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



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FORM 10-K


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|    |  |                                                                                                                                 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------
|[X] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

OR

|      |  |                                                                                                                                
|----- |  | -------------------------------------------------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM      TO

COMMISSION FILE NUMBER: 000-29387

IPET HOLDINGS, INC.
(FORMERLY PETS.COM, INC.)

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) |  | 95-4730753
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

C/O DIABLO MANAGEMENT GROUP
2000 CROW CANYON PLACE, SUITE 270
SAN RAMON, CALIFORNIA 94583
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (925)-552-1299

(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK,
$0.00125 PAR VALUE PER SHARE

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

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

The number of shares of Common Stock, $.00125 par value, outstanding on January
18, 2001 (the effective date of filing of the Companys Certificate of
Dissolution with the Delaware Secretary of State) was 34,741,080 (assuming the
conversion of 1,143,895 shares of outstanding non-voting Series A Preferred
Stock into Common Stock).

DOCUMENTS INCORPORATED BY REFERENCE: Definitive Proxy Statement pursuant to
Schedule 14A of the Securities Exchange Act of 1934 (#000-29387) dated and
filed on December 28, 2000.

This Annual Report on Form 10-K contains forward-looking statements reflecting
managements current forecast of certain aspects of our future. It is based on
current information which we have assessed but which by its nature is dynamic
and subject to rapid and even abrupt changes. Forward looking statements
include statements regarding future financial results from the sale of assets
and settlement of liabilities, dissolution proceedings, and distribution of
proceeds to stockholders. The forward-looking statements are generally
accompanied by words such as plan, estimate, expect, believe, should,
would, could, anticipate or other words that convey uncertainty of future
events or outcomes. Our actual results could differ materially from those
stated or implied by our forward-looking statements due to risks and
uncertainties associated with the wind down of our business. These risks are
described throughout this Annual Report on Form 10-K, which you should read
carefully. We would particularly refer you to the Risk Factors section under
Item 1 of this Report for an extended discussion of the risks confronting our
company. The forward-looking statements in this Annual Report on Form 10-K
should be considered in the context of these risk factors.





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TABLE OF CONTENTS



|                  |                                                                                                |  |  |  |  |  |  | 
|----------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I           
|                  | ITEM 1. BUSINESS.                                                                             
|                  | ITEM 2. PROPERTIES.                                                                           
|                  | ITEM 3. LEGAL PROCEEDINGS.                                                                    
|                  | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                  
|PART II          
|                  | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.                
|                  | ITEM 6. SELECTED FINANCIAL DATA.                                                              
|                  | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|                  | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                          
|                  | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                          
|                  | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. 
|PART III         
|                  | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                                  
|                  | ITEM 11. EXECUTIVE COMPENSATION.                                                              
|                  | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.                      
|                  | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                                      
|PART IV          
|                  | ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.                     
|SIGNATURES       
|POWER OF ATTORNEY
|EXHIBIT INDEX    
|EXHIBIT 10.1     
|EXHIBIT 23.1     



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PART I




ITEM 1. BUSINESS.

COMPANY BACKGROUND

IPET Holdings, Inc., formerly Pets.com, Inc. (the Company), commenced
operations in February 1999 as an online retailer of pet products, integrating
product sales with expert information on pets and their care. On November 4,
2000, the Companys Board of Directors unanimously adopted a Plan of Complete
Liquidation and Dissolution of the Company. On January 16, 2001, our
stockholders approved the Plan of Complete Liquidation and Dissolution as well
as a proposal to change our name from Pets.com, Inc. to IPET Holdings, Inc. On
January 16, 2001, we filed with the Delaware Secretary of State an amendment to
our Certificate of Incorporation to effect the name change and a Certificate of
Dissolution which took effect on January 18, 2001. At the close of business on
January 18, 2001, we also closed our stock transfer books, discontinued
recording transfers of Common Stock, and our Common Stock was delisted from the
Nasdaq Stock Market. Thereafter, certificates representing our Common Stock
were no longer assignable or transferable on the books of the Company.
Accordingly, the proportionate interests of all of our stockholders are fixed
on the basis of their respective stock holdings at the close of business on
January 18, 2001, and any distributions made by the Company after this date
will be made solely to the stockholders of record at the close of business on
January 18, 2001.

In addition, all officers and directors of the Company resigned on January 16,
2001, effective immediately after the stockholder meeting. Richard G. Couch of
Diablo Management Group was retained by our former Board of Directors to act as
the sole Director and Chief Executive Officer, President, Chief Financial
Officer, Treasurer, and Secretary of the Company after this date. Diablo
Management Group currently handles all remaining affairs for IPET Holdings,
Inc., including the final disposition of our remaining assets and settlement of
outstanding creditor liabilities.

EMPLOYEES

Subsequent to the Special Meeting of Stockholders on January 16, 2001, all of
our employees resigned. We currently have no full-time employees, and engage
the services of Diablo Management Group on a part-time consulting basis to
handle the final disposition of our assets, settlement of our liabilities, our
dissolution and the distribution of remaining proceeds to our stockholders.

DISSOLUTION ACTIVITIES

We have vacated all facilities and terminated four of our five building leases
and are currently seeking to sublease our warehouse facility in Union City,
California. All of our inventory, furniture, computer equipment, and warehouse
equipment have been sold or otherwise disposed of. We have also completed the
sale of the Sock Puppet brand icon and most of our domain names, trademarks and
other intellectual property. The collection of our receivables has been
completed with the exception of $153,811 in royalty payments due from Fun4All
Corp. and $90,000 due from the sale of certain domain names to an individual.
Due to the uncertainty of collection, an allowance for doubtful
accounts in the amount of $243,811 has been provided for the combined
amount. We have settled the majority of our trade payables and we are working with the
remaining vendors to reduce our overall cash liabilities. There are a number of
tax filings that must be completed, with their related costs and potential
penalties and interest, to include up to $367,701 in business taxes due to the
City of San Francisco and approximately $8,000 in sales taxes due to the State
of Indiana.

On August 31, 2001, the Sole Director of the Company approved an initial return
of capital liquidating cash distribution to be paid out of net available assets
of $0.09 per share to the stockholders of record as of the Companys final
record date of January 18, 2001. On September 28, 2001, the Company paid this
first return of capital liquidating cash distribution to the stockholders of
record. The Company expects to make subsequent distributions, as appropriate,
during the course of the wind-down period as non-cash assets are converted to
cash and liabilities are settled. At the conclusion of the calendar year, each
stockholder of record, other than corporations and certain other entities, who
had been paid $600 or more in liquidating proceeds during the year was
furnished with a U.S. Department of the Treasury, Internal Revenue Service,
Form 1099. Each stockholder should seek professional tax advice regarding the
treatment of the return of capital liquidating cash distribution on his or her
individual income tax returns. At this time it is unclear exactly when, how
large or if any subsequent distributions to the stockholders can be made. It is
important that we resolve any tax
liabilities, complete the termination of our remaining building lease and make
sure that all other potential liabilities have been resolved before we can
announce or make any further distributions to our stockholders.

SHARE REINSTATEMENT

On November 6, 2001, the Company discovered that U.S. Stock Transfer
Corporation, the Companys former transfer agent, had inadvertently cancelled
524,375 shares of the Companys common stock that U.S. Stock Transfer
Corporation was holding in escrow for PLDC, Inc. (f/k/a Petstore.com, Inc.). On
November 12, 2001, U.S. Stock reinstated these shares and the Companys number
of common shares and common share equivalents outstanding was revised from
34,216,705 to 34,741,080.

RISK FACTORS

This Annual Report on Form 10-K contains certain forward looking statements,
including statements concerning the Companys future financial results from the
sale of assets and settlement of liabilities, dissolution proceedings, and
distribution of proceeds to stockholders. Some remaining assets of the Company
may be difficult for us to convert into cash, and we can make no assurance that
we will receive

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any material amounts in respect of such assets. No assurance can be given that
the amount to be received in liquidation will equal or exceed the price or
prices at which the Common Stock traded prior to our dissolution. In addition,
you should keep in mind that the risks described below are not the only risks
that we face. The risks described below are the risks that we currently believe
are material to the Company. However, additional risks not presently known to
us, or risks that we currently believe are immaterial, may also impair our
ability to distribute proceeds to our stockholders. You should also refer to
the other information set forth in this Annual Report on Form 10-K, including
the discussions set forth in Managements Discussion and Analysis of Financial
Condition and Results of Operations and Business, as well as our financial
statements and the related notes.

Our business, financial condition or results could be adversely affected by any
of the following risks. If we are adversely affected by such risks, then the
proceeds we plan to distribute to our stockholders may be adversely affected.

STOCKHOLDERS MAY BE LIABLE TO CREDITORS OF THE COMPANY FOR UP TO AMOUNTS
RECEIVED FROM THE COMPANY IF THE COMPANYS RESERVES ARE INADEQUATE.

A Certificate of Dissolution was filed with the State of Delaware and became
effective as of January 18, 2001, dissolving the Company as of that date.
Pursuant to the Delaware General Corporation Law, the Company will continue to
exist for three years after the dissolution became effective or for such longer
period as the Delaware Court of Chancery shall direct, for the purpose of
prosecuting and defending suits against it and enabling the Company gradually
to close its business, to dispose of its property, to discharge its liabilities
and to distribute to its stockholders any remaining assets. Under the Delaware
General Corporation Law, in the event the Company fails to create an adequate
contingency reserve for payment of its expenses and liabilities during this
three-year period, each stockholder could be held liable for payment to the
Companys creditors for such stockholders pro rata share of amounts owed to
creditors in excess of the contingency reserve. The liability of any
stockholder would be limited, however, to the amounts previously received by
such stockholder from the Company (and from any liquidating trust or trusts).
Accordingly, in such event a stockholder could be required to return all
distributions previously made to such stockholder. In such event, a stockholder
could receive nothing from the Company under the Plan of Complete Liquidation
and Dissolution. Moreover, in the event a stockholder has paid taxes on amounts
previously received, a repayment of all or a portion of such amount could
result in a stockholder incurring a net tax cost if the stockholders repayment
of an amount previously distributed does not cause a commensurate reduction in
taxes payable. There can be no assurance that the contingency reserve
maintained by the Company will be adequate to cover any expenses and
liabilities.

SHARES OF OUR SERIES A PREFERRED STOCK WILL BE ENTITLED TO SHARE ON A PRO-RATA
BASIS IN ANY DISTRIBUTION OF FUNDS MADE TO HOLDERS OF OUR COMMON STOCK.

Pursuant to our Certificate of Designation of Rights, Preferences and
Privileges of Series A Preferred Stock filed with the Secretary of State of
Delaware on July 6, 2000, the 1,143,895 outstanding shares of our Series A
Preferred Stock will be entitled to share on a pro-rata basis in the general
distribution of proceeds remaining from the sale of our assets to be made to
all Common stockholders, as if their shares of Series A Preferred Stock have
been converted to an equal number of shares of Common Stock.

SUCCESS OF THE PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION DEPENDS ON
QUALIFIED PERSONNEL TO EXECUTE IT.

The success of the Plan of Complete Liquidation and Dissolution depends in
large part upon our ability to retain the services of qualified personnel to
handle the sale of our remaining assets and settlement of remaining
liabilities. Although we have retained the services of Diablo Management Group
for this purpose, the retention of qualified personnel is particularly
difficult under the Companys current circumstances.

OUR STOCK TRANSFER BOOKS WERE CLOSED ON JANUARY 18, 2001, THE FINAL RECORD
DATE, AFTER WHICH ANY TRADES WILL NOT BE RECORDED BY THE COMPANY.

We closed our stock transfer books and discontinued recording transfers of
Common Stock at the close of business on January 18, 2001, the date of
effectiveness of the Certificate of Dissolution we filed with the Delaware
Secretary of State. Thereafter, certificates representing the Common Stock are
not assignable or transferable on our books except by will, intestate
succession or operation of law. The proportionate interests of all of our
stockholders was fixed on the basis of their respective stock holdings at the
close of business on the final record date of January 18, 2001, and any
distributions made by the Company will be made solely to the stockholders of
record at the close of business on the final record date, except as may be
necessary to reflect subsequent transfers recorded on our books as a result of
any assignments by will, intestate succession or operation of law. For any
other trades after the January 18, 2001 final record date, the seller and
purchaser of the stock will need to negotiate and rely on due-bill
contractual obligations between themselves with respect to the allocation of
stockholder proceeds arising from ownership of the shares.

OUR STOCK WAS DELISTED FROM THE NASDAQ STOCK MARKET ON JANUARY 18, 2001 AND IS
SIGNIFICANTLY LESS LIQUID THAN BEFORE.

Our stock was delisted from trading on the Nasdaq Stock Market on January 18,
2001 due to its filing of a Certificate of Dissolution with the State of
Delaware. After this delisting, the ability of stockholders to buy and sell our
shares has been materially impaired, and is limited primarily to
over-the-counter quotation services, such as Pink Sheets, that handle high-risk
ventures and are not regulated by the Securities and Exchange Commission.

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AFTER THE COMPANYS WIND-DOWN THERE MAY BE NO ADDITIONAL CASH TO DISTRIBUTE TO
OUR STOCKHOLDERS AND IF THERE IS ADDITIONAL CASH TO DISTRIBUTE, THE TIMING OF
ANY SUCH FUTURE DISTRIBUTION IS UNCERTAIN.

There is currently no firm timetable for the distribution of proceeds to our
stockholders, because of contingencies inherent in winding up the Companys
business. The liquidation is expected to be concluded prior to the third
anniversary of the filing of the Certificate of Dissolution in Delaware by a
final liquidating distribution either directly to the stockholders or to a
liquidating trust. The proportionate interests of all of our stockholders was
fixed on the basis of their respective stock holdings at the close of business
on the final record date of January 18, 2001, and any future distributions made
by the Company will be made solely to stockholders of record on the close of
business on January 18, 2001, except to reflect permitted transfers. We are,
however, currently unable to predict the precise nature, amount or timing of
any future distribution to stockholders. The actual nature, amount and timing
of all distributions will be determined by our Board of Directors, in its sole
discretion, and will depend in part upon our ability to resolve our remaining
contingencies.

Uncertainties as to the precise net value of our non-cash assets and the
ultimate amount of our liabilities make it impracticable to predict the
aggregate net value ultimately distributable to stockholders. Claims,
liabilities and expenses from operations (including costs associated with
Diablo Management Groups efforts to sell our remaining assets and settle our
remaining liabilities, taxes, legal and accounting fees and miscellaneous
office expenses) will continue to be incurred. These expenses will reduce the
amount of cash available for ultimate distribution to stockholders. However, no
assurances can be given that available cash and amounts received on the sale of
assets will be adequate to provide for our obligations, liabilities, expenses
and claims and to make cash distributions to stockholders. If such available
cash and amounts received from the sale of assets are not adequate to provide
for our obligations, liabilities, expenses and claims, we may not be able to
distribute meaningful cash, or any cash, to our stockholders.

OUR INABILITY TO REACH CASH BREAK-EVEN AND OUR RESULTING DISSOLUTION COULD GIVE
RISE TO SECURITIES CLASS ACTION CLAIMS AGAINST US, WHICH COULD DEPLETE THE
PROCEEDS THAT ARE TO BE DISTRIBUTED TO STOCKHOLDERS.

Securities class action claims have been brought against companies in the past
where the market price of the companys securities has fallen due to an
inability of the company to achieve operational profitability. Any such
litigation could be very costly and divert our remaining resources from being
available for distribution to our stockholders. Any adverse determination in
this kind of litigation could also deplete our cash position, and reduce
proceeds that would otherwise be distributed to our stockholders.

THE PROCEEDS FROM THE SALE OF OUR ASSETS MAY BE LESS THAN ANTICIPATED.

Sales of our remaining assets will be made on such terms as are approved by the
Board of Directors and may be conducted by competitive bidding, public sales or
privately negotiated sales. The prices at which we will be able to sell these
assets will depend largely on factors beyond our control, including, without
limitation, the condition of financial markets, the availability of financing
to prospective purchasers of the assets, United States and foreign regulatory
approvals, public market perceptions, and limitations on transferability of
certain assets. Because some of our remaining assets, particularly intellectual
property assets, may decline in value over time, we may not be able to
consummate the sale of these assets in time to generate meaningful value. In
addition, we may not obtain as high a price for a particular asset as we might
secure if we were not in liquidation.

WE MAY BE UNABLE TO NEGOTIATE SETTLEMENTS WITH RESPECT TO OUR REMAINING
LIABILITIES.

We are currently in the process of negotiating settlements with respect to our
remaining obligations and liabilities which include without limitation building
and facilities leases and tax obligations. If we are unable to
successfully negotiate termination of these obligations, we will have fewer
cash proceeds to distribute to our stockholders.

WE WILL CONTINUE TO INCUR THE EXPENSE OF COMPLYING WITH PUBLIC COMPANY
REPORTING REQUIREMENTS.

We have an obligation to continue to comply with the applicable reporting
requirements of the Securities Exchange Act of 1934, as amended, even though
compliance with such reporting requirements is economically burdensome. In
order to curtail expenses, after filing our Certificate of Dissolution we
sought relief from the Securities and Exchange Commission from the reporting
requirements under the Exchange Act. Until such relief is granted we will
continue to make obligatory Exchange Act filings. We anticipate that even if
such relief is granted in the future, we will continue to file current reports
on Form 8-K to disclose material events relating to our liquidation and
dissolution along with any other reports that the Securities and Exchange
Commission may require.

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ITEM 2. PROPERTIES.

We currently are headquartered in the offices of Diablo Management Group in San
Ramon, California. In addition, we had a lease for approximately 40,410 square
feet of office space in San Francisco, California, which lease terminated in
January 2001. In connection with this lease we made coverage payments through
April 2001. We have a second lease for approximately 143,000 square feet of
warehouse space in Union City, California and are actively working with the
landlord to either terminate the lease or sublease the property.




ITEM 3. LEGAL PROCEEDINGS.

In connection with a contractual dispute concerning the Companys sublease of
certain space in its Union City warehouse, on August 31, 2001 we have filed an
action against our landlord in the Superior Court of California for Alameda
County for breach of contract, specific performance and seeking declaratory
relief. The first amended complaint additionally alleged that the landlord breached the
sublease by failing and refusing to remove a condition of default relating to
claimed repairs to the premises. The second amended complaint added
additional facts to support the allegations. The third amended
complaint additionally alleged that the landlord trespassed on the Companys
space, and constructively, or alternatively, partially evicted the Company by
occupying the Companys space without the Companys consent. National
Distribution Agency has not yet responded to this complaint; and, no trial date
has been set. We are prosecuting this action and intend to pursue the Companys
rights in this matter. The Company is also considering filing collection suits
in connection with the collection of $153,811 in royalty payments remaining due
from Fun4All Corp. and $90,000 remaining due from the sale of certain domain
names to an individual. Due to the uncertainty of collection, an
allowance for doubtful accounts in the amount of $243,811 has been
provided for the combined amount. In addition, it is possible that we may become a party
to various legal proceeding arising from the settlement of our outstanding
liabilities.




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

No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of 2001.




PART II




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

(a)  Market Information and Dividends.

From February 11, 2000, the date of our initial public offering, to January 18,
2001, the date of our Nasdaq Stock Market delisting, our common stock was
traded on the Nasdaq Stock Market under the symbol IPET. The following table
sets forth, for the periods indicated, the high and low sales prices per share
of our common stock as reported on the Nasdaq Stock Market:

|                                     |  |      |       |     |  |   |      | 
|------------------------------------ |  | ---- | ----- | --- |  | - | ---- | 
|YEAR ENDED 2000                      |  | HIGH |       | LOW
|                                     |  |      |       |    
|1st Quarter (from February 11, 2000) |  | $    | 14.00 |     |  | $ | 3.88 | 
|2nd Quarter                          |  | $    | 4.63  |     |  | $ | 1.88 | 
|3rd Quarter                          |  | $    | 2.44  |     |  | $ | 0.59 | 
|4th Quarter                          |  | $    | 0.81  |     |  | $ | 0.06 | 

The closing price of our common stock on January 18, 2001 was $0.125. Our stock
has subsequently continued to trade under the symbol IPETZ through
over-the-counter quotation services, such as Pink Sheets, that handle high-risk
ventures and are not regulated by the Securities and Exchange Commission. The
following table sets forth, for the periods indicated, the high and low sales
prices per share of our common stock as reported by the over-the-counter
quotation service (note: such prices reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent
actual transactions):

|                |  |      |       |     |  |   |       | 
|--------------- |  | ---- | ----- | --- |  | - | ----- | 
|YEAR ENDED 2001 |  | HIGH |       | LOW
|                |  |      |       |    
|1st Quarter     |  | $    | 0.200 |     |  | $ | 0.047 | 
|2nd Quarter     |  | $    | 0.150 |     |  | $ | 0.078 | 
|3rd Quarter     |  | $    | 0.170 |     |  | $ | 0.140 | 
|4th Quarter     |  | $    | 0.090 |     |  | $ | 0.007 | 

On January 18, 2001, the date we closed our stock transfer books, there were
approximately 251 holders of record of our common stock. This figure does not
reflect more than 11,000 beneficial stockholders whose shares are held in
nominee names.

During the fiscal year we did not pay any dividends. Our intent prior to our
dissolution was to retain future earnings to finance the growth and development
of our business. On August 31, 2001, the Sole Director of the Company approved an initial return
of capital liquidating cash distribution to be paid out of net available assets of $0.09 per share
to the stockholders of record as of the Company's final record date of January 18, 2001. On
September 28, 2001, the Company paid this first return of capital liquidating cash distribution
to the stockholders of record. The Company expects to make subsequent distributions, as appropriate,
during the course of the wind-down period as non-cash assets are converted to cash and liabilities
are settled.

(b)  Use of Proceeds From Sale of Registered Securities

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On February 16, 2000, we closed our initial public offering of Common Stock,
$0.00125 par value. The managing underwriters in the offering were Merrill
Lynch & Co., Bear Stearns & Co. Inc., Thomas Weisel Partners LLC, and Warburg
Dillon Read LLC (the Underwriters). The shares of Common Stock sold in the
offering were registered under the Securities Act of 1933, as amended (the
Act) on a Registration Statement on Form S-1 (the Registration Statement)
(Reg. No. 333-92433) that was declared effective by the SEC on February 11,
2000. The offering commenced on February 11, 2000 and ended on February 16,
2000, on which date 7,500,000 shares of Common Stock registered under the
Registration Statement were sold at a price of $11.00 per share. The aggregate
price of the offering amount registered and sold was $82,500,000. In connection
with the offering, we paid an aggregate of $5,775,000 in underwriting discounts
and commissions to the Underwriters and the aggregate proceeds to the Company
were approximately $75.3 million after deducting estimated offering expenses of
$1.4 million. We used the net proceeds primarily for working capital and
general corporate purposes, including marketing expenses to build brand
awareness, purchases of inventory, expansion of our sales and marketing
organization, development of our distribution capabilities, expansion of our
customer base, and expenses incurred in connection with our requisition of
certain assets and partnerships of PetStore.com, Inc. In addition,
approximately $1.4 million was paid to ten corporate officers in the form of
retention bonuses, and another $1.4 million was paid to such officers as
severance.




ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth our audited liquidating activities for the year
ended December 31, 2001 and the period from November 5 to
December 31, 2000. This information has been derived from our audited
financials statements and in the opinion of management includes all
adjustments, consisting of normal recurring adjustments necessary for a fair
presentation of such information in accordance with generally accepted
accounting principles for a company in voluntary liquidation.

IPET HOLDINGS, INC.
(FORMERLY PETS.COM, INC.)
STATEMENTS OF LIQUIDATING ACTIVITIES (in thousands)
FOR THE YEAR ENDED DECEMBER 31, 2001 AND THE PERIOD FROM
NOVEMBER 5, 2000 TO DECEMBER 31, 2000

|                            |                                                                                                                     |  |                               |                                  |   |        |     |        |   |        |       | 
|--------------------------- | ------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | -------------------------------- | - | ------ | --- | ------ | - | ------ | ----- | 
|                            |                                                                                                                     |  |                               |                                  |   | 2001   |     | 2000  
|                            |                                                                                                                     |  |                               |                                  |   |        |     |       
|ADDITIONAL SOURCES OF CASH: |                                                                                                                     |  |                               |                                  |   |        |     |       
|                            | Recovery from sale of Sock Puppet icon                                                                              |  | $                             | 125                              |   |        | $   |       |  
|                            | Earnings on cash and cash equivalents                                                                               |  |                               | 313                              |   |        |     | 21     |  
|                            | Recoveries from sale of fixed assets                                                                                |  |                               |                                 |   |        |     | 2,558  |  
|                            | Recoveries from sale of inventory                                                                                   |  |                               |                                 |   |        |     | 703    |  
|                            | Recovery from lease buyout                                                                                          |  |                               |                                 |   |        |     | 400    |  
|                            | License revenue and other                                                                                           |  |                               |                                 |   |        |     | 113    |  
|                            |                                                                                                                     |  |                               |                                  |   |        |     |       
|                            |                                                                                                                     |  |                               | Total sources of additional cash |   |        | 438 |        |   |        | 3,795 | 
|                            |                                                                                                                     |  |                               |                                  |   |        |     |       
|ADDITIONAL USES OF CASH     |                                                                                                                     |  |                               |                                  |   |        |     |       
|                            | Payments on leases not yet terminated on former operating facilities                                                |  |                               | (1,045                           | ) |        |     | (893   | )
|                            | Outside services during liquidation period                                                                          |  |                               | (927                             | ) |        |     | (278   | )
|                            | Insurance paid for directors and officers                                                                           |  |                               | (783                             | ) |        |     |       |  
|                            | Payment of assessed exterior and interior repairs on leased property                                                |  |                               | (233                             | ) |        |     |       |  
|                            | Other expenses during liquidation period                                                                            |  |                               | (268                             | ) |        |     |       |  
|                            | Retention Bonuses, severance and other compensation incurred
as a result of liquidation and termination of services |  |                               |                                 |   |        |     | (4,196 | )
|                            | Regular compensation during liquidation period                                                                      |  |                               |                                 |   |        |     | (1,331 | )
|                            | Settlement of advertising and cross-marketing agreement                                                             |  |                               |                                 |   |        |     | (400   | )
|                            | Distribution of cash to stockholders                                                                                |  |                               | (3,128                           | ) |        |     |       |  
|                            |                                                                                                                     |  |                               |                                  |   |        |     |       
|                            |                                                                                                                     |  | Total uses of additional cash |                                  |   | (6,384 | )   |        |   | (7,098 | )    
|                            |                                                                                                                     |  |                               |                                  |   |        |     |       
|OTHER INCOME AND EXPENSE:   |                                                                                                                     |  |                               |                                  |   |        |     |       
|                            | Settlements of accounts payable                                                                                     |  | $                             | 408                              |   |        | $   | 431    |  
|                            | Recoveries, net of expenses of $81                                                                                  |  |                               | 92                               |   |        |     |       |  

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|                                                 |                                                     |                                                         |                                |   |   |      |         |         |        |         |   | 
|------------------------------------------------ | --------------------------------------------------- | ------------------------------------------------------- | ------------------------------ | - | - | ---- | ------- | ------- | ------ | ------- | - | 
|                                                 |                                                     |                                                         |                                |   |   | 2001 |         | 2000   
|                                                 |                                                     |                                                         |                                |   |   |      |         |        
|                                                 | Reduction in liability to related party             |                                                         |                                |  |   |      |         | 695     |       
|                                                 | Net book value of fixed assets disposed             |                                                         |                                |  |   |      |         | (18,867 | )     
|                                                 | Recovery of 5,243,752 common shares in exchange for |                                                         |                                |   |   |      |         |         |       
|                                                 |                                                     | settlement of advertising and cross-marketing agreement |                                |   |  |      |         |         | (8,099 | )      
|                                                 | Write off of prepaid advertising                    |                                                         |                                |  |   |      |         | (6,991  | )     
|                                                 | Cost of inventories disposed                        |                                                         |                                |  |   |      |         | (4,812  | )     
|                                                 | Write off of investment in PetPlace.com, Inc.       |                                                         |                                |  |   |      |         | (3,585  | )     
|                                                 | Write off of investment in PetsPark.com, Ltd.       |                                                         |                                |  |   |      |         | (2,073  | )     
|                                                 | Write off of other prepaid expenses                 |                                                         |                                |  |   |      |         | (2,513  | )     
|                                                 |                                                     |                                                         |                                |   |   |      |         |        
|                                                 |                                                     |                                                         | Total other income and expense |   |   | 500  |         |         |        | (45,814 | )
|                                                 |                                                     |                                                         |                                |   |   |      |         |        
|Decrease in net assets in liquidation            |                                                     |                                                         | (5,446                         | ) |   |      | (49,117 | )      
|Net assets in liquidation at beginning of period |                                                     |                                                         | 9,629                          |   |   |      | 58,746  |        
|                                                 |                                                     |                                                         |                                |   |   |      |         |        
|Net assets in liquidation at end of period       |                                                     | $                                                       | 4,183                          |   |   | $    | 9,629   |        
|                                                 |                                                     |                                                         |                                |   |   |      |         |        




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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This discussion contains forward-looking statements. These statements relate to
future events or our future financial performance including, by way of example,
statements concerning the effective liquidation of the companys assets, the
orderly wind down of the company, the settlement of all creditor and other
claims against the company, or the distribution of any cash or other assets to
stockholders. In some cases, you can identify forward-looking statements by
terminology such as may, will, should, expect, plan, intend, anticipate,
believe, estimate, predict, potential or continue, the negative of such terms
or other comparable terminology. These statements are only predictions. Actual
events or results may differ materially. In evaluating these statements, you
should consider various factors, including the risks outlined under the Risk
Factors section under Item 1 of this report, our Registration Statement on
Form S-1 relating to our initial public offering filed with the Securities and
Exchange Commission on February 10, 2000 (File No. 333-92433), and in our
periodic reports filed from time to time with the Securities and Exchange
Commission. These factors may cause our actual results to differ materially
from any forward-looking statement.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, the effective
liquidation of the companys assets, the orderly wind down of the company, the
settlement of all creditor and other claims against the company, or the
distribution of any cash or other assets to stockholders levels of activity,
performance or achievements. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of the forward looking
statements after the date of this Annual Report on Form 10-K to conform such
statements to actual results or to changes in our expectations.

OVERVIEW

On November 4, 2000, the board of directors of IPET Holdings, Inc. (formerly
Pets.com, Inc.) approved an orderly winding down and cessation of the Companys
operations and liquidation of the Companys assets and settlement of the
Companys liabilities pursuant to the Plan of Complete Liquidation and
Dissolution. Until November 4, 2000, the Company was engaged in the sale, over
the Internet, of pet products, services, and information primarily in the
United States. Based upon the Boards approval of the Plan of Complete
Liquidation and Dissolution, the company changed its basis of accounting for
periods subsequent to November 4, 2000, from the going concern to the
liquidation basis.

DISSOLUTION

On January 16, 2001, our stockholders approved the Plan of Complete Liquidation
and Dissolution as well as a proposal to change our name from Pets.com, Inc. to
IPET Holdings, Inc. On January 16, 2001, we filed with the Delaware Secretary
of State an amendment to our Certificate of Incorporation to effect the name
change and we filed a Certificate of Dissolution that took effect on January
18, 2001. At the close of business on January 18, 2001, we closed our stock
transfer books, discontinued recording transfers of Common Stock, and our
Common Stock was delisted from the Nasdaq Stock Market. Thereafter,
certificates representing our Common Stock were no longer assignable or
transferable on the books of the Company. Accordingly, the proportionate
interests of all of our stockholders are fixed on the basis of their respective
stock holdings at the close of business on January 18, 2001, and any
distributions made by the Company after this date will be made solely to the
stockholders of record at the close of business on January 18, 2001.

In addition, all officers and directors of the Company resigned on January 16,
2001, effective immediately after the stockholder meeting. Richard G. Couch of
Diablo Management Group was retained by our former Board of Directors to act as
the sole Director and Chief

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Executive Officer, President, Chief Financial Officer, Treasurer, and Secretary
for the Company after this date. Diablo Management Group currently handles all
remaining affairs for IPET Holdings, Inc., including the final disposition of
our remaining assets and settlement of outstanding liabilities.

ACTIVITIES WHILE IN LIQUIDATION

In order to complete the liquidation process, new management conducted an
updated and comprehensive analysis of the Companys potential asset recoveries
and prepared a detailed settlement schedule of all claims, obligations and
expenses owing to the Companys creditors. During 2001, IPET Holdings (i)
negotiated the release of certificates of deposit, in the aggregate amount of
$1,466,000, that had been securing stand-by letters of credit furnished as
collateral for leases and a credit card processing arrangement; (ii) collected
receivables from the sale of inventory, fixtures, equipment, lease termination
residual, URL domain names and other intangible assets in the amount of
$1,215,000; (iii) collected $125,000 for the assignment to Hakan Enterprises,
Inc. of all of its rights in and to the Sock Puppet brand icon; (iv) settled
trade accounts payable to vendors, net of settlement concessions and
recoveries, in the amount of $1,559,000; (v) terminated and paid the remaining
33 employees an amount of $762,000; (vi) paid liability insurance for directors
and officers in the amount of $783,000; and, (vii) arranged for completion of
the operating and liquidation-period accounting and stockholder reporting in
order to be in compliance with various regulatory agency requirements. During
2001, successful creditor negotiations resulted in the reduction of our
accounts payable obligation for the years 2000 and 2001 by approximately
$839,000.

The collection of our receivables has been completed with the exception of
$153,811 in royalty payments due from Fun4All Corp. and $90,000 due from the
sale of certain domain names to an individual. Due to the uncertainty
of collection, an allowance for doubtful accounts in the amount of
$243,811 has been provided for the combined amount. We have settled our trade
payables but continue to receive apparently inadvertent invoices from former
suppliers who have released their claims against us. We are working to resolve
all such apparently inadvertent invoices. There are a number of tax filings
that must be completed, with their related costs and potential penalties and
interest, to include up to $367,701 in business taxes due to the City of San
Francisco and approximately $8,000 in sales taxes due to the State of Indiana.

On August 31, 2001, the sole director of the Company approved an initial cash
distribution to be paid from net available assets in the amount of $0.09 per
share to stockholders of record holding an aggregate of 34,741,080 shares of
the Companys common stock on the January 18, 2001 final record date. The
Company distributed the cash payments to the stockholders of record on
September 28, 2001. The Company expects to make subsequent distributions, as
appropriate, during the course of the wind-down period as non-cash assets are
converted to cash and liabilities are settled. However, there can be no
assurance that the Company will be able to complete the Plan of Complete
Liquidation and Dissolution as originally contemplated, settle with its
creditors, successfully terminate its one remaining lease, pay its professional
advisors and other ongoing costs, or otherwise execute the Plan of Complete
Liquidation and Dissolution. If it is unable to successfully reach settlements
with all of its creditors or terminate the remaining operating lease, the
Company may be forced to seek protection from creditors under federal
bankruptcy law or may become subject to an involuntary bankruptcy proceeding.
In such event, further distributions to the Companys stockholders may depend
upon the completion of all such proceedings, one or more rulings by a
bankruptcy trustee and/or further court proceedings.

UNION CITY LEASE

In July 1999, the Company established a distribution center in Union City,
California, and leased a warehouse comprised of approximately 143,000 square
feet for a period of five years. The Union City warehouse lease calls for
minimum monthly rent payments of approximately $60,000 through August 4, 2004,
plus annual base-rent increases of up to 6%. As of December 31, 2001, the
remaining minimum lease payments totaling $1,975,000 ($2,791,000 as of December
31, 2000) have not been recorded as a liability on the Companys statement of
net assets in liquidation because of the uncertainty of the amount which will
ultimately be due. Since assuming management of the Company on January 12,
2001, Diablo Management Group engaged qualified professionals to aggressively
market the warehouse and has been actively negotiating with the landlord,
National Distribution Agency, Inc. regarding relief from the terms of the
lease.

In connection with a contractual dispute concerning the Companys sublease of
certain space in its Union City warehouse, on August 31, 2001, the Company
filed a complaint against its landlord, National Distribution Agency, in the
Superior Court of California for Alameda County for breach of contract,
specific performance and seeking declaratory relief. The first amended
complaint additionally alleged that the landlord breached the sublease by failing and
refusing to remove a condition of default relating to claimed repairs to the
premises. The second amended complaint added additional facts to support the allegations. The third amended complaint
additionally alleged that the landlord trespassed on the Companys space, and
constructively, or alternatively, partially evicted the Company by occupying
the Companys space without the Companys consent. National Distribution Agency
has not yet responded to this complaint; and, no trial date has been set. We
are prosecuting this action and intend to pursue the Companys rights in this
matter.

If the Company were to determine that its inability to successfully terminate
the Union City lease was reasonably likely to result in a judgment that would
compromise the Companys ability to successfully complete its Plan of Complete
Liquidation and Dissolution, the Company might be forced to seek protection
from the landlord, National Distribution Agency, under federal bankruptcy law
in order to statutorily limit National Distribution Agencys claims so that all
then remaining creditors could share more fairly in the Companys remaining
assets.

DELISTED STOCK

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On January 16, 2001, the stockholders of the Company approved the Plan of
Complete Liquidation and Dissolution of the Company and changed the corporate
name from Pets.com, Inc., to IPET Holdings, Inc. On January 18, 2001, the
company closed its stock transfer books, discontinued recording transfers of
Common stock and the Companys common stock was delisted from the Nasdaq Stock
Market. Since the close of trading on January 18, 2001, the certificates
representing the Common Stock of the Company have not been assignable or
transferable on the books of the company and any distributions made by the
Company will be made solely to the stockholders of record as of such final
record date. The Company expects that its common stock will ultimately be
deregistered under Rule 12g-4 of the Securities Exchange Act of 1934 in
connection with the Companys execution of the Plan of Complete Liquidation and
Dissolution.

PUBLIC COMPANY REPORTING REQUIREMENTS

We have an obligation to continue to comply with the applicable reporting
requirements of the Securities Exchange Act of 1934, as amended, even though
compliance with such reporting requirements is economically burdensome. In
order to curtail expenses, after filing our Certificate of Dissolution we
sought relief from the Securities and Exchange Commission from the reporting
requirements under the Exchange Act. Until such relief is granted we will
continue to make obligatory Exchange Act filings. We anticipate that even if
such relief is granted in the future, we will continue to file current reports
on Form 8-K to disclose material events relating to our liquidation and
dissolution along with any other reports that the Securities and Exchange
Commission may require.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company currently invests its cash reserves in certificates of deposit and
checking accounts with leading commercial banks. The market risk of such
instruments is minimal as the principal has not been placed at risk.




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEPENDENT AUDITORS REPORT

To the Board of Directors and
Stockholders of IPET Holdings, Inc. (formerly Pets.com, Inc.)

We have audited the statements of net assets in liquidation of IPET Holdings,
Inc. (formerly Pets.com, Inc.) as of December 31, 2001 and 2000, and the
related statements of changes in net assets in liquidation for the year ended
December 31, 2001 and for the period from November 5, 2000, to December 31,
2000. 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 audit 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 made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As described in Note 1, the Companys policy is to prepare its financial
statements on the liquidation basis of accounting.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of IPET Holdings, Inc.
(formerly Pets.com, Inc.) as of December 31, 2001 and 2000, and the changes in
net assets in liquidation for the year ended December 31, 2001 and the period
from November 5, 2000 to December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.

San Rafael, California
March 14, 2002

/s/ Stempek Associates

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IPET HOLDINGS, INC.
(FORMERLY PETS.COM, INC.)
STATEMENTS OF NET ASSETS IN LIQUIDATION
DECEMBER 31, 2001 AND 2000
(In thousands, except shares outstanding and per share data)

|                                                                 |                                                                   |   |            |       |      |   |            |       | 
|---------------------------------------------------------------- | ----------------------------------------------------------------- | - | ---------- | ----- | ---- | - | ---------- | ----- | 
|                                                                 |                                                                   |   | 2001       |       | 2000
|                                                                 |                                                                   |   |            |       |     
|ASSETS                                                           |                                                                   |   |            |       |      |   |            |      
|                                                                 | Cash and cash equivalents                                         |   | $          | 4,628 |      |   | $          | 9,714 | 
|                                                                 | Certificates of deposit securing standby letters of credit        |   |            |      |      |   |            | 1,466 | 
|                                                                 | Receivable
from sale of inventories, fixed assets and other  net |   |            |      |      |   |            | 1,215 | 
|                                                                 | Deposits held by landlord                                         |   |            | 100   |      |   |            | 100   | 
|Total Assets                                                     |                                                                   | $ | 4,728      |       |      | $ | 12,495     |      
|                                                                 |                                                                   |   |            |       |      |   |            |      
|LIABILITIES                                                      |                                                                   |   |            |       |      |   |            |      
|                                                                 | Accounts payable                                                  |   | $          | 545   |      |   | $          | 2,104 | 
|                                                                 | Accrued compensation to former employees                          |   |            |      |      |   |            | 762   | 
|                                                                 | Total Liabilities                                                 |   |            | 545   |      |   |            | 2,866 | 
|                                                                 |                                                                   |   |            |       |      |   |            |      
|NET ASSETS IN LIQUIDATION                                        |                                                                   | $ | 4,183      |       |      | $ | 9,629      |      
|                                                                 |                                                                   |   |            |       |      |   |            |      
|Number of common shares and common share
equivalents outstanding |                                                                   |   | 34,741,080 |       |      |   | 35,418,735 |      
|                                                                 |                                                                   |   |            |       |      |   |            |      
|Net assets in liquidation per share                              |                                                                   | $ | 0.12       |       |      | $ | 0.27       |      
|                                                                 |                                                                   |   |            |       |      |   |            |      

See accompanying notes.

IPET HOLDINGS, INC.
(FORMERLY PETS.COM, INC.)
STATEMENTS OF LIQUIDATING ACTIVITIES (in thousands)
FOR THE YEAR ENDED DECEMBER 31, 2001 AND THE PERIOD FROM
NOVEMBER 5, 2000 TO DECEMBER 31, 2000

|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |         |        |         |       | 
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------------- | - | ------ | ------- | ------- | ------ | ------- | ----- | 
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   | 2001   |         | 2000   
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|ADDITIONAL SOURCES OF CASH:                      |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|                                                 | Recovery from sale of Sock Puppet icon                                                                              |                                                                                                             | $                              | 125                              |   |        | $       |        |       
|                                                 | Earnings on cash and cash equivalents                                                                               |                                                                                                             |                                | 313                              |   |        |         | 21      |       
|                                                 | Recoveries from sale of fixed assets                                                                                |                                                                                                             |                                |                                 |   |        |         | 2,558   |       
|                                                 | Recoveries from sale of inventory                                                                                   |                                                                                                             |                                |                                 |   |        |         | 703     |       
|                                                 | Recovery from lease buyout                                                                                          |                                                                                                             |                                |                                 |   |        |         | 400     |       
|                                                 | License revenue and other                                                                                           |                                                                                                             |                                |                                 |   |        |         | 113     |       
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|                                                 |                                                                                                                     |                                                                                                             |                                | Total sources of additional cash |   |        | 438     |         |        |         | 3,795 | 
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|ADDITIONAL USES OF CASH                          |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|                                                 | Payments on leases not yet terminated on former operating facilities                                                |                                                                                                             |                                | (1,045                           | ) |        |         | (893    | )     
|                                                 | Outside services during liquidation period                                                                          |                                                                                                             |                                | (927                             | ) |        |         | (278    | )     
|                                                 | Insurance paid for directors and officers                                                                           |                                                                                                             |                                | (783                             | ) |        |         |        |       
|                                                 | Payment of assessed exterior and interior repairs on leased property                                                |                                                                                                             |                                | (233                             | ) |        |         |        |       
|                                                 | Other expenses during liquidation period                                                                            |                                                                                                             |                                | (268                             | ) |        |         |        |       
|                                                 | Retention Bonuses, severance and other compensation incurred
as a result of liquidation and termination of services |                                                                                                             |                                |                                 |   |        |         | (4,196  | )     
|                                                 | Regular compensation during liquidation period                                                                      |                                                                                                             |                                |                                 |   |        |         | (1,331  | )     
|                                                 | Settlement of advertising and cross-marketing agreement                                                             |                                                                                                             |                                |                                 |   |        |         | (400    | )     
|                                                 | Distribution of cash to stockholders                                                                                |                                                                                                             |                                | (3,128                           | ) |        |         |        |       
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|                                                 |                                                                                                                     |                                                                                                             | Total uses of additional cash  |                                  |   | (6,384 | )       |         |        | (7,098  | )    
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|OTHER INCOME AND EXPENSE:                        |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|                                                 | Settlements of accounts payable                                                                                     |                                                                                                             | $                              | 408                              |   |        | $       | 431     |       
|                                                 | Recoveries, net of expenses of $81                                                                                  |                                                                                                             |                                | 92                               |   |        |         |        |       
|                                                 | Reduction in liability to related party                                                                             |                                                                                                             |                                |                                 |   |        |         | 695     |       
|                                                 | Net book value of fixed assets disposed                                                                             |                                                                                                             |                                |                                 |   |        |         | (18,867 | )     
|                                                 |                                                                                                                     | Recovery
of 5,243,752 common shares in exchange for
settlement of advertising and cross-marketing agreement |                                |                                  |  |        |         |         | (8,099 | )      
|                                                 | Write off of prepaid advertising                                                                                    |                                                                                                             |                                |                                 |   |        |         | (6,991  | )     
|                                                 | Cost of inventories disposed                                                                                        |                                                                                                             |                                |                                 |   |        |         | (4,812  | )     
|                                                 | Write off of investment in PetPlace.com, Inc.                                                                       |                                                                                                             |                                |                                 |   |        |         | (3,585  | )     
|                                                 | Write off of investment in PetsPark.com, Ltd.                                                                       |                                                                                                             |                                |                                 |   |        |         | (2,073  | )     
|                                                 | Write off of other prepaid expenses                                                                                 |                                                                                                             |                                |                                 |   |        |         | (2,513  | )     
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|                                                 |                                                                                                                     |                                                                                                             | Total other income and expense |                                  |   | 500    |         |         |        | (45,814 | )    
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|Decrease in net assets in liquidation            |                                                                                                                     |                                                                                                             | (5,446                         | )                                |   |        | (49,117 | )      
|Net assets in liquidation at beginning of period |                                                                                                                     |                                                                                                             | 9,629                          |                                  |   |        | 58,746  |        
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        
|Net assets in liquidation at end of period       |                                                                                                                     | $                                                                                                           | 4,183                          |                                  |   | $      | 9,629   |        
|                                                 |                                                                                                                     |                                                                                                             |                                |                                  |   |        |         |        

See accompanying notes.

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Liquidation Basis of Accounting

The accompanying financial statements of IPET Holdings, Inc., formerly
Pets.com, Inc. (The Company), have been prepared in conformity with generally
accepted accounting principles for a company in voluntary liquidation.

As a result of approval on November 4, 2000, by the stockholders and board of
directors of a Plan of Complete Liquidation and Dissolution, the accompanying
financial statements have been prepared in conformity with generally accepted
accounting principles for a company in voluntary liquidation in order to
provide more relevant information as of December 31, 2001 and 2000, and for the
liquidation year ended December 31, 2001, and the liquidation period from
November 5 through December 31, 2000.

The liquidation basis of accounting requires that assets and liabilities be
stated at estimated fair value. The Company established the carrying values of
its assets and liabilities, as reflected in the statements of net assets in
liquidation as of December 31, 2001 and 2000, based upon having given
reasonable consideration to all information available at the time such values
were established. Subsequent to establishing such carrying values, management
has continued to investigate and analyze prior and current transactions.
Accordingly, the statements of net assets in liquidation as of December 31,
2001 and 2000 reflect assets and liabilities based upon their estimated fair
values and estimated settlement amounts as of those dates. Changes in the
estimated liquidation value of assets and liabilities subsequent to December
31, 2001 and 2000, have been and will be recognized in the period in which such
refinements are known.

2. BACKGROUND AND SUMMARY OF SIGNIFICANT DEVELOPMENTS

On November 4, 2000, by the stockholders and board of directors of IPET
Holdings, Inc. (formerly Pets.com, Inc.) adopted a Plan of Complete Liquidation
and Dissolution and orderly winding down and cessation of the Companys
operations and liquidation of the Companys assets and settlement of the
Companys liabilities. Until November 4, 2000, the Company was engaged in the
sale, over the Internet, of pet products, services, and information primarily
in the United States.

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The Company was incorporated in the state of California on October 7, 1998 and
began its commercial operations on February 17, 1999 with the acquisition of
certain assets and Internet domain names. For purposes of disclosure, the
Company elected to use February 17, 1999 as the inception date for reporting,
as no activities were undertaken and no costs were incurred prior to that date.

In December 1999, the board of directors authorized the Company to proceed with
an initial public offering (an IPO) of its common stock. The IPO, which
raised approximately $75 million of new capital, was completed on February 11,
2000. The board of directors also authorized reincorporation of the Company in
the state of Delaware.

Subsequent to its initial public offering, the Company significantly enhanced
its sales, customer service, information technology and administrative
activities. In order to accommodate anticipated additional sales volume, the
Company augmented its operating capacity by developing state-of-the-art
administrative and warehouse facilities in the San Francisco Bay Area and
warehouse facilities in Indianapolis, Indiana. In addition, the Company
acquired certain strategic assets and entered into certain advertising and
co-marketing agreements designed to increase its public image and exposure
through major media channels.

The enhanced marketing and sales efforts and augmented capacity resulted in
greater shipments in the second and third quarters of 2000 as compared with
1999. However, projected profitability was dependent upon achieving even
greater volumes and wider market acceptance than could reasonably be
anticipated to occur in the near term. Additionally, in order to achieve these
greater volumes, there would have been required substantial infusions of new
capital, which the Company was unable to obtain. From its inception until
November 4, 2000, the Company had a negative gross margin from sales and, after
selling, general and administrative expenses, had incurred an accumulated
deficit of $156.3 million.

The Company and its advisors worked to examine all options for additional
financing. They contacted more than 50 domestic and international strategic and
financial prospects. However, no party was prepared to acquire the Company. In
addition, there resulted no reasonable expectations of attracting any party
willing to provide sufficient capital to sustain promotional activities at a
level deemed necessary by management to generate a positive gross margin and
allow the Company to potentially become profitable thereby continuing as a
going concern. As a result, the Companys management and board of directors
concluded that an orderly winding down would be the course of action most
likely to offer the highest return to shareholders; and, that to continue the
operation of the business would most likely reduce the assets and cash that
might otherwise be returned to the stockholders.

Events Subsequent to Decision to Liquidate

On November 7, 2000, approximately 255 of the Companys 320 employees were
terminated and subsequently paid $2.8 million in severance and other
compensation. Senior management who received their regular salaries in addition
to retention bonuses approved by the board of directors in the amount of $1.4
million, and certain other personnel remained to conduct winding-down
activities. This reduction in force significantly affected information
technology, financial management and accounting. By November 10, 2000, the
Companys website was closed and sales transactions could no longer be
conducted.

Because, in the opinion of the Companys management, many of the assets,
particularly its intellectual property, would decline in value over time,
concerted efforts to sell the majority of the Companys assets, including
inventory, distribution center equipment, URLs, website content, the Sock
Puppet brand icon and other intellectual property, were undertaken
expeditiously. Settlements of the Companys outstanding operating liabilities,
commitments with creditors and long-term contractual payment and performance
obligations associated with the Companys buildings and facilities leases,
business agreements with third parties and agreements with vendors and shipping
services were aggressively pursued. As a result of the previously mentioned
reduction in force, administrative matters, including liquidation accounting
and preparations for the Companys affairs to be taken over by a qualified
outside management firm, did not receive the same degree of support.

Pursuant to the Companys Plan of Complete Liquidation and Dissolution,
substantially all of its remaining assets are to be sold and, after payment of
all claims, obligations and expenses owing to the Companys creditors, the
remainder, if any, will be distributed to the holders of common stock on a pro
rata basis.

Events Subsequent to December 31, 2000

On January 12, 2001, the Company engaged the services of Diablo Management
Group, a professional liquidation management firm. Mr. Richard G. Couch, its
Chairman and Chief Executive Officer, was elected sole director of the
Companys board of directors and appointed as the Companys Chief Executive
Officer, President, Chief Financial Officer, Secretary, and Treasurer to take
over from the Companys senior management team and complete the liquidation
process. The Companys name was changed from Pets.com, Inc., to IPET Holdings,
Inc., and management of the Company was assumed by Diablo Management Group.

In order to complete the liquidation process, new management conducted an
updated and comprehensive analysis of the Companys potential asset recoveries
and prepared a detailed settlement schedule of all claims, obligations and
expenses owing to the Companys creditors. In addition, negotiations were
pursued in earnest to terminate the lease for the Companys warehouse facility
in Union City, California (see Note 4).

During 2001, the Company (i) negotiated the release of certificates of deposit,
in the aggregate amount of $1,466,000, securing stand-by letters of credit
furnished as collateral for leases and a credit card processing arrangement;
(ii) collected receivables from the sale of

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inventory, fixtures, equipment, lease termination residual, URL domain name and
other intangible assets in the amount of $1,215,000; (iii) collected $125,000
for the assignment to Hakan Enterprises, Inc., of all of its rights in and to
the Sock Puppet brand icon; (iv) settled trade accounts payable to vendors, net
of settlement concessions and recoveries, in the amount of $1,559,000; (v)
terminated and paid the remaining 33 employees an amount of $762,000; (vi) paid
liability insurance for directors and officers in the amount of $783,000; and,
(vii) arranged for completion of the operating and liquidation-period
accounting and stockholder reporting in order to be in compliance with various
regulatory agency requirements.

Pursuant to a Certificate of Designation of Rights, Preferences and Privileges
of Series A Preferred Stock filed with the Secretary of State of Delaware on
July 6, 2000, upon liquidation or dissolution, holders of shares of Series A
Preferred Stock are entitled to receive $0.00125 per share before any
distribution of funds is made to holders of Common Stock. Series A stockholders
are also entitled to receive accrued but unpaid dividends declared by the board
of directors on Common Stock. No such dividends have ever been declared. After
such initial payment has been made to Series A Preferred stockholders, they
will also share on a pro-rata basis in the general distribution of proceeds
remaining from the sale of assets to be made to all Common stockholders, as if
their shares of Series A Preferred Stock have been converted to an equal number
of shares of Common Stock.

On August 31, 2001, the sole director of the Company approved an initial cash
distribution to be paid from net available assets in the amount of $0.09 per
share to stockholders of record holding 34,741,080 shares as of the Companys
final record date of January 18, 2001. The Company distributed
cash payments in the amount of $3,128,127 to
stockholders of record, which included the initial payment to the Series A
Preferred stockholders, on September 28, 2001. The Company expects to make
subsequent distributions, as appropriate, during the course of the wind-down
period as non-cash assets are converted to cash and liabilities are settled.

Status of Liquidation Process

As of March 14, 2002, substantially all of the Companys assets have been sold.
Further, the Company has consummated transactions with substantially all of its
trade creditors and taxing authorities and terminated all capital and operating
leases except for the warehouse facility in Union City, California. Other than
the Union City warehouse lease, the Company believes that it has negotiated
reasonable settlement amounts with all of its remaining trade and general
creditors.

However, there can be no assurance that the Company will be able to complete
the orderly winding down as originally contemplated, settle with its creditors
and pay for the amounts estimated in its plan of orderly winding down or
successfully terminate its one remaining lease. If it is unable to successfully
reach settlements with all of its creditors or terminate the remaining
operating lease, the Company may be forced to seek protection from creditors
under federal bankruptcy law or may become subject to an involuntary bankruptcy
proceeding. In such event, further distributions to the Companys stockholders
may depend upon completion of all such proceedings, one or more rulings by a
bankruptcy trustee and/or further court proceedings.

Delisted Stock

On January 16, 2001, the stockholders of the Company approved a Plan of
Complete Liquidation and Dissolution of the Company and changed the corporate
name from Pets.com, Inc., to IPET Holdings, Inc. On January 18, 2001, the
Company cancelled 677,655 shares of common stock, closed its stock transfer books, discontinued recording transfers of
common stock and the Companys common stock was delisted from the Nasdaq
National Stock Market. Since the close of trading on January 18, 2001, the
certificates representing the common stock of the Company have not been
assignable or transferable on the books of the Company and all distributions
made by the Company either have been or will be (if applicable) made solely to
the stockholders of record as of such date. The Company expects that its common
stock will ultimately be deregistered under Rule 12g-4 of the Securities
Exchange Act of 1934 in connection with the Companys execution of its Plan of
Complete Liquidation and Dissolution.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

The Companys fiscal year begins on January 1 and ends on December 31 of each
year.

Use Of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles under the liquidation basis of accounting requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements, disclosures of contingent assets and liabilities
and accompanying footnote disclosures at the date of the financial statements.
Significant estimates have been made relative to the valuation of all assets
and liabilities of the Company, including among others, estimates of the
recovery value of assets, sales returns and settlement of trade payables and
long-term lease commitments. Such estimates have been developed pursuant to the
provisions of the Plan of Complete Liquidation and Dissolution. Actual results
may differ from amounts estimated.

4. CONTINGENCIES

Union City Lease

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In July 2000, the Company established a distribution center in Union City,
California, and leased a warehouse comprised of approximately 143,000 square
feet for a period of five years. The Union City warehouse lease calls for
minimum monthly rent payments in the approximate amount of $60,000 through
August 4, 2004, plus annual base-rent adjustments of up to 6%. As of December
31, 2001, the remaining minimum lease payments totaling $1,975,000 ($2,791,000
as of December 31, 2000) have not been recorded as a liability on the Companys
statement of net assets in liquidation because of the uncertainty of the amount
which would ultimately be due. Since assuming management of the Company on
January 12, 2001, Diablo Management Group engaged qualified professionals to
aggressively market the warehouse and has been actively negotiating with the
landlord, National Distribution Agency, Inc. regarding relief from the terms of
the lease.

In connection with a contractual dispute concerning the Companys sublease of
certain space in the Union City warehouse, on August 31, 2001, the Company
filed a complaint against its landlord, National Distribution Agency,
Inc., in the
Superior Court of California for Alameda County for breach of contract,
specific performance and seeking declaratory relief. The third amended
complaint additionally alleges that the landlord trespassed on the Companys
space, and constructively, or alternatively, partially evicted the Company by
occupying the Companys space without the Companys consent. National
Distribution Agency, Inc. has not yet responded to this complaint; and, no trial date
has been set.

If the Company was to determine that its inability to successfully terminate
the Union City lease was reasonably likely to result in a judgement that would
compromise the Companys ability to successfully complete its Plan of Complete
Liquidation and Dissolution, the Company might be forced to seek protection
from the landlord under federal bankruptcy law in order to statutorily limit
the landlords claims so that all then remaining creditors could share more
fairly in the Companys remaining assets. In any event, the Company believes that any
settlement payment to the landlord will be for substantially less than the present value of
all lease payments that it might otherwise owe through the term of the lease.

5. RELATED PARTY TRANSACTIONS

During the fiscal year ended December 31, 2001, the Company paid consulting
fees of $422,018 to Diablo Management Group in connection with its
winding-down
and dissolution activities. This amount included $67,430 in consulting fees to Richard G.
Couch in connection with his role as the sole Director and Chief Executive
Officer, President, Chief Financial Officer, Treasurer, and Secretary of the
Company. The Company paid $179,201 in 2001 ($986,285 in 2000) to a common stockholder for legal services.




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

By an Action by Written Consent effective March 26, 2001, our sole Director
approved the engagement of Stempek Associates of San Rafael, California as the
Companys independent auditors for the fiscal years ending December 31, 2000
and December 31, 2001 to replace the firm of Ernst & Young LLP, who declined to
stand for reelection as auditors of the Company effective March 20, 2001.

The report of Ernst & Young LLP on the Companys financial statements for the
period from February 17, 1999 (inception) to December 31, 1999 did not contain
an adverse opinion or a disclaimer of opinion and was not qualified or modified
as to uncertainty, audit scope, or accounting principles.

In connection with the audit of the Companys financial statements for the
period from February 17, 1999 to December 31, 1999, and in the subsequent
interim period, there were no disagreements with Ernst & Young LLP on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope and procedures which, if not resolved to the satisfaction of
Ernst & Young LLP, would have caused Ernst & Young LLP to make reference to the
matter in their report.




PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Our executive officers and directors and their ages as of December 31, 2001
were as follows:

|                 |  |     |  |                                                                                                          |  |              
|---------------- |  | --- |  | -------------------------------------------------------------------------------------------------------- |  | -------------
|                 |  |     |  |                                                                                                          |  | DIRECTOR OR  
|NAME             |  | AGE |  | POSITION                                                                                                 |  | OFFICER SINCE
|                 |  |     |  |                                                                                                          |  |              
|Richard G. Couch |  | 55  |  | Sole Director and Chief Executive
Officer, President, Chief Financial
Officer, Treasurer, and Secretary. |  | January 2001 

Richard G. Couch was appointed to serve as our sole Director, Chief Executive
Officer, President, Chief Financial Officer, Treasurer, and Secretary in
January 2001 and is currently overseeing our dissolution and wind down. Since
September 1986, Mr. Couch has been Chairman of the Board, Chief Executive
Officer and Managing Principal of Diablo Management Group, a management
consulting company that provides services primarily to companies involved in
mergers, acquisitions, turnarounds, work-outs, reorganizations and sales (of
equity or assets). Through Diablo Management Group, Mr. Couch has served in
various interim executive and/or advisory capacities to companies experiencing
managerial, financial or operational difficulties. Mr. Couch has over 25 years
of corporate, executive and turnaround management experience, and has handled
over 170 assignments in a broad variety of businesses. Before founding Diablo
Management Group in 1986, Mr. Couch founded and managed RGC Associates, through
which he operated troubled

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companies, usually as an interim President/ CEO. Also prior to Diablo
Management Group, Mr. Couch was a Senior Vice President and Principal with INCO
Venture Capital Management, assisting in the selection, growth and transition
of early-stage companies. Mr. Couchs prior experience included CEO roles at
two medium-sized companies, following ten years at Xerox, where he held
management and Vice President positions in the Copier Manufacturing Group and
the Printing Systems Group. Mr. Couch has served as President, Chief Executive
Officer and a Director of Visual Numerics, Inc. since August 1990. In addition,
he has handled numerous assignments as a Chapter 11 bankruptcy trustee. Mr.
Couch received a B.A. in Social Science from the University of Buffalo, an M.S.
in Industrial Psychology from the University of Rochester, and an M.B.A. in
Finance and Economics from the Simon Graduate School of Business at the
University of Rochester.

BOARD COMPOSITION

As of December 31, 2001, our Bylaws provide for a Board of Directors consisting
of one director. Prior to January 16, 2001, our bylaws provided for a Board of
Directors consisting of six directors. Each director was elected for a period
of one year and was to serve until our next annual meeting or until his or her
successor was duly elected and qualified. The executive officers served at the
discretion of the Board of Directors. There were no family relationships among
any of our directors or executive officers, each of whom resigned his or her
position effective as of January 16, 2001. Effective as of that date, our
Bylaws were amended to provide for a single director, and Richard G. Couch of
Diablo Management Group was appointed to serve as the Companys sole director
and also as Chief Executive Officer, President, Chief Financial Officer,
Treasurer, and Secretary.

BOARD COMPENSATION

On January 16, 2001, the members of our Board of Directors resigned and Richard
Couch of Diablo Management Group, a consulting firm retained by the Company to
complete our approved wind-down and dissolution, was named as our sole
Director. Mr. Couch and other consultants of Diablo Management Group render
consulting services in connection with our dissolution pursuant to a
compensation schedule approved by our Board of Directors on January 8, 2001 (a
copy of which is filed as Exhibit 10.1 hereto).

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the compensation committee of our Board of Directors as of
January 16, 2001, the date the existing board members resigned and Richard
Couch was appointed the sole director, were Mark Britto and John Hummer.
Neither of them had at any time been an officer or employee of the Company or
any subsidiary of the Company, nor were there any compensation committee
interlocks or other relationships during 2001 and prior to their resignations
requiring disclosure under item 402(j) of Regulation S-K promulgated by the
Securities and Exchange Commission.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Companys directors and
executive officers, and persons who own more than ten percent of a registered
class of the Companys equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and holders of more than ten percent of the Companys Common Stock
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.

To the Companys knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2000 all
Section 16(a) filing requirements applicable to the Companys officers,
directors and holders of more than ten percent of the Companys Common Stock
were complied with.




ITEM 11. EXECUTIVE COMPENSATION.

The following table provides summary information concerning the compensation
received for services rendered to the Company during the fiscal year ended
December 31, 2001 by (a) each person who served as our chief executive officer
during 2001; (b) each of our other four most highly compensated executive
officers as of December 31, 2001, each of whose aggregate compensation during
our last fiscal year exceeded $100,000; and (c) one additional highly
compensated individual who would have been included under (b) above but for the
fact that he was no longer serving as an executive officer of the Company as of
December 31, 2000 (collectively, the Named Officers).

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SUMMARY COMPENSATION TABLE

|                            |                                                                                                                |                                                                       |        |                     |  |       |       |              |  |            |         |              |  |            |   |              |  |   |   |  |  | 
|--------------------------- | -------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ------ | ------------------- |  | ----- | ----- | ------------ |  | ---------- | ------- | ------------ |  | ---------- | - | ------------ |  | - | - |  |  | 
|                            |                                                                                                                |                                                                       |        |                     |  |       |       |              |  |            |         |              |  |            |   | LONG-TERM    |  |   |   | 
|                            |                                                                                                                |                                                                       |        |                     |  |       |       |              |  |            |         |              |  |            |   | COMPENSATION |  |   |   | 
|                            |                                                                                                                |                                                                       |        |                     |  |       |       |              |  |            |         |              |  |            |   | AWARDS       |  |   |   | 
|                            |                                                                                                                |                                                                       |        | ANNUAL COMPENSATION |  |       |       |              |  |           
|                            |                                                                                                                |                                                                       |        |                     |  |       |       |              |  |            |         | OTHER ANNUAL |  | SECURITIES |   | ALL OTHER   
|                            |                                                                                                                |                                                                       |        | SALARY              |  | BONUS |       | COMPENSATION |  | UNDERLYING |         | COMPENSATION
|NAME AND PRINCIPAL POSITION |                                                                                                                | ($)(1)                                                                |        | ($)                 |  | ($)   |       | OPTIONS(#)   |  | ($)       
|                            |                                                                                                                |                                                                       |        |                     |  |       |       |              |  |           
|Richard G. Couch            |                                                                                                                | $                                                                     | 67,430 |                     |  | $     | 0     |              |  | $          | 0       |              |  |            | 0 |              |  | $ | 0 | 
|                            | Chief Executive Officer, President,
Chief Financial Officer,
Treasurer, and Secretary (after January 16, 2001) |                                                                       |        |                     |  |       |       |              |  |            |         |              |  |            |   |              |  |   |   |  | 
|Julia L. Wainwright         |                                                                                                                | $                                                                     | 31,219 |                     |  | $     | 6,674 |              |  | $          | 0       |              |  |            | 0 |              |  | $ | 0 | 
|                            |                                                                                                                | Chief Executive Officer
(until January 16, 2001)                      |        |                     |  |       |       |              |  |            |         |              |  |            |   |              |  |   |   |  |  | 
|Christopher E. Deyo         |                                                                                                                | $                                                                     | 47,861 |                     |  | $     | 1,988 |              |  | $          | 0       |              |  |            | 0 |              |  | $ | 0 | 
|                            |                                                                                                                | President (until January 16, 2001)                                    |        |                     |  |       |       |              |  |            |         |              |  |            |   |              |  |   |   |  |  | 
|Paul G. Manca               |                                                                                                                | $                                                                     | 42,405 |                     |  | $     | 0     |              |  | $          | 0       |              |  |            | 0 |              |  | $ | 0 | 
|                            |                                                                                                                | Chief Financial Officer
(until January 16, 2001)                      |        |                     |  |       |       |              |  |            |         |              |  |            |   |              |  |   |   |  |  | 
|Ralph Lewis                 |                                                                                                                | $                                                                     | 53,206 |                     |  | $     | 0     |              |  | $          | 150,000 | (2)          |  |            | 0 |              |  | $ | 0 | 
|                            |                                                                                                                | Vice President of Distribution and
Logistics (until January 16, 2001) |        |                     |  |       |       |              |  |            |         |              |  |            |   |              |  |   |   |  |  | 
|Kathryn C. Ringewald        |                                                                                                                | $                                                                     | 22,971 |                     |  | $     | 0     |              |  | $          | 0       |              |  |            | 0 |              |  | $ | 0 | 
|                            |                                                                                                                | Vice President of Human Resources
(until January 16, 2001)            |        |                     |  |       |       |              |  |            |         |              |  |            |   |              |  |   |   |  |  | 



---

|(1) |  | Base salary paid to the Named Officer during the fiscal year ended
December 31, 2001.                                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Cancellation of indebtedness
pursuant to terms of promissory note that provided for cancellation
upon the dissolution of the Company.

OPTION GRANTS

The Company did not grant any stock options in the fiscal year ended December
31, 2001.

OPTION EXERCISES AND HOLDINGS

All options held by Named Officers terminated 60 days after the end of such
officers
employment relationship with the Company and no Named Officer
acquired shares of common stock or options to purchase common stock in the year ended December 31,
2001.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth information regarding the beneficial ownership
of our common stock as of December 31, 2001 and upon conversion of all
outstanding shares of preferred stock into common stock by:

     each stockholder known to us to own beneficially more than 5% of our common stock;

     each of our current directors and the Named Officers (as defined in the Act); and

     all current directors and executive officers as a group.

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##### Table of Contents



Except as otherwise noted, the address of each person listed in the table is
c/o IPET Holdings, Inc., c/o Diablo Management Group, 2000 Crow Canyon Place,
Suite 270, San Ramon, California, 94583. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
includes voting and investment power with respect to shares. To our knowledge,
except under applicable community property laws or as otherwise indicated, the
persons named in the table have sole voting and sole investment control with
respect to all shares beneficially owned by each stockholder as of December 31,
2001. The percent of beneficial ownership for each stockholder is based on
34,741,080 shares of common stock outstanding as of December 31, 2001 (assuming
conversion of all 1,143,895 outstanding shares of non-voting Series A Preferred
Stock into Common Stock).

|                                                         |                                    |       |              |       |              |  |            |   | 
|-------------------------------------------------------- | ---------------------------------- | ----- | ------------ | ----- | ------------ |  | ---------- | - | 
|                                                         |                                    |       |              |       |              |  | PERCENT OF
|                                                         |                                    |       | SHARES       |       | COMMON STOCK
|                                                         |                                    |       | BENEFICIALLY |       | BENEFICIALLY
|NAME AND ADDRESS                                         |                                    | OWNED |              | OWNED
|                                                         |                                    |       |              |      
|Amazon.com, Inc.                                         |                                    |       | 8,973,029    |       |              |  | 25.8       | %
|                                                         | 1200 12th Avenue South, Suite 1200 |       |              |       |              |  |            |   | 
|                                                         | Seattle, WA 98108-1226             |       |              |       |              |  |            |   | 
|Entities Affiliated with Hummer Winblad Venture Partners |                                    |       | 4,677,114    |       |              |  | 13.5       | %
|                                                         | 2 South Park, 2nd Floor            |       |              |       |              |  |            |   | 
|                                                         | San Francisco, CA 94107            |       |              |       |              |  |            |   | 
|Petstore.com, Inc.                                       |                                    |       | 3,700,587    |       |              |  | 10.7       | %
|                                                         | 1545 Park Avenue                   |       |              |       |              |  |            |   | 
|                                                         | Emeryville, CA 94608               |       |              |       |              |  |            |   | 
|Julia L. Wainwright                                      |                                    |       | 912,318      |       |              |  | 2.6        | %
|Christopher E. Deyo                                      |                                    |       | 523,175      |       |              |  | *          |  
|Paul G. Manca                                            |                                    |       | 0            |       |              |  | *          |  
|Ralph E. Lewis                                           |                                    |       | 0            |       |              |  | *          |  
|Kathryn C. Ringewald                                     |                                    |       | 100,000      |       |              |  | *          |  
|Richard G. Couch                                         |                                    |       | 0            |       |              |  | *          |  
|All current executive officers and directors as a group  |                                    |       |              |       |              |  |            |  
|(Richard G. Couch)                                       |                                    |       | 0            |       |              |  | *          |  



---

|* |  | Less than 1% of the outstanding shares of common stock.
|- |  | -------------------------------------------------------

The beneficial ownership for entities affiliated with Hummer Winblad Venture
Partners is comprised of 2,631,337 shares held by Hummer Winblad Venture
Partners III, L.P., 138,491 shares held by Hummer Winblad Technology Fund III,
L.P., 76,291 shares held by Hummer Winblad Technology Partners III, L.P., and
1,830,995 shares held by Hummer Winblad Venture Partners IV, L.P. The general
partner of each of the first three funds listed in the first sentence of this
paragraph is Hummer Winblad Equity Partners III, LLC, and the general partner
of the fourth fund is Hummer Winblad Equity Partners IV, LLC. The members of
each of the foregoing general partners are principals of Hummer Winblad Venture
Partners.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the fiscal year ended December 31, 2001, the Company paid consulting
fees of $422,018 to Diablo Management Group in connection with our wind-down
and dissolution activities to include $67,430 in consulting fees to Richard G.
Couch in connection with his role as the sole Director and Chief Executive
Officer, President, Chief Financial Officer, Treasurer, and Secretary of the
Company. The Company paid $179,201 in 2001 ($986,285 in 2000) to a
common stockholder for legal services.




PART IV




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

The following documents are filed as part of this report:

(a)  Exhibits (numbered in accordance with Item 601 of Regulation S-K):
See Exhibit Index.

(b)  Financial Statement Schedules: Independent Auditors Report of
Stempek Associates, Statements of Net Assets in Liquidation as of December
31, 2001 and 2000, Statements of Liquidating Activities for the year
ended December 31, 2001 and the period from November 5, 2000 to
December 31, 2000, and Notes to Financial Statements.

(c)  Reports on Form 8-K: We filed a Current Report on Form 8-K on
September 7, 2001 with the Securities and Exchange Commission announcing that
on August 31, 2001, the Sole Director of the Company approved an initial cash
distribution to be paid out of net available assets of $0.09 per share to
stockholders of record as of the Companys final record date of January 18,
2001. On September 28, 2001, the Company distributed the initial cash
distribution payments to the stockholders of record.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

| |  |                     |  |                                                                                     
| |  | ------------------- |  | ------------------------------------------------------------------------------------
| |  | IPET HOLDINGS, INC.
|
| |  | By:                 |  | /s/ RICHARD G. COUCH                                                                
| |  |                     |  |                                                                                     
| |  |                     |  | Richard G. Couch                                                                    
| |  |                     |  | Chief Executive Officer, President,
Secretary, Chief Financial Officer
and Treasurer

Date: March 29, 2002




POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard G. Couch, jointly and severally, his or
her attorney-in-fact, each with the power of substitution, for him or her in
any and all capacities, to sign any amendments to this Report on Form 10-K, and
to file the same, with exhibits thereto and other documents in connection
therewith with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitute or
substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
registrant and in the capacity and on the date indicated.

|                                       |  |                                                                                                                                                                  |  |                      
|-------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------
|SIGNATURE                              |  | TITLE                                                                                                                                                            |  | DATE                 
|                                       |  |                                                                                                                                                                  |  |                      
|/s/ RICHARD G. COUCH

Richard G. Couch |  | Chief Executive Officer
(Principal Executive Officer),
President, Chief Financial Officer
(Principal Financial and Accounting
Officer), Treasurer, and Secretary |  | Date:
March  29, 2002
|                                      
|/s/ RICHARD G. COUCH

Richard G. Couch |  | Sole Director                                                                                                                                                    |  | Date: March
 29, 2002

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##### Table of Contents






EXHIBIT INDEX

|        |  |                                                                                               |  |  |  | 
|------- |  | --------------------------------------------------------------------------------------------- |  |  |  | 
|EXHIBIT |  |                                                                                               |  |  |  | 
|NUMBER  |  | DESCRIPTION                                                                                   |  |  |  | 
|        |  |                                                                                               |  |  |  | 
|2.1*    |  | Plan of Complete Liquidation and Dissolution of the Company.                                 
|10.1    |  | Compensation schedule for Diablo Management Group.                                           
|16.1**  |  | Letter from Ernst & Young LLP to the Securities and Exchange Commission dated March 26, 2001.
|23.1    |  | Independent Auditors Report.                                                                
|24.1    |  | Power of Attorney (see page 18)                                                              
|99.1*** |  | Assignment Agreement with Hakan Enterprises, Inc. dated September 7, 2001.                   



---

|*   |  | Previously filed with our Definitive Proxy Statement pursuant
to Schedule 14A of the Securities Exchange Act of 1934
(#000-29387) dated and filed on December 28, 2000 and
incorporated herein by reference.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|**  |  | Previously filed with our Current Report on Form 8-K
(#000-29387) dated March 20, 2001 and filed on March 27, 2001
and incorporated herein by reference.                                                    
|   
|   
|   
|   
|*** |  | Previously filed with our Current Report on Form 10-Q
(#000-29387) dated September 30, 2001 and filed on November 13,
2001 and incorporated herein by reference.                                            

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