SECURITIES
AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-K



Annual Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2002



Whitney Information Network, Inc.

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(Exact name of registrant as specified in its charter)



|Colorado                                       |  | 0-27403                  |  | 84-1475486                       
|---------------------------------------------- |  | ------------------------ |  | ---------------------------------
|                                               |  |                          |  |                                  
|(State or other jurisdiction of Incorporation) |  | (Commission File Number) |  | (IRS Employer Identification No.)



4818
Coronado Parkway, Cape Coral, Florida 33904

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(Address of principal executive
offices) (Zip Code)



Registrants telephone
number, including area code: (941) 542-8999



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



NONE



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



COMMON STOCK

NO par value per share

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(Title of Class)



Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act
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 ̈



The aggregate market value of the voting and nonvoting common
equity held by nonaffiliates of the Registrant, computed by reference to the closing sale price of such common equity as quoted on the Over the Counter Electronic Bulletin Board of $4.00 per share as of February 28, 2003 was $5,867,396.



The Registrant had 8,096,624 common shares of
common stock outstanding as of February 28, 2003.



The Registrants revenues for the fiscal year ended December 31, 2002, were $62,145,237.



Documents incorporated by reference: None



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





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PART I



ITEM 1. BUSINESS



History



We were incorporated in Colorado in February 1996 under the
name Gimmel Enterprises, Inc. In August 1998, we acquired all of the outstanding common stock of Whitney Education Group, Inc., a Florida corporation, organized in November 1992, and Whitney Education became our wholly-owned subsidiary. In August
1998, we changed our name to WIN Systems International, Inc., and in February 1999, we changed our name to Whitney Information Network, Inc. Our Web site is located at www.russwhitney.com. Information on our Web site is not a part of this Annual
Report on Form 10-K.



In February 2003 we filed a
Registration Statement on Form S-1 covering the sale of up to 1,150,000 units of our securities, through Newbridge Securities Corporation as our managing underwriter, at a purchase price of between $5.00 and $6.00 per unit. Each unit consists of one
share of common stock and one common stock purchase warrant.



Current Operations



Since 1992, we have provided post-secondary educational and training courses for students throughout the United States. In recent years we have expanded our operations to include course offerings to students in Canada and the United
Kingdom. Our courses provide instruction in:



| |  |  | real estate investing;
| | - |  | ----------------------



| |  |  | business strategies;
| | - |  | --------------------



| |  |  | stock market investment techniques;
| | - |  | -----------------------------------



| |  |  | entering international business markets;
| | - |  | ----------------------------------------



| |  |  | cash management;
| | - |  | ----------------



| |  |  | asset protection; and
| | - |  | ---------------------



| |  |  | other financially-oriented subjects.
| | - |  | ------------------------------------



We also develop and sell educational resource materials which we prepare to support our course offerings and for sale to the general
public.



Initially, we focused primarily on basic
and advanced real estate training programs which we offered throughout the United States. Although our U.S. based real estate training programs represented approximately 80% of our revenue in 2002, we have gradually expanded our course offerings and
geographical markets. We currently offer approximately 150 educational courses and training programs per month covering more than 20 financially-oriented subjects which we provide either for free or on a fee basis to over 12,000 attendees per month.
For the year ended December 31, 2002, approximately 90% of our revenue was generated from domestic sales and 10% was generated from sales made in Canada and the United Kingdom. For the year ended December 31, 2002, 60% of our revenue was generated
from repeat customers. Tuition ranges from approximately $3,000 to $32,000 per course of study. Our training is offered in the U.S.and internationally:





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| |  |  | in meeting facilities and conference centers;
| | - |  | ---------------------------------------------



| |  |  | at regional training centers located in hotels or other temporarily rented facilities selected by us; and
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | at our 7,000 square foot international training facility and conference center in Costa Rica.
| | - |  | ---------------------------------------------------------------------------------------------



Our students are initially recruited by attending a free
informational training session related to a specific educational subject which is hosted by one of our trainers and is held at a local hotel or other rented auditorium facility. The subject, date and location of the training session is advertised in
local newspapers, on our Web site, in television advertisements and through direct mailings and telemarketing. We hold these sessions in major metropolitan areas throughout the United States, Canada and the United Kingdom. In August 2002, we
purchased for approximately $2,100,000 an airplane which we use to transport some of training personnel when commercial travel is unavailable. Following the free informational training session, the student may purchase reference materials on the
subject discussed or may elect to receive further fee-based training in the many financial subjects we offer either in the students hometown or in regional training centers which we rent temporarily in hotels. We engage over 70 trainers,
instructors and mentors in connection with our various educational course offerings.



Following the first fee-based training session, students interested in learning more on the course topics may also subscribe to our periodic publications, purchase books or software programs or attend
advanced training courses. In addition to our over 25 resource publications, we offer three-day advanced training programs throughout the United States, in Canada and the United Kingdom. We also provide post-training programs conducted by our over
30 mentors, who travel to students hometowns for hands on business training.



Currently, approximately 80% of our revenue is derived from our various real estate training courses, which include leveraged residential and commercial real estate acquisition, real estate financing
techniques, the use of purchase/lease options, property management and real estate foreclosure techniques. The balance of our revenue is divided between courses offering other business strategies, such as stock market strategies, options trading,
asset protection, acquisition of commercial real estate properties, creative financing techniques, international finance and topical business subjects along with the sale of reference materials.



In June 2002, we acquired the Teach Me To Trade division of
Maverick Trading LLC for $1,438,000 in cash and 189,655 shares of our common stock. Teach Me To Trade offers courses similar to ours, but focuses on stock market investment strategies. We subsequently integrated the Teach Me To Trade courses into
our own training sessions.



We support our
educational training by providing our students with a series of outlines, magazines, books, cassette tapes, CDs, Web-based interactive discussions and learning tools and software programs. Currently, we offer over 25 educational publications and
software packages, which are distributed to students registered in our educational programs and sold directly to the public.



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Our Strategy



We believe we have the opportunity to
significantly expand our leadership position in the financial education industry. In order to do so, we have implemented a strategy that includes:



| |  |  | Increasing the number and type of our course offerings.We intend to continue to increase the number and type of our educational course offerings in order to
attract more students. New courses will further diversify our financial educational products and will include subjects which we believe are gaining in interest and popularity among students, such as courses on acquisition of mobile and manufactured
homes and real estate portfolio management.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expanding our markets outside the United States.Consistent with our earlier expansions to Canada and the United Kingdom, we intend to add new markets in
order to attract students we do not currently reach. Initially, we expect to focus our expansion efforts on English speaking European countries, beginning with Ireland and Scotland. However, we expect to offer courses in non-English speaking
countries in the near future, beginning with French-speaking Canada and France.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Marketing our reference materials and online courses.We intend to emphasize the direct marketing of educational products and reference materials which we
currently use primarily to support our training programs. These products will be marketed on a stand alone basis through direct mail campaigns and promotions on our Web sites. We also intend to develop selected courses electronically, primarily
online, as well as through traditional student-attended programs and classes. Our electronic courses will be used to supplement our existing courses and will be marketed using television infomercials developed and produced by us. Responses generated
from our direct mail and infomercial campaigns will also be used to market our existing training programs and courses to those who responded.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Diversifying our media advertising.We intend to increase our print and television advertising and test new forms of marketing, including direct mail
campaigns, e-mail campaigns and attending real estate and financial product shows, seminars and conventions. We also intend to develop and produce infomercials to specifically market our reference materials and our electronic courses.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Developing or acquiring accredited or licensed proprietary schools.We are licensed in Texas as a proprietary school and intend to develop this portion of our
financial education business. We may seek to expand our proprietary school operations by developing new schools that offer post-secondary education technical courses or by acquiring existing schools from third parties. We have no understandings or
agreements to develop or acquire such schools at the present time.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Educational Training



Following a free informational training
session, we offer our students a variety of educational courses, which we also refer to as programs as well as educational materials. These programs provide the opportunity to train either in the students home town or at local or
regional camps. Our trainers take students step-by-step through a curriculum that stresses a broad range of financial educational training, money management and asset protection. Our financial educational training is taught to students in the United
States, Canada and the United Kingdom through traditional course study and hands-on training, and includes the following subjects.



Basic Training



Following the free educational training session, our students may elect to learn more about the subject by attending a basic course in the
students home town.



Real Estate. Our Real Estate
Training Academy is a local training program offering a curriculum that focuses on the general business of real estate and teaches the fundamentals of negotiating real estate purchases with sellers, rehabilitating distressed properties, leasing
rental units to tenants and using a database to generate multiple sources of cash flow. Students are taught the mechanics of completing a real estate transaction in their community, from writing a contract to closing the transaction, with emphasis
upon creative financing strategies.



Business. Our
three-day business local training workshops currently are in development and are being designed to teach students how to organize and build a business, how to broker or buy discount notes and mortgages, how to fund a retirement plan at maximum
levels, how to purchase property at discount prices through auctions or online trading and how to arrange E-commerce accounts for clients and customers.



Financial. Our Teach Me To Trade Training Academy is a local training program offering a curriculum that focuses on stock market trading strategies
and uses proprietary software and specific teaching techniques designed by us. Students are taught to understand the stock markets, investment strategies, risks and how to maximize returns in bull and bear markets.



Advanced Real Estate Training



Upon completion of a local basic training program, students
may seek more advanced training at our specialized regional training centers, which are generally three days in length and are held in locations around the country. Most of these programs offer local tours so that students can observe negotiating
techniques and view properties in the area. Students are led through real estate acquisition and financing transactions from beginning to end and are provided with a number of real estate acquisition strategies.



Intensified Real Estate Training. Our Intensified Real Estate Training
course is offered at our corporate headquarters in Cape Coral, Florida. This course expands upon the students knowledge of real estate gained from our basic course. During Intensified Real Estate Training, students learn how to locate and
analyze various property types and how to effectively analyze



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property income and expense.
Students telephone actual sellers and then tour properties offered for sale throughout the Cape Coral and Fort Myers, Florida areas. Students then conduct real estate investment negotiations and may complete transactions under the supervision of
their instructor. Guest speakers including investors, property managers, developers, grant officers, loan officers, realtors and mortgage brokers explain how students can locate financing for a variety of transactions, from multi-unit apartment
complexes to unimproved land.



Wholesale Buying. Our
Wholesale Buying training course instructs students on the fundamentals of identifying, locating, negotiating, financing and disposing of wholesale properties. Students are also taught how to develop an investor database and how to manage
out-of-state properties. While enrolled in this program, students develop a five-year investment plan with the help of our instructors. This program is focused upon taking students from the level of novice investor to a proficiency in managing a
real estate investment portfolio.



Foreclosure. Our
Foreclosure Training course teaches the intricacies of the real estate foreclosure process, how and why foreclosures occur, the role of secured lenders in foreclosure actions and discusses laws that affect lenders and borrowers. Students visit a
local county courthouse to search foreclosure records and review title and tax information. Students visit with owners of properties that are in foreclosure and learn how to negotiate transactions for properties in foreclosure. Our instructors also
teach students how to read foreclosure notices and how to refinance their acquisitions to generate cash at the closing. Students also learn how to inspect, estimate the value of and rehabilitate houses.



Purchase Options. Our Purchase Option training course is designed to
teach students how to control an equitable interest in property without actually owning the property and how to create lease options on properties. Students learn how to structure lease options and purchase options and how to generate cash from
purchase real estate transactions. Included with the course is a field trip and detailed information on how to select appropriate properties for option or purchase. Other sessions include negotiating with prospective sellers and prospecting for
tenants, buyers and lessees.



Property Management Cash
Flow. Our Property Management & Cash Flow training course teaches students how to manage their rental properties, including how to analyze monthly cash flows. Students also learn how to earn income by managing the properties of others and
how to find and retain tenants. The course curriculum includes numerous approaches to resolving tenant-landlord problems such as delinquent rents, raising rents and evicting tenants. Our instructors discuss governmental regulations and the tax
implications associated with real estate. Students learn about the profit potential for acquiring student housing and rooming houses as well as learning how to find and rehabilitate distressed properties. The program also teaches basic marketing
techniques to increase profits.



Investing in Mobile
Homes. Our Manufactured/Mobile Homes & RV Parks training course teaches students how to buy, sell and rent mobile homes and parks, an often overlooked segment of the real estate market. While mobile homes cost far less than frame constructed
homes, they can yield a significant rate of return on investment. Other subjects include developing and operating a mobile home park, expanding rental pads and lots to hold more units, obtaining



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standard and unconventional
financings, estimating fix-up, improvement and moving costs, obtaining seller financing terms and identifying attractive properties at foreclosures and repossessions.



Commercial Real Estate Investing. Our Commercial Real Estate Investing training course highlights the fundamentals of
analyzing, buying, managing and disposing of commercial properties. Students also learn how to establish relationships with lenders and government financing agencies. This course, like many of our courses, teaches students how to rehabilitate
properties and how to locate and pre-qualify tenants. Our trainers also teach students about various leasing arrangements and describe various legal forms used in commercial property management. Students finish their training with a four-hour
analysis tour of commercial properties.



Keys to Creative Real
Estate Financing. Our Keys to Creative Real Estate Financing course teaches students how to create and refinance mortgages, how to exchange properties without tax consequences and how to structure financings in light of prior credit problems.
Discussions also include determining home equity, engaging in real estate negotiations and the use of hard-money lenders.



Business Success Training



Our Business Success programs offer a series of training courses associated with starting a business, growing a business and protecting
assets.



Asset Protection and Tax Relief. Our Asset
Protection and Tax Relief training course describes various legal entities used to hold property such as partnerships, corporations, and land and international trusts and the use of these entities to protect assets. Students also learn how to
minimize income tax and estate tax liabilities and to develop their own personal investment plans.



Discount Notes and Mortgages. Our Discount Notes and Mortgages training course teaches students how to broker and buy commercial paper at a discount. Students learn how to locate funding sources
for discounted notes and mortgages. Trainers also teach students how to discount other sources of debt such as business leases, business notes, inheritances, lotteries, life insurance policies and structured settlements.



Financial Training Programs



Our Financial Training programs are designed to help students
learn about stock market and international equity investing.



Master Trader. Our Master Trader Advanced Training course is a three-day program offering intensified training designed to provide traders and investors with the knowledge needed to prosper in various market environments. This
program offers the students a selection of long and short-term strategies and uses state of the art proprietary software. Course work includes technical analysis, fundamental analysis and our Master Training techniques.



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Trading P.I.T. Our
Trading P.I.T. (pros-in-training) course describes the trading approaches of top money managers. The course teaches students how to create an income stream using more conservative trading techniques and other strategies designed to limit risk while
increasing the probability of success. Strategies covered include a number of trading approaches such as bidirectional trading, hedged directional trading, nondirectional trading, floor-trading strategies and capital preservation. Our 5-Point STAR
Trader Formula allows users to quickly scan the market, generate forecasts and select strategies.



Single Stock Futures. Our Single Stock Futures course addresses changes in rules regarding single stock futures. We discuss new tools associated with spread trading and leveraged trading.
Students are taught the legal framework of single stock futures, set-ups and strategies and where single stock futures fit into their diversified portfolios.



Advanced P.I.T. Training Camp. Our Advanced P.I.T. Training course offers our students the opportunity to experience the market from the
inside directly from the floor of an organized exchange during a market visit followed by a simulated floor trading session after the market closes. Instruction is provided by our options trainers. Subjects include advanced spread trading
strategies, CPR (current portfolio repair) and creating a personal mutual fund.



International Finance and Investment Training Course. We have recently developed a new advanced training program in international finance and investment which is offered in our Costa Rica Conference Center. This program offers
a curriculum that includes wealth building and investment opportunities overseas. The training also addresses the benefits of establishing a business internationally, investing in foreign markets, raising venture and working capital internationally
and asset protection.



Mentoring Programs



We offer advanced training programs
conducted by our over 30 mentors, who travel to the students home towns for hands-on business training.



Real Estate. Our Real Estate mentoring program applies the curriculum of the basic real estate camps to the students city of choice. Under
this program, one of our mentors travels to the students city for four days to guide the student through an investment transaction. Students review the real estate acquisition techniques involved and learn the real estate characteristics of
the local market. Students can put to practice the skills they have gained while working directly with an experienced mentor.



Financial. For mentored financial training, our students travel to a brokerage firm and spend three and one-half days coached by an experienced
stock market trader.



Additional Products



We market directly to customers a wide
range of educational and reference products that supplement our training programs, such as our Building Wealth Real Estate Home Study Course; Real Estate Success System Software; Business Success System Software; Discount Notes and



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Mortgages Home Study Course;
self-help courses and manuals that provide students with information about their credit along with first-time homebuyers manuals. We are planning to develop on-line courses covering a number of our educational training subjects and expect to
market these courses in the second half of 2003.



Sales and
Marketing



We create interest in and demand
for our educational programs, products and services through a mix of television advertising, print advertising, direct mail, attendance at trade shows and Internet marketing. We employ a sales force of over 100 individuals trained to handle the
needs of new students, to promote new products and services to existing and former students and to respond to customer inquiries via phone, e-mail or the Internet.



Our marketing programs include:



| |  |  | Television advertising, which is our primary means for promoting our educational courses. We generally concentrate our television advertising in the cities where our
courses are scheduled to be held. Television advertising is often used in coordination with direct mail marketing in order to maximize sales efforts and create greater name recognition within the target population. In the future we intend to develop
television infomercials to sell our new electronic course offerings.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Limited news print advertising, which we also purchase in markets where our training courses are scheduled to be held.
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | Direct mail and e-mail marketing, which we use in promoting our educational training courses and marketing new educational products, programs and services to our
current and former students and to prospects whose names have been provided to us by third party vendors.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Internet marketing, which is primarily focused on our Web site at http://www.russwhitney.com. The site contains information about our products, programs and
services, many of which may be purchased online.
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| |  |  | Cross promotional advertising campaigns, which we employ from time to time in conjunction with other financial education service providers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



Competition



The financial education training business is
highly-fragmented and intensely competitive. In a broad sense, we compete with national and international post-secondary education companies, such as Apollo Group, Devry Educational, Sylvan and New Horizon, that offer technical and industrial
training and career training. We do not, however, compete with these or other companies that offer undergraduate or advanced degrees or continuing education programs. More specifically, we compete with a number of smaller companies, such as Wyse
Trade and Robbins Research International, that offer training on specific business subjects including real



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estate and stock market investing. Generally, competitive factors within the proprietary educational
market include the range and depth of course offerings, the quality of teachers and trainers, the quality of reference materials provided in connection with course studies and the cost of the educational process. We believe that the range and depth
of our course offerings and our brand name offer competitive advantages over many of our direct competitors. We train our own teachers and trainers and we prepare most of our own course materials which we believe offer us competitive advantages over
companies that do not train their own teachers or develop their own educational materials. As a result of constantly attending the training sessions of our competitors, we believe that the quality of our teachers, trainers and reference materials
are consistent or superior to those of our competitors. Our charges for our educational courses are also consistent with those of our competitors. Many of our competitors have financial and marketing resources and name recognition superior to ours.



Intellectual Property



We regard our educational materials and products, trademarks,
servicemarks and trade symbols as proprietary and we rely primarily on statutory and common law protections, such as copyrights and trademarks, to protect our interests in these materials. While some of our products and trade names are commonly used
terms and do not afford us significant copyright or trademark protection, we also use employee and third-party noncompetition and nondisclosure agreements and other contractual methods of protecting proprietary rights to safeguard our intellectual
property.



Employees



At December 31, 2002, we had approximately 250 employees,
plus over 70 independent contractors who act as trainers, instructors and mentors. Our employees are not represented by a labor union, and we believe our relations with our employees are satisfactory.



Risk Factors



Investors should consider the following risks prior to
investing in our securities.



If We Do Not Successfully
Introduce New Programs, Products and Services, Our Growth Rate and Revenue Will be Reduced.



Our growth strategy is dependent on our ability to sell existing training programs, products and services to new students, to open new markets and to develop and introduce new educational programs,
products and services. If we are unable to expand our markets and products, our growth rate and revenue will be reduced. Market conditions and the level of customer interest may be different for our current products than for new products, and there
can be no assurance that we will be able to compete favorably with, and obtain market acceptance for, any such new programs, products or services.



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Volatility in the
Securities Markets May Reduce Interest in Our Stock Market Courses.



The level of public interest in investing, particularly in the securities and option markets as well as electronic trading, significantly influences the demand for our stock market programs and related financial education
products and services. The securities markets have experienced weakness and substantial volatility over the last few years. A further decline in securities prices or other negative developments in the securities markets could cause a reduced demand
for these programs, products and services.



Failure to Comply
with State Laws Regulating the Marketing and Sale of Proprietary Educational Courses Could Harm Our Reputation and the Demand for Our Course Offerings.



Many states regulate the marketing and sale of proprietary educational courses, including the content of advertisements to attract
students. Failure to comply with these regulations could result in legal action instituted by the states, including cease and desist and injunction actions. In the event we are subject to such legal action, our reputation would be harmed and the
demand for our course offerings could be significantly reduced.



If Our Planned Expansion Into Foreign Markets is Unsuccessful, Our Profits Will be Reduced.



Our business strategy calls for us to expand into foreign markets, including English-speaking countries in Europe, as well as French
Canada and France. We have limited experience providing education and training outside North America and no such experience in non-English speaking markets. Accordingly, there is a higher degree of risk associated with our expansion into foreign
markets than that which is associated with our ongoing expansion in the United States. Should our expansion provide unsuccessful, our profitability could be reduced.



ITEM 2. PROPERTIES



Our executive offices are located in a 30,000 square foot office building we own at 1612 E. Cape Coral, Cape Coral, Florida 33902. We use
19,000 square feet for our corporate headquarters and administrative facilities and lease 11,000 square feet to nonaffiliates. We also own a 7,000 square foot conference and training center in Costa Rica, which we designed and built in 2002.



We lease 2,242 square feet of office space and
training facilities at 4818 Coronado Parkway, Cape Coral, Florida 33904 from Russell A. Whitney, our Chairman and Chief Executive Officer, under a month-to-month lease, at $2,242 per month. The terms of the lease are no less favorable than those
which we could obtain from an independent third party.



We lease 6,840 square feet of office space at 12244 South Business Park Drive, Suite 230, in Draper, Utah. The lease expires in October 2006 and is payable at the rate of $6,128 per month.



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Our Canadian
subsidiary leases 1,200 square feet of office space at 3780-14thAvenue, Unit 20, Ontario, Canada. The lease expires
in April 2003 and is payable at rates increasing from $1,081 to $1,654 per month over the term of the lease.



We recently purchased an approximately three-acre building site in Cape Coral, Florida, which we may use in the future for a new or
additional corporate headquarters and administrative facilities.



We locate what we refer to as regional training centers in hotels in a number of cities across our market areas. We rent, generally for three to five days, meeting rooms in these hotels for use in training our students.



ITEM 3.    LEGAL PROCEEDINGS



None



ITEM 4.    SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS



None



PART II



ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



Our common stock has traded on the Electronic Bulletin Board
operated by the National Association of Securities Dealers, Inc. under the trading symbol RUSS since August 1998. The high and low closing prices of our common stock for the last two years, by calendar quarter, are set forth below. These
quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not represent actual transactions.



|                             |  | High Closing Price |      | Low Closing Price
|---------------------------- |  | ------------------ | ---- | -----------------
|Year Ended December 31, 2002 |  |                    |      |                  
|Fourth Quarter               |  | $                  | 4.20 |                  
|Third Quarter                |  | $                  | 3.35 |                  
|Second Quarter               |  | $                  | 3.25 |                  
|First Quarter                |  | $                  | 3.60 |                  
|                            
|                             |  | High Closing Price |      | Low Closing Price
|Year Ended December 31, 2001 |  |                    |      |                  
|Fourth Quarter               |  | $                  | 1.85 |                  
|Third Quarter                |  | $                  | 2.95 |                  
|Second Quarter               |  | $                  | 4.00 |                  
|First Quarter                |  | $                  | 3.87 |                  





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As of February
28, 2003, we had approximately 320 record and beneficial stockholders, and the closing price of our common stock on that date was $ 4.00 per share.



ITEM 6.    SELECTED FINANCIAL DATA



The following table sets forth our consolidated selected financial data as of and for the five year period ended December 31, 2002. The
data for the five years has been derived from our consolidated financial statements, which have been audited by Ehrhardt, Keefe, Steiner and Hottman, PC for 2000, 2001 and 2002 and Larry Legel CPA, for 1998 and 1999, independent certified public
auditors, and which appear elsewhere in this prospectus. The following selected consolidated financial data should be read in conjunction with the consolidated financial statements and the notes thereto.



|                                                  |  | Year Ended December 31, |           
|------------------------------------------------- |  | ----------------------- | ----------
|                                                  |  | 2002                    |           
|Operating revenue                                 |  | $                       | 62,145,237
|Profit(loss) from continuing operations           |  | $                       | 6,229,740 
|Profit(loss) from continuing operations per share |  | $                       | .78       
|Total assets                                      |  | $                       | 26,167,287
|Long-term obligations                             |  | $                       | 1,606,410 
|Stockholders (deficit) equity                    |  | $                       | (3,102,555
|Cash flow from operations                         |  | $                       | 9,731,185 



ITEM
7.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion of our financial condition and results of operations for the periods indicated should be read in conjunction with
our financial statements, the notes related thereto and the other financial data included elsewhere in this Report.



Critical Accounting Policies



We are engaged primarily in the business of providing financial education through training courses, which we also refer to as
programs as well as educational materials.



Historically, approximately 80% of our revenue has been derived from our various real estate training courses. We record revenue from these courses and other training programs when both the course fees have been received and the
earlier of the students attendance at the training program or the expiration of our obligation to provide training. We record deferred revenue when the training program proceeds are received in full prior to the time the related program takes
place. Students pay for the courses in advance and the fees are nonrefundable. We allow our students one year to complete their program.



Expenses, other than advertising, directly associated with future courses are deferred until the related revenue is recognized. We expense
advertising costs as incurred in accordance with generally accepted accounting principles. Advertising paid in advance is recorded as prepaid until such time as the advertisement is published.



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Our business
strategy involves geographically focused advertising which attracts potential students to a free training session which tells them about opportunities we offer. If students are interested, they may enter into a contract for future training.
Historically, the amount of advertising we incur is directly related to the amount of revenue we generally earn in the form of course revenue. The revenue from the training courses can be recognized as much as one year after the initial advertising.
From a financial reporting standpoint, this business model, coupled with the nature of our expenditures, will create increased losses, or reduced net income, in periods in which we accelerate our advertising expenditures in relation to prior periods
and create income, or reduced losses, in periods in which we decrease our advertising expenditures in relation to prior periods.



From a balance sheet prospective, the liability, which we designate as deferred revenue, will increase in times of business
growth and decrease in times of business contraction. Furthermore, since we generally receive cash in advance of providing the training, we must retain sufficient cash to pay both income taxes on future profits and final training costs. A
significant decrease in the number of students completing our training courses on an ongoing basis will cause our deferred revenue to decrease and therefore increase our taxable income.



Results Of Operations



Year Ended December 31, 2002 Compared to December 31, 2001



Revenue



Total revenue for the year ended December 31, 2002 was $62,145,237, an increase of $19,900,500 or 47% compared to the same period in 2001
of $42,200,000. The combination of the increase in advance training courses held, higher registrations, and co-marketing efforts via strategic alliances with other educational training companies contributed to the increase. A large portion of this
revenue was recognized because our customers contract periods had expired and we had previously made changes in our internal policies concerning contract terms with our customers. Specifically, in the past, we had permitted customers to extend
their contract period which caused an extension of the time revenue was deferred. Our contract terms no longer permit customers to extend the contracts, therefore, we effectively recognized revenue previously deferred under the old policy. The UK
and Canadian based sales for 2002 were approximately 8% of gross revenues, foreign operations were not significant in prior periods. Total deferred revenue on the balance sheet was $24,500,000 and $23,900,000 at December 31, 2002 and 2001,
respectively.



Advertising, Selling and General and
Administrative Expenses



Advertising and
sales expense, of which advertising represents approximately 60% of the expenses for the year ended December 31, 2002, were $13,900,000, an increase of $2,300,000 or 21% compared to $11,600,000 in the same period in 2001.



13



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General and
administrative expenses increased to $13,904,000, an increase of $5,300,000 or 62% compared to $8,600,000 for the same period in 2001. This increase was due primarily to increased personnel hired to handle the increase in our volume of business.



Direct Course Expenses



Direct course expenses, which consist of instructors
fees, facilities costs and field representatives salaries and travel expenses, increased proportionately in comparison with the increase in sales for the year ended December 31, 2002 to $28,400,000, an increase of $8,600,000 or 44% compared to
$19,700,000 in the same period of 2001. Direct course expenses as a percent of revenue were 46% for 2002 versus 47% for 2001. The improvement as a percent of revenue was due in part to the expiration of contracts described above offset by a slight
change in our product mix.



Net Income



Net income for the year ended December 31, 2002 was
$6,200,000 as compared with net income of $2,500,000 for the year ended December 31, 2001, an increase of 148% or $.78 per share as compared to $.33 per share for the prior period. The increase is directly attributable to increased sales in 2002
over the prior period, increased recognition of deferred revenues, increased production from marketing programs resulting in a larger gross profit and a disproportionate increase in advertising expenses. Currently, more than 12,000 new students
attend one or more of our programs each month, and a large percentage of our gross annual revenue can be attributed to repeat business, a factor that indicates students find our training to be effective.



Liquidity and Capital Resources at December 31, 2002



At December 31, 2002, we had cash of $12,100,000 as compared
with $6,900,000 at December 31, 2001. This increase of $5,200,000 was attributable primarily to cash provided by operations.



Our cash provided by operating activities was $9.7 million versus $5.3 million for the period ended December 31, 2001. In the year ended
December 31, 2002, cash flows from advanced training programs were positively impacted by increased collection efforts.



Our cash used in investing activities was $4,900,000 and $829,000 for the years ended December 31, 2002, and 2001, respectively. The
increase in cash used in investing for the year ended December 31, 2002 was due to our acquisition of Teach Me To Trade, the purchase of an airplane, and progress payments on our facility in Costa Rica. The Teach Me To Trade acquisition added
programs which provide instruction in stock market investment techniques. Our airplane purchase allows us to transport our trainers to scheduled training sessions around the U.S. when commercial air travel is unavailable due to weather conditions or
a lack of flight schedule flexibility. We also allow our executives to use the airplane when we believe our executives will be able to save time compared to commercial flight schedules. We subsequently financed $1,200,000 of the purchase price of
the airplane.



14



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At December
31, 2002 we had unused amounts under two letters of credit aggregating $1,500,000 collateralized by our certificates of deposit.



From time to time, we evaluate potential acquisitions of business products or technologies that complement our business. To the extent
that resources are insufficient to fund future activities, we may need to raise additional funds. However, there can be no assurance that additional funding, if needed, will be available. If adequate funds are not available on acceptable terms, we
may be unable to expand our business, develop or enhance our products and services, take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, operating results and
financial condition.



The following reflects our
commitments for capital expenditures, debt and other commitments.



|           |  | Capital Expenditures |  | Debt      |  | Operating Lease Commitments |  | Total    
|---------- |  | -------------------- |  | --------- |  | --------------------------- |  | ---------
|2003       |  |                    |  | 162,105   |  | 115,292                     |  | 277,397  
|2004       |  |                    |  | 498,573   |  | 89,952                      |  | 588,525  
|2005       |  |                    |  | 52,341    |  | 88,547                      |  | 140,888  
|2006       |  |                    |  | 56,405    |  | 73,359                      |  | 129,764  
|2007       |  |                    |  | 60,784    |  |                           |  | 60,784   
|Thereafter |  |                    |  | 938,307   |  |                           |  | 938,307  
|           |  |                      |  |           |  |                             |  |          
|Total      |  |                    |  | 1,768,515 |  | 387,150                     |  | 2,135,665
|           |  |                      |  |           |  |                             |  |          



We
develop and introduce most of our courses internally and therefore our expansion into new overseas markets requires few strategic relationships or contracts. Normally we visit the market and contact realtors, attorneys and media people, to determine
local procedures and customs. We then develop the manuals and course materials internally. We lease temporary office space in each market until we can find permanent facilities and hire and train personnel to staff our offices. Our contractual
commitments are extremely minimal but our investment in personnel is significant and our largest expense. We estimate that the cost of developing a new foreign market, including air travel, personnel and incidental costs, will amount to $300,000 to
$400,000. This amount includes development of manuals and training materials, development of marketing materials, analysis of markets and laws for the target country to be funded over an approximately 10 month period.



We believe our cash resources are more than sufficient to fund
our operation and growth plans for the next 12 months.



15



---



Year Ended December 31,
2001 Compared to December 31, 2000



Revenue



Revenue for the year ended December 31,
2001 increased to approximately $42,200,000 from $32,900,000 for the year ended December 31, 2000, an increase of $9,300,000, or 28%. Total deferred revenue on the balance sheet was just under $24,000,000 and $22,700,000 at December 31, 2001 and
2000, respectively.



Direct Course Expenses



Direct course expenses decreased to $19,500,000 for the year
ended December 31, 2001 from $22,200,000 for the year ended December 31, 2000, due in part to a $3.4 million reduction in costs related to our internet division. We offered internet courses as a part of our real estate course offerings. Due to rapid
advances in internet technology, the lack of suitable web site designers, and lower than expected revenues, we ceased offering internet courses in 2001. Savings resulting from the termination of internet courses were partially offset by an increase
in speaker fees paid to trainers who conducted our training courses. Instructor fees approximated 12% of revenue ($5,000,000 for 2001 and $4,000,000 for 2000). Other course expenses remained relatively constant from 2000 to 2001. While we defer the
speaker fees related to our deferred revenue, costs of the training courses are expensed as incurred. Due to the $13 million increase in deferred revenue in 2000 over 1999 levels, these courses were generally fulfilled in 2001 causing income from
operations to increase from an $8.9 million operating loss in 2000 to a $2.2 million operating profit in 2001.



Advertising, Selling and General and Administrative Expenses



Advertising, selling and general and administrative expenses increased for the year ended December 31, 2001 to approximately $20,300,000
from $19,600,000 in 2000. The increase in expenses and the corresponding increase in revenue for 2001 over 2000 reflect a general increase in business activity, our expansion into new markets and our development of new products. Separately, general
and administrative expenses increased from $7,100,000 to $8,300,000 due to increased staffing and related expenses associated with our increased business activity.



Sales and marketing expenses consist primarily of television and newspaper advertising, direct mailings,
travel, public relations, trade shows, preparation of marketing literature and overhead allocations. General and administrative expenses consist primarily of salaries and other personnel-related expenses for our administrative, executive and finance
personnel as well as outside legal and auditing costs.



Net
Income



Net income of $2,500,000 or $1.49
per share for the year ended December 31, 2001 increased by $11,200,000 over the net loss for the year ended December 31, 2000 of $8,700,000, or $1.16 per share. Earnings (loss) before interest, taxes, depreciation and amortization for the year
ended December 31, 2001 and 2000 were $2,900,000 and $(8,500,000), respectively.



16



---



After
continued losses in the Internet division, we terminated our outside training operations in 2001 but continued to maintain Web site operations and sales in that division. We also decided during 2001, after a test period, not to proceed with our
Building Wealth Centers in Georgia and Mississippi, due to unacceptable returns and higher than anticipated fixed costs.



Liquidity and Capital Resources at December 31, 2001



At December 31, 2001, we had cash of $6,900,000 as compared with $3,300,000 at December 31, 2000. This increase of $3,600,000 was
attributable primarily to cash provided by operations.



Our cash provided by operating activities was $5.2 million versus $3.5 million for the year ended December 31, 2001 and 2000, respectively. In the year ended December 31, 2001, cash flows from advanced training programs were
positively impacted by the increased collection efforts by the sales associates accompanying the instructors and trainers at the training locations.



Our cash used in investing activities was $829,000 and $1,500,000 for the year ended December 31, 2001 and 2000, respectively. We also
used $875,000 during the year ended December 31, 2001 reducing our long term and officer/stockholder debt.



From time to time, we evaluate potential acquisitions of business products or technologies that complement our business. To the extent
that resources are insufficient to fund future activities, we may need to raise additional funds. However, there can be no assurance that additional funding, if needed, will be available. If adequate funds are not available on acceptable terms, we
may be unable to expand our business, develop or enhance our products and services, take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, operating results and
financial condition.



We believe our cash
resources are more than sufficient to fund our operation and growth plans for the next 12 months.



Year Ended December 31, 2000 Compared to December 31, 1999



Revenue



Revenue for the year ended December 31, 2000 increased to $32,900,000 from $26,800,000 for the year ended December 31, 1999, an increase
of $6,100,000, or 23%. Total deferred revenue on the balance sheet was $22,600,000 and $9,300,000 at December 31, 2000 and 1999, respectively. Cost of sales increased to $22,200,000 for the year ended December 31, 2000 from $11,500,000 for the year
ended December 31, 1999, an increase of 93%. The increase in cost of sales reflected the increase in revenue and the costs of our Internet division which generated only negligible revenues.



17



---



Advertising, Selling and
General and Administrative Expenses



Advertising, selling and general and administrative expenses increased for the year ended December 31, 2000 to $19,600,000 from $17,200,000 in 1999. This increase in expenses and the corresponding increase in revenue for 2000 over
1999 reflects a general increase in business activity and the results of our plan to expand our business into new markets and develop new products. Separately, general and administrative expenses increased from $4,500,000 to $7,100,000 due to
increased staffing and related expenses associated with our increased business activity.



Sales and marketing expenses consisted primarily of television and newspaper advertising, direct mailings, travel, public relations, trade shows and preparation of marketing literature and overhead
allocations. General and administrative expenses consisted primarily of salaries and other personnel-related expenses for our administrative, executive and finance personnel as well as outside legal and auditing costs.



Net Loss



The net loss of $8,700,000 or $1.16 per share for the year ended December 31, 2000 increased by 343% over the
net loss for the year ended December 31, 1999 of just under $2,000,000, or $.26 per share.



Losses before interest, taxes, depreciation and amortization for the years ended December 31, 2000 and 1999 were $8,533,194 and $1,923,999, respectively.



Seasonality and Fluctuations in Quarterly Operating Results



Our quarterly operating results have varied
in the past and are expected to vary in the future as a result of a variety of factors, some of which are outside our control. Factors that may adversely affect our quarterly operating results include the demand for educational training, the timing
of educational sessions and registrations, the mix of revenue from products and services and market acceptance for our products. Typically, our revenue is strongest in the first two quarters of the year and weakest in the fourth quarter.



ITEM 7A.    QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK



Market risk
generally represents the risk that losses may occur in the values of financial instruments as a result of movements in interest rates, foreign currency exchange rates and commodity prices. The Company does not have foreign currency exchange rate and
commodity price market risk.



Interest
Rate Risk  From time to time the Company temporarily invests its excess cash and restricted cash in interest-bearing securities issued by high-quality issuers. The Companys management monitors risk exposure to monies invested in
securities of its financial institutions. Due to the sort time the investments are outstanding and their general liquidity, these instruments



18



---



are classified as cash
equivalents in the consolidated balance sheet and do not represent a material interest rate risk to the Company. The Companys primary market risk exposure for changes in interest rates relates to the Companys long-term debt obligations.
The Company manages its exposure to changing interest rates principally through the use of a combination of fixed and floating rate debt. In addition, certain of the Companys debt instruments have interest rate floors and ceilings.



19



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ITEM
8.    FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA



WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



Table of Contents



|                                                           |  | Page
|---------------------------------------------------------- |  | ----
|Independent Auditors Reports                              |  | 21  
|                                                          
|Consolidated Financial Statements                          |  |     
|Consolidated Balance Sheets                                |  | 22  
|Consolidated Statements of Income                          |  | 23  
|Consolidated Statement of Changes in Stockholders Deficit |  | 24  
|Consolidated Statements of Cash Flows                      |  | 25  
|                                                          
|Notes to Consolidated Financial Statements                 |  | 27  







20



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INDEPENDENT AUDITORS REPORT



Board of Directors and Stockholders

Whitney Information Network, Inc. and Subsidiaries

Cape Coral, Florida



We have audited the accompanying consolidated balance sheets of Whitney Information Network, Inc. and Subsidiaries as of December 31, 2002
and 2001, and the related consolidated statements of income, changes in stockholders deficit and cash flows for the years ended December 31, 2002, 2001 and 2000. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated 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 Whitney Information Network, Inc. and Subsidiaries as of December 31, 2002 and 2001, and the
results of their operations and their cash flows for the years ended December 31, 2002, 2001 and 2000 in conformity with accounting principles generally accepted in the United States of America.



EHRHARDT KEEFE
STEINER & HOTTMAN PC



February 7, 2003

Denver, Colorado



21



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS



|                                                                                                                              |  | December 31, |           
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------
|                                                                                                                              |  | 2002         |           
|ASSETS                                                                                                                        |  |              |           
|Current assets                                                                                                                |  |              |           
|Cash and cash equivalents                                                                                                     |  | $            | 12,080,553
|Accounts receivable, net                                                                                                      |  |              | 507,919   
|Due from affiliates                                                                                                           |  |              | 4,089     
|Prepaid advertising and other                                                                                                 |  |              | 696,441   
|Income taxes receivable and prepayments                                                                                       |  |              |          
|Inventory                                                                                                                     |  |              | 363,555   
|Deferred seminar expenses                                                                                                     |  |              | 2,907,414 
|                                                                                                                              |  |              |           
|Total current assets                                                                                                          |  |              | 16,559,971
|                                                                                                                              |  |              |           
|Property and equipment, net                                                                                                   |  |              | 8,406,370 
|Intangible assets, net                                                                                                        |  |              | 989,061   
|Investment in foreign corporation                                                                                             |  |              | 184,757   
|Other assets                                                                                                                  |  |              | 27,128    
|                                                                                                                              |  |              |           
|Total non-current assets                                                                                                      |  |              | 9,607,316 
|                                                                                                                              |  |              |           
|Total assets                                                                                                                  |  | $            | 26,167,287
|                                                                                                                              |  |              |           
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                         |  |              |           
|Current liabilities                                                                                                           |  |              |           
|Accounts payable                                                                                                              |  | $            | 1,762,614 
|Accrued seminar expenses                                                                                                      |  |              | 63,622    
|Deferred revenue                                                                                                              |  |              | 24,549,429
|Accrued expenses                                                                                                              |  |              | 1,125,662 
|Due to affiliates                                                                                                             |  |              |          
|Current portion of long-term debt                                                                                             |  |              | 103,051   
|Current portion of note payableofficer/stockholder                                                                           |  |              | 59,054    
|                                                                                                                              |  |              |           
|Total current liabilities                                                                                                     |  |              | 27,663,432
|Long-term debt, less current portion                                                                                          |  |              | 1,606,410 
|Note payableofficer/stockholder, less current portion                                                                        |  |              |          
|                                                                                                                              |  |              |           
|Total liabilities                                                                                                             |  |              | 29,269,842
|                                                                                                                              |  |              |           
|Commitments and contingencies                                                                                                 |  |              |           
|Stockholders deficit                                                                                                         |  |              |           
|Preferred stock, no par value, 10,000,000 shares authorized, no shares issued and
outstanding                                 |  |              |          
|Common stock, no par value, 25,000,000 shares authorized, issued and outstanding shares
8,096,624 (2002) and 7,878,023 (2001) |  |              | 939,832   
|Paid-in capital                                                                                                               |  |              | 448,600   
|Accumulated deficit                                                                                                           |  |              | (4,490,987
|                                                                                                                              |  |              |           
|Total stockholders deficit                                                                                                   |  |              | (3,102,555
|                                                                                                                              |  |              |           
|Total liabilities and stockholders deficit                                                                                   |  | $            | 26,167,287
|                                                                                                                              |  |              |           



See notes
to consolidated fiancial statements.



22



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF INCOME



|                                                   |  | For the Years EndedDecember 31, |           
|-------------------------------------------------- |  | ------------------------------- | ----------
|                                                   |  | 2002                            |           
|Sales                                              |  | $                               | 62,145,237
|                                                   |  |                                 |           
|Expenses                                           |  |                                 |           
|Direct course expenses                             |  |                                 | 28,384,333
|Advertising and sales expense                      |  |                                 | 13,936,860
|General and administrative expense                 |  |                                 | 13,863,598
|                                                   |  |                                 |           
|Total expenses                                     |  |                                 | 56,184,791
|                                                   |  |                                 |           
|Income (loss) from operations                      |  |                                 | 5,960,446 
|                                                   |  |                                 |           
|Other income (expense)                             |  |                                 |           
|Interest and other income                          |  |                                 | 339,842   
|Interest expense                                   |  |                                 | (70,548   
|                                                   |  |                                 |           
|                                                   |  |                                 | 269,294   
|                                                   |  |                                 |           
|Net income (loss)                                  |  | $                               | 6,229,740 
|                                                   |  |                                 |           
|Basic weighted average common shares outstanding   |  |                                 | 7,952,180 
|                                                   |  |                                 |           
|Basic income (loss) per common share               |  | $                               | 0.78      
|                                                   |  |                                 |           
|Diluted weighted average common shares outstanding |  |                                 | 9,358,355 
|                                                   |  |                                 |           
|Diluted income (loss) per common share             |  | $                               | 0.67      
|                                                   |  |                                 |           





See notes to consolidated fiancial statements.





23



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS
DEFICIT

For the Years Ended December 31, 2002, 2001 and 2000



|                                                                                                                   |  | Common Stock |  | Additional Paid-in Capital |         | Accumulated Deficit |   |         | Total Stockholders Deficit |  
|------------------------------------------------------------------------------------------------------------------ |  | ------------ |  | -------------------------- | ------- | ------------------- | - | ------- | --------------------------- | -
|                                                                                                                   |  | Shares       |  | Amount                     |         |                     |  
|BalanceDecember 31, 1999                                                                                          |  | 7,528,022    |  | $                          | 67,102  |                     | $ | 900     |                             | $
|Net loss                                                                                                           |  |             |  |                            |        |                     |   |        |                             |  
|                                                                                                                   |  |              |  |                            |         |                     |   |         |                             |  
|BalanceDecember 31, 2000                                                                                          |  | 7,528,022    |  |                            | 67,102  |                     |   | 900     |                             |  
|Issuance of stock for software                                                                                     |  | 163,334      |  |                            | 245,000 |                     |   |        |                             |  
|Issuance of stock, cash and note payable to majority stockholder for interest in
Precision Software Services, Inc. |  | 170,000      |  |                            |        |                     |   |        |                             |  
|Issuance of stock for services                                                                                     |  | 16,667       |  |                            | 25,000  |                     |   |        |                             |  
|Net income                                                                                                         |  |             |  |                            |        |                     |   |        |                             |  
|                                                                                                                   |  |              |  |                            |         |                     |   |         |                             |  
|BalanceDecember 31, 2001                                                                                          |  | 7,878,023    |  |                            | 337,102 |                     |   | 900     |                             |  
|Issuance of stock for assets purchased                                                                             |  | 189,655      |  |                            | 550,000 |                     |   |        |                             |  
|Issuance of stock for stock options exercised                                                                      |  | 26,375       |  |                            | 48,230  |                     |   |        |                             |  
|Issuance of stock for services                                                                                     |  | 2,571        |  |                            | 4,500   |                     |   |        |                             |  
|Compensation expense related to the issuance of stock options                                                      |  |             |  |                            |        |                     |   | 447,700 |                             |  
|Net income                                                                                                         |  |             |  |                            |        |                     |   |        |                             |  
|                                                                                                                   |  |              |  |                            |         |                     |   |         |                             |  
|BalanceDecember 31, 2002                                                                                          |  | 8,096,624    |  | $                          | 939,832 |                     | $ | 448,600 |                             | $
|                                                                                                                   |  |              |  |                            |         |                     |   |         |                             |  







See notes to consolidated financial statements.



24



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WHITNEY
INFORMATION NETWORK, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                        |  | For the Years Ended December 31, |           
|--------------------------------------------------------------------------------------- |  | -------------------------------- | ----------
|                                                                                        |  | 2002                             |           
|Cash flows from operating activities                                                    |  |                                  |           
|Net income (loss)                                                                       |  | $                                | 6,229,740 
|                                                                                        |  |                                  |           
|Adjustments to reconcile net income (loss) to net cash provided by operating
activities |  |                                  |           
|Allowance for doubtful accounts                                                         |  |                                  |          
|Equity earnings in foreign corporation                                                  |  |                                  | (102,257  
|Compensation expense relating to stock options                                          |  |                                  | 447,700   
|Depreciation and amortization                                                           |  |                                  | 598,320   
|(Gain) loss on disposal of assets                                                       |  |                                  | (3,150    
|Stock issued for services                                                               |  |                                  | 4,500     
|Changes in assets and liabilities                                                       |  |                                  |           
|Accounts receivable                                                                     |  |                                  | 14,596    
|Prepaid advertising and other                                                           |  |                                  | 260,583   
|Income taxes receivable and prepayments                                                 |  |                                  | 497,499   
|Inventory                                                                               |  |                                  | (227,011  
|Deferred seminar expenses                                                               |  |                                  | 731,142   
|Other assets                                                                            |  |                                  | 5,790     
|Accounts payable                                                                        |  |                                  | 610,277   
|Accrued seminar expenses                                                                |  |                                  | (371,738  
|Deferred revenue                                                                        |  |                                  | 612,080   
|Accrued expenses                                                                        |  |                                  | 423,114   
|                                                                                        |  |                                  |           
|                                                                                        |  |                                  | 3,501,445 
|                                                                                        |  |                                  |           
|Net cash provided by operating activities                                               |  |                                  | 9,731,185 
|                                                                                        |  |                                  |           
|Cash flows from investing activities                                                    |  |                                  |           
|Purchase of property and equipment                                                      |  |                                  | (4,611,982
|Purchase of intangible assets                                                           |  |                                  | (450,172  
|Loans to affiliates, net                                                                |  |                                  | 155,502   
|Investment in foreign corporation and land                                              |  |                                  |          
|                                                                                        |  |                                  |           
|Net cash used in investing activities                                                   |  |                                  | (4,906,652
|                                                                                        |  |                                  |           
|Cash flows from financing activities                                                    |  |                                  |           
|Proceeds from long-term debt                                                            |  |                                  | 1,200,000 
|Payments of principal on long-term debt                                                 |  |                                  | (815,539  
|Principal payments on note payableofficer/stockholder                                  |  |                                  | (65,946   
|Proceeds from exercise of stock options                                                 |  |                                  | 48,230    
|Distribution to officer/stockholder                                                     |  |                                  |          
|                                                                                        |  |                                  |           
|Net cash provided by (used in) financing activities                                     |  |                                  | 366,745   
|                                                                                        |  |                                  |           
|Net increase in cash and cash equivalents                                               |  |                                  | 5,191,278 
|Cash and cash equivalentsbeginning of year                                             |  |                                  | 6,889,275 
|                                                                                        |  |                                  |           
|Cash and cash equivalentsend of year                                                   |  | $                                | 12,080,553
|                                                                                        |  |                                  |           

(Continued on following page.)



See notes to consolidated financial statements.



25



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)



(Continued from previous page.)



Supplemental disclosure of cash flow information



Cash paid for income taxes was $0, $0 and $925,867 for 2002,
2001 and 2000, respectively.



Cash paid for
interest was $70,548, $104,105 and $10,008 for 2002, 2001 and 2000, respectively.



Supplemental disclosure of non-cash activity:



During 2002, the Company issued 189,655 shares of common stock valued at $550,000 for intangible assets and $750,000 in debt for software in connection with the asset purchase from Teach Me To Trade,
LLC.



During 2001, the Company acquired software
rights of $370,000 through the issuance of common stock of $245,000 and debt of $125,000.



During 2001, the Company acquired software rights owned by an officer/shareholder through the issuance of stock at zero value and debt of $125,000. These transactions were recorded as distributions in
the accompanying financial statements.



During
2000, a building was acquired through a mortgage note payable of $1,200,000.



During 2000, $168,715 of fixed assets were acquired, at net book value, from a related entity through related party advances.







See notes to consolidated financial statements.



26



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 1Description
of Business and Summary of Significant Accounting Policies



Organization and History



Whitney Information Network, Inc. and Subsidiaries (the Company) is engaged primarily in the business of providing financial education and training services through seminars, workshops and publications. The Companys
educational and training services are concentrated in the area of financial management and real estate investment. The Company markets its services and products primarily through periodic publications, telemarketing, television and radio.



Whitney Information Network, Inc., formerly
known as Win Systems International, Inc., incorporated in Colorado on February 23, 1996 under the name of Gimmel Enterprises, Inc.



Whitney Education Group, Inc., formerly known as Win Systems, Inc., incorporated in Florida on November 12, 1992. An exchange of shares
was completed between the shareholders of Win Systems, Inc. and Gimmel Enterprises, Inc. on August 18, 1998. Subsequently, the name of Gimmel Enterprises, Inc. was changed to Win Systems International, Inc. on August 25, 1998, and that name was
changed to Whitney Information Network, Inc. on February 11, 1999. The name of Win Systems, Inc. was changed to Whitney Education Group, Inc. on September 10, 1999.



Win Systems, Inc. has been operating in the educational seminars industry since 1992 and expanded its
operation in the industry subsequent to the aforesaid exchange of shares and name change to Whitney Education Group, Inc.



Whitney Education Group, Inc. is accredited by the State of Texas as a Certified Proprietary School, effective January 8, 1999.



During 1998, Win Systems International, Inc.
expanded its educational seminars business into Canada through the opening of a wholly owned subsidiary, 1311448 Ontario, Inc. The Canadian operations continued to expand and at the end of 1999 the operations were transferred to Whitney Canada, Inc.
through an amalgamation of two wholly owned subsidiaries.



Whitney Canada, Inc. incorporated in Canada on October 5, 1998 and is the surviving corporation of an amalgamation with 3667057 Canada, Inc. 3667057 Canada, Inc. was incorporated in Ontario, Canada on August 21, 1998 under the
name of 1311448 Ontario, Inc. The name was changed to 3667057 Canada, Inc. on October 5, 1999 as a preliminary requirement of federalization of the corporation, which had been an Ontario corporation, in order to qualify for the amalgamation with
Whitney Canada, Inc., which was completed January 6, 2000. There are no significant differences on comprehensive income and foreign exchange.



Whitney Internet Services, Inc. incorporated in Wyoming on June 8, 1999, is located in Cape Coral, Florida and provides web programming
and maintenance services to the Company. The Companys other operating subsidiaries use the site to offer their products and services for sale and the site also includes general information on the Company, its products and services.



Wealth Intelligence Network, Inc. incorporated
in Florida on May 26, 1996 under the name of Real Estate Link, Inc. The name was changed to Wealth Intelligence Network, Inc. on September 20, 1998. Win Systems International, Inc. acquired the shares of Wealth Intelligence Network, Inc. on
November 18, 1998. Wealth Intelligence Network, Inc. is an operating subsidiary marketing financial training seminars, which represents an expansion from the real estate investment training seminar business.



27



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 1Description
of Business and Summary of Significant Accounting Policies (continued)



Organization and History (continued)



Whitney Mortgage.com, Inc. incorporated in Florida on September 30, 1999 and operates as a full service internet mortgage broker affiliated with a national internet mortgage provider. Brokering
mortgages represents an expansion from educational seminars into a different industry.



Russ Whitneys Wealth Education Centers, Inc. incorporated in Wyoming on June 8, 1999 as a wholly owned subsidiary of Whitney Information Network, Inc. and the subsidiary is itself the parent
corporation of two wholly owned subsidiaries formed to operate permanent learning centers in Jackson, Mississippi and Atlanta, Georgia. Russ Whitneys Wealth Education Center of Jackson, MS, Inc. incorporated in Wyoming on June 8, 1999 and a
school was opened in December, 1999. Russ Whitneys Wealth Education Center of Atlanta, GA, Inc. incorporated in Wyoming on July 22, 1999 and a school was opened in June 2000. The Wealth Education Centers were closed during 2001.



Whitney Consulting Services, Inc. incorporated in Wyoming on
July 28, 1998 under the name of Financial Consulting Services, Inc. and the name was changed to Whitney Consulting Group, Inc. on April 28, 1999 when that corporation was acquired by Win Systems International, Inc. which then changed its name to
Whitney Consulting Services, Inc. on March 21, 2000. Whitney Consulting Services, Inc. is located in Salt Lake City, Utah and is an operating subsidiary telemarketing real estate investments and financial training seminars and an individual
one-on-one mentor program.



Precision Software
Services, Inc. was acquired during 2001. Precision Software Services, Inc. was incorporated August 1993 and is a Florida corporation that holds a license to distribute and sell certain real estate and business software that several subsidiaries of
the Company have been selling. Precision Software Services, Inc. was formerly owned 51% by the Chairman of the Board and majority stockholder of the Company.



Whitney U.K. Limited is a British corporation formed and incorporated in October 2001 to engage in educational and training seminars
throughout the United Kingdom. This subsidiary had no significant operations in 2001 and accounted for less than 4% of revenues for 2002.



N123RF, Inc. is a Delaware corporation formed and incorporated in August 2002 to manage and operate the Companys airplane.



Principles of Consolidation



The accompanying consolidated financial statements include
the accounts of Whitney Information Network, Inc. and the following wholly owned subsidiary corporations: Whitney Education Group, Inc.; Whitney Internet Services, Inc.; Russ Whitneys Wealth Education Centers, Inc. and its wholly owned
subsidiary corporations, Russ Whitneys Wealth Education Center of Jackson, MS, Inc. and Russ Whitneys Wealth Education Center of Atlanta, GA, Inc.; Whitney Consulting Services, Inc.; Whitney Canada, Inc.; Whitney Mortgage.com, Inc.;
Wealth Intelligence Network, Inc.; Precision Software Services, Inc.; Whitney U.K. Limited; and N123RF, Inc All material intercompany accounts and transactions have been eliminated in consolidation.



Cash and Cash Equivalents



The Company considers all highly liquid instruments purchased
with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with, and the credit quality of, the financial institutions it invests with.





28



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 1Description
of Business and Summary of Significant Accounting Policies (continued)



Concentrations of Credit Risk



Financial instruments, which potentially subject the Company to concentration of credit risk consist principally of cash and short-term cash investments and accounts receivable. The Company places its
temporary cash investments with what management believes are high-credit, quality financial institutions. As of the balance sheet date, and periodically throughout the year, the Company has maintained balances in various operating accounts in excess
of federally insured limits. The Company periodically performs credit analysis and monitors the financial condition of its customers in order to minimize credit risk.



Accounts Receivable



Accounts receivable consists of trade receivables from the sale of educational products and services for
which the related revenue has been deferred. The amount recorded by the Company as accounts receivable at year end represents known subsequent cash receipts received prior to issuance of the financial statements. Remaining accounts receivable are
netted against deferred revenue for reporting purposes. As such, the Company believes no allowance for doubtful accounts is necessary as of 2002 and 2001 and the entire amount of revenue related to the net accounts receivable is deferred as
described below.



Inventory



Inventory consists primarily of books, videos and training
materials and is stated at the lower of cost or market, determined using the first-in, first-out method (FIFO).



Fair Value of Financial Instruments



The carrying amounts of financial instruments including cash and cash equivalents, short-term investments, receivables, deferred seminar
expense, accounts payable, accrued expenses, deferred educational revenues, and notes payable approximated fair value as of December 31, 2002 because of the relatively short maturity of these instruments.



Revenue Recognition, Deferred Revenue and Deferred Expenses



The Company recognizes revenue for the sale
of products and software, upon delivery. Revenue from educational seminars is recognized upon the earlier of (1) when the non-refundable deposit is received for the seminars and the seminar has taken place; (2) when it is reasonably certain that the
balance of the option to purchase additional programs will be exercised and paid and the seminar has taken place; or (3) upon the contractual expiration of the Companys obligation to provide a seminar. Deferred revenue is recorded when the
seminar proceeds are received prior to the related seminar taking place. Expenses for commission payments made to Company speakers for revenues generated are deferred until the related revenue is recognized.



Advertising Expense and Prepaid Advertising



The Company expenses advertising costs as
incurred. Advertising costs were approximately $8,907,257, $7,829,406, and $7,340,540 for the years ended December 31, 2002, 2001 and 2000, respectively. Advertising paid for in advance is recorded as prepaid until such time as the advertisement is
published. Advertising costs recorded as prepaid as of December 31, 2002 and 2001 were $480,053 and $733,227 respectively.



29



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 1Description of Business and Summary of Significant Accounting Policies (continued)



Property and Equipment



Property and equipment is stated at cost. Depreciation is
provided utilizing the straight-line method over the estimated useful lives for owned assets. The estimated useful life of the buildings is 40 years. The furniture and fixtures estimated useful life is seven years, the airplane, equipment and
leasehold improvements is five years, and the software is three years.



Intangible Assets



Intangible assets include customer lists, trademarks, and loan costs and are recorded at cost. Customer lists and trademarks are being amortized over their estimated useful lives of fifteen years. Loan costs are amortized over the
term of the loan. At December 31, 2002, management performed impairment testing in accordance with Statement of Financial Accounting Standard No. 142 (SFAS 142) and determined that impairment was not considered necessary.



Investment in Foreign Corporation



The Company acquired a 20% ownership interest in a Panama
corporation in 2001. The Company accounts for its investment using the equity method of accounting and records its proportionate share of the corporations profit or loss. The Companys share of the corporations profits for the year
ended December 31, 2002 was $102,257. Operations of the investee corporation were not significant in 2001.



Long-Lived Assets



The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recovered. The Company looks primarily to the undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired.



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Income Taxes



The Company recognizes deferred tax liabilities and assets based on the differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. The Companys temporary differences result primarily from the recognition of deferred revenues and expenses for tax purposes.



Basic Loss Per Share



The Company applies the provisions of Statement of Financial
Accounting Standard No. 128, Earnings Per Share (FAS 128). Prior to 2002, all dilutive potential common shares had an antidilutive effect on diluted per share amounts and therefore were excluded in determining net loss per share.



Recently Issued Accounting Pronouncements



In June 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations. SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are



30



---

WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Recently Issued Accounting Pronouncements (continued)



capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for years beginning after June 15, 2002. The Company believes the adoption of this statement will have no material impact on its
consolidated financial statements.



In April
2002, the FASB issued SFAS No. 145, Rescission of FASB No. 4, 44 and 64, Amendment of FASB No. 13, and Technical Corrections. SFAS rescinds FASB No. 4 Reporting Gains and Losses from Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements. This statement also rescinds SFAS No. 44 Accounting for Intangible Assets of Motor Carriers and amends SFAS No. 13, Accounting for Leases. This statement is effective for fiscal years
beginning after May 15, 2002. The Company does not expect the adoption of this statement to have a material effect on the Companys financial statements.



In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146
addresses accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value when the liability is incurred.
SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The Company does not expect the adoption of this statement to have a material effect on the Companys
financial statements.



In October 2002, the FASB
issued SFAS No. 147 Acquisitions of Certain Financial Institutions SFAS No. 147 amends FASB Statements No. 72 and 144 and FASB Interpretations No. 9. The Company believes the adoption of this statement will have no material impact
on its consolidated financial statements.



In
November 2002, the FASB published interpretation No, 45 Guarantors Accounting and Disclosure requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The Interpretation expands on the accounting
guidance of Statements No. 5, 57, and 107 and incorporates without change the provisions of FASB Interpretation No. 34, which is being superseded. The Interpretation elaborates on the existing disclosure requirements for most guarantees, including
loan guarantees such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that
guarantee and must disclose that information in its interim and annual financial statements. The initial recognition and initial measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002, regardless
of the guarantors fiscal year-end. The disclosure requirements in the Interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company believes the adoption of this statement will
have no material impact on its consolidated financial statements.



In December 2002, the FASB issued SFAS No. 148 Accounting for Stock-Based Compensation Transition and Disclosure. This statement amends SFAS No. 123, Accounting for Stock-Based Compensation to
provide alternative methods of transition for an entity that voluntarily changes to the fair value method of accounting for stock-based compensation. In addition, SFAS 148 amends the disclosure provision of SFAS 123 to require more prominent
disclosure about the effects of an entitys accounting policy decisions with respect to stock-based employee compensation on reported net income. The effective date for this Statement is for fiscal years ended after December 15, 2002. The
Company believes the adoption of this statement will have no material impact on its consolidated financial statements.



Reclassifications



Certain amounts in the 2001 consolidated financial statements have been reclassified to conform to the 2002 presentation.



31



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 2Mergers,
Acquisitions and Capital Accounts



On August
18, 1998, Whitney Education Group, Inc. (formerly Win Systems, Inc.) was acquired by Whitney Information Network, Inc. (formerly Win Systems International, Inc. and prior to that Gimmel Enterprises, Inc.) in a reverse merger whereby Whitney
Education group, Inc. exchanged 100% of its shares for 90% of Gimmels shares bringing the total shares of Whitney Information Network, Inc. (issued and outstanding) at August 18, 1998 to 7,500,047. Whitney Education Group, Inc. became a wholly
owned subsidiary of Whitney Information Network, Inc. (WIN). The financial statements from January 1, 1997 through December 31, 1999 are based upon the assumption that the companies were combined for the entire period and all stock splits have been
reflected in the statements as of the beginning of the period. Also, on August 18, 1998, WIN issued 187,500 Class A stock purchase warrants and 340,000 Class B stock purchase warrants. Both the Class A and Class B warrants were exercisable at $4.00
per share.



The Company also instituted a stock
option plan for key personnel. Under the plan, options are to be granted at the fair market value at the date of the grant and exercisable for a ten-year period after the grant with a three-year vesting schedule. The Company has reserved 2,000,000
shares for the stock option plan of which 1,406,175 option shares have been granted, net of forfeitures and cancellations, at exercise prices from $1.70 to $3.10 per share. No options have been exercised.



On February 1, 1999, the Company purchased all of the assets
of Wealth Intelligence Network, Inc. for 20,000 shares of stock at $2.50 per share. In addition, the Company issued (during the period from May to August 1999) 7,975 shares to a financial public relations firm in lieu of cash for services valued at
$14,500.



In April 2000, the Company converted
their 340,000 class B warrants issued to employees in August 1998 into stock options. In the conversion, the Company reduced the exercise price from $4 to $2 (fair market value at date of conversion). This transaction has since been accounted for
using variable accounting in accordance with FIN 44: Accounting for Certain Transactions Involving Stock Compensation an Interpretation of APB Opinion No. 25 (FIN 44). At December 31, 2002, 136,500 of these options have been forfeited. At December
31, 2002, $447,700 was recorded as additional compensation expense to employees based on a market value of $4.20 per share. No adjustment was made for the periods ending December 31, 2001 and 2000 because the market price of the stock was less than
the $2 exercise price.



In November 2001, the
Company issued 333,334 shares of common stock valued at $500,000 and $250,000 in notes payable for all of the outstanding stock of Precision Software Services, Inc. which had a minimal net book value at the time of the acquisition. Precision
Software Services, Inc. was 51% owned by the Chairman and majority stockholder of the Company who received 170,000 of the shares and $125,000 in notes payable. The excess of the purchase price over material, identifiable net assets relating to the
minority interest was allocated to software rights. The shares issued to the officer were recorded as a distribution as the Company and Precision Software Services, Inc. are under common control.



In November 2001, the Company paid $212,500 for a 20% interest
in a Panama corporation named Rancho Monterrey, S.A. which was formed in April 2001 to own, operate, improve and sell certain real estate in Panama. As part of the investment in Rancho Monterrey, S.A., the Company received a 12 acre parcel of land
valued at $130,000, resulting in a net investment of $82,500. An entity affiliated with the majority stockholder of the Company purchased an additional 20% interest during 2001.



In April 2002, the Company converted its 187,500 Class A warrants issued to outside investors and parties in
August 1998 into stock options. In the conversion, the Company reduced the exercise price from $4 to $2. This transaction does not require treatment under FIN 44.



32



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 2Mergers,
Acquisitions and Capital Accounts (continued)



In August 2002, 189,655 shares valued at $550,000 of the Companys common stock were issued in exchange for assets of a former joint venture partner, Teach Me To Trade, LLC. The purchase price was $1,988,000, net of a $12,000
discount, and was paid for with $688,000 in cash, $550,000 in stock, and $750,000 in debt. During the first and second quarters of 2002, the Company had advanced $200,000 to Teach Me To Trade which was credited towards the purchase price. The
purchase price was allocated $1,000,000 to software, $688,000 to trademarks and $300,000 to customer lists.



Note 3Related Party Transactions



The following balances due from (to) related parties are as follows:



|                                         |  | December 31, |      
|---------------------------------------- |  | ------------ | -----
|                                         |  | 2002         |      
|Due from Whitney Leadership Group        |  | $            |     
|Due from RAW, Inc.                       |  |              | 4,089
|Due to Precision Software Services, Inc. |  |              |     
|Due to Trade Marketing, Inc.             |  |              |     
|Due to MRS Equity Corp                   |  |              |     
|                                         |  |              |      
|                                         |  | $            | 4,089
|                                         |  |              |      



The
Company has rented its corporate headquarters located in Cape Coral, Florida, since 1992 from the Chairman of the Board and pays rent on annual leases. Rentals under the related party lease were $78,844, $86,944 and $69,644 during 2002, 2001 and
2000, respectively. The Company leases approximately 8,700 square feet and the lease terminated in October 2002. The Company currently pays rent on a month-to-month basis.



MRS Equity Corp. provides certain products and services for Whitney Information Network, Inc. and Whitney
Information Network, Inc. provides MRS Equity Corp. with payroll services including leased employees. Whitney Information Network, Inc. provided payroll services to MRS Equity Corp. in the amounts of $145,190, $53,105 and $170,422 during 2002, 2001
and 2000, respectively. MRS Equity Corp. provided Whitney Information Network, Inc. with $678,325, $720,504 and $273,525 for product costs during 2002, 2001 and 2000, respectively. MRS Equity Corp. is a 100 percent subsidiary of Equity Corp.
Holdings, Inc. of which the Chairman of the Board of Whitney Information Network, Inc. owned a controlling interest prior to June 2002. In June 2002, an officer of the Company purchased the Chairman of the Boards controlling interest to become
the sole controlling interest in MRS Equity Corp.



Precision Software Services, Inc. is a company that develops and licenses software primarily for the real estate and small business industries and was acquired by the Company in 2001 (Note 1). Prior to November 2001, the Chairman of
the Board of Directors of Whitney Information Network, Inc. owned a majority interest in Precision Software Services. During 2002, 2001 (prior to the acquisition), and 2000, Precision Software Services provided Whitney Information Network, Inc. $0,
$371,644 and $378,525 in product cost, respectively. Precision Software Services sold products to Whitney Information Network, Inc. at a price less than the prices offered to third parties. Whitney Information Network, Inc. provided payroll services
to Precision Software Services in the amount of $0, $68,811 and $38,605 during 2002, 2001 and 2000, respectively.



Whitney Information Network, Inc. provided payroll services to Whitney Leadership Group, Inc. in the amount of $14,204, $0 and $80,956
during 2002, 2001 and 2000, respectively. During 2002, 2001 and 2000, Whitney Information Network made payments of $210,849, $279,313 and $230,476 for registration fees and commissions. The Chairman of the Board of Whitney Information Network, Inc.
is the President and Chief Operating Officer of Whitney Leadership Group, Inc.



33



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 3Related
Party Transactions (continued)



Corporation
Corp., formerly known as United States Fiduciary Corp, is a company which provides telemarketing services for Whitney Information Network, Inc. The Chairman of the Board of Directors and the Chief Financial Officer were also members of the board of
directors of Corporation Corp. During 2002, 2001 and 2000, Whitney Information Network, Inc. paid $0, $458,877 and $418,096 in commissions to Corporation Corp.



RAW, Inc. is a company owned by the Chairman of the Board of Whitney Information Network, Inc., which buys, sells and invests in real
property. During 2001,Whitney Information Network Inc. provided $10,869 in payroll services to RAW, Inc.



Those items above that are reasonably expected to be collected within one year are shown as current and those that are not expected to be
collected during the next year are shown as non-current.



Note 4Property and Equipment



Property and equipment consist of the following:



|                              |  | December 31, |           
|----------------------------- |  | ------------ | ----------
|                              |  | 2002         |           
|Building                      |  | $            | 3,093,460 
|Airplane                      |  |              | 2,114,474 
|Software                      |  |              | 1,500,639 
|Equipment                     |  |              | 774,608   
|Furniture and fixtures        |  |              | 369,934   
|Land                          |  |              | 1,395,571 
|Leasehold improvements        |  |              | 211,741   
|Construction in progress      |  |              |          
|                              |  |              |           
|                              |  |              | 9,460,427 
|Less accumulated depreciation |  |              | (1,054,057
|                              |  |              |           
|                              |  | $            | 8,406,370 
|                              |  |              |           



Depreciation expense for the periods ended December 31:



|2002 |  | $ | 587,209
|---- |  | - | -------
|2001 |  | $ | 292,522
|2000 |  | $ | 169,933



Intangible assets consist of the following:



|                              |  | December 31,
|----------------------------- |  | ------------
|                              |  | 2002        
|Customer list                 |  | $           
|Trademarks                    |  |             
|Loan costs                    |  |             
|                              |  |             
|                              |  |             
|Less accumulated amortization |  |             
|                              |  |             
|                              |  | $           
|                              |  |             



34



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 4Property
and Equipment (continued)



Amortization
expense for the periods ended December 31:



|2002 |  | $ | 11,111
|---- |  | - | ------
|2001 |  | $ |      
|2000 |  | $ |      



Future
amortization of intangibles is as follows:



|Year Ending December 31, |  | Total
|------------------------ |  | -----
|2003                     |  | $    
|2004                     |  |      
|2005                     |  |      
|2006                     |  |      
|2007                     |  |      
|Thereafter               |  |      
|                         |  |      
|                        
|                         |  | $    
|                         |  |      



Note 5Long-Term
Debt and Note PayableRelated Party



Long-term debt consists of:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | December 31, |          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | 2002         |          
|Note payable to seller of building, interest at a variable interest rate, adjusted
semi-annually based on the prime rate (8.0% total as of December 31, 2002) and shall not exceed 10% or fall below 8% during the first three years of the mortgage. Monthly interest-only payments of $9,000 are payable through December 2004 at which
time the note matures and all principal and accrued interest is due. Collateralized by real property. |  | $            | 450,000  
|                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Note payable to a finance company. Monthly principal and interest payments due beginning
in January 2003 through December 2018. Interest at the LIBOR rate plus 3.42% (4.87% total as of December 31, 2002). Collateralized by an airplane. The note is personally guaranteed (to $170,000) by the majority stockholder.                                                                                                                        |  |              | 1,200,000
|                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Note payable to the previous minority shareholder of Precision Software Services, Inc.
relating to the Companys acquisition. Principal and interest payments due beginning in January 2002. Interest at the prime rate plus 1.5% (5.75% total at December 31, 2002). The note matures in December 2003.                                                                                                                                        |  |              | 59,461   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |              |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |              | 1,709,461
|Less current portion                                                                                                                                                                                                                                                                                                                                                                                                                            |  |              | (103,051 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |              |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | $            | 1,606,410
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |              |          



35



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 5Long-Term
Debt and Note PayableRelated Party (continued)



|Note payablerelated party consists of:                                                                                                                                                                                                                                                                                                                       |  |              |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                                                                                                                                                                                              |  | December 31, |        
|                                                                                                                                                                                                                                                                                                                                                              |  | 2002         |         |   | 2001 |  
|Note payable to the previous majority shareholder of Precision Software Services, Inc.,
an officer and majority shareholder of the Company, relating to the Companys acquisition. Principal and interest payments due beginning in January 2002. Interest at the prime rate plus 1.5% (5.75% total at December 31, 2002). The note matures
in December 2003. |  | $            | 59,054  |   |      | $ | 125,000 |  
|Less current portion                                                                                                                                                                                                                                                                                                                                          |  |              | (59,054 | ) |      |   | (62,500 | )
|                                                                                                                                                                                                                                                                                                                                                              |  |              |         |   |      |   |         |  
|                                                                                                                                                                                                                                                                                                                                                              |  | $            |        |   |      | $ | 62,500  |  
|                                                                                                                                                                                                                                                                                                                                                              |  |              |         |   |      |   |         |  



Maturities of long-term obligations are as follows:



|Year Ending December 31, |  | Related Party Notes |        | Other Notes |   | Total    
|------------------------ |  | ------------------- | ------ | ----------- | - | ---------
|2003                     |  | $                   | 59,054 |             | $ | 103,051  
|2004                     |  |                     |       |             |   | 498,573  
|2005                     |  |                     |       |             |   | 52,341   
|2006                     |  |                     |       |             |   | 56,405   
|2007                     |  |                     |       |             |   | 60,784   
|Thereafter               |  |                     |       |             |   | 938,307  
|                         |  |                     |        |             |   |          
|                         |  | $                   | 59,054 |             | $ | 1,709,461
|                         |  |                     |        |             |   |          



Note
6Commitments and Contingencies



Operating Leases



The
Company leases the following properties: (1) its headquarters building in Cape Coral, Florida (Note 3) month-to-month; (2) its telemarketing facility in Draper, Utah; (3) its Whitney Canada location in Ontario; and (4) its Whitney UK location in
London. These leases expire from May 2003 to October 2006.



Rent expense for all operating leases was:



|Year Ending December 31, |  |  
|------------------------ |  | -
|2002                     |  | $
|2001                     |  | $
|2000                     |  | $



Future
minimum lease payments under these leases are approximately as follows:

|Year Ending December 31, |  |  
|------------------------ |  | -
|2003                     |  | $
|2004                     |  |  
|2005                     |  |  
|2006                     |  |  
|                         |  |  
|                         |  | $
|                         |  |  



36



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 6Commitments
and Contingencies (continued)



Litigation



The Company is not involved in any material
unasserted claims and action arising out of the normal course of its business that in the opinion of the Company, based upon knowledge of facts and advice of counsel, will result in a material adverse effect on the Companys financial position.



Other



The Company carries liability insurance coverage, which it
considers sufficient to meet regulatory and consumer requirements and to protect the Companys employees, assets and operations.



The Company, in the ordinary course of conducting its business, is subject to various state and federal requirements. In the opinion of
management, the Company is in compliance with these requirements.



Construction Agreement



In 2001, the Company entered into an agreement to construct a 7,000 square-foot international conference and training center in Costa Rica at a total estimated cost of $550,000. The Company had expenditures of approximately $714,450
and $105,000 through December 31, 2002 and 2001, respectively. This project was completed in the fourth quarter of 2002.



Credit Facilities



The Company has obtained two letters of credit, totaling $1,500,000, which expire on January 2004, and has available unused amounts
totaling $1,500,000 which are supported by certificates of deposit.



Note 7Stockholders Equity and Transactions



Stock Based Compensation Plans



The Companys stock option plans provide for the granting of stock options to key employees. Under the terms and conditions of the plans, any time between the grant date and two years of service,
the employee may purchase up to 25% of the option shares. After three years of continuous service, the employee may purchase all remaining option shares. All options expire ten years from the date of the grant.



The following table presents the activity for options
outstanding:



|                              |  | Options Related To A Plan |   |  | Weighted Average Exercise Price |      
|----------------------------- |  | ------------------------- | - |  | ------------------------------- | -----
|OutstandingDecember 31, 1999 |  | 787,800                   |   |  | $                               | 1.92 
|Granted                       |  | 385,000                   |   |  | $                               | 1.97 
|Forfeited/canceled            |  | (79,150                   | ) |  | $                               | (1.92
|                              |  |                           |   |  |                                 |      
|OutstandingDecember 31, 2000 |  | 1,093,650                 |   |  | $                               | 1.94 
|Granted                       |  | 10,000                    |   |  | $                               | 1.70 
|Forfeited/canceled            |  | (181,850                  | ) |  | $                               | (1.94
|                              |  |                           |   |  |                                 |      
|OutstandingDecember 31, 2001 |  | 921,800                   |   |  | $                               | 1.94 
|Granted                       |  | 651,750                   |   |  | $                               | 1.81 
|Forfeited/canceled            |  | (141,000                  | ) |  | $                               | (1.98
|Exercised                     |  | (26,375                   | ) |  | $                               | (2.13
|                              |  |                           |   |  |                                 |      
|OutstandingDecember 31, 2002 |  | 1,406,175                 |   |  | $                               | 1.93 
|                              |  |                           |   |  |                                 |      



37



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note
7Stockholders Equity and Transactions (continued)



Stock Based Compensation Plans (continued)



The following table presents the composition of options outstanding and exercisable:



|Range of Exercise Prices |  | Number of Options |  | Price* |      | Life*
|------------------------ |  | ----------------- |  | ------ | ---- | -----
|$1.70                    |  | 10,000            |  | $      | 1.70 |      
|$1.75                    |  | 45,000            |  | $      | 1.75 |      
|$1.81                    |  | 355,225           |  | $      | 1.81 |      
|$1.88                    |  | 288,800           |  | $      | 1.88 |      
|$2.00                    |  | 683,400           |  | $      | 2.00 |      
|$3.10                    |  | 23,750            |  | $      | 3.10 |      
|                         |  |                   |  |        |      |      
|$1.70 to $3.10           |  | 1,406,175         |  |        |      |      
|                         |  |                   |  |        |      |      

---

|* |  | Price and Life reflect the weighted average exercise price and weighted average remaining contractual life, respectively.
|- |  | -------------------------------------------------------------------------------------------------------------------------



The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation. Accordingly, no compensation cost has been recognized for the stock option plans. Had compensation cost for the Companys option plan been
determined based on the fair value at the grant date for awards consistent with the provisions of SFAS No. 123, the Companys net income (loss) and basic income (loss) per common share would have been changed to the pro forma amounts indicated
below:



|                                                 |  | For the Years Ended December 31, |          
|------------------------------------------------ |  | -------------------------------- | ---------
|                                                 |  | 2002                             |          
|Net income (loss)as reported                    |  | $                                | 6,229,740
|Net income (loss)pro forma                      |  | $                                | 5,425,539
|Basic income (loss) per common shareas reported |  | $                                | 0.78     
|Basic income (loss) per common sharepro forma   |  | $                                | 0.68     



The fair
value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used:



|                                              |  | For the Years Ended December 31,
|--------------------------------------------- |  | --------------------------------
|                                              |  | 2002                            
|Approximate risk free rate                    |  | 6.00%                           
|Average expected life                         |  | 10 years                        
|Dividend yield                                |  | 0%                              
|Volatility                                    |  | 154.00%                         
|                                             
|Estimated fair value of total options granted |  | $804,201                        



38



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 8Income
(Loss) Per Share



The following table sets
forth the computation for basic and diluted earnings per share:



|                                                                            |  | For the Years Ended December 31, |          
|--------------------------------------------------------------------------- |  | -------------------------------- | ---------
|                                                                            |  | 2002                             |          
|Numerator for diluted income (loss) per common share                        |  | $                                | 6,229,740
|                                                                            |  |                                  |          
|Denominator for basic earnings per shareweighted average shares            |  |                                  | 7,952,180
|Effect of dilutive securitiesoptions and warrants                          |  |                                  | 1,406,175
|                                                                            |  |                                  |          
|Denominator for diluted earnings per shareadjusted weighted average
shares |  |                                  | 9,358,355
|                                                                            |  |                                  |          
|Diluted income (loss) per common share                                      |  | $                                | 0.67     
|                                                                            |  |                                  |          



Where
the inclusion of potential common shares is anti-dilutive, such shares are excluded from the computation.



Note 9Business Segment Information



The Company and its subsidiaries operate primarily in only one business segment. The Companys revenues are generated through the sale of real estate seminars, programs and products. Only
approximately 2.3% of the Companys revenues are generated relating to investment trading related programs and products. The Company and each of its subsidiaries either directly participate in the real estate market or provide services to one
of the subsidiaries.



The Company does maintain
operations in foreign countries outside the United States. The following provides both revenues and long-lived asset values by location for the period and year ending December 31, 2002. Foreign operations prior to 2002 are not significant.



|Location       |  | Revenues |            | Long-Lived Assets
|-------------- |  | -------- | ---------- | -----------------
|United States  |  | $        | 57,091,029 |                  
|Canada         |  |          | 2,648,171  |                  
|United Kingdom |  |          | 2,406,037  |                  
|Costa Rica     |  |          |           |                  
|               |  |          |            |                  
|               |  | $        | 62,145,237 |                  
|               |  |          |            |                  



39



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 10Income
Taxes



At December 31, 2002, the Company had
net operating losses (NOL) of approximately $3,600,000 related to US federal, foreign and state jurisdictions. Utilization of the net operating losses, which expire at various times starting in the years 2003 through 2022, may be subject to certain
limitations under Section 382 of the Internal Revenue Code of 1986, as amended, and other limitations under state and foreign tax laws.



Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. Significant components of the Companys deferred tax asset are approximately as follows:



|                                                             |  | December 31, |           
|------------------------------------------------------------ |  | ------------ | ----------
|                                                             |  | 2002         |           
|Deferred tax asset from NOL carryforward                     |  | $            | 1,301,000 
|Deferred tax asset (liability) from deferred expense/revenue |  |              | (1,142,000
|                                                             |  |              |           
|Total deferred tax assets                                    |  |              | 159,000   
|Valuation allowance for deferred tax assets                  |  |              | (159,000  
|                                                             |  |              |           
|Net deferred tax asset                                       |  | $            |          
|                                                             |  |              |           



In 2002,
the increase in the Companys Net Operating Loss and the switch from a deferred tax asset to a deferred tax liability is due primarily to approximately $9,000,000 of the Companys deferred revenue at December 31, 2001 that was realized for
income tax purposes due to the fact that the revenue was deferred under an eighteen month contract and was not contractually obligated to be fulfilled in the next fiscal year. This revenue was realized for book purpose for the year ending December
31, 2002 and is a reduction to arrive at taxable income.



Note
11Employee Benefit Plan



The Company
has a 401(k) employee savings plan for eligible employees, which provides for a Company matching contribution determined each year at the discretion of the Company. No Company contributions were charged to operations for the years ended December 31,
2002, 2001, and 2000, respectively.



40



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WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note 12Summarized
Quarterly Results (Unaudited)



The following
table presents unaudited operating results for each quarter within the two most recent years. The Company believes that all necessary adjustments consisting only of normal recurring adjustments, have been included in the amounts stated below to
present fairly the following quarterly results when read in conjunction with the financial statements. Results of operations for any particular quarter are not necessarily indicative of results of operations for a full fiscal year.



|                                      |  | First Quarter |            | Second Quarter |   | Third Quarter |  | Fourth Quarter |           
|------------------------------------- |  | ------------- | ---------- | -------------- | - | ------------- |  | -------------- | ----------
|December 31, 2001                     |  |               |            |                |   |               |  |                |           
|Revenues                              |  | $             | 11,233,678 |                | $ | 11,950,654    |  | $              | 9,239,054 
|Operating expenses                    |  |               | 9,227,361  |                |   | 11,115,533    |  |                | 8,988,795 
|Gross profit (loss)                   |  |               | 2,006,317  |                |   | 835,121       |  |                | 250,259   
|Net income (loss)                     |  |               | 1,958,617  |                |   | 920,927       |  |                | 356,553   
|Basic income (loss) per share (1)     |  |               | 0.26       |                |   | 0.12          |  |                | 0.05      
|                                     
|December 31, 2002                     |  |               |            |                |   |               |  |                |           
|Revenues                              |  | $             | 15,453,018 |                | $ | 17,535,080    |  | $              | 13,875,257
|Operating expenses                    |  |               | 12,173,963 |                |   | 13,494,194    |  |                | 13,078,696
|Gross loss                            |  |               | 3,279,055  |                |   | 4,040,886     |  |                | 796,561   
|Net income (loss)                     |  |               | 3,371,041  |                |   | 2,763,941     |  |                | 672,169   
|Basic earnings (loss) per share (1)   |  |               | 0.43       |                |   | 0.35          |  |                | 0.08      
|Diluted earnings (loss) per share (1) |  |               | 0.36       |                |   | 0.30          |  |                | 0.07      

---

|(1) |  | Earnings per share are computed independently for each quarter and the full year based upon respective average shares outstanding. Therefore, the sum of the
quarterly net earnings per share amounts may not equal the annual amounts reported.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Note 13Subsequent Event (Unaudited)



In February 2003, the Company entered into an agreement with one of its officers to purchase all of the outstanding shares of Equity Corp.
Holdings, Inc. which owns MRS Equity Corp. (Note 3). The purchase price was $250,000. In addition, the Company also assumed a $4,750,000 note payable due to the Companys Chairman of the Board and majority shareholder. This liability arose from
the officers redemption of 90% ownership of Equity Corp. Holdings, Inc. of the Chairman of the Board and majority shareholder in June 2002.



In February 2003, the Company entered into an agreement with the Companys Chairman of the Board and majority shareholder to purchase
all of the outstanding shares of Whitney Leadership Group, Inc. (Note 3). The purchase price for this transaction was $1,200,000.



The Company expects these transactions to close in April 2003. Both agreements are subject to a number of contingencies, including due
diligence and a fairness opinion acceptable to the Companys legal counsel.



41



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



None



PART III



ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.



Officers and Directors



Information concerning each of our executive officers and directors is set forth below:



|Name               |  | Age |  | Position                                                                 
|------------------ |  | --- |  | -------------------------------------------------------------------------
|Russell A. Whitney |  | 47  |  | Chairman of the Board of Directors, Chief Executive Officer and President
|Ronald S. Simon    |  | 60  |  | Executive Vice President, Chief Financial Officer, Secretary and Director
|Nicholas S. Maturo |  | 55  |  | Chief Operating Officer                                                  
|Charles E. Miller  |  | 53  |  | Vice PresidentFinance                                                   
|John F. Kane       |  | 49  |  | Vice PresidentMarketing                                                 



Directors hold office for a period of one year from their election at the annual meeting of stockholders or until their successors are duly elected and qualified. Officers are elected by, and serve at the discretion of, the Board of
Directors.



Russell A. Whitney,
Chairman of the Board of Directors and Chief Executive Officer.Mr. Whitney is our founder and has been Chairman and Chief Executive Officer of our company and its predecessors since 1987. He is also Chief Executive Officer and a director of all
of our wholly-owned subsidiaries. Mr. Whitney is also an active real estate investor for his own account and has written and published three books on wealth building topics. Mr. Whitney devotes substantially all of his time to our business.



Ronald S. Simon, Executive Vice President,
Chief Financial Officer, Secretary and Director.Mr. Simon has been our Chief Financial Officer and a member of our Board of Directors since August 1998. Mr. Simon was a self-employed certified public accountant from 1987 until he joined us as
our Chief Financial Officer in June 1998. In June 2002, he was appointed our Executive Vice President. Mr. Simon holds a Bachelor of Science degree in accounting from the University of Illinois.



42



---



Nicholas S.
Maturo, Chief Operating Officer.Mr. Maturo joined us in September 2002 and became our Chief Operating Officer in January 2003. He was the Chief Operating Officer of Food Trader, Inc. from March 2000 to November 2002. From 1981 to January 2000,
he held a number of executive positions with Kraft Foods and was Chief Information Officer when he left Kraft.



Charles E. Miller, Vice PresidentFinance.Mr. Miller joined us in June 2002. From 1996 until May 2002, he was the Chief
Financial Officer for First Home Builders, a privately-held Florida-based home building company. Mr. Miller is a Certified Public Accountant and an attorney. He graduated in 1971 from Colgate University with a Bachelor of Arts degree and earned a
J.D. degree from Albany Law School in 1974.



John F. Kane, Vice PresidentMarketing.Mr. Kane has been the President of Precision Software Services, Inc., one of our wholly-owned subsidiaries since 1993. Precision develops real estate investment and other basic
business software and was purchased by us in November 2001. We appointed Mr. Kane our Vice President of Marketing in January 2003.



ITEM 11.    EXECUTIVE COMPENSATION



The following table provides certain summary information concerning compensation paid to our Chief Executive Officer and others for the
calendar years indicated below.



SUMMARY
COMPENSATION TABLE



|                                               |  | Annual Compensation |  | Long-Term Compensation Awards
|---------------------------------------------- |  | ------------------- |  | -----------------------------
|Name and Principal Position                    |  | Year                |  | Salary($)                    
|Russell A. Whitney, CEO                        |  | 2002                |  | 350,000                      
|                                               |  | 2001                |  | 250,000                      
|                                               |  | 2000                |  | 250,000                      
|Richard Brevoort, President (1)                |  | 2002                |  | 125,000                      
|                                               |  | 2001                |  | 100,000                      
|                                               |  | 2000                |  | 75,000                       
|Ronald S. Simon, Executive Vice-President, CFO |  | 2002                |  | 100,000                      
|                                               |  | 2001 2000           |  | 55,000 47,500                



|(1) |  | Mr. Brevoort passed away in September 2002.
|--- |  | -------------------------------------------



We currently pay Mr. Whitney a salary of $350,000 per year, together with bonuses to be granted in the discretion of the Board of
Directors, and customary employee benefits, including health insurance. Bonuses granted by the Board of Directors to Mr. Whitney are expected to be between 50% and 100% of his salary, depending upon our level of profitability. We do not have
employment agreements with Messrs. Simon, Maturo, Miller and Kane, who currently receive annual salaries of $180,000, $180,000, $120,000 and $120,000, respectively. We expect to enter into employment contracts with Messrs. Whitney, Simon, Maturo,
Miller and Kane, and to purchase key man life insurance upon Mr. Whitneys life, in the near future.





43



---



We intend to
institute a cash bonus plan which will be administered by the compensation committee of our Board of Directors. Under the bonus plan, employees, including all of our executive officers, except our Chief Executive Officer, may receive cash bonuses of
up to 50% of their salaries based upon a number of factors, including the meeting or exceeding of internally prepared budgets and forecasts, along with a number of subjective criteria.



The following table sets forth certain information regarding grants of stock options to Russell A. Whitney,
Richard Brevoort and Ronald S. Simon, the executive officers who received stock options during the years 1999 through 2002. The fair value of the grants have been estimated utilizing the Black-Scholes option pricing.



|Name                 |  | Number of Underlying Securities Options/SARs Granted 1999-2001 |     |  | Number of Underlying Securities Options/SARs Granted During Last 12 Months |  | Exercise or Base Price ($/Sh) (weighted average) |       | No. of Options Exercised |   | Expiration Date |                 | Grant Date Present Value |        
|-------------------- |  | -------------------------------------------------------------- | --- |  | -------------------------------------------------------------------------- |  | ------------------------------------------------ | ----- | ------------------------ | - | --------------- | --------------- | ------------------------ | -------
|Russell A. Whitney   |  | 76,000                                                         | (1) |  | 76,000                                                                     |  | $                                                | 1.31  |                          | 0 |                 | 04/2005-04/2008 |                          | 94,500 
|Richard Brevoort (2) |  | 143,000                                                        | (3) |  |                                                                           |  | $                                                | 1.934 |                          | 0 |                 | 08/200409/2008 |                          | 262,500
|Ronald S. Simon      |  | 293,000                                                        |     |  |                                                                           |  | $                                                | 1.919 |                          | 0 |                 | 08/200409/2008 |                          | 351,500



|(1) |  | Comprised of options granted to family members of Mr. Whitney.
|--- |  | --------------------------------------------------------------

|(2) |  | Mr. Brevoort passed away in September 2002.
|--- |  | -------------------------------------------

|(3) |  | Includes 25,600 options granted to family members of Mr. Brevoort. The remaining options are now held by Mr. Brevoorts estate.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Our present value computations were based upon the following assumptions: 115% volatility, ten year life, risk free rate of return of 6% and a 0% dividend yield.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table sets forth, on
an aggregated basis, each exercise of stock options (or tandem SARs) and freestanding SARs during the last completed fiscal year by each of the named executive officers and the fiscal year-end value of unexercised options and SARs.



|Name               |  | Shares Acquired on Exercise |  | Value Realized |  | # of Securities Underlying Unexercised Options/SARs at December 31,
2002 |  | Value of Unexercised In-The-Money Options/SARs at December 31,
2002
|------------------ |  | --------------------------- |  | -------------- |  | ------------------------------------------------------------------------ |  | -------------------------------------------------------------------
|Russell A. Whitney |  | 0                           |  | 0              |  | 76,000                                                                   |  | $                                                                  
|Richard Brevoort   |  | 0                           |  | 0              |  | 321,500                                                                  |  | $                                                                  
|Ronald S. Simon    |  | 0                           |  | 0              |  | 293,000                                                                  |  | $                                                                  



We have
not adopted any retirement, pension or profit sharing plans for the benefit of our officers or directors although we adopted our 1998 Stock Option Plan for the benefit of our officers, directors, employees and consultants. We also offer our
employees a 401(k) plan, although we do not make any contributions to the plan.



Compensation of Directors



Our current directors do not receive compensation for attending Board meetings. However, expenses incurred by our directors in attending Board meetings are reimbursed, and directors may receive stock options under our 1998 Stock
Option Plan in as yet undetermined amounts.





44



---



1998 Stock Option Plan



In 1998 we adopted a stock option plan
which provides for the grant of options intended to qualify as incentive stock options or nonqualified stock options within the meaning of Section 422 of the United States Internal Revenue Code of 1986 (the Code).
Incentive stock options are issuable only to employees.



The purposes of the Plan are to attract and retain the best available personnel, to provide additional incentives to our employees and to promote the success of our business.



We have reserved 2,187,500 shares of common stock for issuance
under the Plan, which is administered by the compensation committee of our board of directors. Under the Plan, the compensation committee determines which individuals will receive options, the time period during which the options may be partially or
fully exercised, the number of shares of common stock that may be purchased under each option and the option price. As of March 31, 2003 options to purchase 1,524,425 shares of common stock at exercise prices ranging from $1.70 per share to $3.70
per share were outstanding under the Plan, and 663,075 shares remained available for future option grants. Of these options, 828,800 have been issued to executive officers and directors at exercise prices ranging from $1.81 per share to $3.70 per
share.



The per share exercise price of the
common stock subject to options must not be less than the fair market value of the common stock on the date the option is granted. In the case of incentive stock options, the aggregate fair market value, determined as of the date the option is
granted, of the common stock that any person may purchase in any calendar year pursuant to the exercise of incentive stock options must not exceed $100,000. No person who owns, directly or indirectly, at the time of the granting of an incentive
stock option, more than 10% of the total combined voting power of all classes of our stock is eligible to receive incentive stock options under the Plan unless the option price is at least 110% of the fair market value of the common stock subject to
the option on the date of grant. The stock options are subject to anti-dilution provisions in the event of stock splits, stock dividends and the like.



No incentive stock options are transferable by an optionee other than by will or the laws of descent and distribution, and during the
lifetime of an optionee, the option is only exercisable by the optionee. The exercise date of an option granted under the Plan must not be later than ten years from the date of grant. Any options that expire unexercised or that terminate upon an
optionees ceasing to be employed by us will become available once again for issuance. Shares issued upon exercise of an option rank equally with other shares then outstanding. No options have been exercised under the Plan.



ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The following table sets forth the common stock ownership of each person known by us to be the beneficial owner of five percent or more of our common stock, by certain of our officers, by each of our directors individually and by all
officers and directors as a group. Each person holds record and beneficial ownership and has sole voting and investment power with



45



---



respect to the shares of
common stock shown. The address of all of these individuals is in our care at 1612 Cape Coral Parkway, Suite A, Cape Coral, Florida 33902.



|Name Of Owner                                     |  | Number of Shares |  | Position                                                                  |  | Percent of Class(1) |  
|------------------------------------------------- |  | ---------------- |  | ------------------------------------------------------------------------- |  | ------------------- | -
|Russell A. Whitney (2)                            |  | 6,706,600        |  | Chairman of the Board of Directors and Chief Executive Officer            |  | 81.9                | %
|Ronald S. Simon (3)                               |  | 378,125          |  | Executive Vice President, Chief Financial Officer, Secretary and Director |  | 3.9                 | %
|All officers and directors as a group (5 persons) |  | 7,234,275        |  |                                                                           |  | 84.1                | %



|(1) |  | Includes stock options exercisable within 60 days from the date hereof.
|--- |  | -----------------------------------------------------------------------

|(2) |  | Comprised of 6,615,600 shares held jointly by Mr. Whitney and his wife and 90,000 stock options held by members of Mr. Whitneys family.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Comprised of 35,125 shares and 343,000 stock options.
|--- |  | -----------------------------------------------------



ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



We lease 2,242 square feet of office space at 4818 Coronado Parkway, Cape Coral, Florida 33904 from Russell
A. Whitney, our Chairman and Chief Executive Officer, on a monthly basis without a written lease for $2,242 per month. We have elected to lease the property on a monthly basis without a written lease as we are uncertain of whether we will continue
to use this space, considering we recently purchased our own office building in Cape Coral and may move into additional space in that building when current leases to nonaffiliates expire.



We provide payroll services to Whitney Leadership Group, Inc., a company owned and controlled by Mr. Whitney
and, in the past, Whitney Leadership has lent money to us. As of December 31, 2002 no amounts were owed to or from Whitney Leadership.



MRS Equity Corp. provides software products and services to us which we market that allows mortgagees to pay their mortgages every two
weeks rather than monthly, thereby reducing mortgage payments over the life of the mortgage and increasing principal reductions. We provide MRS with payroll services. MRS is a wholly-owned subsidiary of Equity Corp. Holdings, Inc., which is owned
and controlled by Mr. John F. Kane, our Vice President of Marketing.



Precision Software Services, Inc. develops and licenses software to us. Mr. Whitney owned a controlling interest in Precision until we acquired all of its outstanding shares in November 2001 for 333,334 shares of our common
stock valued at $1.50 per share.



Whitney
Leadership owns the rights to our television real estate infomercials, a number of our educational books and tapes and one of our course offerings, for which we pay Whitney Leadership $1.00 for each person who registers for our free informational
training sessions.



Corporation Company of
Nevada, Inc. provides entity formation services to us. Mr.



46



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Whitney and Mr. Simon were
directors of that company until the fourth quarter of 2001.



The dollar amount of products which we purchased from MRS and Precision Software Services is as follows:



|                                  |  | 2002 |         | 2001 |   | 2000   
|--------------------------------- |  | ---- | ------- | ---- | - | -------
|MRS Equity Corp.                  |  | $    | 678,325 |      | $ | 720,504
|Precision Software Services, Inc. |  | $    | 0       |      | $ | 371,644



Fees we
paid to Whitney Leadership and Corporation Company are as follows:



|                                    |  | 2002 |         | 2001 |   | 2000   
|----------------------------------- |  | ---- | ------- | ---- | - | -------
|Whitney Leadership Group, Inc.      |  | $    | 210,849 |      | $ | 279,313
|Corporation Company of Nevada, Inc. |  | $    | 0       |      | $ | 458,877



Payroll
service fees we received from affiliates are as follows:



|                                  |  | 2002 |         | 2001 |   | 2000  
|--------------------------------- |  | ---- | ------- | ---- | - | ------
|MRS Equity Corp.                  |  | $    | 145,190 |      | $ | 53,105
|Precision Software Services, Inc. |  | $    | 0       |      | $ | 68,811
|Whitney Leadership Group, Inc.    |  | $    | 14,204  |      | $ | 0     



In
September 2001, we purchased for $212,500 a 20% interest in Rancho Monterey, S.A., a Costa Rican company organized in May 2001 to develop unimproved real estate in Costa Rica. Prior to our investment, Rancho Monterey was owned by four persons,
comprised of three nonaffiliated persons and Mr. Whitney, each of whom owned 25% of Rancho Monterey. We paid the same price for our interest in Rancho Monterey as the other four persons paid. We also own 16.67% of Monterey Development, S.A., a
Panamanian corporation which manages the Rancho Monterey development. Mr. Whitney also owns a 16.67% interest in Monterey Development.



In November 2001 we purchased all of the outstanding common stock of Precision Software Services, Inc. from Mr. Whitney and John F. Kane,
who subsequently became one of our executive officers, in exchange for 170,000 shares and 163,324 shares, respectively, of our common stock. Prior to the purchase, Precision developed and licensed educational software for us. Precision continues to
develop software for us as a wholly-owned subsidiary.



In February 2003, we entered into an agreement with John F. Kane, our Vice President of Marketing, to purchase all of the outstanding shares of Equity Corp. Holdings, Inc. which owns MRS Equity Corp. for a purchase price of $250,000,
comprised of $62,500 and 62,500 shares of our common stock at closing and $62,500 payable one year from the closing date evidenced by a promissory note bearing interest at 7% per annum. We also agreed to assume and pay a promissory note issued to
Mr. Whitney by Equity Corp. on June 1, 2002 in the amount of $4,750,000 payable $1,000,000 on February 23, 2003, $1,000,000 on February 23, 2004 and $550,000 payable on each of February 23, 2005 through February 23, 2009. The unpaid balance bears
interest at 7% per annum. Equity Corp. incurred this $4,750,000 obligation when it elected to redeem all of Mr. Whitneys stock ownership in Equity Corp., which amounted to 90% of the outstanding stock of Equity Corp., as of June 1, 2002. We
expect that the transaction with Mr. Kane will close in the second quarter of 2003 and is subject to a number of contingencies, including due diligence on our part and a fairness opinion acceptable to our counsel and us.



47



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In February
2003, we entered into an agreement to purchase all of the outstanding common stock of Whitney Leadership Group, Inc. from Mr. Whitney and his wife, for a purchase price of $1,200,000, payable $300,000 at closing and $300,000 thereafter for each of
the following three years. The outstanding balance will be evidenced by a promissory note bearing interest at 7% per annum. We expect the transaction will close in the second quarter of 2003 and is subject to a number of contingencies, including due
diligence on our part and a fairness opinion acceptable to our counsel and us.



Historically, our Board of Directors has been composed solely of Messrs. Whitney and Simon who are responsible for setting the compensation of all of our executive officers, including Messrs. Whitney
and Simon.



In our view, the terms of the
transactions described above are no less favorable than could have been obtained from independent third parties.



ITEM 14.    CONTROLS AND PROCEDURES



Our principal executive officers have concluded, based upon their evaluation as of February 28, 2003, that (i) our controls and procedures
are adequate to ensure that material information relating to us and our subsidiaries has been made known to our principal executive officers and (ii) there are no significant deficiencies in the design and operation of such controls which could
adversely affect our ability to record, process, summarize or report financial data.



PART IV



ITEM 15.    EXHIBITS AND REPORTS ON FORM 8-K.



|(a) |  | No reports on Form 8K were filed during the last quarter of the period covered by this Report.
|--- |  | ----------------------------------------------------------------------------------------------



|(b) |  | Exhibits
|--- |  | --------



|Exhibit No. |  | Description                                   
|----------- |  | ----------------------------------------------
|           
|3.1*        |  | Articles of Incorporation.                    
|           
|3.2*        |  | Bylaws.                                       
|           
|3.3*        |  | Amended Articles of Incorporation             
|           
|3.4*        |  | Amended Articles of Incorporation             
|           
|4.1*        |  | Specimen Stock Certificate.                   
|           
|21          |  | Whitney Information Network, Inc. Subsidiaries
|           
|27.1*       |  | Financial Data Schedule                       
|           
|99.1*       |  | Class A Warrant Agreement                     
|           
|99.2*       |  | Class B Warrant Agreement                     
|           
|99.3*       |  | Non-Qualified Incentive Stock Option Plan     
|           
|99.4*       |  | Office Lease                                  
|           
|99.5        |  | Certification of Periodic Report              

---

|* |  | Incorporated by reference to the Registrants Registration Statement on Form 10SB12G (SEC File No. 000-27403).
|- |  | --------------------------------------------------------------------------------------------------------------



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SIGNATURES



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



|                      |  |  |  | WHITNEY INFORMATION NETWORK, INC.
|--------------------- |  |  |  | ---------------------------------
|                     
|Dated: April 14, 2003 |  |  |  | By:                              
|                      |  |  |  |                                  



In
accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:



|Signature                                   |  | Title                                                                                        |  | Date          
|------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | --------------
|                                           
|/s/    RUSSELL A.
WHITNEYRussell A. Whitney |  | Chairman of the Board of Directors and Chief Executive Officer                               |  | April 14, 2003
|                                           
|/s/    RONALD S.
SIMONRonald S. Simon       |  | Executive Vice President, Chief Financial Officer, Principal Accounting Officer and
Director |  | April 14, 2003



49



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CERTIFICATION OF PERIODIC REPORT



We, Russell A. Whitney and Ronald S. Simon certify that:



1.    We have reviewed this annual report on Form 10-K of Whitney Information Network, Inc. (registrant) for the year ended December 31, 2002.



2.    Based on our knowledge, this annual
report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this annual report;



3.    Based on our knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this annual report;



4.    We are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-4 and 15d-14) for the registrant and we have:



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



5.    We have
disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



6.    We have
indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



|                    
|--------------------
|Date: April 14, 2003
|                    
|                    
|                    
|                    







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