LEARN2 CORP - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q
(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

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

FOR THE TRANSITION PERIOD FROM ____________TO_______________

COMMISSION FILE NUMBER 000-27417

LTWC CORPORATION
(FORMERLY KNOWN AS LEARN2 CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 76-0518568
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

111 HIGH RIDGE ROAD
STAMFORD, CT 06905
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE AND ZIP CODE)
(203) 975-9602
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

As of November 14, 2002, approximately 75,661,825 shares of the Registrant's
common stock were outstanding.

LTWC CORPORATION
(FORMERLY KNOWN AS LEARN2 CORPORATION)
FORM 10-Q
For the Quarterly Period Ended September 30, 2002
INDEX

2

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

LTWC CORPORATION
(FORMERLY KNOWN AS LEARN2 CORPORATION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

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

3

LTWC CORPORATION
(FORMERLY KNOWN AS LEARN2 CORPORATION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

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

4

LTWC CORPORATION
(FORMERLY KNOWN AS LEARN2 CORPORATION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30,
(in thousands)
(unaudited)

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

5

LTWC CORPORATION
(FORMERLY KNOWN AS LEARN2 CORPORATION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1. INCORPORATION, NATURE OF BUSINESS AND BASIS OF PRESENTATION

Incorporation and Nature of Business

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

On August 9, 2002, the Company sold the assets of its e-learning business. As
part of the agreement, in September 2002, the Company changed its name to LTWC
Corporation. In connection with the sale, the Company announced that it would
focus its efforts on its permission e-mail marketing business.

Basis of Presentation

The condensed consolidated financial statements of the Company as of and for the
three and nine months ended September 30, 2002 and 2001 included herein are
unaudited, but include all adjustments that the management of the Company
believes are necessary for a fair presentation of the financial position as of
the reported dates and the results of operations for the respective periods
presented. Interim financial statements are not necessarily indicative of
results for the full year. The condensed consolidated financial statements
should be read in conjunction with the audited financial statements and related
notes included in the Company's Form 10-K for the year ended December 31, 2001.
The Company has incurred significant net losses and negative cash flows from
operations since its inception. At September 30, 2002, the Company had an
accumulated deficit of approximately $226.8 million.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of," and the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business (as previously
defined in that Opinion). The provisions of SFAS No. 144 are effective for
financial statements issued for fiscal years beginning after December 15, 2001.
The Company adopted SFAS No. 144 in the first quarter of 2002. The Company has
reported the discontinuance of its transportation management business under the
provisions of APB No. 30 and the discontinuance of the e-learning segments in
accordance with SFAS No. 144.

Accordingly, the Company's condensed consolidated financial statements and notes
included herein reflect the discontinued operations of the transportation
business through September 25, 2001 and e-learning segments through September
30, 2002. The results of discontinued operations do not include any interest
income, interest expense or allocation of corporate expenses.

The audit opinion regarding the Company's 2001 financial statements expressed
substantial doubt as to our ability to continue as a going concern. The
accompanying condensed consolidated financial statements have been prepared
assuming the Company will continue as a going concern, which contemplates the
realization of assets and settlement of liabilities in the normal course of
business. The financial statements did not include any adjustments that might
result from the outcome of this uncertainty.

In addition, the operating results for future periods are subject to numerous
other uncertainties. The Company's ability to achieve positive cash flow depends
upon the continued market success of the Company's services, the costs of
developing, producing, and marketing these services, new laws and regulations,
general economic conditions and various other factors, some of which may be
beyond our control. Many of the Company's costs are fixed and are based on
anticipated revenue levels. The Company may be unable to adjust its spending
quickly enough to offset any unexpected shortfall in cash collections or
revenues.

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If the Company has a shortfall in cash collections or in revenues in relation to
expenses, or if the Company's expenses continue to exceed revenues, it would
need to raise additional funds. Because the Company has never earned a profit,
current liabilities exceed current assets and the Company's low current stock
price, management believes that it will be extremely difficult to raise
additional funds.

Management believes that if the Company can restructure its obligations, meet
its revenue and cash collection targets on a timely basis, receive earn-out
payments related to the sale of the e-learning business, receive payments
from the sale of inventories associated with the discontinued e-learning
business, recover from insurance carriers claims that the Company has filed,
and favorably and timely resolve certain litigation matters, the Company will
have sufficient resources for its operating requirements at least for the
next twelve months. However, if each of the assumptions described in the
preceding sentence are not actualized and the Company is unable to raise
additional funds, it is not likely that the Company will continue as a going
concern.

MANAGEMENT USE OF ESTIMATES

The preparation of 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 disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

The value of intangibles and capitalized software is determined either by
management or by an independent third-party expert, based upon estimates,
information and projections prepared by management. Under SFAS 142,
management is required to evaluate impairments to the carrying value of
capitalized software and intangibles. Management expects to perform this
evaluation in the fourth quarter of 2002.

PER SHARE

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

As of September 30, 2002, the Company has issued warrants to exercise
approximately 1,442,000 shares of its common stock with exercise prices ranging
from $1.98 to $15.61 per share. The warrants expire at various dates through
June of 2005.

7

RECLASSIFICATIONS

Certain prior-year amounts have been reclassified to conform to current year's
presentation.

RECENT ACCOUNTING PRONOUNCEMENTS

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

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

NOTE 2. DISPOSITIONS/ACQUISITIONS

DISPOSITION

On August 9, 2002, the Company and certain subsidiaries sold their respective
e-learning assets. The consideration consists of (i) an initial payment to the
Company of $325,000 and (ii) earn-out payments to the Company and its
subsidiaries of up to $3.71 million. The earn-out payments are to be made
monthly commencing on September 9, 2002, in each case, subject to reduction,
until the earlier of sixty (60) months from August 9, 2002 or the date on which
the aggregate amount of the earn-out payments paid to the Company and its
subsidiaries totals $3.71 million. The Company has recorded a $1.2 million
receivable representing the present value of the minimum earn-out payments due
from the buyer of the assets. This amount is included in the condensed
consolidated balance sheet as of September 30, 2002.

The loss on the sale of the e-learning assets was approximately $6.4 million and
is included in the loss on sale from discontinued operations in the accompanying
condensed consolidated statement of operations for the nine months ended
September 30, 2002.

ACQUISITION

On September 25, 2001, the Company acquired all of the outstanding stock of
Learn2.com and assumed the ongoing operations of Learn2.com. Under the terms of
the merger agreement, the Company issued approximately 37.7 million shares of
its common stock. Each share of Learn2.com common stock outstanding immediately
prior to the completion of the merger automatically converted into the right to
receive 0.4747 shares of common stock of the Company, resulting in the
stockholders of the Company immediately prior to the consummation of the merger
owning approximately 50.1% of the outstanding stock of the combined company. The
former stockholders of Learn2.com, including Learn2.com's $10.0 million
convertible debenture holder, received approximately 49.9% of the combined
company. The total value of the transaction was approximately $19.2 million
including approximately $6.6 million of assumed liabilities, transaction costs
totaling approximately $5.2 million and a pre-closing payment of $1.0 million to
Learn2.com's $10.0 million convertible debenture holder.

The transaction was accounted for using the purchase method of accounting
pursuant to SFAS 141, Business Combinations. The results of Learn2.com for the
period from September 25, 2001 through December 31, 2001 are included in the
consolidated statement of operations for the year ended December 31, 2001.

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NOTE 3. DISCONTINUED OPERATIONS

2002 Discontinued Operations

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

The Company recorded a loss on the sale of discontinued operations totaling $6.4
million, which is included in the statement of operations for the nine months
ended September 30, 2002.

Revenues and net loss generated by the e-learning segments were as follows:

The $1.7 million impairment of long-lived assets for the nine months ended
September 30, 2002 is related to the write-down of fixed assets including
$860,000 for property and equipment, $138,000 for software, and $718,000 for the
write-down of the building in Pryor, Oklahoma.

Included in the $928,000 and the $7.6 million of other costs and expenses for
the three and nine months ended September 30, 2002, respectively, are costs
related to operating the discontinued e-learning segments such as research and
development, sales and marketing, and administrative expenses as well as
severance related to workforce reductions.

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

2001 Discontinued Operations

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

9

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

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

NOTE 4. RESTRUCTURING COSTS

In July 2000, the Company restructured its organization to focus on the
development, marketing and sales of its transportation management solutions and
reduced its emphasis on its Internet postage business. In November 2000, the
Company restructured the organization to phase out its Internet postage
business. In the third quarter of 2002, the Company paid $200,000 related to
this restructuring. As of September 30, 2002, the remaining and unpaid
obligations from these two restructurings totaled $108,000.

On March 4, 2002, the Company announced that it would phase out its production
and distribution operations in Pryor, Oklahoma and close certain field sales
operations and eliminated approximately sixty positions. Severance and related
expenses attributable to the elimination of these positions was approximately
$417,000. Asset write-offs as a result of the closing of the facility totaled
approximately $637,000 related to property and equipment, $145,000 related to
software, and $268,000 related to the write-down of the value of its Pryor,
Oklahoma building. All of these costs are included in loss from discontinued
operations included in the condensed consolidated statement of operations for
the nine months ended September 30, 2002.

Also, in March 2002, a subsidiary of the Company, abandoned its office space in
White Plains, New York and defaulted on the lease relating to that space. In the
first quarter of 2002, as a result of these actions and events, the Company
recorded restructuring charges totaling $1.1 million. Approximately $937,000 was
related to the Company's remaining lease obligation and approximately $206,000
was related to the write-off of fixed assets. In the third quarter of 2002, the
Company and the subsidiary reached a settlement with the landlord on its
remaining lease obligation on the office space in White Plains, New York. As a
result, the Company reversed approximately $673,000 of the restructuring accrual
recorded in the first quarter of 2002. This charge is included as a credit to
restructuring charges in the condensed consolidated statement of operations for
the three and nine months ended September 30, 2002.

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

NOTE 5. SEGMENT INFORMATION

As a result of the sale of its e-learning segments, the Company operates in one
principal business segment: "permission e-mail marketing."

NOTE 6. LITIGATION

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

The preliminary settlement related to the Sales and Marketing Technologies, Inc.
suit that was disclosed previously was finalized during the quarter. The final
settlement did not have a material impact on the Company's financial position.

In October 2002, the Company settled a previously disclosed suit by a former
employee of a wholly-owned subsidiary alleging breach of contract and conversion
in connection with a severance agreement between the plaintiff and the Company.
The amount of the settlement has been accrued for and is included in accrued
liabilities in the accompanying condensed consolidated balance sheet at
September 30, 2002 and loss from discontinued operations for the three and nine
months ended September 30, 2002 in the accompanying condensed consolidated
statement of operations.

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

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

In July 2002, the Company was sued by MicroAge, Inc., relating to a claim that
Micro Age's payment to the Company of $163,800 in January 2000 is recoverable to
MicroAge as a preference in MicroAge's bankruptcy in United States Bankruptcy

11

Court, District of Arizona. The payment was for products and services delivered
by the Company to MicroAge. The Company is vigorously defending this action.
Pendency of these legal proceedings can be expected to result in expenses to the
Company and the diversion of management time and other resources.

The Company entered has entered into various settlement agreements, including
one of the agreements referred to above. If the Company fails to pay the amounts
specified under these agreements, the Company would be liable for additional
payments of approximately $500,000, which amount is not included in the
Company's liabilities at September 30, 2002.

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

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended, including statements regarding our
expectations, beliefs, intentions or strategies regarding the future.
Forward-looking statements include, without limitation, statements regarding the
extent and timing of future revenues, expenses and customer demand, the
deployment of our products and services, and reliance on third parties. Our
actual results could differ materially from those in such forward-looking
statements. Factors that might cause or contribute to such a difference include,
but are not limited to, those discussed under the heading "Risk Factors" in this
Form 10-Q and the risks discussed in our other Securities Exchange Commission
filings. All forward-looking statements included in this document are based on
information available to us as of the date hereof, and we assume no obligation
to update any such forward-looking statement.

OVERVIEW

LTWC Corporation was originally known as E-Stamp Corporation and provided an
Internet postage service that enabled users to purchase, download and print
Internet postage directly from their personal computers without the need to
maintain a persistent Internet connection.

On September 25, 2001, we acquired all of the outstanding stock of Learn2.com, a
publicly traded company, changed the name of our company from E-Stamp
Corporation to Learn2 Corporation and assumed the on-going businesses of
Learn2.com. Learn2.com's offerings included engaging online and physical
learning and training products and complementary services, commonly referred to
as e-learning services, marketed to corporate, government and individual clients
and customers and permission e-mail marketing services.

On November 8, 2001, in connection with the merger, we undertook a corporate
restructuring to outsource the packaging and shipping of our retail products to
an outside fulfillment house and eliminate redundant functions. We incurred
charges of approximately $89,000 related to this restructuring.

On March 4, 2002, we announced that we would phase out our production and
distribution operations in Pryor, Oklahoma and closed certain field sales
operations and eliminated approximately sixty positions. Severance and related
expenses attributable to the elimination of these positions were approximately
$417,000 and were included in loss from discontinued operations included in the
condensed consolidated statement of operations for the nine months ended
September 30, 2002.

On July 2, 2002, we announced that we would close our facility in Golden,
Colorado and the elimination of approximately twenty positions throughout the
organization. We incurred charges of approximately $110,000 related to this
workforce reduction which is included in our loss from discontinued operations
in the condensed statement of operations for the three and nine months ended
September 30, 2002.

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

We provide permission e-mail marketing and tracking services. Our services
include e-mail creation, delivery, tracking and response analysis for a high
volume of client e-mail accounts in a short period of time. Our goal is to be
the preferred

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provider of full service and hosted, large-scale email broadcast campaigns. As
set forth in Note 2 to our condensed consolidated financial statements, our
reported results of operations for all periods prior to September 25, 2001 do
not reflect the results of Learn2.com. Consequently, the results prior to these
dates and our consolidated balance sheet at December 31, 2001 are not reflective
of our operations and financial position as presently constituted.

CRITICAL ACCOUNTING JUDGMENTS

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires estimates and assumptions that
affect the reported amounts of assets and liabilities, revenues and expenses,
and related disclosures of contingent assets and liabilities in the consolidated
financial statements and accompanying notes. The U.S. Securities and Exchange
Commission ("SEC") has defined a company's most critical accounting policies as
the ones that are most important to the portrayal of the company's financial
condition and results of operations, and which require the company to make its
most difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. Based on this definition, we
have identified the critical accounting policies and judgments addressed below.
We also have other key accounting policies, which involve the use of estimates,
judgments and assumptions. For additional information see Note 1 "Summary of
Significant Accounting Policies" in Item 14 of Part IV, "Exhibits, Financial
Statement Schedules and Reports on Form 8-K," of our Annual Report on Form 10-K
for the year ended December 31, 2001. Although we believe that our estimates and
assumptions are reasonable, they are based upon information presently available.
Actual results may differ significantly from these estimates under different
assumptions or conditions. The items in our financial statements requiring
significant estimates, judgments, and accounting policies are as follows:

ESTIMATES AND JUDGMENTS

- - BAD DEBTS AND PRICE ADJUSTMENTS. We maintain allowances for doubtful accounts
for estimated losses resulting from either the inability of our customers to
make required payments or customer price adjustments related to services
performed. If the financial condition of our customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.

- - CAPITALIZED SOFTWARE AND INTANGIBLES. The value of our capitalized software
and intangibles is determined either by management or by an independent
third-party expert, based upon estimates, information and projections prepared
by management. Under SFAS 142, annually, we are required to evaluate impairments
to the carrying value of our capitalized software and intangibles. We expect to
perform this evaluation in the fourth of quarter of 2002.

- - LITIGATION. We are currently involved currently in certain legal proceedings
as discussed in Note 6 in the Notes to Condensed Consolidated Financial
Statements. We do not believe these legal proceedings will have a material
adverse effect on our consolidated financial position or results of operations.
However, were an unfavorable ruling to occur, there exists the possibility of a
material impact on our Company that could adversely affect our ability to
continue as a going concern.

RESULTS OF OPERATIONS

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

THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

CONTINUING OPERATIONS

REVENUES AND GROSS MARGIN

Net revenues for the three and nine months ended September 30, 2002 were
approximately $933,000 and $2.3 million, respectively. Net revenues for the
three and nine months ended September 31, 2001 were $69,000. Revenues consist
primarily of permission e-mail marketing and tracking services. For the three
and nine months ended September 30, 2002, three customers accounted for
approximately 90.7% and 78.6%, respectively, of our revenue. Cost of revenues
consists of the expenses associated with the delivery of permission e-mail and
tracking services, including Internet access and personnel related costs
incurred to fulfill our marketing and tracking services.

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OPERATING EXPENSES

RESEARCH AND PRODUCT DEVELOPMENT EXPENSES

Research and product development expenses were approximately $125,000 and
$424,000 for the three and nine months ended September 30, 2002, respectively
and $25,000 for the three and nine months ended September 30, 2001. Research and
product development expenses relate to the development and enhancement of our
technologies.

SALES AND MARKETING

Sales and marketing expenses were approximately $221,000 and $866,000 for the
three and nine months ended September 30, 2002, respectively and $52,000 for the
three and nine months ended September 30, 2001. Sales and marketing expenses
consist primarily of salaries, commissions, advertising, and advertising costs
of marketing materials.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses were approximately $882,000 and $2.6 million
for the three and nine months ended September 30, 2002, respectively compared to
$1.8 million and $6.0 million for the three and nine months ended September 30,
2001, respectively.

For the three and nine months ended September 30, 2002, general and
administrative expenses consist primarily of personnel related costs, occupancy
costs, professional service fees, and the administrative expenses of a public
company. These expenses exclude those costs associated with our e-learning
business.

For the three and nine months ended September 30, 2001, general and
administrative expenses consisted of expenses associated with the general
responsibilities of a public company, and excluded those costs associated with
our transportation management and Internet postage businesses. These expenses
include salaries and related costs for certain administrative functions,
professional services, including legal and accounting services, insurance and an
allocation of facilities costs. These expenses exclude those costs associated
with our e-learning business.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expenses for the three months and nine months
ended September 30, 2002 were approximately $153,000 and $441,000, respectively.
Depreciation and amortization expenses for the three and nine months ended
September 30, 2001 were approximately $5,000.

RESTRUCTURING CHARGES

In March 2002, one of our subsidiaries abandoned its office space in White
Plains, New York and defaulted on the lease relating to that space. As a result
of these actions and events, we recorded a charge of approximately $1.1 million
in the first quarter of 2002 for the remaining lease obligation for the office
space in White Plains, New York and the write-off of fixed assets located in
this facility. In the third quarter of 2002, we reached a settlement with the
landlord on our remaining lease obligation on the office space in White Plains,
New York. As a result, we reversed approximately $673,000 of the restructuring
accrual recorded in the first quarter of 2002.

INTEREST AND OTHER, NET

Interest and other, net for the three months ended September 30, 2002 was income
of $117,000 and $298,000, respectively. The $117,000 for the three months ended
September 30, 2002 primarily consisted of the reversal of prior year's
restructuring accrual offset by non-operating expenses. The $298,000 consisted
primarily of a franchise tax refund and the reversal of a prior year's
restructuring accrual offset by non-operating expenses. Interest and other, net
for the three and nine months ended September 30, 2001 was income of $201,000
and $644,000, respectively. The income for the three and nine months ended
September 30, 2002 was comprised primarily of interest income.

14

DISCONTINUED OPERATIONS

NET LOSS FROM DISCONTINUED OPERATIONS

Discontinued Operations

Calendar Year 2002

Net Loss From Discontinued Operations

Net Loss from discontinued operations of $786,000 for the three months ended
September 30, 2002 reflects the operating costs related to our e-learning
segments as well as termination costs related to closing the operations, net of
revenues of $142,000. This loss was partially offset by the beneficial
settlement of outstanding obligations related to the e-learning segment.

Loss from discontinued operations of $6.7 million for the nine months ended
September 30, 2002 reflects the operating expenses related to our e-learning
segments, net of revenues of $2.7 million. Included in this amount is $1.7
million relating to the write-down of certain intangible assets and the
remaining fixed assets of the e-learning segments including $860,000 for
property and equipment, $138,000 for software, and $718,000 for the write-down
of our building in Pryor, Oklahoma.

Net Loss on Disposal of Discontinued Operations

Net loss on disposal of discontinued operations for the three months ended
September 30, 2002 was $202,000. This represents the additional write-down of
accounts receivable and inventories associated with the e-learning segments.

Net loss on disposal of discontinued operations for the nine months ended
September 30, 2002 was $6.4 million. On August 9, 2002, we and certain
subsidiaries sold our respective e-learning assets. We received consideration
consisting of (i) an initial payment to the Company of $325,000 and (ii)
earn-out payments to the Company and its subsidiaries of up to $3.71 million.
The earn-out payments are to be made monthly commencing on September 9, 2002, in
each case, subject to reduction until the earlier of sixty (60) months from
August 9, 2002 or the date on which the aggregate amount of the earn-out
payments paid to us and our subsidiaries totals $3.71 million. We have recorded
a $1.2 million receivable representing the present value of the minimum earn out
payments due from the buyer of the assets. This represents a total purchase
price of $1.5 million. This is offset by the write-off of the remaining
intangible assets of $4.7 million, property, plant and equipment totaling
$879,000, accounts receivable of $106,000, and inventory of $184,000. This was
also further offset by legal and consulting fees associated with this
transaction.

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

15

Calendar Year 2001

Net Loss From Discontinued Operations

For the nine months ended September 30, 2001, loss from discontinued operations
reflects the operating expenses related to our transportation management
business through the measurement date of April 17, 2001, net of revenues from
that business of approximately $300,000.

Net (Loss) Gain On Disposal Of Discontinued Operations

In April 2001, we sold all of our patent and patent applications and certain
trademarks and domain names related to our Internet postage for cash proceeds of
$7.5 million. In June 2001, we sold our maintenance contracts and trademarks
related to our DigitalShipper and e-Receive products for cash proceeds of
$55,000 and a promissory note of $110,000. We recorded gains totaling
approximately $7.7 million related to these transactions.

These gains were offset by costs of discontinuing the transportation management
business, including costs related to shutting down the business's operations
after the April 17, 2001 measurement date, charges for fixed asset impairment
and an accrual for lease termination costs. For the nine months ended September
30, 2001, the gain on disposal of discontinued operations was approximately
$30,000.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our operations primarily through private and
public sales of equity securities. We have received net proceeds of
approximately $72.9 million in private placements of our equity securities and
net proceeds of $125.4 million from the initial public offering of our common
stock. As of September 30, 2002, we had cash and cash equivalents totaling
$642,000.

Net cash used in continuing operations totaled $1.8 million for the nine months
ended September 30, 2002 while net cash used in continuing operations for the
nine months ended September 30, 2001 totaled $5.5 million. These amounts
resulted primarily from net operating losses during those periods offset by
non-cash charges.

Net cash used in discontinued operations totaled $4.5 million for the nine
months ended September 30, 2002 while net cash used in discontinued operations
for the nine months ended September 30, 2001 totaled $13.8 million.

Net cash used in investing activities totaled $450,000 for the nine months ended
September 30, 2002. This resulted from the initial payment of $325,000 for the
sale of the e-learning segments assets and $270,000 from proceeds of sales of
fixed assets offset by purchases of property and equipment. Net cash provided by
investing activities totaled $6.8 million for the nine months ended September
30, 2001 and resulted mainly from the sale of discontinued operations and a
decrease in restricted cash and other assets offset by merger related expenses
and the purchase of assets.

Net cash provided by financing activities totaled $200,000 for the nine months
ended September 30, 2002.

We have incurred significant net losses and negative cash flows from operations
since our inception. At September 30, 2002, we had an accumulated deficit of
approximately $226.8 million.

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

The audit opinion regarding our 2001 financial statements expressed substantial
doubt as to our ability to continue as a going concern. The accompanying
condensed consolidated financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the realization of
assets and settlement of liabilities in the normal course of business. The
financial statements did not include any adjustments that might result from the
outcome of this uncertainty.

In addition, the operating results for future periods are subject to numerous
other uncertainties. Our ability to achieve positive cash flow depends upon the
continued market success of the our services, the costs of developing,
producing, and

16

marketing these services, new laws and regulations, general economic conditions
and various other factors, some of which may be beyond our control. Many of our
costs are fixed and are based on anticipated revenue levels. We maybe unable to
adjust our spending quickly enough to offset any unexpected shortfall in cash
collections or revenues.

If we have a shortfall in cash collections or in revenues in relation to
expenses, or if our expenses continue to exceed revenues, we would need to raise
additional funds. Because we have never earned a profit, current liabilities
exceed current assets and our low current stock price; we believe that it will
be extremely difficult to raise additional funds.

We believe that if we restructure our obligations, meet our revenue and cash
collection targets on a timely basis, receive earn-out payments related to
the sale of the e-learning business, receive payments from the sale of
inventories associated with the discontinued e-learning business, recover
from our insurance carriers claims we have filed, and favorably and timely
resolve the lawsuits with Morrison and Foerster, Rydell, MicroAge and other
litigation matters, we will have sufficient resources for our operating
requirements at least for the next twelve months. However, if each of the
assumptions described in the preceding sentence, are not actualized and we
are unable to raise additional funds, it is not likely that we will continue
as a going concern

In January 2002, a complaint was filed against us alleging certain common law
claims. In connection with the settlement of the complaint, on January 24, 2002
we issued a promissory note in the principal amount of $400,000 accruing
interest at the rate of 10% per annum. The promissory note is due and payable
upon the earlier of (i) the completion of a Financing (as defined in the
promissory note) or (ii) any dissolution, extraordinary dividend,
recapitalization or similar transaction involving our company. At September 30,
2002, the principal amount of the promissory note is included in other
liabilities in the condensed consolidated financial statements.

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

Through September 30, 2002 Mr. Riley was paid $24,750 under the termination
clause of his Employment Agreement. In October 2002, we and Mr. Riley agreed
to a mutual release under which we were relieved from our obligations in
exchange for a one-time payment of $25,000 and the issuance of a warrant to
purchase 40,000 shares of the our common stock.

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

In May 1999, Robert Ewald now the Chairman of the Board of Directors
exercised unvested stock options through the issuance of a note payable. In
October 2000, we repurchased certain unvested shares and reduced the note
payable to approximately $470,000. At that time we held 652,344 vested shares
as collateral. In September 2001, we and Mr. Ewald entered into a retention
agreement under which the note would be forgiven in the event that Mr.
Ewald's employment was terminated without cause or as a result of
constructive termination within the two year period following the completion
of the merger with Learn2.com, Inc. As a result, at September 30, 2001, we
fully reserved the note. On June 28, 2002, the Board of Directors approved a
proposal to reduce the original exercise price to $0.075 per share, which
represented the last reported sale price of our common stock on the Nasdaq
Small Cap Market on that date. As a result, the outstanding principal balance
of the note was reduced to approximately $49,000. On July 2, 2002, Mr. Ewald
surrendered his right, title and interest in the shares held as collateral in
exchange for the note.

RECENT ACCOUNTING PRONOUNCEMENTS

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

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses financial
accounting and reporting for costs associated with an exit or disposal activity
and requires such costs to be recognized when the liability is incurred.
Previous guidance in EITF No. 94-3, "Liability

17

Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Certain Costs Incurred in a Restructuring)" ("EITF 94-3"), required
that a liability for an exit cost be recognized at the date we commit to an exit
plan. The provisions of SFAS 146 are effective for exit or disposal activities
that are initiated by a company after December 31, 2002. The adoption of SFAS
146 is not expected to have a material effect on our financial position or
results of operations.

RISK FACTORS

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

WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT; WE MAY CONTINUE TO
EXPERIENCE LOSSES.

For the three months ended September 30, 2002, we incurred a net loss of
$842,000 and for the nine months ended September 30, 2002, we incurred a net
loss of $15.7 million. At September 30, 2002, we had an accumulated deficit of
approximately $226.8 million. We may continue to incur losses for the
foreseeable future. We may never become profitable.

OUR AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A
GOING CONCERN; AS OF SEPTEMBER 30, 2002 OUR CURRENT LIABILITIES EXCEEDED OUR
CURRENT ASSETS.

Our auditors have expressed substantial doubt as to our ability to continue as a
going concern. As of September 30, 2002, our current liabilities exceeded our
current assets by approximately $1.9 million. The accompanying condensed
consolidated financial statements have been prepared assuming we will continue
as a going concern, which contemplates the realization of assets and settlement
of liabilities in the normal course of business.

In addition, the operating results for future periods are subject to numerous
other uncertainties. Our ability to achieve positive cash flow depends upon the
continued market success of the our services, the costs of developing,
producing, and marketing these services, new laws and regulations, general
economic conditions and various other factors, some of which may be beyond our
control. Many of our costs are fixed and are based on anticipated revenue
levels. We maybe unable to adjust its spending quickly enough to offset any
unexpected shortfall in cash collections or revenues.

If we have a shortfall in cash collections or in revenues in relation to
expenses, or if our expenses continue to exceed revenues, we would need to raise
additional funds. Because we have never earned a profit, current liabilities
exceed current assets and our low current stock price; we believe that it will
be extremely difficult to raise additional funds.

We believe that if we restructure our obligations, meet our revenue and cash
collection targets on a timely basis, receive earn-out payments related to
the sale of the e-learning business, receive payments from the sale of
inventories associated with the discontinued e-learning business, recover
from our insurance carriers claims we have filed, and favorably and timely
resolve the lawsuits with Morrison and Foerster, Rydell, MicroAge and other
litigation matters, we will have sufficient resources for our operating
requirements at least for the next twelve months. However, if each of the
assumptions described in the preceding sentence, are not actualized and we
are unable to raise additional funds, it is not likely that we will continue
as a going concern

WE MAY NOT REALIZE THE INTENDED BENEFITS OF THE SALE OF OUR E-LEARNING BUSINESS.

We have completed the sale of our e-learning business. The consideration
includes earn-out payments to our Company of up to $3.71 million. The earn-out
payments, which are due monthly for sixty months following August 9, 2002, are
subject to reduction on account of any set off right that the buyer may have
against us and termination upon certain events. Furthermore, each of the first
two earn-out payments have been approximately one month late. The payment due
November 9, 2002 has not yet been received. In addition, we are entitled to
payments for the sale of certain accounts receivable. Failure to collect the
earn-out payments, and/or payments for the receivables will have a material
adverse effect on our ability to

18

continue as a going concern. Also, we are entitled to payments upon
sell-through, for inventories that have been consigned to Learn.com, the buyer
of the e-learning business. Learn.com is not obligated to buy any of the
inventories and, to date, we have not received any payments for the inventories
actually sold-through. Based on the foregoing and other information we have
received from Learn.com, as of November 19, 2002, Learn.com is approximately
$45,000 in arrears with respect to payments due to us.

WE ARE DEPENDENT ON THREE CUSTOMERS FOR A SIGNIFICANT PORTION OF REVENUES

For the three and nine months ended September 30, 2002, three of our customers
accounted for approximately 90.7% and 78.6%, respectively, of our revenues. If
any of these customers was to stop utilizing our services, we may be unable to
replace the lost revenue.

OUR RECENT WORKFORCE REDUCTIONS AND POOR FINANCIAL PERFORMANCE HAS AND WILL
CONTINUE TO PLACE ADDITIONAL STRAIN ON OUR RESOURCES AND MAY HARM THE MORALE AND
PERFORMANCE OF OUR EMPLOYEES AND OUR ABILITY TO HIRE NEW ONES.

In connection with our efforts to streamline our operations, reduce costs and
bring our staffing and structure in line with our expected revenue base, in
November 2001, March 2002, July 2002, and August 2002, we restructured our
organization and reduced our workforce by more than 125 employees. There have
been and may continue to be substantial costs associated with the workforce
reductions related to severance and other employee-related costs, as well as
material charges for reduction of excess facilities. Our restructuring plan may
yield unanticipated consequences, such as attrition beyond that which we
planned. These workforce reductions have placed significant strain on our
administrative, operational and financial resources. As a result, our ability to
respond to unexpected challenges may be impaired and we may be unable to take
advantage of new opportunities. In addition, employees who were terminated
possessed specific knowledge or expertise, and that knowledge or expertise may
prove to have been important to our continuing operations. In that case, their
absence may create significant difficulties. Further, the reduction in workforce
may reduce employee morale and may create concern among potential and existing
employees about their job security, which may lead to difficulty in hiring and
increased turnover in our current workforce, and divert management's attention.
In addition, these headcount reductions may subject us to the risk of
litigation, which could result in substantial costs to us and would divert our
time and attention away from business operations.

IF THE DELIVERY OF EMAIL MESSAGES IS LIMITED OR BLOCKED, THEN OUR CLIENTS MAY
DISCONTINUE THEIR USE OF OUR SERVICES. MISCHARACTERIZATION OF PERMISSION EMAIL
WE SEND ON BEHALF OF OUR CLIENTS AS SPAM, OR UNSOLICITED COMMERCIAL EMAIL HAS
AND WILL CONTINUE TO HAVE AN ADVERSE EFFECT ON OUR BUSINESS

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

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

CHANGES IN LAWS RELATING TO DATA COLLECTION AND USE PRACTICES AND THE PRIVACY OF
INTERNET USERS AND OTHER INDIVIDUALS COULD HARM OUR BUSINESS.

Websites usually place certain information called "cookies" on a user's hard
drive usually without the user's knowledge or consent. Websites use cookies for
a variety of reasons. We employ the use of cookies on our Websites. Certain
Internet browsers allow users to modify their browser settings to remove cookies
at any time or to prevent cookies from being stored on their hard drive. In
addition, some Internet commentators, privacy advocates and governmental bodies
have suggested limiting or eliminating the use of cookies. The effectiveness of
our technology and products could be limited by any reduction or limitation in
the use of cookies. In this regard, there are a large number of legislative
proposals before the United States Congress, foreign governments and other
international regulatory agencies regarding privacy issues and the regulation

19

and use of cookies. It is not possible to predict whether or when such
legislation may be adopted, and certain proposals, if adopted, could adversely
affect our business. This could be caused by, among other possible provisions,
the requirement that permission be obtained before we use cookies.

WE FACE LEGAL UNCERTAINTIES RELATING TO THE INTERNET IN GENERAL AND TO OUR
INDUSTRY IN PARTICULAR AND MAY BECOME SUBJECT TO COSTLY GOVERNMENT REGULATION.

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

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

OUR STOCK PRICE HAS HISTORICALLY BEEN VOLATILE, WHICH MAY MAKE IT MORE DIFFICULT
FOR YOU TO RESELL SHARES WHEN YOU WANT TO DO SO AND AT PRICES YOU FIND
ATTRACTIVE.

The trading price of our common stock can fluctuate significantly. For example,
during the 52-week period ended November 18, 2002, the market price of our
common stock ranged from $0.03 to $0.28 per share. In addition, the market
prices for micro and small cap companies in particular, experience, sometimes on
a daily basis, extreme volatility that often has been unrelated to the
performance of those companies.

WE MAY LOSE OUR LISTING ON THE NASDAQ SMALL CAP MARKET WHICH COULD RESULT IN
YOUR BEING UNABLE TO SELL OUR COMMON STOCK READILY OR AT ALL.

Shares of our common stock are currently listed on the Nasdaq Small Cap Market.
We must comply with Nasdaq Marketplace Rules, in order to maintain the listing
of our common stock on the Nasdaq Small Cap Market. Among these rules is a
requirement that the bid price per share of our common stock must close at or
above $1.00. We are not in compliance with this rule and have been notified as
such by Nasdaq. If our common stock is delisted from the Nasdaq Small Cap
Market, your ability to trade in our common stock may be impacted adversely, not
only in the number of shares which could be bought or sold, but also through
delays in the timing of transactions and a reduction in media coverage. This may
reduce the demand of our common stock and thus the trading price. A delisting
may impair further our ability to raise additional capital.

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

20

FUTURE SALES OF OUR COMMON STOCK BY OUR STOCKHOLDERS COULD HAVE AN ADVERSE
EFFECT ON THE MARKET PRICE OF OUR COMMON STOCK.

In connection our acquisition of Learn2.com, certain current and former
directors and officers of our company and Learn2.com's $10 million convertible
debenture holder were restricted from selling their shares of our common stock
until March 25, 2002. For the six-month period beginning March 25, 2002 until
September 25, 2002, those parties were subject to certain trading limitations.
The overhang on the market of these shares could have an adverse effect on the
market price of our common stock.

WE OPERATE IN A RAPIDLY CHANGING, COMPETITIVE MARKET AND WE MAY NOT HAVE
ADEQUATE RESOURCES TO COMPETE SUCCESSFULLY.

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

OUR FUTURE GROWTH DEPENDS ON OUR ABILITY TO RETAIN KEY, AND WE MAY BE UNABLE TO
HIRE AND RETAIN THE SKILLED PERSONNEL WE NEED TO SUCCEED.

Our future growth and success depends to a significant extent on the continued
service of Marc E. Landy, Executive Vice President, Chief Financial Officer,
Secretary and Treasurer of our company, Paul Goldman our recently appointed
President and Chief Executive Officer and other key employees. Recently Jerry
Sandoval our President and several other key employees left our company to
pursue other interests. Although one of these former employees may agree to
consult to our company on a short-term basis, these resignations have placed
significant strain on our organization. As a result, our ability to respond to
unexpected challenges may be impaired and we may be unable to take advantage of
new opportunities. In addition, these employees possessed specific knowledge or
expertise, which is important to our continuing operations. Competition for
highly skilled personnel is intense. Therefore, if we are unable to fill the gap
created by these resignations, we may face significant difficulties. Further,
their resignations have reduced employee morale and may create concern among
potential and existing employees about their job security, which may lead to
difficulty in hiring and increased turnover in our current workforce, and divert
management's attention. Additionally, our recent workforce reductions and poor
financial performance has and will continue to place additional strain on our
people and may harm the morale and performance of our employees and our ability
to hire new ones. The loss of one or more key or other employees or our
inability to attract additional qualified employees or retain other employees
could have a material adverse effect on our business, results of operations or
financial condition.

WE FACE A RISK OF SYSTEM FAILURE.

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

UNAUTHORIZED BREAK-INS TO OUR SERVICE COULD HARM OUR BUSINESS.

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

21

WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH ARE COSTLY
TO DEFEND AND COULD LIMIT OUR ABILITY TO USE CERTAIN TECHNOLOGIES IN THE FUTURE.

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

OUR INTELLECTUAL PROPERTY RIGHTS ARE COSTLY AND DIFFICULT TO PROTECT.

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

WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE
LIABLE FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.

Third parties may infringe or misappropriate our patents, trademarks or other
proprietary rights, which could have a material adverse effect on our business,
results of operations or financial condition. While we enter into
confidentiality agreements with many of our employees, consultants and strategic
partners and generally control access to and distribution of our proprietary
information, the steps we have taken to protect our proprietary rights may not
prevent misappropriation. We also attempt to register our trademarks and service
marks. However, we may not receive approval on all of our trademark
registrations or patent applications. Even if they are approved, such trademarks
or patents may be challenged by others or invalidated. In addition, we do not
know whether we will be able to defend our proprietary rights because the
validity, enforceability and scope of protection of proprietary rights in
Internet-related industries is uncertain and still evolving.

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

DISCLOSURES ABOUT MARKET RISK

The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion contains forward-looking statements that are subject to risks and
uncertainties. Actual results could differ materially as a result of a number of
factors, including those set forth under caption "Risk Factors" set forth in
Item 2.

INTEREST RATE RISK

As of September 30, 2002, we had cash and cash equivalents of approximately
$642,000. Cash equivalents consist of short-term investments. Due to the
short-term nature of these investments and our investment policies and
procedures, we have determined that the risk associated with interest rate
fluctuations related to these financial instruments does not pose a material
risk to us. As of September 30, 2002, we did not have any outstanding short or
long-term debt. Increases in interest rates could, however, increase the
interest expense associated with our future borrowings, if any. We do not hedge
against interest rate increases.

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FOREIGN CURRENCY EXCHANGE RATE RISK

We do not believe we have any significant direct foreign currency exchange rate
risk. We do not hedge against foreign currency exchange rate changes.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF CONTROLS AND PROCEDURES. In response to recent legislation and
proposed regulations, we established a disclosure committee. The disclosure
committee currently consists of our Chief Executive Officer and President
Paul A. Goldman, who was appointed CEO on November 6, 2002; our Chief
Financial Officer, Marc E. Landy; our Vice President/Controller, Michael M.
Arons; and the Vice President of Finance at our primary operating subsidiary,
Paul Forsyth.

Mr. Goldman's appointment followed the resignation of certain members of the
previous disclosure committee, including our former President and Chief
Operating Officer, Jerry Sandoval. Beginning November 7, 2002, our Disclosure
Committee carried out an evaluation of the effectiveness of the design and
operation of our internal control structure and our disclosure controls and
procedures. Although we believe our pre-existing internal controls and
procedures were adequate to enable us to comply with our disclosure obligations,
as a result of the evaluation and the recent resignations, we are implementing
minor changes, primarily to formalize and document the procedures already in
place.

CEO AND CFO CERTIFICATIONS. Appearing immediately following the Signatures
section of this Quarterly Report there are two separate forms of
"Certifications" of the CEO and the CFO. The first form of Certification is
required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the
Section 302 Certification). This section of the Quarterly Report that you are
currently reading is the information concerning the Controls Evaluation referred
to in the Section 302 Certifications and this information should be read in
conjunction with the Section 302 Certifications for a more complete
understanding of the topics presented.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS. Disclosure Controls are procedures
that are designed with the objective of ensuring that information required to be
disclosed in our reports filed under the Securities Exchange Act of 1934, such
as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and
reported within the time periods specified in SEC's rules and forms. Disclosure
Controls are also designed with the objective of ensuring that such information
is accumulated and communicated to our management, including the CEO and CFO, as
appropriate to allow timely decisions regarding required disclosure. Internal
Controls are procedures that are designed with the objective of providing
reasonable assurance that (1) our transactions are properly authorized; (2) our
assets are safeguarded against unauthorized or improper use; and (3) our
transactions are properly recorded and reported, all to permit the preparation
of our financial statements in conformity with generally accepted accounting
principles.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS. Our management, including our CEO
and CFO, does not expect that our Disclosure Controls or our Internal Controls
will prevent all error and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the control. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions;
over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.

SCOPE OF THE CONTROLS EVALUATION. The CEO/CFO evaluation of our Disclosure
Controls and our Internal Controls included a review of the controls' objectives
and design, the controls' implementation by the company and the effect of the
controls on the information generated for use in this Quarterly Report. In the
course of the Controls Evaluation, we sought to identify data errors, controls
problems or acts of fraud and to confirm that appropriate corrective action,
including process improvements, were being undertaken. This type of evaluation
will be done on a quarterly basis so that the conclusions

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concerning controls effectiveness can be reported in our Quarterly Reports on
Form 10-Q and Annual Report on Form 10-K. Our Internal Controls are also
evaluated on an ongoing basis by our other personnel in our Finance organization
and by our independent auditors in connection with their audit and quarterly
review activities. The overall goals of these various evaluation activities are
to monitor our Disclosure Controls and our Internal Controls and to make
modifications as necessary; our intent in this regard is that the Disclosure
Controls and the Internal Controls will be maintained as dynamic systems that
change (including with improvements and corrections) as conditions warrant.

Among other matters, we sought in our evaluation to determine whether there were
any "significant deficiencies" or "material weaknesses" in the Company's
Internal Controls, or whether the Company had identified any acts of fraud
involving personnel who have a significant role in the company's Internal
Controls. This information was important both for the Controls Evaluation
generally and because items 5 and 6 in the Section 302 Certifications of the CEO
and CFO require that the CEO and CFO disclose that information to our Board's
Audit Committee and to our independent auditors and to report on related matters
in this section of the Quarterly Report. In the professional auditing
literature, "significant deficiencies" are referred to as "reportable
conditions"; these are control issues that could have a significant adverse
effect on the ability to record, process, summarize and report financial data in
the financial statements. A "material weakness" is defined in the auditing
literature as a particularly serious reportable condition where the internal
control does not reduce to a relatively low level, the risk that misstatements
caused by error or fraud may occur in amounts that would be material in relation
to the financial statements and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We also
sought to deal with other controls matters in the Controls Evaluation, and in
each case if a problem was identified, we considered what revision, improvement
and/or correction to make in accord with our on-going procedures.

In order to reach the conclusions that follow, and in addition to the evaluation
of controls referred to above, Mr. Goldman interviewed Messrs. Landy, Arons and
Forsyth.

CONCLUSIONS. Based upon the Controls Evaluation, our CEO and CFO have concluded
that, subject to the limitations noted above, our Disclosure Controls are
effective to ensure that material information relating to LTWC and its
consolidated subsidiaries is made known to management, including the CEO and
CFO, particularly during the period when our periodic reports are being
prepared, and that our Internal Controls are effective to provide reasonable
assurance that our financial statements are fairly presented in conformity with
generally accepted accounting principles.

PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be a party to litigation and claims incident to the
ordinary course of our business. Although the results of litigation and claims
cannot be predicted with certainty, we believe that the final outcome of such
matters will not have a material adverse effect on the business, results of
operations, or financial condition of our Company. However an unfavorable result
in any one of these lawsuits could have a material adverse effect on our ability
to continue as a going concern.

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

The preliminary settlement related to the Sales and Marketing Technologies, Inc.
suit that was disclosed previously was finalized during the quarter. The final
settlement did not have a material impact on our financial position during the
quarter.

In October 2002, we settled a previously disclosed suit by a former employee of
a wholly-owned subsidiary alleging breach of contract and conversion in
connection with a severance agreement between the plaintiff and the Company. The
cost of the settlement is included in accrued liabilities in the accompanying
balance sheet at September 30, 2002.

On February 6, 2002, Morrison & Foerster, a law firm, filed suit against a
consolidated subsidiary of the Company, in the Superior Court of California, San
Francisco County, California. The plaintiff alleges a violation of California
Business & Professional Code, Section 17538.45 and 17200 et. seq., in connection
with permission e-mail marketing services. The suit

24

was later modified to include us as a defendant. The plaintiff seeks statutory
damages, to enjoin us and the subsidiary from further violations of the
specified statutes, costs and fees. We and the subsidiary are vigorously
defending this action. Pendency of these legal proceedings has resulted and can
be expected to continue to result in expenses and the diversion of management
time and other resources.

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

In July 2002, we were served by MicroAge, Inc., relating to a claim that Micro
Age's payment to us of $163,800 in January 2000 is recoverable to MicroAge as a
preference in MicroAge's bankruptcy in United States Bankruptcy Court, District
of Arizona. The payment was for products and services delivered by us to
MicroAge. We are vigorously defending this action. Pendency of these legal
proceedings can be expected to result in expenses to us and the diversion of
management time and other resources.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

(a) Exhibits.

99.1 Certification pursuant to 18 U.S.C. section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley act of 2002 for
Paul A. Goldman, President and Chief Executive Officer of the
Company and Marc E. Landy, Chief Financial Officer of our
Company.

(b) Reports on Form 8-K

A current report on Form 8-K was filed with the Securities and Exchange
Commission by LTWC Corporation on August 14, 2002 to report under Item 2
disposition of assets.

SIGNATURES, AND CERTIFICATIONS OF THE CHIEF EXECUTIVE OFFICER AND THE CHIEF
FINANCIAL OFFICER OF THE COMPANY.

The following pages include the Signatures page for this Form 10-Q, and two
separate Certifications of the Chief Executive Officer (CEO) and the Chief
Financial Officer (CFO) of the company.

The first form of Certification is required by Rule 13a-14 under the Securities
Exchange Act of 1934 (the Exchange Act) in accord with Section 302 of the
Sarbanes-Oxley Act of 2002 (the Section 302 Certification). The Section 302
Certification includes references to an evaluation of the effectiveness of the
design and operation of the company's "disclosure controls and procedures" and
its "internal controls and procedures for financial reporting". Item 4 of Part I
of this Quarterly Report presents the conclusions of the CEO and the CFO about
the effectiveness of such controls based on and as of the date of such
evaluation (relating to Item 4 of the Section 302 Certification), and contains
additional information concerning disclosures to the company's Audit Committee
and independent auditors with regard to deficiencies in internal controls and
fraud (Item 5 of the Section 302 Certification) and related matters (Item 6 of
the Section 302 Certification).

The second form of Certification is required by section 1350 of chapter 63 of
title 18 of the United States Code.

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SIGNATURE

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

Dated: November 19, 2002

LTWC CORPORATION

By: /s/ MARC E. LANDY

Marc E. Landy
Executive Vice President, Chief Financial Officer,
Secretary and Treasurer (Principal Financial and
Accounting Officer)

CERTIFICATION

I, Marc E. Landy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LTWC Corporation;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
a) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 19, 2002

By: /s/ Marc E. Landy
------------------
Marc E. Landy

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CERTIFICATION

I, Paul A. Goldman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LTWC Corporation;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
d) designed such disclosure controls and procedures to ensure that
material information relating to the registrant including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
e) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
f) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
b) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 19, 2002
By: /s/ Paul A. Goldman
--------------------
Paul A. Goldman

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