<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
                                   (MARK ONE)

(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934  [FEE REQUIRED]

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

             FOR TRANSITION PERIOD FROM ___________ TO ____________

                         COMMISSION FILE NUMBER 1-12532

                         RENAISSANCE GOLF PRODUCTS, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

            DELAWARE                                86-0664849
 (STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

   11585 SOUTH STATE STREET,
          DRAPER, UTAH                                   84020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)                (ZIP CODE)

        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (801) 501-0200

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

<TABLE>
<CAPTION>
                                                           NAME OF EACH EXCHANGE
         TITLE OF EACH CLASS                                ON WHICH REGISTERED:
         -------------------                                --------------------
<S>                                                        <C>
                None                                              None
</TABLE>

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

                         COMMON STOCK -- $.001 PAR VALUE
                                (TITLE OF CLASS)

     Check 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
                                       -----       -----

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

Revenues of the registrant for the fiscal year ended December 31, 1999 were
$4,949,309.

<PAGE>

     The aggregate market value of the Common Stock held by non-affiliates of
the registrant on December 31, 1999 was approximately $1,264,302 based upon
the average of the bid and asked prices of the Common Stock, as reported by
the National Quotation Bureau Incorporated.

     The number of shares of the Common Stock of the registrant outstanding
as of December 31, 1999 was 9,429,475.

     Transitional Small Business Disclosure Format (check one):

     Yes            No   X
         -----         -----

<PAGE>

                                     PART I

     All statements, other than statements of historical fact, included in
this Form 10-KSB, including the statements under "Management's Discussion and
Analysis," are, or may be deemed to be, "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934
(the "Exchange Act"). Such forward-looking statements involve assumptions,
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of Renaissance Golf Products,
Inc. (the "Company") to be materially different from any future results,
performance, or achievements expressed or implied by such statements
contained in this Form 10-KSB. Such potential risks and uncertainties
include, without limitation, competitive pricing and other pressures from
other golf equipment manufacturers, economic conditions generally and in the
Company's primary markets, consumer spending patterns, perceived quality and
value of the Company's products, availability of capital, cost of labor
(foreign and domestic), cost of raw materials, occupancy costs, and other
risk factors detailed herein and in other of the Company's filings with the
Securities and Exchange Commission. The Company assumes no obligation to
update the forward-looking statements or to update the reasons actual results
could differ from those projected in such statements. Readers are cautioned
not to place undue reliance on these forward-looking statements.

ITEM 1.  DESCRIPTION OF BUSINESS

BUSINESS HISTORY

     The Company was originally incorporated in Arizona in July 1990 and
commenced sales in January 1991. In September 1993, the Company was
reincorporated in Delaware. In November 1993, the Company completed an
initial public offering of its shares. The Company's securities are traded on
the OTC Electronic Bulletin Board under the symbols "FGLF."

BUSINESS OPERATIONS

     The Company designs, develops, assembles, and distributes high-quality
golf products and golf accessories in North and South America, Europe, the
Middle East, and Africa (the "Licensed Territory") utilizing the Fila
trademark and logo under license from Fila Sport S.p.A. of Biella, Italy
("Fila Sport"), a subsidiary of Fila Holding, S.p.A. Fila Sport has
cultivated a quality image for its athletic footwear, active sportswear, and
leisure and casual wear, and the Company capitalizes on the worldwide
identification with other products bearing the Fila trademark. The Company
has the exclusive right to market golf products bearing the Fila trademark in
the Licensed Territory with the exception of head wear and towels, which are
marketed on a non-exclusive basis in the Licensed Territory.

     Dedicated to honesty and integrity in the game of golf, the Company,
through its subsidiary the World Golf Corporation ("WGC"), which operates the
World Golf Tour ("WGT"), offers golfers an opportunity to participate in
tournaments on a level playing field through the use of the Company's
proprietary handicapping system.

PRODUCTS

     The Company's products include golf clubs, bags, balls, gloves, head
wear, club headcovers, travel covers, umbrellas, towels, and other golf
accessories. The Company offers full lines of both men's and women's woods
and irons. The Company also sells putters, wedges, utility woods, and
oversized woods. Golf club components are manufactured by independent
suppliers, primarily in the United States and the Far East, and are assembled
and distributed by the Company.

     GOLF BAGS. The Company believes its golf bags complement the current
core business and marketing efforts of Fila Sport and are an item strongly
associated with the fashion and function design concept of

                                       3
<PAGE>

Fila Sport. The Company's golf bags are technically innovative and fashion
oriented. Golf bag models feature full-length club dividers, fur lined tops,
four to seven pocket configurations, deluxe harnesses with padded slings,
bottom assist handles, hidden umbrella wells, towel clips, and matching rain
hoods. The Company's bag line includes a selection from light weight carry
golf bags to cart size golf bags ranging in retail price from $165 to $239.

     CLUBS. Many of the Company's lines of golf clubs include innovations and
refinements developed by management and independent equipment designers, from
whom the Company obtains licenses. The retail price on clubs ranges from $329
to $1,599.

     ACCESSORIES. The Company also produces an assortment of golf-elated
accessories. These include divot tools, ball markers, headcovers, travel
bags, towels, ball holders and assorted equipment bags.

     GOLF BALLS. The Company produces a range of golf balls under both the
Fila and WGT brands. These include the Fila Titanium and Fila Balata balls in
addition to the WGT XD, WGT XS, WGT DC, WGT UB, and WGT Balata.

     APPAREL. The Company produces a limited range of golf-related soft goods
under the Fila and WGT brands. Hats are produced under the Fila name while
golf shirts, wind shirts, vests, sweaters and hats are produced under the WGT
name.

     TOURNAMENTS. WGC operates tournaments to provide participants with an
opportunity to win cash and prizes. WGC is a network marketing company where
interested individuals are encouraged to become independent distributors of
tournament participation and golf equipment. The Company believes WGT will
experience increasing participation as golfers are exposed to the tournaments
through fellow golfers who enjoy honest competition.

PRODUCT STRATEGY

     The Company concentrates its product strategy on developing,
manufacturing and distributing innovative, technically-superior golf
equipment and bags identified as premium products by the Fila trademark. The
Company markets its product lines through independent sales representatives
and distributors in golf specialty shops. In addition, the Company is
beginning to distribute many of its products directly to the end consumer
through the Fila Challenge, the Fila Golf Business-to-Business Program, the
Filagolf.com website, and through the members of the World Golf Tour. Some of
the specific elements of the Company's marketing strategy include:

     PRODUCT INNOVATION. The Company designs and markets golf equipment
intended to appeal to both average and skilled golfers. The Company has
experienced minimal returns of its products because of its attention to
product design and manufacturing.

     UTILIZING AND PROMOTING THE FILA IMAGE. Because of the success of Fila
Sport in developing a worldwide, premium brand franchise in its athletic
footwear, active sportswear, and leisure and casual wear, the Company
believes it has its products immediately identified with a high-quality,
high-performance, high-fashion image.

     PROTECTION OF PROPRIETARY RIGHTS. As the licensee of Fila Sport, the
Company aggressively seeks to protect the mutual interests of the Company and
Fila Sport in the value of the Fila trademark. The Company believes that its
WGC handicapping system, golf club designs, manufacturing processes, and
trade names represent valuable intellectual property rights. The Company will
seek to protect its proprietary interests in licenses, trademarks, trade
secrets, trade dress, patents (if any are obtained), and other intellectual
property rights.

MARKETING STRATEGY

                                       4
<PAGE>

     The Company is currently focusing many of its resources on expanding its
distribution channels and becoming a general marketing entity for FILA brand
golf products. Consistent with this philosophy is the increased emphasis on
the Fila Golf Business-to-Business Program, the Fila Challenge, and the
Filagolf.com website.

     BUSINESS-TO-BUSINESS PROGRAM. The Company is currently pursuing major
corporations to act as corporate partners. The Company offers these
corporations significant discounts on its golf products in exchange for
direct access to the partner company's employees. Purchases are eventually
made primarily through the Internet of through corporate catalogs.

     FILA CHALLENGE. Primarily through corporate and charity tournaments, the
Company conducts the "Fila Challenge" where tournament participants are
provided with an opportunity to purchase golf products. In addition, the
Company's sales staff focuses on selling golf products to tournament
organizers for use at their events.

     INTERNET MARKET. The Company is attempting to sell product through the
Internet by maintaining its own corporate website, and by offering certain
products for sale on other retail websites.

MARKET SEGMENTS

     MEN'S GOLF PRODUCTS. By offering a full line of clubs suited for men of
all playing abilities, the Company anticipates continuing to supply this
market with product.

     WOMEN'S GOLF PRODUCTS. The Company's line for the women's market include
a full package of coordinated bag, headcovers, and equipment in various color
categories focusing on fashion and function.

     JUNIOR GOLF PRODUCTS. The carries equipment for children and teenage
golfers to capture a portion of this growing market segment. The Company
offers junior sets consisting of a wood, three irons and putter, designed for
the five to nine year old, and a package suited in weight and length for the
ten to 13 year olds including two woods, four irons and a putter. Both sets
include a bag that is smaller in size and lighter in weight than standard
golf bags to accommodate the junior golfer.

FILA LICENSE

     In November 1990, the Company entered into a license agreement with Fila
Sport pursuant to which Fila Sport granted the Company the right to design,
manufacture, and market certain golf-related products under the Fila brand
name. The agreement was terminated on June 30, 1996 because the Company was
in default under the agreement. In October 1996, the Company entered into a
new license agreement with Fila Sport (the "License Agreement") which
provides that the Company has the exclusive right to manufacture golf clubs,
balls, headcovers, travel covers, gloves, bags, and umbrellas for sale in
North and South America, Europe, the Middle East, and Africa. The Company has
a non-exclusive right to market golf head wear and towels in the Territory.
The terms of the License Agreement do not limit Fila Sport from manufacturing
and marketing articles for active sport, such as jackets, women's tops,
sweaters, all styles of hats, all styles of towels, sports bags, some of
which items may compete with the Company's products. The initial term of the
License Agreement extends through December 31, 2000 with an option to renew
the license for an additional five-year period. The License Agreement also
required that the Company pay to Fila Sport $675,000 in past due royalties on
or before November 21, 1996. As of December 31, 1998, all past due royalties
to Fila Sport were paid in full.

     In consideration for the trademark license, the Company pays Fila Sport
a royalty on net sales. The royalty is 6% of annual net sales up to
$7,500,000, 5.5% of annual net sales from $7,500,000 up to $15,000,000, and
5% of annual net sales in excess of $15,000,000. Annual minimum royalties are
due and payable in installments of 25% of the annual minimum on the 15th day
prior to the end of each calendar quarter. Royalties of $500,000 were paid
during 1998, and a total of $600,000 were payable for 1999, $450,000 which
remains outstanding. Future minimum annual royalties are currently set as
follows

                                       5
<PAGE>

$600,000 in 1999, and $700,000 in 2000. The Company is in the process of
renegotiating the royalties for 2000 and beyond.

     The Company is currently required to obtain an irrevocable letter of
credit in favor of Fila Sport each year equal to the amount of the applicable
minimum royalty. The 2000 letter of credit has not yet been obtained, and no
royalties for 2000 have been paid. The Company also is required to expend in
each year for the duration of the License Agreement an amount equal to 5% of
net sales on advertising the Company's products and 3% of net sales on
promotions.

     The License Agreement also requires the submission to Fila Sport of
quarterly royalty reports, sample advertising, sample products, price lists,
and an annual marketing and advertising plan. New product design plans and
prototypes must also be submitted to Fila Sport for approval prior to
marketing Fila Sport has the right to withhold approval of marketing
approaches or products if it determines that such new product or promotion
would reflect adversely on Fila Sport or impair the quality or image of the
Fila trademark.

     The License Agreement may be terminated by Fila Sport in whole, or in
part, upon the occurrence of certain events, including the following: failure
to perform or any material breach of the obligations under the agreement
where there is no remedy within 30 days of the receipt of written notice of
intent to terminate the License Agreement; failure to make timely royalty
payments, use best efforts to meet established product introduction dates,
maintain required levels of product liability insurance, or meet established
guidelines for quality control; failure to meet advertising, promotional, and
sales targets within a country included in the Territory; and sale or
disposal of substantially all of the Company's business or assets to a third
party or transfer of control of the company to a third party.

     Further, Fila Sport may terminate the License Agreement if the Company's
financial condition becomes unstable, as evidenced by, among other matters,
insolvency or the Company's inability to pay its debts as they become due.
There can be no assurance that the Company will be able to obtain a
sufficient level of sales to meet the licensing fee requirements or to
achieve profit margins necessary to enable the Company to operate profitably.
The loss of the license would have a material adverse effect on the Company's
operations.

     Subsequent to the end of 1999, the Company opened negotiations with Fila
Sport to amend and substantially modify the License Agreement. These
discussions are ongoing.

COMPETITION

     The golf products business is intensely competitive and the Company
competes with numerous companies providing similar products. The Company
believes that there are over 50 companies manufacturing and marketing golf
equipment which each have annual golf equipment sales in excess of
$1,000,000. The Company also believes that the 10 largest golf equipment
manufacturers account for a substantial majority of wholesale golf equipment
sales. Most of the Company's competitors have substantially greater capital
resources, depth of management, and brand name identification in the golf
business than the Company. In addition, there are several golf equipment
manufacturers not currently producing premium quality products which could
affect sales if they did so.

     A company's ability to compete is in part dependent upon its ability to
satisfy various subjective requirements of golfers, including the look and
"feel" of the equipment and its level of acceptance among professional and
other golfers, and its ability to creatively market its products. Equipment
designs and concepts developed by one manufacturer that gain popularity have
been widely imitated by other manufacturers. The subjective preferences of
consumers may also be subject to rapid and unanticipated changes. There can
be no assurances as to the Company's ability to achieve or maintain market
acceptance sufficient to enable the Company to operate profitably. A decline
in the size of the golf equipment market, whether from a decrease in the
popularity of particular equipment or otherwise, could have a material
adverse effect on the Company's business.

                                       6
<PAGE>

MANUFACTURE AND ASSEMBLY

     The components of the Company's golf clubs, primarily club heads,
shafts, and grips, are manufactured by suppliers in the United States and the
Far East. Suppliers are carefully selected and continuously evaluated by the
Company on the basis of the quality of raw materials utilized, quality of the
workmanship, and attention to quality control. The Company believes that its
relationships with key suppliers are good; however, the Company was late with
payments to some of its suppliers during 1999 which could have a negative
effect on the Company's ability to obtain product on account. There are
numerous suppliers of high-quality components and management believes that
the loss of a supplier may result in production delays, but would not have a
material adverse impact on the Company's long-term business.

     The Company assembles its golf clubs at its facility in Draper, Utah.
During the assembly process, the equipment is spot checked and tested
extensively to assure a quality product. Completed inventory is also stored
at the Company's facility prior to shipment. Bags, gloves, and other golf
accessories sold by the Company are manufactured by independent vendors,
primarily in the Far East. Products are either shipped to the Company's
facilities or drop shipped directly to distributors in the case of
international sales. The Company anticipates that some of its club lines will
continue to be manufactured and assembled in the Far East in an effort to
reduce certain expenses while maintaining a high-quality product.

WARRANTY

     The Company currently supports all of its golf clubs with a five year
warranty to the original consumer against any defects in workmanship or
material, provided that the product has not been subject to abuse or
alteration. Golf bags are covered by a limited warranty covering
manufacturing defects only. The Company has experienced minimal problems with
respect to its products and the warranty granted.

EMPLOYEES

     As of December 31, 1999, the Company employed 24 employees, including five
salaried employees on a full-time basis who are considered executive
personnel, one (1) salaried full-time employee in administrative,
supervisory, and clerical positions, nine hourly full-time employees, and two
(2) part-time employees. None of the Company's employees are covered by a
collective bargaining agreement, the Company has never experienced a work
stoppage, and the Company considers its labor relations to be excellent.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company currently occupies approximately 29,230 square feet of
office, manufacturing, and warehouse space located at 11585 South State
Street, Draper, Utah 84020. The lease provides for rent of approximately
$18,000 per month and expires in March 2003.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is currently maintaining a legal action in the Utah
Third District Court on January 6, 1999 entitled Renaissance Golf Products,
Inc. vs. Brad Oliver, case number 990900097, for Breach of Contract, Quantum
Meruit, Fraud and Intentional Interference with Prospective Economic
Advantage. The essence of the case is Brad Oliver receiving inventory valued
at approximately $131,951.04 for resale and not making payment for the goods
received. Settlement discussions are ongoing and the Company intends to
obtain a settlement for the full amount of the goods received by Mr. Oliver.
The prospects for obtaining a judgement against Mr. Oliver for the full
amount of the claim are

                                       7
<PAGE>

good. The prospects for collecting any awarded damages from Mr. Oliver are
unknown due to Mr. Oliver's personal financial circumstances.

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

     No matters were submitted to the stockholders for vote during the fourth
quarter of 1999.

                                  PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The following table sets forth, for the period from January 1998 to
March 31, 2000, the high and low bid quotations for the Common Stock as
reported by the OTC Bulletin Board. The prices represent quotations between
dealers, without adjustment for retail markup, mark down or commission, and
do not necessarily represent actual transactions.

COMMON STOCK PRICE ACTUAL AND ADJUSTED

<TABLE>
<CAPTION>
                                 HIGH                  LOW
                                 ----                  ---
<S>                            <C>                   <C>
                  2000
         1st Quarter            0.5313                0.1875

                  1999
         1st Quarter            0.5313                0.2813
         2nd Quarter            0.5000                0.2500
         3rd Quarter            0.5000                0.2600
         4th Quarter            0.3750                0.1875

                  1998
         1st Quarter            4.5000                2.9375
         2nd Quarter            4.0938                2.8750
         3rd Quarter            3.0625                1.2500
         4th Quarter            1.2813                0.2500
</TABLE>

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

     The Company has not paid any cash dividends on its Common Stock since
its incorporation and anticipates that, for the foreseeable future, earnings,
if any, will continue to be retained for use in its business. As of December
31, 1999, the approximate number of record holders of the Company's Common
Stock is approximately 300.

RECENT SALES OF UNREGISTERED SECURITIES

     During 1999, the Company offered Preferred Stock under Rule 506 to three
accredited investors who were also officers, directors, or beneficial owners
of the Company's stock. Ralph Rasmussen, a Director and Trustee for AKA
Charitable Remainder Unitrust #1 ("AKA"), a greater than 10% beneficial owner
of the Company's stock; and John B. Hewlett, the Company's Chief Executive
Officer, purchased shares. The Preferred Stock shares were offered at $20 per
share and are convertible at any time into shares of Common Stock at the rate
of 20 shares of Common Stock for one share of Preferred Stock.

     AKA purchased 50,000 shares of Convertible Preferred Stock for
$1,000,000. AKA also received 1,000,000 common stock purchase warrants
exercisable at $1.00 for up to 10 years. In the event the Company fails to
comply with the repayment terms of the loan agreements with AKA, the
conversion rate increases from 20 to one, to 100 to one for AKA. The
Preferred Stock pays dividends at the rate of

                                       8
<PAGE>

5% during 1999 (payable in shares of Common Stock), and 6% thereafter
(payable in shares of Common Stock or cash at AKA's election).

     John B. Hewlett purchased 25,000 shares of Convertible Preferred Stock
for $500,000. Mr. Hewlett also received 500,000 common stock purchase
warrants exercisable at $1.00 per share and valid for up to 10 years. The
shares were paid for through the conversion of two outstanding promissory
notes totaling $350,000 plus interest for a total of $403,000, and
unreimbursed expenses totaling $97,000. The Shares are convertible at any
time into shares of Common Stock at the rate of 20 shares of Common Stock for
one share of Preferred Stock. The Preferred Stock pays dividends at the rate
of 5% during 1999 (payable in shares of Common Stock), and 6% thereafter
(payable in shares of Common Stock or cash at Mr. Hewlett's election).

     The Company conducted a private offering in 1998 under Rule 505,
resulting in the sale of 556,000 shares raising $1,668,000. Each share also
carried with it a detachable warrant to purchase one share of Common stock
for $5.00, subject to adjustment in certain events ("Warrants"). The Warrants
may be exercised at any time and from time to time until December 31, 2002.
The Company has the right to redeem the Warrants at $0.01 per Warrant upon
not less than 30 days' notice if the Closing Price of the Common Stock for a
period of 20 consecutive trading days, ending not earlier than 10 days prior
to the date of such redemption notice, equals or exceeds $7.00 per share,
subject to adjustment in certain events.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

     The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this report.

RESULTS OF OPERATIONS

     The Company's operations during 1998 and the first quarter of 1999
required additional access to working capital. During the first quarter of
1999, the Company raised $1,000,000 through the sale of 50,000 shares of
Class "A" Preferred Stock to AKA. The capital infusion allowed the Company to
bring its license commitment to Fila current and pay suppliers providing
product for the Company's mass merchandise line.

     COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO THE YEAR ENDED DECEMBER
31, 1998. Net sales for the year ended December 31, 1999 were $4,949,000
compared to $6,988,000 for the comparable period in 1998, a decrease of
$2,038,000 or 29%. This decrease is attributable to the Company's move out of
the mass retail channel and into the business-to-business market.

     Cost of sales decreased from $6,194,000 for the year ended December 31,
1998 to $ 2,979,000 for the comparable period in 1999, a decrease of
$3,215,000 or 51%. The gross profit margin increased from 11% during 1998 to
39% for the comparable period in 1999.

     Selling, general, and administrative costs were $4,072,000 during 1999
compared to $5,259,000 for the comparable period in 1998, a decrease of
$1,187,000 or 23%. This decrease in selling, general, and administrative
costs is due mainly to the continuing efforts of the Company to reduce
expenses.

     The Company experienced a net loss of $2,818,086 during 1999, which
included an inventory write-down of $75,000, compared to a net loss of
$5,168,000 for the comparable period in 1998, a decrease in losses of
$2,350,000. The decrease in losses is attributable to the Company moving out
of the mass merchandise market which operates on narrow margins.

     The Company's inventory decreased from $2,274,000 at December 31, 1998
to $1,628,000 at December 31, 1999 as a result of the Company selling
existing mass market inventory and only partially replacing it due to the
Company's move to a business-to-business focus.

                                       9
<PAGE>

     COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER
31, 1997. Net sales for the year ended December 31, 1998 were $6,988,000
compared to $5,375,000 for the comparable period in 1997, an increase of
$1,613,000 or 30%. This increase is attributable to the Company's move into
the mass retail channel and the commencement of operations of the WGC.

     Cost of sales increased from $4,822,000 for the year ended December 31,
1997 to $6,194,000 for the comparable period in 1998, an increase of
$1,372,000 or 28%. The gross profit margin increased from 10% during 1997 to
11% for the comparable period in 1998.

     Selling, general, and administrative costs were $5,259,000 during 1998
compared to $2,392,000 for the comparable period in 1997, an increase of
$2,867,000 or 120%. This increase in selling, general, and administrative
costs is due mainly to the continuing efforts of the Company to expand
operations into the mass retail market and commencing WGC operations.

     The Company experienced a net loss of $5,168,000 during 1998 compared to
a net loss of $1,845,000 for the comparable period in 1997, an increase in
losses of $3,323,000. The increase in losses is attributable to the Company
acquiring two entities to combine into the WGC and commencing network
marketing operations. Additionally, the Company wrote down in excess of
$500,000 in inventory during 1998.

     The Company's inventory increased substantially from $758,000 at
December 31, 1997 to $2,274,000 at December 31, 1998 as a result of the
Company having sufficient working capital from newly invested capital and
borrowed funds to fund operations and meet inventory purchase requirements.
The increase in inventory is also due to the general industry market
conditions during 1998 which created an inventory surplus.

LIQUIDITY AND CAPITAL RESOURCES

     Beginning in 1997, the Company entered into a series of Loan and Credit
Agreements with the AKA. The first line of credit was for a maximum amount of
up to $1,000,000, and the second line of credit provides for the Company to
draw the maximum aggregate principal amount of the lesser of $5,000,000, or
80% of the Company's current assets. The Company was not in compliance with
conditions of the Loan and Credit Agreement on December 31, 1998 by having
drawn on the credit line beyond 80% of the Company's current assets and
having not made interest payments for approximately five months. To remedy
any potential defaults under the loan with AKA, the Company entered into an
agreement with AKA on January 11, 1999 to issue shares of its Common Stock in
lieu of any cash payment of interest due or to become due on or before June
30, 1999.

     In conjunction with AKA's purchase of Preferred Stock in March 1999, the
Loan and Credit Agreement was again amended, relieving the Company of its
default under the terms of the agreements with AKA.

     In addition to the credit lines secured by the Company during the past
several years, a private placement of the Company's shares of Common Stock
was undertaken on March 2, 1998 to raise up to $2,400,000. The Company
ultimately sold a total of approximately 556,000 units, raising $1,668,000.

     Based upon the operating history, the Company's auditors during the past
several years have expressed concern about the Company's ability to continue
operations. The Company believes these concerns are primarily founded upon
the Company's lack of working capital resulting from the Company operating at
a loss which causes the Company to rely upon outside capital to fund ongoing
operations. During 1998 and 1999, the Company took action to cut operating
expenses by reducing its work force and bringing certain independent
contractor functions in house. The Company is also pursuing a new marketing
plan. The Company believes these changes will help move existing inventory
and reduce its cash flow concerns, but it is unlikely that these changes
alone will provide sufficient capital to fund ongoing operations.

                                       10
<PAGE>

     Net cash used in operating activities for 1999 and 1998 was $(1,550,000)
and $4,247,000, respectively. Working capital at the end of 1999 and 1998
was $(4,860,000) and $(4,239,000), respectively. Cash and cash equivalents at
December 31, 1999 were $48,000 compared to $63,000 at December 31, 1996, and
$776,000 at December 31, 1997. Inventories, net of reserves at December 31,
1999 were $1,628,000 compared to $2,274,000 at December 31, 1998. Also,
accounts receivable decreased from $411,000 at December 31, 1998 to $233,000
at December 31, 1999. Notes payable for $553,000 were outstanding at December
31, 1999. Total liabilities increased $638,000 from December 31, 1998 to
December 31, 1999.

     The Company strives to maintain a sufficient inventory of golf club
components, bags, and accessories to fulfill orders. Management believes that
all of the golf club components and other products manufactured for the
Company by suppliers are readily available from a variety of sources.

     Historically the Company has funded itself through operations, the sale
of stock, and borrowing. Most recently the Company has raised equity through
a private offering of its stock and through negotiation loan agreements as
are outlined in this report. The Company plans to continue to use these
methods to fund operations; although, no warranties can be provided that
further funding can be raised.

ITEM 7.  FINANCIAL STATEMENTS

     The financial statements listed in the accompanying Index to Financial
Statements are attached hereto and filed as a part of this Report under Item
13.

     In February 1997, FASB issued SFAS No. 128, "Earning Per Share" ("EPS").
SFAS No. 128 requires dual presentation of basic EPS and diluted EPS on the
face of all income statements issued after December 15, 1997 for all entities
with complex capital structures. Basic EPS is computed as net income divided
by the weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur from common
shares issuable through stock options, warrants, and other convertible
securities. There was no effect on EPS upon the adoption of the provisions of
SFAS No. 128 for all years presented. Loss per common share has been computed
on the weighted average number of common and equivalent shares outstanding.
For 1998 the basic net loss per share was ($1.95) and diluted net loss per
share was ($0.64). For 1999 the basic net loss per share was ($0.31) and the
diluted net loss per share was ($0.18).

     In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income, and SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information. SFAS No. 130 requires that an enterprise report, by
major components and as a single total, the change in its net assets during
the period from nonowner sources; and SFAS No. 131 establishes annual and
interim reporting standards for an enterprise's operating segments and
related disclosures about its products, services, geographic areas, and major
customers. Adoption of these statements will not impact the Company's
financial position, results of operations, or cash flows and any effect will
be limited to the form and content of its disclosures. Both statements are
effective for fiscal years beginning after December 15, 1997, with earlier
application permitted.

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

CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT

     Corbin & Wertz acted as the Company's independent public accountants for
the years ending December 31, 1996 and 1997. Upon the recommendation of the
Board of Directors, Corbin & Wertz, located in Irvine, California, was
dismissed effective April 30, 1998 by the Company in order for the Company to
appoint Deloitte & Touche LLP, located in Salt Lake City, Utah, as its
principal accountants following the Company's move to Salt Lake City.
Deloitte & Touche LLP performed no audit functions and provided no opinions
concerning the Company's financial condition or statements. Effective March
15, 1999, Deloitte & Touche resigned as the Company's principal accountants.

                                       11
<PAGE>

     The Board of Directors approved the appointment of Jones, Jensen &
Company as its principal accountants, as of March 15, 1999 for fiscal 1998
and extended the appointment for fiscal 1999. To the knowledge of the
Company, at no time has Jones, Jensen & Company provided any accounting
services to the Company prior to this new engagement, and they have no direct
or indirect financial interest in the Company.

     During the two most recent fiscal years, there have been no
disagreements with the former accountants on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure of any reportable event.

                                    PART III

     The Company incorporates by reference the information required in Part III
from its definitive proxy statement or amendment to this Form 10-KSB to be filed
within 120 days of the end of 1999.


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Draper, State of Utah, on the 14th
day of April 1999.

         By: /s/John B. Hewlett
             -------------------------------------
         John B. Hewlett, Chief Executive Officer


         In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
         SIGNATURE                                   TITLE                                  DATE
<S>                                        <C>                                       <C>


/s/John B. Hewlett                          Chairman of the Board, Director            April 14, 2000
------------------------------------
John B. Hewlett


/s/Michael Hammond                          Chief Financial Officer                    April 14, 2000
------------------------------------
Michael Hammond


/s/Wade M. Mitchell                         Director                                   April 14, 2000
------------------------------------
Wade M. Mitchell


/s/Bruce H. Haglund                         Secretary, Director                         April 14,2000
------------------------------------
Bruce H. Haglund
</TABLE>

                                       12
<PAGE>










                         RENAISSANCE GOLF PRODUCTS, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1999




<PAGE>

                                 C O N T E N T S

<TABLE>
<S>                                                                                                    <C>
Consolidated Balance Sheet.............................................................................. 4

Consolidated Statements of Operations................................................................... 6

Consolidated Statements of Stockholders' Equity (Deficit)............................................... 7

Consolidated Statements of Cash Flows................................................................... 9

Notes to the Consolidated Financial Statements......................................................... 11
</TABLE>

<PAGE>

                         RENAISSANCE GOLF PRODUCTS, INC.
                           Consolidated Balance Sheet

<TABLE>
<CAPTION>
                                     ASSETS
                                     ------
                                                                                                December 31,
                                                                                                    1999
                                                                                              -----------------
<S>                                                                                           <C>
CURRENT ASSETS

   Cash and cash equivalents                                                                  $          47,798
   Accounts receivable, net of allowance for doubtful accounts                                          233,172
   Inventories, net (Note 2)                                                                          1,628,248
   Deposits made on inventory (Note 2)                                                                  155,234
   Prepaid expenses and other current assets                                                             12,047
                                                                                              -----------------

     Total Current Assets                                                                             2,076,499
                                                                                              -----------------
PROPERTY AND EQUIPMENT, NET (Note 3)                                                                    446,069
                                                                                              -----------------

OTHER ASSETS

   Goodwill (net) (Note 1)                                                                              753,333
                                                                                              -----------------

     Total Other Assets                                                                                 753,333
                                                                                              -----------------
     TOTAL ASSETS                                                                             $       3,275,901
                                                                                              =================
</TABLE>


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

                                       4
<PAGE>

                         RENAISSANCE GOLF PRODUCTS, INC.
                     Consolidated Balance Sheet (Continued)

<TABLE>
<CAPTION>
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                                                 December 31,
                                                                                                    1999
                                                                                              -----------------
<S>                                                                                           <C>
CURRENT LIABILITIES

   Revolving line of credit, net of discount (Note 4)                                         $       5,000,000
   Current portion of notes payable (Note 6)                                                            532,650
   Accounts payable                                                                                     295,715
   Accrued interest                                                                                     331,611
   Accrued liabilities                                                                                  154,550
   Accrued royalties                                                                                    568,355
                                                                                              -----------------

     Total Current Liabilities                                                                        6,882,881
                                                                                              -----------------


COMMITMENTS AND CONTINGENCIES (Note 8)

STOCKHOLDERS' EQUITY (DEFICIT)

   Preferred stock, $0.01 par value, 150,000 shares
    authorized: 75,000 shares issued and outstanding                                                        750
   Common stock, $0.001 par value, 40,000,000 shares
    authorized; 9,429,475 shares issued and outstanding                                                   9,429
   Additional paid-in capital                                                                        20,092,443
   Accumulated deficit                                                                              (23,709,602)
                                                                                                 ---------------

     Total Stockholders' Equity (Deficit)                                                           ( 3,606,980)
                                                                                              ------------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                     $       3,275,901
                                                                                              =================
</TABLE>



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

                                       5
<PAGE>

                         RENAISSANCE GOLF PRODUCTS, INC.
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                                 For the Years Ending
                                                                                     December 31,
                                                                        ---------------------------------------
                                                                              1999                  1998
                                                                        -----------------     -----------------
<S>                                                                     <C>                   <C>
NET SALES                                                                $      4,949,309     $       6,987,509

COST OF SALES                                                                   2,979,492             6,194,129
                                                                        -----------------     -----------------

GROSS PROFIT                                                                    1,969,817               793,380
                                                                        -----------------     -----------------

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES                                                        4,072,279             5,258,662
                                                                        -----------------     -----------------

OPERATING LOSS                                                                 (2,102,462)           (4,465,282)
                                                                        -----------------     -----------------

OTHER INCOME (EXPENSE)

   Interest income                                                                  5,027                   -
-
   Interest expense                                                              (749,884)             (701,425)
   Miscellaneous Income (Expense)                                                   5,804                   -
                                                                        --------------------  -----------------------
     Total Other Income (Expense)                                                (739,053)             (701,425)
                                                                        --------------------  -----------------------

LOSS BEFORE PROVISION FOR INCOME
 TAXES AND EXTRAORDINARY ITEM                                                  (2,841,515)           (5,166,707)

PROVISION FOR INCOME TAXES                                                          4,922                   900
                                                                        -----------------     -----------------

LOSS BEFORE EXTRAORDINARY ITEM                                                 (2,836,593)           (5,167,607)

EXTRAORDINARY GAIN FROM FORGIVENESS
 OF DEBT (NET OF INCOME TAXES OF $-0-) (Note 7)                                    18,508                   -
                                                                        -------------------   -------------------

NET LOSS                                                                 $     (2,818,085)    $      (5,167,607)
                                                                        =================     =================

BASIC LOSS PER COMMON SHARE                                              $          (0.31)    $           (1.95)
                                                                        =================     =================

FULLY DILUTED LOSS PER COMMON SHARE                                      $          (0.18)    $           (0.64)
                                                                        =================     =================
WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING                                                                    8,849,374             2,655,538
                                                                        =================     =================
</TABLE>


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

                                       6
<PAGE>

                         RENAISSANCE GOLF PRODUCTS, INC.
            Consolidated Statements of Stockholders' Equity (Deficit)
                 For the Years Ended December 31, 1999 and 1998

<TABLE>
<CAPTION>

                                            Preferred Stock                 Common Stock            Common Stock Subscribed
                                     -----------------------------  ---------------------------  -----------------------------
                                        Shares          Amount          Shares        Amount       Shares           Amount
                                     -------------  --------------  ------------  -------------  -------------   -------------
<S>                                  <C>            <C>             <C>           <C>            <C>             <C>
Balance, December 31, 1997                     250  $            3     4,613,662  $       4,614      1,496,276   $       1,496

Issuance of subscribed stock                -               -          1,496,276          1,496     (1,496,276)         (1,496)

Issuance of stock for cash                  -               -            546,000            546         -               -

Issuance of stock for assets                -               -            250,000            250         -               -

Issuance of stock for services              -               -            292,215            292         -               -

Issuance of stock upon
 conversion of debt                         -               -            300,000            300         -               -

Issuance of stock for services              -               -            200,000            200         -               -

Issuance of stock for assets                -               -                250              0         -               -

Issuance of notes for stock                  (250)             (3)           -              -           -               -

Issuance of stock for services              -               -                  0              0         -               -

Net loss for the year ended
December 31, 1998                           -               -              -             -              -               -
                                     -------------  --------------  ------------  -------------  -------------   -------------

Balance, December 31, 1998                       0  $            0     7,698,403  $       7,698         -        $      -
                                     =============  ==============  ============  =============  =============   =============


<CAPTION>
                                                                        Total
                                      Additional                     Stockholders'
                                       Paid-In       Accumulated        Equity
                                       Capital         Deficit         (Deficit)
                                     ------------- ---------------  --------------
<S>                                  <C>           <C>              <C>
Balance, December 31, 1997           $  14,795,509  $(15,723,910)    $    (922,288)

Issuance of subscribed stock                -               -               -

Issuance of stock for cash               1,682,787          -            1,683,333

Issuance of stock for assets               999,750           -           1,000,000

Issuance of stock for services             243,095           -             243,387

Issuance of stock upon
 conversion of debt                        149,700           -             150,000

Issuance of stock for services              99,800           -             100,000

Issuance of stock for assets                     0           -                   0

Issuance of notes for stock                      3           -                   0

Issuance of stock for services                  30           -                  30

Net loss for the year ended
December 31, 1998                           -           (5,167,607)     (5,167,607)
                                     ------------- ---------------  --------------

Balance, December 31, 1998           $  17,970,674   $ (23,709,602)   $ (3,606,980)
                                     ============= ===============  ==============
</TABLE>


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

                                       7
<PAGE>

                         RENAISSANCE GOLF PRODUCTS, INC.
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
                 For the Years Ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                   Preferred Stock              Common Stock              Common Stock Subscribed
                               -------------------------  ---------------------------  -----------------------------
                                Shares        Amount         Shares         Amount        Shares           Amount
                               ---------  --------------  ------------  -------------  -------------   -------------
<S>                            <C>        <C>             <C>           <C>            <C>             <C>
Balance, December 31, 1998             0  $            0     7,698,403  $       7,698        -         $      -

Issuance of stock for cash        50,000             500             -              -        -                -

Issuance of stock upon            25,000             250             -              -        -                -
 conversion of debt

Issuance of stock upon
 conversion of debt                    -               -     1,696,301          1,696         -               -

Issuance of stock for services         -               -        30,000             30         -               -

Issuance of stock for services         -               -         4,771              5         -               -

Net loss for the year ended
 December 31, 1999                     -               -             -              -         -               -
                               ---------  --------------  ------------  -------------  -------------   -------------

Balance, December 31, 1999        75,000  $          750     9,429,475  $       9,429         -        $      -
                               =========  ==============  ============  =============  =============   =============


<CAPTION>
                                                                   Total
                                Additional                     Stockholders'
                                  Paid-In     Accumulated         Equity
                                  Capital        Deficit         (Deficit)
                               ------------- ---------------  --------------
<S>                            <C>           <C>              <C>
Balance, December 31, 1998     $  17,970,674 $(20,891,517)    $   (2,913,145)

Issuance of stock for cash           999,500            -          1,000,000

Issuance of stock upon               499,750            -            500,000
 conversion of debt

Issuance of stock upon
 conversion of debt                  583,528            -            585,224

Issuance of stock for services        37,470            -             37,500

Issuance of stock for services         1,521            -              1,526

Net loss for the year ended
 December 31, 1999                         -   (2,818,085)        (2,818,085)
                               ------------- ---------------  --------------

Balance, December 31, 1999     $  20,092,443 $(23,709,602)    $   (3,606,980)
                               ============= ===============  ==============
</TABLE>

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

                                       8

<PAGE>

                         RENAISSANCE GOLF PRODUCTS, INC.
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                   For the Years Ending
                                                                                        December 31,
                                                                           --------------------------------------
                                                                                  1999                1998
                                                                           ------------------  ------------------
<S>                                                                        <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net loss                                                                 $      (2,818,085) $       (5,167,607)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
     Depreciation and amortization                                                    103,716             100,162
     Provision for doubtful accounts                                                  317,539                   -
     Provision for allowance for inventory obsolescence                                77,322              75,000
   Changes in operating assets and liabilities:
     (Increase) decrease in accounts receivable                                     (139,400)             576,010
     (Increase) decrease in inventories                                               569,252          (1,590,644)
     (Increase) decrease in deposits on inventory                                     342,604             669,188
     (Increase) decrease in prepaid expenses
      and other current assets                                                          3,853              41,610
     (Increase) decrease in other assets                                                    -              34,199
     Increase (decrease) in accounts payable
      and accrued liabilities                                                       (338,356)             890,402
     Increase (decrease) in accrued royalties                                         331,000             125,000
                                                                           ------------------  ------------------

       Net Cash Used in Operating Activities                                       (1,550,555)         (4,246,680)
                                                                           ------------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Purchases of property and equipment                                                (82,939)            (48,602)
   Abandonment of tenant improvements                                                  32,884                   -
                                                                           ------------------  ------------------
       Net Cash Used in Investing Activities                                          (50,055)            (48,602)
                                                                           ------------------  ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

   Net proceeds on lines of credit                                                           -          1,299,279
   Net payments on long-term debt                                                            -           (200,000)
   Proceeds from long-term debt                                                              -            650,000
   Proceeds from issuance of subordinated convertible debentures                             -          1,668,000
   Proceeds from issuance of common stock for cash                                           -            104,863
   Proceeds from exercise of stock options                                                   -             60,470
   Proceeds from issuance of preferred stock for cash                               1,000,000                   -
   Conversion of debt to equity                                                       585,224                   -
                                                                           ------------------  ------------------
       Net Cash Provided by Financing Activities                            $       1,585,224  $        3,582,612
                                                                           ------------------  ------------------
</TABLE>

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

                                       9
<PAGE>

                         RENAISSANCE GOLF PRODUCTS, INC.
                Consolidated Statements of Cash Flows (Continued)

<TABLE>
<CAPTION>
                                                                                    For the Year Ending
                                                                                        December 31,
                                                                           --------------------------------------
                                                                                  1999                1998
                                                                           ------------------  ------------------
<S>                                                                        <C>                 <C>
NET CHANGE IN CASH AND CASH EQUIVALENTS                                     $         (15,386) $        (712,670)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                           63,184             775,854
                                                                           ------------------  ------------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                      $          47,798  $           63,184
                                                                           ==================  ==================


Cash Paid For:

   Interest                                                                 $          20,268  $          404,369
   Income taxes                                                             $           5,620  $              800

SCHEDULE OF NON-CASH FINANCING ACTIVITIES

   Common stock issued for debt conversion                                  $               -  $          150,000
   Preferred stock issued for debt conversion                               $         500,000  $                -
   Stock for assets                                                         $               -  $        1,000,000
   Stock for services                                                       $          39,056  $          243,387
</TABLE>






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

                                       10
<PAGE>

                         RENAISSANCE GOLF PRODUCTS, INC.
                   Notes to Consolidated Financial Statements
                 For the Years Ended December 31, 1999 and 1998

NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              a.  Nature of Operations

              Renaissance Golf Products, Inc. and Subsidiaries (the "Company")
              assembles and distributes golf clubs and accessories. The
              Company's products are sold domestically and internationally under
              a license agreement with FILA Sport S.p.A. ("FILA").

              b.  Principles of Consolidation

              The consolidated financial statements include those of World Golf
              Corporation, Sports Marketing, Inc. and RGPI, Inc. All significant
              intercompany accounts and transactions have been eliminated.

              c.  Basis of Presentation - Going Concern

              The accompanying consolidated financial statements have been
              prepared on a going concern basis, which contemplates the
              realization of assets and satisfaction of liabilities in the
              normal course of business. The Company has suffered substantial
              recurring losses from operations and has a stockholders' deficit
              at December 31, 1999. These matters, among others, raise
              substantial doubt about the Company's ability to continue as a
              going concern. The consolidated financial statements do not
              include any adjustments that might be necessary should the Company
              be unable to continue as a going concern. The Company's
              continuation as a going concern is dependent on its ability to
              generate sufficient cash flow to meet its obligations on a timely
              basis, to obtain additional debt and/or equity financing as may be
              required, to satisfy its debt and license covenants (see Notes 4
              and 8) and ultimately to attain profitable operations.
              Management's plans to address these matters are as follows:

              -        Obtain additional financing through third party
                       investors;

              -        Focus current marketing strategy on strength of bag and
                       accessory product lines;

              -        Increase the marketing efforts regarding its products;

              -        Refocus product lines; and

              -        Continue restructuring the operations of the Company.

              Management of the Company believes that the proceeds from the
              additional financing, plus increased marketing efforts, will
              enable the Company to fund operations through the end of fiscal
              1999, although there can be no assurance that it will. The Company
              will likely require additional capital for future development and
              the marketing of existing and future product lines. In the event
              the Company cannot fund operations through sales after the initial
              infusion of capital from the aforementioned sources, resolve its
              current debt and any license covenant violation, and if the
              Company is unable to secure additional financing in the future,
              its ability to pursue its business strategy, its consolidated
              financial position, and its results of operations for future
              periods may be adversely impacted.

                                       11
<PAGE>


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              d.  Concentrations of Credit Risk

              CASH

              On occasion, the Company maintains cash balances at certain
              financial institutions in excess of amounts insured by Federal
              agencies.

              ACCOUNTS RECEIVABLE

              The accounts receivable are from a diverse customer base. The
              Company provides credit in the normal course of business to
              customers throughout the United States and foreign markets.
              Accounts deemed uncollectible have been charged against the
              allowance. The Company does not obtain collateral with which to
              secure its accounts receivable. As of December 31, 1999, the
              Company had accounts receivable from one customer which
              represented 16% of net accounts receivable.

              SALES

              One customer accounted for 18% and 27% of net sales for the years
              ended December 31, 1999 and 1998, respectively.

              ACCOUNTS PAYABLE

              No vendor accounted for 10% of inventory purchases for the year
              ended December 31, 1999, and one vendor accounted for 11% of
              inventory purchases for the year ended December 31, 1998.
              No other vendor accounted for 10% or more of inventory purchases
              for these periods. As of December 31, 1999, the Company had
              accounts payable to one vendor which represented 17% of accounts
              payable. The Company believes that it could purchase such
              inventory from other vendors without a materially adverse
              effect to the Company.

              FOREIGN SALES

              The Company had sales to foreign markets of approximately $284,000
              (6%) and $239,351 (3%) for the years ended December 31, 1999 and
              1998, respectively.

              e. Use of Estimates in the Preparation of Consolidated Financial
                 Statements

              The preparation of consolidated financial statements in conformity
              with generally accepted accounting principles 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 consolidated financial statements,
              and the reported amounts of revenues and expenses during the
              reported periods. Significant estimates made by the Company's
              management include, but are not limited to, allowances for trade
              receivables and the net realizable value of inventories. Actual
              results could materially differ from those estimates.

                                       12
<PAGE>


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)

              f.  Fair Value of Financial Instruments

              The Company has financial instruments whereby the fair market
              value of the financial instruments could be different than that
              recorded on a historical basis. The Company's financial
              instruments consist of its cash and cash equivalents, accounts
              receivable, revolving line of credit, notes payable and accounts
              payable. The carrying amounts of the Company's financial
              instruments generally approximate their fair values at December
              31, 1999.

              g.  Cash Equivalents

              For the purpose of the statements of cash flows, the Company
              considers cash equivalents to be highly liquid investments with
              remaining maturities when purchased of three months or less.

              h.  Inventories

              Inventories are stated at the lower of cost or market, and consist
              primarily of golf clubs, golf bags, golf accessories and related
              components. Cost is determined on the first-in, first-out method.
              Cost includes materials, direct labor and an allocable portion of
              direct and indirect manufacturing overhead based on estimates
              derived from historical trends and experience factors. Market is
              determined by comparison with recent purchases or net realizable
              value. The Company did write-down inventory in 1999.

              i.  Property and Equipment

              Property and equipment are recorded at cost and are depreciated
              using the straight-line method over the estimated useful lives of
              the related assets, ranging from five to seven years. Leasehold
              improvements are amortized over the lesser of the estimated useful
              lives of the improvements or the related lease term. Depreciation
              expense relating to property and equipment for the years ended
              December 31, 1999 and 1998 amounted to $110,000 and $80,163,
              respectively, of which $-0- and $13,613, respectively, is included
              in cost of sales in the accompanying consolidated statements of
              operations.

              Maintenance and repairs are charged to expense as incurred.
              Renewals and improvements of a major nature are capitalized. Gains
              or losses are recognized upon sale or disposal of assets.

              j.  Revenue Recognition

              Revenues on product sales are recognized upon shipment of the
              merchandise.

                                       13
<PAGE>


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)

              k.  Stock-Based Compensation

              During 1995, the Financial Accounting Standards Board issued
              Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
              "Accounting for Stock-Based Compensation," which defines a fair
              value based method of accounting for stock-based compensation.
              However, SFAS 123 allows an entity to continue to measure
              compensation cost related to stock and stock options issued to
              employees using the intrinsic method of accounting prescribed by
              Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting
              for Stock Issued to Employees." Entities electing to remain with
              the accounting method of APB 25 must make pro forma disclosures of
              net income and earnings per share, as if the fair value method of
              accounting defined in SFAS 123 had been applied. The Company has
              elected to account for its stock-based compensation to employees
              under APB 25.

              l.  Advertising

              The Company expenses advertising costs as incurred. Advertising
              expense for the years ended December 31, 1999 and 1998 was
              $139,591 and $589,318, respectively.

              m.  Income Taxes

              The Company accounts for income taxes in accordance with Statement
              of Financial Accounting Standards No. 109, "Accounting for Income
              Taxes" ("SFAS 109"). Under SFAS 109, the asset and liability
              method is used in accounting for income taxes. Under this method,
              deferred tax assets and liabilities are determined based on
              differences between the financial reporting and the tax basis of
              assets and liabilities and are measured using enacted tax rates
              and laws that will be in effect when the differences are expected
              to reverse. A valuation allowance is established when necessary to
              reduce deferred tax assets to the amount expected to be realized.

              n.  Limitations on Dividends

              Pursuant to state laws, the Company is currently restricted, and
              may be restricted for the foreseeable future, from making
              dividends to its common stockholders as a result of its
              accumulated deficit as of December 31, 1999.

                                       14
<PAGE>


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)

              o.  Basic Loss Per Common Share

              In February 1997, the Financial Accounting Standards Board
              ("FASB") issued Statement of Financial Accounting Standards No.
              128 ("SFAS No. 128"), "Earnings Per Share" ("EPS"). SFAS No. 128
              requires dual presentation of basic EPS and diluted EPS on the
              face of all income statements issued after December 15, 1997 for
              all entities with complex capital structures. Basic EPS is
              computed as net income divided by the weighted average number of
              common shares outstanding for the period. Diluted EPS reflects the
              potential dilution that could occur from common shares issuable
              through stock options, warrants and other convertible securities.
              There was no effect on EPS upon the adoption of the provisions of
              SFAS No. 128 for all years presented. Loss per common share has
              been computed on the weighted average number of common and
              equivalent shares outstanding. Basic and diluted net loss per
              share are approximately the same.

              p.  Goodwill

              In April 1998, the Company recognized goodwill of $800,000 from
              the purchase the assets of World Golf Federation, Inc. and Ball
              Marketing Co. LLC. The Company recognizes goodwill from the excess
              of the purchase price of its acquisitions over the fair value of
              the net assets acquired.

              The Company evaluates the recoverability of goodwill and long
              lived assets and reviews the amortization period on an annual
              basis. Several factors are used to evaluate goodwill, including
              but not limited to: management's plans for future operations,
              recent operating results and projected, undiscounted cash flows.
              The primary method is projected, undiscounted cash flows.



                                       15
<PAGE>


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)

              q.  Reclassification

              Certain December 31, 1998 balances have been reclassified to
              conform with the December 31, 1999 financial statement
              presentation.

NOTE 2 -      INVENTORIES

              Inventories consist of the following at December 31, 1999

<TABLE>
<S>                                                                                           <C>
                  Component parts                                                             $       (441,487)
                  Finished goods - golf bags, clubs and accessories                                   2,222,057
                                                                                              -----------------
                                                                                                      1,780,570
                  Less inventory reserve                                                              (152,322)
                                                                                              -----------------
                  Net Inventory                                                               $       1,628,248
                                                                                              =================
</TABLE>

              As of December 31, 1999, the Company has made cash deposits on
              inventory to be received during 2000 totaling $155,234.

NOTE 3 -      PROPERTY AND EQUIPMENT

              Property and equipment consists of the following at December 31,
              1999:

<TABLE>
<S>                                                                                           <C>
                  Manufacturing and tooling equipment                                         $          62,963
                  Office furniture and equipment                                                         93,083
                  Computer equipment and software                                                       589,046
                  Automotive equipment                                                                    6,942
                  Leasehold improvements                                                                 87,704
                                                                                              -----------------
                                                                                                        839,738
                  Less accumulated depreciation                                                        (393,669)
                                                                                              -----------------

                  Net Property and Equipment                                                  $         446,069
                                                                                              =================
</TABLE>

NOTE 4 -      LINES OF CREDIT

              In January 1997, the Company entered into a line of credit (line)
              agreement with a bank in which the Company could borrow up to
              $400,000 in connection with a letter of credit established in
              accordance with the FILA license agreement (see below). The line
              bore interest at the bank's prime rate plus 1.5% and was
              collateralized by essentially all of the Company's assets and was
              guaranteed by the Chairman of the Board of Directors. The line
              expired January 31, 1998.

              In connection with the FILA license, the Company established a
              letter of credit with an accredited bank in the amount of
              $400,000. The letter of credit was secured by the line of credit
              discussed above. The letter of credit expired January 31, 1998.


                                       16
<PAGE>


NOTE 4 -      LINES OF CREDIT (Continued)


              The Company and the Company's Chairman of the Board of Directors
              jointly entered into a loan and security agreement with a lender
              on October 29, 1997 to provide the Company the maximum aggregate
              principal amount of the lesser of $5,000,000, or 80% of the
              company's current assets. The amount outstanding on the loan and
              revolving promissory note is adjusted upward or downward on a
              monthly basis, throughout the term of the note, based on total
              current assets, which for purposes of the agreement mean cash,
              accounts receivable aged less than 90 days, and inventory. The
              revolving promissory note executed pursuant to this agreement,
              as amended November 12, 1999, bears an interest rate of 8% and
              expires June 30, 2000. As further consideration for this loan
              and security agreement, warrants to purchase 400,000 shares of
              the Company's common stock were issued to the lender (see Note 9).
              Amounts outstanding under the agreement are collateralized by
              the Company's inventory, open orders, accounts receivable, and
              other assets of the Company. As of December 31, 1999, the
              Company had borrowed $5,000,000 on this revolving promissory
              note. The line provides for various warranties, covenants and
              restrictions and other financial and non-financial matters
              requiring compliance on a continuing basis. Default on any
              warranty, covenant or restriction could effect the lender's
              commitment to lend, and if not waived or corrected, could
              accelerate the maturity of any borrowings outstanding under the
              line. As of December 31, 1999, the Company was in default of
              certain warranties, covenants and restrictions, including the
              borrowing of funds substantially in excess of qualifying
              collateral.

NOTE 5 -      PREFERRED SHARES

              On March 10, 1999, the Company issued to AKA 50,000 share of
              Series "A" Convertible Preferred Stock for $1,000,000 in cash. The
              sale to AKA constituted a sale to an existing accredited investor
              in an isolated transaction exempt from registration. The Shares
              are convertible at any time into shares of Common Stock at the
              rate of 20 shares of Common Stock for one share of Preferred
              Stock. In the event the Company fails to comply with the
              repayment of the loan agreements with AKA, the conversion rate
              increases from 20 to one to 100 to one. The Preferred Stock pays
              dividends at the rate of 5% during 1999 (payable in shares of
              Common Stock), and 6% thereafter (payable in shares of Common
              Stock), and 6% thereafter (payable in shares of Common Stock or
              cash at AKA's election).

              The proceeds received were used to pay $275,000 due to Fila Sports
              pursuant to the License Agreement, and to pay manufacturers and
              suppliers for product ordered by Target, the Company's primary
              mass retail client, and other suppliers for outstanding balances
              due. Other payables of $320,000 were traded for merchandise with
              other vendors.

              During the third quarter, the Company also raised an additional
              $500,000 through the conversion of a promissory note and
              forgiveness of advances made to the Company by its Chairman and
              CEO, John B. Hewlett into 25,000 shares of Preferred Stock of the
              Company.


                                       17
<PAGE>


The Company has not paid any cash dividends on its Preferred Stock since its
incorporation, but it does have an obligation to accrue and pay a 5% dividend
for 1999 which was to be paid on January 31, 2000; for years subsequent to 1999,
a dividend of 6% will be paid in Common Stock valued at the lesser of $1.00 and
the average daily closing price as reported on the OTC:BB for the first 20
trading days after the end of the calendar year for which interest has accrued
or in cash as determined by the Preferred Stockholder. At December 31, 1999, the
number of record holders of the Company's Preferred Stock is two.





























                                       18
<PAGE>



NOTE 6 -      LONG-TERM DEBT

              Notes payable at December 31, 1999 consist of the following:

<TABLE>
<S>                                                                                           <C>
              Unsecured note payable to a shareholder bearing interest at
               10% per annum, all unpaid interest and principle due
               June 30, 1999.                                                                 $          50,000

              Unsecured note payable to a shareholder bearing interest at
               10% per annum, all unpaid interest and principle due
               June 30, 2000.                                                                            20,000

              Unsecured note payable to a shareholder bearing interest at
               12% per annum, all unpaid interest and principle due
               January 7, 1999.                                                                         450,000

              Unsecured note payable to two officers of the Company bearing
               no interest, all unpaid principle due December 31, 2000.                                   7,650

              Unsecured note payable to a shareholder bearing interest at
               10% per annum, all unpaid interest and principle due
               June 30, 2000.                                                                             5,000
                                                                                              -----------------
                                                                                                        532,650
              Less: current maturities                                                                 (532,650)
                                                                                              -----------------
                                                                                              $               0
                                                                                              =================
</TABLE>

              Annual maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
              Years Ending
              December 31,
              ------------
<S>                                                            <C>
                     1999                                      $         532,650
                     2000                                                 -
                     2001                                                 -
                     2002                                                 -
                     2003                                                 -
                                                               -----------------

                                                               $         532,650
                                                               =================
</TABLE>

              Total interest expense incurred in connection with the related
              party debt was $ 52,246 and $119,292 for the years ended December
              31, 1999 and 1998, respectively.


                                       19
<PAGE>



NOTE 7 -      EXTRAORDINARY GAINS ON FORGIVENESS OF DEBT

              In prior years, the Company entered into a royalty agreement with
              a Japanese distributor who designs clubs for Asian markets and
              distributes using the FILA name and trademark. Royalties due to
              the Company related to such agreement are 9% on sales of bags,
              head covers and gloves designed and distributed by the Japanese
              distributor. In fiscal 1997, the distributor released the Company
              from any obligation to repay the prepaid royalties and required no
              additional services from the Company. The Company recorded
              extraordinary gain on forgiveness of debt in the amount of
              $267,723 in the 1997 statement of operations related thereto.

              During 1999 and 1998, certain vendors forgave certain payables.
              The Company recorded $18,508 and $-0- as extraordinary gains on
              forgiveness of debt for the years ended December 31, 1999 and
              1998, respectively.

NOTE 8 -      COMMITMENTS AND CONTINGENCIES

              Operating Leases

              The Company leases its office and certain equipment under several
              non-cancelable lease agreements accounted for as operating leases
              expiring through June 2003. Real estate taxes, insurance and
              maintenance expenses are obligations of the Company.

              Minimum rental payments under non-cancelable operating leases on
              certain equipment are as follows:

<TABLE>
<CAPTION>
                        Years Ending
                        December 31,
                        ------------
<S>                                                                      <C>
                               2000                                      $         223,246
                               2001                                                257,429
                               2002                                                232,762
                               2003                                                 59,534
                               2004                                                134,534
                                                                         -----------------
                                                                         $         779,229
                                                                         =================
</TABLE>

              Rent expense were approximately $114,000 and $74,000 for the years
              ended December 31, 1999 and 1998, respectively.


                                       20
<PAGE>



NOTE 8 -      COMMITMENTS AND CONTINGENCIES, (Continued)

              Royalty and Licensing Agreements

              FILA License

              The Company has an exclusive licensing agreement which granted the
              Company the right to use the FILA name and trademark on defined
              hard products for sale in the United States and foreign countries,
              excluding Asia and a non-exclusive license to use the FILA name
              and trademark on defined soft products for sale in the United
              States and foreign countries, excluding Asia. The license
              agreement expires December 31, 2000 and can be renewed for an
              additional five-year period provided that the Company is not in
              default of any obligation under the agreement. The Company was in
              default with the FILA license agreement at December 31, 1999 (see
              Note 4). The FILA licensing agreement was not impacted by the
              change of control as a result of the equity transactions discussed
              in Notes 8 through 10. Royalty expense under this agreement was
              $600,000 and $500,000 for the years ended December 31, 1999 and
              1998, respectively. Royalties due to FILA at December 31, 1999
              were $450,000.

              The terms of the revised licensing agreement include the following
              minimum payments:

<TABLE>
<S>                                                              <C>
                2000                                             $         700,000
</TABLE>

              Percentage royalty payments are due if such amounts exceed the
              minimum royalty payments and are based on annual sales as follows:

<TABLE>
<S>                                                                                           <C>
                      Sales up to $7,500,000                                                  6.0%
                      Sales from $7,500,001 to $15,000,000                                    5.5%
                      Sales over $15,000,000                                                  5.0%
</TABLE>

              FILA can terminate the license if the Company does not have annual
              sales of licensed product equal to or exceeding the following
              amounts of the respective years:

<TABLE>
<S>                                                                                           <C>
                                             1998                                             $6,250,000
                                             1999                                              7,500,000
                                             2000                                              8,333,333
</TABLE>

              The Company must expend annually not less than five percent (5%)
              of net sales for advertising and not less than three percent (3%)
              of net sales for promotions. The Company is currently negotiating
              with FILA to reduce the royalty obligation for the year 2000.



                                       21
<PAGE>


NOTE 8 -      COMMITMENTS AND CONTINGENCIES (Continued)

              Royalty and Licensing Agreements (Continued)

              FILA License (Continued)

              The Company shall not offer discounts on current products greater
              than twenty-five percent (25%) without first obtaining approval
              from FILA. The Company shall not sell discontinued product lines
              at a discount exceeding fifty percent (50%).

              The Company must establish an irrevocable letter of credit for the
              minimum annual royalty for each contract year which shall be
              renewed annually for the minimum annual royalty for each
              subsequent contract year. The Company has not renewed its letter
              of credit that expired January 31, 1998 and, therefore, is not in
              compliance with this covenant as of the issuance of these
              consolidated financial statements. The Company shall pay one
              fourth (1/4) of the minimum annual royalty to FILA fifteen (15)
              days prior to the end of each quarter. If the Company fails to
              make the required payment, FILA may draw the required payment
              amount from the letter of credit on the last day of the quarter.

              The Company must submit a prototype of each product, as defined,
              for FILA's approval prior to the manufacture, distribution or sale
              of such product. The Company must submit to FILA for approval the
              Company's price lists and a description of any plans to offer
              discounted prices (to eliminate overstock or otherwise).

              FILA may terminate the agreement in whole, or in part, upon the
              occurrence of certain events, including the following:

              -        Failure to perform or otherwise materially breach any of
                       the obligations under the agreement and there is not
                       remedy within 30 days of the receipt of written notice of
                       intent to terminate the agreement from FILA.

              -        Failure to make timely royalty payments, use best efforts
                       to meet established product introduction dates, maintain
                       required levels of product liability insurance or meet
                       established guidelines for quality control.

              -        Failure to meet advertising, promotional and/or sales
                       targets within a country included in the territory, as
                       defined.

              -        Sale or disposal of substantially all of the Company's
                       business or assets to a third party or transfer of
                       control of the Company to a third party or the cessation
                       of an employment relationship with Miles Doody.

              Further, FILA may terminate the license agreement if the Company's
              financial condition becomes unstable, as evidenced by, among other
              matters, insolvency or the Company's inability to pay its debts as
              they become due.



                                       22
<PAGE>



NOTE 8 -      COMMITMENTS AND CONTINGENCIES (Continued)

              Royalty and Licensing Agreements (Continued)

              Japanese Sublicense

              FILA granted an exclusive licensing agreement to Kanebo, Ltd.
              ("Kanebo") covering Japan, prior to granting the Company its
              licensing agreement. This licensing agreement gave Kanebo an
              exclusive right and license to use FILA trademarks in connection
              with the manufacture and sale of certain items including golf
              bags, head covers and gloves sold in Japan, but not including golf
              clubs or balls. Accordingly, the Company entered into a
              sublicensing agreement with Kanebo giving the Company a
              non-exclusive right to sell golf bags, head covers and gloves in
              Japan. The sublicensing agreement was terminated as of June 30,
              1996 upon the termination of the Company's license agreement with
              FILA. Royalty expense in connection with this sublicense was $-0-
              and $-0- for the years ended December 31, 1999 and 1998,
              respectively. Past due royalties related to the sublicense
              agreement totaled $118,359 at December 31, 1999.

              Letters of Credit

              In connection with the FILA license discussed above, the Company
              is required to establish a letter of credit with an accredited
              Italian bank in the amount of $500,000, the minimum royalty for
              fiscal 1998. As of the date of this report, the Company has not
              established the required letter of credit.

              The FILA license agreement requires that a letter of credit is
              maintained annually in the amount of the minimum royalty payments
              outlined therein. Subsequent to year end, the Company had not
              received the letter of credit for the 1999 minimum royalty
              payments as required by the FILA Agreement. Subsequent to year
              end, the Company has met its minimum royalty payments without the
              established letter of credit.

              As discussed above, the Company is currently not in compliance
              with one of the covenants pursuant to the FILA license.
              Non-compliance may cause the agreement to be terminated. The loss
              of the license would have a material adverse effect on the
              Company's operations. These consolidated financial statements do
              not include any adjustments that might result from the outcome of
              this uncertainty.









                                       23
<PAGE>



NOTE 9 -      STOCK OPTIONS

              In January 1994, non-statutory stock options were granted outside
              of the 1993 Plan to professional golfers for the purchase of 6,375
              shares of the Company's common stock at $13.00 per share. Of these
              options, 3,875 vested on issuance and 2,500 were to vest based on
              the golfers achieving certain performance goals (the 2,500 were
              canceled). The remaining 3,875 options expired during the year
              ended December 31, 1998.


              In October 1996, non-statutory stock options were granted outside
              of the 1993 Plan to non-employee members of the Company's Board of
              Directors and various consultants for services provided to the
              Company for the purchase of 1,700,000 shares of the Company's
              common stock at $0.50 per share. These options expire on December
              31, 2006. These options were assumed to be vested as of December
              31, 1996 as a result of the successful completion of the private
              placement memorandum as discussed in Note 10. These options were
              not subject to adjustment as a result of the split of the
              Company's stock. Because the company anticipated the 4:1 reverse
              stock split, the fair market value of the Company's common stock
              was assumed to be $0.50 per share, the trading price of the
              Company's common stock ($0.125) prior to the private placement
              discussions, times four. The Company expensed $14,000 during the
              year ended December 31, 1997 in connection with the issuance of
              these options. During 1998, 500,000 of such options were exchanged
              for debt and services. An additional 1,050,000 options were
              granted to non-employees in connection with the 1996 private
              placement. Because the private placement consisted of 50% debt and
              50% equity, one-half of the 1,050,000 options were attached to the
              debt and an original issue discount was recorded. Accordingly, the
              Company recorded of debt issuance costs, which was amortized in
              its entirety to interest expense during 1998.

              In October 1996, incentive stock options were granted outside of
              the 1993 Plan to certain officers and key employees for the
              purchase of 1,377,000 shares of the Company's common stock at
              $0.50 per share. Of these options, 717,000 vest upon the earlier
              of achieving certain performance goals or ratably over ten years
              and 660,000 were assumed to be vested as of December 31, 1996 as a
              result of the successful completion of a private placement
              memorandum. These options were not subject to adjustment as a
              result of the split of the Company's stock. Because the company
              anticipated the 4:1 reverse stock split, the fair market value of
              the Company's common stock was assumed to be $0.50 per share, the
              trading price of the Company's common stock ($0.125) prior to the
              private placement discussions, times four. These options expire on
              December 31, 2006. During 1998 and 1997, 643,000 and 6,000 of such
              options were canceled, respectively.


                                       24
<PAGE>



NOTE 9 -      STOCK OPTIONS (Continued)

              In October 1996, the Company granted to a director an option to
              acquire 200,000 shares of common stock at an exercise price of
              $0.50 per share and an option to acquire 150,000 shares of common
              stock at an exercise price of $1.00 per share in connection with
              the director's services performed in 1996. The Company also
              granted to another director an option to acquire 1,000,000 shares
              of common stock at an exercise price of $1.00 per share in
              connection with the director's services performed in 1996. The
              options vested immediately and expire December 31, 2006. These
              options were not subject to adjustment as a result of the split of
              the Company's stock. Because the Company anticipated the 4:1
              reverse stock split, the fair market value of the Company's common
              stock was assumed to be $0.50 per share, the trading price of the
              Company's common stock ($0.125) prior to the private placement
              discussions, times four.

              In October 1997, the Company granted non-qualified options outside
              of the 1993 Plan to acquire 500,000 shares of common stock at
              $3.00 per share to employees of the Company. None of these options
              were subject to adjustment as a result of the split of the
              Company's stock. Because the Company anticipated the 4:1 reverse
              stock split, the fair market value of the Company's common stock
              was assumed to be $2.63 per share, the trading price of the
              Company's common stock ($0.65625) at the date of grant, times
              four. The aforementioned options all vested immediately and expire
              October 27, 2007. During 1998, 15,000 shares were exercised.
              During 1999, 30,000 shares were exercised by a former employee.

              In March 1998, the Company granted to a director non-qualified
              options to acquire 500,000 shares of common stock at $4.00 per
              share. These option shares shall not be subject to adjustment upon
              a change in capitalization. In October 1998, the Company also
              granted options to four officers the right for each party to
              acquire 25,000 shares at the current trading price of the stock as
              of October 1, 1998.

              In September 1998, the Company granted options to an individual to
              acquire 150,000 shares of common stock at $5.00 per share. The
              options carried a vesting requirement that certain sales volume
              must be obtained by the individual during each of the next three
              years.

              On September 1, 1999, the Company granted options to its
              employees to acquire 942,500 shares of Common Stock at $0.50
              per share. As of 1/1/2000, 858,500 shares are continuing to be
              vested by employees. The options carry a vesting requirement
              that certain sales volume must be obtained by sales personnel
              during each of the next three years, while for most employees,
              the vesting requirement is six months of continuous employment,
              and on January 1,2000 the options start to be eligible to be
              exercised. This group of remaining options are exercisable as
              follows:

<TABLE>
<S>                                                                             <C>
                                       As of 1/1/2000                              50,000
                                       As of 1/1/2000                              50,000
                                       As of 1/1/2000                              50,000
                                       As of 1/1/2000                              50,000
                                                                                ---------
                                                   Total                         $858,500
</TABLE>


                                       25
<PAGE>



NOTE 9 -      STOCK OPTIONS (Continued)

              A summary of stock option activity for 1999 and 1998 follows:

<TABLE>
<CAPTION>
                                                             1993 Plan         Outside Plan         Price
                                                        ------------------ ------------------  ------------------
<S>                                                     <C>                <C>                 <C>
              Balance at January 1, 1998                        60,000          6,058,249           .50-16.00
              Granted                                             -             1,331,000           1.50-5.00
              Expired/canceled                                  60,000           (427,500)          .50-16.00
              Exercised                                           -              (777,000)           .50-3.00
                                                        ------------------ ------------------  ------------------
                   Balance at December 31,1998                    -             6,184,749           .50-16.00
                   Granted at September 1, 1999                   -               942,500                 .50
              Expired/canceled                                    -                84,000                 .50
              Exercised                                           -                30,000                1.25
                                                        ------------------ ------------------  ------------------

              Balance at December 31, 1999                        -             7,013,249      $    .50-16.00
                                                        ================== ==================  ==================

              Exercisable at December 31, 1999                    -                50,000      $    .50-16.00
                                                        ================== ==================  ==================
</TABLE>

              Pro Forma Stock Option Information

              Pro forma information regarding net income (loss) is required by
              SFAS 123 and has been determined as if the Company had accounted
              for its employee stock options under the fair value method
              pursuant to SFAS 123, rather than the method pursuant to APB 25 as
              discussed herein. The fair value for these options was estimated
              at the date of grant using a Black-Scholes option pricing model
              with the following assumptions: stock price, as determined by the
              Board of Directors, of between $.50 and $2.63 per share; a
              risk-free interest rate of 6.5%; dividend yields of 0.0%;
              volatility factors of the expected market price of the Company's
              common stock of between 40.0% and 72.0%; and expected term of two
              and one-half years.

              The Black-Scholes valuation model was developed for use in
              estimating the fair value of traded options which have no vesting
              restrictions and are fully transferable. In addition, option
              valuation models require the input of highly subjective
              assumptions including the expected stock price volatility. Because
              the Company's employee stock options have characteristics
              significantly different from those of traded options, and because
              changes in the subjective input assumptions can materially affect
              the fair value estimate, in management's opinion, the existing
              models do not necessarily provide a reliable single measure of the
              fair value of its employee stock options.

              For purposes of pro forma disclosure, the estimated fair value of
              the options are amortized to expense over the options' vesting
              period. The Company's pro forma information follows.
<TABLE>
<CAPTION>
                                                                                 1999               1998
                                                                           ------------------  ------------------
<S>                                                                        <C>                 <C>
              Net loss:
                      As reported                                           $      (2,818,085) $       (5,167,607)
                      Pro forma                                             $      (2,818,085) $       (5,167,607)
              Net loss per share:
                      As reported                                           $           (0.31) $            (1.95)
                      Pro forma                                             $           (0.31) $            (1.95)
</TABLE>


                                       26
<PAGE>



NOTE 10 -      STOCK WARRANTS

               The Company is authorized to issue Class A warrants. In
               connection with the offering of convertible debentures, bridge
               financing arrangements and the initial public offering completed
               prior to 1995, the Company issued warrants which expired between
               November 15, 1996 and November 15, 1998. The terms of the
               outstanding warrants are summarized as follows:

              -        Class A warrants entitle the holder to purchase one share
                       of common stock at a price of $5.50 (as adjusted) per
                       share. The warrants are exercisable for five years from
                       the date of issuance and may be redeemed by the Company
                       at $.01 per warrant if the closing bid price of the
                       common stock exceeds $7.00 for 10 consecutive trading
                       days. As of December 31, 1997, 852,060 (as adjusted)
                       Class A warrants are outstanding which expired November
                       15, 1998. No warrants were exercised in 1998.

               During 1997, the Company granted 400,000 warrants to acquire
               shares of the Company's common stock at exercise prices ranging
               from $1.50 to $3.00 to a lender (see Note 4). The warrants are
               not subject to adjustment as a result of the split of the
               Company's stock. Because the Company anticipated the 4:1 reverse
               stock split, the fair market value of the Company's common stock
               was assumed to be $2.63 per share, the trading price of the
               Company's common stock ($0.65625) at the date of grant, times
               four. The warrants expire December 31, 2002, are immediately
               exercisable and carry piggy-back registration rights. The Company
               recorded an original issue discount of $137,000 as a result of
               the issuance of these warrants which will be amortized over the
               twenty-six month life of the debt. During 1998 and 1997,
               approximately $63,000 and $11,000, respectively, of the discount
               was amortized to interest expense.

NOTE 11 -      STOCKHOLDERS' DEFICIT

               In March 1998, the Company approved a private placement
               memorandum to sell 800,000 units. Each unit consists of one share
               of common stock at $3.00 per share and one warrant for one
               additional share of common stock at $5.00 per share. The offering
               expired on June 30, 1998. The Company sold 556,000 units during
               the offering.


                                       27
<PAGE>



NOTE 12 -      PROVISION FOR INCOME TAXES

               The  provision  for income  taxes for the years ended  December
               31, 1999 and 1998 consists of the following:

<TABLE>
<CAPTION>
                                                             Current            Deferred            Total
                                                        ------------------ ------------------  ------------------
<S>                                                     <C>                <C>                 <C>

               Year ended December 31, 1999
                  U.S. Federal                          $           -       $          -       $           -
                  State and local                                    4,922             -                    4,922
                                                        ------------------ ------------------  ------------------

                                                        $            4,922  $          -       $            4,922
                                                        ================== ==================  ==================

               Year ended December 31, 1998
                  U.S. Federal                          $           -       $          -       $            -
                  State and local                                      900             -                      900
                                                        ------------------ ------------------  ------------------

                                                        $              900  $          -       $              900
                                                        ================== ==================  ==================
</TABLE>

               Income tax expense was $4,922 and $900 for each of the years
               ended December 31, 1999 and 1998, respectively, and differed from
               the amounts computed by applying the U.S. Federal income tax rate
               of 34 percent to loss from operations before provision for income
               taxes and extraordinary item as a result of the following:

<TABLE>
<CAPTION>
                                                                                 1999                1998
                                                                           ------------------  ------------------
<S>                                                                        <C>                 <C>
               Computed "expected" benefit                                  $        (912,666) $       (1,756,333)
               Increase (reduction) in income taxes resulting from:
                  Change in valuation allowance for deferred
                    tax assets                                                       (912,666)          1,752,113
                  Non-deductible expenses                                              23,072               3,320
                  Change in deferred tax assets                                        -                   -
                  State taxes, net of benefit                                          -                   -
                                                                           ------------------  -------------------

                                                                            $           4,922  $              900
                                                                           ==================  ==================
</TABLE>

               The tax effects of temporary differences that give rise to
               significant portions of the deferred tax assets at December 31,
               1999 are presented below:

<TABLE>
<S>                                                                                            <C>
               Deferred tax assets:
                  Net operating loss carryforwards
                      Total gross deferred tax assets                                          $        7,709,702
                      Less valuation allowance                                                         (7,709,702)
                                                                                               ------------------
                      Net deferred tax assets                                                  $           -
                                                                                               ==================
</TABLE>

                                       28
<PAGE>



NOTE 12 -      PROVISION FOR INCOME TAXES (Continued)

               The valuation allowance for deferred tax assets as of January 1,
               1999 was $2,684,311 The net change in the total valuation
               allowance for the year ended December 31, 1999 was an increase of
               $884,672.

               At December 31, 1999, the Company had net operating loss
               carryforwards of approximately $23,675,082 available to offset
               future taxable Federal income. The Company's utilization of
               California state operating loss carryforwards is unlikely due to
               the Company's move to Utah in early 1998. The carryforward
               amounts expire in varying amounts between 1999 and 2012.

               Due to the change in ownership provisions of the Tax Reform Act
               of 1986, net operating loss carryforwards for Federal income tax
               reporting purposes are subject to annual limitations. Should a
               change in ownership occur, net operating loss carryforwards may
               be limited as to use in future years.













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