SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

[X]  -  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities 
        Exchange Act of 1934

        For the quarterly period ended June 30, 1998

                                       or

[ ] -   Transition Report Pursuant to Section 13 or 15(d) of the Securities 
        Exchange Act of 1934

Commission File Number:    0-21089

                             GOLDEN BEAR GOLF, INC.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           FLORIDA                                     65-0680880
-------------------------------           --------------------------------------
(State or other jurisdiction of           I.R.S. Employer Identification Number)
incorporation or organization)

11780 U.S. HIGHWAY ONE, NORTH PALM BEACH, FLORIDA        33408
--------------------------------------------------------------------------------
  (Address of principal executive offices)             (Zip Code)

                                 (561) 626-3900
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes  X          No
                                     ---            ---

The Registrant had outstanding 2,744,962 shares of Class A Common Stock (par
value $.01 per share) and 2,760,000 shares of Class B Common Stock (par value
$.01 per share) as of August 7, 1998.


<PAGE>

                             GOLDEN BEAR GOLF, INC.

                     INDEX TO QUARTERLY REPORT ON FORM 10-Q

<TABLE>
<CAPTION>
                                                                                            PAGE
                                                                                            ----
<S>                                                                                           <C>
PART I    -   FINANCIAL INFORMATION

Item 1.       Financial Statements

              Consolidated Condensed Balance Sheets as of
                 June 30, 1998 (Unaudited) and December 31, 1997............................   3

              Consolidated Condensed Statements of Operations (Unaudited) for the
                 Three Months and Six Months Ended June 30, 1998 and 1997...................   4

              Consolidated Condensed Statements of Cash Flows (Unaudited)
                 for the Six Months Ended June 30, 1998 and 1997............................   5

              Notes to Consolidated Condensed Financial Statements (Unaudited)..............   6

Item 2.       Management's Discussion and Analysis of
                 Financial Condition and Results of Operations..............................  14

PART II   -   OTHER INFORMATION

Item 6.       Exhibits and Reports on Form 8-K..............................................  19

Signatures..................................................................................  20
</TABLE>



                                       2
<PAGE>



PART I  -  FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

                                              GOLDEN BEAR GOLF, INC.

                                       CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                    JUNE 30,           DECEMBER 31,
                                                                                      1998                 1997
                                                                                -----------------    -----------------
                                                                                  (UNAUDITED)
<S>                                                                             <C>                  <C>            
                                                       ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                                    $     1,002,166      $     1,826,033
   Accounts receivable, net                                                          10,526,296           13,213,727
   Due from International                                                                85,594              184,502
   Costs and estimated earnings in excess of billings on uncompleted contracts          654,232              725,780
   Prepaid expenses and other current assets                                          2,176,272              867,492
   Net current assets of discontinued operations                                              -              773,185
                                                                                ---------------      ---------------  
           Total current assets                                                      14,444,560           17,590,719

PROPERTY AND EQUIPMENT, net                                                           6,675,393            4,844,577

INTANGIBLES AND OTHER ASSETS, net                                                     1,278,381              774,306

NET NON-CURRENT ASSETS OF DISCONTINUED OPERATIONS                                    21,405,005           22,737,517
                                                                                ---------------      ---------------  

           Total assets                                                         $    43,803,339      $    45,947,119
                                                                                ===============      ===============

                                        LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                             $     6,536,324      $     4,304,993
   Accrued liabilities                                                                6,508,422            2,885,421
   Construction contract loss reserves                                                6,063,127            6,755,654
   Billings in excess of costs and estimated earnings on uncompleted
     Contracts                                                                        6,784,273            6,034,540
   Deferred revenue                                                                     964,676              659,816
   Current portion of notes payable and capital leases                               15,587,586            9,392,487
   Net current liabilities of discontinued operations                                 1,362,206                    -
                                                                                ---------------      ---------------  
           Total current liabilities                                                 43,806,614           30,032,911
                                                                                ---------------      ---------------  
NOTES PAYABLE AND CAPITAL LEASES, net of current portion                              3,270,262            2,352,913
                                                                                ---------------      ---------------  

COMMITMENTS AND CONTINGENCIES (Note 4)

SHAREHOLDERS' EQUITY:
   Preferred stock, $.01 par value, 20,000,000 shares authorized,
     no shares issued and outstanding                                                         -                    -
   Common stock-
     Class A, $.01 par value, 70,000,000 shares authorized, 2,744,962
       shares issued and outstanding                                                     27,450               27,450
     Class B, $.01 par value, 10,000,000 shares authorized, 2,760,000
       shares issued and outstanding                                                     27,600               27,600
   Additional paid-in capital                                                        40,856,943           40,856,943
   Accumulated deficit                                                              (44,185,530)         (27,350,698)
                                                                                ---------------      ---------------  
           Total shareholders' equity                                                (3,273,537)          13,561,295
                                                                                ---------------      ---------------  
           Total liabilities and shareholders' equity                           $    43,803,339      $    45,947,119
                                                                                ===============      ===============
</TABLE>

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

                                       3
<PAGE>


                             GOLDEN BEAR GOLF, INC.

           CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                FOR THE THREE MONTHS ENDED              FOR THE SIX MONTHS ENDED
                                                         JUNE 30,                               JUNE 30,
                                             ----------------------------------     ---------------------------------
                                                  1998               1997                1998              1997
                                             ---------------    ---------------     ---------------   ---------------
<S>                                          <C>                <C>                 <C>               <C>           
REVENUES:
   Consumer Division-
     Golf instruction revenues               $    2,208,717     $    1,984,959      $    4,102,641    $    3,177,470
     Licensing and other revenues                   972,295          1,215,177           1,856,917         1,942,350
     Income from operations of JNAI                  82,771            338,590             191,685           744,514
     Related party commissions and fees              26,958            518,584             120,583         1,035,477
                                             --------------     --------------      --------------    --------------
       Total Consumer Division                    3,290,741          4,057,310           6,271,826         6,899,811

   Construction Division                         18,625,865         12,929,712          26,971,336        14,200,210
                                             --------------     --------------      --------------    --------------
       Total revenues                            21,916,606         16,987,022          33,243,162        21,100,021
                                             --------------     --------------      --------------    --------------

OPERATING COSTS AND EXPENSES:
   Construction and shaping costs                20,935,022         11,889,210          33,009,488        13,471,352
   Operating expenses                             6,256,029          2,792,823           9,421,189         5,270,120
   Corporate administration                         753,109            944,726           1,780,749         2,057,760
   Depreciation and amortization                    467,310            120,695             770,730           191,563
                                             --------------     --------------      --------------    --------------
       Total operating costs and expenses        28,411,470         15,747,454          44,982,156        20,990,795
                                             --------------     --------------      --------------    --------------

           Operating income (loss)               (6,494,864)         1,239,568         (11,738,994)          109,226
                                             --------------     --------------      --------------    --------------


OTHER INCOME (EXPENSE):
   Interest income                                   44,120             28,361              76,102            85,463
   Interest expense                                (355,408)           (40,012)           (577,199)          (61,632)
   Other                                           (128,067)           (50,000)           (254,080)          (29,220)
                                             --------------     --------------      --------------    --------------
       Total other expense                         (439,355)           (61,651)           (755,177)           (5,389)
                                             --------------     --------------      --------------    --------------
       Income (loss) from continuing
          operations before income taxes         (6,934,219)         1,177,917         (12,494,171)          103,837

PROVISION (BENEFIT) FOR
   INCOME TAXES                                     236,379            344,217             285,907           (43,172)
                                             --------------     --------------      --------------    --------------
       Income (loss) from continuing
          operations                             (7,170,598)           833,700         (12,780,078)          147,009

Loss from discontinued operations                (2,405,275)          (830,390)         (4,054,754)       (1,746,341)
                                             --------------     --------------      --------------    --------------
       Net income (loss)                     $   (9,575,873)    $        3,310      $  (16,834,832)   $   (1,599,332)
                                             ==============     ==============      ==============    ============== 

EARNINGS PER SHARE - BASIC
   AND DILUTED:
Income (loss) from continuing operations     $        (1.30)    $         0.15      $        (2.32)   $         0.03
Loss from discontinued operations                     (0.44)             (0.15)              (0.74)            (0.32)
                                             --------------     --------------      --------------    --------------
       Net income (loss) per share           $        (1.74)    $         0.00      $        (3.06)   $        (0.29)
                                             ==============     ==============      ==============    ============== 

Weighted average common shares
   outstanding                                    5,504,962          5,504,962           5,504,962         5,505,437
                                             ==============     ==============      ==============    ============== 
</TABLE>

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


                                       4
<PAGE>



                             GOLDEN BEAR GOLF, INC.

           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                        FOR THE SIX MONTHS ENDED
                                                                                                JUNE 30,
                                                                                    ----------------------------------
                                                                                         1998               1997
                                                                                    ---------------    ---------------
<S>                                                                                 <C>                <C>        
CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING
   OPERATIONS:
   Net Loss                                                                         $  (16,834,832)    $   (1,599,332)
   Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                         770,730            191,563
     Loss from discontinued operations                                                   4,054,754          1,746,341
     Provision for uncollectable accounts                                                        -             40,250
     Provision for loss on construction contracts                                         (692,527)                 -
     Loss on disposal of property and equipment                                            126,219             53,350
     Changes in assets and liabilities:
       Accounts receivable                                                               2,687,431         (4,158,642)
       Due from International                                                               98,908            438,869
       Costs and estimated earnings in excess of billings
          on uncompleted contracts                                                          71,548            273,252
       Prepaid expenses and other current assets                                        (1,308,780)          (648,992)
       Intangibles and other assets                                                       (631,434)        (1,206,233)
       Accounts payable                                                                  2,231,331           (881,130)
       Accrued liabilities                                                               3,623,001          2,373,158
       Billings in excess of costs and estimated earnings on uncompleted contracts         749,733            570,301
       Deferred revenue                                                                    304,860            521,954
       Net cash provided by (used in) operating activities of discontinued
       operations                                                                         (868,965)         4,774,392
                                                                                    --------------     -------------- 

           Net cash used in operating activities                                       (5,618,023)          2,489,101
                                                                                    --------------     -------------- 

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures, net                                                              (436,905)          (617,209)
   Net cash (used in) investing activities of discontinued operations                     (347,959)        (5,911,357)
                                                                                    --------------     -------------- 

           Net cash used in investing activities                                          (784,864)        (6,528,566)
                                                                                    --------------     -------------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from short-term credit facility                                              5,000,000                  -
   Proceeds from revolving credit facilities, net                                          413,000            190,174
   Payments on notes payable and capital leases                                           (464,053)           (83,788)
   Proceeds from exercise of stock options                                                       -             50,400
   Repurchase and retirement of common stock                                                     -            (43,813)
   Net cash provided by (used in) financing activities of discontinued operations          630,073           (158,808)
                                                                                    --------------     -------------- 

           Net cash provided by (used in) financing activities                           5,579,020            (45,835)
                                                                                    --------------     -------------- 

           Net decrease in cash and cash equivalents                                      (823,867)        (4,085,300)

CASH AND CASH EQUIVALENTS, beginning of period                                           1,826,033          6,811,046
                                                                                    --------------     -------------- 

CASH AND CASH EQUIVALENTS, end of period                                            $    1,002,166     $    2,725,746
                                                                                    ==============     ============== 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
      Acquisitions of equipment and furniture accounted for as capital leases       $            -     $    1,163,145
      Notes payable issued in connection with the acquisition of equipment                 503,921             43,468
      Discontinued Operations:
       Acquisitions of equipment accounted for as capital leases                           240,300                  -
       Notes payable issued in connection with the acquisition of golf centers                   -          2,899,000
</TABLE>

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


                                       5
<PAGE>


                             GOLDEN BEAR GOLF, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

The accompanying unaudited Consolidated Condensed Financial Statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the audited Consolidated
Financial Statements and Notes thereto included in Golden Bear Golf, Inc.'s (the
"Company") Annual Report on Form 10-K/A for the fiscal year ended December 31,
1997, as filed with the Securities and Exchange Commission.

The results of operations and cash flows for the three and six-month periods
ended June 30, 1998 are not necessarily indicative of the results of operations
or cash flows which may be reported for the remainder of fiscal 1998.

In order to maintain consistency and comparability between periods presented,
certain amounts have been reclassified from the previously reported financial
statements in order to conform with the financial statement presentation of the
current period. As part of an organizational restructuring, the operations and
financial activity associated with the Company's former Golf and Marketing
Divisions have been consolidated into a new Consumer Division. In addition, the
Company sold its golf centers operations pursuant to a stock sale that closed
subsequent to June 30, 1998. See Note 7. Accordingly, the Company's golf centers
operations have been reclassified in the accompanying Consolidated Condensed
Financial Statements to reflect discontinued operations.

INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". Accordingly, deferred income taxes have been
provided to show the effect of temporary differences between the tax basis of
assets and liabilities and their reported amounts in the financial statements.
The Company files a consolidated Federal income tax return which includes the
operations of the Company and its subsidiaries. Prior to the reorganization of
the Company on August 1, 1996, the respective entities comprising the current
Company were S Corporations for Federal income tax reporting purposes, and
therefore not subject to Federal income taxes.

A valuation allowance was established for the Company's net deferred income tax
assets as of June 30, 1998 and December 31, 1997 as management believes the
future realization of such deferred tax assets is not more likely than not.

EARNINGS PER SHARE

Effective December 15, 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share," which among other changes, requires that basic earnings per share be
computed without regard to any outstanding common equivalent shares. Earnings
per share in the accompanying Consolidated Condensed Statements of Operations is
computed by dividing the net loss by the weighted average common shares
outstanding for the respective periods presented. Diluted earnings per share as
computed under SFAS No. 128 includes the effects of common stock equivalents,
including the dilutive effect of all outstanding stock options using the
treasury stock method. Diluted earnings per share is the same as basic earnings


                                       6
<PAGE>

per share in the accompanying Consolidated Condensed Statements of Operations.
Options to purchase 565,725 and 380,538 shares of common stock were not included
in computing earnings per share for the periods ended June 30, 1998 and 1997,
respectively, because their effects were anti-dilutive for the respective
periods.

COMPREHENSIVE INCOME

Required for 1998 financial statements, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income" which establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. This statement requires that an enterprise (i) classify
items of other comprehensive income by their nature in financial statements and
(ii) display the accumulated balance of other comprehensive income separately
from retained deficit and additional paid-in capital in the equity section of
the balance sheets. Comprehensive income is defined as the change in equity
during the financial reporting period of a business enterprise resulting from
non-owner sources. During the three and six-month periods ended June 30, 1998
and 1997, the Company did not have any changes in its equity resulting from such
non-owner sources, and accordingly, comprehensive income as set forth by SFAS
No. 130 was equal to the net loss amounts presented for the respective periods
in the accompanying Consolidated Condensed Statements of Operations.

SEGMENT REPORTING

Pursuant to the requirements of SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" which is required to be adopted in fiscal
1998, a public business enterprise must report financial and other descriptive
information about its reportable operating segments. Required disclosures
include, among other things, a measure of segment profit or loss, certain
specific revenue and expense items, and segment assets. Information with respect
to the Company's two reportable segments, comprised of the Consumer Division and
Construction Division, is included herein in Note 8.

DERIVATIVE FINANCIAL INSTRUMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. SFAS
133 requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The accounting for changes in fair value depends on the intended
use of the derivative and the resulting designation. This statement is effective
for all fiscal quarters of fiscal years beginning after June 15, 1999. The
Company believes the adoption of SFAS No. 133 will not have a material effect on
the Company's financial condition or results of operations.

2.  COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Costs and estimated earnings on uncompleted construction and shaping contracts
consist of the following for contracts recognized under the
percentage-of-completion method of accounting:

<TABLE>
<CAPTION>
                                                                JUNE 30,            DECEMBER 31,
                                                                  1998                  1997
                                                             ----------------     -----------------
<S>                                                          <C>                  <C>            
      Costs incurred on uncompleted contracts                $    45,436,371      $    23,824,133
      Estimated loss                                              (7,051,238)          (1,528,973)
                                                             ---------------      ---------------  
                                                                  38,385,133           22,295,160
      Less billings to date                                      (44,515,174)         (27,603,920)
                                                             ---------------      ---------------  

                                                             $    (6,130,041)     $    (5,308,760)
                                                             ===============      ===============  
</TABLE>



                                       7
<PAGE>



The amounts associated with costs and estimated earnings on uncompleted
construction and shaping costs are included in the accompanying Consolidated
Condensed Balance Sheets under the following captions:

<TABLE>
<CAPTION>
                                                                JUNE 30,            DECEMBER 31,
                                                                  1998                  1997
                                                             ----------------     -----------------
<S>                                                          <C>                  <C>            
      Costs and estimated earnings in excess of
        billings on uncompleted contracts                    $       654,232      $       725,780

      Billings in excess of costs and estimated

        earnings on uncompleted contracts                         (6,784,273)          (6,034,540)
                                                             ---------------      ---------------  

                                                             $    (6,130,041)     $    (5,308,760)
                                                             ===============      ===============  
</TABLE>

The Company has recorded a construction contract loss reserve totaling
$6,063,127 and $6,755,654 in the accompanying consolidated condensed balance
sheets as of June 30, 1998 and December 31, 1997, respectively, which represents
the balance of estimated losses on certain uncompleted contracts for which
management of the Company believes losses are probable.

3.  NOTES PAYABLE AND CAPITAL LEASES

Notes payable and capital leases consist of the following:

<TABLE>
<CAPTION>
                                                                                    JUNE 30,           DECEMBER 31,
                                                                                      1998                 1997
                                                                                 ----------------     ----------------
<S>                                                                              <C>                  <C>           
      Capital lease obligations secured by equipment and furniture,
         maturing through January, 2003(1)                                       $   3,185,896        $    1,804,047

      Revolving credit facility with a bank, with interest at prime payable
         quarterly, matures in September, 1999(2)                                    9,285,410             8,872,410
 
      Short-term credit facility with a bank, with interest at greater of prime
         or Federal Funds rate + 1/2% payable at maturity in August, 1998(3)         5,000,000                     -

      Notes payable, with principal and interest ranging from 8 3/4% to
         10 3/4% payable monthly, maturing through December, 2002(4)                 1,386,542             1,068,943
                                                                                 -------------        --------------  

                                                                                    18,857,848            11,745,400
      Less current portion                                                         (15,501,609)           (9,392,487)
                                                                                 -------------        --------------   

                                                                                 $   3,356,239        $    2,352,913
                                                                                 =============        ==============
</TABLE>

(1)  The Company acquired certain construction equipment, computer equipment,
     office furniture and phone systems equipment by entering into financing
     arrangements that were accounted for as capital leases. Included in such
     capital lease obligations are additions during the six months ended June
     30, 1998 of approximately $1.1 million to finance the acquisition of
     certain construction equipment. These capital lease obligations have terms
     of up to five years and require monthly payments representing principal and
     interest at rates ranging from 8.5% to 12.7%.

(2)  In September 1997, the Company entered into a definitive credit agreement
     with a bank for a $10 million revolving credit facility that has a term of
     two years. Outstanding borrowings, which bear interest at the prime rate
     payable quarterly, are secured by Company assets excluding various golf
     center properties and certain other assets pledged to secure other
     long-term debt. All amounts outstanding under this credit facility were
     repaid in full in July 1998, and the credit facility was terminated.
     Accordingly, all amounts related to the revolving credit facility are
     classified as current in the accompanying June 30, 1998 and December 31,
     1997 balance sheets.


                                       8
<PAGE>

(3)  On February 27, 1998, the Company entered into a second definitive credit
     agreement with the financial institution that previously in September 1997
     had provided the $10 million revolving credit facility to the Company. The
     new credit facility provided for additional short-term borrowings of up to
     $5 million to be used to finance the working capital requirements of the
     Company's wholly-owned construction subsidiary, Paragon Construction
     International, Inc. ("Paragon"). All amounts outstanding under this credit
     facility were repaid in full in July 1998, and the credit facility was
     terminated. Accordingly, all amounts related to the credit facility are
     classified as a current liability in the accompanying June 30, 1998 balance
     sheet.

(4)  The Company financed the purchase of certain construction equipment and
     vehicles by issuing notes payable secured by the assets purchased. Such
     notes payable have terms of up to five years and require monthly payments
     representing principal and interest at rates ranging from 8 3/4% to 10
     3/4%.

4.  COMMITMENTS AND CONTINGENCIES

CLAIMS AND ASSESSMENTS

In August 1995, Paragon brought an arbitration claim against a customer for
breach of contract. Paragon alleges it has properly completed the construction
relating to the renovation of the customer's golf course and is seeking final
payment of retainage and related amounts due, together with additional damages,
totaling approximately $350,000. Simultaneous to this claim of arbitration, the
customer filed a counterclaim of arbitration against Paragon for alleged
construction defects in the renovation of its golf course. Although the customer
recently claimed its damages were in excess of $1.2 million, the initial claim
submitted by the customer in arbitration was for $750,000. The ultimate outcome
of this matter is not determinable at this time; accordingly, no provision for
loss regarding this matter had been established at June 30, 1998.

Paragon's construction contracts generally provide for warranties that obligate
Paragon to remedy certain construction defects that may arise in the ordinary
course of providing such construction services. Such warranties, which are
customary in the construction industry are usually effective for a period of one
year from the completion date of the respective projects. The Company's
management does not expect the costs associated with corrective action or
penalties incurred pursuant to these warranties, if any, to have a material
impact on its results of operations.

On July 28, 1998, individuals purporting to be shareholders of the Company filed
a class action lawsuit in the United States District Court for the Southern
District of Florida. The lawsuit was filed by the plaintiff individually and on
behalf of all others who purchased common stock of the Company from August 1,
1996 through July 24, 1998, excluding defendants and certain other related
persons or entities, against the Company and certain of the Company's officers
and directors. The complaint alleges that during the purported class period, the
Company violated applicable sections of the Securities Exchange Act of 1934 by
making misrepresentations or omissions of material fact in publicly filed
documents and in other alleged public statements relating to the Company's
financial condition and that of its wholly-owned subsidiary, Paragon
Construction International, Inc. The plaintiff is seeking an unspecified amount
of damages, interest, costs and attorneys' fees. Since the filing of this
matter, seven additional lawsuits have been filed against the Company and
certain of its present and former officers and directors. Six of these lawsuits
were filed in the United States District Court for the Eastern District of New
York. The allegations in these additional lawsuits are essentially the same as
those contained in the initial lawsuit and two lawsuits have asserted claims
under the Securities Act of 1933.

The Company intends to vigorously defend each of the foregoing lawsuits, but
their respective outcomes cannot be predicted. Any of such lawsuits, if
determined adversely to the Company, could have a material adverse effect of the
Company's financial position and results of operations. The Company's ultimate
liability with respect to any of the foregoing proceedings is not presently
determinable.


                                       9
<PAGE>



The Securities and Exchange Commission is conducting a private investigation to
determine whether the Company or certain of its current or former officers,
director and employees have engaged in conduct in violation of certain
provisions of the Securities Exchange Act of 1934 and the rules and regulations
thereunder. The Company believes that such investigation is focused principally
on the recognition of additional costs and losses associated with the review of
Paragon's construction projects and the Company's public statements and
accounting systems with respect thereto. The Company is cooperating in such
investigation.

ACCUMULATED DEFICIT AND LIQUIDITY

The Company has incurred operating losses from continuing operations which has
resulted in an accumulated deficit of approximately $44.2 million and a working
capital deficiency of approximately $29.4 million at June 30, 1998. The Company
incurred a net loss of approximately $17,000,000 (unaudited) for the six months
ended June 30, 1998 and expects such losses to continue during the remainder of
fiscal 1998. Management's plans in regard to these matters include obtaining
funds from the sale of Golden Bear Golf Centers, Inc. to an unrelated party (See
Note 7), as well as reducing on-going expenses at Paragon. In connection with
Paragon, the Company is negotiating with certain project owners, as well as
construction vendors and subcontractors, to expedite the completion of those
projects and to minimize the cost associated with such completion.

Future working capital requirements are dependent on the Company's ability to
complete the sale of Golden Bear Golf Centers which closed on July 21, 1998, to
successfully complete negotiations regarding Paragon as discussed in the
preceding paragraph and to achieve and maintain profitable operations in the
future. Although there can be no assurances, management believes the Company
will be successful in realizing these objectives, and, accordingly, will
generate sufficient cash flow from operations to rectify the Company's current
working capital deficiency and to meet future working capital requirements. To
the extent that capital requirements exceed available capital or the Company is
unable to successfully complete negotiations regarding Paragon, the Company will
need to seek alternative sources of financing to fund its operations. The
Company has no existing credit facility and no assurance can be given that
alternative financing will be available, if at all, in a timely manner, on
favorable terms. If the Company is unable to obtain satisfactory alternative
financing, the Company may be required to delay or reduce its proposed
expenditures or sell additional assets in order to meet its future obligations.

5.  OPERATIONS OF JNAI

The apparel licensing activities of the Company in the Far East are conducted
through Jack Nicklaus Apparel International ("JNAI") and its various
partnerships. The Company serves as a 50% general partner and is generally
entitled to receive 50% of the cash distributions of the various partnerships'
operations. The Company's investment in JNAI is recorded on the equity method.

The following is a condensed summary of the operating results of JNAI:

<TABLE>
<CAPTION>
                                              FOR THE THREE MONTHS ENDED              FOR THE SIX MONTHS ENDED
                                                       JUNE 30,                               JUNE 30,
                                           ----------------------------------     ----------------------------------
                                                1998               1997                1998               1997
                                           ---------------     --------------     ---------------    ---------------
<S>                                        <C>                 <C>                <C>                <C>           
    Licensing revenues                     $      299,703      $     865,826      $      679,548     $    1,631,076
    Operating expenses                            117,767            177,645             232,722            260,913
    Provision (benefit) for income taxes           16,393             10,996              63,455           (118,870)
                                           ==============      =============      ==============     ==============
    Net income                             $      165,543      $     677,185      $      383,371     $    1,489,033
                                           ==============      =============      ==============     ==============
</TABLE>


                                       10
<PAGE>


6.  RELATED PARTY TRANSACTIONS

Pursuant to a design services marketing agreement, the Company marketed golf
course designs worldwide for Nicklaus Design, the golf course design division of
Golden Bear International, Inc. ("International"), a privately owned company
controlled by Jack Nicklaus. As part of an organizational restructuring to
refocus on its core businesses, the Company terminated the design services
marketing agreement effective January 1, 1998. Concurrent with the termination
of the design services agreement, International assumed certain financial
obligations of the Company to employees and third parties formerly involved in
the design marketing function, and the Company obtained a ten year exclusive
commitment from International to continue the marketing of Paragon's golf course
construction services to Nicklaus Design clients and prospects. The arrangement
between the parties will permit Paragon to utilize the services of Nicklaus
Design's sales staff as needed on an independent contract basis and Paragon has
agreed to pay International a commission equal to five percent of the projected
gross profit margin negotiated by Paragon in golf course construction contracts
procured by Nicklaus Design. The Company and Paragon will also be entitled to
receive finder's fees from International for business leads generated by them
which result in definitive golf course contracts for Nicklaus Design.

Under the previous design services marketing agreement, the Company generally
had been entitled to 10% of the gross design fees collected by Nicklaus Design
for its role in marketing such design services. At December 31, 1997, the
Company had a net receivable balance due from International in the amount of
$184,502, substantially all of which was comprised of commissions payable under
the former design services marketing agreement. The Company had earned
commissions in this capacity of $752,997 during the six months ended June 30,
1997.

Pursuant to the terms of a personal services management agreement, International
and Mr. Nicklaus have retained the Company as the exclusive manager and
representative to market the personal endorsement services of Mr. Nicklaus,
pursuant to which the Company is generally entitled to approximately 20% to 30%
of the personal endorsement fees received by Mr. Nicklaus. During the six months
ended June 30, 1998 and 1997, the Company earned management fees attributable to
providing such services of $120,583 and $282,500, respectively.

The Company has an office staff sharing agreement with International which
provides for the sharing of the services of certain specifically identified
office staff and personnel that can effectively serve the needs of both
organizations. During the first six months of fiscal 1998 and 1997, payroll and
related costs associated with such shared employees totaling $55,500 and
$290,400, respectively, were allocated to International. The Company also
previously subleased its corporate office facilities from International through
July 31, 1997. The rent expense incurred under such sublease for the first six
months of fiscal 1997 was $305,655. Effective August 1, 1997, the Company
entered into a separate lease agreement for its corporate office facilities
directly with the owner of such facilities. In addition, the Company had
maintained certain office space in Singapore through October 31, 1997 that was
shared with International. During the six months ended June 30, 1997, a total of
$164,000 of costs associated with maintaining such facilities was allocated to
International. Effective November 1, 1997, the Company relocated its office
facilities in Singapore and entered into a lease for its new facilities that are
no longer shared with International. As of June 30, 1998, the Company had a net
balance due from International of $85,594, comprised primarily of billings for
certain golf course maintenance consulting services provided on behalf of
Paragon.

In the ordinary course of business, the Company purchases golf equipment
manufactured by Nicklaus Golf Equipment Company, L.C., a privately owned company
in which Mr. Nicklaus has a 50% equity interest. Such equipment is purchased
primarily for resale in the pro shops of the Company's golf centers and for
promotional programs associated with the Company's Nicklaus Flick Golf Schools.
During the six months ended June 30, 1998 and 1997, the Company purchased such
golf equipment at a cost of $130,800 and $11,956, respectively.

During the six months ended June 30, 1998 the Company paid Executive Sports
International, a privately held company owned in part by a member of the
Nicklaus family, $75,847 for certain printing and graphics services.


                                       11
<PAGE>



7. DISCONTINUED OPERATIONS

On July 20, 1998, the Company sold all of the issued and outstanding stock of
its Golden Bear Golf Centers, Inc. ("Golf Centers") subsidiary to an unrelated
party for $32 million less the outstanding balance of any capital lease
obligations and purchase money indebtedness remaining in connection with the
Company's initial purchase of the Company's golf center facilities. The purchase
price approximates the book value of the Company's investment in Golf Centers
and the Company does not expect to incur any significant gain or loss on the
sale. Golf Centers was incorporated in December 1992 to offer franchise
opportunities for the operation of golf instruction and practice facilities that
consist of practice stations and the teaching techniques developed by Jack
Nicklaus, Jim Flick and the International staff. In connection with the
franchise program, Golf Centers entered into various agreements with franchisees
including, but not limited to, development and license agreements which provided
for the establishment and operation of golf centers and use of various
trademarks, trade names and associated logos and symbols. In addition, Golf
Centers also owned and operated its own golf instruction and practice facilities
at numerous locations in several states.

Prior to the closing of the sale, Golf Centers distributed certain assets and
liabilities to the Company. The Company has classified the amounts related to
Golf Centers as discontinued operations and has included its results of
operations as "Loss from discontinued operations" in the accompanying
consolidated condensed statements of operations. The loss from operations of
Golf Centers were as follows for each of the periods presented:

<TABLE>
<CAPTION>
                                              FOR THE THREE MONTHS ENDED              FOR THE SIX MONTHS ENDED
                                                       JUNE 30,                               JUNE 30,
                                           ----------------------------------     ----------------------------------
                                                1998               1997                1998               1997
                                           ---------------     --------------     ---------------    ---------------
<S>                                        <C>                 <C>                <C>                <C>           
   Loss from discontinued operations       $    2,405,275      $     830,390      $    4,054,754     $    1,746,341
</TABLE>

The net assets of the discontinued operations at June 30, 1998 and December 31,
1997, as presented in the accompanying consolidated condensed balance sheets,
are as follows:

<TABLE>
<CAPTION>
                                                            JUNE 30, 1998            DECEMBER 31,1997
                                                            -------------            ----------------
<S>                                                        <C>                      <C>          
Current assets                                             $   3,407,349            $   3,812,770
Property and equipment, net                                   23,136,768               23,510,655
Other assets                                                   6,610,311                6,777,646
                                                           -------------            -------------
     Total assets                                             33,154,428               34,101,071
                                                           -------------            -------------

Current liabilities                                            4,769,555                  691,858
Other liabilities                                              8,342,074                7,550,784
                                                           -------------            -------------
     Total liabilities                                        13,111,629                8,242,642
                                                           -------------            -------------

     Net assets of discontinued operations                 $  20,042,799            $  25,858,429
                                                           =============            =============
</TABLE>

8.  SEGMENT REPORTING

The Company's revenue generating operations are conducted through two divisions,
comprised of the Consumer Division and the Construction Division. The Consumer
Division primarily includes golf instruction activities along with the
development of the licensed products and marketing endorsement relationships.
The Construction Division reflects the operating activities of Paragon, which is
primarily engaged in the construction and shaping of golf courses.



                                       12
<PAGE>


The revenues, operating income (loss), capital expenditures, and depreciation
and amortization of the respective segments are set forth below.

<TABLE>
<CAPTION>
                                             FOR THE THREE MONTHS ENDED                  FOR THE SIX MONTHS ENDED
                                                      JUNE 30,                                   JUNE 30,
                                         ------------------------------------     ----------------------------------------
                                              1998                1997                 1998                  1997
                                         ---------------     ----------------     ----------------    --------------------
<S>                                      <C>                 <C>                  <C>                 <C>           
      Revenues:
         Consumer division               $    3,290,741      $    4,057,310       $    6,271,826      $    6,899,811
         Construction division               18,625,865          12,929,712           26,971,336          14,200,210
                                         --------------      --------------       --------------      --------------

                                         $   21,916,606      $   16,987,022       $   33,243,162      $   21,100,021
                                         ==============      ==============       ==============      ==============


      Operating income (loss):
         Consumer division               $    1,379,451      $    1,811,874       $    2,133,648      $    2,927,742
         Construction division              (7,027,156)             491,556          (11,903,793)           (604,120)
         Corporate administration             (847,159)          (1,063,862)          (1,968,849)         (2,214,396)
                                         --------------      --------------       --------------      --------------

                                         $   (6,494,864)     $    1,239,568       $  (11,738,994)     $      109,226
                                         ==============      ==============       ==============      ==============
      Capital expenditures:
         Consumer division               $        2,094      $        7,475       $       44,203      $       51,612
         Construction division                   23,037              70,249              282,911             105,499
         Corporate administration                93,245             447,347              109,791             460,098
                                         --------------      --------------       --------------      --------------

                                         $      118,376      $      525,071       $      436,905      $      617,209
                                         ==============      ==============       ==============      ==============

      Depreciation and amortization:
         Consumer division               $       20,838      $       24,021       $       41,676      $       42,852
         Construction division                  352,422              12,716              540,954              27,253
         Corporate administration                94,050              83,958              188,100             121,458
                                         --------------      --------------       --------------      --------------

                                         $      467,310      $     120,695        $      770,730      $      191,563
                                         ==============      =============        ==============      ==============
</TABLE>

Information with respect to identifiable assets of the respective segments is
set forth below.

<TABLE>
<CAPTION>
                                                                JUNE 30,         DECEMBER 31,
                                                                  1998               1997
                                                             ---------------    ---------------
<S>                                                          <C>                <C>           
      Identifiable assets:
         Consumer Division                                   $    1,341,803     $    1,434,442
         Construction Division                                   18,139,829         17,584,685
         Corporate administration                                 2,916,702          3,417,290
         Net assets of discontinued operations                   21,405,005         23,510,702
                                                             --------------     -------------- 
                                                             $   43,803,339     $   45,947,119
                                                             ==============     ============== 
</TABLE>

9.  SUBSEQUENT EVENT

During July 1998, the Company repaid in full the outstanding balance due under
its revolving and short-term credit agreements, and the agreements were
terminated. See Note 3. Accordingly, all amounts outstanding at June 30, 1998
and December 31, 1997 are classified as current liabilities in the accompanying
balance sheets.



                                       13
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

As part of an organizational restructuring to refocus on its core businesses,
the operations and financial activity associated with the Company's former Golf
and Marketing Divisions have been consolidated into a new Consumer Division.
Accordingly, the Company now operates its business through two divisions
comprised of the Consumer Division and the Construction Division. The Consumer
Division is involved in the licensing and franchising of NICKLAUS, JACK NICKLAUS
and GOLDEN BEAR branded products throughout the world, the operation of the
NICKLAUS FLICK GOLF SCHOOLS and the generation of marketing fees related to Jack
Nicklaus' personal endorsements. The Construction Division provides technical
construction services principally in connection with the construction and
renovation of golf courses and resort-related facilities.

Under the terms of a design services marketing agreement, the Company had
marketed golf course designs worldwide for Nicklaus Design. However, as part of
its organizational restructuring, the Company terminated the design services
marketing agreement effective January 1, 1998 and entered into a ten year
exclusive commitment with International to market Paragon's golf course
construction services to Nicklaus Design clients and prospects. The arrangement
between the parties will permit Paragon to utilize the services of Nicklaus
Design's sales staff as needed on an independent contract basis and Paragon will
be compensated by Nicklaus Design for any design leads generated through
Paragon's activities.

In connection with the departure of certain members of Paragon's senior
management during 1998, the Company conducted a comprehensive review of
Paragon's construction projects, focusing on the status of the projects, the
costs required to fully complete the jobs and the anticipated profitability or
losses of such projects. Attention was also directed toward determining contract
requirements, including known and unknown amendments and change orders, and the
related estimated anticipated costs of fulfilling those requirements. In the
review, the Company found evidence that former management of Paragon falsified
records, underbid construction projects, misrepresented the status of
construction projects and made false statements about Paragon's revenues, costs
and profits to the Company's executive management and Board of Directors. Based
on the results of the review, it was necessary to recognize costs and losses
associated with certain projects based on cost estimates related to uncompleted
contracts. In connection with the review, the Company recorded construction
contract loss reserves of $6,063,127 and $6,755,654 as of June 30, 1998 and
December 31, 1997, respectively.

As a result of the aforementioned review and restatement, numerous purported
class action lawsuits have been filed against the Company and certain current
and former officers and directors of the Company, asserting various claims under
the federal securities laws. While it is not feasible to predict or determine
the outcome of these proceedings or to estimate the amounts or potential range
of loss with respect to these matters, management believes that an adverse
outcome with respect to such proceedings could have a material impact on the
financial condition, results of operations and cash flows of the Company.

The Company has taken steps to stabilize Paragon's operations and to reduce
on-going expenses at Paragon. The Company has closed its offices in Atlanta,
Phoenix and in Manila, Philippines, and has reduced its field and corporate
personnel. The Company intends to continue to be involved in golf course
construction on some basis and is presently in discussions with a third party to
explore a range of alternatives.

The Securities and Exchange Commission is conducting a private investigation to
determine whether the Company or certain of its current or former officers,
director and employees have engaged in conduct in violation of certain
provisions of the Securities Exchange Act of 1934 and the rules and regulations
thereunder. The Company believes that such investigation is focused principally
on the recognition of additional costs and losses associated with the review of
Paragon's construction projects and the Company's public statements and
accounting systems with respect thereto. The Company is cooperating in such
investigation.


                                       14
<PAGE>

DISCONTINUED OPERATIONS

On July 20, 1998, the Company sold all of the issued and outstanding stock of
it's Golden Bear Golf Centers, Inc. ("Golf Centers") subsidiary to an unrelated
party for approximately $32 million less the outstanding balance of any capital
lease obligations and purchase money indebtedness remaining in connection with
the Company's initial purchase of the Company's golf center facilities. Golf
Centers was incorporated in December 1992 to offer franchise opportunities for
the operation of golf instruction and practice facilities that consist of
practice stations and the teaching techniques developed by Jack Nicklaus, Jim
Flick and the International staff. In connection with the franchise program,
Golf Centers entered into various agreements with franchisees including, but not
limited to, development and license agreements which provided for the
establishment and operation of golf centers and use of various trademarks, trade
names and associated logos and symbols. In addition, Golf Centers also owned and
operated its own golf instruction and practice facilities at numerous locations
in several states.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1997

For the three months ended June 30, 1998, total revenues increased to $21.9
million, up 28.8% compared to revenues of $17.0 million for the comparable
period of 1997.

The $4.9 million increase in total revenues during the current quarterly period
was principally the result of an increase in Construction Division revenues to
$18.6 million from $12.9 million for the second quarter of last year. The low
volume of construction business for the second quarter of last year was the
result of management's decision to curtail such activities pending the
implementation of new systems and the integration of new management. Revenues
attributable to the Consumer Division decreased to $3.3 million for the three
months ended June 30, 1998, reflecting a 19.5% decrease from the comparable
period of the prior year. Such decrease in Consumer Division revenues was due to
a reduction in earnings from the Company's partnership interest in JNAI in the
Far East as well as a reduction in related party commissions and fees.

The Company incurred an operating loss of $6.5 million and an operating income
of $1.2 million during the three months ended June 30, 1998 and 1997,
respectively. The decrease in the operating loss incurred for the current
quarterly period was primarily attributable to the gross profit deficit of $2.3
million contributed by the Construction Division, in contrast to a gross profit
of $1.0 million incurred on the reduced volume of revenues for the comparable
period of the prior year. The increase in the gross profit contribution was
offset in part, by a 79.7% increase in operating expenses which resulted from
the expanded level of operations in the majority of the Company's businesses.

The operating loss incurred for the three months ended June 30, 1998 was also
impacted by an increase in the amount of depreciation and amortization expense,
which increased to $0.5 million during the first quarter of the current year
from $0.1 million for the comparable period of 1997, due primarily to the
addition of equipment used for Paragon's operations. Corporate administration
expenses, which are comprised primarily of personnel-related costs, decreased
slightly to $0.8 million for the current quarterly period from $0.9 million for
the comparable period of the prior year.

Interest expense for the three months ended June 30, 1998 increased to $0.4
million from $.04 million for the three months ended June 30,1997, attributable
primarily to outstanding borrowings under the Company's $10 million credit
facility and $5 million short-term credit facility during the current quarterly
period.



                                       15
<PAGE>


The provision for income taxes reflects effective tax rates of 3.4%, of the
pre-tax loss reported for the three months ended June 30, 1998 and 29.2% of the
pre-tax income reported for the three months ended June 30, 1997. The decrease
in the effective tax rate for the current quarterly period is primarily
attributable to management's determination that the future realization of
deferred tax assets is not more likely than not and as such, a valuation
allowance has been established against the Company's deferred tax assets.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997

For the six months ended June 30, 1998, total revenues increased to $33.2
million, up 57.3% compared to revenues of $21.1 million for the comparable
period of 1997.

The $12.1 million increase in total revenues was principally the result of an
increase in Construction Division revenues to $27.0 million from $14.2 million
for the first six months of 1997. The low volume of construction business for
the first six months of 1997 was the result of management's decision to curtail
such activities pending the implementation of new systems and the integration of
new management in 1997. Revenues attributable to the Consumer Division decreased
to $6.3 million for the six months ended June 30, 1998, reflecting a 8.7%
decrease from the comparable period of the prior year. Such decrease in Consumer
Division revenues was due to a reduction in earnings from the Company's
partnership interest in JNAI in the Far East as well as a reduction in related
party commissions and fees.

The Company incurred an operating loss of $11.7 million and operating income of
$0.1 million during the six months ended June 30, 1998 and 1997, respectively.
The operating loss incurred for the current period was primarily attributable to
significant losses incurred on construction projects related to job cost
overruns.

The operating loss incurred for the six months ended June 30, 1998 was also
impacted by an increase in the amount of depreciation and amortization expense,
which increased to $0.8 million during the first half of the current year from
$0.2 million for the comparable period of 1997, due primarily to an increase
from the addition of equipment used for Paragon's operations. Corporate
administration expenses, which are comprised primarily of personnel-related
costs, decreased slightly to $1.8 million for the first half of the current year
from $2.1 million for the comparable period of the prior year.

Interest expense for the six months ended June 30, 1998 increased to $0.6
million from $0.1 million for the first six months of 1997, attributable
primarily to outstanding borrowings under the Company's $10 million credit
facility and $5 million short-term credit facility during the current period.

The provision for income taxes recorded for the six months ended June 30, 1998
reflects an effective tax rate of 2.3% of the pre-tax losses reported for the
period, and the benefit for income taxes recorded for the six months ended June
30, 1997 reflects an effective tax rate of 41.6% of the pre-tax income reported
for the period. The decrease in the effective tax rate for the current six month
period is primarily attributable to management's determination that the future
realization of deferred tax assets is not more likely than not and as such, a
valuation allowance has been established against the Company's deferred tax
assets.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1998 and December 31, 1997, the Company had a working capital
deficit of $29.4 million and $12.4 million, respectively, along with cash and
cash equivalents of $1.0 million and $1.8 million, respectively.

Certain of the Company's working capital requirements are financed by borrowings
under a $10 million revolving credit facility. Borrowings under the facility are
secured by Company assets excluding various golf center properties and certain
other assets pledged to secure other long-term indebtedness. At June 30, 1998
and December 31, 1997, outstanding borrowings under the facility were
approximately $9.3 million and $8.9 million, respectively. The credit agreement
for the facility contains customary conditions and covenants with respect to the
conduct of the Company's business, including dividend payment limitations, and
requires the maintenance of various financial ratios. At June 30, 1998, the
Company was out of compliance with respect to its maintenance of the required
ratio 


                                       16
<PAGE>

of EBITDA to interest expense plus current maturities of debt, as defined in the
credit agreement, for which it obtained a waiver from the financial institution.
During July 1998, all amounts outstanding under this credit facility were repaid
in full, and the credit facility was terminated. Accordingly, all amounts
related to the revolving credit facility are classified as a current liability
in the accompanying balance sheets.

The Company entered into a definitive credit agreement with this same lender on
February 27, 1998 for an additional short-term $5 million credit facility.
Borrowings under the new facility are limited to a percentage of Paragon's
eligible trade receivables and net costs and estimated earnings in excess of
billings on uncompleted construction contracts, subject to certain limitations
and stipulations as set forth in the credit agreement. The new credit agreement
provides for a term of 90 days and as of June 30, 1998, the outstanding balance
of borrowings under the facility was $5 million. Outstanding borrowings are
cross-collateralized with related indebtedness under the $10 million revolving
credit facility previously provided to the Company by this same lender, whereby
all advances payable to such lender are secured by Company assets excluding
various golf center properties and certain other assets pledged to secure other
long-term debt. During July 1998, all amounts outstanding under this credit
facility were repaid in full, and the credit facility was terminated.
Accordingly, all amounts related to the credit facility are classified as a
current liability in the accompanying balance sheets.

The Company has incurred operating losses from continuing operations which has
resulted in an accumulated deficit of approximately $44.2 million and a working
capital deficiency of approximately $29.4 million at June 30, 1998. The Company
incurred a net loss of approximately $17,000,000 (unaudited) for the six months
ended June 30, 1998 and expects such losses to continue during the remainder of
fiscal 1998. Management's plans in regard to these matters include obtaining
funds from the sale of Golf Centers to an unrelated party, as well as reducing
on-going expenses at Paragon. In connection with Paragon, the Company is
negotiating with certain project owners, as well as construction vendors and
subcontractors, to expedite the completion of those projects and to minimize the
cost associated with such completion.

Future working capital requirements are dependent on the Company's ability to
complete the sale of Golden Bear Golf Centers which closed on July 21, 1998, to
successfully complete negotiations regarding Paragon as discussed in the
preceding paragraph and to achieve and maintain profitable operations in the
future. Although there can be no assurances, management believes the Company
will be successful in realizing these objectives, and, accordingly, will
generate sufficient cash flow from operations to rectify the Company's current
working capital deficiency and to meet future working capital requirements. To
the extent that capital requirements exceed available capital or the Company is
unable to successfully complete negotiations regarding Paragon, the Company will
need to seek alternative sources of financing to fund its operations. The
Company has no existing credit facility and no assurance can be given that
alternative financing will be available, if at all, in a timely manner, on
favorable terms. If the Company is unable to obtain satisfactory alternative
financing, the Company may be required to delay or reduce its proposed
expenditures or sell additional assets in order to meet its future obligations.

CURRENCY FLUCTUATIONS

Although substantially all of the Company's contracts are denominated in United
States dollars, fluctuations in the value of foreign currencies relative to the
United States dollar could impact the Company's results of operations. A
substantial portion of the revenues of the Company's overseas licensees are
generated in foreign currencies and accordingly, fluctuations in the value of
these currencies relative to the United States dollar could adversely affect the
Company's profitability. Royalty payments received by the Company or by its JNAI
equity investee relating to foreign licensing arrangements are generally based
on the exchange rate at the time of payment. Although the Company's construction
contracts outside of the United States are generally denominated in United
States dollars, certain payments to local subcontractors and vendors on various
overseas projects are made in the functional currencies of the respective
countries and accordingly, the effective costs to complete certain overseas
projects may increase or decrease as foreign currencies fluctuate relative to
the United States dollar. The Company's JNAI joint venture enters into futures
contracts to hedge its anticipated receipt of certain royalty payments
denominated in Japanese yen. Apart from these futures contracts on the part of
JNAI which were not material to the Company's results of operations, the Company
does not currently engage in hedging activities with respect to currency
fluctuations, but may do so in the future. Furthermore, the Company has
historically engaged in significant business 


                                       17
<PAGE>

activities in Japan and Asia. To the extent that markets in these geographic
areas are volatile and unfavorably impact the Company's customers, such events
could have an adverse effect on the Company's operations in the region going
forward.

YEAR 2000

The Year 2000 issue exists because many computer systems and applications
currently use two-digit fields to designate a year. As the century date change
occurs, date-sensitive systems may recognize the year 2000 as 1900, or not at
all. This inability to properly treat the Year 2000 issue may cause systems to
process critical financial and operational information incorrectly. The Company
has evaluated the modifications required to ensure that its computer systems are
Year 2000 compliant. Such modifications are not anticipated to be significant
and the costs associated with such modifications will be expensed as incurred.
In the opinion of management, the conversions required to comply with the Year
2000 issue are not expected to have a material effect on the Company's results
of operations.

MARKET RISK

The Company is exposed to market risks, including changes in interest rates and
currency exchange rates. Based on the Company's interest rate and foreign
exchange rate exposure at June 30, 1998, a 10% change in the current interest
rate or historical currency rate movements would not have a material effect on
the Company's financial position or results of operations over the remainder of
the current fiscal year.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

This Quarterly Report on Form 10-Q contains forward-looking statements made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995. These forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties, including
but not limited to, to those risks associated with economic conditions generally
and the economy in those areas where the Company has assets and operations
including Asia and Japan; competitive and other factors affecting the Company's
operations, markets, products and services; those risks associated with the
licensing and franchising of golf centers; ;those risks associated with the
performance of Paragon Construction International and stabilization of its
activities, including its ability to obtain new contracts and remain
competitive, its ability to obtain a joint venture partner or other satisfactory
collaborative agreement with a third party, its ability to successfully
negotiate with certain project owners, as well as construction vendors and
subcontractors, regarding the completion of existing projects and the
minimization of costs associated with such completion, risks relating to
estimated contract costs, estimated losses on uncompleted contracts and
estimates regarding the percentage of completion of contracts, and risks
relating to litigation and associated costs arising out of Paragon's activities
and the matters discussed in this report; risks relating to changes in interest
rates and in the availability cost and terms of financing; risks related to the
performance of financial markets; risks related to changes in domestic and
foreign laws, regulations and taxes; risks related to changes in business
strategy or development plans; risks related to the outcomes of the pending
lawsuits against the Company and the associated costs; risks associated with
future profitability; and other factors discussed elsewhere in this release and
in documents filed by the Company with the Securities and Exchange Commission.
Many of these factors are beyond the Company's control. Actual results could
differ materially from these forward-looking statements. In light of these risks
and uncertainties, there can be no assurance that the forward-looking
information contained in this press release will, in fact, occur. The Company
does not undertake any obligation to revise these forward-looking statements to
reflect future events or circumstances and other factors discussed elsewhere in
this report and the documents filed by the Company with the Securities and
Exchange Commission.



                                       18
<PAGE>


PART II - OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

   (a)   Exhibits

         27 Financial Data Schedule (for SEC use only).

   (b)   Reports on Form 8-K

         There were no reports on Form 8-K filed during the six-month period
         ended June 30, 1998.



                                       19
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                           GOLDEN BEAR GOLF, INC.

                           By: /S/  STEPHEN S. WINSLETT
                              --------------------------------------------------
                               Stephen S. Winslett
                               Senior Vice President and Chief Financial Officer

                           Date:  October 19, 1998



                                       20
<PAGE>


                                 EXHIBIT INDEX


EXHIBIT                              DESCRIPTION
-------                              -----------

  27               Financial Data Schedule