GOLF USA - FDD UFOC ITEM 3 Detail

Item 3. LITIGATION

LAXMI Investments. LLC v. Golf USA. Inc.. Superior Court of California, County of Santa Clara, Case No. CV766985; removed to U.S. District Court, Northern District of California, Case No. C-97-20841 EAI ARB, Case No. C-97-20841 RMW; American Arbitration Association, Case No. 74-114-02096-02.

On August 11, 1997, LAXMI Investments, LLC, a franchisee ("LAXMI"), filed an action against us in the Superior Court of California, alleging that we breached the franchise agreement and made misrepresentations concerning operations. On November 8, 2002, LAXMI filed an arbitration demand with the American Arbitration Association after the trial court ordered the matter to arbitration in California. Although we denied its allegations, we settled the arbitration on July 14,

2003 by agreeing to pay $250,000 to LAXMI in exchange for dismissal, with prejudice, of all of its claims against us.

LAXMI''s action arose before current ownership and therefore prior owners are obligated to fully indemnify us for all of our costs and expenses relating to the settlement. As such, the settlement will not adversely affect our current financial statements.

Other than this 1 action, we are not required to disclose any legal proceedings in this Disclosure Document.