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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   ----------
                                   FORM 10-KSB


(Mark One)

|X|  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the fiscal year ended        December 31, 2000
                          ------------------------------------------------------
                                       OR

|_|  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _________________ to ________________________

                        Commission file number: 333-53757

                            McHENRY METALS GOLF CORP.
             (Exact name of Registrant as specified in its charter)

             Nevada                                       87-0429261
     (State of Incorporation)                  (IRS Employer Identification No.)

               1945 Camino Vida Roble, Suite J, Carlsbad, CA 92008
          (Address of principal executive offices, including zip code)

Registrant's telephone number, including area code:       (760) 929-0015
                                                    ----------------------------

Securities Registered Pursuant To Section 12(b) Of The Act:

        Title of each class          Name of each exchange on which registered
        -------------------          -----------------------------------------
              None                                    None

Securities Registered Pursuant To Section 12(g) Of The Act:   None

     Indicate by check mark  whether the  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  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X  No
                                      ---   ---

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant,  as of May 10, 2001 was  approximately  $904,611 (based upon the
closing price for shares of the  Registrant's  Common Stock as quoted by the OTC
Bulletin  Board for the last trading date prior to that date).  Shares of Common
Stock held by each officer, director and holder of 5% or more of the outstanding
Common  Stock  have  been  excluded  in that  such  persons  may be deemed to be
affiliates.  This  determination  of  affiliate  status  is  not  necessarily  a
conclusive determination for other purposes.

On May 10, 2001,  25,204,551 shares of the Registrant's  Common Stock, par value
of $0.001, were outstanding.

Documents Incorporated By Reference. None

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<PAGE>




                                     PART I


ITEM 1. BUSINESS

The following Business section contains forward-looking  statements that involve
substantial risks and  uncertainties.  The Company's actual results could differ
materially  from those  anticipated  in these  forward-looking  statements  as a
result  of  certain  factors,  including  those set  forth  under  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  and
elsewhere in this Annual Report on Form 10-KSB.

History and Development of the Company

McHenry  Metals  Golf  Corp.  (the  "Company")  designs,  develops  and  markets
innovative,  high-quality  golf clubs.  The clubs are being sold to both average
and  skilled  golfers  based  on high  performance,  ease of use and  attractive
appearance.  The Company has formulated several unique and proprietary  concepts
that are being used in the design and manufacture of the clubs. During 1997, the
Company was a development  stage company,  devoting its time to raising capital,
promotion of future  products and  administrative  functions.  The Company began
shipments of its products during the first quarter of 1998.

The Company was  incorporated in Utah on October 31, 1985,  originally under the
name of White Pine, Inc. The Company was organized  initially for the purpose of
creating a vehicle to obtain  capital and to seek out,  investigate  and acquire
interests in products and businesses with the potential for profit. In 1986, the
Company completed a public offering of common stock,  conducted  pursuant to the
exemption  from the  registration  requirements  of the  Securities  Act of 1933
provided by Rule 504 of Regulation D promulgated  thereunder  and was registered
by  qualification  in the  State of Utah.  The  Company  changed  its  corporate
domicile to the State of Nevada in March 1994.

McHenry Metals, Inc. ("MMI") was incorporated in January 1997, under the laws of
the State of Illinois.  The principal business office of the Company and MMI are
located at 1945 Camino Vida Roble, Suite J, Carlsbad, California, 92008. MMI was
founded by the late Gary V. Adams,  who became known as "the father of the metal
driver," and was founder and former chairman of TaylorMade Golf Company, now one
of the largest  golf  equipment  companies in the world.  Mr. Adams  assembled a
management team along with a carefully selected group of investors, consultants,
and advisors to launch MMI as a golf equipment company  developing and marketing
unique, proprietary golf clubs.

On April 1, 1997, the Company (which was then known as Micro-ASI  International,
Inc.) entered into an Agreement and Plan of Reorganization  with MMI and changed
its name to McHenry  Metals Golf Corp.  Pursuant to the  Agreement,  the Company
forward  split its common stock on a 2.2 for 1 basis,  increasing  the number of
shares  outstanding  from 577,770 shares to 1,271,094  shares.  The Company then
issued  5,650,000 post split shares of its  authorized  but previously  unissued
common stock to acquire all the issued and  outstanding  stock of MMI in a stock
for stock  exchange  (the  "Acquisition")  whereupon  MMI became a  wholly-owned
subsidiary of the Company.  The Acquisition is treated as a "reverse merger" for
accounting  purposes  and  MMI is  deemed  to be  the  successor  entity  with a
recapitalization of the stockholders equity portion of its financial statements.
In conjunction  with the  Acquisition,  the Company  declared a distribution  to
shareholders of the Company, of record as of March 31, 1997,  (immediately prior
to the  Acquisition)  of 1,271,094  Series A Warrants to be  distributed  in the
future,  upon  effectiveness of a registration  statement covering the offer and
sale of shares issuable upon exercise of such warrants.

<PAGE>

Effective December 31, 1998, the assets and liabilities of MMI were assumed by
the Company and MMI was dissolved.


Industry Overview

The  development  and  introduction  of new golf club designs and  technological
advances have dramatically influenced the golf club industry. In the late 1960s,
cavity-backed, perimeter-weighted irons were successfully introduced. The "sweet
spot" on these irons was significantly increased, making the club more forgiving
to off-center hits and providing the opportunity for many golfers to make better
golf shots. The golf club market was further advanced by the Company's  founder,
Gary Adams,  in the late 1970s with the  introduction  of "metal  woods,"  which
increased the distance  golfers could achieve with drivers or fairway woods.  In
the early and mid-1990s, oversized metal drivers were introduced.

According to the National Golf  Foundation  (NGF),  wholesale  revenues for golf
equipment in the U.S. in 2000 were  approximately  $2.8 billion, a figure higher
than 1999's results of $2.7 billion,  but down from the industry's all-time high
of $3.0 billion recorded in 1997.

The NGF has also reported that the number of golfers in the U.S. has leveled off
at approximately 26 million, with the number of new golfers each year, estimated
at 3 million, offset by a similar amount of people leaving the game. The lack of
growth in overall golf participation is due to barriers such as time, cost, lack
of playing partners,  and poor play,  according to the NGF's study, "A Strategic
Perspective  on the  Future  of Golf,"  conducted  by  international  consultant
McKinsey  &  Co.  The  study  reported  modest  growth   expectations  for  golf
participation of 1.5% per year, compounded annually, over the next decade.

The golf equipment business is highly competitive, and has been characterized by
widespread   imitation  of  popular  club  designs.   The  Company's   principal
competition comes from several large  well-established and recognized leaders in
the sale of premium golf clubs, such as Callaway Golf Company, TaylorMade-adidas
Golf Company,  Acushnet  (Titleist/Cobra),  Ping, Wilson, and Spalding.  Each of
these  companies has  substantially  more  financial,  management  and technical
resources  than does the Company.  In addition to these  competitors,  there are
some golf club  manufacturers and sporting goods companies that do not currently
manufacture   premium-quality   golf  clubs,  but,  could,  in  light  of  their
substantial resources, pose competition to the Company if they were to enter the
market.  An example is Nike, the world's largest  sporting goods company,  which
began testing prototype drivers and irons on the professional golf tours in late
2000 and early 2001.

A general decline in the golf equipment business following the industry's record
wholesale  revenues of $3.0 billion in 1997 has had a significant  impact on the
Company's  sales and ability to establish a market  presence  for its  products.
This  decline  was  marked by three of the major  golf  equipment  manufacturers
announcing price reductions at the wholesale level as well as the fact that they
were  carrying a  significant  amount of excess  inventory.  As a result,  other
manufacturers of premium golf equipment,  including the Company,  were forced to
reduce their selling prices in order to remain competitive.


Business Strategy

The Company has  competed  in the driver and fairway  wood  category of the golf
equipment  industry based on its innovative  product  designs,  product quality,
usage  on the  professional  golf  tours,  and  mix of  sales  and  distribution
channels.  The  Company's  management  team  has  deep  experience  in the  golf
equipment industry and its late founder, Gary V. Adams, was widely known for his
product concepts and marketing strategies.


                                       2
<PAGE>

Innovative  Product Designs - Since its founding,  the Company has established a
reputation for innovative product designs in the premium driver and fairway wood
business.  The Company's first product,  the TourPure(R) driver, which pioneered
the  combination  of titanium and tungsten,  quickly  became the #1 most popular
Driver  Model on the Senior PGA Tour and was #1 in Driving  Accuracy  on the PGA
Tour for two  consecutive  years.  The Company's new product line for 2001,  the
TourPure(R)  II,  further  enhances  the  Company's  image  for  innovation  and
performance  in premium golf  equipment.  The  TourPure(R)  II driver,  the only
driver to combine forged titanium with exclusive  PowerRing  Technology(TM),  is
being used by some of the leading professionals on the PGA and Senior PGA Tours.

Product  Quality - The Company has endeavored to create golf clubs that would be
known for their  quality  in terms of  performance  as well as  durability.  The
Company's management has carefully selected manufacturing vendors that are known
for the  quality  of their work  relative  to premium  golf  equipment,  and has
committed  resources during the production  process to monitor  adherence to the
Company's quality standards.  Consequently,  the Company has not experienced any
significant problems with product quality or breakage.

Usage on Professional  Golf Tours - The Company has attempted to create consumer
awareness  of its brand and product line  through  usage on the world's  leading
professional  golf tours,  in particular the PGA and Senior PGA Tours.  In 1999,
according to the Darrell  Survey,  the Company's  TourPure(R)  driver was the #1
most  popular  Driver  Model on the  Senior  PGA  Tour.  In 1999 and  2000,  the
TourPure(R)  driver was used to win the title as #1 in Driving  Accuracy  on the
PGA Tour.

Sales and  Distribution  Channels - The Company has  utilized a variety of sales
and distribution channels including:  the industry's  traditional retail channel
of off-course golf specialty stores and on-course golf shops;  on-course product
demonstrations  (known  as  "demo  days");  direct  response  marketing  through
television  infomercials;  direct  response  catalogs;  outbound  telemarketing;
e-commerce  via Internet  "e-tailers"  and the  Company's  proprietary  web site
(www.mchenrymetals.com);   and  distributors  with  domestic  and  international
accounts.

In  support  of these  channels  for sales and  distribution,  the  Company  has
advertised  its  products  on  national  television  networks  such as The  Golf
Channel,  Fox Sports,  and CBS.  The Company  has also  placed  advertising  and
received  editorial  coverage in major golf  publications such as Golf Magazine,
Golf  Digest,   GolfWeek,   GolfWorld,   and  the  GolfPlus  edition  of  Sports
Illustrated.  Since 1998,  the Company has  utilized  8-time Emmy Award  winning
broadcaster  Dick  Enberg  as  its  primary   spokesman.   Enberg's   impressive
broadcasting  career has included golf's U.S. Open, The Masters,  and Ryder Cup,
as well as the Olympics,  Super Bowl, Wimbledon, and other major sporting events
around the world.


Products

Since  1998,  the  Company  has  marketed  and  distributed  a complete  line of
TourPure(R)  drivers and fairway woods,  the first to combine the forgiveness of
titanium with the power of tungsten.

The  comprehensive  TourPure(R) line includes five drivers (7.5, 8.5, 9.5, 10.5,
and 12-degree loft), and 6 fairway woods (strong 3-wood, regular 3, 4, 5, 7, and
9-wood).  Left-handed  versions of the driver were  designed in two models,  and
shorter  shafts and smaller  grips were made  available  for ladies  clubs.  Six
shafts were  developed to match  player swing speeds (70, 80, 90, 100,  110, and
120 mph).

The TourPure(R)  driver's proprietary Tungsten Power Ring replaces unwieldy club
head volume with 16 grams of  high-density  mass precisely  positioned  behind a
huge titanium sweet spot. The Tungsten Power Ring produces optimal launch angles
and reduces backspin, resulting in more roll and distance



                                       3
<PAGE>

down the fairway.  This innovative use of exotic metals and strategic  weighting
creates a driver that is exceptionally forgiving,  easy to hit, and impressively
long. The TourPure driver also  incorporates an ultra-thin,  beta-titanium  face
for improved feel and  responsiveness  and an LTLF (low torque,  low  frequency)
ultralight  graphite shaft for maximum  control and greater  distance.  The LTLF
shaft is a proprietary design supplied by Grafalloy, maker of the #1 ultra-light
shaft on tour.

The  TourPure(R)  titanium-tungsten  driver  quickly  became the #1 most popular
Driver  Model on the Senior PGA Tour and was #1 in Driving  Accuracy  on the PGA
Tour for two  consecutive  years.  The  TourPure(R)  driver has recorded over 20
professional tour victories and millions of dollars in official tour earnings.

In independent testing by two leading facilities, Golf Laboratories of San Diego
and  Grapevine  Research of Dallas,  the  TourPure(R)  driver ranked higher than
drivers made by Callaway,  TaylorMade, and Titleist in terms of overall distance
from the combination of center, heel, and toe hits.

Like the  multi-metal  TourPure(R)  drivers,  TourPure(R)  fairway woods are the
first to combine the forgiveness of titanium with the power of tungsten.  It has
been  determined  through robot and player testing that a golf club with a lower
center of gravity gets the golf ball airborne faster and easier.  By integrating
a lightweight  cast titanium shell, a super-strong  and ultra-thin Beta titanium
face, and the 72-gram,  high-density  Tungsten Power Rails, the Company's design
team achieved a breakthrough in fairway wood performance. The fairway woods also
use the  proprietary  LTLF shaft made by  Grafalloy  for  improved  control  and
playability.

For 2001,  McHenry  Metals(R) has developed the  TourPure(R) II Forged  Titanium
Driver Series.  The TourPure(R) II Forged Titanium  Drivers are the only drivers
to combine  the power,  feel,  and  performance  of Forged  Beta  Titanium  with
exclusive PowerRing  Technology(TM) created by McHenry Metals(R).  The Company's
proprietary  PowerRing  Technology(TM)  optimizes  the  TourPure(R)  II driver's
weight distribution,  launching the ball with a hotter trajectory,  greater ball
speed,  and  less  spin  for  exceptional   distance  off  the  tee.   PowerRing
Technology(TM)  also  stabilizes  the  TourPure(R)  II driver at impact with the
ball,  resulting  in maximum  control and  forgiveness  on  off-center  hits.  A
TourPure(R)  II Forged Steel Fairway Wood Series design also has been created by
the Company's product research and development team.

Manufacturing  - The  manufacturing  of premium golf clubs  involves a number of
specialized processes required by the unique design of the products. The Company
has its products  manufactured by outside  manufacturers.  The Company  believes
there are numerous  suppliers that can manufacture the Company's products to the
high  standards  developed by the Company.  Clubheads,  shafts,  grips and other
components  are  supplied  by  independent  vendors  with whom the  Company  has
established working relationships.

All of  the  Company's  products  are  manufactured  to  the  Company's  precise
specifications by highly competent manufacturers based in part on processes that
are  proprietary  to the  Company.  The Company  works  closely with its casting
houses,  which  enable it to monitor  the quality  and  reliability  of clubhead
productions.  Any significant  delay or disruption in the supply of clubheads by
the casting houses or graphite shaft manufacturers would have a material adverse
effect on the  Company's  business.  In such event,  the Company  believes  that
suitable heads and shafts could be obtained from other  manufacturers,  although
the transition to another supplier could result in production  delays of several
months.

Product  Development - The Company does not limit itself in its research efforts
by trying to duplicate  designs that are  traditional  or  conventional  and has
created  an  environment  in which new ideas are valued  and  explored.  Product
development is the result of the integrated efforts of the Company's  management
team and outside  manufacturers,  working  together  to  generate  new ideas for
premium golf equipment. The Company's


                                       4
<PAGE>


product  development  committee refines these ideas and works with outside firms
to create prototypes, masters and the necessary tooling.

The design of new golf clubs is greatly influenced by rules and  interpretations
of the United  States Golf  Association  ("USGA").  Although the golf  equipment
standards  established  by the USGA generally  apply only to competitive  events
sanctioned  by  that  organization,   designers  of  new  clubs  generally  seek
compliance  with USGA  standards.  The Company's  product design and development
process involves coordination with the USGA staff regarding such compliance. The
Company has been notified by the USGA that its  TourPure(R)  line of drivers and
fairway woods and TourPure(R) II Forged Titanium Driver Series conforms to their
standards.

Expenditures  for  research  and  development  were  approximately  $34,300  and
$113,600 for the years ended December 31, 2000 and 1999, respectively.

Product Warranties - The Company currently supports all of its golf clubs with a
one-year  manufacturer's  warranty.  The Company closely  monitors the level and
nature of any product breakage and, where appropriate,  incorporates  design and
production  changes to assure its customers of the highest quality  available on
the market.  The Company has not experienced  significant  problems with product
quality or  breakage,  however,  if the  Company's  clubs were to  experience  a
significant increase in the incidence of breakage or other product problems, the
Company's sales and image with golfers could be materially adversely affected.

Intellectual Property - The Company seeks to protect its intellectual  property,
such as product  designs,  manufacturing  processes,  new product  research  and
concepts and trademarks.  These rights are protected  through the acquisition of
trademark  registrations,  the maintenance of trade secrets,  the development of
trade dress, and, when necessary and appropriate,  litigation  against those who
are, in the Company's opinion, unfairly competing.

The  Company has applied for and  received  trademark  registration  for McHenry
Metals  and  TourPure.   The  Company  intends  to  assert  its  rights  against
infringers.  There can be no assurance that other golf club  manufacturers  will
not be able to produce successful golf clubs which imitate the Company's designs
without infringing any of the Company's intellectual property rights.

The Company has  developed  stringent  procedures to maintain the secrecy of its
confidential  business  information.  These procedures  include a "need to know"
criteria for dissemination of information and written confidentiality agreements
from visitors and employees.  Suppliers, when engaged in joint research projects
are required to enter into additional confidentiality agreements.

McHenry Metals has an exclusive  license from Grafalloy to promote the LTLF (low
torque, low frequency)  ultralight graphite shaft, which was developed through a
collaborative research and development effort.


Seasonality

Golf is generally regarded as a warm weather sport, which results in significant
seasonality  to the  golf  equipment  business.  Sales  of golf  equipment  have
historically been strongest during the second and third quarters.  No assurances
can be given that the  Company  will be able take  advantage  of greater  demand
during warm weather months or successfully mitigate the negative impact on sales
during cold weather months.


Employees

As of December 31, 200, the Company had 7 full-time employees and 3 contractors.
The Company's  president and a board member are also filling sales and marketing
roles. All of the Company's


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<PAGE>


employees are located in the United  States.  None of the employees are expected
to be  represented  by  union,  and the  Company  has not  experienced  any work
stoppages. The Company considers its employee relations to be good.


ITEM 2. PROPERTIES

The Company's principal  executive offices are located in Carlsbad,  California.
The Company leases approximately 3,800 square feet of office space, which serves
as its corporate  office and  distribution  facility,  for $3,500 per month plus
common area  expenses.  Prior to January 2001,  the Company  occupied a total of
approximately  5,800  square feet at this  location  at a cost of  approximately
$3,900 per month plus common area expenses.  The lease on this facility  expired
on  December  31, 1999 and the Company has  negotiated  renewals,  which  extend
through June 30, 2001. During 1999, the Company also leased  approximately 3,060
square feet of warehouse space for $2,509 per month. The warehouse lease expired
December 31, 1999, at which time the warehouse operations were consolidated into
the corporate headquarters space.


ITEM 3. LEGAL PROCEEDINGS

The Company is  involved in various  claims  arising in the  ordinary  course of
business including: two pending creditor actions pertaining to past due accounts
payable  claims  totaling  approximately  $18,564.39;  a  collection  proceeding
pertaining  to an unpaid  remaining  balance of an expired  bank line of credit,
totaling a principal  balance  remaining of approximately  $487,600 which, as of
May 17,  2001,  a total  indebtedness  settlement  agreement  has been  mutually
entered  into  for  $100,000  (see  Item 6 - Bank  Line of  Credit  and Note 4 -
Financial Statements); and a related party action alleging breech of fulfillment
of a purchase contract,  whereby an action was filed for performance to complete
the purchase of a certain inventory  component  purchase order (see Item 7, Note
10 of Notes to Financial  Statements - Related  Party  Transactions).  Principal
amounts  claimed  pertaining  to  creditor's  actions are  reflected as payables
within the liabilities  section of the Company's financial  statements;  none of
these  claims,  in the  opinion of  management,  is  expected to have a material
adverse impact on operations of the Company.


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

There have not been any items submitted to a vote of security holders.



                                       6
<PAGE>



                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.


The Company's  Common Stock has been quoted on the OTC Bulletin  Board under the
symbol  BB-GLFN.  The  following  table sets forth the range of high and low per
share bid  information,  as reported on the OTC Bulletin  Board for each quarter
during the two-year  period ended December 31, 2000.  These  quotations  reflect
inter-dealer prices, without retail mark-up,  markdown or commission and may not
represent actual  transactions.  On May 10, 2001, the average of the highest and
lowest  trading price per share was $0.04.  As of May 10, 2001,  the Company had
approximately  600 holders of record of its Common Stock and  25,204,551  shares
outstanding.


               Quarter Ended                       High          Low
               -------------                       ----          ---

               March 31, 1999                      $2.813       $1.000
               June 30, 1999                       $1.375       $0.531
               September 30, 1999                  $1.063       $0.406
               December 31, 1999                   $0.625       $0.188

               March 31, 2000                      $0.844       $0.750
               June 30, 2000                       $0.266       $0.234
               September 30, 2000                  $0.188       $0.156
               December 31, 2000                   $0.094       $0.078


During 1999, the Company issued 1,616,000  shares of the Company's  unregistered
common stock to qualified  investors for approximately  $1,200,000.  The Company
also issued  1,715,100  shares of the  Company's  unregistered  common  stock to
qualified  investors in exchange for goods and services provided to the Company,
which  were  valued at  $1,034,900.  Certain  holders of  unregistered  warrants
elected to convert their warrants into 275,000 shares of Company's  unregistered
common  stock.  Each of these  warrants  were  convertible  at $1.00  per  share
(proceeds to the Company  totaled  $275,000).  Holders of registered  "Shop/Pro"
warrants received 4,125 shares of the Company's registered common stock upon the
conversion of their warrants.  Each of these warrants were  convertible at $1.48
per share,  resulting  in proceeds to the  Company of $6,100.  The Company  also
issued 756,000 shares of the Company's unregistered common stock to employees in
exchange for services rendered, which were valued at $244,200.

During 2000, the Company  issued  862,500  shares of the Company's  unregistered
common stock to qualified  investors for  approximately  $ 160,000.  The Company
also issued  4,551,400  shares of the  Company's  unregistered  common  stock to
qualified  investors in exchange for a combination  of past due and future goods
and services provided to the Company which were valued at $ 1,039,500.

Pursuant  to  state  laws,  the  Company  is  currently  restricted,  and may be
restricted for the foreseeable future, from paying dividends to its stockholders
a result of its accumulated deficit as of December 31, 1999.




                                       7



<PAGE>


During the past year,  the Company did not declare or pay any cash  dividends on
its Common Stock.  The Company  currently plans to retain all of its earnings to
support  the  development  and  expansion  of its  business  and has no  present
intention of paying any dividends on Common Stock in the foreseeable future.





                                       8


<PAGE>



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


Management's  Discussion  and  Analysis of Financial  Conditions  and Results of
Operations contain forward-looking statements that involve substantial risks and
uncertainties.  The Company's actual results could differ  materially from those
anticipated in these forward-looking  statements as a result of certain factors,
including those set forth in this section and elsewhere in this Annual Report on
Form 10-KSB.


Management's Plan Of Operations

The following  discussion and analysis  should be read in  conjunction  with the
Company's  financial  statements and the notes associated with them contained in
Item 7. The financial  statements of the Company  referred to in this discussion
include and reflect the financial  condition  and  operating  results of McHenry
Metals Golf Corp.  for the two years ended  December 31, 2000.  This  discussion
should  not be  construed  to  imply  that the  results  discussed  herein  will
necessarily  continue into the future or that any conclusion reached herein will
necessarily be indicative of actual operating results in the future.


Years Ended December 31, 2000 and 1999


Net Sales

Net sales  for the year  ended  December  31,  2000  ("2000")  were  $1,366,800,
representing  a decrease of  $2,185,700 or 62% less than net sales of $3,552,500
for the year ended  December 31, 1999 ("1999").  The Company began  shipments of
its products  during the first quarter of 1998.  During 1997,  the Company was a
development stage company and thus, had no revenues.

Due to the Company's limited operating history,  management has elected to defer
recognition  of revenue on product sales until the related  accounts  receivable
have been collected.  This basis of revenue  recognition is expected to continue
until, in the opinion of management, there exists sufficient history of customer
payments and returns to provide a reasonable  basis to conclude  that revenue is
earned at the point of shipment.  As a result of this  policy,  net sales do not
include  the sales  value of  shipments  for which the  Company has not yet been
paid. The Company will likely continue to report revenues on this basis.

Several factors  affected sales of the Company's  products in 2000 and 1999, the
most significant of which was a general decline in the golf equipment  industry,
which  began  during  1998.  This  decline was marked by three of the major golf
equipment  manufacturers  announcing  price reductions at the wholesale level as
well as the fact  that  they  were  carrying  a  significant  amount  of  excess
inventory.   Consequently,   other  manufacturers  of  premium  golf  equipment,
including the Company,  were forced to reduce their  selling  prices in order to
remain  competitive.  The  Company's  original  TourPure(R)  line of drivers and
fairway woods was also nearing the end of its product life cycle during 2000.

Cost of Goods Sold

For 2000, cost of goods sold was $907,700 or 66.4% of net sales.  For 1999, cost
of goods was  $2,571,800  or 72.4% of net  sales.  Until the  Company is able to
significantly  increase its production levels, the Company believes its costs of
goods sold will remain above  industry  averages (cost of goods sold in the golf
equipment industry generally runs in the range of 40% to 60% of net sales).


                                       9
<PAGE>


Gross Profit

Gross profit for 2000 was $459,100 or 33.6% of net sales, as compared to a gross
profit for 1999 of $980,700 or 27.6% of net sales.  The Company believes that it
can improve its margins by working to control  costs,  finding ways of producing
products more cost-effectively and exploring direct-to-consumer sales via direct
response advertising and the internet to increase sales volume.


Selling Expenses

Selling  expenses  were  $707,500 for 2000 as compared to  $4,144,500  for 1999,
representing  a decrease of  approximately  $3,437,000  or 83%.  The decrease in
selling expenses is directly related to the Company's lack of sufficient capital
resources   preventing  the  Company  from  fully-executing  its  marketing  and
advertising plans for 2000.


General and Administrative Expenses

General  and  administrative  expenses  were  $621,800  for 2000 as  compared to
$1,530,900 for 1999, representing a decrease of $909,100 or 59%. The decrease in
general and administrative expenses is directly related to the Company's lack of
sufficient capital resources,  which caused the Company to significantly  reduce
its overhead expenses during 2000.


Research and Development Expenses

Research and development  expenses were $34,300 for 2000 as compared to $113,600
for 1999, representing a decrease of approximately $79,200 or 70%. A majority of
the Company's  research and development  occurred in 1997 prior to production of
the Company's first products in 1998.


Income Taxes

The Company  accounts for income taxes in accordance with Statement of Financial
Accounting  Standards  ("SFAS") No. 109, which requires  recognition of deferred
tax assets and liabilities  for the expected  future tax  consequences of events
that have been included in the financial  statements or tax returns.  Under this
method,  deferred  tax  assets and  liabilities  are  determined  based upon the
difference  between  the  financial  statement  and  tax  bases  of  assets  and
liabilities  using  enacted  tax rates in effect  for the  year(s)  in which the
differences are expected to reverse.


A  valuation  allowance  is  provided  when it is more likely than not that some
portion or all of the deferred  tax assets will not be realized.  As a result of
the Company's significant losses in 2000 and 1999 and uncertainties  surrounding
the  realization  of the net operating loss  carryforwards  which were generated
during 2000 and 1999, management has determined that the realization of deferred
tax assets is more likely than not. Accordingly, a 100% valuation allowance of $
6,470,000 has been recorded as of December 31, 2000.


Net Loss

Net loss for 2000 was $1,008,500,  a decrease of $3,928,600 or 80% less than the
net loss of $4,937,100 in 1999.


Liquidity and Capital Resources

The Company  primarily  financed its operations in 2000 through a combination of
the sale of common stock and conversion of accounts  receivable and  inventories
to cash,  thereby reducing  accounts  receivable by $ 285,300 and inventories by
$427,000.   During  2000,  operating   activities  used  $  335,000,


                                       10
<PAGE>


investing  activities,  consisting  of  purchases  of  equipment  and  leasehold
improvements,  used $ 5,500, and financing activities provided $ 326,500,  which
consisted  primarily  of the sale of  common  stock  ($160,000),  proceeds  from
convertible  notes ($ 245,000)  and the  reduction  of debt and  capital  leases
($54,100 and $24,400), respectively.

During  1999,  operating  activities  used  $1,635,500,   investing  activities,
consisting of purchases of equipment and leasehold  improvements,  used $36,900,
and financing activities provided $1,097,000.

At  December  31,  2000,  the  Company  had  a  working  capital  deficiency  of
$1,470,000, an accumulated deficit of $19,348,900 and $487,600 outstanding under
a bank line of credit which was in default.


Bank Line of Credit

In July  1998,  the  Company  obtained  a  $3,000,000  bank line of credit  that
provided  an advance on  eligible  accounts  receivable  and was  secured by the
assets  of the  Company.  Due to slow  customer  payments,  the  Company  became
over-advanced  in its position with the bank.  The line of credit was reduced to
$930,000  and the  expiration  date of the line of credit  changed from July 30,
1999 to November  11,  1998.  As of December  31,  1998,  the Company was not in
compliance with most of its loan covenants of the line of credit  agreement.  On
January 29, 1999, the Company and the bank  negotiated an amended line of credit
agreement  which revised the maturity date from February 11, 1999 to the earlier
of the  Company's  sale of  $2,000,000  in  additional  equity or May 11,  1999,
increased  the interest  rate to prime plus 7%,  reduced the amount which can be
borrowed  to $870,000  (the  outstanding  balance as of that date) and  required
principal  payments  should the  Company's  borrowing  base be  insufficient  to
support the outstanding  balance on the dates the payments were due: $125,000 as
of March 31, 1999 (which was paid on March 31,  1999);  $150,000 as of April 30,
1999 (which was not paid); and $175,000 on May 10, 1999 (which was not paid). On
July 30, 1999, the Company and the bank negotiated an additional amendment (when
it appeared  the  Company  would be able to secure  another  line of credit from
another  source) which reduced the line of credit to $665,000,  set the maturity
date to July 15,  1999,  established  a  repayment  schedule of $50,000 per week
until the debt is paid in full.  When it became  apparent that the Company would
not be able to obtain a  replacement  line of  credit,  the bank  permitted  the
Company to make payments in the amount of 20% of its daily cash  collections  on
trade receivables. Payments under this unwritten plan continued until the end of
October 1999,  when the Company  advised the bank that it would require all cash
collections at that time in order to meet its monthly expenses.

On May 4, 2000, the Company and the bank signed a new forbearance agreement.  At
that time,  the Company paid all past due interest at a fixed rate of 12.5% from
September  15, 1999 to May 4, 2000 and agreed to pay interest  monthly at a rate
of 4% over prime  during  the  forbearance  period.  The  forbearance  agreement
extended the loan until  August 31, 2000,  and, if the loan balance was $300,000
or less at that time,  the agreement  would have further  extended until October
31, 2000.  The Company did not achieve a loan  balance  reduction to $300,000 by
August 31, 2000. In the May 4th forbearance agreement, the Company agreed to and
implemented  a  daily  principal  paydown  program  of 20% of its  net  accounts
receivable and cash collections. However, to accelerate principal reductions, on
August 17, 2000 the Company implemented an increase of its paydown percentage to
50% for a period of  approximately  three  weeks  until  September  7, 2000.  In
anticipation  of the  August  31,  2001,  termination  of the  loan  forbearance
agreement,  and in order to further  protect its interest in collateral  pledged
pursuant to terms within the original loan  agreement,  the bank chose to file a
legal proceeding  granting rights for possession of inventory  collateral should
it desire to execute on such rights. During additional  forbearance  discussions
and until such a forbearance  was agreed to, the Company  agreed to a stipulated
order to maintain its ordinary course of business and not to otherwise remove or
impair the value of the bank's collateral.  Additionally,  the Company agreed to
continue loan principal reductions as percentage of accounts receivable and cash
collections.  As of November 14, 2000,  the Company and the bank


                                       11
<PAGE>

agreed to terms for an additional period of forbearance extending to the earlier
date of February 15, 2001 or completion of any merger transaction,  from which a
payoff would ensue upon the transaction's completion.

In February,  2001 discussion commenced for an additional  forbearance and terms
for a discounted  settlement  agreement for all remaining  balances.  As further
protection  of  the  bank's  collateral,   the  Company  on  February  21,  2001
voluntarily  released a portion of its inventory to be stored temporarily in the
bank's possession.

On May 17, 2001 the bank and the Company  entered  into a period of  forbearance
until  October 31, 2001 and the bank agreed that should the Company make payment
to the bank of $40,000 by June 15, 2001 and $60,000 by July 15,  2001,  then the
bank would deem all  balances  owed to be fully paid and  satisfied  and thereby
discharge  and release  the Company  from  responsibility  to pay any  remaining
balance.  All inventory  existing  within the bank's control  subsequent to such
$40,000 payment made will be released back to the company.


Future Operations - Status as a Going Concern

The financial  statements  of the Company have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going concern.  However,  the Company is newly formed, has incurred
losses  since its  inception  and has not yet been  successful  in  establishing
profitable  operations.  The Company's  independent certified public accountants
have included an explanatory paragraph in their audit report with respect to the
Company's 2000 and 1999 financial statements related to a substantial doubt with
respect to the Company's  ability to continue as a going concern.  The financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.  There can be no assurance that the Company's future financial
statements will not include another going concern  explanatory  paragraph if the
Company is unable to raise additional funds and become  profitable.  The factors
leading to, and the existence of, the explanatory paragraph will have a material
adverse  effect on the Company's  ability to obtain  additional  financing.  See
"Future  Capital Needs;  Need for Additional  Financing -- Liquidity and Capital
Resources --Financial Statements."


Risk of Bankruptcy

The  Company  may need to be  reorganized  under  Chapter  11 of Title 11 of the
United  States  Code or  liquidated  under  Chapter 7 of Title 11 of the  United
States Code. There can be no assurance that if the Company decides to reorganize
under the  applicable  laws of the  United  States  that  such  reorganizational
efforts would be successful or that shareholders  would receive any distribution
on account of their ownership of shares of the Company's stock. Similarly, there
can be no  assurances  that  if the  Company  decides  to  liquidate  under  the
applicable laws of the United States that such  liquidation  would result in the
shareholders  receiving any distribution on account of their ownership of shares
of the  Company's  stock.  In fact,  if the Company  were to be  reorganized  or
liquidated  under the applicable laws of the United States,  the bankruptcy laws
would  require (with  limited  exceptions)  that the creditors of the Company be
paid before any distribution is made to the shareholders.


Future Capital Needs; Need for Additional Financing

The Company estimates that it may need substantial  funding,  in addition to its
present  capital,  to be able to fully  develop  and  expand its  business.  The
Company's future capital  requirements will depend upon many factors,  including
the extent and timing of  acceptance  of the  Company's  products in the market,
commitments to third parties to develop and manufacture  products,  the progress
of the Company's product  development  efforts,  the Company's operating results
and the status of  competitive  products.  The  Company  has no  commitment  for
additional  funding and may have to seek  further  equity  financing


                                       12
<PAGE>

in order to continue to develop and expand its  business.  There is no assurance
that the Company  will be able to obtain  such  funding and if obtained it could
dilute the ownership of present shareholders.


Future Operating Results

The Company is newly formed, has incurred losses since its inception and has not
yet been successful in establishing  profitable  operations.  Operating  results
will continue to fluctuate  significantly in the future depending upon a variety
of  factors,  including  creditor  relationships,  downward  pressure  on  gross
margins, delayed market acceptance,  if any, of new and enhanced versions of the
Company's products, delays,  cancellations or reschedulings of orders, delays in
product  development,  defects in products,  integration of acquired businesses,
relationships with and conditions of customers,  subcontractors,  and suppliers,
price  competition,  seasonality in the golf industry and general  conditions in
the golf industry. In addition,  operating results will fluctuate  significantly
based upon several other factors, including the Company's ability to attract new
customers   and   changes   in  pricing  by  the   Company,   its   competitors,
subcontractors,  customers or suppliers.  The absence of significant backlog for
an  extended  period of time  will also  limit  the  Company's  ability  to plan
production and inventory levels, which could lead to substantial fluctuations in
operating results.  Accordingly,  the failure to receive  anticipated orders, or
delays in shipments due, for example, to unanticipated shipment reschedulings or
defects  or  to  cancellations  by  customers,  or to  unexpected  manufacturing
problems may cause net sales in a particular quarter to fall significantly below
the  Company's  expectations,   which  would  materially  adversely  affect  the
Company's  operating  results  for such  quarter.  The impact of these and other
factors on the  Company's  net sales and  operating  results  in future  periods
cannot be forecasted with any certainty.  In addition,  the fixed overhead costs
at the Company's  facilities,  the need for continued  expenditures  for product
development and other commitments of the Company, among other factors, will make
it difficult  for the Company to reduce its  expenses in a particular  period if
the  Company's  sales goals for such period are not met. A large  portion of the
Company's  operating  expenses  are fixed and are  difficult to reduce or modify
should  revenues  not meet  the  Company's  expectations,  thus  magnifying  the
material adverse impact of any such revenue shortfall. Accordingly, there can be
no  assurance  that the Company will not incur losses in the future or that such
losses  will not have a  material  adverse  effect  on the  Company's  business,
financial condition and results of operations.


Seasonality and Quarterly Fluctuations

Golf  generally is regarded as a warm weather sport and sales of golf  equipment
historically have been strongest during the second and third quarters,  with the
weakest sales occurring  during the fourth quarter.  In addition,  sales of golf
clubs are dependent on discretionary consumer spending, which may be affected by
general economic  conditions.  A decrease in consumer  spending  generally could
result in  decreased  spending  on golf  equipment,  which could have a material
adverse  effect on the  Company's  business,  operating  results  and  financial
condition.  In addition,  the Company's  future  results of operations  could be
affected by a number of other  factors,  such as  unseasonal  weather  patterns;
demand for and market acceptance of the Company's  existing and future products;
new product  introductions by the Company's  competitors;  competitive pressures
resulting  in lower than  expected  average  selling  prices;  reliance on third
parties including suppliers; and the volume of orders that are received and that
can be fulfilled in a quarter.  Any one or more of these factors could result in
the  Company  failing  to achieve  its  expectations  as to future  sales or net
income.


Highly Competitive Industry; Significant Price Competition

The market for premium-quality golf clubs is highly competitive and is served by
a number of  well-established,  well-financed  companies with  recognized  brand
names. In addition, there are several golf club manufacturers and sporting goods
companies with substantial resources that, although they do not


                                       13
<PAGE>


currently  manufacture   premium-quality  golf  clubs,  could  pose  significant
competition to the Company if they were to enter the market for  premium-quality
golf clubs.  The golf club  industry,  in  general,  has been  characterized  by
widespread  imitation of popular club designs. A company's ability to compete is
in part dependent upon its ability to satisfy various subjective requirements of
golfers,  including  the golf club's look and "feel" and the level of acceptance
that the golf club has among  professional  and other  golfers.  The  subjective
preferences  of  golf  club   purchasers  may  also  be  subject  to  rapid  and
unanticipated  changes. There can be no assurances as to whether or how long the
Company's  golf clubs will receive market  acceptance.  A decline in the size of
the golf club  market,  whether  from a decrease  in the  popularity  of golf or
otherwise  would  have a  material  adverse  effect  on the  Company's  proposed
business.


Dependence on Golf Industry

The  financial  performance  of the Company is  dependent in large part upon the
current and  anticipated  market demand for golf equipment.  Recently,  the golf
equipment industry has experienced periods of oversupply and little to no growth
in player  participation and equipment spending. A minimal rate of growth in the
demand  for  golf   equipment  due,  for  example,   to   competitive   factors,
technological  change or otherwise,  may materially adversely affect the markets
for the Company's products. Accordingly, any factor adversely affecting the golf
equipment  industry may  materially  adversely  affect the  Company's  business,
financial  condition and results of  operations.  There can be no assurance that
the  Company's  net sales  and  results  of  operations  will not be  materially
adversely  affected if downturns or  slowdowns  in the golf  equipment  industry
continue or occur again in the future.


Credit Risk

The Company  sells a significant  percentage  of its products to golf  equipment
retailers.  The Company  performs  ongoing credit  evaluations of its customers'
financial  condition and generally  requires no collateral from these customers.
The recent  downturn  in the  retail  golf  equipment  market  has  resulted  in
delinquent or uncollectible  accounts for some of the Company's customers.  As a
result, beginning with its first year of reporting revenues, the Company elected
to defer revenues on uncollected sales (see Note 1 to the Financial Statements).
Management  does not foresee any  significant  improvement in the golf equipment
market and therefore expects this trend to continue.  Accordingly,  there can be
no assurance that the Company's  results of operations or cash flows will not be
adversely  impacted by the failure of its customers to meet their obligations to
the Company.


Importance of Timely Product Introduction; Uncertainty of Market Acceptance

The basis of the Company's  future is the  introduction of new,  innovative golf
clubs.  New models and basic design changes are frequently  introduced  into the
golf club market but are often met with consumer rejection. No assurances can be
given that the  Company  will be able to design and market  golf clubs that meet
with market  acceptance.  In addition,  prior successful designs may be rendered
obsolete within a relatively short period of time as new products are introduced
into the  market.  The design of new golf clubs is also  greatly  influenced  by
rules and  interpretations  of the  United  States  Golf  Association  ("USGA").
Although the golf equipment  standards  established by the USGA generally  apply
only to competitive  events  sanctioned by that  organization,  designers of new
clubs generally seek  compliance  with USGA standards.  Although the Company has
been notified by the USGA that its TourPure(R) line of drivers and fairway woods
and  its  TourPure(R)  II  Forged  Titanium  Driver  Series  conforms  with  its
standards,  no assurance  can be given that any new  products  will receive USGA
approval  or that  USGA  existing  standards  will not be  altered  in ways that
adversely affect the future sales of the Company's products.



                                       14
<PAGE>

Technological Changes

The manufacture and design of golf clubs has undergone  significant changes with
respect to design and  materials in recent  years.  The  introduction  of new or
enhanced  technologies  or designs by  competitors  could  render the  Company's
products  less  marketable.  The ability of the Company to compete  successfully
will depend to a large  degree on its ability to innovate and respond to changes
and advances in its industry. There can be no assurance that the Company will be
able over the long term to keep pace with the demands of the marketplace.


Dependence on Certain Suppliers

The Company  intends to purchase  most of its metal wood club heads from certain
well-known  casting houses on a purchase order basis and to purchase club shafts
from certain shaft  manufacturers  which may have to make modifications in their
standard   products  to  accommodate  the  Company's  golf  club  designs.   Any
significant delay or disruption in the supply of club heads or shafts would have
a material adverse effect on the company's business.  In such event, the Company
believes  that  suitable  club heads and  shafts  could be  obtained  from other
manufacturers,  although  the  transition  to another  supplier  could result in
production delays of several weeks.


Risks of Technical Problems or Product Defects

There is no assurance, despite testing and quality assurance efforts that may be
performed by the Company and/or its industry  partners,  that technical problems
or product  defects  will not be found,  resulting in loss of or delay in market
acceptance  and  sales,  diversion  of  development  resources,  injury  to  the
Company's  reputation or increased service and support costs, any of which could
have a material adverse effect on the Company's business.  Moreover, there is no
assurance that the Company will not experience  difficulties that could delay or
prevent the development and introduction of its products and services,  that new
or enhanced  products and  services  will meet with market  acceptance,  or that
advancements by competitors will not erode the Company's  position or render the
Company's products and services obsolete.


Dependence on Proprietary Technology

The  Company's   success  will  be  heavily  dependent  upon  a  combination  of
proprietary design and technology developed internally.  The Company has pursued
trademark and patent  protection  and also expects to rely on a  combination  of
trade secrecy, non-disclosure agreements and contractual provisions with respect
to the proprietary nature of its technology.  However, there can be no assurance
that any  steps  taken by the  Company  will  prevent  misappropriation  of this
technology.  Effective legal protection of these technologies may be unavailable
or limited in certain  foreign  countries.  Third  parties  could  independently
develop competing technologies that are substantially  equivalent or superior to
the Company's technologies.  Although the Company believes that its products and
the  proprietary  rights  developed by it do not infringe  upon any  proprietary
rights of others, an infringement  claim was filed against the Company,  but was
subsequently settled and dismissed.  Whether or not this or any claim has merit,
there is no assurance  regarding the outcome of  litigation,  which could have a
material adverse effect upon the Company. See "Legal Proceedings."


Dependence on Key Personnel

The  Company is  dependent  upon the  management  and  leadership  skills of its
management  team.  There is intense  competition for qualified  personnel in the
golf club  industry,  and the loss of key  personnel or an inability to attract,
retain and motivate key personnel could adversely affect the Company's business.


                                       15
<PAGE>


There is no  assurance  that the  Company  will be able to retain  its  existing
management personnel or to attract additional  qualified personnel.  The Company
has no key man life  insurance on members of  management.  There is no assurance
that the Company will be able to retain its existing management  personnel or to
attract additional qualified personnel.


Volatility of Stock Price

A limited  public market has developed for the common stock of the Company,  and
market prices have fluctuated significantly. Market prices will be influenced by
many  factors,  and will be subject to  significant  fluctuation  in response to
variations  in  operating  results  of the  Company  and other  factors  such as
investor perceptions of the Company,  supply and demand, interest rates, general
economic conditions and those specific to the industry,  international political
conditions,  developments  with  regard  to  the  Company's  activities,  future
financial condition and management.


Year 2000 Issue

Historically,  many computer  programs have been written using two digits rather
than four to define the  applicable  year,  which  could  result in the  program
failing to properly  recognize  a year that  begins  with "20"  instead of "19."
This, in turn, could result in major system failures or miscalculations,  and is
generally referred to as the "Year 2000" or "Y2K" issue. While the Company's own
products do not contain date-based  functionality and are not susceptible to the
Y2K issue,  much of the  Company's  operations  incorporate  or are  affected by
systems which may contain date-based functionality.

The Company found that its systems are Y2K compliant and has not experienced any
interruptions  in any of its internal  systems during the change to the new year
or subsequently. In addition, the Company has not experienced any lack of supply
of raw  materials or lack of payments from  customers due to the Y2K issue.  The
Company did not incur a significant  amount of time or cost to bring its systems
into compliance.


Growth Strategy Through Acquisitions

The  Company  has in the past  sought and may in the future  continue to seek to
increase  sales and achieve  growth  through the  acquisition  of  comparable or
complementary  businesses.  The  implementation  of this strategy will depend on
many factors,  including the  availability of acquisitions at attractive  prices
and the ability of the Company to make acquisitions, the integration of acquired
businesses  into existing  operations,  the expansion of the Company's  customer
base and the availability of required  capital.  Acquisitions by the Company may
result in the issue of equity  securities  that will have a dilutive effect upon
existing shareholders,  and an increase in debt and the amortization of goodwill
and  other   intangible   assets  that  could  adversely  affect  the  Company's
profitability. Any inability to control and manage growth effectively could have
a material  adverse effect on the Company's  business,  financial  condition and
results  of  operations.  There  can  be no  assurance  that  the  Company  will
successfully expand or that growth and expansion will result in profitability or
that the Company's  growth plans through  acquisitions  will not be inhibited by
the Company's current lack of resources.







                                       16
<PAGE>






ITEM 7. FINANCIAL STATEMENTS


                          Independent Auditors' Report

To the Board of Directors
McHenry Metals Golf. Corp.
Carlsbad, California

We have audited the  accompanying  balance sheet of McHenry Metals Golf Corp. as
of December 31, 2000 and the related  statements  of  operations,  stockholders'
equity (deficit), and cash flows for the years ended December 31, 2000 and 1999.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of McHenry Metals Golf Corp. at
December 31, 2000 and the results of its  operations  and its cash flows for the
years ended December 31, 2000 and 1999 in conformity with accounting  principles
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements, the Company suffered a net loss of $1,008,500 for the year
ended  December  31, 2000 and, as of December 31,  2000,  has a working  capital
deficiency of  $1,470,000,  and an  accumulated  deficit of  $19,348,900.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 2.  Continuation of the Company is dependent on the Company's ability to
raise  sufficient  capital,  achieve  sufficient  cash  flow  to meet  its  debt
obligations and achieve profitability.  The accompanying financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

                                Clumeck, Stern, Phillips & Schenkelberg
                                Certified Public Accountants


Encino, California
May 14, 2001

Except for Notes 4, 5 and 12
which are as of May 17, 2001



                                       17
<PAGE>



                            McHenry Metals Golf Corp.
                                  Balance Sheet
                                December 31, 2000

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------- --------------------
<S>                                                                                 <C>
ASSETS
Current Assets
     Cash                                                                           $         6,600
     Accounts receivable, net                                                                38,100
     Inventories                                                                            122,800
     Deferred costs on unrecognized sales                                                    29,200
     Other current assets                                                                   106,800
--------------------------------------------------------------------------------- --------------------
Total Current Assets                                                                        303,500
Equipment and leasehold improvements, net                                                   106,300
Other non-current assets                                                                     30,300
--------------------------------------------------------------------------------- --------------------
Total Assets                                                                        $       440,100
================================================================================= ====================

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
     Line of credit borrowings, in default                                          $       487,600
     Current portion of leases payable                                                        5,500
     Accounts payable and accrued liabilities                                             1,187,900
     Accrued compensation                                                                    54,300
     Deferred revenue                                                                        38,200
--------------------------------------------------------------------------------- --------------------
Total Current Liabilities                                                                 1,773,500
--------------------------------------------------------------------------------- --------------------

Notes payable, convertible to equity                                                        591,700
--------------------------------------------------------------------------------- --------------------

Leases payable, less current portion                                                             --
--------------------------------------------------------------------------------- --------------------

Total Long Term Liabilities                                                                 591,700
--------------------------------------------------------------------------------- --------------------
Commitments and Contingencies
Subsequent Event

Shareholders' Deficit
     Preferred stock, $0.001 par value; 5,000,000 shares authorized;
        no shares issued or outstanding                                                          --
     Common stock, $0.001 par value; 50,000,000 shares authorized; 23,300,000
        issued and outstanding                                                               23,300
     Additional paid-in capital
                                                                                         17,400,500
     Accumulated deficit
                                                                                        (19,348,900)
--------------------------------------------------------------------------------- --------------------
Total Stockholders' Deficit
                                                                                         (1,925,100)
--------------------------------------------------------------------------------- --------------------
Total Liabilities and Stockholders' Deficit
                                                                                    $       440,100
================================================================================= ====================
</TABLE>

                                 See accompanying notes to financial statements.




                                       18
<PAGE>



                            McHenry Metals Golf Corp.
                            Statements of Operations

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                       --------------------------------------------------
                                                                   2000                   1999
---------------------------------------------------------------------------------------------------------
<S>                                                       <C>                       <C>
Net sales                                                 $     1,366,800        $     3,552,500
Cost of goods sold                                                907,700              2,571,800
---------------------------------------------------------------------------------------------------------
Gross profit                                                      459,100                980,700
Selling expenses                                                  707,500              4,144,500
General and administrative expenses                               621,800              1,530,900
Research and development costs                                     34,300                113,600
---------------------------------------------------------------------------------------------------------
Loss from operations                                             (904,500)            (4,808,300)
Interest expense, net                                             (62,600)              (123,000)
Other expense                                                     (41,400)                (5,800)
---------------------------------------------------------------------------------------------------------

Net loss                                                  $    (1,008,500)       $    (4,937,100)
=========================================================================================================


Basic and diluted loss per share                          $        (0.05)        $         (0.31)
=========================================================================================================
</TABLE>

                                 See accompanying notes to financial statements.






                                       19
<PAGE>



                            McHenry Metals Golf Corp.
                  Statements of Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>

                                   Common Stock            Additional
                            ----------------------------     Paid-In         Unearned        Accumulated
                               Shares        Amount          Capital       Compensation        Deficit           Total
 ---------------------------------------------------------------------------------------------------------------------------
<S>                           <C>            <C>          <C>              <C>              <C>              <C>
 Balance,
    December 31, 1998         13,499,500        13,500        13,548,200        (517,700)       (13,403,300)       (359,300)
 Stock issued for cash         1,616,000         1,600         1,076,400              --                 --       1,078,000
 Stock issued upon
    exercise of warrants         279,100           300           280,800              --                 --         281,100
 Stock issued for
    goods and services         1,715,100         1,700         1,033,200              --                 --       1,034,900
 Stock issued
    as compensation              756,000           800           243,400        (104,500)                --         139,700
 Options and warrants
    issued as compensation            --            --            24,400          10,700                 --          35,100
 Amortization of
    unearned compensation             --            --                --         611,500                 --         611,500
 Net loss                             --            --                --              --         (4,937,100)     (4,937,100)
 ---------------------------------------------------------------------------------------------------------------------------
 Balance,
    December 31, 1999         17,865,700     $  17,900       $16,206,400   $          --    $   (18,340,400) $   (2,116,100)
 Stock issued for cash           862,500           800           159,200              --                 --         160,000
 Stock issued
    for accrued
    compensation                 562,500           500           187,000              --                 --         187,500
 Stock issued for
    goods and services         2,157,700         2,200           354,600              --                 --         356,800
 Stock issued
    for accounts payable         501,700           500           179,200              --                 --         179,700
 Stock issued to employees        59,500           100            10,100              --                 --          10,200
 Cost of capital adjustment           --            --            51,300              --                 --          51,300
  Note payable conversion      1,270,000         1,300           252,700              --                 --         254,000
 Net loss                             --            --                --              --         (1,008,500)     (1,008,500)
 ---------------------------------------------------------------------------------------------------------------------------
 Balance,
    December 31, 2000         23,279,600     $  23,300       $17,400,500   $          --    $   (19,348,900) $   (1,925,100)
 ===========================================================================================================================
</TABLE>



                                       20
<PAGE>



                            McHenry Metals Golf Corp.
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                                 -----------------------------------------
                                                                        2000                 1999
----------------------------------------------------------------------------------------------------------
<S>                                                                <C>                  <C>
Cash flows used in operating activities:
Net loss                                                           $     (1,008,500)    $     (4,937,100)
Adjustments to reconcile net loss to
  cash used in operating activities:
    Loss on leased equipment                                                 12,100                   --
    Stock issued as compensation                                             11,800              139,700
    Amortization of services for stock                                      257,700                   --
    Warrants issued as compensation                                              --              (86,900)
    Amortization of unearned compensation                                        --              611,500
    Deferred costs on unrecognized sales                                     12,400              257,000
    Provision for inventory obsolescence                                         --             (408,200)
    Depreciation and amortization                                           106,000              244,600
    Non-cash interest expense`                                                5,000                   --
Changes in operating assets and liabilities:
    Inventories                                                             427,000            1,865,300
    Other current assets                                                    273,000               97,600
    Other non-current assets                                                 (4,800)                  --
    Accounts payable and accrued liabilities                               (459,200)             585,300
    Accrued compensation                                                     32,500               (4,300)
----------------------------------------------------------------------------------------------------------
Cash used in operating activities                                          (335,000)          (1,635,500)
----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
    Purchases of equipment and leasehold improvements                        (5,500)             (36,900)
----------------------------------------------------------------------------------------------------------
Cash used in investing activities                                            (5,500)             (36,900)
----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
    Net borrowings (repayments) under line of credit                        (54,100)            (358,300)
    Proceeds from convertible note                                          245,000                   --
    Principal payments on leases payable                                    (24,400)             (24,900)
    Net proceeds from sale of common stock                                  160,000            1,481,100
----------------------------------------------------------------------------------------------------------
Cash provided by financing activities                                       326,500            1,097,900
----------------------------------------------------------------------------------------------------------
Net decrease in cash                                                        (14,000)            (574,500)
Cash at beginning of period                                                  20,600              595,100
----------------------------------------------------------------------------------------------------------
Cash at end of period                                              $          6,600     $         20,600
----------------------------------------------------------------------------------------------------------
Non Cash Financing
----------------------------------------------------------------------------------------------------------
    Stock issued for goods and services                                     536,500            1,034,900
----------------------------------------------------------------------------------------------------------
    Stock issued for compensation                                            10,200              268,600
----------------------------------------------------------------------------------------------------------
    Note payable converted to stock                                         254,000                   --
==========================================================================================================
</TABLE>

                                 See accompanying notes to financial statements.


                                       21
<PAGE>




NOTE 1 - DESCRIPTION OF COMPANY AND SUMMARY OF ACCOUNTING POLICIES


McHenry Metals Golf Corp. (the "Company") was incorporated in 1985 in Utah under
the name of White Pine,  Inc. In 1986, the name was changed to Symphony  Holding
Company. In 1993, the corporate domicile was changed from Utah to Nevada and the
corporation  changed its name to Symphony  Ventures,  Inc. In 1996, the name was
changed to Micro-ASI  International,  Inc. On April 1, 1997, the Company entered
into an Agreement and plan of Reorganization  with McHenry Metals,  Inc. ("MMI")
and changed its name to McHenry Metals Golf Corp. MMI was incorporated under the
laws of Illinois on January 13, 1997, to engage in the manufacture and sale of a
new line of golf related equipment.

Pursuant to the Agreement,  the Company  forward split its common stock on a 2.2
for 1 basis,  increasing the number of shares outstanding from 577,770 shares to
1,271,094  shares.  The Company then issued  5,650,000  post split shares of its
authorized  but previously  unissued  common stock to acquire all the issued and
outstanding  stock of MMI in a stock  for  stock  exchange  (the  "Acquisition")
whereupon MMI became a wholly-owned  subsidiary of the Company.  The Acquisition
is treated as a "reverse merger" for accounting purposes and MMI is deemed to be
the successor entity with a recapitalization  of the stockholders equity portion
of its financial  statements.  In conjunction with the Acquisition,  the Company
declared a distribution to  shareholders  of the Company,  of record as of March
31, 1997,  (immediately prior to the Acquisition) of 1,271,094 Series A Warrants
(see  Note  8)  to  be  distributed  in  the  future,  upon  effectiveness  of a
registration  statement  covering  the offer and sale of  shares  issuable  upon
exercise of such warrants.

Prior to 1998, the Company was a development stage company. In 1998, the Company
started to manufacture, market and sell its line of golf clubs.

On December 31, 1998, the Company  assumed all the assets and liabilities of MMI
and dissolved MMI.


Revenue Recognition - Due to the Company's limited operating history, management
has elected to defer  recognition  of revenue on product sales until the related
accounts  receivable have been collected.  This basis of revenue  recognition is
expected  to  continue  until,  in  the  opinion  of  management,  there  exists
sufficient  history of customer  payments  and  returns to provide a  reasonable
basis to conclude that revenue is earned at the point of shipment.

The revenue  that is deferred is equal to the net accounts  receivable  balance,
and is classified as a current liability. The cost of the deferred revenues make
up the balance of deferred costs on unrecognized  sales, which are classified as
current assets.


Inventories - Inventories are stated at the lower of cost (determined  using the
first-in,  first-out method) or market (net realizable  value).  The industry in
which the Company  operates is  characterized  by intense  competition and rapid
technological  changes.  Should  demand for the Company's  products  prove to be
significantly  less  than  anticipated,  the  ultimate  realizable  value of the
Company's inventory would be less than the amounts reflected in the accompanying
balance  sheet.  See Note 11 for additional  inventory net realizable  value and
concentration of risk considerations.


Equipment and Leasehold  Improvements - Equipment and leasehold improvements are
stated at cost, less  accumulated  depreciation.  Depreciation is computed using
the straight-line  method over estimated useful lives generally ranging from two
to seven  years.  Leasehold  improvements  and assets under  capital  leases are
amortized  over the shorter of the  estimated  useful lives of the assets or the
life of the lease.


Long-Lived  Assets - The Company  reviews the carrying  amount of its long-lived
assets and  identifiable  intangible  assets for  possible  impairment  whenever
events or changes in  circumstances  indicate  that the  carrying  amount of the
assets may not be recoverable.  Recoverability  of assets to be held and used is


                                       22
<PAGE>


measured  by a  comparison  of  the  carrying  amount  of  an  asset  to  future
undiscounted  net cash flows  expected  to be  generated  by the asset.  If such
assets are  considered  to be  impaired,  the  impairment  to be  recognized  is
measured by the amount by which the  carrying  amount of the assets  exceeds the
fair value of the assets.  Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.


Intangible Assets - Intangible  assets are included in other non-current  assets
in the accompanying  balance sheet and were comprised of trademarks and patents.
As of  December  31,  1999,  the Company  determined  that it would be unable to
obtain a patent for the products for which  applications  had been filed.  Thus,
the unamortized  balance of $15,600 was written-off in 1999. The amortization of
such amounts is computed using the straight-line method over an estimated useful
life of 17 years.


Income  Taxes - The  Company  accounts  for  income  taxes  in  accordance  with
Statement of Financial  Accounting Standards ("SFAS") No. 109. SFAS 109 requires
recognition of deferred tax assets and  liabilities  for the expected future tax
consequences  of events  that  have been  included  in the  Company's  financial
statements  or  tax  returns.  Under  this  method,   deferred  tax  assets  and
liabilities  are  determined  based upon the  difference  between the  financial
statement  and tax bases of assets and  liabilities  using  enacted tax rates in
effect for the year(s) in which the  differences  are expected to reverse.  This
requires  that the  Company  record a deferred  tax asset  related to the future
income  tax  benefits  associated  with tax loss and credit  carryforwards,  and
certain  temporary  differences  for which tax benefits have not previously been
recognized.  Deferred tax assets are to be reduced by a valuation allowance when
it is more likely than not that a portion or all of the  deferred tax asset will
not be realized.  In addition,  under SFAS 109, the tax benefit  associated with
the  utilization  of  operating  loss  carryforwards  is included in the regular
provision for income taxes.


Stock-Based  Compensation - The Company applies APB Opinion 25,  "Accounting for
Stock Issued to Employees,"  and related  interpretations  in accounting for its
stock-based compensation plans. Accordingly,  no compensation cost is recognized
for its employee  stock  option  grants,  unless the  exercise  price of options
granted is less than fair  market  value on the date of grant.  The  Company has
adopted the disclosure provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (see Note 9).


Fair Value of  Financial  Instruments  - The carrying  amount of cash,  accounts
receivable,  accounts payable and accrued  expenses are reasonable  estimates of
their fair value  because of the short  maturity of these  items.  The  carrying
amounts of the Company's  short-term  credit  facilities  approximate fair value
because  the  interest  rates on these  instruments  are  subject to change with
market interest rates.


Research and Development  Cost - Research and development  costs are expensed as
incurred.


Product Warranty - The Company supports all of its golf clubs with a limited one
year written warranty. Provision for estimated warranty costs is recorded at the
time of sale and periodically adjusted to reflect actual experience.


Advertising Costs - The Company expenses advertising costs when incurred.  Trade
and consumer ad space and event sponsorships was approximately $335,301 for 2000
and $1,892,500 for 1999, respectively.


Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that  affect the  reported  amounts of assets,  including  the
inventory  obsolescence  provision,  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.



                                       23
<PAGE>

Concentrations of Credit Risk - The Company operates in one reportable  business
segment with a single  product  line within that  segment.  The Company  sells a
significant  percentage  of its  products  to golf pro shops and golf  equipment
dealers,  but also  sells  products  to a select  number  of golf and  specialty
catalogs as well as direct to customers through an infomercial and the internet,
resulting in  concentrated  credit risk with respect to the  Company's  accounts
receivable. The Company performs ongoing credit evaluations of its customers but
does  not  require  collateral  for  credit  purchases.  The  Company  maintains
allowances  for  potential  credit  losses,  and such  losses  have been  within
management's  expectations.  During 2000 and 1999,  the Company did not have any
customers accounting for 10% or more of total sales.


Loss per share - Loss per  share is  calculated  pursuant  to the  Statement  of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). Basic
loss per share  includes no dilution and is computed by dividing loss  available
to common  shareholders  by the weighted  average  number of shares  outstanding
during the period.  Diluted loss per share  reflects the  potential  dilution of
securities that could share in the earnings of the Company.

The following  table  illustrates  the computation of basic and diluted loss per
share:

<TABLE>
<CAPTION>
                                                                        Year ended December 31,
                                                           --------------------------------------------------
                                                                     2000                     1999
                                                           --------------------------------------------------
<S>                                                           <C>                      <C>
Numerator:
      Net loss available for common stockholders              $      (1,008,500)       $      (4,937,100)
                                                           ==================================================
Denominator:
Weighted average number of common shares outstanding
   during the period                                                 20,826,400               16,075,900
                                                           ==================================================
Basic and diluted loss per share                             $            (0.05)       $            (.31)
                                                           ==================================================
</TABLE>

The  computation  of diluted loss per share  excludes the effect of  incremental
common shares  attributable to the exercise of outstanding  common stock options
and warrants  because their effect would be antidilutive  due to losses incurred
by the  Company  during  periods  presented.  See summary of  outstanding  stock
options and warrants in Note 9.


Comprehensive  Income - In June 1997, the Financial  Accounting  Standards Board
issued SFAS No. 130,  Reporting  Comprehensive  Income  ("SFAS No.  130").  This
statement  establishes  standards for reporting the components of  comprehensive
income and  requires  that all items that are  required to be  recognized  under
accounting  standards as  components  of  comprehensive  income be included in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  Comprehensive  income  includes  net  income  as well as
certain  items  that are  reported  directly  within  a  separate  component  of
stockholders'  equity and bypass net income.  The Company adopted the provisions
of this  statement  in 1998.  These  disclosure  requirements  had no  impact on
financial  position  or results of  operations.  The  Company has no elements of
other comprehensive income, as defined by SFAS No. 130.



                                       24
<PAGE>

Segment  Information - In June 1997, the Financial  Accounting  Standards  Board
issued SFAS No. 131, Disclosures Of An Enterprise And Related  Information.  The
provisions of this statement  require  disclosures of financial and  descriptive
information  about an  enterprise's  operating  segments  in annual and  interim
financial  reports issued to  stockholders.  The statement  defines an operating
segment as a component of an enterprise that engages in business activities that
generate revenue and incur expense,  whose operating results are reviewed by the
chief operating  decision maker in the determination of resource  allocation and
performance,  and for which discrete  financial  information  is available.  The
Company  adopted the  provisions of this  statement  for 1998 annual  reporting.
These disclosure  requirements had no impact on financial position or results of
operations, or the Company's existing segment disclosures.


NOTE 2 - OPERATING RESULTS, CAPITAL RESOURCES AND GOING CONCERN


The accompanying  financial  statements have been prepared  assuming the Company
will continue as a going concern.  A number of factors,  including the Company's
history of significant losses, negative working capital, its accumulated deficit
and the need to restructure debt which is currently in default raise substantial
doubts  about the  Company's  ability  to  continue  as a going  concern.  As of
December 31, 2000, the Company has an accumulated  deficit of $19,348,900  and a
working  capital  deficiency of $1,470,000.  The Company is currently in default
under the terms of its  revolving  line of credit with a bank.  The Company does
not possess  sufficient  cash resources to repay this obligation and the Company
would be unable to repay this loan in the event that such demand was made by the
Company's creditor (see Note 5). These factors raise substantial doubt about the
ability of the Company to continue as a going concern.

In this regard,  management is proposing to raise any necessary additional funds
not provided by its planned  operations  through  additional sales of its equity
securities pursuant to the exercise of outstanding warrants or otherwise.  There
is no assurance  that the Company will be successful in raising this  additional
capital  or  achieving  profitable   operations.   The  accompanying   financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.


NOTE 3 - COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS

       Accounts receivable consist of:
          Trade receivables.....................................    $   529,200
          Allowance for doubtful accounts.......................       (491,100)
                                                                    ------------
                                                                    $    38,100
                                                                    ============

       Inventories consist of:
          Raw materials.........................................    $    67,000
          Finished goods........................................         55,800
                                                                    ------------
                                                                    $   122,800
                                                                    ============

       Other current assets consist of:
          Supplier deposits.....................................    $     6,900
          Prepaid insurance.....................................          2,400
          Other - stock for services............................         97,500
                                                                    ------------
                                                                    $   106,800
                                                                    ============


                                       25
<PAGE>



       Equipment and leasehold improvements consist of:
          Machinery, equipment and tooling......................    $   266,200
          Office equipment and furniture........................        117,700
          Computer equipment and software.......................        121,700
          Show booth............................................         81,500
          Leasehold improvements................................         36,600

                                                                    ------------
                                                                        623,700
       Accumulated depreciation and amortization................       (517,400)
                                                                    ------------
                                                                    $   106,300
                                                                    ============

Total depreciation charged to operations in 2000 and 1999 was $ 104,700 and $
227,700, respectively.


NOTE 4  -  LINE OF CREDIT


In July  1998,  the  Company  obtained  a  $3,000,000  bank line of credit  that
provided  an advance on  eligible  accounts  receivable  and was  secured by the
assets  of the  Company.  Due to slow  customer  payments,  the  Company  became
over-advanced  in its position with the bank.  The line of credit was reduced to
$930,000  and the  expiration  date of the line of credit  changed from July 30,
1999 to November  11,  1998.  As of December  31,  1998,  the Company was not in
compliance with most of its loan covenants of the line of credit  agreement.  On
January 29, 1999, the Company and the bank  negotiated an amended line of credit
agreement  which revised the maturity date from February 11, 1999 to the earlier
of the  Company's  sale of  $2,000,000  in  additional  equity or May 11,  1999,
increased  the interest  rate to prime plus 7%,  reduced the amount which can be
borrowed  to $870,000  (the  outstanding  balance as of that date) and  required
principal  payments  should the  Company's  borrowing  base be  insufficient  to
support the outstanding  balance on the dates the payments were due: $125,000 as
of March 31, 1999 (which was paid on March 31,  1999);  $150,000 as of April 30,
1999 (which was not paid); and $175,000 on May 10, 1999 (which was not paid). On
July 30, 1999, the Company and the bank negotiated an additional amendment (when
it appeared  the  Company  would be able to secure  another  line of credit from
another  source) which reduced the line of credit to $665,000,  set the maturity
date to July 15,  1999,  established  a  repayment  schedule of $50,000 per week
until the debt is paid in full.  When it became  apparent that the Company would
not be able to obtain a  replacement  line of  credit,  the bank  permitted  the
Company to make payments in the amount of 20% of its daily cash  collections  on
trade receivables. Payments under this unwritten plan continued until the end of
October 1999,  when the Company  advised the bank that it would require all cash
collections at that time in order to meet its monthly expenses.

On May 4, 2000, the Company and the bank signed a new forbearance agreement.  At
that time,  the Company paid all past due interest at a fixed rate of 12.5% from
September  15, 1999 to May 4, 2000 and agreed to pay interest  monthly at a rate
of 4% over prime  during  the  forbearance  period.  The  forbearance  agreement
extended the loan until  August 31, 2000,  and, if the loan balance was $300,000
or less at that time,  the agreement  would have further  extended until October
31, 2000.  The Company did not achieve a loan  balance  reduction to $300,000 by
August 31, 2000. In the May 4th forbearance agreement, the Company agreed to and
implemented  a  daily  principal  paydown  program  of 20% of its  net  accounts
receivable and cash collections. However, to accelerate principal reductions, on
August 17, 2000 the Company implemented an increase of its paydown percentage to
50% for a period of  approximately  three  weeks  until  September  7, 2000.  In
anticipation  of the  August  31,  2001,  termination  of the  loan  forbearance
agreement,  and in order to further  protect its interest in collateral  pledged
pursuant to terms within the original loan  agreement,  the bank chose to file a
legal proceeding  granting rights for possession of inventory  collateral should
it desire to execute on such rights. During additional  forbearance  discussions
and until such a forbearance  was agreed to, the


                                       26
<PAGE>

Company agreed to a stipulated order to maintain its ordinary course of business
and not to  otherwise  remove or  impair  the  value of the  bank's  collateral.
Additionally,  the  Company  agreed to continue  loan  principal  reductions  as
percentage of accounts receivable and cash collections. As of November 14, 2000,
the Company and the bank agreed to terms for an additional period of forbearance
extending to the earlier date of February 15, 2001 or  completion  of any merger
transaction, from which a payoff would ensue upon the transaction's completion.

In February,  2001 discussion commenced for an additional  forbearance and terms
for a discounted  settlement  agreement for all remaining  balances.  As further
protection  of  the  bank's  collateral,   the  Company  on  February  21,  2001
voluntarily  released a portion of its inventory to be stored temporarily in the
bank's possession.

On May 17, 2001 the bank and the Company  entered  into a period of  forbearance
until  October 31, 2001 and the bank agreed that should the Company make payment
to the bank of $40,000 by June 15, 2001 and $60,000 by July 15,  2001,  then the
bank would deem all  balances  owed to be fully paid and  satisfied  and thereby
discharge  and release  the Company  from  responsibility  to pay any  remaining
balance.  All inventory  existing  within the bank's control  subsequent to such
$40,000 payment made will be released back to the company.


NOTE 5  -  COMMITMENTS AND CONTINGENCIES


Leases

Following is a schedule of estimated future minimum lease payments under capital
lease agreements:


    Year ended
    December 31, 2000                                            Amount
    -------------------------------------------------------- ----------------
    2001                                                              5,620
    -------------------------------------------------------- ----------------
    Total minimum lease payments                                      5,620
    Amount representing interest                                        170
    -------------------------------------------------------- ----------------
    Present value of net minimum lease payments                       5,450
    ======================================================== ================

The Company was also committed under noncancelable  operating agreements for the
lease of office space  during 2000 and 1999.  Rent expense for 2000 and 1999 was
$51,000 and $72,600, respectively.


Agreements

The Company has no current open agreements.

Litigation

The Company is  involved in various  claims  arising in the  ordinary  course of
business including: two pending creditor actions pertaining to past due accounts
payable  claims  totaling  approximately  $18,564.39;  a  collection  proceeding
pertaining  to an unpaid  remaining  balance of an expired  bank line of credit,
totaling a principal  balance  remaining of approximately  $487,600 which, as of
May 17,  2001,  a total  indebtedness  settlement  agreement  has been  mutually
entered  into for  $100,000  (see Item 6 - Bank Line of  Credit);  and a related
party action alleging breech of fulfillment of a purchase  contract,  whereby an
action was filed for performance to complete the purchase of a certain inventory
component purchase order (see Note 10 - Related Party  Transactions).  Principal
amounts claimed pertaining to creditors actions are reflected as payables within
the liabilities  section of the Company's  financial  statements;  none of these
claims,  in the opinion of  management,  is expected to have a material  adverse
impact on operations of the Company.


                                       27
<PAGE>


NOTE 6  -  INCOME TAXES


A  reconciliation  of the provision  for income taxes to the amount  computed by
applying the  statutory  Federal  income tax rate to income  before income taxes
follows:

<TABLE>
<CAPTION>
                                                                                      Year ended December 31,
                                                                         ---------------------------------------------------
                                                                                   2000                      1999
                                                                         ---------------------------------------------------
<S>                                                                         <C>                        <C>
         Amounts computed at Federal statutory rate.....................    $       (517,000)          $     (1,777,200)
         State income taxes.............................................                 800                        800
         Non-deductible expenses........................................                  --                     15,500
         Losses for which no current benefits are available.............             517,000                  1,761,700
                                                                         ---------------------------------------------------

         Provision for income taxes.....................................    $            800           $            800
                                                                         ===================================================

The components of deferred income taxes:
                                                                                 December 31, 2000
                                                                             ------------------------
        Deferred tax assets:
        Net operating loss carryforwards.................................        $     5,594,700
        Accrued liabilities and reserves.................................                 17,100
        Deferred income..................................................                 38,200
                                                                             ------------------------
                                                                                       5,650,000
        Deferred tax liabilities:
        Book and tax depreciation differences............................                (29,300)
                                                                             ------------------------
                                                                                       5,620,700
        Valuation allowance..............................................             (5,620,700)
                                                                             ------------------------

        Deferred taxes...................................................        $         --
                                                                             ========================
</TABLE>

At December 31, 1999, a 100% valuation  allowance has been provided on the total
deferred income tax assets as they are not more likely than not to be realized.

The Company has not  recorded  provisions  for Federal  income taxes in 2000 and
1999. At December 31, 2000, the Company had net operating loss  carryforwards of
approximately  $15,225,600 for Federal tax reporting  purposes and approximately
$8,704,300 for California tax purposes. The net operating loss carryforwards for
tax purposes expire between 2001 and 2020.

As a result of the significant equity transactions in 1997 and 1998, the Company
could have  experienced a more than 50% ownership  change for Federal income tax
purposes.  As a result,  an annual limitation could be placed upon the Company's
ability to realize  the benefit of its net  operating  loss  carryforwards.  The
amount of this limitation has not been definitively determined at this time.


NOTE 7  -  STOCKHOLDERS' DEFICIT

During 1999, the Company issued 1,616,000  shares of the Company's  unregistered
common stock to qualified  investors for approximately  $1,200,000.  The Company
also issued  1,715,100  shares of the  Company's  unregistered  common  stock to
qualified  investors in exchange for goods and services  provided to the Company
which  were  valued at  $1,034,900.  Certain  holders of  unregistered  warrants
elected to convert their warrants into 275,000 shares of Company's  unregistered
common  stock.  Each of these  warrants  were


                                       28
<PAGE>

convertible  at $1.00 per share  (proceeds  to the  Company  totaled  $275,000).
Holders of registered "Shop/Pro" warrants received 4,125 shares of the Company's
registered  common stock upon the  conversion of their  warrants.  Each of these
warrants  were  convertible  at $1.48 per share,  resulting  in  proceeds to the
Company of $6,100.  The Company  also  issued  756,000  shares of the  Company's
unregistered common stock to employees in exchange for services rendered,  which
were valued at $244,200.

During 2000, the Company  issued  862,500  shares of the Company's  unregistered
common stock to qualified  investors for  approximately  $ 160,000.  The Company
issued 2,157,700 shares of unregistered  common stock to qualified  investors in
exchange  for services  provided to the Company,  which were valued at $356,800.
The Company also issued 562,500 and 59,000 shares of  unregistered  common stock
for accrued compensation and compensation to employees,  valued at approximately
$ 187,500 and 10,200  respectively.  In addition,  the Company issued  1,270,000
shares of  unregistered  common stock to for the  conversion  of notes  payable,
valued at approximately $ 254,000.

Pursuant  to  state  laws,  the  Company  is  currently  restricted,  and may be
restricted for the foreseeable future, from paying dividends to its stockholders
a result of its accumulated deficit as of December 31, 1999.

During the past year,  the Company did not declare or pay any cash  dividends on
its Common Stock.  The Company  currently plans to retain all of its earnings to
support  the  development  and  expansion  of its  business  and has no  present
intention of paying any dividends on Common Stock in the foreseeable future.


NOTE 8  -  STOCK OPTION PLAN AND WARRANTS

Stock  Option  Plan - The  Company  maintains  a stock  option  plan under which
incentive  stock  options  may  be  granted  to  employees  of the  Company  and
nonqualified  stock  options  may be granted to  non-employee  directors  of the
Company. Under the terms of the plan, qualified  nontransferable  options may be
granted  for terms of up to 10 years or 5 years for  individuals  with more than
10% ownership.  Vesting terms and  exercisable  rate for qualified stock options
and grant terms for nonqualified  stock options are determined at the discretion
of the Board of Directors.  Options are generally granted with an exercise price
not less than the fair market value of the common stock at the date of grant.  A
total of 2,295,000  shares of common stock have been reserved for issuance under
the plan.  Options may be granted  under the plan until it is  terminated by the
Board of Directors,  applicable law, or after the passage of ten years from plan
approval or adoption.

Statement of Financial  Accounting  Standards No. 123 ("SFAS 123"),  "Accounting
for  Stock-Based  Compensation,"  requires  the  Company  to  provide  pro forma
information  regarding net income and earnings per share as if such compensation
cost for the Company's  stock option and issuance  plans had been  determined in
accordance with the fair value based method  prescribed in SFAS 123. The Company
estimates  the fair  value of each  stock  option at the grant date by using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions used for grants in 2000: 0% dividend yield;  expected  volatility of
148%,  risk  free  interest  rates of  4.96%;  and  expected  lives 1 to 5 years
(determined on an option-by-option basis).




                                       29
<PAGE>

Under the accounting provisions of SFAS 123, the Company's net loss per share
would have been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                              2000                 1999
                                                                       -------------------  -------------------
<S>                                                                      <C>                  <C>
          Net loss:
              As reported ............................................   $    (1,008,500)     $    (4,937,100)
                                                                       ===================  ===================

              Pro forma ..............................................   $    (1,341,600)     $    (5,109,600)
                                                                       ===================  ===================

          Basic and Diluted EPS:
              As reported ............................................   $       (0.05)       $        (.31)
                                                                       ===================  ===================

              Pro forma ..............................................   $       (0.06)       $        (.32)
                                                                       ===================  ===================
</TABLE>

A summary of the status of the  Company's  stock  option plan as of December 31,
2000 and 1999, and changes during the periods ending on those dates is presented
below:

<TABLE>
<CAPTION>
                                                               2000                                    1999
                                               -------------------------------------- ---------------------------------------
                                                                   Weighted-Avg.                           Weighted-Avg.
                                                    Shares         Exercise Price          Shares         Exercise Price
                                               --------------------------------------  --------------------------------------
<S>                                                  <C>            <C>                      <C>           <C>
Outstanding at beginning of period...........        1,745,000      $        0.83            2,195,000     $        0.72
Granted......................................        2,270,000      $        0.32               20,000     $        1.41
Cancelled....................................       (1,745,000)     $        0.83             (470,000)    $        1.02
                                               -----------------                       ----------------
Outstanding at end of period.................        2,270,000      $        0.32            1,745,000     $        0.83
                                               =================                       ================
Options exercisable at end of period.........        2,270,000      $        0.80            1,520,000     $        0.80
                                               =================                       ================
Weighted-average fair value of
   options granted during the period.........                       $        0.32                          $       $1.06
</TABLE>

The following table summarizes  information  about stock options  outstanding at
December 31, 2000:

<TABLE>
<CAPTION>
                                            Options Outstanding                            Options Exercisable
                               Number        Weighted-Average    Weighted-Average        Number      Weighted-Average
                           Outstanding at        Remaining        Exercise Price     Exercisable at   Exercise Price
         Prices               12/31/00       Contractual Life                           12/31/00
----------------------------------------------------------------------------------  ----------------------------------
<S>                             <C>                 <C>                <C>               <C>             <C>
         $ 0.20                 1,225,000           0.4 years          $  0.20           1,225,000       $    0.20
         $ 0.22                   150,000           0.4                   0.22             150,000            0.22
         $ 0.50                   600,000            --                   0.50             600,000            0.50
         $ 0.50                   295,000           0.4                   0.50             295,000            0.50
                          --------------------------------------------------------  ----------------------------------
                                2,270,000           2.2 years          $  0.36           2,270,000       $    0.36
                          ========================================================  ==================================
</TABLE>

Warrants - From time to time, the Company grants common stock purchase  warrants
as a form of payment for  services to  non-employee  directors  of the  Company,
suppliers and  customers.  Generally,  warrants are granted for terms of up to 5
years. In addition,  the Company issues warrants in connection with the issuance
of common stock or for other purposes.


                                       30
<PAGE>

A summary of the status of the Company's  common stock  purchase  warrants as of
December 31, 2000 and 1999, and changes during the periods ending on those dates
is presented  below (all  warrants are  included  below,  except for the caption
"Weighed  average  fair value of warrants  granted  during the year," which only
includes  warrants  issued as  compensation  to  non-employee  directors  of the
Company, suppliers and customers):

<TABLE>
<CAPTION>
                                                                   2000                                  1999
                                                   -------------------------------------  -----------------------------------
                                                                      Weighted-Avg.                        Weighted-Avg.
                                                       Shares         Exercise Price         Shares        Exercise Price
                                                   -------------------------------------  -----------------------------------
<S>                                                    <C>               <C>                  <C>             <C>
Outstanding at beginning of period...............      2,513,600         $    1.87            2,872,700       $    1.78
Granted..........................................             --         $     --               220,000       $    0.76
Exercised........................................             --         $     --              (279,100)      $    1.01
Cancelled........................................             --         $     --              (300,000)      $    1.00
                                                   ----------------                       --------------
Outstanding at end of period.....................      2,513,600         $    1.87            2,513,600       $    1.87
                                                   ================                       ==============
Warrants exercisable at end of period............      2,513,600         $    1.87            2,513,600       $    1.87
                                                   ================                       ==============
</TABLE>

The following table summarizes  information about common stock purchase warrants
outstanding at December 31, 2000.


<TABLE>
<CAPTION>
                                             Warrants Outstanding                           Warrants Exercisable
                            --------------------------------------------------------  ----------------------------------
                                 Number        Weighted-Average   Weighted-Average         Number      Weighted-Average
                             Outstanding at       Remaining        Exercise Price      Exercisable at   Exercise Price
          Prices                12/31/00       Contractual Life                           12/31/00
------------------------------------------------------------------------------------  ----------------------------------
<S>                               <C>                 <C>               <C>                <C>             <C>
  $ 0.40    to  $  1.00             921,400           1.1 years         $  0.92              921,400       $    0.92
  $ 1.38    to  $  2.50           1,223,900           3.3                  1.68            1,223,900            1.68
  $ 4.13    to  $  5.00             368,300           0.2                  4.88               368,300           4.88
                            --------------------------------------------------------  ----------------------------------
  $ 0.40    to  $  5.00           2,513,600           1.5 years         $  1.87             2,513,600      $    1.87
                            ========================================================  ==================================
</TABLE>

Holders of warrants  convertible  into 279,100 shares  exercised  their warrants
during 1999 providing proceeds to the Company totaling $281,100.


NOTE 9  -  SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS

Cash  paid for  interest  during  2000 and 1999  totaled  $77,000  and  $62,600,
respectively and cash paid for income taxes was $800 in 2000 and 1999.


NOTE 10  -  RELATED PARTY TRANSACTIONS

In November  1998,  the Company  was advised by its  principal  supplier of club
heads that,  due to changes in the golf  industry,  the  supplier had decided to
cease  production of golf club heads.  As of December 9, 1998,  the Company owed
this supplier  $556,300 for golf club heads which had been received and had open
purchase  orders for golf club heads with a value of  approximately  $2,350,000.
The Company was able to negotiate a one-time buy-out of the balance owing to the
supplier plus the open purchase  orders for  $1,090,000 as of December 11, 1998.
This transaction  represented a discount of 62% from the total commitment to the
original vendor of $2,906,300.


                                       31
<PAGE>

As the  Company did not have the  financial  resources  to complete  the buy-out
discussed  above,  the Company  entered into an agreement with a company,  whose
Executive  Vice  President  was a Director of the Company,  to purchase the golf
club  heads  that the  Company  purchased,  but had not yet paid  for,  from the
supplier, plus the remaining golf club heads on open purchase orders as they are
completed by the supplier. Pursuant to the agreement, the Company purchases golf
club heads on a COD basis,  as needed from the related  party.  In exchange  for
financing the purchase of these golf club heads,  the Company pays a 20% mark-up
over cost.  The total  purchase  price of these golf club heads at December  31,
1998 was  approximately  $1,410,000 and was to have been paid no later than June
30,  1999.  Additionally,  the  agreement  with the related  party  required the
Company to purchase a certain  minimum number of golf club heads each month from
January  through June 1999.  Since the Company failed to complete the buy-out by
June 30,  1999,  the  related  party has been  under no  obligation  to sell the
remaining  golf club heads to the Company and has the right to sell the heads or
may complete  them into  finished  clubs,  and sell them to whomever the related
party chooses.  In September  1999, the Director  resigned his position with the
Company.

As of  December  1, 2000  approximately  $284,200  of golf  club head  inventory
remained  unpurchased  by the  Company  pursuant  to the terms of the  foregoing
purchase  agreement with the former related party.  In  mid-December  the former
related  party  filed and served an action  against  the Company and two Company
officers  alleging breech of fulfillment of a purchase  contract.  As of May 17,
2001 the action remains  pending and  discussions  for settlement  have occurred
without resolution.

A board member converted $187,500 owing to him on December 31, 1999 into 562,500
shares of restricted common stock on April 7, 2000.


NOTE 11  -  EMPLOYEE BENEFIT PLAN

The Company maintains a defined  contribution  retirement savings plan, which is
intended to qualify under section 401(k) of the Internal  Revenue Code. The Plan
covers substantially all full-time U.S. employees. Participants may contribute a
percentage  of their  salaries  subject to  statutory  annual  limitations.  The
Company currently does not make any contributions to the plan, except to pay for
the expense of maintaining the plan.


NOTE 12  -  SUBSEQUENT EVENT

In February,  2001 discussion commenced for an additional  forbearance and terms
for a discounted  settlement  agreement for all remaining  balances.  As further
protection  of  the  bank's  collateral,   the  Company  on  February  21,  2001
voluntarily  released a portion of its inventory to be stored temporarily in the
bank's possession.

On May 17, 2001 the bank and the Company  entered  into a period of  forbearance
until  October 31, 2001 and the bank agreed that should the Company make payment
to the bank of $40,000 by June 15, 2001 and $60,000 by July 15,  2001,  then the
bank would deem all  balances  owed to be fully paid and  satisfied  and thereby
discharge  and release  the Company  from  responsibility  to pay any  remaining
balance.  All inventory  existing  within the bank's control  subsequent to such
$40,000 payment made will be released back to the company.


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


None.





                                       32
<PAGE>






                                    PART III
                                    --------


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


Directors, Executive Officers and Significant Employees

The  following  table sets forth the  directors,  executive  officers  and other
significant  employees  of the  Company,  their  ages,  terms of office  and all
positions.  Directors  are elected  for a term of one year,  and serve until the
next  annual  meeting  or  until  their  successors  are  duly  elected  by  the
stockholders and qualify.  Officers and other employees serve at the will of the
Board of Directors.  Disclosure relating to compliance with Section 16(a) of the
Securities Exchange Act of 1934 is not applicable,  as the Company does not have
a class of equity securities  registered  pursuant to Section 12 of the Exchange
Act.

<TABLE>
<CAPTION>
Name of Director, Officer
or Significant Employee               Age     Served Since    Positions and Offices Held With The Company
---------------------------------------------------------------------------------------------------------------
<S>                                    <C>      <C>           <C>
Gary V. Adams(1)...................    --       Apr. 1997     Former Chairman and Chief Executive Officer
Theodore Aroney(1)(3)..............    61       Apr. 1997     Chairman of the Board and Secretary
Mark Bergendahl(2)(3)..............    40       Apr. 1997     Vice Chairman of the Board
Henry J. Fleming, Jr.(2)...........    57       Apr. 1997     Director
Sal Lupo...........................    67       Apr. 1997     Director
Gary L. Moles......................    48       Apr. 1997     Chief Operating Officer

Bradley J. Wilhite(1)..............    36       Apr. 1997     President, Chief Executive Officer and Director

(1)      Member of the Executive Committee
(2)      Member of the Audit Committee
(3)      Member of the Compensation/Stock Option Plan Committee
</TABLE>


Except for Messrs.  Adams, Aroney,  Bergendahl,  Fleming and Lupo, each of these
individuals  devoted  full time to the  Company as  employees  during  2000.  In
January,  2000, Mr. Adams,  the founder of the Company passed away. There are no
family  relationships  among executive  officers or directors of the Company.  A
brief  description  of these  individuals  and  their  background  and  business
experience follows:

Gary V.  Adams - Mr.  Adams  founded  McHenry  Metals in 1997 and was the former
Chairman and Chief Executive Officer.  Mr. Adams passed away on January 2, 2000.
Previously,  Mr. Adams was President and CEO of Founders Club Golf Company (1989
- 1994),  which he established in 1989. As chairman of TaylorMade Golf Co. (1979
- 1989),  which he founded in 1979,  he became known as the "Father of the Metal
Driver." During his accomplished  career over the past three decades,  Mr. Adams
received numerous awards for his industry-leading  innovations. Most notably, he
received the PGA of America's  highest  honor,  the Ernie  Sabayrac  Award,  for
lifetime contributions to the industry. The elite class of recipients recognized
with this award includes Karsten Solheim,  founder of Karsten  Manufacturing and
Ping golf clubs,  and Ely Callaway,  founder and chairman of Callaway  Golf. Mr.
Adams was also elected to the  Illinois PGA Hall of


                                       33
<PAGE>

Fame in 1994,  and was named "Man of the Year" by the National Golf  Association
in 1994, and "Golf Innovator of the Decade" by the International Network of Golf
in 1995.

Theodore Aroney.  Mr. Aroney is a founding director and Vice Chairman of McHenry
Metals(R).  Mr.  Aroney was also a founding  director  and  private  investor in
Odyssey  Golf,  a golf  equipment  company  that was started in the early 1990s,
developed an innovative  putter that became #1 in the world,  and was later sold
to Callaway  Golf for $130  million.  Mr.  Aroney is currently the owner of Halo
Farms Breeding and Racing Operation for thoroughbred horses, an operation he has
been associated with since 1970. Mr. Aroney is a private investor and consultant
with experience in many other businesses.

Mark A.  Bergendahl.  Mr.  Bergendahl  is a founding  director  and  Chairman of
McHenry  Metals(R).  Mr.  Bergendahl  was also an initial  director  and private
investor in Odyssey  Golf,  a golf  equipment  company  which was started in the
early 1990s,  developed an innovative  putter which became #1 in the world,  and
was later sold to Callaway Golf for $130 million.  Mr.  Bergendahl  formerly was
the  president of Redfield  Taylor & Associates,  Inc, an  investment  firm that
focuses on emerging  growth  companies.  He  continues  as  managing  partner of
Edie-Wig-BB,  a California limited partnership.  Since 1986, he has held various
posts  including  director  of  marketing,   corporate  managing  director,  and
president of Gloria  Marshall  Figure Salons of  Australia,  Pty,  Ltd.,  one of
Australia's  leading weight loss companies.  Mr. Bergendahl is a graduate of the
Entrepreneurship  Program  at  the  University  of  Southern  California  in Los
Angeles, California.

Henry J.  Fleming,  Jr.  Mr.  Fleming  is a  founding  board  member of  McHenry
Metals(R)  and the former  treasurer of TaylorMade  Golf Company,  a position he
held  during  the  company's  formative  years.  Mr.  Fleming is  currently  the
president of Fleming and Company, Certified Public Accountants.  Practicing as a
certified  public  accountant since 1973,  Fleming has had extensive  experience
working with private industry. He has also been involved with Allison America, a
manufacturer of tanning beds, Ex-Tec Plastics and Advantage Rental, Inc. Fleming
serves on the board of  directors  of Amcore  Bank  Northwest  and with  various
closely held  corporations.  Fleming graduated with a bachelor of arts degree in
accounting from Lewis College in Lockport, Illinois.

Sal Lupo. Mr. Lupo is a founding board member of McHenry  Metals(R) and assisted
the late Gary V. Adams with the launch of the McHenry  Metals(R)  brand in 1997.
Lupo also provided marketing planning and execution support for the introduction
and  development  of the TaylorMade  Golf Company.  In addition to the work with
TaylorMade,  Lupo and  Associates  provided  strategic  planning  and  marketing
development  for other golf equipment  companies  such as Aldila,  United Sports
Technologies,  Wilson,  Cleveland  Golf, and Tiger Shark.  Lupo  previously held
marketing  and  management  posts at Helene  Curtis  Industries,  including  new
products  manager,  corporate  director of marketing  and  president of the Hair
Fashions Division.

Gary L. Moles. Mr. Moles,  McHenry  Metals'(R) Chief Operating Officer since the
Company's founding in 1997, managed all product development  associated with the
TourPure(R)   line  of  drivers  and  fairway  woods  and  was  responsible  for
establishing the Company's operational  infrastructure.  Mr. Moles is a seasoned
industry  expert with  experience in product  development,  materials  sourcing,
manufacturing,  operations,  supplier management, and international business. He
held a variety of operations and management positions with Wilson Sporting Goods
from  1973 to 1990.  During  1991 to 1992,  Mr.  Moles  served  as  director  of
purchasing  of  Sunbeam-Oster  Household  Products.  During 1993 to 1995,  Moles
served as vice  president  of  operations  of  Founders  Club Golf  Company.  He
received a Bachelor of Science degree in business  administration from Tennessee
Technological University located in Cookeville, Tennessee.

Bradley J.  Wilhite.  Mr.  Wilhite,  Chief  Executive  Officer,  President,  and
Director of McHenry  Metals(R),  has led the  Company's  growth and  development
since its founding in 1997. Mr. Wilhite's professional career



                                       34
<PAGE>


includes strong management, finance, sales, and marketing experience with two of
the nations largest banking  organizations  NationsBank  (now  BankAmerica)  and
First Union  Corporation.  During his career in the financial services industry,
he served as a corporate banker working with emerging growth companies,  managed
several  lines of  business,  directed  successful  product  launches  and brand
development  programs,  and led merger and acquisition teams. Mr. Wilhite is the
son of a PGA golf  professional,  and he played  college golf at Oklahoma  State
University and Texas Christian  University where his teammates  included several
current PGA Tour players.  Mr. Wilhite received a bachelor's  degree in business
administration and finance from Texas Christian  University in Fort Worth, Texas
and a master's  degree in business  administration  and  marketing  from Wichita
State University in Wichita, Kansas.


ITEM 10. EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

The following table provides certain summary information concerning compensation
earned,  for services rendered in all capacities to the Company,  for the fiscal
year ended December 31, 2000 and 1999. These persons are  collectively  referred
to as "Named Executive Officers."


<TABLE>
<CAPTION>
                                                                                                 Long Term
                                                          Annual Compensation                Compensation Awards
                                                       --------------------------------------------------------------------
                                                                   Other Annual   Restricted
                                                                   Compen-sation    Stock       Securities    All Other
                                                          Salary        ($)        Award(s)     Underlying  Compen-sation
Name and Principal Position                      Year      ($)                      ($)(5)      Options(#)       ($)
---------------------------------------------------------------------------------------------------------------------------

<S>                                              <C>    <C>             <C>        <C>          <C>               <C>
Gary V. Adams, Former Chairman of the Board and  2000       --          --              --          --            --
   Chief Executive Officer...................... 1999   $  67,500       --              --          --            --
                                                 1998      34,600       --              --          --            --

Mark Bergendahl, Director....................... 2000   $ 109,125       --              --          --            --
                                                 1999       --          --              --          --            --
                                                 1998       --          --              --          --            --

                                                 2000       --          --              --          --            --
Sal Lupo,(1) Director........................... 1999   $  32,100       --              --       50,000           --
                                                 1998     105,400       --              --          --            --

Gary Moles,                                      1999   $ 104,583       --         $  30,000    150,000           --
   Chief Operating Officer...................... 1998      99,800       --              --          --            --
                                                           95,800                               225,000

Bradley J. Wilhite, President, Chief Executive   2000   $ 138,125       --              --      275,000           --
   Officer and Director......................... 1999     140,300       --         $  40,000        --            --
                                                 1998      83,700       --              --      325,000(2)

</TABLE>

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


                                       35
<PAGE>

(1)  Mr.  Lupo  was a  Director  of  the  Company  and  served  as  Senior  Vice
     President-Marketing  from  April  1997  through  June 30,  1998 and then as
     Executive  Vice  President  until March 31, 1999.  Subsequent  to March 31,
     1999, Mr. Lupo continues to serve as a Director of the Company.

(2)  Includes  100,000  shares  originally  granted on September 29, 1997 with a
     five (5) year term and an  exercise  price of $4.125  per share  which were
     cancelled    and    regranted    pursuant    to   the   January   5,   2000
     cancellation/regrant program.

(3)  Indicated  below is a list of each Named  Executive  Officer along with the
     number and value of restricted  stock holdings as of December 31, 2000. The
     value has been  calculated  using the closing market price of the Company's
     unrestricted stock on December 31, 2000:

     (a)  Mr. Adams' estate held 1,259,250 shares with a value of $100,740.

     (b)  Mr. Wilhite held 305,000 shares with a value of $24,400.

     (c)  Mr. Lupo held 358,333 shares with a value of $28,667.

     (d)  Mr. Moles held 250,000 shares with a value of $20,000.


Aggregated Option Exercises and Fiscal Year End Values

No options were exercised by the Company's Chief Executive  Officer or the other
Named  Executive  Officers  during the fiscal year ended  December 31, 2000. The
following  table sets forth  information  concerning  option  holdings  for such
fiscal year with respect to the Company's  Chief  Executive  Officer and each of
the other Named Executive Officers. The fair market value of the Common Stock at
fiscal year-end was $0.08 per share, based on the average of the highest bid and
lowest  ask price as quoted on the OTC  Bulletin  Board.  No stock  appreciation
rights were exercised or outstanding during such fiscal year.


<TABLE>
<CAPTION>
                                                          Number of Securities                  Value of exercised
                                                         Underlying Unexercised                In-the-Money Options
                                                     Options at Fiscal Year End(#)            at Fiscal Year End($)
                                                  --------------------------------------------------------------------------
 Name                                                Exercisable      Unexercisable       Exercisable      Unexercisable
 ---------------------------------------------------------------------------------------------------------------------------


<S>                                                      <C>                              <C>                <C>
 Bradley J. Wilhite..............................        600,000                __        $     --           $    --

 Sal Lupo........................................         52,667                --        $     --           $    --

 Gary Moles......................................        375,000               ___        $     --           $    --
</TABLE>


Compensation of Directors


Fees and Expenses

Directors are  reimbursed  for expenses  incurred in connection  with  attending
Board and Committee meetings.  Directors receive no additional  remuneration for
serving as Directors.


Employment  Contracts  and  Termination  of  Employment  and  Change in  Control
Arrangements

Employment Agreement with Gary V. Adams

On April 1, 1997, the Company entered into an employment agreement with Mr. Gary
Adams, Chairman and CEO, which terminated upon the death of Mr. Adams on January
2, 2000. Mr. Adams was required to devote his


                                       36
<PAGE>

full-time  business  efforts  to the  Company  for  which he was paid an  annual
salary,  initially at a rate of $120,000 per year,  which was later increased to
$150,000 per year and was eliminated as of May 31, 1999. In addition,  Mr. Adams
was to be paid a royalty upon the sale or license of "metal  woods"  designed by
him at the rate of $1.00 per club for the first 500,000 clubs;  at $.50 per club
for the next  500,000  clubs;  and $.25 per  club  for all  sales in  excess  of
1,000,000 clubs.


Employment Agreement with Bradley J. Wilhite

The Company has entered into an employment agreement with Mr. Bradley J. Wilhite
for a period of one year commencing in April 1997. This agreement  automatically
renews for succeeding  terms of one year unless either party gives notice to the
other at least sixty (60) days prior to the expiration of any term of his or its
intention not to renew. Mr. Wilhite is required to devote his full-time business
efforts to the Company  for which he is paid an annual  salary,  initially  at a
rate of $5,000 per month for the months of May and June 1997 and  thereafter  at
the rate of  $94,800  per year.  Mr.  Wilhite's  salary was later  increased  to
$135,000 per year.  This agreement also provided Mr. Wilhite with 100,000 shares
of the Company's restricted common stock.


Change in Control Arrangements

The Company currently has no compensatory plan or arrangement for the benefit of
any officer, director or employee resulting from the resignation,  retirement or
any  other  termination  of  such  officer,  director  or  employee  or  from  a
change-in-control of the Company.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth  information  known to the Company  regarding the
ownership of the Company's Common Stock as of May 10, 2001 for (i) each Director
and nominee who owns Common  Stock,  (ii) all persons or entities who were known
by the  Company  to be  beneficial  owners of five  percent  (5%) or more of the
Company's  Common  Stock,  (iii)  the  Chief  Executive  Officer  and the  other
executive  officers whose  compensation for 2000 were each in excess of $100,000
and (iv) all executive officers and Directors of the Company as a group.

<TABLE>
<CAPTION>
                                                            Number of Shares                  Percent of Total Shares
Name and Address of Beneficial Owner                      Beneficially Owned(1)           Outstanding Beneficially Owned
------------------------------------                      ---------------------           ------------------------------

<S>                                                            <C>                                     <C>
Theodore Aroney (2)
7220 Arenal Lane
Carlsbad, California 92009 ........................            2,692,500                               8.7%
Mark Bergendahl (3)
1945 Camino Vida Roble, J
Carlsbad, California 92008.........................              695,500                               2.8%
Henry J. Fleming, Jr. (4)
1322 Surrey Court
Alonquin, Illinois 60102 ..........................              302,500                               1.2%
Sal Lupo (5)
41 Antigua
Dana Point, California 92629.......................              408,333                               1.6%
</TABLE>



                                       37
<PAGE>

<TABLE>
<CAPTION>
                                                            Number of Shares                  Percent of Total Shares
Name and Address of Beneficial Owner                      Beneficially Owned(1)           Outstanding Beneficially Owned
------------------------------------                      ---------------------           ------------------------------

<S>                                                            <C>                                    <C>
Bradley J. Wilhite (6)
1945 Camino Vida Roble, J
Carlsbad, California 92008 ........................              905,000                               3.6%
Gary Moles (7)
31718 Corte Rosario
Temecula, California 92592 ........................              625,000                               2.5%
All directors and executive officers
as a group (7 persons).............................            5,628,833                              22.3%
Bobby Clampett
232 Devonbrook Lane
Cary, North Carolina 27511  .......................            1,483,500                               5.9%
</TABLE>


-----------
(1)  Beneficial  ownership is  determined  in  accordance  with the rules of the
     Securities  and  Exchange  Commission  and  generally  includes  voting  or
     investment power with respect to securities.  Percentage beneficially owned
     is based  on a total of  25,204,551  shares  of  Common  Stock  issued  and
     outstanding  as of May 10, 2001.  Shares of Common Stock subject to options
     or  warrants  currently  exercisable  or  convertible,  or  exercisable  or
     convertible  within  60 days of May 10,  2001 are  deemed  outstanding  for
     computing the percentage of the person holding such options or warrants but
     are not  outstanding  for  computing  the  percentage  of any other person.
     Except  as  indicated  in the  footnotes  to this  table  and  pursuant  to
     applicable  community  property  laws,  the persons named in the table have
     sole voting and investment power with respect to all shares of Common Stock
     beneficially owned.

(2)  Includes  350,000  shares not  presently  outstanding,  which Mr.  Theodore
     Aroney (Vice Chairman) has the right to acquire as follows:  150,000 shares
     through the  exercise  of  outstanding  options at $0.22 per share  through
     January 5, 2005;  and 200,000  shares  through the exercise of  outstanding
     warrants at $1.00 per share through November 19, 2001.

(3)  Includes 150,000 shares not presently outstanding which Mr. Mark Bergendahl
     (Vice   Chairman)  has  the  right  to  acquire  through  the  exercise  of
     outstanding options at $0.20 per share through January 5, 2005

(4)  Includes  295,000  shares not  presently  outstanding,  which Mr.  Henry J.
     Fleming,  Jr.  (Director) has the right to acquire  through the exercise of
     outstanding options at $0.50 per share through January 5, 2002.

(5)  Includes  50,000  shares  not  presently  outstanding,  which Mr.  Sal Lupo
     (Director)  has the right to acquire  through the  exercise of  outstanding
     warrants at $1.38 per share through March 31, 2004.

(6)  Includes  600,000  shares not presently  outstanding,  which Mr. Bradley J.
     Wilhite (President,  Chief Executive Officer and Director) has the right to
     acquire  through  the  exercise of  outstanding  options at $0.20 per share
     through January 5, 2005.


                                       38
<PAGE>

(7)  Includes  375,000  shares not presently  outstanding,  which Mr. Gary Moles
     (Chief Operating  Officer) has the right to acquire through the exercise of
     outstanding options at $0.20 per share through January 5, 2005.

To  the  Company's  knowledge,  based  solely  upon  representations  from  such
shareholders,  each  beneficial  owner of more than ten percent of the Company's
capital stock and all officers and directors  filed all reports and reported all
transactions on a timely basis with the Securities and Exchange  Commission (the
"Commission"), the NASD and the Company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In November  1998,  the Company  was advised by its  principal  supplier of club
heads that,  due to changes in the golf  industry,  the  supplier had decided to
cease  production of golf club heads.  As of December 9, 1998,  the Company owed
this supplier  $556,300 for golf club heads which had been received and had open
purchase  orders for golf club heads with a value of  approximately  $2,350,000.
The Company was able to negotiate a one-time buy-out of the balance owing to the
supplier plus the open purchase  orders for  $1,090,000 as of December 11, 1998.
This transaction  represented a discount of 62% from the total commitment to the
original vendor of $2,906,300.

As the  Company did not have the  financial  resources  to complete  the buy-out
discussed    above,    the   Company    entered   into   an    agreement    with
Bignell-Ward-Bignell,  whose  President  is Phillip A. Ward,  a Director  of the
Company, to purchase the golf club heads that the Company purchased, but had not
yet paid for,  from the  supplier,  plus the  remaining  golf club heads on open
purchase  orders  as  they  are  completed  by  the  supplier.  Pursuant  to the
agreement,  the Company purchases golf club heads on a COD basis, as needed from
Bignell-Ward-Bignell.  In exchange for financing the purchase of these golf club
heads,  the Company pays a 20% mark-up over cost.  The total  purchase  price of
these golf club heads is approximately $1,410,000 and must be paid no later than
June 30, 1999. Additionally,  the agreement with  Bignell-Ward-Bignell  requires
the Company to purchase a certain  minimum  number of golf club heads each month
from January  through June 1999. If the Company  fails to make these  purchases,
Bignell-Ward-Bignell  is under no  obligation  to sell the  remaining  golf club
heads to the Company and the Company would lose any value-added costs previously
paid for by the Company.

As of December  31,  2000  approximately  $284,200  of golf club head  inventory
remained  unpurchased  by the  Company  pursuant  to the terms of the  foregoing
purchase     agreement    with     Bignell-Ward-Bignell.     In     mid-December
Bignell-Ward-Bignell  filed and served an action  against  the  Company  and two
Company officers  alleging breech of fulfillment of a purchase  contract.  As of
May 17, 2001 the action remains  pending and  discussions  for  settlement  have
occurred without resolution.





                                       39
<PAGE>



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.


(a)  Exhibits

The following exhibits are referenced or included in this report:

        Exhibit         Description
        -------         -----------
           2.1*         Agreement & Plan of Reorganization
           3.1*         Articles of Incorporation
           3.2*         Articles of Amendment
           3.3*         Articles of Amendment
           3.4*         By-Laws
           4.1*         Common Stock Specimen Certificate
           4.2*         Form of Warrant Agreement
           4.3*         Form of Warrant Certificate
           5.1*         Opinion of Counsel
          10.1*         Lease Agreement - Carlsbad, CA
          10.3*         Stock Option Plan
          10.4*         Employment Agreement - Gary Adams
          10.5*         Employment Agreement - Bradley Wilhite
          16.1*         Letter from Clumeck, Stern, Phillips & Schenkelberg
                            on change in certifying accountant
          16-1*         Letter from BDO Seidman, LLP on change in certifying
                            accountant
          24.1*         Power of Attorney (see page 45)
          27.1*         Financial Data Schedule - 1999
---------------------
*        Exhibits previously filed.

(b)  Reports on Form 8-K

There were no reports on Form 8-K filed during the year 2000.






                                       40
<PAGE>



                                   SIGNATURES

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


                                      McHENRY METALS GOLF CORP.


Date:    May 15, 2001               By:      /s/ Bradley J. Wilhite
                                         ---------------------------------------
                                         Bradley J. Wilhite
                                         President, Chief Executive Officer,
                                           Director


Date:    May 15, 2001               By:      /s/ Theodore Aroney
                                         ---------------------------------------
                                         Theodore Aroney
                                         Chairman of the Board and Secretary






                                       41
<PAGE>






                                POWER OF ATTORNEY


KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature  appears
below constitutes and appoints Bradley J. Wilhite and Theodore Aroney,  and each
of them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution  and  resubstitution,  for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments)  to this  Report  on Form  10-KSB,  and to file the  same,  with all
exhibits  thereto,  and  other  documents  in  connection  therewith,  with  the
Securities and Exchange  Commission,  granting unto said  attorneys-in-fact  and
agents,  and each of them,  full power and  authority to do and perform each and
every act and thing requisite and necessary to be done in connection  therewith,
as fully to all intents and  purposes as he might or could do in person,  hereby
ratifying and confirming all that said  attorneys-in-fact  and agents, or any of
them, or their or his substitute or substitutes,  may lawfully do or cause to be
done by virtue hereof.

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



Date:    May 15, 2001                 By:        /s/ Theodore Aroney
                                            ------------------------------------
                                            Theodore Aroney, Director


Date:    May 15, 2001                 By:        /s/ Mark Bergendahl
                                            ------------------------------------
                                            Mark Bergendahl, Director


Date:    May 15, 2001                 By:        /s/ Henry J. Fleming, Jr.
                                            ------------------------------------
                                            Henry J. Fleming, Jr., Director


Date:    May 15, 2000                 By:        /s/ Bradley J. Wilhite
                                            ------------------------------------
                                            Bradley J. Wilhite
                                            President, Chief Executive Officer,
                                              Director


Date:    May 15, 2000                 By:        /s/ Sal Lupo
                                            ------------------------------------
                                            Sal Lupo, Director




                                       42