<PAGE>   1



                       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 June 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
                          Oklahoma 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 August 5, 2001 there were
27,508,290 shares of the Company's common stock issued and outstanding.

Documents Incorporated by Reference:  None


<PAGE>   2


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 six months ended June 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 JUNE 30,
                                                 -------------------------------------------------------------
                                                             2001                             2000
                                                 ----------------------------     ----------------------------
                                                    AMOUNT         PERCENT           AMOUNT          PERCENT
                                                 ------------    ------------     ------------    ------------
<S>                                              <C>             <C>              <C>             <C>

Revenues                                         $  1,171,002           100.0%    $  2,385,022           100.0%
Cost of Revenues                                      707,236            60.4%       1,805,779            75.7%
                                                 ------------    ------------     ------------    ------------
Gross Profit                                          463,766            39.6%         579,243            24.3%
                                                 ------------    ------------     ------------    ------------

Operating Expenses                                    415,103            35.4%         391,970            16.4%
   Selling, general and administrative                 74,135             6.3%          60,640             2.5%
                                                 ------------    ------------     ------------    ------------
   Depreciation and amortization                      489,238            41.8%         452,610            19.0%
                                                 ------------    ------------     ------------    ------------
Total operating expenses                              (25,472)           -2.2%         126,633             5.3%
                                                 ------------    ------------     ------------    ------------

Other income (expense)
   Interest (net)                                     (21,596)           -1.8%          11,596             0.5%
   Other                                                   --              --         (283,349)          -11.9%
                                                 ------------    ------------     ------------    ------------
                                                      (21,596)           -1.8%        (271,753)          -11.4%
                                                 ------------    ------------     ------------    ------------

Income from continuing operations
   before taxes                                       (47,068)           -4.0%        (145,120)           -6.1%
Income tax benefit                                     20,000             1.7%          58,000             2.4%
                                                 ------------    ------------     ------------    ------------
Income from continuing operations                     (27,068)           -2.3%         (87,120)           -3.7%
Discontinued operations
   Income from operations of discontinued
     operation net of taxes                                --              --          (34,107)           -1.4%
   Gain on sale of discontinued
     operation net of taxes                           214,219            18.3%              --              --
                                                 ------------    ------------     ------------    ------------
Net income (loss)                                $    187,151            16.0%    $   (121,227)           -5.1%
                                                 ------------    ------------     ------------    ------------
</Table>



                                       2
<PAGE>   3


<Table>
<Caption>
                                                                 FOR THE SIX MONTHS ENDED JUNE 30,
                                                 -------------------------------------------------------------
                                                             2001                             2000
                                                 ----------------------------     ----------------------------
                                                    AMOUNT         PERCENT           AMOUNT          PERCENT
                                                 ------------    ------------     ------------    ------------
<S>                                              <C>             <C>              <C>             <C>

Revenues                                         $  2,174,807           100.0%    $  3,663,577           100.0%
Cost of Revenues                                    1,318,152            60.6%       2,898,746            79.1%
                                                 ------------    ------------     ------------    ------------
Gross Profit                                          856,655            39.4%         764,831            20.9%
                                                 ------------    ------------     ------------    ------------

Operating Expenses                                    717,601            33.0%         733,131            20.0%
   Selling, general and administrative                150,120             6.9%         124,795             3.4%
                                                 ------------    ------------     ------------    ------------
   Depreciation and amortization                      867,721            39.9%         857,926            23.4%
                                                 ------------    ------------     ------------    ------------
Total operating expenses                              (11,066)           -0.5%         (93,095)           -2.5%
                                                 ------------    ------------     ------------    ------------

Other income (expense)
   Interest (net)                                     (40,640)           -1.9%           3,144             0.1%
   Research and development                                --              --               --              --
   Other                                                   --              --         (266,849)           -7.3%
                                                 ------------    ------------     ------------    ------------
                                                      (40,640)           -1.9%        (263,705)           -7.2%
                                                 ------------    ------------     ------------    ------------

Income from continuing operations
   before taxes                                       (51,706)           -2.4%        (356,800)           -9.7%
Income tax benefit                                     21,000             1.0%         144,000             3.9%
                                                 ------------    ------------     ------------    ------------
Income from continuing operations                     (30,706)           -1.4%        (212,800)           -5.8%
Discontinued operations
   Income from operations of discontinued
     operation net of taxes                           (47,902)           -2.2%         (28,666)           -0.8%
   Gain on sale of discontinued
     operation net of taxes                           214,219             9.9%         438,479            12.0%
                                                 ------------    ------------     ------------    ------------
Net income (loss)                                $    135,611             6.2%    $    197,013             5.4%
                                                 ------------    ------------     ------------    ------------
</Table>


         All 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 June 30, 2001 and their results are included
under discontinued operations. The revenues for the three and six months ended
June 30, 2001 decreased by $1,214,000 and $1,489,000 or 50.9% and 40.6%
respectively from the same periods in 2000. The total volume of minutes sold in
the three and six months ended June 30, 2001 decreased 60% and 36.2% from the
same periods in 2000. These decreases resulted from a change in the customer
base in 2001 as compared to 2000. The Company has focused on business with
higher gross profits and lower volumes which when fully implemented will result
in much higher profit potential without costly capital improvements. The revenue
per minute of calls sold increased from 3.5 cents in the three months ended June
30, 2000 to 4.3 cents per minute sold in the three months ended June 30, 2001
while the cost per minute decreased from 2.7 cents per minute in 2000 to 2.6
cents per minute for the same three month period in 2001 creating a gross profit
increase of .9 cents per minute or 112.5% over the same period in 2000. Most of
the mix in customer base occurred during the three month period ended June 30,
2001 so the increases in gross profit per minute sold was only .4 cents per
minute for the six months ended June 30, 2001 over the same six month period in
2000. As a result of this change the gross profit for three months ended June
30, 2001 were only down 19.9% from the same period in 2000 even though sales
were down by 50.9% for the same period in 2000. For the six months ended June
30, 2001 gross profit was up 12% over the same period in 2001 even though sales
were down 40.6%.

         Selling, general and administrative expenses increased significantly as
a percent of revenue in both the three and six month periods ended June 30, 2001
over the same periods in 2000 mostly because revenue was so much lower in 2001
as compared to 2000. As a dollar amount, these expenditures were relatively even
with the same periods in both years.



                                       3
<PAGE>   4


         Depreciation and amortization increased $13,495 to $74,135 and $25,325
to $150,120 in the three and six month periods ended June 30, 2001 respectively
from the same periods in 2000 and was the result of additional capital
expenditures made in 2000 to increase the Company's switch capacity.

         The increase in interest expense in 2001 over 2000 was due to
additional debt incurred by the Company in 2000 to finance capital expenditures
over the past year.

         Other expense of $283,349 and $266,849 in the three and six month
periods ended June 30, 2000, which does not occur again in 2001, was 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, which was closed down at the end of 2000, Churchlink.com
which was sold at the end of the first quarter in 2001, and the Company's
equipment leasing activities of which were sold off 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
$45,776 in the six months ended June 30, 2001 as compared to cash provided from
operations of $611,503 in the same period in 2000. The main reason for the
difference in cash provided from operations in 2001 compared to cash provided
from operations in 2000 was due to a build up of accounts payable and accrued
expenses at June 30, 2000 which resulted from a delay in the billing from
suppliers during that period.

         At June 30, 2001, the Company had working capital of $164,687 compared
to a deficit in working capital at December 31, 2000 of $(51,361) or an increase
in working capital of $216,048 in the six month period ended June 30, 2001. The
increase in working capital is because two new notes were entered into in the
six months ended June 30, 2001 totaling $438,389 which resulted in additional
long-term debt of $280,924 after debt service payments and a provision for
current portion on the new loans. The Company also had a depreciation and
amortization deduction of $150,120 in the six month period ended June 30, 2001
while outlays for new equipment totaled only $34,006 which also contributed to
the increase in working capital.

         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 June 30, 2001



                                       4
<PAGE>   5


the outstanding principal on this note was $170,001. 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 1.5%
over the Wall Street Prime (currently 6.75%) and is payable monthly. All assets
of the Company and the guarantee of certain officers of the Company secure the
loan.

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 June 30, 2001 are approximately
$9,125,000. Management expects the $ 10,000,000 gross sales revenue to be
achieved in the year 2001.

         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

Eagle Capital International, LTD filed a suit against the Company in the United
States District Court of Utah-Central Division (Case number: 2:00CV0988k) in
December 2000. Eagle is claiming that the contract with the Company to provide
equipment under a Master Sales Agreement was fraudulently induced and therefore
the $850,000 note they owe the Company should not be paid. The case was
dismissed without prejudice by the Utah Court on May 18, 2001.


                                       5
<PAGE>   6


Eagle has filed the same suit in The United States District Court Northern
District of Oklahoma as a counterclaim to the Company's suit (Case number
00CIV1040K (M)) filed against Eagle for the collection of that note. The Company
believes the Eagle claims are without merit and will continue to use all
available resources to defend the Eagle claim and to collect the money due.



Item 2. Change in Securities

312,500 shares of common stock were issued to Robert Dean Guise on May 16, 2001
as settlement for services rendered in 2000.

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

     On April 25, 2001 the Company filed an 8-K describing the sale of its
wholly owned subsidiary Churchlink.com., Inc.

     On June 26, 2001 the Company filed an 8-K/A with pro forma financial
statements reflecting the transaction reported on the 8-K filed on April 25,
2001.






                                       6
<PAGE>   7



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:  August 8, 2001



                                       7
<PAGE>   8


                            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 June 30, 2001, and the related consolidated statements of income
for the three and six months ended June 30, 2001 and 2000 and the consolidated
statements of cash flows for the six months ended June 30, 2001 and 2000 in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of Lone Wolf Energy, Inc.

A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit 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 in order 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
August 7, 2001



                                       F-1
<PAGE>   9


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

<Table>
<Caption>
                                                    2001            2000
                                                ------------    ------------
<S>                                             <C>             <C>
                    ASSETS

CURRENT ASSETS
    Cash                                        $     30,573    $         --
    Accounts receivable                              620,037         599,903
    Current portion of notes receivable              551,657         551,657
    Deposits                                          12,284           4,784
    Inventory                                          7,000           7,000
                                                ------------    ------------
                                                   1,221,551       1,163,344
                                                ------------    ------------

PROPERTY AND EQUIPMENT                             1,737,100       1,817,722
   Less accumulated depreciation                    (714,283)       (595,185)
                                                ------------    ------------
                                                   1,022,817       1,222,537
                                                ------------    ------------

OTHER
    Goodwill (net)                                   414,198         461,633
    Organization costs (net)                           5,015          14,890
    Investments                                       16,375           4,500
    Note receivable                                  120,000              --
    Deferred tax asset                               124,000         213,000
                                                ------------    ------------
                                                     679,588         694,023
                                                ------------    ------------
                                                $  2,923,956    $  3,079,904
                                                ============    ============
</Table>


See Accompanying Notes to Financial Statements

See Accountants Review Report


                                      F-2
<PAGE>   10


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


<Table>
<Caption>
                                                                       2001            2000
                                                                   ------------    ------------
<S>                                                                <C>             <C>
      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Current portion of long-term debt                              $    334,875    $    476,996
    Accounts payable                                                    610,711         625,325
    Accrued expenses                                                     66,459          92,734
    Prepayments and customer deposits                                    44,819          22,650
                                                                   ------------    ------------
                                                                   $  1,056,864    $  1,217,705
                                                                   ------------    ------------

OTHER LIABILITIES
   Long-term debt -net of current portion                               545,003         264,079
   Other liabilities                                                    225,220         242,862
                                                                   ------------    ------------
                                                                        770,223         506,941
                                                                   ------------    ------------

TOTAL LIABILITIES                                                     1,827,087       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 June 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 June 30, 2001 and              (428,000)         (6,000)
       600,000 shares at December 31, 2000 at cost)
    Unrealized Gain (Loss) on Available for Sale Securities             (15,969)        (27,844)
    Retained earnings (deficit)                                        (266,625)       (402,236)
                                                                   ------------    ------------
                                                                      1,096,869       1,355,258
                                                                   ------------    ------------
                                                                   $  2,923,956    $  3,079,904
                                                                   ============    ============
</Table>



See Accompanying Notes to Financial Statements

See Accountants Review Report


                                      F-3
<PAGE>   11

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


<Table>
<Caption>
                                                    THREE MONTHS ENDED              SIX MONTHS ENDED
                                                         JUNE 30,                        JUNE 30,
                                                   2001            2000             2001            2000
                                               ------------    ------------    ------------    ------------
<S>                                            <C>             <C>             <C>             <C>

REVENUES                                       $  1,171,002    $  2,385,022    $  2,174,807    $  3,663,577


OPERATING EXPENSES
    Cost of sales                                   707,236       1,805,779       1,318,152       2,898,746
    Selling, general and administrative             415,103         391,970         717,601         733,131
    Depreciation and amortization                    74,135          60,640         150,120         124,795
                                               ------------    ------------    ------------    ------------
                                                  1,196,474       2,258,389       2,185,873       3,756,672
                                               ------------    ------------    ------------    ------------

OPERATING INCOME (LOSS)                             (25,472)        126,633         (11,066)        (93,095)
                                               ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSE)
   Interest income (expense)                        (21,596)         11,596         (40,640)          3,144
   Merger related costs                                  --        (283,988)             --        (283,988)
   Other income                                          --             639              --          17,139
                                               ------------    ------------    ------------    ------------
                                                    (21,596)       (271,753)         40,640        (263,705)
                                               ------------    ------------    ------------    ------------

NET INCOME (LOSS) FROM OPERATIONS
   BEFORE INCOME TAXES                              (47,068)       (145,120)        (51,706)       (356,800)
   Income Tax (Expense) Benefit                      20,000          58,000          21,000         144,000
                                               ------------    ------------    ------------    ------------

NET INCOME (LOSS) BEFORE
   DISCONTINUED OPERATIONS                     $    (27,068)   $    (87,120)   $    (30,706)   $   (212,800)
                                               ------------    ------------    ------------    ------------
</Table>


See Accompanying Notes to Financial Statements

See Accounts Review Report



                                      F-4
<PAGE>   12


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


<Table>
<Caption>
                                                        THREE MONTHS ENDED               SIX MONTHS ENDED
                                                              JUNE 30,                       JUNE 30,
                                                       2001            2000             2001            2000
                                                   ------------    ------------    ------------    ------------
<S>                                                <C>             <C>             <C>             <C>

NET INCOME (LOSS) BEFORE DISCONTINUED
    OPERATIONS AND SALE OF DISCONTINUED
    BUSINESS                                       $    (27,068)   $    (87,120)   $    (30,706)   $   (212,800)
                                                   ------------    ------------    ------------    ------------

DISCONTINUED OPERATIONS

    Profit (loss) from discontinued business
       operations net of income taxes                        --         (34,107)        (47,902)        (28,666)

    Gain on sale of discontinued operation
       net of income taxes                              214,219              --         214,219         438,479
                                                   ------------    ------------    ------------    ------------

NET INCOME (LOSS)                                  $    187,151        (121,227)   $    135,611    $    197,013

OTHER COMPREHENSIVE INCOME:
   Unrealized holding gains                              11,875              --          11,875              --
                                                   ------------    ------------    ------------    ------------

COMPREHENSIVE INCOME (LOSS)                        $    199,026    $   (121,227)   $    147,486    $    197,013
                                                   ============    ============    ============    ============

   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 Accounts Review Report



                                      F-5
<PAGE>   13


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


<Table>
<Caption>
                                                                 JUNE 30,        JUNE 30,
                                                                   2001            2000
                                                               ------------    ------------
<S>                                                            <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income (Loss)                                           $    147,486    $         86
   Reconciliation of net income to net cash provided by
       operating activities
   Depreciation and amortization                                    150,120         123,711
   Issuance of common stock for services                              4,125              --
   Common received for sale of property and equipment              (410,000)             --
   Increase in carrying value of investments                        (11,875)             --
   Gain (loss) on sale of property and equipment                         --          (5,000)
   Book value of assets disposed                                    140,916
   (Increase) decrease from changes in:
       Deferred Taxes                                                89,000              --
       Accounts receivable                                          (20,134)       (690,896)
       Deposits                                                      (7,500)
   Increase (Decrease) from changes in:
       Accounts payable                                             (14,614)        751,317
       Accrued liabilities                                          (26,275)        487,935
       Prepayments and customer deposits                             22,169         (55,650)
       Other liabilities                                            (17,642)             --
                                                               ------------    ------------
                                                                     45,776         611,503
                                                               ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Cash received for property and equipment sold                         --           5,000
   Purchase of property and equipment                               (34,006)       (257,425)
                                                               ------------    ------------
                                                                    (34,006)       (252,425)
                                                               ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Change in notes receivable                                      (120,000)             --
   Change in notes payable                                          138,803         305,435
                                                               ------------    ------------
                                                                     18,803         305,435
                                                               ------------    ------------
NET INCREASE (DECREASE) IN CASH                                      30,573         664,513
CASH AT BEGINNING OF PERIOD                                              --          87,475
                                                               ------------    ------------
CASH AT END OF PERIOD                                          $     30,573    $    751,988
                                                               ============    ============
</Table>


See Accompanying Notes to Financial Statements

See Accounts Review Report



                                      F-6
<PAGE>   14

                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 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
recorded notes receivable for $1,625,000 of which $775,000 had been collected as
of June 30, 2001. The Company has filed court claim to collect the balance due
on that contract. Eagle has file a counterclaim attempting to negate the
original MESA. The company is vigorously defending the counterclaim and believes
it will be successful in its defense. The Company has terminated the business of
equipment leasing.

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:

<Table>
<S>                                          <C>
    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
</Table>

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%.


                                       F-7
<PAGE>   15


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


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 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 June 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 six months
ended June 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 six months ended June 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>   16


                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 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 periods ended June 30, 2001 and
2000 one vendor carried approximately 70% and 81% 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 68% and 82% of the Zenex revenue for the six months ended June 30,
2001 and 2000 respectively. This customer represents 46% of the accounts
receivable at June 30, 2001. The loss of this customer would have a materially
adverse impact on the company's revenues and operations.

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.


                                       F-9
<PAGE>   17
                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2001



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 June 30, 2001 and December 31, 2001, the Company had                  JUNE 30,      DECEMBER 31,
   notes receivable as follows:                                            2000            2001
                                                                        ---------        ---------
<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                   (a)   $ 551,657        $ 551,657

      Due from an unrelated individual, payable in monthly
      installments 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               --
                                                                        ---------        ---------
                                                                        $ 671,657        $ 551,667
                                                                        =========        =========
</Table>

(a) The note due August 1, 2000 is for a total of $850,000. However, the Company
has certain payment obligations upon the collection of the note. The note is
included in the financial statements at the net realizable value to the Company
after the payment of those obligations. The note is in default as of the date of
these financial statements and the Company has filed suit for collection to
which the maker has filed a counterclaim to void the contract from which the
note originated. The Company believes it will be successful in collecting the
full amount due.


                                      F-10
<PAGE>   18


                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 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 $120,810 and $104,256 for the six
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                             $  1,491,901           5-10
Office software and equipment              193,007            5-7
Autos                                       32,525              5
Leasehold improvements                      19,667              5
                                      ------------
    Total                                1,733,353
Less accumulated depreciation              714,283
                                      ------------
    Net property and equipment        $  1,022,817
                                      ============
</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 June 30, 2001 and
December 31, 2000 totaled $168,842 and 147,863, and amortization expense of
$19,435 and $9,062 was charged to operations for the six months ended June 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 June 30, 2001
and December 31, 2000 totaled $100,480 and $90,605. Amortization expense of
$9,875 and $6,974 was charged to operations the six months ended June 30, 2001
and 2000 respectively.



                                      F-11
<PAGE>   19


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


NOTE 5 - LONG-TERM DEBT


<Table>
<Caption>
The company has notes payable at June 30, 2001 and December 31, 2000 as         JUNE 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.                                    $ 191,558      $ 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.                                         79,558         86,741

   Payable to an 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 a $2,000 per month
   penalty if not refinanced by September 30, 2001.                              280,229             --

   Federal Bank Centre, Tulsa, Oklahoma, 9.75% note
   secured by auto, due in monthly installments of
   $688 including interest, due May 30, 2005.                                     26,795         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
   9%), secured by all assets of Wolf Energy, Inc.
   and the personal guarantee of certain directors,
   due November 2001.                                                            170,001        407,927

   Payable to a corporation, 10% unsecured note, due
   in monthly installments of $4,465 including
   interest, due April, 2004.                                                    131,737             --
                                                                               ---------      ---------

                    Total                                                        879,878        741,075

                    Less Current Portion                                         334,875        476,996
                                                                               ---------      ---------

                    Long-Term Debt                                               545,003        264,079
                                                                               =========      =========
</Table>

Estimated principal payments on the notes for each of the five years subsequent
to March 31, 2001 are as follows:

                    2001                $252,698
                    2002                 172,538
                    2003                 189,976
                    2004                 172,393
                    2005                  85,556
                    2006                  12,453



                                      F-12
<PAGE>   20


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


NOTE 6 - INCOME TAXES

At June 30, 2001, the Company had net operating losses of approximately
$1,805,000 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>
                                                    June 30,      December 31,
                                                      2001            2000
                                                  ------------    ------------
<S>                                               <C>             <C>

Deferred tax liability on depreciation            $   (129,000)   $   (129,000)
Deferred tax assets for loss carryforewards            713,000         802,000
                                                  ------------    ------------
     Deferred tax asset                                584,000         673,000
Less valuation allowance                              (460,000)       (460,000)
                                                  ------------    ------------
     Net deferred tax asset                       $    124,000    $    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 .00395c. to .00310c. per record.


                                      F-13
<PAGE>   21


                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 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 six months ended June,
2001 and 2000 totaled $34,164 and $9,271.

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

<Table>
<Caption>
            YEAR          AMOUNT
            ----         -------
<S>                      <C>
            2001         $ 34,945
            2002           71,886
            2003           74,739
            2004           77,583
            2005           59,787
                         --------

                         $318,940
                         ========
</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 through March 31, 2001 are approximately
$9,125,000. Management expects the $ 10,000,000 gross sales revenue to be
achieved in the year 2001.



                                      F-14
<PAGE>   22


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


NOTE 8 - EARNINGS PER SHARE

<Table>
<Caption>
                                                    THREE MONTHS ENDED              SIX MONTHS ENDED
                                                          JUNE 30,                      JUNE 30,
                                                    2001           2000           2001           2000
                                                ------------   ------------   ------------   ------------
<S>                                             <C>            <C>            <C>            <C>

Primary Earnings Per Share: (in thousands)
    Common shares outstanding                         27,508         34,570         27,508         34,570
                                                ============   ============   ============   ============
    Weighted average shares outstanding               28,185         32,220         33,907         30,033
                                                ============   ============   ============   ============
    Earnings per share                                   nil            nil            nil            nil
                                                ============   ============   ============   ============

Fully Diluted Earnings Per Share:
    Common shares outstanding                         27,508         34,570         27,508         34,570
                                                ============   ============   ============   ============
    Weighted average shares outstanding               28,185         33,039         33,907         30,839
                                                ============   ============   ============   ============
    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 six months
ended June 30, 2001 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>   23


                             LONE WOLF ENERGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 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
six month periods ended June 30, 2001 and 2000 are as follows:

<Table>
<Caption>
                                                    THREE MONTHS ENDED              SIX MONTHS ENDED
                                                          JUNE 30,                      JUNE 30,
                                                    2001           2000           2001           2000
                                                ------------   ------------   ------------   ------------
<S>                                             <C>            <C>            <C>            <C>

DISCONTINUED OPERATIONS
    Sales                                                 --         33,918             --         74,006
    Costs and expenses                                    --        (40,257)            --        (70,904)
    Research and development                              --        (50,768)       (79,902)       (50,768)
    Income tax benefit (expense)                          --         23,000         32,000         19,000
                                                ------------   ------------   ------------   ------------

    Profit (loss) from discontinued business
       operations net of income taxes           $         --        (34,107)       (47,902)        28,666
                                                ------------   ------------   ------------   ------------
</Table>


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


    Property, plant and equipment, net       $ 105,178
    Accounts payable                           (55,807)
    Other Assets                                28,000
                                             ---------
                                             $  77,371
                                             =========




                                      F-16