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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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(Mark One)

|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended June 30, 2004



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------



For the transition period from
 to



Commission file number: 000-27131



LIQUIDGOLF HOLDING CORPORATION

(Exact name of Registrant as specified in its charter)



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|                                                              |  |                        
|------------------------------------------------------------- |  | -----------------------
|Delaware                                                      |  | 88-0381258             
|(State or other Jurisdiction ofIncorporation or Organization) |  | (IRS Employer I.D. No.)



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1017 W. Orange Blossom Trail

Apopka, Florida 32712

(407) 889-7577

(Address and telephone number of principal executive offices)



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Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.



x Yes ̈No



The number of shares of the registrants common stock, par value $0.001 per share, outstanding as of August 10, 2004 was 11,436,232 and
there were 875 stockholders of record.



Transitional Small Business Issuer
Format: ̈YES    x NO



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LIQUIDGOLF HOLDING CORPORATION



FORM 10-QSB



INDEX



|               |  |                                                                                                                    |  |   
|-------------- |  | ------------------------------------------------------------------------------------------------------------------ |  | --
|PART I.        |  | FINANCIAL INFORMATION                                                                                              |  |   
|               |  |                                                                                                                   
|Item 1.        |  | Financial Statements (unaudited)                                                                                   |  |   
|               |  | Consolidated Balance Sheet (unaudited) at June 30, 2004                                                            |  | 3 
|               |  | Consolidated Statements of Operations (unaudited) for the Three Months and Six Months Ended June 30, 2004 and 2003 |  | 4 
|               |  | Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2004 and 2003                  |  | 5 
|               |  | Notes to Consolidated Financial Statements (unaudited)                                                             |  | 7 
|Item 2.        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                              |  | 17
|Item 3.        |  | Controls and Procedures                                                                                            |  | 27
|               |  |                                                                                                                   
|PART II        |  | OTHER INFORMATION                                                                                                  |  |   
|               |  |                                                                                                                   
|Item 1.        |  | Legal Proceedings                                                                                                  |  | 28
|Item 2.        |  | Changes in Securities and Use of Proceeds                                                                          |  | 28
|Item 3.        |  | Defaults Upon Senior Securities                                                                                    |  | 28
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                                                |  | 28
|Item 5.        |  | Other Information                                                                                                  |  | 28
|Item 6.        |  | Exhibits and Reports on Form 8-K                                                                                   |  | 29
|               | 
|SIGNATURE PAGE |  | 30                                                                                                                



EXHIBITS



|             |  |                              
|------------ |  | -----------------------------
|Exhibit 31.1 |  | Dwain Brannon Certifications 
|Exhibit 31.2 |  | Allan Woodlief Certifications
|Exhibit 32.1 |  | Dwain Brannon Certifications 
|Exhibit 32.2 |  | Allan Woodlief Certifications





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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheet



|                                                                                                                          |  |               |             |  
|------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | -
|                                                                                                                          |  | June 30, 2004 |            
|                                                                                                                          |  | (UNAUDITED)   |            
|Assets                                                                                                                    |  |               |             |  
|Current assets:                                                                                                           |  |               |             |  
|Cash and cash equivalents                                                                                                 |  | $             | 233,842     |  
|Investments  certificates of deposit                                                                                     |  |               | 35,000      |  
|Accounts receivable, no allowance deemed necessary                                                                        |  |               | 10,705      |  
|Inventories, net                                                                                                          |  |               | 170,671     |  
|Prepaid expenses                                                                                                          |  |               | 1,141,943   |  
|                                                                                                                          |  |               |             |  
|Total current assets                                                                                                      |  |               | 1,592,161   |  
|Property and equipment, net                                                                                               |  |               | 26,337      |  
|Goodwill                                                                                                                  |  |               | 108,400     |  
|Other assets                                                                                                              |  |               | 25,072      |  
|                                                                                                                          |  |               |             |  
|Total assets                                                                                                              |  | $             | 1,751,970   |  
|                                                                                                                          |  |               |             |  
|Liabilities and Stockholders Equity                                                                                      |  |               |             |  
|Current liabilities:                                                                                                      |  |               |             |  
|Accounts payable                                                                                                          |  | $             | 173,915     |  
|Note payable                                                                                                              |  |               | 600,000     |  
|Other current liabilities                                                                                                 |  |               | 122,765     |  
|                                                                                                                          |  |               |             |  
|Total current liabilities                                                                                                 |  |               | 896,680     |  
|Capital lease obligation, long-term                                                                                       |  |               | 2,932       |  
|                                                                                                                          |  |               |             |  
|Total liabilities                                                                                                         |  |               | 899,612     |  
|Stockholders equity                                                                                                      |  |               |             |  
|Common stock, $0.001 par value, 100,000,000 shares authorized, 10,756,947 shares issued and 10,721,947 shares outstanding |  |               | 10,756      |  
|Additional paid-in capital                                                                                                |  |               | 35,672,105  |  
|Deferred stock-based employee compensation                                                                                |  |               | (537,083    | )
|Accumulated deficit                                                                                                       |  |               | (34,265,141 | )
|                                                                                                                          |  |               |             |  
|                                                                                                                          |  |               | 880,637     |  
|Less treasury stock, at cost                                                                                              |  |               | (28,279     | )
|Total stockholders equity                                                                                                |  |               | 852,358     |  
|                                                                                                                          |  |               |             |  
|Total liabilities and stockholders equity                                                                                |  | $             | 1,751,970   |  
|                                                                                                                          |  |               |             |  



See accompanying notes
to unaudited consolidated financial statements.



3



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations



|                                                                                                                                                                                                                    |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ---------- | - | ------------------------- | - | --------- | ----------- |  | - | ----------- | - |  | - | --------- | -
|                                                                                                                                                                                                                    |  | Three months ended June 30, |            |   | Six months ended June 30, |  
|                                                                                                                                                                                                                    |  | 2004                        |            |   | 2003                      |   |           | 2004        |  |   | 2003        |  
|                                                                                                                                                                                                                    |  | (unaudited)                 |            |   | (unaudited)               |   |           | (unaudited) |  |   | (unaudited) |  
|Net sales                                                                                                                                                                                                           |  | $                           | 241,495    |   |                           | $ | 153,870   |             |  | $ | 548,521     |   |  | $ | 251,455   |  
|Cost of sales                                                                                                                                                                                                       |  |                             | 197,017    |   |                           |   | 130,235   |             |  |   | 447,228     |   |  |   | 220,791   |  
|                                                                                                                                                                                                                    |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|Gross profit                                                                                                                                                                                                        |  |                             | 44,478     |   |                           |   | 23,635    |             |  |   | 101,293     |   |  |   | 30,664    |  
|Operating expenses:                                                                                                                                                                                                 |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|Sales and marketing                                                                                                                                                                                                 |  |                             | 4,653      |   |                           |   | 203,949   |             |  |   | 23,731      |   |  |   | 209,658   |  
|General and administrative (inclusive of non-cash stock-based employee compensation of $141,875 and $41,667 and $287,555 and 41,667 for the
three months and six months ended June 30, 2004 and 2003, respectively) |  |                             | 666,600    |   |                           |   | 24,778    |             |  |   | 1,322,231   |   |  |   | 320,979   |  
|Technology and content                                                                                                                                                                                              |  |                             | 15,790     |   |                           |   | 20,125    |             |  |   | 30,589      |   |  |   | 41,924    |  
|Depreciation and amortization                                                                                                                                                                                       |  |                             | 4,081      |   |                           |   | 3,473     |             |  |   | 8,252       |   |  |   | 6,922     |  
|                                                                                                                                                                                                                    |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|Total operating expenses                                                                                                                                                                                            |  |                             | 691,124    |   |                           |   | 252,325   |             |  |   | 1,384,803   |   |  |   | 579,483   |  
|                                                                                                                                                                                                                    |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|Loss from operations                                                                                                                                                                                                |  |                             | (646,646   | ) |                           |   | (228,690  | )           |  |   | (1,283,510  | ) |  |   | (548,819  | )
|Other income (expense):                                                                                                                                                                                             |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|Interest income                                                                                                                                                                                                     |  |                             | 338        |   |                           |   | 264       |             |  |   | 1,088       |   |  |   | 407       |  
|Interest expense                                                                                                                                                                                                    |  |                             | (60,749    | ) |                           |   | (8,573    | )           |  |   | (96,581     | ) |  |   | (8,918    | )
|Gain on settlement of liabilities                                                                                                                                                                                   |  |                             |           |   |                           |   |          |             |  |   | 207,964     |   |  |   |          |  
|                                                                                                                                                                                                                    |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|Net other (expense) income                                                                                                                                                                                          |  |                             | (60,411    | ) |                           |   | (8,309    | )           |  |   | 112,471     |   |  |   | (8,511    | )
|Net loss                                                                                                                                                                                                            |  | $                           | (707,057   | ) |                           | $ | (236,999  | )           |  | $ | (1,171,039  | ) |  | $ | (557,330  | )
|                                                                                                                                                                                                                    |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|Net loss per share  basic and diluted                                                                                                                                                                              |  | $                           | (0.07      | ) |                           | $ | (0.04     | )           |  | $ | (0.11       | ) |  | $ | (0.09     | )
|                                                                                                                                                                                                                    |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  
|Weighted average shares outstanding used in calculating basic and diluted loss per share                                                                                                                            |  |                             | 10,714,358 |   |                           |   | 6,064,000 |             |  |   | 10,725,681  |   |  |   | 6,064,000 |  
|                                                                                                                                                                                                                    |  |                             |            |   |                           |   |           |             |  |   |             |   |  |   |           |  



See accompanying notes
to unaudited consolidated financial statements.



4



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows



|                                                                            |  |                           |            |   |             |   |          |  
|--------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ----------- | - | -------- | -
|                                                                            |  | Six months ended June 30, |           
|                                                                            |  | 2004                      |            |   | 2003        |  
|                                                                            |  | (UNAUDITED)               |            |   | (UNAUDITED) |  
|Cash flows from operating activities:                                       |  |                           |            |   |             |   |          |  
|Net loss                                                                    |  | $                         | (1,171,039 | ) |             | $ | (557,330 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                           |            |   |             |   |          |  
|Amortization of deferred stock-based employee compensation                  |  |                           | 287,555    |   |             |   | 41,667   |  
|Stock issued to directors for services                                      |  |                           | 4,904      |   |             |   |         |  
|Amortization of stock issued for services                                   |  |                           | 490,500    |   |             |   |         |  
|Depreciation and amortization                                               |  |                           | 68,251     |   |             |   | 6,922    |  
|Gain on settlement of liabilities                                           |  |                           | (207,964   | ) |             |   |         |  
|Changes in operating assets and liabilities:                                |  |                           |            |   |             |   |          |  
|Accounts receivable                                                         |  |                           | (10,705    | ) |             |   |         |  
|Inventories                                                                 |  |                           | 105,505    |   |             |   | (41,282  | )
|Other current assets                                                        |  |                           | 20,702     |   |             |   | 3,482    |  
|Other assets                                                                |  |                           | (245       | ) |             |   |         |  
|Accounts payable                                                            |  |                           | (196,661   | ) |             |   | 25,010   |  
|Accrued expenses                                                            |  |                           | (35,393    | ) |             |   | 26,498   |  
|                                                                            |  |                           |            |   |             |   |          |  
|Net cash used in operating activities                                       |  |                           | (644,590   | ) |             |   | (548,029 | )
|                                                                            |  |                           |            |   |             |   |          |  
|Cash flows from investing activities:                                       |  |                           |            |   |             |   |          |  
|Purchase of Game for Golf, Inc.                                             |  |                           | (30,000    | ) |             |   |         |  
|Purchase of property and equipment                                          |  |                           | (2,279     | ) |             |   | (4,307   | )
|                                                                            |  |                           |            |   |             |   |          |  
|Net cash used in investing activities                                       |  |                           | (32,279    | ) |             |   | (4,307   | )
|                                                                            |  |                           |            |   |             |   |          |  
|Cash flows from financing activities:                                       |  |                           |            |   |             |   |          |  
|Proceeds from issuance of notes payable                                     |  |                           | 600,000    |   |             |   | 770,310  |  
|Payments on notes payable                                                   |  |                           |           |   |             |   | (120,910 | )
|Payments on deferred loan costs                                             |  |                           | (60,000    | ) |             |   |         |  
|Payments on capital lease                                                   |  |                           | (7,092     | ) |             |   | (5,003   | )
|Fees paid to issue convertible debt                                         |  |                           |           |   |             |   | (44,200  | )
|Fees paid to convert note                                                   |  |                           | (30,000    | ) |             |   |         |  
|Redemption of preferred stock                                               |  |                           |           |   |             |   | (69,375  | )
|Collection of stock subscription receivable                                 |  |                           |           |   |             |   | 50,000   |  
|Fees paid to convert warrants                                               |  |                           | (20,000    | ) |             |   |         |  
|                                                                            |  |                           |            |   |             |   |          |  
|Net cash provided by financing activities                                   |  |                           | 482,908    |   |             |   | 580,822  |  
|                                                                            |  |                           |            |   |             |   |          |  
|Net (decrease) increase in cash and cash equivalents                        |  |                           | (193,961   | ) |             |   | 28,486   |  
|                                                                            |  |                           |            |   |             |   |          |  
|Cash and cash equivalents, beginning of period                              |  |                           | 427,803    |   |             |   | 138,884  |  
|                                                                            |  |                           |            |   |             |   |          |  
|Cash and cash equivalents, end of period                                    |  | $                         | 233,842    |   |             | $ | 167,370  |  
|                                                                            |  |                           |            |   |             |   |          |  



See accompanying notes
to unaudited consolidated financial statements.



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued



|                                                                        |  |                           |        |             |   |           
|----------------------------------------------------------------------- |  | ------------------------- | ------ | ----------- | - | ----------
|                                                                        |  | Six months ended June 30,
|                                                                        |  | 2004                      |        | 2003       
|                                                                        |  | (UNAUDITED)               |        | (UNAUDITED)
|Supplemental disclosure of cash flow information:                       |  |                           |        |             |   |           
|Cash paid during the period for:                                        |  |                           |        |             |   |           
|Interest                                                                |  | $                         | 37,366 |             | $ | 9,598     
|                                                                        |  |                           |        |             |   |           
|Supplemental disclosure of non-cash investing and financing activities: |  |                           |        |             |   |           
|Conversion of Series B Preferred Stock                                  |  | $                         |       |             | $ | 14,854,395
|                                                                        |  |                           |        |             |   |           
|Issuance of common stock in settlement of accrued liability             |  | $                         | 35,832 |             | $ | 87,148    
|                                                                        |  |                           |        |             |   |           
|Issuance of common stock for purchase of Game for Golf, Inc.            |  | $                         | 10,900 |             | $ |          
|                                                                        |  |                           |        |             |   |           



See accompanying notes
to unaudited consolidated financial statements.



6



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



June 30, 2004 and 2003



|(1) | HISTORY AND ORGANIZATION
|--- | ------------------------



Formerly Nomadic Collaboration International, Inc., LiquidGolf Holding Corporation and subsidiaries (collectively the Company) was
incorporated on February 16, 1999 under the laws of the State of Delaware and commenced operations in May 1999.



The Company is an online community for golfers worldwide which operates an e-commerce marketplace for golf equipment and related accessories along with a
single retail location in Apopka, Florida. In December 2003, the Company entered the leather products business with the purchase of Leather Craft Technology, Inc (Leather Craft). In June 2004, the Company acquired Game for Golf, Inc.,
through its wholly owned subsidiary Leather Craft.



Merger with LiquidGolf Corporation. On February 12, 2003, an Agreement and Plan of Merger was entered into by and among the Company, LGC Acquisition Company (Acquisition Sub) a Delaware corporation and wholly owned
subsidiary of the Company, and LiquidGolf Corporation, a Delaware Corporation (LiquidGolf Corporation). Pursuant to the Merger Agreement, the Company agreed, among other things, to: (i) merge Acquisition Sub into LiquidGolf Corporation
with LiquidGolf Corporation the surviving corporation; (ii) exchange one share of the Companys Common Stock for every three shares of LiquidGolf Corporation common stock held by the LiquidGolf Corporation stockholders (with fractional shares
paid in cash at $2.00 per share); (iii) convert, on a one-for-one basis, warrants to purchase LiquidGolf Corporation stock (the LiquidGolf Warrants) into warrants to purchase Nomadic Common Stock at the purchase price and on
substantially the same terms set forth in the LiquidGolf Warrants; (iv) change the Companys name to LiquidGolf Holding Corporation; (v) effect the January 10, 2003 reverse stock split; and (vi) increase the authorized shares of the
Companys Common Stock from 666,666 to 100,000,000 shares.



On May 30, 2003, the Company (then known as Nomadic Collaboration International, Inc.) closed the merger and acquired all of the issued and outstanding shares of capital stock of LiquidGolf Corporation, which thereby became a subsidiary of
the Company. However, since the stockholders of LiquidGolf Corporation obtained a majority of the voting rights of the Company as a result of the transaction, the transaction was accounted for as a purchase of Nomadic Collaboration International,
Inc. by LiquidGolf Corporation (a reverse acquisition in which LiquidGolf Corporation is considered the acquirer for accounting purposes). Accordingly, the financial statements of the Company for the periods prior to May 30, 2003, are those of
LiquidGolf Corporation, which was incorporated on February 16, 1999. For accounting purposes, LiquidGolf Corporation is treated as a predecessor to the Company. The acquisition of the predecessor was recorded as a purchase with the assets and
liabilities assumed recorded at their estimated fair values and their results of operations included in the consolidated financial statements of the Company since its date of acquisition.



Acquisition of Leather Craft Technology, Inc. On December 22,
2003, the Company acquired certain assets from Leather Craft Technology, Inc. (Leather Craft), including the name, for a single cash payment of $45,000. In addition to the single cash payment, the Company incurred a finders fee of
$22,500 relating to the acquisition. Leather Craft sells leather bound notebooks and related products. The Company acquired Leather Craft in order to diversify its revenue streams.



Acquisition of Game for Golf, Inc. On June 2, 2004, the Company acquired certain assets from Game for Golf,
Inc. (Game), including the name, for 10,000 shares of our common stock. The Company incurred a finders fee of $30,000 relating to the acquisition. Game sells golf accessories including golf bags, head covers and other embroidered
or embossed artwork for golfers. The Company acquired Game in order to diversify its revenue streams.



7



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(2) | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|--- | ------------------------------------------



Principles of Consolidation. The consolidated financial statements include the accounts of LiquidGolf Holding Corporation and its wholly
owned subsidiaries. All significant intercompany accounts and transactions are eliminated in the consolidated financial statements.



Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America 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.



Net Loss Per Share Information.Basic and diluted loss per share is calculated by dividing net loss by the weighted-average number of common
shares outstanding during the reporting period. The Companys common stock warrants have been excluded from the diluted loss per share computation since their effect is anti-dilutive.



Stock-Based Compensation.The Company has elected to account
for its stock-based compensation granted to employees in accordance with the provisions of Accounting Principles Board Opinion 25 (APB 25), Accounting for Stock Issued to Employees. Under APB 25, compensation expense is based on the
difference, if any, on the date of the grant, between the fair value of the Companys stock and the amount the employee is required to pay. The Company discloses the information required under Statement of Financial Accounting Standards (SFAS)
Statement No. 123, Accounting for Stock-Based Compensation (Statement 123). Stock issued to non-employees is accounted for under the provisions of Statement 123 and the Emerging Issues Task Force (EITF) Consensus in Issue No. 96-18,
Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with, Selling Goods or Services(EITF 96-18).



Under Statement 123, non-employee stock-based compensation is accounted for based on the fair value of the consideration
received or equity instruments issued, whichever is more readily determinable. However, Statement 123 does not address the measurement date and recognition period. EITF 96-18 states a consensus that the measurement date should be the earlier of the
date at which a commitment for performance by the counterparty is reached or the date at which the counterpartys performance is complete.



The Companys non-employee stock-based compensation is determined using the fair value of the Companys equity instruments.



Reclassifications.Certain prior periods balances have
been reclassified to conform to the current year consolidated financial statement presentation. These reclassifications had no impact on previously reported consolidated results of operations or stockholders equity.



8



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(3) | BASIS OF PRESENTATION
|--- | ---------------------



The accompanying unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2004 and 2003 have been
prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-QSB. Accordingly,
they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation of the Companys financial position, results of operations, and cash flows for the periods
presented.



The results of operations for the interim periods
ended June 30, 2004 and 2003 are not necessarily indicative of the results to be expected for the full year. These interim consolidated financial statements should be read in conjunction with the December 31, 2003 consolidated financial statements
and related notes included in the Companys Annual Report on Form 10-KSB for the year ended December 31, 2003.



The Companys consolidated financial statements have been prepared assuming the Company will continue as a going concern. LiquidGolf has experienced
net losses since February 16, 1999 (date of inception), which losses have caused an accumulated deficit of approximately $34,300,000 as of June 30, 2004. This factor, among others, raises substantial doubt about the Companys ability to
continue as a going concern.



Management has been able, thus
far, to finance the losses, as well as the growth of the business, through a series of private placements. The Company is continuing to seek other sources of financing and attempting to increase revenues through a diversification of revenue streams
within its core business of golf equipment sales. This diversification includes, but is not limited to, traditional brick and mortar retail merchandising. In addition, the Company is exploring alternate ways of generating revenues
through partnerships with other businesses. Conversely, the ongoing development and maintenance of its website is expected to result in operating losses for the foreseeable future. There are no assurances that the Company will be successful in
achieving its goals.



In view of these conditions, the
Companys ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. Management believes that its
current and future plans provide an opportunity to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts
and classification of liabilities that may be necessary in the event the Company cannot continue as a going concern.



9



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(4) | ACQUISITIONS
|--- | ------------



LEATHER CRAFT TECHNOLOGY, INC. On December 22, 2003, the Company acquired certain assets from Leather Craft Technology, Inc. (Leather
Craft), including the name, for a single cash payment of $45,000. In addition to the single cash payment, the Company incurred a finders fee of $22,500 relating to the acquisition. Leather Craft sells leather bound notebooks and related
products. The Company acquired Leather Craft in order to diversify its revenue streams. In connection with the purchase of assets, the Company entered into consulting agreements with the two principals of Leather Craft to provide us consulting
services for a period of three years. As compensation for services, each consultant may annually elect to receive: (i) cash payments in arrears of $37,500; or (ii) 12,500 shares of our common stock.



The acquisition was accounted for under the purchase method of accounting;
accordingly, the purchase price has been allocated to reflect the fair value of assets and liabilities acquired at the date of acquisition The results of operations of the acquired business have been included in the accompanying consolidated
financial statements since the date of acquisition. The Company recorded Goodwill of $67,500 as the purchase price exceeds the fair values of the assets acquired by that amount. The Company expects all of the goodwill to be deducted for tax
purposes.



GAME FOR GOLF, INC.On June 2,
2004, the Company acquired certain intangible assets from Game for Golf, Inc. (Game), including the name, for 10,000 shares of our common stock. In addition to the single cash payment, the Company incurred a finders fee of $30,000
relating to the acquisition. Game sells golf accessories including golf bags, head covers and other embroidered or embossed artwork for golfers. The Company acquired Game in order to diversify its revenue streams. In connection with the purchase of
assets, the Company entered into consulting agreements with the two principals of Game to provide us consulting services for a period of three years. As compensation for services, each consultant receives a total of 15,000 shares of our common
stock.



The acquisition was accounted for under the purchase
method of accounting; accordingly, the purchase price has been allocated to reflect the fair value of assets and liabilities acquired at the date of acquisition The results of operations of the acquired business have been included in the
accompanying consolidated financial statements since the date of acquisition. The Company recorded Goodwill of $40,900 as the purchase price exceeds the fair values of the assets acquired by that amount. The Company expects all of the goodwill to be
deducted for tax purposes.



|(5) | SECURED PROMISSORY NOTE
|--- | -----------------------



On February 16, 2004, the Company sold, in a private placement, a secured promissory note in the amount of $600,000 to a stockholder. Interest accrues on
the outstanding principal balance from and after February 16, 2004 at a rate of 18 percent per annum. The lender has the sole option of converting the principal represented by this note into common stock at a strike price equal to a 40 percent
discount to the average closing bid price of the stock for the twenty days immediately prior to the conversion. The lender may convert all or any part of the principal represented by this note. As part of the same transaction, the note holder
acquired a warrant, issued by the Company, to purchase 50,000 shares of common stock at $1.25 per share.



On June 14, 2004, the Company entered into a promissory note conversion agreement (the Agreement) with this stockholder. The agreement called
for the holder of the note to exercise the option to convert the principal sum of $600,000 into shares of the Companys common stock at the lesser of $1.25 per share or a 40% discount to the average closing bid price for the thirty days after
the signing of the agreement. In addition, per the agreement, the Company paid the accrued interest on the note in cash. On August 4, 2004 the Company issued 714,285 shares of common stock to satisfy the promissory note conversion agreement.



10



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(6) | SERIES B REDEEMABLE PREFERRED STOCK
|--- | -----------------------------------



During July 1999, LiquidGolf Corporation began taking subscriptions for preferred stock designated as Series B Convertible Preferred Stock (Series B) to
accredited investors through a private placement memorandum. As of December 31, 2002, 1,886,968 fully paid Series B shares at $8 per share had been issued. Net proceeds after subscription costs of $171,881 were $14,923,769.



On November 5, 1999, the Board of Directors designated 8,000,000 shares of
$.0001 par value preferred stock as Series B. LiquidGolf was obligated to convert each Series B share into common stock if LiquidGolf raised a minimum of $10 million in an initial public offering of its common stock. Holders of Series B preferred
stock would automatically convert at a rate equal to the lesser of the conversion price of $8 per share or 50% of the per share price offered to the public in a public offering. In addition, in the event of a merger with another corporation, all
outstanding shares of preferred stock would be automatically converted into common stock on a share for share basis. Series B stock had the same voting rights and privileges as common stockholders and, as a class, could elect one member of the Board
of Directors. Series B prohibited declaration or payment of any dividends for any class of stock as long as Series B shares were outstanding. Series B stockholders, at their option, could require LiquidGolf Corporation to redeem their shares after
November 5, 2002 at 150% of their Series B stated value of $2 per share. If LiquidGolf Corporation did not have sufficient funds to redeem all of the shares for which redemption had been requested, LiquidGolf Corporation was obligated to redeem as
many shares as could have been redeemed with such funds as were available and must have redeemed such shares from the holders pro rata in accordance with the number of shares each such holder had requested be redeemed.



By April 2003, LiquidGolf had received redemption requests by Series B
stockholders for 23,125 shares, amounting to $69,375. On May 30, 2003 LiquidGolf Corporation completed a reverse merger with Nomadic Collaboration International, Inc. As a result of this merger (Note 1) all remaining 1,863,845 shares of Series B
preferred stock outstanding were converted to common stock on a one for one basis.



|(7) | STOCKHOLDERS EQUITY
|--- | --------------------



Common Stock.The Board of Directors has authorized 100,000,000 shares of common stock with a par value of $.001. Each share of common stock
entitles its holder to one vote on all matters submitted to vote of the stockholders. The holders of common stock do not have cumulative voting rights or preemptive rights.



Investment Banking Agreement. In September of 2003, the Company issued 1,800,000 shares of its common stock in
connection with an investment banking commitment as required by the merger agreement made by the Company after taking the necessary Board of Directors action to retain PanAmerica Capital Group, Inc. to assist the Company in all financial activities
of the corporation including, but not limited, to capital raising, mergers and acquisitions, and future financings. The term of the agreement is two years and the compensation is 1,800,000 shares of common stock. The expenses associated with this
agreement is being recognized ratably over the two-year term.



Convertible Note Offering - 2003.On February 24, 2003, the Company issued a Confidential Private Offering Memorandum offering for sale, only to persons who qualify as accredited investors (as defined in the
Memorandum), convertible promissory notes (the Notes) at a minimum investment increment of $1,000), for a maximum aggregate principal investment amount of $750,000. The Notes had a term of 1 year and bore interest at the rate of 8% per
annum. Principal and interest were payable in full in a single payment upon maturity of the Note.



11



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(7) | STOCKHOLDERS EQUITY, CONTINUED
|--- | -------------------------------



The Notes were convertible, at the option of the Company, into units (the Units), by dividing the total amount of principal plus accrued but
unpaid interest of the Notes by the conversion price of $1.00. Each Unit consisted of one (1) share of common stock, par value $.001 per share and one (1) warrant to purchase one (1) share of common stock, at a purchase price of $1.50 per share. The
warrants have a three (3) year term. Each share of common stock and warrant constituting a Unit will be immediately separable.



The Company sold the Notes in this offering through the Companys officers and through registered broker dealers. The Notes were offered on a
best efforts basis. There were no minimum purchase requirements and no requirement to place funds in an escrow, trust or similar account. The funds raised from this offering were available for immediate use. The Company sold 41 notes
totaling $732,500 and incurred interest expense of $12,005. The Company converted these notes into shares of the Companys common stock on July 23, 2003.



Warrants. On July 23, 2003, the company notified the holders of the of the Companys convertible notes of the Companys intent
to exercise the option to convert the notes into shares of common stock at a $1.00 per share and a warrant to purchase an equal number of shares at $1.50 per share. The warrants have an exercise price of $1.50, are exercisable at issuance, and have
a contractual life of three years expiring three years from the date of the convertible note. As of July 23, 2003 the Company issued 744,505 shares of common stock and warrants for 744,505 shares of common stock in connection with the conversion.



In 1999, the Company issued post-stock-split fully-vested
warrants to purchase 37,500, 31,250, and 31,250 shares of common stock to certain investors for services provided at an exercise price of $8, $12, and $16 per share, respectively. The warrants are not exercisable until one year after the IPO of the
Companys common stock and have a contractual life of five years expiring in March 2005.



In 2000, the Company granted, to a Company related by stock ownership, a warrant as payment for consulting services, containing the right to purchase up to 25,000 post-stock split shares with an exercise price of $8
per share and have a contractual life of five years expiring in June of 2005.



In 2002, in connection with the sale of 1,220,000 shares of Common Stock for $0.25 per share, the Company issued fully vested warrants in two classes to purchase 1,220,000 shares of Common Stock in a Class A Warrant
and 1,220,000 shares of Common Stock in a Class B Warrant.



These warrants were issued in connection with a certain Confidential Private Offering Memorandum dated April 16, 2002. These Class A and Class B Warrants have an exercise price of $1.00 and $1.50 respectively, are exercisable at issuance
and have a contractual life of five years with the last of the warrants expiring in May of 2007. On February 16, 2004 The Company sold, in a private placement, a secured promissory note in the amount of $600,000 to a stockholder. As part of that
transaction, the note holder acquired a warrant, issued by the Company to purchase 50,000 shares of common stock at $0.84 per share and the warrant is exercisable at issuance.



12



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(7) | STOCKHOLDERS EQUITY, CONTINUED
|--- | -------------------------------



|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|---- |  | ------------------------------------------------ |  | -------------- | - |  | -------------- | ----- | --------------- | ------------ | ------------ | - | -------
|Year |  | Warrant Type                                     |  | Warrant Shares |   |  | Exercise Price |       | Expiration Date |              | Net Proceeds
|2000 |  | Investors services warrants                      |  | 37,500         |   |  | $              | 8.00  |                 | March-05     |              |   |        
|     |  | Investors services warrants                      |  | 31,250         |   |  |                | 12.00 |                 | March-05     |              |   |        
|     |  | Investors services warrants                      |  | 31,250         |   |  |                | 16.00 |                 | March-05     |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|     |  | Total investor services                          |  | 100,000        |   |  |                |       |                 |              |              |   |        
|2000 |  | Consulting services warrants                     |  | 25,000         |   |  |                | 8.00  |                 | June-05      |              |   |        
|2000 |  | Notes payable warrants                           |  | 381,000        |   |  |                | 4.00  |                 | August-03    |              |   |        
|     |  | Notes payable warrants expired                   |  | (381,000       | ) |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|     |  | Total 2000 warrants outstanding                  |  | 125,000        |   |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|2001 |  | Notes payable warrants                           |  | 100,000        |   |  |                | 1.00  |                 | December-04  |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|2002 |  | Class A warrants                                 |  | 1,220,000      |   |  |                | 1.00  |                 | May-07       |              |   |        
|     |  | Class A warrants cancelled                       |  | (160,000       | ) |  |                |       |                 |              |              |   |        
|     |  | Class A warrants exercised                       |  | (63,000        | ) |  |                | 1.00  |                 |              |              | $ | 63,000 
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|     |  | Total Class A warrants outstanding               |  | 997,000        |   |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|2002 |  | Class B warrants                                 |  | 1,220,000      |   |  |                | 1.50  |                 | May-07       |              |   |        
|     |  | Class B warrants cancelled                       |  | (160,000       | ) |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|     |  | Total Class B warrants outstanding               |  | 1,060,000      |   |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|2003 |  | Notes payable warrants                           |  | 952,500        |   |  |                | 1.60  |                 | September-03 |              |   |        
|2003 |  | Notes payable warrants exercised                 |  | (202,500       | ) |  |                |       |                 |              |              |   | 308,800
|2003 |  | Notes payable warrants expired                   |  | (750,000       | ) |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|     |  | Total Notes payable warrants outstanding         |  |               |   |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|2003 |  | Convertible Notes payable warrants               |  | 744,505        |   |  |                | 1.50  |                 | June-03      |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|2003 |  | Warrants issued for cancelled warrants           |  | 400,000        |   |  |                | 1.00  |                 | September-03 |              |   |        
|     |  | Warrants issued for cancelled warrants exercised |  | (400,000       | ) |  |                |       |                 |              |              |   | 375,000
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |               |   |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|2004 |  | Warrants issued in connection with note payable  |  | 50,000         |   |  |                | .84   |                 | n/a          |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|     |  | Total warrants outstanding                       |  | 3,076,505      |   |  |                |       |                 |              |              |   |        
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        
|     |  | Total proceeds from warrants exercised           |  |                |   |  |                |       |                 |              |              | $ | 746,800
|     |  |                                                  |  |                |   |  |                |       |                 |              |              |   |        



13



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(8) | SEGMENT INFORMATION
|--- | -------------------



Segment information has been presented on a basis consistent with how business activities are reported internally to management. Management solely
evaluates operating profit by segment by direct costs of manufacturing and marketing its products with allocations of certain indirect costs. The Company has two operating segments  Golf Retail and Leather Goods. Golf Retail includes sales of
golf products via the Companys website www.liquidgolf.com and a golf retail store located in Apopka, Florida. The Companys Leather Goods segment consists of the sale of leather binders and related products.



The following is a summary of certain financial information related to the
Companys operating segments as of and for the three months and six months ended June 30, 2004 and 2003:



|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|---------------------------------- |  | -------------------------- | -------- | - | ------------------------ | - | -------- | ---- |  | - | ---------- | - |  | - | -------- | -
|                                   |  | Three Months EndedJune 30, |          |   | Six Months EndedJune 30, |  
|                                   |  | 2004                       |          |   | 2003                     |   |          | 2004 |  |   | 2003       |  
|Total revenues by segment          |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Golf retail                        |  | $                          | 226,937  |   |                          | $ | 153,870  |      |  | $ | 434,702    |   |  | $ | 251,455  |  
|Leather goods                      |  |                            | 14,558   |   |                          |   |         |      |  |   | 113,819    |   |  |   |         |  
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Total revenues by segment          |  | $                          | 241,495  |   |                          | $ | 153,870  |      |  | $ | 548,521    |   |  | $ | 251,455  |  
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|                                   |  |                           
|                                   |  | Three Months EndedJune 30, |          |   | Six Months EndedJune 30, |  
|                                   |  | 2004                       |          |   | 2003                     |   |          | 2004 |  |   | 2003       |  
|Operating profit (loss) by segment |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Golf retail                        |  | $                          | 40,520   |   |                          | $ | 23,635   |      |  | $ | 68,630     |   |  | $ | 30,664   |  
|Leather goods                      |  |                            | 3,958    |   |                          |   |         |      |  |   | 32,663     |   |  |   |         |  
|Operating expenses                 |  |                            | (691,124 | ) |                          |   | (252,325 | )    |  |   | (1,384,803 | ) |  |   | (579,483 | )
|Interest expense, net              |  |                            | (60,411  | ) |                          |   | (8,309   | )    |  |   | (95,493    | ) |  |   | (8,511   | )
|Gain on extinguishment of debt     |  |                            |         |   |                          |   |         |      |  |   | 207,964    |   |  |   |         |  
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Net income (loss)                  |  | $                          | (707,057 | ) |                          | $ | (236,999 | )    |  | $ | (1,171,039 | ) |  | $ | (557,330 | )
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|                                   |  |                           
|                                   |  |                            |          |   | June 30,                 |  
|                                   |  |                            |          |   |                          |   |          | 2004 |  |   | 2003       |  
|Identifiable assets                |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Golf retail                        |  |                            |          |   |                          |   |          |      |  | $ | 719,376    |   |  | $ | 487,260  |  
|Leather goods                      |  |                            |          |   |                          |   |          |      |  |   | 120,281    |   |  |   |         |  
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Total identifiable assets          |  |                            |          |   |                          |   |          |      |  |   | 839,657    |   |  |   | 487,260  |  
|Corporate and other assets         |  |                            |          |   |                          |   |          |      |  |   | 912,313    |   |  |   | 2,875    |  
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Total assets                       |  |                            |          |   |                          |   |          |      |  | $ | 1,751,970  |   |  | $ | 490,135  |  
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|                                   |  |                           
|                                   |  | Three Months EndedJune 30, |          |   | Six Months EndedJune 30, |  
|                                   |  | 2004                       |          |   | 2003                     |   |          | 2004 |  |   | 2003       |  
|Depreciation by segment            |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Golf retail                        |  | $                          | 4,081    |   |                          | $ | 3,473    |      |  | $ | 8,100      |   |  | $ | 6,922    |  
|Leather goods                      |  |                            |         |   |                          |   |         |      |  |   | 152        |   |  |   |         |  
|Other                              |  |                            |         |   |                          |   |         |      |  |   |           |   |  |   |         |  
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  
|Total depreciation                 |  | $                          | 4,081    |   |                          | $ | 3,473    |      |  | $ | 8,252      |   |  | $ | 6,922    |  
|                                   |  |                            |          |   |                          |   |          |      |  |   |            |   |  |   |          |  



14



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(8) | SEGMENT INFORMATION, CONTINUED
|--- | ------------------------------



|                                |  |                            |   |                          |   |      |  |      |       |  |   |      
|------------------------------- |  | -------------------------- | - | ------------------------ | - | ---- |  | ---- | ----- |  | - | -----
|                                |  | Three Months EndedJune 30, |   | Six Months EndedJune 30,
|                                |  | 2004                       |   | 2003                     |   | 2004 |  | 2003
|Capital expenditures by segment |  |                            |   |                          |   |      |  |      |       |  |   |      
|Golf retail                     |  | $                          |  |                          | $ |     |  | $    |      |  | $ | 4,307
|Leather goods                   |  |                            |  |                          |   |     |  |      | 2,279 |  |   |     
|                                |  |                            |   |                          |   |      |  |      |       |  |   |      
|Total capital expenditures      |  | $                          |  |                          | $ |     |  | $    | 2,279 |  | $ | 4,307
|                                |  |                            |   |                          |   |      |  |      |       |  |   |      



As of June 30, 2004
and 2003, the Companys revenues have primarily been generated in the United States of America. As of June 30, 2004, all of the Companys long-lived assets are located in the United States of America.



|(9) | RESTRICTED STOCK BASED COMPENSATION
|--- | -----------------------------------



LiquidGolf cancelled the 1999 Stock Option Plan on January 15, 2003 as a requirement of the merger agreement with Nomadic Collaboration International,
Inc.



On June 10, 2003, the Board of Directors adopted the
LiquidGolf Holding Corporation 2003 Restricted Stock Plan (the 2003 Plan) and recommended that it be submitted to our stockholders for their approval at the 2003 Annual Meeting. The terms of the 2003 Plan provide for grants of
restricted stock awards.



Under the 2003 Plan, the total
number of shares of restricted common stock that may be subject to the granting of Awards during the term of the 2003 Plan shall be equal to 1,500,000 shares. Shares with respect to which awards previously granted that are forfeited, cancelled or
terminated are returned to the plan and may be reissued. As of December 31, 2003, 1,170,000 shares have been issued under this Plan. During the quarter ended March 31, 2004, 35,000 shares issued under this plan were forfeited and are recorded in
treasury stock.



|(10) | COMMITMENTS AND CONTINGENCIES
|---- | -----------------------------



Employment Agreement. On May 29, 2003 the Company entered into an employment agreement with its Chief Executive Officer. The agreement
commenced on May 29, 2003 and expires on December 31, 2005 but shall be automatically extended for two additional years unless written notice is given by either party 90 days prior to expiration. The agreement includes the payment of a base salary
of $90,000, an incentive compensation bonus equal to 100% of the base salary, based on revenue growth targets, and a restricted stock grant of 1,000,000 shares of common stock. However, the executive must be employed by the Company for a minimum of
two years from the date of the agreement in order to take delivery of the shares. The cost of these shares is being amortized ratably over the twenty-month employment agreement.



Letters of Credit. The Company has issued two separate Letters of Credit in favor of two separate suppliers in
a total amount of $35,000. These Letters of Credit have an open term and can be cancelled by the company with notice and with full payment to the suppliers. These Letters of Credit are collateralized by certificates of deposits that are accounted
for as investments in the accompanying Consolidated Balance Sheet.



15



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LIQUIDGOLF HOLDING CORPORATION AND SUBSIDIARIES



Notes to Unaudited Consolidated Financial Statements



|(11) | EXTINGUISHMENT OF DEBT
|---- | ----------------------



The Company had $207,964 of certain accounts payable, accrued liabilities and other liabilities as of March 31, 2004 that the Company determined they no
longer owed these obligations. Therefore, the Company recognized a one time gain on the extinguishment of debt in the amount of $207,964 in the quarter ending March 31, 2004.



16



---

|Item 2. | Managements Discussion and Analysis or Plan of Operation.
|------- | ----------------------------------------------------------



This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, including, without limitation, statements regarding the Companys expectations, beliefs, intentions or future strategies that are signified by the words expects, anticipates, intends,
believes, or similar language. These forward-looking statements, including those with respect to our operating results for 2004, are based upon current expectations and beliefs of the Companys management and are subject to risks
and uncertainties that could cause results to differ materially from those indicated in the forward-looking statements. Some, but not all, of the factors, which could cause actual results to differ materially include those set forth in the risks
discussed below under the subheading Risk Factors and elsewhere in this report. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements, or to explain why actual
results differ. Readers should carefully review the risk factors described in this section below and in any reports filed with the Securities and Exchange Commission (SEC).



Overview



We market and sell golf equipment, accessories and apparel to golfing consumers and golf industry businesses and leather
bound notebooks and related products. We operate from a brick and mortar retail golf store located in Apopka, Florida, and an online golf community website www.liquidgolf.com.



We manage our business on a segment basis. We rely on an internal management reporting process that provides revenue and
certain operating cost information for making financial decisions and allocating resources. Our principal areas of measurement and decision-making are the Golf Retail sales and Leather Products sales.



Our Golf Retail segment, through our website, grew from approximately
$2,300,000 in revenues in 2000 (our first full year of operations) to approximately $5,000,000 for the year ended December 31, 2001. However, commencing in 2002, we experienced significant difficulties in obtaining financing for our business. This
led to the discontinuance of our website operations in February 2002. We were eventually able to reach accommodations with some of our creditors, including converting some of our debt to equity and settling certain disputes that enabled us to find
limited financing through a private placement of securities in late 2002. However, financial difficulties during this period forced us to downsize our operations and we were unable to carry sufficient inventory to support our historical sales
levels. Revenues for the twelve months ended December 31, 2003 of approximately $781,000 was in accordance with our expectations due to our downsized operations and limited operating funds. Revenues for the three months and six months ended June 30,
2004 were approximately $241,000 and $549,000, respectively. We believe that, when properly capitalized and managed, we can successfully grow the business.



On December 22, 2003, we began our Leather Products segment with the acquisition of certain assets from Leather Craft Technology, Inc. (Leather
Craft), including the name, for a single cash payment of $45,000. In addition to the single cash payment, we incurred a finders fee of $22,500 relating to the acquisition. Leather Craft sells leather bound notebooks and related products.
We acquired Leather Craft in order to diversify our revenue streams. In connection with the purchase of assets, we entered into consulting agreements with the two principals of Leather Craft to provide us consulting services for a period of three
years. As compensation for services, each consultant may annually elect to receive: (i) cash payments in arrears of $37,500; or (ii) 12,500 shares of our common stock. Revenues for the three months and six months ended June 30, 2004 were
approximately $14,500 and $114,000, respectively. The decrease in revenue for the three months ended June 30, 2004 was primarily due to the seasonality of product orders. Leather Craft has a backlog of orders of approximately $85,000 that is
scheduled for shipping in the third and fourth quarter. We believe that selectively diversifying into non-golf related industries may enable us to generate sufficient cash flow and revenues for use in the financing of our business plan and expansion
of our core competency, the retail sale of golf related products and services.



17



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|              |  |                                 |   |  |                               |   |  |                      |   |  |                           |  
|------------- |  | ------------------------------- | - |  | ----------------------------- | - |  | -------------------- | - |  | ------------------------- | -
|              |  | Three Months EndedJune 30, 2004 |   |  | Six Months EndedJune 30, 2004 |  
|              |  | Percentage ofRevenue            |   |  | Percentage ofGross Profit     |   |  | Percentage ofRevenue |   |  | Percentage ofGross Profit |  
|Golf Retail   |  | 94.0                            | % |  | 91.1                          | % |  | 79.2                 | % |  | 67.8                      | %
|Leather Goods |  | 6.0                             | % |  | 8.9                           | % |  | 20.8                 | % |  | 32.2                      | %



We expect to add to
our revenue base through acquisitions. It is our belief that the consumer golf industry is very fragmented with no single online or brick and mortar retailer accounting for even 5% of industry sales. Our growth strategy includes the expansion,
through both organic growth and acquisitions of retail locations and other golf e-tailers websites. We believe that there are acquisition opportunities available at favorable valuations. There can be no assurance that we will be able to
successfully complete any acquisition. Additionally, our Board of Directors has determined that pursuing selective opportunities to diversify our business into other industries will enhance our ability to implement our business plan to expand our
golf related operations and allow us to reach profitability faster.



June 2, 2004, the Company acquired certain assets from Game for Golf, Inc. (Game), including the name, for 10,000 shares of our common stock. The Company incurred a finders fee of $30,000 relating to the acquisition. Game
sells golf accessories including golf bags, head covers and other embroidered or embossed artwork for golfers. The Company acquired Game in order to diversify its revenue streams. In connection with the purchase of assets, the Company entered into
consulting agreements with the two principals of Game to provide us consulting services for a period of three years. As compensation for services, each consultant receives 15,000 shares of our common stock.



Plan of Operation



We currently have very limited operating funds, and we will require additional cash to maintain our operations for the next
twelve months. Based on the cash we currently have, we will likely need additional financing to continue operations beyond November of 2004. Thus, our success is greatly dependent upon our ability to raise additional capital. In the event that we
obtain only modest amounts of additional capital to fund our operations, we will be forced to seek such additional capital or discontinue operations.



We have not generated sufficient operating revenue or had access to sufficient capital to implement our business plan to grow and expand our website and
brick and mortar operations. Since our revenues from operations alone are not likely to provide sufficient capital to allow us to implement our acquisition and growth plans, we must secure a source of new capital. In the absence of more traditional
sources of capital, we have begun to look at non-golf businesses that may produce significant revenue that we can redeploy to implement our growth plans.



Over the next twelve calendar months, we anticipate that our Golf Retail segment will engage primarily in the business of marketing and selling golf
equipment, accessories and apparel to golfing consumers from our brick and mortar retail store and Internet website. Through our relationship with various third party suppliers, we will continue to carry name brand merchandise such as Callaway,
Taylor Made, Adams and Titleist, which management believes is key to maintaining the strong relationships we have with our customers. Additionally, we will continue seeking to build our service operation of providing technology and fulfillment
operations to golf retailers selling via the Internet.



Over
the next twelve calendar months, we anticipate that our Leather Products segment will engage primarily in the business of marketing and selling leather binders and related products. Through our relationship with select third party manufactures, we
will continue to pursue innovative solutions to our clients needs.



We plan to grow our business through the acquisition of one or more companies engaged in similar businesses, including, in particular, retail and online operations focused on golf and golf related products. We have sought to acquire such
golf related companies to maximize the potential operating synergies and economies of scale that may result from such acquisitions (including, but not limited to, price discounts and payment terms). However,



18



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we have been unable to complete an acquisition as a result of unfavorable transaction terms and lack of adequate financial resources. There can be no
assurance that we will be able to successfully complete any acquisitions.



Results of Operations



Because we are in the
early stages of operations as a public company the relationships between revenue, cost of revenue and operating expenses reflected in the financial information included in this report do not represent future expected financial relationships. We
expect that expenses will increase with the escalation of sales and marketing activities and transaction volumes, but at a much slower rate of growth than the corresponding revenue increase.



Comparison of Three Months Ended June 30, 2004 and June 30, 2003.



Consolidated Overview



|              |  |                             |         |  |       |   |  |   |         |  |       |  
|------------- |  | --------------------------- | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|              |  | Three Months Ended June 30, |        
|              |  | 2004                        |         |  | 2003  |  
|Net sales     |  | $                           | 241,495 |  | 100.0 | % |  | $ | 153,870 |  | 100.0 | %
|Cost of Sales |  |                             | 197,017 |  | 81.6  | % |  |   | 130,235 |  | 84.6  | %
|              |  |                             |         |  |       |   |  |   |         |  |       |  
|Gross profit  |  | $                           | 44,478  |  | 18.4  | % |  | $ | 23,635  |  | 15.4  | %



Overall sales for the
three-months ended June 30, 2004 increased by 56.9% compared to the same period in 2003. This increase was due to increased marketing activity during 2004 and the acquisition of Leather Craft in the fourth quarter of 2003. Gross margin as a
percentage of sales improved by 19.5% due to cost controls and increased revenues.



Golf Retail Segment



|              |  |                             |         |  |       |   |  |   |         |  |       |  
|------------- |  | --------------------------- | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|              |  | Three Months Ended June 30, |        
|              |  | 2004                        |         |  | 2003  |  
|Net sales     |  | $                           | 226,937 |  | 100.0 | % |  | $ | 153,870 |  | 100.0 | %
|Cost of Sales |  |                             | 186,417 |  | 82.1  | % |  |   | 130,235 |  | 84.6  | %
|              |  |                             |         |  |       |   |  |   |         |  |       |  
|Gross profit  |  | $                           | 40,520  |  | 17.9  | % |  | $ | 23,635  |  | 15.4  | %



Sales in the Golf
Retail segment increased approximately 47 percent, or approximately $73,000 for the three month period ended June 30, 2004 compared to 2003. In July 2003, we began managing the website golfwarehouse.com in which we had sales increase of
approximately $100,000 for the three month period ended June 30, 2004 compared to the same period in 2003.



Leather Products Segment



|              |  |                             |        |  |       |   |  |   |   |  |  
|------------- |  | --------------------------- | ------ |  | ----- | - |  | - | - |  | -
|              |  | Three Months Ended June 30,
|              |  | 2004                        |        |  | 2003 
|Net sales     |  | $                           | 14,558 |  | 100.0 | % |  | $ |  |  | 
|Cost of Sales |  |                             | 10,599 |  | 72.8  | % |  |   |  |  | 
|              |  |                             |        |  |       |   |  |   |   |  |  
|Gross profit  |  | $                           | 3,958  |  | 27.2  | % |  | $ |  |  | 



Sales in the Leather
Products segment increased by $14,558 for the three month period ended June 30, 2004 compared to 2003. The increases in revenue are due to the acquisition of Leather Craft Technology, Inc. in December 2003.



19



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Operating Expenses



|                                    |  |                             |         |  |       |   |  |   |         |  |       |  
|----------------------------------- |  | --------------------------- | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|                                    |  | Three Months Ended June 30, |        
|                                    |  | 2004                        |         |  | 2003  |  
|Selling, general and administrative |  | $                           | 691,124 |  | 100.0 | % |  | $ | 252,325 |  | 100.0 | %



Selling, general
and administrative expenses. Selling, general and administrative expenses were $691,124 in the second quarter of 2004 compared to $252,325 in 2003, a net increase of $438,799. In September 2003, we signed an investment banking commitment
retaining PanAmerica Capital Group, Inc. to assist us in all of our financial activities. The compensation was 1,800,000 shares of common stock and the remaining term of the agreement is eleven months. During the three months ended June 30, 2004, a
$243,337 non-cash expense was recorded for the amortization of this prepaid expense. In addition, in 2004 there was a $141,875 non-cash expense for the amortization of deferred restricted stock based compensation. The additional increase in 2004 is
due to expenses incurred related to being a publicly traded company.



Other
Income and Expenses



Interest income and expense,
net. Net interest expense was $60,411 for the three month period ended June 30, 2004, compared to $8,309 for the same period in 2003. The increase in interest expense is a result of the secured promissory note in the amount of $600,000 that we
sold in February 2004 in a private placement to a stockholder. Interest accrues on the outstanding principal balance from and after February 16, 2004 at a rate of 18 percent per annum. The lender has the sole option of converting the principal
represented by this note into common stock at a strike price equal to a 40 percent discount to the average closing bid price of the stock for the twenty days immediately prior to the conversion. On August 4, 2004 the principal amount of the note was
converted into 714,285 shares of our common stock pursuant to promissory note conversion agreement that we entered into on June 14, 2004.



Comparison of Six Months Ended June 30, 2004 and June 30, 2003.



Consolidated Overview



|              |  |                           |         |  |       |   |  |   |         |  |       |  
|------------- |  | ------------------------- | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|              |  | Six Months Ended June 30, |        
|              |  | 2004                      |         |  | 2003  |  
|Net sales     |  | $                         | 548,521 |  | 100.0 | % |  | $ | 251,455 |  | 100.0 | %
|Cost of Sales |  |                           | 447,228 |  | 81.5  | % |  |   | 220,791 |  | 87.8  | %
|              |  |                           |         |  |       |   |  |   |         |  |       |  
|Gross profit  |  | $                         | 101,293 |  | 18.5  | % |  | $ | 30,664  |  | 12.2  | %



Overall sales for the
six month period ended June 30, 2004 increased by 118% compared to the same period in 2003. This increase was due to increased marketing activity during 2004 and the acquisition of Leather Craft in the fourth quarter of 2003. Gross margin as a
percentage of sales improved by 51.6% due to cost controls and increased revenues.



Golf Retail Segment



|              |  |                           |         |  |       |   |  |   |         |  |       |  
|------------- |  | ------------------------- | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|              |  | Six Months Ended June 30, |        
|              |  | 2004                      |         |  | 2003  |  
|Net sales     |  | $                         | 434,702 |  | 100.0 | % |  | $ | 251,455 |  | 100.0 | %
|Cost of Sales |  |                           | 366,072 |  | 84.2  | % |  |   | 220,791 |  | 87.8  | %
|              |  |                           |         |  |       |   |  |   |         |  |       |  
|Gross profit  |  | $                         | 68,630  |  | 15.8  | % |  | $ | 30,664  |  | 12.2  | %



20



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Sales in the Golf Retail segment increased approximately 73 percent, or $183,247 for the six month period
ended June 30, 2004 compared to 2003. In July 2003, we began managing the website golfwarehouse.com in which we had sales increase of approximately $134,000 for the six month period ending June 30, 2004 compared to the same period in 2003. The
remaining increase in the Golf Retail segment was the result of having adequate financing that allowed us to make inventory purchases in a timely manner.



Leather Products Segment



|              |  |                           |         |  |       |   |  |   |   |  |  
|------------- |  | ------------------------- | ------- |  | ----- | - |  | - | - |  | -
|              |  | Six Months Ended June 30,
|              |  | 2004                      |         |  | 2003 
|Net sales     |  | $                         | 113,819 |  | 100.0 | % |  | $ |  |  | 
|Cost of Sales |  |                           | 81,155  |  | 71.3  | % |  |   |  |  | 
|              |  |                           |         |  |       |   |  |   |   |  |  
|Gross profit  |  | $                         | 32,664  |  | 28.7  | % |  | $ |  |  | 



Sales in the Leather
Products segment increased by $113,819 for the six month period ended June 30, 2004 compared to 2003. The increases in revenue are due to the acquisition of Leather Craft Technology, Inc. in December 2003.



Operating Expenses



|                                    |  |                           |           |  |       |   |  |   |         |  |       |  
|----------------------------------- |  | ------------------------- | --------- |  | ----- | - |  | - | ------- |  | ----- | -
|                                    |  | Six Months Ended June 30, |          
|                                    |  | 2004                      |           |  | 2003  |  
|Selling, general and administrative |  | $                         | 1,384,803 |  | 100.0 | % |  | $ | 579,483 |  | 100.0 | %



Selling, general
and administrative expenses. Selling, general and administrative expenses were $1,384,803 in the six month period ended June 30, 2004 compared to $579,483 for the same period in 2003, a net increase of $805,320. In September 2003, we signed an
investment banking commitment retaining PanAmerica Capital Group, Inc. to assist us in all of our financial activities. The compensation was 1,800,000 shares of common stock and the remaining term of the agreement is eleven months. During the six
months ending June 30, 2004, a $492,352 non-cash expense was recorded for the amortization of this prepaid expense. Also in 2004 there was a $287,555 non-cash expense for the amortization of deferred restricted stock based compensation. The
additional increase in 2004 is due to expenses incurred related to being a publicly traded company.



Other Income and Expenses



Interest income and expense, net. Net interest expense was $95,492 for the six month period ended June 30, 2004, compared to $8,511 for the same period in 2003. The increase in interest expense is a result of the secured promissory
note in the amount of $600,000 that we sold in February 2004 in a private placement to a stockholder. Interest accrues on the outstanding principal balance from and after February 16, 2004 at a rate of 18 percent per annum. The lender has the sole
option of converting the principal represented by this note into common stock at a strike price equal to a 40 percent discount to the average closing bid price of the stock for the twenty days immediately prior to the conversion.



Gain on Settlement of Liabilities. Gain on settlement of liabilities
was $207,964 for the six month period ended June 30, 2004 compared to $0 for the same period in 2003. This gain was the result of our determination that nothing was owed for these obligations in March of 2004.



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Liquidity and Capital Resources



We had cash balances totaling approximately $234,000 as of June 30, 2004. Historically, our principal source of funds has
been cash generated from financing activities. Our operations are seasonal and our source of liquidity may vary during the year.



We believe that we will require an additional $250,000 to fund our currently anticipated requirements for ongoing operations and budgeted capital
expenditures for our existing business for the next twelve-month period. We currently intend to satisfy our long-term liquidity requirements from cash flow from operations and to the extent such funds are insufficient, we must raise additional funds
to sustain operations. However, our long-term liquidity requirements will depend on many factors, including but not limited to various risks associated with our business that affect our sales levels and pricing, our ability to recover all of our
up-front costs related to future acquisitions, capital expenditures and operating expense requirements, and there can be no assurance that we will not need to raise additional funds to satisfy them.



Cash flow from operations. We have been unable to generate
either significant liquidity or cash flow to fund our current operations. We frequently change our pricing structure to take into account our customers fluctuating cash flows, service and product needs. We anticipate that cash flows from
operations will be insufficient to fund our business operations for the next twelve-month period. Currently, we have not experienced significant additional cash flows from operations from our acquisition of Leather Craft Technology or Game for Golf,
Inc.



Cash flows from financing activities. Net
cash provided by financing activities was generated from the sale, in a private placement, of a secured promissory note in the amount of $600,000 to a stockholder. Interest accrues on the outstanding principal balance from and after February 16,
2004 at a rate of 18 percent per annum. Proceeds from these sales were primarily used as working capital for ongoing operations.



Variables and Trends



We anticipate experiencing greater sales in the third and fourth quarters of the calendar year, as opposed to the first and second quarters of the
calendar year. The seasonality of our sales will be directly related to the golf season in the third quarter and the holiday season in the fourth quarter. The third and fourth quarters of the calendar year are usually our strongest revenue producing
quarters as more customers are playing golf at the height of the golf season and purchasing Golf Retail for gifts for the holiday season in the fourth quarter. The first quarter of the calendar year is usually the slowest due to the winter weather
and not as many customers are playing golf or purchasing Golf Retail. The second quarter of the calendar year is slow and the season is just beginning. Comparisons of our sales and operating results between different quarters within a single year
are, therefore, not necessarily accurate indicators of our future performance.



Although we have a limited operating history in connection with the operation of our web sites and single store, we have no operating history with respect to our plans for the expansion of our business to multiple
locations. To date, we have been unsuccessful in our efforts to obtain sufficient financing to implement our business plan; however, in the event we are able to move forward with our plans for growth, we expect our expenses to increase significantly
as we grow our business and enter into new markets through the opening of new locations or through acquisitions. Accordingly, the comparison of the financial data for the periods presented may not be a meaningful indicator of our future performance
and must be considered in light of our limited operating history.



Critical
Accounting Policies



We make use of estimates and
assumptions that impact the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including
those related to bad debts, inventories and goodwill. These estimates and assumptions are based on historical results and trends as well as our forecasts as to how these might change in the future.



22



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We believe the following critical accounting policies, among others, impact the significant judgments and
estimates we use in the preparation of our financial statements:



Revenue
Recognition



We recognize revenue in accordance with the
provisions of the SECs Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. Specifically, sales and the related cost of goods sold are generally recognized at the latter of the time of shipment or when title
passes to customers. We earn revenue from the sale of golf equipment and related accessories through its online retail store and our retail location. Online merchandise revenue is recognized upon the shipment of the merchandise, which occurs only
after credit card authorization is obtained. Customers are allowed to return items for credit within 14 days of purchase. We provide for estimated returns at the time of shipment based on historical data. For the three months and six months ended
June 30, 2004 and 2003, no allowance for returns was recorded because the estimated amounts were immaterial.



Inventory Valuation



Inventories are stated at the lower of cost or market with cost being determined using the average cost method, which closely approximates the first-in, first-out (FIFO) method. At each balance sheet date, we evaluate our ending inventory
for excess quantities and obsolescence. We provide reserves for estimated obsolescence equal to the difference between the cost of the inventory and its estimated market value. We fully reserve for inventories deemed obsolete. If future demand or
market conditions are less favorable than our projections, additional inventory write-downs may be required.



Stock-Based Compensation



We account for our employee stock-based compensation plans in accordance with APB Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees and Financial Accounting Standards Board Interpretation No. 44,
Accounting for Certain Transactions Involving Stock Compensationan Interpretation of APB Opinion No. 25.



Accordingly, no compensation cost is recognized for our restricted stock granted to employees when the exercise price of each option equals or exceeds the
fair value of the underlying common stock as of the grant date for each stock option.



Off Balance Sheet Arrangements



We have no
off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.



RISKS FACTORS



A more comprehensive list of risk factors are set forth in the Companys Annual Report
on Form 10-KSB for the year ended December 31, 2003, our Schedule 14-C filed on April 28, 2003, and our other filings with the Securities and Exchange Commission. In addition to those risk factors, you should consider the following:



WE HAVE LIMITED OPERATING FUNDS, AND OUR ABILITY TO CONTINUE AS A GOING CONCERN IS
DEPENDENT UPON OUR ABILITY TO OBTAIN ADDITIONAL CAPITAL TO OPERATE THE BUSINESS.



We have incurred net losses and negative cash flows from operations in all of the quarters since our inception. Our lack of sufficient financing to implement our business plan, and our expectation of continued
operating losses for the foreseeable future raises substantial doubt about our ability to continue as a going concern. Our independent certified public accountants have issued its report, which includes an explanatory paragraph for going concern
uncertainty on our financial statements as of December 31, 2003 and 2002. Our ability to continue as



23



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a going concern is heavily dependant upon our ability to obtain additional capital to sustain operations. Currently, we have no commitments to obtain
additional capital, and there can be no assurance additional capital will be available on acceptable terms, if at all.



WE WILL NEED ADDITIONAL FINANCING, THE AVAILABILITY OF WHICH IS UNCERTAIN, TO FUND OUR BUSINESS AND TO IMPLEMENT OUR BUSINESS PLAN.



We will require additional financing in order to carry out our business
plan. Such financing may take the form of the issuance of common or preferred stock or debt securities, or may involve bank financing. There can be no assurance that we will obtain such additional capital on a timely basis, on favorable terms, or at
all. If we are unable to generate the required amount of additional capital, our ability to meet our financial obligations and to implement our business plan may be adversely effected.



IF WE ARE UNABLE TO RETAIN OUR KEY PERSONNEL, WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN.



Our performance is substantially dependent on the performance of our senior
management. In particular, our success depends on the continued efforts of our president and Chief Executive Officer, Dwain Brannon. While we have an employment agreement in place with Mr. Brannon until December 31, 2005, we have not obtained any
key man or other insurance in connection with the life or employment of Mr. Brannon. The loss of Mr. Brannons services could have a material adverse affect on our business, operational results and financial condition.



WE DEPEND ON THIRD PARTY SHIPPERS AND COMMUNICATIONS PROVIDERS TO OPERATE OUR BUSINESS.



We depend on a number of third parties to deliver goods
and services to the Company and to our customers. For example, we rely on the United States Postal Service, United Parcel Service, Federal Express and other carriers to ship merchandise to customers. Strikes or other service interruptions affecting
one or more of such shippers could impair our ability to deliver merchandise on a timely basis, which may have an adverse effect on customer satisfaction and retention. We also depend on communications providers to provide our Internet users with
access to our online store. Our online store could experience disruptions or interruptions in service due to failures by these providers. In addition, our users depend on Internet service providers and website operators for access to our online
store. Each of these groups has experienced significant outages in the past and could experience outages, delays and other difficulties due to system failures unrelated to our systems. These types of occurrences could cause users to perceive our
online store as not functioning properly and therefore cause them to stop using our services. These factors may have an adverse effect on customer satisfaction and retention.



THE COMPANY MAY BE SUBJECT TO SALES AND OTHER TAXES.



We do not currently collect sales or other similar taxes for physical shipments of goods into states other than Florida. One
or more local, state or foreign jurisdictions may seek to impose sales tax collection obligations on our business. In addition, any new operation in states outside Florida could subject our shipments in such states to state sales taxes under current
or future laws. If one or more states or any foreign country successfully asserts that we should collect sales or other taxes on the sale of our products the resulting tax liability could impair our business. Any such liability could also include
liability for back taxes and penalties, which could cause significant harm to our financial condition and may require us to restate earnings for prior periods.



OUR BRAND MAY NOT ATTAIN SUFFICIENT RECOGNITION.



We believe that establishing, maintaining and enhancing our brand is a critical aspect of our efforts to develop and expand our operations. The number of
Internet sites and retail stores that offer competing services, many of which already have well-established brands in online services or the retail golf equipment industry generally, increases the importance of establishing and maintaining brand
name recognition. Promotion of our website and development of our brick and mortar operations will depend largely on our success in providing a high-quality online experience supported by a high level of customer service, which cannot be assured. To
attract and



24



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retain online users, and to promote and maintain our operations in response to competitive pressures, we may find it necessary to increase substantially our
financial commitment to creating and maintaining a strong brand loyalty among customers. This will require significant expenditures on advertising and marketing. If we are unable to provide high-quality online services or customer support, or
otherwise fails to promote and maintain our website, or if we incur excessive expenses in an attempt to promote and maintain our website, our business prospects, operating results and financial condition would be materially and adversely affected.



WE MAY HAVE DIFFICULTY OBTAINING MERCHANDISE.



We want to offer a competitive source of golf apparel and merchandise. There
can be no assurance that we will be able to obtain the quantity, selection or brand quality of items that we believe is necessary. We have no long-term contracts or arrangements with any of our suppliers that guarantee the availability of
merchandise or the continuation of particular pricing practices. Our contracts with our suppliers typically do not restrict such suppliers from selling products to other buyers. There can be no assurance that our current suppliers will continue to
sell products to us on current terms or that we will be able to establish new or otherwise extend current supply relationships to ensure acquisitions of product in a timely and efficient manner and on acceptable commercial terms. Our ability to
obtain favorable contracts with reputable suppliers, obtain high quality merchandise from those suppliers and the ability of the suppliers to produce, stock and deliver high quality products to our customers is critical to our success. If we are
unable to satisfy any of these elements or we are unable to develop and maintain relationships with suppliers that would allow us to obtain a sufficient variety and quantity of quality merchandise on acceptable commercial terms, our business,
operating results and financial condition would be materially and adversely affected.



OUR MANAGEMENT MAY BE UNABLE TO EFFECTIVELY INTEGRATE OUR ACQUISITIONS AND TO MANAGE OUR GROWTH AND WE MAY BE UNABLE TO FULLY REALIZE ANY ANTICIPATED BENEFITS OF THESE ACQUISITIONS.



Our future results will depend in part on our success in implementing our
acquisition strategy. This strategy is limited to effecting acquisitions of retail stores and websites with complementary or desirable new product lines, strategic locations and attractive customer bases and supplier relationships. Our ability to
implement this strategy will be dependent on our ability to identify, consummate and successfully assimilate acquisitions on economically favorable terms. In addition, acquisitions involve a number of special risks that could adversely effect our
operating results, including the diversion of managements attention, failure to retain key acquired personnel, risks associated with unanticipated events or liabilities, legal, accounting and other expenses associated with any acquisition,
some or all of which could increase our operating costs, reduce our revenues and cause a material adverse effect on our business, financial condition and results of operations.



RISKS RELATED TO OUR INDUSTRY



WE OPERATE IN A HIGHLY COMPETITIVE MARKET AND COMPETE WITH COMPANIES THAT HAVE SIGNIFICANTLY LARGER OPERATIONS AND GREATER FINANCIAL RESOURCES; WE MAY NOT BE ABLE TO
COMPETE EFFECTIVELY AGAINST SUCH COMPANIES, WHICH COULD RESULT IN ADDITIONAL LOSSES.



We are subject to extensive competition from numerous competitors. We cannot assure you that we will be able to compete successfully or that competitive pressures will not damage our business.



Our competition includes:



| |  | websites maintained by other online retailers of Golf Retail, including, but not limited to, sporting goods retailers, discount retailers and golf shops;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | traditional department stores and stand-alone golf retailers;
| | - | -------------------------------------------------------------



| |  | nationally known discount golf retailers;
| | - | -----------------------------------------



| |  | other retailers of Golf Retail who seek to purchase high demand or limited supply products;
| | - | -------------------------------------------------------------------------------------------



| |  | catalog retailers of golf equipment, apparel and other golf-related merchandise; and
| | - | ------------------------------------------------------------------------------------



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| |  | Internet portals and on-line service providers that feature shopping services, such as America Online, Yahoo!, Excite and Lycos.
| | - | --------------------------------------------------------------------------------------------------------------------------------



Many of our competitors are larger and have substantially greater financial,
distribution and marketing resources. In addition, many of our competitors may be able to secure products from vendors on more favorable terms, fulfill customer orders more efficiently and adopt more aggressive pricing or inventory availability
policies than we can. Traditional store-based retailers also enable customers to see, feel and test products in a manner that is not possible over the Internet. Some online competitors may be able to use the Internet as a marketing medium to reach
significant numbers of potential customers more effectively than we can. If we cannot compete successfully against such competitors, it will impair our ability to maintain our market position.



GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD BURDEN OUR BUSINESS.



The adoption or modification of laws or regulations applicable to the
Internet could harm our business. The United States Congress passed laws regarding childrens online privacy, copyrights and taxation. The law governing the Internet, however, remains largely unsettled. New laws may impose burdens on companies
conducting business over the Internet. Although our online transmissions generally originate in Orlando, Florida, the governmental agencies of other states or foreign countries might attempt to regulate our transmissions or levy sales or other taxes
relating to our activities. It may take years to determine whether and how existing laws governing intellectual property, privacy, libel and taxation apply to the Internet and online advertising. In addition, the growth and development of online
commerce may prompt calls for more stringent consumer protection laws, in both the United States and abroad. We also may be subject to regulation not specifically related to the Internet, including laws affecting direct marketers.



New laws and regulations and interpretations of existing laws and regulations
could subject us and/or our customers to potential liability, which could have an adverse effect on our business, operating results and financial condition. The adoption of any future laws or regulations might decrease the growth of the Internet,
decrease demand for our products and services, impose taxes or other costly technical requirements or otherwise increase the cost of doing business or in some other manner have a significant adverse effect on us or our customers, which, in turn,
could have a significant adverse effect on our business and operating results. In addition, applying existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel, obscenity and
personal privacy to the Internet is uncertain. The vast majorities of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, do not contemplate or address the unique issues of the Internet and related
technologies. Changes to these laws intended to address these issues, including some recently proposed changes, could create uncertainty in the marketplace which could reduce demand for our services or increase the cost of doing business as a result
of costs of litigation or increased service delivery costs, or could in some other manner have a significant adverse effect on our business and operating results. As our services are available over the Internet in multiple states and foreign
countries, and as we facilitate sales by our customers to end users located in these states and foreign countries, these jurisdictions may claim that we are required to qualify to do business as a foreign corporation in each of these states or
foreign countries. Any new legislation or regulation, or the application of laws or regulations from jurisdictions whose laws may not currently apply to our business, could have a significant adverse effect on our business and operating results.



RISKS RELATED TO OUR SECURITIES



OUR STOCK IS DEEMED PENNY STOCK WHICH MAY REDUCE TRADING ACTIVITY IN THE
SECONDARY MARKETS



The Securities and Exchange Commission
has rules that regulate broker-dealers practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system). The penny stock rules require broker-dealers, prior to a
transaction in penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in
the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny



26



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stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny
stock held in the customers account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the
customer in writing before or with the customers confirmation. These disclosure requirements have the effect of reducing the level of trading activity in the secondary market for our common stock. As a result of the foregoing, investors may
find it difficult to sell their shares.



ITEM 3 - CONTROLS AND PROCEDURES



We have
evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of June 30, 2004. Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that our disclosure controls and procedures are effective to ensure that we record, process, summarize, and report information required to be disclosed by us in our quarterly reports filed under the Securities Exchange Act
within the time periods specified by the Securities and Exchange Commissions rules and forms.



During the quarterly period covered by this report, there were no changes in our internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting. There were no significant changes in the Companys internal controls or in other factors that could significantly affect its internal controls subsequent to the Evaluation Date.



27



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PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------



From time to time we are engaged in various legal and regulatory proceedings arising in the normal course of business. While it is not possible to
determine with certainty the outcome of these matters, we are of the opinion that the eventual resolution of such proceedings will not have a material adverse impact on our financial position or operating results. The Company is not a party to any
pending legal proceedings nor is any of its property subject to pending legal proceedings.



|Item 2. | Changes in Securities and Use of Proceeds.
|------- | ------------------------------------------



|(a) | Not applicable
|--- | --------------



|(b) | Not Applicable
|--- | --------------



|(c) | On February 16, 2004, the Company sold, in a private placement, a secured promissory note in the amount of $600,000 to a stockholder. Interest accrues on the outstanding principal
balance from and after February 16, 2004 at a rate of 18 percent per annum. The lender has the sole option of converting the principal represented by this note into common stock at a strike price equal to a 40 percent discount to the average closing
bid price of the stock for the twenty days immediately prior to the conversion. The lender may convert all or any part of the principal represented by this note. As part of the same transaction, the note holder purchased a warrant, issued by the
Company, to purchase 50,000 shares of common stock at $1.25 per share. We sold the promissory note in reliance upon an exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated there
under. The issuance of these securities was undertaken without general solicitation or advertising. The purchaser represented to us that, among other things, it was acquiring the promissory note for investment purposes only and not with a view
towards public distribution and that it was an accredited investor within the meaning of Rule 501 of Regulation D.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On June 14, 2004, the Company entered into a promissory note conversion agreement (the Agreement) with this stockholder. The agreement called
for the holder of the note to exercise the option to convert the principal sum of $600,000 into shares of the Companys common stock at the lesser of $1.25 per share or a 40% discount to the average closing bid price for the thirty days after
the signing of the agreement. In addition, per the agreement, the Company paid the accrued interest on the note in cash. On August 4, 2004 the Company issued 651,189 shares of common stock to satisfy the promissory note conversion agreement.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------



Not Applicable.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------



Not Applicable.



|Item 5. | Other Information.
|------- | ------------------



Not Applicable.



28



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|Item 6. | Exhibits and Reports on Form 8-K.
|------- | ---------------------------------



(a) Exhibits



|               |  |                                                                                                                                                           
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                               
|               | 
|31.1           |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
|               | 
|31.2           |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
|               | 
|32.1           |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*       
|               | 
|32.2           |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*       

---

|* | Filed herewith.
|- | ---------------



(b) Reports on Form 8-K.



Not Applicable.



29



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SIGNATURES



In accordance with the
requirements of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Date: August 10, 2004



LIQUIDGOLF HOLDING CORPORATIONBy:

/s/    DWAIN BRANNONName:

Dwain BrannonTitle:

President, Chief Executive Officer, Secretary and Director




Pursuant to the
requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.



|       |  |                         |  |                
|------ |  | ----------------------- |  | ---------------
|       |  |                        
|By:    |  | /s/    ALLAN WOODLIEF   |  | August 10, 2004
|Name:  |  | Allan Woodlief (Date)   |  |                
|Title: |  | Chief Financial Officer |  |                
|       |  |                        
|By:    |  | /s/    DWIGHT DAY       |  | August 10, 2004
|Name:  |  | Dwight Day (Date)       |  |                
|Title: |  | Director                |  |                
|       |  |                        
|By:    |  | /s/    SKIP
MCELVERY    |  | August 10, 2004
|Name:  |  | Skip McElvery (Date)    |  |                
|Title: |  | Director                |  |                



30



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EXHIBIT INDEX



|               |  |                                                                                                                                                           
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                               
|               | 
|31.1           |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
|               | 
|31.2           |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
|               | 
|32.1           |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*       
|               | 
|32.2           |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*       

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|* | Filed herewith.
|- | ---------------