FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

[X]  Annual report  pursuant to section 13 or 15(d) of the  Securities  Exchange
     Act of 1934

     For the fiscal year ended December 31, 2000

[]   Transition  report  pursuant  to  section  13 or  15(d)  of the  Securities
     Exchange Act of 1934



                         Commission File Number 0-24829

                                FTS APPAREL, INC.
                ------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Colorado                                               84-1416864
-------------------------------                              ------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               identification No.)


212 North Wahsatch, Suite 205 Colorado Springs, Colorado                80903
--------------------------------------------------------              ----------
     (Address of principal executive offices)                         (Zip Code)


Registrant's telephone number, including area code:  (719) 630-0980
                                                     --------------


Securities registered pursuant to Section 12(b) of the Act:  None

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

                               Title of each class

                          Common Stock, $.001 par value
                       ---------------------------------

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

<PAGE>



Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
the  registrant's  knowledge,  in  definitive  proxy or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

The Registrant's revenues for the most recent fiscal year were $1,360,328.

The  aggregate  market  value of the  1,530,771  shares of common  stock held by
nonaffiliates  of the Company as of March 22, 2001 was  $336,770  based upon the
last reported sale of the common stock of $.22 per share.

The total  number of shares of issuer's  common  equity as of March 29, 2001 was
8,645,951.


                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      None

Transitional Small Business Disclosure Format:   Yes             No    X
                                                     -----           -----


<PAGE>



                                TABLE OF CONTENTS


PART I                                                                  Page

         Items 1 and 2.  Business and Properties.......................    1

         Item 3.         Legal Proceedings.............................    5

         Item 4.         Submission of Matters to a Vote of
                         Security Holders .............................    5
PART II

         Item 5.         Market for Registrant's Securities and Related
                         Shareholders Matters..........................    6

         Item 6.         Management's Discussion and Analysis or
                         Plan of Operation.............................    7

         Item 7.         Financial Statements and Supplementary Data...   12

         Item 8.         Changes in and Disagreements with Accountants
                         on Accounting and Financial Disclosure........   12

PART III

         Item 9.         Directors, Executive Officers and Compliance
                         with Section 16(a) of the Exchange Act .......   12

         Item 10.        Executive Compensation........................   14

         Item 11.        Security Ownership of Certain Beneficial
                         Owners and Management.........................   16

         Item 12.        Certain Relationships and Related Transactions   18

PART IV

         Item 13.        Exhibits, Reports on Form 8-K and
                         And Financial Statements......................   21

         Signature Page................................................   23

         Index to Financial Statements.................................   24

                                       ii
<PAGE>


                           Forward Looking Statements

     See "Special Note Regarding Forward-Looking Statements" at the end of "Item
6.  Management's  Discussion  and Analysis or Plan of Operation"  for cautionary
statements concerning forward-looking information contained in this report.


                             Additional Information

     Descriptions  in this Report are  qualified by reference to the contents of
any contract,  agreement or other  documents and are not  necessarily  complete.
Reference  is made to each such  contract,  agreement  or  document  filed as an
exhibit  to  this  Report,  or  previously  filed  by the  Company  pursuant  to
regulations of the Securities and Exchange Commission (the  "Commission").  (See
"Item 13. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.")

                                       iii
<PAGE>


ITEMS 1. AND 2.  BUSINESS AND PROPERTIES

History
-------

     FTS Apparel,  Inc. ("FTS" or the "Company") was founded under the name Full
Tilt Sports, Inc. in 1997 as a Colorado  corporation to sell designer sportswear
and accessories.  We changed our name to FTS Apparel, Inc., effective August 23,
2000.

     Our common  stock has traded in the  over-the-counter  market  since  March
1999,  shortly after filing a  registration  statement for our common stock with
the Securities and Exchange Commission, and is quoted on the NASD Bulletin Board
under the symbol "FLIP". Currently we have 128 shareholders of record.

Description of Business
-----------------------

     We  are  in  the   business  of   designing   and  selling   high   quality
designer/casual  sportswear  and  accessories,  focusing on athletic  and casual
lifestyle  clothing.  All of our  products  prominently  display  our  "Flip The
Switch" and "FTS"  trademarks  and logos.  We market our products  with a sports
orientated  approach,  primarily by endorsements from professional  athletes and
sports personalities.  Our current target market is retail buyers of young men's
designer sports apparel. Our product line includes shirts, jackets, vests, pants
and caps in various  styles  and  colors  that we  believe  are  attractive  and
appealing to this group of consumers.

     A full line of these items has been sold in retail  clothing and sportswear
stores,  predominantly  in Colorado and upper Midwestern  states.  We maintain a
retail  presence in such  retailers  as JC Penney,  Elder-Beerman,  Gart Sports,
Copper Rivet and Finish Line.  We also have limited  orders from  Kaufmann's  (a
division of the May  Company)  and AAFES.  Selling  our  products in high volume
outlets, like JC Penney, Gart Sports and Elder-Beerman,  is necessary to achieve
the volume of sales and revenues we need to be successful.

     Our products are also sold to amateur sports teams and corporations, mostly
in the Colorado  Springs and Colorado  Front Range region.  These  customers are
mostly soccer,  hockey,  football and baseball clubs and teams, who place orders
for their uniforms and  accessories.  These sales provide exposure and promotion
of our products.

     Although we are using  conventional  types of advertising,  the emphasis of
our marketing is endorsement by professional athletes and other nationally known
personalities. We believe that having these sports personalities and celebrities
wearing our clothing,  being  featured in our  advertisements  and point of sale
visuals,  and  appearing  in  person at our  promotions  will  encourage  retail
customers to buy our clothing line. We have also contracted with Rave Revues,  a
product placement company,  to place our products on primetime  television shows
for the 2000-2001 television season. In addition,  we have retained the services
of several  employees  and  consultants  who have a great deal of  experience in
marketing  this type of clothing,  including a former  executive with No Fear, a
highly successful clothing producer.

                                        1
<PAGE>

Production
----------

     We contract  with  independent  overseas  and  domestic  manufacturers  for
production of our  merchandise,  whose products we have tested and approved.  We
decide  all  specifications  for  our  products,   including  style,  color  and
materials. We have retained the services of two employees,  Dylan Nelson, Senior
Designer and Tony Leng, Vice President of Sourcing and Production, who assist in
the  development  and  production  of our apparel.  We are  producing  only high
quality  garments  and  accessories  to appeal to the  demanding  consumer.  Our
current  manufacturers have performed to our standards in terms of quality, cost
and time of manufacturing and delivery, but we don't have written contracts with
these manufacturers. However, we feel confident that they, or someone else, will
be able to fill our orders.

     The products that we have had produced to date are:

     o    golf shirts
     o    t-shirts
     o    long sleeve shirts
     o    sweat shirts
     o    fleece jackets
     o    pants
     o    shorts
     o    caps

     We place our larger orders with the overseas manufacturers when we can plan
in advance.  These  manufacturers  have more favorable prices but take longer to
fill our orders and deliver our products.  For smaller custom  orders,  that are
required on short notice such as for  tournaments and team sales, we use a local
Colorado  company that can  manufacture  the clothing on short notice.  However,
using a local  manufacturer  is more costly and we  therefore  try to avoid this
whenever possible.

Marketing
---------

     The focus of our  marketing,  and what we  believe  sets us apart from most
other  clothing  companies,  is that  we have  many  professional  athletes  and
celebrity  personalities  wearing and promoting  our  clothing.  We believe that
having  professional  athletes,  celebrities and sports  personalities  wear our
products  will make our target  consumer want to wear them as well. We hope this
exposure will also attract other types of consumers.

     We have been successful in signing several of these  endorsement  contracts
particularly  because several  members of our management have been  professional
baseball  players.  They  personally  know many  professional  athletes and have
contacts  in  professional  sports  to be  introduced  to many  others.  In many
instances, these athletes are not signed to any contract but promote our apparel
line because of the personal relationship with the members of our management. We
have been  successful  in promoting  our apparel line with several  athletes and
sports figures so far. These athletes  include  professional  football  players,
baseball players, boxers and popular former professionals as well.

                                        2
<PAGE>

     Some of the professional athletes endorsing our products include:

     o    Ed McCaffrey of the Denver  Broncos  football team
     o    Trevor Hoffman of the San Diego Padres baseball team
     o    Andy  Pettite of the World Series  champion New York Yankees  baseball
          team
     o    Michael Grant, a professional boxer
     o    Eddie George of the Tennessee Titans football team
     o    Pokey Reese of the Cincinnati Reds baseball team

     Many of  these  athletes  have  contracted  to  wear  our  clothing  during
interviews and during other  appearances  where they will be seen by the public.
They will also  appear  at  promotional  events  held at  retail  stores  and at
sporting events where they will wear our clothing and sign  autographs.  We have
also used photographs of them in our advertisements and our retail point of sale
visuals.  The boxers have worn robes,  shorts and accessories with our trademark
and  logo  in  televised  prizefights  on HBO and  Pay-Per-View  and  have  been
photographed for magazines such as Sports Illustrated in these garments.

     We have produced a conceptual  catalog  featuring  several of our athletes,
including Ed McCaffrey,  Trevor Hoffman,  Pokey Reese, Tim Dwight,  Eddie George
and Billy Wagner. This catalog is helpful during our sales presentations as well
as giving the public a visual representation of the company.

     We also have begun  using  other  methods to promote  our  product  line in
addition to endorsement by professional athletes and sports  personalities.  The
methods we have already used include:

     o    Sponsorship of sporting events
     o    Sponsorship of team sports
     o    Radio advertisements
     o    Newspaper advertisements
     o    Internet advertisements

     Additional new promotion is planned using product placements.  Our products
might be used in movies and  television  shows on lead actors and as  background
items.  We hope this will give our  products  exposure in a new medium.  We have
contracted with Rave Revues, a Hollywood product placement company, in an effort
to have our  clothing  worn by  television  and movie  stars  for the  2000-2001
television season.

Distribution and Sales
----------------------

         The focus of our distribution  and sales is through retail  department,
specialty and sporting goods stores.  We are dependent on sales in these markets
to  achieve  the sale  volumes  we need to be  profitable.  We are  selling  our
products in other markets as well, which give us more exposure and acceptance in
the marketplace.

                                        3
<PAGE>

     Retail Store Sales.
     ------------------
     Our products are sold primarily through department stores, specialty stores
and  sporting  goods  stores,  but we are also  selling our  products in related
athletic and health orientated  stores such as nutrition stores.  Last year, our
products were sold through several major retailers who have locations in several
states.  The number of store locations that each retailer has ranges from one to
as many as two hundred.  The sales  potential  for retailers  varies  greatly as
their locations range from kiosks to department  stores. The retail stores where
our products have been sold in this last year include:

     o    Department Stores - JC Penney and Elder Beerman
     o    Sporting Good Stores - Gart Sports, Copper Rivet, Finish Line and Shoe
          Extreme
     o    Nutrition Stores - Will Power Nutrition and Advanced Nutrition

     The biggest  retailer to sell our products has been JC Penney Co.,  Inc. In
the case of JC Penney Co.,  Inc.,  we were placed in  approximately  two hundred
stores for the Fall 2000  season.  After a test market of our  products at three
locations  in  Colorado in 1999,  JC Penney  increased  their  orders to include
eighteen  stores  for  Summer  2000,  and then to two  hundred  for  Fall  2000,
including stores  throughout the Midwest and Northeast.  JC Penney accounted for
82% of our sales in 2000.

     Team Sales.
     -----------
     We have also been marketing our products to amateur sports teams, mostly in
the Colorado  Springs and Colorado Front Range region,  where we are located and
have the most local  contacts and exposure.  These  customers are mostly soccer,
hockey, football and baseball clubs and teams. We take orders for their uniforms
and accessories,  and place the orders with our local  manufactures that produce
the  products  to  specification  with our  trademark  and logo.  In addition to
generating  revenue,  these  sales help  exposure  and  promotion  to  hopefully
encourage sales in retail stores.

Trademark
---------

     We believe that the distinctiveness of our clothing and accessories lies in
our "Flip The Switch"  concept.  We therefore  take  precautions  to protect our
trademark.  Trademark  registration  applications  have been filed with the U.S.
Patent  and  Trademark  Office  (the  "USPTO").  Registration  for our "Flip The
Switch" trademark has been approved by the USPTO and we expect registration very
shortly.  An opposition has been filed against the federal  registration for our
"FTS" trademark, but we do not believe this opposition has merit. If registered,
these  trademark  registrations  will give us the right to use the trademarks in
any state and  challenge  anyone who infringes on our  trademarks.  If any other
company seeks to use a similar  trademark to sell articles of clothing for which
we have registered our trademark, we can challenge them in court and demand that
they cease.

Research and Development
------------------------

     We rely on the direction of experienced sales consultants who have directed
us in our business to design our apparel and place our products with  retailers.
Our  consultants  have also  assisted us in designing  our clothing and choosing
styles and colors,  based upon their  experience and knowledge of current trends
and popularity in sportswear.

                                        4
<PAGE>


Employees
---------

     As of fiscal  year end  December  31,  2000,  we  employed  nine  full-time
employees.   Roger  Burnett,  President  and  Joseph  DeBerry,  Vice  President,
currently  serve on a full-time  basis and are  responsible  for our  day-to-day
operations and the marketing,  production and  distribution of our products,  as
well as strategic  planning  and  expansion of the  Company's  business.  Robert
(Bobby)  Stephenson  serves as Vice  President of Sales and is  responsible  for
sales,  special  events and trade shows.  Tony Leng serves as Vice  President of
Sourcing and Production  and is  responsible  for production and delivery of our
products.   We  have  five  additional  full-time  employees,   responsible  for
accounting,  team  sales and  graphics.  We have  excellent  relations  with our
employees and none of our employees are unionized.

     We do not  expect  any  additional  significant  changes  in the  number of
employees over the next twelve months. From time-to-time, we engage the services
of  outside  consultants  to  assist  in  our  business,   including  attorneys,
accountants, and marketing and advertising personnel. We may engage the services
of additional  individuals  in the future as our business  needs dictate and our
financial resources permit.

Facilities
----------

     We currently  occupy 6,000 square feet of office and warehouse space at 212
N. Wahsatch Ave., Suite 205, Colorado Springs,  Colorado 80903 and have executed
a three year lease  agreement for this location.  The offices are leased for the
monthly  rental of $7,750 per month,  from a company  controlled by our Chairman
and principal shareholder.  The first two years of our rent is prepaid. See Item
12. Certain Relationships and Related Transactions for a detailed description of
this transaction.

     We  anticipate  that this office space will be adequate for the term of the
lease.

ITEM 3. LEGAL PROCEEDINGS

     Neither we, nor any of our  officers or directors  in their  capacities  as
such, are subject to any material legal  proceedings,  and we do not know of any
potential or threatened legal proceeding.

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

     We held our  annual  meeting  of  shareholders  on  August  23,  2000.  The
shareholders  elected LeRoy  Landhuis,  Roger K. Burnett,  J. Fisher DeBerry and
Joseph F.  DeBerry as  directors.  Mr.  Landhuis  was the only new member of the
Board to be elected.  The  shareholders  also  approved a proposal to change the
name of the company to FTS Apparel,  Inc.  and approve  Articles of Amendment to
the  Articles  of  Incorporation  for the name  change.  The  shareholders  also
ratified the  appointment of Stark Tinter & Associates,  LLC as our  independent
accountants for the fiscal year ending December 31, 2000. No other business came
before the meeting.

     At the annual  meeting  6,103,337  shares were  represented in person or by
proxy constituting a quorum.  There were 6,098,670 votes approving the proposals
to elect each of the  directors,  4776 votes  against and no  abstaining  votes.
There were  6,103,333  votes  approving  the  proposal to amend the  Articles of
Incorporation  to change our name,  no votes  against and no  abstaining  votes.
There  were  6,100,837   votes  approving  Stark  Tinter  &  Associates  as  our
independent accountants, 2000 votes against and 500 votes abstaining.

                                        5
<PAGE>


                                     PART II

ITEM 5. MARKET FOR OUR SECURITIES AND RELATED SHAREHOLDER MATTERS

     On March 18, 1999,  our common stock began trading in the  over-the-counter
market and was quoted on the  Over-The-Counter  Bulletin Board under the symbols
"FTSX". On October 20, 2000, as a result of our name change,  our trading symbol
was changed to "FLIP". Prior to that, there was no trading market for the Common
Stock.

     The following  table sets forth the range of high and low bid quotations as
reported  for the common stock of the  Company,  for the last two fiscal  years.
Quotations  represent  prices between  dealers,  do not include retail  markups,
markdowns or commissions and do not necessarily represent prices at which actual
transactions were effected.

Fiscal Quarter  Ended               High             Low
---------------------             -------          -------
       1999
       ----
March 31                          $ 3.00           $ 2.00
June 30                             3.88             2.25
September 30                        3.50              .81
December 31                         1.81              .75

       2000
       ----
March 31                            1.50              .63
June 30                             1.25              .69
September 30                         .97              .51
December 31                          .53              .19

     The number of record  holders of our common  stock as of December  31, 2000
was 128, not including nominees of beneficial owners.

     Holders of common stock are  entitled to receive  such  dividends as may be
declared by the Company's  Board of Directors.  No dividends on the common stock
have  been  paid or  declared  by the  Company  to date,  nor  does the  Company
anticipate that dividends will be paid in the foreseeable future.

     As of the date of this report,  a total of 150,000  shares were  designated
Series A Preferred Stock, of which 50,000 were issued.  All of the issued shares
have an issue price and preference on liquidation  equal to $1.00 per share. The
Series A Preferred  Shares accrue  dividends at the rate of 10% per annum during
the first two years following issuance, which dividend is payable in cash and is

                                        6
<PAGE>

cumulative.  During the third through fifth year in which the Series A Preferred
Shares are outstanding,  the holders are entitled to 3.75% of the net profits of
the Company,  also payable in cash. The Company may redeem this preferred  stock
at any time  following  notice to the  holder  for an amount  equal to the issue
price, plus any accrued but unpaid dividends.  The holder may convert any number
of shares of Preferred Stock, on a one to one basis, into shares of Common Stock
until April 13,  2003,  and after that date all  remaining  shares of  Preferred
Stock  shall be  converted  on that  conversion  basis into  Common  Stock.  The
Preferred  Shares vote with the Common  Shares on all matters  presented  to the
shareholders and are entitled to one vote for each Preferred Share.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview
--------

     We have still not realized  profit from our  operations  and have  suffered
recurring  losses.  Although  revenue  from sales did increase in the year ended
December  31,  2000,  the cost of goods sold has  increased  disproportionately,
resulting  in a lower gross  profit  margin  compared  to fiscal year 1999.  Our
general and administrative  expenses remained high in 2000,  contributing to our
net loss.  During 2000, we were able to obtain  $1,000,000  in financing  from a
single  source,  and were  dependent  upon that  financing for our operations in
2000. If we do not become  profitable in 2001,  there are doubts that we will be
able to continue as a going concern unless we receive additional financing.  See
Note 2 to the Financial Statements.

Results of Operations

     Year  ended  December  31,  2000.  Year 2000 was the first year in which we
received  significant  revenue from  operations.  Prior to that,  we were in the
development  stage.  During the year ended  December 31, 2000, we realized a net
loss of $1,326,859 (or $0.19 per share) on revenue of $1,360,328,  compared to a
net loss of  $1,513,241  on revenue of $289,180 for the year ended  December 31,
1999.  Revenue  increased  from the prior fiscal year 370% due to the  increased
sale  of  our  products,  primarily  in  large  retail  outlets.   Approximately
$1,092,000 of merchandise sold in 2000 was to one customer which represented 82%
of our sales.

     In 1999 the costs of goods was 31% of revenues. In 2000, the costs of goods
increased to 77% of revenues.  The increased  cost of goods is attributed to the
following  factors:  (i) in 2000,  a greater  percentage  of our  products  were
manufactured overseas, resulting in increased shipping and customs duties costs;
(ii) some of our  overseas  orders had to be shipped  by air  freight,  which is
considerably more expensive than ocean shipping;  (iii)  significant  additional
costs were  incurred in 2000 due to the  delivery of our products to more retail
locations.  Our JC Penney  orders were  shipped  directly to each of two hundred
stores instead of to a centralized location. In 2000, our shipping expenses were
$226,185  compared to $2,002 in 1999.  By making our  shipping  procedures  more
efficient and  decreasing the number of delivery  locations,  we will attempt to
reduce the cost of our goods and  increase  our gross  revenues  in the  current
fiscal year.

                                        7
<PAGE>

     General and  administrative  expenses decreased slightly from 1999 to 2000,
from $1,712,516 in 1999 to $1,643,771 in 2000. However, these expenses are still
relatively high compared to gross profit. A substantial  portion of our net loss
for 2000 resulted from non-cash  expenses  associated with the issuance of stock
in a private  placement  and issuance of stock for services.  Non-cash  expenses
related to stock  based  compensation  during  2000 was  $730,679.  See Item 12.
Certain Relationships and Related Transactions.

     Shipping costs increased  significantly from last year, from $2,002 in 1999
to $226,185 in 2000 as discussed  above,  to meet demands for  increased  sales.
Consulting  fees of $596,404  were also a  significant  expense in 2000. Of that
amount,  $395,928  was charged as  consulting  fees in  connection  with a stock
acquisition.  See Item  12.  Certain  Relationships  and  Related  Transactions.
Salaries  increased,  as we increased the number of full time employees from six
to nine.  Salaries in 2000 were  $225,947 as compared to $189,433  for the prior
fiscal year.

     Professional  fees remained a significant  expense in the amount of $82,256
in 2000 as compared to $82,593 in the prior  fiscal  year.  The high  expense in
2000 was due to costs  associated with Commission  filing  requirements  and the
reimbursement of legal and financial consulting fees to an officer in the amount
of $45,000.

     Advertising expenses decreased in 2000 due to the Company's reallocation of
its efforts and  available  funds to fulfill its larger sales  orders.  In 2000,
advertising  expenses  were $138,312 as compared to $416,799 in the prior fiscal
year. Prepaid advertising costs in the form of endorsement contracts reported as
prepaid expenses  decreased as well, from $153,733 during 1999 to $36,493 during
2000.

     We  anticipate  that we will  continue to incur losses until such time,  if
ever, that we generate revenues from retail sales in an amount adequate to cover
cost of goods and expenses.

     Year ended  December 31, 1999.  During the year ended December 31, 1999, we
realized a net loss of  $1,516,856  (or $0.41 per share) on revenue of $289,180,
compared  to a net loss  applicable  to common  stock of  $186,455 on revenue of
$19,006 for the year ended December 31, 1998.  Revenue  increased from the prior
fiscal  year 1400% due to sale of our  products in retail  outlets,  promotional
events and team sales. However, losses increased as well, due to the substantial
increase in advertising, promotion and other overhead expenses.

     During  1998,  we  were  in  the  beginning  stages  of the  promotion  and
development of our products.  In 1999, we became much more aggressive in product
promotion,  as we placed our  products  in many  additional  retail  outlets and
participated in many  additional  promotional  events.  This is reflected in the
significant  increases in  advertisement  and  promotion  expenses.  Advertising
increased $390,877 from 1998 to 1999, while promotion increased $60,985.

     General and  administrative  expenses  increased  from  $189,372 in 1998 to
$1,712,516 in 1999. We increased the number of full time  employees  from two to
six and we  increased  our office and  warehousing  space.  Therefore,  salaries
increased  from  $60,000  to  $189,433  during  the  latter  period as full time
employment  was  implemented.  Professional  fees  increased from $24,442 in the
former fiscal year to $82,593 in 1999 due to costs  associated  with  Commission
filing  requirements  and  issuance  of our  common  stock  in  certain  private
transactions.  We also realized a substantial  amount of consulting fees, in the
amount of $106,819,  due to our efforts to refine and revise our  business  plan
and gain access to new customers.

                                        8
<PAGE>

     A  substantial  portion  of our net loss for 1999  resulted  from  non-cash
expenses  associated  with the  issuance  of stock  options to  consultants.  In
accordance with generally  accepted  accounting  principles,  we are required to
recognize the fair value of stock options  issued to  nonemployees  based upon a
formula  which  estimates  those  values  based upon  certain  assumptions.  The
application  of those rules  resulted in the  recognition of $606,390 of noncash
expense during 1999 based on the issuance of 435,000  options.  Nonetheless,  we
believe the issuance of those  options was in the best  interest of our company,
and will help our business in the future.

Liquidity and Capital Resources

     December 31, 2000. Our working capital increased $624,571, or 200%, in 2000
from the prior fiscal year.  At December  31,  2000,  we had working  capital of
$933,994,  consisting  of  $1,009,860  of current  assets and $75,866 of current
liabilities.  This compares to working capital of $309,423 at December  31,1999.
Although  $327,425 of our current  assets is in the form of cash, the balance of
our current  assets is  represented  by  accounts  receivables,  inventory,  and
prepaid expenses that cannot be used to satisfy our immediate cash requirements.

     Current assets increased to $1,009,860 in fiscal year 2000 from $448,424 in
the prior  fiscal  year.  At the same time,  current  liabilities  decreased  to
$75,866 in fiscal year 2000 from $139,001 in the prior fiscal year. As a result,
our financial condition is substantially improved from one year ago. However, we
believe  we are still  dependent  on  achieving  profitability  and  receipt  of
financing from outside sources to continue as a going concern.

     The proceeds of the sale of our stock to one principal  shareholder in 2000
paid for a  significant  portion of our  expenses  in 2000 and  accounted  for a
significant  portion of our cash assets at year end.  During 2000,  we completed
the sale of  3,594,256  shares  of  common  stock in a  private  placement  at a
negotiated price of  approximately  $.37 per share. The aggregate value received
in the private  placement was  $1,343,780,  as  determined by the parties.  This
amount consists of $1,000,000 in cash;  payment of rent valued at $193,744,  for
our office  facilities for a two year term;  office  equipment and  improvements
valued at $32,192; and consulting services valued at $117,844.

     We  subsequently  determined that the fair market value of the common stock
for financial  statement  reporting  purposes on the date of the transaction was
approximately  $.55 per share.  Accordingly,  we have recorded  additional stock
compensation   of  $648,864  over  the  lives  of  the   associated   agreements
representing the difference  between the negotiated price per share and the fair
market value of the common stock.  During the year ended  December 31, 2000, the
amount of this additional compensation was $278,084.

     Our capital  requirements  for 2001 include cash for purchase of inventory,
as well as  general  and  administrative  expenses.  When  we  ship  product  to
customers,  it may be several  months  before we are paid.  Also,  when we order
inventory from overseas manufacturers,  which we do to save money, we must place
a deposit and make partial  payment for the  merchandise  many months  before we
receive the goods.  This requires a substantial  investment of cash. During year
2000, we borrowed  $725,000 to finance inventory  acquisition,  all of which was
subsequently  repaid in 2000.  During  the  coming  year,  we intend to  finance
inventory by using our remaining cash resources,  borrowing additional funds and
securing a line of credit with a  financial  institution.  However,  there is no
assurance that these objectives can be met.

                                        9
<PAGE>

     We have  attempted to conserve cash by making  payments in stock in limited
circumstances.  We have used stock to compensate the  professional  athletes who
endorse our products and will use stock in the future for such compensation when
it  is  in  our  best  interest.  Also,  partial  compensation  for  employment,
manufacturing and sales services  agreements and advertisement  have been in the
form of stock.

     December  31,  1999.  At  December  31,  1999,  we had  working  capital of
$309,423,  consisting  of  $448,424  of current  assets and  $139,001 of current
liabilities. This compares to working capital of $95,732 at December 31,1998.

     During 1999,  we required  additional  cash for general and  administrative
expenses,  as the amount of our sales was  insufficient  to cover our costs plus
overhead.  During the twelve months ended December 31, 1999, we used $605,025 in
cash. This represents a substantial increase from 1998, when our operations used
$169,598 in cash.

     During 1999, we conducted an offering through a private placement  pursuant
to Federal and state exemptions from securities registration  requirements.  The
offering  of up to  500,000  shares  of  Common  Stock of the  Company,  with an
offering  price of $1.50 per share,  was offered to  qualified  individuals  and
entities on a best efforts  basis.  The  proceeds of the offering  were used for
working capital, advertising,  acquisition of inventory, and operating expenses.
The offering  expired  March 20, 1999,  and we issued  239,518  shares of Common
Stock and raised $354,055.  We received an additional $142,379 from the exercise
of common stock  warrants  during the year.  While we raised a total of $534,845
from our financing  activities during 1999, we used $605,025 in operations.  Our
cash therefore decreased $96,029.

     Current  assets  increased from $122,639 in fiscal year 1998 to $448,424 in
fiscal  year 1999.  However,  the  current  assets in fiscal  year 1999  reflect
$153,773 in prepaid personal  services,  $25,278 in prepaid trade agreements and
$19,458 in prepaid design services.  Also,  current  liabilities  increased from
$26,907 in the prior  fiscal  year to  $139,001  in fiscal  year  1999.  Current
liabilities  in  fiscal  year  1999  include  $42,000  in notes  payable  to two
shareholders as related parties.

Special Note Regarding Forward-Looking Statements

     This  Report  contains  forward-looking  statements  within the  meaning of
federal  securities  laws.  These  statements plan for or anticipate the future.
Forward-looking  statements  include  statements  about the future of the retail
apparel  industry,  statements  about our future  business plans and strategies,
statements  about our need for  working  capital,  future  revenues,  results of
operations and most other statements that are not historical in nature.  In this
Report,  forward-looking  statements  are  generally  identified  by  the  words
"anticipate,"  "plan,"  "believe,"  "expect,"  "estimate," and the like. Because
forward-looking  statements  involve future risks and  uncertainties,  there are
factors  that  could  cause  actual  results  to differ  materially  from  those
expressed or implied. Some of these risks include, among others, the following:

                                       10
<PAGE>

     1. Dependence on Single Source of Financing.
     --------------------------------------------
     To  continue  as a going  concern in 2000,  we have been  dependent  on the
financing provided by our Chairman,  LeRoy Landhuis. Mr. Landhuis provided short
term loans and purchased a significant amount of stock, the proceeds of which we
have depended on to continue our  operations in 2000 and 2001. We currently have
no other  sources of financing  and our revenues are not  sufficient  to sustain
operations.  There is a risk that if sufficient revenues are not generated or we
cannot obtain  additional  financing,  we may not be able to continue as a going
concern.

     2. Customer Dependence.
     -----------------------
     The  biggest  retailer  to sell our  products,  JC Penney  Co.,  Inc.,  has
accounted  for 82% of our sales in 2000.  We were  placed in  approximately  two
hundred JC Penney stores for the Fall 2000 season,  including stores  throughout
the Midwest and  Northeast.  Therefore,  until we secure a sufficient  number of
additional retailers to sell our products, we are dependant upon continued sales
to JC Penney for a majority of our revenue,  and any discontinuation of sales to
JC Penney will have a material adverse effect on our profits.

     3. No Assurance of Product Acceptance.
     --------------------------------------
     We have no  certainty  that the  marketplace  will  continue  to accept our
products as a desirable  retail clothing and accessory item, or if the Company's
"Flip The Switch"  trademark  and concept as endorsed by  professional  athletes
will be  accepted  and  desired  by  consumers.  We have no  assurance  that the
acceptance of our products will be in sufficient  numbers to achieve  sufficient
revenues and profit. The retail apparel industry is extremely fickle.

     4. Dependence on Key Personnel.
     -------------------------------
     Due in part to our lack of operating history,  our success depends upon the
management  efforts and  expertise  of certain of our  officers,  Messrs.  LeRoy
Landhuis,  Roger Burnett and Joseph DeBerry.  These  individuals are responsible
for overseeing  manufacturing,  marketing and  distribution  of our products and
merchandise,  operation of the business and expansion into  additional  markets.
Further,  the  loss of any of  these  individuals  could  adversely  effect  our
business. We do not intend to obtain key man insurance on the life of any of our
officers or directors.

     5. Intense Competition.
     -----------------------
     Competition  in the apparel  industry is very  intense.  There are numerous
manufacturers and distributors  marketing sporting apparel throughout the United
States, most with substantially greater personnel and financial resources. There
already  exists  many  apparel  lines  which base their  marketing  on a name or
slogan,  such as Nike,  Mossimo, No Fear and Reebok which currently dominate the
industry.  Many of these apparel lines are well  established in the  marketplace
with the consumers and the retail outlets. Our general concept is not unique and
we will have to establish  ourselves as a desirable  apparel line of clothing in
an established marketplace.  We are at a competitive disadvantage with regard to
financial and personnel resources, vis-a-vis our competitors.

     6. Customer Credit Risk.
     ------------------------
     We extend credit to our customers,  including  those who have accounted for
significant portions of our gross revenues. Accordingly, we may have significant
exposure for accounts receivable from our customers.  We have established credit
policies and  procedures,  which we use to manage its credit risk, but we do not
insure our accounts  receivable.  The inability of a significant customer to pay
an outstanding balance would have a material adverse effect on the Company.

                                       11
<PAGE>

     7. Seasonality.
     ---------------

     Our business varies with general seasonal trends that are characteristic of
the  apparel  and retail  industries,  and it  generally  experiences  lower net
revenues  and  higher  net  losses in the first  half of each  fiscal  year,  as
compared to the second half of its fiscal  year.  As our  business  continues to
evolve, our operating performance may not reflect the typical seasonality of the
apparel industry.


ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Reference is made to the Index to Financial Statements following Part IV of
this  Report  for a listing  of the  Company's  financial  statements  and notes
thereto.


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

     On  January  4,  2000,  our  Board  of  Directors  engaged  Stark  Tinter &
Associates  LLC as our principal  accountant  and  independent  auditors for the
years ending December 31, 1999, and  simultaneously  accepted the resignation of
Kish Leake & Associates,  P.C. as our principal  accountant  and auditors.  Kish
Leak & Associates,  P.C. stated as its reason for its resignation  that it would
no longer engage in providing audit services to public companies.

     The reports of Kish Leake & Associates,  P.C. for the past two fiscal years
did not  contain an  adverse  opinion or a  disclaimer  of opinion  and were not
qualified or modified as to uncertainty, audit scope or accounting principles.

     In connection  with the audits of our financial  statements  for the fiscal
year ended December 31, 1998,  and the period from inception  (June 30, 1997) to
December 31, 1997, there were no disagreements with Kish Leak & Associates, P.C.
on any  matters of  accounting  principles  or  practices,  financial  statement
disclosure,  or  auditing  scope and  procedure  which,  if not  resolved to the
satisfaction  of Kish Leake & Associates,  P.C.,  would have caused Kish Leake &
Associates, P.C. to make reference to the matter in their report.


                                    PART III

ITEM 9. DIRECTORS,  EXECUTIVE  OFFICERS AND COMPLIANCE WITH SECTION 16(a) OF THE
        EXCHANGE ACT.

     The following  individuals presently serve as officers and directors of the
Company.  All of our  current  directors  have  served  on the  Board  since our
inception on June 30,  1997,  except for LeRoy  Landhuis,  who has served on the
Board since April 19, 2000.

Name                   Age      Position
----                   ---      --------
LeRoy Landhuis         45       Chairman of the Board of Directors and Chief
                                Executive Officer

                                       12
<PAGE>


Roger K. Burnett       30       President, Chief Financial Officer and Director

J. Fisher DeBerry      61       Executive Vice President and Director

Joseph F. DeBerry      29       Senior Vice President, Secretary, Treasurer
                                and Director

     Messrs.  Burnett, Joseph DeBerry and J. Fisher DeBerry should be considered
"founders" and "parents" (as such terms are defined by rule under the Securities
Exchange Act of 1934,  as  amended),  inasmuch as each has taken  initiative  in
founding and organizing our business.

     All of the directors are currently  serving a term of office until the next
annual meeting of the  shareholders  and until their successors are duly elected
and  qualified,  or until they resign or are removed.  The officers serve at the
will of the Board of  Directors  and  pursuant  to  employment  agreements  (see
below).

     The following  represents a summary of the business  history of each of the
current directors for the last five years:

     LEROY  LANDHUIS.
     ----------------
     Mr.  Landhuis is the president of The Landhuis  Company,  Inc., a privately
held real estate investment company located in Colorado Springs,  Colorado.  Mr.
Landhuis  has  held  that  position  since  1982,  and is  responsible  for that
company's commercial and residential  investment projects.  Mr. Landhuis is also
on the board of directors of several  national  profit and  no-profit  companies
advising on economic  development issues. From 1973 to 1977, Mr. Landhuis served
in the U.S. Air Force.

     ROGER K. BURNETT.
     -----------------
     Mr.  Burnett has been  president of the Company since its inception in June
1997.  Prior to that Mr.  Burnett  graduated from Stanford  University,  in Palo
Alto, California,  with a Bachelor of Arts in Business,  where he was a two time
Collegiate  All-American  at  shortstop.  From 1991 to 1995,  Mr.  Burnett was a
member of the New York  Yankees  farm  organization,  playing  short stop at the
Single A and Double A level of that  organization.  From 1996 until inception of
the Company,  Mr. Burnett  worked on researching  and developing the concept and
feasibility of the Company.

     In his position as President, Mr. Burnett is responsible for overseeing all
of our activities and strategic planning for future development.

     J. FISHER DeBERRY.
     ------------------
     Fisher  DeBerry has been the head football  coach for the Air Force Academy
in Colorado Springs for sixteen years. In that capacity,  he oversees a staff of
assistant  coaches,  and  together  with the athletic  director  and  university
president,  is responsible for all decisions  affecting the football team. Prior
to his position as head football  coach,  Mr. DeBerry was an assistant from 1980
to 1983.

     JOSEPH F. DeBERRY.
     ------------------
     Mr.  DeBerry  has been  senior  vice  president  of the  Company  since its
inception  in June 1997.  Prior to that Mr.  DeBerry  also  played  professional
baseball  from  1991 to 1995,  as a member of the  Cincinnati  Reds and New York
Yankees farm  organizations.  His most recent  position was with the Kansas City
Royals Double A farm organization,  which he concluded early in 1997. During his
two year assignment with the Yankees  organization,  Mr. DeBerry was responsible
for

                                       13
<PAGE>

establishing  and  overseeing  weekly  baseball  camps with local area youths in
Albany,  New York. Mr. DeBerry attended  college at Clemson  University where he
was twice named to the College  All-American  baseball team and  participated in
the 1991  College  Baseball  World  Series.  Prior to that,  he was a  stand-out
athlete at Air Academy High School in Colorado Springs.

     Joseph  DeBerry  is  the  son  of  J.  Fisher  DeBerry.   No  other  family
relationships exist between any of the officers and directors.

COMPLIANCE WITH SECTION 16.

     The following table sets forth each director,  officer or beneficial  owner
of more than ten  percent of any class of equity  securities  of the  registrant
registered  pursuant to Section 12 that failed to file on a timely basis,  Forms
3, 4 or 5 as required  by Section  16(a)  during the most recent  fiscal year or
prior years.

Name of Reporting Person       Late      Late       Late
                               Form 3    Form 4     Form 5      Transactions
------------------------       ------    ------     -------     ------------
LeRoy Landhuis                   0         1          0              1
Roger K. Burnett                 0         2          0              2
Joseph F. DeBerry                0         2          0              2
J. Fisher DeBerry                0         1          0              1
Bill M. Conrad                   0         2          0              2


ITEM 10. EXECUTIVE COMPENSATION

     The  following  table  presents a summary of the  compensation  paid to all
executive  officers of the Company during the last three fiscal years.  No other
executive  officer  received  compensation of any kind.  Except as listed below,
there are no bonuses,  other  annual  compensation,  restricted  stock awards or
stock options/SARs or any other compensation paid to the executive officers.

                           Summary Compensation Table

<TABLE>
<CAPTION>

                                        Annual Compensation               Long-term Compensation
                                    ---------------------------------     -----------------------

                                                        Other Annual      Securities
Name and Position                    Year    Salary     Compensation      Underlying Options
------------------------------      -----   -------     ------------      -----------------------
<S>                                 <C>     <C>         <C>                 <C>
LeRoy Landhuis                      2000    $19,750     $117,844(1)          -0(2)-
Chairman of the Board and
Chief Executive Officer

Roger K. Burnett                    2000     30,000        -0-
President and Chief Financial       1999     30,000                           200,000
Officer                             1998     30,000

Joseph F. DeBerry                   2000     30,000         -0-
Senior Vice President,              1999     30,000                           200,000
Secretary and Treasurer             1998     30,000
</TABLE>

                                       14
<PAGE>
----------------------
     (1) Represents compensation for services pursuant to a Consulting Agreement
which was paid in the form of 315,201  shares of common stock valued at $.373869
per share.  For  additional  amounts  deemed  paid to the officer in the form of
discounted   securities,   See  Item  12.  Certain   Relationships  and  Related
Transactions.

     (2) Excludes  warrants for 1,036,000  shares of common stock.  See Item 12.
Certain Relationships and Related Transactions.
----------------------

Compensation Agreements
-----------------------

     Each of Messrs.  Burnett and Joseph DeBerry presently serve pursuant to one
year  employment  contracts  effective  September  1,  2000.  Pursuant  to those
contracts,  each individual is entitled to annual  compensation in the amount of
$30,000. Each individual is also entitled to participate in health insurance and
other benefit  plans  maintained  for the  employees,  and to be reimbursed  for
reasonable  out-of-pocket  expenses  incurred  on  our  behalf.  The  employment
agreements  may also be terminated by us for cause,  or by the employee upon not
less than sixty days advance written notice. These individuals are also entitled
to participate in the Non-Qualifying Stock Option and Stock Grant Plan discussed
below.

     We entered into a two year consulting agreement with Mr. Landhuis effective
January 1, 2000.  Mr.  Landhuis  provides  consulting  services to assist in our
management  including assisting with negotiations and making decisions regarding
the  production,  distribution  and  marketing of our  products.  The  agreement
provides that Mr. Landhuis received compensation for the first year of $117,844,
and  compensation  in the second year of $220,000,  payable either in cash or in
common stock  valued at 75% of the average  between the ask and bid price of the
common stock at year end December 31, 2000,  at our sole choice and  discretion.
Subsequent  to year end 2000,  782,222  shares of common stock was issued to Mr.
Landhuis as compensation for year two of the Consulting Agreement.  In addition,
Mr. Landhuis  receives  $30,000 annual salary for his services as an officer and
director, effective April 19, 2000.

     Directors  are not  currently  compensated,  except as noted  above for Mr.
Landhuis,  although  each  is  entitled  to be  reimbursed  for  reasonable  and
necessary  expenses  incurred on our behalf.  We reserve the right to enter into
compensation arrangements with the directors in the future.

     There were no stock  options  granted for  services to the named  executive
officers in fiscal year 2000 and there were no stock options exercised by any of
the named executive officers in fiscal year 2000.

     The  following  table is a summary of the value of the  options  granted to
named  executive  officers  as of fiscal  year end 2000,  based  upon the latest
average trading price of our stock.

                                       15
<PAGE>

                          Fiscal Year End Option Value

                        Number of Shares
                        Underlying Unexercised         Value of Unexercised
                        Options at FY-End              Options at FY-End
                        Exercisable                    Exercisable/Unexercisable

Roger K. Burnett        200,000                                 (1)$0
Joseph F. DeBerry       200,000                                 (1)$0


----------------------
     (1) Based upon the mean  between the  closing  bid and asked  prices of our
common stock on March 27, 2000.
----------------------

     Stock Option Plan
     -----------------
     We have  adopted a  Non-Qualified  Stock  Option and Stock  Grant Plan (the
"Plan")  for the  benefit  of key  personnel  and others  providing  significant
services to the Company.  An  aggregate of 2,500,000  shares of Common Stock has
been reserved for issuance under the Plan, as amended.

      The  Plan  is  administered  by the  Board  of  Directors,  which  selects
optionees and recipients of any stock grants, the number of shares and the terms
and  conditions of any options or grants to key persons  defined in the Plan. In
determining the value of services rendered to the Company for purposes of awards
under  the  Plan,  the  Board  considers,  among  other  things,  such  person's
employment   position  and  relationship  with  the  Company,   his  duties  and
responsibilities,  ability,  productivity,  length of  service  or  association,
morale, interest in the Company,  recommendation by supervisors and the value of
comparable  services  rendered by others in the community.  All options  granted
pursuant  to the Plan are  exercisable  at a price not less than the fair market
value of the shares of Common Stock on the date of grant.

     There is no  taxable  income to an  optionee  as a result of the grant of a
Non-Qualified  Stock Option  unless the grant is at less than fair market value.
However,  an optionee incurs taxable income upon the exercise of a Non-Qualified
Stock Option based on the difference  between the fair value of the stock at the
time of exercise  and the exercise  price.  The Company is not entitled to a tax
deduction upon the grant of a Non-Qualified  Stock Option,  but is entitled to a
tax deduction upon exercise  corresponding to the optionee's  taxable income. In
2000, there were options to purchase 14,000 shares of Common Stock granted under
the Plan with a weighted average  exercise price of $1.50 per share.  Options to
purchase a total of 1,050,000 shares of Common Stock are currently outstanding.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     As of March 30,  2001,  there  were a total of  8,645,951  shares of Common
Stock of the  Company  and  50,000  Series A  Preferred  Shares  of the  Company
outstanding,  the only  classes of voting  securities  of the Company  currently
outstanding. The Common Stock and the Series A Preferred Shares vote together as
a single class, and each share is entitled to one vote.

     The  following  tabulates  holdings of Common  Stock of the Company by each
person  who holds of  record or is known by  management  of the  Company  to own
beneficially more than 5% of the voting securities outstanding and, in addition,

                                       16
<PAGE>

by all directors and officers of the Company  individually and as a group. There
are no officers or directors who own Preferred Stock and no holders of Preferred
Stock of the Company who own beneficially  more than 5% of the voting securities
outstanding.  Information in the table includes  options and warrants which were
outstanding and exercisable within 60 days of year end 2000. Percentages include
shares  which  can be  issued  to the  named  shareholder,  but  not  any  other
shareholder.  However,  the table does not  include up to  1,050,000  additional
shares underlying our stock option plan.

     The  shareholders  listed below have sole voting and investment  power. The
address of each of the  beneficial  owners is 212 N. Wahsatch  Ave.,  Suite 205,
Colorado Springs,  Colorado 80903, unless otherwise indicated.  All ownership of
securities is direct ownership unless otherwise indicated.

Name                            Number of Shares   Percent of Voting Securities
----------------------          ----------------   ----------------------------

Officers and Directors
----------------------

LeRoy Landhuis(1)               5,687,978                   58.75%

Roger K. Burnett(2)             854,618                      9.66%

Joseph F. DeBerry(2)            764,618                      8.64%

J. Fisher DeBerry(3)            825,000                      9.51%

All Officers and Directors
as a Group (4 persons)        7,349,992                     86.56%


5% Beneficial Owners
--------------------
Bill M. Conrad(4)               443,966                      5.13%
5525 Erindale Dr., Suite 200
Colorado Springs, Colorado 80918

----------------------
     (1) Includes  warrants for 1,036,000  shares of Common  Stock,  exercisable
immediately for an exercise price of $1.50 per share,  and expiring on April 19,
2010.

     (2)  Includes  options  for  200,000  shares of Common  Stock,  exercisable
immediately  for an exercise price of $1.50 per share,  and expiring on June 30,
2007.

     (3)  Includes  options  for  25,000  shares  of Common  Stock,  exercisable
immediately  for an exercise price of $1.50 per share,  and expiring on June 30,
2007.

     (4) Includes 5,625 shares held by MCM Capital Management, Inc. of which Mr.
Conrad is an officer, director and principal shareholder.
----------------------

                                       17
<PAGE>


Change in Control
------------------

     Contemporaneously  with the sale of  3,594,256  shares of  common  stock to
LeRoy  Landhuis in April 2000,  a voting  agreement  was entered into whereby we
agreed to  effectuate  a change in  management.  Mr.  Landhuis  was  elected  as
Chairman of the Board of  Directors  and the  remaining  seats on the Board were
occupied by Roger K. Burnett,  Joseph F.  DeBerry,  and J. Fisher  DeBerry.  Mr.
Landhuis,  Roger K.  Burnett,  Joseph F.  DeBerry,  and J. Fischer  DeBerry have
agreed to vote their shares to nominate,  vote and maintain these individuals as
members of the Board until April 19,  2002.  We know of no other  circumstances,
including  the pledge by anyone of  securities,  which may result in a change of
control.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

Transactions with LeRoy Landhuis
--------------------------------

     Effective April 19, 2000, we issued  3,594,256  shares of Common Stock in a
private placement to LeRoy Landhuis, Chairman, Chief Executive Officer and owner
of greater than 5% of our common  stock.  The  aggregate  value from the private
placement  was  $1,343,780,  based  upon the  value of the  stock as  originally
negotiated  by the parties  ($.37 per share),  consisting of $1,000,000 in cash;
payment of rent  valued at  $193,744  for our office  facilities  for a two year
term;  office  equipment  and  improvements  valued at $32,192;  and  consulting
services  valued at $117,844.  Mr.  Landhuis was a minority  shareholder  in the
Company prior to the transaction.

     The Company was required to recognize additional  compensation cost because
the  negotiated  value per share of common  stock was lower than its fair value.
The  Company  recorded  $405,583  of prepaid  consulting  fees,  which are being
amortized over a 20-month  period  beginning  April 2000.  During the year ended
December  31,  2000,  additional  compensation  expense  of  $278,084  has  been
recognized in the financial statements.

     As part of that transaction, a Warrant was granted to Mr. Landhuis granting
him the right to acquire up to an  additional  1,036,000  shares of Common Stock
for the price of $1.50 per  share,  effective  immediately  and until  April 19,
2010.  Upon  exercise  of the  Warrant,  Mr.  Landhuis's  share  ownership  will
represent 58.75% of the issued and outstanding voting stock.

     We agreed to prepare and file a  Registration  Statement  to  register  the
shares  of  common  stock  sold to Mr.  Landhuis  with the  Securities  Exchange
Commission  no later than 180 days  following the closing.  Mr.  Landhuis was to
receive 12,500 shares of common stock per month until the Registration Statement
was  made  effective.  In March  2001,  the  Company  and Mr.  Landhuis  agreed,
primarily to save the Company the expense of registration, that the Registration
Statement will be delayed until demand, not earlier than November 1, 2001. Under
that agreement,  the Company accrued 105,000 shares for Mr. Landhuis in 2000 and
an additional  37,500 shares for Mr. Landhuis in 2001.  These shares were issued
to Mr.  Landhuis in April 2001. No additional  shares were required to be issued
under the agreement.

     Also as a part of the transaction,  we entered into a Consulting  Agreement
with  Mr.  Landhuis   effective  January  1,  2000,  whereby  he  would  provide
consultation services to assist in our management. Pursuant to the two year term
consulting agreement,  Mr. Landhuis received compensation in year one of 315,201
shares of common stock valued at $117,844, and compensation in year two equal to

                                       18
<PAGE>

$220,000  payable either in cash or in common stock valued at 75% of the average
between the ask and bid price of the common stock at year end December 31, 2000,
at our sole choice and discretion.  Subsequent to year end 2000,  782,222 shares
of common stock was issued to Mr. Landhuis as  compensation  for year two of the
consulting agreement.

     The Company entered into an agreement with Mr.  Landhuis,  effective August
18,  2000  whereby  the  Company  would  indemnify  Mr.  Landhuis  for  any  tax
liabilities  Mr. Landhuis incurs for income in excess of the amounts agreed upon
in his prior agreements with the Company.

     We also lease our  principal  office  space from The  Landhuis  Company,  a
company  controlled by Mr.  Landhuis.  The lease has a three year term effective
February  1, 2000 for the  monthly  rent of $7,750  per  month.  Rent  valued at
$193,744  for the first two years were paid by the  issuance  of stock under the
Subscription Agreement in April 2000.

     These transactions with Mr. Landhuis were unanimously approved by the Board
of Directors as it then existed.

     During  2000,  Mr.  Landhuis  made a short term loan to the  Company in the
amount  of  $65,685  for  payroll,  accounts  payable,  merchandise  and  travel
expenses.  The loan was repaid prior to year end with  interest in the amount of
$1,585.

     Also during 2000, $16,065 was paid to the Landhuis Brokerage and Management
Co. for consulting services and office support services provided to the Company.
The Landhuis  Brokerage and Management Co. was also reimbursed $7,505 for travel
expenses incurred on behalf of the Company.

     Finally, during 2000, $30,000 was reimbursed to Mr. Landhuis for legal fees
incurred regarding Mr. Landhuis's  acquisition of stock in the Company and other
related transactions.


Miscellaneous Transactions
--------------------------

     In 1999,  we had an  Administrative  Services  Agreement  with MCM  Capital
Management,  Inc. of Colorado  Springs.  Under the agreement MCM had assisted us
with our bookkeeping,  secretarial,  and administrative  needs, provided storage
and warehouse  space on an as-needed basis for a period of one year at a rate of
$2,500 per month.  During the year ended December 31, 1999,  $30,000 was paid to
MCM under this agreement.  Mr. Conrad, a 5% beneficial owner of the Company,  is
also an officer,  director and principal  shareholder of MCM Capital Management,
Inc.

     In 1999 our offices were located in space that was  subleased  from MCM for
the  monthly  rental of $2000.  This rent was in  addition  to the fees paid for
services under the Administrative Services Agreement above. During 1999, we paid
MCM $24,000 under the sublease arrangement.

                                       19
<PAGE>

         Both  these   transactions   were   approved   by  a  majority  of  the
disinterested  directors. The Board of Directors was of the opinion that each of
these  transactions were no less favorable than could have been obtained from an
unaffiliated third party.

                                       20
<PAGE>

                                     PART IV

ITEM 13. EXHIBITS, REPORTS ON FORM 8-K AND FINANCIAL STATEMENTS

     (a)  Exhibits.

          Except as otherwise  indicated,  each of the following  documents were
          included as exhibits to the Company's  Registration  Statement on Form
          10-SB filed under the Securities Act of 1934, File No. 0-24829 and are
          incorporated herein by this reference.

     Exhibit
       No.
     -------
      2          Not applicable.

      3.1        Articles of Incorporation of the Company as filed June
                 30, 1997 with the Secretary of State of the State of Colorado.

      3.2        Articles of  Amendment  of the Articles of  Incorporation
                 of the Company as filed April, 15, 1998 with the Secretary
                 of State of the State of Colorado.

      3.3        *Articles  of Amendment  of the  Articles of  Incorporation
                 of the Company as filed August 23, 2000 with the Secretary
                 of State of the State of Colorado.

      3.4        Bylaws of the Company.

      4.1        Form of Certificate for Common Shares, $.0001 par value
                 per share.

      9          Not applicable.

      10.1       Employment Agreement, by and between the Company and
                 Roger K. Burnett, dated August 5, 1997

      10.2       Employment Agreement, by and between the Company and
                 Joseph F. DeBerry, dated August 5, 1997

      10.3       Non-Qualified Stock Option and Stock Grant Plan,
                 dated July 1, 1998

      10.4       Stock Option Agreement

      10.5       Lease Agreement, dated January 21, 2000 (1)

      10.6       Subscription Agreement, by and between the Company and
                 LeRoy Landhuis, dated April 19, 2000(2)

      10.7       *Consulting Agreement, by and between the Company and
                 LeRoy Landhuis, dated January 1, 2000

                                       21
<PAGE>

      10.8       *Agreement, by and between the Company and LeRoy Landhuis,
                 dated August 18, 2000

      11         Not applicable.

      13         Not applicable.

      16         Letter of Change in Certifying Accountant(3)

      18         Not applicable.

      21         Not applicable.

      22         Not applicable.

      23         Not applicable.

      24         Not applicable.

      27         Not applicable.

      99         Not applicable.

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

* filed herewith

(1)  included  as an exhibit to our Annual  Report on Form 10-KSB for the fiscal
year ended December 31, 1999, and incorporated herein by this reference

(2)  included as an exhibit to our Current  Report on Form 8-K,  dated April 19,
2000, and incorporated herein by this reference

(3) included as an exhibit to our Current  Report on Form 8-K,  dated January 4,
2000, and incorporated herein by this reference

          (b)  Reports on Form 8-K

               The  Company  has not filed any  Reports  on Form 8-K  during the
               fourth quarter of the fiscal year covered by this Report.

          (c)  Financial Statements and Schedules.

               The Financial  Statements filed herein are described in the Index
               to Financial Statements following Part IV of this Report.

                                       22
<PAGE>

                                    SIGNATURE

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Registrant has caused this Report to be signed on its
behalf  by the  undersigned  thereunto  duly  authorized  in  Colorado  Springs,
Colorado on the 13th day of April, 2001.


                                       FTS APPAREL, INC.


                                       By:  /s/ Roger K. Burnett
                                          --------------------------------------
                                             Roger K. Burnett, President

     Pursuant to the  requirements  of the  Security  Exchange  Act of 1934,  as
amended,  this Report has been signed by the following persons in the capacities
and on the dates indicated.

Signatures                      Title                             Date
---------------------  --------------------------------------    ---------

/s/ LeRoy Landhuis     Chairman of the Board of Director        April 16, 2001
---------------------  and Chief Executive Officer              ---------------
LeRoy Landhuis



/s/ Roger K. Burnett   President, Chief Financial Officer and    April 13, 2001
---------------------  Director                                  ---------------
Roger K. Burnett



/s/ J. Fisher DeBerry  Executive Vice President and Director     April 13, 2001
---------------------                                            ---------------
J. Fisher DeBerry


/s/ Joseph F. DeBerry  Senior Vice President, Secretary,         April 13, 2001
---------------------  Treasurer and Director                    ---------------
Joseph F. DeBerry

                                  23
<PAGE>




<PAGE>
                               FTS Apparel, Inc.
                          As of and for the Years Ended
                           December 31, 2000 and 1999
<PAGE>

                                FTS Apparel, Inc.
                                Table of Contents

                                                                         Page

Report of Independent Auditors                                            F-1

Balance Sheet as of December 31, 2000                                     F-2

Statements of Operations for the Two Years Ended December 31, 2000        F-3

Statement of Changes in Stockholders' Equity
  for the Period From January 1, 1999 to December 31, 2000                F-4

Statements of Cash Flows for the Two Years Ended December 31, 2000        F-5

Notes to Financial Statements                                             F-6

<PAGE>

((LETTERHEAD))

((LOGO))

STARK TINTER & ASSOCIATES, LLC
--------------------------------------------------------------------------------
                                                    Certified Public Accountants
                                                           Financial Consultants

                         REPORT OF INDEPENDENT AUDITORS



Shareholders and Board of Directors
FTS Apparel, Inc.

We have  audited  the  accompanying  balance  sheet of FTS  Apparel,  Inc. as of
December  31,  2000,  and the  related  statements  of  operations,  changes  in
stockholders'  equity,  and cash flows for the years ended December 31, 2000 and
1999.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant estimates by management, as well as evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of FTS  Apparel,  Inc. as of
December 31, 2000, and the results of its operations, and its cash flows for the
years ended December 31, 2000 and 1999, in conformity with accounting  princples
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements, the Company has suffered recurring losses from operations.
This factor raises  substantial doubt about the Company's ability to continue as
a going  concern.  Management's  plans  in  regard  to  these  matters  are also
discussed in Note 2. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.

/s/ Stark Tinter & Associates, LLC
----------------------------------
Stark Tinter & Associates, LLC
Denver, Colorado
March 13, 2001




          7535 East Hampden Avenue, Suite 109 - Denver, Colorado 80231
                        (303) 694-6700 Fax (303) 694-6761

                                       F-1
<PAGE>

                                FTS APPAREL, INC.
                                  BALANCE SHEET
                               December 31, 2000

                                     ASSETS

CURRENT ASSETS
      Cash                                                          $   327,425
      Accounts receivable                                                89,165
      Inventory                                                         288,697
      Prepaid expenses                                                  304,573
                                                                    -----------

                 Total current assets                                 1,009,860
                                                                    -----------

PROPERTY AND EQUIPMENT, NET                                              55,166
                                                                    -----------

OTHER ASSETS
      Deposits                                                           11,782
                                                                    -----------

                                                                    $ 1,076,808
                                                                    ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts payable                                              $    42,685
      Accrued expenses                                                   28,012
      Preferred dividends payable                                         1,411
      Deferred income - trade agreements                                  3,758
                                                                    -----------

                 Total current liabilities                               75,866
                                                                    -----------

STOCKHOLDERS' EQUITY
      10% Convertible preferred stock, Series A,
        $0.01 par value, 150,000 shares
        authorized, 50,000 shares issued
        and outstanding                                                  50,000
      Preferred stock, $0.01 par value, 4,850,000
        undesignated shares authorized, none issued
        or outstanding                                                        -
      Common stock, $0.001 par value, 25,000,000 shares
        authorized, 7,721,229 shares issued
        and outstanding                                                   7,721
      Additional paid in capital                                      4,028,715
      Accumulated deficit                                            (3,085,494)
                                                                    -----------

                                                                      1,000,942
                                                                    -----------

                                                                    $ 1,076,808
                                                                    ===========

   The Notes to Financial Statements are an integral part of these statements

                                       F-2
<PAGE>

<TABLE>

                          FTS APPAREL, INC.
                       STATEMENTS OF OPERATIONS
<CAPTION>



                                                             YEAR ENDED       YEAR ENDED
                                                            DECEMBER 31,     DECEMBER 31,
                                                               2000              1999
                                                           --------------  ---------------

 REVENUES
<S>                                                        <C>             <C>
      Sales of merchandise                                 $   1,327,508   $      190,177
      Advertising/promotion income                                 6,860           17,500
      Trade agreements                                            25,960           81,503
                                                           --------------  ---------------

                                                               1,360,328          289,180

 COST OF GOODS SOLD                                            1,043,416           89,905
                                                           --------------  ---------------

 GROSS PROFIT                                                    316,912          199,275

 GENERAL AND ADMINISTRATIVE EXPENSES                           1,643,771        1,712,516
                                                           --------------  ---------------

 (LOSS) FROM OPERATIONS                                       (1,326,859)      (1,513,241)
                                                           --------------  ---------------

OTHER INCOME (EXPENSE)
     Interest income                                              11,179            6,418
     Interest expense                                            (12,750)          (4,763)
                                                           --------------  ---------------

                                                                  (1,571)           1,655
                                                           --------------  ---------------

NET (LOSS)                                                    (1,328,430)      (1,511,586)

PREFERRED DIVIDENDS                                               (1,411)          (5,000)
                                                           --------------  ---------------

NET (LOSS) APPLICABLE TO COMMON STOCK                      $  (1,329,841)  $   (1,516,586)
                                                           =============   ===============

PER SHARE INFORMATION:
WEIGHTED AVERAGE SHARES OUTSTANDING (BASIC AND DILUTED)        6,807,656        3,693,774
                                                           =============   ===============

NET (LOSS) PER COMMON SHARE (BASIC AND DILUTED)            $       (0.20)  $        (0.41)
                                                           =============   ===============
</TABLE>


   The Notes to Financial Statements are an integral part of these statements

                                       F-3
<PAGE>

<TABLE>
            FTS APPAREL, INC.
    STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
       YEARS ENDED DECEMBER 31, 1999 AND 2000

<CAPTION>


                                     Number of    Number of                          Additional                        Total
                                     Preferred     Common       Preferred  Common      Paid-in      Accumulated      Shareholders'
                                      Shares       Shares        Stock      Stock      Capital        Deficit         Equity
                                    ----------   ------------  ---------  ---------  ------------  --------------   ----------


<S>                                 <C>          <C>            <C>       <C>        <C>           <C>              <C>
Balance, December 31, 1998           50,000      3,136,261     $ 50,000   $  3,136   $   286,197   $    (239,067)   $  100,266

  Stock issued for employment
    contract                              -         80,000            -         80        79,920               -        80,000

  Stock issued for trade agreements       -          6,000            -          6        10,489               -        10,495

  Stock issued for services               -        383,022            -        384       555,536               -       555,920

  Stock issued for cash, net of
     offering costs of $5,222             -        239,518            -        240       353,815               -       354,055

  Stock warrants exercised                -         94,921            -         94       142,285               -       142,379

  Preferred dividends declared            -              -            -          -             -          (5,000)       (5,000)

  Stock option grants                     -              -            -          -       606,390               -       606,390

  Net (loss) for the year ended           -              -            -          -             -      (1,511,586)   (1,511,586)
    December 31, 1999               ----------  -------------  ---------  ---------  ------------  --------------   ----------

Balance, December 31, 1999           50,000      3,939,722       50,000      3,940     2,034,632      (1,755,653)      332,919
                                    ----------  -------------  ---------  ---------  ------------  --------------   ----------

  Stock issued for services
    and fixed assets                      -      1,106,773            -      1,106       996,758               -       997,864

  Stock issued for cash                   -      2,674,734            -      2,675       997,325               -     1,000,000

  Preferred dividends declared            -              -            -          -             -          (1,411)       (1,411)

  Net (loss) for the year ended
    December 31, 2000                     -              -            -          -             -      (1,328,430)   (1,328,430)
                                    ----------  -------------  ---------  ---------  ------------  --------------   ----------

Balance, December 31, 2000           50,000      7,721,229     $ 50,000   $  7,721   $ 4,028,715   $  (3,085,494)   $1,000,942
                                    ==========  =============  =========  =========  ============  ==============   ==========
</TABLE>


   The Notes to Financial Statements are an integral part of these statements

                                       F-4
<PAGE>

<TABLE>

                                FTS APPAREL, INC.
                            STATEMENTS OF CASH FLOWS
<CAPTION>



                                                                    YEAR ENDED             YEAR ENDED
                                                                   DECEMBER 31,           DECEMBER 31,
                                                                       2000                   1999
                                                                -------------------    -------------------

OPERATING ACTIVITIES
<S>                                                                <C>                    <C>
         Net (loss)                                                $(1,328,430)           $(1,511,586)
         Adjustments to reconcile net (loss) to net cash
             (used in) operating activities:
                 Amortization and depreciation                          11,695                  6,779
                 Stock issued or subscribed for services,
                    contracts, and trade agreements                    249,501                646,415
                 Amortization of non-cash prepaid
                    expenses                                           481,178                      -
                 Stock option compensation costs                             -                606,390
         Changes in:
             Accounts receivable                                        (6,716)               (72,146)
             Inventory                                                (126,917)              (153,206)
             Prepaid expenses                                          128,928               (197,045)
             Deposits                                                   (8,665)                (3,067)
             Accounts payable                                          (22,470)                48,095
             Accrued expenses                                           22,686                  2,826
             Deferred income - trade agreements                        (21,520)                21,520
                                                                   -----------            -----------
                 Net cash (used in) operating activities              (620,730)              (605,025)
                                                                   -----------            -----------

INVESTING ACTIVITIES
     Acquisition of fixed assets                                       (10,532)               (25,849)
                                                                   -----------            -----------
                 Net cash (used in) investing activities               (10,532)               (25,849)
                                                                   -----------            -----------

FINANCING ACTIVITIES
     Common stock issued, net of offering costs                      1,000,000                496,434
     Proceeds from note payable                                        724,558                      -
     Proceeds from officer loan                                         65,685                      -
     Proceeds from note payable - related party                              -                 42,000
     Payments on note payable                                         (724,558)                     -
     Payments on officer loan                                          (65,685)                     -
     Payments on note payable - related party                          (42,000)                     -
     Preferred dividends paid                                           (5,000)                (3,589)
                                                                   -----------            -----------
                 Net cash provided by financing activities             953,000                534,845
                                                                   -----------            -----------

                          Net increase (decrease) in cash              321,738                (96,029)

CASH AT BEGINNING OF YEAR                                                5,687                101,716
                                                                   -----------            -----------

CASH AT END OF YEAR                                                $   327,425            $     5,687
                                                                   ===========            ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
     Cash paid for:
         Interest                                                  $    12,750            $     4,763
                                                                   ===========            ===========
         Income taxes                                              $         -            $         -
                                                                   ===========            ===========

</TABLE>


SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NON-CASH FINANCING AND INVESTING
ACTIVITIES

During the year ended December 31, 2000, the Company issued 469,597 shares of
     common stock for the following assets:

     Prepaid rent                                                  $   193,744
     Prepaid consulting                                                522,427
     Property and equipment                                             32,192
                                                                   -----------
                                                                   $   748,363
                                                                   ===========


   The Notes to Financial Statements are an integral part of these statements

                                       F-5
<PAGE>

                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


Note 1 - Organization and Summary of Significant Accounting Policies

Organization

FTS Apparel,  Inc. (the Company) was incorporated under the laws of the State of
Colorado.  The Company's  primary  purpose is the  development,  marketing,  and
distribution of clothing apparel bearing the FTS (Flip the Switch) insignia.

The Company was in the  development  stage from its  inception  on June 30, 1997
through December 31, 1999. The Company commenced  operations on January 1, 2000.
Prior to August 23, 2000, the Company was known under the name Full Tilt Sports,
Inc.

Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  amounts  reported in these  financial  statements  and  accompanying
notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

For  purposes of the  statement  of cash flows,  the Company  considered  demand
deposits and highly liquid-debt  instruments  purchased with a maturity of three
months or less to be cash equivalents.

Inventory

Inventories  are stated at the lower of cost or market  using the  average  cost
method.

Property and Equipment

Property  and  equipment  is stated at cost and is being  depreciated  using the
straight-line method over the asset's estimated economic life, ranging from 3 to
10 years.

                                       F-6
<PAGE>


Financial Instruments

Fair value estimates  discussed herein are based upon certain market assumptions
and pertinent  information  available to management as of December 31, 2000. The
respective  carrying  value of certain  on-balance-sheet  financial  instruments
approximated  their fair  values.  These  financial  instruments  include  cash,
accounts  receivable,   and  accounts  payable.   Fair  values  are  assumed  to
approximate  carrying  values for these financial  instruments  because they are
short  term in nature,  the  receivable  or payable is due on demand,  and their
carrying amounts approximate fair value.

Impairment Of Long-Lived Assets

The Company  periodically  reviews the carrying  amount of  property,  plant and
equipment and its identifiable  intangible  assets to determine  whether current
events or  circumstances  warrant  adjustments to such carrying  amounts.  If an
impairment  adjustment is deemed necessary,  such loss is measured by the amount
that the carrying  value of such assets  exceeds their fair value.  Considerable
management  judgement  is  necessary  to  estimate  the fair  value  of  assets;
accordingly, actual results could vary significantly from such estimates. Assets
to be disposed of are carried at the lower of their financial statement carrying
amount or fair value less costs to sell.  As of December  31,  2000,  management
does not believe there is any impairment of the carrying amounts of assets.

Revenue Recognition

Sales are recognized  upon shipment of clothing  apparel.  Revenues are reported
net of sales returns and allowances.

Advertising Costs

Advertising is expensed as incurred.  Advertising  costs  expensed  during years
ended  December  31, 2000 and 1999 were  $138,312  and  $416,799,  respectively.
Prepaid  advertising  costs, in the form of endorsement  contracts,  reported as
prepaid  expenses at  December  31,  2000 and 1999 were  $36,493  and  $153,773,
respectively.

                                       F-7
<PAGE>

Net Loss Per Common Share

The  Company  follows  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings  Per  Share"  ("SFAS  No.  128").  Basic  earnings  per  common  share
calculations  are  determined  by  dividing  net income  (loss) by the  weighted
average number of shares of common stock  outstanding  during the year.  Diluted
earnings per common share  calculations  are  determined  by dividing net income
(loss) by the weighted average number of common shares and dilutive common share
equivalents  outstanding.  During the periods presented common stock equivalents
were not considered, as their effect would be anti-dilutive.

Stock-Based Compensation

The Company  accounts for stock based  compensation  in accordance with SFAS No.
123, "Accounting for Stock-Based Compensation".

Recent Pronouncements

The  FASB  recently  issued   Statement  No  137,   "Accounting  for  Derivative
Instruments and Hedging  Activities-Deferral of Effective Date of FASB Statement
No. 133". The Statement defers for one year the effective date of FASB Statement
No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities".  The
rule now will apply to all fiscal  quarters of all fiscal years  beginning after
June 15,  2000.  In June 1998,  the FASB issued SFAS No.  133,  "Accounting  for
Derivative  Instruments  and Hedging  Activities".  The Statement  permits early
adoption as of the  beginning  of any fiscal  quarter  after its  issuance.  The
Statement  will require the Company to recognize all  derivatives on the balance
sheet at fair  value.  Derivatives  that are not hedges must be adjusted to fair
value through income.  If the derivative is a hedge,  depending on the nature of
the  hedge,  changes  in the fair  value of  derivatives  will  either be offset
against  the  change in fair value of the hedged  assets,  liabilities,  or firm
commitments through earnings or recognized in other  comprehensive  income until
the  hedged  item is  recognized  in  earnings.  The  ineffective  portion  of a
derivative's  change in fair value will be  immediately  recognized in earnings.
The  Company  has not  engaged in any  hedging  activities  for the years  ended
December 31, 2000 and 1999.

                                       F-8
<PAGE>


During December 1999, the Securities and Exchange  Commission (SEC) issued Staff
Accounting   Bulletin  101  (SAB  No.  101)  which  clarifies  certain  existing
accounting   principles   for  the  timing  of  revenue   recognition   and  its
classification  in the financial  statements.  In June 2000, the SEC delayed the
required  implementation  date of SAB No. 101. As a result, SAB No. 101 will not
be effective for the Company until the quarter  ending  September 30, 2001.  The
Company does not anticipate  that SAB No. 101 will impact the Company's  revenue
recognition policies.

Note 2 - Going Concern

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles, which contemplates continuation of the
Company as a going  concern.  However,  the  Company has  sustained  substantial
recurring losses, aggregating $1,328,430 in 2000 and $1,511,586 in 1999.

The  Company's  ability to continue as a going  concern is  contingent  upon its
ability to attain profitable operations.  Additionally,  the Company may need to
secure debt or equity financing to maintain  adequate working capital due to the
seasonality of the apparel industry.

The financial  statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.

Note 3 - Property and Equipment

The following is a summary of property and equipment as of December 31, 2000:

         Furniture and fixtures                                 $44,103
         Leasehold improvements                                  20,177
         Computer equipment                                       6,255
         Other                                                    4,044
                                                                  -----
                                                                 74,579
         Less accumulated depreciation                          (19,413)
                                                                --------
         Net property and equipment                             $55,166
                                                                =======

Depreciation  expense for the years ended  December 31, 2000 and 1999 was $9,851
and $5,544, respectively.

                                       F-9
<PAGE>


Note 4 - Equity

The Company  has  authorized  30,000,000  shares of stock,  of which  25,000,000
shares are $.001 par value common stock and 5,000,000  shares are $.01 par value
preferred  stock.  The Board of Directors is  authorized  to divide the class of
preferred  shares into series and to fix and determine  the relative  rights and
preferences of those shares.

In April 1998 the Company  authorized the issuance of 150,000 shares of Series A
Voting  Convertible  Cumulative  Preferred Stock for $1 per share.  The Series A
Convertible Preferred Stock paid senior preferential fixed dividends at the rate
of 10% per annum  until  April  2000.  From May 2000  through  April  2003,  the
dividend is  calculated  at 3.75% of the "net  profits" of the  Corporation  and
payable  annually  on or before 90 days from the  closing  of the  Corporation's
fiscal year.  Each share of Series A Convertible  Preferred Stock is convertible
into  one  common  stock  share  at the  option  of the  holder.  The  Series  A
Convertible  Preferred  Stock  automatically  converts to common  stock in April
2003. Preferred dividends aggregated $1,411 in 2000 and $5,000 in 1999.

During  January 1999 the Company  issued 80,000 shares of common stock valued at
$80,000 ($1.00 per share) pursuant to an employment contract entered into by the
company. The value ascribed to the common stock corresponds with the fair market
value of the common shares on the date the Company agreed to issue the shares.

During the year ended  December  31, 1999,  the Company  sold 239,518  shares of
common stock for cash  aggregating  $359,277  ($1.50 per share).  After offering
costs of $5,222, the Company netted $354,055

During the year ended  December 31, 1999,  the Company  issued 383,022 shares of
common  stock for  services  valued at  $555,920  ($1.00  per share to $3.81 per
share).  The values  ascribed  to the common  stock  corresponded  with the fair
market value of the common shares on the respective  dates the Company agreed to
issue the shares.

During the year ended  December  31,  1999,  the Company  issued 6,000 shares of
common stock pursuant to a trade agreement valued at $10,495 ($1.12 per share to
$2.75 per share).  The values ascribed to the common stock corresponded with the
fair  market  value of the common  shares on the  respective  dates the  Company
agreed to issue the shares.

                                      F-10
<PAGE>

During the year ended  December  31, 1999 the Company  issued  94,921  shares of
common stock for cash  aggregating  $142,379  pursuant to the exercise of common
stock purchase warrants.

During the year ended December 31, 1999,  stock options with a fair market value
of $606,390 were exercised.

At December 31, 1999 Preferred Dividends of $5,000 were declared.

During the year ended December 31, 2000 the Company issued  1,106,773  shares of
common  stock for  services  and assets  valued at  $997,864  ($.25 to $1.38 per
share).  The values  ascribed  to the common  stock  corresponded  with the fair
market value of the common shares on the respective  dates the Company agreed to
issue the shares.

During the year ended  December  31, 2000 the Company sold  2,674,734  shares of
common stock for cash of $1,000,000. The shares were valued at a discount to the
fair market  value as quoted on the OTC  Bulletin  Board.  A discount of 30% was
applied  to  account  for  the  shares  being  restricted  per  Rule  144 of the
Securities Act of 1933.

At December 31, 2000 Preferred Dividends of $1,411 were declared.

Note 5 - Stock Options

The Company has a Non-Qualified  Stock Option and Stock Grant Plan (the "Plan"),
which began in July 1997.  Under the  Company's  Plan,  the  Company's  Board of
Directors  has  reserved  2,500,000  shares  that may be granted at the Board of
Directors'  discretion.  No option  may be granted  after July 27,  2007 and the
maximum term of the options granted under the Plan is ten years.

The effect of applying SFAS No. 123 on pro forma net loss as stated below is not
necessarily  representative  of the  effects on reported  net income  (loss) for
future years due to, among other things, the vesting period of the stock options
and the fair value of additional stock options in future years. Had compensation
cost for the Company's  stock option plans been  determined  based upon the fair
value  at the  grant  date  for  awards  under  the  plans  consistent  with the
methodology  prescribed  under SFAS No. 123, the Company's net (loss) would have
been $1,340,040,  or $.19 per share, for 2000 and $2,353,442, or $.64 per share,
for  1999.  The fair  values of the  options  granted  during  2000 and 1999 are
estimated  at $1.08  and  $1.39,  respectively,  on the date of grant  using the
Black-Scholes option pricing model with the following  assumptions:  no dividend
yield,  volatility  of 105% (106% in 1999),  a risk-free  interest rate of 6.00%
(5.4% for 1999), and expected lives of 10 years from date of vesting.

                                      F-11
<PAGE>

Changes in options outstanding under the plan are summarized as follows:

                                          Weighted    Weighted
                                          Average     Average
                                          Exercise    Fair Value
                              Shares       Price      of Options
                            ---------    ----------   ----------
Granted in 1999             1,036,000     $   1.50    $   1.39
Granted in 2000                14,000     $   1.50    $   1.08
                            ---------    ----------   ----------
Balance December 31, 2000   1,050,000     $   1.50    $   1.39
                            =========    ==========   ==========

The exercise price for all options is at or above the market value of the common
stock as of the date of grant.

The following table summarizes  information  about  fixed-price stock options at
December 31, 2000:

                       Outstanding                       Exercisable
                       --------------------------     -------------------------
                       Weighted-        Weighted-                    Weighted-
                        Average          Average                     Average
Exercise   Number      Contractual      Exercise      Number         Exercise
Prices   Outstanding     Life            Price        Exercisable     Price

$1.50      1,050,000    8.4 years        $1.50          1,050,000      $1.50


Note 6 - Stock Warrants

The following details the warrants outstanding as of December 31, 2000:

                                             Underlying        Exercise
                                              Shares            Price
Warrant issued during 2000                   1,036,000          $1.50

The  warrant  was  issued to the Chief  Executive  Officer of the  Company.  The
Warrant expires on April 19, 2010. At December 31, 2000 the Company had reserved
1,036,000 shares of common stock for stock warrants.

                                      F-12
<PAGE>

Note 7 - Income Taxes

The Company  accounts for income taxes under  Statement of Financial  Accounting
Standards No. 109 (FAS 109),  "Accounting for Income Taxes",  which requires use
of the  liability  method.  FAS  109  provides  that  deferred  tax  assets  and
liabilities  are  recorded  based on the  differences  between  the tax bases of
assets and  liabilities  and their  carrying  amounts  for  financial  reporting
purposes,  referred  to  as  temporary  differences.  Deferred  tax  assets  and
liabilities at the end of each period are determined using the currently enacted
tax rates  applied to taxable  income in the periods in which the  deferred  tax
assets and liabilities are expected to be settled or realized.

The net deferred tax assets as of December 31, 2000, in the accompanying balance
sheet includes the following components:

                  Deferred tax asset                               $796,000
                  Less valuation allowance                         (796,000)
                                                                  ----------
                                                                  $      -
                                                                  ==========

The net change in valuation  allowance for the year ended  December 31, 2000 was
$567,000.

The types of  temporary  differences  between  the tax basis of assets and their
financial  reporting  amounts  that give rise to a  significant  portion  of the
deferred tax asset are as follows:
                                                     Temporary            Tax
                                                     Difference          Effect

Net operating loss carryforward:                     $2,042,000         $796,000
                                                     ==========         ========

The net operating loss carry forward will expire through 2020.

The provision for income taxes differs from the amount  computed by applying the
statutory  federal  income tax rate of 34% to income  before income taxes due to
the  effect of the net  operating  loss.  The net  operating  loss  negates  any
provision for income taxes.

Note 8 - Commitments

The Company has an irrevocable letter of credit with a financial institution for
$48,488.  As of  December  31,  2000 the  Company had not drawn on the letter of
credit.

                                      F-13
<PAGE>


Note 9 - Concentrations of Credit Risk

The Company  maintains  cash  balances  in money  market  accounts  that are not
insured. The balance of uninsured funds at December 31, 2000 was $220,176.

During 2000,  the Company sold  approximately  $1,092,000 of  merchandise to one
customer. The accounts receivable from this customer as of December 31, 2000 was
$22,936.

Note 10 - Related Party Transactions

On April 19, 2000,  the Company  issued  3,594,256  shares of common stock and a
stock  warrant  (Note 6) in exchange  for cash,  fixed  assets,  office rent and
consulting  services.  The  agreement  also  requires  the  Company  to  file  a
Registration  Statement  for the  shares  issued and to issue  12,500  shares of
common  stock  per  month  until  the  filing  of  the  Registration  Statement.
Subsequent to the year ended  December 31, 2000 the parties  agreed to delay the
filing of the  Registration  Statement  until at least November 1, 2001 and that
the total  shares  issued  would be 142,500  shares.  As of December  31,  2000,
105,000  shares  of  common  stock  related  to  the  agreement   regarding  the
Registration Statement are due to this individual.

During 2000 an officer of the Company  provided a short-term  operating loan for
$65,685. The note was repaid, with interest of $1,585, during 2000.

The Company entered into promissory note agreements for $22,000 with two members
of the board of directors.  The  principal,  plus  interest of $2,850,  was paid
during 2000.

In 1999 the Company had an administrative service agreement with a company owned
by  directors  of the  Company  for  $2,500 per month for a  twelve-year  period
beginning  January 1, 1999.  The total amount paid during 1999 was $30,000.  The
contract was voided during 2000.

Note 11 - Subsequent Event

During  January 2001,  the Company issued 782,222 shares of common stock related
to consulting services to be provided by the Chief Executive Officer.  The value
of the  consulting  services is  stipulated to be $220,000.  Per the  consulting
agreement, the shares were valued at 75% of the average bid and ask price of the
common stock on December 31, 2000.


                                      F-14