<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

            Quarterly Report Pursuant to Section 13 or 15 (d) of the
                         Securities Exchange Act of 1934

                    For the quarter ended September 30, 2001

                           Commission File No. 0-24684

                             LONE WOLF ENERGY, INC.
                 (Name of small business issuer in its charter)

                                    Colorado
         (State or other jurisdiction of Incorporation or Organization)

                                   73-1587867
                      (IRS Employer Identification Number )

                          201 Robert S. Kerr. Suite 500
                          0klahoma City, Oklahoma 73102
                                 (405) 749-9999
        (Address, including zip code and telephone number, including area
                     Code of registrant's executive offices)

                               K&S VENTURES, INC.
                           (Former Name of Registrant)

      Securities registered under Section 12 (b) of the Exchange Act: none

         Securities registered under Section 12 (g) of the Exchange Act:

                         Common Stock, $0.001 par value
                                (Title of class)

Check whether the issuer (1) 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 [ ]


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As November 5, 2001 there were
27,508,290 shares of the Company's common stock issued and outstanding.

Documents Incorporated by Reference: None




                                       1
<PAGE>



PART 1. - FINANCIAL INFORMATION

ITEM 1. Financial Statements

         The financial statements are presented on pages F-1 thru F-16 of this
report.

ITEM 2. Management's Discussion and Analysis or Plan of Operation


         The following discussion should be read in conjunction with the
accompanying financial statements and notes thereto of the Company.

RESULTS OF OPERATIONS

         The following tables set forth selected results of operations for the
three and nine months ended September 30, 2001 and 2000, which are derived from
the reviewed consolidated financial statements of the Company. The results of
operations for the periods presented are not necessarily indicative of the
Company's future operations.


<Table>
<Caption>
                                                                FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                -----------------------------------------------------------------------
                                                              2001                                  2000
                                                ---------------------------------     ---------------------------------
                                                    AMOUNT            PERCENT             AMOUNT             PERCENT
                                                --------------     --------------     --------------     --------------
<S>                                             <C>                <C>                <C>                <C>
Revenues                                        $      895,974              100.0%    $    1,775,751              100.0%
Cost of Revenues                                       597,318               66.7%         1,393,822               78.5%
                                                --------------     --------------     --------------     --------------
Gross Profit                                           298,656               33.3%           381,929               21.5%
                                                --------------     --------------     --------------     --------------
Operating Expenses
    Selling, general and administrative                344,013               38.4%           293,108               16.5%
    Depreciation and amortization                       75,361                8.4%            77,632                4.4%
                                                --------------     --------------     --------------     --------------
Total operating expenses                               419,374               46.8%           370,740               20.9%
                                                --------------     --------------     --------------     --------------
                                                      (120,718)             (13.5)%           11,189                0.6%
                                                --------------     --------------     --------------     --------------
Other income (expense)
    Interest (net)                                     (16,974)              (1.9)%           17,675                1.0%
    Other                                              137,752                 --            (46,735)              (2.6)%
                                                --------------     --------------     --------------     --------------
                                                       120,778               13.5%           (29,060)              (1.6)%
                                                --------------     --------------     --------------     --------------
Income from continuing operations
    before taxes                                            60                0.0%           (17,871)              (1.0)%
Income tax benefit                                      (5,000)              (0.6)%            6,000                0.3%
                                                --------------     --------------     --------------     --------------
Income from continuing operations                       (4,940)              (0.6)%          (11,871)              (0.7)%
Discontinued operations
    Income from operations of discon-
      tinued operation net of taxes                         --                 --            (85,241)              (4.8)%
    Gain on sale of discontinued
      operation net of taxes                                --                 --                 --                 --
                                                --------------     --------------     --------------     --------------
Net income (loss)                               $       (4,940)              (0.6)%   $      (97,112)              (5.5)%
                                                --------------     --------------     --------------     --------------
</Table>



                                       2
<PAGE>



<Table>
<Caption>
                                                                 FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                -----------------------------------------------------------------------
                                                               2001                                 2000
                                                ---------------------------------     ---------------------------------
                                                    AMOUNT             PERCENT            AMOUNT             PERCENT
                                                --------------     --------------     --------------     --------------
<S>                                             <C>                <C>                <C>                <C>
Revenues                                        $    3,070,781              100.0%    $    5,439,328              100.0%
Cost of Revenues                                     1,915,470               62.4%         4,292,568               78.9%
                                                --------------     --------------     --------------     --------------
Gross Profit                                         1,155,311               37.6%         1,146,760               21.1%
                                                --------------     --------------     --------------     --------------
Operating Expenses
    Selling, general and administrative              1,061,614               34.6%         1,026,239               18.9%
    Depreciation and amortization                      225,481                7.3%           202,427                3.7%
                                                --------------     --------------     --------------     --------------
Total operating expenses                             1,287,095               41.9%         1,228,666               22.6%
                                                --------------     --------------     --------------     --------------
                                                      (131,784)              (4.3)%          (81,906)              (1.5)%
                                                --------------     --------------     --------------     --------------
Other income (expense)
    Interest (net)                                     (57,614)              (1.9)%           20,819                0.4%
    Merger related costs                                    --                 --           (325,723)              (7.6)%
    Other                                              149,627                 --             12,139                0.2%
                                                --------------     --------------     --------------     --------------
                                                        92,013                3.0%          (292,765)              (5.4)%
                                                --------------     --------------     --------------     --------------
Income from continuing operations
    before taxes                                       (39,771)              (1.3)%         (374,671)              (6.9)%
Income tax benefit                                      16,000                0.5%           150,000                2.8%
                                                --------------     --------------     --------------     --------------
Income from continuing operations                      (23,771)              (0.8)%         (224,671)              (4.1)%
Discontinued operations
    Income from operations of discon-
      tinued operation net of taxes                    (47,902)              (1.6)%         (113,907)              (2.1)%
    Gain on sale of discontinued
      operation net of taxes                           214,219                7.0%           438,479                8.1%
                                                --------------     --------------     --------------     --------------
Net income (loss)                               $      142,546                4.6%    $       99,901                1.8%
                                                --------------     --------------     --------------     --------------
</Table>



         All operating revenues and cost of revenues for the periods presented
are from Zenex Communications, Inc. All other business segments previously
included in operations have been disposed as of September 30, 2001 and their
results are included under discontinued operations. The revenues for the three
and nine months ended September 30, 2001 decreased by $880,000 and $2,369,000 or
49.5 % and 43.5% respectively from the same periods in 2000. The total volume of
minutes sold in the three and nine months ended September 30, 2001 decreased
58.1% and 43.2% from the same periods in 2000. These decreases resulted from a
change in the customer base in 2001 as compared to 2000. Also during the quarter
ended September 30, 2001 the revenue from the Company's largest customer
decreased by over 50% due to a downturn in that customers business. That
customer previously accounted for approximately 70% of the Company's volume.
During the past quarter management investigated possible acquisitions which
could provide a marketing division to increase the volume of minutes. The
Company has not been successful in locating a suitable partner at this time.
Since the end of the quarter the Company has added its own sales staff and hopes
to see significant results from the sales efforts in the first quarter of 2002.
The Company has focused on business with higher gross profits and lower volumes,
which when fully implemented will result in higher profit potential without
costly capital improvements. The gross profit per minute for calls were 1.43
cents and 1.30 cents for the three and nine month periods ended September 30,
2001 compared to .76 cents and .70 cents for the same periods of 2000 or an
increase of 88% and 86% respectively.

         Selling, general and administrative expenses increased significantly as
a percent of revenue in both the three and nine month periods ended September
30, 2001 over the same periods in 2000 primarily because revenue was lower in
2001 as compared to 2000.

         Depreciation and amortization increased $23,054 for the nine months
ended September 30, 2001 from the same period in 2000 and was the result of
additional capital expenditures made in 2000 and 2001 to increase the Company's
switch capacity.



                                       3
<PAGE>



         The increase in net interest in 2001 over 2000 was due to additional
debt incurred by the Company in 2001 to finance capital expenditures over the
past year and a reduction in interest income from notes held by the Company.

         Other income in the three and nine months ended September 30, 2001 is
primarily a gain from the settlement of the debt due from Eagle Capital. Other
expenses in the period ended September 30, 2000, which does not occur again in
2001, were primarily the costs involved in the merger of Lone Wolf and Prestige
Investments.

         The losses attributable to discontinued operations in 2000 were from
E.P. Distributing and Churchlink.com. and the Company's equipment leasing
activities. The E.P. Distributing segment was closed at the end of 2000 and
Churchlink.com was sold at the end of the first quarter in 2001. The Company's
equipment leasing activities were sold in the first quarter of 2000. The losses
attributable to discontinued operations in 2001 were all attributable to
Churchlink.com.

         The gain on disposal of discontinued operations in 2000 was from the
termination of the Company's Master Equipment Sales Agreement with Eagle Capital
International, LTD. The Company had a net profit after taxes and expenses of
$438,479 from this termination in the first quarter of 2000. The gain on sale of
discontinued operations in 2001 is from the sale of EP Distributing and
Churchlink .com.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's growth has been financed through the sale of equity
securities and bank borrowings. Net cash provided from operations totaled
$162,451 in the nine months ended September 30, 2001 as compared to cash
provided from operations of $158,588 in the same period in 2000.

         At September 30, 2001, the Company had working capital of $160,136
compared to a deficit in working capital at December 31, 2000 of $(54,361) or an
increase in working capital of $214,497 in the nine month period ended September
30, 2001. The increase in working capital is due to two new notes that were
entered into in the nine months ended September 30, 2001 totaling $438,389. The
new notes provided additional long-term debt of $294,207 after debt service
payments and a provision for current portion on the new loans. The Company also
had a depreciation and amortization deduction of $225,481 in the nine month
period ended September 30, 2001 while outlays for new equipment totaled only
$56,940.

         In the event the Company's revenues increase as anticipated, the
Company's working capital requirements will also increase and such requirements
may exceed the net cash provided by operating activities and require cash be
used in operating activities from sources other than operations, including the
raising of cash through borrowing or issuance of equity securities. The increase
in cash used in operations will principally be due to the timing differences
between the Company's payment for services from its suppliers and employee work
force, and the time at which the Company receives payment from its customers.

                  On October 25, 2000, the Company entered into a one-year
revolving loan commitment with Federal Bank Centre for $450,000 to be used in
operating activities of the Company. As of September 30, 2001 the outstanding
principal on this note was $1. Advances on this loan are based upon the Company
not being in default on this Agreement, borrower or any guarantor not declaring
bankruptcy or dying, no material adverse change in the Company's financial
condition, or lender in good faith not deeming itself insecure. The outstanding
principal amount of this loan bears interest at



                                       4
<PAGE>



1.5% over the Wall Street Prime (currently 7%) and is payable monthly. All
assets of the Company and the guarantee of certain officers of the Company
secure the loan. This credit line was renewed after the end of the period
presented.

Future Operations and Liquidity

Prestige Investments, Inc., a wholly owned subsidiary, of the Company acquired
Zenex Long Distance, Inc. in accordance with a letter of intent dated January
27, 1999 and a subsequent Stock Purchase Agreement (" The Agreement") dated
February 19, 1999. The business combination was accounted for as a purchase. In
accordance with the terms of the Agreement, the initial purchase price was
$6,353 for 100% of the 635,295 outstanding common shares. The Agreement includes
a provision whereby the sellers may earn additional amounts if the cumulative
collected gross sales revenue reach certain levels, (the "Earn Out Rights"), as
follows:

When collected gross sales revenue reach Ten Million ($10,000,000), the sellers
will be paid an additional Fifty Cents ($0.50) per share totaling a maximum of
$317,647. When collected gross sales revenue reach Twenty Million ($20,000,000),
the sellers will be paid and additional One Dollar ($1.00) per share totaling
$635,295.
When collected gross sales revenue reach thirty-six Million ($36,000,000), the
sellers will be paid an additional One-Dollar ($1.00) per share totaling
$635,590. In no event will the Purchase Price exceed the amount of Two Dollars
and fifty-one Cents per share totaling $1,594,590.

Collected gross sales revenues through September 30, 2001 are approximately
$10,200,000. Management of Prestige has calculated the first payment of this
buyout which is due December 30, 2001 to be approximately $237,000 and is
currently attempting to arrange financing for the payment or extend the due
date.

         As of the date of this report, other than as described above, the
Company does not have any significant future capital commitments. The Company
anticipates that existing loan commitments and funds to be generated from future
operations will be sufficient to fund operations and future commitments.





PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On December 7, 2000, Lone Wolf filed a civil action in the United States
District Court, Northern District of Oklahoma (Case number 00-CV-1040-K(M))
against Eagle Capital International, Inc. for the collection of a past due
promissory note due Lone Wolf. The balance due on the note was $850,000 plus
accrued interest. The suit was settled during the quarter ended September 30,
2001 with Lone Wolf receiving $500,000 in cash and an undisclosed number of
shares of Eagle's outstanding common stock.




                                       5
<PAGE>




Item 2. Change in Securities

Not Applicable

Item 3. Defaults Upon Senior Securities

Not Applicable

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

Not Applicable

Item 5. Other Information

Not Applicable


Item 6. Exhibits and Reports on Form 8-K

Exhibits

         None

Reports on Form 8-K

         None





SIGNATURES

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

                                               LONE WOLF ENERGY, INC.

                                               /s/ Douglas A. Newman
                                               -------------------------
                                               By: Douglas A. Newman, Sec,y

Date: November 12, 2001



                                       6
<PAGE>



                            INDEPENDENT REVIEW REPORT


Board of Directors and Stockholders
Lone Wolf Energy, Inc.

We have reviewed the accompanying consolidated balance sheet of Lone Wolf
Energy, Inc. as September 30, 2001, and the related consolidated statements of
income for the three and nine months ended September 30, 2001 and 2000 and the
consolidated statements of cash flows for the nine months ended September 30,
2001 and 2000 in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants. These financial statements are the responsibility of the Company's
management.

A review of interim financial statements consists principally of inquiries of
company personnel and analytical procedures applied to financial data. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our review we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.

The December 31, 2000 financial statements for Lone Wolf Energy, Inc. were
audited by us and we expressed an unqualified opinion in our reports dated March
9, 2001, but we have not performed any auditing procedures since that date.



Sutton Robinson Freeman & Co., P.C..
Certified Public Accountants

Tulsa, Oklahoma
November 5, 2001



                                      F-1
<PAGE>


                             LONE WOLF ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 2001 AND DECEMBER 31, 2000


<Table>
<Caption>
                   ASSETS                           2001              2000
                                                -------------    -------------
<S>                                             <C>              <C>
CURRENT ASSETS
   Cash                                         $      90,188    $          --
   Accounts receivable                                456,042          599,903
   Current portion of notes receivable                     --          551,657
   Prepaid expenses                                     4,550            4,784
   Investment held for sale                           380,250               --
   Inventory                                           13,025            7,000
                                                -------------    -------------
                                                      944,055        1,163,344
                                                -------------    -------------

PROPERTY AND EQUIPMENT                              1,762,262        1,817,722
   Less accumulated depreciation                     (776,505)        (595,185)
                                                -------------    -------------
                                                      985,757        1,222,537
                                                -------------    -------------

OTHER
   Goodwill (net)                                     404,480          461,633
   Organization costs (net)                             1,594           14,890
   Investments                                             --            4,500
   Note receivable                                    120,000               --
   Deposits                                            18,228               --
   Deferred tax asset                                 119,000          213,000
                                                -------------    -------------
                                                      663,302          694,023
                                                -------------    -------------
                                                $   2,593,114    $   3,079,904
                                                =============    =============
</Table>

See Accompanying Notes to Financial Statements

See Accountants Review Report



                                      F-2
<PAGE>



                             LONE WOLF ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 2001 AND DECEMBER 31, 2000

<Table>
<Caption>
                LIABILITIES & STOCKHOLDERS' EQUITY                      2001             2000
                                                                    -------------    -------------
<S>                                                                 <C>              <C>
CURRENT LIABILITIES
   Current portion of long-term debt                                $     170,807    $     476,996
   Accounts payable                                                       500,421          625,325
   Accrued expenses                                                        90,940           92,734
   Prepayments and customer deposits                                       21,751           22,650
                                                                    -------------    -------------
                                                                          783,919        1,217,705
                                                                    -------------    -------------
OTHER LIABILITIES
   Long-term debt -net of current portion                                 501,267          264,079
   Other liabilities                                                      216,000          242,862
                                                                    -------------    -------------
                                                                          717,267          506,941
                                                                    -------------    -------------

TOTAL LIABILITIES                                                       1,501,186        1,724,646
                                                                    -------------    -------------
STOCKHOLDERS' EQUITY
   Preferred stock ($0.001 par value, 20,000,000 shares
     authorized, no shares issued and outstanding)                                              --
   Common stock ($0.001 par value, 100,000,000 shares
     authorized, 36,808,290 shares issued and outstanding
     at September 30, 2001 and 36,495,790 issued and
     outstanding at December 31, 2000)                                     36,808           36,496
   Paid-in capital                                                      1,770,655        1,754,842
   Treasury stock (9,300,000 shares at Sept .30, 2001 and)               (428,000)          (6,000)
     600,000 shares at December 31, 2000 at cost)
   Unrealized Gain (Loss) on Available for Sale Securities                     --          (27,844)
   Retained earnings (deficit)                                           (287,535)        (402,236)
                                                                    -------------    -------------
                                                                        1,091,928        1,355,258
                                                                    -------------    -------------

                                                                    $   2,593,114    $   3,079,904
                                                                    =============    =============
</Table>

See Accompanying Notes to Financial Statements

See Accountants Review Report



                                      F-3
<PAGE>



                             LONE WOLF ENERGY, INC.
                      CONSOLIDATED STATEMENTS of OPERATIONS
         FOR the THREE and NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

<Table>
<Caption>
                                                               THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                  SEPTEMBER 30,                     SEPTEMBER 30,
                                                              2001             2000             2001             2000
                                                          -------------    -------------    -------------    -------------
<S>                                                       <C>              <C>              <C>              <C>
REVENUES                                                  $     895,974    $   1,775,751    $   3,070,781    $   5,439,328

OPERATING EXPENSES
  Cost of sales                                                 597,318        1,393,822        1,915,470        4,292,568
  Selling, general and administrative                           344,013          293,108        1,061,614        1,026,239
  Depreciation and amortization                                  75,361           77,632          225,481          202,427
                                                          -------------    -------------    -------------    -------------
                                                              1,016,692        1,764,562        3,202,565        5,521,234
                                                          -------------    -------------    -------------    -------------

OPERATING INCOME (LOSS)                                        (120,718)          11,189         (131,784)         (81,906)
                                                          -------------    -------------    -------------    -------------
OTHER INCOME (EXPENSE)
  Interest income (expense)                                     (16,974)          17,675          (57,614)          20,819
  Merger related costs                                               --          (41,735)              --         (325,723)
  Gain (loss) on sale of securities                             (14,364)              --          (14,364)              --
  Other income                                                  136,147           (5,000)         136,147           12,139
                                                          -------------    -------------    -------------    -------------
                                                                104,809          (29,060)          64,169         (292,765)
                                                          -------------    -------------    -------------    -------------
NET INCOME (LOSS) FROM OPERATIONS
  BEFORE INCOME TAXES                                           (15,909)         (17,871)         (67,615)        (374,671)
  Income Tax (Expense) Benefit                                   (5,000)           6,000           16,000          150,000
                                                          -------------    -------------    -------------    -------------
NET INCOME (LOSS) BEFORE
  DISCONTINUED OPERATIONS                                 $     (20,909)   $     (11,871)   $     (51,615)   $    (224,671)
                                                          -------------    -------------    -------------    -------------
</Table>


See Accompanying Notes to Financial Statements

See Accounts Review Report



                                      F-4
<PAGE>



                             LONE WOLF ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

<Table>
<Caption>
                                                          THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                             SEPTEMBER 30,                     SEPTEMBER 30,
                                                         2001             2000             2001              2000
                                                     ------------    ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>             <C>
NET INCOME (LOSS) BEFORE DISCONTINUED
  OPERATIONS AND SALE OF DISCONTINUED
  BUSINESS                                           $    (20,909)   $    (11,871)   $    (51,615)   $   (224,671)
                                                     ------------    ------------    ------------    ------------
DISCONTINUED OPERATIONS

  Profit (loss) from discontinued business
    operations net of income taxes                             --         (85,241)        (47,902)       (113,907)

  Gain on sale of discontinued operation
    net of income taxes                                        --              --         214,219         438,479
                                                     ------------    ------------    ------------    ------------
NET INCOME (LOSS)                                    $    (20,909)        (97,112)   $    114,702    $     99,901

OTHER COMPREHENSIVE INCOME:
  Unrealized holding gains                                  1,605              --          13,480              --
  Reclassification adjustment                              14,364              --          14,364              --
                                                     ------------    ------------    ------------    ------------
COMPREHENSIVE INCOME (LOSS)                          $     (4,940)   $    (97,112)   $    142,546    $     99,901
                                                     ============    ============    ============    ============
  PRIMARY EARNINGS (LOSS) PER SHARE                           nil             nil             nil             nil
                                                     ============    ============    ============    ============
  FULLY DILUTED EARNINGS (LOSS) PER SHARE                     nil             nil             nil             nil
                                                     ============    ============    ============    ============
</Table>


See Accompanying Notes to Financial Statements

See Accountants Review Report



                                      F-5
<PAGE>



                             LONE WOLF ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

<Table>
<Caption>
                                                                         SEPTEMBER 30,    SEPTEMBER 30,
                                                                              2001            2000
                                                                         -------------    -------------
<S>                                                                      <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net Income (Loss)                                                    $     142,546    $      99,901
    Reconciliation of net income to net cash provided by
      operating activities
    Depreciation and amortization                                              225,481          203,312
    Issuance of common stock for services                                        4,125               --
    Common stock received for sale of property and equipment                  (410,000)              --
    Gain (loss) on sale of property and equipment                                   --           (5,000)
    Book value of assets disposed                                              140,916
    (Increase) decrease from changes in:
      Deferred Taxes                                                            94,000           64,000
      Accounts receivable                                                      143,861         (888,755)
      Inventory                                                                 (6,025)        (242,436)
      Prepaid expenses                                                             234
      Deposits                                                                 (18,228)         (29,284)
    Increase (Decrease) from changes in:
      Accounts payable                                                        (124,904)         850,228
      Accrued liabilities                                                       (1,794)         313,857
      Prepayments and customer deposits                                           (899)         (46,786)
      Other liabilities                                                        (26,862)        (160,449)
                                                                         -------------    -------------
                                                                               162,451          158,588
                                                                         -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Goodwill in businesses acquired                                                 --          (89,732)
    Cash received for property and equipment sold                                   --            5,000
    Increase in carrying value of investments                                 (375,750)              --
    Purchase of property and equipment                                         (59,168)        (379,836)
                                                                         -------------    -------------
                                                                              (434,918)        (464,568)
                                                                         -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Issuance of common stock                                                        --          555,500
    Change in notes receivable                                                 431,657         (248,683)
    Change in notes payable                                                    (69,002)         (48,495)
                                                                         -------------    -------------
                                                                               362,655          258,322
                                                                         -------------    -------------
NET INCREASE (DECREASE) IN CASH                                                 90,188          (47,658)
CASH AT BEGINNING OF PERIOD                                                         --          108,921
                                                                         -------------    -------------
CASH AT END OF PERIOD                                                    $      90,188    $      61,263
                                                                         =============    =============
</Table>


See Accompanying Notes to Financial Statements


See Accountants Review Report




                                      F-6
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF BUSINESSES


Lone Wolf Energy, Inc. (formerly K&S Ventures) was incorporated on March 4, 1991
in the state of Colorado. In February 1999 the Company signed a Master Equipment
Sales Agreement, (the "MESA") with Eagle Capital, Inc. (OTCBB:ECIC) to sell
specialized equipment. The MESA called for the Company to provide fifteen pieces
of equipment over the next three years. In February 2000 the Company terminated
the MESA and sold the equipment it was financing under that agreement. Under the
terms of the termination agreement and sale of the equipment the Company
received $1,625,000 in cash and notes receivable.

In March 2000 the Company purchased the assets of EP Distributing Company
("EPD") for $100,000 in cash and 1,000,000 shares of common stock valued at
$40,000. EPD operated as a division of the Company. The division sells
nutritional products, with its primary line being Earth Pharmacy brand products,
and also brokers medical supplies. The acquisition was accounted for as a
purchase. The company ceased this operation at the end of December 2000 and in
May 2001 negotiated with the prior owners to transfer the assets of that
division back to them. The company received a note for $125,000 to be paid over
a term of three years and the return of the original one million shares common
stock.

On May 11, 2000, the Company acquired ChurchLink.com, Inc., ("ChurchLink"). Thru
the period ended March 31, 2001 ChurchLink operated as a subsidiary of the
Company. ChurchLink has developed a software product that provides an online
communications hub for churches and their members. The purchase price of
ChurchLink was 100,000 shares of the Company's Common Stock. The terms of the
acquisition provide that an additional 400,000 shares of the Company's Common
Stock will be issued as churches subscribe to the service. The additional stock
will be issued as follows:

         20,000 shares for each block of 100 churches up to 1,000 churches -
         200,000 shares 20,000 shares for each block of 300 churches from 1,000
         to 2500 churches - 100,000 shares 20,000 shares for each block of 500
         churches from 2,500 to 5,000 churches - 100,000 shares

The fair market value of the shares issued was $28,000. The acquisition was
accounted for as a purchase.

On April 12, 2001, the Company entered into an Exchange of Stock Agreement with
Ricky Naylor a significant shareholder of the Company, whereby the Company
exchanged all of the stock of its wholly owned subsidiary Churchlink.com, Inc.
for 7,400,000 shares of the Company's common stock held by Mr. Naylor. The
7,400,000 shares of stock returned to the Company were valued at the quoted
market price of $0.05 per share ($370,000) on the date of the transaction and
will now be treated as treasury stock and reduces the outstanding common shares
of the Company by approximately 20%.

On June 21, 2000 the Company completed the acquisition of Prestige Investments,
Inc. and it's wholly owned subsidiary Zenex Long Distance, Inc. (d/b/a Zenex
Communications, Inc.), ("Zenex"). A newly formed wholly owned subsidiary of the
Company, Prestige Acquisition, Corp. ("Prestige Acquisition"), was merged with
and into Prestige Investments, Inc. ("Prestige Investments"), the parent company
of



                                      F-7
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001


Zenex. Prestige Investments was the surviving corporation in the merger. The
merger was pursuant to an Agreement and Plan of Reorganization dated May 4,
2000, by and among the Company, Prestige Acquisition, Prestige Investments and
the five shareholders of Prestige Investments (the "Zenex Merger Agreement").
Pursuant to the Zenex Merger Agreement, the Company issued 15,550,000 of the
Company's common stock to the shareholders of Prestige investments in return for
their surrender to the company of all of their shares of common stock of
Prestige Investments. Following the merger, Prestige Investments became a wholly
owned subsidiary of the Company with Zenex operating as a wholly owned
subsidiary of Prestige Investments. The business combination was accounted for
as a pooling of interest.

Prestige Investments, Inc. and its wholly owned subsidiary, Zenex Long Distance,
Inc. ("Zenex") are engaged primarily in the wholesale of long distance minutes
for prepaid calling cards. Zenex does business as Zenex Communications, Inc. and
primarily markets its product to distributors and switchless resellers who
in-turn market the products to retailers.

Prestige was incorporated in Oklahoma on July 31, 1998. Zenex was incorporated
on January 27, 1994 in Oklahoma. Prestige was formed solely for the purpose of
business acquisitions and investments, and had minimal activities prior to the
acquisition of Zenex. Prestige's only operations are those of its wholly owned
subsidiary, Zenex. Prestige acquired Zenex in accordance with a letter of intent
dated January 27, 1999 and a subsequent Stock Purchase Agreement (" The
Agreement") dated February 19, 1999. The business combination of Prestige and
Zenex was accounted for as a purchase.

The Company's December 31, 2000 consolidated balance sheet includes the wholly
owned subsidiary, Prestige and Prestige's wholly owned subsidiary, Zenex, and
Churchlink. The Company's September 30, 2001 consolidated balance sheet includes
the wholly owned subsidiary, Prestige and Prestige's wholly owned subsidiary,
Zenex. The Company's consolidated statement of operations for the three and nine
months ended September 30, 2001 includes the pooled entity of Prestige and its
wholly owned subsidiary Zenex, and Churchlink to the date of its disposition.
The Company's consolidated statement of operations for the three and nine months
ended September 30, 2000 includes the pooled entity of Prestige and its wholly
owned subsidiary Zenex, and the purchased entity of EPD and Churchlink from the
dates of their purchase. The operations of all disposed entities in the periods
presented are included under the heading of discontinued operations. All
significant inter-company accounts have been eliminated in the consolidated
financial statements.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt or equity instruments purchased
with an original maturity at the date of purchase of 90 days or less to be cash
equivalents.

INVENTORY

Inventory of prepaid long-distance calling cards are stated at the lower of cost
or fair market value. Fair Value of Financial Instruments The Company's
financial instruments include cash, receivables, short-term payables, and notes
payable. The carrying amounts of cash, receivables, and short-term payables
approximate fair value due to their short-term nature. The carrying amounts of
notes payable approximate fair value based on borrowing terms currently
available to the Company.



                                      F-8
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001


ADVERTISING COST

Advertising costs are expensed as incurred as selling, general and
administrative expenses in the accompanying statement of operations.

INCOME TAXES

The company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. This statement prescribes the use of the liability
method whereby deferred tax assets and liabilities are determined based on the
differences between financial reporting and tax bases of assets and liabilities
and measured at tax rates that will be in effect when the differences are
expected to reverse. Valuation allowances are established, when necessary, to
reduce deferred tax assets when it is more likely than not that the deferred tax
asset will not be realized.

REVENUE RECOGNITION

The Company earns revenues by providing access to and usage of long distance
networks and the sale of nutritional products. Revenue is recognized in the
month the service is provided. The Company records deferred revenue for calling
cards sold and recognize revenue as the customer utilizes the calling time.

NET LOSS PER SHARE

The Company computes net income (loss) per share in accordance with SFAS No.
128, Earnings per Share and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS No. 128 and SAB 98 basic net income (loss) per
share is calculated by dividing net income (loss) available to common
stockholders for the period by the weighted average number of common shares
outstanding during the period.

CONCENTRATIONS

In connection with providing long distance service to customers, Zenex has
contractual agreements with certain carriers, which provide access to and usage
of their long distance network. The contracts include an agreed-upon billing
rate and a term for these services. During the three and nine months ended
September 30, 2001 one vendor carried approximately 92% and 82% respectively of
the Company's long-distance traffic. Although other carriers are available to
provide access and usage of their long distance network, there are a limited
number of such sources. Additionally the time required to efficiently transfer
system connections makes the Company vulnerable to a risk of a near-term
significant impact in the event of a natural disaster or any other termination
of the carrier's service. However the Company has the ability to utilize back up
systems in the event of the carriers termination of services.

Although Zenex has a significant number of customers, one customer accounted for
approximately 43% and 61% of the Zenex revenue for the three and nine months
ended September 30, 2001. This customer represents 32% of the accounts
receivable at September 30, 2001. The loss of this customer would have a
materially adverse impact on the company's revenues and operations.



                                      F-9
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001

The Company's receivables are from a small number of companies in the same
industry, which are subject to business cycle variations. This concentration
subjects the Company to a credit risk if the general industry or the companies
fail to perform.

REGULATION

Zenex Long Distance, Inc. is subject to regulation by the Federal Communications
Commission and by various state public service and public utility commissions.
The Company's management and regulatory legal counsel believe the Company is in
compliance with regulations in all states.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the 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.


RECLASSIFICATIONS

Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.

NOTE 2 - NOTES RECEIVABLE

<Table>
<Caption>

At September 30, 2001 and December 31, 2000, the Company had                           SEPTEMBER 30,      DECEMBER 31,
  notes receivable as follows:                                                              2001               2000
                                                                                      ---------------   ---------------
<S>                                                                                   <C>               <C>
  Due from an unrelated corporation, payable in minimum monthly installments of
  $50,000 plus interest at 12% with remaining principal due on August 1, 2001                           $       551,657

  Due from an unrelated individual, payable in monthly instalments of $500 in July
  thru September 2001, $1,000 in September thru December 2001 and $1,500 from
  January 2002 thru May 2004 with a balance of $104,500 due on June 1, 2004. The
  total payments to be received are $153,500 without interest and the note amount
  is shown as the present value with an interest rate imputed at approximately 8%.            120,000                --
                                                                                      ---------------   ---------------
                                                                                      $       120,000   $       551,667
                                                                                      ---------------   ---------------
</Table>



                                      F-10
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001

NOTE 3 - PROPERTY AND EQUIPMENT, ACCUMULATED DEPRECIATION AND AMORTIZATION

Property and equipment are recorded at cost. Expenditures for repairs and
maintenance are charged to operations when incurred. Major improvements and
renewals that extend the useful life of the related asset are capitalized and
depreciated over the remaining useful life. Depreciation and amortization are
computed for financial and income tax reporting purposes using straight-line and
accelerated methods over estimated useful lives ranging from three years to ten
years. Depreciation charged to operations was $183,032 and $158,557 for the nine
months ended June 30, 2001 and 2000. The following table summarizes the
classifications of property and equipment; total accumulated depreciation and
the related estimated useful lives:



<Table>
<Caption>
            PROPERTY AND EQUIPMENT                           COST          YEARS
            -------------------------------------------   -----------   -----------
<S>                                                       <C>           <C>
            Equipment                                     $ 1,510,485          5-10
            Office software and equipment                     199,585           5-7
            Autos                                              32,525             5
            Leasehold improvements                             19,667             5
                                                          -----------
                  Total                                     1,762,262
            Less accumulated depreciation                     776,505
                                                          -----------
                  Net property and equipment              $   985,757
                                                          ===========
</Table>


NOTE 4 - INTANGIBLE ASSETS

Goodwill represents the excess of the cost of assets acquired over the fair
value at date of acquisition. Goodwill is being amortized on the straight-line
method over fifteen years. Accumulated amortization at September 30, 2001 and
December 31, 2000 totaled $178,560 and 147,863, and amortization expense of
$30,697 and $29,681 was charged to operations for the nine months ended
September 30, 2001 and 2000 respectively.

Organization costs primarily include legal and professional fees associated with
organizing operations. These costs are deferred and amortized using the
straight-line method over five years. Accumulated amortization at September 30,
2001 and December 31, 2000 totaled $103,901 and $90,605. Amortization expense of
$13,296 and $15,074 was charged to operations the nine months ended September
30, 2001 and 2000 respectively.



                                      F-11
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001

NOTE 5 - LONG-TERM DEBT

<Table>
<Caption>
The company has notes payable at September 30, 2001 and December 31, 2000 as              SEPT. 30,          DEC. 31,
  follows:                                                                                  2001               2000
                                                                                        --------------   --------------
<S>                                                                                     <C>              <C>
  First National Bank of Midwest City, 9.5% note secured by all Zenex equipment
  and Zenex common stock, due in monthly installments of $5,227, including
  interest through January 2005                                                         $      180,093   $      216,869

  First National Bank of Midwest City, 9.75% note secured by all Zenex equipment
  and Zenex common stock, due in monthly installments of $2,124, including
  interest through March 2005                                                                   75,108           86,741

  Payable to an unrelated individual, 9.5% note secured by all Zenex equipment and
  Zenex common stock, due in monthly installments of $6,302, including interest
  through February, 2006, carries $2,000 per month additional interest if not                  272,061               --
  refinanced by September 30, 2001

  Federal Bank Centre, Tulsa, Oklahoma, 9.75% note secured by auto, due in monthly
  installments of $688 including interest, due May 30, 2005                                     25,373           29,538

  Federal Bank Centre, Tulsa, Oklahoma, $450,000 line of credit note with
  interest payable monthly at 1.5% over Wall Street Journal prime (currently
  7.5%), secured by all assets of Wolf Energy, Inc. and the personal
  guarantee of certain directors, due November 2001                                                  1          407,927

  Payable to an unrelated corporation, 10% unsecured note, due in
  monthly installments of $4,465 including interest, due April, 2004                           119,438               --
                                                                                        --------------   --------------
       Total                                                                                   672,074          741,075

       Less Current Portion                                                                    170,807          476,996
                                                                                        --------------   --------------
       Long-Term Debt                                                                          501,267          264,079
                                                                                        ==============   ==============
</Table>


Estimated principal payments on the notes for each of the five years subsequent
to September 30, 2001 are as follows:

<Table>
<S>                                               <C>
                          2001                    $   39,158
                          2002                       172,538
                          2003                       189,976
                          2004                       172,393
                          2005                        85,556
                          2006                        12,453
</Table>



                                      F-12
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001

NOTE 6 - INCOME TAXES

At September 30, 2001, the Company had net operating losses of approximately
$1,684,000 available to reduce future federal and state taxable income. Unless
utilized, the carryforward amounts will begin to expire in 2012. For federal and
state tax purposes, the Company's net operating loss carryforward amounts are
subject to an annual limitation due to a greater than 50% change in stock
ownership, as defined by federal and state tax law.

Under the provisions of FAS-109, Accounting for Income Taxes, deferred tax
liabilities and assets are measured using the applicable tax rate based on the
taxable and deductible temporary differences and operating loss carryforward
amounts. Taxable temporary differences result principally from the excess of
depreciation for tax purposes over the amount deducted for financial reporting
purposes. Deductible temporary differences and operating loss carryforwards,
giving rise to deferred tax assets, are reduced by a valuation allowance if it
is more likely than not that some or all of the deferred tax assets will not be
realized

The following are components of the net deferred tax asset at:

<Table>
<Caption>
                                                           September 30,       December 31,
                                                               2001                2000
                                                          ---------------    ---------------
<S>                                                       <C>                <C>
Deferred tax liability on depreciation                    $      (129,000)   $      (129,000)
Deferred tax assets for loss carryforwards                        708,000            802,000
                                                          ---------------    ---------------
Deferred tax asset                                                579,000            673,000
Less valuation allowance                                         (460,000)          (460,000)
                                                          ---------------    ---------------
Net deferred tax asset                                    $       119,000    $       213,000
                                                          ---------------    ---------------
</Table>


The Company has established a valuation allowance for a portion of its net
deferred tax assets because of limitations on the use of loss carryforwards due
to ownership changes.

All Income tax provisions presented for the periods represent deferred taxes.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Customer Billing Service

On June 1, 1999, Zenex entered into a billing service agreement with a third
party outsource service provider. The agreement extends for a period of
forty-two (42) months. Under the terms of the agreement the service fee is
$2,750 per month for recording up to 750,000 detail call records per month The
additional monthly fee for call records in excess of 750,000 is on a declining
scale of .00395 cents to .00310 cents per record.



                                      F-13
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001


OPERATING LEASES

The Company leases its facilities under operating leases, which expire at
various intervals through September 30, 2005. Under the terms of the leases the
Company is responsible for its share of common area maintenance and operating
expenses. Rent expense under operating leases for the nine months ended
September 30, 2001 and 2000 totaled $50,429 and $15,346.

As of September 30, 2001, the future minimum lease commitments under the leases
were as follows:

<Table>
<Caption>
        YEAR                      AMOUNT
        ----                    ----------
<S>                             <C>
        2001                    $   18,680
        2002                        71,886
        2003                        74,739
        2004                        77,583
        2005                        59,787
                                ----------
                                $  302,675
                                ==========
</Table>


ACQUISITION OF ZENEX LONG DISTANCE, INC

Prestige Investments, Inc., a wholly owned subsidiary, of the Company acquired
Zenex Long Distance, Inc. in accordance with a letter of intent dated January
27, 1999 and a subsequent Stock Purchase Agreement (" The Agreement") dated
February 19, 1999. The business combination was accounted for as a purchase. In
accordance with the terms of the Agreement, the initial purchase price was
$6,353 for 100% of the 635,295 outstanding common shares. The Agreement includes
a provision whereby the sellers may earn additional amounts if the cumulative
collected gross sales revenue reach certain levels, (the "Earn Out Rights"), as
follows:

When collected gross sales revenue reach Ten Million ($10,000,000), the sellers
will be paid an additional Fifty Cents ($0.50) per share totaling $317,647. When
collected gross sales revenue reach Twenty Million ($20,000,000), the sellers
will be paid and additional One Dollar ($1.00) per share totaling $635,295. When
collected gross sales revenue reach thirty-six Million ($36,000,000), the
sellers will be paid an additional One-Dollar ($1.00) per share totaling
$635,590. In no event will the Purchase Price exceed the amount of Two Dollars
and fifty-one Cents per share totaling $1,594,590.

Collected gross sales revenues collected through September 30, 2001 are
approximately $10,200,000. Management of Prestige has calculated the first
payment of this buyout which is due December 30, 2001 to be approximately
$237,000 and is currently attempting to arrange financing for the payment or
extend the due date.



                                      F-14
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001

NOTE 8 - EARNINGS PER SHARE

<Table>
<Caption>
                                                          THREE MONTHS ENDED           NINE MONTHS ENDED
                                                             SEPTEMBER 30,                SEPTEMBER 30,
                                                         2001            2000          2001           2000
                                                     ------------   ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>            <C>
Primary Earnings Per Share:(in thousands)
  Common shares outstanding                                27,508         35,886         27,508         35,886
                                                     ============   ============   ============   ============
  Weighted average shares outstanding                      27,508         35,886         32,344         30,957
                                                     ============   ============   ============   ============
  Earnings per share                                          nil            nil            nil            nil
                                                     ============   ============   ============   ============
Fully Diluted Earnings Per Share:
  Common shares outstanding                                27,508         35,886         27,508         35,886
                                                     ============   ============   ============   ============
  Weighted average shares outstanding                      27,508         35,886         32,344         31,596
                                                     ============   ============   ============   ============
  Earnings per share                                          nil            nil            nil            nil
                                                     ------------   ------------   ------------   ------------
</Table>


NOTE 9 - STOCK OPTIONS

         In April 1999 a five year option was granted to Federal Bank Centre to
purchase 500,000 shares of the Company's common for $0.15 per share in
accordance with the terms of a loan agreement.


NOTE 10 - DISCONTINUED OPERATIONS

         In February 2000 the Company announced it had terminated its Master
Equipment Sales Agreement (the MESA) with Eagle Capital International Ltd., Inc.
and sold the equipment it was financing under that agreement. The MESA called
for the Company to provide fifteen pieces of equipment over the next three
years. Under the terms of the termination agreement and the sale of the
equipment the company is to receive a total of $1,625,000. For the nine months
ended September 30, 2000 the company recorded a gain net of taxes under
discontinued operations of $438,479.

         In its December 31, 2000 financial statements the Company disclosed
that it had discontinued operations of E.P. Distributing Company (EP). The
Division, based in Salt Lake City, Utah, sells nutritional products and brokers
medical supplies. The Company recorded a loss after taxes of $139,030 as a
result of discontinuing this operation which was recorded at December 31, 2000
under discontinued operations. In May of 2001 the Company reached an agreement
with the former owners of E.P. Distributing to sell them the remaining assets of
that division for the one million shares of stock it originally gave for the
purchase of E.P. valued at $40,000 and a note discounted to $91,500. The gain of
$79,500 after taxes is included under sale of discontinued operations in the
current years financial statements.



                                      F-15
<PAGE>



                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001

         On April 12, 2001, the Company entered into an Exchange of Stock
Agreement with Ricky Naylor a significant shareholder of the Company, whereby
the Company exchanged all of the stock of its wholly owned subsidiary
Churchlink.com, Inc. (Churchlink) for 7,400,000 shares of the Company's common
stock held by Mr. Naylor. The 7,400,000 shares of stock returned to the Company
were valued at the quoted market price of $0.05 per share ($370,000) will now be
treated as treasury stock and reduces the outstanding common shares of the
Company by approximately 20%. The gain net of taxes of $134,719 from this
transaction is recorded under discontinued operations in the current year
financial statements.

         As a result of the disposition of these business segments, Lone Wolf
has restated its prior year financial statements to present operating results of
the Company on a comparable basis. Results of these operations for the three and
nine month periods ended September 30, 2001 and 2000 are as follows:


<Table>
<Caption>
                                                             THREE MONTHS ENDED               NINE MONTHS ENDED
                                                                 SEPTEMBER 30,                   SEPTEMBER 30,
                                                              2001           2000            2001             2000
                                                          ------------   ------------    ------------    ------------
<S>                                                       <C>            <C>             <C>             <C>
DISCONTINUED OPERATIONS
  Sales                                                             --         74,004              --         148,010
  Costs and expenses                                                --       (123,434)             --        (194,338)
  Research and development                                          --       (102,812)        (79,902)       (153,580)
  Income tax benefit (expense)                                      --         61,000          32,000          80,000
                                                          ------------   ------------    ------------    ------------
  Profit (loss) from discontinued business
    operations net of income taxes                        $         --        (91,242)        (47,902)       (119,908)
                                                          ------------   ------------    ------------    ------------
</Table>



         The net assets of Churchlink included in the accompany audited
consolidated balance sheet as of December 31, 2000 consist of the following:


<Table>
<S>                                             <C>
Property, plant and equipment, net              $    105,178
Accounts payable                                     (55,807)
Other Assets                                          28,000
                                                ------------
                                                $     77,371
                                                ============
</Table>




                                      F-16