UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 2000


                           Commission File No. 0-30786

                            LSI COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)


                  Nevada                                  87-0627349
       (State or other jurisdiction           (IRS Employer Identification No.)
    of incorporation or organization)

                          112 West Business Park Drive
                               Draper, Utah 84020
                                 (801) 572-2555
       (Address, including zip code, and telephone number, including area code,
               of registrant's principal executive offices)

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

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

Check whether the issuer (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 [ ]

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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

Registrant's revenues for its most recent fiscal year were $1,405,337.

As of December 31, 2000, there were 11,415,632 shares of common stock, par value
$.001 per share, of the registrant issued and outstanding.

Transitional Small Business Disclosure Format Used (Check one) : Yes [ ] No [X]

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

                                     PART I

Item 1.   Business of the Company ............................................3

Item 2.   Properties.........................................................11

Item 3.   Legal Proceedings..................................................11

Item 4.   Submission of Matters to a Vote of Security Holders................11

                                     PART II

Item 5.   Market for the Registrant's Common Equity and Related
            Shareholder Matters .............................................12

Item 6.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations..............................12

Item 7.   Financial Statements...............................................15

Item 8.   Disagreements on Accounting and Financial Disclosures .............15


                                    PART III

Item 9.   Directors and Executive Officers of the Registrant ................15

Item 10.  Executive Compensation ............................................17

Item 11.  Security Ownership of Certain Beneficial
            Owners and Management............................................18

Item 12.  Certain Relationships and Related Transactions ....................19

Item 13.  Exhibits, Financial Statements and
            Reports on Form 8-K .............................................19

          Additional Information* ...........................................21

          Signatures ........................................................22


* This document incorporates into a single document the requirements of the
Securities and Exchange Commission for the Annual Report to Stockholders and the
Form 10-KSB.

                                       2
<PAGE>

Special Note Regarding Forward-Looking Statements

         Certain statements in this report and elsewhere (such as in other
filings by the Company with the Securities and Exchange Commission ("SEC"),
press releases, presentations by the Company or our management and oral
statements) may constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
"should," and variations of these words and similar expressions, are intended to
identify these forward-looking statements. Our actual results could differ
materially from those anticipated in these forward-looking statements. Factors
that might cause or contribute to such differences include, among others,
competitive pressures, the growth rate of the coaching services and seminar
industry, and the software industry, constantly changing technology and market
acceptance of our products and services. We undertake no obligation to publicly
release the result of any revisions to these forward-looking statements, which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

                                     PART I

ITEM 1.  BUSINESS OF THE COMPANY

General

         LSI Communications, Inc. (OTC Non-BB: LSIM) is a technology
development, sales and training company based in Draper, Utah, just outside of
Salt Lake City. We were incorporated as TPI, Inc., under the laws of the State
of Utah on April 26, 1983. In 1985, the Corporation changed its situs from Utah
to Nevada and changed its name to Connections Marketing Corp. In July, 1992, our
shareholders voted to change our name to LSI Communications, Inc. ("LSI"). We
held mineral properties in Beaver County, Utah; however, no extraction
operations ever commenced and the properties were distributed to the
shareholders through a subsidiary spin-off.

         On November 20, 1998, we entered a Plan of Reorganization and
Acquisition agreement with Warever, Inc., a Utah Corporation, wherein we issued
3,000,000 shares of common stock for 85% of Warever's outstanding common stock.
The acquisition was recorded as a reverse acquisition, with Warever being the
accounting survivor, therefore all historical financial information prior to
November 20, 1998 in this report is that of Warever.

         On June 21, 1999, we acquired 85% of Coaching Institute, Inc.,
(hereafter, "Coaching Institute") a Utah corporation. Coaching Institute is a
majority owned subsidiary. The acquisition of Coaching Institute is discussed
further in the section entitled "Merger and Business Combinations."

         Warever Corporation ("Warever") is in the business of developing,
programming, selling, and marketing computer software packages. Its primary
product was Action Plus, a management assistance software tool and has now
shifted its focus toward PowerHouse, a software program we release in August
2000 that is tailored to the real estate investment industry, and has contact
management, calendaring, property management, presentations, and internet
marketing features. Warever was organized in the State of Utah on May 13, 1992
under the name of Action Plus Software, Inc. On January 17, 1995 the name Action
Plus Software was changed to Warever.

         We operate two distinct, but complementary subsidiaries, Warever and
Coaching Institute. Warever Corporation primarily develops sales automation,
personal productivity and Internet-based software products. It is involved in
the contact management industry and has been involved since the industry's
formative years in the late 1980s and early 1990s. The majority of Warever
applications focus on development of sales force automation and personal
productivity.

                                       3
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         Coaching Institute offers fully integrated "coaching" programs designed
specifically for sales trainers, seminar leaders, motivational speakers and
network marketers who are interested in extending their programs to seminar
attendees through one-on-one training. By implementing an after-market program
such as one-on-one coaching, companies are able to assist clients' personal
development, create additional profits, and increase client loyalty.

         We lost money in each of the last fiscal years and our net losses have
been significant. Our continued operations have depended, to some extent, on
loans from a family member of one of our directors. Despite the fact that
revenues from coaching are increasing and we have recently released a new
software program, there is no assurance that we will ever become consistently
profitable.

NASD OTC Bulletin Board Quotations

         Our common stock is quoted on the OTC Bulletin Board of the NASD under
the symbol "LSIM." For information concerning these stock quotations during the
past two years, see the section entitled "Market Price Of And Dividends On The
Registrant's Common Equity And Related Stockholder Matters." The quotations
presented do not represent actual transactions or broker/dealer markups,
markdowns or commissions.

Merger and Business Combinations

         Effective November 20, 1998, we entered into an agreement and Plan of
Reorganization with Warever, Inc., a private company. The agreement provided for
our merger into Warever to be treated as a reverse merger, with Warever as the
surviving business. Pursuant to the agreement we issued 3,000,000 shares of
common stock to Warever's shareholders of for 85% of the outstanding shares of
Warever. Our management resigned and the management and board of Warever filled
the vacancy. LSI had no assets or liabilities at the time of the merger, but was
only a public shell. We acquired the remaining 15% of Warever in the first
Quarter of 2000 by exchanging 2,500,000 LSI shares.

         During November and December of 1998, we sold 1,000,000 shares of
Common Stock at $.05 per share to "accredited investors" pursuant to Rule 504.

         On June 21, 1999, we acquired 85% of Coaching Institute by issuing
2,500,000 shares of common stock for 85,000 shares, 85%, of the outstanding
common stock of Coaching Institute. The acquisition agreement also provided for
us to receive options to acquire the remaining 15% of Coaching Institute's
issued and outstanding common stock in exchange for 2,045,455 shares of our
common stock. The option can be exercised after January 1, 2001 for a period of
60 days. After the June 21, 1999 acquisition, Coaching Institute survived as our
majority-owned subsidiary. Its operating activities have been included in our
consolidated financials since June 21, 1999.

         Common stock in the Company was issued and delivered to the
shareholders of Coaching Institute as set forth below, such certificates to bear
a restrictive legend in compliance with Rule 144 promulgated by the Securities
and Exchange Commission under the Securities Act of 1933 as amended:

         o    Craig R. Hendricks         1,062,500 shares
         o    Steven E. Carlson          1,062,500 shares
         o    Lona J. Hendricks            175,000 shares
         o    Richard A. McAllister        150,000 shares
         o    Roger G. Williams              50,000 shares

Operations

         We are a technology development, sales, and training company comprised
of two subsidiaries, Warever and Coaching Institute. Our two subsidiaries
provide complementary products, services and contacts to each other. Our
products assist personal and business betterment, through organization and
training.

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<PAGE>

         Warever has primarily developed sales force automation and personal
productivity software. Sales force automation software is designed to improve
the efficiency of the sales process by tracking customer information, such as
names and addresses, correspondence, and scheduling. Warever intends to expand
more heavily into developing software that interacts more fully with the
Internet.

         Coaching Institute was founded in June 1998. Personal Coaching is an
emerging industry where clients are assisted in reaching goals, implementing
real, long-term change. Our coaches work with individuals one-on-one to:

         o     facilitate change
         o     motivate the individual
         o     promote creativity
         o     demand accountability
         o     channel energy and desire
         o     Implement skills and habits

Industry Background

         Warever is in the software development industry, and is primarily
focused on developing software related to Customer Relations Management ("CRM").
CRM is a comprehensive integration of every area of business touching the
customer, namely marketing, sales, customer service and field support. CRM
software assists sales people in tracking client information, time management,
and facilitating regular client correspondence. The CRM sector of the software
industry is fairly new, but like the bulk of the software industry, there is
intense competition, dangers of rapid technological obsolescence and
intellectual property issues.

         Coaching Institute provides personal development coaching services.
Personal development coaching is a new and evolving training methodology that is
growing in popularity and is commonly referred to as "coaching." Coaching is
primarily a service where an individual is assisted in implementing information
learned at the seminar. Normally, the coach telephones the customer at
designated times, such as once a week. During the phone conference the coach
will answer questions, help the customer set goals, assess the customer's
progress in implementing the principles taught at the seminar. The coaching
relationship will commonly continue for 8 to 12 weeks. Coaching may also be used
by purchasers of products, such as durable office equipment and software to
assist the purchaser to effectively implement the products into their business
operations. Coaching supports a variety of topics. Such as:

         o    Sales
         o    sales management
         o    personal development
         o    professional speaking
         o    network marketing
         o    anxiety and stress management
         o    business growth and development
         o    real estate sales
         o    real estate investment; and
         o    areas where personal change would be a benefit
         o    areas where use of new products is to be implemented

         Coaching is used as a format of employee training for major businesses
including Fortune 500 Companies such as Ameritech, Merrill Lynch, Amoco,
Northwestern Mutual Life and Arthur Anderson. We do not currently provide
coaching services to any of these companies. Many members of the National
Speakers Association, as well as such notables as Zig Ziglar, Ron LeGrand, A.D.
Kessler, Roger Butcher, Denis Waitley, Tom Hopkins, Brian Tracy, Peter Lowe,
Stephen R. Covey, Les Brown, and Omar Periu have personal coaching programs.
Many more National Speakers Association members are coaches themselves as well
as professional speakers. We do not have a relationship with the National
Speakers Association, but we do have relationships with many of its members. A
list of vendors with whom we have relationships is listed in the section
entitled "Customers."

                                       5
<PAGE>

Competition in the Market

         Competition in the software market has increased dramatically in recent
years. Software products are sold through mail, seminars, over the Internet,
through telemarketing and retail. Software is also given away as a promotion to
sell other software programs. Warever faces competition from software
manufacturers offering customer relationship management software related to a
variety of industries ranging from real estate and insurance sales to multilevel
marketing. Hundreds of companies including Act, Goldmine and Top Producer
develop software products. Competitors selling CRM software include companies
such as BT Squared Technologies, Inc., Symantec, ARI Network Services, Inc.,
Industri Matematik Abalon AB, Moss Micro, Inc., Information Management
Associates, Inc., Applix, Inc., Saratoga Systems, Inc., Baan Company,
Brightware, Inc., Sunset Software, Inc., Callback Software, Inc., Clarify, Inc.,
On!contact Software Company, ClientXchange, Epicor Software Corporation, DSI
Management Systems, PowerCerv Technologies, Group 1 Software, Inc.

         Our software is tailored to a fairly narrow market. We have attempted
to direct product sales and CRM product development toward businesses in
specific industries, such as real estate. Our market position is turning toward
products such as PowerHouse which, like our software Action Plus, will consist
of functions that can assist companies and particularly sales people's day to
day operations such as data-base maintenance, marketing using the database, time
management, word processing, correspondence and accounting.

         Coaching Institute faces competition from other businesses offering
coaching services such as Franklin Covey Coaching, and dozens of new companies
which are being formed around the country. Coaching is a form of self-help,
which has traditionally been provided in books, tapes, seminars, and speakers.
Competition in the coaching industry is difficult to assess because of the
infancy of the industry. There is a trend for self-help providers, such as
public speakers, motivators and organizers to expand or modify their services
into the area of coaching. A common method of competition is for self-help
providers to use their existing sales and customer contacts to sell coaching
services. Well known self-help providers have an advantage due to their
familiarity to customers and potential outside vendors. The competition from
self-help providers is intense.

         We are attempting to gain notoriety and to establish relationships with
outside vendors. We do not have a large market share. We currently have
relationships with about a dozen outside vendors. However, there is no assurance
that we will be able to gain notoriety or continue to establish or maintain
relationships with outside vendors.

General Operations

         Warever must adjust to the changing nature of the software industry.
Our Management believes that there is a shift to more industry specific software
applications. Warever is attempting to tailor software programs to cover all of
a small business' needs for certain particular industries, especially needs
related to CRM, such as PowerHouse. Currently, we are not aware of other
software programs that have all of these functions. A real estate agent would
need to purchase three different software packages to achieve the same function
provided by PowerHouse. We intend to distribute PowerHouse through relationships
with SDI LeGrand, RE Marketing, and others. Currently, we have oral agreements
with SDI Marketing to sell PowerHouse, however, we have no formal written
agreements. We anticipate that they will be paid 30% from the proceeds of sales
that they refer to us. They will likely be paid approximately 50% for sales of
our software that they completely facilitate. We anticipate relationships with
other entities that can sell or facilitate sales of our software. We do not
anticipate contracts that will require minimum sales by our outside vendors. The
companies provide us with attendance rosters from their seminars. In return,
when we sell products to the attendees, we give them a percentage of the
revenues. In some cases these companies will sell our software directly and be
paid a percentage of the revenues. These companies are not bound to provide us
with names or sell our products and there is no assurance that these companies
will continue to produce for us.

                                       6
<PAGE>

         Coaching Institute must maintain a steady flow of clients because each
coaching arrangement usually lasts only 8-12 weeks. We are actively seeking
referral relationships with professional speakers and seminar companies.
Coaching Institute attends the National Speakers Association convention on an
annual basis for the purpose of acquiring new speakers, and increase the
visibility of Coaching Institute in the speaking and seminar community. We have
no contracts binding anyone to provide us with coaching leads or to sell our
services. Our agreements focus on outside vendors' compensation for referrals
and sales, but do not create binding assurances that such vendors will perform
on our behalf.

         Coaching Institute currently actively recruits and trains coaches and
sales professionals. Our management believes that quality coaching personnel are
key to the competitiveness of a coaching services provider, because consumers of
coaching will be unwilling to recommend or purchase coaching services from
coaches with substandard interpersonal and coaching skills.

Sales and Marketing

         Warever has a three tiered sales strategy.

         o    Direct sales to end users and corporate clients through an
              internal sales force.
         o    Arrangements with outside vendors to sell our software
         o    Sales through regional distributors.

         Warever has attempted to utilize outside vendors as our main marketing
strategy, however we met with little success. We developed a customized version
of our software called "Pocket-it" Software on behalf of Plus Mark, a wholly
owned subsidiary of American Greetings. Pocket-it Software was designed to be
the electronic companion to a paper-based planner called Pocket-it. Plus Mark
entered into a license agreement with Warever to sell the Pocket-it Software.
The software prints schedules, notes, and lists onto the patented Pocket-it
paper for insertion into the planner. We delivered the software source codes to
American Greetings which is solely responsible for replication of the Software,
including all associated costs. In return for developing the Software, Warever
was to receive a $5.00 royalty per unit sold by American Greetings. We have not
received any royalties from the sales of "Pocket-it", nor are we aware of any
sales of the software. Moreover, American Greetings given us reason to believe
that they may not distribute Pocket-it Software. We incurred expenses exceeding
$100,000 to tailor the product to be consistent with Plus Mark's requests.

         Coaching Institute's sales are conducted in two ways. Similar to
Warever's software, Coaching Institute's sales are primarily made through
follow-up telephone calls to individuals who have attended a seminar held by an
organization with which we have sales agreements. Our agreements with outside
vendors both for the sale of our software and coaching services do not require
outside vendors to sell our products and services. The arrangements set out a
percentage of the revenue for the sale of the product or service that will be
given to the outside vendor as compensation for selling the product or service.
Secondly, sales are made directly by our outside vendors in a seminar
environment. The outside vendor can pitch our software during a presentation and
have a table set up in the seminar room from which our software is sold.

         Coaching Institute's coaching services are marketed primarily through
direct mail followed by an outbound telephone campaign to the direct mail
recipients. Outside vendor seminars are the source of the names, numbers, and
addresses in our direct mailing and outbound telephone campaigns. However, we
are moving away from granting marketing and sales responsibilities to outside
vendors and instead seeking to generate leads from internal marketing and sales
efforts.

                                       7
<PAGE>

Customers

         Warever's relationship with outside vendors are structured to allow
mutual profit from the sale of our products and services to the outside vendor's
clients. This relationship is potentially beneficial because of the outside
vendor's distribution channels and their ability to set up a table and sell
products at seminars. Warever has similar sales relationships with network
marketing companies such as SDI LeGrand.

         Over the past several years, Warever Corporation has sold to
approximately 30,000 individuals and businesses, ranging from home-based
businesses to Fortune 1000 companies. Our customers have included:

         Radisson Hotels International             Franklin Quest Corporation
         Bank of New York                          Blue Cross/Blue Shield
         United Technologies (Carrier)             Bank One
         Nu Skin International                     Canadian Government
         Fruit of the Loom                         American Home Business Assoc.
         Zions Bank                                Paragon Trade Brands
         California Steel                          SKF
         Library of Congress                       Imall

         In the last several years, Coaching Institute has had sales
arrangements with people and organizations that have distribution channels or
that speak in front of large audiences, such as, motivational speakers, sales
trainers, seminar companies, and network marketing organizations. These people
and organizations have acted as outside vendors but have not been bound to sell
our products or services. Pursuant to written agreements, these people and
organizations are paid a pre-designated percentage of sales that they generate.
However, there is no assurance that they will continue to sell our products.
Currently we have sales arrangements with:

         Omar Periu                         Rory Aplanalp
         RE Marketing                       Automation Quest
         SDI Ron LeGrand Publishing         Skin Secrets

         The majority of our coaching revenues came from leads from Automation
Quest, SDI LeGrand and RE Marketing. The remaining outside vendors supplied only
3% of our coaching customers. Due to our high reliance on vendors such as
Automation Quest, we are seeking to diversify and internalize our coaching
customer sourcing. A reduction in sales generated by Automation Quest would have
a detrimental impact on our coaching sales.

Products and Services

         Warever has several products currently available.

         o        Action Plus ($395.00) - The flagship product of Warever
                  Corporation, is a database program for businesses that
                  includes a time manager, word processor and sales module that
                  creates sales invoices, tracks inventory and performs certain
                  accounting functions. Action Plus has received recognition
                  from PC Computing Magazine and Portable Computing Magazine.

         o        Powerbase Financial Advisor ($99.00)- This program tracks
                  personal financial information, including assets, liabilities,
                  and net worth. It also tracks cash flow and debt, giving
                  different methods of debt reduction. Financial calculators are
                  included.

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<PAGE>

         o        Idea Bank ($99.00)- This multimedia product is ideal for
                  motivation speakers and other professional speakers, trainers
                  or anyone who needs to reference large amounts of text data.
                  Idea Bank stores, sorts and facilitates the retrieval of
                  information such as quotes and anecdotes. Users can listen to
                  audio or watch video presentations of the speaker.

         We have sold approximately 30,000 units of Action Plus, but sales have
dramatically decreased in recent years resulting in a significant reduction in
Warever's revenues. We continue to sell a nominal number of Action Plus units
and Action Plus upgrades. We sell the upgrades for $129 per user unit. Our other
software programs have been used as incentives, promotions and giveaways, and
direct revenues from these programs have been minute as we have sold less than
100 total units. We have not actively marketed PowerHouse since its release, but
intend to do so during 2001 by hiring a limited number of software sales
personnel. We hope that our sales efforts in 2001 will revive our software
sales.

         Warever has several products on the drawing board, but not in
production due to the shifting of financial resources to coaching sales and
fulfillment. Our development of Powerbase, a 32-bit, internet-enabled business
automation product, was suspended indefinitely. Powerbase is the basic software
program upon which our vertical market software products, such as PowerHouse
were to be based. Our scarce resources were shifted from the development of
Powerbase to the production of PowerHouse. Our Management elected to allocate
resources to PowerHouse, a software product geared toward the real estate
industry, because a significant number of our current customers operate in the
real estate sales market. Due to cash constraints, we do not currently intend to
start production or development of any software programs other than PowerHouse.

Coaching Institute provides the following services:

         o        Personal Coaching - Personal Coaching is conducted over the
                  telephone, offering the client the greatest opportunity to
                  utilize their own environment to make needed changes. Sessions
                  last one half hour each over a period of 8-12 weeks with up to
                  a year of follow up.

         o        Telesales - Coaching Institute is equipped with advanced phone
                  systems and provides telesales services to our outside
                  vendors.

         o        Data Base Management - Utilizing some of Warever Corporation's
                  core technologies, Coaching Institute is able to manage
                  outside vendor databases. We use our software and knowledge to
                  operate and organize Omar Periu and RE Marketing's customer
                  databases. We benefit because they provide us with names in
                  the database to whom we market our coaching services. Database
                  management is not currently a source of direct revenues for
                  Warever.

         o        Seminar Management - Seminars allow Coaching Institute to
                  control lead flow from start to finish as well as provide
                  needed structure to beginning speakers and fledgling
                  organizations such as Xtax run by our outside vendor Jim
                  Burton.

Intellectual Property and Proprietary Rights

         We rely on a combination of copyright, trade secret, and trademark law
to protect our technology, although we believe that other factors such as the
technological and creative skills of our personnel, new product developments,
frequent product and feature enhancements, and reliable product support and
maintenance are more essential to maintaining a technology leadership position.
We currently do not have any patents issued or pending.

                                       9
<PAGE>

         We generally enter into confidentiality and nondisclosure agreements
with our employees, consultants, prospective customers, licensees, and corporate
partners. In addition, we control access to and distribution of our software,
coaching programs, documentation, and other proprietary information. Despite our
efforts to protect our intellectual property and proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use our
products or technology. Effectively policing the unauthorized use of their
products is time-consuming and costly, and there can be no assurance that the
steps we take will prevent misappropriation of our technology.

         We attempt to avoid infringing known proprietary rights of third
parties in our product development efforts. However, we do not regularly conduct
comprehensive patent searches to determine whether the technology used in our
products infringes on patents held by third parties. There are many issued
patents as well as patent applications in the electronic messaging field.
Because patent applications in the United States are not publicly disclosed
until the patent is issued, applications may have been filed which relate to our
software products. If we were to discover that our products violated or
potentially violated third party proprietary rights, we might not be able to
obtain licenses to continue offering those products without substantial
reengineering. Any reengineering effort may not be successful, nor can we be
certain that any licenses would be available on commercially reasonable terms.

         Substantial litigation regarding intellectual property rights exists in
the software industry, and it is expected that software products may be
increasingly subject to third-party infringement claims as the number of
competitors in the industry segments grows and the functionality of software
products in different industry segments overlaps. Any third-party infringement
claims could be time-consuming to defend, result in costly litigation, divert
management's attention and resources, cause product and service delays or
require us to enter into royalty or licensing agreements. Any royalty or
licensing arrangements, if required, may not be available on acceptable terms,
if at all. A successful claim of infringement against us and our failure or
inability to license the infringed or similar technology could have a material
adverse effect on our business, financial condition, and results of operations.

         We may find defects in our sales automation and internet-based software
that may require us to incur substantial product liability costs and significant
redesign costs. Warever Corporation's product types often contain errors or
defects, particularly when first introduced or when new versions or enhancements
are released. Defects or errors in Warever Corporation's products could result
in a loss of customers, reduced revenues and higher sales automation and
internet-based software development costs, which would seriously harm our
business.

Acquisitions

         We may seek to expand through acquisitions which are not currently
identified and which therefore may entail risks which cannot be evaluated at
this time. We may seek to expand our operations by acquiring companies in
businesses that we believe will complement or enhance our business, particularly
in the seminar related industries. We cannot be assured that we will be able to
ultimately effect any acquisition, successfully integrate any acquired business
in our operations or otherwise successfully expand our operations. We have not
established any minimum criteria for any acquisition and our management may have
complete discretion in determining the terms of any acquisition.

Supplies

         The principal materials and components used in our software products
include computer media, including disks and CD-ROMs, and user manuals. For each
product, we prepare a master software disk or CD-ROM, user manuals, which may be
in printed form or distributed on a CD-ROM, and packaging. Substantially all of
our disk and CD-ROM duplication is performed by third-party vendors, using disks
and blank CD-ROMs acquired from various sources. Outside sources print Warever
Corporation's packaging and related materials to its specifications. Portions of
the completed packages are assembled by third-party vendors. To date, Warever
Corporation has not experienced any material difficulties or delays in the
manufacture and assembly of its products, or material returns due to product
defects. We do not have any contracts with our suppliers. We believe that we
could replace our current suppliers without great expense, although such a
replacement may slow down our operation and negatively impact our profits.
Software is not a raw materials intensive product. The floppy disks, computer
disks, and paper for manuals that we produce could be purchased from a number of
suppliers.

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<PAGE>

R&D

         We spent $27,200 in 1999 and only $3,792 in 2000. We do not currently
employ any full-time programmers and rely on independent contractors for the
development of our software. Our R&D costs are not directly borne by our
customers.

Employees

         We currently have a total of twenty-one full time employees, two of
whom are involved in management, six of whom are in our sales department, nine
are coaches, and four are in administration support. We do not have employment
contracts that guarantee a term or salary or grant stock options. We estimated
our number of employees to increase by the end of 2000, but due to a slowdown in
our coaching sales growth, delays in the release of PowerHouse and flat software
sales our number of employees stayed fairly steady during 2000. We cannot be
certain of the number of employees that we will have by the end of 2001, but we
may increase our sales force and coaching fulfillment force by 10% to 20%.

ITEM 2.  PROPERTIES

         We do not own any real property.

         Our corporate headquarters are located in Draper, Utah. We operate from
an office building in a business park where we have leased and occupy
approximately 3,100 square feet of usable office space and 1,100 square feet of
warehouse space. We own thirty computers, fax, phones, copiers, printers,
typewriters, desks, a conference table, cabinets and other general office
equipment. The monthly rental/lease rate is approximately $4,100 per month. We
believe that as we expand the business, and cultivate additional relationships
with outside vendors, we will need to relocate our executive offices to a nearby
location or expand into our connected warehouse space which is currently part of
our lease. We believe that suitable additional or substitute space will be
available on commercially reasonable terms.

ITEM 3.  LEGAL PROCEEDINGS

         We are not a party to any pending legal proceedings, or governmental
agency proceedings, and no such action by or, to the best of our knowledge,
against us has been threatened.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to our security holders during the fiscal
year ended December 31, 2000.

                                       11
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         (a) Market for Common Equity

         Our common stock is traded on the Over the Counter Bulletin Board under
the symbol "LSIM". The CUSIP number is 501919104. Knight Trading Group, Inc. of
Jersey City, NJ and Fleet Trading, a Division of Fleet Securities of Jersey
City, NJ are among the most active market makers for the stock.

         The following is a table of the high and low bid prices of our stock
for each of the four quarters of the fiscal year ended December 31, 2000:

         Quarter Ended                 High        Low
         -------------                 ----        ---
         December 31, 2000           $ 0.218    $ 0.050
         September 30, 2000            0.250      0.100
         June 30, 2000                 0.500      0.100
         March 31, 2000                1.000      0.100

         These quotations reflect interdealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.

         (b) Security Holders

         The Company has approximately 121 shareholders of record.

         (c) Dividends

         There have been no cash dividends declared or paid since the inception
of the company, and no cash dividends are contemplated to be paid in the
foreseeable future. The Company may consider a potential dividend in the future
in either common stock or the stock of future operating subsidiaries.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL AND RESULTS OF
         OPERATIONS AND PLAN OF OPERATION

         (a) Overview

         The year ended December 31, 2000 was marked by a period of increased
revenue generation. The year was also characterized by the continued transition
to revenues from coaching services from software sales.

         We are a technology development, sales and training company based in
Draper, Utah. We operate two distinct, but complementary subsidiaries, Warever
Corporation and Coaching Institute, Inc.

         Coaching Institute, Inc. offers fully integrated "coaching" programs
designed specifically for sales trainers, seminar leaders, motivational speakers
and network marketers who are interested in extending their programs to seminar
attendees through one-on-one training. By implementing an after-market program
such as one-on-one coaching, companies are able to assist clients' personal
development, create additional profits, and increase client loyalty.

         Warever Corporation develops, programs, sells, and markets computer
software packages. Sales of its primary product, Action Plus, a management
assistance software are being phased out. On August 31, 2000, Warever
Corporation released PowerHouse, a sales force automation and personal
productivity software program designed for the real estate industry. We expect
sales of PowerHouse to constitute nearly all of Warever's software sales in the
next few quarters.

         (b) Results of Operations

                  (i) Fiscal Year Ended December 31, 2000 and December 31, 1999

                                       12
<PAGE>

Sales Revenues

         Sales revenues for the fiscal year ended December 31, 2000 were
$1,405,337, an increase of $872,290, or 163.6% from $533,047 for the fiscal year
ended December 31, 1999. The increase in revenues is due to the acquisition of
Coaching Institute and relative increases in training sales. Warever's software
sales, which prior to Coaching Institute's acquisition at the end of the second
quarter of 1999, was our only source of revenues, decreased 82.7% to $20,269
from $117,316 in the year ended December 31, 1999. Warever's software sales have
been declining as demand for Action Plus, our primary software product reached
the end of its product lifecycle and the technology became less current. Despite
the release of PowerHouse on August 31, 2000, we did not have any significant
software sales during 2000. We intend to market PowerHouse at real estate
seminars in the United States and expect sales of PowerHouse to result in 2001.
However, we have performed no market tests and have insufficient information to
adequately assess the potential demand for PowerHouse.

         The overall increase in our sales was due to $1,385,068 in revenues
from Coaching Institute during the fiscal year ended December 31, 2000. Coaching
Institute's revenues increased $969,337 or 233.1% from $415,731 during the
fiscal year ended December 31, 1999. The $415,731 in revenue in the period ended
December 31, 1999 only reflect coaching sales for approximately six months since
the time Coaching Institute was acquired in June 1999. Further discussion and
financial statements related to Coaching Institute's financials and their impact
on our financial statements can be found in our registration statement on Form
10SB12G/A as filed with the SEC on June 23, 2000.

         Our management believes that Coaching Institute's revenue should stay
steady in the coming 12 months. However, we cannot ensure that we will be able
to maintain or increase revenues from coaching services. In addition, we are not
certain that we will be successful in generating coaching sales leads internally
or that be will be able to maintain the flow of customers from outside vendors.

         Cost of Sales

         Cost of Sales increased by $288,333, or 193.4%, to $437,397 in the 2000
fiscal year from $149,064 in the comparable 1999 fiscal year. The decrease was
attributable to the decrease in software sales. Many of Coaching Institute's
clients or trainees are referred by entities, such as SDI Le Grand, that produce
seminars. We pay commissions to these entities in exchange for their trainee
referrals. The commission costs are included in our consolidated Cost of Sales.
Salaries paid to the coaches who perform the coaching, which is very labor
intensive, are also included in Costs of Sales. Salaries and fees to independent
contractors related to fulfillment of coaching services exceeded $300,000. The
commission and salaries are the primary cause of the cost of sales increase. Our
management is exploring possible ways to decrease training related cost of sales
by increasing the proportion of our trainees that we acquire from our direct
marketing efforts. However, until we plan and implement an effective method to
expand our direct sales, we must heavily rely on commission based referrals. We
expect training related cost of sales to continue to mirror training revenues in
the foreseeable future. Selling expenses related to software sales actually
decreased due to retraction of our software selling efforts during the
development phase of PowerHouse.

         Cost of sales related to software should increase relative to sales of
our new software product PowerHouse. Software costs of sales in relation to
software related revenues should remain under 10%.

         Selling, General and Administrative Expenses

         General and Administrative expenses increased by $240,926, or 156.8%,
to $394,536 in the 2000 fiscal year from $153,610 in the 1999 fiscal year. A
primary reason for the 2000 fiscal year increase is the acquisition of Coaching
Institute in the middle of the Year period December 31, 1999. We now have
General and Administrative expenses for two subsidiaries where we only had one
for the majority of the comparable fiscal year ended December 31, 1999.
Approximately $222,000 of our General and Administrative expenses consisted of
Management and support staff salaries. Additional causes of increased General
and Administrative related expenses included a large increase in telephone
expenses, accounting and legal fees.

                                       13
<PAGE>

         Selling expenses increased by $73,437, or 22.9%, to $393,679 in the
fiscal year ended December 31, 2000 from $320,242 in the comparable 1999 fiscal
year. This increase is the result of Coaching Institute's salaries, commissions,
advertising and general sales expenses that were not present on our books prior
to Coaching Institute's acquisition in June 1999. We paid salaries totaling
$265,000 related to coaching sales. We expect our selling expenses to increase
as we expand coaching services and commence marketing of the PowerHouse
software.

         Payroll related expenses increased by $226,788, or 332.1%, to $295,065
in the fiscal year ended December 31, 2000 from $68,277 in the comparable 1999
fiscal year. The Payroll line item of our Statement of Operations includes all
salaries, primarily administrative, not related to selling, marketing or actual
coaching. This increase is generally attributable to the expansion of our
administration to accommodate Coaching Institute and its growth.

         Interest Expense

         Interest expense remained steady decreasing by $725 to $13,505 in the
2000 fiscal year from $14,230 in the 1999 fiscal year. The increase was
primarily due to interest paid on loans required to continue our operations.

         Net Loss

         Our net loss for the 2000 fiscal year decreased by $168,141, or 50.6%,
to a net loss of ($164,088) from a net loss of ($332,229) in the comparable 1999
period. This decreased net loss is due primarily to the absence of consulting
fees during the 2000 period in contrast to the 1999 fiscal year.

         (c) Liquidity and Capital Resources

         Our liquidity and capital resources as of December 31, 2000 were
$5,270, and as of December 31, 1999 were $18,393, a decrease of $13,123 or
71.3%. Our capital resources were higher in 1999 due to the sale of a contract.
The decrease is due to funds being used for operations in the 2000 fiscal year.

         At December 31, 2000, our current liabilities exceeded our current
assets by approximately $114,146, with a ratio of current liabilities to current
assets of approximately 1.7 to 1. Inventory levels increased by $6,899 or 151.7%
to $11,445 on December 31, 2000 compared to $4,546 on December 31, 1999. The
primary reason for this increase was the production and accumulation of units of
PowerHouse, our new software product that was completed and released during late
2000. Accounts receivable were lower due to collections from SDI LeGrand. The
majority of remaining current accounts receivable are owed by SDI LeGrand.

         We may not be able to satisfy our cash requirements during the next 12
months from cash on hand and revenues and are considering raising money through
a stock offering to meet capital needs and to expand and fund our operations. We
have no commitments for significant capital expenditures over the next 12
months.

                                       14
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

         The audited consolidated balance sheet of the Company for its years
ended December 31, 2000 and 1999 and related consolidated statements of
operations, stockholders' equity and cash flows for the years ended December 31,
2000 and 1999 are included, following Item 13, in sequentially numbered pages
numbered F-1 through F-19. The page numbers for the financial statement
categories are as follows:

                 Index                                                  Page

   Report of Independent Auditors                                        F-3

   Consolidated Balance Sheets as of December 31, 2000 and 1999          F-4

   Consolidated Statements of Operations
   for the Years Ended December 31, 2000 and 1999                        F-6

   Consolidated Statement of Stockholders' Equity
   for the Years Ended December 31, 2000 and 1999                        F-7

   Consolidated Statements of Cash Flows
   for the Years Ended December 31, 2000 and 1999                        F-8

   Notes to Consolidated Financial Statements                            F-10

ITEM 8.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

         None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934,
         AS AMENDED

Officers and Directors

         The following table sets forth the names, age, and position of each of
our directors and executive officers.

      Name                 Age      Position and Office Held

  Craig R. Hendricks       34       President, Chief Executive Officer
                                    Chief Accounting Officer,
                                    Chief Financial Officer, Director

  Rick McAllister          41       Vice President of Coaching

  Steven E. Carlson        31       Director

         Craig R. Hendricks became an officer, and both he and Steven E. Carlson
became director in connection with our re-organization on December 8, 1998. Rick
McAllister became Vice President of Coaching in July 2000. The term of office of
each officer and director is until his successor is elected and qualified.

                                       15
<PAGE>

Biographical Information

         Set forth below is biographical information for each officer and
director. No person other than officers and directors will currently perform any
of our management functions.

         Craig R. Hendricks, President, Chief Executive Officer, Chief
Accounting Officer, Chief Financial Officer, Director has been with Warever
Corporation since 1992. In 1993, he orchestrated and led the buyout of Warever
Corporation from its founding owners. Prior to joining Warever Corporation in
1992, Mr. Hendricks began his career at WordPerfect Corporation. He served on
the Board of CMS Casuals, Inc., a manufacturing company based in Bellevue,
Washington with approximately 40 employees, which was sold to a group of
Microsoft employees in 1990. He received a Bachelor of Science in accounting and
a Master of Business Administration Degree, graduating with distinction from
Brigham Young University in 1992.

         Rick McAllister, Vice President of Coaching, has been with Coaching
Institute since 1998 and has served as Vice President of Coaching since July
2000. While at Coaching Institute, he has assisted in the development of
coaching methodologies and was involved in authoring Chain Reaction Downline, a
informational and strategy book targeting the network marketing industry. Prior
to joining coaching, Mr. McAllister worked for Borges Lamont between 1995 and
1998 in their coaching and symposium sales department. Mr. McAllister received a
Bachelor of Science in international business, from the University of Texas.

         Steven E. Carlson, Director, helped create Warever Corporation as one
of the original founders while attending the University of Utah. Mr. Carlson has
been a member of the board of directors since Warever's inception and served as
vice president of sales and marketing between 1995 and 2000. Mr. Carlson has
been involved in the productivity and sales automation industries since the late
1980's. Between 1995 and 2000, Mr. Carlson focused on day to day operations
related to Warever's software sales and on-site implementation of Warever's
automation system software.

         Our bylaws provide for indemnification of officers, directors or LSIM
agents against legal expenses, judgments, fines, settlements and other amounts
reasonably incurred by such persons after having been made or threatened to be
made a party to legal action. Payment of such amounts may also be made in
advance if expenses are likely to be incurred by officers, directors or agents
in defense of any such action.

         The extent, amount and eligibility for the indemnification provided
will be determined by the Board of Directors. These indemnifications will be
made by a majority vote of a quorum of directors, including any director who is
a party to such action, suit, or proceeding or by the shareholders by a majority
vote of a quorum of shareholders including any shareholder who is a party to
such action, suit or proceeding.

         We are further authorized by the bylaws to purchase insurance for
indemnification of any person as provided by the bylaws and to the extent
provided by Nevada law. We, at this time, have no insurance coverage for
officers and directors and have not expended any funds to obtain such insurance
policies to insure or indemnify directors or officers against any liabilities
that may occur. Management reserves the right to obtain such insurance.

         Section 78.7502 of the Nevada Revised Statutes authorizes
indemnification of officers, directors, employees and agents in instances
constituting certain violations of criminal law which the person did not know
were illegal, or actions taken in good faith by persons which were intended to
be in the best interests of the corporation.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of LSIM pursuant to the foregoing provisions or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

                                       16
<PAGE>

         In the event that a claim for indemnification against such liabilities
(other than the payment by LSIM of expenses incurred or paid by a director,
officer or controlling person of LSIM in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by LSIM is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

ITEM 10. EXECUTIVE COMPENSATION

         The President's target compensation is $100,000 per year, but defers
his compensation from time to time due to cash constraints. The Vice President
of Coaching receives an annual salary of approximately $60,000. Compensation is
not paid to Directors for fulfilling their roles as Directors.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                              SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------------
Name and Principal    Year
Position (a)          (b)                                         Long-Term Compensation
-------------------------------------------------------------------------------------------------------------------------
                              Annual Compensation            Awards                       Payouts
                            ------------------------------------------------------------------------------
                               Salary (c)   Bonus (d)   Other       Restricted     Securities   LTIP         All
                                                        Annual      Stock          Under-       Payouts      Other
                                                        Compen-     Award (f)      lying        (h)          Compen-
                                                        sation (e)                 Options/                  sation (i)
                                                                                   SARs (g)
-------------------------------------------------------------------------------------------------------------------------
<S>                  <C>      <C>           <C>        <C>            <C>           <C>          <C>         <C>
Craig Hendricks      2000     $ 85,250      $0.0          $0.0        $0.0           0            $0.0        $0.0
Chairman, CEO,       1999     $ 49,500      $0.0       $45,500        $0.0           0            $0.0        $0.0
President            1998     $ 50,250      $0.0          $0.0        $0.0           0            $0.0        $0.0
-------------------------------------------------------------------------------------------------------------------------
Steven Carlson       2000*    $ 33,250      $0.0          $0.0        $0.0           0            $0.0        $0.0
Vice President       1999     $ 49,500      $0.0       $45,500        $0.0           0            $0.0        $0.0
                     1998     $ 50,250      $0.0          $0.0        $0.0           0            $0.0        $0.0
-------------------------------------------------------------------------------------------------------------------------
Rick McAllister      2000**   $ 57,000      $0.0          $0.0        $0.0           0            $0.0        $0.0
Vice President       1999     $ 38,500      $0.0          $0.0        $0.0           0            $0.0        $0.0
                     1998     $ 26,000      $0.0          $0.0        $0.0           0            $0.0        $0.0
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Steven Carlson served as Vice President through May 2000. ** Rick McAllister
became Vice President of Coaching in July 2000.

         There are no other agreements or arrangements, express or implied,
between us and any other officer or director, regarding any other form of
compensation, including stock options, warrants, employment incentives, or the
like.

         No long-term incentive plan awards were issued or granted to our
management during the years ended December 31, 2000, 1999 or 1998. Deferred
compensation totaling $90,000, or $45,500 for each Steve Carlson and Craig
Hendricks was booked for the year ended December 31, 1999 and remains on the
books.

                                       17
<PAGE>

Compensation of Directors.

         There are no standard arrangements pursuant to which our directors are
compensated for any services provided as a director. No additional amounts are
payable to our directors for committee participation or special assignments.

Employment  Contracts  and  Termination  of  Employment  and  Change in  Control
Arrangements.

         There are no employment contracts, compensatory plans or arrangements,
including payments to be received from us, with respect to any of our directors
or executive officers which would in any way result in payments to any such
person because of his or her resignation, retirement or other termination of
employment with us, any change in control of our organization, or a change in
the person's responsibilities following a change in control of our organization.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of the date of this report, the
aggregate number of shares of common stock owned of record or beneficially by
each person who owned of record, or is known by us to own beneficially, more
than 5% of our common stock, and the name and holdings of each officer and
director and all officers and directors as a group:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Title of Class                  Name and                         Amount and                 Percent of Class
                        Address of Beneficial Owner       Nature Beneficial Owner
----------------------------------------------------------------------------------------------------------------
<S>                    <C>                                       <C>                             <C>
                        Officers and Directors:

 Common Stock            Craig R. Hendricks                       2,894,604                       26.1%
                         112 W. Business Park Drive
                         Draper, Utah 84020

 Common Stock            Steven E. Carlson                        2,894,604                       26.1%
                         112 W. Business Park Drive
                         Draper, Utah 84020

                        5% Shareholders:

 Common Stock            Lona Hendricks                           1,186,340                       10.7%
                         4103 205th Ave. S.E.
                         Issaquah, WA 98029
----------------------------------------------------------------------------------------------------------------
</TABLE>

         The following table sets forth, as of the date of this report, the
aggregate number of shares of common stock warrants held by each person who
owned of record, or is known by us to own beneficially, more than 5% of our
common stock, and the name and holdings of each officer and director.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
 Name of Warrant Holder        Title and Amount of Securities             Exercise Price                 Date of Exercise
                               Called for by Warrants
<S>                            <C>                                   <C>                             <C>
Craig R. Hendricks             869,318 shares of common stock.       .0073 shares of Coaching        For a period of 60 days
112 W. Business Park Drive                                            Institute, Inc stock per       after January 1, 2001.
Draper, Utah 84020                                                    share.

Steven E. Carlson              869,318 shares of common stock.        .0073 shares of Coaching       For a period of 60 days
112 W. Business Park Drive                                             Institute, Inc stock per      after January 1, 2001.
Draper, Utah 84020                                                     share.


Lona Hendricks                 143,182 shares of common stock.         .0073 shares of Coaching      For a period of 60 days
4103 205th Ave. S.E.                                                   Institute, Inc stock per      after January 1, 2001.
Issaquah, WA 98029                                                     share.
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       18
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Loan From 5% Stockholders

         During 1995, a shareholder relative of Craig Hendricks, an officer and
director of the Company, advanced $39,000 for working capital. As of December
31, 2000 $35,866 in payments were made to this related party with a balance due
at December 31, 2000 and 1999, of $3,134 and $3,134, respectively.

         During 1999, a shareholder relative of Craig Hendricks, an officer and
director of the Company, advanced $190,000 for working capital. As of December
31, 2000 $86,126 was paid to this related party with a balance due at December
31, 2000 and 1999 of $103,874 and $163,453, respectively.

         During 1999, Craig Hendricks, an officer and director of the Company,
advanced $5,000 for working capital. As of December 31, 1999 $5,000 in payments
were made to this related party removing the balance due from the Company's
books.
<TABLE>
<CAPTION>
 ---------------------------------------------------------------------------------------------------------
 Date of Loan         Principal Amount     Interest Rate           Term            Payment Terms
 ---------------------------------------------------------------------------------------------------------
<S>                        <C>                <C>                 <C>           <C>
 April 1, 1999             $40,000            9.75%               3 years       Monthly payments of
                                                                                principal and interest
                                                                                amortized over 36 months
 ---------------------------------------------------------------------------------------------------------
 July 1, 1999              $50,000            9.75%               1 year        Monthly payments of
                                                                                interest only with balloon
                                                                                payment due on or before
                                                                                month 12.
 ---------------------------------------------------------------------------------------------------------
 August 1, 1999           $100,000            9.75%               1 year        Monthly payments of interest
                                                                                only with balloon payment
                                                                                due on or before month 12.
 ---------------------------------------------------------------------------------------------------------
</TABLE>

ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

         (a) Index to financial statements and financial statement schedules

         The audited balance sheets of the Company as of May 31, 2000 and 1999
and the related statements of operations, stockholders' equity and cash flows
for the years ended May 31, 2000 and 1999 follow in sequentially numbered pages
F-1 through F-19. The page numbers for the financial statement categories are as
follows:

     Page                  Description

     F-3         Report of Independent Auditors - December 31, 2000 and 1999

     F-4         Balance Sheets as of December 31, 2000 and 1999

     F-6         Statements of Operations for the Years Ended December 31, 2000
                   and 1999

     F-7        Statement of Stockholders' Equity for the Years Ended December
                  31, 2000 and 1999

     F-8        Statements of Cash Flows for the Years Ended December 31, 2000
                  and 1999

     F-10       Notes to Financial Statements

         (b) 8-K Reports

                                       19
<PAGE>

         On February 26, 2001 a Form 8-K was filed with the Securities and
Exchange Commission reporting in Item 5, "Other Events", that we had acquired
the final 15% of Coaching Institute.

         On February 26, 2001 a Form 8-K was filed with the Securities and
Exchange Commission reporting in Item 5, "Other Events", that our orders from
Automation Quest, a source of 33.1% of our revenues in 2000 had dropped to $0.00
in February 2001.

         (c) Exhibits:

-------------------------------------------------------------------------------
Exhibit No.                         Title of Document
-------------------------------------------------------------------------------
2.1               Plan of Acquisition by which LSI Communications, Inc. shall
                  acquire Warever, Inc.(1)
-------------------------------------------------------------------------------
2.2               Plan of Acquisition by which LSI Communications, Inc. shall
                  acquire Coaching Institute, Inc.(1)
-------------------------------------------------------------------------------
3.1               Articles of Incorporation of Connections Marketing Corp.(1)
-------------------------------------------------------------------------------
3.2               Articles of Amendment to the Articles of Incorporation of
                  Connections Marketing Corp.(1)
-------------------------------------------------------------------------------
3.3               Bylaws of Connections Marketing Corp.(1)
-------------------------------------------------------------------------------
10.1              Promissory Note to Lona J. Hendricks ($100,000)(1)
-------------------------------------------------------------------------------
10.2              Promissory Note to Lona J. Hendricks ($40,000)(1)
-------------------------------------------------------------------------------
10.3              Promissory Note to Lona J. Hendricks ($50,000)(1)
-------------------------------------------------------------------------------
10.4              Coaching and Strategic Agreement-8/25/99(1)
-------------------------------------------------------------------------------
10.5              Coaching and Strategic Agreement-1/6/99(1)
-------------------------------------------------------------------------------
10.6              Coaching and Strategic Agreement-6/5/99(1)
-------------------------------------------------------------------------------
10.7              Standard Distribution Provisions--Columbia House Co., and
                  Warever, Inc. (1)
-------------------------------------------------------------------------------
21.1              Subsidiaries of the Company (1)
-------------------------------------------------------------------------------

(1)   Incorporated by reference to our registration statement on Form 10SB12G as
      filed with the SEC on May 19, 2000.

                                       20
<PAGE>

                             ADDITIONAL INFORMATION

                             Corporate Headquarters
                112 West Business Park Drive, Draper, Utah 84020
          Telephone Number: (801) 572-2555; Fax Number: (801) 572-2444
                     Internet Address http://www.lsicom.com;

                         Independent Public Accountants
                              Chisholm & Associates
                          Certified Public Accountants
                                 P.O. Box 54026
                           North Salt Lake, Utah 84054

                                 Transfer Agent
                        Interwest Transfer Company, Inc.,
                         1981 East Murray-Holladay Road,
                               Holladay, UT 84117.

         Exhibits to Form 10-KSB will be provided to shareholders of the
Registrant upon written request addressed to LSI Communications, Inc., 112 West
Business Park Drive, Draper, Utah 84020. Any exhibits furnished are subject to a
reasonable photocopying charge.

         The Securities and Exchange Commission has not approved or disapproved
of this Form 10-KSB and Annual Report to Shareholders nor has it passed upon its
accuracy or adequacy.

                                       21
<PAGE>

                            LSI Communications, Inc.

                        Consolidated Financial Statements

                           December 31, 2000 and 1999


                                      F-1
<PAGE>

                                 C O N T E N T S

Accountants' Report .....................................................F-3

Consolidated Balance Sheets .............................................F-4

Consolidated Statements of Operations ...................................F-6

Consolidated Statements of Stockholders' Equity..........................F-7

Consolidated Statements of Cash Flows ...................................F-8

Notes to the Consolidated Financial Statements ..........................F-10


                                      F-2
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders
of LSI Communications, Inc.


We have audited the accompanying consolidated balance sheets of LSI
Communications, Inc. as of December 31, 2000 and 1999 and the related statements
of operations, stockholders' equity and cash flows for the years 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 audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of LSI Communications,
Inc. as of December 31, 2000 and 1999 and the results of its consolidated
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2, the Company's
recurring operating losses and lack of working capital raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to those matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Chisholm & Associates
February 27, 2001

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                             LSI Communications, Inc.
                                            Consolidated Balance Sheets

                                                      ASSETS
                                                                                    December 31,
                                                                            2000                      1999
                                                                      ------------------      ------------------
<S>                                                                   <C>                     <C>
CURRENT ASSETS
   Cash & Cash Equivalents                                            $            5,270      $           18,393
   Inventory                                                                      11,445                   4,546
   Accounts Receivable (Net of allowance
     of $7,000 and $13,000, respectively)                                        113,884                 157,829
   Notes Receivable                                                                  -                   226,800
   Deposits                                                                       26,500                     -
                                                                      ------------------      ------------------
     Total Current Assets                                                        157,099                 407,568
                                                                      ------------------      ------------------

PROPERTY & EQUIPMENT                                                              56,736                  26,135
                                                                      ------------------      ------------------

OTHER ASSETS
    Deposits & Prepaids                                                            6,076                   6,076
                                                                      ------------------      ------------------

    Total Other Assets                                                             6,076                   6,076
                                                                      ------------------      ------------------
     TOTAL ASSETS                                                     $          219,911      $          439,779
                                                                      ==================      ==================
</TABLE>
    The accompanying notes are an integral part of these financial statements

                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                                             LSI Communications, Inc.
                                       Consolidated Balance Sheets continued

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                    December 31,
                                                                            2000                      1999
                                                                      ------------------      ------------------
<S>                                                                   <C>                     <C>
CURRENT LIABILITIES
   Accounts payable                                                   $           36,290      $           22,858
   Accrued expenses                                                               41,269                  34,410
   Current portion of long-term liabilities                                      102,686                 195,081
   Deferred Revenues                                                                   -                   1,962
   Deferred Compensation                                                          91,000                  91,000
                                                                      ------------------      ------------------
     Total Current Liabilities                                                   271,245                 345,311
                                                                      ------------------      ------------------

LONG TERM LIABILITIES
   Notes payable                                                                       -                  37,368
   Notes payable-related party                                                   103,874                 166,587
   Capital lease obligations                                                      23,472                       -
   Less current portion                                                         (102,686)               (195,081)
                                                                      ------------------      ------------------
     Total long term Liabilities                                                  24,660                   8,874
                                                                      ------------------      ------------------
     TOTAL LIABILITIES                                                           295,905                 354,185
                                                                      ------------------      ------------------

MINORITY INTEREST                                                                      -                       -
                                                                      ------------------      ------------------

STOCKHOLDERS' EQUITY
   Common stock, authorized 50,000,000 shares of $.001
     par value, issued and outstanding 11,415,632 and
     8,915,632 shares, respectively                                               11,416                   8,916
   Additional Paid-in capital                                                    731,598                 731,598
   Retained earnings                                                            (819,008)               (654,920)
                                                                      ------------------      ------------------
     Total Stockholders' Equity                                                  (75,994)                 85,594
                                                                      ------------------      ------------------
TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                                               $          219,911      $          439,779
                                                                      ==================      ==================
</TABLE>
    The accompanying notes are an integral part of these financial statements

                                       F-5
<PAGE>
<TABLE>
<CAPTION>
                                             LSI Communications, Inc.
                                       Consolidated Statements of Operations

                                                                                     For the Year Ended
                                                                                        December 31,
                                                                                     2000           1999
                                                                                ------------   --------------
<S>                                                                             <C>            <C>
REVENUES
  Software Sales                                                                $     20,269   $      117,316
  Training Revenues                                                                1,385,068          415,731
                                                                                ------------   --------------
TOTAL REVENUES                                                                     1,405,337          533,047
                                                                                ------------   --------------

COST OF SALES
  Software                                                                             1,013            5,719
  Training                                                                           436,384          143,345
                                                                                ------------   --------------
TOTAL COST OF SALES                                                                  437,397          149,064
                                                                                ------------   --------------

GROSS PROFIT                                                                         967,940          383,983
                                                                                ------------   --------------

SELLING EXPENSES                                                                     393,679          320,242
DEPRECIATION & AMORTIZATION                                                           18,083           10,964
PRODUCTION FEES                                                                            -          126,100
CONSULTING FEES                                                                            -          135,000
PAYROLL                                                                              295,065           68,277
GENERAL & ADMINISTRATIVE EXPENSES                                                    394,536          153,610
RESEARCH & DEVELOPMENT                                                                 3,792           27,200
                                                                                ------------   --------------
TOTAL OPERATING EXPENSES                                                           1,105,155          841,393
                                                                                ------------   --------------
OPERATING LOSS                                                                      (137,215)        (457,410)
                                                                                ------------   --------------

OTHER INCOME AND (EXPENSES)
  Minority interest                                                                        -           (5,209)
  Miscellaneous income                                                                     -            1,620
  Interest expense                                                                   (13,505)         (14,230)
  Gain/(Loss) on sale of asset                                                       (13,368)         143,000
                                                                                ------------   --------------
    Total Other Income and (Expenses)                                                (26,873)         125,181
                                                                                ------------   --------------

LOSS BEFORE INCOME TAXES                                                            (164,088)        (332,229)

PROVISION FOR INCOME TAXES                                                                 -                -
                                                                                ------------   --------------

NET INCOME/(LOSS)                                                               $   (164,088)  $     (332,229)
                                                                                ============   ==============

NET INCOME/(LOSS) PER SHARE                                                     $      (.02)   $         (.05)
                                                                                ============   ==============

WEIGHTED AVERAGE OUTSTANDING SHARES                                               11,207,299        7,444,168
                                                                                ============   ==============
</TABLE>
    The accompanying notes are an integral part of these financial statements

                                       F-6
<PAGE>
<TABLE>
<CAPTION>
                                             LSI Communications, Inc.
                                  Consolidated Statements of Stockholders' Equity
                                 From December 31, 1998 through December 31, 2000


                                               Common Stock             Additional    Retained
                                        --------------------------       Paid-in     Earnings
                                           Shares         Amount          Capital    (Deficit)
                                        ------------    ----------     ------------  ---------
<S>                                       <C>           <C>            <C>           <C>
Balance on December 31, 1998               5,959,697    $    5,960     $   310,035      (322,691)

March 3, 1999 - shares issued in
   Shareholder settlement at
   $.001 per share                            27,485            27             (27)          -

April 1, 1999 - shares issued for
   consulting agreement at
   $1.00 per share                            85,000            85          84,915           -

June 28, 1999 - shares issued in
    acquisition of Coaching Institute,
    Inc.                                   2,500,000         2,500          27,019           -

July 1, 1999 - shares issued for
   consulting agreement at
   $.25 per share                            200,000           200         49,800            -

August 30, 1999 - shares issued for
   royalty agreement at $1.825
   per share                                 143,450           144        259,856            -

Net Loss for the year ended
 December 31, 1999                             -              -                -        (332,229)
                                        ------------    ----------     ------------  -----------

Balance on December 31, 1999               8,915,632         8,916          731,598  $  (654,920)

January 31, 2000 - shares issued
   for exercise of option agreement
   for minority interest of
   subsidiary at $.001 per share           2,500,000         2,500             -             -

Net Loss for the year ended
 December 31, 2000                             -              -                -        (164,088)
                                        ------------    ----------     ------------  -----------
Balance on December 31, 2000              11,415,632    $   11,416     $    731,598  $  (819,008)
                                        ============    ==========     ============  ===========
</TABLE>
    The accompanying notes are an integral part of these financial statements

                                      F-7
<PAGE>
<TABLE>
<CAPTION>
                                             LSI Communications, Inc.
                                       Consolidated Statements of Cash Flows

                                                                                     Year Ended December 31,
                                                                                     2000             1999
                                                                                 ------------     -------------
<S>                                                                              <C>              <C>
Cash Flows From Operating Activities
Net income (loss)                                                                $   (164,088)    $    (332,229)
Non-cash items:
   Consulting fee paid with stock issues                                                  -             135,000
   Depreciation & amortization                                                         18,083            10,964
   Account payable forgiveness                                                            -              25,000
   Bad Debt                                                                             8,526            17,593
   Minority Interest                                                                      -               5,209
   Gain on sale of contract                                                               -            (143,000)
(Increase)/decrease in current assets:(net of acquisition)
   Accounts receivable                                                                 37,650           (43,023)
   Inventory                                                                           (6,899)              740
   Deposits (Current)                                                                 (26,500)              -
Increase/(decrease) in current liabilities:
   Accounts payable                                                                    13,432            (7,752)
   Accrued expenses                                                                     6,859            19,277
   Deferred revenues                                                                   (1,962)           (3,038)
   Deferred compensation                                                                  -              91,000
                                                                                 ------------     -------------
     Net Cash Provided (Used)
      by Operating Activities                                                        (114,899)         (224,259)
                                                                                 ------------     -------------

Cash Flows from Investing Activities
  Cash from acquisition of
      Coaching Institute, Inc.                                                           -               14,448
  Cash paid for property, equipment
     and software technology                                                          (22,723)          (19,902)
  Cash received from note receivable                                                  226,800
  Cash received from sale of contract                                                    -              151,200
                                                                                 ------------     -------------
     Net Cash Provided (Used)
      by Investing Activities                                                         204,077           145,746
                                                                                 ------------     -------------

Cash Flows from Financing Activities
  Proceeds from long term debt                                                            -             120,000
  Principal payments on long-term debt                                               (102,301)          (47,512)
                                                                                 ------------     -------------
     Net Cash Provided (Used)
      by Financing Activities                                                        (102,301)           72,488
                                                                                 ------------     -------------

    Increase/(decrease) in Cash                                                       (13,123)           (6,025)

Cash and Cash Equivalents
  at Beginning of Period                                                               18,393            24,418
                                                                                 ------------     -------------
Cash and Cash Equivalents
  at End of Period                                                               $      5,270     $      18,393
                                                                                 ============     =============
                                   (continued)

    The accompanying notes are an integral part of these financial statements

                                       F-8
<PAGE>
<CAPTION>
                                             LSI Communications, Inc.
                                       Consolidated Statements of Cash Flows
                                                    (continued)

<S>                                                                              <C>              <C>
Supplemental Cash Flow Information:
  Cash paid for interest                                                         $     13,505     $      14,230
  Cash paid for income taxes                                                     $       -        $         -

Non-Cash Investing Activities:
   In 1999, the Company issued 2,500,000 shares of common stock for 85,000
shares (85%) of common stock of Coaching Institute, Inc.

   In 2000, the Company issued 2,500,000 shares of common stock for 15% of the
outstanding common stock of Warever.

   In 1999, the Company issued 285,000 shares of common stock for services
valued at $135,000.

   In 1999, the Company issued 143,450 shares of common stock for a royalty
agreement valued at $260,000.
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                       F-9
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 1 - Summary of Significant Accounting Policies

  a.          Organization

              The Company was incorporated as TPI, Inc., under the laws of the
  State of Utah on April 26, 1983. In 1985, the Corporation changed its situs
  from Utah to Nevada and its name to Connections Marketing Corp. In July, 1992,
  the shareholders of the Corporation voted to change the name to LSI
  Communications, Inc. (LSI). The Company held mineral properties in Beaver
  County, Utah; however, no extraction operations ever commenced and the
  properties were distributed to the shareholders through a subsidiary spinoff.

              On November 20, 1998, the Company entered a Plan of Reorganization
  and Acquisition agreement with Warever, Inc. (Warever) a Utah Corporation,
  wherein the Company issued 3,000,000 shares of common stock for 85% of the
  outstanding common stock of Warever. The agreement provided for the Company to
  acquire the remaining 15% of Warever for 2,500,000 shares of LSI through
  option agreements which are exercisable for a period of 60 days following
  January 1, 2000. The Company exercised this option in January 2000 and issued
  2,500,000 for the remaining 15% of Warever and valued the shares at $2,500.

              Warever was organized in the State of Utah on May 13, 1992 under
  the name of Action Plus Software, Inc. On January 17,1995 the company changed
  the name of the company to Warever, Inc.

              Warever is in the business of developing, programming, selling and
  marketing a computer software package named Action Plus, a management
  assistance software tool.

              The acquisition is recorded as a reverse acquisition, with Warever
  being the accounting survivor, therefore all historical financial information
  prior to November 20, 1998 in these statements are those of Warever.

              On June 21, 1999, the Company entered into a Plan of Acquisition
  with Coaching Institute, Inc., a Utah corporation, wherein the Company issued
  2,500,000 shares of common stock for 85,000 shares, 85%, of the outstanding
  common stock of Coaching Institute, Inc. The agreement provides for the
  Company to receive options to acquire the remaining 15% of the issued and
  outstanding common stock of Coaching Institute, Inc. in exchange for 2,045,455
  shares of the Company's common stock. After the acquisition, both companies
  are surviving with Coaching Institute, Inc. being a majority-owned subsidiary
  of LSI Communications, Inc.

                                      F-10
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 1 - Summary of Significant Accounting Policies (continued)

  a.          Organization (continued)

              The acquisition of Coaching Institute, Inc. has been recorded
  using the purchase method of a business combination. Operating activities have
  been included from Coaching Institute in the consolidated financials since
  June 21, 1999. Due to the common ownership of Coaching and LSI, the Company
  valued the acquisition of Coaching Institute at historical cost which was
  $34,728.

              The ownership of Coaching was identical to that of Warever
  Corporation, prior to its merger with LSI, therefore Coaching is controlled by
  the controlling shareholders of LSI. Due to this common control, no change in
  valuation is included upon the recording of the assets, nor is goodwill
  recorded on the purchase of Coaching.

  b.          Recognition of Revenue/Deferred Revenue

              The Company recognizes income and expense on the accrual basis of
  accounting. The Company receives revenues from services provided for custom
  program conversions and training. Pursuant to SOP 97-2, revenue is recorded
  when the services are completed. The Company also generates revenues from the
  sale of their Action Plus software technology. This product is sold separately
  without future performance such as upgrades or maintenance, and is not sold
  with PCS services, therefore according to SOP 97-2 revenue is recorded upon
  the sale and delivery of the product once an agreement exists, the price is
  fixed and collectability is probable.

              The Company sells post contract support services separately for
  one year. The Company defers the revenue and recognizes it over the contract
  term as required by SOP 97-2. The deferred revenue at December 31, 2000 and
  1999 on contracts sold during 2000 and 1999 total $0 and $1,962, respectively.

  c.          Earnings (Loss) Per Share

              The computation of earnings per share of common stock is based on
  the weighted average number of shares outstanding at the date of the financial
  statements.
<TABLE>
<CAPTION>
                                                              Income(loss)          Shares          Per-Share
                                                              (Numerator)        (Denominator)        Amount
           <S>                                                <C>                   <C>           <C>
           For the year ended December 31, 2000:

              Income (loss) from operations                    $ (137,215)
                                                              ------------
              Basic EPS
              Income (loss) to common
              stockholders                                    $  (164,088)         11,207,299     $        (.02)
                                                              ============     ==============     =============

           For the year ended December 31, 1999:

              Income (loss) from operations                   $  (457,410)
                                                              ------------
              Basic EPS
              Income (loss) to common
              stockholders                                    $  (332,229)          7,444,168     $        (.05)
                                                              ============     ==============     =============
</TABLE>
                                      F-11
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 1 - Summary of Significant Accounting Policies (Continued)

  d.          Provision for Income Taxes

              In 1997, Warever, Inc. elected to file federal and state income
  taxes under the provisions of Subchapter S of the Internal Revenue Code. Under
  those provisions, the Company does not pay corporate income taxes on its
  taxable income during that period of time. Instead, the stockholders are
  liable for individual income taxes on their respective shares of the Company's
  net operating income in their individual income tax returns. Effective
  December 1, 1998, the Company will file a consolidated return with it's parent
  and will lose it's S-Corp status.

              No provision for income taxes has been recorded due to net
  operating loss carry forwards totaling approximately $819,008 that will be
  offset against future taxable income. These NOL carry forwards begin to expire
  in 2013. No tax benefit has been reported in the financial statements because
  the Company has not yet proven it can generate taxable income.

              Deferred tax assets and the valuation account is as follows at
  December 31, 2000 and 1999:

                                                      December 31,
                                                 2000                1999
                                             -----------         ------------
            Deferred tax asset:
              NOL carry forward              $   278,000         $    222,000
              Valuation allowance               (278,000)            (222,000)
                                             -----------         ------------
                Total                        $        -          $         -
                                             ===========         ============

  e.          Cash and Cash Equivalents

              The company considers all highly liquid investments with
  maturities of three months or less to be cash equivalents.

  f.          Property and Equipment

              Expenditures for property and equipment and for renewals and
  betterments, which extend the originally estimated economic life of assets or
  convert the assets to a new use, are capitalized at cost. Expenditures for
  maintenance, repairs and other renewals of items are charged to expenses. When
  items are disposed of, the cost and accumulated depreciation are eliminated
  from the accounts, and any gain or loss is included in the results of
  operations.

              The provision for depreciation is calculated using the
  straight-line method over the estimated useful lives of the assets.
  Depreciation expense for the period ended December 31, 2000 and 1999 is
  $18,083 and $9,586, respectively. The useful lives of assets is as follows:

              Computer Equipment                    3 to 5 years
              Furniture & Fixtures                       5 years
              Lease agreement                            5 years
              Automobile                                 5 years
              Software                                   3 years

                                      F-12
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 1 - Summary of Significant Accounting Policies (Continued)

  f.          Property and Equipment (continued)

              In accordance with Financial Accounting Standards Board Statement
  No.121, the Company records impairment of long-lived assets to be held and
  used or to be disposed of when indicators of impairment are present and the
  undiscounted cash flows estimated to be generated by those assets are less
  than the carrying amount. At December 31, 2000, no impairments were
  recognized.

  g.          Inventory

              Inventory consists primarily of software manuals and disks and is
  recorded at the lower of cost or market.

  h.          Advertising Costs

              Advertising costs are charged to operations when incurred. The
  cost for direct response advertising is also expensed because the future
  benefit is only three days, therefore capitalization is ineffective.

  j.          Consolidation Policy

              These financial statements include the books of LSI
  Communications, Inc., a public shell company, Warever Corporation, a software
  sales and marketing company, and Coaching Institute, Inc., a training and
  consulting firm. All intercompany accounts and transactions have been
  eliminated in the consolidation.

NOTE 2 - Going Concern

              The accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern. The Company has operating
  losses and is dependent upon financing to continue operations. The financial
  statements do not include any adjustments that might result from the outcome
  of this uncertainty. It is management's plan to continue to expand their
  operations, thus creating necessary operating revenue. Until the Company can
  sufficiently cover their operating expenses, the Company relies on shareholder
  loans to support cash-flow needs.

                                      F-13
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 3 - Property & Equipment

              Property and equipment consists of the following at December 31,
  2000 and 1999:
<TABLE>
<CAPTION>
                                                                2000          1999
                                                            ----------     ----------
<S>                                                         <C>            <C>
    Computer equipment                                      $   53,009     $   41,002
    Leased equipment                                            15,075         15,075
    Furniture and fixtures                                      12,755          1,769
      Automobile                                                25,692             -
    Software technology                                            916            916
                                                            ----------     ----------
                                                               107,447         58,762
    Less: Accumulated depreciation - equipment                 (35,636)       (18,557)
          Accumulated depreciation - leased equipment          (15,075)       (14,070)
                                                            ----------     ----------
    Total Property & Equipment                              $   56,736     $   26,135
                                                            ==========     ==========
</TABLE>

NOTE 4 - Contract

              In 1999, the Company acquired a contract for a video production.
  The amount capitalized as the cost of the contract is the value of the
  participation in the video by Karl Malone and others. For their participation,
  143,450 shares of common stock were issued at a valuation of $1.825 per share
  or $260,000. The stock was valued at the average market price at the time of
  issue. This cost was to be amortized over three years.

              On October 26, 1999, the contract for the video series featuring
  Karl Malone was sold. On the date of the sale, the buyer executed a $100,000
  promissory note to the production company in order to terminate the agreement
  with Coaching Institute, Inc. In addition, the buyer executed an agreement
  with the production company to forgive the $25,000 principal balance due from
  Coaching Institute, Inc.

              Besides the above agreements, the buyer agreed to pay cash in the
  amount of $378,000 to Coaching Institute, Inc. according to the following
  schedule:

              At Closing                                  $    75,600
              November 15, 1999                                75,600
              December 15, 1999                                75,600
              January 15, 2000                                 75,600
              February 15, 2000                                75,600
                                                           ----------
                                                          $   378,000

              At December 31, 2000, the balance due Coaching Institute was $0.

                                      F-14
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 5 - Long-Term Liabilities

              Long Term Liabilities are detailed in the following schedules as
  of December 31, 2000 and 1999:

  Note payable-related party is detailed as follows:
<TABLE>
<CAPTION>
                                                            December 31,
                                                      2000              1999
                                                  -----------      -----------
  <S>                                             <C>              <C>
  Note payable to a relative of an officer
  of the Company, bears interest at 12%,
  with principal due April 1999, unsecured
  note                                            $     3,134      $     3,134

  Note payable to a relative of an officer
  of the Company, bears interest at 9.75%
  payments due monthly of $1,286 through
  April 1, 2002, unsecured                             20,740           33,453

  Note Payable to a relative of an officer
  of the Company, bears interest at 9.75%
  with principal due of $50,000 at July 1,
  2000, unsecured                                           -           50,000

  Note Payable to a relative of an officer
  of the Company, bears interest at 9.75%
  with principal of $100,000 due at August
  1, 2001, unsecured                                   80,000           80,000
                                                  -----------      -----------

  Total Notes Payable - Related Party                 103,874          166,587
                                                  -----------      -----------

  Notes payable are detailed as follows:

  Note payable to a corporation for
  working capital, payments due monthly of
  $698 through June 2000, bears interest
  at 11%, uncolateralized.                        $         -      $    10,821
                                                  -----------      -----------
  Note payable to a corporation for
  working capital, payments due monthly of
  $830 through October 1998, bears
  interest at 12%, unsecured.                               -              118

  Note payable to a corporation for
  working capital, payments due monthly of
  $1,087 through January 2000, bears
  interest at 11%, unsecured.                               -           26,429
                                                  -----------      -----------

                                      F-15
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 5 - Long-Term Liabilities (Continued)

<CAPTION>
                                                            December 31,
                                                      2000              1999
                                                  -----------      -----------
  <S>                                             <C>              <C>
  Total Notes Payable                                       -           37,368
                                                  -----------      -----------

  Capital lease obligations are detailed
  as follows:

  Lease obligation to a corporation, bears
  interest at 8.75%, secured by
  automobile, payments due monthly of $614
  through August 2004                                  23,472                -
                                                  -----------      -----------

  Total Capital Lease Obligations                      23,472                -
                                                  -----------      -----------

  Total Long Term Liabilities                         127,346          203,955
                                                  -----------      -----------

  Less current portion of:
    Notes payable - related party                      97,157          158,567
    Notes payable                                           -           36,514
    Capital lease obligations                           5,529               -
                                                  -----------      -----------
  Total current portion                               102,686          195,081
                                                  -----------      -----------

  Net Long Term Liabilities                       $    24,660      $     8,874
                                                  ===========      ===========

  Future minimum principal payments on
  notes payable are as follows:
  <S>                                                              <C>
              2001                                                 $    97,157
              2002                                                       6,717
                                                                   -----------
              Total                                                $   103,874
                                                                   ===========

  Future minimum lease payments are as follows:
              2001                                                       7,365
              2002                                                       7,365
              2003                                                       7,365
              2004                                                       4,910
                                                                   -----------
                                                                        27,005

              Less: portion representing interest                       (3,533)
              Total                                                 $   23,472
                                                                   ===========
</TABLE>
                                      F-16
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 6 - Use of Estimates in the Preparation of Financial Statements

              The preparation of financial statements in conformity with
  generally accepted accounting principles requires management to make estimates
  and assumptions that affect reported amounts of assets and liabilities,
  disclosure of contingent assets and liabilities at the date of the financial
  statements and revenues and expenses during the reporting period. In these
  financial statements, assets and liabilities involve reliance on management's
  estimates. Actual results could differ from those estimates.

NOTE 7 - Commitments and Contingencies

              The Company is committed for their office facilities. Monthly
  lease payments are due of $4,000 for a 24 month period beginning May 1, 1999.

              The Company is committed to an operating lease for an automobile.
  Monthly lease payments are due of $690 for a 36 month period beginning
  September 1, 2000.

  Future minimum lease payments are as follows at December 31, 2000:

              2001                                              $     28,280
              2002                                                     8,280
              2003                                                     8,280
              2004                                                     5,520
                                                                ------------
                                                                $     50,360

NOTE 8 - Related Party Transactions

              During 1995, a shareholder relative of Craig Hendricks, an officer
  and director of the Company, advanced $39,000 for working capital. As of
  December 31, 2000 $35,866 in payments were made to this related party with a
  balance due at December 31, 2000 and 1999, of $ 3,134 and $3,134,
  respectively.

              During 1999, a shareholder relative of Craig Hendricks, an officer
  and director of the Company, advanced $190,000 for working capital. As of
  December 31, 2000 $86,126 was paid to this related party with a balance due at
  December 31, 2000 and 1999 of $103,874 and $163,453, respectively.

              During 1999, Craig Hendricks, an officer and director of the
  Company, advanced $5,000 for working capital. As of December 31, 1999 $5,000
  in payments were made to this related party removing the balance due from the
  Company's books.

                                      F-17
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 9 - Reverse Merger

              Effective November 20, 1998, LSI Communications, Inc. (a public
  company) entered into an agreement and Plan of Reorganization with Warever,
  Inc., (a private company). The agreement provides for the merger of the
  Company into Warever to be treated as a reverse merger, thus making Warever
  the accounting survivor. Pursuant to the agreement the Company issued
  3,000,000 shares of common stock to the shareholders of Warever for 85% of the
  shares of their Company. Because the historical financial information in these
  financial statements prior to the reverse merger (November 20, 1998) is that
  of the accounting acquirer (Warever), The 3,000,000 shares have been shown as
  if they were issued at inception and a reorganization adjustment is shown for
  the 1,959,697 shares held by the minority shareholders. The management of the
  Company resigned and the management and board of Warever filled the vacancy.
  LSI Communications, Inc. had no assets or liabilities at the time of the
  merger, but was only a public shell.

NOTE 10 - Segment Data

              For the year ended December 31, 1999, the Company had two
  reportable industry segments: (i) Software Sales and (ii) Training Services.

              Sales (Net of Accounts)
                   Software                               $       117,316
                   Training                                       415,731
                                                          ---------------
                      Consolidated                        $       533,047
                                                          ===============
              Operating Income (Loss)
                   Software                               $      (411,703)
                   Training                                      (112,981)
                                                          ---------------
                      Consolidated                               (524,684)
                   Other Income/(expense)                          (3,589)
                   Gain on Sale of Contract                       143,000
                   Interest expense                               (14,230)
                                                          ---------------
                      Net (Loss) before Income Taxes      $      (399,503)
                                                          ===============
              Accounts Receivable

                   Software                               $         3,240
                   Training                                       154,389
                                                          ---------------
                      Consolidated                        $       157,629
                                                          ===============
              Identifiable Assets

                   Software                               $       248,782
                   Training                                       190,997
                                                          ---------------
                      Consolidated                                439,779
                   Goodwill                                     1,278,207
                                                          ---------------
                      Total                               $     1,717,986
                                                          ===============

              For the year ended December 31, 2000, segment data has not been
  reported because the software sales portion of the Company's operations was
  immaterial.

                                      F-18
<PAGE>

                            LSI Communications, Inc.

                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 11 - Software Technology

              Pursuant to FASB 86, the Company expensed all costs associated
  with the development of its software product until technological feasibility
  is reached. At such time the Company capitalizes costs associated with
  producing the master files. The Company also capitalizes software purchased
  for internal use.

NOTE 12 - Fair Value of Financial Statements

              Unless otherwise indicated, the fair values of all reported assets
  and liabilities which represent financial instruments (none of which are held
  for trading purposes) approximate the carrying values of such instruments. The
  Company has no investments in derivative financial instruments.

                                      F-19
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         LSI COMMUNICATIONS, INC.

                                         By:  /s/ Craig Hendricks
                                             ------------------------------
                                             Craig Hendricks
                                             Chief Executive Officer, President
                                             Date 3/30/01

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