<PAGE>

                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, DC  20549
                                   UNITED STATES

                                    FORM 10-KSB

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the fiscal year ended December 31, 1997

                                         OR

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

     For the transition period from _________________ to ______________________

     Commission File Number:  0-20995


                              VISUAL EDGE SYSTEMS INC.
                (Exact name of Registrant as specified in its charter)

          DELAWARE                                     13-3778895
(State or other jurisdiction of              (IRS Employer Identification No.)
  incorporation or organization)

     2424 NORTH FEDERAL HIGHWAY, SUITE 100, BOCA RATON, FLORIDA       33431
               (Address of principal executive offices)             (Zip Code)

                                   (561) 750-7559
                (Registrant's telephone number, including area code)

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

     Securities registered pursuant to Section 12 (g) of the Exchange Act:  
     
                       COMMON STOCK, PAR VALUE $.01 PER SHARE
          REDEEMABLE WARRANTS, EACH TO PURCHASE ONE SHARE OF COMMON STOCK
                                  (Title of Class)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                              Yes   X   No
                                  -----    -----


<PAGE>

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

The Registrant's revenue for its most recent fiscal year:  $1,381,111 The 
aggregate market value of the Registrant's Common Stock (the "Common Stock"), 
$.01 par value, held by non-affiliates as of March 25, 1998, based on the 
last sale price of the Common Stock as reported on the Nasdaq SmallCap 
Market, was:  $9,272,786.

As of March 25, 1998, there were 5,316,696 shares of the Registrant's Common
Stock and 2,230,000 redeemable warrants outstanding of which 1,495,000 are
publicly traded.

                         DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Proxy Statement for the 1998 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission not later than 120 days
after the end of the Registrant's fiscal year ended December 31, 1997 are
incorporated by reference into Part III of this Form 10-KSB.


                                          2

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                               VISUAL EDGE SYSTEMS INC.
                                          
                                 TABLE OF CONTENTS


                                                                          PAGE 

                                        PART I

Item 1.   Description of Business                                           4

ITEM 2.   Description of Property                                          17

ITEM 3.   Legal Proceedings                                                17

ITEM 4.   Submission of Matters to a Vote of Securityholders               17

                                       PART II

ITEM 5.   Market for Common Equity and Related Stockholder Matters         18

ITEM 6.   Management's Discussion and Analysis or Plan of Operation        19

ITEM 7.   Financial Statements                                             21

ITEM 8.   Changes in and Disagreements with Accountants on 
          Accounting and Financial Disclosure                              43

                                       PART III

ITEM 9.   Directors, Executive Officers, Promoters and Control 
          Persons; Compliance with Section 16(a) of the Exchange Act       44

ITEM 10.  Executive Compensation                                           44

ITEM 11.  Security Ownership of Certain Beneficial Owners and 
          Management                                                       44

ITEM 12.  Certain Relationships and Related Transactions                   44

ITEM 13.  Exhibits, Financial Statements Schedules, and Reports on 
          Form 8-K                                                         45


                                          3

<PAGE>

                                        PART I

ITEM 1.  DESCRIPTION OF BUSINESS  

     GENERAL

          Visual Edge Systems Inc. (the "Company") was organized to develop and
          market personalized videotape golf lessons featuring ONE-ON-ONE
          instruction by leading professional golfer Greg Norman and is in the
          early stages of being an operational company. The Company has
          developed video production technology which digitally combines actual
          video footage of a golfer's swing with a synchronized "split-screen"
          comparison to Greg Norman's golf swing to produce a 45-minute
          ONE-ON-ONE videotape golf lesson. The Company's ONE-ON-ONE
          personalized videotape golf lesson analyzes a golfer's swing by
          comparing it to Greg Norman's swing at several different club
          positions from two camera angles using Greg Norman's pre-recorded
          instructional commentary and analysis and computer graphics to
          highlight important golf fundamentals intended to improve a golfer's
          performance.  The Company sells its products under the name
          "ONE-ON-ONE WITH GREG NORMAN." 

     INDUSTRY OVERVIEW

          Golf has become an increasingly popular form of sport and
          entertainment in recent years.  According to the National Golf
          Foundation, consumer spending on golf-related activities, including
          green fees, golf equipment and related merchandise, increased from
          approximately $12.7 billion in 1989 to approximately $15.1 billion in
          1994. The number of golfers and golf courses and driving ranges has
          also increased and golf industry participants have sought to increase
          public awareness and provide greater access to golfers of all ages and
          income levels. 

     PRODUCTS

          The Company has developed six full swing personalized ONE-ON-ONE golf
          lessons with Greg Norman for both right- and left-handed golfers.  The
          Company's personalized products include a lesson stressing basic golf
          fundamentals for either males or females, a lesson geared towards
          senior golfers, an advanced lesson for lower-handicap players and a
          "follow-up" lesson which measures a golfer's improvement from prior
          lessons.  The Company also plans to develop additional videotape golf
          lessons, such as short game, sand play and putting lessons.

     RELATIONSHIP WITH GREG NORMAN

          Pursuant to a license agreement, as amended, by and among the Company,
          Greg Norman and Great White Shark Enterprises, Inc. (the "Greg Norman
          License"), Greg Norman agreed to grant to the Company a worldwide
          license to use his name, likeness and endorsement and certain
          trademarks owned by him in connection with the production and
          promotion of the Company's products. Pursuant to the Greg Norman
          License, the Company will make minimum guaranteed royalty payments to
          Mr. Norman from January 1998 through April 2000, which will consist of
          $2.38 million in cash and 102,000 shares of Common Stock.  The Company
          has paid Mr. Norman $600,000 in cash through December 31, 1997.  After
          the initial term, which ends on June 30, 2000, the Company has the
          option to renew the Greg Norman License for two additional five-year
          periods.  The Company's business and prospects are dependent upon the
          Company's continued association with Greg Norman.  


                                          4

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          The Greg Norman License prohibits Greg Norman from granting similar
          rights to any person with respect to any concept which is the same as
          or confusingly similar to the Company's concept or products.
          "Products" means a videotape or CD-ROM or printed versions or other
          similar medium that is given or sold to a customer upon use of the
          concept in which Greg Norman's golf swing or any other golf
          professional's golf swing is compared to the user's golf swing using
          audio and video analysis of both swings. 

          The Company may assign the Greg Norman License to an affiliated 
          entity and enter into distribution agreements with third parties 
          with respect to product sales.

     MARKETING AND DISTRIBUTION

          The Company's primary focus is concentrated on marketing and sales 
          efforts. The Company's marketing strategy is to sell ONE-ON-ONE 
          videotapes on a prearranged basis to various organizers of amateur, 
          corporate, charity and member golf tournaments (who typically offer 
          gifts to tournament participants), golf professionals at private 
          and daily fee golf courses, driving ranges and indoor event 
          planners who organize trade shows, conventions, sales meetings, 
          retail store openings and promotions and automobile dealer showroom 
          promotions.  To implement its marketing and business strategy, the 
          Company has developed 15 mobile ONE-ON-ONE vans equipped with video 
          and personal computer equipment to market, promote and produce the 
          Company's products.  The Company has positioned its ONE-ON-ONE vans 
          in selected geographic areas that will service golf courses 
          throughout the United States, including Arizona, California (2), 
          Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, 
          Nevada, New Jersey, New York, Ohio, Pennsylvania and Texas. In 
          addition, to further implement its marketing and sales efforts, the 
          Company has over 25 full time commissioned ONE-ON-ONE sales 
          representatives and has enlisted independent sales representatives 
          who cater to the specialty advertising, premium and incentive 
          industries across the country to present the Company's products to 
          their clients who seek incentives and premiums.  These premium 
          sales representatives will be positioning the Company's products as 
          premiums or incentives similar to the Cadillac Agreement, which is 
          described below. 

          THE CADILLAC AGREEMENT

          The Company entered into an agreement with Cadillac Motor Car Division
          of General Motors ("Cadillac") on August 5, 1997 (the "Cadillac
          Agreement"). The Cadillac Agreement granted Cadillac the exclusive
          U.S. dealership showroom rights to the Company's ONE-ON-ONE WITH GREG
          NORMAN concept and allowed Cadillac to exclusively offer its customers
          a free video golf lesson personally analyzed by Greg Norman if they
          test drove a Cadillac.  Pursuant to the Cadillac Agreement the Company
          provides each participating Cadillac dealership with all marketing
          materials related to this promotion, including creative pieces for
          print and radio advertisements, banners, posters and direct mail
          invitations. 
          
          In December 1997, the Company and Cadillac amended the Cadillac
          Agreement (the "Amended Agreement"), and extended the dealership
          showroom rights granted to Cadillac, subject to the limitations on
          exclusivity set forth below.  The Amended Agreement also extended the
          rights to the Company's concept to other General Motors divisions.
          Provided that the Company has enough vans in operation to service all
          of the Cadillac or General Motors dealers on a nationwide basis, for
          the period from December 18, 1997 through December 31, 


                                          5

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          1998, Cadillac, combined with General Motors, has guaranteed to
          purchase a total of 1,500 "Event Days" from the Company or one "Event
          Day" for each Cadillac dealership where the Company has a van in the
          area to service the dealership, whichever is less.  Each "Event Day"
          is a day on which one of the Company's ONE-ON-ONE vans appears at a
          Cadillac or other General Motors dealership to provide up to 165
          instructional videotapes for the dealership's customers.  On or prior
          to August 31, 1998, the Company must notify Cadillac as to whether the
          guaranteed number of "Event Days" are scheduled to be conducted by
          December 31, 1998.  If 1,500 "Event Days" are not scheduled and
          conducted by December 31, 1998, then the Company is no longer
          obligated to provide its product exclusively to Cadillac, and may
          offer its product to auto dealerships other than Cadillac and General
          Motors dealerships.  In each of the periods from January 1, 1999
          through December 31, 1999 and January 1, 2000 through December 31,
          2000, the terms of the Amended Agreement remain the same, except that
          the number of "Event Days" guaranteed by Cadillac, combined with
          General Motors, increases to 2,500 in each of such periods. In the
          event that in any given year the number of actual "Event Days"
          conducted by the Company is less than the number of "Event Days"
          guaranteed by Cadillac, combined with General Motors, then the Company
          is no longer obligated to provide its product exclusively to Cadillac
          and General Motors; in such event Cadillac and General Motors,
          however, have no obligation to pay the Company for the difference
          between the guaranteed number of "Event Days" and the actual number of
          "Event Days" provided by the Company to Cadillac and General Motors
          dealerships. 

     FINANCING TRANSACTIONS

          MARCH BRIDGE FINANCING

          In March 1997, the Company consummated a bridge financing (the 
          "March Bridge Financing") pursuant to which it issued to 13 
          investors (including Status-One Investments Inc., a company 
          controlled by the family of the Chief Executive Officer of the 
          Company), a non-cash financing fee of (i) 100,000 shares of Common 
          Stock and (ii) 100,000 warrants to purchase 100,000 shares of 
          Common Stock at a price of $10.00 per share, subject to adjustment 
          in certain circumstances. As consideration for such securities, the 
          investors in the March Bridge Financing pledged an aggregate of 
          $3,500,000 in cash and other marketable securities as cash 
          collateral (the "Cash Collateral") to various banks, which in turn 
          issued stand-by letters of credit (the "Letters of Credit") to the 
          Company in the aggregate amount of up to $3,500,000. The Company 
          used the Letters of Credit to secure a $3,500,000 line of credit 
          (the "Line of Credit") from a bank.  In June 1997, the Company used 
          a portion of the proceeds from the issuance and sale of certain 
          securities, outlined hereafter in note 5(b) in the accompanying 
          financial statements, to repay the remaining outstanding balance 
          due and owing on the Line of Credit and returned the Letters of 
          Credit to the various banks, which in turn returned all of the Cash 
          Collateral to the March Bridge Financing investors.

          JUNE CONVERTIBLE FINANCING

          On June 13, 1997, the Company arranged a three-year $7.5 million debt
          and convertible equity facility (the "June Financing") with a group of
          investment funds (the "Funds").  The Company issued and sold to the
          Funds the following securities pursuant to the Securities Purchase
          Agreement, dated as of June 13, 1997 (the "Agreement"), among the
          Company and the Funds: (i) 8.25% unsecured convertible notes (the
          "Notes") in the aggregate principal amount of $7,500,000 with a
          maturity date of three years from the date of issuance, subject to the
          mandatory automatic exchange of $5 million of the Notes for Preferred
          Stock, par value $.01 


                                          6

<PAGE>

          per share, which Notes are convertible into shares of Common Stock
          (the "Note Conversion Shares") at any time and from time to time
          commencing January 1, 1998 at the option of the holder thereof subject
          to certain limitations on conversion set forth in the Agreement; (ii)
          93,677 shares of Common Stock  subject to adjustment (the "Grant
          Shares"); and (iii) five-year warrants (the "June Warrants") to
          purchase 100,000 shares of Common Stock (the "Warrant Shares") at an
          exercise price equal to $10.675. The June Warrants are redeemable
          commencing October 1, 1998 at a redemption price equal to $.10 per
          share, subject to adjustment based on a 20-day minimum closing bid
          price of the Common Stock. The net proceeds to the Company from the
          sale of the Notes, Grant Shares and June Warrants was $7,236,938.  In
          addition, the Company issued 14,052 shares (the "IPO Underwriters
          Shares") of Common Stock to the underwriter in the Company's initial
          public offering as a fee for services rendered in connection with the
          transactions contemplated by the Agreement. 

          Pursuant to the Agreement, the Company was required to issue 
          additional Grant Shares (the "Additional Grant Shares") to the 
          Funds in the event that the closing bid price of Common Stock for 
          each trading day during any consecutive 10 trading days from June 
          13, 1997 through December 31, 1997 did not equal at least $10.00 
          per share.  The Company issued 180,296 Additional Grant Shares 
          during the fourth quarter of 1997.

          Interest payments on the Notes are, at the option of the Company, 
          payable in cash or in shares of Common Stock.  During 1997 the 
          Company issued an aggregate of 65,671 shares (the "Interest 
          Shares") for payment of interest due. 

          On February 6, 1998 the Company entered into the First Amendment to 
          the Securities Purchase Agreement and Related Documents, dated as 
          of December 31, 1997 (the "First Amendment"), among the Company and 
          the Funds. Pursuant to the First Amendment, the Funds converted $6 
          million aggregate principal amount of the Notes into the Company's 
          Series A Convertible Preferred Stock (the "Preferred Stock"). In 
          addition, the "Maximum Conversion Price" (as defined in the First 
          Amendment) at which shares of Preferred Stock are convertible into 
          Common Stock (the "Stock Conversion Shares") is $6.00, subject to 
          adjustment in certain circumstances.

          The remaining $1.5 million of outstanding Notes held by the Funds have
          become secured debt pursuant to a Security Agreement, dated as of
          February 6, 1998 (the "Security Agreement"), between the Company and
          H.W. Partners, L.P., as agent for and representative of the Funds.
          With respect to such $1.5 million in outstanding Notes, the Funds have
          been granted a security interest in the collateral described in the
          Security Agreement, which includes all of the Company's unrestricted
          cash deposit accounts, accounts receivable, inventory and equipment
          and fixtures excluding the vans.

          The Company has issued to the Funds an aggregate of 200,000 warrants
          (the "New Warrants"), each to purchase one share of Common Stock
          (collectively, the "New Warrant Shares") at an exercise price equal to
          $4.00 per share.  The New Warrants are exercisable through December
          2002 and are redeemable at the option of the Company, commencing
          January 1, 2000, based on a 20-day minimum closing bid price of Common
          Stock, at a redemption price equal to $.10 per share.  The New
          Warrants also contain a "cashless exercise" feature. 

          On March 16, 1998, the Company sold an additional 1,550 shares of 
          Preferred Stock to the Funds in exchange for non-marketable securities
          with an aggregate value of $1,550,000 (See note 5(b)). In connection 
          therewith, the Funds as the holders of the majority of the 
          outstanding Preferred Stock obtained the right to appoint one 
          director to the Company's Board of Directors, though they had not 
          named such director as of April 3, 1998.

          As a condition to the consummation of the Marion Equity Financing 
          (as defined in and described in "Marion Equity Financing" and Note 
          5(c) in the accompanying financial statements), the Company entered
          into the Agreement and Second Amendment to Bridge Securities 
          Purchase Agreement and Related 

                                          7

<PAGE>

          Documents (the "Second Amendment"), among the Company and the 
          Funds. Pursuant to the Second Amendment, the Funds agreed that they 
          would not convert, prior to December 31, 1998, any shares of 
          Preferred Stock or any principal amount of the Notes into shares of 
          Common Stock, unless a "Material Transaction" (defined as a change 
          of control of the Company, a transfer of all or substantially all 
          of the Company's assets or a merger of the Company into another 
          entity) has occurred. Further, the Funds agreed that they would 
          not, prior to March 31, 1999, publicly sell any shares of Common 
          Stock owned or acquired by the Funds, unless a Material Transaction 
          has occurred; the Funds are permitted, after June 30, 1998 and 
          subject to the Company's right of first refusal, to privately sell 
          any shares of Common Stock that they own or acquire, provided the 
          purchaser agrees in writing to be bound by the same resale 
          restrictions.


          The Funds have granted to the Company an option to redeem the
          Preferred Stock and the Notes owned by the Funds as follows:  (i) up
          to $2,500,000 principal amount may be redeemed on or before April 30,
          1998;  (ii) an additional $2,500,000 principal amount may be redeemed
          on or before May 31, 1998; and (iii) an additional $2,500,000
          principal amount may be redeemed from and after June 1, 1998.  If the
          date that the Company redeems such Preferred Stock and Notes is on or
          before June 30, 1998, the redemption price will be 80% of the
          principal amount outstanding of the Notes being redeemed or 80% of the
          liquidation preference of the Preferred Stock being redeemed, plus
          accrued interest and dividends in the event that all of the Preferred
          Stock and Notes owned by the Funds are not redeemed by June 30, 1998. 
          If the redemption of the Notes and Preferred Stock is after June 30,
          1998 but on or before December 31, 1998, the 80% referred to in the
          preceding sentence shall increase by 2% per month, up to 90% in
          December 1998.  If the redemption of the Notes and Preferred Stock
          occurs after December 31, 1998, the redemption price shall be as
          provided in the original agreement between the Company and the Funds. 
          The Company is required to redeem all of the Preferred Stock
          outstanding prior to redemption of any of the Notes.  In addition, the
          Funds have granted to the Company and to Marion (as hereafter defined)
          an option to acquire, on or before March 31, 1999, all of the shares
          of Common Stock owned by the Funds. 

          In connection with the Second Amendment, the Funds received 100,000 
          shares of Common Stock, as well as the right to receive 200,000 
          additional shares of Common Stock in the event that all of the 
          Preferred Stock and Notes owned by the Funds have not been redeemed 
          by the Company by June 30, 1998.  Further, the exercise price of 
          the June Warrants has been reduced from $10.675 per share to $3.25 
          per share and the exercise price of the New Warrants has been 
          reduced from $4.00 per share to $3.25 per share.  The Company has 
          agreed to register all of such shares of Common Stock (including the 
          shares underlying warrants) under the Securities Act of 1933, as 
          amended.

          MARION EQUITY FINANCING

          In March 1998, the Company entered into a Purchase Agreement (the 
          "Marion Agreement") with Marion Interglobal, Ltd., an investment 
          group ("Marion").  The Marion Agreement calls for the Company to 
          receive up to $11,000,000 from Marion in exchange for shares of 
          Common Stock as explained herein.  Pursuant to the Marion 
          Agreement, the purchase of Common Stock is to occur in three 
          tranches as follows: (i) on March 27, 1998 the Company sold to 
          Marion 1,200,000 shares of Common Stock for an aggregate 
          consideration of $3,000,000; $1,500,000 of the $3,000,000 has been 
          funded, with the remaining $1,500,000 to be funded on the business 
          day after the Company's shelf registration statement with respect to 
          the shares sold to Marion has been declared effective by the 
          Securities and Exchange Commission; (ii) sixty days following the 

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          registration of all the underlying shares of Common Stock under the 
          Marion Agreement, the Company will sell to Marion 800,000 shares of 
          Common Stock for an aggregate consideration of $2,000,000; and 
          (iii) on or prior to September 30, 1998 the Company shall sell a 
          number of shares of Common Stock (to be determined by when the 
          closing occurs, which would range from 2,666,667 shares to 
          3,200,000 shares) for an aggregate consideration of $6,000,000. The 
          third tranche is contingent on Marion's satisfaction that the 
          Company has met or exceeded the financial targets expected by 
          Marion, in its sole discretion. The Company has agreed to use the 
          $6,000,000 in proceeds from the third tranche to redeem the Notes 
          and Preferred Stock issued in the June Financing. The issuance and 
          sale of 1,400,000 shares of Common Stock in the first tranche and 
          all of the shares to be issued in the second tranche to Marion, is 
          subject to approval by the Company's stockholders.  The Company will
          pay transaction fees to Marion upon completion of each tranche as 
          follows: (i) 1,200,000 shares of Common Stock for the first $3,000,000
          tranche; (ii) 800,000 shares of Common Stock for the second $2,000,000
          tranche; and (iii) no additional fee for the completion of the third 
          tranche. 

          Further, upon the consummation of the second tranche of the 
          Marion Agreement, Mr. Alan Lubell, Chairman of the Board of the 
          Company, has agreed to transfer to Marion 250,000 shares of Common 
          Stock, which shares are required to be registered under the 
          Securities Act of 1933, as amended.
 
          In addition, if the third tranche of the aforementioned financing 
          is completed, then until March 30, 2001, the Company is required to 
          obtain the prior written consent of Marion before the consummation 
          of any additional financing transaction except for any credit 
          facilities or lines of credit with lenders or equipment financing 
          arrangements. Further, the Company may not redeem the warrants 
          issued in the initial public offering (the "IPO Warrants") without 
          the prior written consent of Marion.

          As a condition to the consummation of this equity financing, the 
          Company renegotiated the terms of its outstanding Notes and 
          Preferred Stock with the Funds (see June Convertible Financing and 
          Note 5(b) in the accompanying financial statements for details).  

          PRO FORMA EFFECT OF FINANCINGS

          At December 31, 1997 the Company had a stockholders' deficit of 
          $1,137,662. Pursuant to the First Amendment, the Funds converted $6 
          million aggregate principal amount of the Notes, net of financing 
          costs of $2,178,942 into shares of Preferred Stock. If the 
          conversion on February 6, 1998 had taken place on December 31, 1997 
          the Company would have had stockholders' equity of approximately 
          $2,683,396. 

          On March 16, 1998, the Funds purchased an additional 1,550 shares 
          of Preferred Stock in exchange for non-marketable securities with an 
          aggregate value of $1,550,000 (See note 5(b)). If this purchase had 
          taken place on December 31, 1997, the Company would have had 
          stockholders' equity of approximately $4,233,396.

          In addition, if the $1,500,000 payment from the first tranche of the 
          Marion Agreement had taken place on December 31, 1997, the Company 
          would have recorded approximately an additional $1,250,000 in cash 
          and in stockholders' equity (net of expenses) for a total 
          stockholders' equity of $5,483,396.

          EQUIPMENT FINANCING

          In August 1997, the Company entered into an equipment financing 
          agreement (the "Equipment Financing") with Vision Financial Group 
          of Pittsburgh ("Vision"), whereby Vision agreed to provide the 
          Company with up to $2.5 million in financing by September 1998. 
          Such arrangement provides the Company with equipment financing of 
          $100,000 for each of its next 25 mobile one-on-one vans equipped 
          with video and personal computer equipment, each of which is 
          anticipated to cost approximately $150,000.  The Company has drawn 
          on $800,000 of the facility to finance eight vans purchased in May 
          1997. The outstanding balance bears interest at the rate of 11.62% 
          and is payable in 36 consecutive monthly payments of $25,328 which 
          commenced in August 1997, followed by one balloon payment of 
          $47,040.  Further, the Company has agreed to pledge as collateral a 
          certificate of deposit in the amount of $25,000 per van to Vision.  
          Such collateral is to be returned to the 

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<PAGE>

          Company within 5 days after the Company notifies Vision that (a) the
          Company has earned $1,000,000 or more on a pre-tax basis for fiscal
          1998 or 1999, or (b) the Company's stock has traded at $20.00 per
          share for at least 5 consecutive trading days.  The Company has
          pledged to Vision a certificate of deposit in the aggregate amount of
          $200,000 in connection with the financing of the first eight vans.  In
          connection with the Equipment Financing, the Company issued warrants
          to Vision (the "Vision Warrants") to purchase 75,000 shares of Common
          Stock at a price per share of $10.00 (subject to adjustment in certain
          circumstances) at any time prior to August 20, 2000.  

     COMPETITION

          The Company faces competition for consumer discretionary spending from
          numerous other businesses in the golf industry and related market
          segments.  The Company competes with a variety of products and
          services which are used as participant gifts at golf events or provide
          golf instruction, including instructional golf videotapes, golf
          software used to analyze golf swings and golf courses, schools and
          professionals who offer video golf lessons, certain of which may be
          less expensive or provide other advantages to consumers.  In addition,
          certain companies offer both hardware and software to golf
          professionals for use in connection with golf lessons.  Moreover, the
          instructional golf video segment of the industry has no substantial
          barriers to entry and, consequently, the Company expects that other
          companies which have developed software technologies may seek to enter
          the Company's target markets and compete directly against the Company.
          There can be no assurance that other companies are not developing or
          will not seek to develop similar products.

     PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION

          The Company has filed a patent application with the United States
          Patent and Trademark Office covering certain aspects of its digital
          video editing and videotape production process.  There can be no
          assurance, however, as to the breadth or degree of protection which
          patents may afford the Company, that any patent applications will
          result in issued patents or that patents will not be circumvented or
          invalidated.  Rapid technological developments in the computer
          software industry result in extensive patent filings and a rapid rate
          of issuance of new patents.  In addition, there can be no assurance
          that the Company will have financial or other resources necessary to
          enforce its own patent or defend a patent infringement action and the
          Company could, under certain circumstances, become liable for damages,
          which also could have a material adverse effect on the Company.  The
          Company relies on proprietary processes and employs various methods to
          protect the concepts, ideas and documentation of its products. 
          However, such methods may not afford complete protection and there can
          be no assurance that others will not independently develop such
          processes or obtain access to the Company's proprietary processes,
          ideas and documentation.  Furthermore, although the Company has
          entered into confidentiality agreements with certain of its employees,
          there can be no assurance that such arrangements will adequately
          protect the Company.

     EMPLOYEES

          At December 31, 1997, the Company employed (directly or indirectly)
          five executive employees and 47 employees engaged in the operation of
          its offices and vans.


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     EXECUTIVE OFFICERS OF THE COMPANY

               NAME          AGE        POSITION
               ----          ---        --------

          Earl T. Takefman    47        Chief Executive Officer and Director
          Alan L. Lubell      59        Chairman of the Board and Vice President
          Richard Parker      36        President and Chief Operating Officer
          Thomas Peters       52        Director of Operations and Technology
          Melissa Forzly      39        Chief Financial Officer

          EARL T. TAKEFMAN, a co-founder of the Company, has been Chief
          Executive Officer of the Company since March 1995. Prior to founding
          the Company, Mr. Takefman was Co-Chief Executive Officer of SLM
          International, Inc. ("SLM"), a publicly traded toy and sporting goods
          company, from December 1989 to August 1994.  SLM filed for protection
          under Chapter 11 of the U.S. Bankruptcy Code in October 1995.  From
          1980 to 1989, prior to joining SLM, Mr. Takefman was Chief Operating
          Officer of Charan Industries ("Charan"), a publicly traded Canadian
          toy and sporting goods company.  Mr. Takefman received a Bachelor of
          Architecture degree in 1971 and a Masters of Business Administration
          degree from McGill University in Montreal, Canada in 1973.

          ALAN L. LUBELL, a co-founder of the Company, has been Chairman of the
          Board of the Company since July 1994 and Vice President since May
          1996.  Prior to founding the Company, Mr. Lubell had been an
          entrepreneur in the area of sports television.  From 1977 to July
          1994, Mr. Lubell served as President of Marathon Entertainment, a
          sports television company which he founded, that created many events
          and programs that were sold to television stations and networks and
          national advertisers.  Among the events developed, packaged and
          produced by Marathon Entertainment was the New York City Marathon. 
          Mr. Lubell received a Bachelor of Science degree in marketing from New
          York University in 1960.

          RICHARD PARKER has been the Company's President and Chief Operating
          Officer since July 1996.  From February 1990 until his appointment as
          Chief Operating Officer of the Company, Mr. Parker was the founder,
          owner and President of Diomo Marketing Inc. and Devrew Merchandising
          Inc., companies engaged in marketing and selling consumer products in
          Canada.  From August 1984 to February 1990, Mr. Parker held various
          positions, including Vice President at Charan.  Mr. Parker graduated
          from Vanier College in Montreal in 1980.

          THOMAS PETERS has been Director of Operations and Technology of the
          Company since May 1996.  Since July 1992, Mr. Peters has been the
          owner of Smart View ("Smart View"), a company he founded to design and
          develop computer golf software to be used by golf professionals when
          giving video golf lessons.  In March 1995, Smart View was engaged as
          an independent consultant to the Company and was principally
          responsible for the development of the software used in the Company's
          products.  Smart View also developed operating systems used by Golf
          Academy at PGA National and at the Doral Golf Learning Center, each in
          Florida.  Prior to founding Smart View, Mr. Peters, for 26 years, held
          various positions at IBM Corporation, including Manager of Application
          Development from July 1989 to July 1992 and Personal Computer Product
          Planning Manager from 1984 to 1989.  Mr. Peters graduated from Harper
          College at University of New York in 1967, with a B.A. in mathematics.


                                          11

<PAGE>

          MELISSA FORZLY has been the Chief Financial Officer of the Company
          since March 1998 and joined the Company as Controller in June 1997.
          Prior to joining the Company, Ms. Forzly was Controller of Big
          Entertainment, a public company trading on the Nasdaq SmallCap market,
          which is a diversified entertainment company involved in the licensing
          of entertainment properties, the operation of retail stores, and the
          publishing and packaging of books.  Ms. Forzly graduated from Boston
          University in 1981 with a B.S. in Business Administration with
          concentrations in accounting and finance.

     RISK FACTORS

          Readers of this annual report should carefully consider the following
          risk factors, in addition to the other information contained herein. 
          This annual report contains certain statements of a forward-looking
          nature relating to future events or the future financial performance
          of the Company within the meaning of Section 27A of the Securities Act
          of 1933, as amended, and Section 21E of the Securities Exchange Act of
          1934, as amended, and which are intended to be covered by the safe
          harbors created thereby. Readers are cautioned that such statements
          are only predictions and that actual events or results may differ
          materially.  In evaluating such statements, readers should
          specifically consider the various factors identified herein, including
          the matters set forth below, which could cause actual results to
          differ materially from those indicated by such forward-looking
          statements.

          SIGNIFICANT AND CONTINUING LOSSES. For the period from July 15, 1994
          (inception) to December 31, 1997, the Company incurred a cumulative
          net loss of $13,618,223.  The Company believes that it will incur
          continuing losses until, at the earliest, the Company generates
          sufficient revenues to offset the substantial up-front capital
          expenditures and operating costs associated with commercializing its
          products.

          NEED FOR ADDITIONAL FINANCING. The Company recently entered into a 
          purchase agreement with Marion Interglobal, Ltd. ("Marion"), for 
          additional financing as detailed more fully in "Marion Equity 
          Financing" and Note 5(c) in the accompanying financial statements.  
          The continued implementation of the Company's business plan will 
          require capital resources that will be available to the Company only 
          upon the completion of the first and second tranches of the 
          aforementioned financing. There can be no assurance that the 
          conditions necessary for the completion of these tranche will occur. 
          In addition, if the third tranche of the aforementioned financing is 
          completed, then until March 30, 2001, the Company is required to 
          obtain the prior written consent of Marion before the consummation of
          any additional financing transaction except for any credit facilities
          or lines of credit with lenders, or equipment financing arrangements.
          Further, there can be no assurance that Marion will consent to any 
          additional financings.

          UNCERTAINTY OF PROPOSED PLAN OF OPERATION.  The Company's plan of
          operation and prospects are largely dependent upon the Company's
          ability to successfully hire and retain skilled technical, marketing
          and other personnel, establish and maintain satisfactory relationships
          with those who arrange golf events, successfully develop, equip and
          operate ONE-ON-ONE vans on a timely and cost effective basis and
          achieve significant market acceptance for its products. There can be
          no assurance that the Company will be able to continue to implement
          its business plan or that unanticipated expenses, problems or
          technical difficulties will not occur which would result in material
          delays in its implementation.

          POTENTIAL INFLUENCE ON MARKET OF SALE OF THE FUNDS' SHARES AND
          MARION'S SHARES; DILUTION.  As part of the June Bridge Financing, the
          Company issued to the Funds, through December 31, 1997, an aggregate
          of 65,671 Interest Shares, 93,677 Grant Shares and 180,296 Additional
          Grant Shares.  In addition, the Company will be obligated to issue to
          the Funds the Note Conversion Shares and the Stock Conversion Shares
          in the event that the Funds decide to convert their Notes or shares of
          Preferred Stock into Common Stock.  As of December 31, 


                                          12

<PAGE>

          1997, the Funds converted $6.0 million aggregate principal amount 
          of the Notes into 6,000 shares of Preferred Stock.  The remaining 
          $1.5 million in Notes outstanding, as well as the 6,000 outstanding 
          shares of Preferred Stock, are convertible into Common Stock at an 
          average discount of 20% to the market price of the Common Stock at 
          the time of conversion; in certain circumstances, the conversion 
          price may be as low as 50% of the market price of the Common Stock 
          at the time of conversion.  Conversion of some or all of the $7.5 
          million of Notes and Preferred Stock would have a dilutive effect 
          on the Company's stockholders.  In addition, in connection with the 
          Marion Agreement the Company issued 1,000,000 shares of  Common 
          Stock and may be obligated to issue an additional 6,200,000 shares 
          of Common Stock to Marion, which shares will be registered under 
          the Securities Act of 1933, as amended, at which time such shares 
          will be freely tradable without restriction.  While no prediction 
          can be made as to the effect that the sale of any of the 
          aforementioned shares will have on market prices of the Common 
          Stock prevailing from time to time, the possibility that a 
          substantial number of shares of Common Stock may be sold in the 
          public market may adversely affect prevailing market prices and 
          could impair the Company's ability to further raise capital through 
          the sale of its equity securities. 

          POTENTIAL INFLUENCE ON MARKET OF WARRANT REDEMPTION.  Each of the 
          1,495,000 IPO Warrants entitles the registered holder thereof to 
          purchase one share of Common Stock, at a price of $5.00, subject to 
          adjustment in certain circumstances, at any time until July 24, 
          2000. The IPO Warrants are redeemable by the Company, upon the 
          consent of the underwriter in the Company's IPO, at a price of $.10 
          per Warrant, and subject to the terms set forth therein. In the 
          event that the Company calls the IPO Warrants for redemption, it 
          will be economically advantageous for the warrant holders to 
          exercise the IPO Warrants, resulting in the issuance by the Company 
          of up to 1,495,000 additional shares of Common Stock. While no 
          prediction can be made as to the effect, if any, that the 
          availability for sale or actual sale of such shares of Common Stock 
          will have on market prices prevailing from time to time, the 
          possibility that a substantial number of shares of Common Stock may 
          be sold in the public market may adversely affect prevailing market 
          prices for the Common Stock and could impair the Company's ability 
          to further raise capital through the sale of its equity securities. 
          Further, the exercise of the IPO Warrants and issuance of shares of 
          Common Stock at a price of $5.00 (an amount that is likely to be 
          below the prevailing market price of the Common Stock since a 
          precondition for the redeemability of the IPO Warrants is that the 
          price of the Common Stock is at least $7.50, subject to certain 
          terms and adjustments) may have an adverse effect on the market 
          price of the Common Stock. In addition, the Company may not redeem 
          the warrants issued in the initial public offering (the "IPO 
          Warrants") without the prior written consent of Marion. There can 
          be no assurance that Marion will consent to such redemption.

          OUTSTANDING OPTIONS AND WARRANTS. There are currently outstanding 
          options to purchase an aggregate of 948,419 shares of Common Stock 
          at exercise prices ranging from $5.00 to $10.75 per share, and 
          outstanding warrants (including the IPO Warrants) to purchase an 
          aggregate of 2,230,000 shares of Common Stock at exercise prices 
          ranging from $3.25 to $10.00. Exercise of any of the foregoing 
          options or warrants will have a dilutive effect on the Company's 
          stockholders. Furthermore, the terms upon which the Company may be 
          able to obtain additional equity financing may be adversely 
          affected, since the holders of the options or warrants can be 
          expected to exercise them, if at all, at a time when the Company 
          would, in all likelihood, be able to obtain any needed capital on 
          terms more favorable to the Company than those provided in the 
          options or warrants. 

          DEPENDENCE ON GREG NORMAN LICENSE.  Pursuant to the Greg Norman
          License, Greg Norman agreed to grant to the Company a worldwide
          license to use his name, likeness, endorsement and certain trademarks
          in connection with the production and promotion of the Company's


                                          13

<PAGE>

          products. The Company will make guaranteed minimum royalty payments to
          Mr. Norman from January 1998 through April 2000, which will consist of
          $2.38 million in cash and 102,000 shares of Common Stock.  Pursuant to
          the Greg Norman License, the Company has paid Mr. Norman $600,000
          through December 31, 1997. Failure to make any required payment under
          the Greg Norman License would result in termination of the license
          agreement, which would have a material adverse effect on the Company.
          Greg Norman's death, disability or retirement from tournament play or
          any significant decline in the level of his tournament play may, under
          certain circumstances, have a material adverse effect on the Company.
          In addition, the commission by Greg Norman of any serious crime or any
          act which adversely affects his reputation could also have an adverse
          affect on the Company. The Company has obtained "key-man" insurance on
          the life of Greg Norman in the amount of $10,000,000. 

          UNCERTAINTY OF MARKET ACCEPTANCE AND COMMERCIALIZATION STRATEGY.  The
          Company's ONE-ON-ONE personalized videotape golf lesson is a new
          business concept and, accordingly, demand and market acceptance for
          the Company's products is subject to a high level of uncertainty.
          Achieving market acceptance for the Company's products will require
          significant efforts and expenditures by the Company to create
          awareness and demand. The Company's prospects will be significantly
          affected by its ability to successfully build an effective sales
          organization and develop a significant number of ONE-ON-ONE vans. The
          Company only commenced marketing activities in 1997 and has limited
          marketing and technical experience and limited financial, personnel
          and other resources to independently undertake extensive marketing
          activities. The Company's strategy and preliminary and future
          marketing plans may be subject to change as a result of a number of
          factors, including progress or delays in the Company's marketing
          efforts, changes in market conditions (including the emergence of
          potentially significant related market segments), the nature of
          possible license and distribution arrangements which may become
          available to it in the future and competitive factors. To the extent
          that the Company enters into third-party marketing and distribution
          arrangements in the future, it will be dependent on the marketing
          efforts of such third parties and in certain instances on the
          popularity and sales of their products. Additionally, to the extent
          that the Company seeks to market its products in foreign markets, the
          Company may be subject to various risks associated with foreign trade,
          including customs duties, quotas and other trade restrictions,
          shipping delays, currency fluctuations and international political and
          economic developments. There can be no assurance that the Company's
          strategy will result in successful product commercialization or that
          the Company's efforts will result in initial or continued market
          acceptance for the Company's products. 

          POTENTIAL PRODUCT OBSOLESCENCE.  The markets for the Company's
          products may be characterized by rapidly changing technology which
          could result in product obsolescence or short product life cycles.
          Accordingly, the ability of the Company to compete may be dependent
          upon the Company's ability to continually enhance and improve its
          software. There can be no assurance that competitors will not develop
          technologies or products that render the Company's products obsolete
          or less marketable. 

          DEPENDENCE ON KEY PERSONNEL; NEED FOR QUALIFIED PERSONNEL.  The
          prospects of the Company are dependent on the personal efforts of Earl
          T. Takefman, its Chief Executive Officer, and other key personnel. The
          loss of the services of Mr. Takefman could have a material adverse
          effect on the Company's proposed business and prospects. The Company
          has entered into employment agreements with Mr. Takefman and other key
          personnel and has obtained "key-man" insurance on the life of
          Mr. Takefman in the amount of $5,000,000. The success of 


                                          14

<PAGE>

          the Company is also dependent upon its ability to hire and retain
          additional qualified marketing, technical, financial and other
          personnel. Competition for qualified personnel is intense and there
          can be no assurance that the Company will be able to hire or retain
          additional qualified personnel. Any inability to attract and retain
          qualified personnel would have a material adverse effect on the
          Company. 

          DEPENDENCE ON LIMITED PRODUCT LINE.  The Company is entirely dependent
          on the sales of a limited product line to generate revenues and on the
          commercial success of its products. There can be no assurance that the
          Company's products will prove to be commercially viable. Failure to
          achieve commercial viability would have a material adverse effect on
          the Company. 

          INDUSTRY FACTORS. The Company's future operating results will depend
          on numerous factors beyond its control, including the popularity,
          price and timing of competitors' products being introduced and
          distributed, national, regional and local economic conditions
          (particularly recessionary conditions adversely affecting consumer
          spending), changes in consumer demographics, the availability and
          relative popularity of other forms of sports and entertainment, and
          public tastes and preferences, which may change rapidly and cannot be
          predicted. The Company's ability to plan for product development and
          promotional activities may be affected by the Company's ability to
          anticipate and respond to relatively rapid changes in consumer tastes
          and preferences. To the extent that the Company targets consumers with
          limited disposable income, the Company may find it more difficult to
          price its products at levels which result in profitable operations. In
          addition, seasonal weather conditions limiting the playing seasons in
          certain geographic areas may result in fluctuations in the Company's
          future operating results. 

          DEPENDENCE ON THIRD-PARTY PRODUCTION COMPANIES AND EQUIPMENT
          MANUFACTURERS.  The Company relies on third-party manufacturers for
          all of its supply of video and computer equipment and vans used in its
          operations. The Company has not entered into agreements with any
          equipment manufacturer and intends to purchase or lease equipment
          components pursuant to purchase orders placed from time to time in the
          ordinary course of business. While the Company is not dependent on any
          single supplier to continue its operations, the failure or delay by
          any manufacturer in supplying components to the Company on favorable
          terms could result in interruptions in its operations and adversely
          affect the Company's ability to implement its business plan. 

          NO DIVIDENDS.  To date, the Company has not paid any cash dividends on
          its Common Stock and does not expect to declare or pay dividends on
          the Common Stock in the foreseeable future. In addition, the payment
          of cash dividends is limited by the terms of the Preferred Stock and
          may be further limited or prohibited by the terms of future loan
          agreements, if any, or the future issuance of other series of
          Preferred Stock, if any. 

          AUTHORIZATION AND DISCRETIONARY ISSUANCE OF PREFERRED STOCK.  The 
          Company's Certificate of Incorporation authorizes the Company's Board
          of Directors to issue up to 5,000,000 shares of Preferred Stock, from
          time to time, in one or more series. On February 6, 1998, $6 million 
          principal amount of outstanding Notes was converted into 6,000 shares
          of Preferred Stock; and on March 16, 1998, an additional 1,550 shares
          of Preferred Stock was purchased by the Funds in exchange for 
          marketable securities with an aggregate value of $1,550,000.  The 
          Preferred Stock has a liquidation preference of $1,000 per share and 
          is senior to the Common Stock with respect to dividends, liquidation 
          and dissolution.  Each share of Preferred Stock entitles the holder 
          to an annual dividend of 8.25%, payable on a quarterly basis, which 
          dividend increases to 18% in 

                                          15

<PAGE>

          certain situations as specified in the Amended Certificate of 
          Designation with respect to the Preferred Stock.  Holders of the 
          shares of Preferred Stock do not have voting rights, except upon 
          the occurrence of certain events that would affect the preferences 
          and rights of the Preferred Stock.  Each share of Preferred Stock 
          is convertible into Common Stock at the lesser of:  (i) $6.00 per 
          share of Common Stock or (ii) a discount ranging from 15% to 22.5% 
          of the market price of the Common Stock at the time of conversion; 
          in certain circumstances, the conversion price may be as low as 50% 
          of the market price of the Common Stock at the time of conversion.  
          The Preferred Stock is redeemable by the Company at any time at its 
          option. In addition, the holder of a majority of the outstanding 
          Preferred Stock have the right to appoint one director to the 
          Company's Board of Directors, though they had not named such 
          director at April 3, 1998.

          The Board of Directors is authorized, without further approval of the
          stockholders, to fix the dividend rights and terms, conversion rights,
          voting rights, redemption rights and terms, liquidation preferences,
          and any other rights, preferences, privileges and restrictions
          applicable to each new series of Preferred Stock.

          VOLATILITY OF MARKET PRICE OF COMMON STOCK AND WARRANTS.  Since the
          IPO, the market prices of the Company's publicly traded securities
          have been highly volatile as has been the case with the securities of
          other emerging companies. Factors such as the Company's operating
          results and announcements by the Company or its competitors may have a
          significant impact on the market price of the Company's securities. In
          addition, in recent years, the stock market has experienced a high
          level of price and volume volatility and market prices for the stock
          of many companies have experienced wide price fluctuations which have
          not necessarily been related to the operating performance of such
          companies. 

          POTENTIAL INFLUENCE ON THE MARKET OF THE IPO UNDERWRITER.  The  
          underwriter in the Company's IPO makes a market in the Common Stock 
          and the IPO Warrants and may otherwise effect transactions in the 
          Common Stock and the IPO Warrants. Such activities may exert a 
          dominating influence on the market and such activity may be 
          discontinued at any time. The prices and liquidity of the Company's 
          securities may be significantly affected by the underwriter in the 
          Company's IPO.

          LIMITATIONS OF LIABILITY OF DIRECTORS AND OFFICERS.  The Company's
          Certificate of Incorporation includes provisions to limit, to the full
          extent permitted by Delaware law, the personal liability of directors
          of the Company for monetary damages arising from a breach of their
          fiduciary duties as directors. The Certificate of Incorporation also
          includes provisions to the effect that (subject to certain exceptions)
          the Company shall, to the maximum extent permitted from time to time
          under the law of the State of Delaware, indemnify, and upon request
          shall advance expenses to, any director or officer to the extent
          permitted under such law as it may from time to time be in effect. In
          addition, the Company's By-Laws require the Company to indemnify, to
          the full extent permitted by law, any director, officer, employee or
          agent of the Company for acts which such person reasonably believes
          are not in violation of the Company's corporate purposes as set forth
          in the Certificate of Incorporation. As a result of such provisions in
          the Certificate of Incorporation and the By-Laws of the Company,
          stockholders may be unable to recover damages against the directors
          and officers of the Company for actions taken by them which constitute
          negligence, gross negligence or a violation of their fiduciary duties,
          which may reduce the likelihood of stockholders instituting derivative
          litigation against directors and officers and may discourage or deter
          stockholders from suing directors, officers, employees and agents of
          the Company for breaches of their duty of care, even though such an
          action, if successful, might otherwise benefit the Company and its
          stockholders. 


                                          16

<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

          The Company leases approximately 4,400 square feet of office space in
          Boca Raton, Florida for its executive offices. The lease of this
          office space provides for a monthly rent of approximately $9,031 and
          expires on September 30, 1999, with one option to renew for an
          additional three years.  The Company believes that suitable additional
          space, if required, is readily available on terms that will be
          reasonably acceptable to the Company.  The Company also leases two
          sales/operations offices, one of which is in San Diego, with
          approximately 1,600 square feet, pursuant to a lease expiring June 30,
          1998, at a monthly rental of approximately $1,045, and the other which
          is in New York City with approximately 260 square feet on a month to
          month rental with a monthly rent of approximately $2,000.  In
          addition, the Company also leases approximately 1,000 square feet of
          warehouse space in Pompano Beach, Florida with a monthly rent of $475.
          This lease expired on December 31, 1997 and the Company is in the
          process of renegotiating a new lease on new space.

ITEM 3.  LEGAL PROCEEDINGS

          The Company has no material legal proceedings pending or, to the
          Company's knowledge, threatened.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

          None.













                                          17

<PAGE>
                                       PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS SUBMISSION 
OF MATTERS TO A VOTE OF SECURITYHOLDERS

     MARKET FOR COMMON STOCK

          The Company's Common Stock and warrants are traded on the Nasdaq
          SmallCap Market under the symbols "EDGE" and "EDGEW," respectively. 
          The Company completed the IPO in July 1996 at an offering price of
          $5.00 per share for its Common Stock and $.10 per warrant.  The
          following table sets forth, for the periods indicated, the range of
          high and low last reported sale prices for the Common Stock and the
          warrants.

<TABLE>
<CAPTION>

                    Common Stock:                   High      Low
                    -------------                   ----      ---

<S>                                              <C>       <C>
          Fiscal Year 1996
            Third Quarter (from July 24, 1996)    $ 8.00    $4.38
            Fourth Quarter                          7.63     5.63

          Fiscal Year 1997
            First Quarter                         $12.38    $5.75
            Second Quarter                         13.75     8.63
            Third Quarter                          10.25     6.50
            Fourth Quarter                          8.25     3.06


                    IPO Warrants:                   High      Low
                    -------------                   ----      ---

          Fiscal Year 1996
            Third Quarter (from July 24, 1996)    $ 4.13    $1.00
            Fourth Quarter                          3.16     1.88

          Fiscal Year 1997
            First Quarter                         $ 7.56    $1.88
            Second Quarter                          8.63     4.00
            Third Quarter                           5.13     3.00
            Fourth Quarter                          3.44      .75

</TABLE>

     HOLDERS OF COMMON STOCK
     
          On March 25,1998, the last reported sale price of the Common Stock on
          the Nasdaq SmallCap Market was $3.375 per share and the last reported
          sale price of the warrants on the Nasdaq SmallCap Market was $.9375
          per warrant.  At March 25, 1998, there were 75 holders of record of
          the Company's Common Stock and 3 holders of record of the Company's
          warrants.  The Company believes that there are more than 700
          beneficial holders of the Company's Common Stock.

     DIVIDENDS

          The Company does not anticipate paying any cash dividends on its
          Common Stock in the foreseeable future and intends to retain its
          earnings, if any, to finance the expansion of its 


                                          18

<PAGE>

          business and for general corporate purposes.  Any payment of future
          dividends will be at the discretion of the Board of Directors and will
          depend upon, among other things, the Company's earnings, financial
          condition, capital requirements, level of indebtedness, contractual
          restrictions and other factors that the Company's Board of Directors
          deems relevant. In addition, the payment of cash dividends is limited
          by the terms of the Preferred Stock and may be further limited or
          prohibited by the terms of future loan agreements or the future
          issuance of other series of Preferred Stock, if any.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

          The following discussion and analysis should be read in conjunction
          with the Company's Financial  Statements and the Notes thereto
          included in Part II, Item 7 of this Report.

     RESULTS OF OPERATIONS

          The Company was a development stage company in 1996 and had no revenue
          for the fiscal year ended December 31, 1996.  The Company commenced
          its introduction and marketing of personalized videotape golf lessons,
          featuring ONE-ON-ONE instruction by leading professional golfer Greg
          Norman, during the fourth quarter of 1996.  The Company completed and
          launched its first seven mobile production units ("vans") during the
          first three months of 1997 and an additional eight vans were launched
          in the second quarter of 1997.  As of December 31, 1997, the Company
          had 15 vans in operation.  

          During the first quarter of 1997 the Company began to generate 
          revenue from the sales of its videotape golf lessons.  For the year 
          ending December 31, 1997, the Company had sales of  $1,381,111 and 
          a gross loss of $186,362. The gross loss reflected for the year 
          ending December 31, 1997 included significant training costs of van 
          operators and resulted from low initial sales during its start-up 
          phase.  

          Operating expenses for the year ending December 31, 1997 were 
          $7,929,850 as compared to $2,416,834 for the year ending December 
          31, 1996.  The increase in operating expenses for the year ending 
          December 31, 1997, as compared to the year ending December 31, 
          1996, is primarily attributable to start-up expenses related to the 
          launching of the Company's 15 vans and consisted of payroll, 
          marketing, training, travel and other administrative expenses. 
          These expenses also include depreciation and amortization expenses, 
          which totaled $1,128,964 for the year ending December 31, 1997, as 
          compared to $155,546 for the year ending December 31, 1996. 
          Additionally, in compliance with Statement of Financial Accounting 
          Standards ("SFAS") No. 123, "Accounting for Stock Based 
          Compensation", the Company recorded a non-cash marketing expense of 
          $93,132 related to the 25,000 options granted to Greg Norman and a 
          non-cash stock severance expense of $150,125 related to the 
          termination of an employee. In addition, the Company recorded a 
          non-cash expense of $1,036,000 in connection with securities issued 
          for financial advisory and strategic business planning services.

          Interest expense for the year ending December 31, 1997 was $508,080 as
          compared to $50,854 for the year ending December 31, 1996.  The
          increase in interest expense is primarily due to the interest
          associated with the Company's financings. 
     
          The Company earned $111,140 in interest income for the year ending
          December 31, 1997.  Amortization of deferred financing fees and
          extraordinary expense-financing fees were 


                                          19

<PAGE>

          $1,243,418 and $999,000, respectively, for the year ended December 
          31, 1997, and resulted from: (i) non-cash financing fees of 
          $1,665,000 in connection with the March Bridge Financing, (which 
          have been fully expensed via amortization of $666,000 and the 
          balance of $999,000 as an extraordinary item (see Note 5)); (ii) 
          June Financing fees of $881,569; and (iii) equipment financing 
          costs of $178,980. 

     LIQUIDITY AND CAPITAL RESOURCES

          At December 31, 1997 the Company had cash and cash equivalents of 
          $224,429, unrestricted short-term investments of $1,080,000 and 
          working capital of $788,323. Net cash used in operating activities 
          for the year ending December 31, 1997 was $5,997,342, primarily 
          representing cash used for start-up expenses related to the 
          launching of the Company's 15 vans.  Net cash provided by financing 
          was $6,083,778 ($95,124 of which was used in investing activities) 
          for a total decrease in cash and cash equivalents of $8,688.

          A significant portion of the Company's disbursements during the year
          ending December 31, 1997 represented investment in fixed assets of
          $71,457.  At December 31, 1997, the Company's cumulative gross
          investment in fixed assets was $3,529,180.

          On December 31, 1997 the Company had a stockholders' deficit of 
          $1,137,662.  On February 6, 1998, the Company entered into the 
          First Amendment pursuant to which the Funds converted $6 million 
          aggregate principal amount of the Notes into Preferred Stock which 
          would have resulted in an increase to stockholders' equity of 
          approximately $3,821,058. On March 16, 1998, the Funds purchased an 
          additional 1,550 shares of Preferred Stock in exchange for 
          non-marketable securities  with an aggregate value of $1,550,000 
          (See note 5(b)). In addition, in March 1998, the Company entered 
          into the Marion Agreement with Marion.  The Marion Agreement calls 
          for the Company to receive a minimum of $5,000,000 from Marion in 
          exchange for shares of Common Stock as explained in Marion Equity 
          Financing.  The company received $1,500,000 of the First Tranche on 
          April 3, 1998. If the $1,500,000 payment under the first tranche of 
          the Marion Agreement had been received as of December 31, 1997, the 
          Company would have recorded approximately an additional $1,250,000, 
          which is net of expenses, in cash and in stockholders' equity. If the 
          conversion of Notes and Preferred Stock and the $1,500,000 payment 
          under the first tranche of the Marion Agreement had been recorded on 
          December 31, 1997 the Company's stockholders' equity would have been 
          approximately $5,433,396 as of such date. 

          Based on the recently completed securities purchase agreement for
          additional financing as detailed more fully in "Marion Equity
          Financing" and Note 5(c), the Company anticipates that its current
          capital resources, when combined with anticipated cash flows from
          operations, will be sufficient to satisfy the Company's contemplated
          working capital requirements for the next twelve months.

     THIRD PARTY REPORTS

          The Company does not make financial forecasts or projections nor
          endorse the financial forecasts or projections of third parties nor
          does it comment on the accuracy of third party reports.  The Company
          does not participate in the preparation of the reports or the
          estimates given by the analysts.  Analysts who issue financial reports
          are not privy to non-public financial information.  Any purchase of
          the Company's securities based on financial estimates provided by
          analysts or third parties is done entirely at the risk of the
          purchaser.


                                          20

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                            INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE

          Report of Independent Certified Public Accountants for year 
               ended December 31, 1997                                      22
          Report of Independent Certified Public Accountants for year 
               ended December 31, 1996                                      23
          Balance Sheets as of December 31, 1997 and December 31, 1996      24
          Statements of Operations for the Years Ended December 31, 
               1997 and 1996                                                25
          Statements of Changes in Stockholders' Equity for the Years 
               Ended December 31, 1997 and 1996                             26
          Statements of Cash Flows for the Years Ended December 31, 
               1997 and 1996                                                27
          Notes to Financial Statements                                     28


                                          21

<PAGE>

                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



     To the Board of Directors and Stockholders
          of Visual Edge Systems Inc.
     
     We have audited the accompanying balance sheet of Visual Edge Systems Inc.
     as of December 31, 1997, and the related statements of operations,
     stockholders' equity (deficit) and cash flows for the year then ended. 
     These financial statements are the responsibility of the Company's
     management.  Our responsibility is to express an opinion on these financial
     statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
     in all material respects, the financial position of Visual Edge Systems
     Inc. as of December 31, 1997, and the related statements of operations,
     stockholders' equity and cash flows for the year then ended in conformity
     with general accepted accounting principles.

     ARTHUR ANDERSEN LLP

     Miami, Florida,
      February 20, 1998 (except with respect 
      to the matters discussed in Notes 5(b),(c)
      and 10, as to which the date is April 4, 1998).  


                                          22

<PAGE>

                             INDEPENDENT AUDITORS REPORT
     
     
     
     To the Board of Directors and Stockholders
          of Visual Edge Systems Inc.
     
     We have audited the accompanying balance sheet of Visual Edge Systems Inc.
     (a development stage company) as of December 31, 1996, and the related
     statements of operations, stockholders' equity (deficit) and cash flows for
     the year then ended.  These financial statements are the responsibility of
     the Company's management.  Our responsibility is to express an opinion on
     these financial statements based on our audit.
     
     We conducted our audit in accordance with generally accepted auditing
     standards.  Those standards require that we plan and perform the audit to
     obtain reasonable assurance about whether the financial statements are free
     from material misstatement.  An audit includes examining, on a test basis,
     evidence supporting the amounts and disclosures in the financial
     statements.  An audit also includes assessing the accounting principles
     used and significant estimates made by management, as well as evaluating
     the overall financial statement presentation.  We believe that our audit
     provides a reasonable basis for our opinion.
     
     In our opinion, the financial statements referred to above present fairly,
     in all material respects, the financial position of Visual Edge Systems
     Inc. as of December 31, 1996 and the results of its operations and
     its cash flows for the year then ended in conformity with general accepted
     accounting principles.
     
     The accompanying financial statements have been prepared assuming that the
     Company will continue as a going concern. As discussed in Note 1 to the
     financial statements, the Company is in its development stage and its
     recurring losses through 1996 and contractual commitment under a license
     agreement raise substantial doubt about its ability to continue as a going
     concern unless additional financing or equity is obtained. Management's
     plans in regard to these matters are also described  in Note 1.  The
     financial statements do not include any adjustments that might result from
     the outcome of this uncertainty.  



     KPMG Peat Marwick LLP

     Fort Lauderdale, Florida,
      January 24, 1997, except as to note 9(b) which is as of April 3, 1997. 


                                          23

<PAGE>

<TABLE>
<CAPTION>

                                                  VISUAL EDGE SYSTEMS INC.
                                                       BALANCE SHEETS
                                              As of December 31, 1996 and 1997

                                                                                                      Pro Forma (see Note 10 )
                                                                    1996                1997                     1997
                                                               -------------      --------------      ------------------------
                                                                                                             (unaudited)

                      ASSETS
<S>                                                            <C>                <C>                      <C>
Current Assets:
 Cash and Cash Equivalents                                      $   233,117        $    224,429             $  1,474,429
 Short-Term Investments                                           1,869,052           1,080,000                1,080,000
 Accounts Receivable                                                      -              23,917                   23,917
 Inventory                                                           36,747              72,771                   72,771
 Prepaid Expenses - Advance Royalties                               300,000             350,000                  350,000
 Other Current Assets                                                80,756             217,225                  217,225
                                                                -----------        ------------             ------------
            Total Current Assets                                  2,519,672           1,968,342                3,218,342

Fixed Assets, net                                                 1,624,826           2,632,826                2,632,826
Non-Marketable Securities                                                 -                   -                1,550,000
             
Intangible Assets, net                                              616,470             286,986                  286,986
Other Assets                                                         23,202                 449                      449
Investments-Restricted                                                    -             812,719                  812,719
                                                                -----------        ------------             ------------
            Total Assets                                        $ 4,784,170        $  5,701,322             $  8,501,322
                                                                ===========        ============             ============

          LIABILITIES AND STOCKHOLDERS' EQUITY  (DEFICIT)
Current liabilities:
 Bank Borrowings                                                $   500,000        $          -             $          -
 Accounts Payable                                                   333,114             344,884                  344,884
 Accrued Expenses                                                   284,900             173,605                  173,605
 Other Current Liabilities                                            1,500             121,266                  121,266
 Current Maturities of  Equipment Loans                                   -             540,264                  540,264
                                                                -----------        ------------             ------------
            Total Current Liabilities                             1,119,514           1,180,019                1,180,019
Equipment  Loans                                                          -             661,939                  661,939
Convertible Debt                                                          -           4,997,026                1,175,968
                                                                -----------        ------------             ------------
            Total Liabilities                                     1,119,514           6,838,984                3,017,926
                                                                -----------        ------------             ------------

Commitments and Contingencies (Notes 1,4,5 and 9)

                STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, $.01 par value, 5,000,000 shares authorized, 
none issued                                                               -                   -                7,550,000
Common Stock, $.01 par value, 20,000,000 shares authorized,
4,615,000 shares issued and outstanding at December 31, 1996 
and  5,316,696 issued and outstanding at December 31, 1997           46,150              53,167                   66,167
Additional Paid in Capital                                        6,481,159          12,427,394               11,485,452
Accumulated Deficit                                              (2,862,653)        (13,618,223)             (13,618,223)
                                                                -----------        ------------             ------------
            Total Stockholders' Equity (Deficit) (Note 10)        3,664,656          (1,137,662)               5,483,396
                                                                -----------        ------------             ------------
            Total Liabilities & Stockholders' Equity (Deficit)  $ 4,784,170        $  5,701,322             $  8,501,322
                                                                ===========        ============             ============

</TABLE>

    The accompanying notes are an integral part of these financial statements.


                                        24

<PAGE>

                                 VISUAL EDGE SYSTEMS
                               STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                              For the years ended
                                                                  December 31,
                                                          ----------------------------
                                                               1996           1997   
                                                          ------------- --------------

<S>                                                       <C>           <C>
Sales                                                      $         -   $  1,381,111

Cost of Sales                                                        -      1,567,473
                                                           -----------   ------------

Gross Loss                                                           -       (186,362)
                                                           -----------   ------------

Operating Expenses:
 General and Administrative                                  1,552,062      4,565,007
 Selling and Marketing                                         264,772      2,072,537
 Financing Fees (Note 5)                                             -      1,049,049
 Non-cash Stock Compensation Expense (Note 9)                  600,000        243,257
                                                           -----------   ------------
          Total Operating Expenses                           2,416,834      7,929,850
                                                           -----------   ------------
          Operating Loss                                    (2,416,834)    (8,116,212)
                                                           -----------   ------------
Other (Income) Expenses:
 Interest Income                                               (69,998)      (111,140)
 Interest Expense                                               50,854        508,080
 Amortization of Deferred Financing Fees (Note 5)                    -      1,243,418
                                                           -----------   ------------
          Total Other (Income) Expenses                        (19,144)     1,640,358
                                                           -----------   ------------
          Net Loss Before Extraordinary Expense             (2,397,690)    (9,756,570)
 Extraordinary Expense - Early retirement of debt
   (Note 5a)                                                         -        999,000
                                                           -----------   ------------
          Net Loss                                         $(2,397,690)  $(10,755,570)
                                                           ===========   ============
Net Loss per Share, basic and diluted:
 Net Loss before Extraordinary Expense                     $     (0.63)  $      (2.05)
 Extraordinary Expense                                            -.00          (0.21)
                                                           -----------   ------------
          Net Loss per Share                               $     (0.63)  $      (2.26)
                                                           ===========   ============

Weighted average common shares outstanding (Note 1g)         3,801,250      4,758,605
                                                           ===========   ============

</TABLE>

    The accompanying notes are an integral part of these financial statements.


                                        25

<PAGE>

<TABLE>
<CAPTION>

                                                   VISUAL EDGE SYSTEMS INC.
                                         STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                        For the Years Ended December 31, 1996 and 1997


                                                              Common Stock        Additional
                                                       -------------------------    Paid-in          Accumulated         
                                                        Shares            Amount    Capital            Deficit       Total
                                                       -----------       --------  ------------   -------------  -------------

<S>                                                    <C>              <C>        <C>           <C>            <C>
Balance at December 31, 1995                            3,000,000        $30,000    $   385,460   $   (464,963)  $    (49,503)

Issuance of common stock                                1,615,000         16,150      5,495,699              -      5,511,849
Common stock issued by stockholders for services                -              -        600,000              -        600,000
Net loss                                                        -              -              -     (2,397,690)    (2,397,690)
                                                        ---------        -------    -----------   ------------   ------------
Balance at December 31, 1996                            4,615,000         46,150      6,481,159     (2,862,653)     3,664,656

Common stock issued in connection with the March 
bridge financing                                          100,000          1,000        999,000              -      1,000,000
Warrants issued in connection with the March bridge 
financing                                                       -              -        665,000              -        665,000
Common stock issued in connection with the June 
convertible debt financing                                288,025          2,880      1,755,619              -      1,758,499
Warrants issued in connection with the June 
convertible debt financing                                      -              -        962,012              -        962,012
Common stock issued for services                          270,000          2,700        997,300              -      1,000,000
Options and warrants issued for services                        -              -        458,237              -        458,237
Exercise of options                                        25,000            250        127,750              -        128,000
Issuance of common stock for payment of interest on 
convertible debt                                           65,671            657        333,101              -        333,758
Repurchase and cancellation of common stock               (47,000)          (470)      (351,784)             -       (352,254)
Net loss                                                        -              -              -    (10,755,570)   (10,755,570)
                                                        ---------        -------    -----------   ------------   ------------
Balance at December 31,1997                             5,316,696        $53,167    $12,427,394   $(13,618,223)  $ (1,137,662)
                                                        =========        =======    ===========   ============   ============

</TABLE>

    The accompanying notes are in integral part of these financial statements.


                                        26

<PAGE>

                                           VISUAL EDGE SYSTEMS INC.
                                           STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                         For the years ended
                                                                                            December 31,
                                                                                    ---------------------------
                                                                                        1996           1997   
                                                                                    ------------  -------------
<S>                                                                                <C>           <C>
Operating activities:
Net loss                                                                            $(2,397,690)  $(10,755,570)
Adjustments to reconcile net loss to net cash used in operating acitivities:
     Extraordinary Item                                                                       -        999,000
     Non-cash stock compensation expense                                                600,000        243,257
     Non-cash financing expenses                                                              -      1,036,000
     Non-cash interest expenses                                                               -        333,758
     Depreciation and amortization                                                      155,546      1,128,964
     Amortization of deferred financing expenses                                              -      1,243,418
     Changes in assets and liabilities:
          Increase in accounts receivable                                                     -        (23,917)
          Increase in other current assets                                             (117,503)      (136,469)
          Increase in prepaid expense - advance royalties                              (300,000)       (50,000)
          Increase in inventory                                                         (23,202)       (36,024)
          Increase (decrease) in accounts payable                                        63,852         11,770
          Increase (decrease) in accrued expenses                                       271,182       (111,295)
          Increase in other current liabilities                                           1,500        119,766
                                                                                    -----------   ------------
          Net cash used in operating activities                                      (1,746,315)    (5,997,342)
                                                                                    -----------   ------------
Investing activities:
     Capital expenditures                                                            (1,365,365)       (71,457)
     Increase in intangible assets                                                     (398,558)             -
     Purchases of short-term investments                                             (3,508,015)    (3,523,667)
     Proceeds from the sale of short-term investments                                 1,638,963      3,500,000
                                                                                    -----------   ------------
          Net cash used in investing activities                                      (3,632,975)       (95,124)
                                                                                    -----------   ------------
Financing activities:
     Proceeds from issuance of common stock upon exercise of options                  5,511,849        128,000
     Repurchase common stock                                                                  -       (352,254)
     Repayment of borrowings                                                         (1,615,000)    (4,351,968)
     Payments of financing costs                                                              -       (340,000)
     Proceeds from borrowings                                                         1,715,000     11,000,000
                                                                                    -----------   ------------
          Net cash provided by financing activities                                   5,611,849      6,083,778
                                                                                    -----------   ------------
          Net increase (decrease) in cash and cash equivalents                          232,559         (8,688)
Cash and cash equivalents at beginning of period                                            558        233,117
                                                                                    -----------   ------------
Cash and cash equivalents at end of period                                          $   233,117   $    224,429
                                                                                    ===========   ============
Supplemental schedule of cash related activities:
     Cash paid for interest                                                         $    50,854   $    174,069
                                                                                    ===========   ============
Supplemental disclosure of noncash related activities:
     In 1997, the Company, in connection with the March Bridge Financing and
     the June Convertible Debt Financing, recorded non-cash financing fees of
     $1,665,000 and $2,720,511, respectively, related to the issuance of the 
     Company's securities.

     In 1997, the Company, in connection with its Equipment Financing, 
     recorded non-cash financing fees of $178,980 related to the issuance of 
     warrants to purchase the Company's common stock.

     In 1997 the Company entered into capital lease and equipment financing 
     transactions totaling $1,713,270 for the Company's mobile production 
     units.

</TABLE>

    The accompanying notes are an integral part of these financial statements.


                                        27

<PAGE>


                               VISUAL EDGE SYSTEMS INC.


                            NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1996 AND 1997

(1)  BACKGROUND

          Visual Edge Systems Inc. (the "Company") was organized to develop and
          market personalized videotape golf lessons featuring ONE-ON-ONE
          instruction by professional golfer Greg Norman. Through December
          31,1996, the Company focused its efforts on developing video
          production technology which digitally combines actual video footage of
          a golfer's swing with a synchronized "split-screen" comparison to Greg
          Norman's golf swing to produce a ONE-ON-ONE videotape golf lesson. The
          Company sells its products under the name "ONE-ON-ONE WITH GREG
          NORMAN". 

          The Company was incorporated in July 1994 and commenced developmental
          operations in January 1995.  From the Company's inception through the
          end of December 31, 1996, it was primarily engaged in product
          development, market development, technology testing, recruitment of
          key personnel, capital raising and preparation of the software,
          hardware and videotape coaching instructions used in the production of
          its products.  As a consequence, the Company did not generate any
          revenue and operated as a development stage company through December
          31, 1996.  The Company emerged from its development stage and
          commenced generating revenue from its primary business activities
          during the first quarter of fiscal 1997.

          The Company's primary marketing strategy is to sell "ONE-ON-ONE WITH
          GREG NORMAN" videotapes on a prearranged basis to various organizers
          of amateur corporate, charity and member golf tournaments (who
          typically offer gifts to tournament participants), golf professionals
          at private and daily fee golf courses and driving ranges and indoor
          event planners who organize trade shows, conventions, sales meetings,
          retail store openings and promotions and automobile dealer showroom
          promotions. To implement its marketing and business strategy, the
          Company has developed 15 mobile production facilities ("vans")
          equipped with video and personal computer equipment to market, promote
          and produce the Company's products.  The Company has positioned its 15
          ONE-ON-ONE vans in selected geographic areas that service golf courses
          and driving ranges throughout the United States, including Arizona,
          California (2), Florida, Georgia, Illinois, Maryland, Massachusetts,
          Michigan, Nevada, New Jersey, New York, Texas, Ohio and Pennsylvania. 
          The Company anticipates that additional vans will be developed and
          situated based on the demand for the Company's products.

          The Company entered into an agreement with Cadillac Motor Car 
          Division of General Motors ("Cadillac") on August 5, 1997 (the 
          "Cadillac Agreement").  The Cadillac Agreement granted Cadillac the 
          exclusive U.S. dealership showroom rights to the Company's 
          ONE-ON-ONE WITH GREG NORMAN concept and allowed Cadillac to 
          exclusively offer its customers a free video golf lesson personally 
          analyzed by Greg Norman if they test drove a Cadillac.  Pursuant to 
          the Cadillac Agreement, the Company provides each participating 
          Cadillac dealership with all the marketing materials related to 
          this promotion, including creative pieces for print and radio 
          advertisements, banners, posters, and direct mail invitations. 

          In December 1997, the Company and Cadillac amended the
          Cadillac Agreement (the "Amended Agreement"), and extended the 


                                          28

<PAGE>

          dealership showroom rights granted to Cadillac, subject to the 
          limitations on exclusivity set forth below.  The Amended Agreement
          also extended the rights to the Company's concept to other General
          Motors divisions. Provided that the Company has enough vans in 
          operation to service all of the Cadillac or General Motors dealers
          on a nationwide basis, for the period from December 18, 1997 
          through December 31, 1998, Cadillac, combined with General Motors,
          has guaranteed to purchase a total of 1,500 "Event Days" from the 
          Company or one "Event Day" for each Cadillac dealership where the 
          Company has a van in the area to service the dealership, whichever
          is less. The Company currently has 15 vans in operation, though it
          believes it will need approximately 25 vans to potentially realize
          the minimum guarantee of 1500 "Event Days" for 1998. The Company 
          believes that it will require 30 to 35 vans in the years 1999 and 
          2000 to potentially realize the minimum guarantee of 2500 "Event 
          Days". Each "Event Day" is a day on which one of the Company's 
          ONE-ON-ONE vans appears at a Cadillac or other General Motors 
          dealership to provide up to 165 instructional videotapes for the 
          dealership's customers.  On or prior to August 31, 1998, the 
          Company must notify Cadillac as to whether the guaranteed number of 
          "Event Days" are scheduled to be conducted by December 31, 1998.  
          If 1,500 "Event Days" are not scheduled and conducted by December 
          31, 1998, then the Company is no longer obligated to provide its 
          product exclusively to Cadillac, and may offer its product to auto 
          dealerships other than Cadillac and General Motors dealerships.  In 
          each of the periods from January 1, 1999 through December 31, 1999 
          and January 1, 2000 through December 31, 2000, the terms of the 
          Amended Agreement remain the same, except that the number of "Event 
          Days" guaranteed by Cadillac, combined with General Motors, 
          increases to 2,500 in each of such periods. In the event that in 
          any given year the number of actual "Event Days" conducted by the 
          Company is less than the number of "Event Days" guaranteed by 
          Cadillac, combined with General Motors, then the Company is no 
          longer obligated to provide its product exclusively to Cadillac and 
          General Motors; in such event Cadillac and General Motors, however, 
          have no obligation to pay the Company for the difference between 
          the guaranteed number of "Event Days" and the actual number of 
          "Event Days" provided by the Company to Cadillac and General Motors 
          dealerships. 
          
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  ACCOUNTING 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 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.

     (b)  REVENUE RECOGNITION

          Revenue from sale of  personalized videotapes is recognized when the
          Company delivers the videotapes to the customer.  Deposits received in
          advance of videotape delivery are recorded as cutomer deposits which
          are included in other current liabilites in the accompanying 1997
          balance sheet.

     (c)  FIXED AND INTANGIBLE ASSETS

          Fixed assets are stated at cost.  Depreciation is calculated on a
          straight-line basis over the estimated useful lives of the assets
          which range from 3 to 5 years.  Intangible assets consist primarily of
          video production costs.  The costs of video production are amortized
          on a straight-line basis over a period of 4 years, the estimated
          useful lives of the intangible assets.


                                          29

<PAGE>

          The Company adopted the provisions of Statement of Financial
          Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
          of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" on
          January 1, 1996.  The adoption of SFAS No. 121 did not have a material
          effect on the Company's financial statements.  This Statement requires
          that long-lived assets and certain identifiable intangibles be
          reviewed for impairment whenever events or changes in circumstances
          indicate that the carrying amount of an asset may not be recoverable. 
          Recoverability of assets to be held and used is measured by a
          comparison of the carrying amount of an asset to undiscounted future
          net cash flows expected to be generated by the asset.  If such assets
          are considered to be impaired, the impairment to be recognized is
          measured by the amount by which the carrying amount of the assets
          exceed fair value.

     (d)  PREPAID EXPENSES-ADVANCE ROYALTIES

          As discussed in Note 9(a), the Company is required to pay a royalty 
          payment of 8% of all net revenues. Guaranteed minimum royalty 
          payments are capitalized and expensed as revenues are earned. The 
          Company continually evaluates the expected realization of the 
          carrying value of the prepaid royalty and, if necessary, reduces 
          the carrying value to reflect management's best estimate of the 
          amounts to be recovered in future periods.

     (e)  INCOME TAXES

          In accordance with SFAS No. 109, "Accounting for Income Taxes,"
          deferred tax assets or liabilities are computed based upon the
          difference between the financial statement and income tax basis of
          assets and liabilities using the enacted marginal tax rate applicable
          when the related asset or liability is expected to be realized or
          settled.  Deferred income tax expense or benefit is based on the
          changes in the asset or liability from period to period.  If available
          evidence suggests that it is more likely than not that some portion or
          all of the deferred tax assets will not be realized, a valuation
          allowance is required to reduce the deferred tax assets to the amount
          that is more likely than not to be realized.  Future changes in such
          valuation allowance would be included in the provision for deferred
          income taxes in the period of change.

     (f)  CONCENTRATION OF CREDIT RISK

          The Company has no significant off-balance sheet concentrations of
          credit risk.

     (g)  FAIR VALUE OF FINANCIAL INSTRUMENTS

          The carrying amounts of cash, short-term investments, accounts
          receivable, prepaid expenses-advance royalties, and other current
          assets as well as accounts payable, accrued expenses and other current
          liabilities as reflected in the accompanying financial statements
          approximate fair value due to the short term maturity of these
          instruments.  The fair value of equipment loans and the convertible
          debt is estimated using an appropriate valuation method and
          approximates the carrying amount of the equipment loans and the
          convertible debt in the accompanying December 31, 1997 balance sheet.

     (h)  LOSS PER SHARE

          The Company adopted SFAS No. 128, "Earnings Per Share" during 1997. 
          SFAS No. 128 establishes standards for computing and presenting 
          basic and diluted earnings per share.   Basic earnings per share is 
          calculated by dividing income (loss) available to Common 
          Stockholders by the weighted average number of shares of Common 
          Stock outstanding during each period.  Diluted 

                                          30

<PAGE>

          earnings per share includes the potential impact of dilutive common
          share equivalents using the treasury stock method.  Convertible
          securities and common share equivalents have not been included in the
          computation of diluted loss per share in the accompanying statements
          of operations as their impact is antidilutive.

          Pursuant to SFAS No. 128 as interpreted by Staff Accounting Bulletin
          ("SAB") No. 98, "Computations of Earnings Per Share," Common Stock
          issued by the Company for nominal consideration just prior to its
          initial public offering have been included in the calculation of
          weighted average shares for all periods presented even though their
          effect is antidilutive.  The computation of weighted average common
          shares and common share equivalents outstanding for the year ended
          December 31, 1997 is as follows:

<TABLE>
<CAPTION>

                                                            1996       1997
                                                            ----       ----
<S>                                                        <C>        <C>
          Weighted average common shares outstanding,
               exclusive of issuances within twelve 
               months prior  to the Company's initial 
               public offering in 1996                      3,581,250  4,758,605
          Shares issued within twelve months prior to 
               the Company's initial public offering 
               assumed to be outstanding for the
               entire period                                  220,000          
                                                            ---------  ---------
          Weighted average common shares outstanding        3,801,250  4,758,605
                                                            =========  =========

</TABLE>

     (i)  STOCK OPTION PLAN

          Under the provisions of SFAS No. 123, "Accounting for Stock-Based
          Compensation," companies can either measure the compensation cost of
          equity instruments issued under employee compensation plans using a
          fair value based method, or can continue to recognize compensation
          cost using the intrinsic value method under the provisions of
          Accounting Principles Board ("APB") Opinion No. 25.  The Company
          intends to recognize compensation costs, where appropriate, under the
          provisions of APB No. 25, and has provided the expanded disclosure
          required under SFAS No. 123 for the years ending December 31, 1996 and
          1997 (see Note 8).

     (j)  SHORT-TERM INVESTMENTS

          Short-term investments consist of discount notes and treasury bills
          and are available for sale.  The difference between the carrying value
          and fair value of short-term investments is immaterial at December 31,
          1997. 

     (k)  RECENT ACCOUNTING PRONOUNCEMENT

          In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
          Income" which is required to be adopted in fiscal years beginning
          after December 15, 1997.  This statement requires the reporting and
          display of comprehensive income and its components in a full set of
          general-purpose financial statements. Comprehensive income is defined
          as the change in equity during the financial reporting period of a
          business enterprise resulting from non-owner sources.  The Company
          will adopt SFAS No. 130 on January 1, 1998.

          In June 1997, the FASB issued SFAS No. 131, "Disclosures about
          Segments of an Enterprise and Related Information", which is required
          to be adopted in fiscal years beginning after December 15, 1997.  This
          statement establishes standards for the way that public business 


                                          31

<PAGE>

          enterprises report information and related disclosures about products,
          services, geographic areas and major customers. The Company will adopt
          SFAS No. 131 on January 1, 1998.

          The Company's management believes the adoption of SFAS Nos. 130 and
          131 will not have a material impact on its financial position or
          results of operations.

(2)  FIXED ASSETS, NET

          Fixed assets, including equipment and mobile production units acquired
          under capital leases, consist of the following at December 31, 1996
          and 1997:

<TABLE>
<CAPTION>

                                                                          LIVES
                                                  1996       1997        (YEARS)
                                                  ----       ----        -------
<S>                                           <C>          <C>           <C>
          Mobile video-tape production units   $  951,653   $2,394,704      5
          Product development equipment           407,184      489,149    3 - 5
          Training and processing equipment       112,302      116,271      5
          Office furniture and equipment          144,808      382,399      5
          Trade show exhibits                     144,787      146,657      5
                                               -----------------------
                                                1,760,734    3,529,180
          Less accumulated depreciation          (135,908)    (896,354)
                                               -----------------------
          Fixed assets, net                     1,624,826    2,632,826
                                               =======================

<CAPTION>

(3)  INTANGIBLE ASSETS, NET

          Intangible assets consist of the following at December 31, 1996 and
          1997:  

                                                  1996       1997
                                                  ----       ----
<S>                                             <C>         <C>
          Video and marketing production costs   $674,366    $ 447,404
          Deferred organizational costs            29,428       29,428
                                                 ---------------------
                                                  703,794      476,832
          Less accumulated amortization           (87,324)    (189,846)
                                                 ---------------------
          Intangible assets, net                 $616,470    $ 286,986
                                                 =====================

</TABLE>

(4)  LEASES

          The Company has two noncancelable operating leases for corporate 
          office space that expire in 1998 and 1999.  Rental payments include
          minimum rentals plus building expenses.  Rental expense for these 
          leases during 1996 and 1997 was $16,984 and $107,863, respectively.
          Future minimum lease payments under these leases as of December 31,
          1997 are as follows:

<TABLE>

<S>                                                   <C>
               1998                                    $108,374
               1999                                      78,398
                                                       --------
               Minimum lease payments                  $186,772
                                                       ========

</TABLE>


                                          32

<PAGE>

(5)  FINANCINGS

     (a)  MARCH BRIDGE FINANCING

          In March 1997, the Company consummated a bridge financing (the 
          "March Bridge Financing") pursuant to which it issued to 13 
          investors (including Status-One Investments Inc., a company 
          controlled by the family of the Chief Executive Officer of the 
          Company), a non-cash financing fee of (i) 100,000 shares of common 
          stock and (ii) 100,000 warrants to purchase 100,000 shares of 
          common stock at a price of $10.00 per share, subject to adjustment 
          in certain circumstances. As consideration for such securities, the 
          investors in the March Bridge Financing pledged an aggregate of 
          $3,500,000 in cash and other marketable securities as cash 
          collateral (the "Cash Collateral") to various banks, which in turn 
          issued stand-by letters of credit (the "Letters of Credit") to the 
          Company in the aggregate amount of up to $3,500,000. The Company 
          used the Letters of Credit to secure a $3,500,000 line of credit 
          (the "Line of Credit") from a bank.  In June 1997, the Company used 
          a portion of the proceeds from the issuance and sale of certain 
          securities, outlined hereafter in note 5(b), to repay the remaining 
          outstanding balance due and owing on the Line of Credit and 
          returned the Letters of Credit to the various banks, which in turn 
          returned all of the Cash Collateral to the March Bridge Financing 
          investors.

          The Company valued the non-cash financing fee in accordance with SFAS
          No. 123, which resulted in the recording of original issue discounts 
          and financing fees of $1,665,000.  At the time of the repayment of the
          outstanding balance due under the Line of Credit, the Company had
          amortized $666,000 of the fees.  The remaining fees of $999,000 are
          reflected as an extraordinary item in the accompanying statement of
          operations for the year ended December 31, 1997. 

     (b)  JUNE CONVERTIBLE FINANCING

          On June 13, 1997, the Company arranged a three-year $7.5 million debt
          and convertible equity facility (the "June Financing") with a group of
          investment funds (the "Funds").  The Company issued and sold to the
          Funds the following securities pursuant to the Securities Purchase
          Agreement, dated as of June 13, 1997 (the "Agreement"), among the
          Company and the Funds: (i) 8.25% unsecured convertible notes (the
          "Notes") in the aggregate principal amount of $7,500,000 with a 
          maturity date of three years from the date of issuance, subject to 
          the mandatory automatic exchange of $5 million of the Notes for 
          preferred stock, par value $.01 per share (the "Preferred Stock"), 
          which Notes are convertible into shares of common stock (the "Note 
          Conversion Shares") at any time and from time to time commencing 
          January 1, 1998 at the option of the holder thereof subject to 
          certain limitations on conversion set forth in the Agreement; (ii) 
          93,677 shares of common stock  subject to adjustment (the "Grant 
          Shares"); and (iii) five-year warrants (the "June Warrants") to 
          purchase 100,000 shares of common stock (the "Warrant Shares") at an 
          exercise price equal to $10.675. The Warrants are redeemable 
          commencing October 1, 1998 at a redemption price equal to $.10 per 
          share, subject to adjustment based on a 20-day minimum closing bid 
          price of the Company's common stock. The net proceeds to the Company
          from the sale of the Notes, Grant Shares and June Warrants was
          $7,236,938.  In addition, the Company issued 14,052 shares (the "IPO
          Underwriters Shares") of common stock to the underwriter in the
          Company's initial public offering as a fee for services rendered in
          connection with the transactions contemplated by the Agreement. 


                                          33

<PAGE>

          Pursuant to the Agreement, the Company was required to issue 
          additional Grant Shares (the "Additional Grant Shares") to the 
          Funds in the event that the closing bid price of the Company's 
          common stock for each trading day during any consecutive 10 trading 
          days from June 13, 1997 through December 31, 1997 did not equal at 
          least $10.00 per share.  The Company issued 180,296 Additional 
          Grant Shares during the fourth quarter of 1997.

          Interest payments on the Notes are, at the option of the Company, 
          payable in cash or in shares of common stock.  During 1997 the 
          Company issued an aggregate of 65,671 shares (the "Interest 
          Shares") for payment of interest due of $333,758. 

          On February 6, 1998 $6 million principal amount of outstanding 
          Notes was converted into 6,000 shares of Preferred Stock (the 
          "First Amendment"). The Preferred Stock has a liquidation 
          preference of $1,000 per share and is senior to the Common Stock
          with respect to dividends, liquidation and dissolution. Each share 
          of Preferred Stock entitles the holder to an annual dividend of 
          8.25%, payable on a quarterly basis, which dividend increases to 
          18% in certain situations as specified in the Amended Certificate 
          of Designation with respect to the Preferred Stock. Holders of the 
          shares of Preferred Stock do not have voting rights, except upon 
          the occurrence of certain events that would affect the preferences 
          and rights of the Preferred Stock. Each share of Preferred Stock is 
          convertible into Common Stock at the lesser of; (i) $6.00 per share 
          of Common Stock or (ii) a discount ranging from 15% to 22.5% of the 
          market price of Common Stock at the time of conversion; in certain 
          circumstances, the conversion price may be as low as 50% of the 
          market price of the Common Stock at the time of conversion. The 
          Preferred STock is redeemable by the Company at any time at its 
          option. In addition, the holder of a majority of the outstanding 
          Preferred Stock have the right to appoint one director to the 
          Company's Board of Directors, through they had not named such 
          director at March 30, 1998.

          The Board of Directors is authorized, without further approval of 
          the stockholders, to fix the dividend rights and terms, conversion 
          rights, voting rights, redemption rights and terms, liquidation 
          preferences, and any other rights, preferences, privileges and 
          restrictions applicable to each new series of Preferred Stock.

          The remaining $1.5 million of outstanding Notes held by the Funds have
          become secured debt pursuant to a Security Agreement, dated as of
          February 6, 1998 (the "Security Agreement"), between the Company and
          H.W. Partners, L.P., as agent for and representative of the Funds. 
          With respect to such $1.5 million in outstanding Notes, the Funds have
          been granted a security interest in the collateral described in the 
          Security Agreement, which includes all of the Company's unrestricted 
          cash deposit accounts, accounts receivable, inventory and equipment 
          and fixtures excluding the vans.

          The Company has issued to the Funds an aggregate of 200,000 warrants
          (the "New Warrants"), each to purchase one share of Common Stock
          (collectively, the "New Warrant Shares") at an exercise price equal to
          $4.00 per share.  The New Warrants are exercisable through December 
          2002 and are redeemable at the option of the Company, commencing 
          January 1, 2000, based on a 20-day minimum closing bid price of the 
          Company's common stock, at a redemption price equal to $.10 per share.
          The New Warrants also contain a "cashless exercise" feature.

          The issuance of the Grant Shares, June Warrants, IPO Underwriters 
          Shares and the New Warrants resulted in the recording of financing 
          costs of $2,720,511.  Additionally, the Company paid financing costs
          of $340,000 in connection with the Agreement.  As $5 million of the 
          Notes were automatically convertible to Preferred Stock as of 
          January 1, 1998, the total financing fees incurred were allocated to 
          equity and debt costs on a pro rata basis consistent with the portion
          of the Notes subject to the automatic conversion feature. The entire 
          cost of the financing has been recorded as a reduction of the carrying
          value of the Notes, while the portion of the financing fees 
          attributable to debt costs are recorded as an original issue discount
          and are being amortized using a method which approximates the interest
          method over the term of the Notes. The remaining cost of the financing
          will be reflected as an equity financing cost in 1998 upon automatic 
          conversion of the Notes in 1998.

          On March 16, 1998, the Company sold an additional 1,550 shares of 
          Preferred Stock to the Funds in exchange for non-marketable securities
          with an aggregate fair value of $1,550,000 (See note 5(b)). The 
          securities consist of warrants to acquire common shares of various 
          publicly traded companies and the fair value has been determined 
          using the Black Scholes model. In connection therewith, the Funds as 
          the holders of the majority of the outstanding Preferred Stock 
          obtained the right to appoint one director to the Company's Board 
          of Directors, though they had not named such directors as of 
          April 3, 1998.

          As a condition to the consummation of the Marion Equity Financing (see
          Note 5c), the Company entered into the Agreement and Second Amendment 
          to Bridge Securities Purchase Agreement and Related Documents (the 
          "Second Amendment"), dated March 27, 1998, among the Company and the 


                                          34

<PAGE>

          Funds.  Pursuant to the Second Amendment, the Funds agreed that 
          they would not convert, prior to December 31, 1998, any shares of 
          Preferred Stock or any principal amount of the Notes into shares of 
          Common Stock, unless a "Material Transaction" (defined as a change 
          of control of the Company, a transfer of all or substantially all 
          of the Company's assets or a merger of the Company into another 
          entity) has occurred.  Further, the Funds agreed that they would 
          not, prior to March 31, 1999, publicly sell any shares of Common 
          Stock owned or acquired by the Funds, unless a Material Transaction 
          has occurred; the Funds are permitted, after June 30, 1998 and 
          subject to the Company's right of first refusal, to privately sell 
          any shares of Common Stock that they own or acquire, provided the 
          purchaser agrees in writing to be bound by the same resale 
          restrictions.

          The Funds have granted to the Company an option to redeem the 
          Preferred Stock and the Notes owned by the Funds as follows:  (i) up 
          to $2,500,000 principal amount may be redeemed on or before April 30, 
          1998;  (ii) an additional $2,500,000 principal amount may be redeemed 
          on or before May 31, 1998; and (iii) an additional $2,500,000 
          principal amount may be redeemed from and after June 1, 1998.  If 
          the date that the Company redeems such Preferred Stock and Notes is 
          on or before June 30, 1998, the redemption price will be 80% of the 
          principal amount outstanding of the Notes being redeemed or 80% of 
          the liquidation preference of the Preferred Stock being redeemed, 
          plus accrued interest and dividends in the event that all of the 
          Preferred Stock and Notes owned by the Funds are not redeemed by 
          June 30, 1998.  If the redemption of the Notes and Preferred Stock 
          is after June 30, 1998 but on or before December 31, 1998, the 80% 
          referred to in the preceding sentence shall increase by 2% per 
          month, up to 90% in December 1998.  If the redemption of the Notes 
          and Preferred Stock occurs after December 31, 1998, the redemption 
          price shall be as provided in the original agreement between the 
          Company and the Funds.  The Company is required to redeem all of 
          the Preferred Stock outstanding prior to redemption of any of the 
          Notes.  In addition, the Funds have granted to the Company and to 
          Marion (Note 5c) an option to acquire, on or before March 31, 1999,
          all of the shares of Common Stock owned by the Funds.

          In connection with the Second Amendment, the funds received 100,000 
          shares of Common Stock, as well as the right to receive 200,000 
          additional shares of Common Stock in the event that all of the 
          Preferred Stock and Notes owned by the Funds have not been redeemed 
          by the Company by June 30, 1998.  Further, the exercise price of 
          the June Warrants has been reduced from $10.675 per share to $3.25 
          per share and the exercise price of the New Warrants has been 
          reduced from $4.00 per share to $3.25 per share.  The Company has 
          agreed to register all of such shares of Common Stock 
          (including the shares underlying warrants) under the Securities Act 
          of 1933, as amended.

     (c)  MARION EQUITY FINANCING

          In March 1998, the Company entered into a Purchase Agreement (the 
          "Marion Agreement") with Marion Interglobal, Ltd., an investment 
          group ("Marion").  The Marion Agreement calls for the Company to 
          receive up to $11,000,000 from Marion in exchange for shares of 
          Common Stock as explained herein.  Pursuant to the Marion 
          Agreement, the purchase of Common Stock is to occur in three 
          tranches as follows: (i) on March 27, 1998 the Company sold to 
          Marion 1,200,000 shares of Common Stock for an aggregate 
          consideration of $3,000,000; $1,500,000 of the $3,000,000 has been 
          funded, with the remaining $1,500,000 to be funded on the business 
          day after the Company's registration statement with respect to 
          the shares sold to Marion has been declared effective by the 
          Securities and Exchange Commission; (ii) sixty days following the

                                          35

<PAGE>

          registration of all the underlying shares of Common Stock under the 
          Marion Agreement, the Company will sell to Marion 800,000 shares of 
          Common Stock for an aggregate consideration of $2,000,000; and 
          (iii) on or prior to September 30, 1998 the Company shall sell a 
          number of shares of Common Stock (to be determined by when the 
          closing occurs, which would range from 2,666,667 shares to 
          3,200,000 shares) for an aggregate consideration of $6,000,000. The 
          third tranche is contingent on Marion's satisfaction that the 
          Company has met or exceeded the financial targets expected by 
          Marion, in its sole discretion. The Company has agreed to use the 
          $6,000,000 in proceeds from the third tranche to redeem the Notes 
          and Preferred Stock issued in the June Financing.  The issuance and 
          sale of 1,400,000 shares of Common Stock in the first tranche and 
          all of the shares to be issued in the second tranche to Marion, is 
          subject to approval by the Company's stockholders.  The Company 
          will pay transaction fees to Marion upon completion of each tranche 
          as follows: (i) 1,200,000 shares of Common Stock for the first 
          $3,000,000 tranche; (ii) 800,000 shares of Common Stock for the 
          second $2,000,000 tranche; and (iii) no additional fee for the 
          completion of the third tranche. 

          Further, upon the consummation of the second tranche of the Marion 
          Agreement, Mr. Alan Lubell, Chairman of the Board of the Company, 
          has agreed to transfer to Marion 250,000 shares of Common Stock, 
          which shares are required to be registered under the Securities Act 
          of 1933, as amended.
 

          In addition, if the third tranche of the aforementioned financing 
          is completed, then until March 30, 2001, the Company is required to 
          obtain the prior written consent of Marion before the consummation 
          of any additional financing transaction except for any credit 
          facilities or lines of credit with lenders or equipment financing 
          arrangements. Further, the Company may not redeem the warrants 
          issued in the initial public offering (the "IPO Warrants") without 
          the prior written consent of Marion.

          As a condition to the consummation of this equity financing, the 
          Company renegotiated the terms of its outstanding Notes and 
          Preferred Stock with the Funds (see June Convertible Financing and 
          Note 5b for details).

     (d)  EQUIPMENT LOANS

          In August 1997, the Company entered into an equipment financing 
          facility whereby the Company will be provided with up to $2.5 
          million in financing by September 1998.   The facility provides the 
          Company with equipment financing of $100,000 for each of its next 
          25 vans, each of which is anticipated to cost approximately 
          $150,000.  The Company has drawn on $800,000 of the facility to 
          finance eight vans purchased in May 1997. The outstanding balance 
          bears interest at the rate of 11.62% and is payable in 36 
          consecutive monthly payments of $25,328 which commenced in August 
          1997, followed by one balloon payment of $47,040. The Company has 
          pledged to Vision a certificate of deposit in the aggregate amount 
          of $200,000 in connection with the financing of the first eight 
          vans which is included in investments-restricted in the 
          accompanying December 31, 1997 balance sheet.  Future payments 
          under the facility are as follows:

<TABLE>

<S>                                                  <C>
               For the year ended December 31,
                1998                                  $ 303,936
                1999                                    303,936
                2000                                    199,008
                                                      ---------
                                                        806,880
               Less amount representing interest        (96,615)
                                                      ---------
               Present value payments                   710,265
               Less current portion                    (234,985)
                                                      ---------
               Non current portion                    $ 475,280
                                                      =========

</TABLE>

          In connection with the Equipment Financing, the Company issued 
          warrants to purchase 75,000 shares of the Company's common stock at 
          a price per share of $10.00 (subject to adjustment in certain 
          circumstances) at any time prior to August 20, 2000. The fair value 
          of the warrants ($178,980) was recorded as an original issue 
          discount and is being amortized using a method 


                                          36

<PAGE>

          which approximates the interest method over the term of the equipment
          financing.  The unamortized portion of the original issue discount is
          $159,099 at December 31, 1997. 

          The Company acquired certain fixed assets under leases totaling 
          $913,170, which are accounted for as capital leases.  As a 
          condition of the leases the Company is required, throughout the 
          term of the leases, to post letters of credit in the aggregate 
          amount of $538,902 for collateral on the leases.  The letters of 
          credit were issued from the Company's bank and the Company pledged 
          one of its investment funds with a balance of $612,719 as security, 
          which is included in investments-restricted in the accompanying 
          December 31, 1997 balance sheet. Future minimum lease payments 
          under capital lease obligations together with the present value of 
          the net minimum lease payments as of December 31, 1997 are as 
          follows:

<TABLE>

<S>                                                            <C>
               For the year ended December 31,
                1998                                            $ 353,172
                1999                                              348,992
                2000                                               16,706
                                                                ---------
               Minimum lease payments                             718,870
               Less amount representing interest                  (67,833)
                                                                ---------
               Present value of net minimum lease payments        651,037
               Less current portion                              (305,279)
                                                                ---------
               Non current portion                              $ 345,758
                                                                =========

</TABLE>

     (e)  FINANCING FEES

          In October, November and December of 1997 two companies provided 
          consulting services to the Company in an attempt to identify 
          financing sources. One of the companies, in exchange for its 
          services, received 270,000 shares of the Company's common stock at 
          an exercise price of $7.50 per share, with a fair market value of 
          $1,000,000, which is included in financing fees in the accompanying 
          1997 statement of operations. The other company, in exchange for 
          its services, received 10,548 options to purchase the Company's 
          common stock, with a fair market value of $36,000, which is 
          included in financing fees in the accompanying 1997 statement of 
          operations.

          During 1997 the Company incurred miscellaneous cash financing expenses
          of  $13,049 in connection with its financing activities. 

     (f)  BANK BORROWINGS

          In November 1996, the Company entered into a revolving line of credit
          arrangement with a financial institution for $4,000,000.  Through
          December 20, 1996, the line of credit bore an interest rate of 6.625%.
          Subsequent to December 20, 1996, the interest rate is 1.25% plus LIBOR
          (5.50% at December 31, 1996).  All investments held with the financial
          institution are pledged as collateral for the line of credit.  At
          December 31, 1996, the outstanding balance under this line was 
          $500,000.

(6)  COMMON STOCK

          Prior to its initial public offering, in March 1996, the Company's
          Board of Directors eliminated the Class A and B designation of its
          common stock and declared a recapitalization effective


                                          37

<PAGE>

          May 1996, whereby .488268 of a share and 4882.68 shares of common 
          stock with a par value of $.01 per share were issued for each Class A 
          and Class B share, respectively, of common stock outstanding on that 
          date. In addition, options to purchase Class A common stock were 
          converted into the right to purchase .5831847 shares of common 
          stock.  All share and per share information related to shares 
          issued prior to the recapitalization have been restated to reflect 
          the recapitalization.

          In April 1996, three shareholders transferred an aggregate of 300,000
          shares of common stock to Greg Norman, upon his exercise of an option
          granted to him pursuant to the terms of the Shareholders Agreement and
          Greg Norman License (see note 9a).  The fair value of the option 
          granted to Greg Norman of $600,000 has been recorded as non-cash 
          compensation expense in the accompanying 1996 statement of 
          operations.

          To generate funds to develop the Company's products and commence its
          planned primary business activities in May 1996 the Company raised
          $965,000, net of expenses, from the sale of 22 units, in a private
          placement for $50,000 per unit, each unit consisting of an 8% 
          unsecured promissory note in the principal amount of $50,000 and 
          10,000 shares of the Company's common stock.  The promissory notes 
          ($1,100,000) were repaid upon consummation of the Company's initial 
          public offering (IPO) in July 1996.

          In the July 1996 IPO, the Company sold 1,395,000 shares of common 
          stock and 1,495,000 redeemable warrants (the "IPO Warrants") to the 
          public.  The IPO Warrants are exercisable and grant the holder the 
          right to purchase one share of Common Stock at a price of $5.00 per 
          share, subject to adjustment in certain circumstances. The IPO 
          Warrants are redeemable by the Company, upon the consent of the IPO 
          underwriter, at a price of $.10 per Warrant, and subject to the 
          terms set forth therein. In the event that the Company calls the 
          IPO Warrants for redemption, it will be economically advantageous 
          for the warrant holders to exercise the IPO Warrants, resulting in 
          the issuance by the Company of up to 1,495,000 additional shares of 
          Common Stock. As of December 31, 1997, none of the warrants issued 
          in connection with the Company's IPO have been exercised.  Net 
          proceeds from the IPO were $5,511,849.  In addition, the Company 
          issued to the IPO underwriters 260,000 warrants to purchase Common 
          Stock at a price of $6.90 per share.

          A summary of Common Stock reserved for potential future issuances as
          of December 31, 1997 is as follows:

<TABLE>

<S>                                                                  <C>
          IPO warrants at $5.00 per share (Note 6)                    1,495,000
          Stock option plan for officers, directors, employees
               and consultants (Note 8)                                 912,871
          Warrants issued in connection with June Financing, 
               100,000 at $3.25 per share and 200,000 at $4.00
               per share (Note 5b)                                      300,000
          Employment agreement options at $5.00 per share (Note 9b)     250,000
          Warrants issued in connection with March Bridge 
               Financing at $10.00 per share (Note 5a)                  100,000
          Equipment financing warrants at $10.00 per share 
               (Note 5d)                                                 75,000
          Options granted to Greg Norman at $10.00 per share 
               (Note 9a)                                                 25,000
          Options granted for consulting services at $7.50 per 
               share (Note 5e)                                           10,548
                                                                      ---------
                                                                      3,168,419
                                                                      =========

</TABLE>


                                          38

<PAGE>

(7)  INCOME TAXES

          As of December 31, 1996 and December 31, 1997, the Company had
          approximately $1,075,000 and $5,011,000, respectively, of net deferred
          tax assets resulting primarily from net operating loss carryforwards. 
          Due to the uncertainty of the Company's ability to generate sufficient
          taxable income in the future to utilize such loss carryforwards, the 
          net deferred assets have been fully reserved as of December 31, 1996 
          and 1997.

          As of December 31, 1997 the Company's net operating loss carryforward
          is approximately $13,618,223 and expires as follows:

<TABLE>

<S>                                              <C>
                         2011                     $ 3,067,406
                         2012                      10,550,817
                                                  -----------
                                                  $13,618,223
                                                  ===========

</TABLE>

(8)  STOCK OPTION PLAN
     
          In April 1996, the Company adopted the 1996 Stock Option Plan (the 
          "Plan"), which provides for the granting to directors, officers, key 
          employees and consultants the greater of 800,000 shares of common 
          stock (reduced by the number of options which may be granted to two 
          executive officers pursuant to their employment agreements) or 12% 
          of the aggregate number of the Company's common stock outstanding, 
          whichever is greater.  Grants of options may be incentive stock 
          options (to a maximum of 300,000) or non-qualified stock options 
          and will be at such exercise prices, in such amounts, and upon such 
          terms and conditions, as determined by the compensation committee 
          of the board of directors. The term of any option may not exceed 
          ten years (unless granted as an incentive stock option to a 10% or 
          more stockholder, which terms may not exceed five years). In 
          February of 1997, the Plan was amended to increase the number of 
          shares reserved for issuance to the greater of 1,200,000 or 12% of 
          the Company's common stock outstanding and to include a provision 
          allowing the compensation committee to issue options under the Plan 
          at below fair market value.

          The Plan also provides for the automatic grant of 5,000 
          non-qualified stock options upon commencement of service of a 
          non-employee director and 2,500 options per year per director 
          thereafter.  The exercise price of the option may not be less than 
          100% of the market value of the Company's common stock at the time 
          of grant.  Such options vest one-third on the date of the grant and 
          one-third on the first two anniversary dates and have a term of 
          five years.

          The Company applies APB Opinion No. 25 in accounting for its Plan. 
          Had the Company determined compensation cost based on fair value at 
          the grant date for its stock options under SFAS No. 123, the 
          Company's net loss and net loss per share for the years ended 
          December 31, 1996 and 1997 would have increased to $3,579,469 and 
          $.94 and $12,575,665 and $2.64, respectively.


                                          39

<PAGE>

     Stock option activity during the periods is indicated as follows:

<TABLE>
<CAPTION>

                                                            Weighted Average
                                   Number of Shares         Exercise Price
                                   ----------------         --------------

<S>                                      <C>               <C>
     Balance at January 1, 1996            177,871          $5.00
               Granted                     787,871          $5.00
               Forfeited                  (177,871)         $5.00
                                          --------          -----
     Balance at December 31, 1996          787,871          $5.00
               Granted                     223,548          $7.07
               Exercised                   (25,000)         $5.12
               Forfeited                   (38,000)         $5.75
                                          --------          -----
     Balance at December 31, 1997          948,419          $5.46
                                          ========          =====

<CAPTION>

     At December 31, 1996 and December 31, 1997, 287,871 and 504,124 options 
     were exercisable, respectively.
     
     At December 31, 1997, the weighted average exercise price and 
     weighted-average remaining contractual life of outstanding options was as
     follows:

                                 Outstanding               Exercisable
                            -----------------------    -------------------
                                        Weighted-
                            Weighted    Average                  Weighted-
                            Average     Remaining                Average
     Exercise               Exercise    Contractual              Exercise
      Price       Shares    Price       Life           Shares    Price
     --------     ------    --------    -----------    ------    ---------
<S>              <C>       <C>         <C>            <C>       <C>
   $5.00- 5.75    873,871   $ 5.10      5.70           466,908   $ 5.00
      7.50         10,548     7.50      4.50            10,548     7.50
   10.00-10.75     64,000    10.06      6.34            26,668    10.05
                  -------                              -------
    5.00-10.75    948,419     5.46      5.73           504,124     5.16
                  =======                              =======

</TABLE>

          The fair value of each option grant is estimated on the date of 
          grant using an option pricing model with the following assumptions 
          used for grants in 1996 and 1997: risk free interest rate of 6.3%; 
          expected lives of 2.5 to 5 years; and expected volitility of 70%.  
          The fair value of options granted during 1996 and 1997 were $2.61 
          and $3.99 per share or $2,057,388 and $892,139, respectively.


(9)  COMMITMENTS AND CONTINGENCIES

     (a)  LICENSE AGREEMENT

          Effective March 1, 1995 the Company entered into a license agreement
          (the "Norman Agreement") with Greg Norman, a professional golfer, and
          Great White Shark Enterprises, Inc. ("Great White Shark"), pursuant to
          which the Company was granted a worldwide license to use Mr. Norman's
          name, likeness, endorsement and certain trademarks in connection with
          the production and promotion of the Company's products.  Mr. Norman 
          will receive guaranteed minimum payments against royalties of 8% of 
          all net revenues, as defined, derived from the sale of ONE-ON-ONE 
          videotapes. 


                                          40

<PAGE>

          As of June 3, 1997, the Company, Mr. Norman and Great White Shark 
          executed an amendment (the "Amendment") to the Norman Agreement.  
          Mr. Norman, Great White Shark and the Company agreed to restructure 
          the terms of the guaranteed minimum payments due to Mr. Norman 
          under the Agreement by:  (i) altering the payments such that Mr. 
          Norman will receive 102,000 in shares of the Company's common 
          stock;  (ii) changing the schedule of the payments such that they 
          will be paid to Mr. Norman over a period of time from January 1998 
          through April 2000; and (iii) granting to Mr. Norman 25,000 options 
          to purchase shares of Common Stock. Such options are exercisable at 
          a price of $10.00 per share, vest immediately and are exercisable 
          at Norman's discretion at any time prior to their expiration on 
          June 30, 2000.  The Company recorded a non-cash marketing expense 
          of $93,132 related to the options.

          The Amendment restructures the payments to Norman as follows: 

<TABLE>
<CAPTION>

                                                            Shares of
            For the year ended December 31,    Cash        Common Stock
            ------------------------------   ----------     ------------

<S>                                         <C>              <C>
                    1997                     $  600,000          -
                    1998                        700,000        30,000
                    1999                      1,200,000        48,000
                    2000                        480,000        24,000
                                             ----------       -------
                                             $2,980,000       102,000
                                             ==========       =======

</TABLE>

          Through December 31, 1996 and 1997, the Company made payments to 
          Mr. Norman amounting to $300,000 each year.  These payments are 
          presented in the accompanying 1996 balance sheet as prepaid 
          expenses-advance royalties. In 1997 the Company expensed $250,000  
          of these payments, which is included in the 1997 statement of 
          operations as a cost of sales, of the total $600,000 paid to date 
          and the remaining $350,000 is included in the accompanying 1997 
          balance sheet as prepaid expenses-advance royalties.  

          After the initial term, which ends on June 30, 2000, the Company 
          has the option to renew the Agreement for two additional five-year 
          periods (each five-year period, a "Renewal Term").  The guaranteed 
          fee to Norman in the first year of the first Renewal Term will be 
          $1,300,000, increasing by $100,000 each successive year thereafter. 
          All such fees will be payable in cash in equal quarterly 
          installments.

     (b)  EMPLOYMENT AGREEMENTS

          The Company entered into employment agreements with six executive 
          employees expiring through December 1998 which provide for 
          aggregate minimum annual compensation of approximately $673,333 in 
          1997, and $665,000 in 1998.  The agreements are automatically 
          renewed for additional one-year periods unless the Company or the 
          employees provide timely notice of termination. The agreements also 
          provide for bonuses and severance payments ranging from three to 
          twelve months.  In addition, two of the employment agreements 
          provide for options for each employee to purchase an aggregate of 
          up to 250,000 shares of common stock, at an exercise price per 
          share equal to the IPO price of $5.00 per share, which was the per 
          share price at the date of grant.  Such options have a vesting term 
          of five years, subject to acceleration if the trading price of the 
          common stock reaches certain thresholds. The original option 
          agreement contained an error in that it did not include a provision 
          for the options to vest 


                                          41

<PAGE>

          in five years.  Such error was corrected by revisions to the option
          agreements dated April 3, 1997.

          Upon the termination of an employee the 25,000 options to purchase 
          the Company's common stock that were granted to the employee were 
          cancelled. Pursuant to a severance agreement, these option were 
          reissued and the fair market value of $150,125 was included in 
          non-cash stock compensation expense in the accompanying 1997 
          statement of operations.

     (c)  SIGNIFICANT AND CONTINUING LOSSES 
     
          For the period from July 15, 1994 (inception) to December 31, 1997, 
          the Company incurred a cumulative net loss of $13,618,223.  The 
          Company believes that it will incur continuing losses until, at the 
          earliest, the Company generates sufficient revenues to offset the 
          substantial up-front capital expenditures and operating costs 
          associated with commercializing its products.

     (d)  NEED FOR ADDITIONAL FINANCING 

          The Company recently entered into a purchase agreement with Marion 
          Interglobal, Ltd. ("Marion"), for additional financing as detailed 
          more fully in Note 5(c).  The continued implementation of the 
          Company's business plan will require capital resources that will be 
          available to the Company only upon the completion of the first and 
          second tranches of the aforementioned financing. There can be no 
          assurance that the conditions necessary for the completion of these 
          tranches will occur. 

     (e)  UNCERTAINTY OF PROPOSED PLAN OF OPERATION 

          The Company's plan of operation and prospects are largely dependent 
          upon the Company's ability to successfully hire and retain skilled 
          technical, marketing and other personnel, establish and maintain 
          satisfactory relationships with those who arrange golf events, 
          successfully develop, equip and operate ONE-ON-ONE vans on a timely 
          and cost effective basis and achieve significant market acceptance 
          for its products. There can be no assurance that the Company will 
          be able to continue to implement its business plan or that 
          unanticipated expenses, problems or technical difficulties will not 
          occur which would result in material delays in its implementation.

(10) PRO FORMA PRESENTATION OF STOCKHOLDERS' EQUITY (DEFICIT)-UNAUDITED

          At December 31, 1997 the Company had a stockholders' deficit of 
          $1,137,662. On February 6, 1998 the Company entered into the First 
          Amendment relating to its June Convertible Financing with the Funds.
          Pursuant to the First Amendment, the Funds converted, as of 
          December 31, 1997, $6 million aggregate principal amount of the 
          Notes, net of financing costs of $2,178,942, into shares of 
          Preferred Stock (See Note 5(b)). 

          On March 16, 1998, the Funds purchased an additional 1,550 shares 
          of Preferred Stock in exchange for marketable securities with an 
          aggregate value of $1,550,000. 

          In addition, in March 1998, the Company entered into the Marion
          Agreement.  The 


                                          42

<PAGE>

          Marion Agreement is detailed in Note 5(c).  

          On a pro forma basis, assuming the June Financing (including the 
          First Amendment) and the Preferred Stock and the $1,500,000 
          payment from the first tranche of the Marion Agreement had occurred 
          on December 31, 1997, the Company would have recorded stockholders' 
          equity (net of expenses) of $5,483,396.

          On a pro forma basis, assuming the June Financing (including the 
          First Amendment) and the Preferred Stock and the $1,500,000 
          payment from the first tranche of the Marion Agreement had occurred 
          on January 1, 1997, basic and diluted earnings per share for the year 
          ended December 31, 1997 would have been $1.83 per share.
        
           Determined as follows:

<TABLE>

<S>                                                             <C>
                   Net Loss                                     $10,755,570
                   Preferred Stock Dividend                         355,869
                                                                -----------

                   Net Loss Applicable to 
                      Common Stockholders                       $11,111,439
                                                                ===========

                   Weighted Shares Outstanding
                      As Reported                                 4,758,605

                   Additional Common Shares
                      Issued                                      1,300,000
                                                                -----------
                                                                  6,058,605
                                                                ===========

</TABLE>
          If the balance of the first tranche and second and third tranches of 
          the Marion Agreement had also occurred prior to December 31, 1997 the
          Company's stockholders' equity would have increased by approximately 
          $3,075,000 for a total stockholders' equity of $8,508,396.

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

          None.


                                          43

<PAGE>

                                       PART III
     
ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          Information called for by Item 9 is set forth under the caption
          "Election of Directors" in the Company's 1997 Proxy Statement, which 
          is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

          Information called for by Item 10 is set forth under the caption
          "Executive Compensation" in the Company's 1997 Proxy Statement, which 
          is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          Information called for by Item 11 is set forth under the caption
          "Security Ownership of Certain Beneficial Owners and Management" in
          the Company's 1997 Proxy Statement, which is incorporated herein by
          reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Information called for by Item 12 is set forth under the caption
          "Certain Relationships and Related Transactions" in the Company's 1997
          Proxy Statement, which is incorporated herein by reference.


                                          44

<PAGE>

                                       PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  The following Exhibits are filed as part of this Report as required by
          Item 601 of Regulation S-B.

EXHIBIT
NUMBER                        DESCRIPTION
-------                       -----------

3.1       Certificate of Incorporation of the Company, as amended 
          (Incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the 
          Registrant's Registration Statement on Form SB-2 (Registration No. 
          333-5193) effective July 24, 1996)

3.2       Amended and Restated By-Laws of the Company (Incorporated by 
          reference to Exhibit 3.2 to Amendment No. 1 to the Registrant's 
          Registration Statement on Form SB-2 (Registration No. 333-5193) 
          effective July 24, 1996)

4.1       Form of Specimen Common Stock Certificate (Incorporated by 
          reference to Exhibit 4.1 to Amendment No. 1 to the Registrant's 
          Registration Statement on Form SB-2 (Registration No. 333-5193) 
          effective July 24, 1996)

4.2       Form of Specimen Redeemable Warrant Certificate (Incorporated by 
          reference to Exhibit 4.2 to Amendment No. 1 to the Registrant's 
          Registration Statement on Form SB-2 (Registration No. 333-5193) 
          effective July 24, 1996)

4.3       Form of Warrant Agreement between the Company and Whale Securities 
          Co., L.P. (Incorporated by reference to Exhibit 4.3 to the 
          Registrant's Registration Statement on Form SB-2 (Registration No. 
          333-5193) effective July 24, 1996)

4.4       Form of Warrant among American Stock Transfer & Trust Company, the 
          Company and Whale Securities Co., L.P. (Incorporated by reference 
          to Exhibit 4.4 to the Registrant's Registration Statement on Form 
          SB-2 (Registration No. 333-5193) effective July 24, 1996)

4.5       Form of Warrant Certificate issued to investors in the March 1997 
          Bridge Financing (Incorporated by reference to the Registrant's 
          Registration Statement on Form SB-2 (Registration No. 333-24675) 
          filed April 7, 1997)

4.6       Form of Common Stock Purchase Warrant issued to investors in the 
          June 1997 Bridge Financing (Incorporated by reference to Exhibit 
          99.4 to the Registrant's Current Report on Form 8-K filed June 23, 
          1997)

4.7       Form of Convertible Note issued to investors in the June 1997 
          Bridge Financing (Incorporated by reference to Exhibit 99.5 to the 
          Registrant's Current Report on Form 8-K filed June 23, 1997)


                                          45

<PAGE>

4.8       Form of Common Stock Purchase Warrant issued to Vision Financial 
          Group, Inc. (Incorporated by reference to Exhibit 4.8 to the 
          Registrant's Quarterly Report on Form 10-QSB filed November 14, 
          1997)

4.9       Form of Common Stock Purchase Warrant issued to investors in the 
          June 1997 Bridge Financing in connection with the amendment to such 
          financing (Incorporated by reference to Exhibit 99.3 to the 
          Registrant's Current Report on Form 8-K filed February 9, 1998)

10.1      License Agreement, dated March 1, 1995, between Great White Shark 
          Enterprises, Inc. and the Company, as supplemented (Incorporated by 
          reference to Exhibit 10.1 to the Registrant's Registration 
          Statement on Form SB-2 (Registration No. 333-5193) effective July 
          24, 1996)

10.2      Amendment to License Agreement, dated as of June 3, 1997, by and 
          among the Company, Greg Norman and Great White Shark Enterprises, 
          Inc. (Incorporated by reference to Exhibit 99.1 to the Registrant's 
          Current Report on Form 8-K/A filed June 27, 1997)

10.3*     Employment Agreement, dated as of January 1, 1996, between Earl 
          Takefman and the Company (Incorporated by reference to Exhibit 10.3 
          to the Registrant's Registration Statement on Form SB-2 
          (Registration No. 333-5193) effective July 24, 1996)

10.4*     Employment Agreement, dated as of January 1, 1996, between Alan 
          Lubell and the Company (Incorporated by reference to Exhibit 10.4 
          to the Registrant's Registration Statement on Form SB-2 
          (Registration No. 333-5193) effective July 24, 1996)

10.5*     Employment Agreement, dated as of May 1, 1996, between Thomas S. 
          Peters and the Company (Incorporated by reference to Exhibit 10.5 
          to the Registrant's Registration Statement on Form SB-2 
          (Registration No. 333-5193) effective July 24, 1996)

10.6      License Agreement, dated as of November 1, 1996, between the 
          Company and Visual Edge Systems (Australia) Pty. Ltd. (Incorporated 
          by reference to Exhibit 10.6 to the Registrant's Registration 
          Statement on Form SB-2 (Registration No. 333-5193) effective July 
          24, 1996)

10.7      Form of Consulting Agreement between the Company and Whale 
          Securities Co., L.P. (Incorporated by reference to Exhibit 10.7 to 
          the Registrant's Registration Statement on Form SB-2 (Registration 
          No. 333-5193) effective July 24, 1996)

10.8*     Amended and Restated 1996 Stock Option Plan (Incorporated by 
          reference to the Company's 1996 definitive Proxy Statement)

10.9*     Employment Agreement, dated as of June 1, 1996, between the Company 
          and Richard Parker (Incorporated by reference to Exhibit 10.9 to 
          Amendment No. 1 to the Registrant's Registration Statement on Form 
          SB-2 (Registration No. 333-5193) effective July 24, 1996)

10.10     Assignment, dated April 19, 1996 from Thomas S. Peters to the 
          Company (Incorporated by reference to Exhibit 10.11 to the 
          Registrant's Registration Statement on Form SB-2 (Registration No. 
          333-5193) effective July 24, 1996)


                                          46

<PAGE>

10.11     Share and Warrant Purchase Agreement, dated as of February 27, 
          1997, between the Company and Status-One Investments Inc. 
          (Incorporated by reference to Exhibit 10.11 to the Registrant's 
          Registration Statement on Form SB-2 (Registration No. 333-24675) 
          filed April 7, 1997)

10.12     Bridge Securities Purchase Agreement, dated as of June 13, 1997, 
          among the Company and Infinity Investors Limited, Infinity Emerging 
          Opportunities Limited, Sandera Partners, L.P. and Lion Capital 
          Partners, L.P. (collectively with their transferees, the "Funds") 
          (Incorporated by reference to Exhibit 99.1 to the Registrant's 
          Current Report on Form 8-K filed June 23, 1997)

10.13     Registration Rights Agreement, dated as of June 13, 1997, among the 
          Company and the Funds (Incorporated by reference to Exhibit 99.2 to 
          the Registrant's Current Report on Form 8-K filed June 23, 1997)

10.14     Amended and Restated Guarantee and Agreement, dated as of December 
          18, 1997, between the Company and Cadillac Motor Car Division of 
          General Motors Corporation (Incorporated by reference to Exhibit 
          99.1 to the Registrant's Current Report on Form 8-K filed December 
          30, 1997)

10.15     First Amendment to Bridge Securities Purchase Agreement and Related 
          Documents, dated as of December 31, 1997, among the Company and the 
          Funds (Incorporated by reference to Exhibit 99.1 to the 
          Registrant's Current Report on Form 8-K filed February 9, 1998) 

10.16     Purchase Agreement, dated as of March 27, 1998, among the Company 
          and Marion Interglobal, LTD. (Incorporated by reference to Exhibit 
          99.1 to the Registrant's Current Report on Form 8-K filed April 7, 
          1998)

10.17     Registration Rights Agreement, dated as of March 27, 1998, among 
          the Company and Marion Interglobal, LTD. (Incorporated by reference 
          to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed
          April 7, 1998)

10.18     Second Amendment to Bridge Securities Purchase Agreement and 
          Related Documents, dated as of March 27, 1998, among the Company
          and the Funds (Incorporated by reference to Exhibit 99.3 to the 
          Registrant's Current Report on Form 8-K filed April 7, 1998)

16        Letter, dated November 14, 1997, from KPMG Peat Marwick LLP to the 
          Securities and Exchange (Incorporated by reference to Exhibit 1 to 
          the Registrant's Current Report on Form 8-K/A filed November 19, 
          1997) 

24        Power of Attorney (included with the signature page hereof)

27**      Financial Data Schedule


                                          47

<PAGE>

          * Designates management contracts and compensatory plans and
          arrangements required to be filed as Exhibits to this Report.

          ** Filed herewith. 

          (b)Reports on Form 8-K

          During the last quarter of the fiscal year ended December 31, 1997, 
          the Company filed Current Reports on Form 8-K on November 14, 1997 
          (as amended on November 19, 1997) and December 30, 1997.

                                          48

<PAGE>

                                      SIGNATURES


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


                                        VISUAL EDGE SYSTEMS INC.



                                        /s/ Earl T. Takefman
                                        ----------------------------------------
                                        Earl T. Takefman
March __, 1998                          Chief Executive Officer




                                 POWER OF ATTORNEY

Each person whose signature appears below hereby authorizes and constitutes Earl
Takefman and Alan Lubell, and each of them singly, his true and lawful
attorneys-in-fact with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all  capacities to sign and file
any and all amendments to this report with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
and he hereby ratifies and confirms all that said attorneys-in-fact or any of
them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.

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

SIGNATURE                CAPACITY IN WHICH SIGNED                DATE
---------                ------------------------                ----

/s/ Earl Takefman        Director, Chief Executive Officer       March 31, 1998
---------------------    (Principal Executive Officer)
Earl Takefman

/s/ Melissa Forzly       Chief Financial (Principal Financial    March 31, 1998
---------------------    and Accounting Officer)
Melissa Forzly

/s/ Alan Lubell          Chairman of the Board                   March 31, 1998
---------------------
Alan Lubell 

/s/ Eddie Einhorn        Director                                March 31, 1998
---------------------
Eddie Einhorn 

/s/ Mark Hershhorn       Director                                March 31, 1998
---------------------
Mark Hershhorn  


                                          49

<PAGE>

/s/ Beryl Artz           Director                                March 31, 1998
---------------------
Beryl Artz 

/s/ Richard Parker       Director                                March 31, 1998
---------------------
Richard Parker 


                                          50