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, 2000

                                       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.)

         17950 Preston Road, Suite 912, Dallas, Texas             75252
         (Address of principal executive offices)               (Zip Code)

       Registrant's telephone number, including area code: (972) 267-7250

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:  $-0-.

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,
2000 was $1,702,586.

At April 30, 2000, the registrant had  outstanding  14,788,619  shares of common
stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Part III (except  Item 13) will be contained in  Registrant's  Definitive  Proxy
Statement for the Annual Meeting of Stockholders to be heard in November 1999.

           Transitional Small Business Disclosure Format (check one):

                                              Yes      No  X
                                                  ---     ---


<PAGE>

<TABLE>

<CAPTION>

                                TABLE OF CONTENTS

                                                                                  Page
                                                                                  ----
<S>                                                                                <C>


                                     PART I

  Item 1.     Description of Business                                              1

  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                                               20

  Item 11.    Security Ownership of Certain Beneficial Owners and Management       20

  Item 12.    Certain Relationships and Related Transactions                       20

  Item 13.    Exhibits and Reports on Form 8-K                                     21

</TABLE>







<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 LEDS.

         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 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  adequate 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.

         The  company  is now in  position  to  pursue  its  mission  and  begin
providing  learning  systems  for users of all ages based on the Lucas  Learning
System(TM).

Company Vision and Key Business Strategies

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

         The  company is  establishing  itself as a marketing  oriented  content
provider.  Product  development  will focus 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 will  seek to  distribute  its  learning  products  directly  to end
consumers via e-commerce enabled channels,  and simultaneously  begin leveraging
the more  traditional  wholesale  distribution  channels  available  to the book
publishing   industry.   By  outsourcing  low  value  product   duplication  and
distribution  functions,  the  company  will  seek to  scale  up its  operations
significantly without a proportionate increase in fixed costs. In the near-term,
the company seeks to:

     o    Implement  an  integrated  marketing  approach  with  an  emphasis  on
          targeted selling;

     o    Create  strong  brand   awareness   under  the  trademarks  of  Doctor
          Memory(TM) and Learning That Lasts(TM);

     o    Drive traffic to the company's DoctorMemory.com web site;

     o    Develop wholesale distribution opportunities;

     o    Implement a continuous  improvement  program to insure  quality in the
          rapidly expanding product line.




                                       1

<PAGE>


     Once established the company will seek to:

     o    Create a formal strategic partnering and alliance program;
     o    Leverage  the  broadband   capabilities   of  the  Internet   offering
          multi-media  streaming and downloadable content that is virtually free
          of distribution costs;
     o    Extend its product line beyond the initial digital,  video,  audio and
          printed  materials by adapting the  methodologies  to public education
          courseware and/or television programming.



Product Overview

         The company employs a market driven product development strategy.  This
strategy focuses on near term selling opportunities while prioritizing resources
to those products  projected to create the most value for the company.  It seeks
to  develop  products  which are  easily and cost  effectively  reproducible  to
penetrate high demand\high value market segments.

         Lucas  Learning  System(TM)  products  will  generally be positioned to
enable delivery through multiple distribution  channels.  The company intends to
offer numerous  products that are scheduled for release in both digital and more
traditional  formats during the next twelve months.  Future releases of products
are contemplated in which Internet access can allow real-time  streaming of data
without significant distribution costs. As broadband deployment progresses, both
leased  access and  downloadable  digital  distribution  models are  expected to
coexist with more traditional video, audio, and printed formats.

         Numerous  products have been targeted for  deployment  during the first
year of  operations.  The  majority  of these  products  have  adapted the Lucas
Learning System(TM) to specific learning situations. Topics of broad interest to
adult and student learners such as learning to speak Spanish and how to remember
names and faces will be offered in a variety of media.  Programs  that adapt the
techniques to the unique  learning  requirements of children aid in the teaching
of reading,  writing,  grammar,  mathematics,  and social  studies.  Still other
contemplated  products assist the Christian  community in the retention of Bible
materials of interest to bible study  groups,  Sunday school  classes,  etc. One
product in particular,  a book entitled Doctor  Memory's  Learning How to Learn,
actually  provides the reader with a detailed  framework upon which all learning
can be adapted.

         The initial  products  represent the  utilization of only a fraction of
the  images,  scripts,  writings,  characters,  and  concepts  that  make up the
intellectual property exclusively assigned to the company. Significant expansion
into  additional  product  offerings such as the development and production of a
children's  educational  television  series or  comprehensive  course  materials
targeted at the public education sector are consistent with the company's vision
and  mission.  However,  given the  significant  resource  requirements  of such
product  offerings,  the company  believes the development and marketing of such
products  should be deferred in favor of building  brand  awareness  around more
rapidly deployable products such as those mentioned above.

Marketing Program

         The market for the  company's  products  consists of anyone  seeking to
learn,  memorize or retain any subject matter more  thoroughly  and  effectively
than  through  traditional  repetition-based  methods of  learning.  Persons who
utilize the  company's  products  include those seeking the ability to speak and
understand  foreign  languages,  remember names and faces for building  personal
relationships,  recall  and  quote  Bible  scripture  for use in daily  life and
instruction  of  others,   remember  core  educational  subject  matter,  recall
information  for test  taking,  and to memorize  basic  information  for general
reference.  While the  company  will focus its  marketing  efforts on the United
States  market,  significant  international  sales could  result from the global
exposure provided via the direct  distribution  channel  (DoctorMemory.com)  and
through  the  development  of  a  wholesale  distribution  alliance  within  the
traditional book-publishing and distribution channel.


                                       2

<PAGE>


         The company will initially focus on image development and branding. The
primary  goal  is to  gain  recognition  of  Doctor  Memory(TM)  as the  leading
authority in memory training and superior learning techniques.  The company will
seek to:

     o    Implement a marketing  approach that leverages the public  recognition
          of Mr. Lucas seeking cost effective promotional opportunities wherever
          appropriate;

     o    Execute a  multi-faceted  image  campaign,  including TV  appearances,
          radio interviews, speeches, articles, and book reviews;

     o    Create visibility through product placement in traditional  bookstores
          and other selected retail outlets;

     o    Capitalize on the socially  responsible aspects of the product line to
          seek referrals and endorsements;

     o    Leverage cost effective  e-commerce  marketing  opportunities to drive
          traffic to the DoctorMemory.com web site;

     o    Seek  increased  "share of customer" by providing,  for example,  free
          access  to  value  added   services   available   exclusively  on  the
          DoctorMemory.com  web site; and  implementing  other customer  loyalty
          programs as appropriate;

     o    Implement a direct  sales  program  with the  formation  of  strategic
          alliances with software vendors,  learning centers, and other relevant
          organizations.

Employees

         As of April 30, 2000, the company employed four persons,  consisting of
three executives and one product development  manager.  Product development will
require  additional  personnel as the product lines increase.  Quality assurance
oversight will continue to be provided by Mr. Lucas and through the  outsourcing
of the editorial review function. The company intends to add personnel primarily
in the sales and marketing  area to focus on top line growth.  A quality  "total
customer  experience"  will be assured  through  back office and  administrative
personnel.  The company anticipates outsourcing all product duplication and both
the  direct  and  wholesale   distribution   functions.   By  implementing  this
outsourcing  philosophy,  the  company  will  seek to scale  operations  without
proportionate increases in the number of employees.

Intellectual Property Rights

         The company  holds  under  license  from Jerry R. and Cheryl  Lucas the
exclusive  right  to  develop,  market  and  distribute  products  based  upon a
proprietary  memory enhancement  methodology.  The company intends to manage the
intellectual  property rights to provide for their  protection in the market and
to continue a program of  identifying  and  seeking  protection  for  additional
products as they are developed.  It regards the trademarks,  copyrights,  logos,
methodology  and similar  intellectual  property as vital to its success and the
success of its products.  The company relies on the protection  afforded them by
the laws of the United  States.  The company  additionally  has  confidentiality
agreements  with  its   employees/business   partners  to  further  protect  its
proprietary rights.

Competition

         Although various persons and entities are engaged in similar endeavors,
management believes there is no significant  competition with the company due to
the unique  nature of the learning and memory  techniques  and related  products
developed  by Mr.  Lucas and the general lack of  competition  with  significant
brand awareness.

         The  company  believes  it will be able to  compete on the basis of its
brand awareness to be developed  based upon Mr. Lucas' name  recognition and the
effectiveness  and variety of the  company's  products  across broad  classes of
users.


                                       3

<PAGE>


Environmental Impact

       None of the  company's  activities  utilize any  hazardous  materials  or
result 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
        -----------------------

         The company's  principal executive offices are located at 17950 Preston
Road,  Suite 912, Dallas,  Texas 75252.  The premises,  which are leased from an
unaffiliated party,  consist of 1,200 square feet. The executive office facility
contains  management  offices,  workstations,  computer  equipment,  and related
software. Monthly rent is $2,200 through the remainder of a 36-month lease term,
which expires on April 30, 2003.

         A product development facility is located in Templeton, California. The
premises,  which are  rented on a  month-to-month  basis  from a related  party,
consist of approximately 1,200 square feet. Monthly rent is $1,200.

         Product  duplication  and  printing  will be  performed  in  outsourced
locations, as well as product warehousing and distribution.

         All of the  company's  properties  are covered by property and casualty
insurance the company believes to be adequate.

Item 3.  LEGAL PROCEEDINGS

         The action filed July 22, 1999, in the Third Judicial District Court of
Salt Lake County, State of Utah, styled Martineau & Company, Plaintiff vs. Lucas
Educational Systems,  Inc., Jerry R. Lucas, Cheryl Lucas, William Husa and David
E. Nelson, claiming $23,079 for services rendered,  expenses and the balance due
on a loan, together with interest at the rate of 2% per month until paid in full
was settled on April 4, 2000 for a total of $28,143, inclusive of all legal fees
and related settlement charges.

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

         None.





                                       4

<PAGE>

<TABLE>

<CAPTION>

                                     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  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
-------------                    ----              ---              ----            ---
<S>                             <C>               <C>              <C>             <C>

 6-30-98                        7.3125            5.1250           7.3750          5.5000
 9-30-98                        5.2500            1.2500           5.5000          1.8125
12-31-98                        2.1875            0.6250           2.3750          1.0000
 3-31-99                        1.1875            0.5625           1.3125          0.6563
 6-30-99                        1.0000            0.2500           1.0313          0.3000
 9-30-99                        0.2800            0.0625           0.3750          0.1250
12-31-99                        0.1250            0.0313           0.1875          0.0938
 3-31-00                        0.5625            0.0500           0.6875          0.0938

</TABLE>


Holders

         As of April 30, 2000,  there were 142 record  holders of the  company's
common  stock and 7 holders  of the  company's  Series A  Convertible  Preferred
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 the
fiscal  year ended March 31,  2000,  the company  reduced  operating  expense by
decreasing the number of employees and minimizing professional services.

         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.  The capital  raised in connection  with the private  placement will be
used to  complete  development  of its initial  product  line and  commence  the
marketing  and  distribution  of its  products.  See  Part I,  Item 1,  "Product
Overview."  The company is now in position to pursue its business of providing a
learning system for users of all ages based on the Lucas learning techniques.


                                       5

<PAGE>


Results of Operations

         Due to a lack of capital  and  management,  the  company  was unable to
establish  distribution  channels and complete  development  and  production  of
targeted products.  Therefore,  meaningful  revenues were not created during the
fiscal year ended March 31, 2000.  The company,  also  constrained by capital in
the prior year, received no revenues during the year ended March 31, 1999.

         Net loss for the year ended March 31, 2000 was  $295,280 as compared to
a net loss of  $895,509  for the year  ended  March 31,  1999.  The net loss was
reduced primarily by reducing general and administrative  expenses by decreasing
the  number of  employees  and  minimizing  the  professional  services  that it
utilized as cash  declined  because of a lack of funding  during the year.  This
decrease was partially offset by the costs associated with the private placement
of Series A Convertible Preferred Stock in March 2000.

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, 2000 of $1,278,924  represents
an increase of  $1,189,378  compared to available  cash at March 31,  1999.  The
increase is primarily  related to the  company's  sale of $1,400,000 of Series A
Convertible  Preferred Stock in March,  2000, offset partially by the settlement
of various outstanding liabilities.  Additionally,  during the fiscal year ended
March 31, 2000 the company issued  2,385,000 shares of common stock for services
(See  section  entitled  "Executive  Compensation"  appearing  in the  company's
Definitive  Proxy Statement for the Annual Meeting of Stockholders to be held on
or about July 29, 2000).

         As of March 31, 2000 the company had no significant  credit  facilities
available.

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,  2000 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. 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.





                                       6

<PAGE>




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

INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report ..............................................    8



Consolidated Balance Sheets as of March 31, 2000 and 1999 .................    9



Consolidated Statements of Operations for the years ended
March 31, 2000 and 1999 ...................................................   10



Consolidated Statement of Stockholders' Equity for the years ended ........   11
March 31, 2000 and 1999



Consolidated Statements of Cash Flows for the years ended
March 31, 2000 and 1999 ...................................................   13



Notes to Consolidated Financial Statements ................................   14








                                       7


<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. (a development  stage company) as of March 31, 2000 and 1999, 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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our 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. as of March 31, 2000 and 1999, 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
generally accepted accounting principles.

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

Salt Lake City, Utah
May 18, 2000






                                       8

<PAGE>

<TABLE>

<CAPTION>

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

                           Consolidated Balance Sheet

                                                                           March 31,
                                                                  --------------------------
              Assets                                                  2000            1999
              ------
<S>                                                               <C>            <C>

Current assets:
     Cash                                                         $ 1,278,924    $    89,546
     Related party receivables                                           --            3,400
     Inventory                                                          5,610          5,610
                                                                  --------------------------
                  Total current assets                              1,284,534         98,556

Property and equipment, net                                            52,252         60,144
Other                                                                   3,045           --
                                                                  --------------------------
                                                                  $ 1,339,831    $   158,700
                                                                  ==========================

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

Current liabilities:
     Accounts payable                                             $    46,724    $    11,438
     Related party notes payable                                        2,500         12,000
                                                                  --------------------------
                  Total current liabilities                            49,224         23,438

Commitments                                                              --             --

Stockholders' equity:
     Preferred stock; 1,000,000 shares authorized, $.001
       par value; 89,974 and 0 shares issued and
       outstanding, respectively (aggregate liquidation
       preference $1,400,000)                                              90           --
     Common stock 20,000,000 shares authorized,
       $.001 par value; 14,788,619 and 12,453,619 shares issued
       and outstanding, respectively                                   14,789         12,454
     Additional paid-in capital                                     3,366,196      1,476,436
     Unearned compensation                                           (548,435)      (106,875)
     Accumulated deficit                                           (1,542,033)    (1,246,753)
                                                                  --------------------------
                   Total stockholders' equity                       1,290,607        135,262
                                                                  --------------------------
                                                                  $ 1,339,831    $   158,700
                                                                  ==========================


</TABLE>




                                       9


<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
                                                      2000            1999       Amounts
                                                --------------------------------------------
<S>                                             <C>             <C>             <C>    <C>

Revenue                                         $       --      $       --      $       --

General and administrative expenses                  293,236         893,394       1,537,874
                                                --------------------------------------------
          Loss from operations                      (293,236)       (893,394)     (1,537,874)

Other income (expense):
     Interest income                                     472            --               472
     Interest expense                                 (2,516)         (2,115)         (4,631)
                                                --------------------------------------------
         Loss before benefit for income taxes       (295,280)       (895,509)     (1,542,033)

Benefit for income taxes                                --              --              --
                                                --------------------------------------------
         Net loss                               $   (295,280)   $   (895,509)   $ (1,542,033)
                                                ============================================

         Loss per common share -
           basic and diluted                    $       (.02)   $       (.08)   $       (.13)

         Weighted average shares -
           basic and diluted                      12,519,000      11,975,000      11,929,000

</TABLE>








                                       10



<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, 2000

                                          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         --         --            --            --       8,700,000          8,700
Net loss from inception on December
5, 1996 through March 31, 1997            --         --            --            --            --             --
                                      ----------------------------------------------------------------------------
Balance at March 31, 1997                 --         --            --            --       8,700,000          8,700

Common stock issued in
recapitalization                          --         --            --            --       1,849,869          1,850
Common stock issued for:
    cash and services                     --         --            --            --         192,000            192
    Debt                                  --         --            --            --         333,000            333
    Services                              --         --            --            --         168,750            169
Net loss                                  --         --            --            --            --             --
                                      ----------------------------------------------------------------------------
Balance at March 31, 1998                 --         --            --            --      11,243,619         11,244

Proceeds from stock subscription
receivable                                --         --            --            --            --             --
Common stock issued for:
    Cash                                  --         --            --            --          90,000             90
    Debt and payables                     --         --            --            --         400,000            400
    Services                              --         --            --            --         720,000            720
Contributed shares                     455,000       --            --            --            --             --
Treasury stock issued for cash        (455,000)      --            --            --            --             --
Net loss                                  --         --            --            --            --             --
                                      ----------------------------------------------------------------------------
Balance at March 31, 1999                 --         --            --            --      12,453,619         12,454

Common stock issued for services          --         --            --            --       2,385,000          2,385
Convertible preferred stock issued
for cash                                  --         --          89,974            90          --             --
Cancellation of common stock issued
for services                              --         --            --            --         (50,000)           (50)
Stock compensation                        --         --            --            --            --             --
Net loss                                  --         --            --            --            --             --
                                      ----------------------------------------------------------------------------
Balance at March 31, 2000                 --     $   --          89,974   $        90    14,788,619    $    14,789
                                      ============================================================================

</TABLE>








                                       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, 2000

                                        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          (8,600)          --             --             --              100
Net loss from inception on December
5, 1996 through March 31, 1997               --             --             --              (63)           (63)
                                      -----------------------------------------------------------------------
Balance at March 31, 1997                  (8,600)          --             --              (63)            37

Common stock issued in
recapitalization                           (1,810)          --             --             --               40
Common stock issued for:
    Cash and services                     114,808           --              (25)          --          114,975
    Debt                                  199,667           --             --             --          200,000
    Services                              101,081           --             --             --          101,250
Net loss                                     --             --             --         (351,181)      (351,181)
                                      -----------------------------------------------------------------------
Balance at March 31, 1998                 405,146           --              (25)      (351,244)        65,121

Proceeds from stock subscription
receivable                                   --             --               25           --               25
Common stock issued for:
    Cash                                  179,910           --             --             --          180,000
    Debt and payables                     299,600           --             --             --          300,000
    Services                              364,280       (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               1,476,436       (106,875)          --       (1,246,753)       135,262

Common stock issued for services          546,050       (548,435)          --             --             --
Convertible preferred stock issued
for cash                                1,399,910           --             --             --        1,400,000
Cancellation of common stock issued
for services                              (56,200)        56,250           --             --             --
Stock compensation                           --           50,625           --             --           50,625
Net loss                                     --             --             --         (295,280)      (295,280)
                                      -----------------------------------------------------------------------
Balance at March 31, 2000             $ 3,366,196    $  (548,435)          --      $(1,542,033)   $ 1,290,607
                                      =======================================================================


</TABLE>





                                       12

<PAGE>

<TABLE>

<CAPTION>

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

                      Consolidated Statement of Cash Flows
                       Years Ended March 31, 2000 and 1999
                  and Cumulative Amounts Since December 5, 1996
                   (Date of Commencement of Development Stage)

                                                                                        Cumulative
                                                             2000           1999         Amounts
                                                         -----------------------------------------
<S>                                                      <C>            <C>            <C>

Cash flows from operating activities:

     Net loss                                            $  (295,280)   $  (895,509)   $(1,542,033)
     Adjustments to reconcile net loss to net cash
       used in operating activities:
         Depreciation and amortization                        28,583         21,903         56,236
         Exchange of assets for services                       1,262           --            1,262
         Common stock issued for services and payables          --          506,997        844,375
         Stock compensation                                   50,625           --           50,625
         (Increase) decrease in:
              Related party receivables                        3,400         (3,400)          --
              Inventories                                       --             --           (5,610)
              Deposits                                          --            3,000           --
              Other                                           (3,045)          --           (3,045)
         Increase (decrease) in:
              Accounts payable                                35,286          1,530         46,724
              Accrued liabilities                               --           (9,863)          --
                                                         -----------------------------------------
   Net cash used in operating activities                    (179,169)      (375,342)      (551,466)

Cash flows from investing activities-

     Purchases of property and equipment                     (21,953)        (6,828)      (109,750)
                                                         -----------------------------------------

Cash flows from financing activities:

     Proceeds from related party notes payable                 2,500         33,500         36,000
     Payments on related party notes payable                 (12,000)        (6,500)       (18,500)
     Issuance of convertible preferred stock               1,400,000           --        1,400,000
     Issuance of common stock                                   --          180,000        295,115
     Issuance of treasury stock                                 --          227,500        227,500
     Proceeds from stock subscription receivable                --               25             25
                                                         -----------------------------------------
   Net cash provided by financing activities               1,390,500        434,525      1,940,140

                                                         -----------------------------------------
Net increase in cash                                       1,189,378         52,355      1,278,924

Cash, beginning of period                                     89,546         37,191           --

                                                         -----------------------------------------
Cash, end of period                                      $ 1,278,924    $    89,546    $ 1,278,924
                                                         =========================================

</TABLE>






                                       13

<PAGE>


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

                   Notes to consolidated Financial Statements
                             March 31, 2000 and 1999

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. In November  1997,
Lucas and Lucas Educational  Systems,  Inc. (Lucas Nevada), a Nevada corporation
completed an Agreement and Plan of Reorganization whereby Lucas issued 8,700,000
shares of its common stock in exchange for all of the  outstanding  common stock
of Lucas Nevada.  Immediately prior to the Agreement and Plan of Reorganization,
Lucas had  1,849,869  shares of common  stock  issued and  outstanding.  Mirador
Equity Partners,  Ltd. changed its name to Lucas  Educational  Systems,  Inc. in
conjunction with the merger.

The acquisition was accounted for as a recapitalization  of Lucas Nevada because
the shareholders of Lucas Nevada  controlled Lucas after the acquisition.  Lucas
is the  acquiring  entity for legal  purposes and Lucas Nevada is the  surviving
entity for accounting purposes. There was no adjustment to the carrying value of
the assets or liabilities of Lucas Nevada in the exchange.

Lucas' vision is to change the way people learn  through  Learning That LastsTM.
Its mission is to gain recognition as the nation's leading authority and largest
provider of memory training techniques and related educational products.

Principles of Consolidation
The consolidated  financial statements include the financial statements of Lucas
and its wholly owned subsidiary  Lucas Nevada,  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 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.






                                       14

<PAGE>


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, which range from
3 to 5 years.  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.

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.

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.













                                       15

<PAGE>

<TABLE>

<CAPTION>


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, 2000 and 1999,  options to purchase  7,910,000 and 25,000
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.   Property And Equipment

Property and equipment consist of the following:

                                                            March 31,
                                                  2000                  1999
                                              ---------------------------------
Furniture and fixtures                        $     4,104          $      1,931
Leasehold improvements                             11,070                11,070
Vehicles                                           37,382                37,382
Master videos                                      13,577                13,577
Computer Equipment                                 41,801                23,837
                                              ---------------------------------
                                                  107,934                87,797

Accumulated Depreciation and amortization         (55,682)              (27,653)
                                              ---------------------------------

                                              $    52,252          $     60,144
                                              =================================




                                       16

<PAGE>



3.   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
                                                        2000             1999                Amounts
                                                 ----------------------------------------------------
<S>                                              <C>              <C>           <C>     <C>

Income tax benefit at statutory rate             $     100,000    $      305,000        $     524,000
Change in valuation allowance                         (100,000)         (305,000)            (524,000)
                                                 ----------------------------------------------------
                                                 $       -        $        -            $       -
                                                 ====================================================


Deferred tax assets are comprised of the following:

                                                                      March 31,
                                                                2000              1999
                                                          -----------------------------------
Net operating loss carryforwards                          $     524,000         $     424,000
Valuation allowance                                            (524,000)             (424,000)
                                                          -----------------------------------
                                                          $       -             $       -
                                                          ===================================



At  March  31,  2000,  the  Company  had net  operating  loss  carryforwards  of
approximately  $1,542,000.  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 the substantial change in ownership that took place
as described in note 1.

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.

4.   Related Party Transactions

Related party receivables consist of non-interest bearing cash advances due from
employees  totaling $0 and $3,400,  respectively  at March 31, 2000 and 1999. In
addition,   the  Company  has  a  licensing  and  royalty   agreement   with  an
officer/shareholders (See note 6).

At March 31, 2000 and 1999,  related party notes payable consist of an unsecured
note payable to a  shareholder  with  interest at 10% totaling  $-0- and $3,500,
respectively,  and an unsecured,  non-interest bearing, demand note payable to a
shareholder totaling $2,500 and $8,500, respectively.

</TABLE>


                                       17


<PAGE>


5.   Supplemental Cash Flow Information

During the year ended March 31, 1999,  the Company  reduced  related party notes
payable and  accounts  payable in the amount of $51,128 in  exchange  for common
stock.

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

                                          Year Ended
                                           March 31,
                                  --------------------------         Cumulative
                                     2000             1999             Amounts
                                  ---------------------------------------------
Interest                          $  2,516          $  2,115         $  4,631
                                  ---------------------------------------------

Income taxes                      $    -            $   -            $    -
                                  ---------------------------------------------


6.       Commitments

Operating Lease Obligation

The Company leases certain office space under a  noncancellable  operating lease
agreement.  Future minimum lease payments required under the operating lease are
as follows:

                  Years Ending March 31,                   Amount
                  ----------------------              -----------------
                  2001                                $          25,530
                  2002                                           26,640
                  2003                                           26,640
                  2004                                            1,110
                                                      -----------------
                                                      $          79,920
                                                      =================

Rent expense for the years ended March 31, 2000 and 1999  totaled  approximately
$8,000 and $36,000, respectively.

Licensing and Royalty Agreement

On August 13, 1997, the Company entered into a 99-year license agreement with an
officer/shareholders 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 has agreed to pay royalties  totaling 8% of the gross
receipts  on  applicable   sales.   In  addition,   under  the  agreement,   the
officer/shareholders  also have,  under certain  limited  conditions,  rights to
purchase inventory from the Company at cost plus 25%.

Employment Agreements

During the year ended March 31, 2000, the Company entered into three  employment
agreements  with officers.  The agreements  provide for the payment of salaries,
stock and stock options and have terms which shall continue indefinitely.

7.   Capital Stock

The  Company  has  established  a  series  of  preferred  stock  with a total of
1,000,000  authorized  shares and a par value of $.001, and 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 $.001 par value. Unconverted shares may be redeemed



                                       18

<PAGE>


by the  Company  any time  after  April 1, 2002 at $15.56  per  share.  Series A
Convertible Preferred Stock is non-transferable and has the following rights and
privileges:

1.   The holders of the shares are  entitled  to  non-cumulative  dividends,  if
     declared by the Board of Directors.

2.   Upon liquidation of the Company,  the holders of the shares are entitled to
     receive,  prior to any  distribution  of any assets or surplus funds to the
     holders of shares of common stock, an amount equal to $15.56 per share plus
     unpaid declared dividends, if any.

3.   Provided the Company's  certificate  of  incorporation  has been amended to
     authorize  sufficient  common shares,  the preferred  shares  automatically
     convert to common stock on March 24,  2001,  the first  anniversary  of the
     closing of the offering,  or sooner in the event of a transfer of more than
     50% of all  shares  outstanding,  a merger in which the  Company is not the
     surviving company,  or liquidation.  The shares will convert at the rate of
     100  shares of common  stock  per share of Series A  Convertible  Preferred
     Stock.

4.   The  holders are  entitled  to 100 votes per share of Series A  Convertible
     Preferred  Stock and together are entitled to elect one member of the Board
     of Directors.

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
                                                         =======================


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.


                                       19

<PAGE>

<TABLE>

<CAPTION>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:

                                                                March 31,
                                                            2000         1999
                                                         -----------------------
                 Expected dividend yield                 $     -            -
                 Expected Stock price volatility               276%         109%
                 Risk-free interest rate                       6.1%         5.0%
                 Expected life of options                  10 years      2 years
                                                         -----------------------


The weighted average fair value of options granted during 2000 and 1999 are $.44
and $.66, respectively.

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

                          Outstanding                                           Exercisable
--------------------------------------------------------------      ---------------------------------
<S>   <C>            <C>              <C>          <C>                <C>               <C>

                                      Weighted
                                       Average
                                      Remaining    Weighted                                Weighted
                                     Contractual    average                                 Average
     Exercise         Number            Life       Exercise             Number             Exercise
       Price        Outstanding        (Years)       Price            Exercisable            Price
-----------------------------------------------------------------------------------------------------
$          .06      7,430,000             10     $     .06                -             $      -
           .40        480,000             10           .40                -                    -
-----------------------------------------------------------------------------------------------------
$      .06-.40      7,910,000             10     $     .08                -             $      -
=====================================================================================================
</TABLE>


9.   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.

10.  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.

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting  Bulletin  No. 101 ("SAB  101"),  Revenue  Recognition  in  Financial
Statements,  which  provides  guidance  on the  recognition,  presentation,  and
disclosure  of  revenue in  financial  statements  filed  with the SEC.  SAB 101
outlines the basic  criteria that must be met to recognize  revenue and provides
guidance for  disclosure  related to revenue  recognition  policies.  Though the
Company is currently evaluating the impact (if any) of SAB 101, the Company does
not presently  believe it will have a material effect on the financial  position
or results of operations of the Company.


                                       20

<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 THE EXCHANGE ACT
          -----------------------------------------



The  sections  entitled  "Directors  and  Executive  Officers"  appearing in the
company's  Definitive  Proxy Statement for the Annual Meeting of Stockholders to
be held on or about July 29, 2000, sets forth certain  information  with respect
to the directors and executive officers of the company.

Item 10.  EXECUTIVE COMPENSATION

The  section  entitled  "Executive  Compensation"  appearing  in  the  company's
Definitive  Proxy Statement for the Annual Meeting of Stockholders to be held on
or about July 29,  2000,  sets forth  certain  information  with  respect to the
compensation of management of the company.

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

The  sections  entitled  "Securities  Ownership  of Certain  Beneficial  owners"
appearing in the company's  Definitive Proxy Statement for the Annual Meeting of
Stockholders  to be  held  on  or  about  July  29,  2000,  sets  forth  certain
information with respect to the ownership of the company's Common Stock.

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

The section  entitled  "Related Party  Transactions"  appearing in the company's
Definitive  Proxy Statement for the Annual Meeting of Stockholders to be held on
or about July 29, 2000,  sets forth  certain  information  with respect to these
matters.









                                       21



<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
 ****        27        Financial Data Schedule

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

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







                                       22


<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 13th day of June, 2000.

                                        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         Chief Executive Officer       June 13, 2000
       --------------------         and Director (Principal
       Jeffrey R. Gullo             Executive Officer)

       /s/ Jerry R. Lucas           Chairman                      June 13, 2000
       ------------------
       Jerry R. Lucas

       /s J. D. Young               Director                      June 13, 2000
       --------------
       J. D. Young

       /s/ Steven R. Crowell        Chief Financial Officer       June 13, 2000
       ---------------------        (Principal Financial
       Steven R. Crowell            Officer and Principal
                                    Accounting Officer)






                                       23



<PAGE>


                                 EXHIBIT 10.3.3

                         LUCAS EDUCATIONAL SYSTEMS, INC.


                              EMPLOYMENT AGREEMENT

         This Employment Agreement is entered into as of this 31st day of March,
2000,  between  Lucas  Educational  Systems,  Inc.  (hereinafter  referred to as
"Employer"), and Steven R. Crowell (hereinafter referred to as "Employee").

         In  consideration  of the mutual promises  hereinafter  set forth,  the
parties hereto agree as follows:

1.  Employment.  Employer agrees to employ Employee and Employee agrees to serve
Employer  to perform  such duties as may be  appointed  from time to time by the
Board  of  Directors  or  the  Chief  Executive  Officer  of the  Employer.  The
Employee's  employment  shall be upon the terms and conditions  hereinafter  set
forth.  If Employee is elected or appointed  with the  Employee's  consent to an
office with any of Employer's subsidiaries or affiliates during the term of this
Agreement,  the  Employee  will serve in such  capacity  or  capacities  without
additional compensation.

2. Term.  The  employment of Employee  hereunder and this  Employment  Agreement
shall commence the date hereof and shall continue in effect  indefinitely  until
terminated pursuant to Section 7 hereof.

3. Extent of Services.  Employee  shall devote  substantially  all of Employee's
productive  time,  attention,  knowledge  and skills  solely to the business and
interest of Employer.  Employee  shall not,  during the term of this  Agreement,
directly  or  indirectly  render  any  services  of a  business,  commercial  or
professional  nature  to  any  other  person  or  organization  which  would  be
detrimental  to Employer or which would  prohibit  Employee from  performing the
reasonable duties of his position with Employer. Employee shall be free to spend
time during  non-business  hours on matters of market  investment by himself and
members of his family.

4. Conformity to Employer's  Systems and Procedures.  Employee agrees to follow,
obey and observe all of the rules, regulations, policies, procedures and systems
of Employer, to observe the workdays and hours as specified by Employer, to work
for the best interest of Employer in the business in which it is engaged, and to
strive to further the goodwill and  professional  standing of Employer  with its
clients,  customers  and the  public  generally,  to  attend  to the  duties  of
employment  hereunder regularly and not to be absent therefrom except on account
of illness or other conditions beyond the control of Employee.

5. Compensation.

         5.1 Base Salary.  Employer will pay Employee during the Employee's term
of  service  hereunder  compensation  for  the  Employee's  services  (sometimes
hereinafter  referred  to as the "Base  Salary"),  in the amount of $80,000  per
year.  Employee's salary will be reviewed at least annually and adjustments made
as Employer may determine.

         5.2 Bonus.  An annual  bonus of up to 80% of base  salary  will be paid
within 90 days after the end of  Employer's  fiscal  year,  upon  achieving  the
following  targeted  amounts of earnings before  deduction for interest,  taxes,
depreciation and amortization ("EBITDA") during each fiscal year during the term
of this Agreement (or partial year thereof):

                     Annual Fiscal                            Bonus Percentage
                       EBITDA                                 of Base Salary
                  ---------------------                      -----------------

                  Less than $250,000                                   -0-
                  $250,000-$749,999                                    20%
                  $750,000-$1,249,999                                  40%
                  $1,250,000-$1,749,999                                60%
                  more than $1,750,000                                 80%





                                       24

<PAGE>


         The bonus  formula shall be subject to review by the Board of Directors
from time to time. In order to be eligible for a bonus payment, Employee must be
employed with the company through the day of  distribution;  upon termination of
Employment, all unpaid bonus amounts are forfeited.

         5.3  Withholding.  Employer and Employee each recognize and acknowledge
that  Employer  is  obligated  to  withhold  payroll  taxes  from the  salary of
Employee,  and that Employee shall receive  compensation  after deduction of all
payroll  taxes  which   Employer  is  required  by  law  to  withhold  from  the
compensation of Employee.

         5.4 Benefit Plans.  Employer shall provide  Employee with full coverage
under all benefit plans maintained by the Employer for its employees.

         5.5 Stock  Issuance.  Employer  shall issue to  Employee  shares of its
common stock on the following dates,  assuming  Employee is employed by Employer
on such dates:

                  April 1, 2001             -                 40,000 shares
                  April 1, 2002             -                 40,000 shares


         5.6. Stock Options.  Employer shall grant to Employee the stock options
described in the attached Stock Option Agreement.

6. Expenses.  During the term of employment provided for herein,  Employer shall
pay or reimburse Employee, in accordance with its standard policy in effect from
time to time,  upon  submission  of vouchers by the Employee for all  reasonable
expenses incurred by the Employee in the interest of Employer's business.

7. Termination.

         7.1 Termination  Events.  Subject to the provisions of Paragraph 7.2 of
this Section, this Agreement shall terminate:

                  7.1.1    Upon death of Employee.

                  7.1.2 At the option of the  Employer if Employee  shall become
         disabled and remain disabled for a period of six (6) months. Disability
         shall be defined as Employee's inability through illness or other cause
         to perform  his normal  workload  as measured by the twelve (12) months
         preceding the commencement of such disability.  During such disability,
         Employee shall be compensated in accordance  with  Employer's  standard
         policy regarding disability.

                  7.1.3    Upon mutual agreement.

                  7.1.4    At any time at the option of Employee.

                  7.1.5.  At the  Employer's  option  for any  good  cause.  For
         purposes of this Section,  "good cause" for termination shall mean: (a)
         the conviction of Employee of any act involving moral turpitude, or (b)
         any material  breach by Employee of any of the terms of, or the failure
         to perform any covenant contained in, this Agreement.

                  7.1.6.   For any reason other than those set forth in Sections
         7.1.1., 7.1.2., 7.1.3., 7.1.4, or 7.1.5, upon giving Employee 120 days
         advance notice, or, in lieu thereof, 120 days severance pay.





                                       25

<PAGE>


         7.2  Consequences of Termination.

                  7.2.1.  Upon termination for  any reason the Employee shall be
         paid all salary and benefits prorated to the date of termination.

                  7.2.2 Upon termination under Section 7.1.6., Employee shall be
         entitled to receive the  severance  compensation  described  in Section
         7.1.6.in lieu of any further compensation after the termination date in
         a single payment in cash.

         The amounts  provided for in Section 7.2 shall be paid within five days
after the  Employee's  Termination  Date.  The Employee shall not be required to
mitigate  the amount of any payment  provided  for in this  Agreement by seeking
other  employment or otherwise and no such payment shall be offset or reduced by
the amount of any  compensation  or  benefits  provided  to the  Employee in any
subsequent  employment.  The severance pay and benefits provided for in Sections
7.2.2 shall be in lieu of any other  severance pay to which the Executive may be
entitled under any Company severance plan, program or arrangement.

8.  Trade  Secrets  and  Confidential  Information.  During  the  term  of  this
Agreement,  Employee  will have access to  customer  lists and  compilations  of
information  and records  specific to and regularly used in the operation of the
business of Employer.  Employee  acknowledges that such information  constitutes
valuable  and  confidential  information  of the  Employer.  Employee  shall not
disclose any of the aforesaid  private company secrets,  directly or indirectly,
either during the term of this Agreement or after termination of employment. All
files,  records,  electronic  and  magnetic  files,  documents,  specifications,
equipment and similar information relating to the business of Employer,  whether
prepared by Employee or  otherwise  coming  into  Employee's  possession,  shall
remain the  exclusive  property  of Employer  and shall not be removed  from the
premises  of  Employer  except as shall be  necessary  for  Employee  to perform
Employee's  duties under this Agreement.  Upon termination of this Agreement for
any reason,  Employee will deliver all such  materials in his possession and all
copies thereof to Employer.

9. Work Product. All elements of proprietary products and intellectual  property
developed by Employee  during the term of this  Agreement  shall be  exclusively
owned by Employer  and shall be  considered  works made for hire by Employee for
Employer.  Any copyrights,  trademarks,  tradenames or service marks relating to
products  developed by Employee shall be owned by Employer and registered in the
name of Employer with the exception of  pre-existing  works.  Employee agrees to
assign and herewith  assigns to Employer  ownership of all  copyrights and other
intellectual  property for products  developed during the term hereof.  Employee
agrees to execute any and all  assignments  presented by Employer to give effect
to this Section.

In the event that any portion of any product developed for Employer  constitutes
a preexisting  work for which  Employee  cannot grant to Employer the rights set
forth  above,  Employee  shall  specify  in  writing:  (1)  the  nature  of such
pre-existing  work;  (2)  its  owner;  (3) any  restrictions  or  royalty  terms
applicable  to  Employee's  or  Employer's  use of such  pre-existing  work,  or
Employer's  exploitation  of the work developed for Employer as derivative  work
thereof;  and (4) the source of Employee's  authority to employ the  preexisting
work in the preparation of the work developed for Employer.

10. Restrictive Covenants.  In consideration of the provision to Employee of the
Employer's trade secrets and confidential  information,  and in order to protect
the rights of  Employer  to its trade  secrets,  confidential  information,  and
client relationships, the Employee hereby agrees as follows:

         10.1 Employee  agrees that during a period of twelve  months  following
any  termination  of  employment,  Employee  shall not be an officer,  director,
employee, agent or representative, or an owner of more than five percent (5%) of
the outstanding  capital stock of any  corporation,  or an owner of any interest
in,  or  employee,  agent or  representative  of,  any  other  form of  business
association, sole proprietorship or partnership that solicits, hires (whether or
not  solicited)  or  otherwise  attempts  to  induce  any  employees,  agents or
representatives  of Employer to terminate  their position as employee,  agent or
representative therewith.

         10.2 Employee agrees that,  during the term of this Agreement and for a
period of twelve months  following  termination  for any reason,  Employee shall
not,  directly or indirectly  by being an officer,  director,  employee,  agent,


                                       26

<PAGE>

representative or consultant,  or a record or beneficial owner of more than five
percent of the  outstanding  capital stock of any corporation or an owner of any
interest  in, or  employee  of, any other  form of  business  association,  sole
proprietorship  or  partnership,  conduct a  business  in  competition  with the
business conducted by Employer on the date of termination  anywhere within a 100
mile radius of Employee's place of employment as of the date of termination.

         10.3 In the event that any  adjudicative  body shall  finally hold that
this Section 10  constitutes an  unreasonable  restriction  upon  Employee,  the
parties hereby  expressly agree that the provisions of this Section 10 shall not
be  rendered  void,  but shall apply as to time and  territory  or to such other
extent as such body may indicate constitutes a reasonable  restriction under the
circumstances involved.

11. Arbitration. Any controversy between the parties to this Agreement involving
the construction or application of any of the terms,  covenants or conditions of
this  Agreement  or  arising  out of any  section  hereof  or any  condition  in
connection with the termination of employment,  shall, on the written request of
one party served on the other,  be submitted to binding  arbitration  in Dallas,
Texas, and such arbitration  shall comply with and be governed by the Commercial
Arbitration  Rules of the American  Arbitration  Association.  Each party hereto
shall  appoint one person as an  arbitrator  within 30 days after service of the
request for arbitration,  and the two arbitrators so chosen shall select a third
impartial  arbitrator  with  fifteen  days  of the  date  on  which  the  second
arbitrator is selected.  The arbitrators shall decide all questions presented to
them by majority  vote. The decision of a majority of the  arbitrators  shall be
final  and  conclusive  on all  parties  hereto.  The  expenses  of  arbitration
conducted  pursuant  to this  Section  shall  be borne  by the  parties  in such
proportions as the arbitrators  may decide.  All parties shall be entitled to be
represented by counsel of their choosing throughout the arbitration proceedings.

12. General Provisions.

         12.1  Notice.  Any notice  required or permitted to be given under this
Agreement  shall be  sufficient  if in  writing  and sent by  certified  mail by
Employer to the residence of Employee,  or by Employee to  Employer's  principal
office.

         12.2  Assignability.  This  Agreement  and the  rights,  interests  and
benefits  hereunder shall not be assignable or in any way alienated by Employee.
Employer shall have the right of assignment and transfer of its rights hereunder
to any successor to the majority of its assets and any such  successor  shall be
bound by the terms hereof.

         12.3  Waiver of Breach.  The waiver by Employer or Employee of a breach
of any  provisions  of this  Agreement  by the  other  shall not  operate  or be
construed as a waiver of any subsequent breach.

         12.4 Entire Agreement. This instrument contains the entire agreement of
the parties.  It may not be changed orally, but only by an agreement in writing,
signed  by  the  party  against  whom   enforcement   of  any  waiver,   change,
modification, extension or discharge is sought.

         12.5  Attorneys'  Fees. In the event that there shall be any litigation
or court  proceeding  with respect to this  Agreement or the  obligations of the
parties hereunder,  the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs from the other party.

         12.6 Governing Law. This Employment  Agreement shall be governed by the
laws of the State of Texas.

         12.7  Survival.  Sections  8,  9,  10,  11 and  12  shall  survive  the
termination of this Agreement and remain  applicable to and enforceable  against
Employer,  Employee,  and  their  respective  heirs,  personal  representatives,
successors and assigns.


                                       27

<PAGE>


         IN WITNESS WHEREOF, Employer has caused this Employment Agreement to be
executed  in  its  corporate  name  by  its  corporate  officer  thereunto  duly
authorized, and Employee has executed this Employment Agreement.

                                            EMPLOYEE:


                                            /s/ Steven R. Crowell
                                            ------------------------------------
                                                Steven R. Crowell

                                            Lucas Educational Systems, Inc.

                                            By:  /s/ Jeffrey R. Gullo
                                                 -------------------------------
                                                     Jeffrey R. Gullo, President













                                       28

<PAGE>


                                  EXHIBIT 21.1

                         LUCAS EDUCATIONAL SYSTEMS, INC.



  SUBSIDIARIES OF THE COMPANY

  Lucas Educational Systems, Inc.           A Nevada corporation









                                       29