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, 2001

                           Commission File No. 0-30786

                                PEREGRINE, 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)

                         8200 E. Pacific Place, Ste. 204
                                Denver, CO 80231
                                 (303) 337-4811
                -------------------------------------------------
               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                          principal executive offices)

                            LSI COMMUNICATIONS, INC.
                 112 West Business Park Drive, Draper, UT 84020
               ---------------------------------------------------
                            (Former Name and Address)

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 $0.

As of April 15, 2002,  there were 19,331,456  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.............................................................4
Item 3. Legal Proceedings......................................................5
Item 4. Submission of Matters to a Vote of Security Holders....................5

                                     PART II

Item 5. Market for the Registrant's Common Equity and Related
        Shareholder Matters ...................................................5
Item 6. Management's Discussion and Analysis of Financial Condition
        and Results of Operations..............................................6
Item 7. Financial Statements...................................................7
Item 8. Disagreements on Accounting and Financial Disclosures .................8

                                    PART III

Item 9. Directors and Executive Officers of the Registrant.....................8
Item 10. Executive Compensation ..............................................11
Item 11. Security Ownership of Certain Beneficial Owners and Management.......11
Item 12. Certain Relationships and Related Transactions.......................12
Item 13. Exhibits, Financial Statements and Reports on Form 8-K...............12
Additional Information* .......................................................
Signatures....................................................................14

* 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.


<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

The Company was  incorporated as TPI, Ihc.,  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 was in the business of developing,  programming, selling and marketing a
computer  software package named Action Plus, a management  assistance  software
tool.

The  acquisition was recorded as a reverse  acquisition,  with Warever being the
accounting  survivor.  In June 2001,  the Company  sold 100% of its  interest in
Warever.  The Company exchanged all of the outstanding shares of common stock of
Warever  for  175,000  shares  of  common  stock of a public  company  valued at
$866,250. The Company recognized a gain on the sale of $865,485.

                                       3
<PAGE>


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  stock of
Coaching  Institute,  Inc. In exchange  for  2,045,455  shares of the  Company's
common stock.  In February 1, 2001, the Company  exercised its option by issuing
2,045,455  shares of its common stock valued at $2,045.  After the  acquisition,
both companies were surviving with Coaching Institute, Inc. being a wholly-owned
subsidiary of LSI Communications, Inc.

The  acquisition  of Coaching  Institute,  Inc. was 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 a historical cost which was $34,728.

In  November  2001,  the  Company  sold the assets and  liabilities  of Coaching
Institute,  Inc. to a major  shareholder.  The Company  recognized a loss on the
sale of $574,236.

On December 21, 2001,  the Company  executed an agreement to acquire 100% of the
issued  and  outstanding  shares of  Peregrine  Control  Technologies,  Inc.  in
exchange for 14,731,200 post reverse split shares of the Company's common stock.
As a result of the acquisition and the change in focus of the Company's business
the Company changed its name to Peregrine,  Inc. Prior thereto,  the Company had
reverse split its shares on a 1:100 basis.  This transaction will close when the
Peregrine,  Inc. audited financial statements are completed which is anticipated
to be in late April 2002.

NASD OTC Bulletin Board Quotations

Our  common  stock is quoted  on the OTC  Bulletin  Board of the NASD  under the
symbol "PGRN". 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.

ITEM 2. PROPERTIES

We do not own any real property.

Subsequent  to the  acquisition  of  Peregrine  Control  Technologies,  Inc. the
corporate offices were moved to Denver, CO. where we occupy 2,500 square feet of
class A  office  space in the  southeast  section  of the  city.

                                       4
<PAGE>

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, 2001.

                                     PART II

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

(a) Market for Common Equity

Since January 2002, our common stock is traded on the Over the Counter  Bulletin
Board  under the  symbol  "PGRN".  The new CUSIP  number is 71366C 10 2.  Knight
Trading  Group,  Inc.  of Jersey  City,  NJ Fleet  Trading,  a Division of Fleet
Securities of Jersey City, NJ and Alpine  Securities of Salt Lake City, Utah 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     Quarter Ended       High     Low
     -------------           ----     ---     -------------       ----     ---
     December 31, 2001      $0.218   $0.05    December 31, 2000  $0.077  $0.020
     September 30, 2001      0.250   0.100    September 30, 2000  0.61    0.020
     June 30, 2001           0.500   0.100    June 30, 2000       0.20    0.020
     March 31, 2001          1.000   0.100    March 31, 2000      0.12    0.025

These quotations reflect interdealer prices,  without retail mark-up,  mark-down
or commission and may not represent  actual  transactions.  These prices also do
not reflect the 1:100 reverse split which occurred in January, 2002.

(b) Security Holders

The Company has  approximately  121  shareholders of record and in excess of 420
total shareholders.

                                       5
<PAGE>

(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 OR PLAN OF OPERATION

This  discussion  and  analysis is  qualified  in its  entirety by the fact that
Warever,  the  software  operations  of the  Company  were sold in June 2001 and
Coaching  Institute,  Inc., its training  subsidiary was disposed of in November
2001.  Because  of  these  dispositions,  the  results  of  operations  are  not
reflective  of what might have been the  results of  operations  had both of the
companies been included in the financial statements for the entire year, 2001.

Revenues.  Revenues for the year ended December 31, 2001 declined by $674,464 or
48% to $730,873  for the year ended  December 31, 2001 from  $1,405,337  for the
year ended  December  31, 2000.  Although  the  software  sales were up slightly
($963), training revenues declined by $675,429 from $1,385,068 to $709,684. This
decrease is attributable to the disposition of the company's training subsidiary
during the year ended December 31, 2001.

Cost of Sales.  Cost of sales  decreased by $399,464 or 91.3% to $37,933 for the
year ended December 31, 2001 from $437,397 for the year ended December 31, 2000.
This  decrease in cost of sales is  attributable  to a reduction  in the cost of
sales for training  because of the  reduction  in revenue and the  corresponding
reduction in referred commission.

Selling Expenses.  Selling expenses decreased by $197,130 or 50% to $196,549 for
the year ended  December 31, 2001 from $393,679 for the year ended  December 31,
2000. This reduction in selling  expenses is primarily  attributable to the sale
of the  subsidiaries  of during the year  ended  December  31,  2001 and did not
reflect a full year of operations.

Depreciation and Amortization. Depreciation and amortization decreased by $2,581
or 14.3% to $15,502 for the year ended  December  31, 2001 from  $18,083 for the
year ended December 31, 2000.  This reduction in depreciation  and  amortization
resulted  because  of a sale of the  depreciable  assets  during  the year ended
December 31, 2001.

Payroll. Payroll expenses declined by $146,892 or 49.8% to $148,173 for the year
ended December 31, 2001 from $295,065 for the year ended December 31, 2000. This
reduction in payroll  reflects the  disposition of the  subsidiaries  during the
year ended December 31, 2001.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased  by $90,766 or 23% to $485,302  for the year ended  December  31, 2001
from  $394,536  for  the  year  ended  December  31,  2000.   This  increase  is
attributable to travel expenses and two bad debts from uncollected receivables.
Research and Development.  Research and development expenses decreased by $3,792
to $0 for the year  ended  December  31,  2001 from  $3,792  for the year  ended
December 31, 2001. This reduction  reflects the sale of the software  operations
during the year ended December 31, 2001.

                                       6
<PAGE>

Other Income and Expenses.  The Company recorded interest expense of $14,467 for
the year  ended  December  31,  2001 and  increase  of $960 from the year  ended
December  31, 2000.  This  increase in interest  expense  reflects a higher loan
balance outstanding during the current year. The Company also recorded a loss on
the disposition of assets of $329,915 for the year ended December 31, 2001. This
compares  with a gain of  $13,368  for the year ended  December  31,  2000.  The
current years  reflects a gain of $865,485  from the Company's  sale of Warever,
which was partially  offset by a loss on the Company's  disposition  of Coaching
Institute, Inc. of $574,236.

As a result of the  foregoing,  the  Company  reported a net loss of $496,966 or
$.02 per share for the current  year.  This compares with a net loss of $164,088
for the year ended  December  31, 2000 or $.02 per share.  Although  the loss is
greater for the current year, the average number of shares  outstanding was also
significantly higher for the year ended December 31, 2001.

Liquidity and Capital Resources.

As of December 31, 2001, the Company had disposed of all of its operating assets
and most of its  liabilities.  As a result,  the  Company had no cash or current
assets but did have liabilities totalling $89,950 and a note payable of $80,741.
Because the Company has no  operating  assets and no cash,  unless it is able to
raise funds,  acquire an operating  company with which to merge, or obtain loans
from its shareholders,  it will have  insufficient  funds to continue as a going
concern.

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, 2001 and 2000.............. F-4
Consolidated Statements of Operations for the Years Ended December
31, 2001 and 2000 ........................................................ F-6
Consolidated Statement of Stockholders' Equity for the Years Ended
December 31, 2001 and 2000................................................ F-7
Consolidated Statements of Cash Flows for the Years Ended December 31,
2001 and 2000............................................................. F-8
Notes to Consolidated Financial Statements ............................... F-

                                       7
<PAGE>

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

Indemnification  of  Directors,   Executive  Officers  and  Certain  Significant
Employees.

The  following  table sets  forth  certain  information  regarding  the  current
directors and executive officers of the Company.

         Name                    Age                    Position
         ----                    ----       --------------------------------
         Steven Jacobson          38        Chief Executive Officer and Director
         Arlen Felsen             41        Director
         Herbert I. Jacobson      71        Director
         Max Polinsky             44        Director

The following family  relationships  exist between the officers and/or directors
of the Company. Herbert I. Jacobson is the father of Steve Jacobson.

Business Experience

Steven Jacobson

Mr. Jacobson was instrumental in the development of Page  Tap/Peregrine from its
inception and has  participated in all major decisions of the company.  In March
of 1992 he began as Vice  President of Marketing and assumed the COO/CFO role in
1995.  From  1987-1992  he was a  legislative  aide to US Senator Hank Brown and
Congressman James Schuer where his  responsibilities  included the oversight and
coordination of joint environmental policy legislation. Mr. Jacobson has a joint
MA from  Rutgers  and  Princeton  in Public  Policy and  Finance,  and a BA from
Colorado  College.  He recently  received a Masters of  Business  Administration
(MBA)  through a joint  program  from the  University  of Colorado  and Columbia
University. Steven Jacobson is the son of Herbert I. Jacobson.


                                       8
<PAGE>

Arlen Felsen


Mr. Felsen has an extensive background in the paging industry including in depth
knowledge of paging  technology.  In 1991 he co-founded  (along with Amy Felsen)
Vacation  Communication,  Inc. d.b.a. Gotta Go Wireless,  a retail and wholesale
paging  and  wireless  provider.  He built the  company  into a  leading  paging
provider to the Denver  metropolitan area and expanded the operation  throughout
Colorado,  Utah and Idaho.  Within a few years Gotta Go Wireless had significant
market share in this region of the U.S. When the Company  purchased  Gotta Go in
2001, Mr. Felsen joined the Company to oversee product development.

Herbert I. Jacobson

Mr. Jacobson is an entrepreneur who has built several businesses from the ground
up. In 1984 he founded Advanced  Communication  Services and Aaron Communication
Services,  both sales and  service  companies  in paging  and cable.  He started
Peregrine  Control  Technologies  in 1992 as a  progression  into  the  wireless
control  industry.  He also was  founder of the  Children's  Metabolic  Research
Foundation and a Director of the National Gaucher  Foundation.  He volunteers at
the Denver Museum of Nature & Science and mentors senior  citizens on the use of
the Internet.  He served in Army Finance and taught American history,  political
science,  business and  literature at the high school level.  Mr.  Jacobson is a
graduate of Montclair State  University and completed  graduate level coursework
at Denver  University and the University of Florida.  Mr. Jacobson is the father
of Steven Jacobson.

Max Polinsky

Mr.  Polinsky is a director and principal of Venbanc,  Inc.,  an investment  and
merchant  bank  located in  Winnipeg,  Manitoba  Canada  that he founded  with a
partner  in 1994.  Venbanc  specializes  in the  structuring  and  financing  of
start-up  companies  and provides  follow on financial and  management  advisory
assistance.  It has  successfully  funded and taken public several  companies in
Canada and the Unites States in the past seven years. Prior to this Mr. Polinsky
was the general manager of City Machinery Ltd., a nationwide power  transmission
parts  distributor  with  offices  across  Canada.  He  began  his  career  as a
stockbroker at Canarim  Investment  Corp.  (now Canaccord  Capital) in 1982. Mr.
Polinsky  graduated with honors from the University of Manitoba with a degree in
Business Administration, Finance Major.

Term of Officer

The  directors  named above will serve until the next  meeting of the  Company's
shareholders. Officers will hold their positions at the pleasure of the Board of
Directors, absent on any employment agreements.

Our bylaws provide for indemnification of officers, directors of Peregrine, Inc.
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.

                                       9
<PAGE>

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 Peregrine,  Inc. 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.

In the event that a claim for  indemnification  against such liabilities  (other
than the payment by Peregrine,  Inc. of expenses incurred or paid by a director,
officer or controlling  person of Peregrine,  Inc. 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 Peregrine, Inc. is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such issue.

Compliance with Section 16(a) of the Exchange Act

Under the securities  laws of the United States,  the Company's  directors,  its
executive  officers,  and any  person  holding  more  than  ten  percent  of the
Company's  Common Stock are required to report  their  initial  ownership of the
Company's  Common  Stock and any  subsequent  changes in that  ownership  to the
Securities  and Exchange  Commission.  Specific due dates for these reports have
been  established and the Company is required to disclose any failure to file by
these dates during  fiscal year 2001.  To the  Company's  knowledge,  all of the
filing requirements were satisfied on a timely basis in fiscal year 2001,


                                       10
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

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, 2001 or 2000. 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>

                                                              Amount and Nature
Name and Address of Beneficial Owner       Title of Class     Beneficial Owner      Percentage
------------------------------------       ---------------    ------------------    -----------
<S>                                        <C>                 <C>                  <C>

Steven Jacobson                                Common             7,700,000 (1)        39.8%




Arlen Felson                                   Common               175,000             0.9%




Herbert I. Jacobson                            Common             7,700,000 (2)        39.8%




Max Polinsky                                   Common               500,000 (3)         2.6%




All officers and directors as a                                   8,375,000            43.3%
group (4 persons)
</TABLE>


                                       11
<PAGE>

Herbert I. Jacobson is the father of Steven Jacobson.

(1)  Steven  Jacobson holds  3,500,000  shares  directly and is deemed to have a
     beneficial  interest  in  4,200,000  shares  held by other  members  of his
     family.
(2)  Herbert I. Jacobson along with his wife own 3,000,000  shares  directly and
     is deemed to have a beneficial  interest in 4,700,000  shares held by other
     members of his family.
(3)  Max Polinsky owns100,000 shares directly and is deemed to have a beneficial
     interest in 400,000 owned by Venbenc, a company of which he is a 50% owner.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



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, 2001 and 2000
      F-4      Balance Sheets as of December 31, 2001 and 2000
      F-6      Statements of Operations for the Years Ended December 31, 2001
               and 2000
      F-7      Statement of Stockholders' Equity for the Years Ended December
               31, 2001 and 2000
      F-8      Statements of Cash Flows for the Years Ended December 31, 2001
               and 2000
      F-       Notes to Financial Statements

(b)      8-K Reports

         None



                                       12
<PAGE>

                                   SIGNATURES

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

                                                  Peregrine, Inc.



Dated: April 29, 2002                            By: /s/ Steven Jacobson
                                                    ---------------------
                                                     Steven Jacobson
                                                     Chief Executive Officer

                                                 By:
                                                    ----------------------
                                                    Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed  below by the  following  persons on behalf of Urbana and in the
capacities and on the date indicated:


Signature                       Title                                 Date
---------                       ------                              --------
/s/ Steven Jacobson            Director                          April 29, 2002
-------------------------
Steven Jacobson

/s/ Arlen Felsen               Director                          April 29, 2002
-------------------------
Arlen Felsen

/s/ Herbert I. Jacobson        Director                          April 29, 2002
-------------------------
Herbert I. Jacobson

/s/ Max Polinsky               Director                          April 29, 2002
--------------------------
Max Polinsky

                                       13
<PAGE>


                           LSI Communications, Inc.

                        Consolidated Financial Statements

                           December 31, 2001 and 2000


<PAGE>


                                 C O N T E N T S


Accountants' Report ....................................................... 3

Consolidated Balance Sheets ............................................... 4

Consolidated Statements of Operations ..................................... 6

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

Consolidated Statements of Cash Flows ..................................... 8

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


<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, 2001 and 2000 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
in the  United  States of  America.  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,  2001 and 2000 and the  results  of its  consolidated
operations and cash flows for the years then ended in conformity  with generally
accepted accounting principles in the United States of America.

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
North Salt Lake, Ut
January 11, 2002


<PAGE>


                            LSI Communications, Inc.
                           Consolidated Balance Sheets

                                     ASSETS

                                                                    December 31,
                                                    2001               2000
                                                 -----------       -------------
CURRENT ASSETS

   Cash & Cash Equivalents                       $        -        $       5,270
   Inventory                                              -               11,445
   Accounts Receivable (Net of allowance
     of $7,000)                                           -              113,884
   Deposits                                               -               26,500
                                                 ------------      -------------

     Total Current Assets                                 -              157,099
                                                 ------------      -------------

PROPERTY & EQUIPMENT                                      -               56,736
                                                 ------------      -------------

OTHER ASSETS

    Deposits & Prepaids                                   -                6,076
                                                 ------------      -------------

    Total Other Assets                                    -                6,076
                                                 ------------      -------------

     TOTAL ASSETS                                $        -        $     219,911
                                                 ============      =============

   The accompanying notes are an integral part of these financial statements

<PAGE>


                            LSI Communications, Inc.
                      Consolidated Balance Sheets continued


                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>

                                                                            December 31,
CURRENT LIABILITIES                                        2001                2000
                                                       ------------      ----------------
<S>                                                    <C>               <C>


   Accounts payable                                    $         -        $     36,290
   Accrued expenses                                            9,174            41,269
   Current portion of long-term
       liabilities                                            80,741           102,686
   Deferred Compensation                                         -              91,000
                                                       -------------      --------------

     Total Current Liabilities                                89,915           271,245
                                                       -------------      --------------


LONG TERM LIABILITIES

   Notes payable                                              80,741                 -
   Notes payable-related party                                   -             103,874
   Capital lease obligations                                     -              23,472
   Less current portion                                      (80,741)         (102,686)
                                                       -------------      --------------

     Total long term Liabilities                                 -              24,660
                                                       -------------      --------------
     TOTAL LIABILITIES                                        89,915           295,905
                                                       -------------      --------------

STOCKHOLDERS' EQUITY

   Common stock,  authorized  50,000,000  shares
   of $.001 par value,  issued and outstanding
   46,511,087 and 11,415,632 shares,
     respectively                                             46,511            11,416
   Additional Paid-in capital                              1,179,548           731,598
   Retained earnings                                      (1,315,974)         (819,008)
                                                       -------------      --------------

     Total Stockholders' Equity                              (89,915)          (75,994)
                                                       -------------      --------------

TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                                $         -        $    219,911
                                                       =============      ==============
</TABLE>

   The accompanying notes are an integral part of these financial statements
<PAGE>

                            LSI Communications, Inc.
                      Consolidated Statements of Operations

                                                      For the Year Ended
                                                         December 31,
                                                    2001              2000
                                               -------------      ------------

REVENUES
        Software Sales                           $     21,232  $        20,269
        Training Revenues                             709,641        1,385,068
                                                 ------------      -----------
TOTAL REVENUES                                        730,873        1,405,337
                                                 ------------      -----------

COST OF SALES
        Software                                          -              1,013
        Training                                       37,933          436,384
                                                 ------------      -----------
TOTAL COST OF SALES                                    37,933          437,397
                                                 ------------      -----------

GROSS PROFIT                                          692,940          967,940
                                                 ------------      -----------

SELLING EXPENSES                                      196,549          393,679
DEPRECIATION & AMORTIZATION                            15,502           18,083
PAYROLL                                               148,173          295,065
GENERAL &
  ADMINISTRATIVE EXPENSES                             485,302          394,536
RESEARCH & DEVELOPMENT                                    -              3,792
                                                 ------------      -----------

TOTAL OPERATING EXPENSES                              845,526        1,105,155
                                                 ------------      -----------

OPERATING LOSS                                       (152,586)        (137,215)
                                                 ------------      -----------

OTHER INCOME AND (EXPENSES)
   Interest expense                                   (14,465)         (13,505)
   Gain/(Loss) on sale of assets                     (329,915)         (13,368)
                                                 ------------      -----------

     Total Other Income and (Expenses)               (344,380)        (26,873)
                                                 ------------      -----------

NET INCOME (LOSS) BEFORE INCOME TAXES                (496,966)       (164,088)

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

NET INCOME/(LOSS)                                $   (496,966)     $  (164,088)
                                                 ============      ===========

NET INCOME/(LOSS) PER SHARE                      $       (.02)     $      (.02)
                                                 ============      ===========
WEIGHTED AVERAGE
  OUTSTANDING SHARES                               20,582,299       11,207,299
                                                 ============      ===========


   The accompanying notes are an integral part of these financial statements
<PAGE>


                            LSI Communications, Inc.
                 Consolidated Statements of Stockholders' Equity
                From December 31, 1998 through December 31, 2001
<TABLE>

                                                                                     Additional      Retained
                                                            Common Stock             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)

February 1, 2001 - shares issued
   for exercise of option agreement
   for remaining interest in
   subsidiary at $.001 per share                      2,045,455        2,045                  -             -

</TABLE>



   The accompanying notes are an integral part of these financial statements
<PAGE>


                            LSI Communications, Inc.
           Consolidated Statements of Stockholders' Equity (Continued)
                From December 31, 1998 through December 31, 2001
<TABLE>
<S>                                                   <C>             <C>                <C>           <C>

June 20, 2001 - shares issued for
   notes payable at $.02 per share                    1,000,000        1,000               19,000           -

July 17, 2001 - shares issued for
   motion picture rights at $.07
   per share                                          2,800,000        2,800              193,200           -

July 30, 2001 - shares issued for
   licenses at $.03 per share                         3,000,000        3,000               87,000           -

November 8, 2001 - shares issued
   for cash at $.007 per share                        26,250,000       26,250             148,750            -

Net income for the year ended
   December 31, 2001                                  -                -                      -          (496,966)
                                        ----------------          -------------      ------------  --------------

Balance December 31, 2001                    46,511,087         $  46,511           $ 1,179,548     $  (1,315,974)
                                        ================          =============      ============  ==============

</TABLE>

   The accompanying notes are an integral part of these financial statements



<PAGE>



                            LSI Communications, Inc.
                      Consolidated Statements of Cash Flows
                                                             Year Ended
                                                            December 31,
                                                        2001             2000
                                                    -------------    -----------
Cash Flows From Operating Activities
Net income (loss)                              $     (496,966)    $  (164,088)
Non-cash items:
   Depreciation & amortization                         15,502          18,083
   Bad Debt                                                 -           8,526
   Gain on sale of assets                             329,915               -
(Increase)/decrease in current assets:
  (net of acquisition)
   Accounts receivable                                 29,254          37,650
   Inventory                                              327          (6,899)
   Deposits                                            24,476         (26,500)
   Other receivables                                   (7,139)              -
Increase/(decrease) in current liabilities:
   Bank overdraft                                       5,287               -
   Accounts payable                                    52,438          13,432
   Accrued expenses                                    10,238           6,859
   Deferred revenues                                      -            (1,962)
   Deferred compensation                              (91,000)              -
                                                 ------------       -----------
     Net Cash Provided (Used)
      by Operating Activities                        (127,668)         (114,899)
                                                 ------------       -----------

Cash Flows from Investing Activities
  Cash paid for property, equipment
     and software technology                                -           (22,723)
  Cash received from note receivable                        -           226,800
  Cash received from sale of equipment                 24,125                 -
                                                 ------------       ------------
     Net Cash Provided (Used)
      by Investing Activities                          24,125           204,077
                                                 ------------       ------------

Cash Flows from Financing Activities
  Proceeds from issuance of common stock               94,139                 -
  Proceeds from long term debt                         18,687                 -
  Principal payments on long-term debt                (14,553)         (102,301)
                                                 ------------       ------------
     Net Cash Provided (Used)
      by Financing Activities                          98,273          (102,301)
                                                 ------------       ------------

    Increase/(decrease) in Cash                        (5,270)          (13,123)

Cash and Cash Equivalents
  at Beginning of Period                                5,270            18,393
                                                 ------------       ------------

Cash and Cash Equivalents
  at End of Period                               $         -        $     5,270
                                                 ============       ============



   The accompanying notes are an integral part of these financial statements


<PAGE>

                            LSI Communications, Inc.
                      Consolidated Statements of Cash Flows
                                   (continued)

                                                             Year Ended
                                                            December 31,
                                                         2001           2000
                                                       ---------      ---------

Supplemental Cash Flow Information:

  Cash paid for interest                               $  9,515     $   14,230
  Cash paid for income taxes                           $   -        $     -

Non-Cash Investing Activities:

   In 2001,  the Company issued  2,045,455  shares of common stock for remaining
15% of the outstanding common stock of Coaching Institute, Inc.

   In 2001,  the Company  issued  1,000,000  shares of common  stock for a notes
payable valued at $20,000.

   In 2001,  the Company  issued  2,800,000  shares of common stock for licenses
valued at $90,000.

   In 2001,  the  Company  issued  3,000,000  shares of common  stock for motion
pictures valued at $196,000.

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



   The accompanying notes are an integral part of these financial statements

<PAGE>


                            LSI Communications, Inc.
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000


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

  The acquisition was recorded as a reverse acquisition,  with Warever being the
accounting survivor.

              In June 2001,  the Company  sold 100% of its  interest in Warever.
The Company  exchanged all of the outstanding  shares of common stock of Warever
for 175,000 shares of common stock of a public  company valued at $866,250.  The
Company recognized a gain on the sale of $865,485.

  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  stock of
Coaching  Institute,  Inc. In exchange  for  2,045,455  shares of the  Company's
common stock.  In February 1, 2001, the Company  exercised its option by issuing
2,045,455  shares of its common stock valued at $2,045.  After the  acquisition,
both companies were surviving with Coaching Institute, Inc. being a wholly-owned
subsidiary of LSI Communications, Inc.

<PAGE>

NOTE 1 - Summary of Significant Accounting Policies (continued)

  a.          Organization (continued)

  The  acquisition of Coaching  Institute,  Inc. was 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.

              In November 2001,  the Company sold the assets and  liabilities of
Coaching Institute,  Inc. to a major shareholder.  The Company recognized a loss
on the sale of $574,236.

  b.          Recognition of Revenue

  The Company recognizes income and expenses on the accrual basis of accounting.

  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>

                                                     Income(loss)       Shares         Per-Share
                                                     (Numerator)     (Denominator)      Amount
                                                    --------------   -------------    -----------
          <S>                                     <C>               <C>              <C>

           For the year ended December 31, 2001:
              Basic EPS
              Income (loss) to common
              stockholders                         $   (496,966)        20,582,299   $        (.02)
                                                   =============    ==============   ==============

           For the year ended December 31, 2000:
              Basic EPS
              Income (loss) to common
              stockholders                         $  (164,088)          11,207,299  $        (.02)
                                                   ============     ===============  ==============

</TABLE>

<PAGE>


  NOTE 1 - Summary of Significant Accounting Policies (Continued)

d.            Provision for Income Taxes

  No provision  for income taxes has been  recorded  due to net  operating  loss
  carry forwards totaling  approximately  $1,300,000 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, 2001
and 2000:

                                                    December 31,
                                               2001             2000
                                             ---------         --------
  Deferred tax asset:
              NOL carry forward           $   447,000         $ 278,000
              Valuation allowance            (447,000)         (278,000)
                                          -----------         ----------
  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

  The Company review  property and equipment for impairment  whenever  events or
  changes in circumstances indicate that the carrying amount of an asset may not
  be  recoverable.  Recoverability  is measured by  comparison  of its  carrying
  amount to future net cash flows the assets are expected to  generate.  If such
  assets are  considered  to be impaired,  the  impairment  to be  recognized is
  measured by the amount by which the carrying  amount of the asset  exceeds its
  fair market  value.  Property and  equipment to be disposed of are reported at
  the lower of the carrying amount or fair value less costs to sell.

  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, 2001 and 2000 is $15,502 and $18,083,  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



<PAGE>
                            LSI Communications, Inc.
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000


NOTE 1 - Summary of Significant Accounting Policies (Continued)

g.            Investments Available for Sale

              Management determines the appropriate classification of marketable
equity  security  investments  at the  time of  purchase  and  reevaluates  such
designation  as of each  balance  sheet  date.  Unrestricted  marketable  equity
securities  have been  classified  as  available  for sale.  Available  for sale
securities are carried at fair market value,  with unrealized  gains and losses,
net of tax,  reported  as a net  amount  in  accumulated  comprehensive  income.
Realized  gains  and  losses  and  declines  in value  judged  to be other  than
temporary on available for sale  securities  are included in investment  income.
The cost of  securities  sold is based on the  specific  identification  method.
Interest  and  dividends on  securities  classified  as  available  for sale are
included in investment income

h.       Comprehensive Income (Loss)

              The  Company has adopted  SFAS No.  130,  Reporting  Comprehensive
Income.  SFAS  No.  130  establishes   standards  of  reporting  and  displaying
comprehensive   income  and  its  components  of  net  income  and  "accumulated
comprehensive  income" in a full set of  general-purpose  financial  statements.
"Accumulated  Comprehensive  Income"  refers to  revenues,  expenses,  gains and
losses that are not included in net income,  but rather are recorded directly in
stockholders' equity.

j.      Consolidation Policy

              The financial statements at December 31, 2001 include the books of
LSI  Communications,  Inc.,  public  shell  company,  the  activity  of  Warever
Corporation  thru the date of the sale in June 2001 and the activity of Coaching
Institute, Inc. thru the date of the spin-off in November 2001.
  The  financial  statements at December 31, 2000 include the books of all three
  companies for the entire year. 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.


<PAGE>


NOTE 3 - Property & Equipment

     Property and  equipment  consists of the following at December 31, 2001 and
2000:

                                                  2001              2000
                                               -----------       ---------
 Computer equipment                             $      -         $  53,009
 Leased equipment                                      -            15,075
 Furniture and fixtures                                -            12,755
 Automobile                                            -            25,692
 Software technology                                   -               916
                                                ----------       ----------
                                                       -           107,447
 Less: Accumulated depreciation - equipment            -           (35,636)
       Accumulated depreciation - leased equipment     -           (15,075)
                                                ----------       ----------

 Total Property & Equipment                    $       -         $  56,736
                                                ==========       ==========

NOTE 4 - Long-Term Liabilities

              Long Term  Liabilities are detailed in the following  schedules as
of December 31, 2001 and 2000:

     Note payable-related party is detailed as follows:

                                                          December 31
                                                     2001             2000
                                                  ----------        -----------
  Note  payable to a relative of an officer
  of the  Company,  bears  interest at
  12%, with principal due April 1999,
  unsecured note                                  $       -        $   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

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

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

<PAGE>


                            LSI Communications, Inc.
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000


NOTE 4 - Long-Term Liabilities (Continued)


Note payable is detailed as follows:
<TABLE>

                                                                       December 31
                                                                 2001                2000
                                                              ----------           ---------
<S>                                                           <C>                  <C>

 Note payable to an individual,  bears interest at 9.75%
  payments due monthly of $1,286 through
  April 1, 2002, unsecured                                     $   740            $     -

  Note Payable to an individual, bears interest at 9.75%
  with principal of $80,000 due at
  August 1, 2002, unsecured                                     80,000                  -

  Total Notes Payable                                           80,740                  -

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

  Less current portion of:
       Notes payable - related party                                 -             97,157
       Notes payable                                            80,740                  -
       Capital lease obligations                                     -              5,529
  Total current portion                                         80,740            102,686

  Net Long Term Liabilities                                  $       -         $   24,660
                                                            ===========        ===========

</TABLE>

<PAGE>



                            LSI Communications, Inc.
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000


NOTE 5 - 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 6 - 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.