<PAGE>   1


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB


[x]      Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the fiscal year ended December 31, 1997.

[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from ________ to
         ________

                           COMMISSION FILE NO. 0-24812

                            BRASSIE GOLF CORPORATION
           -----------------------------------------------------------
           (Name of small business issuer as specified in its charter)


                  Delaware                                 56-1781650
      ---------------------------------                -------------------
        (State or other jurisdiction                    (I.R.S. Employer
      of incorporation or organization)                Identification No.)

                201 N. Franklin Street, Suite 200, Tampa, Florida
                -------------------------------------------------
                    (Address of principal executive offices)


                                      33602
                                   ----------
                                   (Zip Code)


                                 (813) 222-0611
                           ---------------------------
                           (Issuer's telephone number)

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


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

                          Common Stock, $.001 Par Value
                          -----------------------------
                                (Title of class)


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 [ ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B in this form and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

         The issuer's revenues for its most recent fiscal year: $4,093,599.

         The aggregate market value at March 25, 1998 of shares of the Common
Stock held by non-affiliates of the issuer was $16,770,066 based upon the
closing price of the Common Stock in the NASDAQ System (as reported by the
National Quotation Bureau, Inc.). Solely for the purpose of this calculation,
shares held by the principal shareholders named in Item 12 hereof, as well as
shares held by directors and officers of the Registrant, have been excluded.
Such exclusion should not be deemed a determination or an admission by the
issuer that such shareholders or individuals are, in fact, affiliates of the
issuer.

         On March 25, 1998, there were 48,343,526 shares of the Registrant's
Common Stock $.001 par value and 2,040 shares of the Registrant's Preferred
Stock, $.001 par value outstanding.

                       Documents Incorporated by Reference
                       -----------------------------------

Portions of the Proxy Statement for the annual shareholders meeting to be held
May 7, 1998 are incorporated by reference into Part III.

Transitional small business disclosure format  Yes  [ ]   No  [X}



<PAGE>   2



                            BRASSIE GOLF CORPORATION
                                   FORM 10-KSB
                          YEAR ENDED DECEMBER 31, 1997

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                               Page
<S>      <C>       <C>                                                                         <C>
PART I

         ITEM 1.   Description of Business.....................................................  3
         ITEM 2.   Description of Property..................................................... 14
         ITEM 3.   Legal Proceedings........................................................... 15
         ITEM 4.   Submission of Matters to a Vote of Security-Holders......................... 17

PART II

         ITEM 5.   Market for the Common Equity and Related Stockholder Matters................ 17
         ITEM 6.   Management's Discussion and Analysis........................................ 18
         ITEM 7.   Financial Statements........................................................ 24
         ITEM 8.   Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosure....................................... 41

PART III

         ITEM 9.   Directors, Executive Officers, Promoters and Control Persons;
                     Compliance with Section 16(a) of The Exchange Act......................... 42
         ITEM 10.  Executive Compensation...................................................... 42
         ITEM 11.  Security Ownership of Certain Beneficial Owners and Management.............. 42
         ITEM 12.  Certain Relationships and Related Transactions.............................. 42
         ITEM 13.  Exhibits, List and Reports on Form 8-K...................................... 42

SIGNATURES..................................................................................... 51
</TABLE>

                                        2

<PAGE>   3



                                     PART I

ITEM 1.       DESCRIPTION OF BUSINESS

A.  CORPORATE HISTORY

              Brassie Golf Corporation, a Delaware corporation (the "Company"),
together with its predecessors and subsidiaries, has engaged, since August 1988,
in the acquisition, design, construction, operation and management of private,
semi-private and daily-fee (i.e., "public") golf courses in the United States
and the sale of golf-related consumer products.

              The Company was incorporated in Delaware on November 12, 1991
under the name "Longview Golf Corporation" as a holding company to acquire
majority interests in two corporations (one of which is now an operating
subsidiary of the Company), each of which was then developing a golf course. On
November 14, 1991, the Company entered into an Agreement and Plan of
Reorganization (the "Reorganization") with the shareholders of both The Gauntlet
at St. James, Inc. (a North Carolina corporation formerly known as Longview Golf
Corporation) ("GSJ") and The Gauntlet at Laurel Valley, Inc. (formerly known as
Laurel Valley Golf Corporation) ("GLV") pursuant to which the Company acquired
all of the outstanding shares of GSJ and GLV except those shares owned,
respectively, by Canadian PT Limited Partnership (a limited partnership
comprising three pension funds and referred to herein as "PT Partnership") and
Edmonton Pipe Industry Pension Trust Fund (referred to herein as the "EPI
Pension Fund").

              On September 18, 1992, the Company changed its name from "Longview
Golf Corporation" to "Brassie Golf Holdings, Ltd." On March 29, 1993, the
Company changed its name from "Brassie Golf Holdings, Ltd." to "Brassie Golf
Corporation" and increased its authorized capital to 25,000,000 shares of Common
Stock, $.001 par value per share ("Common Stock"), and 1,000,000 shares of
Preferred Stock, $.001 par value per share ("Preferred Stock"). On July 18,
1994, the Company increased the number of authorized shares of Common Stock to
50,000,000 shares.

              REORGANIZATION WITH HALE IRWIN GOLF SERVICES, INC. On May 16,
1994, the Company acquired 100% of the capital stock of Hale Irwin Golf
Services, Inc. ("HIGSI"), an international golf course design, development and
management company based in St. Louis, Missouri, in exchange for 1,250,000
shares of the Company's Common Stock in a stock-for-stock reorganization (the
"Reorganization"). HIGSI, a Missouri corporation incorporated on October 28,
1986, was founded by Hale S. Irwin, a golf course designer, PGA TOUR
professional and Life Member of the Professional Golf Association of America,
and Richard J. Stahlhuth, a golf course owner and developer. HIGSI had two
operating divisions -- Hale Irwin Golf Design (the "Design Division") and Hale
Irwin Golf Management (the "Management Division"). On September 10, 1994,
HIGSI's operations were combined with the Company's and the Company's principal
executive office was moved from Southport, North Carolina to St. Louis,
Missouri. Messrs. Irwin and Stahlhuth became members of the Board of Directors
of the Company. Mr. Irwin was the President of the Design Division until August
19, 1996, at which time he tendered his resignation as a Director and Officer of
the Company. Mr. Stahlhuth was President of the Company until January 17, 1995,
at which time he tendered his resignation as a Director and Officer of the
Company.

                                        3

<PAGE>   4




              On May 16, 1997, Mr. Irwin's employment agreement with the Company
expired. The Company and Mr. Irwin chose not to renew the agreement and all
design contracts were sold by the Company to Mr. Irwin's new design company. See
Item 1.b. "Golf Course Design Services."

              MERGER AND REORGANIZATION WITH SUMMIT GOLF CORPORATION. On June
30, 1995, the Company acquired all the issued and outstanding shares of Summit
Golf Corporation, a Florida corporation ("Summit"), through the consummation of
an Agreement of Merger and Reorganization (the "Agreement") whereby the
Company's newly incorporated Florida subsidiary, Brasmit Golf Corporation
("Brasmit"), merged with Summit, thereby simultaneously vesting Summit
shareholders with the right to exchange their Summit shares for 1,875,000 newly
issued common shares, $.001 par value (the "Common Stock") of the Company, which
as a result were then issued. Copies of the Agreement, Amendment No.1 thereto,
and a Pre-Closing Agreement in connection with the transaction were filed as
Exhibits 2.1, 2.2 and 2.3 respectively to the Company's Form 8-K filed July 6,
1995 and are incorporated herein by reference. Additional consideration paid by
the Company comprised 375,000 shares of newly issued subordinated redeemable
preferred stock with a par value of $.001 per share (each share has a stated
value of $10.00 and is convertible into five shares of Common Stock; the
"Preferred Stock"), 500,000 five-year warrants exercisable at $2.50 per share
for the first three (3) years and $3.25 per share for the next two years,
$275,854 cash, and $224,146 in promissory notes. The Company's Certificate of
Designations, Preferences and Rights of Junior Non-Cumulative Redeemable
Convertible Preferred Stock setting the qualities of the Preferred Stock was
filed as an Exhibit to the Company's report on Form 10-Q filed November 14, 1995
and is incorporated herein by reference.

              Pursuant to the Articles of Merger filed pursuant to the
Agreement, Brasmit was the surviving corporation and its acquired assets include
(1) all the shares of Club Operations and Property Management, Inc. ("COPM"), a
Florida corporation based in Tallahassee which provided consulting services to
or managed, on the effective date of the merger, a portfolio of 44 facilities,
including 39 private, semi-private and daily-fee golf courses in 14 states
throughout the U.S. and five courses in Mexico; (2) all of Summit's previously
acquired assets of Resort Golf Clubs International, Inc. ("RGCI") including the
RGCI 1995 Marketing Plan which the Company intended eventually to develop and
implement in connection with its interval membership and golf villa programs;
and (3) Summit Golf Properties, Inc., an inactive Delaware corporation.

              Following the merger on June 30, 1995, William Horne, Tom
Richardson and Lance McNeill were nominated and elected as Directors at the
Company's Annual Meeting of Shareholders and appointed Officers of the Company
with the following responsibilities:

  William E. Horne      -  President and Chief Executive Officer
  Thomas K. Richardson  -  Senior Vice President - Operations and Chief
                              Operating Officer
  Lance McNeill         -  Senior Vice President - Acquisitions & Development

              Gary A. Nacht resigned as interim President and was appointed
Executive Vice President of the Company and acted as its Chief Financial Officer
until his resignation in all capacities on January 30, 1996.


                                        4

<PAGE>   5



              To fund the cash portion of the transaction, the Company utilized
a portion of the proceeds received from a subsidiary's debt repayment which
repayment was funded by surplus proceeds from the subsidiary's May 1995
refinancing of its NationsBank first mortgage on its golf course in Southport,
North Carolina. (See Item 1.c.1. "The Company's Golf Courses - The Gauntlet at
St. James").

              Effective September 4, 1995, the Company's St. Louis, Missouri and
Southport, North Carolina corporate offices were, simultaneously with COPM's
move from Tallahassee, relocated to leased premises at the Company's new
corporate headquarters in Tampa, Florida. (See Item 2. "Description of Property"
for information regarding the Company's office facilities.)

              In connection with the purchase of the shares and assets described
above, the Company entered into employment agreements (the "Employment
Agreements") with Mr. Horne and Mr. Richardson. Copies of the Employment
Agreements were filed as Exhibits 2.4 and 2.5 respectively to the Company's Form
8-K filed July 6, 1995 and are incorporated herein by reference. The Employment
Agreements contained non-competition provisions and provisions for the
reimbursement of expenses, an automobile allowance, disability and other
customary benefits and are further described hereafter (See Item 12. "Certain
Relationships and Related Transactions.")  Each of the Employment Agreements
were terminated during the year ended December 31, 1997.

              In connection with Mr. Horne's termination, the Company purchased
all preferred stock held by Mr. Horne for $211,000.


B. GENERAL.

              The Company's principal business has historically been the
ownership, development and operation of golf courses. During the year ended
December 31, 1997, the Company sold one of its golf courses, its design
business ("HIGSI"), Summit, and transferred operating control of its two
minority owned golf courses over to its partner, EPI Pension Fund. Until its
disposition of HIGSI and Summit, the Company also provided golf course design
and management services to others in exchange for design and management fees.
During the year ended December 31, 1997, the design and management service
subsidiaries were sold and revenues for each are included through their
respective sale dates.

              On June 2, 1997, Joseph R. Cellura was appointed Chairman of the
Board and Chief Executive Officer of the Company.

              On September 2, 1997, Clifford F. Bagnall was appointed Chief
Operating Officer and Secretary of the Company.

              On December 1, 1997, Jeremiah M. Daly became President of the
Company and was elected to the Board of Directors.

              Messrs. Cellura, Bagnall and Daly all entered into long-term
employment agreements with the Company. Copies of the Employment Agreements are
attached as Exhibit 10.61, 10.62, and 10.66, respectively.














                                        5

<PAGE>   6



              OWNERSHIP AND OPERATION OF GOLF COURSES.

              The Company's business plan was to expand, by acquisition and
development, its portfolio of golf courses primarily by capitalizing on the
present and projected need for quality golf courses in markets where management
believed (i) demand exceeded supply and (ii) buying power, integrated operating
systems and national account management can generate significant economies of
scale. The Company, through its subsidiaries, currently holds ownership
interests in three operating golf courses which are located in South Carolina
and Virginia (see Item 1.c. "The Company's Golf Courses"). All of the courses in
which the Company has an ownership interest are open to the general public for
daily-fee play at normal greens fees ranging from $15.00 to $60.00 per round
(including cart fees) depending upon the time of year, location of the course
and competitive conditions. For a more complete description of the Company's
current facilities, see Item 1.c. "The Company's Golf Courses."

              Sale of Resident Memberships. As more fully described below, by
agreement with the developer of the residential development contiguous to the
St. James golf course, initial membership fees were paid to the Company, on
behalf of the purchasing resident, by the developer upon the closing of each lot
sale. These "resident" members are entitled to preferential tee times generally
unavailable to the daily-fee player from other facilities. The bylaws of the
residential development at St. James limit the number of "resident" memberships
(and certain "resident" privileges) that may be sold to and/or activated by lot
owners. The Company sold The Gauntlet at St. James Golf Course on November 13,
1997, and all resident memberships terminated going forward. See Item 1.c.1.
"The Company's Golf Courses -- The Gauntlet at St. James" for a further
discussion on the limitation of the sale of such "resident" memberships.

              Competitive Advantage. The Company's management seeks to provide
high quality golf play, superior pro shop equipment and clothing lines and
friendly service. Quality golf play is achieved by striving for the highest
standards of course maintenance while utilizing golf course designs by P.B. Dye
(son of golf course architect Pete Dye).

              In connection with its due diligence and market evaluation
activities for prospective acquisition and development opportunities, the
Company typically performs a market analysis of both the location and the
resident and tourist population, an examination of all existing facilities,
equipment and inventory, a review of an up-to-date property survey and Phase I
Environmental Audit, an examination of permits, variances and required approvals
for the development and/or operation of the golf course, an investigation of the
seller's or developer's financial history, an inspection of infrastructure and
improvements, which includes roads, utility services, sewer, water and easements
and an analysis of administrative changes and/or capital improvements required
to bring the facility in line with the Company's level of service and
operational quality.

              The Company estimates that in connection with due diligence,
market evaluation and deposit expenditures, it has incurred expenses of
approximately $230,000 and $281,000 for the years ended December 31, 1997 and
1996, respectively. The Company aggressively pursued opportunities to acquire
and/or develop golf courses and other predevelopment opportunities during both
years.


                                        6

<PAGE>   7



              Competition with the Company's Golf Course Operations.  The
Company's courses face substantial competition for the business of the local and
tourist golfer. Competitors for daily-fee play include other public and private
golf courses within each course's region. For each of the Company's courses,
there are numerous competitive courses within close proximity. For example, the
Myrtle Beach area has approximately one hundred 18-hole courses within a
ninety-minute drive.

              Courses competitive with those of the Company generally have
on-site pro shops. Such shops, together with sporting goods stores and clothing
stores within each course's market vicinity, are the Company's principal
competitors with respect to product sales.

              Seasonality. In operating its courses, the Company's revenues are
directly affected by the seasonal tourist trade, the weather, and the effects of
the local economy. For example, play often increases during the autumn and
spring months at its courses located in South Carolina, may cease during the
winter months at its course located in Virginia, and decreases at all courses
during unseasonably hot weather.

              Under the terms of the Agreement and Plan of Reorganization
between the Company and the former shareholders of HIGSI, the Company was
granted the exclusive right to use the following trade names: "Hale Irwin Golf
Services," "Hale Irwin Golf Management" and "Hale Irwin Golf Design." The
Company's right to use these names expired on May 16, 1997, and therefore the
Company will no longer use Mr. Irwin's name in connection with its business.

              Government Regulation Relating to the Environment. Two of the
three golf courses in which the Company has an ownership interest were developed
by the Company. During the construction of golf courses the Company must be
concerned with protecting land designated as "wetlands" and other development
and land use restrictions. Because Phase I environmental audits and permits for
the development sites have been procured in the past by the developers, the
Company has not been required to expend substantial funds on an annual basis in
complying with federal, state and local provisions relating to the environment.
There can be no assurance, however, that future compliance expenditures incurred
by the Company will not be substantial, or that necessary permits and/or
licenses will be granted.

              Additionally, operations at the Company's golf courses involve the
use and storage of various hazardous materials such as herbicides, pesticides,
fertilizers, motor oil and gasoline. Various federal, state and local laws,
ordinances and regulations control the storage, use and discharge of such
materials. The Company believes that it is in substantial compliance with all
such laws, ordinances and regulations applicable to its storage and use of such
materials and does not currently incur substantial sums relating to compliance.
However, property owners and users are generally

                                        7

<PAGE>   8



responsible for all environmental conditions present on such property and for
any discharge of any hazardous substances thereon, regardless of knowledge or
responsibility therefor. Consequently, there can be no assurance that the
Company will not in the future incur substantial sums in connection with any
such condition or future discharge.

              GOLF COURSE DESIGN SERVICES.

              The Company derived revenue from the design of golf courses for
others through its wholly-owned golf course design division, HIGSI. Hale Irwin
previously served as president of the Company's Design Division and was
primarily responsible for the golf course design projects undertaken by the
Company.

              On May 16, 1997, Mr. Irwin's three-year employment agreement with
the Company expired. Such employment agreement governed Mr. Irwin's employment
as president of HIGSI, which was purchased by the Company on May 16, 1994. Mr.
Irwin informed the Company that he did not intend to renew the employment
agreement upon its expiration in order to pursue golf course design
independently. In addition, the Company and Mr. Irwin reached an agreement
whereby the Company sold HIGSI to Mr. Irwin for a portion of the earnings to be
received on design contracts the Company was then currently negotiating with
clients, as well as a percentage of revenues on future design contracts procured
by the Company. As HIGSI has been less profitable than anticipated since its
acquisition by the Company in May 1994, the Company believes this agreement will
improve the financial results of the Company compared to previous years. The
Company derived $110,000 in total revenues from its golf course design services
in 1997.

              GOLF COURSE MANAGEMENT SERVICES.

              The Company also derived revenue through Brassie Golf Management
Services, Inc. ("BGMS") and COPM (subsidiaries of the Company and collectively
referred to as the "Management Division") from operations relating to the
day-to-day management of golf courses for others. As of July 15, 1997, the
Management Division was sold.

              EMPLOYEES.

              As of December 31, 1997, the Company and its subsidiaries had 43
employees and consultants. As of March 15, 1998, total employees had increased
to 46. No employees of the Company are members of any union or collective
bargaining agreement.

C.  THE COMPANY'S GOLF COURSES.

              As of December 31, 1997, the Company had ownership interests in
three golf courses: The Gauntlet at Curtis Park, The Gauntlet at Laurel Valley,
and The Gauntlet at Myrtle West. The Company's fourth golf course, The Gauntlet
at St. James, was sold on November 13, 1997.

              In the late fall of 1995, the Company engaged in discussions with
its three pension fund partners, EPI Pension Fund, UA Canadian Pipeline Industry
National Pension Plan ("UA Pension Fund") and Canadian Limited PT Partnership
("PT Partnership") (the "Pension Funds") in the four courses in which the
Company had ownership interests ("The Gauntlet Courses") with a view to modeling
a future joint venture and reorganizing existing relationships to enhance the
Company's cash flows and profitability.  During February 1996, the parties
established their mutual intentions and on February 21, 1996, the parties
memorialized their intentions in a document captioned an "agreement in
principle" (the "AIP"). In the second quarter of 1996, the Company reached an
agreement with two of its pension fund partners, UA Pension Fund and PT
Partnership, relating to two of the golf courses, The Gauntlet at Curtis Park
and The Gauntlet at St. James, respectively. However, the Company was unable to
reach a satisfactory agreement with EPI Pension Fund with respect to the other
two golf courses, The Gauntlet at Laurel Valley and The Gauntlet at Myrtle
Beach. Certain provisions of the AIP contemplate alternative ownership scenarios
whereby the Pension Funds would assume primary responsibility for The Gauntlet
Courses. These alternative ownership scenarios have been implemented for The
Gauntlet at Laurel Valley and The Gauntlet at Myrtle West (see Item 3, "Legal
Proceedings").

                                        8

<PAGE>   9



              The Gauntlet at Curtis Park is owned through a wholly-owned
subsidiary of the Company. The Gauntlet at Laurel Valley and The Gauntlet at
Myrtle West are each owned through separate subsidiaries (the "GLV and GMW
Subsidiaries").

              The GLV and GMW Subsidiaries are parties to and the subject of
pending litigation between the Company and EPI Pension Fund. As a result of a
preliminary injunction granted by the Circuit Court in and for Hillsborough
County, Florida on July 12, 1996, the Company transferred 45% of the outstanding
equity in both of the GLV and GMW Subsidiaries to EPI Pension Fund. As a result
of this transfer, the Company's ownership was reduced to, as described above,
30% of the outstanding equity in each of these two subsidiaries. For further
discussion of the Company's pending litigation with EPI Pension Fund see Item 3.
"Legal Proceedings." Through this reorganization, EPI Pension Fund has increased
its ownership interest in and financial commitment to these two golf courses
and, as a result, the Company significantly reduced all short and long term
obligations associated with the ownership of these two golf courses.

              1.      THE GAUNTLET AT ST. JAMES,
                      BRUNSWICK COUNTY, SOUTHPORT, NORTH CAROLINA

              The Gauntlet at St. James (formerly known as Longview Country
Club) was sold on November 13, 1997 and is a 200 acre, 18-hole, daily-fee golf
course located in the St. James Plantation real estate development in Southport,
North Carolina, which is 30 miles south of Wilmington, North Carolina and 35
miles north of Myrtle Beach, South Carolina. The golf course was designed by
P.B. Dye. Amenities include a 16,000 square foot clubhouse (including the golf
pro shop, restaurant, bar, snack bar and cart storage), a swimming pool and two
tennis courts with a separate tennis pro shop. The Gauntlet at St. James was
owned by a subsidiary of the Company, The Gauntlet at St. James, Inc. ("GSJ"), a
North Carolina corporation. Through November 13, 1997, the Company owned 80%,
and PT Partnership owned 20%, of the outstanding equity shares of GSJ as
follows:


                                        9

<PAGE>   10



<TABLE>
<CAPTION>
                     Voting        Non-Voting      Percent of
                  Common Stock    Common Stock     Outstanding
                  ------------    ------------     -----------
<S>               <C>             <C>              <C>
PT Partnership        7,200          12,800            20%
The Company          28,800          51,200            80%
                     ------          ------           ---
                     36,000          64,000           100%
</TABLE>

              The GSJ Shareholders' Agreement provides PT Partnership with
certain powers and safeguards with respect to GSJ, including, without
limitation, control over certain expenditures (checks over $5,000 must be
co-signed by a representative of PT Partnership who acts as Secretary of GSJ),
the ability to appoint a majority of directors to the Board of Directors of GSJ
upon written notice to the Company, the ability to purchase the Company's GSJ
shares for fair market value in the event that PT Partnership determines its
investment to be "at risk" (after giving the Company notice of the condition
causing PT Partnership to believe the project is at risk and the Company's
failure to cure the default cited in the notice), a right of first refusal on
all sales of GSJ shares by the Company, certain buy-out provisions in the event
either shareholder receives a third-party offer to purchase its holdings, and
upon exercising its right to appoint a majority of the Board of Directors, the
requirement that at least two directors nominated by PT Partnership must vote in
favor of any resolution passed by the Board of Directors. Reference is made to
the GSJ Shareholders Agreement and Amendments where such provisions are set
forth in full.

              Full service play at The Gauntlet at St. James began in October
1991. The residential community, which is adjacent to the golf course, is owned
and being developed by Homer E. Wright, Jr., Inc. ("Wright"), an unaffiliated
entity. For each residential lot or multi-family dwelling unit sold, up to a
maximum of 900, GSJ receives a $5,000 mandatory resident membership fee from the
developer. This membership fee entitles such buyer to membership at The Gauntlet
at St. James, the association in which residents are granted memberships. For
the periods ended November 13, 1997 and December 31, 1996, there were 66 and 96
lots or units sold, respectively, in connection with which the Company received
a resident membership fee. The number of buyers entitled to activate their
memberships at The Gauntlet at St. James is at any given time limited to 485.

              At such time as The Gauntlet at St. James has at least 485 active
resident members, its Bylaws provide that its membership may have an option to
purchase the golf course and certain related facilities at the then fair market
value. In addition, Wright, the developer, holds a twenty-five year right of
first refusal to purchase the golf course and certain related facilities on the
same terms as a third-party offeror. In addition, Wright is entitled to a
commission of 5% in the event the golf course is sold (within twenty-five years
from opening). For more information with respect to such provisions, see the
Bylaws of The Gauntlet at St. James and the Purchase Agreement between Wright
and GSJ, dated as of September 8, 1990.

              The Gauntlet at St. James serves two client bases: (a) golf
vacationers primarily during the months of September through December and
February through May; and (b) local players throughout the year. The Company
estimates that it receives approximately 60% of its annual revenues at this golf
course from the Myrtle Beach tourist trade with the balance of revenues from

                                       10

<PAGE>   11



the local resident population. During the period ended November 13, 1997 29,796
rounds were played compared to 37,387 rounds played in 1996.

              2.      THE GAUNTLET AT LAUREL VALLEY,
                      GREENVILLE COUNTY, TIGERVILLE, SOUTH CAROLINA

              The Gauntlet at Laurel Valley is a 165 acre, 18-hole, daily-fee
golf course located near Greenville, South Carolina and 22 miles from
Spartanburg, South Carolina. The course was designed by P.B. Dye. The Gauntlet
at Laurel Valley includes a 4,500 square foot clubhouse with restaurant, pro
shop, members' lounge and underground cart storage facility. The course was
built in conjunction with a planned residential real estate development. The
Company has a 30% ownership interest in The Gauntlet at Laurel Valley, Inc.
("GLV"), a South Carolina corporation. EPI Pension Fund owns the remaining 70%
of the outstanding equity shares of GLV as follows:

<TABLE>
<CAPTION>
                                    Voting                   Non-Voting          Percent of
                                 Common Stock              Common Stock          Outstanding
                                 ------------              ------------          -----------
<S>                              <C>                        <C>                  <C>
EPI Pension Fund                       7,000                   6,720                 70%
The Company                            3,000                   2,880                 30%
                                     -------                   -----                ---
                                      10,000                   9,600                100%
</TABLE>

              The Shareholders' Agreement between the Company and EPI Pension
Fund, dated as of October 30, 1991 (the "GLV Shareholders' Agreement"),
provides EPI Pension Fund with certain rights with respect to GLV, including,
without limitation, control over all expenditures over $5,000 (checks over such
amounts must be co-signed by a representative of EPI Pension Fund who acts as
Secretary of GLV), equal representation on the Board of Directors of GLV (with a
director selected jointly by the Company and EPI Pension Fund to break any
ties), the ability to purchase the Company's shares in GLV for fair market value
in the event that EPI Pension Fund determines its investment to be "at risk" and
the Company fails to cure the default cited in the notice, and certain forced
buy-out provisions in the event either shareholder receives a third-party offer
to purchase its holdings. Reference is made to the GLV Shareholders' Agreement
where such provisions are set forth in full.

     Full service play commenced in April 1993. There are approximately 425
residential lots adjacent to this facility to be developed by the residential
developer. Based on the transfer of ownership to EPI Pension Fund, the lack of
control by the Company of the golf course and the lack of development to date,
the Company does not expect any proceeds from the sale of lots in the future. In
addition, during the year ended December 31, 1997, the Company charged off
approximately $523,000 of accounts receivable deemed uncollectible by the
Company related to the Laurel Valley development.


                                       11

<PAGE>   12



              The Gauntlet at Laurel Valley draws its golfing clientele
primarily from the Greenville/Spartanburg metropolitan area.

              3.      THE GAUNTLET AT CURTIS PARK,
                      STAFFORD COUNTY, VIRGINIA

              The Gauntlet at Curtis Park, Inc. ("GCP") has a lease agreement
with the Board of Supervisors of Stafford County, Virginia to lease, through the
year 2026 (with two renewal options of 6 years each), land for the development,
construction and operation of an 18-hole golf course with room and permission to
expand to 27 holes (subject to market conditions) within Curtis Memorial Park,
Stafford County, Virginia (the "Lease"). The Lease requires the Company to pay
rental payments equaling the greater of $25,000 or 5% of net revenues (excluding
revenues from certain membership sales) for each of the years remaining in the
initial 33-year lease term. Rental payments are not to exceed 7 1/2% and 11% of
net revenues, respectively, for each year of the two renewal terms. Amenities
include an 8,500 square foot clubhouse which includes an adjacent golf teaching
center, driving range, practice putting green and parking facilities. The golf
course was designed by P.B. Dye and opened for public play in June 1995.

              In 1994, the Company entered into a Shareholders' Agreement
concerning GCP with UA Canadian Pipeline Industry National Pension Plan ("UA
Pension Fund") of which the Company owned 80% and UA Pension Fund owned 20% of
the outstanding equity shares of GCP. On September 13, 1996, the Company
purchased the remaining 20% of GCP from UA Pension Fund for $50,000. At the same
time, the Company paid down the $1,600,000 second mortgage loan held by UA
Pension Fund. The remaining loan balance was purchased by, and assigned to, A &
E Capital Funding, Inc. (see Item 12. "Certain Relationships and Related
Transactions") thereby completely terminating UA Pension Fund's interest in GCP.


                                       12

<PAGE>   13




              On October 30, 1997, GCP completed a refinancing of the
NationsBank loan on the golf course with a loan and mortgage of $3,280,000 with
Washington Mortgage Financial Group, Ltd. The proceeds of the loan paid off the
first mortgage of approximately $2,200,000 outstanding on that date. In
addition, the proceeds were used to paydown $400,000 on a second mortgage held
by A&E Capital. Certain reserves totaling $104,688 were held out of proceeds by
the lender for capital improvements to the golf course and clubhouse. These
amounts are expected to be expended in the first six months of 1998. The balance
of proceeds were used for working capital purposes for the Company.

              Terms of the loan provide for a fixed interest rate of 8.37% for a
period of 10 years, amortized over 20 years. Monthly payments total $26,125,
including principal and interest. In addition, the loan provides that a capital
replacement reserve be established through the year with monthly payments of
$5,331.

              GCP seeks to draw golfing clientele from, and sell memberships to,
the residents of the surrounding areas, which include the Washington, D.C.
metropolitan area and the suburbs of Richmond, Virginia. The Curtis Park golf
course has no contiguous or adjacent residential community and therefore there
is no developer with whom GCP has an agreement regarding imposition of mandatory
residential membership fees as a condition of its sale of lots. During the years
ended December 31, 1997 and 1996, 37,982 and 31,167 rounds were played,
respectively.

              4.      THE GAUNTLET AT MYRTLE WEST,
                      HORRY COUNTY, NORTH MYRTLE BEACH, SOUTH CAROLINA

              The Gauntlet at Myrtle West is a 196 acre, 18-hole, daily-fee golf
course located in North Myrtle Beach, South Carolina. The course was designed by
Tom Jackson. The Gauntlet at Myrtle West includes an 8,000 square foot clubhouse
with restaurant, pro shop, members' lounge and a 6,600 square foot underground
cart storage facility. The course, which was previously known as The Myrtle West
Golf and Country Club, was purchased by The Gauntlet at Myrtle West, Inc.
("GMW"), a South Carolina corporation, on December 30, 1993. The Company owns
30% and EPI Pension Fund owns 70% of the outstanding equity shares of GMW as
follows:
<TABLE>
<CAPTION>

                           Voting                Non-Voting             Percent of
                         Common Stock           Common Stock           Outstanding
<S>                      <C>                    <C>                    <C>
EPI Pension Fund            7,000                  6,720                   70%
The Company                 3,000                  2,880                   30%
                           ------                  -----                  ---
                           10,000                  9,600                  100%
</TABLE>


                                       13

<PAGE>   14



              The Shareholders' Agreement between the Company and EPI Pension
Fund (the "GMW Shareholders' Agreement"), provides EPI Pension Fund with certain
rights with respect to GMW, including, without limitation, approval over
expenditures that are in excess of $5,000 or outside the annual budget (which
requires the consent of both the President and the Secretary/Treasurer, an EPI
Pension Fund representative) of GMW, equal representation on the Board of
Directors of GMW (with a director selected jointly by EPI Pension Fund and the
Company to break any deadlocks), the ability to purchase the Company's shares in
GMW for fair market value in the event EPI Pension Fund determines its
investment to be "at risk" and the Company fails to cure the default cited in
the notice, and certain forced buy-out provisions in the event either
shareholder receives a third-party offer to purchase its holdings. Reference is
made to the GMW Shareholders' Agreement where such provisions are set forth in
full.

              The shares of the Company's Common Stock issued to the North
Myrtle Beach Golf Club, Inc. ("the MW Seller") in connection with the Company's
acquisition of GMW from the MW Seller, were, under certain circumstances,
guaranteed by the Company to have a value in the event of a public sale of
$350,000. On December 11, 1995, MW Seller filed a Complaint against GMW and the
Company, alleging an inability to sell the Company's Common Stock. GMW and the
Company dispute the claim and, as described in Item 3. "Legal Proceedings," have
filed an Answer and will vigorously oppose the action.

              The Company took possession of, and commenced operations at, The
Gauntlet at Myrtle West on December 30, 1993. The golf course draws its
clientele predominantly from the Myrtle Beach area golf market. There is no
residential development contiguous to GMW, nor is there a developer from whom
the Company will receive automatic membership fees. The Company wrote down the
remaining investment in the GMW based on EPI Pension Fund control and
anticipated ability to generate proceeds from the GMW.


ITEM 2.       DESCRIPTION OF PROPERTY

              The Company's principal business office is located at One Tampa
City Center, 201 North Franklin Street, Suite 200, Tampa, Florida 33602.
Effective December 16, 1997, the Company took occupancy of 8,932 square feet of
newly leased office space at the above address (the "Premises"). A five-year
lease ending December 16, 2002 provides for rent on a monthly basis, and for
each of the ensuing years of the term, the Company has agreed to pay annual base
rents of $133,980, $142,910, $151,844, $160,776, and $169,708, respectively. The
landlord's operating expenses for services provided to the Company and other
lessees of the building that accommodates the Premises are estimated, paid
monthly as additional rent, and adjusted annually according to the lease. The
Company may not sublet the Premises or assign the lease (unless to a qualified
and approved affiliate) without the consent of the landlord. The lease contains
other such customary provisions including a force majeure clause and
indemnities.

              On July 15, 1997, the Company leased 4,140 square feet at Suite
2550 in the same building for a term of 37 months. The lease provides for
monthly rental of $4,830 during the first twelve (12) months, $5,175 for months
14 through 25, and $5,520 for months 26 through 37. As a result of the

                                       14

<PAGE>   15



Company's need for additional space, the Company sublet Suite 2550 beginning
January 1, 1998 for the remaining 32 months of the lease term for $5,520 per
month. On December 31, 1997, the Company executed an agreement to terminate its
lease dated September 1, 1995 at 5806-A Breckenridge Parkway, Tampa, Florida
33610 and made full settlement with the landlord for a settlement payment of
$76,253. All remaining liabilities are eliminated.

              The office space occupied by the Company is sufficient for the
conduct of the Company's business therein.

              In December 1996 the Company, through a wholly-owned subsidiary,
Divot Properties WGV, Inc. ("Divot WGV"), purchased for $810,617 approximately
4.25 acres described as Southeast Parcel 2 of the St. Johns Planned Unit
Development located in St. Johns County, Florida, as well as certain license
rights. The land is located within the World Golf Village ("WGV") development
which is currently being developed within the 6,300 acre St. Johns planned
community. The World Golf Village resort, located approximately 15 miles south
of Jacksonville, Florida, upon completion, will be home to the World Golf Hall
of Fame Museum, the World Golf Village Resort Hotel and Conference Center, three
18-hole championship golf courses, PGA Tour Productions, a PGA Tour Golf
Academy, and other amenities. The license rights entitle the Company, for a
period of twenty-five years, to use the World Golf Village name and logos in
connection with the promotion and operation of certain service enterprises, and
the marketing of certain consumer products related to the World Golf Village.

              At December 31, 1997, the Company had made a deposit of $500,000
on another parcel of property located within the World Golf Village, described
as Parcel 11. The Company acquired this parcel, again through Divot WGV, for
$1,850,000, on January 16, 1998. Such property is to be used for the
development of the World Golf Village Spa and 32 bungalows at WGV.

              For a complete description of all other properties owned or leased
by the Company, see Item 1.c. "Business -- The Company's Golf Courses."

ITEM 3.       LEGAL PROCEEDINGS


                                       15

<PAGE>   16



              On August 10, 1995, the Company and its subsidiary, The Gauntlet
at Myrtle West, Inc. ("GMW"), received from North Myrtle Beach Golf Club, Inc.
("MW Seller") a "Notice of Default Under Indemnity Agreement and Guaranty" dated
December 28, 1993 in connection with MW Seller's alleged inability to realize
$350,000 or any proceeds through its attempts at a public sale of its 102,010
shares of the Company's Common Stock. The stock was issued to MW Seller and the
Indemnity Agreement and Guaranty (the "Guaranty") was entered into by the
Company and GMW as part consideration for the December 28, 1993 sale to GMW of
certain of MW Seller's assets, inclusive of certain golf course lands and
improvements in Myrtle Beach, S.C. The obligations under the Guaranty are
secured by a third mortgage and security agreement over the golf course. The
Company has disputed the claim that its shares held by MW Seller have no value
and on February 12, 1996 filed an Answer to the December 11, 1995 Complaint and
Third Mortgage Foreclosure proceedings filed by MW Seller under Civil Action No.
5-CR26.3462 in The Court of Common Pleas, County of Horry, State of South
Carolina. The Company denies liability and states that MW Seller's failure to
sell the stock as required by the Guaranty discharges the Company's and GMW's
obligations. The Company believes its maximum liability exposure will be the
shortfall, if any, from $350,000 and the sale proceeds at the time MW Seller's
102,010 Company shares are sold or should have been sold. The Company has
recorded in its Consolidated Financial Statements a reserve for its estimated
maximum liability for this case.

              In connection with the Company's February 21, 1996 Agreement in
Principle ("AIP") with its three Pension Fund Partners (see introduction to Item
1.c. "The Company's Golf Courses" for further discussion of the AIP and see
Exhibit 10.47), definitive agreements were reached during the second quarter of
1996 with regards to two of the Company's four golf courses. However, the
Company's efforts to interpret the AIP and negotiate with EPI Pension Fund
regarding the two other courses were unsuccessful. On May 31, 1996, EPI Pension
Fund commenced an action claiming breach of contract, specific performance, a
constructive trust and temporary and permanent injunctive relief. At a hearing
conducted on July 12, 1996 in the Circuit Court in and for Hillsborough County,
Florida, the court issued a preliminary injunction which required the Company to
transfer to EPI Pension Fund 45% of the outstanding equity in the Company's GLV
and GMW subsidiaries whereby

                                       16

<PAGE>   17



the Company now holds 30% of the outstanding equity in each of these two
subsidiaries and EPI Pension Fund holds 70%. The Company filed an appeal brief
to this preliminary injunction on August 14, 1996 in the 2nd District Court of
Appeals for the 13th Judicial District in and for Hillsborough County, Florida.
The District Court denied this appeal on February 11, 1997. The Company entered
into a settlement agreement with the EPI Pension Fund on October 15, 1997, which
purported to resolve all outstanding issues between the Company and the EPI
Pension Fund. The Company has failed to perform all of its obligations under the
settlement. On February 10, 1998, the Circuit Court entered an order directing
the Company to perform fully all of its obligations under the Settlement
Agreement prior to February 24, 1998. At a hearing on March 26, 1998 the
Company offered partial performance under the Settlement Agreement which was
taken under advisement by the Circuit Court and opposing counsel and will be
ruled upon at a hearing to be scheduled in the future.

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

              No matters were submitted to a vote of the security holders during
the fourth quarter of 1997.


                                     PART II

ITEM 5.       MARKET FOR THE COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS

              From August 6, 1993 through July 17, 1996, the Company's Common
Stock traded on the Toronto Stock Exchange (the "TSE") under the trading symbol
"TEE." The Company voluntarily delisted from the TSE.

              The following table sets forth the high and low closing prices on
the TSE for each quarter from January 1, 1996 through the Company's voluntary
request to delist from the TSE on July 17, 1996 (all such prices are in Canadian
dollars):

<TABLE>
<CAPTION>
                                             Closing Prices
                                             --------------
Period Ended                              High               Low
------------                             -----              -----
<S>                                      <C>                <C>
March 30, 1996                           $3.60              $2.10
June 30, 1996                             2.25               1.05
July 17, 1996                             1.25                .68
</TABLE>

              Since November 22, 1994, trading of the Company's Common Stock has
been quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") SmallCap Market. The following table sets forth, for the
periods indicated, the quarterly range of the high and

                                       17

<PAGE>   18
low closing prices of the Common Stock as reported by the Nasdaq SmallCap Market
(all such prices are in U.S. dollars):

<TABLE>
<CAPTION>
                                           Closing Prices
                                           --------------
Quarter Ended                          High                Low
-------------                          ----               -----
<S>                                   <C>                 <C>
March 31, 1996                        $2.69               $1.50
June 30, 1996                          1.69                 .88
September 30, 1996                     1.00                 .25
December 31, 1996                       .50                 .25
March 31, 1997                          .69                 .25
June 30, 1997                           .44                 .25
September 30, 1997                      .37                 .19
December 31, 1997                       .63                 .13
</TABLE>

              On March 25, 1998, the closing market price for the Company's
Common Stock on the Nasdaq SmallCap Market was $.37 per share.

              As of March 25, 1998, there were approximately 3,000 holders of
record of the Company's Common Stock and 22 holders of record of the Company's
Preferred Stock.

              No dividend has been declared or paid by the Company since
inception on the Company's Common Stock. The Company does not anticipate that
any dividends will be declared or paid in the future on the Company's Common
Stock.

              As of December 31, 1997, the Company sold 1,920 shares of its 1997
Convertible Preferred Stock ("1997 Preferred").  The 1997 Preferred was sold
solely to accredited investors pursuant to a private placement offering in
reliance upon Section 4(2) of the Securities Act of 1933, as amended. Proceeds
from the private placement of the 1997 Preferred equaled $1,920,000, less fees
of $165,000. The 1997 Preferred was offered in units of 15 preferred shares,
with each such share having a liquidation value of $1,000, plus 10,000 warrants
(exercisable at $1.00 per share for a period of three years) for a price of
$15,000 per unit. The holders of the 1997 Preferred are entitled to 7%
cumulative dividends payable quarterly which percentage increases in certain
events. The Company does not anticipate paying any dividends in the foreseeable
future. The 1997 Preferred is convertible immediately to shares of the Company's
Common Stock at $1,000 per share so converted divided by the "conversion price"
which is a formula based on the lesser of $0.70 or 75% of the average of the
closing price during the ten-day period prior to conversion. Subsequent to
December 31, 1997, the Company sold 120 shares of its 1997 Preferred to similar
investors.

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

         The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements included herein for the years ended
December 31, 1997 and 1996.

         Brassie Golf Corporation (the "Company") owns and operates golf
courses, is engaged in the development and marketing of golf-related businesses,
and holds licensing rights in the United States and internationally.

         The Company holds certain licensing rights affiliated with the World
Golf Village, which is expected to be a premier tourism, business, and golf
destination in America; the World Golf Village is currently being developed
south of Jacksonville, Florida. The Company also owns land intended for future
development at the World Golf Village. In addition, the Company's portfolio
includes a wholly-owned subsidiary that leases a golf course in Virginia and
minority interests in two golf courses in South Carolina. The Company sold its
interest in a fourth golf course, the Gauntlet at St. James, located in
Southport, North Carolina, in November 1997.

         The following table shows the number of full months each golf course
was operating under the Company's ownership during the respective periods:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED     YEAR ENDED
                                                 % OWNERSHIP     DECEMBER 31,   DECEMBER 31,
                                                AS OF 12/31/97       1997           1996
                                                --------------   ------------   ------------
<S>            <C>                              <C>              <C>            <C>
Curtis Park    (opened for play June 1995)....       100%             12             12
               (opened for play October
St. James      1991)..........................       100%             10             12
Laurel Valley  (opened for play April 1993)...        30%             12             12
Myrtle West    (acquired December 30, 1993)...        30%             12             12
</TABLE>

         In addition, the Company recently entered into a letter of intent to
acquire Lady Fairway Golf, one of the nation's leading manufacturers of women's
golf shoes and accessories. This is the first of several planned acquisitions of
companies in the golf consumer products market.

         The Company is seeking to secure additional licensing rights for a
variety of products and services specific to the World Golf Village. The Company
has also been actively engaged in the development of management and hospitality
businesses to be located at the World Golf Village.

         As of December 31, 1997, the Company's total assets were approximately
$7,974,000 and the Company's total debt, including capitalized leases, was
approximately $4,292,000.

                                       18
<PAGE>   19




                             RESULTS OF OPERATIONS

  Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

REVENUES

     The Company derives its revenues primarily from golf revenues (including
greens fees, range fees and cart fees), management and design fees, resident
membership fees, membership sales and annual dues, proshop revenue and food and
beverage revenue. The period-to-period change in each of the revenues categories
is as follows:

<TABLE>
<CAPTION>
                                                YEAR ENDED     YEAR ENDED
                                               DECEMBER 31,   DECEMBER 31,    INCREASE
                                                   1997           1996       (DECREASE)
                                               ------------   ------------   -----------
<S>                                            <C>            <C>            <C>
Golf Revenues................................   $1,833,010     $1,878,273    $   (45,263)
Management and Design Fees...................      809,660      1,785,818       (976,158)
Resident Membership Fees, Membership Sales
  and Annual Dues............................      699,733        774,594        (74,861)
Food & Beverage Revenues.....................      485,737        508,911        (23,174)
Proshop Revenues.............................      259,099        277,188        (18,089)
Other Income.................................        6,360          7,118           (758)
                                                ----------     ----------    -----------
Totals.......................................   $4,093,599     $5,231,902    $(1,138,303)
                                                ==========     ==========    ===========
</TABLE>

     In the aggregate, the Company generated $4,093,599 in revenues during the
year ended December 31, 1997, compared to $5,231,902 in the year ended December
31, 1996, a decrease of $1,138,303. The decrease primarily consists of a
$692,866 decrease in management revenues related to the sale of the management
division in July 1997, a $157,226 decrease in design revenues related to the
sale of the design division in August 1997, and a $141,000 decrease related to
the construction management division which had no operations in 1997. In
addition, as a result of the sale of St. James in November 1997, corresponding
decreases of $228,457, $50,249, $59,916, and $44,134 occurred for golf revenue,
resident membership fees, membership sales and annual dues, food and beverage
revenue, and proshop revenue, respectively. These decreases were offset in part
by an increase of $221,156 in total revenues for Curtis Park.

COSTS AND EXPENSES

     The Company's total operating expenses decreased from $11,056,005 during
the year ended December 31, 1996 to $6,660,207 during the year ended December
31, 1997, a decrease of $4,395,798. The decrease is largely attributable to the
writedown of goodwill by $4,050,000 in 1996, reduced expenses of $763,568 as a
result of the sale of the management division in July 1997, reduced expenses of
$424,062 as a result of the sale of the design division in August 1997 and
reduced expenses of $171,412 related to the construction management division
which had no operations in 1997. In addition, a reduction of $153,450 in
operating expenses resulted from the sale of St. James in November 1997 and a
reduction of $171,669 resulted from a related decrease in amortization and
depreciation expense. These items were offset in part by a $307,161 increase in
bad debt expense and a $708,421 increase in other general and administrative
costs. These increased costs were in conjunction with writing off the
uncollectible receivables of the Company, other legal and accounting fees, and
costs and other professional fees associated with preparing the new business
plan of the Company. Marketing costs increased by $135,329 in 1997 in an effort
to enhance investor relations and to more effectively market the business of the
Company. Finally, expenses associated with the operations of the golf course at
Curtis Park were $146,734 higher than in the previous year.

     The Company incurred a write down of goodwill of $-0- and $4,050,000
related to the Summit merger as of December 31, 1997 and 1996. The write down in
1996 was a result of management's evaluation of the future value of goodwill on
the Company's financial statements at year end.

     Golf course operations include the compensation and benefits costs of
course personnel and related payroll taxes, golf cart leases, equipment rental
and maintenance, clubhouse repairs and

                                       19
<PAGE>   20




upkeep, insurance, utilities, chemicals, seed and fertilizers, water, supplies
and other miscellaneous costs typically incurred in the operation of a golf
course.

     General and administrative expenses include management and administrative
compensation, related payroll taxes and benefits, professional fees, including
legal and accounting and other consultants, telephone, utilities, insurance,
other taxes, allowance for doubtful accounts receivable, fixed asset valuation
adjustments, travel, meals and entertainment and office expenses, including
rent.

     Interest expense decreased to $683,755 during the year ended December 31,
1997 from $2,316,301 during the year ended December 31, 1996. This $1,632,546
decrease was primarily due to a one-time charge to interest expense in 1996 of
$1,400,000 related to the discount on convertible debentures. In addition, the
contractual interest expense on the debentures and lower principal balances on
certain debt, partially related to the payoff of loans due to the sale of the
St. James property in November 1997, resulted in an additional decrease of
$146,896. The prime rate decreased from 8.65% at December 31, 1996 to 8.50% at
December 31, 1997.

     As a result of the 30,082,268 warrants issued in connection with the
issuance of new debentures, the Company recorded $892,709 in amortization
expense related to the debt discount on convertible debentures in 1997.

     The loss on equity investment in subsidiaries decreased from $966,579
during the year ended December 31, 1996 to $116,318 during the year ended
December 31, 1997. This $850,261 decrease results primarily from a substantial
writedown of the Company's investment in the Gauntlet at Laurel Valley and the
Gauntlet at Myrtle West subsidiaries in 1996 due to a redetermination of the net
realizable value of the Company's ownership interests in these entities at that
time. Due to the recurring losses and working capital deficiencies of the
entities, the Company in 1997 again redetermined the net realizable value of the
Company's investment in the entities, which the company found to be zero, and
wrote down the investment value by $116,318 to reflect that redetermination as
of December 31, 1997.

     For the year ended December 31, 1997, the Company recorded a loss on sale
of subsidiaries of $1,826,164. The Company recorded a $1,931,875 loss on the
sale of the golf course at St. James and a $19,289 loss on the sale of Hale
Irwin Golf Services which were offset by a $125,000 gain on the sale of Brassie
Golf Management Services, Inc. and Summit Golf Corporation. No gains or losses
on the sale of subsidiaries were recorded in 1996 as no subsidiaries were sold
during the year.

     Interest and other income decreased to $98,520 during the year ended
December 31, 1997 from $659,266 during the year ended December 31, 1996. This
$560,746 decrease resulted primarily from a one-time gain of $580,000 related to
proceeds received in 1996 from a settlement of claims in connection with a
disposition of securities held by the Company's foreign subsidiary.

     The provision for income taxes of $110,000 in 1996 was a result of foreign
income taxes due as a result of the $580,000 gain from the former disposition of
securities mentioned above. No provision for income taxes was necessary in 1997
due to the losses incurred by the Company.

NET LOSS

     For the year ended December 31, 1997, the Company had a net loss of
$5,987,034, compared to the net loss of $8,625,732 at December 31, 1996. This
$2,638,698 decrease in loss from prior year is the net result of the items
explained above.

INFLATION

     Inflation has not had a material effect on the Company's operations during
the years ended December 31, 1997 and 1996.

                                       20
<PAGE>   21




                        LIQUIDITY AND CAPITAL RESOURCES

     Historically, golf revenues, resident membership fees, membership sales and
annual dues, proshop revenue, food and beverage revenue and management and
design fees have been the principal source of funds to pay the operating
expenses of the Company. To fund acquisitions, capital improvements, and a
portion of working capital needs, the Company had to rely upon long-term
borrowing and equity financing.

DEFICIENCY IN WORKING CAPITAL

     The Company had a deficit in working capital in the amount of $98,529 as of
December 31, 1997, compared to a working capital deficit of $404,785 as of
December 31, 1996. The improvement in the working capital deficiency was
primarily attributable to the effects of proceeds received from the issuance of
preferred stock through a private placement, the sales of the management
division of the Company and the golf course at St. James, and the loan
refinancing related to the golf course at Curtis Park which has been offset in
part by a loss from operations, purchases of long-term assets, deposits toward
business acquisitions and other long-term assets, and a paydown of long-term
debt. The availability of cash and short-term investments as of December 31,
1997 is $188,285, of which $135,019 is restricted for certain expenditures
primarily relating to improvements and repairs at the Curtis Park golf course.

     The Company is not generating sufficient revenues from its operations to
fund its activities and therefore is dependent on additional financing from
external sources. This fact raises substantial doubt about the Company's ability
to continue as a going concern. The Company secured $1.92 million of capital in
a private placement transaction in December 1997. The Company expects to raise
additional amounts from private placements in 1998. If the Company is successful
in raising additional capital in 1998, management believes that the Company will
have adequate resources to continue to meet its current debt obligations, fund
capital improvements and expand and develop its businesses. There is no
assurance that such additional funding will be completed and the inability to
obtain such financing would have a material adverse effect on the Company.

     The Company has taken measures to maintain controls on operating costs in
1998 as part of a continuing effort to become profitable. Management intends to
take further steps to improve the Company's liquidity and reduce debt, both
short and long term.

     As noted above, the Company concluded on a private placement offering in
December 1997 of 7% Cumulative Convertible Preferred Stock ("Preferred Stock")
for $1.92 million, less associated costs of $165,000 to secure such funding. The
Preferred Stock was offered for a price of $15,000 per unit. One hundred
twenty-eight units (128) were sold. Each unit was made up of 15 Preferred Shares
and 10,000 warrants. Each preferred share has a liquidation value of $1,000 and
each warrant is exercisable immediately for a period of 3 years to purchase one
share of common stock for $1.00 each.

     During March 1996, the Company issued $5.5 million in six percent
convertible debentures to finance the operations for the Company. During 1996,
the holders of the debentures converted $2,034,262 of the debt into 6,350,564
shares which equated to $2,496,785 in equity, net of financing fees. Through
March 1, 1997, these debentures were convertible into shares of common stock at
discounts ranging from 15%-35% of its current market value. The Company recorded
$1.4 million in interest during 1996 to reflect the discounts upon conversion of
the Company's common stock. As of December 31, 1996, $3,465,738 of convertible
debentures were outstanding.

     From January through October 1997, the holders of the debentures converted
$1,195,743 of the debt into 4,972,107 shares which equated to $1,573,308 in
equity, net of financing fees. During November 1997, the remaining $2,269,995
plus accrued interest of outstanding debentures were transferred to new
debenture holders in a third party transaction. Simultaneously, the Company

                                       21
<PAGE>   22




retired the 1996 debenture agreements and replaced them with new debenture
agreements containing new terms.

     The new debentures are payable on December 31, 1998. Through December 31,
1998, the holders of the debentures are entitled to convert the debentures into
common stock of the Company at a conversion price equal to the lesser of (1)
$0.17 per share or (2) 70% of the average closing bid of the common stock during
the last five trading days prior to conversion.

     From November through December 1997, $1,259,346 of the debentures'
principal had been converted into 8,460,888 shares of common stock, which
equated to $1,863,442 in equity, net of financing fees. As of December 31, 1997,
$1,010,649 of convertible debentures were outstanding.

     In connection with the sale of the debenture agreements issued in November
of 1997, the Company issued (1) warrants to purchase 15,041,134 shares of common
stock of the Company at the lesser of $0.17 per share or 70% of the average
closing bid price of the common stock during the last five trading days prior to
exercise, (2) warrants to purchase 15,041,134 shares of common stock of the
Company at the lesser of $0.34 per share or 70% of the average closing bid price
of the common stock during the last five trading days prior to exercise and (3)
1,672,128 shares of common stock. The warrants are exercisable for a period of
three years from the date of issuance.

USES OF FUNDS

     From the proceeds obtained through the private placement of preferred
stock, the sale of businesses, and the loan refinancing for Curtis Park, the
Company has positioned itself to execute the new business plan of the Company.
The Company has made a $300,000 deposit toward the acquisition of certain assets
from Divot Golf Corporation that will enable the Company to obtain certain
additional development rights and license agreements at the World Golf Village
and concentrate on golf-related consumer products. The Company also made a
$100,000 deposit toward the acquisition of Lady Fairway Golf, a leading
manufacturer of women's golf shoes and accessories.

     In addition, the Company paid $75,000 in cash and 3,000,000 shares of
common stock to purchase certain assets of Divot Spa WGV, Inc., including
licensing and developmental rights on Parcel 11-A of the World Golf Village, the
Spa Tournament Championship development program, and the spa products and
catalogs. In a related transaction, the Company deposited $500,000 toward the
purchase of a parcel of land at the World Golf Village upon which the Company
plans to construct a health spa which will charge a daily fee to visitors of the
World Golf Village and the Golf Hall of Fame located within the Village; the
Company also plans to sell health and spa related consumer products at this
location. The Company expended approximately $215,000 toward the development of
management and hospitality services at the World Golf Village project and
satisfied other short-term and long-term debt and working capital obligations.

DECREASE IN DEBT

     Total debt decreased from $10,073,122 at December 31, 1996 to $4,291,574 at
December 31, 1997. Of this $5,781,548 decrease, $3,053,981 is attributed to the
St. James golf course which was sold in November 1997, $2,455,089 is attributed
to the conversion of debt to equity related to debentures issued by the Company,
and $446,291 is attributed to other debt repayments. These decreases were offset
by $440,000 in net proceeds from refinancing the loan on the Curtis Park golf
course after retiring the previous first and second mortgages on the property.

FINANCIAL COMMITMENTS

     The Company has current commitments for improvements and repairs at The
Gauntlet at Curtis Park totalling $104,688. Cash has been restricted under the
loan agreement to cover these expenditures. The Company intends to seek
financing for these capital expenditures from outside

                                       22
<PAGE>   23




financing sources, although there is no assurance that such financing will be
available or, if available, will be on terms acceptable to the Company.

     As a result of its letter of intent to acquire Lady Fairway Golf signed in
December 1997, the Company has a commitment to fund the purchase and to close
the transaction. The Company also has commitments for future minimum lease
payments under operating and capital leases and has commitments to its executive
officers through employment agreements.

SHAREHOLDERS' EQUITY

     During the year ended December 31, 1997, the Company's shareholders' equity
increased from $1,843,291 to $2,590,885. This $747,594 increase was primarily a
result of the issuance of 15,085,123 common shares and 30,082,268 warrants in
connection with the convertible debentures for $4,999,815 and proceeds from the
private placement of preferred stock for $1,920,000 less fees of $165,000,
offset by a net loss of $5,987,034.

WARRANT EXERCISES

     As of December 31, 1997, warrants to purchase 33,550,268 shares of the
Company's common stock were outstanding as follows:

<TABLE>
<CAPTION>
# WARRANTS ISSUED     EXPIRATION DATE     EXERCISE PRICE
-----------------   -------------------   --------------
<C>                 <S>                   <C>
      100,000       September 28, 1998     $2.40
      238,000       November 17, 1998      $2.40
       50,000       December 5, 1998       $1.00
      150,000       June 30, 1999          $2.00
    1,400,000       June 30, 2000          $2.45-$3.25
      250,000       September 28, 2000     $2.40
   15,041,134       November 18, 2000      $0.17*
   15,041,134       November 18, 2000      $0.34*
    1,280,000       December 3, 2000       $1.00**
   ----------
   33,550,268
   ==========
</TABLE>

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

 * Or 70% of the average closing bid price of the common stock during the last
   five trading days prior to conversion, whichever is less.
** Or 75% of the average closing bid price of the common stock during the last
   ten trading days prior to conversion, whichever is less.

PROCEEDS FROM DEVELOPER'S RESIDENT LOT SALES

     By agreement with the developer of the residential real estate development
contiguous to the Gauntlet at St. James golf course constructed by the Company,
initial membership fees were paid to the Company by the developer on behalf of
the purchasing resident upon the closing of each lot sale pursuant to negotiated
or assumed agreements. During the years ended December 31, 1997 and 1996, 65 and
96 lots were sold, respectively, by the developer at St. James, the proceeds of
which increased cash by $325,000 and $480,000 in 1997 and 1996, respectively. As
a result of the sale of the St. James golf course in November 1997, the Company
expects to receive no further proceeds from the sale of residential lots as
those rights are now held by the buyer of the golf course.

                                       23
<PAGE>   24
ITEM 7.       FINANCIAL STATEMENTS

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Brassie Golf Corporation

     We have audited the accompanying consolidated balance sheet of Brassie Golf
Corporation and subsidiaries as of December 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 1997 and 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

     As discussed in Note 10 to the consolidated financial statements, the
Company changed its method of accounting for two previously majority-owned
subsidiaries.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Brassie Golf Corporation and subsidiaries at December 31, 1997 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1997 and 1996 in conformity with generally accepted
accounting principles.

     The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
described in Note 1, the Company has incurred recurring operating losses and has
a working capital deficiency. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.

                                          [ERNST & YOUNG LLP]
                                            ERNST & YOUNG LLP

Raleigh, North Carolina
January 12, 1998

                                       24
<PAGE>   25




                            BRASSIE GOLF CORPORATION

                           CONSOLIDATED BALANCE SHEET

                               DECEMBER 31, 1997

<TABLE>

<S>                                                           <C>

                                  ASSETS

Current assets:

  Cash......................................................  $    53,266
  Cash -- restricted........................................      135,019
  Trade accounts receivable, net of allowance for doubtful
     accounts of $150,800...................................      352,018
  Accounts receivable from related parties..................      160,543
  Inventories...............................................       31,611
  Prepaid expenses and other current assets.................    1,038,588
                                                              -----------
          Total current assets..............................    1,771,045
Property and equipment at cost:
  Land and land improvements................................    2,789,069
  Depreciable golf course improvements......................      828,681
  Buildings.................................................    1,426,369
  Furniture, machinery and equipment........................      986,642
                                                              -----------
                                                                6,030,761

Less accumulated depreciation and amortization..............      742,956
                                                              -----------
                                                                5,287,805

Intangible assets, net of accumulated amortization of
  $270,000..................................................      583,400
Goodwill....................................................      331,250
                                                              -----------
          Total assets......................................  $ 7,973,500
                                                              ===========
                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Accounts payable and accrued expenses.....................  $   772,460
  Accrued interest payable..................................       32,751
  Income tax payable........................................      181,793
  Current portion of long-term debt.........................      757,023
  Current maturities of capital lease obligations...........       21,510
  Accrued discount on convertible debentures................      104,037
                                                              -----------
          Total current liabilities.........................    1,869,574

Long-term debt, less current portion........................    3,477,256
Long-term capital lease obligations, less current portion...       35,785

Commitments and Contingencies
Shareholders' equity:

  Convertible Preferred Stock, $.001 par value; 1,000,000
     shares authorized; 283,170 shares issued and
     outstanding (aggregate liquidation
     preference of $1,920,000)..............................          283
  Common Stock, $.001 par value; 50,000,000 shares

     authorized; 42,632,503 shares issued and outstanding...       42,633
  Additional paid-in capital................................   32,043,966
  Accumulated deficit.......................................  (29,176,276)
  Less cost of Convertible Preferred Stock held in treasury,
     281,250 shares.........................................     (210,937)
  Foreign currency translation adjustment...................     (108,784)
                                                              -----------
          Total shareholders' equity........................    2,590,885
                                                              -----------
          Total liabilities and shareholders' equity........  $ 7,973,500
                                                              ===========
</TABLE>

                            See accompanying notes.

                                       25
<PAGE>   26




                            BRASSIE GOLF CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                               YEAR ENDED DECEMBER 31,

                                                              --------------------------
                                                                 1997           1996
                                                              -----------   ------------
<S>                                                           <C>           <C>
Operating revenues:

  Golf revenues.............................................  $ 1,833,010   $  1,878,273
  Food and beverage revenues................................      485,737        508,911
  Proshop revenues..........................................      259,099        277,188
  Membership sales and dues.................................      372,233        294,594
  Resident membership fees..................................      327,500        480,000
  Management and design fees................................      809,660      1,785,818
  Other.....................................................        6,360          7,118
                                                              -----------   ------------
          Total operating revenues..........................    4,093,599      5,231,902
Operating expenses:
  Golf course operations....................................    1,293,975      1,328,564
  Cost of food and beverage sales...........................      195,869        203,660
  Cost of proshop sales.....................................      193,886        173,812
  Advertising expense.......................................      313,351        216,254
  Management and design expenses............................      701,191      1,553,821
  General and administrative expenses.......................    3,090,713      2,487,003
  Depreciation and amortization expense.....................      871,222      1,042,891
  Write down of goodwill....................................           --      4,050,000
                                                              -----------   ------------
          Total operating expenses..........................    6,660,207     11,056,005
                                                              -----------   ------------
Operating loss..............................................   (2,566,608)    (5,824,103)
Other income (expense):
  Interest expense -- contractual...........................     (683,755)      (916,301)
  Interest expense -- discount on convertible debentures....           --     (1,400,000)
  Amortization of debt discount on convertible debentures...     (892,709)            --
  Loss on equity investment in subsidiaries.................     (116,318)      (966,579)
  Loss on sale of subsidiaries..............................   (1,826,164)            --
  Bad debt recoveries.......................................           --        510,000
  Interest income...........................................       98,520        149,266
                                                              -----------   ------------
  Loss before minority interest.............................   (5,987,034)    (8,447,717)
  Minority interest expense.................................           --        (68,015)
                                                              -----------   ------------
  Loss before income taxes..................................   (5,987,034)    (8,515,732)
  Provision for income taxes................................           --       (110,000)
                                                              -----------   ------------
Net loss....................................................  $(5,987,034)  $ (8,625,732)
                                                              ===========   ============
Basic and diluted loss per common share.....................  $      (.22)  $       (.43)
                                                              ===========   ============
Weighted average number of common shares outstanding........   29,724,100     20,005,900
                                                              ===========   ============
</TABLE>

                            See accompanying notes.

                                       26
<PAGE>   27




                            BRASSIE GOLF CORPORATION

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>

<CAPTION>

                                                                                                                 CONVERTIBLE

                                                               CONVERTIBLE                                        PREFERRED

                                         COMMON STOCK        PREFERRED STOCK    ADDITIONAL                      TREASURY STOCK
                                     --------------------   -----------------     PAID-IN     ACCUMULATED    --------------------

                                       SHARES     AMOUNT     SHARES    AMOUNT     CAPITAL       DEFICIT       SHARES     AMOUNT

                                     ----------   -------   --------   ------   -----------   ------------   --------   ---------
<S>                                  <C>          <C>       <C>        <C>      <C>           <C>            <C>        <C>
Balance at December 31, 1995.......  17,678,066   $17,678    375,000    $375    $21,857,456   $(13,893,582)        --   $      --
Net loss...........................          --       --          --      --             --    (8,625,732)         --          --
Issuance of Common Stock in
 connection with conversion of

 convertible debentures............   6,350,564    6,351          --      --      2,490,434            --          --          --
Issuance of Common Stock in lieu of
 compensation......................      50,000       50          --      --         58,545            --          --          --
Unrealized gain on investments.....          --       --          --      --             --            --          --          --
Translation of foreign currency
 financial statements..............          --       --          --      --             --            --          --          --
                                     ----------   -------   --------    ----    -----------   ------------   --------   ---------
Balance at December 31, 1996.......  24,078,630   $24,079    375,000    $375    $24,406,435   $(22,519,314)        --   $      --
                                     ==========   =======   ========    ====    ===========   ============   ========   =========
Net loss...........................          --       --          --      --             --    (5,987,034)         --          --
Conversion of Preferred Stock
 to Common Stock...................     468,750      469     (93,750)    (94)          (375)           --          --          --
Repurchase of Preferred Stock......          --       --          --      --             --            --    (281,250)   (210,937)
Issuance of Preferred Shares in
 connection with a private

 placement.........................          --       --       1,920       2      1,754,998            --          --          --
Preferred Stock Dividend
 -- conversion discount............          --       --          --      --        669,928      (669,928)         --          --
Issuance of Common Stock
 in connection with conversion

 of convertible debentures.........  13,432,995   13,433          --      --      3,423,317            --          --          --
Issuance of 30,082,268 warrants
 in connection with convertible

 debentures........................          --       --          --      --      1,203,291            --          --          --
Issuance of Common Stock
 in connection with the convertible

 debenture agreement...............   1,652,128    1,652          --      --        308,122            --          --          --
Issuance of Common Stock
 in connection with the purchase of

 Divot Spa WGV, Inc................   3,000,000    3,000          --      --        278,250            --          --          --
Unrealized gain on investments.....          --       --          --      --             --            --          --          --
Translation of foreign currency
 financial statements..............          --       --          --      --             --            --          --          --
                                     ----------   -------   --------    ----    -----------   ------------   --------   ---------
Balance at December 31, 1997.......  42,632,503   $42,633    283,170    $283    $32,043,966   $(29,176,276)  (281,250)  $(210,937)
                                     ==========   =======   ========    ====    ===========   ============   ========   =========

<CAPTION>

                                       FOREIGN     UNREALIZED
                                      CURRENCY     GAIN (LOSS)

                                     TRANSLATION       ON
                                     ADJUSTMENT    INVESTMENTS     TOTAL

                                     -----------   -----------   ----------
<S>                                  <C>           <C>           <C>
Balance at December 31, 1995.......   $(259,664)      $(593)     $7,721,670
Net loss...........................          --          --      (8,625,732)
Issuance of Common Stock in
 connection with conversion of

 convertible debentures............          --          --       2,496,785
Issuance of Common Stock in lieu of
 compensation......................          --          --          58,595
Unrealized gain on investments.....          --         356             356
Translation of foreign currency
 financial statements..............     191,617          --         191,617
                                      ---------       -----      ----------
Balance at December 31, 1996.......   $ (68,047)      $(237)     $1,843,291
                                      =========       =====      ==========
Net loss...........................          --          --      (5,987,034)
Conversion of Preferred Stock
 to Common Stock...................          --          --              --
Repurchase of Preferred Stock......          --          --        (210,937)
Issuance of Preferred Shares in
 connection with a private

 placement.........................          --          --       1,755,000
Preferred Stock Dividend
 -- conversion discount............          --          --              --
Issuance of Common Stock
 in connection with conversion

 of convertible debentures.........          --          --       3,436,750
Issuance of 30,082,268 warrants
 in connection with convertible

 debentures........................          --          --       1,203,291
Issuance of Common Stock
 in connection with the convertible

 debenture agreement...............          --          --         309,774
Issuance of Common Stock
 in connection with the purchase of

 Divot Spa WGV, Inc................          --          --         281,250
Unrealized gain on investments.....          --         237             237
Translation of foreign currency
 financial statements..............     (40,737)         --         (40,737)
                                      ---------       -----      ----------
Balance at December 31, 1997.......   $(108,784)      $  --      $2,590,885
                                      =========       =====      ==========
</TABLE>

                            See accompanying notes.

                                       27
<PAGE>   28




                            BRASSIE GOLF CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                YEAR ENDED DECEMBER 31,

                                                              ---------------------------
                                                                  1997           1996
                                                              ------------   ------------
<S>                                                           <C>            <C>
OPERATING ACTIVITIES
Net loss....................................................  $ (5,987,034)  $ (8,625,732)

Adjustments to reconcile net loss to net cash used in operating activities:

  Loss on sales of subsidiaries.............................     1,826,164             --
  Amortization of debt discount.............................       892,709             --
  Loss on equity investments in subsidiaries................       116,318        966,579
  Depreciation..............................................       520,959        535,293
  Amortization..............................................       350,263        507,598
  Writedown of goodwill.....................................            --      4,050,000
  Bad debt expense..........................................       372,161         65,000
  Loss on sale of marketable equity securities..............        21,404            182
  Trade accounts receivable.................................      (197,388)        66,826
  Accounts receivable from related parties..................       (10,543)       107,258
  Inventories and other current assets......................      (953,044)       (55,202)
  Accounts payable and accrued expenses.....................       280,744       (368,480)
  Accrued interest payable..................................       103,774      1,024,133
  Income tax payable........................................       (15,919)       197,712
                                                              ------------   ------------
Net cash used in operating activities.......................    (2,679,432)    (1,528,833)
INVESTING ACTIVITIES
Payments for intangible assets..............................      (260,006)      (571,293)
Purchases of property and equipment, net....................      (366,612)      (698,630)
Change in restricted cash...................................      (135,019)            --
Additional investments in subsidiaries......................        33,682       (486,770)
Proceeds from sale of marketable equity securities..........        18,271             --
Proceeds from sale of subsidiaries..........................     3,550,000             --
                                                              ------------   ------------
Net cash provided by (used in) investing activities.........     2,840,316     (1,756,693)
FINANCING ACTIVITIES
Additions to long-term borrowings...........................     3,417,480      5,480,388
Payments on long-term borrowings and capital leases.........    (4,540,608)    (4,836,509)
Issuance of common stock....................................            --      2,555,380
Payments on loans from officers and shareholders............    (1,293,895)       648,121
Proceeds from sales of convertible preferred stock..........     1,920,000             --
Payment for stock issuance costs............................      (165,000)            --
Payments made to retire preferred stock.....................      (210,937)            --
                                                              ------------   ------------
Net cash (used in) provided by financing activities.........      (872,960)     3,847,380
Effect of foreign currency exchange rate changes on cash....       (40,737)       191,617
                                                              ------------   ------------
(Decrease) Increase in cash.................................      (752,813)       753,471
Cash at beginning of year...................................       806,079         52,608
                                                              ------------   ------------
Cash at end of year.........................................  $     53,266   $    806,079
                                                              ------------   ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for interest....................  $    580,581   $    938,071
                                                              ============   ============
</TABLE>

                            See accompanying notes.

                                       28
<PAGE>   29
                            BRASSIE GOLF CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 1997

1.  BUSINESS OF THE COMPANY, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING

    POLICIES

     Brassie Golf Corporation ("the Company") owns and operates golf courses and
is engaged in the development, licensing and marketing of golf-related
businesses. The Company also holds certain exclusive licensing rights in the
United States and internationally.

     As of December 31, 1997, the Company has a net working capital deficiency
of $98,529. The Company is not generating sufficient revenues from its
operations to fund its activities and therefore is dependent on additional
financing from external sources. Such factors raise substantial doubt about the
Company's ability to continue as a going concern. The Company secured $1.9
million of funding in a private placement transaction in December 1997. The
Company expects to raise additional amounts from private placements in 1998. If
the Company is successful in raising additional equity capital in 1998,
management believes that the Company will have adequate resources to continue to
meet its current debt obligation, fund capital improvements and expand and
develop its businesses. There is no assurance that such additional funding will
be completed and the inability to obtain such financing would have a material
adverse effect on the Company.

  Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and all wholly and majority-owned subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation. The subsidiaries and
related percentage of ownership by the Company at December 31, 1997 are as
follows:

<TABLE>
<CAPTION>

                                                                   OWNERSHIP PERCENTAGE

                                                                            AT
                                                                       DECEMBER 31,

                                                                   ---------------------
COMPANY NAME                                        ABBREVIATION     1997        1996
------------                                        ------------   ---------   ---------
<S>                                                 <C>            <C>         <C>
The Gauntlet at St. James, Inc. ..................   St. James        100%         80%
The Gauntlet at Curtis Park, Inc. ................  Curtis Park       100         100
Brassie Golf Management Services, Inc. ...........     BGMS            --         100
Summit Golf Corporation...........................    Summit           --         100
Hale Irwin Golf Services, Inc. ...................     HIGSI           --         100
Brassie Construction Management Services, Inc. ...     BCMS           100         100
Amalgamated Equity Golf (a British Columbia
  Corporation)....................................  Amalgamated       100         100
Divot Properties WGV, Inc. .......................  Properties        100         100
</TABLE>

     Minority interest expense in 1996 represents the 20% interest in the St.
James golf course owned by a related entity. The Company received the remaining
20% Minority interest in St. James as part of the sale of the golf course in
1997 (see Note 9, "Disposition of Assets").

     The Company's 30% investments in The Gauntlet at Laurel Valley, Inc., a
golf course located in Greenville, S.C., and The Gauntlet at Myrtle West, Inc.,
a golf course located in Myrtle Beach, S.C., are accounted for using the equity
method (See Note 10 "Change in Reporting Entity").

  Property and Equipment

     Property and equipment is recorded at cost. Costs relating to the
acquisition and development of golf courses, including the cost of real estate,
related legal fees, construction costs, interest, and other direct costs
associated with the development of the golf courses are capitalized as part of
the cost of the course. Depreciable golf course improvements are comprised
primarily of irrigation

                                       29
<PAGE>   30



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

systems, cart paths, bridges, and other land improvements. Depreciation on
property and equipment begins when the assets are placed into service and is
charged to operations over the estimated useful lives of the assets (5 to 20
years), utilizing the straight-line method for financial reporting purposes and
accelerated methods for tax purposes. All other costs are charged to expense as
incurred.

  Intangible Assets

     Intangible assets consist primarily of financing costs and licensing fees.
Costs incurred in obtaining long-term debt obligations are capitalized at cost
and amortized over the lives of the respective loans. Significant additions to
financing costs during 1997 resulted primarily from costs incurred to obtain
financing on more favorable terms.

  Goodwill

     The Company initially records goodwill at its cost and amortizes the cost
over the estimated useful life of the asset. At the end of each accounting
period, the Company reviews the carrying value of the goodwill for possible
impairment. The Company's policy for the valuation of goodwill is to calculate
the undiscounted projected future cash flows expected to be generated over the
life of the goodwill. This amount is then compared to the carrying value of the
goodwill to determine if the asset is impaired.

     The Company has classified, as goodwill, the cost in excess of the fair
value of the net assets of SPA, which was acquired through a purchase
transaction during 1997 (see Note 8, "Acquisitions", for further discussion).
Goodwill is being amortized on a straight-line basis over 15 years. Amortization
charged to continuing operations amounted to $18,092 and $255,226 in 1997 and
1996, respectively.

     During 1996, the Company recorded a goodwill writedown of $4,050,000 on
Summit, leaving a remaining balance of $626,245, net of accumulated
amortization, at December 31, 1996 which reflects estimated future discounted
cash flows. The writedown is included in the accompanying statement of
operations for the year ended December 31, 1996.

     In July 1997, the Company sold its golf course management division,
consisting of Brassie Golf Management Services. Inc. and Summit. The Company's
remaining goodwill associated with the Summit was written off in connection with
the sale (See Note 9, "Disposition of Assets").

  Restricted Cash

     Restricted cash represents escrow accounts of Curtis Park and Saint James
on behalf of certain lending institutions pursuant to loan and sale agreements,
respectively. Such amounts are to be recorded as expense when earned over the
terms of the agreements and are recoverable by the Company upon occurrence of
certain events specified in the respective escrow agreements.

  Cash and Cash Equivalents

     The Company considers highly liquid, short-term investments with a maturity
of three months or less when purchased to be cash equivalents.

  Marketable Equity Securities

     The Company's marketable equity securities are classified as
available-for-sale and carried at fair value. The ending balance of
shareholders' equity has been adjusted to reflect the net unrealized holding
gain or loss on securities classified as available-for-sale.

                                       30
<PAGE>   31



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     During 1997, the Company sold all of its marketable equity securities. Net
realized gains, determined by specific identification, were not material.

     The Company maintains cash and short-term investments with various
financial institutions. These financial institutions are located in different
areas of the U.S. and Canada, and Company policy is designed to limit exposure
to any one institution. The Company performs periodic evaluations of the
relative credit standing of those financial institutions utilized in the
Company's investment strategy.

  Inventories

     Inventories are stated at the lower of cost or market as determined using
the specific identification method.

     Inventory at December 31, 1997 consists of:

<TABLE>

<S>                                                           <C>
Proshop merchandise.........................................  $ 27,415
Food and beverage inventory.................................     4,196

                                                              --------
                                                              $ 31,611

                                                              ========
</TABLE>

  Revenues

     Revenues of the Company include daily golf fees, proshop merchandise sales
and food and beverage sales. Golf fees include revenue generated from green
fees, cart fees and range fees. Revenues also include sales of memberships and
annual dues charged to members and golf course management and design fees.

     Golf fees, proshop merchandise sales and food and beverage sales are
recognized when received. Annual membership dues are recognized and earned
ratably over a twelve-month period. Membership dues collected in advance are
deferred as "unearned income" and recognized over the period of prepayment.
Membership fees that are non-refundable are recognized by the Company when
received. Golf course management and design fees are recognized as services are
performed.

     As part of an agreement with the developer of the residential lots, the
Company receives $5,000 in membership fees for each residential lot sold in the
immediate area of the St. James golf course through November 23, 1997 (See Note
9, "Disposition of Assets").

  Stock Based Compensation

     On January 1, 1996, the company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which
requires companies to recognize as expense the fair value of all stock-based
awards on the date of grant, or continue to apply the provisions of Accounting
Principles Board Opinion No. 25 ("APB 25") and provide pro forma net income and
pro forma earnings per share disclosures for employee stock option grants as if
the fair-value-based method defined in SFAS 123 had been applied. The Company
has elected to continue to apply the provisions of APB 25 and provide the pro
forma disclosure provisions of SFAS 123 (See Note 7, "Stock Options").

  Advertising Expense

     The cost of advertising is expensed as incurred. The Company incurred
$313,000 and $216,000 in advertising costs during the years ended December 31,
1997 and 1996, respectively.

                                       31
<PAGE>   32



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Use of Estimates

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

  Concentration of Credit Risk

     The Company's primary financial instrument subject to potential
concentration of credit risk is trade accounts receivable which are unsecured.
The Company provides an allowance for doubtful accounts based on its analysis of
potentially uncollectible accounts. The Company's trade receivables arise
principally from its golf course management operations. As of December 31, 1997,
the Company had no significant concentrations of credit risk with any individual
customers.

  Foreign and Domestic Operations

     Net (loss) income from the Company's foreign subsidiary (Amalgamated) was
approximately $(201,000) and $339,000 for the years ended December 31, 1997 and
1996, respectively. Net loss from domestic operations was approximately
$5,786,000 and $8,965,000, respectively, for the same periods.

  Translation of Foreign Currencies

     Foreign currency transactions and financial statements of Amalgamated are
translated from the local currency, Canadian dollars, into U.S. dollars at the
current exchange rates except for revenues, costs and expenses which are
translated at average exchange rates. Adjustments resulting from translations of
financial statements are reflected as a separate component of shareholders'
equity.

  Net Loss Per Share

     In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements. Stock
options, warrants and the five percent convertible debentures are considered
anti-dilutive and therefore have not been included in the computation.

  Long Lived Assets

     In 1996, the Company adopted FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
Under the provisions of the Statement, impairment losses are recognized when
expected future cash flows are less than the assets' carrying value.
Accordingly, when indicators of impairment are present, the Company evaluates
the carrying value of property and equipment and intangibles in relation to the
operating performance and future undiscounted cash flows of the underlying
business. The Company adjusts the net book value of the underlying assets if the
sum of expected future cash flows is less than book value. Based on the
application of the Statement, goodwill was adjusted to its estimated fair value
which resulted in a write-down of $4,050,000 in 1996.

                                       32
<PAGE>   33



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Fair Value of Debt

     The Company estimates that the fair value of notes payable approximates the
carrying value based upon its effective current borrowing rate for debt with
similar terms and remaining maturities. Disclosure about fair value of financial
instruments is based upon information available to management as of December 31,
1997. Although management is not aware of any factors that would significantly
affect the fair value of amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date.

  Impact of Recently Issued Accounting Standards

     In 1997, the FASB issued Statements No. 130, "Reporting Comprehensive
Income" ("SFAS 130") and No. 131, "Disclosures About Statements of an
Enterprise and Related Information" ("SFAS 131"), which are both effective for
fiscal years beginning after December 15, 1997. SFAS 130 addresses reporting
amounts of other comprehensive income and SFAS 131 addresses reporting segment
information. The Company does not believe that the adoption of these new
standards will have a material impact on its financial statements.

2.  LONG-TERM DEBT

     Long-term debt with financial institutions and other third parties at
December 31, 1997 consists of the following:

<TABLE>

<S>                                                           <C>
Loan to Curtis Park from bank, payable in monthly payments

  of $26,124, which includes principal and interest
  beginning December 1, 1997 with remaining principal and
  interest due October 1, 2007; collateralized by leasehold
  interest in land and land improvements. Interest is
  payable monthly at 8.37% per annum........................  $3,276,753
Unsecured convertible 5% debentures due December 31, 1998,
  unless converted into common stock, interest payable
  quarterly and incrementally based upon conversions with
  the balance due, if any, at maturity, net of unamortized
  discount of $620,356......................................     390,293
Unsecured operating term loan from bank, with interest at
  10.75%, payable in monthly installments of $16,723, which
  includes principal and interest, through January 1999.....     220,366
Other notes payable.........................................     346,867
                                                              ----------
                                                               4,234,279

Less current portion........................................     757,023
                                                              ----------
                                                              $3,477,256

                                                              ==========
</TABLE>

     Principal maturities of all the indebtedness detailed above during each of
the following five years and thereafter are as follows:

<TABLE>

<S>                                                           <C>
1998........................................................   $  757,023
1999........................................................       77,455
2000........................................................      242,850
2001........................................................       47,422
2002........................................................       51,607
Thereafter..................................................    3,057,922
                                                               ----------
                                                               $4,234,279

                                                               ==========
</TABLE>

CONVERTIBLE DEBENTURE EXCHANGE

     During March 1996, the Company issued $5.5 million in six percent
convertible debentures to finance the operations of the Company. During 1996,
the holders of the debentures converted $2,034,262 of the debt into 6,350,564
shares which equated to $2,496,785 in equity, net of financing fees. Through
March 1, 1998, the six percent debentures were convertible into shares of common
stock at discounts ranging from 15%-35% of its current market value. The Company
recorded $1.4 million in interest expense during 1996 to reflect the discounts
upon conversion of the

                                       33
<PAGE>   34



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company's common stock. As of December 31, 1996, $3,465,738 of convertible
debentures were outstanding.

     From January through October 1997, the holders of the debentures converted
$1,195,743 of the debt into 4,972,107 shares which equated to $1,573,308 in
equity, net of financing fees. During November 1997, the remaining $2,269,995 of
outstanding debentures were transferred to new debenture holders in a third
party transaction. Simultaneously, the Company retired the 1996 debenture
agreements and replaced them with new debenture agreements containing new terms.

     The new debentures are payable on December 31, 1998. Through December 31,
1998, the holders of the debentures are entitled to convert the debentures into
common stock of the Company at a conversion price equal to the lesser of (1)
$0.17 per share or (2) 70% of the average closing bid of the common stock during
the last five trading days prior to conversion. The debentures accrue interest,
payable quarterly commencing March 1, 1998, at a rate of 5% per annum. If the
Company does not file a Registration Statement with the SEC to register
securities in a public offering within 120 days from November 18, 1997, the
interest rate shall increase to 18% per annum. If the Effective Date of the
Registration Statement has not occurred by the 180th day after November 18,
1997, then the interest rate shall further increase to 24% per annum until the
Effective Date. The accrued interest is convertible into common stock of the
Company at the same conversion price as the debenture principal. In any event,
each holder cannot as a result of such conversions beneficially own more than
4.99% of the then outstanding common stock. In the event that the debenture
holder proposes to convert all or any portion of the principal and interest at a
conversion price of less than $0.05, the Company shall have the option to redeem
all or any part of the amount proposed to be converted at a redemption price of
125% of the amount of the principal and interest proposed to be converted. In
conjunction with these debenture agreements, the Company incurred issuance costs
totaling $27,000. These issuance costs are being amortized as a component of
interest expense over the term of the debentures.

     From November through December 1997, $1,259,346 of the debentures'
principal had been converted into 8,460,888 shares of common stock, which
equated to $1,863,442 in equity, net of financing fees. As of December 31, 1997,
$1,010,649 of convertible debentures were outstanding.

     In connection with the sale of the debenture agreements, the Company issued
(1) warrants to purchase 15,041,134 shares of common stock of the Company at the
lesser of $0.17 per share of 70% of the average closing bid price of the common
stock during the last five trading days prior to exercise, (2) warrants to
purchase 15,041,134 shares of common stock of the Company at the lesser of $0.34
per share of 70% of the average closing bid price of the common stock during the
last five trading days prior to exercise and (3) 1,672,128 shares of common
stock. The warrants are exercisable for a period of three years from the date of
issuance. The estimated value of these warrants and common stock, $1,513,065,
has been recorded as additional paid-in capital.

3.  LEASES

     The Company leases certain equipment used in the daily operations of the
Company under capital leases which are included in furniture, machinery and
equipment. Leased equipment under capital leases included in furniture,
machinery and equipment at December 31, 1997 consists of the following:

<TABLE>

<S>                                                           <C>
Equipment...................................................  $69,683
Less accumulated amortization...............................    5,203

                                                              -------
                                                              $64,480

                                                              =======
</TABLE>

                                       34
<PAGE>   35



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The accumulated amortization with respect to these capitalized leases is
included in "accumulated depreciation and amortization" in the accompanying
balance sheet. Amortization expense is included in depreciation and amortization
expense in the accompanying statement of operations.

     Future minimum lease payments, by year and in the aggregate, under capital
leases, consist of the following at December 31, 1997:

<TABLE>

<S>                                                           <C>
1998........................................................  $ 28,228
1999........................................................    25,236
2000........................................................    16,148

                                                              --------
Total minimum lease payments................................    69,612
Amounts representing interest...............................   (12,317)
                                                              --------
                                                                57,295

Less current portion........................................   (21,510)
                                                              --------
                                                              $ 35,785

                                                              ========
</TABLE>

     The Company also rents certain facilities, land and equipment under
operating leases which expire at various times through 2027. Total rent expense
for the Company was approximately $283,200 and $207,500, for the years ended
December 31, 1997 and 1996, respectively.

     Future minimum lease payments, by year and in the aggregate, under
operating leases consist of the following at December 31, 1997:

<TABLE>

<S>                                                           <C>
1998........................................................  $  272,200
1999........................................................     284,674
2000........................................................     242,428
2001........................................................     187,356
2002........................................................     180,566
Thereafter..................................................     600,000
                                                              ----------
                                                              $1,767,224

                                                              ==========
</TABLE>

4.  RELATED PARTY TRANSACTIONS

     The Company funded expenses on behalf of certain entities affiliated
through common ownership. Accounts receivable from related parties were $160,543
at December 31, 1997. The Company expects payment of the amount outstanding at
December 31, 1997 within the next twelve months; accordingly, the amounts are
classified as short-term assets.

     The Company provided management services to related parties resulting in
approximately $77,000 and $190,000 in management fee revenue for the years ended
December 31, 1997 and 1996, respectively.

5.  INCOME TAXES

     Under Financial Accounting Standards Board Statement No. 109, "Accounting
for Income Taxes," the liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

     Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income

                                       35
<PAGE>   36



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

tax purposes. Significant components of the Company's deferred tax liabilities
and assets at December 31, 1997 are as follows:

<TABLE>

<S>                                                           <C>
Deferred tax liabilities:

  Tax over book depreciation and amortization...............  $        --
                                                              -----------
                                                              $        --
                                                              ===========
Deferred tax assets:

  Book over tax depreciation and amortization...............  $   130,000
  Net operating loss carryforwards..........................    4,400,000
  Bad debt allowance........................................       60,000
  Other.....................................................        4,700
                                                              -----------
Total deferred tax assets...................................    4,594,700
Valuation allowance for deferred tax assets.................   (4,594,700)
                                                              -----------
Net deferred tax assets.....................................           --
                                                              ===========
Net deferred taxes..........................................  $        --
                                                              ===========
</TABLE>

     At December 31, 1997 the Company has a net operating loss carryforward of
$11,000,000 which will begin to expire in the year 2007. The tax benefits of
these items are reflected in the above table of deferred tax assets and
liabilities. U.S. tax rules impose limitations on the use of net operating
losses following certain changes in ownership. If a change were to occur, the
limitation could reduce the amount of these benefits that would be available to
offset future taxable income each year, starting with the year of ownership
change.

     The reconciliation of income tax attributable to continuing operations
computed at the U.S. federal statutory tax rates to income tax expense is:

<TABLE>
<CAPTION>

                                                                DECEMBER 31,

                                                         --------------------------
                                                            1997           1996
                                                         -----------    -----------
<S>                                                      <C>            <C>
Income tax benefit at U.S. statutory rate..............  $(2,040,000)   $(2,895,000)
Amortization and write-off of goodwill.................           --      1,722,000
State tax benefit, net.................................     (360,000)      (492,000)
Equity income..........................................       47,000        326,000
Interest expense for which no tax benefit was

  provided.............................................      357,000        648,000
Impact of foreign losses for which a current tax
  benefit is not available.............................       80,000             --
Impact of sale of stock in subsidiaries................      460,000             --
Other items............................................      141,000        438,300
Change in valuation allowance..........................    1,315,000        252,700
Foreign tax............................................           --        110,000
                                                         -----------    -----------
Tax expense............................................  $        --    $   110,000
                                                         ===========    ===========
</TABLE>

                                       36
<PAGE>   37



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6.  SHAREHOLDERS' EQUITY

     During 1996, the Company issued 50,000 shares of common stock with a value
of $58,595 in lieu of compensation for consulting services performed. The value
of the issued stock was based on the fair market value of the Company's common
stock on the date that the consulting services were performed and reflects the
value of services received. The Company recognized $58,595 in compensation
expense related to the transaction.

     During December 1997, the Company closed on a private placement offering of
7% Cumulative Convertible Preferred Stock ("Preferred Stock") for $1.92 million.
The Preferred Stock was offered in units of 15 Preferred Shares, with each such
share having a liquidation value of $1,000, and 10,000 warrants, for a price of
$15,000 per unit.

     The holders of the Preferred Stock are entitled to a cash dividend equal to
$70 per share payable quarterly commencing April 1, 1998, although the Company
has the option to utilize shares of its common stock, under certain conditions,
to satisfy the dividend requirement. If the Company has not filed a Registration
Statement with the SEC to register securities in a public offering within 180
days of issuance, the Preferred Stock shall accrue dividends at an annual rate
of $180 per share. The purchaser has the right to convert the Preferred Stock
immediately into a number of shares of the Company's common stock equal to
$1,000 per share converted divided by the Conversion Price. The Conversion Price
means the lesser of (1) $0.70 or (2) 75% of the average of the closing bid price
of a share of the Company's common stock during the ten trading days prior to
such conversion provided that the holder can not as a result of such conversion
beneficially own more than 4.99% of the then outstanding common stock. In the
event the Conversion Price falls below $0.50, the Company may redeem, at $1,250
per share plus any accrued but unpaid dividends, all (but not any part) of
shares proposed to be converted. In conjunction with the discount allowed on the
conversion of the Preferred Stock into common stock, the Company has recorded
dividends of $669,928. The Preferred Stock does not carry any voting rights. As
of December 31, 1997, 128 units of Preferred Stock had been sold while no
conversions of shares of the Company's common stock had taken place.

     In connection with the sale and issuance of the Preferred Stock, the
Company issued warrants, exercisable immediately, to purchase 1,280,000 shares
of common stock of the Company at $1.00 per share for a period of three years
from the date of issuance. The Company incurred approximately $165,000 in
additional costs related to the issuance of the Preferred Stock, which are
offset against additional paid-in capital in the consolidated statements of
shareholders' equity.

     As of December 31, 1997, warrants to purchase 33,550,268 shares of the
Company's common stock were outstanding. These warrants have exercise prices
ranging from $.17 to $3.25 per share; 100,000 warrants expire September 28, 1998
(exercise price equals $2.40 per share); 238,000 warrants expire November 17,
1998 (exercise price equals $2.40 per share); 50,000 warrants expire December 5,
1998; (exercise price equals $1.00 per share); 150,000 warrants expire June 30,
1999 (exercise price equals $2.00 per share); 1,400,000 warrants expire June 30,
2000 (exercise prices range from $2.40 to $3.25 per share), 250,000 warrants
expire September 28, 2000 (exercise price equals $2.40 per share); 15,041,134
warrants expire November 18, 2000 (exercise price equals the lesser of $0.17 per
share or 70% of the average closing bid of the common stock during the last five
trading days prior to conversion); 15,041,134 warrants expire November 18, 2000
(exercise price equals the lesser of $0.34 per share or 70% of the average
closing bid of the common stock during the last five trading days prior to
conversion); and 1,280,000 warrants expire December 3, 2000 (exercise price
equals $1.00 per share).

                                       37
<PAGE>   38



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Loss per Share

     The following table sets forth the computation of basic and diluted
earnings per share in accordance with Statement No. 128, Earnings per Share:

<TABLE>
<CAPTION>

                                                                DECEMBER 31

                                                         --------------------------
                                                            1997           1996
                                                         -----------    -----------
<S>                                                      <C>            <C>
Numerator:

  Net loss.............................................  $(5,987,034)   $(8,625,732)
  Preferred stock dividends -- conversion discount.....     (669,928)            --
                                                         -----------    -----------
  Numerator for basic and dilutive earnings per share--

     income available to common stockholders...........  $(6,656,962)   $(8,625,732)

Denominator:

  Denominator for basic and diluted earnings per

     share -- weighted-average shares..................   29,724,100     20,005,900
                                                         -----------    -----------
  Basic and diluted loss per share.....................  $      (.22)   $      (.43)
                                                         ===========    ===========
</TABLE>

     The following number of potentially convertible shares of common stock
related to convertible preferred stock, convertible debentures, warrants, and
stock options are as follows at December 31, 1997:

<TABLE>

<S>                                                           <C>
     For conversion of convertible preferred stock..........   4,873,096
     For conversion of convertible debentures...............   5,944,994
     Outstanding warrants...................................  33,550,268
     Outstanding stock options..............................     594,261
     Possible future issuance under stock option plan.......     905,739
                                                              ----------
       Total shares potentially convertible.................  45,868,358

                                                              ==========
</TABLE>

     As of December 31, 1997, the Company had only 7,367,497 common shares
available to be issued.

7.  STOCK OPTIONS

     On June 3, 1994, the Board of Directors and the stockholders of the Company
adopted the Brassie Golf Corporation 1994 Stock Option and Restricted Stock
Purchase Plan (the "Stock Option Plan") as an incentive for key employees. The
purchase price for any Stock Awards and the exercise price for any Options may
not be less than the fair market value for the common stock on the date of
grant. Unless otherwise agreed between the grantee and the Company, the Stock
Awards and Options expire 90 days after termination of the grantee's
relationship with the

                                       38
<PAGE>   39



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company. Because no options were issued during the years ended December 31, 1997
and 1996, no pro forma disclosures are required under SFAS 123.

  Options Outstanding, Common Stock

<TABLE>
<CAPTION>

                                                                       OPTIONS OUTSTANDING

                                                         SHARES     --------------------------
                                                        AVAILABLE    NUMBER         PRICE
                                                        FOR GRANT   OF SHARES     PER SHARE

                                                        ---------   ---------   --------------
<S>                                                     <C>         <C>         <C>
Balances at December 31, 1995.........................    217,475   1,282,525   $2.00 to $3.80
  Options granted.....................................         --          --               --
  Options canceled....................................     47,000     (47,000)              --
  Options exercised...................................         --          --               --
                                                        ---------   ---------   --------------
Balances at December 31, 1996.........................    264,475   1,235,525   $2.00 to $3.80
                                                        ---------   ---------   --------------
  Options granted.....................................         --          --               --
  Options canceled....................................    641,264    (641,264)              --
  Options exercised...................................         --          --               --
                                                        ---------   ---------   --------------
Balances at December 31, 1997.........................    905,739     594,261   $2.00 to $3.80
                                                        =========   =========   ==============
</TABLE>

8.  ACQUISITIONS

     On December 26, 1997, the Company acquired from a related party certain
licensing and development rights on Parcel 11-A of the World Golf Village, the
Spa Tournament Championship development program, and the Spa Products and
Catalog from Divot Spa WGV, Inc., for approximately $356,000. The purchase price
of which approximately $331,000 and $25,000 has been allocated to goodwill and
licensing fees, respectively, consisted of 3,000,000 shares of the Company's
common stock and cash of $75,000. No expense was recorded during 1997 in
connection with this goodwill. The goodwill will be amortized using the straight
line method over a period of 15 years.

     On December 28, 1997, the Company executed a letter of intent with Lady
Fairway Golf to purchase 100% of the outstanding stock of Lady Fairway Golf. In
connection with this agreement, the Company paid a nonrefundable deposit of
$100,000 which is included in the other assets of the Company's consolidated
balance sheet at December 31, 1997. The Company contemplates closing this
transaction in the first quarter 1998.

                                       39
<PAGE>   40



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9.  DISPOSITION OF ASSETS

     During the year ended December 31, 1997, the Company disposed of three
subsidiaries and substantially all of the assets of St. James in three separate
transactions for an aggregate amount of approximately $3,800,000 ($3,550,000 in
cash and $250,000 in accounts receivable). In addition, the Company is entitled
to receive a certain percentage of future contract revenue of Hale Irwin Golf
Services, Inc. The Company recognized a loss of $1,826,164 in connection with
the disposition of these subsidiaries. This loss is reflected in the statement
of operations. The operating results of the subsidiaries were included in the
consolidated statements of operations of the Company from the dates of
acquisition through the dates of disposition. The proceeds from the sale and
related gain (loss) are recorded as follows:

<TABLE>
<CAPTION>

                                                                 PROCEEDS
                                                                FROM SALE     GAIN/(LOSS)

                                                                ----------    -----------
<S>                                                             <C>           <C>

Brassie Golf Management Services, Inc. and Summit Golf

  Corporation...............................................    $  850,000    $   125,000
The Gauntlet at St. James...................................     2,950,000     (1,931,875)
Hale Irwin Golf Services, Inc...............................            --        (19,289)
                                                                ----------    -----------
                                                                $3,800,000    $(1,826,164)

                                                                ==========    ===========
</TABLE>

10.  CHANGE IN REPORTING ENTITY

     In 1995, the Company consolidated two 75% owned subsidiaries, The Gauntlet
at Laurel Valley and The Gauntlet at Myrtle West in accordance with Financial
Accounting Standards Board Statement 94. In 1996, the Company transferred 45% of
the ownership interest in the subsidiaries to the minority shareholder to comply
with a mandatory injunction issued by the 13th Circuit Court of Hillsborough
County of Florida. Accordingly, the financial statements for 1996 have been
restated to reflect the Company's ownership in the subsidiaries under the equity
method of accounting. In 1996, the Company recognized a loss of $310,888 on the
transference of the interest in the subsidiaries. The Company's interest in the
net losses of these entities is recorded at 75% up until the date of
transference and at 30% thereafter.

     Due to the recurring operating losses and working capital deficiencies of
the entities, the Company assessed the net realizable value of these investments
at December 31, 1996 to be -0-. Therefore, on the Company's assessment, a
write-down of $116,318 and $505,691 was recorded in 1997 and 1996, respectively
to reflect the net realizable value of these investments. The write-down is
included in the loss on equity investment in subsidiaries line item on the
Company's 1997 and 1996 statement of operations.

     The components of the line item, Loss on equity investment in subsidiaries,
as reported in the consolidated statements of operations are as follows:

<TABLE>
<CAPTION>

                                                                1996       1997

                                                              --------   --------
<S>                                                           <C>        <C>
Pro rata share of net loss..................................  $310,888   $     --
Write-down to carrying value ...............................   505,691    116,318
Reserve for ongoing litigation..............................   150,000         --
                                                              --------   --------
Loss on equity investment in subsidiaries...................  $966,579   $116,318
                                                              ========   ========
</TABLE>

                                       40
<PAGE>   41



                            BRASSIE GOLF CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11.  COMMITMENTS AND CONTINGENCIES

     The Company has employment agreements with its executive officers, the
terms of which expire at various times through September 3, 2004. Such
agreements provide for minimum salary levels, as well as for incentive bonuses
which are payable if specified management goals are attained. Minimum
commitments for future salaries, excluding bonuses, by year and in the aggregate
consist of the following at December 31, 1997:

<TABLE>

<S>                                                           <C>
1998........................................................  $  650,000
1999........................................................     650,000
2000........................................................     591,667
2001........................................................     475,000
2002........................................................     454,167
Thereafter..................................................     375,000
                                                              ----------
                                                              $3,195,834

                                                              ==========
</TABLE>

     The Company, in the ordinary course of business, is the subject of, or
party to, various pending or threatened claims and litigation. In the opinion of
management, settlement of such claims and litigation will not have a material
effect on the Company's operations or financial position.


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

                      NONE

                                       41
<PAGE>   42




                                    PART III

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

              Information incorporated by reference from the Company's Proxy
Statement, under captions "Proposal Two" and "Compliance with Section 16 of the
Securities Exchange Act of 1934"

ITEM 10.  EXECUTIVE COMPENSATION

              Information incorporated by reference from the Company's Proxy
Statement, under caption "Executive Compensation"

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

              Information incorporated by reference from the Company's Proxy
Statement, under caption "Beneficial Owners and Management"

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

              Information incorporated by reference from the Company's Proxy
Statement, under caption "Certain Relationships and Related Transactions"

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

              (a)(1) and (2) List of Financial Statements

              The following consolidated financial statements of Brassie Golf
Corporation and subsidiaries are included in Item 7:

         Consolidated Balance Sheet - December 31, 1997

         Consolidated Statements of Operations - Years ended December 31, 1997
         and 1996

         Consolidated Statements of Shareholders' Equity - Years ended
         December 31, 1997 and 1996

         Consolidated Statements of Cash Flows - Years ended December 31, 1997
         and 1996

         Notes to Consolidated Financial Statements

         No other schedule for which provision is made in the applicable
         accounting regulation of the Securities and Exchange Commission are
         required under the related instructions or are applicable and therefore
         have been omitted.


                                       42
<PAGE>   43



              (3)  Exhibits

              The exhibits listed below which are marked with a page number
reference were filed with a prior registration statement filed under the
Securities Act or in a periodic report filed under the Exchange Act and are
incorporated herein by this reference. The exhibits listed below which are not
marked with a page number reference are filed with this Form 10-KSB.

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT/ITEM        DOCUMENT/DESCRIPTION                                                                              PAGE
                                                                                                                     NUMBER
<S>                 <C>                                                                                              <C>
2.1                 Agreement and Plan of Reorganization effective as of November 14, 1991 by                          (A)
                    and among Longview Golf Corporation (the "Company"), Eliga Corporation
                    ("Eliga") and Gutta Percha, Inc. ("GPI")

2.2                 Arrangement Agreement dated as of March 26, 1993 between Equity                                    (A)
                    Preservation Corp. ("Equity"), the Company and 440888 B.C. Ltd. and the
                    Information Circular distributed to shareholders in connection with the
                    arrangement contemplated by such Arrangement Agreement (the "Arrangement").

2.3                 Final Order of the Supreme Court of British Columbia, dated May 17, 1993,                          (B)
                    relating to the fairness of the Arrangement.

2.4                 Agreement of Purchase and Sale, dated as of December 23, 1993, by and                              (B)
                    between North Myrtle Beach Golf Club, Inc. ("MW Seller"), the Company and
                    The Gauntlet at Myrtle West, Inc. ("GMW"), and the material Exhibits thereto.

2.5                 Purchase and Sale Agreement, dated as of April 12, 1994, between Wedgefield                        (B)
                    Limited Partnership ("Wedgefield LP"), the Company and The Gauntlet at
                    Wedgefield, Inc. ("GWF"), and the material Exhibits thereto.

2.6                 Purchase and Sale Agreement, dated as of April 12, 1994,
                    between Palisades Golf Partners ("Palisades GP"), the                                              (B)
                    Company and The Gauntlet at Palisades, Inc.
                    ("GPS"), and the material Exhibits thereto.

2.7                 Purchase and Sale Agreement, dated as of April 12, 1994, between Northshore                        (B)
                    Golf Partners, Ltd. ("Northshore GP"), the Company and The Gauntlet at
                    Northshore, Inc. ("GNS"), and the material Exhibits thereto.

2.8                 Agreement and Plan of Reorganization dated as of May 16, 1994, between the                         (B)
                    Company and the shareholders of Hale Irwin Golf Services, Inc., and the
                    material Exhibits thereto.

3.1                 Certificate of Incorporation of the Company, as amended.                                           (A)

3.2                 By-laws of the Company.                                                                            (A)
</TABLE>


                                       43
<PAGE>   44





<TABLE>
<CAPTION>
EXHIBIT/ITEM        DOCUMENT/DESCRIPTION                                                                              PAGE
                                                                                                                     NUMBER
<S>                 <C>                                                                                              <C>
3.3                 Amendment to the Certificate of Incorporation of the Company filed July 18,                        (B)
                    1994.

4.1                 Escrow Agreement dated as of July 23, 1993 between The Toronto Stock                               (A)
                    Exchange, the Company, Montreal Trust Company of Canada and the individuals
                    listed on Schedule A thereto.

4.2                 Certificate of Designations, Preferences and Rights of 1997 Convertible
                    Preferred Stock of the Company dated December 29, 1997.

4.3                 Certificate of Designations, Preferences and Rights of 10,500 Shares of 1997
                    Convertible Preferred Stock of the Company dated January 13, 1998.

10.1                Shareholders Agreement between Eliga, Canadian PT Limited Partnership ("PT                         (A)
                    Partnership"), Rizzo Inc., and Longview Golf Corporation ("GSJ") dated as of
                    October 1, 1990.

10.2                Bylaws of Longview Country Club dated November 14, 1990.                                           (A)

10.3                Purchase Agreement between Homer E. Wright, Jr. and GSJ dated as of                                (A)
                    September 8, 1990.

10.4                Loan Agreement between NCNB National Bank of North Carolina                                        (A)
                    ("NationsBank") and GSJ dated as of October 1, 1990; Promissory Note made
                    by GSJ in favor of NationsBank dated October 1, 1990; Deed of Trust and
                    Security Agreement between GSJ and NationsBank dated October 1, 1990.

10.5                Loan Agreement between GSJ and PT Partnership dated October 1, 1990;                               (A)
                    Promissory Note made by GSJ to PT Partnership dated October 1, 1990; and
                    Future Advance Deed of Trust, Assignment and Security Agreement made by
                    GSJ dated October 1, 1990.

10.6                Shareholders Agreement between Eliga, Edmonton Pipe Industry Pension Trust                         (A)
                    Fund (the "EPI Pension Fund"), EPI and Laurel Valley Golf Corporation
                    ("GLV") dated as of October 30, 1991.

10.7                Loan Agreement between GLV and NationsBank dated as of October 30, 1991;                           (A)
                    Promissory Note made by GLV in favor of NationsBank dated October 30,
                    1991; and Mortgage of Real Property and Security Agreement between GLV and
                    NationsBank dated as of October 30, 1991.

10.8                Loan Agreement between GLV and EPI Pension Fund dated as of October 30,                            (A)
                    1991; Promissory Note made by GLV to EPI Pension Fund; and second
                    mortgage and Security Agreement between GLV and EPI Pension Fund dated as
                    of October 30, 1991.

10.9                Joint Venture Agreement dated as of May 11, 1993 between Laurel Development                        (A)
                    Corporation ("LDC"), Foothills Development, Inc. ("Foothills") and Partners in
                    Progress X.

10.10               Loan Agreement dated as of July 6, 1993 between Amalgamated Equity Golf                            (A)
                    Corp. and Foothills.

10.11               Project Management Agreement dated June 1, 1993 between LDC and PMI.                               (A)
</TABLE>


                                       44
<PAGE>   45





<TABLE>
<CAPTION>
EXHIBIT/ITEM        DOCUMENT/DESCRIPTION                                                                              PAGE
                                                                                                                     NUMBER
<S>                 <C>                                                                                              <C>
10.12               Subscription, Assignment and Assumption Agreement dated as of November 23,                         (A)
                    1993 between Amalco and Project 93 Management Ltd. ("Project 93") including
                    Promissory Note made by Project 93 in favor of Amalco.

10.13               Lease Agreement, as amended, between the Company and the Board of                                  (B)
                    Supervisors of Stafford County, Virginia dated as of November 23, 1993.

10.14               Shareholders' Agreement between the Company, UA Canadian Pipeline Industry                        (B)
                    National Pension Plan ("UA Pension Fund") and The Gauntlet at Curtis Park,
                    Inc. ("GCP") dated April 19, 1994 and Amendment thereto dated May 13, 1994.

10.15               Loan Agreement between GCP and NationsBank dated as of April 19, 1994;                             (B)
                    Promissory Note made by GCP in favor of NationsBank dated April 19, 1994;
                    and Credit Line Deed of Trust and Security Agreement between GCP and
                    NationsBank dated as of April 19, 1994.

10.16               Guaranty Agreement between the Company, NationsBank and GCP dated as of                            (B)
                    April 19, 1994; Pledge Agreement between the Company and NationsBank dated
                    as of April 19, 1994; Amending Agreement between the Company, PT
                    Partnership, GSJ and NationsBank dated as of April 19, 1994 (amending GSJ
                    Shareholders' Agreement to permit the stock pledge); Amending Agreement
                    between the Company, EPI Pension Fund, GLV and NationsBank dated as of
                    April 19, 1994 (amending GLV Shareholders' Agreement to permit the stock
                    pledge).

10.17               Loan Agreement between GCP and UA Pension Fund dated April 19, 1994;                               (B)
                    Promissory Note made by GCP to UA Pension Fund dated April 19, 1994; and
                    Second Lien Credit Line Deed of Trust and Security Agreement, dated April 19,
                    1994, between GCP and UA Pension Fund.

10.18               Shareholders' Agreement, dated February 25, 1994, between                                          (B)
                    the Company, Edmonton Pipe Industry Pension Trust Fund
                    ("EPI Pension Fund") and GMW.

10.19               Indemnity Agreement and Guaranty, dated December 28, 1993, MW Seller,                              (B)
                    GMW and the Company; Third Mortgage of Real Property and Security
                    Agreement, dated December 28, 1993 by GMW to MW Seller.

10.20               Loan Agreement, dated as of December 28, 1993, by and between GMW and                              (B)
                    NationsBank; Promissory Note made by GMW to NationsBank dated December
                    28, 1993; Mortgage of Real Property and Security Agreement, dated December
                    28, 1993, by GMW to NationsBank.

10.21               Mortgage Purchase and Subscription Agreement, effective as of February 28,                         (B)
                    1994, between the Company, EPI Pension Fund and GMW.
</TABLE>


                                       45
<PAGE>   46





<TABLE>
<CAPTION>
EXHIBIT/ITEM        DOCUMENT/DESCRIPTION                                                                              PAGE
                                                                                                                     NUMBER
<S>                 <C>                                                                                              <C>
10.22               Loan Agreement, dated December 28, 1993, between the Company and GMW;                              (B)
                    Promissory Note made by GMW to the Company dated December 28, 1993;
                    Second Mortgage of Real Property and Security Agreement, dated December 28,
                    1993, by GMW to the Company.

10.23               Intercreditor Agreement, dated December 28, 1993, by and among NationsBank,                        (B)
                    the Company, GMW and MW Seller; Assignment and Assumption of
                    Intercreditor Agreement, dated February 28, 1994, between NationsBank, the
                    Company, EPI Pension Fund, GMW and MW Seller.

10.24               Subordinated Convertible Note, dated as of April 12, 1994 from the Company to                      (B)
                    Warren J. Stanchina, as Trustee; Promissory Mortgage Note dated April 12,
                    1994 from the Company, GNS, GPS and GWF to Warren J. Stanchina, as
                    Trustee.

10.25               Indemnity Agreement, dated April 12, 1994, between Wedgefield LP, GWF and                          (B)
                    the Company; Indemnity Agreement, dated April 12, 1994, between Palisades
                    GP, GPS and the Company; Indemnity Agreement, dated April 12, 1994,
                    between Northshore GP, GNS and the Company; Wedgefield Second Mortgage
                    Deed and Security Agreement dated as of April 12, 1994 by GWF in favor of
                    Warren Stanchina, as Trustee; Palisades Second Mortgage Deed and Security
                    Agreement dated as of April 12, 1994 by GPS in favor of Warren Stanchina, as
                    Trustee; Second Deed of Trust and Security Agreement dated as of April 12,
                    1994 by  GNS in favor of  Warren Stanchina, as Trustee.

10.26               Assumption Agreement, dated April 28, 1994, between BancFlorida, a Federal                         (B)
                    Savings Bank ("BancFlorida"), GWF and GPS; Mortgage, Security Agreement,
                    and Assignment of Rents, dated April 21, 1989, by Wedgefield LP in favor of
                    BancFlorida; Mortgage Note, dated April 21, 1989, from Wedgefield LP to
                    BancFlorida.

10.27               Assumption Agreement, dated April 28, 1994, between BancFlorida, GPS and                           (B)
                    GWF; Mortgage, Security Agreement, and Assignment of Rents, dated December
                    8, 1989, by Palisades GP in favor of BancFlorida; Mortgage Note, dated
                    December 8, 1989, from Palisades GP to BancFlorida.

10.28               Agreement Relating to Construction, Maintenance and Operation of Golf Course                       (B)
                    and Country Club, dated October 18, 1989, between Palisades Golf Club Limited
                    Partnership and Canam Palisades, Ltd.

10.29               Promissory Note, dated April 12, 1994, from GAS to Hermann Flachsmann;                             (B)
                    Deed of Trust, Security Agreement, Financing Statement, and Assignment of
                    Rental dated April 12, 1994 by GAS to Wolfgang Dueren, as Trustee.

10.30               Cooperation Agreement Relating to the Sale of Residential Property and                             (B)
                    Operation of a Golf Course and Country Club, dated April 12, 1994, by and
                    between Northshore LP and GAS.
</TABLE>


                                       46
<PAGE>   47





<TABLE>
<CAPTION>
EXHIBIT/ITEM        DOCUMENT/DESCRIPTION                                                                              PAGE
                                                                                                                     NUMBER
<S>                 <C>                                                                                              <C>
10.31               Brassie Golf Corporation 1994 Stock Option and Restricted Stock Purchase Plan.                     (B)

10.32               Exclusive Personal Service Contract between the Company and Dye, Inc. dated                        (C)
                    March 3, 1993.

10.33               Loan Agreement, dated as of April 24, 1991, between Eliga                                          (D)
                    and the Company and Promissory Note dated September 15,
                    1991 in the amount of $780,000.

10.34               Employment Agreement, dated as of May 16, 1994, between the Company and                            (B)
                    Richard J. Stahlhuth; Employment Agreement, dated as of May 16, 1994,
                    between the Company and Hale S. Irwin.

10.35               Employment Agreement, dated as of June 30, 1994, between the Company and                           (B)
                    Gary A. Nacht.

10.36               Warrant Agreement, dated March 15, 1994, between the Company and The                               (B)
                    Travers Financial Corporation; Warrant Agreement, dated March 15, 1994,
                    between the Company and Theo Kraumanis.

10.37               Form of Warrant Agreement between the Company and the signatories thereto                          (E)
                    dated July 28, 1993.

10.38               Form of Warrant Agreement between the Company and the signatories thereto                          (F)
                    dated March 29, 1993.

10.39               Form of Warrant Issued to the Summit Shareholders dated June 30, 1995.                             (G)

10.40               Form of Warrant and Registration Rights Agreement Issued to Financial Advisor                      (G)
                    dated June 30, 1995.

10.41               1995 GSJ Partnership Loan Agreement and Promissory Note dated June 19,                             (G)
                    1995.

10.42               GSJ Loan Agreement with Canadian PT Limited Partnership, 1995 GSJ Deed of                          (G)
                    Trust and Security Agreement and Promissory Note dated October 1, 1995.

10.43               1995 Deed of Trust and Security Agreement, Promissory Note and 1995 GSJ                            (G)
                    NationsBank Loan Agreement dated June 19, 1995.

10.44               Amended and Restated GCP Promissory Note, First Amendment to GCP Loan                              (G)
                    Agreement, First Amendment to Credit Line Deed of Trust and Security
                    Agreement and Restatement of Guaranty Agreement dated May 5, 1995.

10.45               Office Lease between Breckenridge VIII Investment Corporation, Lessor, and                         (G)
                    Brassie Golf Corporation, Lessee, dated June 22, 1995.

10.46               Consulting Agreement between the Company and Fantor Consulting Ltd. (Allen                         (G)
                    Jefferson) dated January 1, 1996.
</TABLE>


                                       47
<PAGE>   48





<TABLE>
<CAPTION>
EXHIBIT/ITEM        DOCUMENT/DESCRIPTION                                                                              PAGE
                                                                                                                     NUMBER
<S>                 <C>                                                                                              <C>
10.47               Agreement in Principle dated February 21, 1996 between the Company, Gordon                         (H)
                    Ewart, the Company's four golf course subsidiaries and the Company's three
                    pension fund partners.

10.48               Form of $5.5 million 6% Convertible Debenture issued by the Company on                             (I)
                    March 19, 1997.

10.49               Form of Letter Agreement dated September 6, 1996 Amending Terms of                                 (J)
                    Company's $5.5 million 6% Convertible Debenture.

10.50               Sale of Certain Note Secured by Junior Security dated November 14, 1996                            (K)
                    between UA Pension Fund, A & E Capital Funding, Inc., GCP, and the
                    Company selling and assigning the second mortgage loan on The Gauntlet at
                    Curtis Park from UA Pension Fund to A & E Capital.

10.51               Agreement for Sale and Purchase dated June 25, 1996 between Divot                                  (K)
                    Development Corporation and SJH Partnership, Ltd. concerning Southeast Parcel
                    2 of the St. Johns Development.

10.52               Amendment to Agreement for Sale and Purchase dated December 11, 1996                               (K)
                    between SJH Partnership, Ltd. and Divot Properties WGV, Inc. concerning
                    Southeast Parcel 2 of the St. Johns Development.

10.53               Assignment and Assumption of Purchase Agreement dated December 11, 1996                            (K)
                    between Divot Development Corporation and Divot Properties WGV, Inc.
                    concerning Southeast Parcel 2 of the St. Johns Development.

10.54               Letter Agreement dated January 31, 1997 between Flurina Development S.A. and                       (K)
                    the Company amending the terms of the Company's Convertible Debenture held
                    by Flurina.

10.55               Letter Agreement dated February 5, 1997 between Pyramid Investments, LLC                           (K)
                    and the Company amending the terms of the Company's Convertible Debenture
                    held by Pyramid.

10.56               Letter Agreement dated January 29, 1997 between Infinity Investors Ltd. and the                    (K)
                    Company concerning converting a portion of the Infinity debenture and the
                    payoff of the Infinity debenture.

10.57               Assignment of Debenture dated February 5, 1997 between Infinity Investors Ltd.                     (K)
                    and Pyramid Investments, LLC assigning to Pyramid the Company's debenture
                    held by Infinity.

10.58               Form of Warrant issued to Infinity Investors Ltd. dated January 31, 1997.                          (K)

10.59               Form of Warrant Agreement between the Company and Pyramid Investments,                             (K)
                    LLC dated February 5, 1997.

10.60               Sublease Agreement dated as of January 1, 1998 between Churchill Capital
                    Corporation and the Company, and Consent of Landlord.

10.61               Amended and Restated Employment Agreement dated September 3, 1997 between the
                    Company and Joseph R. Cellura.

10.62               Employment Agreement dated September 2, 1997 between the Company and
                    Clifford F. Bagnall.

10.63               Purchase and Sale Agreement dated October of 1997 by and among the Company,
                    Divot Spa WGV, Inc. and Robert N. Gewant

10.64               Cross Creek/Brassie Stock Agreement dated November 13, 1997 between the Company
                    and Lance McNeill; General Release by Lance McNeill; Resignation of Lance McNeill;
                    and Indemnification Agreement between the Company and Lance McNeill.

10.65               Form of Convertible Debenture Agreement dated November 18, 1997 between the Company
                    and the signatories thereto, Convertible Note and Warrant.

10.66               Employment Agreement dated December 1, 1997 between the Company and Jeremiah M. Daly.

10.67               Form of Private Placement Purchase Agreement dated December 3, 1997 between the Company
                    and the signatories thereto, with form of Warrant to purchase shares of the Company's
                    Common Stock.

10.68               Letter Agreement dated December 5, 1997 between the Company and Mr. and
                    Mrs. William E. Horne, et. al., and Stock Purchase Agreement; Resignation of
                    William E. Horne; General Release by William E. Horne; and Indemnification Agreement
                    between the Company and William E. Horne.

10.69               Agreement of Lease dated December 16, 1997 between Tampa City Center Associates and the
                    Company.

10.70               Form of Mortgage and Security Agreement dated January of 1998 given by Divot Properties
                    WGV, Inc.; Promissory Note in the principal amount of $1,500,000 given by Divot Properties
                    WGV, Inc.; Assignment of Net Sales Proceeds; and Continuing Guaranty.

10.71               Form of Private Placement Purchase Agreement dated January of 1998 between the Company and
                    the signatories thereto.

10.72               Loan Agreement dated as of October 30, 1997 between The Gauntlet at Curtis Park, Inc., the
                    Company and Washington Mortgage Financial Group, Ltd.

21.1                Subsidiaries of the Company.                                                                       (B)
</TABLE>


                                       48
<PAGE>   49





<TABLE>
<CAPTION>
EXHIBIT/ITEM        DOCUMENT/DESCRIPTION                                                                              PAGE
                                                                                                                     NUMBER
<S>                 <C>                                                                                              <C>
27                  Financial Data Schedule (For SEC Use Only)
</TABLE>


(A)      Incorporated by reference from the Company's Form 10, file No. 0-23056,
         filed on December 13, 1993.

(B)      Incorporated by reference from the Company's Form 10, file No. 0-24812,
         filed on September 15, 1994.

(C)      Incorporated by reference from the Company's Form 10, file No. 0-23056,
         filed on December 13, 1993 (Exhibit 10.14 thereto).

(D)      Incorporated by reference from the Company's Form 10, file No. 0-23056,
         filed on December 13, 1993 (Exhibit 10.15 thereto).

(E)      Incorporated by reference from the Company's Form 10, file No. 0-23056,
         filed on December 13, 1993 (Exhibit 10.16 thereto).

(F)      Incorporated by reference from the Company's Form 10, file No. 0-23056,
         filed on December 13, 1993 (Exhibit 10.17 thereto).

(G)      Incorporated by reference from the Company's Form 10-K, file No.
         0-24812, filed on April 15, 1996.

(H)      Incorporated by reference from the Company's Form 8-K, file No.
         0-24812, filed on August 30, 1996.

(I)      Incorporated by reference from the Company's Form 10-QSB, file No.
         0-24812, filed on May 15, 1996.

(J)      Incorporated by reference from the Company's Form 10-QSB, file No.
         0-24812, filed on October 30, 1996.

(K)      Incorporated by reference from the Company's Form 10-KSB, file No.
         0-24812, filed on April 14, 1997.


                                       49
<PAGE>   50



         (b)      Reports on Form 8-K

                  Dated February 13, 1998
                  Dated January 12, 1998
                  Dated January 12, 1998
                  Dated November 23, 1997
                  Dated September 30, 1997
                  Dated August 1, 1997
                  Dated July 31, 1997

                                       50
<PAGE>   51


                                   SIGNATURES

           In accordance with Sections 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.


                                    BRASSIE GOLF CORPORATION


                                    By:  /s/ Joseph R. Cellura
                                         -----------------------
                                         Chief Executive Officer

Dated: March 30, 1998


           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.


<TABLE>
<CAPTION>
SIGNATURE                                   TITLE                               DATE
---------                                   -----                               ----
<S>                                         <C>                                 <C>
/s/ Joseph R. Cellura                       Director                            March 30, 1998
-------------------------------
Joseph R. Cellura


/s/ Gordon D. Ewart                         Director                            March 30, 1998
-----------------------------
Gordon D. Ewart


/s/ Clifford F. Bagnall                     Director                             March 30, 1998
-------------------------------
Clifford F. Bagnall


/s/ Jeremiah M. Daly                        Director                             March 30, 1998
------------------------------
Jeremiah M. Daly


/s/ James A. McNulty                        Chief Financial Officer              March 30, 1998
------------------------------
James A. McNulty
</TABLE>



                                       51