<PAGE>
                                   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, 2002

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


                         Commission File Number 0-24829
                                                -------

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


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


301 Oxford Valley Rd., Suite 1202, Yardley, Pennsylvania               19067
--------------------------------------------------------              ----------
(Address of principal executive offices)                              (Zip Code)


Registrant's telephone number, including area code:  (215) 369-9979
                                                     --------------

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

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

                               Title of each class

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

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

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 $0.

The  aggregate  market  value  of  the  3,456,402 shares of common stock held by
Non-affiliates of the Company as of March 6, 2003 was $587,588.34 based upon the
last  reported  sale  of  the  common  stock of $.17 per share on March 5, 2003.

The total  number of shares of  issuer's  common  equity as of April 8, 2003 was
17,180,240.

                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      None

Transitional Small Business Disclosure Format:   Yes [ ]   No  [X]

<PAGE>



                           Forward Looking Statements


  This  report  includes  "forward-looking  statements" within the meaning of
Section  27A  of  the  Securities  Act of 1933 and Section 21E of the Securities
Exchange  Act of 1934. For example, statements included in this report regarding
our  financial  position,  business  strategy and other plans and objectives for
future  operations, and assumptions and predictions about future product demand,
supply,  manufacturing,  costs,  marketing  and  pricing  factors  are  all
forward-looking  statements.  When  we  use  words  like "intend," "anticipate,"
"believe,"  "estimate,"  "plan"  or  "expect,"  we  are  making  forward-looking
statements.  We  believe that the assumptions and expectations reflected in such
forward-looking  statements are reasonable, based on information available to us
on  the  date  hereof,  but  we  cannot  assure  you  that these assumptions and
expectations  will  prove  to  have been correct or that we will take any action
that  we  may presently be planning. We have disclosed certain important factors
that  could  cause  our  actual  results  to  differ materially from our current
expectations  elsewhere  in  this  report.  You  should  understand  that
forward-looking  statements  made  in  this  report are necessarily qualified by
these  factors.  We  are  not  undertaking  to  publicly  update  or  revise any
forward-looking statement if we obtain new information or upon the occurrence of
future  events  or  otherwise.







                                       i
<PAGE>

ITEM 1.  BUSINESS

History

     FTS Apparel,  Inc. ("FTS" or the "Company") was founded under the name Full
Tilt Sports, Inc. in 1997 as a Colorado  corporation to sell designer sportswear
and accessories.  Effective August 23, 2000, we changed our name to FTS Apparel,
Inc. Our common stock trades on the OTC Bulletin Board.

     Effective  January 11, 2002, we experienced a change in control.  Effective
that date, our Board of Directors  appointed a new Chairman and Chief  Executive
Officer.   Subsequently,  all  former  officers  and  directors  resigned  their
positions with the Company and the new Chairman  appointed three  additional new
members to the Board.  The new  Chairman  also  agreed to  purchase  most of the
Company  common  stock owned by two of the former  officers  and  directors  and
additional  stock  from  some  other  Company  shareholders.  As  a  result,  we
experienced a change in control.  See Item 9.  Directors and Executive  Officers
and Item 11. Security Ownership of Certain Beneficial Owners and Management.

     In  conjunction  with  this  change in control, our principal executive and
administrative  offices  were  moved to Pennsylvania. Our current address is 301
Oxford  Valley  Rd.,  Suite  1202,  Yardley,  Pennsylvania  19067.

Description of Business

     Historically we have been in the brick-and-mortar business of designing and
selling  designer/casual  sportswear  and  accessories, focusing on athletic and
casual  lifestyle  clothing.  We  identify  our  merchandise  with the "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  product line included shirts, jackets, vests, pants
and  caps  in  various  styles  and  colors  that  we believe are attractive and
appealing to our target market of young consumers. In connection with the change
in  control  of  our  management  in  January  2002,  we  decided to explore the
opportunities,  if  any, of acquiring other operating companies and/or expanding
our  business  model  to  include  an  e-commerce  infrastructure.


<PAGE>
     Our  investigation  to  date has revealed that attractive opportunities are
still  available  in  the  technology  and  wireless industries. Accordingly, we
intend to evaluate one or more companies in an effort to identify a company that
offers  high  profit  margin  with  little  downside  risk.

     On  February  14, 2003, pursuant to an Asset Purchase Agreement dated as of
February  14,  2003  (the  "Purchase  Agreement")  by  and between us and Simply
Cellular,  Inc., a Florida corporation (the "Seller"), we acquired substantially
all  of  the  assets  of  the Seller's wireless cellular service and accessories
store,  as  well  as  the sellers e-commerce web store www.CellularDeals.com. We
intend  to  continue to use the acquired assets as a platform for future growth.
The  purchase price consisted of $70,000 of cash. Funds for the acquisition were
obtained  via  our  sale  of 6% convertible debentures. We intend to continue to
operate  the  cellular  phone business with a view towards growth and expansion.

     Another  avenue  that  we  are exploring is to adapt our historical apparel
business  to  an  e-commerce business model. In this concept, we would offer the
merchandise that we have sold historically to consumers exclusively
on  the  Internet  through a web site. This would reduce the overhead associated
with  the  need  to maintain a staff of sales, order processing and distribution
personnel.  While this  project is in the early stages of exploration, we
believe  that  this  would be an attractive way to use our intellectual property
more  effectively  than  we  have  in  the  past.

Apparel Services

Production
----------

     In the past we  have contracted  with independent overseas and domestic
Manufacturers  for  production of our merchandise, whose products we have tested
And   approved.   In the future, should we receive orders, we intend to continue
to  outsource  these  functions.  We  currently  have  the ability with outside
consultants,  to   design  and  produce  all  of our products, including style,
color   and   materials.   We   believe   that   we  produce   high quality
garments  and  accessories to appeal to the discriminating consumer. Our current
manufacturers have performed to our standards in terms of quality, cost and time
of  manufacturing  and  delivery,  however, we do not maintain written contracts
with our manufacturers. We believe that our current manufacturers, or others who
will  be  able  to  provide  services of equal quality, will be able to fill our
orders,   if   any.

     The  products  that  we  have  had  produced  to  date  are:

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

     We place our larger orders, if any, with overseas manufacturers when we are
able to 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 New Jersey manufacturing company that can manufacture the clothing
on  short  notice. Our principal suppliers and manufacturers include:

(a) RiversEdge Printing in Point Pleasant, New Jersey and

(b) MajesticWest, based in Colorado.

     All of our design work is contracted out to independent contractors as is
the manufacturing of all of our products. We believe this allows us to control
and monitor our cost structure. We intend to sell our products through (i) our
group of Internet sites located at www.Flip.tv, www.FlipTheSwitch.TV and
www.FTSApparel.com scheduled for launch later this year and (ii) through a mail
order catalog that we intend to produce. We also intend to possibly develop a
retail sales channel by selling our products to local and national retail
establishments; however, we have no agreements to do so as of yet.

<PAGE>
Marketing
---------

     In  the  past, the focus of our marketing historically has been through the
use  of  professional athletes and celebrity personalities wearing and promoting
our  clothing.  We  had been successful in signing several of these endorsement
personalities particularly because several members of our former management were
professional  baseball  players  and had contacts with these athletes. We do not
have any signed endorsement contracts with any athletes, but the athletes listed
below  have  promoted our apparel line because of the personal relationship with
the  members  of  our  former  management.  These  athletes include professional
football players, baseball players, boxers and popular former professionals such
as:

     Michael  Grant,  Ed  McCaffrey, Rod Smith, Bill Romanowski- Oakland Raiders
     Eddie George, Trevor Hoffman, Floyd Mayweather, Reggie Johnson, Tim Dwight,
     Chad  Brown,  Billy  Wagner,  and  Pokie  Reese.

These  athletes  have  not  endorsed  our  products  since the fiscal year ended
December  31, 2001 and we may not be able to engage them to endorse our products
in  the  future.

    We  also market  our  products  in  the  following  manner:

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

     Due to the disappointing  results of our sales efforts, we believe that our
past  methods  need  refining.  Accordingly,  we will  evaluate  other  means of
marketing  in  the  future  as  our  new  business  model  evolves.

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

     The focus of our distribution and sales has been through retail department,
specialty and sporting goods stores.  We are dependent on sales in these markets
to  achieve  the  sale  volumes  we  need  to  be  profitable. We have had no
material sales since the fiscal year ended December 31, 2002.

     Retail Store Sales.  Our products  have  historically  been sold  primarily
through  department stores, specialty stores and sporting goods stores. In 2000,
we  were  successful  in  placing  our merchandise in JC Penny, a major national
retailer.  However,  due to the disappointing results of that placement, we have
been  unable  to  renew  that  relationship  since 2001. The sales potential for
retailers  varies  greatly  as  their  locations range from kiosks to department
stores.  The  retail  stores  where  our  products  have  been  sold  include:

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

Our products have not been sold in these stores since the fiscal year ended
December 31, 2001. In 2003 we experienced a restructuring and did not sell any
apparel products.

     Team  Sales.  In the past we marketed our products to amateur sports teams,
mostly  in  the  Colorado  Springs  and  Colorado  Front Range region, where our
headquarters  were formerly located and where we had the most local contacts and
exposure.  These  customers  were  mostly  soccer, hockey, football and baseball
clubs  and  teams.


<PAGE>
Trademark
---------

     We believe that the distinctiveness of our clothing and accessories lies in
our "Flip The Switch" concept. We have filed Trademark registration applications
with  the  U.S.  Patent and Trademark Office (the "USPTO"). Registration for our
"Flip  The  Switch"  trademark  has  been  approved  by the USPTO (Trademark No.
2493173).  Registration  for a design has been also been approved (Trademark No.
2456035). Registration for a second design Serial # 76-191249 has been "allowed"
as  of  April 23, 2002 by the USPTO. An opposition has been filed by Propet Usa,
Inc.  against  the  federal  registration for our "FTS" trademark, but we do not
believe  this opposition has merit and have contacted Propet Usa, Inc to attempt
and  resolve  this  matter.

Wireless Communications Business

     On  February  14, 2003, pursuant to an Asset Purchase Agreement dated as of
February  14,  2003  (the  "Purchase  Agreement")  by  and between us and Simply
Cellular,  Inc., a Florida corporation (the "Seller"), we acquired substantially
all of the assets of the Seller's wireless service and accessories store and web
site.  We  intend  to  continue to use the acquired assets for the same use. The
purchase  price  consisted  of  $70,000  of cash. Funds for the acquisition were
obtained  via  our  sale  of 6% convertible debentures. We intend to continue to
operate  the  wireless  phone business with a view towards growth and expansion.

     In March 2003, we incorporated a new Florida company, FTS Wireless, Inc.
into which we intend to transfer our wireless phone business assets into.
Through our store located in Tampa, Florida, and our web site
www.CellularDeals.com we sell a wide range of products, accessories and
components for wireless phones, including batteries, chargers, antennas and
more.

     Products.  We  currently  sell  products  including,  but  not  limited to,
rechargeable  batteries,  personal  and  portable  hands  free  kits, hands free
installation  kits,  portable  and vehicle antennas, in-car and travel chargers,
fashionable accessory faceplates and colored housings for cellular phones, plain
and  colored  phone  carrying  cases  and  two-way  and  pager  accessories.

     Cellular phones are an integrated communications system that integrate
wired, wireless, exchange equipment. The Mobile/Cellular telephones are composed
of a mobile telephone exchange center, base station and mobile station.
Currently, there are two kinds of mobile cellular telephones, (a) the simulated
mobile telephone and (b) the digital mobile telephone. We carry many kinds of
brand name mobile telephones and accessories such as, Motorola, Nokia and
Ericsson.

     We have secured agreements with two master dealer's to provide products and
services for three leading cellular service providers in the country including
Sprint PCS, T-Mobile and NexTel:

     Malsha Products is a New York based master distributor of Sprint products
and services in the Tampa, Florida marketplace and serves as our master
dealer to obtain Sprint PCS products and services.

     American Connections, LLC (ACL) is a nationwide wholesale and retail
distributor. ACL is one of the largest national wholesale distributors of
wireless service and products. ACL features NexTel as its primary service
product and is currently operating in 11 states and the District of Columbia.

-    We intend to increase our same store sales by continuing our focus on
     products incorporating the latest technology, since higher sales prices are
     typically associated with these products.

-    We expect to continue to explore the opening of new stores in geographic
     areas. We intend to franchise our brand name, "FTS Wireless" to the
     northeastern U.S. area and other locations to be determined.

-    We intend to improve our existing store by upgrading and rotating product
     displays as well as carrying the latest high technology products. We also
     plan to train our employee's as wireless consultant offering value added
     services to the retail wireless client.

-    We intend, but have no agreement to, pursue strategic acquisitions of local
     and regional cellular phone stores.

-    We intend to develop the "FTS Wireless" brand name.

<PAGE>

Employees

     As of December 31, 2002, we had one full time employee, excluding our
Chairman and chief executive officer, Scott Gallagher, and W. Scott McBride a
Director, on a consulting basis. We do not have any part-time employees. We have
never experienced a work stoppage and we believe that our relationship with Mr.
Gallagher is a good one. Our success depends to a large extent upon the
continued services of Mr. Gallagher. The loss of his services could have a
material adverse effect on our business and our results of operations.

     In connection with our cellular phones and accessories business, we employ
one individual as an independent contractor to run the "FTS Wireless" store
located in Tampa, Florida.

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

Item 2.  Properties

     We  lease  our  facilities  located  at 301 Oxford Valley Road, Suite 1202,
Yardley,  Pennsylvania  19067  for use as our corporate headquarters. We entered
into  our  lease  commencing  on  July  1, 2002 for a period of one (1) year and
currently pay a monthly rental fee of $900.00 to occupy approximately 700 square
feet.  Our  lease  agreement  provides for a one year renewal option. We believe
that  our  leased  properties  are  adequate  for  our  current  and immediately
foreseeable  operating  needs. We do not have any policies regarding investments
in  real  estate,  securities  or  other  forms of property. We also operate our
wireless  phone  business from leased facilities located at 12014 Anderson Road,
Tamp, Florida, 33625. The facilities, leased to Simply Cellular, Inc., commenced
on August 1, 2001, with Life Investor Inc., Co., as landlord and on February 14,
2003,  Simply  Cellular,  Inc.,  assigned  such  leased  facilities  to  us.

Transfer  agent

     Our  transfer  agent  is  Securities  Transfer Corporation, located at 2591
Dallas Parkway Suite 102,  Frisco,  Texas 75034.  Their phone number is (469)
633-0101.

RISK  FACTORS

     You  should  carefully  consider  the  following risk factors and all other
information  contained  in this prospectus before investing in our common stock.
Investing  in  our  common  stock  involves  a  high degree of risk.  Any of the
following  risks  could  adversely  affect our business, financial condition and
results  of  operations  and could result in a complete loss of your investment.
The  risks  and uncertainties described below are not the only ones we may face.

<PAGE>
We Had A Loss For The Year Ended December 31, 2002 And Expect Losses To Continue
In  The  Future.  There  Is  A  Risk  We  May  Never  Become  Profitable.

     We  had a net loss of $1,168,154 for the year ended December 31, 2002 and a
net  loss of $815,907for the year ended December 31, 2001. Our future operations
may  not  be  profitable  if  we  are  unable  to  develop our recently acquired
operating  business or if we are unable to expand our current limited operations
to  an e-commerce business model. Revenues and profits, if any, will depend upon
various  factors,  including  whether  we  will  be  able  to receive funding to
advertise  our products or find additional businesses to operate and/or acquire.
We may not achieve our business objectives and the failure to achieve such goals
would  have  an  adverse  impact  on  us.

There  Is Substantial Doubt About Our Ability To Continue As A Going Concern Due
To  Recurring  Losses And Working Capital Shortages, Which Means That We May Not
Be  Able  To  Continue  Operations  Unless  We  Obtain  Additional  Funding.

     Our  audited  financial  statements  for the fiscal year ended December 31,
2002,  reflect  a  net  loss  of $1,168,154. These conditions raised substantial
doubt  about our ability to continue as a going concern if sufficient additional
funding was not acquired or alternative sources of capital developed to meet our
working  capital  needs.

Our Current And Potential Competitors in the Apparel Industry, Some Of Whom Have
Greater  Resources  And  Experience Than We Do, May Manufacture Or Sell Products
That  Cause  Greater  Demand  For  Their  Products  Which May Cause Sales Of Our
Products To Decline. If We Are Unable To Generate Sales For Our Products, We May
Not  Be  Able  To  Continue  To  Operate.

     We  compete  with  numerous  domestic  and  foreign  designers,  brands and
manufacturers  of  apparel,  accessories  and  other products, some of which are
significantly larger and have greater resources, than we do. Management believes
that  our  ability to compete effectively depends upon our continued flexibility
in  responding  to  market  demand  and  our  ability to offer fashion conscious
consumers  a  wide  variety  of  high  quality  apparel  at  competitive prices.

<PAGE>

Our  Business  Is  Dependent  Upon  Our Being Able To Accurately Predict Fashion
Trends,  Customer  Preferences,  And  Other  Fashion-Related  Factors. If We Are
Unable  To  Successfully  Predict Or Respond To Changing Styles, We May Be Faced
With  A  Substantial Amount Of Unsold Inventory That Would Cause Our Business To
Lose  Money.

     Customer tastes and fashion trends are volatile and tend to change rapidly.
Our success depends in part on our ability to effectively predict and respond to
quickly  changing  fashion  tastes and consumer demands, and to translate market
trends  into  appropriate,  saleable  product  offerings.  If  we  are unable to
successfully  predict  or  respond to changing styles or trends and misjudge the
market  for  our  products  or any new product lines, our sales, if any, will be
lower  and  we  may  be  faced  with a substantial amount of unsold inventory or
missed  sales opportunities. In response, we may be forced to rely on additional
markdowns  or  promotional sales to dispose of excess, or slow-moving inventory,
which could cause our business to lose money and could cause the value of our
stock to decline.

The  Decline  In  General Economic Conditions Has Led To Reduced Consumer Demand
For  Our  Apparel  And  Accessories  And  May  Continue  To Do So In The Future.

     Consumer  spending  habits,  including  spending  for  our  apparel  and
accessories,  are  affected  by,  among  other  things,  prevailing  economic
conditions,  levels  of  employment,  salaries,  wage rates, the availability of
consumer  credit,  consumer  confidence,  and  consumer  perception  of economic
conditions.  The general slowdown in the United States economy and the uncertain
economic  outlook  have  adversely  affected  consumer  spending habits and mall
traffic,  which have resulted in, and may continue to result in, lower net sales
by  us. A prolonged economic downturn could cause our business to lose money and
could  cause  the  value  of  our  common  stock  to  decline.

The  Loss  Of  Our  Key  Employees  May  Adversely Affect Our Growth Objectives.

     Our  success in achieving our growth objectives depends upon the efforts of
our  top  management team including the efforts of Mr. Scott Gallagher. The loss
of  the services of any of this individual may have a material adverse effect on
our  business,  financial  condition  and  results of operations. We can give no
assurance  that  we  will  be able to maintain and achieve our growth objectives
should  we  lose Mr. Gallagher's services. Although we intend to apply
for  key-man  life  insurance,  we  do not currently maintain key life insurance
policies  for  Mr.  Gallagher.

We  May Pursue Strategic Acquisitions, Which Could Have An Adverse Impact On Our
Business.

       We  may  from time to time acquire complementary companies or businesses.
Acquisitions  may result in difficulties in assimilating acquired companies, and
may  result  in the diversion of our capital and our management's attention from
other  business  issues  and  opportunities.  We may not be able to successfully
integrate  operations  that  we  acquire,  including  their personnel, financial
systems,  distribution, operations and general store operating procedures. If we
fail  to  successfully  integrate  acquisitions,  our  business could suffer. In
addition, the integration of any acquired business, and their financial results,
into  ours  may adversely affect our operating results. We currently do not have
any  agreements  with  respect  to  any  such  acquisitions.


<PAGE>

We  May,  In The Future, Issue Additional Shares Of Our Common Stock Which Would
Reduce  Investors  Percent  Of  Ownership  And  May  Dilute  Our  Share  Value.

     Our  articles of incorporation authorizes the issuance of 25,000,000 shares
of  common  stock,  par  value  $.001  per  share. As of March 15, 2003 we have
15,530,240  shares  of  our  common  stock  issued  and outstanding. We are also
authorized  to  issue  150,000  shares of our Series A 10% convertible preferred
stock  of  which  50,000  shares  are  issued  and  outstanding  and  4,850,000
undesignated  preferred shares, par value $.01 per share, of which authorized no
shares  are  issued  or  outstanding.  The future issuance of all or part of our
remaining  authorized  common  stock  may  result in substantial dilution in the
percentage  of  our  common stock held by our then existing shareholders. We may
value  any common stock issued in the future on an arbitrary basis. The issuance
of  common  stock for future services or acquisitions or other corporate actions
may  have  the effect of diluting the value of the shares held by our investors,
and  might  have  an  adverse effect on any trading market for our common stock.

Shares Of Our Total Outstanding Shares That Are Restricted From Immediate Resale
But  May  Be  Sold Into The Market In The Future Could Cause The Market Price Of
Our  Common  Stock  To  Drop  Significantly, Even If Our Business Is Doing Well.

     As  of March 15, 2003, we had 15,530,240 shares of our common stock issued
and  outstanding.  Of  such  shares, 11,629,609  shares  of  common  stock  were
restricted.  As  of March 2003 approximately 142,500 shares will become eligible
for  resale  under Rule 144 which have been held for a period of two years. Rule
144  provides,  in  essence, that a person holding "restricted securities" for a
period  of  one  year  may  sell  only an amount every three months equal to the
greater  of (a) one percent of a company's issued and outstanding shares, or (b)
the  average weekly volume of sales during the four calendar weeks preceding the
sale.  The  amount  of  "restricted  securities"  which  a  person who is not an
affiliate  of  our  company may sell is not so limited, since non-affiliates may
sell  without  volume  limitation  their  shares  held for two years if there is
adequate  current  public information available concerning us. In such an event,
"restricted  securities"  would be eligible for sale to the public at an earlier
date. The sale in the public market of such shares of Common Stock may adversely
affect  prevailing  market  prices  of  our  Common  Stock.

Our  Common  Stock  May  Be Affected By Limited Trading Volume And May Fluctuate
Significantly

     There  has  been a limited public market for our common stock and there can
be no assurance that an active trading market for our common stock will develop.
As  a  result, this could adversely affect our shareholders' ability to sell our
common  stock  in  short  time periods, or possibly at all. Our common stock has
experienced,  and  is  likely to experience in the future, significant price and
volume  fluctuations which could adversely affect the market price of our common
stock  without regard to our operating performance. In addition, we believe that
factors  such  as quarterly fluctuations in our financial results and changes in
the  overall  economy  or the condition of the financial markets could cause the
price  of  our  common  stock  to  fluctuate  substantially.

<PAGE>
Our Common Stock Is Deemed To Be "Penny Stock," Which May Make It More Difficult
For  Investors  To  Resell  Their  Shares  Due  To  Suitability  Requirements

     Our  common  stock  is  a  penny  stock.  Penny stocks generally are equity
securities  with  a  price  of  less  than $5.00 per share other than securities
registered  on  certain  national  securities  exchanges or quoted on the NASDAQ
Stock Market, provided that current price and volume information with respect to
transactions  in  such  securities  is  provided  by the exchange or system. Our
securities  may  be  subject to "penny stock rules" that impose additional sales
practice  requirements  on  broker-dealers  who  sell such securities to persons
other  than established customers and accredited investors (generally those with
assets  in  excess of $1,000,000 or annual income exceeding $200,000 or $300,000
together  with  their  spouse).  For  transactions  covered  by these rules, the
broker-dealer  must make a special suitability determination for the purchase of
such  securities  and  have  received  the  purchaser's  written  consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny  stock, unless exempt, the "penny stock rules" require the delivery, prior
to  the  transaction,  of  a  disclosure  schedule  prescribed by the Commission
relating  to  the  penny  stock market. The broker-dealer also must disclose the
commissions  payable to both the broker-dealer and the registered representative
and  current  quotations for the securities. Finally, monthly statements must be
sent  disclosing recent price information on the limited market in penny stocks.
Consequently, the "penny stock rules" may restrict the ability of broker-dealers
to  sell our securities and may have the effect of reducing the level of trading
activity  of  our  common  stock in the secondary market. The foregoing required
penny  stock  restrictions  will  not apply to our securities if such securities
maintain  a  market price of $5.00 or greater. We can give no assurance that the
price  of  our  securities  will  reach  or  maintain  such  a  level.

Risks Related to Our Cellular Phone Business

Because We Depend On Third Party Vendors, We May Not Be Able To Secure
Cost Effective Products Which Could Cause Us To Lose Money.

     Our performance depends on our ability to purchase our products in
sufficient quantities at competitive prices and on our vendors' ability to make
and deliver high quality products in a cost effective, timely manner. Some of
our smaller vendors have limited resources, production capacities and limited
operating histories. We have no long-term purchase contracts or other contracts
that provide continued supply, pricing or access to new products and any vendor
or distributor could discontinue selling to us at any time. We may not be able
to acquire the products that we need in sufficient quantities or on terms that
are acceptable to us in the future.

<PAGE>

Because  The Cellular Phone Industry Is A Competitive One, We May Not Be Able To
Successfully  Compete  With  Other  Companies Which Would Cause Us To Lose Money
And/Or  Would  Cause  A  Decline  In  The  Value  Of  Our  Stock.

     We operate in a highly competitive environment. We principally compete with
a  variety  of  small distributors of cellular phone accessories that focus on a
particular  segment  of  the  market, as well as a few single large distributors
that  offer  a  broad  range  of  such  products. We believe that success in the
industry  is  based  on  maintenance  of  product  quality, competitive pricing,
delivery  efficiency,  customer  service and satisfaction levels, maintenance of
satisfactory  dealer  relationships, and the ability to anticipate technological
changes  and  changes  in  customer preferences. Our suppliers whose products we
distribute  or  major  cellular phone manufacturers may acquire, startup, and or
expand  their own distribution systems to sell directly to commercial and retail
customers which would cause us to lose money and/or would cause a decline in the
value  of  our  stock.


If  The  Company  Becomes  A  Franchisor,  It Must Comply With Federal And State
Franchise  Regulations  And If The Company Should Fail To Materially Comply With
Such  Regulations,  The  Company  May  Not  Be Able To Continue To Franchise Its
FTS Wireless  Cellular  Stores.

     The  offer and sale of franchises is subject to extensive federal and state
laws  and  substantial  regulation  under  those  laws  by  government agencies,
including  the  Federal  Trade Commission ("FTC") and various state authorities.
Pursuant  to  FTC  regulations,  the  Company  would  be  required to furnish to
prospective  franchisees  a  current  franchise  offering  disclosure  document
containing  information  prescribed by the FTC. The Company would be required to
prepare  Uniform  Franchise  Offering  Circulars  to  satisfy  this  disclosure
obligation.  In  addition,  in  certain states, the Company would be required to
register or file with those states and to provide prescribed disclosures. If the
Company  should fail to materially comply with such regulations, the company may
not  be  able  to  continue  to  franchise  its  simply  cellular  stores.

The  Products  We Sell Rely On Technology Systems And Networks. If Any System Or
Network  Disruption  Occurs,  It  Could  Cause  A  Disruption In Service For Our
Customers  Which  Could  Cause  Us  To  Lose  Their  Business

     Our  operations  rely  to  a  significant  degree  on  the  efficient  and
uninterrupted  operation of complex information technology systems and networks,
which  are integrated with those of third parties. Any failure of our current or
future  systems  or  networks  could  have  a  material  adverse  effect  on our
operations,  sales  and  operating  profit.

<PAGE>
Subsequent Events

     On March 8, 2003 we entered into a letter of cancellation to cancel the
6.0 million equity line of credit agreement entered into with Dutchess
Private Equities LLP in August 2002.

     Pursuant  to  a  Subscription  Agreement entered into on February 14, 2003,
between the Company and Dutchess Private Equities Fund, LP, the Company received
$212,500  from  the sale of the Company's 6% secured convertible debentures. The
terms of the debentures provide for full payment on or before February 14, 2007,
with  interest of 6% per annum, which may be converted at any time at the lesser
of  (i)  80%  of  the  average  of  the five lowest closing bid price during the
fifteen  (15)  trading  days  prior  to  the conversion date or (ii) 100% of the
average  of  the closing bid prices for the twenty (20) trading days immediately
preceding  the  closing date. Under a related registration rights agreement, the
Company  agreed  to  register  all  of  the  shares  underlying such convertible
debentures  on  a  registration  statement  on  Form  SB-2  to be filed with the
Securities  and  Exchange Commission. In exchange for $12,500 of the $212,500 6%
convertible  debenture,  Dutchess  has  agreed to exchange 250,000 shares of the
Company's  common  stock  which  Dutchess  had  purchased  in August 2002, which
shares,  when  received  by  the Company, shall be cancelled. As of March 25,
2003,  $212,500  of  the  debentures  have  been issued, none of which have been
converted.

     On  March  19,  2003  the Company's Board of Directors and a majority of it
Shareholders,  by  written  consent, voted to amend the Company's Certificate of
Incorporation  to  (1)  increase the Company's authorized shares of common stock
from  25,000,000  shares, par value $.001 per share, to 100,0000,000 shares, par
value  $.001  per  share  and  (2)  to  change  the name of the Company from FTS
Apparel,  Inc.  to "The FTS Group, Inc." The Company intends to file and mail an
Information  Statement  to  its  shareholders  stating  the  details  of  such
amendments.


ITEM 3. LEGAL PROCEEDINGS
        -----------------

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


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

     No matters were  submitted to a vote of security  holders during the fourth
quarter of the year covered by this Annual Report.


                                     PART II


ITEM 5. MARKET FOR OUR SECURITIES AND RELATED SHAREHOLDER MATTERS
         --------------------------------------------------------

     Our common stock has traded over the counter and has been quoted in the OTC
Bulletin Board since March 18, 1999. The stock currently trades under the symbol
"FLIP."

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

Year Ended                  High            Low
------------------         ------          -----

         2001
         ----
March 31                   $ .31           $ .07
June 30                    $ .26           $ .07
September 30               $ .25           $ .02
December 31                $ .07           $ .02

         2002
         ----
March 31                   $ .35           $ .06
June 30                    $ .20           $ .04
September 30               $ .20           $ .05
December 31                $ .15           $ .06


     The number of record holders of our common stock as of April 8, 2003 was
approximately 150, not including nominees of beneficial owners. There are
17,180,240 shares of the Company's common stock outstanding as of such date.

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

     As  of  the date of this Annual Report, a total of 150,000 preferred shares
were  designated  Series  A Preferred Stock, of which 50,000 were issued. All of
those  shares  have  an issue price and preference on liquidation equal to $1.00
per  share.  The  Series  A Preferred Shares accrue dividends at a rate equal to
3.75% of the net profits of the Company, 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 basis into common stock.
Holders  of the preferred stock vote with the holders of the common stock on all
matters  presented  to  the  shareholders  and are entitled to one vote for each
share.


Recent  Sales  of  Unregistered  Securities

     For  the  fourth quarter of the year ended December 31, 2002, we issued the
following  number  of  restricted  shares  of  our common stock to the following
individuals listed below.

     On November 12, 2002 we issued: Scott Gallagher - 833,333 shares of common
stock  for  services  rendered  to  the  Company valued at $.06 per share; Scott
McBride  -  125,000  shares of common stock for services rendered to the Company
valued  at  $.06  per  share  and also 300,000 shares of common stock which were
purchase  at  $.05  per  share  for  proceeds  to  the Company of $15,000; James
Gilligan  -  125,000 shares of common stock for services rendered to the Company
valued  at  $.06  per share; and Linda Ehlen 166,666- shares of common stock for
services  rendered  to  the  Company valued at $.06 per share. Also, on November
12th  ,  2002,  we  issued  30,000 shares of common stock to two Individuals for
services  rendered  to  the  Company valued at $.06 per share. We also issued an
aggregate  of  350,000 shares of common stock to three individuals who purchased
shares  in September 2022 at $.05 per share, but who never received such shares.
We  believe  such issuance was exempt from registration pursuant to Section 4(2)
of  the  Securities  Act  of  1933.

On November 26, 2002, we issued Scott Gallagher - 387,500 shares of common stock
for  services  rendered to the Company valued at $.08 per share; Scott McBride -
75,000  shares  of  common  stock for services rendered to the Company valued at
$.08  per  share;  James  Gilligan  - 75,000 shares of common stock for services
rendered  to  the  Company  valued  at  $.08 per share; David Rasmussen - 75,000
shares  of  common stock for services rendered to the Company valued at $.08 per
share;  and Linda Ehlen - 56,250 shares of common stock for services rendered to
the  Company  valued  at $.08 per share. We also issued 322,160 shares valued at
$.08  to  a  shareholder in connection with a prior lease settlement. We believe
such  issuance  was  exempt  from  registration  pursuant to Section 4(2) of the
Securities  Act  of  1933.


<PAGE>

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

Overview
---------

     Historically and through the year ended December 31, 2002, we have operated
exclusively  in  the  apparel  industry. We marketed, produced and distributed a
line  of recreation apparel under the label "FTS" or "Flip the Switch." However,
the results of our efforts were unsatisfactory and, as a result, the Company may
expand  its  operations to other industries in an effort to increase shareholder
value.  Due  to  continuing losses from operations, the accountant which audited
our  financial  statements  for  the  year ended December 31, 2002 assessed that
there  was  substantial  doubt about our ability to continue as a going concern.

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

YEAR ENDED  DECEMBER 31, 2002 COMPARED TO THE YEAR ENDED DECEMBER 31, 2001.

     During the year ended December 31, 2002, we realized a net loss of
$1,168,154 (or $0.14 per share) on revenue of $568,953, compared to a net loss
of $815,907 ($.07 per share) for the year ended December 31, 2001. Revenue
during 2002 decreased by $568,953 over the prior year due primarily to
our inactivity as the company generated no revenue in 2002.

     The cost of goods sold in 2001, was $645,824. That is, our cost of goods
exceeded our revenue. The write down of inventory during 2001 was necessitated
by our decision to liquidate the inventory for quick sale. Despite our efforts,
including manufacturing a portion of our products overseas, we do not believe
that we ever achieved sufficient sales to reduce our cost of goods to acceptable
levels. This fact, coupled with our general and administrative expenses, caused
us to report a net loss for each year of our existence.

     General and administrative expenses decreased from 2001 to 2002, from
$1,101,127 in 2001 to $811,678 in 2002. the administrative expenses in 2002 are
comprised principally of non cash stock compensation of $604,363 and salaries of
$134,500. The administrative expenses in 2001 are comprised principally of non
cash stock compensation of $512,559 and salaries of $212,372.



<PAGE>

     Professional  fees remained a significant  expense in the amount of $56,478
in 2002 as compared to $49,776 in the prior fiscal  year.  These  expenses  were
incurred in connection  with our need to file periodic  reports with the SEC, as
well as fees incurred in connection  with the  investigation  of  acquisition of
other  businesses.

     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.

OTHER:

Except  for historical information contained herein, the matters set forth above
are forward-looking statements that involve certain risks and uncertainties that
could  cause  actual  results  to  differ  from  those  in  the  forward-looking
statements.  Potential risks and uncertainties include such factors as the level
of  business  and  consumer  spending,  the  amount  of  sales  of the Company's
products,  the  competitive  environment  within  the  investigative services
industry,  the  ability of the Company to continue to expand its operations, the
level  of  costs  incurred  in  connection with the Company's expansion efforts,
economic  conditions  and  the financial strength of the Company's customers and
suppliers.  Investors  are  directed  to  consider other risks and uncertainties
discussed  in  documents  filed  by the Company with the Securities and Exchange
Commission.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 146, " Accounting for Costs
Associated with Exit or Disposal Activities" (FAS 146).  FAS 146, which will be
effective for exit or disposal activities initiated after December 31, 2002, is
not expected to have a material impact on the company's results of operation,
financial position or cash flows.

     In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation-Transition and
Disclosure" (FAS 148), which amends FAS 123, "Accounting for Stock-Based
Compensation", transition requirements when voluntarily changing to the fair
value based method of accounting for stock-based compensation and also amends
FAS 123 disclosure requirements.  FAS 148 is not expected to have a material
impact on the company's results of operations, financial position or cash flow.


<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     In December, 2001, the SEC issued a cautionary advice to elicit more
precise disclosure in this Item 7, MD&A, about accounting policies management
believes are most critical in portraying the company's financial results and in
requiring management's most difficult subjective or complex judgments. The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make judgments and estimates.

     We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

     Revenue Recognition:  REVENUE RECOGNITION

Net revenues from wholesale  product sales are  recognized  upon the transfer of
title and risk of ownership to  customers.  Allowances  for  estimated  returns,
discounts and doubtful  accounts are provided when sales are recorded.  Shipping
and handling costs are included in cost of sales.

The Company  recognizes  revenue from  advertising  and promotion  income as the
requisite services are provided.
Revenues are recognized.


     Goodwill and Intangible Asset Impairment: IMPAIRMENT OF LONG-LIVED ASSETS

The Company  periodically  reviews the carrying  amount of  property,  plant and
equipment and its identifiable  intangible recognition

     Goodwill and Intangible Asset Impairment:  See note 1 impairment of
long lived 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.


IMPACT OF INFLATION

     Inflationary factors have not had a significant effect on our operations.



<PAGE>

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         ------------------------------------------

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


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


         There  were  no  changes  in  or  disagreements  with  accountants  on
accounting  and  financial  disclosure  for  the  period covered by this report.



                                    PART III

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

     The following  individuals presently serve as officers and directors of the
Company.  All of our current  directors  except Mr. Gallagher have served on the
Board since February 10, 2002; Mr. Gallagher has served since January 11, 2002.

Name                        Age            Position
---------------------      -----         -----------
Scott  Gallagher           36           Chairman  of  the  Board of Directors,
                                        Chief  Executive  Officer and President

Linda  Ehlen               53           Interim Chief  Financial  Officer

David  R.  Rasmussen       36           Director

W.  Scott  McBride         30           Director

James  H.  Gilligan        30           Director

     All directors hold office until the next annual meeting of stockholders and
until  their  successors  are elected. Officers are elected to serve, subject to
the  discretion of the Board of Directors, until their successors are appointed.

     SCOTT GALLAGHER. Mr. Gallagher has served on our board of directors since
January 11, 2002. Mr. Gallagher serves as the Chief Executive Officer and a
director of our wholly owned subsidiary FTS Wireless, Inc. Since 1998, Mr.
Gallagher has served as the president of About-Face Communications, LLC, a
privately held business consulting firm located in Yardley, Pennsylvania. Prior
to founding About-Face Communications, LLC, Mr. Gallagher was the chief
investment officer and a general partner with the Avalon Investment Fund, a
private hedge fund based in New York City. Prior to working for Avalon
Investment Fund, Mr. Gallagher was a branch manager and founder of the
Langhorne, Pennsylvania office for Scottsdale Securities, Inc., a national
brokerage firm based in St. Louis, Missouri.

         LINDA  EHLEN.   Since 1995, Ms. Ehlen has served as the Chief Financial
Officer of Casa Comieda,  Inc., a company involved in the  restaurant  business.
From  1981  to  1995, she was a controller  for Livingston Oil Corp.  Ms.  Ehlen
earned  her  Bachelor's  Degree  in  Accounting  from  Monmouth  University,
Rutgers  School  of  Government  and  Accounting.

<PAGE>

     DAVID  R.  RASMUSSEN.  Mr.  Rasmussen  has served on our board of directors
since  February 10, 2002. Mr. Rasmussen received a Bachelor's degree in Computer
Technology from Rockhurst University in Kansas City Missouri. He has been in the
IT  (information  Technology Field) since 1992. From 1997 through 2000 he worked
as  a  program  analyst for National Association of Insurance Commissions. Since
2000, Mr. Rasmussen has served as a Project leader for ERC, Inc, a subsidiary of
General Electric (NYSE:GE). In his current position he is charged with providing
IT  solutions  that  enable business to drive core processes and grow profitable
relationships.

     W.  SCOTT  MCBRIDE.  Mr. McBride has served on our board of directors since
February  10,  2002.  Mr. McBride also serves as the President and a director of
our  wholly  owned  subsidiary  FTS  Wireless,  Inc.  Mr. McBride graduated from
Western  State  College,  in  Gunnison  Co.  in  1995 with a BA in Political and
Environmental  Science.  From  1995  to  1997 Mr. McBride was a partner in a New
Jersey  real  estate development venture. From 1997 to 2000 Mr. McBride attended
Monmouth  University,  in  West  Long  Branch  ,  New Jersey where he received a
Master's  Degree in Education. From January of 2000 through December of 2000 Mr.
McBride  worked  with  the  firm  Datek  Online  Brokerage  Services,  as a team
technology  leader  in the customer service area. In January of 2001 Mr. McBride
became  a  Security Information Technology (SIT) Consultant, providing a variety
of  services  to  companies  and  law  enforcement agencies in the SIT Industry.

     JAMES  H. GILLIGAN. Mr. Gilligan has served on our board of directors since
February  10,  2002.  From  1996  to  2001,  Mr.  Gilligan  was  employed  at
Kristensons-Petroleum,  Inc.  ("KPI")  as  a  broker/trader.  KPI  services ship
owners,  marine  fuel suppliers and a network of independent brokers and traders
around  the  world.  In  September  of  2001,  Mr.  Gilligan began working as an
independent  sales  consultant  for  Digital  Descriptor  Systems,  Inc.,  a
security/biometric company. Mr. Gilligan earned his BA in Liberal Arts from West
Virginia  University  in Morgantown, West Virginia and his Associates in Liberal
Arts  from  Brookdale  Community  College,  in  Lincroft,  New  Jersey.

Involvement  In  Certain  Legal  Proceedings

      We  are  not  aware  of  any material legal proceedings that have occurred
within the past five years concerning any director, director nominee, or control
person  which  involved  a criminal conviction, a pending criminal proceeding, a
pending  or  concluded  administrative  or  civil  proceeding  limiting  one's
participation  in  the  securities  or  banking  industries,  or  a  finding  of
securities  or  commodities  law  violations.

Executive  Compensation
------------------------

     The  following  table  presents a summary of the  compensation  paid to our
Chief  Executive  Officer during the last three fiscal years. No other executive
officer  received  compensation  in excess of $100,000  during  2002.  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.




<PAGE>

                           Summary Compensation Table

                                                                 Long-term
                                   Annual Compensation          Compensation
                                ---------------------------   ------------------
                                                Other Annual  Securities
Name and Position                Year  Salary   Compensation  Underlying Options
-------------------------------  ----  ------   ------------  ------------------

Scott Gallagher                  2002     NA     1,220,833(*)
 Chairman of the Board and       2001     NA
 Chief Executive Officer         2000     NA

LeRoy Landhuis,                  2000 $19,750    $117,844(1)         -0-(2)
 Chairman of the Board and       2001      -0-   $226,672(3)         -0-(2)
 Chief Executive Officer(A)      2002     NA(**)

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

(A)   Mr. Landbuis is no longer our Chairman and Chief Executive Officer.

(*)  Such shares reflect an aggregate of $75,000 of accrued salary and $6,000 of
     compensation for services rendered by serving on the Company's Board of
     Directors.

(**) Shares  were  issued  to Mr. Landhuis in connection with a lease settlement
     agreement,  but not for services in connection with servicing as an officer
     or  director  of  the  Company.


     (1) Represents compensation for services pursuant to a consulting agreement
which was paid in the form of 315,201  shares of common stock valued at $.373869
per share.  For  additional  amounts  deemed  paid to the officer in the form of
discounted   securities.

     (2) Excludes  warrants to produce 1,036,000  shares of our common stock.

     (3) Includes 782,222 shares of common stock valued at $220,000  pursuant to
a  consulting  agreement with the named  executive officer and 142,500 shares of
common stock valued at $6,672 issued pursuant to a registration rights agreement
with the named executive officer.

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

     Effective  January 11, 2002, Mr. Gallagher executed an executive employment
agreement  with us pursuant to which he was  appointed our Chairman of the Board
and  chief  executive  officer.  The  agreement  provides  him a base  salary of
$100,000  per  year,  the   opportunity  for  bonuses  based  on  our  financial
performance,  1,200,000  shares of our common stock and the right to participate
in benefit programs maintained for its other employees. The agreement covers the
period through the end of 2004,  subject to earlier  termination.  The Agreement
provides that we may terminate his employment with "cause," as defined  therein.
In the event that his employment is terminated  without  cause,  we must pay him
for  the  balance  of  the  original  term.

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

     There were no stock  options  granted for  services to the named  executive
officers in fiscal year 2001 and there were no stock options exercised by any of
the  named  executive  officers  in  fiscal  year  2002.

     The  following  table is a summary of the value of the  options  granted to
named  executive  officers  as of fiscal  year end 2002,  based  upon the latest
average  trading  price  of  our  stock.

<PAGE>
                          Fiscal  Year  End  Option  Value

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

None

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  us. An aggregate of 2,500,000 shares of our common stock have been
reserved  for  issuance  under  the  Plan,  as  amended.

     The  Plan  is  administered  by  our  Board  of  Directors,  which  selects
recipients  of  any  stock options or 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 us for purposes of awards under
the  Plan,  the  Board  considers,  among other things, such person's employment
position  and  relationship  with  us, his duties and responsibilities, ability,
productivity, length of service or association, morale, interest in our 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.

     In  2001  and  2002 no options were granted under the Plan. We have options
outstanding  to  purchase  a  total  of  598,000  shares  of our common stock at
exercise  prices  ranging  from  $.81  per  share  to  $2.75  per  share.


COMPLIANCE WITH SECTION 16.
----------------------------

     Section  16(a)  of  the  Exchange  Act,  as amended, requires our executive
officers,  directors  and persons who beneficially own more than 10% of Planet's
common  stock  to  file  reports  of  their  beneficial ownership and changes in
ownership  (Forms 3, 4 and 5, and any amendment thereto) with the SEC. Executive
officers,  directors,  and  greater-than-ten  percent  holders  are  required to
furnish us with copies of all Section 16(a) forms they file. Based on our review
of the activity of our officers and directors for the fiscal year ended December
31,  2002,  there  were  no  other  Forms  3,  4  or  5  required  to  be filed.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------


     The  following  table sets forth certain information as of the date of this
Report  regarding  the  beneficial ownership of our common stock held by each of
our  executive  officers  and directors, individually and as a group and by each
person  who  beneficially owns in excess of five percent of the common stock. In
general,  beneficial ownership includes those shares that a person has the power

<PAGE>

to  vote,  sell,  or  otherwise dispose. Beneficial ownership also includes that
number  of  shares,  which an individual has the right to acquire within 60 days
(such as stock options) of the date this table was prepared. Two or more persons
may  be  considered the beneficial owner of the same shares. In the registration
statement  of  which  this  prospectus is a part, "voting power" is the power to
vote  or  direct the voting of shares, and "investment power" includes the power
to dispose or direct the disposition of shares. The inclusion in this section of
any  shares  deemed  beneficially owned does not constitute an admission by that
person  of  beneficial  ownership  of  those  shares.

     The  shareholders  listed below have sole voting and investment  power. The
address  of  each  of  the  beneficial  owners  is  301  Oxford  Valley  Road,
Yardley,  Pennsylvania  19067,  unless  otherwise  indicated.  All  ownership of
securities  is direct  ownership  unless  otherwise  indicated.

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

Officers  and  Directors:

Scott  Gallagher                        4,302,451                    25.04%

Linda  Ehlen                              222,916                     1.29%

David  R.  Rasmussen                       75,000                        *

W.  Scott  McBride                        500,000                     2.91%

James  H.  Gilligan                       200,000                     1.16%

All  Officers  and  Directors
as  a  Group  (5  persons)              5,280,367                    30.73%


5%  Beneficial  Owners:

Dutchess Advisors(2)                    1,600,000                     9.31%

Michael Novielli(2)                     1,600,000                     9.31%

LeRoy  Landhuis(3)                      6,793,471                     37.3%
212  N.  Wahsatch  Avenue,
Suite  301
Colorado  Springs,  CO  80903

-----------------------------
* Represents less than one percent of the Company's shares outstanding.

(1)  Based  upon  17,180,240 shares  of  our  common  stock  outstanding  as of
April 8, 2003.

(2)  Includes  600,000  shares  owned  by  Dutchess  of  which Mr. Novielli is a
principal.  The  1,000,000  shares  owned  by  Mr.  Novielli  were issued to him
individually  for  consulting  services  rendered  to  the  Company.

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


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

Transactions with LeRoy Landhuis

     During  the  year  ended  December  31,  2001, we issued a total of 924,722
shares  of  our  common  stock  to LeRoy Landhuis, our former Chairman and Chief
Executive  Officer  and  currently the owner of greater than five percent of our
common stock. Of that amount, 782,222 shares were issued for consulting services
valued  at  $220,000  and  142,500  shares  valued  at  $6,672  were  issued  in
satisfaction  of  our obligation pursuant to a registration rights agreement. We
negotiated  the  number  of  shares  issued  in  connection  with the consulting
services  with  Mr.  Landhuis prior to his becoming an officer and director, and
the  number  of  shares was based on a discount from the public trading price of
our  common  stock  on  December 31, 2001. We negotiated the number of shares in
connection  with  the registration agreement at the time the shares were issued;
this  amount  was based on the fair market value of the common stock at the time
of  the  transaction  and the perceived value of the opportunity foregone by Mr.
Landhuis.

     During the years ended  December 31, 2000 and 2001, we occupied  facilities
in space  leased from an affiliate of Mr.  Landhuis.  The rent paid  pursuant to
this  arrangement for those two years was $193,744,  based on the value assigned
to  the  stock  that  we  issued  to  Mr.  Landhuis  in  exchange  for the rent.

     Effective April 19, 2000, we issued 3,594,256 shares of our common stock in
a  private  placement  to  Mr. Landhuis. The aggregate proceeds from the private
placement  was  $1,343,780,  based  upon  the  value  of the stock as originally
negotiated  by  the  parties ($.37 per share), consisting of $1,000,000 in cash;
payment  of  rent  valued  at  $193,744 for our office facilities for a two year
term;  office  equipment  and  improvements  valued  at  $32,192; and consulting
services  valued  at  $117,844.  Mr.  Landhuis was a minority shareholder in our
company  prior  to  the  transaction.  As part of that transaction, we granted a
warrant to Mr. Landhuis to acquire up to 1,036,000 shares of our common stock at
an  exercise  price  of  $1.50  per  share,  effective  until  April  19,  2010.

<PAGE>

     We  entered  into an agreement with Mr. Landhuis, effective August 18, 2000
whereby we agreed to indemnify Mr. Landhuis for any tax liabilities Mr. Landhuis
incurs  for income in excess of amounts agreed upon in his prior agreements with
us.  During  2000,  Mr.  Landhuis  made a short term loan to us in the amount of
$65,685 for payroll, accounts payable, merchandise and travel expenses. The loan
was  repaid prior to year end with interest in the amount of $1,585. Also during
2001  and  2000,  $5,936  and  $16,065  was  paid  to the Landhuis Brokerage and
Management  Co.  for consulting services and office support services provided to
us.  The  Landhuis  Brokerage and Management Co. was also reimbursed $12,621 for
travel  expenses  incurred on our behalf. During 2000, $30,000 was reimbursed to
Mr. Landhuis for legal fees incurred regarding Mr. Landhuis's acquisition of our
stock and other related transactions. Finally, in the fourth quarter of 2002, we
issued 322,160  shares of the Company's common stock to Mr. Landbuis, valued at
$.08  per  share,  in  connection  with  a  lease  settlement  agreement.

     In  August  we  sold  300,000  shares  of  our  common  stock to one of our
directors,  W,  Scott  McBride,  at  a  purchase  price of $.05 per share for an
aggregate  purchase  price  of  15,000.  The  Company believes such issuance was
exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

     On November 12, 2002 we issued: Scott Gallagher - 833,333 shares of common
stock for services rendered to the Company valued at $.06 per share; Scott
McBride - 125,000 shares of common stock for services rendered to the Company
valued at $.06 per share; James Gilligan - 125,000 shares of common stock for
services rendered to the Company valued at $.06 per share; and Linda Ehlen
166,666 shares of common stock for services rendered to the Company valued at
$.06 per share. We believe such issuance was exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933.

     On  November 26, 2002, we issued Scott Gallagher - 387,500 shares of common
stock  for  services  rendered  to  the Company valued at $.08 per share; Scott
McBride  -  75,000  shares  of common stock for services rendered to the Company
valued  at  $.08  per share; James Gilligan - 75,000 shares of common stock for
services  rendered  to  the Company valued at $.08 per share; David Rasmussen -
75,000  shares  of  common  stock for services rendered to the Company valued at
$.08  per  share;  and Linda Ehlen - 56,250 shares of common stock for services
rendered to the Company valued at $.08 per share. We believe such issuance was
exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.


<PAGE>

ITEM 13.  CONTROLS AND PROCEDURES

     (a)     Evaluation of Disclosure Controls and Procedures.
             ------------------------------------------------

     Within the 90 days prior to the date of this Annual Report for the year
ended December 31, 2002, we carried out an evaluation, under the supervision and
with the participation of our management, including the company's Chairman and
Chief Executive Officer and the Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934 (the
"Exchange Act"), which disclosure controls and procedures are designed to insure
that information required to be disclosed by a company in the reports that it
files under the Exchange Act is recorded, processed, summarized and reported
within required time periods specified by the SEC's rules and forms.  Based upon
that evaluation, the Chairman and the Principal Financial Officer concluded that
our disclosure controls and procedures are effective in timely alerting them to
material information relating to the company (including our consolidated
subsidiaries) required to be included in the company's period SEC filings.

     (b)     Changes in Internal Control.
             ---------------------------

     Subsequent to the date of such evaluation as described in subparagraph (a)
above, there were no significant changes in our internal controls or other
factors that could significantly affect these controls, including any corrective
action with regard to significant deficiencies and material weaknesses.





<PAGE>
                                     PART IV

ITEM 14. EXHIBITS, REPORTS ON FORM 8-K AND FINANCIAL STATEMENTS
         ------------------------------------------------------

3.1  Articles  of  Incorporation  of the Company as filed June 30, 1997 with the
     Secretary  of State of the State of Colorado and included as exhibit 2.1 to
     the  Company's Form 10-SB dated August 24, 1998, and incorporated herein by
     reference

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
     and  included  as  exhibit 2.2 to the Company's Form 10-SB dated August 24,
     1998,  and  incorporated  herein  by  reference.

3.3  Articles  of  Amendment  of the Articles of Incorporation of the Company as
     filed  August 23, 2000 with the Secretary of State of the State of Colorado
     included  as exhibit 3.3 to our Annual Report on Form 10-KSB for the fiscal
     year  ended  December  31, 2000, and incorporated herein by this reference.

3.4  Bylaws  of  the Company included as exhibit 2.3 to the Company's Form 10-SB
     dated  August  24,  1998,  and  incorporated  herein  by  reference.

4.1  Form  of  Certificate  for  Common  Shares,  included as exhibit 4.1 to our
     Annual  Report  on Form 10-KSB for the fiscal year ended December 31, 1998,
     and  incorporated  herein  by  this  reference.

10.1 Non-Qualified  Stock  Option  and  Stock  Grant  Plan,  dated  July 1, 1998
     included  as exhibit 6.3 to the Company's Form 10-SB dated August 24, 1998,
     and  incorporated  herein  by  reference.

10.2 Executive  Employment  Agreement  between  the  Company and Scott Gallagher
     dated  January  11,  2002 included as exhibit 10.1 to our Current Report on
     Form  8-K,  dated  February  11,  2002,  and  incorporated  herein  by this
     reference.

99.1 Certificate Pursuant to 18 USC Section 1350, as Adopted Pursuant to Section
     906 of the Sarbanes-Oxley Act of 2002

99.2 Certificate Pursuant to 18 USC Section 1350, as Adopted Pursuant to Section
     906 of the Sarbanes-Oxley Act of 2002

     (b) Reports on Form 8-K

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

     (c) Financial Statements and Schedules.

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


<PAGE>

                                    SIGNATURE
                                    ---------

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Registrant has caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized in Yardley,  Pennsylvania on
the 9th day of April, 2003.


                                FTS APPAREL, INC.


                            By: /s/ Scott Gallagher
                               -----------------------------------------------
                               Scott Gallagher, Chairman of the Board,
                               Chief Executive Officer, President and Director


                            By:  /s/ Linda Ehlen
                               ------------------------------------------------
                              Linda Ehlen, Chief Financial Officer and Principal
                              Accounting Officer

     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/ James H. Gilligan           Director                       April 9, 2003
------------------------
James H. Gilligan


/s/ Scott McBride               Director                       April 9, 2003
------------------------
Scott McBride


/s/ David R.  Rasmussen         Director                       April 9, 2003
------------------------
David R.  Rasmussen


<PAGE>







                                FTS Apparel, Inc.
                                Table of Contents

                                                               PAGE

Report of Independent Auditors                                    31

Balance Sheet                                                     32

Statements of Operations                                          33

Statement of Changes in Stockholders' Equity                      34

Statements of Cash Flows                                          35

Notes to Financial Statements                                     36
































<PAGE>



                         REPORT OF INDEPENDENT AUDITORS


Shareholders and Board of Directors
FTS Apparel, Inc.

We have  audited  the  accompanying  balance  sheet of FTS  Apparel,  Inc. as of
December  31,  2002,  and the  related  statements  of  operations,  changes  in
stockholders'  (deficit),  and cash flows for the years ended  December 31, 2001
and 2002.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of FTS  Apparel,  Inc. as of
December 31, 2002, and the results of its operations, and its cash flows for the
years ended December 31, 2001 and 2002, in conformity with accounting principles
generally accepted in the United States of America.

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


Stark Winter Schenkein & Co., LLP
Denver, Colorado
March 31, 2003
<PAGE>

                           FTS APPAREL, INC.
                             BALANCE SHEET
                           DECEMBER 31, 2002


<TABLE>
<CAPTION>
<S>                                                                         <C>



  ASSETS

CURRENT ASSETS
      Cash                                                                            $ 219
                                                                        --------------------

 PROPERTY AND EQUIPMENT, NET                                                          3,943
                                                                        --------------------

 OTHER ASSETS                                                                           900
                                                                        --------------------

                                                                                    $ 5,062
                                                                        ====================

                LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
      Accounts payable and accrued expenses                                        $ 58,219
      Accounts payable - related party                                               53,926
                                                                        --------------------
                 Total current liabilities                                          112,145
                                                                        --------------------

STOCKHOLDERS' (DEFICIT)
      10% Convertible preferred stock, Series A, $0.01 par value, 150,000 shares
        authorized, 50,000 shares issued
        and outstanding                                                              50,000
      Preferred stock, $0.01 par value, 4,850,000 undesignated
        shares authorized, none issued or outstanding.                                    -
      Common stock, $0.001 par value, 25,000,000 shares
        authorized, 15,530,240 shares issued
        and outstanding                                                              15,530
      Additional paid in capital                                                  4,956,942
       Deferred Compensation                                                        (60,000)
      Accumulated (deficit)                                                      (5,069,555)
                                                                        --------------------
                                                                                   (107,083)
                                                                        --------------------

                                                                                    $ 5,062
                                                                        ====================
</TABLE>

The notes to the financial statements are an integral part of these statements.

                                       2
<PAGE>


                             FTS APPAREL, INC.
                          STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>


                                                    YEAR ENDED         YEAR ENDED
                                                   DECEMBER 31,       DECEMBER 31,
                                                      2001                2002
<S>                                                     <C>                <C>
                                                 ----------------- -------------------
 REVENUES
       Sales of merchandise                             $ 568,953                 $ -
       Advertising and promotion income                     7,893                   -
                                                 ----------------- -------------------
                                                           576,846                   -
                                                 ----------------- -------------------

 COST OF GOODS SOLD                                       645,824                   -
                                                 ----------------- -------------------

 GROSS PROFIT (LOSS)                                      (68,978)                  -

 GENERAL AND ADMINISTRATIVE EXPENSES                    1,101,127             811,674
                                                 ----------------- -------------------

 (LOSS) FROM OPERATIONS                                (1,170,105)           (811,674)
                                                 ----------------- -------------------

OTHER INCOME (EXPENSE)
      Interest income                                       3,207                   -
      Interest expense                                     (1,256)             (4,233)
                                                 ----------------- -------------------

                                                            1,951              (4,233)
                                                 ----------------- -------------------


NET (LOSS)                                             (1,168,154)           (815,907)

PREFERRED DIVIDENDS                                             -                   -
                                                 ----------------- -------------------

NET (LOSS) APPLICABLE TO COMMON STOCK                $ (1,168,154)         $ (815,907)
                                                 ================= ===================

PER SHARE INFORMATION:

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
      (BASIC AND DILUTED)                               8,598,451          11,132,146
                                                 ================= ===================

NET (LOSS) PER COMMON SHARE (BASIC AND DILUTED)           $ (0.14)            $ (0.07)
                                                 ================== ===================

</TABLE>
The notes to the financial statements are an integral part of these statements.

                                       3
<PAGE>

                FTS APPAREL, INC.
        STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
      YEARS ENDED DECEMBER 31, 2001 AND 2002
<TABLE>
<CAPTION>

                                      Number of Number of                   Additional
                                     Preferred   Common   Preferred Common   Paid-in      Deferred
                                      Shares     Shares     Stock    Stock   Capital     Compensation
                                    --------- ---------- --------- -------- ----------- --------------
<S>                                                 <C>     <C>         <C>      <C>      <C>
Balance, December 31, 2000            50,000   7,721,229  $50,000  $ 7,721  $4,028,715   $           -

  Subscribed stock issued                  -     105,000        -      105        (105)
  Stock issued for services                -     819,722        -      820     225,852
  Net (loss) for the year
    ended December 31, 2001                -           -        -        -           -               -
                                    --------- ---------- --------- -------- ----------- --------------

Balance, December 31, 2001            50,000   8,645,951   50,000    8,646   4,254,462               -

   Stock issued pursuant to
     employment contract                   -   1,200,000        -    1,200     118,800       (120,000)
   Stock issued for services               -   2,648,749        -    2,649     271,651               -
   Stock issued for cash                   -     900,000        -      900      44,100               -
   Stock issued for settlement of lease    -   2,135,540        -    2,135     267,929               -
   Amortization of deferred compensation   -           -        -        -           -          60,000
   Net (loss) for the year ended
      December 31, 2002                    -           -        -        -           -               -
                                    --------- ---------- --------- -------- ----------- --------------

Balance, December 31, 2002            50,000  15,530,240  $50,000  $15,530  $4,956,942   $    (60,000)
                                    ========= ========== ========= ======== =========== ==============

                                                                     Total
                                                     Accumulated  Stockholders'
                                                     (Deficit)     (Deficit)
                                                    ------------  ------------
Balance, December 31, 2000                          $(3,085,494)  $ 1,000,942

  Subscribed stock issued
  Stock issued for services                             226,672
  Net (loss) for the year ended December 31, 2001    (1,168,154)   (1,168,154)
                                                    ------------  ------------

Balance, December 31, 2001                           (4,253,648)       59,460

   Stock issued pursuant to employment contract               -             -
   Stock issued for services                                  -       274,300
   Stock issued for cash                                      -        45,000
   Stock issued for settlement of lease                       -       270,064
   Amortization of deferred compensation                      -        60,000
   Net (loss) for the year ended December 31, 2002     (815,907)     (815,907)
                                                    ------------  ------------

Balance, December 31, 2002                          $(5,069,555)  $  (107,083)
                                                    ============  ============

</TABLE>
The notes to the financial statements are an integral part of these statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>

  FTS APPAREL, INC.
                   STATEMENTS OF CASH FLOWS



                                                                        YEAR ENDED               YEAR ENDED
                                                                         DECEMBER 31,             DECEMBER 31,
                                                                            2001                     2002
                                                                     --------------------     --------------------

<S>                                                                        <C>                        <C>

OPERATING ACTIVITIES
          Net (loss)                                                        $ (1,168,154)              $ (815,907)
          Adjustments to reconcile net (loss) to net cash
              (used in) operating activities:
                  Amortization and depreciation                                   32,822                      657
                  Stock issued or subscribed for services,
                     contracts, and trade agreements                             226,672                  604,364
                  Amortization of non-cash prepaid
                     expenses                                                    304,728                        -
                  Write-down of inventory                                        111,979                        -
                  Loss on sale of property and equipment                          (2,662)                       -
          Changes in:
              Accounts receivable                                                 89,165                        -
              Inventory                                                          176,718                        -
              Prepaid expenses                                                         -                   19,682
              Other assets                                                        11,782                     (900)
              Accounts payable and accrued expenses                              (66,799)                  56,118
              Accounts payable - related party                                     1,971                   51,569
                                                                     --------------------     --------------------
                  Net cash (used in) operating activities                       (281,778)                 (84,417)
                                                                     --------------------     --------------------

INVESTING ACTIVITIES
      Acquisition of fixed assets                                                      -                   (4,600)
                                                                     --------------------     --------------------
                  Net cash (used in) investing activities                              -                   (4,600)
                                                                     --------------------     --------------------

FINANCING ACTIVITIES
      Proceeds from issuance of common stock                                           -                   45,000
      Preferred dividends paid                                                    (1,411)                       -
                                                                     --------------------     --------------------
                      Net cash provided by (used in)
                        financing activities                                      (1,411)                   45,000
                                                                     --------------------     --------------------

                      Net (decrease) in cash                                    (283,189)                 (44,017)

CASH AT BEGINNING OF YEAR                                                        327,425                   44,236
                                                                     --------------------     --------------------

CASH AT END OF YEAR                                                             $ 44,236                    $ 219
                                                                     ====================     ====================

SUPPLEMENTAL CASH FLOW INFORMATION:
      Cash paid for:
          Interest                                                               $ 1,256                  $ 4,233
                                                                     ====================     ====================
          Income taxes                                                               $ -                      $ -
                                                                     ====================     ====================

SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NON-CASH FINANCING AND INVESTING ACTIVITIES

      Common stock issued for deferred compensation                                  $ -                $ 120,000
                                                                     ====================     ====================

</TABLE>
The notes to the financial statements are an integral part of these statements.

                                       5















                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

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

Effective  January 11, 2002,  the Company  experienced  a change in control,  in
which  the Board of  Directors  appointed  a new  Chairman  and Chief  Executive
Officer.  In connection  with the change in control,  the Company has decided to
explore opportunities outside of the apparel industry. However, the Company does
not anticipate abandoning their traditional business.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the  reporting  period.  Actual  results could differ  significantly  from those
estimates.

CASH AND CASH EQUIVALENTS

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

INVENTORY

Inventories  are stated at the lower of cost or market  using the  average  cost
method.  The  Company's  evaluates  the net  realizable  value of inventory on a
quarterly basis. For the year ending December 31, 2001, the Company has recorded
a loss on  write-down  of inventory  of  $111,979,  which is included in cost of
goods sold.

PROPERTY AND EQUIPMENT

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

                                       6
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002
FINANCIAL INSTRUMENTS

Fair value estimates  discussed herein are based upon certain market assumptions
and pertinent  information  available to management as of December 31, 2002. The
respective  carrying  value of certain  on-balance-sheet  financial  instruments
approximated  their fair values.  These financial  instruments  include cash and
accounts  payable and accrued  expenses.  Fair values are assumed to approximate
carrying values for these financial  instruments  because they are short term in
nature,  or are  receivable  or payable on demand,  and their  carrying  amounts
approximate fair value.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company  periodically  reviews the carrying  amount of  property,  plant and
equipment and its identifiable  intangible  assets to determine  whether current
events or  circumstances  warrant  adjustments to such carrying  amounts.  If an
impairment  adjustment is deemed necessary,  such loss is measured by the amount
that the carrying  value of such assets  exceeds their fair value.  Considerable
management  judgement  is  necessary  to  estimate  the fair  value  of  assets;
accordingly, actual results could vary significantly from such estimates. Assets
to be disposed of are carried at the lower of their financial statement carrying
amount or fair value less costs to sell.

REVENUE RECOGNITION

Net revenues from wholesale  product sales are  recognized  upon the transfer of
title and risk of ownership to  customers.  Allowances  for  estimated  returns,
discounts and doubtful  accounts are provided when sales are recorded.  Shipping
and handling costs are included in cost of sales.

The Company  recognizes  revenue from  advertising  and promotion  income as the
requisite services are provided.

SEGMENT INFORMATION

The Company follows Statement of Financial  Accounting  Standards  ("SFAS") 131,
"Disclosure  about Segments of an Enterprise and Related  Information".  Certain
information is disclosed,  per SFAS 131,  based on the way management  organizes
financial information for making operating decisions and assessing  performance.
The  Company  currently  operates  in one  business  segment  and will  evaluate
additional segment disclosure requirements if it expands operations.


                                       7
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002
NET LOSS PER COMMON SHARE

The Company  follows SFAS 128,  "Earnings Per Share".  Basic earnings (loss) per
common share  calculations  are  determined by dividing net income (loss) by the
weighted average number of shares of common stock  outstanding  during the year.
Diluted earnings (loss) per common share calculations are determined by dividing
net income (loss) by the weighted  average  number of common shares and dilutive
common  share  equivalents  outstanding.   During  the  periods  when  they  are
anti-dilutive,  common  stock  equivalents,  if any, are not  considered  in the
computation.

STOCK-BASED COMPENSATION

The Company  accounts for equity  instruments  issued to employees  for services
based on the fair value of the equity instruments issued and accounts for equity
instruments  issued  to other  than  employees  based  on the fair  value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable.

The Company  accounts for stock based  compensation in accordance with SFAS 123,
"Accounting  for  Stock-Based  Compensation."  The  provisions of SFAS 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 Accounting Principles
Board  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.

DEFERRED OFFERING COSTS

The Company defers costs  associated with the raising of capital until such time
as the offering is  completed,  at which time the costs are charged  against the
capital  raised.  Should the  offering  be  terminated  the costs are charged to
operations  during the period when the offering is  terminated.  During the year
ended  December  31,  2002 the  Company  charged an  aggregate  of  $141,000  to
operations  related to these costs for charges  incurred related to a terminated
offering.

RECENT PRONOUNCEMENTS

In December 2002, the Financial  Accounting Standards Board ("FASB") issued SFAS
148  "Accounting  for Stock-Based  Compensation--Transition  and  Disclosure--an
amendment of SFAS 123." SFAS 148 provides  alternative methods of transition for
a voluntary  change to the fair value based method of accounting for stock-based
employee  compensation  from the  intrinsic  value-based  method  of  accounting
prescribed  by APB 25. As  allowed  by SFAS 123,  the  Company  has  elected  to
continue  to apply  the  intrinsic  value-based  method of  accounting,  and has
adopted the disclosure  requirements of SFAS 123. The Company currently does not
anticipate adopting the provisions of SFAS 148.

                                       8
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

In July 2002, the FASB issued SFAS 146,  "Accounting  for Costs  Associated with
Exit or Disposal  Activities." SFAS 146 provides new guidance on the recognition
of costs  associated  with exit or disposal  activities.  The standard  requires
companies to recognize costs  associated  with exit or disposal  activities when
they are incurred  rather than at the date of  commitment to an exit or disposal
plan.  SFAS 146 supercedes  previous  accounting  guidance  provided by the EITF
Issue No. 94-3 "Liability  Recognition for Certain Employee Termination Benefits
and Other  Costs to Exit an  Activity  (including  Certain  Costs  Incurred in a
Restructuring)."  EITF Issue No. 94-3 required  recognition of costs at the date
of  commitment  to an  exit  or  disposal  plan.  SFAS  146  is  to  be  applied
prospectively to exit or disposal activities  initiated after December 31, 2002.
Early  application is permitted.  The adoption of SFAS 146 by the Company is not
expected to have a material impact on the Company's financial position,  results
of operations, or cash flows.

In April 2002, the FASB issued SFAS 145,  "Rescission of FASB  Statements No. 4,
44, and 64,  Amendment of FASB  Statement  No. 13, and  Technical  Corrections."
Among other things,  this statement  rescinds FASB  Statement No. 4,  "Reporting
Gains and Losses  from  Extinguishment  of Debt"  which  required  all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an  extraordinary  item, net of related income tax effect.  As a result,  the
criteria  in APB  Opinion  No.  30,  "Reporting  the  Results of  Operations  --
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions," will now be used to
classify  those  gains and  losses.  The  provisions  of SFAS 145 related to the
classification  of debt  extinguishment  are effective for years beginning after
May 15, 2002.  The adoption of SFAS 145 by the Company is not expected to have a
material impact on the Company's financial position,  results of operations,  or
cash flows.

In  November  2001,  the EITF of the  FASB  issued  EITF  01-9  "Accounting  for
Consideration  Given by a Vendor to a  Subscriber  (Including  a Reseller of the
Vendor's  Products)."  EITF 01-9 provides  guidance on when a sales incentive or
other consideration given should be a reduction of revenue or an expense and the
timing of such recognition.  The guidance provided in EITF 01-9 is effective for
financial  statements for interim or annual periods beginning after December 15,
2001. The adoption of EITF 01-9 by the Company did not have a material impact on
the Company's financial statements.


                                       9
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

In August 2001,  the FASB issued SFAS 144,  "Accounting  for the  Impairment  or
Disposal  of  Long-Lived   Assets."  SFAS  144  provides  new  guidance  on  the
recognition of impairment  losses on long-lived assets with definite lives to be
held and  used or to be  disposed  of and also  issued  the  definition  of what
constitutes  a  discontinued  operation  and how the  results of a  discontinued
operation  are to be measured and  presented.  SFAS 144 is effective  for fiscal
years beginning after December 15, 2001. The adoption of SFAS 144 did not have a
material impact on the Company's financial position,  results of operations,  or
cash flows.

In June  2001,  the FASB  issued  SFAS 143,  "Accounting  for  Asset  Retirement
Obligations."  SFAS 143  requires  the fair  value of a  liability  for an asset
retirement  obligation  to be  recognized in the period that it is incurred if a
reasonable  estimate of fair value can be made. The associated  asset retirement
costs are  capitalized as part of the carrying  amount of the long-lived  asset.
SFAS 143 is  effective  for fiscal  years  beginning  after June 15,  2002.  The
adoption of SFAS 143 is not expected to have a material  impact on the Company's
financial position, results of operations or cash flows.

In June 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible  Assets,"
which provides for  non-amortization of goodwill and intangible assets that have
indefinite useful lives, annual tests of impairments of those assets and interim
tests of  impairment  when an event occurs that more likely than not has reduced
the fair value of such assets.  The statement  also provides  specific  guidance
about how to determine and measure goodwill impairments, and requires additional
disclosure  of  information  about  goodwill and other  intangible  assets.  The
provisions  of this  statement  are required to be applied  starting with fiscal
years  beginning  after December 15, 2001, and applied to all goodwill and other
intangible assets recognized in the financial  statements at that date. Goodwill
and  intangible  assets  acquired  after  June 30,  2001 will be  subject to the
non-amortization provisions of the statement. Early application is permitted for
entities  with fiscal years  beginning  after March 15, 2001,  provided that the
first interim financial statements had not been issued previously. The Company's
adoption  of the  provisions  of SFAS 142 did not have a material  impact on the
Company's financial position, results of operations or cash flows.

In June  2001,  the FASB  issued  SFAS 141,  "Business  Combinations,"  which is
effective for all business combinations  initiated after June 30, 2001. SFAS 141
requires  companies to account for all business  combinations using the purchase
method of accounting,  recognize  intangible assets if certain criteria are met,
as well as provide additional  disclosures  regarding business  combinations and
allocation of purchase  price.  The adoption of SFAS 141 did not have a material
impact on the Company's financial position, results of operations or cash flows.


                                       10
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002
NOTE 2 - GOING CONCERN

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles, which contemplates continuation of the
Company as a going  concern.  However,  the  Company has  sustained  substantial
recurring  losses,  aggregating  $1,168,154  in 2001 and  $815,907  in 2002.  In
addition the Company has working capital and stockholders'  deficits of $111,926
and $107,083 at December 31, 2002 and has no revenue producing operations.

The  Company's  ability to continue as a going  concern is  contingent  upon its
ability to attain profitable  operations and obtain capital. The Company intends
to raise capital through the sale of equity  securities  and/or the solicitation
of short term financing. However, the Company has no firm commitments for either
the sale of equity securities or debt financing.

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

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

         Office equipment                                     $ 4,600
         Less: accumulated depreciation                           657
                                                            ---------
                                                              $ 3,943

During 2002 the Company entered into a lease  settlement  agreement (See Note 8)
in which all property and equipment  held at December 31, 2001,  with a net book
value of $19,682 was given to the  landlord as partial  satisfaction  of a lease
obligation.

Depreciation  expense for the years ended December 31, 2001 and 2002 was $30,063
and $657.

NOTE 4 - STOCKHOLDERS' (DEFICIT)

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


                                       11
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

During  January 2001,  the Company issued 782,222 shares of common stock related
to consulting services to be provided by the Chief Executive Officer.  The value
of the  consulting  services is  stipulated to be $220,000.  Per the  consulting
agreement, the shares were valued at 75% of the average bid and ask price of the
common stock on December 31, 2000,  which  approximates  the discount that would
have  been  applied  due to the  shares  being  restricted  per  Rule 144 of the
Securities Act of 1933.

During April 2001,  the Company issued 142,500 shares of common stock related to
a stock purchase agreement with the Chief Executive Officer in which the Company
agreed to issue 12,500  shares every month until a  Registration  Statement  was
filed. The parties agreed to delay the filing of the Registration  Statement and
that the total additional shares issued would be 142,500 shares (see Note 8). Of
the 142,500 shares issued during 2001,  105,000 were earned and subscribed as of
December 31, 2000. The remaining 37,500 shares were earned during the year ended
December 31, 2001.

During January 2002 the Company issued 1,200,000 shares of common stock pursuant
to the terms of an  employment  contract with its  president.  These shares were
valued at their fair market value on the date an agreement  was reached to issue
the shares of $120,000.  The shares have been recorded as deferred  compensation
and are being  amortized  over the term of the  employment  contract of 2 years.
During 2002 $60,000 was charged to operations.

During August and September  2002 the Company  issued  900,000  shares of common
stock for cash  aggregating  $45,000.  Of the shares issued  300,000 shares were
sold to a related  party at a discount  from fair market  value.  This  discount
aggregating  $18,000  has been  charged  to  operations  during  the year  ended
December 31, 2002.

During the year ended December 31, 2002 the Company issued  2,648,749  shares of
common stock valued at $256,300 for services.  These shares were valued at their
fair market value on the date an agreement was reached to issue the shares. This
charge to  operations  includes  $126,000  of costs  which had been  recorded as
deferred offering costs.

                                       12
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

During the year ended December 31, 2002 the Company issued  2,135,540  shares of
common  stock  valued at $270,064  related to a lease  settlement  (see Note 8).
These shares were valued at their fair market value on the date an agreement was
reached to issue the shares.

During September 2002 the Company filed a Form SB-2 Registration  Statement with
the Securities and Exchange  Commission to register  11,000,000 shares of common
stock.  In conjunction  with this  registration  statement the Company  incurred
offering costs including $15,000 paid in cash and $126,000 paid in common stock.
The Company  subsequently  withdrew the  registration  statement and charged the
$141,000 in offering costs to operations.

NOTE 5 - STOCK OPTIONS

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

The effect of applying  SFAS 123 on pro forma net (loss) as stated  below is not
necessarily  representative  of the  effects on reported  net income  (loss) for
future years due to, among other things, the vesting period of the stock options
and the fair value of additional  stock options in future years. The Company did
not grant any stock options during 2001 and 2002.

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

                                                  Number of        Weighted
                                                   Shares          Average
                                                                Exercise Price
                                              --------------- ----------------
          Outstanding at December 31, 2000      1,050,000       $      1.50
          Granted                                                         -
                                                        -
          Exercised                                                       -
                                                        -
          Forfeited                               452,000              1.50
                                               ------------     ------------
          Outstanding at December 31, 2001
           and 2002                               598,000       $      1.50
                                               ============     ============


                                       13
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

The following table summarizes information about fixed price stock options:

                                                      OUTSTANDING AND
                                                       EXERCISABLE
                                                 Weighted        Weighted
                                                 Average          Average
                                Number         Contractual        Exercise
    EXERCISE PRICES          OUTSTANDING          Life             PRICE
    ---------------          -----------          ----             -----
     $0.81 - $1.38                4,000      6.1 years              $1.14
     $1.50 - $2.75              594,000      6.7 years              $1.50

NOTE 6 - STOCK WARRANTS

The following details the warrants outstanding as of December 31, 2002:

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

The warrant was issued to the former Chief Executive Officer of the Company. The
Warrant  expires  on  April  19,  2010.  At  December  31, 2002, the Company had
reserved  1,036,000  shares  of  common  stock  for  stock  warrants.

NOTE 7 - INCOME TAXES

The Company  accounts  for income taxes under SFAS 109,  "Accounting  for Income
Taxes",  which  requires use of the  liability  method.  SFAS 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.

Reconciliation  of the Federal statutory income tax rate of 34% to the effective
rate is as follows:

          Federal statutory income tax rate                  34.00 %
          State taxes, net of federal benefit                 4.95 %
          Valuation allowance                               (38.95)%
                                                            ----------
                                                                 - %
                                                            ==========

                                       14
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

The tax effects of temporary differences and net operating losses that give rise
to significant portions of deferred tax assets and liabilities  consisted of the
following:

       Reconciling items:
       Net operating loss carryforward                      $       1,496,000
       Less valuation allowance                                    (1,496,000)
                                                            ------------------
       Net deferred tax asset                               $               -
                                                            ==================

The net operating  loss carry forward of  approximately  $4,400,000  will expire
through 2022.

The net change in valuation  allowance for the year ended  December 31, 2002 was
$270,000.

NOTE 8 - RELATED PARTY TRANSACTIONS

The  Company was the recipient of legal services from a shareholder. The Company
incurred expenses of $24,841 and $28,000 related to these services for the years
ended  December  31,  2001  and 2002 including the issuance of 100,000 shares of
common  stock  valued  at  its  fair  market  value  of  $18,000  in  2002.

On April 19, 2000,  the Company  issued  3,594,256  shares of common stock and a
stock warrant (See Note 6) in exchange for cash,  fixed assets,  office rent and
consulting  services.  The  agreement  also  required  the  Company  to  file  a
Registration  Statement  for the  shares  issued and to issue  12,500  shares of
common stock per month until the filing of a Registration Statement.  Subsequent
to the year ended  December 31, 2000,  the parties agreed to delay the filing of
the Registration  Statement and that the total additional shares issued would be
142,500 shares (see Note 4).

On January 5, 2002, the Company entered into a lease  settlement  agreement with
the former  President  whereby,  for forgiving a one-year  lease  obligation for
office space,  the former President  received the following,  with an aggregated
value of $91,901:  (i) all cash on hand at January 5, 2002,  (ii)  assignment of
all  equipment and inventory  remaining in the office,  (iii)  assignment of all
uncollected  accounts receivable as of January 5, 2002, (iv) issuance of 433,333
shares of common stock, (v) accrual of interest on the remaining  balance at the
rate of 12% per  annum,  and (vi) on June 5, 2002  settlement  of any  remaining
balance,  estimated at $27,983 in the form of common stock at an assigned  value
of $0.03 per share.  During 2002 the Company issued  2,135,540  shares of common
stock in relation to this  settlement  (see Note 4). The difference  between the
fair market value of the common  stock and the assigned  value was recorded as a
charge to operations.


                                       15
<PAGE>
                                FTS APPAREL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

During  January 2002 the Company  entered into an employment  agreement with its
president.  The  agreement  is for a period of 2 years and  provides  for a base
salary of  $100,000  per annum plus an annual  bonus of at least 25% of the base
salary. In addition,  the contract provided for the issuance of 1,200,000 shares
of common stock (see Note 4).  During 2002  certain  amounts due pursuant to the
employment  contract  were  paid by the  issuance  of  1,220,833  shares  of the
Company's  common stock valued its fair market value of $80,000 (see Note 4). At
December  31, 2002  $45,000 of unpaid  salary is included in accounts  payable -
related party.

NOTE 9 - SUBSEQUENT EVENTS

During February 2003 the Company completed a debenture  offering.  Pursuant to a
subscription  agreement with Dutchess Private Equities Fund, LP ("Dutchess") the
Company received  $212,500 from the sale of 6% secured  convertible  debentures.
The terms of the  debentures  provide for payment by February  14, 2007 with the
debentures being  convertible into the Company's common stock at any time at the
lesser of (i) 80% of the  average of the five lowest  closing bid prices  during
the 15 days prior to  conversion  or (ii) 100% of the average of the closing bid
prices for the 20 trading  days  immediately  preceding  the closing  date.  The
Company has agreed to register the shares  underlying  the  debentures on a From
SB-2  Registration  Statement.  In  addition,  in  exchange  for $12,500 in cash
Dutchess  agreed to return 250,000  shares of the Company's  common stock to the
Company which were purchased by Dutchess in August 2002.

During February 2003 the Company  entered into an asset purchase  agreement with
Simply Cellular,  Inc. whereby it acquired  substantially all of the assets of a
cellular service and accessories store for $70,000 in cash.

During  February  2003  the  Company  filed a Form  S-8  Registration  Statement
registering 1,900,000 shares of its common stock to be used a compensate certain
consultants for services to be provided to the Company.




<PAGE>