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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-K

|(MARK ONE)                                                   |                                                                                     
|------------------------------------------------------------ | ------------------------------------------------------------------------------------
|ý                                                            | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002                 
|OR                                                          
|o                                                            | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15() OF THE EXCHANGE ACT OF 1934        
|FOR THE TRANSITION PERIOD
FROM                            TO

COMMISSION FILE NUMBER: 0-27417

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LTWC CORPORATION(Exact name of registrant as specified in its charter)

|DELAWARE(State of incorporation)                                                  |  | 76-0518568(I.R.S. Employer Identification No.)
|--------------------------------------------------------------------------------- |  | ----------------------------------------------
|111 HIGH RIDGE ROAD
STAMFORD, CONNECTICUT(Address of principal executive offices) |  | 06905(Zip Code)                               

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(203) 975-9602(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK,
PAR VALUE $0.001 PER SHARE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

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

Indicate
by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Act
Yes o    No ý

State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold,
or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter:$4,932,793 as of
June 28, 2002.

Indicate
the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 75,747,984, as of April 9, 2003.

Documents Incorporated by Reference: None

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LTWC CORPORATION
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2002

TABLE OF CONTENTS

|         |  |                                                                                       |  | PAGE
|-------- |  | ------------------------------------------------------------------------------------- |  | ----
|PART I  
|ITEM 1.  |  | Business                                                                              |  | 3   
|ITEM 2.  |  | Properties                                                                            |  | 11  
|ITEM 3.  |  | Legal Proceedings                                                                     |  | 11  
|ITEM 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 12  
|PART II 
|ITEM 5.  |  | Market for Registrant's Common Equity and Related Stockholder Matters                 |  | 12  
|ITEM 6.  |  | Selected Consolidated Financial Data                                                  |  | 13  
|ITEM 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 15  
|ITEM 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 27  
|ITEM 8.  |  | Financial Statements and Supplementary Data                                           |  | 27  
|ITEM 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 28  
|PART III
|ITEM 10. |  | Directors and Executive Officers of the Registrant                                    |  | 29  
|ITEM 11. |  | Executive Compensation                                                                |  | 31  
|ITEM 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 36  
|ITEM 13. |  | Certain Relationships and Related Transactions                                        |  | 37  
|ITEM 14. |  | Controls and Procedures                                                               |  | 38  
|PART IV 
|ITEM 15. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |  | 39  

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PART I

ITEM 1. BUSINESS

This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements
based on expectations, estimates and projections as of the date of this filing. Actual results may differ materially from those expressed in forward-looking statements. See Item 7 of
Part II"Management's Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking Statements."

History

LTWC Corporation was originally known as E-Stamp Corporation, founded in 1994, and provided an Internet postage service that enabled users to
purchase, download and print Internet postage directly from their personal computers without the need to maintain a persistent Internet connection. In May 2000, we acquired two companies,
Infinity Logistics and Automated Logistics for a total purchase price of $9.0 million. These companies offered transportation management and warehouse management products and services that
allowed enterprise customers to review carrier rates and shipping options, select a carrier, print shipping labels, track shipments and create shipping reports. During 2000, we undertook two corporate
restructurings. In July 2000, we restructured the organization to accelerate the development, marketing and sales of our transportation management products and services in addition to our
Internet postage business. In November 2000, we restructured the organization to phase out our Internet postage business. We incurred charges of approximately $20.3 million related to
these restructurings, which is included in loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2000. On April 19, 2001, in
connection with our then planned merger with Learn2.com, Inc., a publicly traded company, we discontinued our remaining transportation management business.

On
September 25, 2001, we acquired all of the outstanding stock of Learn2.com, changed the name of our company from E-Stamp Corporation to Learn2 Corporation and
assumed the on-going businesses of Learn2.com. Learn2.com's e-learning business included engaging online and physical learning and
training products and complementary services, marketed to corporate, government and individual clients and customers and an e-mail marketing services business that provided permission
e-mail marketing and tracking services. The services included e-mail creation, delivery, tracking and response analysis for a high volume of client e-mail accounts
in a short period of time. Under the terms of the merger agreement, we issued approximately 37.8 million shares of our common stock. Each share of Learn2.com common stock outstanding
immediately prior to the completion of the merger automatically converted into the right to receive 0.4747 shares of our common stock resulting in our stockholders immediately prior to the
consummation of the merger owning approximately 50.1% of the outstanding stock of the combined company. The former stockholders of Learn2.com, including Learn2.com's $10.0 million convertible
debenture holder, received approximately 49.9% of the combined company. The total value of the transaction was approximately $19.2 million including approximately $6.6 million of assumed
liabilities, transaction costs totaling approximately $5.2 million and a pre-closing payment of $1.0 million to Learn2.com's $10.0 million convertible debenture
holder. The transaction was accounted for using the purchase method of accounting.

On
November 8, 2001, in connection with the merger, we undertook a corporate restructuring to outsource the packaging and shipping of our retail products to an outside fulfillment
house and eliminate redundant functions. We incurred charges of approximately $89,000 related to this restructuring, which is included in loss from discontinued operations in the consolidated
statement of operations for the year ended December 31, 2001.

On
March 4, 2002, we announced that we would phase out our production and distribution operations in Pryor, Oklahoma and closed certain field sales operations and eliminated
approximately

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60 positions. Severance and related expenses attributable to the elimination of these positions were approximately $409,000 and are included in loss from discontinued operations in the consolidated
statement of operations for the year ended December 31, 2002.

On
July 2, 2002, we announced that we would close our facility in Golden, Colorado and the elimination of approximately 20 positions throughout the organization. We incurred
charges of approximately $110,000 related to this workforce reduction and this amount is included in our loss from discontinued operations in the consolidated statement of operations for the year
ended December 31, 2002.

On
August 9, 2002, we sold our e-learning assets. As part of the agreement, we changed our name to LTWC Corporation. The consideration consisted of (1) an
initial payment to us of $325,000, paid on August 9, 2002 and (2) earn-out payments of up to a maximum of $3.71 million. The earn-out payments were to be
made monthly commencing on September 9, 2002, in each case, subject to reduction, until the earlier of 60 months from August 9, 2002, or the date on which the aggregate amount of
the earn-out payments paid totals $3.71 million. In connection with the sale of our e-learning assets, we announced that we would focus our efforts on our permission
e-mail marketing business.

On
March 28, 2003, we and certain subsidiaries entered into an agreement with the buyer of the e-learning assets whereby the buyer agreed to pay us $540,000 to
buy-out the remaining earn-out payments and monies owed to us for consigned inventory and purchased receivables. As a result, we wrote-off the receivable
representing the present value of the minimum earn-out payments to $540,000. The write-off of the receivable of approximately $563,000 and the write-off of amounts
due on consigned inventory and purchased receivables totaling $42,000 were recorded as a charge to net loss (gain) on disposal of discontinued operations in the accompanying consolidated statement of
operations for the year ended December 31, 2002.

As
used herein, LTWC Corporation, "we" "our" and similar terms include LTWC Corporation and its subsidiaries, unless the context indicates otherwise.

Permission E-Mail Marketing Overview

We provide permission e-mail marketing and tracking services. Our services include e-mail creation, delivery, tracking and response
analysis for a high volume of client e-mail accounts in a short period of time. Our goal is to be the preferred provider of full service and hosted, large-scale email broadcast campaigns.
As set forth in Note 1 to our consolidated financial statements, our reported results of operations for all periods prior to September 25, 2001 do not reflect the results of Learn2.com.
Furthermore, only our e-mail marketing services business is included in our results from continuing operations. Our other businesses are reflected as discontinued operations in the
accompanying consolidated financial statements.

Marketplace

The permission e-mail marketing and tracking industry is in its early stages of development. We believe that the industry will evolve over the next
few years as permission e-mail marketing becomes even more widely used and as traditional direct marketers leverage e-mail marketing in their businesses. The permission
e-mail market is extremely competitive. Participants compete primarily in the following areas: reporting and tracking capabilities, customer service, ability to deliver to AOL, MSN and
Yahoo e-mail addresses, brand recognition, ease of implementation, time-to-market of a campaign and price.

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Competitive Strengths

As one of the first permission e-mail marketing and tracking companies, we have managed thousands of permission e-mail campaigns. We are
able to send over 100 million unique e-mail messages per day. Our
proprietary technology allows for extensive data mining, broadcasting, tracking, and real-time reporting. We own substantially all of our mail transfer agent and APTracking -,
or APT technologies. APT utilizes noninvasive technology, provides tracking and logging information and analysis that can cross application and server boundaries without requiring our clients to
modify their HTML code or place cookies on a user's hard drive.

Products And Services

Permission e-mail servicesWe offer list development and refinement, e-mail distribution, tracking and
reporting. We charge for this service on a cost per thousand, or CPM, basis.

List rentalBeginning in 2003, we sublicense e-mail addresses, that we have licensed from third parties. We charge
for this service on a CPM basis.

Tracking servicesWe offer APT services to customers who use our broadcast e-mail services, and as a standalone
service. We charge for this service on a CPM basis.

We
offer consulting services to assist our clients in their implementation and deployment of our services within their organization.

Business Strategy And Strategic Direction

Our goal is to be the preferred provider of full service and hosted, large-scale e-mail marketing campaigns. To achieve this goal we intend to expand
our technologies, expand our service offerings and expand our distribution.

Expand Technologies



Expand Service Offerings



Expand Distribution



Customers

The following customers individually accounted for more than 10% of our $3.3 million in revenue in 2002:



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In
the first quarter of 2003, there was a significant decrease in revenue from Choicepoint. We may be unable to replace the lost revenue.

Our
competitors in the permission e-mail marketing and tracking arena include providers of e-mail based services such as: Double Click, Experian, Responsys,
Digital Impact, and Cheetah Mail. The majority of our competitors operate with greater financial resources than we do.

Intellectual Property And Licenses

Our success and ability to compete effectively will depend, in part, on our ability to protect our intellectual property. We rely primarily on a combination of
statutory and common law copyright, trademark and trade secret laws, customer licensing agreements, employee and third-party nondisclosure agreements and other methods to protect our proprietary
rights. We have applied for a patent for our APT technology.

We
use employee and third-party confidentiality and non-disclosure agreements to protect our trade secrets and unpatented know-how. We require our employees to
assign to us all rights in any proprietary information or technology made or contributed by the employee during his or her employment with us. In addition, we regularly enter into
non-disclosure agreements with third parties including consultants, potential strategic partners and customers. Unfortunately, these agreements cannot guarantee the confidentiality of our
trade secrets or unpatented know-how, nor can they prevent third parties from independently developing substantially equivalent proprietary information or copying, developing, or otherwise
obtaining and using our proprietary information without authorization. We may resort to litigation to enforce our intellectual property rights, determine the validity and scope of the proprietary
rights of others, or defend against claims of infringement or invalidity by others. While we are not currently engaged in any intellectual property litigation or proceedings, we may be in the future.
An adverse outcome in a litigation or similar proceeding could subject us to significant liabilities to third parties, require disputed rights to be licensed from others, or require us to cease
marketing or using certain products or services. The cost of addressing any intellectual property litigation, both in legal fees and the diversion of management resources, regardless of whether the
claim is valid, could be significant.

Third
parties may claim that our current or future products infringe on their proprietary rights. We may be subject to these claims as the number of products and competitors in the
marketplace overlap. Any of these claims, with or without merit, could result in costly litigation or might require us to enter into royalty or licensing agreements. These royalty or license
agreements, if required, may not be available on terms acceptable to us, if at all.

Employees

As of March 13, 2003, we had a total of eighteen employees, of whom seven were engaged in research and product development, eight in sales and marketing
and three in general and administrative functions. Substantially all of our employees are co-employees with TriNet, an outsourced human resource provider, and work in our offices in
Belmont, California. None of our employees are subject to a collective bargaining agreement and we have not experienced any work stoppages. We believe that our relationship with our employees is good.
However, our recent workforce reductions and poor financial performance will place additional strain on our people and may harm the morale and performance of our employees and our ability to hire new
ones.

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RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK IS EXCEPTIONALLY RISKY. YOU SHOULD CONSIDER CAREFULLY THE RISKS DESCRIBED BELOW TOGETHER WITH ALL OF THE
OTHER INFORMATION IN OUR FORM 10-K AND OTHER SEC FILINGS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE AFFECTED
MATERIALLY AND ADVERSELY; THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.

We need to raise additional funds and our auditors have expressed substantial doubt as to our ability to continue as a going concern; as of December 31, 2002 our current
liabilities exceeded our current assets.

As of December 31, 2002 we had $466,000 in cash and cash equivalents. We believe that this cash may not be adequate to meet our operating requirements for
the next twelve months. Our auditors have expressed substantial doubt as to our ability to continue as a going concern. As of December 31, 2002, our current liabilities exceeded our current
assets by approximately $580,000. Furthermore we have a $440,000 note payable with accrued interest due January 2004. The accompanying consolidated financial statements have been prepared
assuming we will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. In addition, the operating results for future
periods are subject to numerous other uncertainties. Our ability to achieve positive cash flow depends upon the success of marketing our services, the costs of developing, producing, and marketing
these services, new laws and regulations, general economic conditions and various other factors, some of which may be beyond our control. Many of our costs are fixed and are based on anticipated
revenue levels. We may be unable to adjust our spending quickly enough to offset any unexpected shortfall in cash collections or revenues.

Based
on our current level of expenses, if our revenues and related cash collections are less than $1.0 million per quarter, or if our cash expenditures and payments continue to
exceed cash collections, we would need to raise additional funds. Our current forecasted revenues and cash collections are less than $1.0 million for each of the quarters in 2003. Because we
have never earned a profit, current liabilities exceed current assets and the market price of our common stock price is low, we believe that it will be extremely difficult to raise additional funds.

We
believe that if we restructure our existing obligations for approximately 10%-15% of their face amounts, exceed our cash collection targets by approximately $200,000 per
quarter, recover from our insurance carriers claims we have filed, and favorably and timely resolve the lawsuits with Morrison & Foerster, Rydell, and other litigation matters, we will have
sufficient resources for our operating requirements at least for the next twelve months. However, if each of the assumptions described in the preceding sentence are not actualized and we are unable to
raise additional funds or sell assets, it is not likely that we will continue as a going concern.

We have a history of losses and an accumulated deficit; we may continue to experience losses.

For the year ended December 31, 2002, we incurred a net loss of $15.8 million and for the year ended December 31, 2001, we incurred a net
loss of $22.4 million. At December 31, 2002, we had an accumulated deficit of approximately $226.8 million. We may continue to incur losses for the foreseeable future. We may
never become profitable.

We are dependent on three customers for a significant portion of revenues.

For the year ended December 31, 2002, three of our customers accounted for approximately 81.9% of our revenues. In the first quarter of 2003, there was a
significant decrease in revenue from ChoicePoint. As a result, we may be unable to replace this lost revenue.

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If the delivery of email messages is limited or blocked, then our clients may discontinue their use of our services. Mischaracterization of permission email we send on behalf
of our clients as spam, or unsolicited commercial email, has and will continue to have an adverse effect on our business.

We rely on our ability to deliver permission-based e-mails through Internet service providers such as America Online and email providers such as Yahoo
and Hotmail. A significant percentage of our permission-based e-mails sent on behalf of our clients are sent to AOL, Yahoo, and Hotmail e-mail
accounts. We do not have, and are not required to have, agreements with these e-mail providers to deliver permission-based e-mails to their members. In addition, these
e-mail providers and other Internet service providers are able to halt the delivery of our permission-based e-mails without prior warning or cause.

The
release of AOL version 8.0, which has features that enable AOL members to report any e-mail they receive as "spam", (whether or not that e-mail was solicited
by the AOL member), has resulted in an increase of the number of complaints from AOL members to AOL. AOL has informed us that they may revoke our "white listed" status if the number of complaints that
they receive does not decrease to a level they deem acceptable. To date this has not affected our business materially. However, if we are unable to deliver permission e-mails sent on
behalf of our clients then we may lose certain clients and our business will be adversely and materially impacted.

Changes in laws relating to data collection and use practices and the privacy of internet users and other individuals could harm our business.

Websites usually place certain information called "cookies" on a user's hard drive usually without the user's knowledge or consent. Websites use cookies for a
variety of reasons. We employ the use of cookies on our websites. Certain Internet browsers allow users to modify their browser settings to remove cookies at any time or to prevent cookies from being
stored on their hard drive. In addition, some Internet commentators, privacy advocates and governmental bodies have suggested limiting or eliminating the use of cookies. The effectiveness of our
technology and products could be limited by any reduction or limitation in the use of cookies. In this regard, there are a large number of legislative proposals before the United States Congress,
foreign governments and other international regulatory agencies regarding privacy issues and the regulation and use of cookies. It is not possible to predict whether or when such legislation may be
adopted, and certain proposals, if adopted, could adversely affect our business. This could be caused by, among other possible provisions, the requirement that permission be obtained before we use
cookies.

We face legal uncertainties relating to the internet in general and to our industry in particular and may become subject to costly government regulation.

The applicability to the Internet of existing laws is uncertain and developing with regard to many issues, including sales tax, intellectual property ownership
and infringement, copyright, trademark, trade secret, obscenity, libel, export of encryption technology, solicited and unsolicited e-mail and personal privacy. There are an increasing
number of laws and regulations pertaining to liability for information received from or transmitted over the Internet, online content regulation, user privacy, taxation and quality of products and
services. In addition, it is possible that more laws and regulations may be adopted with respect to the Internet, such as laws or regulations relating to user privacy, taxation, e-mail,
pricing, Internet access, content, copyrights, distribution and characteristics and quality of products and services. Changes in existing laws and the adoption of additional laws or regulations may
decrease the popularity or limit expansion of the Internet, especially for marketing services like we provide. A decline in the growth of the Internet could decrease demand for our services and
increase our cost of doing business. We are currently defending claims that we violated certain statutes relating
to the distribution of unsolicited e-mail. The defense of these actions may not be successful; we may be subject to further similar actions.

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California
and several other states have enacted legislation regulating the sending of unsolicited commercial e-mail. Existing or future legislation regarding commercial
e-mail may harm our business. The federal government, foreign governments and several other states are considering, or have considered, similar legislation. These provisions generally
limit or prohibit both the transmission of unsolicited commercial e-mails and the use of forged or fraudulent routing and header information.

Our common stock is listed on the OTC bulletin board and is considered a "penny stock". Consequently you may be unable to sell our common stock readily or at all.

The SEC has adopted regulations which generally define "penny stock" to be any equity security that has a market price or exercise price of less than $5.00 per
share, subject to certain exceptions, including listing on the Nasdaq National Market or the Nasdaq SmallCap Market. For transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The
broker-dealer is also subject to additional sales practice requirements. Consequently, the penny stock rules may restrict the ability of broker-dealers to sell our securities and may affect the
ability of holders to sell these securities in the secondary market and the price at which such holders can sell any such securities.

We operate in a rapidly changing, competitive market and we may not have adequate resources to compete successfully.

The permission e-mail market is evolving quickly and is subject to rapid technological change, shifts in customer demands and evolving industry
standards. To succeed, we must continue to upgrade our technologies. We may not be able to do so successfully. If we fail to anticipate or respond adequately to changes in technology and customer
preferences, or we have any significant delays in development or introduction of new products, our competitors may be able to attract and maintain a greater customer base. The permission
e-mail market is characterized by significant price competition. This has resulted in reduced revenues, operating margins, and market share. Although the market is highly fragmented with
no single competitor accounting for a dominant market share, competition is intense. Our competitors vary in size and in the scope and breadth of their offerings and services. Several of our
competitors have longer operating histories and most have significantly greater financial, technical and marketing resources.

Our future growth depends on our ability to retain key personnel, and we may be unable to hire and retain the skilled personnel we need to succeed.

Our future growth and success depends to a significant extent on the continued service of Paul A. Goldman, our recently appointed President and Chief Executive
Officer. Recently Jerry Sandoval our President, Marc E. Landy, our Executive Vice President, Chief Financial Officer, Secretary and Treasurer and several other key employees left our company to pursue
other interests, including the principal developer of the Adaptive Proxy Tracking Technology. These resignations have placed significant strain on our organization. As a result, our ability to respond
to unexpected challenges may be impaired and we may be unable to take advantage of new opportunities. In addition, these employees possessed specific knowledge or expertise, which is important to our
continuing operations. Competition for highly skilled personnel is intense. Therefore, if we are unable to fill the gap created by these resignations, we may face significant difficulties. Further,
these resignations have reduced employee morale and may create concern among potential and existing employees about their job security, which may lead to difficulty in hiring and increased turnover in
our current workforce, and divert management's attention. Additionally, our recent workforce reductions and poor financial

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performance has and will continue to place additional strain on our people and may harm the morale and performance of our employees and our ability to hire new ones. The loss of one or more key or
other employees or our inability to attract additional qualified employees or retain other employees could have a material adverse effect on our business, results of operations or financial condition.

We face a risk of system failure.

Our
operations depend to a significant extent on our ability to maintain our computer and telecommunications systems. We must also protect our systems against damage from fire, natural
disaster, power loss, telecommunications failure or similar events. In addition, growth of our customer base may strain the capacity of our computer operations center and telecommunications systems
and/or lead to degradations in performance or system failure. Any damage to or loss of our computer and telecommunications networks including our operations center could affect adversely the
performance of our business. To date, we have not experienced system failures that have materially and adversely affected operations.

Unauthorized break-ins to our service could harm our business.

Our servers are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions, delays,
loss of data or the inability to complete customer transactions. In addition, unauthorized persons may improperly access our data, which could harm us. Actions like these may be very expensive to
remedy and could damage our reputation and discourage new and existing users from purchasing our products and services. To date, we have not experienced an unauthorized break-in or similar
disruption that has adversely and materially affected operations.

We may be subject to intellectual property infringement claims, which are costly to defend and could limit our ability to use certain technologies in the future.

Many parties are developing and improving technologies that compete with our proprietary technologies. We believe that these parties will continue to take steps
to protect these technologies, including seeking patent protection. As a result, disputes regarding the ownership of these technologies could arise in the future. To date, claims against us alleging
infringement of certain proprietary rights have not been material. Third parties may assert further claims against us alleging infringement of patents, copyrights, trademark rights, trade secret
rights or other proprietary rights or alleging unfair competition. In the event that we determine that licensing patents or other proprietary rights is appropriate, we may not be able to license
proprietary rights on reasonable terms or at all. As the number of products in our target markets increase and the functionality of these products further overlap, we have become subject to further
infringement claims. We may incur substantial expenses in defending against third-party infringement claims regardless of the merit of those claims. In the event that there is a determination that we
have infringed third-party proprietary rights, we could incur substantial monetary liability and be prevented from using the rights in the future.

Our intellectual property rights are costly and difficult to protect.

We have a patent pending for our AdaptiveProxy Tracking technology. The principal developer of this technology left us recently. We may be unable to complete the
patent process without his assistance. In the future, any patents that we have may be deemed to be invalid or unenforceable, or otherwise not provide us with any meaningful protection. Our success and
ability to compete effectively will depend, in part, on our ability to protect our intellectual property, which we protect through a combination of patent, trade secret, copyright, trademark,
nondisclosure agreements and other contractual provisions and technical measures. None of these protections may be adequate to prevent our competitors from copying or reverse engineering our products,
concepts, trade names and trade

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dress. Furthermore, none of these protections prohibit our competitors from independently developing technologies that are substantially equivalent or superior to our technologies.

ITEM 2. PROPERTIES

We lease a 7,788 square foot office in Belmont, California where substantially all of our employees work. The lease expires April 30, 2004 with a
five-year renewal term. Our scheduled payments under the terms of the lease are $100,000 in 2003 and $33,333 in 2004.

In
connection with the merger with Learn2.com, we closed our Mountain View, California corporate headquarters office, originally leased on February 25, 2000, for a payment to the
lessor of approximately $1.6 million. This amount is included in the accompanying consolidated statement of operations for the year ended December 31, 2001 as part of gain on disposal of
discontinued operations.

In
addition to the lease in Belmont, California referred to above, in connection with the merger with Learn2.com we assumed lease obligations for facilities in White Plains, New York and
Golden, Colorado. In 2002, in settlement of these two obligations, we agreed to pay the lessors of these two facilities a total of $55,682 plus our security deposits of $174,562 related to those
leases. The total payments of $190,667 for the White Plains, New York lease is included in the restructuring charge in the accompanying consolidated statement of operations for the year ended
December 31, 2002. The total of $39,577 for the Golden, Colorado lease is included in the loss from discontinued operations in the accompanying consolidated statement of operations for the year
ended December 31, 2002.

Also
in connection with the merger with Learn2.com, we acquired a land and building in Pryor, Oklahoma. The land and building were sold in 2002 for $270,000. In 2002, we wrote down the
building to its fair value of $270,000. The write-down of $718,000 is included in the loss from discontinued operations in the accompanying consolidated statement of operations for the
year ended December 31, 2002.

We
believe our properties are suitable and adequate for our present and anticipated near term needs.

ITEM 3. LEGAL PROCEEDINGS

On March 16, 2001, Mr. Joseph Pavel filed a purported consumer class action suit against us in the Supreme Court of the State of New York, County of
Kings. The suit alleges that we breached our contract with the plaintiff and other customers. The plaintiff seeks unspecified damages and disgorgement of monies received in connection with the sale of
Internet postage products. By agreement of the parties, the plaintiff dismissed the New York action and refiled in Santa Clara County, California on or about May 24, 2001. We filed the answer
to the complaint on June 18, 2001. On February 20, 2002, the Court granted Plaintiff's motion for class certification. We reached a settlement with the Plaintiff and court has been
approved for settlement. This settlement is not expected to have a material impact on the our financial position or results of operations.

On
February 6, 2002, Morrison & Foerster, a law firm, filed suit against a consolidated subsidiary of ours, in the Superior Court of California, San Francisco County,
California. The plaintiff alleges a violation of California Business & Professional Code, Section 17538.45 and 17200 et. seq., in connection with permission e-mail marketing
services. The suit was later modified to include us as a defendant. The plaintiff seeks statutory damages, to enjoin us and the subsidiary from further violations of the specified statutes, costs and
fees. We and the subsidiary are vigorously defending this action. These legal proceedings have resulted and can be expected to continue to result in expenses and the diversion of management time and
other resources.

11

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On
July 18, 2002, Joseph Rydell filed suit against us and certain other parties in the Circuit Court of Cook County in the State of Illinois. The plaintiff alleges a violation of
the Illinois Electronic Mail Act and the Consumer Fraud and Deceptive Business Practices Act, in connection with permission e-mail marketing services. The plaintiff seeks actual and
punitive damages, and costs and fees. We are vigorously defending this action. Pendency of these legal proceedings can be expected to result in expenses to us and the diversion of management time and
other resources.

In
July 2002, we were sued by MicroAge, Inc., relating to a claim that Micro Age's payment to us of $163,800 in January 2000 is recoverable to MicroAge as a
preference in MicroAge's bankruptcy in United States Bankruptcy Court, District of Arizona. The payment was for products and services delivered by us to MicroAge. In February 2003, we were
notified that a default judgment had been entered on behalf of the plaintiff in the amount of $163,800. We negotiated a settlement with MicroAge in the amount of $25,000. Under the terms of the
settlement, we are required make two payments of $15,000 due on March 17, 2003 and $10,000 due on May 3, 2003. If we do not make the payments in accordance with the settlement agreement,
we would be liable for the full judgment of $163,800 plus accrued interest. On March 17, 2003, we made the first scheduled payment. This amount of $25,000 has been accrued for and is included
in other liabilities in the consolidated balance sheet at December 31, 2002.

We
have entered into various settlement agreements during 2002. One of these settlement agreements requires us to pay $10,000, monthly through July of 2004. If we fail to make these
monthly payments on a timely basis, we would be liable for the full amount of the judgment totaling $399,754 plus interest at a rate of 10% per annum from September 12, 2001 to the date of the
payoff plus attorney fees in the amount of $15,000. As of December 31, 2002, we have only accrued the remaining payments under the settlement agreement. This amount totaled $190,000.

In
addition, we are involved in certain other legal proceedings and claims in the ordinary course of our business. We are vigorously contesting all matters referred to above and
management believes that their ultimate resolution may not have a materially adverse effect on our consolidated financial position, results of operations or cash flows.

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 the year ended December 31, 2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Since January 14, 2003, our common stock has traded on the OTC Bulletin Board under the symbol "LTWC.OB" Prior to January 14, 2003, our common stock
traded on the Nasdaq SmallCap Market. The following table sets forth, for the periods indicated, the range of the high and low closing sale prices for our common stock as reported on Nasdaq SmallCap
Market. The quotations below

12

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reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

HIGH

LOWFiscal Year Ended December 31, 2002First Quarter

$
0.280

$
0.110Second Quarter

$
0.160

$
0.070Third Quarter

$
0.110

$
0.030Fourth Quarter

$
0.160

$
0.030Fiscal Year Ended December 31, 2001First Quarter

$
0.344

$
0.063Second Quarter

$
0.310

$
0.060Third Quarter

$
0.220

$
0.070Fourth Quarter

$
0.180

$
0.010


The
last reported sale price of our common stock on March 26, 2003, was $0.026 per share. As of March 26, 2003, there were 1,034 stockholders of record of our common stock.

On
January 6, 2003, we received notification from Nasdaq that we were not in compliance for continued listing on the Nasdaq SmallCap Market because of (1) our failure to
hold an annual meeting of shareholders, to solicit proxies and provide proxy statements to Nasdaq and (2) Nasdaq's records indicate that we have not yet paid our SmallCap listing fee in the
amount of $4,667, which was due on July 12, 2002. We indicated that the primary reason for not holding an annual meeting was to conserve cash. Effective with the opening of business,
January 14, 2003 our common stock began trading on the OTC Bulletin Board.

Dividends

We have never declared or paid any dividends on our capital stock. We currently expect to retain future earnings, if any, for use in the operation and expansion
of our business and do not anticipate paying any cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities

None.

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data set forth below with respect to our consolidated statements of operations for each of the years ended December 31,
2002, 2001 and 2000 and with respect to our consolidated balance sheets as of December 31, 2002 and 2001 have been derived from our audited financial statements. The selected consolidated
financial data set forth with respect to our consolidated statements of operations for each of the years ended December 31, 2000, 1999 and 1998 and with
respect to our consolidated balance sheets as of December 31, 2000, 1999 and 1998 are derived from our audited financial statements, which are not included herein.

13

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The following selected financial data should be read in connection with the Financial Statements and Notes thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

|                                                       |                                           | Year Ended December 31, |        
|------------------------------------------------------ | ----------------------------------------- | ----------------------- | -------
|
|Net revenues                                           |                                           | $                       | 3,280  
|Cost of revenues                                       |                                           |                         | 677    
|                                                       |                                           |                         |        
|Gross margin                                           |                                           |                         | 2,603  
|Operating expenses:                                    |                                           |                         |        
|                                                       | Research and product development          |                         |        
|                                                       | Sales and marketing                       |                         |        
|                                                       | General and administrative                |                         |        
|                                                       | Depreciation and amortization             |                         |        
|                                                       | Impairment of long-lived assets           |                         |        
|                                                       | Non-recurring costs                       |                         |        
|                                                       | Restructuring charges                     |                         |        
|                                                       |                                           |                         |        
|Total operating expenses                               |                                           |                         | 5,733  
|                                                       |                                           |                         |        
|Operating loss                                         |                                           |                         | (3,130 
|Interest income                                        |                                           |                         | 39     
|Interest expense and other, net                        |                                           |                         | 467    
|                                                       |                                           |                         |        
|Net loss from continuing operations                    |                                           |                         | (2,624 
|Discontinued operations:                               |                                           |                         |        
|Net loss from discontinued operations                  |                                           |                         | (6,088 
|Net (loss) gain on disposal of discontinued operations |                                           |                         | (7,042 
|                                                       |                                           |                         |        
|                                                       |                                           |                         | (13,130
|                                                       |                                           |                         |        
|Net loss                                               |                                           |                         | (15,754
|Accretion on redeemable convertible preferred stock    |                                           |                         |       
|                                                       |                                           |                         |        
|Net loss available to common stockholders              |                                           | $                       | (15,754
|                                                       |                                           |                         |        
|Basic and diluted loss per common share:               |                                           |                         |        
|                                                       | Continuing operations                     |                         | $      
|                                                       | Discontinued operations                   |                         | $      
|                                                       |                                           |                         |        
|                                                       | Net loss available to common stockholders |                         | $      
|                                                       |                                           |                         |        
|Weighted average basic and diluted shares outstanding  |                                           |                         | 75,717 
|                                                       |                                           |                         |        

|                    |                                        | As of December 31, |  
|------------------- | -------------------------------------- | ------------------ | -
|
|Balance Sheet Data: |                                        |                    |  
|                    | Cash and cash equivalents              |                    | $
|                    | Working capital (deficit)              |                    |  
|                    | Total assets                           |                    |  
|                    | Capital lease, net of current portion  |                    |  
|                    | Redeemable convertible preferred stock |                    |  
|                    | Total stockholders' equity (deficit)   |                    |  

---

14

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See Note 12 of Notes to Consolidated Financial Statements for an explanation of the method used to determine the number of shares used in
computing per share amounts.

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

Overview

LTWC Corporation was originally known as E-Stamp Corporation, founded in 1994, and provided an Internet postage service that enabled users to
purchase, download and print Internet postage directly from their personal computers without the need to maintain a persistent Internet connection. In May 2000, we acquired two companies,
Infinity Logistics and Automated Logistics for a total purchase
price of $9.0 million. These companies offered transportation management and warehouse management products and services that allowed enterprise customers to review carrier rates and shipping
options, select a carrier, print shipping labels, track shipments and create shipping reports. During 2000, we undertook two corporate restructurings. In July 2000, we restructured the
organization to accelerate the development, marketing and sales of our transportation management products and services in addition to our Internet postage business. In November 2000, we
restructured the organization to phase out our Internet postage business. We incurred charges of approximately $20.3 million related to these restructurings, which is included in loss from
discontinued operations in the consolidated statement of operations for the year ended December 31, 2000. On April 19, 2001, in connection with our then planned merger with Learn2.com, a
publicly traded company, we discontinued our remaining transportation management business.

On
September 25, 2001, we acquired all of the outstanding stock of Learn2.com, changed the name of our company from E-Stamp Corporation to Learn2 Corporation and
assumed the on-going businesses of Learn2.com. Learn2.com's e-learning business included engaging online and physical learning and training products and complementary services,
marketed to corporate, government and individual clients and customers and an e-mail marketing services business that provided permission e-mail marketing and tracking
services. The services included e-mail creation, delivery, tracking and response analysis for a high volume of client e-mail accounts in a short period of time. Under the terms
of the merger agreement, we issued approximately 37.8 million shares of our common stock. Each share of Learn2.com common stock outstanding immediately prior to the completion of the merger
automatically converted into the right to receive 0.4747 shares of our common stock resulting in our stockholders immediately prior to the consummation of the merger owning approximately 50.1% of the
outstanding stock of the combined company. The former stockholders of Learn2.com, including Learn2.com's $10.0 million convertible debenture holder, received approximately 49.9% of the combined
company. The total value of the transaction was approximately $19.2 million including approximately $6.6 million of assumed liabilities, transaction costs totaling approximately
$5.2 million and a pre-closing payment of $1.0 million to Learn2.com's $10.0 million convertible debenture holder. The transaction was accounted for using the purchase
method of accounting.

On
November 8, 2001, in connection with the merger, we undertook a corporate restructuring to outsource the packaging and shipping of our retail products to an outside fulfillment
house and eliminate redundant functions. We incurred charges of approximately $89,000 related to this restructuring, which is included in loss from discontinued operations in the consolidated
statement of operations for the year ended December 31, 2001.

On
March 4, 2002, we announced that we would phase out our production and distribution operations in Pryor, Oklahoma and closed certain field sales operations and eliminated
approximately 60 positions. Severance and related expenses attributable to the elimination of these positions were

15

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approximately $409,000 and were included in loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2002.

On
July 2, 2002, we announced that we would close our facility in Golden, Colorado and the elimination of approximately 20 positions throughout the organization. We incurred
charges of approximately $110,000 related to this workforce reduction and this amount is included in our loss from discontinued operations in the consolidated statement of operations for the year
ended December 31, 2002.

On
August 9, 2002, we sold our e-learning assets. As part of the agreement, we changed our name to LTWC Corporation. The consideration consisted of (1) an
initial payment to us of $325,000, paid on August 9, 2002 and (2) earn-out payments of up to a maximum of $3.71 million. The earn-out payments were to be
made monthly commencing on September 9, 2002, in each case, subject to reduction, until the earlier of 60 months from August 9, 2002, or the date on which the aggregate amount of
the earn-out payments paid totals $3.71 million. In connection with the sale of our e-learning assets, we announced that we would focus our efforts on our permission
e-mail marketing business.

On
March 28, 2003, we and certain subsidiaries entered into an agreement with the buyer of the e-learning assets whereby the buyer agreed to pay us $540,000 to
buy-out the remaining earn-out payments and monies owed to us for consigned inventory and purchased receivables. As a result, we wrote-off the receivable
representing the present value of the minimum earn-out payments to $540,000. The write-off of the receivable of approximately $563,000 and the write-off of amounts
due on consigned inventory and purchased receivables totaling $42,000 was recorded as a charge to net loss (gain) on disposal of discontinued operations in the accompanying consolidated statement of
operations for the year ended December 31, 2002.

We
provide permission e-mail marketing and tracking services. Our services include e-mail creation, delivery, tracking and response analysis for a high volume of
client e-mail accounts in a short period of time. Our goal is to be the preferred provider of full service and hosted, large-scale email broadcast campaigns. As set forth in Note 1
to our condensed consolidated financial statements, our reported results of operations for all periods prior to September 25, 2001 do not reflect the results of Learn2.com. Furthermore, only
our e-mail marketing services business is included in our results from continuing operations. Our other businesses are reflected as discontinued operations in the accompanying consolidated
financial statements.

As
a result of the sale of the e-learning assets, we operate in one segment, permission email marketing. In accordance with SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to be Disposed of, "all operations that have been sold have been reflected as discontinued operations for
all periods presented in the Company's condensed consolidated financial statements. All prior period financial information has been restated to reflect the discontinued operations and the single
segment.

Critical Accounting Judgments and Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that
affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying
notes. The U.S. Securities and Exchange Commission ("SEC") has defined a company's most critical accounting policies as the ones that are most important to the portrayal of the company's financial
condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently
uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key

16

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accounting policies, which involve the use of estimates, judgments and assumptions. For additional information see Note 1 "Summary of Significant Accounting Policies" in Item 14 of
Part IV, "Exhibits, Financial Statement Schedules and Reports on Form 8-K," of our Annual Report on Form 10-K for the year ended December 31, 2002.
Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different
assumptions or conditions. The items in our financial statements requiring significant estimates, judgments, and accounting policies are as follows:

Estimates And Judgments

Bad Debts And Price Adjustments.We maintain allowances for doubtful accounts for estimated losses resulting from either the inability of
our customers to make required payments or customer price adjustments related to services performed. If the financial condition of our customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required.

Capitalized Software And IntangiblesThe value of our capitalized software and intangibles is determined either by management or by an
independent third-party expert, based upon estimates, information and projections prepared by management. Under SFAS 144, annually, we are required to evaluate impairments to the carrying value
of our capitalized software and intangibles. As a result of this review, in the fourth quarter of 2002, we recorded an impairment charge of approximately $221,000.

LitigationWe are currently involved in certain legal proceedings as discussed in Note 11 in the Notes to Consolidated Financial
Statements. We do not believe these legal proceedings will have a material adverse effect on our consolidated financial position or results of operations. However, were an unfavorable ruling to occur,
there exists the possibility of a material impact on us that could adversely affect our ability to continue as a going concern.

The
above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically
dictated by accounting principles generally accepted in the U.S., with no need for management's judgment in their application. There are also areas in which management's judgment in selecting any
available alternative would not produce a materially different result. See our audited consolidated financial statements and notes thereto which begin on page F-1 of this Annual Report on
Form 10-K which contain accounting policies and other disclosures required by generally accepted accounting principles.

Critical Accounting Policies

Revenue

Revenues from permission email marketing services are recognized at the time the broadcast is sent, as we have no further significant obligations and
collectibility is probable.

Discontinued Operations

As a result of the sale of the e-learning assets, we operate in one segment, permission email marketing. In accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to be Disposed of, "all operations that have been sold have been reflected as
discontinued operations for all periods presented in the Company's condensed consolidated financial statements. All prior period financial information has been restated to reflect the discontinued
operations and the single segment.

17

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Results of Operations

2002 Compared To 2001

Continuing Operations

Revenues and Gross Margin

Net revenues for 2002 were $3.3 million. Net revenues for 2001 were $1.7 million which included revenues for the period September 25, 2001
through December 31, 2001. Revenues consist primarily of permission e-mail marketing and tracking services. In 2002, three customers accounted for approximately 81.9% of our revenue
as discussed in our risk factor on significant customers. Cost of revenues for 2002 and 2001 were approximately $677,000 and $45,000. Cost of revenues consists of the expenses associated with the
delivery of permission e-mail and tracking services, including Internet access and personnel related costs incurred to fulfill our email marketing and tracking services.

Operating Expenses

Research and Product Development Expenses

Research and product development expenses for 2002 were approximately $540,000. Research and product development expenses for 2001 were approximately $282,000,
which include expenses for the period September 25, 2001 through December 31, 2001. Research and product development expenses relate to the development and enhancement of our
technologies. These expenses exclude those costs associated with our e-learning business.

Sales and Marketing Expenses

Sales and marketing expenses for 2002 were approximately $1.0 million. Sales and marketing expenses for 2001 were approximately $374,000, which include
expenses for the period September 25, 2001 through December 31, 2001. Sales and marketing expenses consist primarily of salaries, commissions,
advertising, and advertising costs of marketing materials. These expenses exclude those costs associated with our e-learning business.

General and Administrative Expenses

General and administrative expenses for 2002 were approximately $3.2 million. For 2002, general and administrative expenses consist primarily of personnel
related costs, occupancy costs, professional service fees, and the administrative expenses of a public company. These expenses exclude those costs associated with our e-learning business.

General
and administrative expenses for 2001 were approximately $7.0 million and consisted of expenses associated with the general responsibilities of a public company, and
excluded those costs associated with our transportation management and Internet postage businesses. These expenses include salaries and related costs for certain administrative functions, professional
services, including legal and accounting services, insurance and an allocation of facilities costs. These expenses exclude those costs associated with our e-learning business.

Depreciation and Amortization

Depreciation and amortization expenses for 2002 were approximately $600,000. Depreciation and amortization expenses for 2001 were approximately $163,000. These
expenses for 2001 exclude depreciation and amortization related to our permission email marketing business.

18

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Impairment of Long-Lived Assets

The value of our capitalized software and intangibles is determined either by management or by an independent third-party expert, based upon estimates,
information and projections prepared by management. Under SFAS 144, annually, we are required to evaluate impairments to the carrying value of our capitalized software and intangibles. As a
result of this review, in the fourth quarter of 2002, we recorded an impairment charge of approximately $221,000.

Restructuring Charges

In March 2002, one of our subsidiaries abandoned its office space in White Plains, New York and defaulted on the lease relating to that space. As a result
of these actions and events, we recorded a charge of approximately $1.1 million in the first quarter of 2002 for the remaining lease obligation for the office space in White Plains, New York
and the write-off of fixed assets located in this facility. In the third quarter of 2002, we reached a settlement with the landlord on our remaining lease obligation on the office space in
White Plains, New York. As a result, we reversed approximately $705,000 of the restructuring accrual recorded in the first quarter of 2002.

Non-Recurring Costs

In 2001, non-recurring charges related and consequential to the merger totaling approximately $2.5 million were incurred. These costs consisted
primarily of $1.4 million for severance and other related payroll charges, $843,000 for Directors' & Officers' tail insurance for acts that occurred prior to the Learn2.com acquisition,
and $340,000 for other costs related to our November 8, 2001 workforce reduction.

Operating Loss

The operating loss for 2002 was $3.1 million compared to $8.7 million in 2001 and was attributable to the factors discussed above.

Interest Income

Interest income consists primarily of earnings on our cash and cash equivalents. Interest income was $39,000 for 2002 compared to interest income of $766,000 for
2001. The decrease was due to decreased interest earned as a result of lower average balances resulting from our continued use of cash to fund our operations and lower interest rates.

Interest Expense and Other, Net

Interest expenses and other, net, for 2002 was income of $467,000 compared to an expense of $35,000 for 2001. The $467,000 consisted primarily of a franchise tax
refund, the reversal of prior year's restructuring accrual, and the settlement of vendor obligations offset by non-operating expenses.

Discontinued Operations

Net Loss From Discontinued Operations

Net loss from discontinued operations of $6.1 million for 2002 reflects the operating expenses related to our e-learning segments, net of
revenues of $2.7 million. Included in this amount is $1.7 million relating to the write-down of certain intangible assets and the remaining fixed assets of the
e-learning segments including $843,000 for property and equipment, $145,000 for software, and $718,000 for the write-down of our building in Pryor, Oklahoma. Also, included in
this amount is $7.0 million of other costs and expenses primarily relating to the operating costs of the e-learning

19

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segment partially offset by the beneficial settlement of outstanding obligations related to the e-learning segment as well as the reversal of legacy accruals related to the
e-learning segment.

In
the fourth quarter of 2002, we reclassified certain severance and other related expenses totaling $303,000 from the e-learning segment from restructuring charges to loss
from discontinued operations.

Net Loss on Disposal of Discontinued Operations2002

Net loss on disposal of discontinued operations for 2002 was $7.0 million. On August 9, 2002, we and certain subsidiaries sold our respective
e-learning assets. We received consideration consisting of (1) an initial payment to the Company of $325,000 and (2) earn-out payments to the Company and its
subsidiaries of up to a maximum of $3.71 million. The earn-out payments were to be made monthly commencing on September 9, 2002, in each case, subject to reduction until the
earlier of 60 months from August 9, 2002 or the date on which the aggregate amount of the earn-out payments paid to us and our subsidiaries totals $3.71 million. We
recorded a $1.2 million receivable representing the present value of the minimum earn out payments due from the buyer of the assets. This represented a total purchase price of
$1.5 million.

On
March 28, 2003, we and certain subsidiaries entered into an agreement with the buyer of the e-learning assets whereby the buyer agreed to pay us a payment of
$540,000 to buy-out the remaining earn-out payments and monies owed to us for consigned inventory and purchased receivables. As a result, we wrote-off the
receivable representing the present value of the minimum earn-out payments to $540,000. As a result of this write-down, the net purchase price was approximately $955,000.

The
purchase price was offset by the write-off of the remaining intangible assets of $6.2 million, property, plant and equipment totaling $893,000, accounts receivable
of $166,000, and inventory of $306,000. This was also further offset by legal and consulting fees associated with this transaction totaling $266,000. In addition, as a result of the
buy-out of the consigned inventory and purchased receivables, we wrote-off an additional $134,000.

In
the third quarter of 2002, we reclassified certain expenses related to the sale of the e-learning assets included in the three and six months ended June 30, 2002
from loss from discontinued operations to loss on sale of discontinued operations. The reclassification was as follows:

|                                        |  | Three Months
Ended
June 30, 2002 |        | Six Months
Ended
June 30, 2002 |  
|--------------------------------------- |  | -------------------------------- | ------ | ------------------------------ | -
|
|Loss from discontinued operations       |  | $                                | (8,184 | )                              | $
|Loss on sale of discontinued operations |  |                                  |       |                                |  
|                                        |  |                                  |        |                                |  
|                                        |  | $                                | (8,184 | )                              | $
|                                        |  |                                  |        |                                |  

20

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Discontinued Operations2001 and 2000

Net Loss From Discontinued Operations

For 2001, loss from discontinued operations reflects the operating expenses related to our transportation management business as well as the discontinued
operations of the e-learning business. A summary of net loss from discontinued operations is as follows:

|                                                   |  | Year Ended December 31, 2001 |        | Year Ended December 31, 2000 |  
|-------------------------------------------------- |  | ---------------------------- | ------ | ---------------------------- | -
|
|Net revenues                                       |  | $                            | 2,679  |                              | $
|Impairment of long-lived assets                    |  |                              | (1,716 | )                            |  
|In-process research and development                |  |                              |       |                              |  
|Restructuring costs                                |  |                              |       |                              |  
|Reversal of restructuring reserves                 |  |                              |       |                              |  
|Reversal of excess allowance for doubtful accounts |  |                              |       |                              |  
|Other costs and expenses                           |  |                              | (4,021 | )                            |  
|                                                   |  |                              |        |                              |  
|                                                   |  |                              | (5,737 | )                            |  
|                                                   |  |                              |        |                              |  
|Net loss from discontinued Operations              |  | $                            | (3,058 | )                            | $
|                                                   |  |                              |        |                              |  



For 2001, for the transportation management solutions business, loss from discontinued operations reflects the operating expenses related to our transportation
management business through the measurement date of April 19, 2001, net of revenues from that business of approximately $317,000. Operating expenses for 2001 were significantly reduced from
operating expenses for 2000 primarily due to reduced headcount resulting from our restructuring efforts in 2000. In addition, we significantly reduced our advertising and promotional activities in the
first half of 2001. Amortization of deferred stock compensation, which is recorded using the graded vesting method, was $2.3 million in 2001.

These
decreases in operating expenses were partially offset by charges totaling $4.7 million related to the amortization and write off of goodwill and other intangible assets
related to our transportation management solutions business. During the first quarter of 2001,we identified possible indicators of impairment of these assets and determined that these assets had a
fair value of zero. In addition, we wrote off property and equipment held for disposal as a result of reduced employee headcount totaling $1.4 million.

In
addition, in 2001, loss from discontinued operations was partially offset by the reversal of excess restructuring accruals related to Internet postage refunds and to certain contract
terminations. We also reversed an excess allowance for doubtful accounts. These reversals totaled approximately $1.0 million.



For 2001, for the e-learning business, loss from discontinued operations reflects the operating expenses related to our e-learning
business, net of revenues of $2.7 million. Operating expenses for 2001 were $4.0 million.

21

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Gain on Disposal of Discontinued Operations2001

In April 2001, we sold all of our patent and patent applications and certain trademarks and domain names related to our Internet postage business to
Stamps.com, Inc. for cash proceeds of $7.5 million. In June 2001, we sold our maintenance contracts and trademarks related to our DigitalShipper and e-Receive products
to Data Track Technologies of California, Inc. for cash proceeds of $55,000 and a promissory note of $110,000. We recorded gains totaling approximately $7.7 million related to these
transactions. This income was offset by costs of discontinuing the transportation management business, including costs related to shutting down the business' operations after the April 19, 2001
measurement date, charges for fixed asset impairment and an accrual for lease termination costs. For 2001, the gain on disposal of discontinued operations, net was approximately $165,000.

Net Loss Available to Common Stockholders

The net loss available for common stockholders was $15.8 million for 2002 compared to $22.4 million for 2001 and was attributable to the factors
discussed above.

2001 Compared To 2000

Continuing Operations

Revenues and Gross Margin

Net revenues for 2001 which include revenues for the period September 25, 2001 through December 31, 2001 was approximately $1.7 million.
Revenues consist primarily of permission e-mail marketing and tracking services. Costs of revenues for 2001 were approximately $45,000. Cost of revenues consists of the expenses associated
with the delivery of permission e-mail and tracking services, including Internet access and personnel related costs incurred to fulfill our marketing and tracking services. All revenues
for 2000 have been included in net loss from discontinued operations.

Operating Expenses

Research and Product Development Expenses

Research and product development expenses were approximately $282,000 for 2001. Research and product development expenses relate to the development and
enhancement of our technologies, content, Website and product design. For 2001, these expenses exclude those costs associated with our e-learning business.

Sales and Marketing Expenses

Sales and marketing expenses were approximately $374,000 for 2001. Sales and marketing expenses consist primarily of salaries, commissions, advertising, trade
show expenses and advertising costs of marketing materials. For 2001, these expenses exclude those costs associated with our e-learning business.

General and Administrative Expenses

General and administrative expenses were approximately $7.0 million for 2001 compared to $8.2 million for 2000. These expenses consist of expenses
associated with the general responsibilities of a public company, and exclude those costs associated with our transportation management and Internet postage businesses. These expenses include salaries
and related costs for certain administrative functions, professional services, including legal and accounting services, insurance and an allocation of facilities costs. For 2001, these expenses
exclude those costs associated with our e-learning business.

22

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Non-Recurring Costs

In 2001, non-recurring charges related and consequential to the merger totaling approximately $2.5 million were incurred. These costs consisted
primarily of $1.4 million for severance and other related payroll charges, $843,000 for Directors' & Officers' tail insurance for acts that occurred prior to the Learn2.com acquisition,
and $340,000 for other costs related to our November 8, 2001 workforce reduction.

Operating Loss

The operating loss for 2001 was $8.7 million compared to $8.2 million in 2001 and was attributable to the factors discussed above.

Interest Income

Interest income, consists primarily of earnings on our cash and cash equivalents. Interest income was income of $766,000 for 2001 compared to income of
$4.0 million for 2000. The decrease in interest income, net, was due to decreased interest earned as a result of lower average cash balances resulting from our continued use of cash to fund our
operations and lower interest rates.

Interest Expense And Other, Net

Interest expense and other, net was an expense of $35,000 in 2001 compared to an expense of $178,000 in 2000.

Net Loss Available to Common Stockholder

The
net loss available for common stockholders was $22.4 million for 2001 compared to $112.8 million for 2000 and was attributable to the factors discussed above.

Liquidity And Capital Resources

Since inception, we have financed our operations primarily through private and public sales of equity securities. We have received net proceeds of approximately
$72.9 million in private placements of our equity securities and net proceeds of $125.4 million from the initial public offering of our common stock. As of December 31, 2002, we
had cash and cash equivalents totaling $466,000.

As
of December 31, 2002, our principal commitments consist of payments related to the settlement of various lawsuits totaling $240,000 with $170,000 due in 2003 and $70,000 due in
2004. One of these settlement agreements requires us to pay, $10,000 monthly through July of 2004. If we fail to make these monthly payments on a timely basis, we would be liable for the full
amount of the judgment totaling $399,754 plus interest at a rate of 10% per annum from September 12, 2001 to the date of the payoff plus attorney fees in the amount of $15,000. As of
December 31, 2002, we have only accrued the remaining payments under the settlement agreement. This amount totaled $190,000.

Additionally,
our lease and other contractual obligations totaled $335,000, and future minimum lease payments required under operating leases and other contractual requirements with
initial or remaining noncancellable terms in excess of one year as of December 31, 2002, were $314,000 in 2003, $17,000 in 2004, $4,000 in 2005. There are no commitments beyond 2005. Our
unconditional purchase obligations, as defined by SFAS No. 47, "Disclosure of Long-Term Obligations," were immaterial.

Net
cash used in continuing operations totaled $3.5 million in 2002 while net cash used in continuing operations for 2001 totaled $5.7 million, and for 2000 totaled
$1.9 million. These amounts resulted primarily from net operating losses during those periods offset by non-cash charges.

23

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Net
cash used in discontinued operations totaled $3.1 million for 2002 while net cash used in discontinued operations for 2001 totaled $20.3 million and for 2000 totaled
$72.3 million. These amounts resulted primarily from net operating losses during those periods offset by non-cash charges.

Net
cash provided by investing activities totaled $524,000 for 2002. This resulted from the initial payment of $325,000 for the sale of the e-learning segments assets plus
$90,000 of minimum royalty earn-out payments and $270,000 from proceeds of sales of fixed assets offset by purchases of property and equipment totaling $161,000. Net cash provided by
investing activities totaled $7.1 million for 2001 and resulted mainly from the sale of discontinued operations and a decrease in restricted cash and other assets offset by merger related
expenses and the purchase of assets. Net cash used in investing activities totaled $19.9 million for 2000 and resulted primarily from the use of restricted cash for a lease deposit, purchases
of property, plant and equipment, cash used for a business combination, and other decreases in other deposits and assets.

Net
cash provided by financing activities totaled $210,000 for 2002 and consisted primarily of the collection of a note receivable from a former employee totaling $200,000 and proceeds
from the exercise of employee stock options. Net cash provided by financing activities totaled $630,000 for 2000 and consisted primarily of the collection of a note receivable from a shareholder and
proceeds from the issuance of stock options. This was partially offset by repayments of lease and notes payable obligations.

We
have incurred significant net losses and negative cash flows from operations since our inception. At December 31, 2002, we had an accumulated deficit of approximately
$226.8 million.

Subsequent
to our merger with Learn2.com, we have taken the following actions to reduce our cash consumption. On November 8, 2001, we undertook a corporate restructuring to
outsource the packaging and shipping of our retail products to an outside fulfillment house and eliminate redundant functions. On March 4, 2002, we announced that we would phase out our
remaining production and distribution operations in Pryor, Oklahoma and eliminated approximately sixty positions, primarily in the Oklahoma facility and certain field sales operations. On
July 2, 2002, we announced that we would close our facility in Golden, Colorado and eliminated approximately twenty positions throughout the organization. On August 9, 2002, we and
certain subsidiaries sold our respective e-learning assets. In connection with the sale of the e-learning assets, we announced that we would focus our efforts on our permission
e-mail marketing business.

As
of December 31, 2002 we had $466,000 in cash and cash equivalents. We believe that this cash may not be adequate to meet our operating requirements for the next twelve months.
The audit opinion
regarding our 2002 financial statements expressed substantial doubt as to our ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The financial statements did not include any
adjustments that might result from the outcome of this uncertainty.

As
of December 31, 2002, our current liabilities exceeded our current assets by approximately $580,000. Furthermore, we have a $440,000 including accrued interest note payable due
January 2004. In addition, the operating results for future periods are subject to numerous other uncertainties. Our ability to achieve positive cash flow depends upon the success of the our
marketing or services, the costs of developing, producing, and marketing these services, new laws and regulations, general economic conditions and various other factors, some of which may be beyond
our control. Many of our costs are fixed and are based on anticipated revenue levels. We may be unable to adjust our spending quickly enough to offset any unexpected shortfall in cash collections or
revenues.

Based
on our current level of expenses, if our revenues and related cash collections are less than $1 million per quarter, or if our cash expenditures and payments continue to
exceed cash collections,

24

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we would need to raise additional funds. Our current forecasted revenues and cash collections are less than $1 million for each of the quarters in 2003. Because we have never earned a profit,
current liabilities exceed current assets and the market price of our common stock price is low; we believe that it will be extremely difficult to raise additional funds.

We
believe that if we restructure our existing obligations for approximately 10%-15% of their face amounts, exceed our cash collection targets by approximately $200,000 per
quarter, recover from our insurance carriers claims we have filed, and favorably and timely resolve the lawsuits with Morrison & Foerster, Rydell, and other litigation matters, we will have
sufficient resources for our operating requirements at least for the next twelve months. However, if each of the assumptions described in the preceding sentence are not actualized and we are unable to
raise additional funds or sell assets, it is not likely that we will continue as a going concern.

In
January 2002, a complaint was filed against us alleging certain common law claims. In connection with the settlement of the complaint, on January 24, 2002 we issued a
promissory note in the principal amount of $400,000 accruing interest at the rate of 10% per annum. The promissory note is due and payable upon the earlier of (i) the completion of a Financing
(as defined in the promissory note) or (ii) any dissolution, extraordinary dividend, recapitalization or similar transaction involving our company. At December 31, 2002, the principal
amount of the promissory note is included in other liabilities in the consolidated balance sheet.

In
connection with the sale of the e-learning segments, we terminated the employment of Kevin Riley, the former President of the e-learning division on
August 15, 2002. Under Mr. Riley's Employment Agreement he was entitled to receive: his annual base salary, $250,000, paid consistent with our payroll
practices for one year; immediate vesting in all options held; with respect to fully vested options held, the privilege of exercising the options for one year from termination; and health insurance
benefits for one year following termination.

Through
December 31, 2002, Mr. Riley was paid $23,750 under the termination clause of his Employment Agreement. In October 2002, we and Mr. Riley agreed to a
mutual release under which we were relieved from our obligations in exchange for a one-time payment of $25,000 and the issuance of a warrant to purchase 40,000 shares of the our common
stock.

In
connection with the sale of the e-learning segments, we terminated the employment of Ms. Lindsey, the former Vice President of Research and Development of the
e-learning division on August 15, 2002. Under Ms. Lindsey's Employment Agreement she is entitled to receive $131,250, paid in eighteen equal semi-monthly
installments.

Through
December 31, 2002, Ms. Lindsey was paid $58,333 under the termination clause of her Employment Agreement. In December 2002, we and Ms. Lindsey agreed
to a mutual release under which we were relieved from our obligations in exchange for the issuance of a warrant to purchase 40,000 shares of our common stock.

In
May 1999, Robert Ewald now the Chairman of the Board of Directors exercised unvested stock options through the issuance of a note payable. In October 2000, we
repurchased certain unvested shares and reduced the note payable to approximately $470,000. At that time, we held 652,344 vested shares as collateral. In September 2001, we and Mr. Ewald
entered into a retention agreement under which the note would be forgiven in the event that Mr. Ewald's employment was terminated without cause or as a result of constructive termination within
the two year period following the completion of the merger with Learn2.com, Inc. As a result, at September 30, 2001, we fully reserved the note. On June 28, 2002, the Board of
Directors approved a proposal to reduce the original exercise price to $0.075 per share, which represented the last reported sale price of our common stock on the Nasdaq SmallCap Market on that date.
As a result, the outstanding principal balance of the note was reduced

25

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to approximately $49,000. On July 2, 2002, Mr. Ewald surrendered his right, title and interest in the shares held as collateral in exchange for the note.

Recent Accounting Pronouncements

In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS 145"). SFAS 145 rescinds the automatic treatment of gains or losses from extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in APB No. 30. In addition, SFAS 145 also requires sale-leaseback accounting for certain lease modifications that have economic effects that
are similar to
sale-leaseback transactions and makes various technical corrections to existing pronouncements. SFAS 145 is effective for us for all financial statements issued in fiscal 2003.
Management does not expect the adoption of SFAS 145 to have a material effect on our consolidated financial position or results of operations.

In
July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses financial
accounting and reporting for costs associated with an exit or disposal activity and requires such costs to be recognized when the liability is incurred. Previous guidance in EITF
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Certain Costs Incurred in a Restructuring)" ("EITF
94-3"), required that a liability for an exit cost be recognized at the date of a company's commitment to an exit plan. The provisions of SFAS 146 are effective for exit or disposal
activities that are initiated by a company after December 31, 2002. We have not yet determined the impact that the adoption of SFAS 146 will have on our financial position or results of
operations.

In
November 2002, the FASB issued FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." This
interpretation expands the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees and requires the guarantor to recognize a liability for the
fair value of an obligation assumed under a guarantee. FIN 45 clarifies the requirements of SFAS No. 5, "Accounting for Contingencies," relating to guarantees. In general, FIN 45 applies to
contracts or indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an underlying that is related to an asset, liability, or
equity security of the guaranteed party. Certain guarantee contracts are excluded from both the disclosure and recognition requirements of this interpretation, including, among others, guarantees
relating to employee compensation, residual value guarantees under capital lease arrangements, commercial letters of credit, loan commitments, subordinated interests in a special purpose entity, and
guarantees of a company's own future performance. Other guarantees are subject to the disclosure requirements of FIN 45 but not to the recognition provisions and include, among others, a guarantee
accounted for as a derivative instrument under SFAS No. 133, a parent's guarantee of debt owed to a third party by its subsidiary or vice versa, and a guarantee which is based on performance
not price. The disclosure requirements of FIN 45 are effective for the Company as of December 31, 2002, and require disclosure of the nature of the guarantee, the maximum potential amount of
future payments that the guarantor could be required to make under the guarantee, and the current amount of the liability, if any, for the guarantor's obligations under the guarantee. The recognition
requirements of FIN 45 are to be applied prospectively to guarantees issued or modified after December 31, 2002. Significant guarantees that have been entered into by us are disclosed in
Note 11 in the accompanying consolidated financial statements. The adoption of FIN 45 is not expected to have a material impact on our financial statements.

In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure". This Statement amends SFAS No. 123, "Accounting
for Stock-Based Compensation" and provides alternative methods of transition for an entity's voluntary change to the

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fair value method of accounting for stock-based employee compensation. This Statement also amends the disclosure requirements of SFAS No. 123 to require more prominent disclosures and
specifies the form, content and location of those disclosures in both annual and interim financial statements
regarding the method of accounting used for stock-based employee compensation and its effect on reported results. This Statement is effective for fiscal years ending after December 15, 2002. As
we continue to account for employee stock-based compensation under APB 25, and we did not make a voluntary change to the fair value based method of accounting for stock-based employee compensation
under SFAS No. 123 in 2002, the adoption of SFAS No. 148 did not impact the Company's financial position or results of operations.

Other
pronouncements issued by the FASB or other authoritative accounting standard setting groups with future effective dates are either not applicable or are not significant to the
financial statements of the Company.

ITEM 7A. QUANTITIES AND QUALITATIVE DISCUSSIONS ABOUT MARKET RISK

Interest Rate Risk

The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To
achieve this objective, we maintain our portfolio of cash equivalents in a variety of securities, including both government and corporate obligations and money market funds.

We
have never held derivative financial instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements required pursuant to this item are included in Item 15 of this Annual Report on Form 10-K and are presented beginning
on page F-1.

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SUPPLEMENTARY DATA

The following tables set forth unaudited quarterly supplementary data for each of the eight quarters in the two-year period ended December 31,
2002.

|                                         |  | 2002 |       
|---------------------------------------- |  | ---- | ------
|
|
|Income (loss) from continuing operations |  | $    | (1,898
|(Loss)/gain from discontinued operations |  |      | (3,839
|Net Loss                                 |  |      | (5,737
|Loss per share, basic and diluted:       |  |      |       
|Continuing operations                    |  | $    | (0.03 
|Discontinued operations                  |  | $    | (0.05 
|Net Loss                                 |  | $    | (0.08 

|                                         |  | 2001 |        
|---------------------------------------- |  | ---- | -------
|
|
|Loss from continuing operations          |  | $    | (1,366 
|(Loss)/gain from discontinued operations |  |      | (12,487
|Net Loss                                 |  |      | (13,853
|Loss per share, basic and diluted:       |  |      |        
|Continuing operations                    |  | $    | (0.04  
|Discontinued operations                  |  | $    | (0.33  
|Net Loss                                 |  | $    | (0.37  

ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURES

Effective May 6, 2002, the Company dismissed Arthur Andersen LLP as the Company's independent public accountants and appointed BDO Seidman as its new
independent public accountants for the year ending December 31, 2002.

On
October 1, 2001, we terminated Ernst & Young LLP as our independent auditors. We then engaged Arthur Andersen LLP as of October 1, 2001 to serve as our
independent auditors for the fiscal year ended December 31, 2001. This change was executed in connection with our merger with Learn2.com. Learn2.com had engaged Andersen as its independent
public accountants since January 15, 1999.

We
filed form 8-K for each of these changes in accountants on May 10, 2002 and October 5, 2001.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF LTWC CORPORATION.

The following table sets forth our directors' and executive officers' ages and positions as of March 31, 2003:

|Name             |  | Age |  | Position                              
|---------------- |  | --- |  | --------------------------------------
|Robert J. Cresci |  | 59  |  | Director (1)                          
|Robert H. Ewald  |  | 55  |  | Chairman of the Board of Directors (2)
|Paul A. Goldman  |  | 41  |  | President and Chief Executive Officer 
|David Shohet     |  | 35  |  | Director (1)                          
|Fred Welz        |  | 58  |  | Director (1) (2)                      
|Michael M. Arons |  | 40  |  | Acting Chief Financial Officer        

---

Robert
J. Cresci has served as a Director of our company since October 1999. Since 1990 Mr. Cresci has served as a Managing Director of Pecks Management
Partners Ltd., which manages portfolios of private mezzanine securities. Mr. Cresci currently serves on the board of directors of Sepracor, Inc., Aviva Petroleum Ltd., Film
Roman, Inc., j2 Global Communications, Inc., Luminex Corporation, Continucare Corporation, Candlewood Hotel Co., Sera,Care Life Sciences, Inc. and several private companies.
Mr. Cresci is a graduate of the United States Military Academy at West Point and received an MBA in Finance from Columbia University.

Robert
H. Ewald has served as the Chairman of our Board of Directors since September 2002. He was Executive Chairman of the Board of Directors of LTWC from September 2001
until September 2002. Mr. Ewald served as our President and Chief Executive Officer from February 1999 to September 2001 and has served as a Director since
January 1999. Mr. Ewald is currently President and Chief Executive Officer of Scale Eight, a network storage system company. From July 1996 to July 1998, Mr. Ewald
held various executive positions at Silicon Graphics, Inc., a manufacturer of computer workstations, servers and supercomputers, most recently as Executive Vice President and Chief Operating
Officer. From August 1984 to June 1996, Mr. Ewald held various management and executive positions with Cray Research, Inc., a manufacturer of high performance computers,
including President and Chief Operating Officer. Before joining Cray Research, Inc., Mr. Ewald led the Computing and Communications Division of the Los Alamos National Laboratory and was
responsible for providing computing and communications services to government customers nationwide between 1980 and 1984. Mr. Ewald is currently a director of Ceridian, Inc., an
information technology services company. Mr. Ewald received his B.S. in civil engineering from the University of Nevada and his M.S. in civil engineering from the University of Colorado.

Paul
A. Goldman has been our President and Chief Executive Officer since November 2002, and a Director since September 2002. Mr. Goldman has been a private real
estate investor since 1991. In 2002, Mr. Goldman was Director of Operations for Lisa Frank, a marketer of stationery and other products for children. Mr. Goldman originally joined our
company in 2000 as Vice President, Sales and Marketing in connection with our acquisition of Infinity Logistics and Automated Logistics, both of which he founded. He remained in that role until 2001.
From 1990 to 2000, Mr. Goldman was President of Automated Logistics. In 1998, Mr. Goldman founded Infinity Logistics and served as President and Chief Executive Officer from 1998 to
2000. Prior to 1990 Mr. Goldman was Area Sales Manager of the Northwest Pacific Region at Pitney Bowes for five years. Mr. Goldman received his B.S. in Marketing and Economics from
Boston College.

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David
Y. Shohet has served on our Board of Directors since December 2002. Mr. Shohet is a self-employed finance consultant. From 2000 to 2002, Mr. Shohet
was Director of Finance at Menerva Technologies, Inc., a private software development company. In 1999, Mr. Shohet was the Chief Financial Officer of TuneTrax.com, Inc., a private
Internet technology company. From 1997 to 1998, Mr. Shohet was an associate consultant at Mitchell Madison Group, a strategy consulting firm. Mr. Shohet served as Chief Financial Officer
of Shetland Toys, LLC from 1994 to 1995, and as an investment banking analyst at Dean Witter Reynolds, Inc. from 1990 to 1992. Mr. Shohet received his B.S. in business administration
from the University of California, Berkeley and his MBA from the Harvard Business School.

Fred
Welz has served on our Board of Directors since December 2002. Since February 2003, he is Vice President of the Americas and Worldwide Sales Operations for
PalmSource, Inc., the developer of the Palm operating system for handheld devices and smart phones. PalmSource is a subsidiary of Palm, Inc. He also is currently a director of
FluxNetwork, Inc., a private software and integration services company providing client-server and web-based solutions for management of rich media information on handheld and
wireless devices. Prior to joining PalmSource, Mr. Welz was Chief Operating Officer of FluxNetwork, since 2001. Mr. Welz held various senior executive positions at Silicon Graphics
Computer Systems from 1990 to 2001, the most recent of which was Vice President of Global Accounts and Programs. Previously, Mr. Welz held executive positions at Control Data Corporation and
with the Federal Government in Washington, D.C. Mr. Welz received both a M.S. in International Economics and Marketing and a M.A. in International Public Policy and Administration from the
University of Wisconsin, Madison. Mr. Welz received a B.S. in Business Administration, Economics and Finance from the University of Denver.

Michael
M. Arons has served as the Acting Chief Financial Officer since March 17, 2003. Mr. Arons has been employed by the Company since September 2001 as Vice President and
Corporate Controller. From March 1999 to September 2001, Mr. Arons served as Vice President and Controller of Learn2.com Inc. Prior to March 1999, he was Assistant Corporate Controller of Golden Books
Family Entertainment from May of 1998 to March of 1999. Mr. Arons received his B.B.A. in Accounting from Hofstra University and is a licensed Certified Public Accountant in the State of New
York

Classified Board

Our certificate of incorporation provides for a classified board of directors consisting of three classes of directors, each serving staggered
three-year terms. As a result, a portion of our board of directors will be elected each year. Robert J. Cresci, Fred Welz and David Shohet have been designated as Class I directors
whose terms expire in 2003 annual meeting of stockholders. Robert H. Ewald and Paul Goldman have been designated as Class II directors whose terms will expire in 2004. This classification of
the board of directors may delay or prevent a change in control of our company or in our management.

Compliance With Section 16(A) Of The Exchange Act

Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to
file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors and 10% stockholders are also required by the Securities
and Exchange Commission's rules to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms received by us, we believe that, during
the fiscal year ended December 31, 2002, all Section 16(a) filing requirements applicable to its officers, directors and 10% stockholders were satisfied, except that
Messrs. Ewald, Landy, and Riley each filed late a Form 4 related to a stock option grant. Mr. Ewald and Mr. Landy each filed timely a Form 5 in February 2003.

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ITEM 11. EXECUTIVE COMPENSATION

Director Compensation

Effective January 2003, we pay our independent directors, Mr. Cresci, Mr. Shohet and Mr. Welz, $1,000 for each board meeting or
committee meeting they attend.

From
September 2001 through September 2002, Mr. Ewald was paid $24,166 per month for his services as Executive Chairman of the Board of Directors. In addition, we
provided Mr. Ewald with health coverage and other employee benefits during that period.

From
September 2001 to December 2002 we paid Mr. Gumucio $9,537 per month for his service as a board member. In addition, we provided Mr. Gumucio with health
coverage and other employee benefits.

Under
our stock option plan, directors are eligible to receive stock option grants at the discretion of the board of directors or other administrator of the plan.

Mr. Goldman
was paid a salary $16,667, for consulting services he performed from September 2002 through October 2002.

Executive Compensation

Effective November 2002, Mr. Goldman is paid an annual salary of $200,000 for his services as President and Chief Executive Officer of the
Corporation. He is entitled to a bonus of $100,000 if the Corporation attains earnings, before interest, taxes, depreciation and amortization, or "EBITDA", of $750,000 in fiscal year 2003. He is
entitled to an additional bonus of 13.3% of any EBITDA in excess of $750,000 attained in fiscal year 2003, such additional bonus not to exceed $100,000.

The
table below summarizes the compensation earned for services rendered to us in all capacities for the fiscal year ended December 31, 2002, by each person that (i) served
as chief executive officer during the last fiscal year, (ii) two highly compensated executive officers that were serving as executive officers at the end of the fiscal year and (iii) any
individual that would have qualified under

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category (ii) but for the fact that such individual was not an executive officer at the end of the fiscal year. These executives are referred to herein as the named executive officers.

|Name And Principal Position                                                                               |  | Year           |  | Salary($)               |  | Bonus ($)         |  | Long-Term
Compensation
Awards Securities
Underlying Options
(# Of Shares) |   | All Other
Compensation
($) |            
|--------------------------------------------------------------------------------------------------------- |  | -------------- |  | ----------------------- |  | ----------------- |  | ------------------------------------------------------------------------- | - | -------------------------- | -----------
|Robert H. Ewald, Former Executive Chairman of the Board; Former President and Chief Executive Officer (1) |  | 2002
2001
2000 |  | 205,417
290,000
296,657 |  | 
350,150
100,000 |  | 928,906

928,906(13                                                      | ) | 171,522
269,672
273,398    | (4)(5)(6)  
|Paul A. Goldman, President and Chief Executive Officer; Former Vice President Sales and Marketing (2)     |  | 2002
2001
2000 |  | 41,667
114,731
148,750  |  | 

             |  | 1,500,000

100,000                                                       |   | 16,667
180,250             | (7)(8)     
|Marc E. Landy, Former Executive Vice President and Chief Financial Officer(14)                            |  | 2002
2001
2000 |  | 175,000
46,667
        |  | 
60,000
        |  | 482,346

                                                               |   | 4,950

                  | (9)        
|Laurie Lindsey, Former Vice President Product Development                                                 |  | 2002
2001
2000 |  | 109,375
124,728
139,346 |  | 
30,000
18,000   |  | 
250,000
340,000                                                         |   | 61,615
56,426
2,841        | (10)(11)(9)
|Kevin Riley, Former President Learning Services Division                                                  |  | 2002
2001
2000 |  | 126,789
47,500
        |  | 35,000
15,000
   |  | 563,917

                                                               |   | 51,875

                 | (12)       
|Jerry Sandoval, Former President and Chief Operating Officer; Former President Etracks subsidiary(3)      |  | 2002
2001
2000 |  | 130,589
40,000
        |  | 
56,000
        |  | 

                                                                     |   | 

                      |            

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Option Grants In Last Fiscal Year

The following table provides certain information relating to stock options granted to our named executive officers during the fiscal year ended
December 31, 2002. In addition, as required by rules promulgated by the Securities and Exchange Commission, the table sets forth the hypothetical gains that would exist for the shares subject
to such options based on assumed annual compound rates of stock price appreciation during the option term.

|                |  |           |  |       |  |   |      |  |          | Potential Realized Value at
Assumed Annual Rates of
Stock Price Appreciation
for Option Term (2)
|--------------- |  | --------- |  | ----- |  | - | ---- |  | -------- | ------------------------------------------------------------------------------------------------
|
|
|
|
|Robert H. Ewald |  | 928,906   |  | 17.1% |  | $ | 0.04 |  | 8/1/12   |                                                                                                 
|Paul A. Goldman |  | 1,500,000 |  | 27.6% |  | $ | 0.07 |  | 11/21/12 |                                                                                                 
|Marc E. Landy   |  | 482,346   |  | 8.9%  |  | $ | 0.04 |  | 8/1/12   |                                                                                                 
|Kevin Riley     |  | 563,917   |  | 10.4% |  | $ | 0.04 |  | 8/1/12   |                                                                                                 

---

There
were no options granted to Mr. Sandoval or Ms. Lindsey.

Aggregate Option Exercises In Last Fiscal Year And Fiscal Year-End Option Values

The following table provides information about stock options held by our named executive officers at December 31, 2002. During fiscal year 2002, none of
our named executive officers exercised stock options.

33

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In
May 1999, Robert H. Ewald, now the Chairman of the Board of Directors, exercised unvested stock options through the issuance of a note payable. In October 2000, we
repurchased certain unvested shares and reduced the note payable to approximately $470,000. At that time we held 652,344 vested shares as collateral. In September 2001, we entered into a
retention agreement with Mr. Ewald, which provides for the payment of one year base salary, continued health coverage for a one year period, and the forgiveness of loans related to the early
exercise of stock options in the event that Mr. Ewald's employment is terminated without "Cause" (as defined in the retention agreement) or if Mr. Ewald resigns his employment for "Good
Reason" (as defined in the retention agreement) within the two-year period following the completion of the merger with Learn2.com, Inc. As a result, at September 30, 2001, we
fully reserved the note. On June 28, 2002, the Board of Directors approved a proposal to reduce the original exercise price to $0.075 per share, which represented the last reported sale price
of our common stock on the Nasdaq Small Cap Market on that date. As a result, the outstanding principal balance of the note was reduced to approximately $49,000. On July 2, 2002,
Mr. Ewald surrendered his right, title and interest in the shares held as collateral in exchange for the note.

|                |  |   |  |   |  | Number of
Securities Underlying
Unexercised Options
At December 31, 2002 |  |           |  |  
|--------------- |  | - |  | - |  | ------------------------------------------------------------------------ |  | --------- |  | -
|
|
|
|Robert H. Ewald |  |  |  |  |  | 753,480                                                                  |  | 175,426   |  | $
|Paul A. Goldman |  |  |  |  |  |                                                                         |  | 1,500,000 |  |  
|Marc E. Landy   |  |  |  |  |  | 458,611                                                                  |  | 23,735    |  |  
|Kevin Riley     |  |  |  |  |  | 563,917                                                                  |  | 563,917   |  |  

---

Compensation Committee Interlocks And Insider Participation

During the fiscal year ended December 31, 2002 Robert Ewald, Rebecca Saeger, S. Lee Kling, James A. Cannavino and Marcelo A. Gumucio served as members of
our company's Compensation Committee.

Pursuant
to a stock pledge agreement between our company and Marcelo Gumucio and Carole Gumucio, as of April 9, 2001, we had the right to repurchase 15,000 shares of our common
stock upon an event of default under the agreement. The stock pledge agreement was entered into in connection with a loan of approximately $150,000 to the Gumucio's. The purpose of the loans was to
pay the taxes incurred by the Gumucio's upon receipt of a 62,500 share stock bonus to Mr. Gumucio. Mr. Gumucio issued to our company a promissory note in connection with the loan. In
September 2001, we forgave the promissory note issued by Mr. Gumucio in its entirety together with a tax gross up on the forgiveness.

Employment Contracts And Termination Of Employment And Change-In-Control Arrangements.

In May 1999, Robert H. Ewald, now the Chairman of the Board of Directors exercised, unvested stock options through the issuance of a note payable. In
October 2000, we repurchased certain unvested shares and reduced the note payable to approximately $470,000. At that time we held 652,344 vested shares as collateral. In September 2001,
we entered into a retention agreement with Mr. Ewald, which provides for the payment of one year base salary, continued health coverage for a one year period, and the forgiveness of loans
related to the early exercise of stock options in the event that

34

---

Mr. Ewald's employment is terminated without "Cause" (as defined in the retention agreement) or if Mr. Ewald resigns his employment for "Good Reason" (as defined in the retention
agreement) within the two-year period following the completion of the merger with Learn2.com, Inc. As a result, at September 30, 2001, we fully reserved the note. On
June 28, 2002, the Board of Directors approved a proposal to reduce the original exercise price to $0.075 per share, which represented the last reported sale price of our common stock on the
Nasdaq Small Cap Market on that date. As a result, the outstanding principal balance of the note was reduced to approximately $49,000. On July 2, 2002, Mr. Ewald surrendered his right,
title and interest in the shares held as collateral in exchange for the note.

In
2001, we entered into an agreement with Mr. Ewald to loan him approximately $410,000 to enable him to pay the taxes he incurred upon receipt of a 125,000 share stock bonus in
2000. On a quarterly basis during 2000 and 2001, we forgave the amount due and agreed to provide Mr. Ewald with a tax gross-up on the forgiveness. In 2002 we paid Mr. Ewald
approximately $239,000, which represented the additional taxes he paid and incurred in 2002 as a result of the forgiveness.

Learn2.com
entered into an Employment Agreement, dated as of February 16, 1999, employing Marc E. Landy as its Chief Financial Officer. The parties entered into amendments to the
employment agreement dated as of February 16, 2001 and February 16, 2002. The term of Mr. Landy's employment agreement continues until February 16, 2003, subject to earlier
termination for death, disability, resignation or removal. Mr. Landy's annual base salary is $175,000. If Mr. Landy resigns his employment for "Good Reason" (as defined in the employment
agreement), if we terminate his employment without "Cause" (as defined in the employment agreement), or if we elect not to extend the term of Mr. Landy's employment, Mr. Landy will be
entitled to (1) receive his base salary, benefits and incentive bonuses to which he is entitled but not paid, up to and including the effective date of his termination of employment,
(2) receive an amount equal to one year's base salary, (3) with respect to fully vested
options, the privilege of exercising the unexercised portion of such options upon the later of (x) one year from the effective date of his termination or (y) thirty days from the
expiration of any restriction on the sale, transfer or other disposition of the shares of common stock underlying the options, and (4) receive an amount equal to the higher of (x) any
bonus or incentive compensation he earned or received with respect to the prior fiscal year or (y) $40,000. Mr. Landy's employment agreement also contains confidentiality,
non-competition and indemnification provisions. On February 26, 2003, Marc E. Landy resigned as Executive Vice President, Chief Financial Officer, Secretary and Treasurer of LTWC
Corporation. Under the terms of his agreement, Mr. Landy was not entitled to receive compensation related to items (2) and (4) explained above.

In
connection with the sale of the e-learning business, we terminated the employment of Mr. Kevin Riley, the former President of the e-learning division on
August 15, 2002. Under Mr. Riley's Employment Agreement he was entitled to receive: his annual base salary, $250,000, paid consistent with our payroll practices for one year; immediate
vesting in all options held; with respect to fully vested options held, the privilege of exercising the options for one year from termination; and health insurance benefits for one year following
termination. Through September 30, 2002, Mr. Riley was paid $24,750 in severance. In October 2002, we agreed to a mutual release with Mr. Riley, under which we were
relieved from our obligations in exchange for a one-time payment of $25,000 and the issuance of a warrant to purchase 40,000 shares of the our common stock at $0.07 per share, which
represented the last reported sale price of our common stock on the Nasdaq Small Cap Market on that date. The warrant vested immediately and will expire five years from the date of issuance.

In
May 2001, Ms. Laurie Lindsey, our then Vice President of Product Development, was terminated and paid approximately $54,000 under her Employment agreement. In
October 2001 Ms. Lindsey was rehired by the Company as Vice President of Research and Development of the e-learning division, in exchange for Ms. Lindsey's agreement
to defer her remaining $131,250 in severance payments. In connection with the sale of the e-learning business, Ms. Lindsey was terminated

35

---

on August 15, 2002. In 2002, we paid Ms. Lindsey $58,333 of the remaining $131,250 severance to which she was entitled. In December 2002, we agreed to a mutual release with
Ms. Lindsey, under which we were relieved from our obligations in exchange for the issuance of a warrant to purchase 40,000 shares of the our common stock at $0.06 per share, which represented
the last reported sale price of our common stock on the Nasdaq SmallCap Market on that date. The warrant vested immediately and will expire five years from the date of issuance.

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

The following table sets forth as of December 31, 2002, information related to each category of equity compensation plan approved or not approved by our
shareholders, including individual compensation arrangements with our non-employee directors. All stock options, warrants and rights to acquire our equity securities are exercisable for or
represent the right to purchase our common stock.

Equity Compensation Plan Information

|PLAN CATEGORY                                              |  | NUMBER OF SECURITIES
TO BE ISSUED UPON
EXERCISE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS |  | WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS |      | NUMBER OF SECURITIES
REMAINING FOR FUTURE
ISSUANCE UNDER EQUITY
COMPENSATION PLANS
(EXCLUDING SECURITIES
REFLECTED IN COLUMN (A))
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | ---- | ---------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders     |  |                                                                                             |  |                                                                             |      |                                                                                                                                  
|Employee stock options plans (1)                           |  | 5,706,627                                                                                   |  | $                                                                           | 0.20 |                                                                                                                                  
|Employee stock purchase plans (2)                          |  |                                                                                            |  |                                                                             | N/A  |                                                                                                                                  
|Equity compensation plans not approved by security holders |  |                                                                                            |  |                                                                             |     |                                                                                                                                  
|TOTAL                                                      |  | 5,706,627                                                                                   |  | $                                                                           | 0.20 |                                                                                                                                  

---

The
following table sets forth certain information that has been provided to our company with respect to the beneficial ownership of shares of our common stock as of March 31,
2003 by (i) each of our current directors, (ii) each of our current executive officers and (iii) all directors and executive officers of our company as a group. We are not aware
of any person or entity that has a beneficial ownership in the Company of 5% or more. Unless otherwise noted, we believe that all persons named in the table have sole voting and investment power with
respect to all shares of common stock

36

---

beneficially owned by them. Unless otherwise indicated, the address for each stockholder listed in the following table is c/o LTWC Corporation, 111 High Ridge Road, Stamford, CT.

|Name of Person
or Identity of Group (1)                                |  | Amount and Nature of
Beneficial Ownership |  | Percentage of Class (2)
|---------------------------------------------------------------------- |  | ----------------------------------------- |  | -----------------------
|Robert H. Ewald (3)                                                    |  | 1,047,472                                 |  | 1.38%                  
|Paul A. Goldman                                                        |  | 513,104                                   |  | *                      
|Robert J. Cresci (4)                                                   |  | 200,000                                   |  | *                      
|Fred Welz                                                              |  |                                          |  |                       
|David Y. Shohet                                                        |  |                                          |  |                       
|Michael M Arons (5)                                                    |  | 64,826                                    |  | *                      
|Marc E. Landy(6), (8)                                                  |  | 535,820                                   |  | *                      
|Kevin Riley(6), (9)                                                    |  | 371,334                                   |  | *                      
|Laurie Lindsey(6)                                                      |  |                                          |  |                       
|Jerry Sandoval(6)                                                      |  |                                          |  |                       
|All current directors and executive officers as a group (6 persons)(7) |  | 1,825,402                                 |  | 2.41%                  

---

Change In Control

We are not aware of any arrangement the operation of which may at a subsequent date result in a change in control of our company.

37

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In May 1999, Robert H. Ewald, now the Chairman of the Board of Directors exercised unvested stock options through the issuance of a note payable. In
October 2000, we repurchased certain unvested shares and reduced the note payable to approximately $470,000. At that time we held 652,344 vested shares as collateral. In September 2001,
we entered into a retention agreement with Mr. Ewald, which provides for the payment of one year base salary, continued health coverage for a one year period, and the forgiveness of loans
related to the early exercise of stock options in the event that Mr. Ewald's employment is terminated without "Cause" (as defined in the retention agreement) or if Mr. Ewald resigns his
employment for "Good Reason" (as defined in the retention agreement) within the two-year period following the completion of the merger with Learn2.com, Inc. As a result, at
September 30, 2001, we fully reserved the note. On June 28, 2002, the Board of Directors approved a proposal to reduce the original exercise price to $0.075 per share, which represented
the last reported sale price of our common stock on the Nasdaq SmallCap Market on that date. As a result, the outstanding principal balance of the note was reduced to approximately $49,000. On
July 2, 2002, Mr. Ewald surrendered his right, title and interest in the shares held as collateral in exchange for the note.

In
2001, we entered into an agreement with Mr. Ewald to loan him approximately $410,000 to enable him to pay the taxes he incurred upon receipt of a 125,000 share stock bonus in
2000. On a quarterly basis during 2000 and 2001 we forgave the amount due and agreed to provide Mr. Ewald with a tax gross-up on the forgiveness. In 2002 we paid Mr. Ewald
approximately $239,000, which represented the additional taxes he paid and incurred in 2002 as a result of the forgiveness.

In
May 2001, Ms. Laurie Lindsey, our then Vice President of Product Development, was terminated and paid approximately $54,000 under her Employment agreement. In
October 2001 Ms. Lindsey was rehired by the Company as Vice President of Research and Development of the e-learning division, in exchange for Ms. Lindsey's agreement
to defer her remaining $131,250 in severance payments. In connection with the sale of the e-learning business, Ms. Lindsey was terminated on August 15, 2002. In 2002, we paid
Ms. Lindsey $43,750 of the remaining $131,250 severance to which she was entitled. In December 2002, we agreed to a mutual release with Ms. Lindsey, under which we were relieved
from our obligations in exchange for the issuance of a warrant to purchase 40,000 shares of the our common stock at $0.06 per share, which represented the last reported sale price of our common stock
on the Nasdaq SmallCap
Market on that date. The warrant vested immediately and will expire five years from the date of issuance.

On
September 25, 2001, we acquired all of the outstanding stock of Learn2.com. Under the terms of the merger agreement, we issued approximately 37.8 million shares of our
common stock. Each share of Learn2.com common stock outstanding immediately prior to the completion of the merger automatically converted into the right to receive 0.4747 shares of our common stock
resulting in our stockholders immediately prior to the consummation of the merger owning approximately 50.1% of the outstanding stock of the combined company. The former stockholders of Learn2.com
including Learn2.com's $10.0 million convertible debenture holder, received approximately 49.9% of the combined company. In connection with the merger, we made a pre-closing payment
of $1.0 million to Learn2.com's $10.0 million convertible debenture.

ITEM 14. CONTROLS AND PROCEDURES

Within 90 days of the filing of this Form 10-K, we carried out an evaluation, under the supervision and with the participation of
management, including the Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the
Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely
alerting them to material information required to be included in periodic filings with the Securities and Exchange Commission.

There
were no significant changes in our internal controls or in other factors that could significantly affect these internal controls subsequent to the date of our most recent
evaluation.

38

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

(a)  1.
Consolidated Financial Statements. The following consolidated financial statements, and related notes, of LTWC Corporation and the Report of Independent Public
Accountants are filed as part of this Form 10-K.

INDEX TO FINANCIAL STATEMENTS

|                                                            |  | PAGE
|----------------------------------------------------------- |  | ----
|Report of Independent Public Accountants (BDO Seidman, LLP) |  | F-1 
|Report of Independent Auditors (Ernst & Young LLP)          |  | F-2 
|Consolidated Balance Sheets                                 |  | F-3 
|Consolidated Statements of Operations                       |  | F-4 
|Consolidated Statements of Cash Flows                       |  | F-5 
|Consolidated Statements of Stockholders' Equity             |  | F-6 
|Notes to Consolidated Financial Statements                  |  | F-7 

(a)  2.
Financial Statement Schedules.



(a)  3.
Exhibits. The exhibits listed on the accompanying index to exhibits immediately following the financial statement schedule are filed as part of, or incorporated by
reference into, this Form 10-K.

(b)  Reports
on Form 8-K, We filed a Current Report on Form 8-K dated December 18, 2002 with the Securities and Exchange
Commission on December 23, 2002 to report the appointment of David Shohet and Fred Welz as directors of the Company and the resignation of John V. Balen and Rebecca Saeger as directors of the
Company.

(c)  Exhibits
The following exhibits are filed with this report:

|EXHIBIT |  | DESCRIPTION                                                                                                               
|------- |  | --------------------------------------------------------------------------------------------------------------------------
|3.1(1)  |  | Amended and Restated Certificate of Incorporation of E-Stamp Corporation.                                                 
|3.2(1)  |  | Amended and Restated Bylaws of E-Stamp Corporation.                                                                       
|10.1(2) |  | Indemnification Agreement between E-Stamp Corporation and each of its directors and officers.                             
|10.2(2) |  | 1999 Stock Plan of E-Stamp Corporation and form of agreements thereunder.                                                 
|10.3(2) |  | 1999 Employee Stock Purchase Plan of E-Stamp Corporation and form of agreements thereunder.                               
|10.4(2) |  | 1999 Director Option Plan of E-Stamp Corporation and form of agreements thereunder.                                       
|10.5(2) |  | 1996 Stock Option and Restricted Stock Plan of E-Stamp Corporation.                                                       
|10.6(2) |  | 1996 Non-Employee Director Stock Option Plan of E-Stamp Corporation.                                                      
|10.7(3) |  | Letter, dated October 23, 2000, from E-Stamp Corporation to Robert H. Ewald.                                              
|10.8(4) |  | Change of Control Severance Agreement, effective as of November 17, 2000, between E-Stamp Corporation and Robert H. Ewald.
|        |  |                                                                                                                           

39

---

|10.9(5)  |  | Retention Agreement, dated as of September 25, 2001, between Learn2 Corporation and Robert H. Ewald                                                                                
|-------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10(5) |  | Employment Agreement, dated as of February 16, 1999, between Learn2.com, Inc. and Marc E. Landy.                                                                                   
|10.11(5) |  | Amendment to Employment Agreement, dated as of February 16, 2001, between Learn2.com, Inc. and Marc E. Landy.                                                                      
|10.12(6) |  | Second Amendment to Employment Agreement, dated as of February 16, 2002, between Learn2 Corporation (successor to Learn2.com, Inc.) and Marc E. Landy.                             
|10.13(5) |  | Amendment to Employment Agreement dated May 31, 2001, between Learn2.com, Inc. and Kevin C. Riley.                                                                                 
|10.14(7) |  | Form of Lock-Up Agreement, dated as of September 25, 2001, between Learn2.com, Inc. and Marc E. Landy, Donald Schupak and Stephen P. Gott.                                         
|10.15(7) |  | Form of Lock-Up Agreement, dated as of September 25, 2001, between E-Stamp Corporation and Robert H. Ewald, Marcelo A. Gumucio, John V. Balen, Rebecca Saeger and Robert J. Cresci.
|10.16(6) |  | Form of Promissory Note, dated January 24, 2002, issued by Learn2 Corporation in the principal amount of $400,000.                                                                 
|10.17(8) |  | Registration Rights Agreement, dated as of April 25, 2001, between Learn2 Corporation, Learn2.com, Inc. and RGC International Investors, LDC.                                      
|23.1     |  | Consent of Ernst & Young LLP, Independent Auditors.                                                                                                                                
|23.2     |  | Consent of BDO Seidman, LLP, Independent Public Accountants                                                                                                                        
|99.1     |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.                                                                                        
|99.2     |  | Certification of Acting Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.                                                                                 

---

40

---

41

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REPORT OF BDO SEIDMAN, LLP

Independent Auditors' Report

To
the Board of Directors and Stockholders of
LTWC Corporation
Stamford, Connecticut

We
have audited the accompanying consolidated balance sheets of LTWC Corporation as of December 31, 2002 and 2001 and the related consolidated statements of operations,
stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LTWC Corporation as of December 31,
2002 and 2001, and the results of its operations of LTWC Corporation and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of
America.

The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from and negative cash flow from operations that raises substantial doubt about its 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 that might result from the outcome of this uncertainty.

BDO
Seidman, LLP

Valhalla,
New York

March 28,
2003
except for note 13,
for which the date
is April 7, 2003

F-1

---



REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The
Board of Directors and Stockholders
LTWC Corporation

We
have audited the accompanying statements of operations, redeemable convertible preferred stock and stockholders' equity (deficit), and cash flows of LTWC Corporation (formerly
E-Stamp Corporation) for the year ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.

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

In
our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations of LTWC Corporation and its cash flows for the year ended
December 31, 2000, in conformity with accounting principles generally accepted in the United States.

The
accompanying financial statements have been prepared assuming that LTWC Corporation (formerly E-Stamp Corporation) will continue as a going concern. As more fully
described in Note 1, in April 2001, the Company announced its intention to cease its current business operations prior to its proposed merger with Learn2.com. This condition raises
substantial doubt about the Company's ability to continue as a going concern. The 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.



Palo
Alto, California
February 20, 2001
except for the second paragraph of Note 1,
as to which the date is April 20, 2001.

F-2

---



LTWC CORPORATION  CONSOLIDATED BALANCE SHEETS  AS OF DECEMBER 31,  (In thousands, except par value amounts)

2002

2001ASSETSCurrent assets:Cash and cash equivalents

$
466

$
6,337Accounts receivable, net of allowance of $46 and $50, respectively


371


979Prepaid expenses and other current assets


945


591Current assets of discontinued operations


2


2,666Total current assets


1,784


10,573Fixed assetsnet


301


299Capitalized softwarenet


3,278


3,675Intangible assetsnet


13


296Non-current assets of discontinued operations





9,959Total assets

$
5,376

$
24,802LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable

$
438

$
834Accrued expenses and other current liabilities


856


2,657Accrued restructuring costs


20


308Current liabilities of discontinued operations


1,050


2,716Total current liabilities


2,364


6,515Other liabilities


440


423Total liabilities


2,804


6,938Commitments and contingenciesStockholders' equity:Common stock, $0.001 par value per share: 200,000 shares authorized, 75,748 and 75,578 shares issued and outstanding at December 31, 2002 and 2001, respectively


76


76Additional paid in capital


229,344


229,333Deferred stock compensation





(451
)Accumulated deficit


(226,848
)

(211,094
)Total stockholders' equity


2,572


17,864Total liabilities and stockholders' equity

$
5,376

$
24,802


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

F-3

---



CONSOLIDATED STATEMENTS OF OPERATIONS  YEARS ENDED DECEMBER 31,  (in thousands, except share and per share data)

2002

2001

2000Net revenues

$
3,280

$
1,693

$
Cost of revenues


677


45


Gross margin


2,603


1,648


Operating expenses:Research and product development


540


282


Sales and marketing


1,027


374


General and administrative


3,178


7,031


8,230Depreciation and amortization


600


163


Impairment of long-lived assets


221





Non-recurring costs





2,493


Restructuring charges


167





Total operating expenses


5,733


10,343


8,230Operating loss


(3,130
)

(8,695
)

(8,230
)Interest income


39


766


3,982Interest expense and other, net


467


(35
)

(178
)Net loss from continuing operations


(2,624
)

(7,964
)

(4,426
)Discontinued operations:Net loss from discontinued operations


(6,088
)

(14,642
)

(108,400
)Net (loss) gain on disposal of discontinued operations


(7,042
)

165


(13,130
)

(14,477
)

(108,400
)Net loss available to common stockholders

$
(15,754
)
$
(22,441
)
$
(112,826
)Basic and diluted loss per common share:Continuing operations

$
(0.04
)
$
(0.16
)
$
(0.12
)Discontinued operations

$
(0.17
)
$
(0.30
)
$
(2.92
)Net loss available to common stockholders

$
(0.21
)
$
(0.46
)
$
(3.04
)Weighted average basic and diluted shares outstanding


75,717


48,369


37,144


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

F-4

---



LEARN2 CORPORATION  CONSOLIDATED STATEMENTS OF CASH FLOWS  YEAR ENDED DECEMBER 31,  (In thousands)

|                                             |                                                                                                             | 2002 |                                                    | 2001    |                                                     | 2000   |        
|-------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ---- | -------------------------------------------------- | ------- | --------------------------------------------------- | ------ | -------
|Cash flows from operating activities:        |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Net loss                                                                                                    |      | $                                                  | (15,754 | )                                                   | $      | (22,441
|                                             | Adjustments to reconcile net loss to cash used in operating activities:                                     |      |                                                    |         |                                                     |        |        
|                                             |                                                                                                             |      | Depreciation and amortization                      |         |                                                     | 600    |        
|                                             |                                                                                                             |      | Net loss from discontinued operations              |         |                                                     | 6,088  |        
|                                             |                                                                                                             |      | Loss (gain) on disposal of discontinued operations |         |                                                     | 7,042  |        
|                                             |                                                                                                             |      | Non-cash restructuring charges                     |         |                                                     | 395    |        
|                                             |                                                                                                             |      | Bad-debt expense                                   |         |                                                     | 39     |        
|                                             |                                                                                                             |      | Amortization of deferred stock compensation        |         |                                                     | 451    |        
|                                             |                                                                                                             |      | Impairment of long-lived assets                    |         |                                                     | 221    |        
|                                             |                                                                                                             |      | Reduction of notes receivable                      |         |                                                     |       |        
|                                             | Change in operating assets and liabilities:                                                                 |      |                                                    |        |                                                     |        |        
|                                             |                                                                                                             |      | Accounts receivable                                |         |                                                     | 420    |        
|                                             |                                                                                                             |      | Prepaid expenses and other current assets          |         |                                                     | (502   | )      
|                                             |                                                                                                             |      | Accounts payable and accrued expenses              |         |                                                     | (2,499 | )      
|                                             |                                                                                                             |      | Other liabilities                                  |         |                                                     | 37     |        
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             |                                                                                                             |      |                                                    |         | Net cash used in continuing operations              |        |        
|                                             |                                                                                                             |      |                                                    |         | Net cash used in discontinued operations            |        |        
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             |                                                                                                             |      | Cash used in operating activities                  |         |                                                     | (6,605 | )      
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|Cash flows from investing activities:        |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Decrease (increase) in restricted cash                                                                      |      |                                                    |        |                                                     |        | 3,750  
|                                             | Proceeds from sale of discontinued operations                                                               |      |                                                    | 415     |                                                     |        | 7,786  
|                                             | Closing payment in Learn2.com merger                                                                        |      |                                                    |        |                                                     |        | (1,000 
|                                             | Other cash used in Learn2.com merger                                                                        |      |                                                    |        |                                                     |        | (4,161 
|                                             | Purchase of property and equipment for continuing operations                                                |      |                                                    | (139    | )                                                   |        | (36    
|                                             | Purchase of property and equipment for discontinued operations                                              |      |                                                    | (22     | )                                                   |        | (457   
|                                             | Cash used for business combinations of discontinued operations                                              |      |                                                    |        |                                                     |        |       
|                                             | Proceeds from sale of property and equipment from discontinued operations                                   |      |                                                    | 270     |                                                     |        |       
|                                             | Decrease in deposits and other assets                                                                       |      |                                                    |        |                                                     |        | 340    
|                                             | Decrease/(increase) in deposits and other assets of discontinued operations                                 |      |                                                    |        |                                                     |        | 860    
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             |                                                                                                             |      |                                                    |         | Net cash provided by (used in) investing activities |        |        
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|Cash flows from financing activities:        |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Repayments of lease obligations of discontinued operations                                                  |      |                                                    |        |                                                     |        |       
|                                             | Repayments of notes payable of discontinued operations                                                      |      |                                                    |        |                                                     |        |       
|                                             | Collection of notes receivable of discontinued operations from stockholders                                 |      |                                                    |        |                                                     |        |       
|                                             | Net proceeds from exercise of stock options and employee stock purchase plan,
net of repurchases            |      |                                                    | 7
     |                                                     |        | 
    
|                                             | Collection of note receivable from former employee                                                          |      |                                                    | 200     |                                                     |        |       
|                                             | Other                                                                                                       |      |                                                    | 3       |                                                     |        |        
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             |                                                                                                             |      |                                                    |         | Net cash provided by financing activities           |        |        
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             |                                                                                                             |      |                                                    |         | Net decrease in cash and cash equivalents           |        |        
|Cash, and cash equivalents beginning of year |                                                                                                             |      | 6,337                                              |         |                                                     | 25,233 |        
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|Cash, end of year                            |                                                                                                             | $    | 466                                                |         | $                                                   | 6,337  |        
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|Supplemental cash flow information:          |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Cash paid for interest                                                                                      |      | $                                                  |        |                                                     | $      | 3      
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Issuance of note payable                                                                                    |      | $                                                  |        |                                                     | $      | 400    
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Repurchase of common stock in exchange for cancellation of notes receivable                                 |      | $                                                  |        |                                                     | $      | (608   
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Issuance of common stock for business combination                                                           |      | $                                                  |        |                                                     | $      | 6,401  
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Deferred stock compensation related to business combination                                                 |      | $                                                  |        |                                                     | $      |       
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        
|                                             | Reversal of deferred stock compensation related to unvested stock options forfeited by terminated employees |      | $                                                  |        |                                                     | $      |       
|                                             |                                                                                                             |      |                                                    |         |                                                     |        |        

See notes 3, 4 and 7 for supplemental disclosures on acquisition information and non-cash financing activities.

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

F-5

---



LTWC CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands)

|                                                                 |  | Common Stock |   |   |    | Notes
Receivable
From
Employees |   |         |   |   |        |   |   |         |  
|---------------------------------------------------------------- |  | ------------ | - | - | -- | ------------------------------- | - | ------- | - | - | ------ | - | - | ------- | -
|
|
|Balance at January 1, 2000                                       |  | 39,110       |   | $ | 39 |                                 | $ | 224,835 |   | $ | (3,540 | ) | $ | (15,327 | )
|Exercise of stock options                                        |  | 76           |   |   |   |                                 |   | 45      |   |   |       |   |   |        |  
|Issuance of common stock under employee stock purchase plan      |  | 152          |   |   |   |                                 |   | 457     |   |   |       |   |   |        |  
|Issuance of common stock in connection with acquisition          |  | 1,164        |   |   | 1  |                                 |   | 5,309   |   |   |       |   |   | (1,200  | )
|Amortization of deferred stock compensation                      |  |             |   |   |   |                                 |   |        |   |   |       |   |   | 8,040   |  
|Amortization of deferred distribution costs                      |  |             |   |   |   |                                 |   |        |   |   |       |   |   |        |  
|Reversal of deferred stock compensation for terminated employees |  |             |   |   |   |                                 |   | (3,865  | ) |   |       |   |   | 3,865   |  
|Compensation related to share repurchase                         |  |             |   |   |   |                                 |   | 724     |   |   |       |   |   |        |  
|Shares repurchased                                               |  | (2,488       | ) |   | (2 | )                               |   | (2,627  | ) |   | 2,629  |   |   |        |  
|Payments on notes receivable                                     |  |             |   |   |   |                                 |   |        |   |   | 247    |   |   |        |  
|Net loss and comprehensive loss                                  |  |             |   |   |   |                                 |   |        |   |   |       |   |   |         |  
|                                                                 |  |              |   |   |    |                                 |   |         |   |   |        |   |   |         |  
|Balance at December 31, 2000                                     |  | 38,014       |   |   | 38 |                                 |   | 224,878 |   |   | (664   | ) |   | (4,622  | )
|Issuance of common stock in connection with acquisition          |  | 37,661       |   |   | 38 |                                 |   | 6,363   |   |   |       |   |   |        |  
|Amortization of deferred stock compensation                      |  |             |   |   |   |                                 |   |        |   |   |       |   |   | 2,293   |  
|Reversal of deferred stock compensation for terminated employees |  |             |   |   |   |                                 |   | (1,878  | ) |   |       |   |   | 1,878   |  
|Compensation related to share repurchase                         |  |             |   |   |   |                                 |   | 42      |   |   | 68     |   |   |        |  
|Compensation related to loan foregiveness                        |  |             |   |   |   |                                 |   | 2       |   |   | 56     |   |   |        |  
|Shares repurchased                                               |  | (97          | ) |   |   |                                 |   | (71     | ) |   | 540    |   |   |        |  
|Other                                                            |  |              |   |   |    |                                 |   | (3      | ) |   |        |   |   |         |  
|Net loss and comprehensive loss                                  |  |             |   |   |   |                                 |   |        |   |   |       |   |   |        |  
|                                                                 |  |              |   |   |    |                                 |   |         |   |   |        |   |   |         |  
|Balance at December 31, 2001                                     |  | 75,578       |   |   | 76 |                                 |   | 229,333 |   |   |       |   |   | (451    | )
|Exercise of stock options                                        |  | 170          |   |   |   |                                 |   | 7       |   |   |       |   |   |        |  
|Warrants issued to non-employees                                 |  |             |   |   |   |                                 |   | 4       |   |   |       |   |   |        |  
|Amortization of deferred stock compensation                      |  |             |   |   |   |                                 |   |        |   |   |        |   |   | 451     |  
|Net loss and comprehensive loss                                  |  |             |   |   |   |                                 |   |        |   |   |       |   |   |        |  
|                                                                 |  |              |   |   |    |                                 |   |         |   |   |        |   |   |         |  
|                                                                 |  | 75,748       |   | $ | 76 |                                 | $ | 229,344 |   | $ |       |   | $ |        |  
|                                                                 |  |              |   |   |    |                                 |   |         |   |   |        |   |   |         |  

F-6

---



LTWC CORPORATION        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1Description of Business, Basis of Presentation and Accounting Policies

Description of Business

LTWC Corporation, a Delaware corporation (the "Company" or "LTWC"), was incorporated on August 23, 1996. The Company originally provided an Internet
postage service. On September 25, 2001, the Company acquired all of the outstanding shares of Learn2.com, Inc., and assumed the on-going operations of Learn2.com's
e-learning and permission e-mail marketing businesses. In connection with its then proposed merger with Learn2.com, the Company announced that it would discontinue its existing
transportation management business prior to completion of the merger. On August 9, 2002, the Company sold the assets of its e-learning business. As part of the agreement, in
September 2002, the Company changed its name to LTWC Corporation. In connection with the sale, the Company announced that it would focus its efforts on its permission e-mail
marketing business.

Basis Of Presentation

Fiscal 2000

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred significant net losses
and negative cash flows from operations since its inception. At December 31, 2000, the Company had an accumulated deficit of approximately $188.7 million. On April 20, 2001, the
Company announced that it had signed a merger agreement with Learn2.com. The merger agreement was subject to certain closing conditions including maintaining a minimum net cash position at the closing
date and approvals from stockholders of both companies. Pursuant to the terms of the merger agreement, upon completion of the merger, E-Stamp stockholders were to own approximately 50.1%
of the combined company. The Company also announced that it would discontinue its existing transportation management solution business prior to the closing of the merger. As a result of these actions
at the time in April 2001, there was no assurance that the Company would be able to close the merger, and the Company's announcement that it would discontinue its remaining operations raised
substantial doubt about the Company's ability to continue as a going concern if the Company failed to complete the merger. Accordingly, Ernst & Young LLP's audit report with respect to the
financial statements for the year ended December 31, 2000, included an explanatory paragraph highlighting the substantial doubt about the Company's ability to continue as a going concern. The
financial statements for the year ended December 31, 2000, did not include any adjustments that might have resulted from this uncertainty.

Fiscal 2002 and 2001

The Company has incurred significant net losses and negative cash flows from operations since its inception. At December 31, 2002, the Company had an
accumulated deficit of approximately $226.8 million. Subsequent to the Company's merger with Learn2.com, the Company has taken the following actions to reduce its cash consumption. On
November 8, 2001, the Company undertook a corporate restructuring to outsource the packaging and shipping of its retail products to an outside fulfillment house and eliminate redundant
functions. On March 4, 2002, the Company announced that it would phase out its remaining production and distribution operations in Pryor, Oklahoma and eliminated approximately sixty positions,
primarily in the Oklahoma facility and certain field sales operations. On July 2, 2002, the Company announced that it would close its facility in Golden, Colorado and eliminated approximately
twenty positions throughout the organization. On August 9, 2002, the Company and certain subsidiaries sold its respective e-learning assets. In connection with the sale of the
e-learning assets, the Company announced that it would focus its efforts on its permission e-mail marketing business.

F-7

---

As
of December 31, 2002, the Company's current liabilities exceeded its current assets by approximately $580,000. Furthermore, the Company has a $440,000 including accrued
interest note payable due January 2004. In addition, the operating results for future periods are subject to numerous other uncertainties. The Company's ability to achieve positive cash flow
depends upon the market success of its services, the costs of developing, producing, and marketing these services, new laws and regulations, general economic conditions and various other factors, some
of which may be beyond its control. Many
of the Company's costs are fixed and are based on anticipated revenue levels. The Company may be unable to adjust its spending quickly enough to offset any unexpected shortfall in cash collections or
revenues.

As
of December 31, 2002 the Company had $466,000 in cash and cash equivalents. The Company believes that this cash may not be adequate to meet its operating and requirements for
the next twelve months. The audit opinion regarding its 2002 financial statements expressed substantial doubt as to the Company's ability to continue as a going concern. The accompanying consolidated
financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of
business. The financial statements did not include any adjustments that might result from the outcome of this uncertainty.

The
Company believes that if it restructures its existing obligations, exceeds its cash collection targets, recover from its insurance carriers claims it has filed, and favorably and
timely resolve the lawsuits with Morrison & Foerster, Rydell, and other litigation matters, the Company will have sufficient resources for its operating requirements at least for the next
twelve months. However, if each of the assumptions described in the preceding sentence, are not actualized and the Company is unable to raise additional funds or sell assets, it is not likely that the
Company will continue as a going concern.

Because
of the Company's announcement on April 20, 2001 and August 9, 2002, that it was discontinuing the remaining business operations, the statements of operations for
the years ended December 31, 2002 and 2001 have been restated to reflect the results of the Company's Internet postage and transportation management solutions and e-learning segment as
discontinued operations, in accordance with SFAS No. 144.

Principles Of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and
accounts have been eliminated in consolidation.

Reclassifications

Certain amounts in the prior periods' consolidated financial statements have been reclassified for comparative purposes to conform to the current periods'
presentation.

Critical Accounting Estimates

The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to bad debts,
intangible assets, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making

F-8

---

judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or
conditions.

Revenue Recognition

Revenues from permission email marketing services are recognized at the time the broadcast is sent, as the Company has no further significant obligations and
collectibility is probable.

Research and Product Development Expenditures

Costs incurred in research and development are expensed as incurred. Software development costs are required to be capitalized when a product's technological
feasibility has been established through the date the product is available for general release to customers. The Company has not capitalized any software development costs as technological feasibility
is generally not established until a working model is completed at which time substantially all development is complete.

Advertising Expenses

The Company expenses the cost of advertising and promoting its services as incurred. Such costs are included in sales and marketing in the consolidated statements
of operations.

Internal-Use Software

The Company accounts for internal use software in accordance with AICPA's SOP 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." This standard requires
certain direct development costs associated with internal-use software to be capitalized including external direct costs of material and services and payroll costs for employees devoting
time to the software projects. Costs incurred during the preliminary project stage, as well as for maintenance and training are expensed as incurred.

Fair Value Of Financial Instruments

The Company's financial instruments consist of cash and cash equivalents, investments in marketable securities, accounts receivable, accounts payable, notes
payable and accrued expenses. At December 31, 2002 and 2001, the carrying amounts of these instruments approximated their fair value.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(FAS 109") using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured
using currently enacted tax rates. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the results of operations in the period that includes the enactment date.

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees." APB No. 25 prescribes the use of the intrinsic value method, which measures compensation cost as the quoted

F-9

---

market price of the stock at the date of grant less the amount, if any, that the employee is required to pay. As required by SFAS No. 123, "Accounting for Stock-Based Compensation," which was
amended by SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure," the Corporation discloses the pro forma effects on net earnings and earnings per share as if
stock-based compensation had been recognized based on the estimated fair value at the date of grant for options awarded. Had the Company's compensation expense for the Company's stock option grants
been determined based on the fair value at the grant date for awards consistent with the method of SFAS No. 123, the Company's pro forma net loss amounts for each year are indicated below (in
thousands except per share data):

Years ended December 31,2002

2001

2000Net loss, as reported

$
(15,754
)
$
(22,441
)
$
(112,826
)


Add:
Stock based compensation cost included in determination of compensation expense

451

2,293

8,764Deduct:
Total stock-based employee compensation expense determined under the fair value based method for all rewards, net of related tax effects

(295
)
(1,010
)
(2,902
)


Pro forma net loss

$
(15,598
)
$
(21,158
)
$
(106,964
)Basic and diluted-as reported

$
(0.21
)
$
(0.46
)
$
(3.04
)Basic and diluted-pro forma

$
(0.21
)
$
(0.40
)
$
(2.80
)


The
weighted average fair value of each option granted in 2002, 2001, and 2000 was $0.05, $3.79, and $7.89, respectively. The fair value of the Company stock-based awards to employees
prior to the Company's initial public offering in October 1999 was estimated using the minimum value method for the purposes of determining the stock-based compensation under the fair value method.
The weighted
average fair value of employee stock purchase plan rights granted in 2000 was. $0.56. These values are based on estimates on the date of grant using the Black-Scholes option-pricing model using the
following weighted average assumptions:

2002

2001

2000Risk-free interest rate

4.14% to 4.47%

6.40
%
6.40
%Expected life in years

10

3.5

3.5Expected volatility

135% to 151.87%

171
%
160
%Expected dividend yield





Expected life in years of employee stock purchase plan rights

N/A

N/A

1.2Risk-free interest rate purchase plan rights

N/A

N/A

6.0
%


Cash And Cash Equivalents

The Company considers all highly liquid investments with a remaining maturity of three months or less when purchased to be cash equivalents Cash equivalents
include highly liquid, temporary cash investments having original maturity dates of three months or less. For reporting the Company's cash and cash equivalents are carried at cost, which approximates
market.

F-10

---

Fixed Assets

Fixed assets are recorded at cost and are depreciated using the straight-line method over their estimated useful lives. Leasehold improvements are
amortized over their estimated useful lives, or the term of the leases, whichever is shorter.

Intangible Assets

Intangible assets are comprised of the excess of the purchase price and related acquisition costs over the fair value assigned to the net tangible assets of
businesses acquired in purchase business combinations, which primarily are subject to the provisions of Statement of Financial Accounting Standards ("SFAS") No. 142 "Goodwill and Other
Intangible Assets" and SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." The Company records impairment losses other intangible assets when events and
circumstances indicate that such assets might be impaired and the estimated fair value of the asset is less than its recorded amount. Conditions that would necessitate an impairment assessment include
material adverse changes in operations, significant adverse differences in actual results in comparison with initial valuation forecasts prepared at the time of acquisition, a decision to abandon
acquired products or services. If impairment is determined, the asset is written down to estimated fair value. As a result of this review, in the fourth quarter of 2002, the Company recorded an
impairment charge of approximately $221,000.

Intangibles
are presented net of related accumulated amortization and impairment charges.

Recent Accounting Pronouncements

In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS 145"). SFAS 145 rescinds the automatic treatment of gains or losses from extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in APB No. 30. In addition, SFAS 145 also requires sale-leaseback accounting for certain lease modifications that have economic effects that
are similar to sale-leaseback transactions and makes various technical corrections to existing pronouncements. SFAS 145 is effective for the Company for all financial statements
issued in fiscal 2003. Management does not expect the adoption of SFAS 145 to have a material effect on its consolidated financial position or results of operations.

In
July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses financial
accounting and reporting for costs associated with an exit or disposal activity and requires such costs to be recognized when the liability is incurred. Previous guidance in EITF
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (Certain Costs Incurred in a Restructuring)" ("EITF 94-3"), required that a liability for an exit cost be recognized at the date of a company's
commitment to an exit plan. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated by a company after December 31, 2002. The Company has not yet
determined the impact that the adoption of SFAS 146 will have on the Company's financial position or results of operations.

In
November 2002, the FASB issued FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." This
interpretation expands the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees and requires the guarantor to recognize a liability for the
fair value of an obligation assumed under a guarantee. FIN 45 clarifies the requirements of SFAS No. 5, "Accounting for Contingencies," relating to guarantees. In general, FIN 45 applies to
contracts or

F-11

---

indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an underlying that is related to an asset, liability, or equity
security of the guaranteed party. Certain guarantee contracts are excluded from both the disclosure and recognition requirements of this interpretation, including, among others, guarantees relating to
employee compensation, residual value guarantees under capital lease arrangements, commercial letters of credit, loan commitments, subordinated interests in a special purpose entity, and guarantees of
a company's own future performance. Other guarantees are subject to the disclosure requirements of FIN 45 but not to the recognition provisions and include, among others, a guarantee accounted for as
a derivative instrument under SFAS No. 133, a parent's guarantee of debt owed to a third party by its subsidiary or vice versa, and a guarantee which is based on performance not price. The
disclosure requirements of FIN 45 are effective for the Company as of December 31, 2002, and require disclosure of the nature of the guarantee, the maximum potential amount of future payments
that the guarantor could be required to make under the guarantee, and the current amount of the liability, if any, for the guarantor's obligations under the guarantee. The recognition requirements of
FIN 45 are to be applied prospectively to guarantees issued or modified after December 31, 2002. Significant guarantees that have been entered into by the Company are disclosed in
Note 11. The adoption of FIN 45 is not expected to have a material impact on the Company's financial position or results of operations.

In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based CompensationTransition and Disclosure". This Statement amends SFAS No. 123,
"Accounting for Stock-Based Compensation" and provides alternative methods of transition for an entity's voluntary change to the fair value method of accounting for stock-based employee compensation.
This Statement also amends the disclosure requirements of SFAS No. 123 to require more prominent disclosures and specifies the form, content and location of those disclosures in both annual and
interim financial statements regarding the method of accounting used for stock-based employee compensation and its effect on reported results. This Statement is effective for fiscal years ending after
December 15, 2002. As the Company continues to account for employee stock-based compensation under APB 25, and the Company did not make a voluntary change to the fair value based method of
accounting for stock-based employee compensation under SFAS No. 123 in 2002, the adoption of SFAS No. 148 did not impact the Company's financial position or results of operations. Other
pronouncements issued by the FASB or other authoritative accounting standard setting groups with future effective dates are either not applicable or are not significant to the financial statements of
the Company.

Note 2. Dispositions/Acquisitions

Disposition

On August 9, 2002, the Company and certain subsidiaries sold their respective e-learning assets. The consideration consists of (i) an
initial payment to the Company of $325,000 and (ii) earn-out payments to the Company and its subsidiaries of up to $3.71 million. The earn-out payments are to be
made monthly commencing on September 9, 2002, in each case, subject to reduction, until the earlier of sixty (60) months from August 9, 2002 or the date on which the aggregate
amount of the earn-out payments paid to the Company and its subsidiaries totals $3.71 million. The Company recorded a $1.2 million receivable representing the present value
of the minimum earn-out payments due from the buyer of the assets.

On
March 24, 2003, the Company and certain subsidiaries entered into an agreement with the buyer of the e-learning assets whereby the buyer agreed to pay the Company a
one time lump-sum payment of $540,000 to buy-out the remaining earn-out payments and monies owed to the Company for consigned inventory and purchased receivables.
As a result, the Company wrote-off the receivable

F-12

---

representing the present value of the minimum earn-out payments to $540,000. As a result of this write-down, the net purchase price was approximately $955,000.

The
loss on the sale of the e-learning assets was approximately $7.0 million and is included in the loss on sale from disposal of discontinued operations in the
accompanying consolidated statement of operations for the year ended December 31, 2002.

The
purchase price of $955,000 was offset by the write-off of the remaining intangible assets of $6.2 million, property, plant and equipment totaling $893,000,
accounts receivable of $166,000, and inventory of $306,000. This was also further offset by legal and consulting fees associated with this transaction totaling $266,000. In addition, as a result of
the buy-out of the consigned inventory and purchased receivables, the Company wrote-off an additional $134,000.

Acquisitions

On September 25, 2001, the Company acquired all of the outstanding stock of Learn2.com, and changed its name to Learn2 Corporation. Under the terms of the
merger agreement, the Company issued
approximately 37.7 million shares of its common stock. Each share of Learn2.com common stock outstanding immediately prior to the completion of the merger automatically converted into the right
to receive 0.4747 shares of common stock of the Company, resulting in the stockholders of the Company immediately prior to the consummation of the merger owning approximately 50.1% of the outstanding
stock of the combined company. The former stockholders of Learn2.com, including Learn2.com's $10.0 million convertible debenture holder, received approximately 49.9% of the combined company.
The total value of the transaction was approximately $19.2 million including approximately $6.6 million of assumed liabilities, transaction costs totaling approximately
$5.2 million and a pre-closing payment of $1.0 million to Learn2.com's $10.0 million convertible debenture holder. The transaction was accounted for using the purchase
method of accounting pursuant to SFAS 141. The results of Learn2.com for the period from September 25, 2001 through December 31, 2002 are included in the consolidated statement of
operations for the year ended December 31, 2002.

F-13

---



The following table sets forth the calculation of the purchase price (in thousands):

Total LTWC Corporation shares outstanding prior to the merger


37,842Learn2 Corporation common stock per share market value at date the merger was announced.

$
0.17$
6,433Ownership factor from the merger agreement.


99.5
%Value of LTWC Corporation common stock issued in connection with the merger.


6,400Pre-closing payment


1,000Liabilities assumed


6,596Transaction costs


5,159Total

$
19,155


Under
the purchase method of accounting, the net purchase price under this transaction has been allocated to the assets and liabilities of Learn2.com based on their estimated values at
the date of the transaction. However, the estimated fair values of the net assets acquired of Learn2.com at the date of the transaction totaled $23.3 million, which exceeded the purchase price
of $19.2 million resulting, in a deficiency of approximately $4.1 million. The deficiency has been allocated to reduce proportionately the long-lived tangible and intangible
assets on the basis of relative fair values based on an independent third-party valuation. The following table sets forth the allocation (in thousands):

Fair Value
Of Assets
Acquired

Deficiency

Adjusted
Fair ValueNet current assets

$
4,346

$


$
4,346Fixed assets


4,188


(922
)

3,266Capitalized software


10,500


(798
)

9,702Other identifiable intangible assets


4,080


(2,411
)

1,669Other non-current assets


221


(49
)

172$
23,335

$
(4,180
)
$
19,155


The
following table sets forth the cash utilized and acquired in the acquisition (in thousands):

Cash acquired

$
998Less: acquisition costs


(5,159
)Net cash utilized in acquisition, net of cash acquired

$
(4,161
)


In
addition, the Company made a pre-closing payment of $1.0 million to Learn2.com's $10.0 million convertible debenture holder.

The
following unaudited pro forma information has been prepared assuming that the acquisition of Learn2.com had taken place at the beginning of the respective periods presented. The
unaudited pro forma information presented in the table below represents the combined loss from continuing

F-14

---

operations, discontinued operations, net loss and loss per share. The pro forma financial information is not necessarily indicative of the combined results that may occur in the future (in
thousands):

Twelve Months Ended
December 31,2001

2000Net revenues

$
4,318


4,179Net loss from continuing operations


(9,980
)

(11,574
)Net loss from discontinued operations


(29,529
)

(139,242
)Net (loss) gain on disposal of discontinued operations


165


Net loss available to common stockholders


(39,344
)

(150,816
)Basic and diluted loss per common shareContinuing operations

$
(0.37
)
$
(0.56
)Discontinued operations

$
(0.15
)
$
(1.42
)Net loss available to common stockholders

$
(0.52
)
$
(1.98
)


Note 3. Discontinued Operations

2002 Discontinued Operations

As discussed in Note 2, on August 9, 2002, the Company and its subsidiaries sold the assets of its e-learning segments. In connection
with the sale, the Company announced that it would focus its efforts and operate in its existing permission e-mail marketing segment. In accordance with SFAS No. 144, all operations
that have been sold have been reflected as discontinued operations for all periods presented in the Company's condensed consolidated financial statements. All prior period financial information has
been restated to reflect the discontinued operations.

The
Company recorded a net loss from disposal of discontinued operations totaling $7.0 million, which is included in the statement of operations for the year ended
December 31, 2002 (see Note 2).

The
net loss from discontinued operation for the year ended December 31, 2002 was $6.1 million. Revenues and net loss generated by the e-learning segments were
as follows (in thousands):

Year Ended December 31, 2002Net revenues

$
2,709Impairment of long-lived assets


(1,716
)Other costs and expenses


(7,081
)(8,797
)Net loss from discontinued operations

$
(6,088
)


The
$1.7 million impairment of long-lived assets is related to the write-down of fixed assets including $860,000 for property and equipment, $138,000 for
software, and $718,000 for the write-down of the building in Pryor, Oklahoma.

Included
in the $7.1 million of other costs and expenses for the year ended December 31, 2002, are costs related to operating the discontinued e-learning
segments such as research and development, sales and marketing, and administrative expenses as well as severance related to workforce reductions, partially offset by excess accruals for legacy
liabilities related to the e-learning segment.

F-15

---

The
results of discontinued operations do not include any interest income, interest expense or allocation of general corporate expenses. General corporate expenses consist of general and
administrative overhead expenses, including expenses associated with the general responsibilities of a public company, and exclude those costs associated with the Company's e-learning
business.

2001 Discontinued Operations

Until April 19, 2001, the Company operated under a single reportable segment transportation management solutions. On April 19, 2001, the Company
entered into a merger agreement under which it would merge with Learn2.com and announced it would phase-out its existing transportation management solutions business prior to the
completion of the merger. Accordingly, the Company's financial statements and notes included herein reflect these businesses as discontinued operations in accordance with APB No. 30.

Revenues
and net loss generated by the discontinued operations for both the e-learning and transportation management solutions businesses were as follows:

|                                                   |  | Year Ended December 31, 2001 |        | Year Ended December 31, 2000 |  
|-------------------------------------------------- |  | ---------------------------- | ------ | ---------------------------- | -
|
|Net revenues                                       |  | $                            | 2,679  |                              | $
|                                                   |  |                              |        |                              |  
|Impairment of long-lived assets                    |  |                              | (1,716 | )                            |  
|In-process research and development                |  |                              |       |                              |  
|Restructuring costs                                |  |                              |       |                              |  
|Reversal of restructuring reserves                 |  |                              |       |                              |  
|Reversal of excess allowance for doubtful accounts |  |                              |       |                              |  
|Other costs and expenses                           |  |                              | (4,021 | )                            |  
|                                                   |  |                              |        |                              |  
|                                                   |  |                              | (5,737 | )                            |  
|                                                   |  |                              |        |                              |  
|Net loss from discontinued Operations              |  | $                            | (3,058 | )                            | $
|                                                   |  |                              |        |                              |  

The results of discontinued operations do not include any interest income, interest expense or allocation of general corporate expenses. General
corporate expenses consist of general and administrative overhead expenses, including expenses associated with the general responsibilities of a public company, and exclude those costs associated with
the Company's transportation management solutions and Internet postage businesses.

F-16

---

The
assets and liabilities of discontinued operations, which are included in the corresponding line item on the balance sheet at December 31, 2002 and 2001 are as follows (in
thousands):

December 31,2002

2001Accounts receivableTrade

$


$
1,966Inventories





549Other assets-current





151Fixed assets, net





3,110Capitalized software, net





5,750Intangible assets, net





1,002Other assets non-current


2


97Total assets

$
2

$
12,625


December 31,2002

2001Accounts payable

$
886

$
1,600Accrued payroll and other compensation expenses





292Accrued professional fees





110Accrued customer returns


136


352Other accrued expenses and liabilities


28


362Total liabilities

$
1,050

$
2,716


Note 4. Restructuring Costs And Non-Recurring Costs

During 2000, the Company undertook two corporate restructurings. In July 2000, the Company restructured its organization to focus on the development,
marketing and sales of its transportation management solutions and reduce emphasis on its Internet postage business. In November 2000, the Company restructured the organization to phase out its
Internet postage business. The Company incurred charges of approximately $20.3 million related to these restructurings, which is included in the net loss from discontinued operations.

In
connection with the phase-out of the Internet postage business, the Company allowed customers to return certain items purchased since September 1, 2000 for a full
refund. As a result, the Company did not recognize revenue on Internet postage products in the fourth quarter of 2000 and recorded a reserve for sales returns to cover the refund of Internet postage
products that occurred after September 1, 2000. Sales of Internet postage products totaled $0.6 million from September 1, 2000 through November 2000.

The
restructuring charge included $2.3 million related to severance and other employee costs associated with the elimination of 52 positions. Costs associated with employee
termination included severance pay and medical and other benefits. All of the affected employees had been notified as of December 31, 2000. Of the 52 terminated employees, 32 had left the
Company by December 31, 2000 and the remaining 20 employees left at various dates through April 30, 2001. Asset write-offs as a result of the
abandonment of the Internet postage business totaled $13.3 million. This amount included $6.9 million related to property and equipment, $4.6 million related to prepaid marketing
and warranty agreements, $1.4 million for inventory and $.4 million for accounts receivable.

F-17

---

The
Company also recorded charges totaling $2.9 million related to costs to terminate various agreements with suppliers, partners and lessors arising from the decision to phase
out the Internet postage business.

On
February 22, 2001, the Company announced a further reduction in force and the elimination of forty-five employees and contractors from its workforce. In connection
with this action, the Company incurred severance expense of $392,000. This expense is included in loss from discontinued operations for the year ended December 31, 2002. All costs were paid as
of December 31, 2001.

On
March 4, 2002, the Company announced that it would phase out its production and distribution operations in Pryor, Oklahoma and close certain field sales operations and
eliminated approximately sixty positions. Severance and related expenses attributable to the elimination of these positions was approximately $409,000. Asset write-offs as a result of the
closing of the facility totaled approximately $843,000 related to property and equipment, $145,000 related to software, and $268,000 related to the write-down of the value of its Pryor,
Oklahoma building. All of these costs are included in loss from discontinued operations.

Also,
in March 2002, a subsidiary of the Company, abandoned its office space in White Plains, New York and defaulted on the lease relating to that space. In the first quarter of
2002, as a result of these actions and events, the Company recorded restructuring charges totaling $1.1 million. Approximately $937,000 was related to the Company's remaining lease obligation
and approximately $206,000 was related to the write-off of fixed assets. In the third quarter of 2002, the Company and the subsidiary reached a settlement with the landlord on its
remaining lease obligation on the office space in White Plains, New York. As a result, the Company reversed approximately $770 of the restructuring accrual recorded in the first quarter of 2002. This
net charge of $167 is included as restructuring charges in the consolidated statement of operations for the year ended December 31, 2002.

The
following table sets forth the restructuring activity during 2002 (in thousands):

|                     |                            | Charges in
2002 |       | Cash
Paid |     | Write-offs |      | Balance December 31, 2002
|-------------------- | -------------------------- | --------------- | ----- | --------- | --- | ---------- | ---- | -------------------------
|March restructuring: |                            |                 |       |           |     |            |      |                          
|                     | Employee termination costs |                 | $     | 409       | (1) | $          | (409 | )                        
|                     | Contract terminations      |                 |       | 937       |     |            | (167 | )(3)                     
|                     | Write-off of fixed assets  |                 |       | 1,270     | (1) |            |     |                          
|                     |                            |                 |       |           |     |            |      |                          
|                     |                            | $               | 2,616 |           | $   | (576       | )    | $                        
|                     |                            |                 |       |           |     |            |      |                          

|                            |  | Balance December 31, 2001 |     | Cash
Paid |   | Write-offs |   |    
|--------------------------- |  | ------------------------- | --- | --------- | - | ---------- | - | ---
|November 2000 restructuring |  | $                         | 308 |           | $ | (200       | ) | (88
|                            |  |                           |     |           |   |            |   |    
|Total                       |  |                           |     |           |   |            |   |    
|                            |  |                           |     |           |   |            |   |    

---

F-18

---

In
2001, the Company incurred non-recurring charges primarily related and consequential to the merger totaling approximately $2.5 million. These costs consisted of
$1.4 million for severance and other related payroll charges, $843,000 for Directors' & Officers' tail insurance for acts that occurred prior to the Learn2.com acquisition and $340,000
for other costs related to its November 8, 2001 workforce reduction. There are no accruals as of December 31, 2002 with respect to these non-recurring charges. All costs were
paid as of December 31, 2002.

Note 5. Certain Consolidated Balance Sheet Components

Fixed assets, at cost consisted of the following:

December 31,Depreciable
Life (years)2002

2001(in thousands)Building and Leasehold improvements

5

$
250

$
233Equipment

3-7


402


276Furniture, fixtures and other

3-7


24


24676


533Less: accumulated depreciation




375


234$
301

$
299


Depreciation
expense related to fixed assets was approximately $141,000, $48,000 and $2.4 million in 2002, 2001 and 2000, respectively.

Prepaid
and other current assets consisted of the following (in thousands):

December 31,2002

2001Prepaid insurance

$
282

$
212Due from Learn.com


540


Security deposits


120


108Due from former employee





200Other assets


3


71Total prepaid expenses and other current assets

$
945

$
591


Intangible
assets consisted of the following (in thousands):

December 31,Useful
life (years)2002

2001Tradenames



$
125

$
125Customer lists

3


187


187Capitalized software

8-17


3,774


3,7744,086


4,086Less: accumulated amortization




(795
)

(115
)$
3,291

$
3,971


F-19

---

Accumulated
amortization of intangible assets consisted of the following (in thousands):

December 31,2002

2001Tradenames

$
112

$
Customer lists


187


16Capitalized software


496


99795


115


Amortization
expense related to intangible assets was approximately $459,000, $115,000 and $1.1 million in 2002, 2001 and 2000, respectively. In the fourth quarter of 2002, the
Company recorded an impairment charge of approximately $221,000. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the succeeding
fiver years is as follows: 2003: $400,000; 2004: $400,000; 2005: $400,000; 2006: $400,000, and 2007: $400,000.

Accrued
expenses and other current liabilities consisted of the following (in thousands):

December 31,2002

2001Accrued payroll and other compensation expenses

$
94

$
116Accrued professional fees


446


591Accrued expenses relating to the merger


190


999Other accrued expenses and liabilities


126


951Total liabilities

$
856

$
2,657


Note 6. Other Liabilities

In January 2002, a complaint was filed against the Company alleging certain common law claims. In connection with the settlement of the complaint, on
January 24, 2002 the Company issued a promissory note in the principal amount of $400,000 accruing interest at the rate of 10% per annum. The promissory note is due and payable upon the earlier
of (i) the completion of a Financing (as defined in the promissory note) or (ii) any dissolution, extraordinary dividend, recapitalization or similar transaction involving our company.
At December 31, 2002, the principal amount of the promissory note and accrued interest totaled $440,000 and is included in other liabilities in the consolidated balance sheet.

Note 7. Stockholders' Equity

Sales Of Common Stock

On September 10, 1999, the Company issued 726,745 shares of its common stock and warrants to purchase an additional 83,855 shares of common stock at an
exercise price of $0.01 per share to investors for cash proceeds of $5.0 million. The fair value of the common stock and warrants was deemed by management to be $7.8 million and
$1.0 million, respectively. The fair value of the warrants was computed using the Black-Scholes method using the following assumptions: expected volatility of 100%, expected life of
3 years, risk free interest rate of 6.0% and expected dividend yield of 0.0%. The warrants were exercised in 1999.

F-20

---

In
connection with the issuance of common stock and warrants, the Company and the investors signed non-binding letters of intent to negotiate for a period of up to one year
to enter into definitive joint venture, joint marketing, cooperation, or technology development agreements. The Company recorded the $3.8 million excess of the fair value of the common stock
and warrants over the consideration received as deferred distribution costs (as a contra equity account). The balance was amortized to expense over the one-year period covered by the
letter of intent. Amortization of deferred distribution
costs amounted to $2.9 million in 2000 and $0.9 million in 1999. At December 31, 2000, the balance had been fully amortized.

1999 Employee Stock Purchase Plan

In
September 1999, the board of directors and stockholders adopted the 1999 Employee Stock Purchase Plan ("ESPP"). A total of 850,000 shares of common stock have been reserved for
issuance under the ESPP. The ESPP permits eligible employees to acquire shares of the Company's common stock through periodic payroll deductions of up to 15% of total compensation. No more than 5,000
shares may be purchased on any purchase date per employee. Each offering period will have a maximum duration of 24 months. The price at which the common stock may be purchased is 85% of the
lesser of the fair market value of the Company's common stock on the first day of the applicable offering period or on the last day of the respective purchase period. No shares were purchased in 2002
and 2001. In 2000, 151,627 shares were purchased at a weighted average price of $3.01. At December 31, 2002, 1,048,373 shares remain available for future issuance.

Stock Option Plans

Pursuant
to the Company's, the 1999 Stock Plan and the 1999 Director Option Plan (together, the "Plans"), the board of directors or one of its designated committees are authorized to
grant incentive stock options or nonstatutory stock options to employees, officers and directors of the Company. As of December 31, 2002, a total of 10.1 million shares remain available
for future grants under the Plans.

Stock
options are limited to ten-year terms, and the exercise price for stock options may not be less than the fair value of the shares on the date of grant for incentive
stock options and is subject to the discretion of the committee for nonstatutory stock options. Restricted stock may be granted at no cost to recipients. Compensation expense, if any, equal to the
fair value of the restricted stock or stock options granted in excess of the purchase or exercise price, is recognized over the related vesting period using the graded vesting method.

In
May 2000, in connection with the acquisitions of Infinity Logistics Corporation and Automated Logistics Corp., the Company assumed the option plans of these companies and
converted all outstanding options to purchase the common stock of these companies to options to purchase the Company's common stock. The assumed options have a maximum term of ten years and generally
vested ratably over two to four years on a monthly basis. No further options can be granted under the Infinity and Automated Logistics plans.

In
September 2001, in connection with the merger with Learn2.com, Inc., the Company assumed the option plans of Learn2.com and converted all outstanding options to purchase
shares of common stock of Learn2.com into options to purchase 5.1 million shares of the Company's common stock. The options
have a maximum term of ten years. Of these, options to purchase 3.4 million shares vested as a result of the merger. Options to purchase 1.2 million shares vest in April 2002 and
the remainder vest over the next four years. No further options can be granted under the Learn2.com, Inc. plans.

F-21

---

On
December 4, 2001, the Company's board of directors approved a stock option exchange program. Under the terms of the exchange program, the Company offered to exchange all
outstanding unexercised options with an exercise price greater than $0.12 per share (the closing price of the Company's common stock on December 20, 2001, the date the Offer to Exchange
commenced) to purchase shares of the Company's common stock held by eligible employees, officers and directors for new options the Company granted under the 1999 Stock Plan. Employees, officers and
directors were "eligible" to participate in the offer if they (i) were employees, officers and/or directors of the Company or its subsidiaries on September 25, 2001, and (ii) were
employees, officers and/or directors of the Company or its subsidiaries on both (A) the date the offer commenced and (B) the date Company granted new options under the Plan, which was
August 1, 2002.

The
number of shares subject to the new options that were granted to each eligible employee, officer and director was equal to the number of shares subject to the options tendered by the
eligible employee, officer and director and accepted for exchange. Subject to the terms and conditions of this offer, the grant date for the new options was on August 1, 2002. The offer expired
on January 28, 2002. The Company accepted for cancellation options to purchase 4,391,140 shares of the Company's common stock. The Company issued new options to purchase up to a total of
2,681,255 shares of the Company's common stock in exchange for the options surrendered in the offer on August 1, 2002 and priced at its closing market price as reported in the Nasdaq National
Market (or any other securities quotation system or any stock exchange on which are shares are then quoted or listed) of $0.04 per share.

F-22

---

A
summary of activity under the Company's Plans is as follows:

Outstanding
OptionsShares
Available
For Grant

Number
of Shares

Weighted-Average
Exercise Price(In thousands, except per share amounts)Options outstanding at December 31, 1999

1,304

2,260

$
7.37Authorized

1,120Granted

(4,061
)
4,061


4.30Assumption of option plans in acquisitions



245


0.82Exercised



(76
)

0.64Repurchases of restricted stock

2,180




Canceled

3,280

(3,280
)

6.97Expired



(1
)

0.82Options outstanding at December 31, 2000

3,823

3,209


3.67Authorized

8,000




Granted

(1,248
)
1,248


0.13Assumption of option plans in acquisition



5,100


3.28Exercised






Repurchases of restricted stock

5

(5
)

0.57Canceled

2,135

(2,135
)

4.52Other



(27
)

2.86Expired






Options outstanding at December 31, 2001

12,715

7,390


2.56Authorized

1,000Granted

(5,434
)
5,434


0.06Exercised



(171
)

0.04Canceled

1,845

(6,946
)

2.52Options outstanding at December 31, 2002

10,126

5,707

$
0.20Excercisable at December 31, 2002



2,814

$
0.27


F-23

---



The following table summarizes information about stock options at December 31, 2002:

|      |  | Options Outstanding |  |      |  |  
|----- |  | ------------------- |  | ---- |  | -
|
|
|
|
|$0.04 |  | 2,042               |  | 9.58 |  | $
|$0.07 |  | 2,503               |  | 9.92 |  |  
|$0.08 |  | 250                 |  | 9.92 |  |  
|$0.12 |  | 800                 |  | 8.83 |  |  
|$6.88 |  | 112                 |  | 6.67 |  |  
|      |  |                     |  |      |  |  
|      |  | 5,707               |  |      |  |  
|      |  |                     |  |      |  |  

Deferred Stock Compensation

During
2000, the Company reversed approximately $3.9 million of deferred stock compensation related to unvested stock options that were forfeited upon the employee's termination
of employment.

During
2001, the Company reversed approximately $1.9 million of deferred stock compensation related to unvested stock options that were forfeited upon the employee's termination
of employment.

During
2002, the Company recorded deferred stock compensation expense totaling approximately $451,000.

In
2000, the Company recorded deferred stock compensation of $1.2 million related to the acquisitions of Infinity Logistics Corporation and Automated Logistics Corp. Approximately
$0.9 million of this amount related to an agreement with a stockholder of Infinity Logistics Corporation and Automated Logistics Corp. to remain an employee of the Company for a
two-year period. The remainder related to stock options that were assumed by the Company. The amounts related to stock options were being amortized by charges to operations over the
vesting periods of the individual stock options using the graded vesting method. The amount related to the agreement with the stockholder of Infinity Logistics Corporation and Automated Logistics
Corp. was being amortized on a straight-line basis over the two-year vesting period. In 2001, in connection with the Company's decision to discontinue its digital shipper
business, the unamortized deferred stock compensation relating to Infinity Logistics and Automated Logistics Corp. acquisitions was written-off and is included in the net loss from
discontinued operations.

The
amounts amortized were approximately $2.3 million and $8.0 million in 2001and 2000, respectively and are included in net loss from discontinued operations.

Stock Subject To Rescission

Shares
issued under the Company's 1996 Employee Plan, 1996 Director Plan and 1999 Stock Plan (the "Plans") prior to October 14, 1999 may not have qualified for exemption from
registration or qualification under federal and state securities laws and therefore may be subject to rescission. On February 2, 2000, the Company filed a rescission offer for 5,682,341 shares
of common stock pursuant to a registration statement filed under the Securities Act of 1933, as amended, covering shares of common stock issued under the Plans. The Company may file a request
to withdraw the registration

F-24

---

statement. Because the Act does not provide that a rescission offer will terminate a purchaser's right to rescind a sale of stock and a significant portion of the shares have been resold for a price
in excess of the original purchase price paid by the optionees, the Company does not intend to extend the rescission offer to the optionees. Management believes that the Company does not have a
contingent liability resulting from the issuance of stock to these optionees that would materially and adversely impact the results of operations or financial position of the Company. Shares subject
to rescission have been included in stockholders' equity in the accompanying balance sheets.

Stock Subject to Repurchase

As
of December 31, 1999 and 2000, the Company had 3,358,570 and 425,882 shares of common stock outstanding, respectively, that were subject to repurchase. All of the shares
subject to repurchase at December 31, 1999 and 193,262 shares at December 31, 2000 are the result of the exercise of unvested stock options by employees in exchange for notes and cash.
These shares vest over the four-year vesting period of the underlying exercised stock options. At December 31, 2000, the remaining 232,620 shares subject to repurchase relate to the
earn-out agreement entered into in connection with the acquisition of Infinity Logistics Corporation and Automated Logistics Corp. The right to repurchase these shares is at the sole
discretion of the Company.

As
of December 31, 2001, the Company had 96,086 shares that were subject to repurchase. All of the shares subject to repurchase at December 31, 2001 are the result of the
exercise of unvested stock options by employees in exchange for notes and cash. These shares vest over the four-year vesting period of the underlying exercised stock options. At
December 31, 2002, the Company had zero shares that were subject to repurchase.

In
September 2000, the Company repurchased unvested shares as part of the severance arrangement from two terminated employees at a price exceeding the fair value of the stock at
the date of
repurchase. The Company recorded expense of $0.6 million in connection with the repurchase, which is included in loss from discontinued operations.

Notes Receivable From Stockholders

In
1999 and 1998, the Company received $3.1 million and $0.7 million, respectively, of full recourse notes receivable from employees that bear interest at 6% per annum in
consideration for the exercise of stock options. Interest on the notes was payable annually on the anniversary date of the note and principle is due on the earlier of the fifth anniversary of the note
or 90 days after termination of employment. In 2000 and 1999, the Company received payments on the notes of $247,000 and $168,000, respectively. In 2000 and 1999, the Company canceled notes
totaling $2.7 million and $27,000, respectively, in connection with the repurchase of shares or rescission of option exercises upon termination of certain note holders.

In
October 2000, the Company allowed four officers to rescind their exercise of stock options with respect to the unvested portion of the shares exercised. A total of 1,304,687
shares were returned to the Company in exchange for the cancellation of promissory notes totaling $1.1 million. In connection with the rescission, the Company recognized compensation expense of
$121,000. The Company granted to two of the officers replacement options for a total of 1,035,156 shares at an exercise price of $0.75 per share, the fair market value on the date of the grant. In
accordance with APB Opinion No. 25 and Financial Accounting Standards Board Interpretation No. 44, no compensation expense was recognized in connection with the replacement option
because the exercise price was equal to the fair market

F-25

---

value on the date of grant and also was in excess of the exercise price for the options that were rescinded.

In
September 2001, the Company forgave the promissory notes issued by three of the officers in their entirety together with a tax gross up on the forgiveness. The principal amount
currently outstanding under the remaining promissory note issued to an officer is approximately $469,688 and under the terms of the officer's retention agreement, the loan will be forgiven in the
event that the officer's employment is terminated without cause or as result of constructive termination within the two year period following the completion of the merger. In 2002, the Board of
Directors approved a proposal to reduce the original exercise price to $0.075 per share, which represented the last reported sale price of our common stock on the Nasdaq SmallCap Market on that date.
As a result, the outstanding principal balance of the note was reduced to approximately $49,000. Subsequently, the officer surrendered his right, title and interest in the shares held as collateral in
exchange for the note.

Shares Reserved

As
of December 31, 2002, the common shares reserved for future issuance were as follows (in thousands):

Stock options

15,833Employee stock purchase plans

1,048Total shares reserved

16,881


Warrants

In
connection with the acquisition of Learn2.com, the Company assumed warrants to exercise approximately 1,299,000 shares of its common stock with exercise prices ranging from $1.98 to
$15.61 per share. The warrants expire at various dates through June of 2005.

In
October 2002, the Company agreed to a mutual release with a former employee, under which the Company was relieved from its severance obligations in exchange for a
one-time payment of $25,000 and the issuance of a warrant to purchase 40,000 shares of the Company's common stock at $0.07 per share, which represented the last reported sale price of our
common stock on the Nasdaq SmallCap Market on that date. The warrants were valued using the Black Scholes option-pricing model. The warrant vested immediately and will expire five years from the date
of issuance. The expense related to this warrant was $1,506 and is included in loss from discontinued operations included in the accompanying statement of operations for the year ended
December 31, 2002.

In
December 2002, the Company agreed to a mutual release with a former employee, under which the Company was relieved from its obligations in exchange for the issuance of a
warrant to purchase 40,000 shares of the Company's common stock at $0.06 per share, which represented the last reported sale price of our common stock on the Nasdaq SmallCap Market on that date. The
warrants were valued using the Black Scholes option-pricing model. The warrant vested immediately and will expire five years from the date of issuance. The expense related to this warrant was $2,312
and is included in loss from discontinued operations included in the accompanying statement of operations for the year ended December 31, 2002.

F-26

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Note 8. Major Customers And Concentration Of Credit Risk

SFAS No. 105, "Disclosure of Information About Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations
of Credit Risk", requires disclosure of any significant off balance sheet and credit risk concentration. The Company has no significant off-balance-sheet concentration of credit risk such
as foreign currency exchange contracts or other hedging arrangements. Financial instruments that subject the Company to credit risk are accounts receivable. The Company places its temporary cash and
cash equivalents in financial institutions. Two customers accounted for 43.2% and 29.4% of revenues, respectively for 2002. These two customers also represented 46.3% and 35.1% of accounts receivable
at December 31, 2002. Subsequent to December 31, 2002, the Company has collected 91.7% of the amounts due from both of these customers. One customer accounted for of the Company's 2001
23.9% revenue and 21.1% of its accounts receivable balance at December 31, 2001. All amounts due from the customer as of December 31, 2001 were collected subsequent to
year-end. No customer represented greater than 10% of the Company's total net revenues in 2000. Credit is extended based on an evaluation of a customer's financial condition. The Company
generally does not require collateral. The Company performs on-going credit evaluations of its customers and maintains an allowance for doubtful accounts.

Note 9. Employee Benefit Plans

The Company sponsors 401(k) plans for its employees allowing employees that qualify for participation under the plans to contribute up to 15% of their salary,
before taxes, subject to a maximum contribution limit determined by the Internal Revenue Service. The Company matches 50% of participant contributions up to a maximum of 6% of a participant's salary.
For the years ended December 31, 2002, 2001 and 2000, the Company made contributions to the plans of approximately $83,000, $38,000 and $218,000 respectively. Learn2 does not provide any
post-retirement benefits other than the 401(k) plans.

Note 10. Income Taxes

Due to operating losses, no income tax provision has been recorded for 2002 and 2001 and 2000.

Significant
components of the Company's deferred tax assets and liabilities for federal and state tax purposes are as follows (in thousands):

December 31,2002

2001Net operating loss carryforwards

$
72,000

$
69,000Research and development credit carryforwards


2,100


2,100Other


(1,200
)

(3,300
)Total deferred tax assets


72,900


67,800Valuation allowance


(72,900
)

(67,800
)Net deferred tax assets

$


$



FAS 109
provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Based upon the weight of available evidence, which includes the
Company's historical operating performance and the reported cumulative net losses in prior years, the Company has provided a full valuation allowance against its net deferred tax assets.

F-27

---

As
of December 31, 2002, the Company had federal net operating loss carryforwards of approximately $197.2 million. The net operating loss carryfowards will expire at
various dates beginning 2012 through 2022, if not utilized. The Company also had federal research and development tax credit carryforwards of approximately $1.9 million. The federal credit
carryforwards will expire at various dates beginning in 2011 through 2020, if not utilized.

Utilization
of some of the net operating loss carryforwards may be subject to a substantial annual limitations due to the ownership change limitations provided by the Internal Revenue
Code and similar state provisions. The annual limitation may result in the expiration of net operating loss carryforwards before utilization.

Note 11. Commitments And Contingencies

(A) Leases

The Company entered into an operating lease agreement on February 25, 2000 for office space in Mountain View, California. As a result of the merger with
Learn2.com, the Company closed its corporate headquarters in Mountain View and negotiated a settlement with the lessor of approximately $1.6 million. This amount is recorded in the accompanying
consolidated statement of operations for the year ended December 31, 2001 as part of the gain on disposal of discontinued operations.

The
Company leases a 7,788 square foot office in Belmont, California where substantially all of our employees work. The lease expires April 30, 2004 with a five-year
renewal term. The Company also leased 1,800 square feet office space in Stamford, Connecticut. The lease expires March 31, 2003. The total rent expense for both offices totaled approximately
$117,000 in 2002. Rent expense for 2001 and 2000 was $507,000 and $427,000, respectively. The Company's payment under the terms of its leases is $100,000 in 2003 and $33,333 in 2004.

In
addition to the lease in Belmont, California referred to above, in connection with the merger with Learn2.com, the Company assumed lease obligations for facilities in White Plains,
New York and Golden, Colorado. In 2002, in settlement of these two obligations, the Company agreed to pay the lessors of these two facilities a total of $55,682 plus our security deposits of $174,562,
related to those leases. The total payments of $190,667 for the White Plains, New York lease is included in the restructuring charge in the accompanying consolidated statement of operations. The total
of $39,577 for the Golden, Colorado lease is included in the loss from discontinued operations in the accompanying consolidated statement of operations.

Also
in connection with the merger with Learn2.com, the Company acquired a land and building in Pryor, Oklahoma. The land and building were sold in 2002 for $270,000. In 2002, the
Company wrote-off down the building to its fair value of $270,000. The write-down of $718,000 is included in the loss from discontinued operations in the accompanying
consolidated statement of operations for the year ended December 31, 2002.

As
of December 31, 2002, the Company's principal commitments consist of obligations to pay amounts related to the settlement of various lawsuits totaling $240,000 with $170,000
due in 2003 and $70,000 due in 2004. One of these settlement agreements requires the Company to pay $10,000, monthly through July of 2004. If the Company fails to make these monthly payments on a
timely basis, the Company would be liable for the full amount of the judgment totaling $399,754 plus interest at a rate of 10% per annum from September 12, 2001 to the date of the payoff plus
attorney fees in the amount of $15,000. As of December 31, 2002, the Company has only accrued the remaining payments under the settlement agreement.

F-28

---

Additionally,
the Company's lease and other contractual obligations totaled $335,000, and future minimum lease payments required under operating leases and other contractual requirements
with initial or remaining noncancellable terms in excess of one year as of December 31, 2002, were $314,000 in 2003, $17,000 in 2004, $4,000 in 2005. There are no commitments beyond 2005. The
Company's unconditional purchase obligations, as defined by SFAS No. 47, "Disclosure of Long-Term Obligations," were immaterial.

(B) Litigation

On March 16, 2001, Mr. Joseph Pavel filed a purported consumer class action suit against the Company in the Supreme Court of the State of New York,
County of Kings. The suit alleges that the Company breached its contract with the plaintiff and other customers. The plaintiff seeks unspecified damages and disgorgement of monies received in
connection with the sale of Internet postage products. By agreement of the parties, the plaintiff dismissed the New York action and refiled in Santa Clara County, California on or about May 24,
2001. The Company filed the answer to the complaint on June 18, 2001. On February 20, 2002, the Court granted Plaintiff's motion for class certification. The Company reached a settlement
with the Plaintiff and has received final court approval of the settlement. The approval of this settlement did not have a material impact on the Company's financial position or results of operations.

The
Company settled its lawsuit with Sales and Marketing Technologies, Inc. The final settlement did not have a material impact on the Company's financial position.

In
October 2002, the Company settled a previously disclosed suit by a former employee of a wholly-owned subsidiary alleging breach of contract and conversion in connection with a
severance agreement between the plaintiff and the Company. The amount of the settlement has been accrued for and is included in accrued liabilities in the accompanying condensed consolidated balance
sheet at December 31, 2002 and other expense in the accompanying consolidated statement of operations for the year ended December 31, 2002.

On
February 6, 2002, Morrison & Foerster, a law firm, filed suit against a consolidated subsidiary of the Company, in the Superior Court of California, San Francisco
County, California. The plaintiff alleges a violation of California Business & Professional Code, Section 17538.45 and 17200 et. seq., in connection with permission e-mail
marketing services. The suit was later modified to include the Company as a defendant. The plaintiff seeks statutory damages, to enjoin the Company and the subsidiary from further violations of the
specified statutes, costs and fees. The Company and the subsidiary are vigorously defending this action. These legal proceedings have resulted and can be expected to continue to result in expenses and
the diversion of management time and other resources.

On
July 18, 2002, Joseph Rydell filed suit against the Company and certain other parties in the Circuit Court of Cook County in the State of Illinois. The plaintiff alleges a
violation of the Illinois Electronic Mail Act and the Consumer Fraud and Deceptive Business Practices Act, in connection with permission e-mail marketing services. The plaintiff seeks
actual and punitive damages, and costs and fees. The Company is vigorously defending this action. Pendency of these legal proceedings can be expected to result in expenses to the Company and the
diversion of management time and other resources.

In
July 2002, the Company was sued by MicroAge, Inc., relating to a claim that Micro Age's payment to the Company of $163,800 in January 2000 is recoverable to
MicroAge as a preference in MicroAge's bankruptcy in United States Bankruptcy Court, District of Arizona. The payment was for products and services delivered by the Company to MicroAge. In
February 2003, the Company was

F-29

---

notified that a default judgment had been entered on behalf of the plaintiff in the amount of $163,800. The Company negotiated a settlement with MicroAge in the amount of $25,000. Under the terms of
the settlement, the Company is required make two payments of $15,000 due on March 17, 2003 and $10,000 due on May 3, 2003. If the Company does not make the payments in accordance with
the settlement agreement, the Company would be liable for the full judgment of $163,800 plus accrued interest. On March 17, 2003, the Company made the first schedule payment. This amount of
$25,000 is included as other expense in the accompanying consolidated statement of operations for the year ended December 31, 2002.

The
Company entered has entered into various settlement agreements during 2002. One of these settlement agreements requires the Company to pay $10,000, monthly through July of 2004. If
the Company fails to make these monthly payments on a timely basis, the Company would be liable for the full amount of the judgment totaling $399, 754 plus interest at a rate of 10% per annum from
September 12, 2001 to the date of the payoff plus attorney fees in the amount of $15,000. As of December 31, 2002, the Company has only accrued the remaining payments under the
settlement agreement. This amount totaled $190,000.

In
addition, the Company is involved in certain other legal proceedings and claims in the ordinary course of business. We are vigorously contesting all matters referred to above and
management believes that their ultimate resolution may have a materially adverse effect on its consolidated financial position, results of operations or cash flows.

Note 12. Loss Per Share

Loss per share has been computed in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128"), which
requires disclosure of basic and diluted earnings per share. Basic loss per share excludes any dilutive effects of options, shares subject to repurchase, warrants and convertible securities. The
Company's potentially dilutive securities were antidilutive and therefore were not included in the computation of weighted-average shares used in computing diluted loss per share. Therefore, the
Company's basic and diluted loss per share are the same.

The
following table presents the calculation of basic and diluted loss per share (in thousands, except per share data):

|                                                           |                                              | Year Ended December 31, |        
|---------------------------------------------------------- | -------------------------------------------- | ----------------------- | -------
|
|Loss from continuing operations                            |                                              | $                       | (2,624 
|Loss from discontinued operations                          |                                              |                         | (13,130
|                                                           |                                              |                         |        
|Net loss attributable to common stockholders               |                                              | $                       | (15,754
|                                                           |                                              |                         |        
|Weighted-average shares of common stock outstanding        |                                              |                         | 75,765 
|Less: weighted-average shares subject to repurchase        |                                              |                         | (48    
|                                                           |                                              |                         |        
|Shares used in computing loss per share, basic and diluted |                                              |                         | 75,717 
|                                                           |                                              |                         |        
|Loss per share, basic and diluted:                         |                                              |                         |        
|                                                           | Continuing operations                        |                         | $      
|                                                           | Discontinued operations                      |                         | $      
|                                                           | Net loss attributable to common stockholders |                         | $      

F-30

---

The
total number of shares excluded from the calculations of diluted net loss per share were 4,113,000, 13,410,000 and 3,683,000 for the years ended December 31, 2002, 2001, and
2000, respectively. Such securities, had they been dilutive, would have been included in the computations of diluted net loss per share using the treasury stock method.

Note 13. Subsequent Events

On March 28, 2003, the Company and certain subsidiaries entered into an agreement with the buyer of the e-learning assets whereby the buyer
agreed to pay the Company $540,000 to buy-out the remaining earn-out payments and monies owed to the Company for consigned inventory and purchased receivables. As a result, the
Company wrote-off the receivable representing the present value of the minimum earn-out payments to $540,000. On March 31, 2003, the Company received the first payment
of $100,000 and received the remaining payment of $440,000 on April 7, 2003.

F-31

---

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE

To the Shareholders and Directors of LTWC Corporation

The
audits referred to in our report dated March 28, 2003 relating to the consolidated financial statements of LTWC Corporation as of and for the years ended December 31,
2002 and 2001, which is
contained in Item 8 of this Form 10-K, included the audit of the financial statement schedule listed in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based upon our audits.

In
our opinion such financial statement schedule present fairly, in all material respects, the information set forth therein.

|Valhalla, New York
March 28, 2003 |  | BDO Seidman, LLP
|--------------------------------- |  | ----------------

F-32

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Schedule II  Valuation and Qualifying AccountsYears Ended December 31, 2002, 2001, and 2000
(in thousands)

|                                |      | Balance at
Beginning of Year |   | Charged to Costs
and Expenses |  | Write-Offs Net
of Recoveries |    | Balance at
End of Year
|------------------------------- | ---- | ---------------------------- | - | ----------------------------- |  | ---------------------------- | -- | ----------------------
|Allowance for Doubtful Accounts |      |                              |   |                               |  |                              |    |                       
|                                | 2002 |                              | $ | 50                            |  | $                            | 51 |                       
|                                | 2001 |                              | $ | 66                            |  | $                            | 41 |                       
|                                | 2000 |                              | $ |                              |  | $                            |   |                       

F-33

---



CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Paul A. Goldman, certify that:

1.    I
have reviewed this annual report on Form 10-K of LTWC Corporation;

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

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

4.    The
registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:



5.    The
registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors:



6.    The
registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses

Date:
April 15, 2003

|/s/PAUL A. GOLDMANName:  Paul A. Goldman
Title:    President and Chief Executive Officer |  | 
|---------------------------------------------------------------------------------------- |  | 

42

---

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Michael Arons, certify that:

1.    I
have reviewed this annual report on Form 10-K of December 31, 2002;

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

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

4.    The
registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:



5.    The
registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors:



6.    The
registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses

Date:
April 15, 2003

|/s/MICHAEL M. ARONSName:  Michael M. Arons
Title:    Acting Chief Financial Officer |  | 
|----------------------------------------------------------------------------------- |  | 

43

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|EXHIBIT   |  | DESCRIPTION                                                                                                                                                                        
|--------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1 (1)   |  | Amended and Restated Certificate of Incorporation of E-Stamp Corporation.                                                                                                          
|3.2 (1)   |  | Amended and Restated Bylaws of E-Stamp Corporation.                                                                                                                                
|10.1 (2)  |  | Indemnification Agreement between E-Stamp Corporation and each of its directors and officers.                                                                                      
|10.2 (2)  |  | 1999 Stock Plan of E-Stamp Corporation and form of agreements thereunder.                                                                                                          
|10.3 (2)  |  | 1999 Employee Stock Purchase Plan of E-Stamp Corporation and form of agreements thereunder.                                                                                        
|10.4 (2)  |  | 1999 Director Option Plan of E-Stamp Corporation and form of agreements thereunder.                                                                                                
|10.5 (2)  |  | 1996 Stock Option and Restricted Stock Plan of E-Stamp Corporation.                                                                                                                
|10.6 (2)  |  | 1996 Non-Employee Director Stock Option Plan of E-Stamp Corporation.                                                                                                               
|10.7 (3)  |  | Letter, dated October 23, 2000, from E-Stamp Corporation to Robert H. Ewald.                                                                                                       
|10.8 (4)  |  | Change of Control Severance Agreement, effective as of November 17, 2000, between E-Stamp Corporation and Robert H. Ewald.                                                         
|10.9 (5)  |  | Retention Agreement, dated as of September 25, 2001, between Learn2 Corporation and Robert H. Ewald                                                                                
|10.10 (5) |  | Employment Agreement, dated as of February 16, 1999, between Learn2.com, Inc. and Marc E. Landy.                                                                                   
|10.11 (5) |  | Amendment to Employment Agreement, dated as of February 16, 2001, between Learn2.com, Inc. and Marc E. Landy.                                                                      
|10.12 (6) |  | Second Amendment to Employment Agreement, dated as of February 16, 2002, between Learn2 Corporation (successor to Learn2.com, Inc.) and Marc E. Landy.                             
|10.13 (5) |  | Amendment to Employment Agreement dated May 31, 2001, between Learn2.com, Inc. and Kevin C. Riley.                                                                                 
|10.14 (7) |  | Form of Lock-Up Agreement, dated as of September 25, 2001, between Learn2.com, Inc. and Marc E. Landy, Donald Schupak and Stephen P. Gott.                                         
|10.15 (7) |  | Form of Lock-Up Agreement, dated as of September 25, 2001, between E-Stamp Corporation and Robert H. Ewald, Marcelo A. Gumucio, John V. Balen, Rebecca Saeger and Robert J. Cresci.
|10.16 (6) |  | Form of Promissory Note, dated January 24, 2002, issued by Learn2 Corporation in the principal amount of $400,000.                                                                 
|10.17 (8) |  | Registration Rights Agreement, dated as of April 25, 2001, between Learn2 Corporation, Learn2.com, Inc. and RGC International Investors, LDC.                                      
|23.1      |  | Consent of Ernst & Young LLP, Independent Auditors.                                                                                                                                
|23.2      |  | Consent of BDO Seidman, LLP, Independent Public Accountants                                                                                                                        
|99.3      |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.                                                                                        
|          |  |                                                                                                                                                                                    

---

|99.4 |  | Certification of Acting Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
|---- |  | --------------------------------------------------------------------------------------------------

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