|SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549


FORM 10-KSB
|-----------------------------------------------------------------------

||X| | Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|--- | -------------------------------------------------------------------------------------

||_| | Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|--- | -----------------------------------------------------------------------------------------

|For the fiscal year
ended March 31, 2003


Commission File Number:
0-06334


BRAINWORKS VENTURES,
INC.
(Name of Small Business
Issuer in its Charter)
|-----------------------------------------------------------------------------------------------------------------------------------------------------

|NEVADA
(State or other Jurisdiction of
Incorporation or Organization) | 87-0291240
(I.R.S. Employer
Identification No.)
|--------------------------------------------------------------------- | -----------------------------------------------

|5500 INTERSTATE NORTH PARKWAY
ATLANTA, GEORGIA
(Address of Principal Executive Offices) | 30328
(Zip Code)
|--------------------------------------------------------------------------------------- | ----------------

|Registrants
Telephone Number including Area Code: (770) 952-0200


Securities Registered Pursuant to
Section 12(b) of the Exchange Act:
|----------------------------------------------------------------------------------------------------------------------------------------

|Title of Each Class
NONE | Name of Each Exchange
on which Registered
NONE
|------------------------ | ----------------------------------------------

|Securities Registered Pursuant to
Section 12(g) of the Exchange Act:


COMMON STOCK, PAR VALUE
$0.01
(Title of Class)


Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes |X| No |_|


Check
if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. |_|


State
issuers revenues for its most recent fiscal year: $40,000.


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 sold in the
over-the-counter market on June 3, 2003, was approximately $1,930,426.


APPLICABLE ONLY TO
CORPORATE REGISTRANTS


As
of June 3, 2003, the Registrant had outstanding 2,271,090 shares of its common stock, par
value $.01 per share.


Transitional
Small Business Issuer Disclosure format (check one):


Yes |_| No |X|


DOCUMENTS INCORPORATED
BY REFERENCE


If
the following documents are incorporated by reference, briefly describe them and identify
the Part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or information
statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) under the
Securities Act of 1933.


None
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|TABLE OF CONTENTS
|-----------------

|ITEM NUMBER AND CAPTION | PAGE NUMBER
|----------------------- | -----------
|PART I                  |            
|1.                      |            
|2.                      |            
|3.                      |            
|4.                      |            
|PART II                 |            
|5.                      |            
|6.                      |            
|7.                      |            
|8.                      |            
|PART III                |            
|9.                      |            
|10.                     |            
|11.                     |            
|12.                     |            
|13.                     |            
|Signatures              |            

|
|

|PART I
|------

|Item 1. | DESCRIPTION
OF BUSINESS
|------- | -----------------------

|Overview


Brainworks
Ventures, Inc., a Nevada corporation (the Company), provided funding and
business consulting services to early-stage technology companies by developing, investing
in, acquiring or acquiring interests in, and operating such companies. The Company also
sought to work with universities, corporations, research laboratories, government economic
authorities and individual investors to foster the commercialization of new concepts and
technologies. Effective April 1, 2003 merged with AssuranceAmerica Corporation. The
purpose of the merger was to facilitate the Companys entrance into the property and
casualty insurance industry. In anticipation of the merger, Brainworks ceased its
operations in 2003.


On
February 14, 2001, the Company acquired all the outstanding capital stock of
eBusinessLabs, Inc., a privately-held Georgia corporation now known as Brainworks Ventures
Labs, Inc. (BVL), for approximately 800,000 shares of the Companys
common stock. BVL seeks to develop university affiliated venture development labs designed
to assist the launch of business ventures.


On
May 8, 2001, the Company acquired all the outstanding capital stock of Executive Venture
Partners, Ltd., a privately held Massachusetts company (EVP), for 500,000
shares of the Companys common stock. EVP provides consulting services to develop and
implement corporate venturing strategies for Fortune 2,000 companies by offering advice
and recommendations related to asset development and value maximization. EVP holds a
non-exclusive license to use an asset commercialization methodology. This license may be
revoked upon the happening of certain events specified in the Amended and Restated License
Agreement between EVP and Robert H. Cawly dated March 6, 2001.


On
March 31, 2003, the Company has three wholly-owned subsidiaries: Auric Minerals
Corporation, a Nevada corporation (Auric Minerals), EVP and BVL.


History


The
Company originally incorporated in 1969 under the laws of the state of Utah. In 1985, the
Company became a Nevada corporation by merging with a Nevada corporation that was a
wholly-owned subsidiary of the Company created solely for the purpose of changing the
Companys state of domicile. Prior to May 2000, the Company was principally engaged
in the acquisition, exploration and development of interests in various natural resource
properties, primarily through participation with other parties in natural resource joint
ventures or other arrangements. During the fiscal year ended March 31, 2001, the Company
sold its ownership interests in all natural resource properties held by the Company as
described below.


Disposition and
Termination of Interest in Natural Resource Properties


Hillcrest
Claims


In
1981, the Company leased forty-five (45) unpatented mining claims (the Hillcrest
Claims) covering approximately 600 acres northwest of Elko, Nevada from Hillcrest
Mining Company (Hillcrest) under a lease the initial term of which expired on
August 31, 1984. The lease granted to the Company the option to extend the lease for
twenty (20) additional one-year terms by making advance royalty payments of $6,000 per
year to Hillcrest. The lease further provided that the Company will pay to Hillcrest a
royalty equal to fifty percent (50%) of the Companys earnings from the property,
after deducting all direct costs incurred by the Company in the development of the
property, exclusive of the Companys overhead. Pursuant to the terms of a
modification to the lease which provided the Company and Hillcrest with equal interests
under the lease, the Company and Hillcrest each became entitled to receive a one percent
(1%) royalty interest for gold and a three percent (3%) royalty interest on other metals
extracted from the Hillcrest Claims.


In
1981, the Company subleased its interest in the Hillcrest Claims to USX, formerly known as
United States Steel Corporation, under a sublease the initial term of which expired on
December 31, 1983. Pursuant to the sublease, USX had the right to renew the sublease for
20 additional one-year terms by paying an advance royalty of $50,000 per year for the term
of the lease or as long as there was production. USX paid the advance royalty for each
year through the fiscal year ended March 31, 1998.


In
August 1997, the Company agreed to an assignment of the sublease to Great Basin Gold, Inc.
and an amendment to said sublease (the Sublease Amendment). Under the terms of
the Sublease Amendment, the Company and Hillcrest agreed to extend the sublease for up to
four 20-year periods commencing on December 31, 1997, provided that the $50,000 annual
advance royalty payment is paid for each year for which there are no mining operations on
the leased property. For each 20-year renewal period, the annual minimum advance royalty
increases $5,000 per year.


1
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
October 2000, the Company sold its entire leasehold interest in the Hillcrest Claims to
James Fouts, a former president of the Company, for $22,000.


Disposition
of Interest in Ivanho Property


The
Company also held a leasehold interest in 85,000 acres of property located near Elko,
Nevada (the Ivanho Property). In October 2000, the Company sold its entire
leasehold interest in the Ivanho Property to Mr. Fouts for $200,000.


Disposition
of Investment in Dynamic Oil Limited


As
of March 31, 2000, the Company held 129,600 shares of restricted common stock of Dynamic
Oil Limited, an unaffiliated publicly-held British Columbia corporation
(Dynamic) engaged in oil and gas exploration. In June 2000, the Company sold
79,600 shares of Dynamic for $107,000. In August 2000, the Company sold the remaining
50,000 shares of Dynamic for $56,000.


Disposition
of Interest in Robbie Claims


In
September 1995, the Company entered into a partnership agreement with Hi-Tech Exploration,
Ltd. (Hi-Tech), Hillcrest, and Mr. Fouts, who then served as the
Companys president, pursuant to which the Company, Hillcrest and Mr. Fouts each
purchased from Hi-Tech a twenty-five percent (25%) interest in 107 unpatented lode mining
claims (the Robbie Claims) for the sum of $3,567. The Robbie Claims are
located near Elko, Nevada, on land controlled by the Bureau of Land Management
(BLM).


During
the fiscal year ended March 31, 2000, the parties leased the Robbie Claims to Great Basin
Gold, Inc., for the sum of $4,000 per year, together with a royalty of two percent (2%) of
net smelter returns and an obligation by the leaseholder to cover the annual fee payable
to BLM of $100 per claim, payable by September 1 of each year. Pursuant to such lease, the
Company was entitled to receive one-fourth of the annual payment and one-fourth of the net
smelter returns, if any. In July 2000, the Company sold its interest in these claims to
Mr. Fouts for $4,000.


Sale of Investment in
La Fonda


In
addition to the natural resource investments previously held by the Company, Auric
Minerals owned a minority interest in the outstanding capital stock (the La Fonda
Stock) of Corporacion de La Fonda, Inc., a closely-held corporation that owns and
operates the La Fonda Hotel in Santa Fe, New Mexico (La Fonda).


During
the fiscal year ended March 31, 2000, the Company sold to La Fonda a total of 800 shares
of La Fonda Stock at a price of $141.00 per share, resulting in a net pre-tax gain of
$103,000. In May 2000, the Company sold to La Fonda its remaining 9,200 shares of La Fonda
Stock at a price of $141.00 per share for a total of $1,304,000 in cash. The Company
realized a gain of approximately $1,188,000 from the sales of the La Fonda Stock.


Employees


The
Company currently has one full time employee. This employee is not represented by a labor
union.


2
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 2. | DESCRIPTION
OF PROPERTY
|------- | -----------------------

|Effective
August 31, 2002, the Company terminated its lease of 101 Marietta Street, Suite 3450,
Atlanta, GA.


As
discussed in Item 1  Description of Business above, the Company no
longer holds interests in any natural resource properties.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 3. | LEGAL
PROCEEDINGS
|------- | -----------------

|The
Company is not a party to any pending legal proceedings.
|------------------------------------------------------------

|Item 4. | SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

|The Company
did not submit any matters to a vote of security holders during the quarter ended March
31, 2003.


      PART II
|-----------------------------------------------------------------------------------------------------------------------------

|Item 5. | MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | --------------------------------------------------------

|The
Companys common stock is quoted on the Over-the-Counter Bulletin Board
(OTC-BB) under the symbol BRAV. There is currently a very limited
trading market for the Companys common stock. The following sets forth, for the
respective periods indicated, the high and low sales prices of the Companys common
stock in the over-the-counter market, as reported and summarized by the OTC-BB. Such
prices are based on inter-dealer bid and asked prices, without markup, markdown,
commissions or adjustments, and may not represent actual transactions.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|QUARTER ENDED      | HIGH |  | LOW
|------------------ | ---- |  | ---
|2002 Fiscal Year:  |      |  |    
|June 30, 2001      |      |  | $  
|September 30, 2001 |      |  |    
|December 31, 2001  |      |  |    
|March 31, 2002     |      |  |    
|2003 Fiscal Year:  |      | 
|June 30, 2002      |      |  | $  
|September 30, 2002 |      |  |    
|December 31, 2002  |      |  |    
|March 31, 2003     |      |  |    

|On
June 3, 2003, the low and high bid prices quoted by broker-dealer firms effecting
transactions in the Companys common stock were $ 0.75 and $ 1.05, respectively.


The
Company has never declared or paid cash dividends on its common stock and currently
intends to retain any future earnings for the operation and expansion of its business. Any
determination to pay cash dividends on the Companys common stock will be at the
discretion of the Board of Directors of the Company (the Board) and will be
dependent on the Companys financial condition, results of operations, contractual
restrictions, capital requirements, business prospects and such other factors as the Board
deems relevant.


At
June 3, 2003, there were approximately 770 holders of record of the Companys common
stock.


3
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
following table sets forth information regarding compensation plans under which the
Companys common stock is authorized for issuance as of March 31, 2003. The
Companys stockholders approved the Brainworks Ventures Inc. Stock Option Plan (the
Plan) at the Companys 2000 annual meeting of stockholders. The Plan is
the Companys only equity compensation plan approved by the Companys
stockholders.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                             | Number of securities
      to be
      issued upon exercise of
      outstanding options and
      warrants | Weighted-average exercise
      price of outstanding options
      and warrants | Number of securities
      remaining available for
      issuance under equity
      compensation plans
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------
|Equity compensation plan approved by securities holders      | 693,918                                                                                                     | $4.73
      per share                                                           | 4,306,082                                                                                              
|Equity compensation plans not approved by securities holders | 255,000                                                                                                     | $ 2.30
      per share                                                          | N/A                                                                                                    
|                                                             |                                                                                                             |                                                                                 |                                                                                                        
|TOTAL                                                        | 948,918                                                                                                     | $ 4.41
      per share                                                          | 3,703,000                                                                                              

|
|

| | (1) | Represents
(i) warrants and options to purchase 250,000 shares of the                Companys
common stock granted in April and May 2000 to current officers                and
directors of the Company for consulting services rendered before such
               grantees became officers and directors of the Company and (ii) an option
to                purchase 5,000 shares of the Companys common stock granted to
Weberize,                Inc. in October 2000 in exchange for services.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 6. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                      OPERATIONS
|------- | -----------------------------------------------------------------------------------------------------------

|Certain
statements contained in this Annual Report on Form 10-KSB are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, and are thus prospective in nature. The words believe,
expect, anticipate, predict, potential,
seek, continue, will, may,
could, intend, plan, estimate, and the
negative thereof and other similar expressions are intended to identify forward-looking
statements. Such forward-looking statements reflect managements beliefs and
assumptions and are based on information currently available to management. The
forward-looking statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance or achievements of the Company to
differ materially from those expressed or implied in such statements. There can be no
assurance that such factors or other factors will not affect the accuracy of such
forward-looking statements. The Company does not assume any duty to publicly update these
forward-looking statements. The Company strongly recommends that the discussion and
analysis set forth below be read in conjunction with the Companys consolidated
financial statements and notes thereto contained elsewhere herein.


Overview


The
Company provided funding and business consulting services to early stage development
companies by developing, investing in, acquiring or acquiring interest in and operating
such companies. The Company previously made equity investments in three start-up
companies. The Company also provided consulting services to commercialize new concepts and
intellectual property developed by universities, research laboratories and other large
commercial companies.


During
the past two years, the Company has incurred significant losses from operations and such
losses are expected to continue. Due to the lack of adequate working capital and business
prospects, in 2003 the Board decided to cease its operations in anticipation of executing
a merger with AssuranceAmerica Corporation on April 1, 2003. The Company, which will
survive the merger, will focus upon offering automobile insurance coverages through the
operating subsidiaries of AssuranceAmerica Corporation. The operating subsidiaries
include: AssuranceAmerica Managing General Agency, AssuranceAmerica Insurance Company, and
AssetAmerica Insurance Agencies.

      
      Revenues


The
Companys revenues consist of dividend and interest income, and income from
consulting contracts. The companys consulting contracts were terminated in 2002.


4
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Operating
Expenses


Selling,
general and administrative expenses consist primarily of consulting expenses,
administrative and management personnel and related expenses, and depreciation and
amortization expense.


Results
of Operations


For
the year ended March 31, 2003, the Company had revenues of $40,000, cost of revenue and
selling, general and administrative expenses of $802,000, and other net expenses of
$511,000, including impairment cost related to goodwill of $267,000, loss on disposal of
fixed assets of $212,000 and a realized loss of $33,000 on the disposition of an
investment. The Companys operations resulted in a net loss of $1,273,000 and a net
loss per common share of $0.53. For the year ended March 31, 2002, the Company had
revenues of $610,000, cost of revenue and selling, general and administrative expenses of
$3,739,000, and other net expenses of $1,850,000, including impairment cost related to
goodwill of $1,630,000, and a realized loss of $238,000 on the disposition of an
investment. The Companys operations resulted in a net loss of $4,979,000 and a net
loss per common share of $2.01.


Management
does not believe that the Companys operations have been impacted by inflation.


Liquidity and Capital
Resources


In
the year ended March 31, 2003, net cash used in operating activities was $446,000. Net
cash used in operating activities includes the net loss for the year ended March 31, 2003
of $1,273,000 offset by non-cash charges related to depreciation and amortization of
$33,000 amortization of deferred compensation for warrants and options issued to advisors
and consultants of $375,000 and asset impairment charges of $267,000. Net cash provided by
investing activities was $54,000, which is associated with the sale of equipment and
investments.


As
of March 31, 2003, the Company had working capital of $(15,000).
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 7. | FINANCIAL
STATEMENTS
|------- | --------------------

|The
Companys consolidated financial statements (see Index to Financial
Statements attached hereto) for the year ended March 31, 2003, together with the
notes thereto, have been audited by the independent accounting firm of Miller Ray &
Houser, LLP, whose opinion thereto is included herein, which is included in this Report
beginning at page F-1 hereof. The Companys consolidated financial statements for the
year ended March 31, 2002, together with the notes thereto, have been audited by the
independent accounting firm of Eisner, LLP, which were included in the Companys
10-QSB for the fiscal year ending March 31, 2002.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 8. | CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                       DISCLOSURE
|------- | -----------------------------------------------------------------------------------------------------------

|During
the fiscal year ended March 31, 2003, there has been no disagreement with the
Companys accountants on any matter of accounting principles or practices or
financial statement disclosure required to be disclosed pursuant to Item 304 of Regulation
S-B.

      
      PART
        III
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 9. | DIRECTORS,
EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT
|------- | ---------------------------------------------------------------------------------------------------------------

|Officers and
        Directors


The
table below sets forth the name, age and position of each executive officer and director
of the Company:


5
|-------------------------------------------------------------------------------------------------------------------------------------------------

|Name                   |  | Age |    | Position                                                                        | Officer
      or
      Director Since(1)
|---------------------- |  | --- | -- | ------------------------------------------------------------------------------- | ----------------------------------------
|Donald
      Ratajczak |  |     | 60 | Chairman                                                                        | May
      2000                          
|Marc
      J. Schwartz |  |     | 39 | President,
      Chief Financial 
      Officer, Secretary and 
      Treasurer | May
      2000                          

|
|

|(1) | Dr. Ratajczak
and Mr. Schwartz were appointed as officers and directors of the Company in May 2000
to replace prior management in connection with the Companys decision to change the
Companys business direction. (See Item 12 hereof, Certain Relations and
Related Transactions.)
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Set
forth below is a brief biographical description of Dr. Ratajczak and Mr. Schwartz:


Donald
Ratajczak, age 60, has served as the Chairman of the Board and Chief Executive Officer of
the Company since May 2000. From May 2000 to November 2000, Dr. Ratajczak has also
served as the Companys President. From July 1973 to June 2000, he served as a
professor and Director of Economic Forecasting Center at the J. Mack Robinson College of
Business Administration at Georgia State University. Dr. Ratajczak also currently
serves on the Board of Directors of the following organizations: Crown Crafts, Inc., a
textile manufacturing company; T.B.C. Corporation, a tire distribution company, Ruby
Tuesday, Inc., a food service company and Regan Holdings, an insurance marketing company.
He is a consulting economist for Morgan, Keegan & Co., a broker/dealer company and a
trustee for C.I.M. High Yield, a bond fund company.


Marc
J. Schwartz, age 39, has served as President of the Company since March, 2002, and as
Chief Financial Officer, Secretary, Treasurer and director of the Company since May 2000.
From May 2000 through March, 2002, Mr. Schwartz also served as Vice President of the
Company. Since April 1998, he has served as a registered financial advisor and Vice
President of Investments for Dunwoody Brokerage Services, Inc. From February 1995 to April
1998, he served as a financial consultant with Smith Barney, Inc.


There are no family relationships
among any of the executive officers or directors of the Company. Each director of the
Company serves as a director until his successor is elected and qualified at the
Companys next annual meeting of stockholders.


Section 16(a)
Beneficial Ownership Reporting Compliance


Section 16(a) of
the Securities and Exchange Act of 1934, as amended, requires the           Companys
directors, executive officers and persons who own beneficially           more than 10% of
a registered class of the Companys equity securities to           file with the
Securities and Exchange Commission (the SEC) initial           reports of
ownership and reports of changes in ownership of such securities of           the
Company. Directors, executive officers and greater than 10% stockholders are
          required by SEC regulations to furnish the Company with copies of all
          Section 16(a) reports they file.


To
the Companys knowledge, the Section 16(a) filing requirements applicable to its
directors, executive officers and greater than 10% beneficial owners were complied with
during the fiscal year ended March 31, 2003.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 10. | EXECUTIVE
COMPENSATION
|-------- | ----------------------

|Compensation
        of Directors


For
the fiscal year ended March 31, 2003, the Company did not compensate directors for
their service on the Companys Board of Directors (the Board).



6
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Compensation
        of Executive Officers


The
following table sets forth the cash and non-cash compensation awarded or paid by the
Company for services rendered during each of the years in the three-year period ended
March 31, 2003, to its Chief Executive Officer and to its most highly compensated
executive officers other than the Chief Executive Officer whose annual compensation
exceeded $100,000 (the Named Executive Officers).


Summary Compensation
Table
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Name and Principal Position   |  | Year
Ended
March 31,
2003 |  | Salary |  | Bonus |        | Long-Term
Compensation
Awards/
Securities
Underlying
Options(#)(1) |   | All Other
Compensation
|----------------------------- |  | ------------------------- |  | ------ |  | ----- | ------ | ------------------------------------------------------------------ | - | ----------------------
|Donald Ratajczak(2)           |  |                           |  | 2003   |  | $     |       |                                                                    | $ |                      
|Chief
      Executive Officer |  |                           |  | 2002   |  |       |       |                                                                    |   |                      
|                              |  |                           |  | 2001   |  |       |       |                                                                    |   |                      
|Marc J.
      Schwartz(3)     |  |                          
|President,
      Chief        |  |                          
|Financial
      Officer       |  |                           |  | 2003   |  |       | 35,000 |                                                                    |   |                      
|Secretary and                 |  |                           |  | 2002   |  |       |       |                                                                    |   |                      
|Treasurer                     |  |                           |  | 2001   |  |       |       |                                                                    |   | 350,000               

|
|

|(1) | Unless otherwise
      noted, represents options granted under the Companys Stock Option
      Plan.
|--- | -----------------------------------------------------------------------------------------------------

|(2) | Dr. Ratajczak
      began serving as Chief Executive Officer of the Company in May 2000. Dr. Ratajczak
      also served as President of the Company from May 2000 to November 2000.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Schwartz
      began serving as an executive officer of the Company in May 2000.
|--- | ------------------------------------------------------------------------------------

|Option Grants in the
Last Fiscal Year


During
the fiscal year ended March 31, 2003, the Company did not grant any stock options to
either of the Named Executive Officers.


Year-End Option Values


Neither
of the Named Executive Officers exercised any stock options during the fiscal year ended
March 31, 2003. The following table sets forth information concerning the value at
March 31, 2003, of unexercised options held by each Named Executive Officer.


7
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Name             |  | Number Of Securities
Underlying Unexercised
Options at 3/31/03
Exercisable/Unexercisable |  | Value Of Unexercised
In-The-Money Options at
3/31/03(1)
Exercisable/Unexercisable
|---------------- |  | ---------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------
|Donald Ratajczak |  |                                                                                          |  | 260,000/0                                                                        
|Marc J. Schwartz |  |                                                                                          |  | 210,000/0                                                                        

|
|

|(1) | Value
      of the Companys unexercised, in-the-money options based on the average
      of the high and low price of the Companys common stock as of March 31,
      2003, which was $0.25.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 11. | SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- | --------------------------------------------------------------

|The
following table sets forth, as of March 31, 2003, the beneficial ownership of the
Companys common stock by (i) each shareholder who is known by the Company to
own beneficially more than 5% of the outstanding common stock, (ii) each director,
(iii) each Named Executive Officer, and (iv) all officers and directors of the
Company as a group:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  | Common Stock
Beneficially Owned(1) | 
|------------------------------------------------- | ---------------------------------- | 
|
|Marc J. Schwartz                                |                                    | 
|Donald Ratajczak                                |                                    | 
|Dean W. Andersen                                  |                                    | 
|Robert H. Cawly                                   |                                    | 
|Cole F. Walker                                  |                                    | 
|John P. Cayce                                     |                                    | 
|All officers and directors as a group (3 persons) |                                    | 

| Executive Officer
of the Company.
 Director of the Company.
|--------------------------------------------------------------

|(1) | Information as
      to the beneficial ownership of the Companys common stock has either
      been furnished to the Company by or on behalf of the indicated persons or
      is taken from reports on file with the SEC.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Unless otherwise
      indicated, the principal business address of each beneficial owner is 5500
      Interstate North Parkway, Suite 600, Atlanta, GA 30328.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | In accordance
      with the regulations of the SEC, the percentage calculations for each individual
      or group listed are based on 2,271,090 shares of the Companys common
      stock issued and outstanding as of March 31, 2003, plus shares of the Companys
      common stock which may be acquired within 60 days of March 31, 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr.
Andersens address is 1439 Emory Drive, Atlanta, Georgia 30306.
|--- | -------------------------------------------------------------------

|(5) | Includes (i) 13,538
      shares of the Companys common stock held by TANCS, Inc., of which
      Mr. Walker is an officer, director and sole stockholder and over which
      Mr. Walker may be deemed to have sole investment and voting power with
      respect to such shares, and (ii) options to acquire 55,000 shares of
      the Companys common stock exercisable within 60 days of July
      26, 2002.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8
|-

|The
following table sets forth information regarding compensation plans under which the
Companys common stock is authorized for issuance as of March 31, 2003. The
Companys stockholders approved the BrainWorks Ventures Inc. Stock Option Plan (the
Plan) at the Companys 2000 annual meeting of stockholders. The Plan is
the Companys only equity compensation plan approved by the Companys
stockholders.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                             | Number of securities to be
issued upon exercise of
outstanding options and
warrants | Weighted-average exercise
price of outstanding options
and warrants | Number of securities
remaining available for
issuance under equity
compensation plans
|------------------------------------------------------------ | ----------------------------------------------------------------------------------- | ------------------------------------------------------------------- | -------------------------------------------------------------------------------------
|Equity compensation plan approved by securities holders      | 693,918                                                                             | $4.73 per share                                                     | 4,306,082                                                                            
|Equity compensation plans not approved by securities holders | 255,000                                                                             | $ 2.30 per share                                                    | 0                                                                                    
|TOTAL                                                        | 948,918                                                                             | $ 4.41 per share                                                    | 4,306,082                                                                            

|
|

|(1) | Represents (i) warrants
      to purchase 250,000 shares of the Companys common stock granted in
      April 2000 to current officers and directors of the Company for consulting
      services rendered before such grantees became officers and directors of
      the Company; and (ii) a warrant to purchase 5,000 shares of the Companys
      common stock granted to Weberize, Inc. in exchange for services.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9
|-

|Item 12. | CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

|On
February 14, 2001, the Company acquired all the outstanding common stock (the
EBL Common Stock) of eBusinessLabs, Inc., a Georgia corporation now known as
BrainWorks Ventures Labs, Inc. (EBL), pursuant to an Agreement and Plan of
Merger (the EBL Merger Agreement) dated as of December 29, 2000, by and
among the Company, a wholly-owned subsidiary of the Company, EBL and certain stockholders
of EBL, whereby EBL became a wholly-owned subsidiary of the Company (the EBL
Merger). Pursuant to the EBL Merger Agreement, all the issued and outstanding shares
of EBL Common Stock were converted into the right to receive approximately 800,000 shares
of the Companys common stock. Mr. Cayce, President of the Company at the time of the
EBL Merger, owned approximately 3.4% of the issued and outstanding shares of EBL Common
Stock immediately prior to the EBL Merger and, at the effective time of the EBL Merger,
such shares were converted into the right to receive 27,446 shares of the Companys
common stock. Mr. Andersen, a beneficial owner of greater than 5% of the outstanding
common stock of the Company, owned approximately 18.5% of the outstanding shares of EBL
Common Stock immediately prior to the EBL Merger and, at the effective time of the EBL
Merger, such shares were converted into the right to receive 147,692 shares of the
Companys common stock.


On
May 8, 2001, the Company acquired all the outstanding common stock (the EVP
Common Stock) of Executive Venture Partners, LTD., a Massachusetts company
(EVP), pursuant to an Agreement and Plan of Merger (the EVP Merger
Agreement) dated as of May 8, 2001, by and among the Company, a wholly-owned
subsidiary of the Company, EVP and all the stockholders of EVP, whereby EVP became a
wholly-owned subsidiary of the Company (the EVP Merger). Pursuant to the EVP
Merger Agreement, all the outstanding shares of EVP Common Stock were converted into the
right to receive 500,000 shares of the Companys common stock.


The
holders of approximately 78% of the outstanding EVP Common Stock immediately prior to the
EVP Merger were, at the time the EVP Merger was consummated, officers or directors of the
Company or beneficial owners of greater than 5% of the outstanding common stock of the
Company. Specifically, Dr. Ratajczak, Mr. Cayce and Kirk Reiss, who were, at the
time the EVP Merger was consummated, each directors of the Company and the Chief Executive
Officer, President and a senior advisor to the Company, respectively, owned approximately
20%, 20% and 2%, respectively, of the outstanding EVP Common Stock immediately prior to
the EVP Merger. At the effective time of the EVP Merger, Dr. Ratajczak and
Messrs. Cayce and Reiss became entitled to receive 100,000, 100,000 and 10,000 shares
of the Companys common stock, respectively. Mr. Andersen, a beneficial owner of
greater than 5% of the Companys outstanding common stock, owned approximately 8% of
the outstanding EVP Common Stock immediately prior to the EVP Merger and, at the effective
time of the EVP Merger, became entitled to receive 40,000 shares of the Companys
common stock.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|No
        reports filed on Form 8-K for fiscal year ended March 31, 2003.
|--------------------------------------------------------------------------

| | (B) | REPORTS
ON FORM 8-K
| | --- | -------------------

|During
the quarter ended March 31, 2002, the Company did not file any Current Reports on Form
8-K.


10
|-------------------------------------------------------------------------------------------------------

|SIGNATURES


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

|Date: June 27, 2003 | By: | REGISTRANT:
      BRAINWORKS VENTURES, INC.
      /s/ Lawrence Stumbaugh
      
      Lawrence Stumbaugh,
      Chief Executive Officer and Director
|------------------- | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|/s/
      Lawrence Stumbaugh 
      
           Lawrence Stumbaugh | Chief Executive Officer and Director
(Principal Executive Officer) | Date: June 27, 2003
|----------------------------------------------------------------------------- | ------------------------------------------------------------------ | -------------------

|/s/
      Robert J. Cormican 
      
           Robert J. Cormican | Senior Vice
      President, Chief Financial Officer (Principal Financial and Accounting Officer) | Date: June 27, 2003
|----------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | -------------------

|11
|--

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Index to Financial
Statements
|--------------------------------------------------------------------------

|                                                                                                       | PAGE
|------------------------------------------------------------------------------------------------------ | ----
|Report of Independent Public Accountants                                                               | F-1 
|Financial statements:                                                                                 
|Consolidated balance sheet as of March 31, 2003 and 2002                                               | F-2 
|Consolidated statements of operations for the years ended  March 31, 2003 and 2002                     | F-3 
|Consolidated statements of changes in stockholders equity for the years ended March 31, 2003 and 2002 | F-4 
|Consolidated statements of cash flows for the years ended March 31, 2003 and 2002                      | F-5 
|Notes to consolidated financial statements                                                             | F-6 

|
|

|Report of Independent
Public Accountants


To the Board of
Directors and Stockholders of
Brainworks Ventures, Inc. and Subsidiaries


We have audited the consolidated
balance sheet of Brainworks Ventures, Inc. and subsidiaries as of March 31, 2003, and the
related consolidated statements of operations, changes in stockholders equity and
cash flows for the year then ended. These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The consolidated
financial statements of Brainworks Ventures, Inc. and subsidiaries as of March 31, 2002,
were audited by other auditors whose report dated June 12, 2002, on those statements
included an explanatory paragraph describing conditions that raised substantial doubt
about the Companys ability to continue as a going concern.


We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the 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 consolidated
financial position of Brainworks Ventures, Inc. and subsidiaries as of March 31, 2003 and
the results of its consolidated operations and its consolidated cash flows for the year
then ended in conformity with accounting principles generally accepted in the United
States of America.


      


Atlanta, Georgia
May 7, 2003


F-1
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Consolidated Balance
Sheets


March 31, 2003 and 2002
|--------------------------------------------------------------------------------------------------

|                                                             |      |  |      |            |   |   |            |  
|------------------------------------------------------------ | ---- |  | ---- | ---------- | - | - | ---------- | -
|Assets                                                       |      | 
|                                                             | 2003 |  | 2002
|Current assets:                                              |      |  |      |            |   |   |            |  
|Cash                                                         |      |  | $    | 5,000      |   | $ | 397,000    |  
|Accounts receivable                                          |      |  |      | 10,000     |   |   | 6,000      |  
|Due from employees                                           |      |  |      |           |   |   | 11,000     |  
|Prepaid expenses and other current assets                    |      |  |      |           |   |   | 38,000     |  
|                                                             |      |  |      |           
|Total current assets                                         |      |  |      | 15,000     |   |   | 452,000    |  
|Fixed assets, net                                            |      |  |      | 5,000      |   |   | 294,000    |  
|Investments in non-marketable equity securities              |      |  |      |           |   |   | 43,000     |  
|Goodwill                                                     |      |  |      |           |   |   | 267,000    |  
|                                                             |      |  |      |           
|Total assets                                                 |      |  | $    | 20,000     |   | $ | 1,056,000  |  
|                                                             |      |  |      |           
|Liabilities and Stockholders Equity                        
|Current liabilities:                                         |      | 
|Accounts payable and accrued expenses                        |      |  | $    | 30,000     |   | $ | 168,000    |  
|                                                             |      |  |      |           
|Stockholders equity (deficit):                              |      | 
|Common Stock, $0.01 par value; authorized 25,000,000 shares; |      | 
|2,271,090 and 2,561,186 issued and outstanding               |      |  |      | 23,000     |   |   | 26,000     |  
|Additional paid-in capital                                   |      |  |      | 7,877,000  |   |   | 7,884,000  |  
|Accumulated deficit                                          |      |  |      | (7,910,000 | ) |   | (6,637,000 | )
|Deferred compensation                                        |      |  |      |           |   |   | (375,000   | )
|Receivables for stock                                        |      |  |      |           |   |   | (10,000    | )
|                                                             |      |  |      |           
|Total stockholders equity (deficit)                         |      |  |      | (10,000    | ) |   | 888,000    |  
|                                                             |      |  |      |           
|Total liabilities and stockholders equity                   |      |  | $    | 20,000     |   | $ | 1,056,000  |  
|                                                             |      |  |      |           

|See accompanying notes and report of
independent public accountants.



F-2
|---------------------------------------------------------------------------

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Consolidated
Statements of Operations


For the Years Ended
March 31, 2003 and 2002
|--------------------------------------------------------------------------------------------------------------------------------

|                                                    |      |  |      |            |   |   |            |  
|--------------------------------------------------- | ---- |  | ---- | ---------- | - | - | ---------- | -
|                                                    | 2003 |  | 2002
|Revenue                                             |      |  | $    | 40,000     |   | $ | 610,000    |  
|Operating costs and expenses:                       |      | 
|Cost of revenue                                     |      |  |      | 15,000     |   |   | 549,000    |  
|Selling, general and administrative                 |      |  |      | 787,000    |   |   | 3,190,000  |  
|Impairment of goodwill                              |      |  |      | 267,000    |   |   | 1,630,000  |  
|                                                    |      |  |      |           
|                                                    |      |  |      | 1,069,000  |   |   | 5,369,000  |  
|                                                    |      |  |      |           
|Loss from operations                                |      |  |      | (1,029,000 | ) |   | (4,759,000 | )
|Interest expense                                    |      |  |      | (1,000     | ) |   |           |  
|Interest and dividends                              |      |  |      | 2,000      |   |   | 18,000     |  
|Loss on disposal of fixed assets                    |      |  |      | (212,000   | ) |   |           |  
|Realized loss on investments                        |      |  |      | (33,000    | ) |   | (238,000   | )
|                                                    |      |  |      |           
|Net loss                                            |      |  | $    | (1,273,000 | ) | $ | (4,979,000 | )
|                                                    |      |  |      |           
|Net loss per common share-basic and diluted         |      |  | $    | (0.53      | ) | $ | (2.01      | )
|                                                    |      |  |      |           
|Weighted average number of shares outstanding-basic |      | 
|and diluted                                         |      |  |      | 2,412,000  |   |   | 2,475,000  |  
|                                                    |      |  |      |           

|See accompanying notes and report of independent
public accountants.



F-3
|---------------------------------------------------------------------------

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Consolidated
Statements of Changes in Stockholders Equity


For the Years Ended
March 31, 2003 and 2002
|-----------------------------------------------------------------------------------------------------------------------------------------------------

|                                               | Common Stock |  | Additional
      Paid in Capital |           | AccumulatedDeficit |   | Deferred |   | Receivables
      for |          
|---------------------------------------------- | ------------ |  | -------------------------------- | --------- | ------------------ | - | -------- | - | --------------------- | ---------
|
|Balance,
      March 31, 2001                  |              |  |                                  | 1,950,000 |                    | $ | 19,000   |   | $                     | 6,279,000
|Issuance
      of common stock in a private    |              | 
|placement                                      |              |  |                                  | 144,918   |                    |   | 2,000    |   |                       | 423,000  
|Issuance
      of common stock in EVP merger   |              |  |                                  | 500,000   |                    |   | 5,000    |   |                       | 549,000  
|Fair value
      of options granted to         |              | 
|consultants
      and advisors                 |              |  |                                  |          |                    |   |         |   |                       | 617,000  
|Collection
      on subscription receivable    |              |  |                                  |          |                    |   |         |   |                       |         
|Cancellation
      of subscription             |              |  |                                  | (42,732   | )                  |   |         |   |                       | (38,000  
|Shares
      issued for services and equipment |              |  |                                  | 9,000     |                    |   |         |   |                       | 54,000   
|Amortization
      of deferred compensation    |              |  |                                  |          |                    |   |         |   |                       |         
|Net loss                                       |              |  |                                  |          |                    |   |         |   |                       |         
|                                               |              |  |                                  |           |                    |   |          |   |                       |          
|Balance, March 31, 2002                        |              |  |                                  | 2,561,186 |                    |   | 26,000   |   |                       | 7,884,000
|Cancellation
      of subscription             |              |  |                                  | (9,846    | )                  |   |         |   |                       | (10,000  
|Amortization
      of deferred compensation    |              |  |                                  |          |                    |   |         |   |                       |         
|Shares
      returned and cancelled            |              |  |                                  | (280,250  | )                  |   | (3,000   | ) |                       | 3,000    
|Net loss                                       |              |  |                                  |          |                    |   |         |   |                       |         
|                                               |              |  |                                  |           |                    |   |          |   |                       |          
|Balance, March 31, 2003                        |              |  |                                  | 2,271,090 |                    | $ | 23,000   |   | $                     | 7,877,000
|                                               |              |  |                                  |           |                    |   |          |   |                       |          

|See accompanying notes and report of
independent public accountants.


F-4
|--------------------------------------------------------------------------

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Consolidated
Statements of Cash Flows


For the Years Ended
March 31, 2003 and 2002
|--------------------------------------------------------------------------------------------------------------------------------

|                                                        |  |  |   | 2003       |   |   | 2002       |  
|------------------------------------------------------- |  |  | - | ---------- | - | - | ---------- | -
|Cash flows from operating activities:                   |  | 
|Net loss                                                |  |  | $ | (1,273,000 | ) | $ | (4,979,000 | )
|Adjustments to reconcile net loss to net                |  | 
|cash used by operating activities:                      |  | 
|Depreciation                                            |  |  |   | 33,000     |   |   | 87,000     |  
|Amortization                                            |  |  |   |           |   |   | 1,137,000  |  
|Stock issued for services                               |  |  |   |           |   |   | 21,000     |  
|Loss on disposal of fixed assets                        |  |  |   | 212,000    |   |   |           |  
|Impairment of goodwill                                  |  |  |   | 267,000    |   |   | 1,630,000  |  
|Realized loss on investments                            |  |  |   | 33,000     |   |   | 238,000    |  
|Deferred compensation amortization                      |  |  |   | 375,000    |   |   | 1,159,000  |  
|Changes in assets and liabilities:                      |  | 
|Accounts receivable                                     |  |  |   | (4,000     | ) |   | 86,000     |  
|Due from employees                                      |  |  |   | 11,000     |   |   | 3,000      |  
|Prepaid expenses and other current assets               |  |  |   | 38,000     |   |   | (11,000    | )
|Accounts payable and accrued expenses                   |  |  |   | (138,000   | ) |   | (172,000   | )
|                                                        |  |  |   |           
|Net cash used by operating activities                   |  |  |   | (446,000   | ) |   | (801,000   | )
|                                                        |  |  |   |           
|Cash flows from investing activities:                   |  | 
|Purchase of equipment                                   |  |  |   |           |   |   | (5,000     | )
|Proceeds from sale of equipment                         |  |  |   | 44,000     |   |   | 5,000      |  
|Proceeds from sale of investments                       |  |  |   | 10,000     |   |   |           |  
|Net cash paid on acquisitions                           |  |  |   |           |   |   | (77,000    | )
|                                                        |  |  |   |           
|Net cash provided (used) by investing activities        |  |  |   | 54,000     |   |   | (77,000    | )
|                                                        |  |  |   |           
|Cash flows from financing activities:                   |  | 
|Collection of note receivable from officer              |  |  |   |           |   |   | 225,000    |  
|Proceeds from sale of common stock                      |  |  |   |           |   |   | 425,000    |  
|Collection of subscriptions receivable                  |  |  |   |           |   |   | 14,000     |  
|                                                        |  |  |   |           
|Net cash provided by financing activities               |  |  |   |           |   |   | 664,000    |  
|                                                        |  |  |   |           
|Net decrease in cash                                    |  |  |   | (392,000   | ) |   | (214,000   | )
|Cash, beginning of year                                 |  |  |   | 397,000    |   |   | 611,000    |  
|                                                        |  |  |   |           
|Cash, end of year                                       |  |  | $ | 5,000      |   | $ | 397,000    |  
|                                                        |  |  |   |           
|Supplemental Disclosure of Cash Flow Information        |  | 
|Cash paid for:                                          |  | 
|Interest                                                |  |  | $ | 1,000      |   | $ |           |  
|Non-Cash Investing and Financing Activities             |  | 
|Issuance of options and warrants                        |  |  | $ |           |   | $ | 617,000    |  
|Issuance of stock for acquisition                       |  |  | $ |           |   | $ | 554,000    |  
|Cancellation of stock subscription                      |  |  | $ | 10,000     |   | $ | 38,000     |  
|Note and accounts receivable converted to investment in |  | 
|non-marketable equity securities                        |  |  | $ |           |   | $ | 76,000     |  
|Issuance of stock for equipment                         |  |  | $ |           |   | $ | 54,000     |  

|See accompanying notes and report of independent
public accountants.


F-5
|--------------------------------------------------------------------------

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Notes to Consolidated
Financial Statements


March 31, 2003 and
2002
|-----------------------------------------------------------------------------------------------------------------

|(1) | Summary
of Significant Accounting Policies
|--- | ------------------------------------------

| | Organization
and Nature of Operations
| | -------------------------------------

| | Brainworks
Ventures, Inc. (Brainworks), together with its subsidiaries, referred to as
the Company, is a Nevada corporation that ceased operations as of March 31,
2003. The Company formerly provided funding and business consulting services to early
stage technology companies. As described in note 9, effective April 1, 2003, the Company
has entered the property and casualty insurance industry through a merger with
AssuranceAmerica Corporation.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 14, 2001, Brainworks acquired Brainworks Ventures Labs, Inc., formerly
known as eBusinessLabs, Inc. (BVL), which formerly provided
business-consulting services to early stage technology companies.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 8, 2001, the Company acquired Executive Venture Partners, Ltd. (EVP),
which formerly provided consulting services to develop and implement corporate venturing
strategies to corporations and research laboratories.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
acquisitions were accounted for under the purchase method of accounting.
| | ----------------------------------------------------------------------------

| | Basis
of Presentation
| | ---------------------

| | The
consolidated financial statements include the accounts of its wholly-owned subsidiaries,
BVL, EVP (from May 8, 2001) and Auric Minerals Corporation (which is currently inactive).
All intercompany balances and transactions have been eliminated.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cash
| | ----

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

| | Investments
| | -----------

| | Investments
consist of equity securities classified as available for sale. Investments in
non-marketable securities are carried at cost as adjusted for declines in value which are
other than temporary in accordance with Statement of Financial Accounting Standards (SFAS)
No. 115, Accounting for Certain Investments in Debt and Equity Securities. Realized
gains and losses on sales of investments are included in earnings and are determined on
the specific identification method.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fixed
Assets
| | ------------

| | Fixed
assets, consisting of office equipment, furniture and fixtures and leasehold
improvements, are stated at cost. Depreciation is provided using the straight-line method
over the estimated useful lives of the assets. Leasehold improvements are amortized over
the shorter of the term of the lease or useful life of the improvements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F-6
|---

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Notes to Consolidated
Financial Statements, Continued
|--------------------------------------------------------------------------------------------------

|(1) | Summary
of Significant Accounting Policies, continued
|--- | -----------------------------------------------------

| | Goodwill
| | --------

| | The
Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, on April
1, 2002. Under SFAS No. 142, goodwill, which represents the excess of purchase price over
fair value of net assets acquired, and intangible assets with indefinite useful lives are
no longer amortized but will be tested for impairment at least on an annual basis in
accordance with the provisions of SFAS No. 142.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Goodwill
is tested for impairment at least on an annual basis. The impairment test involves a
comparison of the fair value of each of the reporting units as defined under SFAS No.
142, with its carrying amount. If an assets carrying amount exceeds its fair value,
then such asset is considered to be impaired. The impairment to be recognized is measured
by the amount by which the carrying value of the reporting entity being measured exceeds
its fair value, up to the total amount of its assets. The Company expects to perform its
impairment tests during the fourth quarter of each year.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Prior
to April 1, 2002, goodwill was amortized on a straight-line basis over the expected
period to be benefited, which was estimated to be three years.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | Revenue
Recognition
| | -------------------

| | Revenue is generated from
consulting fees and is recognized when services are performed by the Company.
| | -------------------------------------------------------------------------------------------------------

| | Income
Taxes
| | ------------

| | The
Company accounts for income taxes in accordance with SFAS No. 109, Accounting
for Income Taxes, which requires recognition of deferred tax liabilities and assets
for expected future tax consequences attributable to differences between the financial
statement carrying amounts of the existing assets and liabilities and their respective
tax basis. Deferred tax liabilities and assets are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amounts expected to be realized.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock-Based
Compensation
| | ------------------------

| | The
Company has adopted SFAS No. 123, Accounting for Stock-Based Compensation(SFAS
123). The provisions of SFAS 123 allow companies to either expense the estimated
fair value of employee stock options or to continue to follow the intrinsic value method
set forth in Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees (APB No. 25), but disclose the pro
forma effects on net income had the fair value of the options been expensed. The Company
has elected to apply APB No. 25 in accounting for its employee stock option grants.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F-7
|---

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Notes to Consolidated
Financial Statements, Continued
|--------------------------------------------------------------------------------------------------

|(1) | Summary
of Significant Accounting Policies, continued
|--- | -----------------------------------------------------

| | Net
Loss Per Share
| | ------------------

| | Basic
and diluted loss per common share is computed using the weighted average number of common
shares outstanding during the period. Stock options and warrants have not been included
in the diluted loss per share calculation as their inclusion would have been
antidilutive. Potential common shares not included in the calculation of net loss per
share for the year ended March 31, 2003, and 2002 are as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |               |  |  |  | 2003    |  |  | 2002      | 
| | ------------- |  |  |  | ------- |  |  | --------- | 
| | Warrants      |  |  |  | 245,000 |  |  | 535,000   | 
| | Stock options |  |  |  | 705,000 |  |  | 1,452,000 | 
| |               |  |  | 
| |               |  |  |  | 950,000 |  |  | 1,987,000 | 
| |               |  |  | 

| | Financial
Instruments
| | ---------------------

| | The
carrying amounts of cash, accounts receivable, amounts due from employees, prepaid
expenses and other current assets, investments in non-marketable equity securities, and
accounts payable and accrued expenses approximate their fair value based on the nature of
those items.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Use
of Estimates
| | ----------------

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

| | Recent
Accounting Pronouncements
| | --------------------------------

| | The
Company adopted SFAS No. 141, Business Combinations. Under SFAS No. 141,
all acquisitions subsequent to June 30, 2001, must be accounted for under the
purchase method of accounting and goodwill is no longer amortized but is reviewed
annually (or more frequently if impairment indicators arise) for impairment. Separable
intangible assets acquired in a business combination that are not deemed to have an
indefinite life will continue to be amortized over their useful lives.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F-8
|---

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Notes to Consolidated
Financial Statements, Continued
|--------------------------------------------------------------------------------------------------

|(2) | Acquisitions
|--- | ------------

| | On
May 8, 2001, Brainworks consummated its acquisition of EVP. The transaction was accounted
for under the purchase method of accounting. EVP was acquired for 500,000 shares of
Brainworks common stock with a fair value of $554,000.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value was based on an independent appraisal and the purchase price was substantially
attributed to goodwill. The stock issued in the acquisition is entitled to piggy-back registration
rights. Certain shareholders of EVP were also shareholders or directors of Brainworks
prior to the acquisition. Such shareholders or directors received 390,000 shares of the
total shares exchanged in the acquisition of EVP.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
assets acquired, liabilities assumed and the cost of the acquisition was as follows:
| | ----------------------------------------------------------------------------------------

| |  |  | Assets acquired:                           |  |  |   |         | 
| |  |  | ------------------------------------------ |  |  | - | ------- | 
| |  |  | Other current assets                       |  |  | $ | 51,000  | 
| |  |  | Fixed assets                               |  |  |   | 6,000   | 
| |  |  | Goodwill                                   |  |  |   | 575,000 | 
| |  |  |                                           
| |  |  |                                            |  |  | $ | 632,000 | 
| |  |  |                                           
| |  |  | Liabilities assumed and acquisition costs: |  | 
| |  |  | Common stock issued to EVP                 |  | 
| |  |  | stockholders at fair value                 |  |  | $ | 544,000 | 
| |  |  | Transaction costs                          |  |  |   | 78,000  | 
| |  |  |                                           
| |  |  |                                            |  |  | $ | 632,000 | 
| |  |  |                                           

|(3) | Fixed
Assets
|--- | ------------

| | Fixed
assets at March 31, 2003 and 2002 are as follows:
| | -------------------------------------------------------

| |  | 2003 |                               | 2002 |  | Estimated
Useful Life - Years
| |  | ---- | ----------------------------- | ---- |  | -----------------------------
| |  |      | Computer equipment            |      |  | $                            
| |  |      | Furniture and fixtures        |      |  |                              
| |  |      | Leasehold improvements        |      |  |                              
| |  |      |                               |     
| |  |      |                               |      |  |                              
| |  |      | Less accumulated depreciation |      |  |                              
| |  |      |                               |     
| |  |      |                               |      |  | $                            
| |  |      |                               |     

|Depreciation and amortization
expense on fixed assets for the years ended March 31, 2003 and 2002 was $33,000 and
$87,000, respectively.


F-9
|----------------------------------------------------------------------------------------------------------------------------------------------

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Notes to Consolidated
Financial Statements, Continued
|--------------------------------------------------------------------------------------------------

|(4) | Investments
|--- | -----------

| | The
investments consist of non-marketable equity securities and are carried at cost as
adjusted for declines in value which are other then temporary. The Company determined the
decline in the fair value of the non-marketable securities to be other than temporary and
recorded a realized loss of $33,000 and $238,000 for the years ended March 31, 2003 and
2002, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Goodwill
|--- | --------

| | Goodwill
acquired in the acquisitions of BVL and EVP of approximately $2,580,000 and $575,000,
respectively, was recorded at the date of the acquisitions.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
the year ended March 31, 2002, the Company recorded amortization expense related to
goodwill of $1,137,000 based on an estimated useful life of three years. The Company also
recorded an impairment charge related to goodwill of $1,630,000 for the year ended March
31, 2002.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
accordance with SFAS No. 142 the Company recorded an impairment charge related to
goodwill of $267,000 for the year ended March 31, 2003.
| | --------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Stock
Options
|--- | -------------

| | Stock
Options Plan
| | ------------------

| | Options
to purchase common stock under the Companys 2000 Stock Option Plan (the Plan)
can be granted to employees and directors. Under the Plan, up to 5,000,000 shares may be
granted. The Plan is administered by the Board of Directors, which determines the terms
of the options granted, including the exercise price, the number of shares subject to
option, and the option vesting period. The exercise price of all options granted under
the plan must be at least 100% of the fair market value on the date of grant. Options
generally have a maximum term of five to six years and vest over two years.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Value
of Options Granted to Employees
| | -------------------------------------

| | For
disclosure purposes, the fair value of all stock options granted is estimated using the
Black-Scholes option-pricing model. No stock options were granted by the Company for the
year ended March 31, 2003. The following weighted average assumptions were used for stock
options granted by the Company during the year ended March 31, 2002:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Annual dividends         | 0%    | 
| | ------------------------ | ----- | 
| | Expected Volatility      | 186% 
| | Risk-free interest rate  | 4.59%
| | Expected life (in years) | 5.37%

|F-10
|----

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Notes to Consolidated
Financial Statements, Continued
|--------------------------------------------------------------------------------------------------

|(6) | Stock
Options, continued
|--- | ------------------------

| | Value
of Options Granted to Employees, continued
| | ------------------------------------------------

| | If
compensation cost had been determined on the basis of fair value pursuant to SFAS 123,
then net loss attributable to common stockholders and net loss per share attributable to
common stockholders would have increased for the years ended March 31, 2003 and 2002
as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (In thousands, except per share data)
| |  | -------------------------------------
| |  |                                      
| |  |                                      
| |  |                                      
| |  |                                      
| |  |                                      
| |  |                                      
| |  |                                      
| |  |                                      
| |  |                                      

| | Following
is a summary of stock option and warrant activity during each of the years ended March 31,
2003 and 2002:
| | -------------------------------------------------------------------------------------------------------------------

|                            | 2003                     | 2002     
|--------------------------- | ------------------------ | ---------
|                            | Range of
Exercise Prices | Shares   
|Outstanding at              |                          |          
|beginning of year           | $1.125 - $7.75           | 1,552,000
|Granted during the year     |                         |         
|Expired                     | $1.125 - $7.70           | (602,000)
|Exercised                   |                         |         
|Outstanding at end of  year | $1.125 - $7.75           | 950,000  
|Exercisable at end of  year | $1.125 - $7.75           | 950,000  

|F-11
|----

|Following is a summary of options and
warrants outstanding as of March 31, 2003:
|--------------------------------------------------------------------------------

|Options and Warrants Outstanding | Options and Warrants Exercised
|-------------------------------- | ------------------------------
|
|$1.125 - $3.00                   | 250,000                       
|$3.90 - $5.00                    | 131,000                       
|$5.25 - $7.75                    | 569,000                       

|F-12
|----

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Notes to Consolidated
Financial Statements, Continued
|--------------------------------------------------------------------------------------------------

|(7) | Income
Taxes
|--- | ------------

| | The
following table summarizes the significant differences between the U.S. Federal statutory
tax rate and the Companys effective tax rate:
| | --------------------------------------------------------------------------------------------------------------------------------------------

| | Year Ended March 31,
| | --------------------
| | 2003                
| |                     
| |                     
| |                     
| |                     
| |                     
| |                     
| |                     

| | Deferred
tax assets and liabilities are determined based on the difference between the financial
accounting and tax bases of assets and liabilities. Significant components of the Companys
deferred tax assets as of March 31, 2003 and 2002 are as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2003 |  | 2002                                 
| | ---- |  | -------------------------------------
| |      |  | Deferred tax assets:                 
| |      |  | Net operating loss and research and  
| |      |  | experimentation credit carry forwards
| |      |  | Intangible assets                    
| |      |  | Non qualified stock options and      
| |      |  | warrants granted                     
| |      |  | Loss recorded on investments         
| |      |  | Depreciation                         
| |      |  |                                      
| |      |  |                                      
| |      |  | Valuation allowance for deferred     
| |      |  | tax assets                           
| |      |  |                                      
| |      |  | Net deferred tax assets              
| |      |  |                                      

|The net increase in the valuation
allowance for deferred tax assets in 2003 was $271,000. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred income tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those differences become deductible. Management
considers the scheduled reversal of deferred income tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment.


At March 31, 2003, the Company
has net operating loss carry forwards for U.S. federal and state income tax purposes of
approximately $3,033,000 which expire in varying amounts beginning in the year 2020.
Utilization of the net operating losses carried forward will be limited under
Section 382 of the Internal Revenue Code as the Company experienced an ownership
change greater than 50%. Accordingly, certain net operating losses may not be realizable
in future years due to this limitation.


F-13
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|BRAINWORKS VENTURES,
INC. AND SUBSIDIARIES


Notes to Consolidated
Financial Statements, Continued
|--------------------------------------------------------------------------------------------------

|(8) | Private
Placement
|--- | -----------------

| | Between
September 2001 and January 2002, the Company raised net proceeds of $425,000 (net of
expenses of approximately $9,000) in a private placement offering of its securities.
Pursuant to the offering, the Company sold 144,918 shares of its common stock for $3.00
per share and issued 144,918 warrants to buy the Companys common stock at an
exercise price of $5.50 per share (Warrant I). Each Warrant I is exercisable
over a five-year period from the date of issuance, and when exercised, the holder
receives one share of common stock and another warrant to buy the Companys common
stock at an exercise price of $8.25 per share (Warrant II). Each Warrant II
is exercisable over a five-year period from the date of issuance, and when exercised the
holder receives one share of common stock and a third warrant to buy the Companys
common stock at an exercise of $12.375 per share.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Subsequent
Event
|--- | ----------------

| | On
April 1, 2003, pursuant to an agreement and plan of mergers and reorganization, the
Company merged with AssuranceAmerica Corporation. The purpose of the merger was to
facilitate the Companys entrance into the property and casualty insurance industry.
The combination was a reverse acquisition and was accounted for as a purchase with the
Company as the acquired entity.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company issued 19,508,902 shares of common stock on April 1, 2003 and anticipates issuing
23,241,098 additional shares at such time as the authorized number of common shares is
increased to a number sufficient to complete the transaction. As a result of the merger,
the existing shareholders will have approximately 5% ownership in the new entity.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
assets, liabilities and stockholders equity of AssuranceAmerica Corporation were as
follows:
| | -------------------------------------------------------------------------------------------------

| |  |  | Assets:                                       |  |  |   |           |   |  |  | 
| |  |  | --------------------------------------------- |  |  | - | --------- | - |  |  | 
| |  |  | Current assets                                |  |  | $ | 926,000   |   |  |  | 
| |  |  | Fixed assets                                  |  |  |   | 815,000   |   |  |  | 
| |  |  | Intangible assets                             |  |  |   | 3,321,000 |   |  |  | 
| |  |  | Other assets                                  |  |  |   | 49,000    |   |  |  | 
| |  |  |                                              
| |  |  |                                               |  |  | $ | 5,111,000 |   |  |  | 
| |  |  |                                              
| |  |  | Current liabilities and stockholders equity: |  | 
| |  |  | Current liabilities                           |  |  | $ | 1,524,000 |   |  |  | 
| |  |  | Long-term debt and accrued                    |  | 
| |  |  | interest to related party                     |  |  |   | 3,582,000 |   |  |  | 
| |  |  | Other liabilities                             |  |  |   | 107,000   |   |  |  | 
| |  |  | Stockholders equity (deficit)                |  |  |   | (102,000  | ) |  |  | 
| |  |  |                                              
| |  |  |                                               |  |  | $ | 5,111,000 |   |  |  | 
| |  |  |                                              

|F-14
|----