, delivery and performance by
Purchaser of this Agreement and the consummation by Purchaser of
the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both, (i) violate
any provision of any law, rule or regulation to which Purchaser
is subject; (ii) violate any order, judgment or decree applicable
to Purchaser; or (iii) conflict with or result in a breach of or
a default under any term or condition of Purchaser's Certificate
of Incorporation or By-Laws or any agreement or other instrument
to which Purchaser is a party or by which it or its assets may be
bound, except in each case, for violations, conflicts, breaches

- 23 -

or defaults which in the aggregate would not materially hinder or
impair the consummation of the transactions contemplated hereby.
6.3 Survival. It shall be a condition to each
party's obligation to close hereunder that the representations
and warranties of the parties made in this Article 6 and the
factual matters represented to Seller's knowledge shall be true
and correct as of the Closing Date. The representations and
warranties of the parties made in this Article 6 shall survive
the Closing.
7. Seller's Covenants. Seller hereby covenants and
agrees with Purchaser as follows:
7.1 Access to Information. From the date hereof
through the Closing Date, Seller shall afford to Purchaser and
Purchaser's accountants, counsel and other representatives full
and complete access, upon reasonable notice and in such a manner
as will not unreasonably interfere with the conduct of the
Business, to the Property.
7.2 Cooperation by Seller. Seller will use its
best efforts to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as
shall be required in order to enable Seller to effect the
transactions contemplated hereby, and will otherwise use its best
efforts to cause the consummation of the transactions
contemplated hereby in accordance with the terms and conditions
hereof.
7.3 Operation of the Premises Prior to Closing.
During the period from the date hereof through the Closing Date,

- 24 -

Seller agrees that (except as expressly contemplated or permitted
by this Agreement or to the extent that Purchaser shall otherwise
consent in writing):
7.3.1 Seller shall operate the Business in
the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and shall use all reasonable
efforts to preserve intact its present business organization,
keep available the services of its present employees and preserve
its relationships with customers, suppliers and others having
business dealings with it to the end that its goodwill and
ongoing business shall not be impaired in any material respect at
the Closing Date;
7.3.2 Seller shall maintain all existing
insurance policies in respect of the Property in full force and
effect;
7.3.3 Seller shall not commit a breach of,
or default under, any Permit or violate any applicable law,
regulation, ordinance, order, injunction or decree or any other
requirement of any governmental body or court, relating to the
Property;
7.3.4 Seller shall maintain its inventory
at ordinary, customary levels, consistent with past practices;
7.3.5 Seller shall maintain the Property in
as good a state of operating condition and repair as they are on
the date of this Agreement, except for ordinary wear and tear;
and

- 25 -

7.3.6 Seller shall not enter into any lease
or occupancy agreement with respect to any of the Property.
7.4 Employees. All employees at the Premises will
be terminated by Seller prior to the Closing.
7.5 Contracts. Seller will terminate all Contracts
other than the Assumed Contracts, such termination to be
effective as of the Closing Date.
7.6 Further Assurances. At any time and from time
to time after the Closing Date, Seller shall, at the request of
Purchaser, execute and deliver any further instruments or
documents and take all such further action as Purchaser may
reasonably request in order to transfer into the name of
Purchaser any and all Property contemplated to be sold pursuant
to this Agreement and to further consummate the transactions
contemplated by this Agreement. This Section 7.6 shall survive
the Closing.
8. [Intentionally Omitted]
9. Brokers. Seller and Purchaser warrant and represent
to each other that they dealt with no broker, finder or similar
agent or party who or which might be entitled to a commission or
compensation on account of introducing the parties, the
negotiation or execution of this Agreement and/or the closing of
the transaction provided for herein. Purchaser and Seller hereby
respectively agree to indemnify and hold harmless the other party
from and against all loss, liability, damage and expense
(including, without limitation, attorneys' fees) imposed upon or
incurred by the other party by reason of any claim for

- 26 -

commissions or other compensation for bringing about this
transaction by any broker, finder or similar agent or party who
claims to have dealt with the indemnifying party in connection
with this transaction. The provisions of this Article 9 shall
survive the Closing or any termination of this Agreement.
10. "As Is". Purchaser represents that it has inspected
the Property and is familiar with the physical condition thereof,
and that it agrees to accept the Property "as is", in its
condition at the date of this Agreement.
11. Condemnation; Fire or Other Casualty. Between the
date hereof and the Closing, the risk of ownership and loss of
the Property shall belong solely to Seller. If, between the date
hereof and the Closing, all or any portion of the Property is
condemned, taken by eminent domain, damaged by fire or other
casualty or by any other cause of nature, Seller shall promptly
give Purchaser notice thereof. After receipt of notice of such
condemnation, taking or damage (from Seller or otherwise),
Purchaser shall have the option either:
11.1 to require Seller to assign, transfer and/or
convey the Property in accordance with the terms and provisions
hereof on the date of the Closing to Purchaser in its damaged
condition upon and subject to all of the other terms and
conditions of this Agreement, including payment of the purchase
price without adjustment on account of such condemnation, taking
or damage, and to assign to Purchaser all of Seller's right,
title and interest in and to any claims Seller may have under the
casualty insurance policies, condemnation awards and/or any

- 27 -

causes of action with respect to such condemnation or taking of
or damage to the Property and to pay to Purchaser by certified or
bank check all payments theretofore made under such insurance
policies plus any deductible amount under its insurance policies,
or by such condemning or taking authorities; Seller shall not
settle any fire, casualty, condemnation or eminent domain claim
without the prior written consent of Purchaser; or
11.2 to terminate this Agreement by giving notice to
Seller, whereupon this Agreement shall be terminated, and neither
party shall have any further rights, claims, liabilities or
obligations to the other except for those rights, claims,
liabilities and obligations specifically surviving the
termination of this Agreement.
12. Default. If Seller shall default in the performance
of its obligations under this Agreement, Purchaser shall be
entitled to all rights and remedies available at law or in
equity, including, without limitation, specific performance. If
Purchaser shall default in the performance of its obligations
under this Agreement, the sole right and remedy of Seller shall
be to terminate this Agreement, and Seller shall not seek or
obtain any money or other judgment against Purchaser or any
disclosed or undisclosed parent, principal, officer or employee
of Purchaser or against the assets or estate of Purchaser.
13. Costs and Fees. Documentary stamps for the Deed,
deed transfer or conveyancing taxes, if any, shall be payable by
Seller, and in no event be payable by Purchaser. Recording fees
for the Deed shall be payable by Purchaser. Purchaser shall also

- 28 -

pay the expenses incurred in connection with (a) the examination
of title, (b) the issuance of a policy of title insurance for
Purchaser, and (c) a survey of the Property, if obtained by
Purchaser. Any other similar costs not expressly provided for
elsewhere in this Agreement shall be divided and borne in
accordance with the usual practices in the jurisdiction where the
Premises are located. It is agreed that no portion of the
consideration paid by Purchaser hereunder shall be allocated
toward items of personal property conveyed hereunder. The
provisions of this Article shall survive the Closing.
14. Indemnification.
14.1 Subject to the further provisions of this
Article, Seller shall protect, defend, hold harmless and
indemnify Purchaser, its officers, directors, shareholders,
employees, agents and affiliates, and their respective successors
and assigns, from, against and in respect of any and all losses,
liabilities, deficiencies, penalties, fines, costs, damages and
expenses whatsoever (including without limitation, reasonable
professional fees and costs of investigation, litigation,
settlement, and judgment and interest) ("Losses") that may be
suffered or incurred by any of them arising from or by reason of
(i) any Retained Liability or other liability or obligation of
Seller which is not an Assumed Liability; (ii) the breach of any
representation, warranty, covenant or agreement of Seller
contained in this Agreement or in any document or other writing
delivered pursuant to this Agreement; and (iii) any and all
actions, suits, proceedings, claims, demands, assessments,

- 29 -

judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees)
incident to the foregoing and the enforcement of the provisions
of this Section 14.1.
14.2 Subject to the further provisions of this
Article, Purchaser shall protect, defend, hold harmless and
indemnify Seller, its partners, employees and agents, and its
successors and assigns from, against and in respect of any and
all Losses that may be suffered or incurred by any of them
arising from or by reason of (i) any of the Assumed Liabilities
on and after the Closing Date, (ii) the breach of any
representation, warranty, covenant or agreement of Purchaser
contained in this Agreement or in any document or other writing
delivered pursuant to this Agreement; and (iii) any and all
actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees)
incident to the foregoing and the enforcement of the provisions
of this Section 14.2.
14.3 Whenever a party hereto (such party and each of
its affiliates which is entitled to indemnification pursuant to
any provision of this Agreement, an "Indemnified Party") shall
learn after the Closing of a claim that, if allowed (whether
voluntarily or by judicial or quasi-judicial tribunal or agency),
would give rise to an obligation of another party (the
"Indemnifying Party") to indemnify the Indemnified Party under
any provision of this Agreement, before paying the same or

- 30 -

agreeing thereto, the Indemnified Party shall promptly notify the
Indemnifying Party in writing of all such facts within the
Indemnified Party's knowledge with respect to such claim and the
amount thereof (a "Notice of Claim"). If, prior to the
expiration of fifteen (15) days from the mailing of a Notice of
Claim, the Indemnifying Party shall request, in writing, that
such claim not be paid, the Indemnified Party shall not pay the
same, provided the Indemnifying Party proceeds promptly, at its
or their own expense (including employment of counsel reasonably
satisfactory to the Indemnified Party), to settle, compromise or
litigate, in good faith, such claim. After notice from the
Indemnifying Party requesting the Indemnified Party not to pay
such claim and the Indemnifying Party's assumption of the defense
of such claim at its or their expense, the Indemnifying Party
shall not be liable to the Indemnified Party for any legal or
other expense subsequently incurred by the Indemnified Party in
connection with the defense thereof. However, the Indemnified
Party shall have the right to participate at its expense and with
counsel of its choice in such settlement, compromise or
litigation. The Indemnified Party shall not be required to
refrain from paying any claim which has matured by a court
judgment or decree, unless an appeal is duly taken therefrom and
execution thereof has been stayed, nor shall the Indemnified
Party be required to refrain from paying any claim where the
delay in paying such claim would result in the foreclosure of a
lien upon any of the property or assets then held by the
Indemnified Party. The failure to provide a timely Notice of

- 31 -

Claim as provided in this Section 14.3 shall not excuse the
Indemnifying Party from its or their continuing obligations
hereunder; however, the Indemnified Party's claim shall be
reduced by any damages to the Indemnifying Party resulting from
the Indemnified Party's delay or failure to provide a Notice of
Claim as provided in this Section 14.3.
14.4 For purposes of this Article, any assertion of
fact and/or law by a third party that, if true, would constitute
a breach of a representation or warranty made by a party to this
Agreement or make operational an indemnification obligation
hereunder, shall, on the date that such assertion is made,
immediately invoke the Indemnifying Party's obligation to
protect, defend, hold harmless and indemnify the Indemnified
Party pursuant to this Article.
14.5 The obligation of Seller under Section 14.1
and Purchaser under Section 14.2 shall survive the Closing.
15. Notices.
15.1 All notices, demands, requests, consents or
other communications ("Notices") which either party may desire or
be required to give to the other hereunder shall be in writing
and shall be delivered by hand, overnight express carrier, or
sent by registered or certified mail, return receipt requested,
postage prepaid, in either event, addressed to the parties at
their respective addresses first above set forth. A copy of any
Notice given by Seller to Purchaser shall simultaneously be given
in either manner provided above to Williams, Mullen, Christian &
Dobbins, P.C., 1021 East Cary Street, 16th Floor, Richmond,

- 32 -

Virginia 23219, Attention: John M. Mercer, Esq. A copy of any
Notice given by Purchaser to Seller shall simultaneously be given
in either manner provided above to Moyle, Flanigan, Katz,
Fitzgerald & Sheehan, 625 North Flagler Drive, 9th Floor, West
Palm Beach, Florida 33402, Attention: Martin V. Katz. Notices
given in the manner aforesaid shall be deemed to have been given
three (3) business days after the day so mailed, the day after
delivery to any overnight express carrier and on the day so
delivered by hand. Either party shall have the right to change
its address(es) for the receipt of Notices by giving Notice to
the other party in either manner aforesaid. Any Notice required
or permitted to be given by either party may be given by that
party's attorney.
16. Miscellaneous.
16.1 This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and
assigns.
16.2 This Agreement shall be governed by,
interpreted under and construed and enforced in accordance with,
the laws of the State of Florida.
16.3 The captions or article headings in this
Agreement are for convenience only and do not constitute part of
this Agreement.
16.4 This Agreement has been fully negotiated by the
parties and rules of construction construing ambiguities against
the party responsible for drafting agreements shall not apply.

- 33 -

16.5 It is agreed that, except where otherwise
expressly provided in particular Articles or Sections of this
Agreement, none of the provisions of this Agreement shall survive
the Closing.
16.6 This Agreement (including the Exhibits annexed
hereto) contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior
understandings, if any, with respect thereto.
16.7 This Agreement may not be modified, changed,
supplemented or terminated, nor may any obligations hereunder be
waived, except by written instrument signed by the party to be
charged or by its agent duly authorized in writing or as
otherwise expressly permitted herein.
16.8 No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof or of any other agreement
or provision herein contained. No extension of the time for
performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations or
acts.
16.9 This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall
be deemed an original, but all of which taken together shall
constitute but one and the same original.

[SIGNATURES APPEAR ON NEXT PAGE]

- 34 -

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.

WEST PALM BEACH FAMILY GOLF
CENTERS, INC., a Delaware
corporation

By: /s/ Robert Krause
-----------------------------
Name: Robert Krause
---------------------------
Title: Vice President
--------------------------

W.A.G.N. PARTNERS, a Florida
general partnership

By: PINE VALLEY APARTMENTS, INC.,
a New York corporation, General
Partner

By: /s/ Gary M. Axenferd
-------------------------
Name: Gary M. Axenferd
-----------------------
Title: President
----------------------

/s/ Patrick J. Nolan
---------------------------------
Patrick J. Nolan, General Partner

/s/ Robert Kelley
---------------------------------
Robert Kelley, General Partner

/s/ Norman Golden
---------------------------------
Norman Golden, General Partner

- 35 -

STATE OF NEW YORK

COUNTY OF SUFFOLK, to-wit:

The foregoing instrument was acknowledged before me this 7th
day of June, 1996, by Robert Krause, as Vice President of
West Palm Beach Family Golf Centers, Inc., a Delaware
corporation, on behalf of the corporation.

My commission expires: 1/30/97.

Barbara H. Wright
-----------------------------------
Notary Public

STATE OF FLORIDA

COUNTY OF PALM BEACH, to-wit:

The foregoing instrument was acknowledged before me this 9th
day of June, 1996, by Gary Axenferd, as President
of Pine Valley Apartments, Inc., a New York corporation and a
general partner of W.A.G.N. Partners, a Florida general
partnership, on behalf of the partnership.

My commission expires: ________.

Paul Krasker
-----------------------------------
Notary Public

- 36 -

STATE OF FLORIDA

COUNTY OF PALM BEACH, to-wit:

The foregoing instrument was acknowledged before me this 10th
day of June, 1996, by Patrick J. Nolan, a general partner
of W.A.G.N. Partners, a Florida general partnership, on behalf of
the partnership.

My commission expires: /s/ Paul Krasker
--------------------

Paul Krasker
_______________________
Notary Public

STATE OF _________________________

_______________ OF _______________, to-wit:

The foregoing instrument was acknowledged before me this ___
day of ___________, 19__, by Robert Kelley, a general partner of
W.A.G.N. Partners, a Florida general partnership, on behalf of
the partnership.

My commission expires: ____________________________.

___________________________________
Notary Public

STATE OF FLORIDA

COUNTY OF PALM BEACH, to-wit:

The foregoing instrument was acknowledged before me this 10th
day of June, 1996, by Norman Golden, a general partner of
W.A.G.N. Partners, a Florida general partnership, on behalf of
the partnership.

My commission expires: /s/ Terry J. Passon
----------------------------
Terry J. Passon
----------------------------
Notary Public

- 37 -

INDEX OF EXHIBITS

EXHIBIT A LEGAL DESCRIPTION
EXHIBIT B PERSONAL PROPERTY (not included)
EXHIBIT C-1 ASSUMED CONTRACTS (not included)
EXHIBIT C-2 RETAINED CONTRACTS (not included)
EXHIBIT D ASSUMED LIABILITIES (not included)
EXHIBIT E PERMITTED EXCEPTIONS (not included)

EXHIBIT A

LEGAL DESCRIPTION

A parcel of land with all the improvements thereon and
appurtenances thereunto belonging, lying and being in the
Northwest Quarter of Section 35, Township 43 South, Range 42
East, Palm Beach County, Florida, being more particularly
described as follows:

Beginning at the Northeast corner of Lot 9, Block "A", WOODED
ACRES, as same is recorded in Plat Book 36, page 140, Public
Records of Palm Beach County, Florida, run thence South 00
degrees 02' 51" West along the East line of said Block "A" 587.02
feet; thence South 23 degrees 36' 00" West along the Easterly
line of Block "A" 591.01 feet; thence South along the East line
of Block "A" 381.38 feet; thence North 89 degrees 17' 47" East
along the North line of Lots 37 through 49, Block "A", a distance
of 1035.93 feet to a point in the West line of 4th Addition to
Plat of Lake Belvedere Estates as recorded in Plat Book 27, page
9, Public Records of Palm Beach County; thence North 00 degrees
02' 51" East along the West line of said 4th Addition and along
the West line of the 3rd Addition and 1st Addition to Plat of
Lake Belvedere Estates as recorded in Plat Book 26, page 67 and
Plat Book 26, page 185, respectively, Public Records of Palm
Beach County, 1562.89 feet to a point in a line 20.0 feet (as
measured at right angles) Southerly from and parallel to the
North line of aforesaid Section 35, said line also being the
South right-of-way line of a 20.0 foot platted road right-of-way
as shown on Model Land Company Plat of Subdivision of said
Section 35, as recorded in Plat Book 5, page 77, Public Records
of Palm Beach County; thence South 89 degrees 05' 40" West along
said right-of-way line 800.11 feet to a point in the Northerly
prolongation of the East line of Block "A" of Wooded Acres;
thence South 00 degrees 02' 51" East 53.0 feet to the POINT OF
BEGINNING.

BEING the same real estate conveyed to W.A.G.N. Partners, a
Florida general partnership by instrument recorded in Official
Records Book 6547, Page 1603, of the Public Records of Palm Beach
County, Florida.

EXHIBIT 11.1

COMPUTATION OF EARNINGS PER SHARE
FAMILY GOLF CENTERS, INC.

DECEMBER 31,
-----------------------------------------------------

PRO FORMA

1993 1994 1995 1995
------------ ----------- ------------ ------------
Net income (loss) ............ $ (763,000) $ 488,000 $1,074,000 $ (435,000)
------------ ----------- ------------ ------------
Shares:
Weighted average number of
common shares outstanding
(1) ......................... 3,272,000 3,637,000 5,117,000 5,117,000
Shares to be issued in
connection with acquisitions
of golf facilities .......... 267,000 366,000
Shares assumed sold with
proceeds used for:
Repayment of debt ...........
Shares issuable upon exercise
of dilutive options and
warrants .................... 267,000
Less shares assumed
repurchased ................. (113,000) (113,000)
------------ ----------- ------------ ------------
Pro forma shares ............. 3,272,000 3,637,000 5,271,000 5,637,000
============ =========== ============ ============
Income (loss) per common
share ....................... $(0.23) $0.13 $0.22 $(0.08)
============ =========== ============ ============

[TABLE RESTUBBED FROM ABOVE]

MARCH 31,
--------------------------------------------------------
PRO FORMA AS
PRO FORMA ADJUSTED
------------ -------------
1995 1996 1996 1996
----------- ----------- ------------ -------------
Net income (loss) ............ $ 2,000 $ 69,000 $ (113,000) (33,000)
----------- ----------- ------------ -------------
Shares:
Weighted average number of
common shares outstanding
(1) ......................... 4,938,000 8,367,000 8,367,000 8,367,000
Shares to be issued in
connection with acquisitions
of golf facilities .......... 131,000 131,000
Shares assumed sold with
proceeds used for:
Repayment of debt ........... 198,000
Shares issuable upon exercise
of dilutive options and
warrants .................... 792,000 792,000 792,000
Less shares assumed
repurchased ................. (511,000) (511,000) (511,000)
----------- ----------- ------------ -------------
Pro forma shares ............. 4,938,000 8,648,000 8,779,000 8,977,000
=========== =========== ============ =============
Income (loss) per common
share ....................... $0.00 $0.01 $(0.01) $0.00
=========== =========== ============ =============

</TABLE>

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

(1) In accordance with Securities and Exchange Commission requirements,
common shares, options and warrants issued in Family Golf Centers, Inc.
and certain of its wholly owned subsidiaries during the twelve-month
period prior to the filing of the initial public offering have been
included in the calculation as if they were outstanding for all periods
prior to the offering.

EXHIBIT 21.1

WHOLLY-OWNED SUBSIDIARIES OF
FAMILY GOLF CENTERS, INC.

SUBSIDIARY STATE OF INCORPORATION
- --------------------------------------------- --------------------------
Orient Associates International, Inc. ....... New York
Skydrive Alley Pond Company, Inc. ............ New York
Skydrive Greenburgh Co., Inc. ................ New York
Skycon Construction Co., Inc. ................ New York
Skydrive Willowbrook NJ, Inc. ................ New Jersey
Skydrive Co., Inc. ........................... New York
Pelham Family Golf Centers, Inc. ............. Delaware
Richmond Family Golf Centers, Inc. ........... Delaware
Peachtree Family Golf Centers, Inc. ......... Delaware
Alpharetta Family Golf Centers, Inc. ........ Delaware
Valley View Family Golf Centers, Inc. ....... Delaware
Mesa Family Golf Centers, Inc. ............... Delaware
Flemington Family Golf Centers, Inc. ........ Delaware
Yorktown Family Golf Centers, Inc. ........... Delaware
Virginia Beach Family Golf Centers, Inc. .... Delaware
Indian River Family Golf Centers, Inc. ...... Delaware
K.G. Golf, Inc. .............................. Ohio
Tucson Family Golf Centers, Inc. ............. Delaware
St. Louis Family Golf Centers, Inc. .......... Delaware
West Palm Beach Family Golf Centers, Inc. .... Delaware
The Practice Tee, Inc. ....................... California
TPT El Segundo, Inc. ......................... California
Global/Golf Gavilan .......................... California

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to use in this Registration Statement on Form SB-2 of
our report dated March 15, 1996 relating to the consolidated financial
statements of Family Golf Centers, Inc. and subsidiaries, and to the
reference to our Firm under the caption "Experts" in the Prospectus.

Richard A. Eisner & Company, LLP
New York, New York
June 12, 1996

[LETTERHEAD OF CHARLES W. CAIRNES JR. P.A.]

CONSENT OF INDEPENDENT AUDITORS

I hereby consent to the use in this Registration Statement on Form SB-2
of my report dated June 8, 1996, relating to the financial statements of
Golf & Sports Center of the Palm Beach, Inc. and to the reference to my Firm
under the caption "Experts" in the prospectus.

/s/ Charles W. Cairnes Jr.
- ---------------------------------------------
Charles W. Cairnes Jr. PA CPA

North Palm Beach, FL 33408
June 12, 1996

<PAGE>

[LETTERHEAD OF CHARLES W. CAIRNES JR. P.A.]

CONSENT OF INDEPENDENT AUDITORS

I hereby consent to the use in this Registration Statement on Form SB-2
of my report dated June 8, 1996, relating to the financial statements of
W.A.G.N. Partners and to the reference to my Firm under the caption "Experts"
in the prospectus.

/s/ Charles W. Cairnes Jr.
- ---------------------------------------------
Charles W. Cairnes Jr. PA CPA

North Palm Beach, FL 33408
June 12, 1996

<PAGE>

FORM OF AUDITORS' CONSENT

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form SB-2 of
our report dated June 6, 1996, relating to the financial statements
of Catalina Golf Center and to the reference to our Firm under the caption
"Experts" in the Prospectus.

/s/ Robert Decker, C.P.A.
- ------------------------------
Robert Decker, C.P.A.

Tucson, Arizona
June 12, 1996

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated June 6, 1996, relating to the financial statements of K.G.
Golf, Inc. and to the reference to our Firm under the caption
"Experts" in the Prospectus.

/s/ Goffena & Baker, C.P.A.
- ---------------------------------
Goffena & Baker, C.P.A.

Fairfield, Ohio
June 12, 1996

<PAGE>

[LETTERHEAD OF BDO SEIDMAN, LLP.]

CONSENT OF INDEPENDENT
ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated June 5, 1996, relating to the financial statements of Tree
court Golf & Recreational Complex, Inc. and to the reference to our Firm under
the caption "Experts" in the Prospectus.

/s/ BDO Seidman LLP.

St. Louis Missouri
June 12, 1996

<PAGE>

[LETTERHEAD OF SHANHOLT GLASSMAN HOFFMAN KLEIN & CO.]

CONSENT OF INDEPENDENT
ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated February 7, 1996, relating to the financial statements of
Indian River Golf-o-Rama, Inc. as of December 31, 1995 and 1994, and to the
reference our Firm under the caption "Experts" in the Prospectus.

SHANHOLT GLASSMAN HOFFMAN KLEIN & CO., P.C.

By /s/ Mitchell Waxman

---------------------------
Mitchell Waxman, CPA

New York, NY 10022
June 12, 1996

<PAGE>

[LETTERHEAD ANNE EVANS GORRY, P.C.]

CONSENT OF INDEPENDENT AUDITOR

I hereby consent to the use in this Registration Statement on Form SB-2
of my report dated February 12, 1996, relating to the financial statements of
Owls Creek Golf Center, Inc. and to the reference to my Firm under the
caption "Experts" in the Prospectus.

/s/ Anne Evans Gorry
- -----------------------
Anne Evans Gorry, P.C.
Virginia Becah, Virginia
June 12, 1996

<PAGE>

[LETTERHEAD Ehrenkrantz and Company]

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated February 28, 1996, relating to the financial statements of
Flemington Golf & Sports Center LCC, and to the reference to our Firm under the
caption "Experts" in the Prospectus.

/s/ Ehrenkrantz and Company
----------------------------
Ehrenkrantz and Company

Roseland, New Jersey
June 12, 1996

<PAGE>

[LETTERHEAD MANGINI, TRAEGER & COMPANY, P.C.]

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated April 8, 1996, relating to the financial statements of
202 Golf Associates, Inc. and to the reference to our Firm under the
caption "Experts" in the Prospectus.

/s/ Mangini, Traeger & Company, P.C.
- ----------------------------
Mangini, Traeger & Company, P.C.

Armonk, New York
June 12, 1996

<PAGE>

[LETTERHEAD SILVERSTEIN LOFTUS & ROSS, CPAs, P.C.]

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated July 12,1995, relating to the financial statements of
Hiland Park Golf Course and to the reference to our Firm under the
caption "Experts" in the Prospectus.

/s/ SILVERSTEIN, LOFTUS & ROSS, CPAs, P.C.
- -----------------------------------------
SILVERSTEIN, LOFTUS & ROSS, CPAs, P.C.

Queensbury, New York
June 12, 1996

<PAGE>

[LETTERHEAD BRADSHAW, GORDON & CLINKSCALES, P.A.]

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated April 25, 1995, relating to the financial statements of
Pelham Enterprises, and to the reference to our Firm under the
caption "Experts" in the Prospectus.

/s/ Roger B. Clinkscales
- ----------------------------------------
Bradshaw, Gordon & Clinkscales, P.A.

Greenville, South Carolina
June 12, 1996

<PAGE>

[LETTERHEAD DRUNAGEL, JOHNSON, RUTHERFORD & WILKINS, P.L.C.]

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated August 8, 1995, relating to the financial statements of
RFC Enterprises, Incorporated and to the reference to our Firm under the
caption "Experts" in the Prospectus.

/s/ Drunagel, Johnson, Rutherford & Wilkins, P.L.C.
- ---------------------------------------------------
DRUNAGEL, JOHNSON, RUTHERFORD & WILKINS, P.L.C.

Warrenton, Virginia
June 12, 1996

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the Registration Statement on Form SB-2 of our Reports
dated November 7, 1995, relating to the financial statements of UPPER HEMBREE
PARTNERS, LP and to the reference to my Firm under the caption "Experts" in the
Prospectus.

/s/ Ernest T. Northrup
- -----------------------------------------
Ernest T. Northrup, CPA

Atlanta, GA
June 12, 1996

<PAGE>

[LETTERHEAD ROBERT DEL RIEGO]

CONSENT OF INDEPENDENT AUDITOR

I hereby consent to the use in this Registration Statement of Form SB-2
of my report dated September 14, 1995 relating to the financial statements of
The Practice Tee, Inc., and to the reference to my firm under the caption
"Experts" in the Prospectus.

/s/ Robert Del Riego
- ----------------------------------------
Robert Del Riego
Certified Public Accountant
Manhattan Beach, California
June 12, 1996

<PAGE>

[LETTERHEAD SEWELL & Co., Inc.]

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form SB-2
of our report dated November 2, 1995, relating to the financial statements of
Golf Masters Limited Partnership and Airdome Limited Partnership, and to the
reference to our Firm under the captions "Summary Financial information",
"Selected Financial Data" and "Experts" in the Prospectus.

/s/ Sewell & Co., Inc.
- ---------------------------------------------------

Cleveland, Ohio
June 12, 1996

[LETTERHEAD HOULIHAN LOKEY HOWARD & ZUKIN, INC.]

CONSENT OF HOULIHAN LOKEY HOWARD & ZUKIN, INC.

The Board of Directors
of Family Golf Centers, Inc.

We hereby consent to the reference to our name and our opinion, dated
October 30, 1995 in the Registration Statement of Family Golf Centers, Inc. and
to the inclusion of our opinion, in its entirety as an exhibit to such
Registration Statement.

HOULIHAN LOKEY HOWARD & ZUKIN, INC.

/s/ Robert F. Howard
- ---------------------------------------------------
Robert F. Howard
Senior Managing Director

Dated: June 12, 1996
Los Angeles, California