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, 1999 or

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


                         Commission File Number 0-24829

                             FULL TILT SPORTS, 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 Shares, $.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 $289,180.

The aggregate  market value of the 1,462,261 Common Shares held by nonaffiliates
of the Company as of March 27, 2000, was approximately $1,462,261 based upon the
last reported sale of the Company's Common Shares of $1.00 per share.

The total  number of Common  Shares  outstanding  as of  December  31,  1999 was
3,933,722.


                      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..................................8

    Item 4.           Submission of Matters to a Vote of
                           Security Holders .............................8
PART II

    Item 5.           Market for Registrant's Securities and Related

                      Shareholders Matters...............................9

    Item 6.           Management's Discussion and Analysis or

                      Plan of Operation.................................10

    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 ...........14

    Item 10. Executive Compensation.....................................16

    Item 11. Security Ownership of Certain Beneficial
                      Owners and Management.............................18

    Item 12. Certain Relationships and Related Transactions.............19

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>

                             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.")

                Special Note Regarding Forward Looking Statements

         Certain  statements   contained  herein  constitute   "forward  looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995. Such forward looking statements  include without limitation  statements
regarding the Company's plan of business  operations  and related  expenditures,
potential   contractual   arrangements,   anticipated   revenues   and   related
expenditures.  Factors  that could  cause  actual  results to differ  materially
include, among others, the following: acceptability of the Company's products in
the retail market place,  general economic  conditions,  tax legislation and the
overall state of the retail clothing industry. Most of these factors are outside
the control of the Company. Investors are cautioned not to put undue reliance on
forward  looking   statements.   Except  as  otherwise  required  by  applicable
securities  statutes  or  regulations,  the  Company  disclaims  any  intent  or
obligation to update  publicly these forward  looking  statements,  whether as a
result of new information, future events or otherwise.


                                      iii

<PAGE>



ITEMS 1 and 2.    BUSINESS AND PROPERTIES

General

     Full Tilt Sports,  Inc.,  was founded in 1997 as a Colorado  corporation to
sell designer  sportswear and  accessories  emphasizing  an  aggressive,  active
attitude  and  lifestyle,  as  expressed  in our  "Flip  The  Switch"  and "FTS"
trademarks  and logos.  This last year was our second year of operation,  and we
have continued pursuing our original goals of promoting our products and selling
them in retail stores on a large scale.

     Our stock has been traded in the over-the-counter  market since March, 1999
and is quoted on the NASD Bulletin  Board under the symbol  "FTSX".  This is the
only trading market for our stock. Currently we have 140 shareholders.


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

     We are in the  business  of selling  high  quality  casual  sportswear  and
accessories,  focusing on athletic  and active  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 target
market is retail  buyers of casual  active  clothing of both sexes and all ages.
Our product line includes high quality 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 have been  manufactured and are for sale in many
retail  clothing  and  sportswear  stores,  predominantly  in Colorado and other
western states. Although most of our retailers are small to medium size and have
lower sale volumes,  we presently  have limited orders to sell our products with
JC Penney Co. Inc., a national  department  store.  Selling our products in high
volume outlets,  like JC Penney, is necessary to achieve the volume of sales and
revenues we need to be successful.

     Our products are also sold to amateur sports teams,  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 help  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  sports
personalities.  We believe that having these  sports  personalities  wearing our
clothing,  being featured in our  advertisements  and appearing in person at our
promotions will encourage sports orientated retail customers to buy our clothing
line. We have made  substantial  progress in securing these  endorsements  as we
have


                                       1

<PAGE>


entered into agreements with over a dozen athletes and sport  personalities
in the last year.  We have also  retained the services of several  employees and
consultants  who have a great  deal of  experience  in  marketing  this  type of
clothing,  including  two former  executives  with No Fear, a highly  successful
clothing producer.

     However,  we are still a development  stage  company in a new venture.  All
prospective  investors  need to be aware of the  difficulties  and risks in this
type of new  business.  These risks  include  lack of  experience,  the need for
additional capital, limited market recognition and intense competition.


Production
------------

     We are not in the business of manufacturing our clothing line.  Instead, we
contract with independent overseas and domestic manufacturers, whose products we
have  tested  and  approved.  We decide  all  specifications  for our  products,
including  style,  color and  materials.  We are  producing  only  high  quality
garments and accessories to appeal to the demanding  consumer.  We hope that the
specifications  we have chosen for our clothing and  accessories  will make them
more distinctive and superior in quality  compared to most sportswear  currently
available, and therefore more attractive to customers. Our current manufacturers
have performed to our standards in quality,  cost and time of manufacturing  and
delivery, but we don't have written contracts with these manufactures.  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

     Although, we have to pay in advance for our product orders, we hope to have
a letter of credit in place for future orders,  working capital  permitting.  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 which can manufacture  the clothing on short notice.  However,
using a local  manufacturer  is more costly and we  therefore  try to avoid this
whenever possible.  We have already placed an order with our manufacturers for a
spring  line  of  clothing.  We  are  currently  in the  process  of  placing  a
manufacturing  order  for our fall  line,  which we hope  will be  significantly
larger  than our spring  line  order.  However,  we have no firm orders from our
customers for our fall line at this time.


                                       2

<PAGE>


Marketing
---------

     The focus of our  marketing,  and what we  believe  sets us apart from most
other clothing companies,  is that we have many different  professional athletes
and sports personalities wearing and promoting our clothing. The concept is that
by having popular  professional  athletes,  ballplayers and sports personalities
wearing our clothing and looking  attractive in them, the fans of these athletes
and sports personalities will want to wear them as well. Hopefully this exposure
will also attract other types of consumers as well.

     We have been successful in signing these endorsement contracts particularly
because several  members of our management  have been minor league  professional
baseball  players.  They  personally  know many  professional  athletes and have
contacts in  professional  sports to be introduced to many others.  We have been
successful  in signing  contracts  with about 20 athletes and sports  figures so
far. These athletes include  professional  football  players,  baseball players,
boxers and popular former professionals as well.

         Some of the professional athletes endorsing our products include:

          o    Ed McCaffrey of the Denver Broncos football team
          o    Bill Romanowski of the Denver Broncos football team
          o    Glenn Cadez of the Denver Broncos football team
          o    Ray Crockett of the Denver Broncos football team
          o    Mike DeJean of the Colorado Rockies baseball team
          o    Trevor Hoffman of the San Diego Padres baseball team
          o    Andy  Pettitte  of the World  Series  champion  New York  Yankees
               baseball  team
          o    Rick "Goose" Gossage, a former professional baseball player
          o    Floyd Mayweather, Jr., a professional boxer
          o    Michael Grant, a professional boxer

     These athletes have contracted to wear our clothing  during  interviews and
during other  appearances where they will be seen by the public in person and in
the media. 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
will also be able to use photographs of them in our  advertisements.  The boxers
have worn robes, shorts and accessories with our trademark and logo in televised
prizefights and have been photographed for magazines such as Sports  Illustrated
in these garments.

     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, especially golf tournaments
         o  Sponsorship of team sports
         o  Radio advertisements
         o  Newspaper advertisements

                                       3

<PAGE>


         o  Internet advertisements

     Radio  advertisements have been broadcast for the past year on a syndicated
radio show on over 200 AM and FM radio stations  nationally.  Advertisements are
also taken out in local  newspapers  whenever we are  conducting  a  promotional
event,  such as an appearance and autograph  signing by one of our  professional
athletes.  We have also  sponsored  local  sporting  events in the  Colorado and
neighboring  states, in particular golf tournaments in Colorado and Arizona.  At
these  events we display  our  products,  put up signs and posters and give away
some promotional items like t-shirts as well as have our products  displayed for
sale. On the Internet our web page  advertises our products and will  eventually
be able to accept orders.

     We have an agreement with Michael Grant,  a  professional  boxer,  who will
wear robes,  boxing  trunks and other  accessories  with our  trademark and logo
during a title  fight with  Lennox  Lewis on April 29 of this  year.  This prize
fight will be  televised  and there will be a great  deal of media  coverage  on
television and in the press.

     To assist our marketing  efforts,  we employed Robert (Bobby) Stephenson as
Vice  President of Sales and Marketing and have retained the services of several
individuals and consulting  companies with sales and marketing experience in the
sportswear business. Our two new consultants,  Britt Galland and John Rich, will
provide a great deal of assistance in reaching these objectives. They are former
executives with No Fear, an industry  leader in the sale of sportswear  apparel.
Their contacts  within  professional  sports and the sportswear  industry should
open up new doors and they should be able to direct us in promoting our products
more effectively and in different ways.

     Additional new promotion is planned using product placements. This is where
our products might be used in movies and television  shows as background  items.
This will give our  products  exposure in a new medium.  Britt  Galland and John
Rich have experience and contacts in this field to implement this promotion.


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

     The focus of our distribution  and sales will be through retail  department
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.
Different sales avenues we are selling our products through include:

         o  Department stores
         o  Clothing stores
         o  Sporting good stores
         o  Team sales
         o  Sporting events and tournaments
         o  Catalogue
         o  Internet

                                       4


<PAGE>


     Retail Store Sales.  Our  products are most suited for  department  stores,
clothing 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 we started  selling our products with only one retailer,  and by the end of
the year our products were being sold with seven retailers who have locations in
seven states.  The number of store  locations that each retailer has ranges from
one to as many as  eleven.  In the case of JC  Penney  Co.,  Inc.,  we were test
marketed in three stores this past year.  The sales  potential for each retailer
varies  greatly as their  locations  range  from  kiosks to  department  stores.
Payment  arrangements vary with each retailer,  but generally  retailers pay for
their orders 30 days after  delivery.  The retail stores where our products have
been sold in this last year include:

         o  JC Penney
         o  Sportsfan
         o  PrimeTime Sports
         o  Mr. K Sportsworld
         o  Will Power Nutrition
         o  Shoe Extreme
         o  Italian Connection

     Sportsfan  was the  first  retailer  to  carry  our line of  products.  Our
products  went on sale at Sportsfan  beginning in April 1999.  Sportsfan  has 10
stores in  Colorado,  one store in Wyoming and one store in  Arizona.  PrimeTime
Sports  has  eleven  stores in  Colorado,  Wyoming  and New  Mexico.  Will Power
Nutrition has eight  locations in Colorado and sells their  products from kiosks
in malls and other locations.

     The biggest  retailer to sell our products has been JC Penney Co.,  Inc. JC
Penney is a national  department  chain and is the type of large volume retailer
we need in our efforts to generate  significant  revenue and  profits.  In their
test market of our products at three locations in Colorado over three months, we
were number one in sales and gross  margins for the young men's  department.  JC
Penney has placed  their order for this year and will sell our products in 14 of
their stores in Southern California, Colorado, Arizona, New Mexico and Salt Lake
City.  If our initial  spring line order is  successful,  we hope that JC Penney
will place a larger order for our fall line and introduce sales nationwide.

     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
from  these  teams  and  clubs  for  their  uniforms  and  accessories  to their
specifications, and place the orders with our local manufactures who produce the
products with our trademark and logo. In addition to generating  revenue,  these
sales help exposure and promotion to hopefully encourage sales in retail stores.
These sales have accounted for about 10% of our sales in this last year.

         Additional  Sales.  There are also a small  number of sales at the golf
tournaments that we have sponsored. We participate in these events primarily for
marketing  and  promotion.

                                       5


<PAGE>


However,  we do offer  our  products  for sale at these  events  and have sold a
limited amount of our product in this manner.  In the next year, we also plan to
add catalogue  sales.  The catalogue  should be completed  within the next year,
which will allow us to have direct sales to the  customers  and obtain a greater
profit margin on those sales. Sales may also be made on the Internet.  Presently
we have a web page  which  advertises  our  products.  We are in the  process of
changing the web page for on line purchases.


Trademark
---------

     The  distinctiveness  of our clothing and accessories lies in our "Flip The
Switch" concept.  We are emphasizing and promoting a certain concept  associated
with this  trademark.  We  therefore  want to take  precautions  so that another
company does not use our trademark.  Trademark  registration  applications  have
been  filed  with the U.S.  Patent  and  Trademark  Office  that we expect to be
approved in 2000 or 2001. 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  starts to use a  similar  trademark  to sell
clothes, we can challenge them in court and demand that they cease.


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

     We have not conducted formal market or feasibility  studies for the sale of
our products.  These  studies would cost too much at this time.  Instead we have
relied on the direction of experienced sales consultants who have directed us in
our business.  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.


Risk Factors
-------------

     In  addition  to our  status as a  development  stage  enterprise,  we face
numerous  risks  in  our  business,   including   competition  from  established
businesses,  lack of a  proven  market  for  our  products,  lack of an  assured
manufacturer  for  our  product,  dependence  on  endorsements  of  professional
athletes and dependence on key personnel.  While we will do our best to mitigate
these risks in our business  plan,  there is no  assurance  such efforts will be
successful.

     1. Limited  Capitalization  and Lack of Working Capital.  We have extremely
limited  capitalization  and are  dependent  on the  proceeds  of  stock  sales,
achieving  profitable  operations and receiving additional financing to continue
as a going concern.  Proceeds  raised in the stock  offerings have been budgeted
for a limited period of time and we will likely require  additional capital from
outside sources.  Although we will endeavor to finance our working capital needs
through  additional  debt or equity  financing,  there is no assurance that this
financing can be obtained on acceptable terms.

     2. 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

                                       6

<PAGE>


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.

     3. Dependence on Key Personnel;  Lack of Operating Experience.  Due in part
to our lack of operating  history,  our success will depend upon the  management
efforts and  expertise of certain of our  officers,  Messrs.  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.  However,  they have little
experience in the operation our business.  All of these  individuals  are former
members of  professional  baseball  organizations  and have spent a majority  of
their adult life  participating  in baseball.  Messrs.  Burnett and DeBerry have
retained  the  services  of  outside  consultants  to assist in  management  and
operation  of the  business  where  appropriate.  While we  believe  we have the
necessary  expertise to operate this business,  there is no assurance that these
efforts will be profitable.  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.

     4.  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. Due to the our
status as a development stage enterprise,  we are at a competitive  disadvantage
with regard to financial and  personnel  resources,  vis-a-vis our  competitors.
Investors  should be aware of the competitive  environment in which our business
operates.


Employees
----------

     As of  fiscal  year end  December  31,  1999,  we  employed  six 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 the our products,  as well as
strategic  planning and  expansion of the  Company's  business.  Robert  (Bobby)
Stephenson  serves as Vice  President of Sales and Marketing and is  responsible
for sales,  special  events and trade  shows.  Fisher  DeBerry,  Executive  Vice
President and a director of the Company,  currently devotes only a minor portion
of his time to the Company and assists in marketing and promotion.  We also have
three  additional  full  time  employees,   each  responsible  respectively  for
accounting, team sales and graphics.

         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 the Company's 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.


                                       7


<PAGE>


Facilities
----------

     Commencing  on February 1, 2000,  we changed the location of our  principal
offices to 212 N. Wahsatch Ave., Suite 205, Colorado Springs, Colorado 80903 and
have executed a three year lease  agreement for this  location.  The offices are
located in 6,000  square feet of office and  warehouse  space and are leased for
the monthly rental of $7,750 per month, from a company  controlled by one of our
shareholders  who owns 98,000 shares.  We anticipate that this office space will
be adequate for the term of the lease.


ITEM 3.  LEGAL PROCEEDINGS

     We, or our  officers  or  directors  in their  capacities,  do not have any
material legal  proceedings  in progress or pending  against us or our property,
and we do not know of any potential or threatened legal proceeding.


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

     We did not hold a shareholder's  meetings during the fiscal year covered by
this Report.

                                       8

<PAGE>


                                     PART II

ITEM 5. MARKET FOR OUR SECURITIES AND RELATED SHAREHOLDER MATTERS

     As of March 18, 1999,  the  Company's  Common  Shares began  trading in the
over-the-counter  market and were  quoted on the NASD  Bulletin  Board under the
symbols "FTSX ". Prior to that, there was no established  trading market for the
Common Stock.

     The following  table sets forth the range of high and low bid quotations as
reported for the Common  Shares of the Company,  for the period last fiscal year
to the date of the filing of this Report.  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.

                                                Common Shares

        FISCAL YEAR 1999                   High              Low

        First Quarter                      $3.00            $2.00
        (March 18 through March 31)

        Second Quarter                     $3.875           $2.25
        (April 1 through June 30)

        Third Quarter                      $3.50            $ .8125
        (July 1 through September 30)

        Fourth Quarter                     $1.8125          $ .75
        (October 1 through December 31)

        FISCAL YEAR 2000

        First Quarter                      $1.50            $ .625
        (Jan. 1 through March 30)

     The number of record  holders of the Common  Shares as of December 31, 1999
was 140,  including  nominees of beneficial  owners.  The Company estimates that
there are  approximately  200 beneficial  owners of its Common Shares, as of the
filing of this Report.

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

                                       9


<PAGE>


     As of the date of this filing,  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
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.  There is
presently no market for the Preferred Shares, and it is not anticipated that one
will develop in the future.

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS

Introduction
-------------
     Certain  statements in this report are "forward looking  statements" within
the  meaning of the  Private  Securities  Litigation  Reform  Act of 1995.  Such
forward looking statements include, without limitation, statements regarding our
plan of business operations,  potential  contractual  arrangements,  anticipated
revenues and related  expenditures.  Factors that could cause actual  results to
differ materially include, among others, the following: acceptability of the our
products  in  the  retail  market  place,  general  economic   conditions,   tax
legislation and the overall state of the retail clothing industry. Most of these
factors are outside of our control.  Investors  are  cautioned  not to put undue
reliance  on  forward  looking  statements.  Except  as  otherwise  required  by
applicable  securities  statutes  or  regulations,  we  disclaim  any  intent or
obligation to update  publicly these forward  looking  statements,  whether as a
result of new information, future events or otherwise.


Liquidity and Capital Resources
-------------------------------

     While our working capital increased from year end 1998 to year end 1999, we
believe that we are still  dependent on receipt of capital from outside  sources
to continue as a going concern.  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.
However,  only a minor  portion of the current  assets which existed at year end
1999,  in the  amount  of  $5,687,  is in the  form  of  cash.  The  balance  is
represented   by   inventory,   accounts   receivable,   prepaid   services  and
miscellaneous   items  that  cannot  be  used  to  satisfy  our  immediate  cash
requirements.  Furthermore,  a  substantial  portion of the working  capital was
utilized  subsequent to year end in our  operations.  Accordingly,  we require a
substantial  investment of cash to meet our operating  requirements and continue
in business.


                                       10

<PAGE>



     Our capital  requirements  for 2000 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 pay
for the  merchandise  many months  before we receive the goods.  This requires a
substantial investment of cash.

     Because our sales are still relatively low, we also require additional cash
for general and  administrative  expenses.  The amount of our sales through 1999
was insufficient to cover our costs plus overhead.  Overhead includes such items
as  advertising,  consulting,  legal and  accounting,  salaries  and  rent.  Our
operations  during 1999 have used rather than  provide  cash.  During the twelve
months  ended  December  31,  1999,  the Company  used  $605,025  in cash.  This
represents a substantial  increase from 1998,  when our operations used $169,598
in cash. This increase is  attributable to the substantial  increase in overhead
expenses during 1999.

     Our efforts to obtain  capital have focused on  additional  private debt or
equity financing.  During 1999, we negotiated with a private lender in an effort
to obtain a line of credit to assist in financing  our  inventory  requirements.
However,  the  financing  was too  expensive  and we  decided  to look for other
sources.   We  also  explored  many  opportunities  to  sell  additional  equity
securities to institutional  investors or other qualified investors in a private
placement,  but were  unsuccessful  in reaching an  agreement.  Accordingly,  we
continue our efforts to raise money.

     Historically,  we have relied on private sales of our common stock to raise
money.  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.

     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
in our best interest.  Also, partial compensation for employment,  manufacturing
and sales services agreements and advertisement have been in the form of stock.

                                       11


<PAGE>


Results of Operations
---------------------

     During  the  year  ended  December  31,  1999,  we  realized  a net loss of
$1,516,856 (or $0.41 per share) on revenues of $289,180,  compared to a net loss
applicable to common stock of $186,455 on revenues of $19,006 for the year ended
December 31, 1998.  Revenues  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.  These
increased  expenses are considered to be necessary costs associated with selling
a new product line in the retail market.

     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.

     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 accounting rules, 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.

     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.


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.


                                       12

<PAGE>



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 year
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 the Company's 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.

     During the two most recent fiscal years and any subsequent  interim period,
the Company has not  consulted  Stark Tinter &  Associates  LLC,  regarding  any
matter requiring disclosure in this Form 10-KSB.


                                       13

<PAGE>


                                    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.

Name                                Age    Position
----                                ---    --------

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

J. Fisher DeBerry                   61     Executive Vice President and Director

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

Bill M. Conrad                      43     Director

     Messrs.  Burnett,  Joseph  DeBerry,  J. Fisher DeBerry and Conrad 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.

     Messrs.  Burnett,  and Joseph DeBerry  presently  serve pursuant to written
employment  contracts,  effective  September  1, 1998,  for a term of 12 months,
which have been  renewed  for  additional  terms and  continue on a year to year
basis, unless terminated.  Mr. Fisher DeBerry serves at the will of the Board of
Directors. All of the directors are currently serving a term of office until the
next annual meeting of shareholders  and until their successors are duly elected
and  qualified,  or until  they  resign or are  removed.  Each of the  foregoing
individuals  has served in his current  position  since our  inception  in June,
1997. Raymond E. McElhaney, a director since our inception, resigned as director
effective  January  31,  2000.  We did  not  have  any  disagreements  with  Mr.
McElhaney.

     The following  represents a summary of the business  history of each of the
foregoing individuals for the last five years:

ROGER K. BURNETT.
----------------
     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.


                                       14

<PAGE>


J. FISHER DeBERRY
-----------------
     Fisher  DeBerry has been the head football  coach for the Air Force Academy
in Colorado Springs for fourteen 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. During
his tenure with the Air Force Falcons,  Mr. DeBerry has compiled a record of 104
wins and 56  losses,  eleven of his  thirteen  teams  having  achieved a winning
record and nine  receiving a bowl bid.  Prior to his  position as head  football
coach,  Mr.  DeBerry was an assistant from 1980 to 1983. Mr. DeBerry will assist
in marketing and program development.

JOSEPH F. DeBERRY
-----------------
     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  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.

     As Vice President,  Mr. DeBerry will be in charge of marketing,  production
and other day-to-day operations.


BILL M. CONRAD
--------------
     Mr.  Conrad is active in a number of  business  endeavors,  where he serves
primarily in the area of  corporate  finance.  He is  presently  vice-president,
secretary,  treasurer  and a director of  Wallstreet  Racing  Stables,  Inc.,  a
publicly  traded  Colorado  corporation  formerly  engaged  in the  acquisition,
training,  racing and sale of  thoroughbred  race horses.  He has occupied  that
position  since 1995.  Mr. Conrad is the vice  president of  privately-held  MCM
Capital  Management,  Inc., a financial public relations  company.  From 1989 to
early  1997,  Mr.  Conrad  was the  vice  president  of  corporate  development,
secretary  and a director of  Consolidated  Capital of North  America,  Inc.,  a
publicly traded corporation at that time engaged in the real estate business.

     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 of 5 as required  by Section  16(a)  during the most recent  fiscal year or
prior years.

                            Late       Late          Late
Name of Reporting Person    Form 3     Form 4        Form 5        Transactions
------------------------    -------    -------       -------       ------------
Roger K. Burnett              0           1             0            1
Joseph F. DeBerry             0           2             0            2
J. Fischer DeBerry            0           1             0            1


                                       15

<PAGE>


Bill M. Conrad                0           2             0            2
Raymond E. McElhaney          0           1             0            1


ITEM 10. EXECUTIVE COMPENSATION

         The  following  table  is a  summary  of the  compensation  paid to all
executive  officers  of the  Company  during the period  from  inception  of the
Company,  June 30, 1997,  to the end of the fiscal year,  December 31, 1999.  No
other executive  officer  receives  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

                                                        Long-term Compensation
                                                        Securities Underlying
Name and Position                    Year     Salary    Options
-----------------                   ------   -------    ----------------------
Roger K. Burnett                    1997      $10,000
President, Chief Executive Officer, 1998       30,000
and Chief Financial Officer         1999       30,000    200,000 Common Shares

Joseph F. DeBerry                   1997       10,000
Vice President, Secretary           1998       30,000
 and Treasurer                      1999       30,000    200,000 Common Shares

     Each of Messrs.  Burnett and Joseph DeBerry presently serve pursuant to one
year  employment  contracts  effective  September  1,  1999.  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.

     Employees  receive  no  additional   compensation  for  their  services  as
directors. Directors are not currently compensated, 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.

     The following  table is a summary of the stock options granted to the named
executive  officers in fiscal year 1999, as well as the exercise share per price
and the expiration date of those options.


                                       16

<PAGE>


                      Option/SAR Grants in Last Fiscal Year
                               (Individual Grants)

--------------------------------------------------------------------------------
Name               Number of        Percent of      Exercise or   Expiration
                   Securities       total           base price    date
                   Underlying       options/SARs    ($/Sh)
                   Options/SARs     granted to
                   Granted (#)      employees in
                                    fiscal year
--------------------------------------------------------------------------------

Roger K. Burnett   200,000           50.0%          $1.50         June 30, 2007
Joseph F. DeBerry  200,000           50.0%          $1.50         June 30, 2007

     The  following  table is a summary of the value of the  options  granted to
employees in fiscal year 1999,  based upon the latest  average  trading price of
our stock.

                          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


                                       17
<PAGE>


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 1999, there were options for 1,036,000 shares
granted and  outstanding  under the Plan for exercise  prices  between  $1.25 to
$2.75 per share.  There was also 469,022  shares for  services  issued under the
Plan in 1999.

ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     As of December 31, 1999,  there were a total of 3,933,722  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,
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 which were  outstanding
and  exercisable  within 60 days of year end 1999.  Percentages  include  shares
which can be issued to the  named  shareholder,  but not any other  shareholder.
However,  the table does not include up to 994,978  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
----------------------          ----------------    ----------------------------
Roger K. Burnett (1,3)             854,618                    20.7%
Joseph F. DeBerry (1,3)            764,618                    18.5%
J. Fisher DeBerry (1,4)            825,000                    21.0%
Bill M. Conrad1, (2,3)             443,966                    10.7%
Raymond E. McElhaney (2,4)         232,899                     5.9%
5525 Erindale Dr., Suite 200
Colorado Springs, Colorado 80918

All Officers, Directors and 5% Beneficial Owners

as a Group (5 persons)           3,121,101                   76.8%

---------------------
     (1)  Officer or director.


                                       18

<PAGE>


     (2)  Includes  5,625 shares held by MCM Capital  Management,  Inc. of which
          Messrs.  McElhaney  and Conrad are  officers,  directors and principal
          shareholders.

     (3)  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.

     (4)  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.
----------------------------


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On August 1, 1998,  Stephen K.  Anderson  resigned his position as officer,
director and employee of the Company, and returned 600,000 shares to the Company
treasury.  Of the remaining shares, 95,000 were transferred to Bill M. Conrad, a
director, and 5,000 shares were retained by Mr. Anderson.

     On April 1, 1999 options to purchase shares of Common Stock were granted to
the officers,  directors and 5%  beneficial  owners to acquire  shares of Common
Stock for the purchase price of $1.50 per share exercisable until June 30, 2007.
Roger K. Burnett, President and Director, was granted 200,000 options; Joseph F.
DeBerry,  Vice President and Director was granted  200,000  options;  J. Fischer
DeBerry,  Vice President and Director was granted 25,000 options; Bill M. Conrad
was granted 200,000 options; and Raymond E. McElhaney, a 5% beneficial owner was
granted 25,000 options

     In July,  1998,  Messrs.  Joseph  DeBerry  and  Burnett  each  acquired  an
additional  4,618  shares of Common  Stock of the Company in  consideration  for
services  rendered  to the  Company  in the months of May and June,  1998.  Said
consideration was in lieu of salary payable under the Employment Agreements that
Messrs. Joseph DeBerry and Burnett have entered into with the Company.

     In July, 1998, MCM Capital Management, Inc. acquired 5,625 shares of Common
Stock of the Company for  consideration  of service and satisfaction of accounts
payable under the Administrative  Services Agreement.  Mr. Conrad,  directors of
the Company,  and Mr. McElhaney,  a 5% beneficial owner of the Company, are also
officers, directors and principal shareholders of MCM Capital Management, Inc.

     In January,  1999,  Roger K. Burnett and Joseph F. DeBerry each acquired an
additional  80,000  shares of Common Stock of the Company in  consideration  for
services  rendered to the  Company in 1998.  Said  consideration  was in lieu of
salary payable under the Employment  Agreements that Messrs.  Joseph DeBerry and
Burnett have entered into with the Company.

     In 1999 our Administrative  Services Agreement with MCM Capital Management,
Inc. of Colorado  Springs expired and this agreement was not renewed.  Under the
agreement  MCM  had  assisted  us  with  our   bookkeeping,   secretarial,   and
administrative  needs,  provided  storage and  warehouse  space as well as on an
as-needed basis for a period of one year at a rate of $2,500 per month beginning
January 1, 1998. During the years ended December 31, 1998 and 1999,


                                       19


<PAGE>


$60,000 was
paid to MCM under this agreement.  Mr. Conrad, directors of the Company, and Mr.
McElhaney,  a 5% beneficial owner of the Company,  are also officers,  directors
and principal shareholders of MCM Capital Management, Inc.

     In 1999 our  offices  were  located  at 5525  Erindale  Drive,  Suite  200,
Colorado  Springs,  Colorado 80918, 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. We signed a one year lease on
February  1,  1999  for  this  space,  and did not  renew  this  lease  upon its
expiration.  Commencing  on  February 1, 2000,  we changed  the  location of our
principle offices to 212 N. Wahsatch Ave., Suite 205, Colorado Springs, Colorado
80903 and have  executed a three year lease  agreement  for this  location.  The
offices are located in 6,000 square feet of office space and are leased from The
Landhuis  Company for the monthly rental of $7,750 per month. We anticipate that
this office space will be adequate for the term of the lease.

     All these  transactions  were  approved by a majority of the  disinterested
directors  at that time.  The Board of  Directors is of the opinion that each of
these  transactions  were no less  favorable  than  could  be  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  Bylaws of the Company.

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

     4.2  Not applicable.

     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

     10.6 Lease Agreement, dated January 21, 2000 *

     11   Not applicable.

     13   Not applicable.

     16   Letter of Change in Certifying Accountant**


                                       21

<PAGE>


     18   Not applicable.

     21   Not applicable.

     22   Not applicable.

     23   Not applicable.

     24   Not applicable.

     27   Financial Data Schedule*

     99   Not applicable.

     (b)  Reports on Form 8-K

          We filed a report on Form 8-K,  dated  January  4,  2000,  to report a
          change in certifying accountants.

     (c)  Financial Statements and Schedules.

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

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

                                       22


<PAGE>


                                    SIGNATURE

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the  undersigned  thereunto duly  authorized in Colorado  Springs,
Colorado on the 30th day of March, 2000.

                    FULL TILT SPORTS, INC.

                By: /s/ Roger K. Burnett
                    ---------------------
                    Roger K. Burnett,  President, Chief Executive Officer, Chief
                    Financial Officer and Chairman of the Board

     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/ Roger K. Burnett     President, Chief Executive Officer,     March 30, 2000
-----------------------  Chief Financial Officer and Chairman
    Roger K. Burnett     of the Board of Directors


/s/ J. Fisher DeBerry    Executive Vice President and Director   March 30, 2000
-----------------------
    J. Fisher DeBerry

/s/ Joseph F. DeBerry    Vice President, Secretary, Treasurer    March 30, 2000
-----------------------  and Director
    Joseph F. DeBerry

/s/ Bill M. Conrad       Director                                March 30, 2000
-----------------------
    Bill M. Conrad



<PAGE>


                             Full Tilt Sports, Inc.
                          (A Development Stage Company)
                          As of and for the years ended
                           December 31, 1999 and 1998
                  and the period from June 30, 1997 (inception)
                              to December 31, 1999


<PAGE>




                             Full Tilt Sports, Inc.
                          (A Development Stage Company)
                                Table of Contents

                                                Page

Report of Independent Auditors                     1

Balance Sheet                                      2

Statements of Operations                           3

Statement of Changes in Stockholders' Equity       4

Statements of Cash Flows                           5

Notes to Financial Statements                   6-14



<PAGE>


((LETTERHEAD))

((LOGO))

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

                         REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
Full Tilt Sports, Inc.
212 North Wahsatch, Suite 205
Colorado Springs, CO 80903

We have audited the  accompanying  balance  sheet of Full Tilt  Sports,  Inc. (a
development  stage company) as of December 31, 1999, and the related  statements
of operations,  changes in  stockholders'  equity,  and cash flows for the years
ended  December  31,  1999 and the  period  from June 30,  1997  (inception)  to
December 31, 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  generally   accepted  auditing
standards. 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 Full Tilt  Sports,  Inc. (a
development  stage  company) as of  December  31,  1999,  and the results of its
operations,  and its cash flows for the years  ended  December  31, 1999 and the
period from June 30, 1997  (inception) to December 31, 1999, in conformity  with
generally accepted accounting principles.


Stark Tinter & Associates, LLC
Denver, Colorado

February 25, 2000



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


<PAGE>


                             FULL TILT SPORTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                               December 31, 1999

                                     ASSETS

CURRENT ASSETS
      Cash                                                      $      5,687
      Accounts receivable                                             82,449
      Inventory                                                      161,779
      Prepaid expenses                                               198,509
                                                                -------------

                 Total current assets                                448,424
                                                                -------------

PROPERTY AND EQUIPMENT, net of depreciation                           24,137
                                                                -------------

OTHER ASSETS
      Deposits                                                         3,117
                                                                -------------

                                                                $    475,678
                                                                =============



            LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts payable                                          $     64,418
      Accrued expenses                                                 6,063
      Preferred dividends payable                                      5,000
      Deferred income - trade agreements                              21,520
      Notes payable - related party                                   42,000
                                                                -------------

                 Total current liabilities                           139,001


LONG-TERM LIABILITIES
      Deferred Income - trade agreements                               3,758
                                                                -------------

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                                                  -
      Common stock, $0.001 par value, 25,000,000 shares
        authorized, 3,939,722 shares issued
        and outstanding                                                3,940
      Additional paid in capital                                   2,034,632
      Deficit accumulated during the development stage            (1,755,653)
                                                                -------------

                 Total stockholders' equity                          332,919
                                                                -------------

                                                                $    475,678
                                                                =============

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

                                       2

<PAGE>

<TABLE>
<CAPTION>


                             FULL TILT SPORTS, INC.
                        (A DEVELOPMENTAL STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
JUNE 30, 1997
                                                                                                            (INCEPTION)
                                                                 YEAR ENDED            YEAR ENDED             THROUGH
                                                                  DECEMBER              DECEMBER              DECEMBER
                                                                  31, 1999              31, 1998              31, 1999
                                                              ----------------      ----------------      ----------------
<S>                                                           <C>                   <C>                   <C>
 REVENUES


      Sales of merchandise                                    $       188,038       $        19,003       $       207,041
      Advertising/Promotion income                                     17,500                     -                17,500
      Trade agreements                                                 81,503                     -                81,503
      Miscellaneous                                                     2,139                     3                 2,142
                                                              ----------------      ----------------      ----------------

                                                                      289,180                19,006               308,186
                                                              ----------------      ----------------      ----------------

 COST OF GOODS SOLD                                                    89,905                15,622               105,527
                                                              ----------------      ----------------      ----------------

 GROSS PROFIT                                                         199,275                 3,384               202,659
                                                              ----------------      ----------------      ----------------

 GENERAL AND ADMINISTRATIVE EXPENSES                                1,712,516               189,372             1,954,435
                                                              ----------------      ----------------      ----------------

 (LOSS) FROM OPERATIONS                                            (1,513,241)             (185,988)           (1,751,776)
                                                              ----------------      ----------------      ----------------
OTHER INCOME (EXPENSE)
     Interest income                                                    6,418                 3,285                 9,703
     Interest expense                                                  (4,763)                 (163)               (4,991)
                                                              ----------------      ----------------      ----------------

                                                                        1,655                 3,122                 4,712
                                                              ----------------      ----------------      ----------------

NET (LOSS)                                                    $    (1,511,586)      $      (182,866)      $    (1,747,064)

PREFERRED DIVIDENDS                                                    (5,000)               (3,589)               (8,589)
                                                              ----------------      ----------------      ----------------

NET (LOSS) APPLICABLE TO COMMON STOCK                         $    (1,516,586)      $      (186,455)      $    (1,755,653)
                                                              ================      ================      ================

PER SHARE INFORMATION:
WEIGHTED AVERAGE SHARES OUTSTANDING (BASIC AND DILUTED)             3,693,774             3,417,663             3,349,575
                                                              ================      ================      ================

NET (LOSS) PER COMMON SHARE (BASIC AND DILUTED)               $         (0.41)      $         (0.05)      $         (0.52)
                                                              ================      ================      ================

</TABLE>

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


                                       3
<TABLE>
<CAPTION>


                             FULL TILT SPORTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
               JUNE 30, 1997 (INCEPTION) THROUGH DECEMBER 31, 1999

                                                                                                        Deficit
                                                                                                      Accumulated
                                     Number of    Number of                           Capital Paid     During the       Total
                                     Preferred    Common       Preferred    Common     In Excess Of    Development     Shareholders'
                                     Shares       Shares       Stock        Stock      Par Value         Stage          Equity
                                     ---------    ----------   ---------    --------  -------------   ------------     -------------
<S>                                  <C>          <C>          <C>          <C>       <C>             <C>              <C>
Balance, June 30, 1997                    -             -      $    -       $   -     $       -       $       -        $       -

    Stock issued for cash                         3,500,000         -         3,500        66,500                           70,000

    Net (loss) for the period ended
        December 31, 1997                                                                                 (52,612)         (52,612)
                                     ---------    ----------   ---------    --------  -------------   ------------     -------------
Balance, December 31, 1997                -       3,500,000         -         3,500        66,500         (52,612)          17,388

    Stock issued for cash              50,000                    50,000                                                     50,000

    Stock issued for cash, net of
       offering costs of $11,928                    211,400                     211       199,261                          199,472

    Stock issued for services                        24,861                      25        19,836                           19,861

    Cancelled shares                               (600,000)                   (600)          600                              -

    Preferred dividends declared                                                                           (3,589)          (3,589)

    Net (loss) for the year ended
        December 31, 1998                                                                                (182,866)        (182,866)
                                     ---------    ----------   ---------    --------  -------------   ------------     -------------
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 excercised                        94,921                      94       142,285                          142,379

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

    Stock options                                                                         606,390                          606,390

    Net (loss) for the year ended
        December-31, 1999                 -             -           -           -                      (1,511,586)      (1,511,586)
                                     ---------    ----------   ---------    --------  -------------   ------------     -------------
Balance, December 31, 1999             50,000     3,939,722    $ 50,000     $ 3,940   $ 2,034,632     $(1,755,653)     $   332,919
                                     =========    ==========   =========    ========  =============   ============     =============
</TABLE>



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

                                       4


<PAGE>

<TABLE>
<CAPTION>


                             FULL TILT SPORTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS

                                                                                                    JUNE 30, 1997
                                                                                                     (INCEPTION)
                                                                YEAR ENDED          YEAR ENDED         THROUGH
                                                                 DECEMBER            DECEMBER          DECEMBER
                                                                 31, 1999           31, 1998           31, 1999
                                                              --------------      -------------    ---------------
<S>                                                           <C>                 <C>              <C>
OPERATING ACTIVITIES
         Net (loss)                                           $ (1,511,586)         $ (182,866)      $ (1,747,064)
         Adjustments to reconcile net (loss) to net cash
            flows from operating activities:
                Amortization and depreciation                        6,779               1,665              9,319
                Stock issued for services, contracts,
                   and trade agreements                            646,415              19,861            666,276
                Stock option compensation costs                    606,390                   -            606,390
         Changes in:
            Accounts receivable                                    (72,146)            (10,303)           (82,449)
            Inventory                                             (153,206)            (10,037)          (163,243)
            Stock subscriptions receivable                               -              10,000                  -
            Prepaid expenses                                      (197,045)                  -           (197,045)
            Other assets                                            (3,067)                  -             (3,879)
            Accounts payable                                        45,818               2,557             64,418
            Accrued salaries                                         2,826                   -              5,326
            Deferred income - trade agreements                      21,520                   -             21,520
            Other accrued expenses                                   2,277                (475)             4,495
                                                              --------------      -------------    ---------------
                Net cash (used in) operating  activities          (605,025)           (169,598)          (815,936)
                                                              --------------      -------------    ---------------
INVESTING ACTIVITIES
     Acquisition of fixed assets                                   (25,849)             (4,449)           (32,694)
                                                              --------------      -------------    ---------------
                Net cash (used in) investing activities            (25,849)             (4,449)           (32,694)
                                                              --------------      -------------    ---------------
FINANCING ACTIVITIES
     Common stock issued, net of offering costs                    496,434             199,472            765,906
     Preferred stock issued                                              -              50,000             50,000
     Proceeds from note payable                                     42,000                   -             42,000
     Preferred dividends paid                                       (3,589)                  -             (3,589)
                                                              --------------      -------------    ---------------
                Net cash provided by financing activities          534,845             249,472            854,317
                                                              --------------      -------------    ---------------

                    Net increase (decrease) in cash                (96,029)             75,425              5,687

CASH AT BEGINNING OF YEAR                                          101,716              26,291                  -
                                                              --------------      -------------    ---------------
CASH AT END OF YEAR                                                $ 5,687           $ 101,716            $ 5,687
                                                              ==============      =============    ===============
SUPPLEMENTAL CASHFLOW INFORMATION:
     Cash paid for:
         Interest                                                  $ 4,763               $ 163            $ 4,991
                                                              ==============      =============    ===============
         Income taxes                                                  $ -                 $ -                $ -
                                                              ==============      =============    ===============

</TABLE>


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

                                       5





<PAGE>


                             FULL TILT SPORTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS



Note 1 - Organization and Summary of Significant Accounting Policies


Organization

On June 30, 1997 Full Tilt Sports, Inc. (the Company) was incorporated under the
laws the State of Colorado.  The Company's  primary  purposes are to develop and
market the Full Tilt line of  clothing  apparel and  secondly  to  organize  and
develop one or more indoor multi-sport facilities in the United States.


Development Stage

The  Company is  currently  in the  developmental  stage and has no  significant
revenues from operations to date.


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 weighted average
method.


Property and Equipment

Property and equipment are being depreciated using the straight-line method over
the estimated economic lives ranging from 3 to 5 years.


Financial Instruments

The  carrying  amounts for the  company's  cash and cash  equivalents,  accounts
receivable,  accounts payable,  accrued expenses and notes payable-related party
approximate fair value.


                                       6

<PAGE>

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,  1999,  management
does not believe there is any impairment of the carrying amounts of assets.


Revenue Recognition

The Company's  revenue is generated by  manufacturing  and then  distributing an
apparel line of sportswear. Sales are recognized upon shipment of product.


Advertising Costs

Advertising is expensed as incurred.  Advertising  costs  expensed  during years
ended  December 31, 1999 and 1998,  and the period June 30, 1997  (inception) to
December 31, 1999 were $416,799,  $25,922, and $443,071,  respectively.  Prepaid
advertising  costs reported as prepaid  personal  services asset at December 31,
1999 were $153,773.


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 ("EPS")
calculations  are  determined  by dividing  net income 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 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.


Comprehensive income

The  Company  follows  Statement  of  Financial  Accounting  Standards  No. 130,
"Reporting  Comprehensive  Income." SFAS 130 establishes standards for reporting
and displaying  comprehensive  income, its components and accumulated  balances.
SFAS 130 is effective for periods beginning after December 15, 1997. The Company
adopted SFAS 130 in 1998.


                                       7


<PAGE>



Segment Information

Effective in 1999, the Company adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." Certain information is disclosed, per
SFAS No. 131, based on the way management  organizes  financial  information for
making  operating  decisions and assessing  performance.  The Company  currently
operates in a single  segment and will evaluate  additional  segment  disclosure
requirements as it expands its operations.


Stock-Based Compensation

The Company  accounts for stock based  compensation  in accordance with SFAS No.
123,  "Accounting for Stock-Based  Compensation." The provisions of SFAS No. 123
allow  companies to either  expense the estimated fair value of stock options or
to continue to follow the  intrinsic  value  method set forth in APB Opinion 25,
"Accounting for Stock Issued to Employees" ("APB 25") but disclose the pro forma
effects on net income  (loss) had the fair value of the options  been  expensed.
The Company has elected to continue to apply APB 25 in accounting  for its stock
option incentive plans.


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," which is required to be adopted
in years beginning after June 15, 1999. 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
yet  determined  if it will early adopt and what the effect of SFAS No. 133 will
be on the earnings and financial position of the Company.



                                       8


<PAGE>




Note 2 - Property and Equipment

The  following is a summary of property and equipment as of December 31, 1999 at
cost less accumulated depreciation:

         Furniture and fixtures             $20,593
         Computer equipment                   4,870
         Other                                7,079
                                            ---------
                                             32,542
         Less accumulated depreciation       (8,405)
                                            ---------
         Net property and equipment         $24,137
                                            =========

Depreciation  expense for the years ended  December  31, 1999 and 1998,  and the
period June 30, 1997  (inception)  to December  31, 1999 was $5,544,  $1,512 and
$7,855, respectively.


Note 3 - 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 and. 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.

On July 5, 1997 the Company  issued  2,800,000  shares of common  stock for cash
aggregating  $20,000  ($.007 per share) and on July 7, 1997 the  Company  issued
500,000 shares of common stock for cash aggregating $10,000 ($.02 per share).

On December 31, 1997 the Company  issued 200,000 shares of common stock for cash
aggregating $40,000 ($.20 per share).

In April 1998 the Company offered to sell up to 50,000 units at $10.00 per Unit,
based on a best efforts basis. Each Unit was comprised of 10 shares of $.001 par
value  common stock and 5 common stock  purchase  warrants.  The warrants can be
exercised  at anytime to purchase 1 share of common  stock for $1.50 until April
13, 2000.  The minimum was 15,000 Units and the maximum 50,000 Units for a total
offering of $500,000.  The shares of common stock contained in the Units were to
be issued  pursuant to an exemption  from  registration  under  Section 3(b) and
Regulation D, Rule 504, of the  Securities  Act of 1933,  as amended,  and to an
exemption to registration  provided by Section  11-51-308(l)(p)  of the Colorado
Securities Act.


                                       9

<PAGE>


In June 1998 the Company  completed the offering and sold 21,140 units including
211,400  shares  of common  stock  and  105,700  warrants  for cash  aggregating
$211,400. After deducting offering costs of $11,928, the Company netted $199,472
from the offering.

During the year ended  December 31, 1998,  the Company  issued  14,861 shares of
common stock for services  valued at $14,861 ($1.00 per share) and 10,000 shares
of common  stock for  services  valued at $5,000  ($.50 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.

In August 1998 a shareholder of the Company contributed 600,000 shares of common
stock to the Company at which time the shares were canceled.

In April 1998 the Company  authorized the issuance of 150,000 shares of Series A
Voting  Convertible  Preferred Stock to be issued at the discretion of the Board
of Directors  for $1 per share.  The Series A  Convertible  Preferred  Stock has
senior preferential fixed dividends at the rate of 10% per annum ($.10 per year)
pro rated to the date of  issuance,  for a period of 24 months  after  issuance,
payable  annually on or before December 31 of each such calendar year before any
dividend  shall be  declared  or paid upon or set apart  for the  Common  Stock.
Beginning on the first day of the 25th month and continuing until the expiration
of 60 months from the date of issuance,  unless sooner  converted,  the dividend
shall be calculated as 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.
The Series A Convertible Preferred Stock is convertible into common stock at the
rate of one for one.  The Series A  Convertible  Preferred  Stock  automatically
converts to common  stock in 5 years from the date of issuance.  The  conversion
rate will be subject to adjustments in certain  events,  including  stock splits
and dividends.

During  April,  1998,  the Company  sold 50,000  shares of Series A  Convertible
Preferred Stock for cash aggregating $50,000.

At December 31, 1998 Preferred Dividends of $3,589 were declared.

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.



                                       10

<PAGE>



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.

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 the above
described warrants.

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

Note 4 - Stock Options

At December  31, 1999 the Company  had 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 which 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 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) in would
have been  approximately  $2,353,442  or $.64 per share.  The fair values of the
options  granted  during 1999 are  estimated at $1.39 on the date of grant using
the  Black-Scholes  option  pricing  model with the  following  assumptions:  no
dividend yield,  volatility of 106%, a risk-free  interest rate of 5.40%, and an
expected lives of 10 years from date of vesting.

During 1999,  options to purchase  600,000  shares at an exercise price of $1.50
per share were granted to employees,  (including  two  officers),  which options
expire ten years after the grant date.



                                       11

<PAGE>

During 1999,  options to purchase  435,000 shares at exercise prices of $1.13 to
$2.75 per share were  granted to  officers,  directors,  and  consultants  which
options expire ten years after the grant date.

The Company accounts for transactions  with individuals  other than employees in
which goods or  services  are the  consideration  received  for the  issuance of
equity  instruments in accordance  with the provisions of SFAS 123, based on the
fair  value  of the  consideration  received  or the fair  value  of the  equity
instrument issued, whichever is more reliably measurable.

At December 31, 1999, stock option expense to non-employees totaled $606,390 and
was charged to general and administrative expenses.

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                    1,035,000       $1.50               $1.39
                                   ---------       ---------       ------------
Balance December 31, 1999          1,035,000       $1.50               $1.39
                                   =========       =========       =============

The following table summarizes  information  about  fixed-price stock options at
December 31, 1999:

                        Outstanding                      Exercisable
                        -----------                      -----------
                        Weighted-        Weighted-                 Weighted-
                        Average          Average                   Average
Exercise  Number        Contractual      Exercise   Number         Exercise
Prices    Outstanding   Life             Price      Exercisable    Price
--------  -----------   -----------      --------   -----------    -----------
$1.50     1,035,000     9.2 years         $1.50     1,035,000      $1.50


Note 5 - Stock Warrants

The following details the warrants outstanding as of December 31, 1999:

                               Underlying        Exercise
                               Shares            Price         Expiration

1998 Warrants                  10,779            $1.50         April 13, 2000

At December 31, 1999 the Company has reserved  10,779 shares of common stock for
stock warrants.


                                       12

<PAGE>


Note 6 - 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.

Income  tax  provision  (benefit)  for income  taxes  differs  from the  amounts
computed by applying the statutory federal income tax rate of 34% as a result of
the following:

                                                   Years ended December 31,

                                                   1999              1998
                                                ----------        -----------
   Computed "expected" tax provision (benefit)  ($308,738)        ($62,174)
   Valuation allowance                            308,738           62,174
                                                ----------        -----------
                                                $      -          $      -
                                                ==========        ===========

The net deferred tax assets as of December 31, 1999, in the accompanying balance
sheet includes the following components:

   Deferred tax asset                           $228,706
   Less valuation allowance                     (228,706)
                                                ----------
                                                $      -
                                                ==========

The net change in valuation  allowance for the year ended  December 31, 1999 was
$181,674.

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:                $1,143,530        $228,706
                                                ==========        ===========

The net operating loss carry forward will expire in the years 2013 and 2014.


                                       13

<PAGE>


Note 7 - Related Party Transactions

The Company has  executed 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 Company has an option to acquire property purchased by an officer/director.

The Company entered into promissory note agreements for $22,000 with two members
of the board of directors.  The initial terms stated that the full amount of the
note plus interest were due January 2000 but were subsequently extended to March
2000.


Note 8 - Subsequent Events

In January 2000 the Company signed an  endorsement  contract with a professional
athlete and issued 20,000 common stock shares in exchange for personal  services
to be performed in 2000.

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