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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

COMMISSION FILE NUMBER: 0-27417

LTWC CORPORATION
(Exact name of registrant as specified in its charter)

(203) 975-9602
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK,
PAR VALUE $0.001 PER SHARE

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Act Yes o    No ý

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: $4,932,793 as of June 28, 2002.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 75,747,984, as of April 9, 2003.

Documents Incorporated by Reference: None

LTWC CORPORATION
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2002

TABLE OF CONTENTS

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PART I

ITEM 1. BUSINESS

        This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements based on expectations, estimates and projections as of the date of this filing. Actual results may differ materially from those expressed in forward-looking statements. See Item 7 of Part II—"Management's Discussion and Analysis of Financial Condition and Results of Operations—Forward-Looking Statements."

History

        LTWC Corporation was originally known as E-Stamp Corporation, founded in 1994, 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. In May 2000, we acquired two companies, Infinity Logistics and Automated Logistics for a total purchase price of $9.0 million. These companies offered transportation management and warehouse management products and services that allowed enterprise customers to review carrier rates and shipping options, select a carrier, print shipping labels, track shipments and create shipping reports. During 2000, we undertook two corporate restructurings. In July 2000, we restructured the organization to accelerate the development, marketing and sales of our transportation management products and services in addition to our Internet postage business. In November 2000, we restructured the organization to phase out our Internet postage business. We incurred charges of approximately $20.3 million related to these restructurings, which is included in loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2000. On April 19, 2001, in connection with our then planned merger with Learn2.com, Inc., a publicly traded company, we discontinued our remaining transportation management business.

        On September 25, 2001, we acquired all of the outstanding stock of Learn2.com, 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 e-learning business included engaging online and physical learning and training products and complementary services, marketed to corporate, government and individual clients and customers and an e-mail marketing services business that provided permission e-mail marketing and tracking services. The services included e-mail creation, delivery, tracking and response analysis for a high volume of client e-mail accounts in a short period of time. Under the terms of the merger agreement, we issued approximately 37.8 million shares of our 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 our common stock resulting in our stockholders 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.

        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, which is included in loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2001.

        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

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60 positions. Severance and related expenses attributable to the elimination of these positions were approximately $409,000 and are included in loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2002.

        On July 2, 2002, we announced that we would close our facility in Golden, Colorado and the elimination of approximately 20 positions throughout the organization. We incurred charges of approximately $110,000 related to this workforce reduction and this amount is included in our loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2002.

        On August 9, 2002, we sold our e-learning assets. As part of the agreement, we changed our name to LTWC Corporation. The consideration consisted of (1) an initial payment to us of $325,000, paid on August 9, 2002 and (2) earn-out payments of up to a maximum of $3.71 million. The earn-out payments were to be made monthly commencing on September 9, 2002, in each case, subject to reduction, until the earlier of 60 months from August 9, 2002, or the date on which the aggregate amount of the earn-out payments paid 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.

        On March 28, 2003, we and certain subsidiaries entered into an agreement with the buyer of the e-learning assets whereby the buyer agreed to pay us $540,000 to buy-out the remaining earn-out payments and monies owed to us for consigned inventory and purchased receivables. As a result, we wrote-off the receivable representing the present value of the minimum earn-out payments to $540,000. The write-off of the receivable of approximately $563,000 and the write-off of amounts due on consigned inventory and purchased receivables totaling $42,000 were recorded as a charge to net loss (gain) on disposal of discontinued operations in the accompanying consolidated statement of operations for the year ended December 31, 2002.

        As used herein, LTWC Corporation, "we" "our" and similar terms include LTWC Corporation and its subsidiaries, unless the context indicates otherwise.

Permission E-Mail Marketing Overview

        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 provider of full service and hosted, large-scale email broadcast campaigns. As set forth in Note 1 to our consolidated financial statements, our reported results of operations for all periods prior to September 25, 2001 do not reflect the results of Learn2.com. Furthermore, only our e-mail marketing services business is included in our results from continuing operations. Our other businesses are reflected as discontinued operations in the accompanying consolidated financial statements.

Marketplace

        The permission e-mail marketing and tracking industry is in its early stages of development. We believe that the industry will evolve over the next few years as permission e-mail marketing becomes even more widely used and as traditional direct marketers leverage e-mail marketing in their businesses. The permission e-mail market is extremely competitive. Participants compete primarily in the following areas: reporting and tracking capabilities, customer service, ability to deliver to AOL, MSN and Yahoo e-mail addresses, brand recognition, ease of implementation, time-to-market of a campaign and price.

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Competitive Strengths

        As one of the first permission e-mail marketing and tracking companies, we have managed thousands of permission e-mail campaigns. We are able to send over 100 million unique e-mail messages per day. Our proprietary technology allows for extensive data mining, broadcasting, tracking, and real-time reporting. We own substantially all of our mail transfer agent and APTracking ™-, or APT technologies. APT utilizes noninvasive technology, provides tracking and logging information and analysis that can cross application and server boundaries without requiring our clients to modify their HTML code or place cookies on a user's hard drive.

Products And Services

        Permission e-mail services—We offer list development and refinement, e-mail distribution, tracking and reporting. We charge for this service on a cost per thousand, or CPM, basis.

        List rental—Beginning in 2003, we sublicense e-mail addresses, that we have licensed from third parties. We charge for this service on a CPM basis.

        Tracking services—We offer APT services to customers who use our broadcast e-mail services, and as a standalone service. We charge for this service on a CPM basis.

        We offer consulting services to assist our clients in their implementation and deployment of our services within their organization.

Business Strategy And Strategic Direction

        Our goal is to be the preferred provider of full service and hosted, large-scale e-mail marketing campaigns. To achieve this goal we intend to expand our technologies, expand our service offerings and expand our distribution.

Expand Technologies

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We intend to continue to develop or license software that will enable our customers to manage their e-mail campaigns on our servers. We believe this will create new opportunities for attracting customers that do not need or require full service e-mail broadcast campaigns.



•

We intend to develop a content management module to enable our clients to self-manage their brand and creative assets.

Expand Service Offerings

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We intend to resell campaign analysis services provided by third parties.

Expand Distribution

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We intend to develop business relationships with advertising agencies, marketing agencies and e-mail list brokers that will represent and resell our services.

Customers

        The following customers individually accounted for more than 10% of our $3.3 million in revenue in 2002:

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Traffix $1.4 million or 43.2% of revenue.



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Choicepoint $963,000 or 29.4% of revenue.

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        In the first quarter of 2003, there was a significant decrease in revenue from Choicepoint. We may be unable to replace the lost revenue.

        Our competitors in the permission e-mail marketing and tracking arena include providers of e-mail based services such as: Double Click, Experian, Responsys, Digital Impact, and Cheetah Mail. The majority of our competitors operate with greater financial resources than we do.

Intellectual Property And Licenses

        Our success and ability to compete effectively will depend, in part, on our ability to protect our intellectual property. We rely primarily on a combination of statutory and common law copyright, trademark and trade secret laws, customer licensing agreements, employee and third-party nondisclosure agreements and other methods to protect our proprietary rights. We have applied for a patent for our APT technology.

        We use employee and third-party confidentiality and non-disclosure agreements to protect our trade secrets and unpatented know-how. We require our employees to assign to us all rights in any proprietary information or technology made or contributed by the employee during his or her employment with us. In addition, we regularly enter into non-disclosure agreements with third parties including consultants, potential strategic partners and customers. Unfortunately, these agreements cannot guarantee the confidentiality of our trade secrets or unpatented know-how, nor can they prevent third parties from independently developing substantially equivalent proprietary information or copying, developing, or otherwise obtaining and using our proprietary information without authorization. We may resort to litigation to enforce our intellectual property rights, determine the validity and scope of the proprietary rights of others, or defend against claims of infringement or invalidity by others. While we are not currently engaged in any intellectual property litigation or proceedings, we may be in the future. An adverse outcome in a litigation or similar proceeding could subject us to significant liabilities to third parties, require disputed rights to be licensed from others, or require us to cease marketing or using certain products or services. The cost of addressing any intellectual property litigation, both in legal fees and the diversion of management resources, regardless of whether the claim is valid, could be significant.

        Third parties may claim that our current or future products infringe on their proprietary rights. We may be subject to these claims as the number of products and competitors in the marketplace overlap. Any of these claims, with or without merit, could result in costly litigation or might require us to enter into royalty or licensing agreements. These royalty or license agreements, if required, may not be available on terms acceptable to us, if at all.

Employees

        As of March 13, 2003, we had a total of eighteen employees, of whom seven were engaged in research and product development, eight in sales and marketing and three in general and administrative functions. Substantially all of our employees are co-employees with TriNet, an outsourced human resource provider, and work in our offices in Belmont, California. None of our employees are subject to a collective bargaining agreement and we have not experienced any work stoppages. We believe that our relationship with our employees is good. However, our recent workforce reductions and poor financial performance will place additional strain on our people and may harm the morale and performance of our employees and our ability to hire new ones.

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RISK FACTORS

        AN INVESTMENT IN OUR COMMON STOCK IS EXCEPTIONALLY RISKY. YOU SHOULD CONSIDER CAREFULLY THE RISKS DESCRIBED BELOW TOGETHER WITH ALL OF THE OTHER INFORMATION IN OUR FORM 10-K 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 need to raise additional funds and our auditors have expressed substantial doubt as to our ability to continue as a going concern; as of December 31, 2002 our current liabilities exceeded our current assets.

        As of December 31, 2002 we had $466,000 in cash and cash equivalents. We believe that this cash may not be adequate to meet our operating requirements for the next twelve months. Our auditors have expressed substantial doubt as to our ability to continue as a going concern. As of December 31, 2002, our current liabilities exceeded our current assets by approximately $580,000. Furthermore we have a $440,000 note payable with accrued interest due January 2004. The accompanying 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 success of marketing 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 may be unable to adjust our spending quickly enough to offset any unexpected shortfall in cash collections or revenues.

        Based on our current level of expenses, if our revenues and related cash collections are less than $1.0 million per quarter, or if our cash expenditures and payments continue to exceed cash collections, we would need to raise additional funds. Our current forecasted revenues and cash collections are less than $1.0 million for each of the quarters in 2003. Because we have never earned a profit, current liabilities exceed current assets and the market price of our common stock price is low, we believe that it will be extremely difficult to raise additional funds.

        We believe that if we restructure our existing obligations for approximately 10%-15% of their face amounts, exceed our cash collection targets by approximately $200,000 per quarter, recover from our insurance carriers claims we have filed, and favorably and timely resolve the lawsuits with Morrison & Foerster, Rydell, 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 or sell assets, it is not likely that we will continue as a going concern.

We have a history of losses and an accumulated deficit; we may continue to experience losses.

        For the year ended December 31, 2002, we incurred a net loss of $15.8 million and for the year ended December 31, 2001, we incurred a net loss of $22.4 million. At December 31, 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.

We are dependent on three customers for a significant portion of revenues.

        For the year ended December 31, 2002, three of our customers accounted for approximately 81.9% of our revenues. In the first quarter of 2003, there was a significant decrease in revenue from ChoicePoint. As a result, we may be unable to replace this lost revenue.

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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. AOL has informed us that they may revoke our "white listed" status if the number of complaints that they receive does not decrease to a level they deem acceptable. 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 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.

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        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 common stock is listed on the OTC bulletin board and is considered a "penny stock". Consequently you may be unable to sell our common stock readily or at all.

        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 SmallCap 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.

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 personnel, 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 Paul A. Goldman, our recently appointed President and Chief Executive Officer. Recently Jerry Sandoval our President, Marc E. Landy, our Executive Vice President, Chief Financial Officer, Secretary and Treasurer and several other key employees left our company to pursue other interests, including the principal developer of the Adaptive Proxy Tracking Technology. 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, these 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

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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 and adversely 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.

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 us recently. We may be unable to complete the patent process without his assistance. 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

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dress. Furthermore, none of these protections prohibit our competitors from independently developing technologies that are substantially equivalent or superior to our technologies.

ITEM 2. PROPERTIES

        We lease a 7,788 square foot office in Belmont, California where substantially all of our employees work. The lease expires April 30, 2004 with a five-year renewal term. Our scheduled payments under the terms of the lease are $100,000 in 2003 and $33,333 in 2004.

        In connection with the merger with Learn2.com, we closed our Mountain View, California corporate headquarters office, originally leased on February 25, 2000, for a payment to the lessor of approximately $1.6 million. This amount is included in the accompanying consolidated statement of operations for the year ended December 31, 2001 as part of gain on disposal of discontinued operations.

        In addition to the lease in Belmont, California referred to above, in connection with the merger with Learn2.com we assumed lease obligations for facilities in White Plains, New York and Golden, Colorado. In 2002, in settlement of these two obligations, we agreed to pay the lessors of these two facilities a total of $55,682 plus our security deposits of $174,562 related to those leases. The total payments of $190,667 for the White Plains, New York lease is included in the restructuring charge in the accompanying consolidated statement of operations for the year ended December 31, 2002. The total of $39,577 for the Golden, Colorado lease is included in the loss from discontinued operations in the accompanying consolidated statement of operations for the year ended December 31, 2002.

        Also in connection with the merger with Learn2.com, we acquired a land and building in Pryor, Oklahoma. The land and building were sold in 2002 for $270,000. In 2002, we wrote down the building to its fair value of $270,000. The write-down of $718,000 is included in the loss from discontinued operations in the accompanying consolidated statement of operations for the year ended December 31, 2002.

        We believe our properties are suitable and adequate for our present and anticipated near term needs.

ITEM 3. LEGAL PROCEEDINGS

        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 the answer to the complaint on June 18, 2001. On February 20, 2002, the Court granted Plaintiff's motion for class certification. We reached a settlement with the Plaintiff and court has been approved for settlement. This settlement is not expected to have a material impact on the our financial position or results of operations.

        On February 6, 2002, Morrison & Foerster, a law firm, filed suit against a consolidated subsidiary of ours, 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 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. These legal proceedings have resulted and can be expected to continue to result in expenses and the diversion of management time and other resources.

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        On July 18, 2002, Joseph Rydell filed suit against us 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 sued 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. In February 2003, we were notified that a default judgment had been entered on behalf of the plaintiff in the amount of $163,800. We negotiated a settlement with MicroAge in the amount of $25,000. Under the terms of the settlement, we are required make two payments of $15,000 due on March 17, 2003 and $10,000 due on May 3, 2003. If we do not make the payments in accordance with the settlement agreement, we would be liable for the full judgment of $163,800 plus accrued interest. On March 17, 2003, we made the first scheduled payment. This amount of $25,000 has been accrued for and is included in other liabilities in the consolidated balance sheet at December 31, 2002.

        We have entered into various settlement agreements during 2002. One of these settlement agreements requires us to pay $10,000, monthly through July of 2004. If we fail to make these monthly payments on a timely basis, we would be liable for the full amount of the judgment totaling $399,754 plus interest at a rate of 10% per annum from September 12, 2001 to the date of the payoff plus attorney fees in the amount of $15,000. As of December 31, 2002, we have only accrued the remaining payments under the settlement agreement. This amount totaled $190,000.

        In addition, we are involved in certain other legal proceedings and claims in the ordinary course of our business. We are vigorously contesting all matters referred to above and management believes that their ultimate resolution may not have a materially adverse effect on our consolidated financial position, results of operations or cash flows.

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

        No matters were submitted to a vote of the security holders during the fourth quarter of the year ended December 31, 2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        Since January 14, 2003, our common stock has traded on the OTC Bulletin Board under the symbol "LTWC.OB" Prior to January 14, 2003, our common stock traded on the Nasdaq SmallCap Market. The following table sets forth, for the periods indicated, the range of the high and low closing sale prices for our common stock as reported on Nasdaq SmallCap Market. The quotations below

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reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

        The last reported sale price of our common stock on March 26, 2003, was $0.026 per share. As of March 26, 2003, there were 1,034 stockholders of record of our common stock.

        On January 6, 2003, we received notification from Nasdaq that we were not in compliance for continued listing on the Nasdaq SmallCap Market because of (1) our failure to hold an annual meeting of shareholders, to solicit proxies and provide proxy statements to Nasdaq and (2) Nasdaq's records indicate that we have not yet paid our SmallCap listing fee in the amount of $4,667, which was due on July 12, 2002. We indicated that the primary reason for not holding an annual meeting was to conserve cash. Effective with the opening of business, January 14, 2003 our common stock began trading on the OTC Bulletin Board.

Dividends

        We have never declared or paid any dividends on our capital stock. We currently expect to retain future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities

        None.

ITEM 6. SELECTED FINANCIAL DATA

        The selected consolidated financial data set forth below with respect to our consolidated statements of operations for each of the years ended December 31, 2002, 2001 and 2000 and with respect to our consolidated balance sheets as of December 31, 2002 and 2001 have been derived from our audited financial statements. The selected consolidated financial data set forth with respect to our consolidated statements of operations for each of the years ended December 31, 2000, 1999 and 1998 and with respect to our consolidated balance sheets as of December 31, 2000, 1999 and 1998 are derived from our audited financial statements, which are not included herein.

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        The following selected financial data should be read in connection with the Financial Statements and Notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

(1)

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.

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        See Note 12 of Notes to Consolidated Financial Statements for an explanation of the method used to determine the number of shares used in computing per share amounts.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

        LTWC Corporation was originally known as E-Stamp Corporation, founded in 1994, 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. In May 2000, we acquired two companies, Infinity Logistics and Automated Logistics for a total purchase price of $9.0 million. These companies offered transportation management and warehouse management products and services that allowed enterprise customers to review carrier rates and shipping options, select a carrier, print shipping labels, track shipments and create shipping reports. During 2000, we undertook two corporate restructurings. In July 2000, we restructured the organization to accelerate the development, marketing and sales of our transportation management products and services in addition to our Internet postage business. In November 2000, we restructured the organization to phase out our Internet postage business. We incurred charges of approximately $20.3 million related to these restructurings, which is included in loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2000. On April 19, 2001, in connection with our then planned merger with Learn2.com, a publicly traded company, we discontinued our remaining transportation management business.

        On September 25, 2001, we acquired all of the outstanding stock of Learn2.com, 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 e-learning business included engaging online and physical learning and training products and complementary services, marketed to corporate, government and individual clients and customers and an e-mail marketing services business that provided permission e-mail marketing and tracking services. The services included e-mail creation, delivery, tracking and response analysis for a high volume of client e-mail accounts in a short period of time. Under the terms of the merger agreement, we issued approximately 37.8 million shares of our 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 our common stock resulting in our stockholders 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.

        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, which is included in loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2001.

        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 60 positions. Severance and related expenses attributable to the elimination of these positions were

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approximately $409,000 and were included in loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2002.

        On July 2, 2002, we announced that we would close our facility in Golden, Colorado and the elimination of approximately 20 positions throughout the organization. We incurred charges of approximately $110,000 related to this workforce reduction and this amount is included in our loss from discontinued operations in the consolidated statement of operations for the year ended December 31, 2002.

        On August 9, 2002, we sold our e-learning assets. As part of the agreement, we changed our name to LTWC Corporation. The consideration consisted of (1) an initial payment to us of $325,000, paid on August 9, 2002 and (2) earn-out payments of up to a maximum of $3.71 million. The earn-out payments were to be made monthly commencing on September 9, 2002, in each case, subject to reduction, until the earlier of 60 months from August 9, 2002, or the date on which the aggregate amount of the earn-out payments paid 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.

        On March 28, 2003, we and certain subsidiaries entered into an agreement with the buyer of the e-learning assets whereby the buyer agreed to pay us $540,000 to buy-out the remaining earn-out payments and monies owed to us for consigned inventory and purchased receivables. As a result, we wrote-off the receivable representing the present value of the minimum earn-out payments to $540,000. The write-off of the receivable of approximately $563,000 and the write-off of amounts due on consigned inventory and purchased receivables totaling $42,000 was recorded as a charge to net loss (gain) on disposal of discontinued operations in the accompanying consolidated statement of operations for the year ended December 31, 2002.

        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 provider of full service and hosted, large-scale email broadcast campaigns. As set forth in Note 1 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. Furthermore, only our e-mail marketing services business is included in our results from continuing operations. Our other businesses are reflected as discontinued operations in the accompanying consolidated financial statements.

        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.

Critical Accounting Judgments and Policies

        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

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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, 2002. 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 144, annually, we are required to evaluate impairments to the carrying value of our capitalized software and intangibles. As a result of this review, in the fourth quarter of 2002, we recorded an impairment charge of approximately $221,000.

Litigation—We are currently involved in certain legal proceedings as discussed in Note 11 in the Notes to 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 us that could adversely affect our ability to continue as a going concern.

        The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the U.S., with no need for management's judgment in their application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result. See our audited consolidated financial statements and notes thereto which begin on page F-1 of this Annual Report on Form 10-K which contain accounting policies and other disclosures required by generally accepted accounting principles.

Critical Accounting Policies

Revenue

        Revenues from permission email marketing services are recognized at the time the broadcast is sent, as we have no further significant obligations and collectibility is probable.

Discontinued 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.

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Results of Operations

2002 Compared To 2001

Continuing Operations

Revenues and Gross Margin

        Net revenues for 2002 were $3.3 million. Net revenues for 2001 were $1.7 million which included revenues for the period September 25, 2001 through December 31, 2001. Revenues consist primarily of permission e-mail marketing and tracking services. In 2002, three customers accounted for approximately 81.9% of our revenue as discussed in our risk factor on significant customers. Cost of revenues for 2002 and 2001 were approximately $677,000 and $45,000. 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 email marketing and tracking services.

Operating Expenses

Research and Product Development Expenses

        Research and product development expenses for 2002 were approximately $540,000. Research and product development expenses for 2001 were approximately $282,000, which include expenses for the period September 25, 2001 through December 31, 2001. Research and product development expenses relate to the development and enhancement of our technologies. These expenses exclude those costs associated with our e-learning business.

Sales and Marketing Expenses

        Sales and marketing expenses for 2002 were approximately $1.0 million. Sales and marketing expenses for 2001 were approximately $374,000, which include expenses for the period September 25, 2001 through December 31, 2001. Sales and marketing expenses consist primarily of salaries, commissions, advertising, and advertising costs of marketing materials. These expenses exclude those costs associated with our e-learning business.

General and Administrative Expenses

        General and administrative expenses for 2002 were approximately $3.2 million. For 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.

        General and administrative expenses for 2001 were approximately $7.0 million and 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, professi