UNITED STATES
                       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 March 31, 2001
                                       OR
[ ]     TRANSITION   REPORT  PURSUANT TO  SECTION 13 OR 15 (d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 (no fee required)
                          For the transition period     to
                                                   ----    ----

                           Commission File No. 0-24374

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                 (Name of small business issuer in its charter)

       Delaware                                              62-1690722
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

         5600 Woodspring, Plano, Texas                       75093
         (Address of principal executive offices)            (Zip Code)

       Registrant's telephone number, including area code: (972) 818.8573

Securities registered pursuant to Section 12(b) of the Act:  None

Securities  registered  pursuant to Section 12(g) of the Act: Common Stock,  par
value $0.001

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 the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
YES  X    NO
   -----    -----

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B contained  herein,  and none will 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-KSB or any  amendment to
this Form 10-KSB. [ ]

The registrant's revenues for its most recent fiscal year were:  $72,581.

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity,  as of April 30,
2001 was $233,731.

At April 30, 2001,  the registrant had  outstanding  3,339,016  shares of common
stock.

                       DOCUMENTS INCORPORATED BY REFERENCE


   Transitional Small Business Disclosure Format (check one): Yes     No  X
                                                                 ----   ----

<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                     PART I

  Item 1.     Description of Business                                          3

  Item 2.     Description of Property                                          4

  Item 3.     Legal Proceeding                                                 4

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



                                     PART II

  Item 5.     Market for Common Equity and Related Stockholder Matters         5

  Item 6.     Management's Discussion and Analysis or Plan of Operations       5

  Item 7.     Financial Statements                                             7

  Item 8.     Changes in and Disagreements with Accountants on Accounting
                 and Financial Disclosure                                     20



                                    PART III

  Item 9.     Directors,  Executive Officers,  Promoters and Control Persons;
                 Compliance with Section 16(a) of the Exchange Act            20

  Item 10.    Executive Compensation                                          21

  Item 11.    Security Ownership of Certain Beneficial Owners and Management  22

  Item 12.    Certain Relationships and Related Transactions                  22

  Item 13.    Exhibits and Reports on Form 8-K                                23


<PAGE>


                                     PART I

Item 1.  DESCRIPTION OF BUSINESS
         -----------------------

General

     Founded in 1996 by Jerry R. Lucas to commercialize the learning  techniques
developed  by Mr.  Lucas  over 30 years of  research  and  experimentation,  the
predecessor of the company was merged into a publicly traded corporation in 1997
and exists  today as a  development  stage  company  trading on the OTC Bulletin
Board under the symbol LCSE.

     Mr.  Lucas  has  devoted  his life to  cultivating  ideas and  methods  for
memory-retention.  The  resulting  methodology  is known as The  Lucas  Learning
System(TM). His guest appearances on nationally syndicated television shows such
as the Tonight Show and Good Morning  America,  coupled with his countless  live
appearances  and seminars  earned Mr. Lucas the title of Doctor  Memory(TM).  He
graduated Phi Beta Kappa from Ohio State University,  became the only three-time
recipient of the Big Ten player of the year award,  was chosen seven times as an
All-Pro  during his career with the New York Knicks,  was inducted  into the NBA
Hall of Fame in 1979, and was recently named one of the 50 most  outstanding NBA
players of all time.  In late 1999 Mr.  Lucas was chosen as one of the five most
outstanding  college  basketball  players  of the  twentieth  century  by Sports
Illustrated.  In the resulting  article he was  specifically  recognized for his
memory-retention expertise.

     Late in 1999,  Mr.  Lucas  retained the  consulting  services of Jeffrey R.
Gullo to assist with the development and revision of the company's  business and
marketing  plans,  and to assist in securing  capital to transition  the company
from a development stage into operations. In March 2000, the company completed a
private  placement  of  $1,400,000  of  Series A  Convertible  Preferred  Stock,
appointed  two  directors  to fill  vacancies,  hired Mr.  Gullo to  become  its
President and Chief Executive Officer, and hired a Chief Financial Officer.

     During  Fiscal  2001 the  capital  raised in  connection  with the  private
placement  was used by the company to further  develop its initial  product line
and commence the marketing  and  distribution  of its  products.  In the quarter
ended  September 30, 2000 the company began accepting and filling product orders
through its direct  distribution  channel as well as establishing a distribution
avenue through traditional bookstores.

     In December 2000 the company  announced  its  intention to seek  additional
funding to allow it to exit the development  stage and build sales and marketing
organization.  On  February  28,  2001 the  company  announced  that it had been
unsuccessful in raising the necessary funding.  Further, the Board resolved that
the company maximize its value by ceasing current operations and pursue a merger
candidate  that might value the public entity after the current  operations  had
been removed.  All employees were terminated,  Mr. Lucas resigned from the Board
to pursue personal  interests and the remaining Board members  proceeded to wind
down the  operations in an orderly  manner to maximize the residual value of the
public entity.


Company Vision and Key Business Strategies

     The  company's  vision  has been to change  the way  people  learn  through
Learning That  Lasts(TM).  Its mission was to gain  recognition  as the nation's
leading authority and largest provider of memory training techniques and related
educational products.

     The  company  was  establishing  itself  as a  marketing  oriented  content
provider.  Product  development  focused on  bringing  to market  highly  valued
adaptations  of  its  methodologies   that  service  adult  general   interests,
children's  learning  requirements,  and the needs of the Christian  Bible Study
sector.  It sought to distribute its learning products directly to end consumers
via  e-commerce  enabled  channels,   and   simultaneously   leverage  the  more
traditional  wholesale  distribution  channels  available to the book publishing
industry.   By  outsourcing  low  value  product  duplication  and  distribution
functions, the company sought to scale up its operations significantly without a
proportionate increase in fixed costs.

                                       3

<PAGE>

Product Overview

     The company  employed a market driven product  development  strategy.  This
strategy focused on near term selling opportunities while prioritizing resources
to those products projected to create the most value for the company.  It sought
to  develop  products  which are  easily and cost  effectively  reproducible  to
penetrate  high  demand\high  value  market  segments.  As of the  cessation  of
operations on February 28, 2001, the company has no specific  product or service
offering.


Employees

       As of March 31, 2000, there were no employees.

Environmental Impact

     None of the  company's  activities  utilized  any  hazardous  materials  or
resulted  in any  discharge  of  pollutants  into the  environment.  The company
believes it complies fully with all environmental laws and regulations.


Regulation

     There are no specific regulatory issues affecting the company not common to
publicly held businesses in general.


Item 2.  DESCRIPTION OF PROPERTY
         -----------------------

       As of March 31, 2001 the company did not own or lease any property.

Item 3.  LEGAL PROCEEDINGS
         -----------------

     The company was not  engaged in any legal  proceedings  on the date of this
report.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------

     The following  matters were submitted to a vote of stockholders at the July
29, 2000 annual meeting of stockholders.

Election of Directors
---------------------

Upon  nomination,  Mr. Jerry R. Lucas, Mr. Jeffrey R. Gullo, and Mr. J. D. Young
were elected as  Directors of the company to hold office for a term  expiring at
the 2001  annual  meeting,  and  thereafter  until his  successor  has been duly
elected  and  qualified.  Each  of the  above  received  20,821,205  affirmative
pre-split votes with respect to the election of directors.

Amendment of the Certificate of Incorporation
---------------------------------------------

A proposal to amend the Certificate of  Incorporation  to decrease the number of
authorized  shares of common  stock from  Twenty  Million  (20,000,000)  to Five
Million (5,000,000),  and the thereby effect a one-for-four reverse split of the
common  stock,  and,  after  giving  effect to the  reverse  split,  restore the
authorized number of shares of common stock to Twenty Million (20,000,000).  The
votes cast were as follows:  19,637,965  pre-split shares were voted in favor of
the amendment,  324,937 pre-split shares were voted against the amendment and no
shares abstained from voting.

                                       4

<PAGE>

Adoption of the  Company's  2000 Employee  Stock Option Plan
------------------------------------------------------------

The  Company's  2000Employee  Stock  Option  Plan  was  approved  by a  vote  of
19,637,965  pre-split  shares  voted in favor,  324,937  pre-split  shares voted
against the resolution and no shares abstained.

Adoption of the Company's 2000 Executive Incentive Plan
-------------------------------------------------------

The company's 2000 Executive Incentive Plan was approved by a vote of 19,671,087
pre-split shares were voted in favor of the resolution, 291,815 pre-split shares
were voted against the resolution and no shares abstained from voting.


                                     PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
         --------------------------------------------------------

Market Information

     The company's common stock is traded in the over-the-counter  market on the
OTC  Bulletin  Board  under the symbol  LCSE.  Prior to August 1, 2001 the stock
traded under the symbol LEDS.  The following  table shows the price range of the
company's common stock as reported by Nasdaq for the last two fiscal years.

                                 BID                               ASK
Quarter Ended           High              Low              High            Low
-------------           ----              ---              ----            ---
06-30-99               1.0000            0.2500           1.0313          0.3000
09-30-99               0.2800            0.0625           0.3750          0.1250
12-31-99               0.1250            0.0313           0.1875          0.0938
03-31-00               0.5625            0.0500           0.6875          0.0938
06-30-00               0.5100            0.1250           0.5625          0.2500
09-30-00               0.2600            0.1000           1.0000          0.7500
12-31-00               0.2812            0.0625           0.7500          0.1875
03-31-01               0.0937            0.0625           0.1875          0.1500

Holders

     As of April 30, 2001, there were 146 record holders of the company's common
stock.

Dividends

     The company does not  anticipate  any stock or cash dividends on its common
stock in the foreseeable future.


Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
         ----------------------------------------------------------

General

     In  November  1997,  the  company  completed  a  reorganization  whereby it
acquired all of the outstanding voting securities of Lucas Educational  Systems,
Inc., a Nevada  corporation.  During the remainder of fiscal 1998 and continuing
through fiscal 1999 and 2000, the company  remained in the  developmental  stage
and sought  funding  from  various  sources to enable it to seek  marketing  and
distribution  channels  for its  products,  which are based  upon a  proprietary
memory enhancement methodology developed by its founder, Jerry R. Lucas.

     In March 2000, the company  completed a private  placement of 89,974 shares
of Series A Convertible  Preferred  Stock to accredited  investors as defined in
Regulation D promulgated pursuant to the Securities Act of 1933, as amended.

                                       5

<PAGE>

     During the Year Ended March 31, 2001 the capital raised in connection  with
the private  placement  was used by the  company to further  develop its initial
product line and commence the marketing and  distribution  of its products.  The
company began  accepting and filling  product  orders in August 2000 through its
direct  distribution  channel  as well as  establishing  a  distribution  avenue
through traditional bookstores.

     In December 2000 the company  announced  its  intention to seek  additional
funding to allow it to exit the development  stage and build sales and marketing
organization.  On  February  28,  2001 the  company  announced  that it had been
unsuccessful in raising the necessary funding.  Further, the Board resolved that
the company maximize its value by ceasing current operations and pursue a merger
candidate  that might value the public entity after the current  operations  had
been removed.  All employees were terminated,  Mr. Lucas resigned from the Board
to pursue personal  interests and the remaining Board members  proceeded to wind
down the  operations in an orderly  manner to maximize the residual value of the
public entity.

Results of Operations

     Net  revenues for the Year Ended March 31, 2001 were $72,581 as compared to
$-0- for the prior year. The generation of revenue  recognizes  that the company
began  selling  its  products  during the year ended March 31, 2001 and prior to
that did not have products  available  for sale.  The company had been unable to
establish  distribution  channels and complete  development  and  production  of
targeted  products in previous years.  Therefore,  meaningful  revenues were not
created  during the fiscal year ended March 31, 2000.  Net revenues for the year
include $8,740 of related party sales.

     Net loss for the year ended March 31, 2001 was  $1,718,407 as compared to a
net loss of $295,280 for the year ended March 31, 2000.  The net loss  increased
as the company increased its focus on product  development and distribution,  as
well as the establishment of a brand awareness campaign.  Increased Other Income
resulting from higher cash balances  available for investment  partially  offset
the increased expenditures for development and channel establishment.

Liquidity

     As a development stage company, the company has historically relied on cash
generated  through the sale of various equity  instruments as its primary source
of liquidity.  Available cash at March 31, 2001 of $9,385  represents a decrease
of  $1,269,539  compared to available  cash at March 31,  2000.  The decrease is
primarily  related to the company's use of the fund  generated  from the Private
Placement  for  the  development  of  products  and  channels  as  well  as  the
establishment of a brand awareness campaign.

     As of March 31,  2001 the  company  had no  significant  credit  facilities
available.  While the company is aggressively seeking additional equity funding,
there can be no assurances that such funding is forthcoming.

Year 2000

     With the change to the year 2000,  the company  experienced  no significant
interruptions in its normal business processes as a result of its own systems or
those of companies with which it does business.  During the year ended March 31,
2001 the  company  did not incur any costs  related  to the  remediation  of the
company's systems for the year 2000.


Forward Looking Information

     This report  contains  certain  forward-looking  statements and information
relating  to the  company  that  are  based  on  the  beliefs  of the  company's
management as well as assumptions made by and information currently available to
the company's management.  When used in this report, words such as "anticipate,"
"believe," "estimate," "expect," "intend," "should," and similar expressions, as
they  relate  to  the  company  or  its  management,   identify  forward-looking
statements.  Such  statements  reflect  the current  views of the  company  with
respect to future  events and are subject to certain  risks,  uncertainties  and
assumptions  relating to the  operations,  results of operations,  liquidity and
growth  strategy  of the  company,  including  competitive  factors  and pricing
pressures,   changes  in  legal  and  regulatory  requirements,   interest  rate
fluctuations,  and  general  economic  conditions,  as  well  as  other  factors
described in this report.

                                       6

<PAGE>

Should one or more of the risks  materialize,  or should underlying  assumptions
prove  incorrect,  actual  results or outcomes  may vary  materially  from those
described herein as anticipated, believed, estimated, expected or intended.

                                       7

<PAGE>


Item 7.  FINANCIAL STATEMENTS
         --------------------


INDEX TO FINANCIAL STATEMENTS


Independent Auditors' Report                                                  9


Consolidated Balance Sheet                                                    10


Consolidated Statements of Operations                                         11


Consolidated Statement of Stockholders Equity                                 12


Consolidated Statements of Cash Flows                                         16


Notes to Consolidated Financial Statements                                    17






                                       8

<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
Lucas Educational Systems, Inc.


We have audited the accompanying consolidated balance sheet of Lucas Educational
Systems,  Inc. and Subsidiary (a development stage company) as of March 31, 2001
and 2000, and the related consolidated  statements of operations,  stockholders'
equity and cash flows for the years then ended, and the cumulative amounts since
December 5, 1996 (date of commencement of development stage). These consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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 consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Lucas Educational
Systems,  Inc. and  Subsidiary as of March 31, 2001 and 2000, and the results of
their  operations  and  their  cash  flows  for the years  then  ended,  and the
cumulative  amounts since December 5, 1996 (date of  commencement of development
stage),  in conformity  with  accounting  principles  generally  accepted in the
United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the company will continue as a going concern. As discussed in note 2 to the
consolidated financial statements,  there is substantial doubt about the ability
of the Company to continue as a going concern.  Management's  plans in regard to
that matter are also described in note 2. The consolidated  financial statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.


 /s/     Tanner + Co.
-------------------------

Salt Lake City, Utah
June 11, 2001

                                       9

<PAGE>
<TABLE>
<CAPTION>

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                          (A Development Stage Company)

                           Consolidated Balance Sheet

                                                                                  March 31,
                                                                        --------------------------

              Assets                                                        2001           2000
              ------
<S>                                                                     <C>            <C>
Current assets:
     Cash                                                               $     9,385    $ 1,278,924
     Inventory                                                                 --            5,610
     Prepaid expenses                                                         6,715           --
     Deposits                                                                25,028           --
                                                                        --------------------------
                  Total current assets                                       41,128      1,284,534

Property and equipment, net                                                   3,403         52,252
Other                                                                          --            3,045
                                                                        --------------------------
                                                                        $    44,531    $ 1,339,831
                                                                        ==========================


              Liabilities and Stockholders' Equity
              ------------------------------------

Current liabilities:
     Accounts payable                                                   $    15,262    $    46,724
     Accrued liabilities                                                        789           --
     Related party notes payable                                               --            2,500
                                                                        --------------------------
                  Total current liabilities                                  16,051         49,224

Commitments                                                                    --             --

Stockholders' equity:
     Preferred stock; 1,000,000 shares authorized, $.001
       par value; 0 and 89,974 shares issued and
       outstanding, respectively (aggregate liquidation
       preference $1,400,000 in 2000)                                          --               90
     Common stock 20,000,000 shares authorized,
       $.001 par value; 3,339,016 and 3,697,157 shares issued
       and outstanding, respectively                                          3,339          3,697
     Additional paid-in capital                                           3,286,059      3,377,288
     Treasury Stock                                                            (478)          --
     Unearned compensation                                                     --         (548,435)
     Accumulated deficit                                                 (3,260,440)    (1,542,033)
                                                                        --------------------------
                  Total stockholders' equity                                 28,480      1,290,607
                                                                        --------------------------
                                                                        $    44,531    $ 1,339,831
                                                                        ==========================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       10

<PAGE>
<TABLE>
<CAPTION>

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                          (A Development Stage Company)

                      Consolidated Statement of Operations
                              Years Ended March 31,
                  and Cumulative Amounts Since December 5, 1996
                   (Date of Commencement of Development Stage)


                                                                               Cumulative
                                                      2001           2000       Amounts
                                                -----------------------------------------
<S>                                             <C>             <C>            <C>
Revenue                                         $    72,581    $      --      $    72,581
Cost of  goods sold                                  36,822           --           36,822
                                                -----------------------------------------
     Gross profit                                    35,759           --           35,759

General and administrative expenses               1,778,073        293,236      3,315,947
                                                -----------------------------------------
         Loss from operations                    (1,742,314)      (293,236)    (3,280,188)

Other income (expense):
     Interest income                                 23,907            472         24,379
     Interest expense                                  --           (2,516)        (4,631)
                                                -----------------------------------------
         Loss before benefit for income taxes    (1,718,407)      (295,280)    (3,260,440)

Benefit for income taxes                               --             --             --
                                                -----------------------------------------
         Net loss                               $(1,718,407)   $  (295,280)   $(3,260,440)
                                                =========================================

         Loss per common share -
           basic and diluted                    $      (.51)   $      (.09)

         Weighted average shares -
           basic and diluted                      3,395,000      3,130,000
</TABLE>


See accompanying notes to consolidated financial statements.

                                       11

<PAGE>
<TABLE>
<CAPTION>

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                          (A Development Stage Company)

                 Consolidated Statement of Stockholders' Equity
                         For the Period December 5, 1996
                   (Date of Commencement of Development Stage)
                             Through March 31, 2001

                                               Treasury Stock            Preferred Stock            Common Stock
                                            Shares        Amount       Shares       Amount       Shares        Amount
                                          -----------------------------------------------------------------------------
<S>                                       <C>           <C>          <C>          <C>          <C>            <C>
Balance at December 5, 1996                     --      $     --           --     $     --           --      $     --
Issuance of common stock for cash               --            --           --           --      2,175,000         2,175
Net loss from inception on December 5,
1996 through March 31, 1997                     --            --           --           --           --            --
                                          -----------------------------------------------------------------------------
Balance at March 31, 1997                       --            --           --           --      2,175,000         2,175

Common stock issued in recapitalization         --            --           --           --        462,468           463
Common stock issued for:
    Cash and services                           --            --           --           --         48,000            48
    Debt                                        --            --           --           --         83,251            83
    Services                                    --            --           --           --         42,188            42
Net loss                                        --            --           --           --           --            --
                                          -----------------------------------------------------------------------------
Balance at March 31, 1998                       --            --           --           --      2,810,907         2,811

Proceeds from stock subscription
receivable                                      --            --           --           --           --            --
Common stock issued for:
    Cash                                        --            --           --           --         22,500            22
    Debt and payables                           --            --           --           --        100,000           100
    Services                                    --            --           --           --        180,000           180
Contributed shares                           113,750          --           --           --           --            --
Treasury stock issued for cash              (113,750)         --           --           --           --            --
Net loss                                        --            --           --           --           --            --
                                          -----------------------------------------------------------------------------
Balance at March 31, 1999                       --            --           --           --      3,113,407         3,113

Common stock issued for services                --            --           --           --        596,250           597
Convertible preferred stock issued for
cash                                            --            --         89,974           90         --            --
Cancellation of common stock issued for
services                                        --            --           --           --        (12,500)          (13)
Stock compensation                              --            --           --           --           --            --
Net loss                                        --            --           --           --           --            --
                                          -----------------------------------------------------------------------------
Balance at March 31, 2000                       --      $     --         89,974   $       90    3,697,157    $    3,697
                                          -----------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       12

<PAGE>
<TABLE>
<CAPTION>

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                          (A Development Stage Company)

                 Consolidated Statement of Stockholders' Equity
                         For the Period December 5, 1996
                   (Date of Commencement of Development Stage)
                             Through March 31, 2001

                                            Treasury Stock              Preferred Stock              Common Stock
                                           Shares      Amount         Shares       Amount         Shares       Amount
                                        -------------------------------------------------------------------------------
<S>                                     <C>          <C>          <C>           <C>          <C>            <C>
Balance at March 31, 2000                    --     $     --          89,974    $       90     3,697,157    $    3,697
Treasury stock purchased                      500         (478)         --            --            --            --
Contributed shares                           --           --            --            --        (596,250)         (596)
Stock compensation                           --           --            --            --            --            --
Treasury stock purchased and retired         --           --            --            --      (2,011,250)       (2,011)
Conversion of preferred stock                --           --         (89,974)          (90)    2,249,359         2,249
Net loss                                     --           --            --            --            --            --
                                        -------------------------------------------------------------------------------
Balance at March 31, 2001                     500   $     (478)         --      $     --       3,339,016    $    3,339
                                        -------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       13

<PAGE>
<TABLE>
<CAPTION>

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                          (A Development Stage Company)

                 Consolidated Statement of Stockholders' Equity
                         For the Period December 5, 1996
                   (Date of Commencement of Development Stage)
                             Through March 31, 2001

                                           Additional                      Stock
                                            Paid-in        Unearned     Subscription   Accumulated
                                            Capital      Compensation    Receivable      Deficit         Total
                                          -----------------------------------------------------------------------
<S>                                       <C>            <C>            <C>            <C>            <C>
Balance at December 5, 1996               $      --      $      --      $      --      $      --      $      --
Issuance of common stock for cash              (2,075)          --             --             --              100
Net loss from inception on December 5,
1996 through March 31, 1997                      --             --             --              (63)           (63)
                                          -----------------------------------------------------------------------
Balance at March 31, 1997                      (2,075)          --             --              (63)            37

Common stock issued in recapitalization          (422)          --             --             --               40
Common stock issued for:
    Cash and services                         114,952           --              (25)          --          114,975
    Debt                                      199,917           --             --             --          200,000
    Services                                  101,207           --             --             --          101,250
Net loss                                         --             --             --         (351,181)      (351,181)
                                          -----------------------------------------------------------------------
Balance at March 31, 1998                     413,579           --              (25)      (351,244)        65,121

Proceeds from stock subscription
receivable                                       --             --               25           --               25
Common stock issued for:
    Cash                                      179,978           --             --             --          180,000
    Debt and payables                         299,900           --             --             --          300,000
    Services                                  364,820       (106,875)          --             --          258,125
Contributed shares                               --             --             --             --             --
Treasury stock issued for cash                227,500           --             --             --          227,500
Net loss                                         --             --             --         (895,509)      (895,509)
                                          -----------------------------------------------------------------------
Balance at March 31, 1999                   1,485,777       (106,875)          --       (1,246,753)       135,262

Common stock issued for services              547,839       (548,435)          --             --             --
Convertible preferred stock issued for
cash                                         1,399,91           --             --             --         1,400,00
Cancellation of common stock issued for
services                                      (56,238)        56,250           --             --             --
Stock compensation                               --           50,625           --             --           50,625
Net loss                                         --             --             --         (295,280)      (295,280)
                                          -----------------------------------------------------------------------
Balance at March 31, 2000                 $ 3,377,288    $  (548,435)   $      --      $(1,542,033)   $ 1,290,607
                                          -----------------------------------------------------------------------

</TABLE>



See accompanying notes to consolidated financial statements.

                                       14

<PAGE>
<TABLE>
<CAPTION>

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                          (A Development Stage Company)

                 Consolidated Statement of Stockholders' Equity
                         For the Period December 5, 1996
                   (Date of Commencement of Development Stage)
                             Through March 31, 2001

                                         Additional                      Stock
                                           Paid-in       Unearned     Subscription  Accumulated
                                           Capital     Compensation    Receivable     Deficit         Total
                                        ----------------------------------------------------------------------
<S>                                     <C>            <C>            <C>           <C>            <C>
Balance at March 31, 2000               $ 3,377,288    $  (548,435)          --     $(1,542,033)   $ 1,290,607

 Treasury stock purchased                      --             --             --            --             (478)
 Contributed shares                             596           --             --            --             --
 Stock compensation                            --          548,435           --            --          548,435
 Treasury stock purchased and retired       (89,666)          --             --            --          (91,677)
 Conversion of preferred stock               (2,159)          --             --            --             --
 Net loss                                      --             --             --      (1,718,407)    (1,718,407)
                                        ----------------------------------------------------------------------
Balance at March 31, 2001               $ 3,286,059    $      --      $      --     $(3,260,440)   $    28,480
                                        ----------------------------------------------------------------------

</TABLE>


See accompanying notes to consolidated financial statements.

                                       15

<PAGE>
<TABLE>
<CAPTION>

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                          (A Development Stage Company)

                      Consolidated Statement of Cash Flows
                       Years Ended March 31, 2001 and 2000
                  and Cumulative Amounts Since December 5, 1996
                   (Date of Commencement of Development Stage)

                                                                                        Cumulative
                                                             2001           2000         Amounts
                                                         -----------------------------------------
<S>                                                      <C>             <C>           <C>
Cash flows from operating activities:
     Net loss                                            $(1,718,407)   $  (295,280)   $(3,260,440)
     Adjustments to reconcile net loss to net cash
       used in operating activities:
         Depreciation and amortization                        31,047         28,583         87,283
         Loss on sale of property and equipment               13,715           --           13,715
         Exchange of assets for services                        --            1,262          1,262
         Common stock issued for services and payables          --             --          844,375
         Stock compensation                                  548,435         50,625        599,060
         (Increase) decrease in:
              Related party receivables                         --            3,400           --
              Inventories                                   (171,613)          --         (177,223)
              Prepaid expenses                                (6,715)          --           (6,715)
              Deposits                                       (25,028)       (25,028)
              Other                                            3,045         (3,045)          --
         Increase (decrease) in:
              Accounts payable                                83,272         35,286        129,996
              Accrued liabilities                                789           --              789
                                                         -----------------------------------------
   Net cash used in operating activities                  (1,241,460)      (179,169)    (1,792,926)

Cash flows from investing activities-
     Purchases of property and equipment                     (30,314)       (21,953)      (140,064)
     Proceeds from sale of property and equipment              5,213           --            5,213
                                                         -----------------------------------------
   Net cash used in investing activities                     (25,101)       (21,953)      (134,851)

Cash flows from financing activities:
     Purchase of treasury stock                                 (478)          --             (478)
     Payments on related party notes payable                  (2,500)       (12,000)       (21,000)
     Proceeds from related party notes payable                  --            2,500         36,000
     Issuance of convertible preferred stock                    --        1,400,000      1,400,000
     Issuance of common stock                                   --             --          295,115
     Issuance of treasury stock                                 --             --          227,500
     Proceeds from stock subscription receivable                --             --               25
                                                         -----------------------------------------
   Net cash (used in) provided by financing activities        (2,978)     1,390,500      1,937,162

                                                         -----------------------------------------
Net (decrease) increase in cash                           (1,269,539)     1,189,378          9,385
Cash, beginning of period                                  1,278,924         89,546           --
                                                         -----------------------------------------
Cash, end of period                                      $     9,385    $ 1,278,924    $     9,385
                                                         =========================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       16

<PAGE>

                         LUCAS EDUCATIONAL SYSTEMS, INC.
                          (A Development Stage Company)

                   Notes to consolidated Financial Statements
                             March 31, 2001 and 2000

1.   Organization and Significant Accounting Policies

Organization and Nature of Activities
Lucas Educational Systems, Inc. (formerly Mirador Equity Partners, Ltd.) (Lucas)
was incorporated in the state of Delaware on June 11, 1992. Lucas' vision was to
change the way people learn  through  Learning That Lasts TM. Its mission was to
gain  recognition  as the nation's  leading  authority  and largest  provider of
memory training  techniques and related educational  products.  In February 2001
the Board of Directors  of the company  resolved  that the company  maximize its
value by ceasing  current  business  strategies and pursuing a merger  candidate
that might value the public  entity.  All employees were  terminated,  Mr. Lucas
resigned from the Board and the remaining Board members proceeded to focus their
efforts to maximize the residual value of the public entity.


Principles of Consolidation
The consolidated  financial statements include the financial statements of Lucas
and its wholly  owned  subsidiary  Lucas  Educational  Systems,  Inc.  (A Nevada
corporation),  collectively,  the company. All significant intercompany balances
and transactions have been eliminated.


Development Stage Company
Effective  December  5, 1996,  the Company is  considered  a  development  stage
company as defined in SFAS No. 7. The Company has, at the present time,  not had
significant revenues,  not paid any dividends and any dividends that may be paid
in the future  will depend upon the  financial  requirements  of the Company and
other relevant factors.


Concentration of Credit Risk
The Company  maintains its cash in bank deposit  accounts which,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts and believes it is not exposed to any  significant  credit risk on
cash and cash equivalents.


Cash and Cash Equivalents
The Company considers all highly liquid investments with original  maturities of
three months or less to be cash equivalents.


Inventory
Inventory  consists of books held for resale and are stated at the lower of cost
or market. Cost is determined by the first-in, first-out (FIFO) method.


Property and Equipment
Property and  equipment  are recorded at cost,  less  accumulated  depreciation.
Depreciation and amortization are computed using the  straight-line  method over
the estimated useful lives of the assets or terms of the lease. Expenditures for
maintenance   and  repairs  are  expensed  when  incurred  and  betterments  are
capitalized. Gains and losses on sale of property and equipment are reflected in
the statement of operations.

                                       17

<PAGE>

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


Revenue Recognition
The company  recognized  revenue  according to Staff  Accounting  Bulletin  101,
Revenue Recognition in Financial Statements.  Accordingly, revenue is recognized
when a sales order has been  placed,  the price is fixed and  determinable,  the
order is  shipped,  collection  is  reasonably  assured  and the  company has no
significant obligations remaining.


Income Taxes
The Company  accounts  for income  taxes using the asset and  liability  method.
Under the asset and liability  method,  deferred tax assets and  liabilities are
recognized for future tax consequences  attributable to differences  between the
financial  statement  carrying  amounts of existing  assets and  liabilities and
their  respective tax bases.  Deferred tax assets and  liabilities  are measured
using  enacted  tax rates  expected  to apply to taxable  income in the years in
which those temporary  differences are expected to be recovered or settled.  The
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized in income in the period that includes the enactment date.


Loss Per Share
The computation of basic loss per common share is based on the weighted  average
number of shares outstanding during each year.

The  computation  of  diluted  loss per  common  share is based on the  weighted
average  number of shares  outstanding  during  the year plus the  common  stock
equivalents,  that would arise from the exercise of stock  options  outstanding,
using the treasury  stock  method and the average  market price per share during
the year. At March 31, 2001 and 2000, options to purchase 0 and 7,910,000 shares
of common stock,  respectively,  were outstanding,  but were not included in the
diluted  loss  per  share  calculation   because  the  effect  would  have  been
antidilutive.


2.       Going Concern

The accompanying  consolidated  financial statements have been prepared assuming
that the company will continue as a going concern.  As of March 31, 2001 and for
the year then ended, the company had an accumulated deficit, negative cash flows
from  operations  and  suffered  a  substantial  loss.  These  conditions  raise
substantial  doubt  about the  ability  of the  company to  continue  as a going
concern.  The consolidated  financial  statements do not include any adjustments
that might result from the outcome of this  uncertainty.  Management  has ceased
current  business  strategies  and is  pursuing a merger  candidate  in order to
maximize the residual value of the public entity. However, there is no assurance
they will be successful.

                                       18

<PAGE>

3.       Property And Equipment

Property and equipment consist of the following:

                                                           March 31,
                                                   2001                 2000
                                            -----------------------------------
Furniture and fixtures                      $       --           $        4,104
Leasehold improvements                              --                   11,070
Vehicles                                            --                   37,382
Master videos                                       --                   13,577
Computer equipment                                4,098                  41,801
                                            -----------------------------------
                                                  4,098                 107,934

Accumulated depreciation and amortization          (695)                (55,682)
                                            -----------------------------------

                                            $     3,403          $       52,252
                                            ===================================


4.       Income Taxes

The benefit for income taxes is different  than amounts  which would be provided
by applying the  statutory  federal  income tax rate to loss before  benefit for
income taxes for the following reasons:

                                              Year Ended
                                               March 31,
                                      ------------------------      Cumulative
                                          2001         2000           Amounts
                                      -----------------------------------------
Income tax benefit at statutory rate  $   607,000  $   100,000     $  1,124,000
Change in valuation allowance            (607,000)    (100,000)      (1,124,000)
                                      -----------------------------------------
                                      $     --     $      --       $       --
                                      =========================================


Deferred tax assets are comprised of the following:

                                                         March 31,
                                                   2000              2000
                                             -----------------------------------
Net operating loss carryforwards             $   1,131,000         $     524,000
Valuation allowance                            (1,131,000)             (524,000)
                                             -----------------------------------
                                             $       -             $       -
                                             ===================================


At  March  31,  2001,  the  Company  had net  operating  loss  carryforwards  of
approximately  $3,326,000.  These  carryforwards  are available to offset future
taxable income and begin to expire in 2017. The amount of the loss carryforwards
which may be used is  dependent  upon the tax laws in effect at the time the net
operating  loss  carryforwards  can be  utilized.  The  Tax  Reform  Act of 1986
significantly limits the annual amount that can be utilized for certain of these
carryforwards as a result of substantial changes in ownership of the company.

A valuation  allowance  has been  established  that offsets the net deferred tax
asset because there is uncertainty  surrounding  its ultimate  realization.  The
uncertainty  is caused by the company's  recurring  losses and the annual limits
referred to above.

                                       19

<PAGE>

5.   Supplemental Cash Flow Information

Actual amounts paid for interest and income taxes are as follows:

                                           Year Ended
                                            March 31,
                                   --------------------------         Cumulative
                                      2001            2000             Amounts
                                   ---------------------------------------------

Interest                           $     -           $  2,516         $  4,631
                                   ---------------------------------------------

Income taxes                       $    1,655        $   -            $  1,655
                                   ---------------------------------------------


Non-cash investing and financing activities:
During the year ended March 31, 2001:
o         89,974 shares of preferred stock were converted into 2,249,359  shares
          of common stock.
o         The company  acquired  2,011,250 shares of common stock and eliminated
          payables  of  $114,734  in exchange  for  inventory  of  $177,223  and
          property and equipment with a net book value of $29,188.
o         The company retired treasury stock totaling $91,677.


6.   Capital Stock

Common Stock
The company has established one series of common stock with a par value of $.001
and a total of 20,000,000 authorized shares.

Series A Preferred Stock
On March 1,  2000,  the  company  established  a series of  voting,  convertible
preferred shares designated as Series A Convertible Preferred Stock,  consisting
of 90,000  shares with a $.001 par value.  On March 24, 2000 the company  issued
89,974  shares  to a group of  accredited  investors.  On  March  24,  2001,  in
accordance  with the rights and privileges  attached to the Series A Convertible
Preferred Stock, the preferred stock converted to common stock.

Reverse Stock Split
On July 31, 2000, the company  effected a one-for-four  reverse stock split. All
share and per share amounts have been restated to reflect the split as though it
was  effective  as of  December  5, 1996 (date of  commencement  of  development
stage).

                                       20

<PAGE>

7.   Stock Options

The Company has two stock option plans (the Option Plans),  which together allow
a maximum of 12,815,000 options to be granted to purchase common stock at prices
generally  not less than the fair  market  value of common  stock at the date of
grant.  Under the  Option  Plans,  grants  of  options  may be made to  selected
officers and key  employees  without  regard to any  performance  measures.  The
options may be  immediately  exercisable  or may vest over time as determined by
the Board of  Directors.  However,  the maximum term of an option may not exceed
ten years.

Information regarding the stock options is summarized below:


                                                                      Weighted
                                                          Number      Average
                                                            Of        Exercise
                                                          Options      Price
                                                       ------------------------
       Outstanding at April 1, 1998                          --        $   --
         Granted                                          625,000           .43
         Exercised                                       (600,000)          .38
                                                       ------------------------

       Outstanding at March 31, 1999                       25,000         1.50
         Granted                                        7,910,000          .08
         Forfeited                                        (25,000)         1.50
                                                       ------------------------

       Outstanding at March 31, 2000                     7,910,000          .08
         Granted                                            60,000          .50
         Forfeited                                      (7,970,000)         .08
                                                       ------------------------

       Outstanding at March 31, 2001                         --        $   --
                                                       ========================


The Company has adopted the disclosure only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based  Compensation."
Accordingly,  no  compensation  expense has been  recognized  for stock  options
granted to employees.  Had compensation  expense for the Company's stock options
been  determined  based on the fair  value at the grant  date and loss per share
consistent  with the  provisions  of SFAS No.  123,  the  Company's  results  of
operations would not have changed.


8.   Related Party Transactions

At March 31, 2000, related party note payable of $2,500 consists of an unsecured
non-interest bearing demand note payable to a shareholder. During the year ended
March 31,  2001  this note was paid off.  In  addition,  net  revenues  for 2001
include $8,740 of sales to an officer/shareholder.

In  addition,  the  Company  had a  licensing  and  royalty  agreement  with  an
officer/shareholder.  On August 13,  1997,  the company  entered  into a 99 year
license agreement with an officer/shareholder  for exclusive worldwide rights to
develop and sell products based on their training system.  On March 22, 2000 the
agreement was expanded to include the option to acquire certain items previously
excluded.  In  exchange  for these  rights the company  agreed to pay  royalties
totaling 8% of the gross receipts on applicable  sales.  In addition,  under the
agreement the  officer/shareholder  also has, under certain limited  conditions,
rights to purchase  inventory from the company at cost plus 25%. On February 28,
2001 this agreement was terminated by mutual agreement of all parties.

                                       21

<PAGE>


9.    Commitments

Operating Lease
The company was obligated under a noncancellable operating lease for a telephone
system.  Upon winding down the operations,  the telephone system was returned to
the lessor.  However,  the lease was never cancelled.  It is unknown whether the
lessor will take further  action.  Future minimum lease payments were as follows
at March 31, 2001:

                          Year                   Amount
                          ----                  --------
                          2002                  $  2,163
                          2003                     2,163
                          2004                     2,163
                          2005                     2,163
                          2006                       180
                                                --------

                                                $  8,832
                                                ========


10.   Fair Value of Financial Instruments

The Company's financial  instruments consist of cash and payables.  The carrying
amount of cash and payables  approximates  fair value because of the  short-term
nature of these items.


11.  Recent Accounting Pronouncements

In June  1999,  the  FASB  issued  SFAS  No.  137,  "Accounting  for  Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  date of FASB
Statement No. 133." SFAS 133 establishes  accounting and reporting standards for
derivative  instruments and requires recognition of all derivatives as assets or
liabilities  in the  statement of financial  position and  measurement  of those
instruments at fair value.  SFAS 133 is now effective for fiscal years beginning
after June 15, 2000. The company believes that the adoption of SFAS 133 will not
have any material effect on the financial statements of the company.

SFAS No. 140,  Accounting  for Transfers  and Servicing of Financial  Assets and
extinguishments of Liabilities,  was issued in September 2000. SFAS No. 140 is a
replacement  of SFAS  No.  125,  "Accounting  for  Transfers  and  Servicing  of
Financial Assets and Extinguishments of Liabilities".  Most of the provisions of
SFAS No. 125 were carried forward to SFAS No. 140 without reconsideration by the
Financial Accounting Standards Board (FASB), and some were changed only in minor
ways. In issuing SFAS No. 140, the FASB included  issues and decisions  that had
been  addressed and determined  since the original  publication of SFAS No. 125.
SFAS No. 140 is effective for transfers  after March 31, 2001.  Management  does
not expect the  adoption  of SFAS No.  140 to have a  significant  impact on the
financial position or results of operations of the company.

                                       22

<PAGE>

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

           Not applicable.


                                    PART III

Item 9.  DIRECTORS,   EXECUTIVE   OFFICERS,  PROMOTERS   AND  CONTROL  PERSONS;
         -----------------------------------------------------------------------
         COMPLIANCE WITH 16(A) OF TH EXCHANGE ACT
         ----------------------------------------

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

Under U.S.  securities laws,  directors,  certain executive officers and persons
holding more than 10% of the  Company's  common stock must report their  initial
ownership  of the  common  stock  and  any  changes  in  that  ownership  to the
Securities and Exchange  Commission.  The Securities and Exchange Commission has
designated specific due dates for these reports and the company must identify in
this Proxy  Statement  those  persons who did not file these  reports  when due.
Based on its  review of the  reports  filed  with the  Securities  and  Exchange
Commission and written  representations of its directors and executive officers,
the Company believes,  except as follows,  that all persons subject to reporting
filed the required reports on time during the year ended March 31, 2001.

Directors and Executive Officers
--------------------------------

Name                   Age     Position with Company
----                   ---     ---------------------

Jeffrey R. Gullo        38     Chairman, President, Director and Chief Executive
                               Officer
J. D. Young             42     Director
Steven R. Crowell       47     Chief Financial Officer and Secretary

     Jeffrey R. Gullo,  Chairman since March 1, 2001,  President  since 2000 and
consultant since late 1999. Prior to consulting with the company,  Mr. Gullo was
a Senior Vice  President with United Dental Care,  Inc. He had previously  spent
six years  with  Arthur  Andersen  & Co.  as a Senior  Manager  specializing  in
business process re-engineering and information systems integration. Mr. Gullo's
employment  was  terminated on February 28, 2001. He now serves the company on a
contractual basis at the discretion of the Board of Directors.

     J. D. Young, Director since 2000. Since retiring from Oracle Corporation in
1997, Mr. Young has been an Independent Investor. He was a sales executive while
with Oracle.

     Steven R. Crowell,  Chief  Financial  Officer since 2000. From 1998 to 2000
Mr. Crowell was Chief Financial Officer with Integrated Software Solutions, Inc.
Previously  he was Vice  President - Treasurer for TIG  Insurance  Company.  Mr.
Crowell's  employment  was  terminated  on February 28, 2001.  He now serves the
company on a contractual basis at the discretion of the Board of Directors.

Directors serve for a term of one year or until their successors are elected and
qualified. Directors do not receive cash compensation for serving as such.

Executive  officers  are  appointed  by and  serve at the  will of the  Board of
Directors.  There  are no  family  relationships  between  or  among  any of the
directors or executive officers of the company.


                                       23

<PAGE>
<TABLE>
<CAPTION>

Item 10. EXECUTIVE COMPENSATION
         ----------------------

Executive Compensation

The  following  summary   compensation  table  sets  forth  certain  information
regarding compensation paid during each of the fiscal years ended March 31, 2001
and 2000, to the persons serving as the company's  chief  executive  officer and
each executive officer.

                               Annual Compensation
                               -------------------   Restricted   Securities       All
Name and                       Fiscal                   Stock     Underlying      Other
Principal Position             Year        Salary      Awards       Options    Compensation
------------------             ----        ------      ------       -------    ------------
<S>                            <C>        <C>         <C>          <C>         <C>
Jeffrey R. Gullo               2001       $262,400       -0-          -0-         $-0-
President and CEO              2000       $ -0-       2,385,000    5,430,000      $-0-

Steven R. Crowell              2001       $113,333       -0-          -0-         $-0-
CFO, Secretary and Treasurer

</TABLE>

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------

The  following  table  sets  forth  certain  information  concerning  beneficial
ownership of the company's common stock as of April 30, 2001, by (i) each person
who is known to us to own beneficially more than five percent of the outstanding
shares of common stock,  (ii) each director and executive officer of the company
and (iii) all directors and executive officers as a group.

       Name and Address of                                      Percent of
        Beneficial Owner                 Number of Shares     Voting Control
      ----------------------------------------------------------------------

      J. D. Young                          1,451,509              43.5%
      17950 Preston Rd., Ste. 912
      Dallas, Texas 75252

      The John J. Gullo 1994 Trust           321,337               9.6%
      5504 Weatherby Lane
      Plano, Texas  75093

      Directors and executive              1,451,509              43.5%
      officers as a group
      (1 person)

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


Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------


Substantially  all of the company's  intellectual  property used in its products
was held under a Licensing and Royalty  Agreement (the "License") with Jerry and
Cheryl  Lucas  that  provided  for  the  Lucases  to  retain  ownership  of  all
intellectual  property  previously  developed by them and the license of certain
products  in exchange  for 8% of the sales  price as  defined.  When the company
ceased  operations in February  2001,  the License was terminated and all rights
therein reverted to Mr. and Mrs. Lucas.


The company  leased its 1,200  square foot  product  development  facility  from
Cheryl Lucas on a  month-to-month  rental basis for monthly rent of $1,200 until
February 28, 2001.

                                       24

<PAGE>

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

         (a) Exhibits

                          Exhibit
                          Number            Description of Exhibits
                          -----------------------------------------


               *           2        Agreement  and  Plan  of  Reorganization and
                                    exhibits thereto
               **          3.1.1    Certificate of Incorporation
               **          3.1.2    Certificate  of Amendment  to Certificate of
                                    Incorporation
               ***         3.1.3    Certificate  of   Designations,  Preferences
                                    and Rights of Series A Convertible
                                    Preferred Stock
               **          3.2      Bylaws
               **          10.1     Licensing and Royalty Agreement
               ***         10.2     Amendment to Licensing and Royalty Agreement
               ***         10.3.1   Employment Agreement with Jeffrey R. Gullo
               ***         10.3.2   Employment Agreement with Jerry R. Lucas
               ****        10.3.3   Employment Agreement with Steven R. Crowell
               ***         10.4.1   2000 Employee Stock Option Plan
               ***         10.4.2   2000 Executive Stock Incentive Plan
               *****       21.1     Subsidiaries of the company


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

*        Incorporated by reference to company's Form 8-K dated November 11, 1997
**       Incorporated  by  reference to the  company's  Form 10-KSB for the year
         ended March 31, 1999
***      Incorporated by reference to company's Form 8-K dated April 5, 2000
****     Incorporated  by reference to company's  Form 10-KSB for the year ended
         March 31, 2000
*****    Filed herewith

         (b) Reports on Form 8-K

         A Form  8-K was  filed  on  April  5,  2000,  disclosing  in Item 1 the
issuances  of  shares  in  connection  with the  private  placement  of Series A
Convertible Preferred Stock.

         A Form 8-K was  filed  on  August  9,  2000,  disclosing  in Item 5 the
Stockholders'  approval of an Amendment to the Certificate of  Incorporation  to
decrease the number of  authorized  shares of common  stock from Twenty  Million
(20,000,000) to Five Million (5,000,000) and to recapitalize the common stock to
effect a one-for-four reverse split of the common stock of the company.  Further
the  Stockholders  approved that,  after giving effect to the reverse split, the
authorized  number of shares of common stock will be restored to Twenty  Million
(20,000,000).

         Form  8-K's  were  filed on  November  7, 2000 and  November  20,  2000
disclosing in Item 4 changes in the company's certifying independent accountants
and the  reappointment of Tanner + Co. There were no  disagreements  between the
company and Tanner + Co. on any matter.

         A Form 8-K was filed on March 8, 2001  disclosing  that on February 28,
2001 the Board of Directors of the company had resolved the company maximize its
value by ceasing current operations and pursue a merger candidate.  Further, Mr.
Lucas had resigned from the Board,  all employees  had been  terminated  and the
Board would proceed to wind down operations.


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<PAGE>

                                   SIGNATURES

In  accordance  with Section 13 or 15(d) of the  Securities  and Exchange Act of
1934,  the company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized this 14th day of June 2001.

                                        LUCAS EDUCATIONAL SYSTEMS, INC.




                                        By:    /s/ Jeffrey R. Gullo
                                           -------------------------------------
                                           Jeffrey R. Gullo
                                           Chief Executive Officer and Director

In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed  below by the  following  persons  on  behalf of the  company  and in the
capacities and on the dates indicated.

         Name                          Office                           Date
         ----                          ------                           ----

/s/ Jeffrey R. Gullo       Chairman, Chief Executive Officer       June 15, 2001
-----------------------    and Director (Principal
Jeffrey R. Gullo           Executive Officer)


/s/ J.D. Young             Director                                June 15, 2001
-----------------------
J. D. Young

/s/ Steven R. Crowell      Chief Financial Officer                 June 15, 2001
-----------------------    (Principal Financial
Steven R. Crowell          Officer and Principal
                           Accounting Officer)





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