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

                                    FORM 10-K


[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the fiscal year ended December 30, 2000

         Commission File Number 0-27002

                         GRANITE BAY TECHNOLOGIES, INC.
                       (Formerly Morrow Snowboards, Inc.)
             (Exact name of Registrant as specified in its charter)

          California                                    93-1011046
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


                           599 Menlo Drive, Suite 200
                            Rocklin, California 95765
                    (Address of principal executive offices)

                                 (916) 315-2021
              (Registrant's telephone number, including area code)

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

          None                                           N/A
 (Title of each class)               (Name of each exchange on which registered)


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

                           Common Stock, no par value
                                (Title of Class)


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

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  the  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  aggregate  market  value of voting  shares  held by  non-affiliates  of the
registrant's Common Stock on April 10, 2001, was approximately $7,550,119 (based
on closing sale price of such stock as reported by Pink Sheets, $0.51).

The number of shares outstanding of the registrant's Common Stock, no par value,
as of April 10, 2001, was 19,150,507.




<PAGE> 2

     With the exception of historical facts stated herein, the matters discussed
in this  Form 10-K are  "forward  looking"  statements  that  involve  risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
projected  results.  Such  "forward  looking"  statements  include,  but are not
necessarily  limited  to  statements  regarding  anticipated  levels  of  future
revenues and earnings from the operation of Granite Bay  Technologies,  Inc. and
its  subsidiaries,  (the  "Company"),  projected  costs and expenses  related to
operations of the Company's liquidity,  capital resources,  and the availability
of future equity capital on commercially  reasonable  terms.  Factors that could
cause  actual  results  to  differ  materially  are  discussed  under  "Item 7 -
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations -- Liquidity  and Capital  Resources - Factors That May Affect Future
Results."  Readers of this Form 10-K are cautioned not to put undue  reliance on
"forward looking"  statements which, by their nature,  are uncertain as reliable
indicators of future performance. The Company disclaims any intent or obligation
to publicly update these "forward  looking"  statements,  whether as a result of
new information, future events, or otherwise.

                                     PART I

Item 1. Business

     Granite Bay  Technologies,  Inc. (the "Company,"  "Gbay," "we" or "us") was
originally  incorporated under Oregon law as Morrow Snowboards,  Inc. to design,
manufacture and market snowboards,  boots, bindings,  apparel and accessories to
retail  outlets in the United States as well as  international  distributors  in
several foreign countries.  In 1999, we sold our Morrow  intellectual  property,
inventory and snowboard and binding production equipment to K2 Acquisitions Inc.
(K2) and sold our apparel line to Westbeach  Sports,  Inc. and  discontinued the
manufacturing,  marketing and sale of snowboards,  boots, bindings,  apparel and
accessories.  On January 31, 2000, we purchased all of the outstanding shares of
Common  Stock of  International  DisplayWorks,  Inc.,  a  Delaware  corporation,
("IDW")  from four  private  investors,  whereby  IDW became  our  wholly  owned
subsidiary.   On  February  1,  2000,  IDW  acquired  through  its  wholly-owned
subsidiary,  International  DisplayWorks (HK)  Ltd.(IDWHK),  a company organized
under the laws of Hong Kong,  SAR, 100% of the shares of MULCD  Microelectronics
Company Ltd.  ("MULCD")  and IDW Shenzhen  Technology  Development  Company Ltd.
("IDWT"),  companies  organized under the laws of the People's Republic of China
from Vikay  Industrial  Ltd.,  a  Singapore  company  operating  under  Judicial
Management. Judicial management is a form of bankruptcy proceeding in Singapore.
(MULCD and IDWT are collectively referred to as the "PRC Companies"). In October
2000,  pursuant  to  shareholder  approval,  the  Company  changed  its state of
incorporation to California and its name to Granite Bay Technologies, Inc.

     The major business operation of the company is conducted through IDW, IDWHK
and  the  PRC  companies.  IDW,  IDW HK and  the  PRC  Companies  operate  as an
integrated  company.  The following  discussion  is presented on a  consolidated
basis, and analyzes the financial condition and results of operations of IDW and
its subsidiaries for the year ended December 30, 2000.

     Our  headquarters  are  located  in  Rocklin,  California.  We  design  and
manufacture a wide range of display  products  including liquid crystal displays
("LCD"), LCD modules,  turnkey assemblies,  front panel display systems, printed
circuit  board  assemblies  for use in the end  products of  Original  Equipment
Manufacturers   ("OEMs")   and   products   incorporating   LCD's   for  use  in
telecommunications   and  other  electronics   equipment,   including  appliance
controllers, and personal communications devices.

     The  LCD's  and   circuits   we  design   and   manufacture   are  used  in
telecommunications  (cell phones and other wireless  communication  devices), as
well  as in  medical  equipment,  household  appliances,  utility  applications,
automotive  equipment,  retail and office  equipment,  and  consumer  electronic
products. Targeted areas for new applications include office equipment (copiers,
facsimile machines, and printers),  high-resolution graphic display products for
personal digital assistants (PDA's) and small


<PAGE> 3

computer  and map  displays.  Our  corporate  mission is "to be the  premier LCD
Company  of the 21st  Century."  To  achieve  this we must  create an  efficient
display  manufacturing  operation  that will  include  the  latest  product  and
production technologies and high production yields. The design and manufacturing
of our products are  conducted at the  facilities  of the PRC  Companies in Heng
Gang,  Shenzhen,  Peoples Republic of China (PRC) where we employ  approximately
1,300 people.

     Approximately  25% of fiscal  year 2000 sales were from the home  appliance
market,  approximately  20%  to  the  telecommunications  industry  (principally
cellular  telephones  and caller ID),  approximately  15% to the local Hong Kong
consumer market,  approximately  10% to the automotive  market,  and the balance
spread  over a variety of  products  and  industries.  We  currently  market our
services  primarily in Hong Kong and the United States,  with a growing presence
in other  parts of Asia,  and we intend  to  expand  in the PRC and other  Asian
regions,  as well as Europe.  We maintain  design  centers at our  manufacturing
facilities  and in  Singapore.  Over 90% of sales in fiscal  year 2000 were from
custom liquid crystal displays and modules developed in close collaboration with
our customers.

     When we purchased the PRC Companies, they were under judicial management, a
form of  bankruptcy  proceeding  in Singapore  where the PRC  Companies'  former
parent was based.  The PRC Companies had higher output prior to their control by
the Judicial Managers.  We are actively working to build revenues throughout the
company by focusing on 10 to 12 major  accounts  located  throughout  the world,
some of which are  relationships  lost during the Judicial  Management  era, and
many  of  which  are  new  relationships  we  have  been  developing  since  the
acquisition  of the  PRC  companies.  To  remain  competitive  we are  expanding
production  capacity  and  capabilities,   improving  the  organization  of  and
expanding the staff at the manufacturing facilities, and increasing the level of
senior  management  supervision  throughout  the  company.  We are  focusing  on
high-volume  production and management  support to increase  yields and decrease
unit costs,  reducing  inventories  through  careful  planning  and  scheduling,
increasing  design  staff to support new projects  and product  development  and
reducing  overall  operating  costs. We have  established  internal  systems and
priorities  to improve  the level of  communications  among the  factory,  sales
offices  and  customers  to reduce lead times for price  quotations,  design and
manufacturing turn-around.

     We believe that these  internal  changes will  facilitate  substantial  and
profitable  sales growth over the next five years,  refine our customer base and
the markets we serve,  give us strength in designing  prototypes  and  producing
products  on a timely and  cost-efficient  basis,  including  a wide  variety of
custom design,  quality display modules required in the end products of OEMs and
increase the volume and efficiency of throughput through our LCD line.

Industry Overview

     Since  the  commercial  production  of the  first  light  emitting  diodes,
("LEDs") in the 1960s and twisted  nematic (TN) liquid  crystal  displays in the
1970s, the use of LCD and LED indicators has become widespread in industrial and
consumer electronics products with LCD now the predominant technology. These new
technologies  were  developed to overcome  limitations  in uses,  principally in
terms of size,  life,  and power  consumption,  or prior  standard  displays  or
indicators.

     An LCD modifies  light that passes  through or is  reflected by it,  rather
than emitting light like an LED. An LCD generally  consists of a layer of liquid
crystalline  material  suspended  between two glass plates.  The crystals  align
themselves in a predictable manner, which changes when stimulated  electrically.
The change in  alignment  produces a visual  representation  of the  information
desired when used in conjunction  with A polarizers and either an external light
source or natural ambient light.

     The flexibility of liquid crystal  technology allows for easy customization
in both size and design.  For instance,  displays are manufactured in sheet form
and  the  images  can  be  changed  by  generating  artwork  to  the  customer's
requirements. Display size can be controlled by programming the cutting tool

<PAGE> 4

to the desired dimensions. There is no significant additional manufacturing cost
for a fully  custom  display  that  allows  each  product to have its own unique
appearance such as icons, annunciators, and color printing.

     OEMs often  design their  products to contain  unique  display  modules and
features as a highly cost-effective means of differentiating their products from
competing products. OEMs then make the decision whether to use standard devices,
design and produce devices  in-house or outsource design and/or  production.  In
making the decision,  OEMs often  recognize  that their  greatest  strengths are
consumer   recognition  of  their  brand  names,  market  research  and  product
development expertise and effective sales and distribution  channels.  OEMs also
recognize that the time constraints and limitations of available resources often
preclude them from maintaining the specialized  in-house expertise and equipment
necessary  to  design  and   manufacture   custom   devices  and  that  standard
"off-the-shelf"  devices are not always available. As a result, many OEMs decide
to outsource the design and  production of devices and  components in which they
lack the requisite  technology  and  expertise and focus their  resources on the
areas where they have the greatest  expertise and leverage.  Outsourcing  allows
them to gain  access to  specialized  design and  manufacturing  technology  and
expertise,  accelerate  the  design  process,  reduce  their own  investment  in
equipment,  facilities,  and  personnel  necessary  for  specialized  design and
production capabilities,  reduce design and manufacturing costs by utilizing the
specialized  resources of the supplier,  and  concentrating  their  resources on
their strengths in the production and distribution of their core products.

     Several  major  OEM's in the  electronics  industry  have  announced  their
decision  to  outsource  production  of  components  and final  assembly  of end
products, including major cellular phone and PDA manufacturers, and many others.
We  believe  that  these  decisions  have  been  made to  allow  major  OEM's to
concentrate  on designing  concepts and marketing the finished  product,  and to
better control  costs.  IDW expects to benefit from these  decisions  because it
will   provide  us  with  more  design   input  and  create   more   value-added
opportunities,   resulting  in  increased  module  and  assembly  business,  and
solidified   relationships,   while   providing  our  customers   with  quality,
reliability and lower overall product and service costs.

     The estimated world market for segmented and character LCD's is reported to
be $1.3 billion, of which $225 million is in North America.  The majority of our
business  is  small  alpha-numeric  displays  and  modules  which  represents  a
significant portion of that market.

Products and Service

     Our products consist of LCD's and  subassemblies,  ranging from the low-end
LCD's for  calculators,  watches and  electronic  games to STN-LCD's  for use in
applications  that require high multiplex  rates and wide viewing  angles.  Such
devices are used in cellular telephones,  consumer appliances, office equipment,
bar code readers,  automotive  equipment,  and medical electronics.  The display
division, MULCD, produces the LCD's. The electronics division, IDWT, designs and
manufactures  customized  LCD modules  adding value to the basic  displays  with
electronics,  keypads, interface circuitry, back lighting and mounting hardware.
This division also produces  assemblies  without LCD's.  IDWT has production and
design  capability  in module  processes,  including  surface  mount  technology
("SMT"),  chip-on-board  ("COB"),  chip-on-film  ("COF"), tape automated bonding
("TAB"),  keypads and back lighting.  IDW expects to add  chip-on-glass  ("COG")
processing during the second quarter of 2001.

     IDW currently emphasizes  custom-design  display modules. IDW believes that
custom devices represent approximately 90% of its sales and the best opportunity
for higher  profits and  potential  growth.  For each custom  device,  IDW works
directly  with its  customer  to develop and  produce  the  original  design and
manufacture  the device in accordance  with the customer's  specifications.  IDW
identifies   the  specific   needs  of  existing  and   prospective   customer's
applications. IDW then assigns a cross-functional

<PAGE> 5

team of IDW engineers to a custom design project to develop the product  working
with the customer's engineers throughout the design phase, prototype development
and manufacturing  process. This effort normally results in a complete system or
product  requiring  a specific  visual  display  (cellular  telephones,  medical
instruments  or  hand-held  data  collection  devices).  IDW  has  a  number  of
previously prepared custom designs that are currently generating revenue and are
expected to generate additional revenue in the future.

     IDW also designs and produces standard or  "off-the-shelf"  devices,  which
include   designs  that  are  adaptable  to  various   fixed-end   uses  without
modifications or with slight  modification.  Standard  devices  encompass a wide
variety of LCD devices having varied applications  including dot matrix modules,
graphic modules and watch and calculator displays.

     IDW is instituting a careful  marketing and customer  selection  process to
more closely  align its growth and  development  with that of the  customers and
industries we believe offer the greatest  opportunity for growth. IDW's research
and development  will focus upon  technological  developments  and products that
meet the current and future requirements of those industries and companies.

     With our high-volume LCD manufacturing  line at the MULCD  facilities,  IDW
will focus its efforts on creating advanced display technologies. These advanced
display   technologies   will  allow  IDW  to   provide   its   customers   with
differentiating  products or products that provide higher information content in
either custom or standard devices.

Manufacturing

     The PRC Companies have a broad range of production processes to manufacture
a  variety  of LCD types  and  features,  including  TN and STN  displays  which
incorporate a wide variety of interface  technology,  as well as appearance  and
environmental  options.  The PRC Companies compose two manufacturing  divisions.
MULCD, the display  subsidiary,  has a  state-of-the-art,  fully automated,  LCD
front-end sheet  processing  production line that started in 1998,  supported by
back-end  processing and testing operators.  MULCD's LCD line was awarded an ISO
9001  certification for quality.  (ISO is a quality standard  established by the
International  Organization  for  Standardization.)  The existing LCD  front-end
processing  production  line is currently  operating  at 35%  capacity  with the
majority of the production supporting the local Hong Kong market. IDW will focus
on fully utilizing the excess production  capacity by selling to a select number
of high volume users in the Far Eastern,  North American and European markets to
create longer production runs thereby further reducing unit costs.  IDW's future
plans  potentially  include adding a second automated LCD production line and an
Indium Tin Oxide (ITO)  production line that will complement the present line by
adding  capabilities for thin glass production and chip-on-glass  displays.  IDW
has adequate space to incorporate a second line if  circumstances  warrant.  IDW
expects the costs of such an additional line to be up to $14 million.  This cost
would be funded through  internal  generation of funds,  lease  financing,  debt
financing,  and/or  private  placement  by Granite Bay of  additional  shares of
Common  Stock.  There  are no  concrete  plans at the  present  time for such an
investment.

     IDWT, the module and assembly subsidiary,  is an ISO 9001 certified display
module and assembly  production facility geared for customers with $1 million or
more per month in production requirements. This division is currently running at
approximately  40%  capacity and is qualified to produce LCD modules for several
major  cell phone and  telecommunication  manufacturers.  Current  manufacturing
technologies  are COB, SMT, TAB assembly and heat seal flex circuitry  assembly.
IDWT has the option to buy displays from outside  sources in order to expand its
production   capabilities  or  to  have  a  second  source  to  meet  customers'
requirements.  IDWT's  production  capabilities  include  five (5) SMT lines for
high-speed  electronic  component  placement and seventeen (17) production lines
for LCD Modules,  PCB  assemblies.  IDWT also  produces  printed  circuit  board
assemblies without LCD's.


<PAGE> 6

     We believe that wage costs for manufacturing are currently materially lower
in China,  a competitive  advantage that allows IDW to compete  effectively  for
business in the United States,  Europe and throughout Asia. IDW may be less able
to compete for customers outside China with companies with closer  manufacturing
facilities  if this  wage  advantage  were to  disappear  or lessen  other  cost
differentials affecting IDW's ability to provide products at competitive prices.

     We seek to  increase  our  value  to  customers  by  providing  responsive,
flexible,  total  design  and  manufacturing  services.  To date,  manufacturing
services have been concentrated towards the manufacture of LCD's and assembly of
custom design display modules. IDW will provide extended  manufacturing services
beyond those base services if the customer requests them.  Extended services may
include design, process development and turnkey manufacturing.

Quality Control

     IDW has an aggressive quality control program and maintains quality systems
and processes that meet or exceed the  requirements  set by many leading OEMs in
our  targeted  industries.  IDW bases its  quality  control  program  upon Total
Quality  Management  ("TQM").  IDW  routinely  performs  product  testing on its
standard and custom  products to ensure  product  reliability  and quality.  IDW
analyzes test results and takes actions to adjust the  manufacturing  process or
enhance product design and quality.  IDW's customers generally evaluate price in
the  quotation  process,  while  delivery  and quality are  evaluated  after the
product is shipped.  Therefore,  many customers  evaluate a company's quality by
reviewing  the  quality  systems   employed.   IDW's  receipt  of  an  ISO  9001
certification  for quality for the MULCD facility and an ISO 9001  certification
for the IDWT  facility  will  give its  clients  assurance  as to IDW's  quality
control  processes.  IDW is also certified with QS9000 for automotive  products,
which qualifies it to work with North American automakers.

Sales and Marketing

     IDW has contracted  with  electronics  sales  representative  organizations
establishing a network of sales  representatives  covering the majority of North
America. We also have sales representatives  covering the key markets in the Far
East,  including  Singapore,  Malaysia,  Taiwan and PRC. IDW also employs a full
time sales staff  covering the Hong Kong market.  In support of our sales force,
we employ  design  and sales  support  engineers  for  technical  backup.  These
engineers are based in the USA,  Singapore,  Hong Kong and at the  manufacturing
facilities. Sales offices are currently maintained in Rocklin, CA, Hong Kong and
Singapore.

     IDW's  sales in Asia were  approximately  55% of total sales in fiscal year
2000,  primarily  concentrated  in the  Hong  Kong  market.  The  United  States
accounted for 41% of total sales and Europe  accounted for  approximately  4% of
total sales in fiscal year 2000.

Customers

     IDW  operates  under  Non-Disclosure  Agreements  with  many  of its  major
customers  and thus  cannot  provide  specific  customer  details.  Our  largest
customer  accounted  for  approximately  28% of sales in fiscal year 2000.  Four
customers  each  represented  more than 5% of sales in fiscal  year 2000.

Research and Development

     IDW is currently  developing  LCD  technology to compete for the automotive
dashboard  and  clock  business,  laser  printer  and  copier  business  and the
point-of-sale  market (through  development of cold cathode  fluorescent ("CCF")
back-lighting production capability) and, through development of large

<PAGE> 7

graphic LCD's, portable word processing, medical instrument, ticketing machines,
hand-held computers, financial terminals and point-of-sale and other electronics
markets.

     Additionally,  IDW will conduct research and development that is focused on
improving  technology,  developing  improved  designs,  improving  manufacturing
processes and  improving  the overall  quality of the products and services that
IDW offers. IDW expects to increase its research and development  efforts on new
display technologies and more sophisticated display technologies. IDW expects to
restore research and development funding activities to appropriate levels and is
hiring research personnel to accomplish that goal.

Backlog

     As of  December  30,  2000,  IDW had a  backlog  of  orders in excess of $5
million,  all of which is  believed  to be firm and  expected  to be  filled  by
December 31, 2001.  IDW believes  that the  changing  economic  environment  has
encouraged  customers to place orders on a shorter  order cycle,  thus  reducing
overall  value  of  IDW's  backlog.   However,   customers  have  been  ordering
consistently  and on a more frequent basis. We believe that IDW will continue to
receive orders from its key customers, resulting in increased revenues overall.

Seasonality

     IDW's business experiences a marginal amount of seasonality. Our production
tends to ramp up in the second quarter,  continuing  through the fourth quarter,
but  declines  somewhat  in the  first  quarter  leading  up to and  immediately
following  the Chinese New Year.  We believe that as we increase our revenues to
key  customers in the USA and Far East,  and reduce our reliance on  traditional
markets in Hong Kong, that IDW's seasonality will be less of a factor.

Competition

     IDW believes Three-Five Systems, Varitronix,  Wintek, Optrex, Truly, Elec &
Eltek and Namtai  constitute  the principal  competitors  for IDW's LCD devices.
Some of these  competitors are presently  larger  companies that are believed to
have  greater  financial,  technical,  marketing,  manufacturing,  research  and
development,  and personnel  resources than IDW.  IDW's  success,  including its
revenue and profitability,  depends substantially on its ability to compete with
the other  suppliers of display  modules.  There is no  assurance  that IDW will
continue to be able to compete successfully with such companies.  There are also
other  companies in the  electronics  industry that have  significantly  greater
resources than the Company and these other  companies  could decide to enter the
LCD  market and  become  major  competitors.  However,  we believe  that IDW can
compete  favorably on the basis of customer  relationships,  service,  technical
innovation,  design capability,  product  performance,  cost, quality and timely
delivery.  To remain competitive and increase market share, IDW needs to develop
more sophisticated, higher-end LCD displays and COG module capability.

Intellectual Property

     IDW relies upon a combination of trade secrets, trademark,  confidentiality
procedures  and  contractual  provisions to protect its  intellectual  property.
IDW's core business is not dependent on any patent or trademark  protection  and
IDW does not expect to seek patent  protection  for any  technology  in the near
future, and does not presently hold any patents for existing technology.

Raw Materials/Suppliers

     The principal raw materials used in producing IDW's products consist of raw
and coated glass,  polarizers,  liquid crystal,  chemicals,  PCBs,  driver IC's,
molded plastic parts, electronic components and

<PAGE> 8

packaging materials.  The PRC Companies electric power plant requires the use of
diesel fuel to generate  electricity.  IDW has alternative sources of supply for
the majority of these  materials and believes that  additional  sources would be
available if any of its existing  suppliers were to go out of business or not be
able to furnish materials. Several of these materials, however, must be obtained
from foreign  suppliers,  which  subjects IDW to the risk  inherent in obtaining
materials  from foreign  sources,  including  currency  fluctuations  and supply
interruptions.  IDW's  ability  to  produce  a  significant  percentage  of  its
requirements  of LCD glass has  reduced  its  dependence  on  foreign  LCD glass
suppliers.  The PRC companies are  evaluating  the  opportunity to switch to the
local utility power grid,  which would  eliminate the need for consuming  diesel
fuel to generate electricity.  Meanwhile,  diesel fuel continues to be available
but prices have been increasing which will affect margins.

Employees

     As of  December  30,  2000,  the  Company  and  its  subsidiaries  employed
approximately  1,279 persons.  Of those, most are employed by the PRC Companies,
with 10 employed by IDW in California,  10 by IDW HK in Hong Kong, and 3 by IDWS
in  Singapore.  Over 90% of our  employees who are employed by the PRC Companies
work in manufacturing.  We consider our relationships  with employees to be good
and that  compensation  provided  to our  employees  is  similar  to  comparable
employers in the same  geographic  markets and  industry.  Our  employees do not
belong to a union or other collective bargaining unit.

Environmental

     IDW's operations generate small amounts of hazardous waste as manufacturing
byproducts,  including various gases, epoxies,  inks, solvents and other wastes.
The PRC Companies also operate a diesel-fired electricity plant on its property.
As IDW's  operations  expand,  the amount of such  hazardous  waste produced may
increase.  Over time,  hazardous  waste has received  increased  regulation from
federal, state, local and international governments and agencies. Our operations
comply with all  applicable  environmental  regulations  and that all  hazardous
waste is being stored, used and disposed of in accordance with applicable laws.

Corporate History

     From  its  inception  in  1989,   the  Company  was  organized  to  design,
manufacture and market snowboards,  boots, bindings,  apparel and accessories to
retail  outlets in the United States as well as  international  distributors  in
several foreign countries.  The Company  originally  organized under the laws of
the State of Oregon and was  headquartered in Salem,  Oregon.  In November 1997,
the Company  acquired all of the outstanding  securities of Westbeach  Snowboard
Canada Ltd., a manufacturer, wholesaler and retailer of snowboarding apparel and
casual  clothing.  On March  26,  1999,  the  Company  sold all of its  "Morrow"
intellectual  property,  along with all snowboard  inventories and its snowboard
and binding production equipment to K2 Acquisitions Inc. On November 12, 1999, a
subsidiary of the Company,  Westbeach  Canada ULC,  sold all of its  "Westbeach"
operations,  along with all apparel  inventories to Westbeach  Sports,  Inc. The
Company has discontinued all manufacturing  and marketing of snowboards,  boots,
bindings and apparel.  These sales effectively  eliminated all the prior ongoing
operations of the Company.

     On January 31,  2000,  we acquired  all of the  outstanding  shares of IDW,
headquartered in Rocklin, California. On February 1, 2000, IDW acquired, through
its wholly owned subsidiary "IDW HK," a company organized under the laws of Hong
Kong,  People's  Republic  of China  ("PRC"),  MULCD  and IDWT,  both  companies
organized under PRC law. The Company is now headquartered in Rocklin, California
and,  with  approval  of its  shareholders,  reincorporated  into  the  State of
California.

<PAGE> 9

     During  2000,  we loaned IDW  approximately  $8.3  million  to finance  the
acquisitions  of MULCD and IDWT, as outlined  below,  and to provide for working
capital needs. Unless otherwise noted, all references herein to monetary amounts
are to United States Dollars ("US$").

     To complete the  acquisition of the PRC Companies,  a payment of $4,271,729
was made on February 1, 2000, $592,935 on May 1, 2000, $296,457 on May 31, 2000,
$296,463 on June 9, 2000,  $533,641 on June 27, 2000,  and $650,000 on September
15, 2000.  Further,  the following was placed in escrow pending the finalization
of  documents:  $542,920 on January 26, 2001,  $288,027 on February 26, 2001 and
$8,894 on February 27, 2001. These final payments are expected to leave IDW with
a small  credit  balance  when the final  reconciliation  is  completed.  IDW HK
entered into a Supplemental  Deed and Charge ("Charge  Agreement") among IDW and
IDW HK, as Chargors, and Vikay Industrial (Hong Kong) Ltd. and Vikay Industrial,
Ltd., as Chargees.  Under the Charge Agreement,  IDW pledged the Common Stock of
IDW HK and the PRC Companies' assets to secure the payment of the balance of the
purchase  price for the PRC Companies.  Upon  finalization  of documents,  these
charges  will be  released.  These  releases  are expected to occur by April 30,
2001.

Item 2.  Property

     The PRC  Companies  own  manufacturing  facilities  which  consist of three
buildings totaling  approximately  270,000 square feet situated on four acres in
Heng Gang  Industrial  Estate  located 30 minutes  from the city of Shenzhen and
about one hour from Hong Kong.  The buildings are  approximately  ten years old,
the LCD  production  line  approximately  three  years old,  the SMT  production
machinery  approximately two to three years old and the balance of the machinery
of varying ages.  There is sufficient land to accommodate  future  expansion and
growth of the business. There is additional production floor space for available
support and  expansion of IDW's  manufacturing  operations.  The PRC  Companies'
facilities are on land leased pursuant to a 50-year land lease expiring in 2043.
The PRC Companies must pay annual land rent of approximately US$70,000,  subject
to certain  periodic  rent  increases.  The PRC companies  also lease  dormitory
facilities for its production  employees on an adjacent  property from the local
government.

     Space is also  leased in  Singapore  for sales and  engineering  staff.  In
Singapore,  the Company leases  approximately 2,100 sq. ft in an office building
at a lease rate of $3,000 per month which lease expires March 2003.

     IDW HK's corporate  offices consist of 3,100 sq. ft. in a high-rise  office
building in Hong Kong, SAR (Special  Administrative  Region). The lease is for 6
months  with a base rent of $3,850  per month and a building  management  fee of
$1,400 per month.  Management  of IDW is reviewing a possible  extension to this
lease, as well as considering other space in the same locale.

     The Company's  corporate  offices consist of 9,300 sq. ft. in an industrial
park in Rocklin, California. The lease is for a term of 62 months and expires in
April 2005.  Besides the base rent of $8,817 per month, IDW pays a proportionate
share of operating expenses not to exceed $2,149 per month. In October 2002, the
base rent will be adjusted to $9,259 for the remainder of the lease.

     On December 1, 2000, we sold the approximately 103,000 square foot facility
in Salem, Oregon ("Oregon Property") for $2.7 million. The proceeds were used to
reduce  debt and  provide  working  capital.  The  Oregon  Property  was used in
discontinued business of Morrow Snowboards(TM).

Item 3.  Legal Proceedings

     The  Company  is  currently  involved  in  the  litigation  and  proceeding
described below.

Nicholas Steenolsen vs. Squaw Valley Ski Corporation,  Granite Bay Technologies,
Inc., Morrow

<PAGE> 10

Snowboards, Inc., et al., Superior Court of California, Los Angeles County, Case
No. BC243817,  a complaint for personal injuries that arose from plaintiff's use
of a snowboard allegedly  manufactured by Morrow Snowboards,  Inc. The complaint
seeks  unspecified  general  damages,  and  unspecified  past and future medical
expenses.  The Company has not yet answered the  complaint  and no discovery has
been  conducted.  The Company intends to defend the action and has no basis upon
which to  determine  the amount of damages or  probability  of  recovery at this
time.

Item 4. Submission of Matters to a Vote of Security Holders

     The  Company  did not submit any  matters to  security  holders  during the
fourth quarter of its last fiscal year ended December 30, 2000.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

     From December 14, 1995 until February 18, 2000, the Company's  Common Stock
was trading  under the symbol  "MRRW" and since  February  18,  2000,  under the
symbol  "GBAY." On April 27,  1999,  the  Company was  delisted  from the Nasdaq
National  Market,  but is currently  traded on the Pink Sheets.  As of April 10,
2001, there were approximately 703 registered holders of the Common Stock of the
Company.  Because  many of the shares of Common  Stock are held in street  name,
there may be additional  beneficial  holders of the Company's  Common Stock.  On
December 30, 2000 there were 19,150,507 shares outstanding.

     The  following  table  shows  the  range of high and low  market  prices as
reported by the Pink  Sheets and while the  Company was  involved in its current
operations:

                                               High                   Low
Fiscal 2000:
-----------
First Quarter (Apr 2)                          $5.25                 $0.28
Second Quarter (July 2)                        $3.31                 $1.50
Third Quarter (Oct. 1)                         $2.30                 $1.60
Fourth Quarter (Dec. 31)                       $1.90                 $0.45


     The  following  table  shows  the  range of high and low  market  prices as
reported  by the Nasdaq  National  Market or Pink  Sheets  while the Company was
involved in the now discontinued operations:

                                               High                   Low
Fiscal 1999:
-----------
First Quarter (Apr. 3)                         $0.84                 $0.38
Second Quarter (July 3)                        $0.38                 $0.01
Third Quarter (Oct. 2)                         $0.25                 $0.01
Fourth Quarter (Jan. 1)                        $1.00                 $0.01


     The Company has paid no dividends on its Common Stock since its  inception.
For the foreseeable  future, any earnings will be retained to finance the growth
of the Company and, accordingly,  the Company does not anticipate the payment of
cash dividends.

<PAGE> 11

Recent Sales of Unregistered Securities

     For the year ended December 30, 2000, we have sold and issued the following
securities which were not previously reported in our quarterly reports:

     1. We granted  stock  options to our  employees,  officers,  and  directors
pursuant  to the 1990 Stock  Option  Plan,  in the  aggregate  amount of 547,500
shares at exercise prices ranging from $0.75 to $1.70.

     2. We granted an  aggregate  of 180,000  shares of our Common  Stock to our
outside directors under our 1999 Stock Option Plan for nonemployee  directors at
exercise prices ranging from $0.75.

     3. We granted an  aggregate  of 131,000  shares of our Common  Stock to our
employees,  officers and directors under our 2000 Equity Incentive Plan exercise
prices ranging from $0.75 to $0.78.

     4. On October 27, 2000,  we changed our  corporate  domicile from Oregon to
California  pursuant to a merger  agreement.  Each  outstanding  share of Common
Stock  and  option  and  warrant  to  purchase  shares  of  Common  Stock of our
predecessor  automatically  became  one share of our  Common  Stock or option or
warrant to purchase shares of our Common Stock.  The corporate  existence of our
predecessor  ceased. We relied on the exemption from  registration  contained in
Rule 145(a)(2) of the Securities Act of 1933.

     5. In  connection  with our  private  placement  in June  2000,  we  issued
warrants to purchase 25,000 shares of Common Stock at a price of $1.50 per share
which expires June 21, 2005 to finders.

     6. On August 1, 2000,  the Company  granted  5,000 shares of Common  Stock,
pursuant  to  stock  purchase  agreements,   to  creditors  in  connection  with
discontinued  operations.  These  shares were  granted in  consideration  of the
creditors release of interest in the Oregon property refinance.

     7. In  connection  with the  Company's  August 2000  private  placement of
134,000 shares of Common Stock, the Company entered into a put option agreement.
In the put  option  agreement  the  shareholder  has the  right to  require  the
Company, for a period of thirty (30) days beginning August 24, 2001, to purchase
all or a portion of these  shares at a price of $2.25 per share.  The Company at
its option may redeem these shares at a price of $2.25 up to August 25, 2001.

     8. On September 8, 2000, the Company  granted 10,000 shares of Common Stock
at $1.73 per share to a Vice President of IDW for his services.

     9. On September 8, 2000, the Company sold 100,000 shares of Common Stock to
a Vice President of IDW. The Company received a promissory note for $150,000 for
the purchase of these  shares.  These shares and related note were  subsequently
cancelled when the employment of the employee was ended.

     10. Also, in the fourth  quarter of 2000, the Company,  in another  private
placement,  sold 458,630 shares of Common Stock at $1.50 per share to accredited
investors.  Total  proceeds from the offering were  $687,945.  The Board set the
offering price based on then market prices and other factors.

     11. On December 22, 2000, the Company closed a unit offering  consisting of
debt  instruments and warrants to purchase shares of Common Stock of the Company
equal to 20% of the investment amount.  Under the debt instruments,  the Company
will pay interest  only payments each month at a rate of 12.68% per year and the
total amount  borrowed is due on December 30, 2001. The warrants are exercisable
for $0.75 per share for a period of 5 years. The Company's net proceeds from the
offering  were  $449,303.  There  was no  broker  or  placement  agent  in  this
transaction. After December 30, 2000, we sold additional units with net proceeds
totaling $50,000.

     The sales  and  issuances  of the  shares of  Common  Stock,  options,  put
options,  and  warrants to purchase  Common Stock in private  placements  listed
above were made by us in reliance upon the exemptions from registration provided
under Section 4(2) and 4(6) of the Securities Act of 1933, as amended,  and Rule
506 of Regulation D,  promulgated by the SEC under federal  securities  laws and
comparable exemptions for sales to "accredited" investors under state securities
laws. The offers and sales were made to accredited  investors as defined in Rule
501(a) under the Securities Act, no general  solicitation  was made by us or any
person  acting on our  behalf;  the  securities  sold were  subject to  transfer
restrictions,  and the  certificates  for those shares  contained an appropriate
legend  stating that they had not been  registered  under the Securities Act and
may not be offered or sold  absent  registration  or  pursuant  to an  exemption
therefrom.

<PAGE> 12

Item 6. Selected Consolidated Financial Data

     The following table presents a summary of selected  financial data for each
of the five years in the period  ended  December 30, 2000.  The  Financial  Data
includes the Company discontinued snowboard and apparel operations, except where
noted.
<TABLE>
<S>                                                        <C>               <C>          <C>            <C>           <C>



                                                                                           Years Ended
------------------------------------------------------------------------------------------------------------------------------------
                                                            December 30,      January 1,    December 26,  December 27,  December 31,
                                                                2000            2000           1998           1997          1996
------------------------------------------------------------------------------------------------------------------------------------
                                                                          (in thousands, except share and per share data)
Net sales (1)                                                 $ 17,804           $ -
Cost of goods sold (1)                                          12,578             -
                                                              ---------     ---------      ---------       ---------       ---------
    Gross profit (1)                                             5,226             -              -               -               -
                                                              ---------     ---------      ---------       ---------       ---------
Operating expenses:
    Selling, marketing & customer service                        1,545             -              -               -               -
    Engineering, advance design and product
      management                                                   570             -              -               -               -
    General and administrative                                   5,124           347            295             332             315
                                                              ---------     ---------      ---------       ---------       ---------
      Total operating expenses (1)                               7,239           347            295             332             315
                                                              ---------     ---------      ---------       ---------       ---------
Operating loss                                                  (2,013)         (347)          (295)           (332)           (315)
                                                              ---------     ---------      ---------       ---------       ---------
Other income (expense):
    Interest expense                                              (442)          (27)             -               -               -
    Unrealized loss on asset                                    (1,000)
    Other income                                                   (29)            -              -               -               -
                                                              ---------     ---------      ---------       ---------       ---------
                                                                (1,471)          (27)             -               -               -
                                                              ---------     ---------      ---------       ---------       ---------
Loss from continuing operations before income taxes             (3,484)         (374)          (295)           (332)           (315)
                                                              ---------     ---------      ---------       ---------       ---------
    Income tax benefit (expense)                                     -             -              -               -               -
                                                              ---------     ---------      ---------       ---------       ---------
Loss from continuing operations                                 (3,484)         (374)          (295)           (332)           (315)
                                                              ---------     ---------      ---------       ---------       ---------
    Income (loss) on discontinued snowboard operations              69           165         (7,402)         (6,688)          2,462
    Loss on disposition of snowboard operations                   (269)            -         (1,952)              -               -
    Loss on discontinued apparel operations                       (112)       (3,309)        (4,939)              -               -
    Loss on disposition of apparel operations                     (269)         (132)             -               -               -
                                                              ---------     ---------      ---------       ---------       ---------
Loss from discontinued snowboard and apparel
operations, net of taxes before extraordinary item                (581)       (3,276)       (14,293)         (6,688)          2,462
                                                              ---------     ---------      ---------       ---------       ---------
    Extraordinary Loss on Extinguishment of Debt                     -             -              -               -               -
                                                              ---------     ---------      ---------       ---------       ---------
Net income (loss)                                             $ (4,065)     $ (3,650)     $ (14,588)       $ (7,020)        $ 2,147
                                                              =========     =========      =========       =========       =========
Income (loss) per share from continuing operations (2)
    Basic                                                      $ (0.20)      $ (0.06)       $ (0.05)        $ (0.06)        $ (0.05)
    Diluted                                                    $ (0.20)      $ (0.06)       $ (0.05)        $ (0.06)        $ (0.05)

Income (loss) per share from discontinued operations (2)
    Basic                                                      $ (0.03)      $ (0.51)       $ (2.31)        $ (1.18)         $ 0.43
    Diluted                                                    $ (0.03)      $ (0.51)       $ (2.31)        $ (1.18)         $ 0.41

Net income (loss) per share (2)
    Net loss - basic                                           $ (0.23)      $ (0.57)       $ (2.36)        $ (1.24)         $ 0.38
    Net loss - diluted                                         $ (0.23)      $ (0.57)       $ (2.36)        $ (1.24)         $ 0.35

Weighted average number of shares outstanding (1)
    Basic                                                   17,482,583     6,377,556      6,176,556       5,671,634       5,684,053
                                                            ===========    =========      =========       =========       =========
    Diluted                                                 17,482,583     6,377,556      6,176,556       5,671,634       5,929,674
                                                            ===========    =========      =========       =========       =========

------------------------------------------------------------------------------------------------------------------------------------
                                                                 As Of
                                                              December 30,   January 1,    December 26,   December 27,  December 31,
                                                                 2000          2000           1998          1997 (3)       1996 (3)
------------------------------------------------------------------------------------------------------------------------------------
                                                                          (in thousands, except share and per share data)
Balance Sheet Data:
Cash and cash equivalents                                          914         1,930          1,348             855           5,062
Short term investments                                               -             -              -               -           3,700
Net current assets from continuing operations                    5,563         2,111          1,348           9,790          23,017
Net current assets of discontinued operations                       24         2,332          9,449           4,006               -
Equipment, fixtures, and property, net                           7,191         3,061          3,108           3,980           9,183
Total assets from continuing operations                         18,849         6,172          4,456          17,965          32,243
Total net assets from discontinued operations                       24         2,404         15,622           9,332               -
Current liabilities                                              4,941         3,973         12,583           5,196           3,789
Long-term debt and capital lease obligations, net
      of current portion                                           201             -              -              13             258
Shareholders' equity                                            13,731         4,603          7,495          22,058          27,892

</TABLE>


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Overview

     Since its  formation in 1989 until 1999,  the Company  focused its business
activities on designing,  manufacturing  and marketing  premium  snowboards  and
related  products under the "Morrow" brand name. In March 1999, the Company sold
its "Morrow" intellectual property, along with all 1999/2000 inventories and its
snowboard and binding production  equipment to K2. In November 1999, the Company
sold  its  "Westbeach"  brand  name  to  Westbeach  Sports,  Inc.  resulting  in
discontinuance  of  all  operations.  The  Company's  total  revenues  from  the
discontinued  operations during the fiscal year ended December 30, 2000 amounted
to  $107,000  representing  rent  income on a  facility  previously  used in the
discontinued   apparel   operations.   This  compares  to  $9,108,000   for  the
discontinued  operations  during the fiscal year ended January 1, 2000, of which
$86,000 related to discontinued  snowboard  operations and $9,022,000 related to
discontinued apparel operations.

On January 31, 2000,  the Company  acquired  100% of the  outstanding  shares of
International  DisplayWorks,  Inc. ("IDW") and,  concurrently,  IDW (through its
subsidiary  IDW Hong  Kong  ("IDW  HK")  acquired  100% of the  shares  of MULCD
Microelectronics   Company  Ltd.   ("MULCD")  and  Vikay   Shenzhen   Technology
Development  Company,  Ltd.  ("IDWT").   MULCD  and  IDWT  are  engaged  in  the
manufacturing  and assembly of liquid  crystal  displays and  assemblies  in the
Peoples Republic of China ("PRC Companies").

The operations of the Company in the year ended December 30, 2000 consist of the
activities of IDW on a consolidated basis for the eleven-month period from their
acquisition on January 31, 2000 through December 30, 2000.

Comparison  of the Years Ended  December 30, 2000  (Fiscal  2000) and January 1,
2000 (Fiscal 1999)

     Continuing Operations.  The Company's continuing operations consist of IDW,
IDW HK and the PRC Companies,  which  manufacture  liquid  crystal  displays and
assemblies.  As previously  mentioned,  the Company  discontinued  snowboard and
apparel operations. As a result of the discontinued operations, the consolidated
financial  statements report the transactions of the discontinued  operations as
net amounts  separate from  continuing  operations.  All  continuing  operations
ceased in 1999 except for some general and  administrative  expenses incurred to
wind  down  operations  and  interest  expense  on the  Company's  bridge  loan.
Discussion  and analysis of the results of continuing  operations in fiscal 2000
as compared to fiscal 1999 follow.

     Revenues.  The Company had consolidated net sales of $17,804,000,  from the
sale of liquid crystal displays and assemblies for electronic  equipment for the
year  ended  December  30,  2000.  Such  sales  represent  sales  of IDW and its
subsidiaries for the eleven-month  period from their  acquisition on January 31,
2000  through  December  30,  2000.  All sales in  fiscal  1999 were part of the
Company's discontinued operations and, therefore, are not compared to the fiscal
2000 results.

     Gross Profit.  Gross profit from  continuing  operations in the fiscal year
ended December 30, 2000 was $5,226,000,  which represents  continuing operations
of IDW and its subsidiaries for the eleven- month period from their  acquisition
on January 31, 2000 through  December  30, 2000.  All prior year gross profit is
part of the Company's  discontinued  operations and therefore is not compared to
the 2000 results.

<PAGE> 13

     Operating Expenses.  Operating expenses of continuing operations consist of
selling, marketing and customer service; engineering, advance design and product
development;  and general  and  administrative  expenses.  These  expenses  were
$7,239,000 for the year ended December 30, 2000,  which represents the operating
expenses  of the  continuing  operations  of IDW and its  subsidiaries  from the
acquisition  date of January 31, 2000 through  December 30, 2000 and the ongoing
corporate administration of the Company.

     Selling,  Marketing and Customer Service.  Selling,  marketing and customer
service  expenses for the year ended  December 30, 2000 were  $1,545,000,  which
represents   continuing   operations  of  IDW  and  its  subsidiaries  from  the
acquisition  date of January 31, 2000 through  December 30, 2000.  There were no
selling,  marketing  and  customer  service  expenses in fiscal 1999  related to
continuing  operations.  Significant  elements  of this  expense in fiscal  2000
consists  of staff and  employee  related  expenses  of  $1,071,000,  travel and
related expenses of $65,000 and advertising expense of $73,000.

     Engineering,  Advance Design and Product Management.  Engineering,  advance
design and product  management expense for the year ended December 30, 2000 were
$570,000 representing continuing operations of IDW and its subsidiaries from the
acquisition  date of January 31, 2000 through  December 30, 2000.  There were no
engineering,  advance design and product management  expenses during fiscal 1999
related to continuing  operations.  The significant  element of the engineering,
advance design and product management expenses for continuing  operations during
fiscal 2000 was staff and employee related expenses of $522,000.

     General and  Administrative.  General and  administrative  expenses for the
year ended  December  30,  2000 were  $5,124,000,  which  represents  continuing
operations of IDW and its subsidiaries  from the acquisition date of January 31,
2000 through  December 30, 2000 and continuing  operations  expenses for ongoing
corporate administration of the Company. The significant elements of the general
and administrative expenses of continuing operations of IDW and its subsidiaries
during fiscal 2000 relate to staff and employee  related expenses of $1,696,000,
rent, telephone, and utilities expenses of $288,000, legal expenses of $158,000,
accounting   expenses  of  $238,000  and  local  government  fees  of  $122,000.
Significant  elements of the  continuing  operations  expenses for the Company's
ongoing corporate  administration  include $310,000 in accounting fees, $249,000
in legal fees,  $213,000 of insurance costs,  $175,000 in salaries and benefits,
and $395,000 in amortization of goodwill from the IDW acquisition.  Depreciation
of general and administrative facilities amounted to $341,000.

     Interest Expense.  Interest expense increased by $415,000,  to $442,000 for
the year ended  December  30, 2000,  from $27,000 for the year ended  January 1,
2000. The interest  expense in fiscal 2000 related  primarily to interest on the
obligations  incurred  to raise the funds  for the  acquisitions  of IDW and its
subsidiaries.  The  interest  expense in fiscal 1999  related to payments on the
$675,000 outstanding bridge loan.

     Other  Expense.  Other  expenses of  continuing  operations  in fiscal 2000
amounted to a $1,000,000  unrealized  loss  resulting  from the  write-off of an
investment  in common  shares of  Globalgate,  an  e-commerce  company  that had
suffered  deteriorated  financial  condition such that the company  believed its
investment had little or no market value, and $29,000  representing  small items
of other  income and  expense.  There was no other  income or expense in 1999 of
continuing operations.

     Net Loss. Net loss for fiscal year 2000 was $4,065,000 compared to net loss
of $3,650,000 for fiscal 1999. The loss from  continuing  operations in 2000 was
$3,484,000,  or  an  increase  of  $3,110,000  over  the  loss  from  continuing
operations  of $374,000 in 1999.  The loss from  continuing  operations  in 2000
represents  the  results of  operations  of IDW and its  subsidiaries  while the
activities  in 1999 were  primarily  focused on  discontinued  operations of the
snowboard and apparel segments. The loss from

<PAGE> 14

discontinued  operations  was $581,000 in fiscal 2000, a decrease of  $2,695,000
from the loss from  discontinued  operations of  $3,276,000 in fiscal 1999.  The
decrease  is  attributable  to the  closure of  operations  of the  discontinued
segments.  Costs of  winding  down the  discontinued  operations  and  losses on
disposition  of their  assets in excess of  previous  estimates  resulted in the
fiscal 2000 loss from discontinued operations.

     Discontinued  Operations.  The net loss  from  discontinued  snowboard  and
apparel  operations in fiscal 2000 was $581,000  consisting of a loss of $43,000
from  discontinued  operations  ($69,000 income for snowboards and $112,000 loss
for  apparel)  and a  loss  of  $538,000  from  disposition  of  assets  of  the
discontinued  operations  ($269,000  loss  from  snowboards  and  $269,000  from
apparel).  The loss from discontinued  operations represents differences between
incurred  costs of winding  down the  operations  and losses on  disposal of the
assets of  discontinued  operations  and estimates  made in prior years when the
decision was made to discontinue the two segments activities.

Comparison  of the Years Ended  January 1, 2000,  (Fiscal 1999) and December 26,
1998, (Fiscal 1998)

     Continuing Operations. As previously mentioned, the Company sold its Morrow
business to K2 in March 1999,  and its Westbeach  business to Westbeach  Sports,
Inc.  in  November  1999.  As a result  of these  transactions,  all  continuing
operations ceased except for some general and  administrative  expenses incurred
to wind down operations and interest expense on the Company's bridge loan. These
continuing operations expenses were $374,000 for fiscal 1999.

     Net Sales.  All sales are a part of the Company's  discontinued  operations
and therefore not reflected in this comparison.

     Gross  Profit.  All  sales  and cost of sales  are a part of the  Company's
discontinued  operations  and  therefore  no gross  profit is  reflected in this
comparison.

     Operating Expenses.  Operating expenses of continuing operations consist of
general and administrative costs. These costs increased to $347,000 for the year
ended January 1, 2000,  from $295,000 for the year ended December 26, 1998. This
increase  is a result of greater  consulting  needs in fiscal  1999 to wind down
operations. The general and administrative expenses for fiscal 1999 consisted of
salaries  and  accounting   consulting  of  $242,000  as  well  as  $105,000  in
depreciation expense.

     Interest Expense.  Interest expense increased to $27,000 for the year ended
January 1, 2000,  from $0 for the year ended  December  26,  1998.  The interest
expense in 1999 related to payments on the $675,000 outstanding bridge loan. The
1998 interest expense is a part of discontinued  operations and is not reflected
in this comparison.

     Other  Income/Expense.  There  were  no  other  income/expenses  due to the
Company's  discontinued  operations  and  therefore  none are  reflected in this
comparison.

     Discontinued  Operations.  On March 26,  1999,  the Company sold all of its
snowboard,  boot and binding assets to K2 for $3.2 million. The Company retained
all of the  related  receivables  and  liabilities,  except  for  capital  lease
obligations and certain contract team rider obligations.

     There was income from discontinued snowboard operations of $165,000 in 1999
compared to a loss on discontinued  snowboard operations of $7,402,000 in fiscal
1998.  The Company  recognized a loss on the  discontinuance  of  $1,952,000  in
fiscal  1998,  which  is  comprised  of a  $454,000  loss on the  sale to K2 and
$1,498,000 in accruals related to discontinued snowboard operations in the first
quarter of fiscal 1999. The Company also saw decreased  sales and write downs in
the value of  certain  equipment  related to future  usage for the  discontinued
snowboard operations in 1998. The income from discontinued  snowboard operations
in  fiscal  1999  resulted  from the  revaluation  of  allowances  and  accruals
established at the time of the sale to K2.

<PAGE> 15

     On  November  12,  1999,  the  Westbeach  subsidiaries  were sold  creating
discontinued  apparel operations for the apparel business.  Westbeach had a loss
from discontinued  apparel  operations in 1999 of $3,309,000  compared to a loss
from  discontinued  apparel  operations  of  $4,939,000  in  1998.  The  Company
recognized  a loss on the  discontinuance  of  $132,000  in fiscal  1999,  which
results from a loss on the sale to Westbeach  Sports,  Inc. The fiscal 1999 loss
from discontinued  apparel operations  included a loss on impairment of goodwill
of $1,135,000.

     Net (Loss) Income. Net loss for fiscal 1999 was $3,650,000  compared to net
loss of $14,588,000  for fiscal 1998. The difference is mainly  attributable  to
the  discontinuance  of the  snowboard  business and the  significant  losses it
created in 1998.  Of the  $3,650,000  net loss for fiscal 1999,  $374,000 is net
loss from continuing  operations  related to the operating  expense and interest
expense previously mentioned.

Liquidity and Capital Resources

     The Company  requires  capital to pay certain  existing fixed  obligations,
provide working capital for the PRC Companies, cover administrative overhead for
the parent  company  and certain  costs  related to being a public  company.  As
discussed  below,  the  Company  will  require  additional  working  capital  to
implement its current Business Plan for IDW.

     Net cash used in operating activities from continuing operations for Fiscal
2000 was $1,051,000 resulting primarily from a net loss of $4,065,000, increases
in accounts  receivable  of  $1,501,000  and  decreases  in accounts  payable of
$1,597,000 partially offset by noncash expenses of depreciation and amortization
of $2,413,000 and loss from write-off of a $1,000,000 investment.  This compares
to cash  provided  by  operating  activities  for 1999 of  $4,741,000  resulting
primarily  from a net loss of  $3,650,000,  increases in accrued  liabilities of
$1,998,000 and increase in accrued loss on disposal of $1,498,000 with add backs
for  depreciation  and  amortization  of $758,000,  loss on  write-down of fixed
assets of $2,659,000,  decreases in accounts receivable of $3,339,000, decreases
in inventories of $4,099,000. Cash provided by discontinued operations in fiscal
2000 was  $2,394,000,  which  consisted  primarily of proceeds from sale of real
estate of the previous apparel segment.

     Net cash used in investing  activities for fiscal 2000 was  $4,493,000.  Of
that  amount,  $4,272,000  represents  payments  toward the  purchase of the PRC
Companies, and $285,000 was used for the acquisition of property and equipment.

     Net cash provided by financing  activities  in fiscal 2000 was  $2,134,000,
consisting  principally  of  $6,017,000  from sale of shares of Common  Stock in
private  placements and partially offset by $4,391,000 of net repayment of debt.
Net cash used in financing activities was $4,524,000 in fiscal 1999,  consisting
of  $2,251,000  in  principal  payments and  $3,698,000  in repayment of line of
credit  borrowings,  partially  offset by $675,000  borrowings from the acquired
bridge loan and $750,000 proceeds from the issuance of Common Stock.

     On  March  30,  1999,  some  of the  Company's  trade  creditors  filed  an
Involuntary Petition ("Involuntary  Petition") for relief under Chapter 7 of the
United  States  Bankruptcy  Code in the United States  Bankruptcy  Court for the
District of Oregon (Case No.  699-61663-FRA7).  On March 30, 1999, the Company's
accounts payable were approximately $2,500,000 and were all overdue more than 90
days. The Company negotiated a settlement with substantially all those creditors
and the Involuntary  Petition was dismissed on June 16, 1999. The settlement was
accepted by over 90% of the Company's  creditors (by number and dollar amount of
claims) with  undisputed  claims.  On August 2, 2000, the Company made the final
payment of $1,384,000 due to creditors under the settlement.

<PAGE> 16

     The  planned  future  expansion  of IDW and its  subsidiaries  includes  an
expansion  into COG  production and related  product  development.  A payment of
approximately  $800,000 is required in the second  quarter of 2001. In addition,
approximately  $2,000,000 of additional  capital  expenditures is expected to be
needed during 2001 to enhance existing  production  capabilities,  de-bottleneck
processes,  assure future product  quality and  reliability,  reduce costs,  and
expand  capacity.  IDW is expected to  generate  significant  amounts of working
capital  beginning  later in 2001.  IDW  expects to borrow  against  unleveraged
assets such as the manufacturing facility in PRC.

     Any  financing,  involving  equity or rights to acquire  equity  interests,
would result in dilution in the  percentage  ownership of existing  shareholders
when such equity  interests  were issued and,  depending on the sales  price,  a
dilution in book value.  There is no  assurance  the  expected  $2.8  million in
financing  needed in 2001 will be raised or raised in a timely  manner.  In such
event, we would face a reduced level of operating  performance,  possible losses
on investment and ability to service our customers' growing needs.

     See "Item 7.  Management's  Discussion and Analysis of Financial  Condition
and  Results of  Operations  -- Factors  that May Affect  Future  Results -- PRC
Companies'  Operating Results;  Payment of Balance of Purchase Price for the PRC
Companies"  and  "--Granite  Bay's Capital  Resources and  Liquidity;  Potential
Consequences  of Failure  to Raise  Additional  Needed  Capital"  regarding  the
Company's  capital  and  resources  to  finance  such  payments  and  the  risks
associated therewith.

Factors That May Affect Future Results

     This report contains forward-looking  statements which are made pursuant to
the safe harbor  provisions of the Private  Securities  Litigation Reform Act of
1995. The forward-looking  statements involve risks and uncertainties that could
cause actual results to differ materially from the  forward-looking  statements.
When  used  in this  report,  the  words  "anticipate,"  "believe,"  "estimate,"
"expect"  and similar  expressions  as they relate to Granite Bay  Technologies,
Inc. (the "Company," "Granite Bay" or "we") or its management, including without
limitation,  IDW, IDW HK and the PRC Companies (as defined herein), are intended
to identify  such  forward-looking  statements.  Granite  Bay's actual  results,
performance or achievements  could differ  materially from the results expressed
in, or  implied  by these  forward-looking  statements.  Granite  Bay  wishes to
caution readers of the important factors,  among others, that in some cases have
affected,  and in the future could affect Granite Bay's actual results and could
cause actual  consolidated  results for fiscal year 2001, and beyond,  to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, Granite Bay. These factors include without limitation,  Granite Bay's
change in business  lines,  Granite  Bay's  ability to obtain  capital and other
financing in the amounts and the times needed,  realization of forecasted income
and  expenses,initiatives  by  competitors,  price  pressures,  changes  in  the
political  climate for business,  the loss of one or more significant  customers
and the risk factors  listed from time to time in Granite  Bay's SEC reports and
risk factors listed below.

     Granite Bay's principal assets consist of its equity interests in IDW. As a
result,  Granite Bay's operating  results will primarily reflect IDW's operating
results.  A wide  variety of factors  will  affect  operating  results and could
adversely impact net sales and profitability. Significant factors in our success
will be our ability to establish and, in certain cases,  re-establish design and
manufacturing relationships with key OEM customers that will generate sufficient
orders,  including  orders of higher margin products,  to increase  revenues and
profitability.

     Our products are incorporated in a wide variety of communications, consumer
and  appliance  products.  A slowdown in demand for such  products  that utilize
IDW's  displays and modules as a result of economic or other  conditions and the
market  served by IDW or other factors could  adversely  affect IDW's  operating
results.  Our products are sold into an industry  characterized  by increasingly
rapid product turnaround, increasingly shorter lead times, product obsolescence,
order cancellation and other

<PAGE> 17

factors  that make it  difficult  to  forecast  future  orders,  production  and
personnel needs and other resource  requirements with a high level of certainty.
Our ability to anticipate  such factors and respond to them in a timely  fashion
will  affect its  ability to utilize  its  manufacturing  capacity  effectively,
maintain a proper product mix and avoid downtimes due to product conversions and
other  factors.  Such  uncertainty  also  creates  difficulties  in  maintaining
adequate  supplies of raw materials to meet shifting customer needs and customer
orders  placed on short  notice.  Other  factors,  many of which are  beyond the
Company's control are described below.

     Granite  Bay's  Capital  Resources  and  Liquidity  and IDW 2000  Operating
Results.  The actual  performance of IDW for 2000,  following its acquisition by
Granite Bay was materially less than forecasted.  This performance resulted from
unexpectedly  longer lead times to restart  relationships  that had been ignored
while the PRC companies were operated under Judicial Management,  prior to their
acquisition  by IDW. In addition,  the longer than expected time to complete the
final payments and reconciliation with the Judicial Managers, and the protracted
accounting and legal issues  relating to the complexity of buying  companies out
of distress situations, has affected the timeliness of Granite Bay regaining its
listing on NASDAQ,  which, along with an increasingly  difficult  environment in
North America for raising new capital, has slowed our ability to provide for the
financing  requirements of IDW. While IDW is closer to producing a positive cash
flow, if we are unsuccessful in raising capital when required,  then Granite Bay
could  face a  total  risk  of  loss  of its  investment  in IDW as  well as the
underlying PRC Companies. Further, any financing,  involving equity or rights to
acquire equity interests,  would result in dilution in the percentage  ownership
of existing  shareholders when such equity interests were issued and,  depending
on the sales price, a dilution in book value.  Further, to capitalize on certain
growth  opportunities  for the PRC  Companies or if projected  revenues are less
and/or costs higher than projected,  we would have to raise additional financing
beyond that outlined  above.  Without such  expansion,  the potential for IDW to
grow,  as well as to maximize  revenues  and  potential  profitability,  will be
limited; this could affect the value of the Company's Common Stock. See "Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations -- Liquidity and Capital  Resources"  and "-- Factors that May Affect
Future  Results"  regarding  Granite Bay's capital and resources to finance such
payments and the risks associated therewith.

     Dependence  on Key  Personnel.  Our success is largely  dependent  upon the
expertise of key members of IDW's management team including its founder, Anthony
Genovese,  and Philip Gregory,  its VP of Manufacturing.  Loss of their services
could  materially and adversely  affect our business,  its future  prospects and
operating results,  including its ability to penetrate the United States market.
We do not  presently  have a  long-term  employment  agreements  with  these key
employees.  Our business and operating results also depend  substantially on the
efforts and  abilities of our senior  management  and technical  personnel.  The
competition  for qualified  management and technical  personnel is intense.  The
loss of service of one or more of its key  employees  or the  ability to add and
retain key personnel could have a material  adverse effect.  We do not presently
maintain key-person life insurance.

     A Few Customers and Applications Account for a Significant Portion of IDW's
Sales; Order Cancellations. In fiscal year 2000 ten customers represented 56% of
total sales revenue. One customer represented 28% of IDW revenue. At our present
size, the loss of any one of these customers could have a material affect on the
Company's health.  Customers have not made firm long-term purchase  commitments.
Delay or  reduction  of customer  orders  could  result in  under-absorption  of
manufacturing capacity. These risks are enhanced because of the large percentage
of sales to electronic  industry customers who are subject to severe competitive
pressures,  rapid  technological  change  and  obsolescence.  While we expect to
continue  to  receive  orders  from  existing  and new  customers,  there  is no
assurance orders will be received,  and if received,  not cancelled,  delayed or
reduced,  which  could  have a  material  adverse  effect  on IDW's  results  of
operations.  To reduce  this risk,  we expect to continue  to  emphasize  custom
modules which increase sales to the above  customers or new customers for custom
devices  where  purchase  orders are  generally  longer  term with more  limited
cancellation provisions.

<PAGE> 18

     Need for Additional  Financing.  The  opportunities for long-term growth in
IDW's lines of business are dependent upon having  sufficient  capital resources
available to realize the rapid growth  potential of significant OEM key accounts
which we have  identified and targeted.  We expect to need capital to fuel IDW's
growth for both working capital and our capital expenditure program.

     The inability to include new display  devices in its product  offerings may
affect our ability to seek  business  from certain  customers  who want complete
solutions  to all their  display  device needs or could  adversely  affect IDW's
operating results if technology shifts to such higher-end devices in general.

     Ramifications of a Long Period of Judicial Management.  Since the parent of
MULCD and IDWT was under  judicial  management  from  December  6, 1997  through
January 2000,  many of our customers found second sources of supply or purchased
goods  elsewhere.  The  probability of recovering much of that lost business has
been  impaired by the passage of time.  Judicial  management  also  affected the
pricing,  terms and  conditions  of  payments to its  suppliers.  In many cases,
supplier  relationships  may have been adversely  impacted in the short and long
run. We have worked hard to  reestablish  credit and verify that material  costs
are in line with the  industry.  In some  cases,  we may have to  establish  new
sources of supply.  We also  believe that the  judicial  management  resulted in
financial  and  operating  performances  that  are  not  reliable  in  terms  of
predicting future financial performance operations.

     IDW Faces Intense Competition. We operate in a competitive environment that
is characterized  by price erosion,  technological  change and competition.  IDW
competes with major Asian and international companies. Most of IDW's competitors
have greater market recognition and substantially greater financial,  technical,
marketing,  distribution,  manufacturing  and other resources than IDW. Further,
many  of  our  competitors  have   manufacturing   and  sales  forces  that  are
geographically diversified allowing them to reduce transportation,  tariff costs
and  currency   fluctuations  for  certain  customers  in  markets  where  their
facilities are located.  Many  competitors have production lines that allow them
to  produce  more  sophisticated  and  complex  devices  than IDW and to offer a
broader  range of display  devices  to  customers.  New  emerging  companies  or
companies in related  industries  may also increase their  participation  in the
display module market which would increase competition.

     Our ability to compete successfully depends on a number of factors, both in
and  outside  of  its  control.  Those  factors  include:  the  price,  quality,
performance,  reliability, ease of use and features of our products; the variety
of our product  solutions;  foreign  currency  fluctuation;  trade  barriers and
custom  duties which may effect the cost of products;  our ability to design and
manufacture new product solutions,  including incorporating new technology;  the
availability  and price of raw  materials;  our  ability  to fully  utilize  our
manufacturing  facility; new product technology or solutions by our competitors;
the  number  and  success  of  competitors;  and  general  market  and  economic
conditions.  Our competitive  position can also be adversely  affected if one or
more of our  customers,  including  our key  customers,  decide  to  design  and
manufacture their own display modules, use different devices or purchase devices
from  competitors.  We cannot  assure that we will compete  successfully  in the
future.

     Risk of  Inability  to Produce  High-End  Products.  IDW's  success will be
partly dependent upon our ability to effectively offer or manufacture higher-end
products such as large graphic STN, color graphic displays,  micro-displays  and
black mask automotive products.

     These  products  offer both the  opportunity  to  increase  utilization  of
existing  manufacturing  capacity,  and also the  opportunity to generate higher
margins and profits at given  revenue  levels.  The  production of such products
requires increased custom design and manufacturing and the maintenance of strong
customer  relationships.  This will  require  that we  maintain  and upgrade our
research,  engineering and designing  capabilities to remain in the forefront of
developments in the industries.

<PAGE> 19

     Changing  Technologies.   We  operates  in  an  industry  characterized  by
technological  advances,  the  introduction  of new  products and new design and
manufacturing   techniques.  As  a  result,  IDW  will  be  required  to  expend
substantial funds and to commit significant resources to continuing research and
development  activities,  engaging  additional  engineering  and other technical
personnel, purchasing new design, production and test equipment, and continually
enhancing  design and  manufacturing  processes  and  techniques.  IDW's  future
operating  results will depend  significantly  on our ability to timely  provide
design and  manufacturing  services for new products that compete favorably with
the design and manufacturing capabilities of OEMs and third-party suppliers.

     IDW could invest significant sums in design and manufacturing  services for
new  product  solutions  that may not  receive or  maintain  customer  or market
acceptance or effectively  address  customer needs which could adversely  affect
our future  operating  results.  Further,  customers may change or delay product
introductions  or terminate  existing  products without notice for any number of
reasons unrelated to IDW, including lack of market acceptance for a product.

     We may also be required to increase  our design  staff and other  personnel
and incur other expenses on capital equipment, leasehold permits and other items
to meet the  anticipated  or actual demand of our  customers.  Those  additional
costs may adversely impact operating margins in the short term.

     Maintenance   of   Satisfactory   Manufacturing   Yields  and   Capacities;
Variability of Customer Requirements. The profitability and operating results of
IDW are dependent upon a variety of factors,  including product mix, utilization
rates of its manufacturing lines, downtime due to product changeover, impurities
in raw materials causing shutdowns,  maintenance of contaminant-free  operations
and other factors.

     Risks Associated with International Operations.  IDW has made a decision to
locate  all of its  manufacturing  operations  in China and to  establish  sales
offices in Asia, Europe and the United States. The geographical distance between
its  manufacturing  facilities in China and in North America  create a number of
logistical  and  communications  challenges.  Because  of  the  location  of the
manufacturing facilities in China, IDW may be affected by economic and political
conditions in that country, as well as economic and political  conditions in the
countries in which it markets and  distributes its products,  including  without
limitation,  problems related to labor unrest, lack of developed infrastructure,
variances  in  payment  cycles,  currency  fluctuations,  overlapping  taxes and
multiple taxation issues,  employment and severance taxes, compliance with local
laws and  regulatory  requirements,  greater  difficulty in collecting  accounts
receivable,  political  and  economic  instability  and the  burdens of cost and
compliance with a variety of foreign laws.

     Further,  changes  in  policies  by the  United  States  or  other  foreign
governments resulting in, among other things, increased duties, higher taxation,
currency   conversion,   limitations   and   restrictions  on  the  transfer  or
repatriation of funds or limitations on imports or exports, or the expropriation
of private  enterprises  could also have a materially  adverse effect on IDW and
its results of operations. In addition, IDW could be adversely affected if China
were to change its current policies of encouraging foreign investment or foreign
trade.  IDW could  also be  adversely  impacted  if the  United  States  were to
withdraw  the  "most  favored  nation"  ("MFN")  status  and  trade  preferences
currently being extended to China. That status is annually reviewed and there is
no  assurance  that the United  States  will renew  China's MFN status in future
years.  The  non-renewal  of China's MFN status  could  adversely  affect IDW by
increasing the cost to United States  customers or products  manufactured by IDW
in  China.  IDW's  operators  are  further  subject  to  significant  political,
economic, legal and other uncertainties in China. Despite progress in developing
its legal  system,  China does not  have a  comprehensive  or  highly  developed
system of laws,  particularly with respect to foreign investment  activities and
foreign  trade.  Enforcement  of  existing  and  future  laws and  contracts  is
uncertain,   and   implementation   and  interpretation  of  such  laws  may  be
inconsistent.  Changes in existing laws, the adoption of new laws and preemption
of local regulations by national laws may adversely affect foreign investment in
China. IDW could also be adversely affected

<PAGE> 20

by other  factors,  including the  imposition  of austerity  and other  monetary
measures to fight inflation or to achieve other economic objectives,  inadequate
development or maintenance of infrastructure, including adequate power and water
supplies,  transportation  or raw materials in parts or the deterioration in the
general political, economic or social environment.

     Risks Associated with Collectibility of Receivables.  IDW extends credit to
its customers  based on an assessment of a customer's  financial  circumstances,
generally without requiring collateral, in both the United States and in various
countries in the Far East.  These  extended  payment  terms,  if continued,  may
increase  our  exposure to risk of  uncollected  receivables.  The  inability to
collect  on  these  accounts  receivable  taking  into  account  normal bad debt
reserves,  could have a materially  adverse  effect on our results of operations
and profitability.

     Risks Associated with Currency  Fluctuations and International Trade. Sales
in global markets,  primarily Europe, the United States and other parts of Asia,
are expected to increase  significantly in 2001 and subsequent  years.  Economic
and political  conditions  internationally  may adversely affect the manufacture
and sale of IDW's products. Protectionist trade legislation in the United States
or  foreign  countries,  such as a change in export or import  compliance  laws,
tariff or duty structures,  or other trade policies,  could adversely affect our
ability  to sell  devices in foreign  markets,  to  purchase  raw  materials  or
equipment from foreign suppliers.

     IDW  transacts  business in a variety of  currencies  including HK dollars,
Singapore dollars, US dollars and the Chinese renmimbi ("RMB").  Increased sales
to Europe may result in payments in other currencies, such as the Euro. Further,
IDW accounts for a portion of its costs, such as payroll,  land rent and certain
other  costs  in RMB.  While  foreign  currency  exchange  fluctuations  are not
believed to materially affect our operations, changes in the relation of the RMB
or other  currencies  to the US dollar,  could  affect IDW's cost of goods sold,
operating  margins  and  result  in  exchange  losses.  In  addition,   currency
devaluations,  changes in exchange rate  fluctuations  could affect the value of
deposits of currencies IDW holds or results of  operations.  The Chinese RMB has
experienced  significant  devaluation against most major currencies in the past.
Because the RMB is not freely traded, hedging that currency is difficult.

     IDW May Experience  Shortages of Raw Materials and Supplies.  Principal raw
materials  used in producing  IDW's  products  consist of raw and coated  glass,
polarizers,  liquid crystal, chemicals, PCBs, driver IC's, molded plastic parts,
electronic  components and packaging materials.  For its energy supply, IDW uses
diesel fuel. IDW purchases most of these  materials in Asia. We do not have long
term supply  contracts  with our  suppliers.  IDW believes that it has secondary
sources of supplies for most of its products  and, if we were to lose any of its
primary or secondary suppliers, we could develop new sources of supply. However,
because IDW's sources for many materials are from foreign suppliers,  IDW may be
subject to certain risks,  including tariffs,  currency  fluctuations and supply
interruptions.  The impact of price  increases will affect  operating  costs and
product margins, the materiality of which cannot be presently determined.

     Environmental  Regulations.  Our operations result in the creation of small
amounts of hazardous wastes,  including various gases,  epoxies,  inks, solvents
and other coal wastes. IDW is, therefore,  subject to national,  state and local
governmental  regulations  related  to the use,  storage  and  disposal  of such
hazardous  wastes  used in the  manufacturing  processes.  IDW  also has its own
electric  power  generation  plant which operates on diesel fuel. The amounts of
such hazardous waste are expected to increase in the future as our manufacturing
operations increase. The failure to comply with present and future environmental
regulation  can  result in the  imposition  of fines,  suspension  or halting of
production, or closure of manufacturing operations. Environmental compliance may
also require IDW to purchase pollution-control equipment or to incur significant
capital or other  expenses.  Although we believe we are  operating in compliance
with  applicable  environmental  laws,  there  is no  assurance  that  IDW is in
compliance or will remain in compliance as such laws and regulations change.

<PAGE> 21

     Governmental  Regulations.  IDW is subject to numerous  foreign,  state and
local government  regulations.  We are subject to laws and regulations governing
its  relationship  with our  employees,  including  wage and hour  requirements,
working and safety conditions, citizenship requirements, work permits and travel
restrictions.  Further,  the PRC  Companies  are  leasing  the land under  their
facilities  under a 50-year  lease,  which expires in the year 2043. We are also
subject to significant  government regulation relating to property ownership and
use, import  restrictions,  currency  restrictions and other areas, all of which
consistently impact profits and operating results.

     Other Risks. Other risks IDW faces include the prior cyclical nature of the
electronics  industry,  the  protection of IDW's trade  secrets and  technology,
management of expected  rapid growth in personnel,  capital  equipment,  outside
sales force,  sales and accounts  receivable and other items, and maintenance of
adequate research and development efforts and personnel.

     Besides the general risk factors  noted above,  there are several  specific
risks that should be noted:

     Future  Potential  Depressive  Effect in Stock Prices from Recently  Issued
Securities.  In fiscal year 2000,  the Company  issued an  additional  9,973,951
shares of its Common Stock. All of those shares are restricted under federal and
state  securities  laws and may only be resold  pursuant to  exemptions or under
Rule 144 in the future. Under Rule 144, each of the holders of those securities,
after  holding  them  for one  year,  may  sell in any  given  calendar  quarter
thereafter,  the greater of (i) 1% of the outstanding  Common Stock,  (currently
approximately  194,000  shares) per quarter,  or (ii) the average weekly trading
volume for the Common Stock for the prior four full calendar  weeks.  Under Rule
144, a significant  amount of stock could be sold in any calendar  quarter after
January 31, 2001,  with a potential  depressive  effect on the  Company's  stock
prices.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Inflation Risk

     We do not  expect  inflation  to have a  material  effect on the  Company's
operating expenses

Interest Rate Risk

     We do not believe  that any change in  interest  rates will have a material
impact on the Company during fiscal 2001. Currently,  our long-term debt is at a
fixed interest rate.

Foreign Currency Exchange Risk

     The Company  accumulates  foreign  currency in payment of accounts which it
then uses to pay its foreign vendors or converts to U.S.  dollars,  exposing the
Company to fluctuations in currency  exchange rates. The Company currently holds
foreign  currencies  which are translated  into U.S.  dollars using the year-end
exchange  rate,  for a total  of  $440,926.  The  potential  loss in fair  value
resulting from an adverse change in quoted  foreign  currency  exchange rates of
10% amounts to $44,049.  Actual  results may differ.  The Company  does not hold
other market sensitive  instruments and therefore does not expect to be affected
by any adverse  changes in  commodity  prices,  or  marketable  equity  security
prices.

<PAGE> 22


Item 8. Financial Statements and Supplemental Data

Consolidated Financial statements and Supplemental Schedule

For the Years Ended December 31, 2000, January 1, 2000 and December 26, 1998

Independent Auditor's Report. . . . . . . . . . . . . . . . . . . . . . . . . 23

Consolidated Financial Statements

  Consolidated Balance Sheet  . . . . . . . . . . . . . . . . . . . . . 24 to 25

  Consolidated Statement of Operations. . . . . . . . . . . . . . . . . 26 to 27

  Consolidated Statement of Shareholders' Equity. . . . . . . . . . . . . . . 28

  Consolidated Statement of Cash Flows. . . . . . . . . . . . . . . . . 29 to 30

  Nots to Consolidated Financial Statements . . . . . . . . . . . . . . 31 to 47

Supplemental Schedule - Supplementary Information Requiried
 under the Securities and Exchange Act of 1934. . . . . . . . . . . . . . . . 48

<PAGE> 23
                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
Granite Bay Technologies, Inc.
   and Subsidiaries

     We have audited the accompanying  consolidated balance sheet of Granite Bay
Technologies, Inc. and subsidiaries (the "Company"), as of December 30, 2000 and
January  1,  2000,  and  the  related  consolidated  statements  of  operations,
shareholders' equity and cash flows for the years then ended. These consolidated
financial  statements and the schedule referred to on the following page are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated  financial  statements and supplemental  schedules
based on our  audit.  The  consolidated  financial  statements  of  Granite  Bay
Technologies,  Inc. and subsidiaries,  as of and for the year ended December 26,
1998,  were audited by other  auditors whose report dated June 17, 1999 on those
statements included an explanatory  paragraph describing  conditions that raised
substantial doubt about the Company's ability to continue as a going concern.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Granite Bay  Technologies,  Inc.  and  subsidiaries  as of December 30, 2000 and
January 1, 2000, and the consolidated results of their operations and their cash
flows for the years then ended, in conformity with generally accepted accounting
principles.

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated  financial  statements,  certain matters raise substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans in regard  to these  matters  are  described  in Note 1. The  consolidated
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.

     Our  audits  were  conducted  for the  purpose of forming an opinion on the
basic  consolidated  financial  statements  taken as a whole.  The  Supplemental
Schedule of  Valuation  and  Qualifying  Accounts is  presented  for purposes of
complying with the Securities and Exchange  Commission's rules and is not a part
of the  basic  consolidated  financial  statements.  This  information  has been
subjected  to the  auditing  procedures  applied  in  the  audit  of  the  basic
consolidated  financial  statements and, in our opinion, is fairly stated in all
material  respects in relation to the basic  consolidated  financial  statements
taken as a whole.

                                                             /s/ Perry-Smith LLP


Sacramento, California
March 9, 2001, except for Note 19, as to which
 the date is April 11, 2001.

<PAGE> 24

Report of Independent Public Accountants

To the Board of Directors of
Granite Bay Technologies, Inc.:

We  have  audited  the  accompanying   consolidated  statements  of  operations,
shareholders'  equity  and cash  flows of  Granite  Bay  Technologies,  Inc.  (a
California corporation,  formerly Morrow Snowboards, Inc.) and subsidiaries (the
Company) for the year ended December 26, 1998.  These  financial  statements and
the  schedule   referred  to  below  are  the  reponsibility  of  the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. 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  evaulating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the results of  operations,  changes in  shareholders'
equity  and cash  flows of  Grantie  Bay  Technologies,  Inc.  (formerly  Morrow
Snowboards,  Inc.) and  subsidiaries  for the year ended  December  26,  1998 in
conformity with accounting principles generally accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company incurred  significant losses in 1998 and had
liquidity  problems.  These matters raise  substantial doubt about the Company's
ability to continue as a going  concern.  Management's  plans in regard to these
mattters are described in Note 1. The  fianancial  statements do not include any
adjustments relating to the recoverability and classifications of asset carrying
amounts or the amount and  classification of liabilites that might result should
the Company be unable to continue as a going concern.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
consolidated  financial  statements  taken as a whole. The Schedule of Valuation
and  Qualifying  Accounts  as of and for the year  ended  December  26,  1998 is
presented  for  purposes  of  complying   with  the   Securities   and  Eschange
Commission's  rules  and  is  not  part  of  the  basic  consolidated  financial
statements. This information has been subject to the auditing procedures applied
in our audit of the basic consolidated  financial statements and, in or opinion,
fairly states in all material  respects,  the financial  data required to be set
forth therein, in relation to the basic consolidated  financial statements taken
as a whole.

                                                             ARTHUR ANDERSEN LLP

Portland, Oregon
June 17, 1999 (except with respect to the discontinuance
 of the Westbeach operations discussed in Notes 1 and 18,
 as to which the date is November 12, 1999)

<PAGE> 25
                 GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                        (In Thousands, Except Share Data)

                      December 30, 2000 and January 1, 2000


                                               December 30,        January 1,
                                                   2000               2000
                                               -------------     --------------

                  ASSETS

Current assets:
         Cash and cash equivalents             $      914         $    1,930
         Accounts receivable, net                   2,954                  -
         Inventories (Note 4)                       1,466                  -
         Prepaid expense                              178                127
         Refundable income taxes                                          54
         Other                                         51                  -
         Net current assets of discontinued
           operations (Notes 4, 15 and 18)             24              2,332
                                               -------------     --------------

                    Total current assets            5,587              4,443
                                               -------------     --------------

Property and equipment, at cost, net (Note 5)       7,191              3,061

Other assets:
         Investments (Note 6)                           -              1,000
         Goodwill, net (Note 3)                     6,079                  -
         Net non-current assets of
          discontinued operations
             (Noted 5 and 18)                           -                 72
         Other assets, net                             16                  -
                                               -------------     --------------

                    Total other assets              6,095              1,072
                                               -------------     --------------

                    Total assets               $   18,873        $     8,576
                                               =============     ==============

















<PAGE> 26

                 GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                        (In Thousands, Except Share Data)
                                   (Continued)
                      December 30, 2000 and January 1, 2000


                                                December 30,       January 1,
                                                   2000               2000
                                               -------------     --------------

            LIABILITIES AND
         SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                            $   2,265          $    2,796
    Accrued liabilities (Note 7)                    1,356                 502
    Notes payable, short term (Note 8)              1,320                   -
                                               -------------     --------------

            Total current liabilities               4,941               3,298
                                               -------------     --------------

Notes payable, noncurrent (Note 8)                      -                 675
                                               -------------     --------------

Total Liabilities                                   4,941               3,973
                                               -------------     --------------
Put option (Note 8)                                   201                   -

Commitments and contingencies (Note 10)

Shareholders' equity (Note 11):
    Preferred stock, no par value,
      10,000,000 shares authorized, no
      shares issued or outstanding                      -                   -
   Common stock, no par value,
      20,000,000 shares authorized,
      19,150,507 and 9,176,556 shares
      issued and outstanding at
      December 30, 2000 and                          40,997           27,866
      January 1, 2000, respectively
   Accumulated deficit                              (27,317)         (23,252)
   Accumulated other comprehensive
      income (loss)                                      51              (11)
                                               -------------     --------------

            Total shareholders' equity               13,731            4,603
                                               -------------     --------------

            Total liabilities and share         $    18,873            8,576
            equity                             =============      =============








   The accompanying notes are an integral part of these financial statements.



<PAGE> 27



                 GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS
                 (In Thousands, Except Share and Per Share Data)

 For the Years Ended December 30, 2000, January 1, 2000 and December 26, 1998


                                  December 30,     January 1,      December 26,
                                      2000            2000             1998
                                  ------------    ------------     ------------

Net sales                           $  17,804               -                -
Cost of goods sold                     12,578               -                -
                                  ------------    ------------     ------------

  Gross profit                          5,226               -                -
                                  ------------    ------------     ------------

Operating expenses:
  Selling, marketing and
    customer service                    1,545               -                -
  Engineering, advanced design
    and product management                570               -                -
      General and administrative        5,124             347              295
                                  ------------    ------------     ------------

        Total operating expenses        7,239             347              295
                                  ------------    ------------     ------------

Operating loss                         (2,013)           (347)            (295)

Other income (expense):
  Interest expense                       (442)            (27)               -
  Unrealized loss (Note 6)             (1,000)              -                -
  Other expense                           (29)              -                -
                                  ------------    ------------     ------------

                                       (1,471)            (27)               -
                                  ------------    ------------     ------------

Loss from continuing operations             -               -                -
  before income taxes                  (3,484)           (374)            (295)
                                  ------------    ------------     ------------

Income tax benefit (Note 13)
Loss from continuing operations        (3,484)           (374)            (295)

Income (loss) on discontinued
  snowboard operations                     69             165           (7,402)
Loss on disposition of snowboard
  operations                             (269)          1,952)               -
Loss on discontinued apparel
  operations                             (112)         (3,309)          (4,939)
Loss on disposition of apparel
  operations                             (269)           (132)               -
                                  ------------    ------------     ------------

Loss from discontinued snowboard
  and apparel operations, net of
    taxes  (Notes 13 and 18)             (581)         (3,276)         (14,293)
                                  ------------    ------------     ------------

Net loss                           $   (4,065)    $    (3,650)     $   (14,588)
                                  ============    ============     ============

                                                    (Continued)


<PAGE> 28
                 GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS
                 (In Thousands, Except Share and Per Share Data)
                                   (Continued)

 For the Years Ended December 30, 2000, January 1, 2000 and December 26, 1998


                                          December 30,  January 1,  December 26,
                                              2000         2000         1998
                                          ------------  ----------  ------------

Net loss per common share (Note 3):
 Loss from continuing operations - basic      $ (.06)     $ (.06)     $ (.05)
 Loss from continuing operations - diluted    $ (.20)     $ (.06)     $ (.05)
 Loss from discontinued operations -
  basic                                       $ (.03)     $ (.51)     $(2.31)
 Loss from discontinued operations -
  diluted                                     $ (.03)     $ (.51)     $(2.31)
 Net loss - basic                             $ (.23)     $ (.57)     $(2.36)
 Net loss - diluted                           $ (.23)     $ (.57)     $(2.36)

Weighted average number of shares
  used in computing per share amounts:
                  Basic                     17,482,583   6,377,556   6,176,556
                                          ============  ==========  ============

                  Diluted                   17,482,583   6,377,556   6,176,556
                                          ============  ==========  ============








The accompanying notes are an integral part of these financial statements.

<PAGE> 29

                 GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                        (In Thousands, Except Share Data)

  For the Years Ended December 30, 2000, January 1, 2000 and December 26, 1998
<TABLE>
<S>                                 <C>         <C>        <C>           <C>           <C>                  <C>

                                                                                       Accumulated
                                                           Notes                       Other
                                       Common Stock        Receivable                  Comprehensive
                                       ------------        for Common    Accumulated   Income
                                    Shares   -   Amount    Stock         Deficit       (Loss)              Total
                                                           ----------    -----------   -------------

Balance, December 27, 1997          6,176,556   $27,116      $ (94)        $ (5,014)     $       50      $  22,058

Forgiveness of shareholder
  notes receivable                                              94                                              94

Comprehensive loss:
  Net loss                                                                  (14,588)                       (14,588)
  Change in translation
    adjustment                                                                                  (69)           (69)
                                                                                                         ----------

    Total comprehensive loss                                                                               (14,657)
                                    ---------   --------   ----------    -----------   -------------     ----------

Balance, December 26, 1998          6,176,556    27,116                     (19,602)            (19)         7,495

  Sale of stock                     3,000,000       750                                                        750

Comprehensive loss:
  Net loss                                                                   (3,650)                        (3,650)
  Change in translation
    adjustment                                                                                    8              8
                                                                                       -------------     ----------

    Total comprehensive loss                                                                                (3,642)
                                    ---------   --------   ----------    -----------   -------------     ----------

Balance, January 1, 2000            9,176,556    27,866                     (23,252)            (11)         4,603
                                    ---------   --------   ----------    -----------   -------------     ----------

Comprehensive loss:
  Net loss                                                                   (4,065)                        (4,065)
  Change in translation
    adjustment                                                                                   62             62
                                                                                       -------------     ----------

    Total comprehensive loss                                                                                (4,003)

  Stock issued for acquisition
    (Notes 2 and 11)                2,680,000     7,236                                                      7,236
  Stock issued in Private
    Placement (Note 11)             7,251,601     6,078                                                      6,078
  Common stock options exercised
    (Note 11)                          42,350        18                                                         18
  Common stock subject to put
    option (Note 8)                                (201)                                                      (201)
                                   ----------   --------   ----------    -----------   -------------     ----------

Balance, December 30, 2000         19,150,507   $40,997     $      -     $  (27,317)   $         51        $13,731
                                   ==========   ========   ==========    ===========   =============     ==========

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

<PAGE> 30

                 GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In Thousands)

  For the Years Ended December 30, 2000, January 1, 2000 and December 26, 1998

                                          December 30,  January 1,  December 26,
                                              2000         2000         1998
                                          ------------  ----------  ------------

Cash flows from operating activities:
  Net loss                                   $ (4,065)    $ (3,650)   $ (14,588)
  Adjustments to reconcile net loss to
    net cash (used in) provided by
    operating activities:
       Loss from discontinued operations          581        1,267        1,952
       Depreciation                             2,018          671        2,122
       Amortization of goodwill                   395           87           87
       Provision for uncollectible
        accounts receivable                        66            -            -
       Write-off of investment                  1,000            -            -
       Loss on impairment of assets                 -        2,659        2,745
       Loss on retirement of fixed a               33           30           89
       Deferred income taxes                        -            -          (30)
       Loss on forgiveness of shareholder
         notes receivable                           -            -           94
       Other income                               (17)           8          (69)
       Changes in operating assets and
          liabilities, net of business
          combinations:
          (Increase) decrease in:
         Accounts receivable                   (1,501)       3,339        1,215
         Inventories                              372        4,099        1,757
         Prepaid expenses                         127          469           32
         Refundable income taxes                   54          (54)         285
         Other assets                             849         (431)        (292)
         Increase (decrease) in:
         Accounts payable                      (1,597)        (257)       1,405
         Accrued liabilities                      631       (1,998)         899

                                                            (Continued)


<PAGE> 31

                 GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In Thousands)

 For the Years Ended December 30, 2000, January 1, 2000 and December 26, 1998
<TABLE>
<S>                                             <C>            <C>          <C>

                                                December 30,   January 1,   December 26,
                                                   2000           2000         1998
                                                ------------   ----------   ------------
    Accrued loss on disposal                              3       (1,498)             -
                                                ------------   ----------   ------------

      Net cash (used in) provided
       by operating  activities                      (1,343)       4,741         (2,297)
                                                ------------   ----------   ------------

Cash flows from investing activities:
  Purchase of investment                                  -       (1,000)             -
  Acquisitions, net of cash acquired                 (4,208)           -              -
  Acquisition of property and equipment                (285)        (209)          (924)
  Proceeds from sale of equipment                         -        1,574             81
                                                ------------   ----------   ------------

      Net cash (used in) provided by
      investing activities                           (4,493)         365           (843)
                                                ------------   ----------   ------------

Cash flows from financing activities:
   Proceeds from issuance of common
     stock                                         $  6,078          750              -
   Proceeds from issuance of short-term
     notes payable                                    1,320            -              -
   Proceeds from issuance of noncurrent
     notes payable                                    2,100          675       $  2,000
   Principal payments on notes payable               (7,141)      (2,251)          (142)
   Payment of loan fees                                (223)           -              -
   Line of credit (payments) borrowings, net              -       (3,698)         1,775
                                                ------------   ----------   ------------

      Net cash provided by (used in)
       financing activities                           2,134       (4,524)         3,633
                                                ------------   ----------   ------------

Net (decrease) increase in cash and cash
   equivalents                                       (1,016)         582            493

Cash and cash equivalents at beginning
   period                                             1,930        1,348            855
                                                ------------   ----------   ------------

Cash and cash equivalents at end of period         $    914      $ 1,930       $  1,348
                                                ============   ==========   ============
</TABLE>





   The accompanying notes are an integral part of these financial statements.


<PAGE> 32
                 GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. ORGANIZATION

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

     Granite  Bay   Technologies,   Inc.  and   subsidiaries   (the  "Company"),
     headquartered  in Rocklin,  California,  was  organized  in October 1989 as
     Morrow  Snowboards,  Inc.,  and  recently  changed  its name to Granite Bay
     Technologies, Inc. upon its change in state of incorporation from Oregon to
     California. The Company is currently engaged in the design, manufacture and
     worldwide  distribution of liquid crystal  displays  (LCDs),  modules,  and
     assemblies for major original equipment  manufacturers  (OEMs) applications
     in  telecommunications,   automotive,   industrial,  medical  and  consumer
     products.

     The Company was  originally  organized  to design,  manufacture  and market
     snowboards,  boots, bindings,  apparel and accessories to retail outlets in
     the United States, as well as international distributors in several foreign
     countries,   which  business  was  conducted  from   organization   through
     discontinuance of the snowboard and apparel operations in November 1999. In
     March 1999,  the Company  sold all of its "Morrow"  intellectual  property,
     along  with all  1999-2000  snowboard  inventories  and its  snowboard  and
     binding  production  equipment to K2 Acquisitions  Inc. ("K2"). In November
     1999, a subsidiary  of the Company,  Westbeach  Canada ULC, sold all of its
     "Westbeach"  operations,  along with all apparel  inventories  to Westbeach
     Sports,  Inc., an unrelated  company.  The results of operations  for these
     business  segments have been  reflected as  discontinued  operations in the
     accompanying Consolidated Statements of Operations (Note 18).

     During the year ended December 30, 2000, the Company operated in the single
     business segment of electronic equipment and parts.

     Going Concern
     -------------

     The Company  incurred net losses of $4,065,000,  $3,650,000 and $14,588,000
     in the fiscal years ended 2000, 1999 and 1998, respectively.  Commencing in
     1998,  management evaluated its ability to continue under the then existing
     corporate structure and determined to sell the snowboard,  boot and binding
     business.  In  addition,  in 1999 a  subsidiary  of the  Company  sold  its
     Westbeach  operations.  The results of operations for 1999 and 1998 reflect
     the losses  incurred in connection with the  discontinuance  of operations,
     including  impairment  write-  downs  of  equipment  and  other  assets  of
     $2,659,000 and $2,745,000,  respectively  (Notes 5 and 18). The Company has
     experienced  liquidity  problems  as a  result  of  recurring  losses  from
     operations.

     The Company  completed  several  private  placements of common stock during
     2000  (Note  11).  Consistent  with  management's  strategic  plans for the
     Company,  the  proceeds  from the  offerings  were used to  facilitate  the
     acquisition of certain  manufacturing  companies.  Management believes that
     these  companies  will  generate  sufficient  net income and  liquidity  to
     sustain  the  Company's  operations.  Further,  in the  event of a  capital
     shortfall,  management  of the Company  believes that it has the ability to
     raise additional equity capital.  However,  there can be no assurances that
     the  Company's  recent   acquisitions  will  operate   profitably  or  that
     management will be successful in raising additional equity capital.

     The matters  described above raise a substantial  doubt about the Company's
     ability to continue as a going  concern.  The  financial  statements do not
     include any adjustments  relating to the  recoverability and classification
     of asset carrying amounts or the amount and  classification  of liabilities
     that might  result  should the  Company  be unable to  continue  as a going
     concern.

<PAGE> 33

2. INTERNATIONAL DISPLAYWORKS, INC.

     Acquisition
     -----------

     On January 31, 2000, the Company acquired 100% of the outstanding shares of
     International   DisplayWorks,   Inc.,   (IDW)   a   Delaware   corporation,
     headquartered  in Rocklin,  California,  through the  issuance of 2,680,000
     shares  of  common  stock.  The  acquisition  was  accounted  for using the
     purchase method of accounting.  On February 1, 2000, IDW through its wholly
     owned  subsidiary,  International  DisplayWorks  (Hong Kong) Ltd. (IDW HK),
     acquired 100% of the shares of MULCD Microelectronics  Company Ltd. (MULCD)
     and IDW Shenzhen Technology  Development  Company,  Ltd. (IDWT).  MULCD and
     IDWT are engaged in the  manufacturing  and assembly of LCDs and modules in
     Peoples  Republic of China (PRC Companies).  The PRC Companies  manufacture
     LCDs  and  assemblies  for the  USA,  Europe  and  Far  East  markets.  The
     acquisition,  which was accounted for by the purchase method of accounting,
     required a total payment of  approximately  $8,481,000.  As of December 30,
     2000,  approximately  $820,000  was due,  which may be further  adjusted to
     reflect  final  accounting  adjustments  and other items under  negotiation
     (Note 19). Any  adjustments to the final purchase price have been reflected
     as an  adjustment  to the  recorded  values of the assets  purchased in the
     period in which the accounting and final settlement is made.

     In addition to the acquisition of the PRC Companies,  IDW HK entered into a
     Supplemental  Deed and Charge (Charge  Agreement)  among IDW and IDW HK, as
     Chargors, and Vikay Industrial (Hong Kong) Ltd. and Vikay Industrial, Ltd.,
     as Chargees.  Under the Charge  Agreement,  IDW pledged the common stock of
     IDW HK and the PRC Companies'  assets to collateralize  the deferral of the
     payment of the balance of the purchase  price for the PRC  Companies.  Upon
     finalization of documents, these charges will be released (Note 19)

     Following the acquisition of the PRC Companies,  IDW,  together with IDW HK
     and the PRC  Companies,  designs,  markets and  produces  LCDs and products
     incorporating  LCDs,  principally  in Asia,  the United  States and Europe.
     Design and  manufacture  of such products is done at the  facilities of the
     PRC Companies in the Peoples Republic of China, with a focus on high-volume
     OEMs  who are  leaders  in  their  fields.  Unless  the  context  indicates
     otherwise,  IDW means IDW, IDW HK and the PRC Companies  and  references to
     IDW or IDW's electronics business,  unless the context indicates otherwise,
     is  to  the  business  conducted  by  the  PRC  Companies  prior  to  their
     acquisition by IDW HK and by IDW and its  subsidiaries  thereafter.  IDW HK
     also  owns 100% of  Glamorous  Fortune,  Inc.,  a  British  Virgin  Islands
     Company.

     Over 90% of  IDW's  sales  in 2000  consisted  of  custom  display  modules
     developed in close  collaboration with its customers.  Devices designed and
     manufactured by IDW include applications in telecommunications (cell phones
     and other wireless communication service), as well as in medical equipment,
     appliances,  utility applications,  automotive equipment, retail and office
     equipment,  and  consumer  electronic  products,   including  entertainment
     systems.  Targeted  areas for new  applications  include  office  equipment
     (copiers,  facsimile  machines and  printers) and high  resolution  graphic
     display products for personal digital assistance and small computer and map
     displays.  Approximately  30% of  1999  total  sales  were  to  the  office
     machinery market  (principally  calculators) and  approximately  20% to the
     telecommunications  industry  (principally  cellular  telephones)  with the
     balance  spread over a variety of products and  industries.  IDW  currently
     specializes  in LCD  components  and  technology  and providing  design and
     manufacturing  services  for  its  customers.  IDW  currently  markets  its
     services primarily in Hong Kong and, to a lesser extent,  Asia, but intends
     to expand  sales  efforts  in the  United  States,  Europe  and  Asia.  IDW
     maintains design centers at its manufacturing  facilities and in Singapore,
     a country which contains  corporate  headquarters or regional  headquarters
     for many major electronics firms.

     The consolidated  financial statements include accounts and transactions of
     IDW and the  PRC  Companies  from  January  31,  2000,  the  date of  their
     acquisition.

<PAGE> 34

     The  following  unaudited  pro forma  information  presents  the results of
     operations  of the  Company as if the  acquisition  had taken  place on the
     first day of each of the  years  ended as  follows  (in  thousands,  except
     weighted average shares outstanding and earnings per share):

                                                     Years Ended
                                             ----------------------------
                                              December 30,     January 1,
                                                  2000            2000
                                             -------------     ----------

     Net sales                               $     19,320      $  22,292
     Cost of goods                           $     13,789      $  19,199
     Operating expenses                      $      7,360      $   2,431
     Net loss                                $     (3,901)     $  (2,778)
     Weighted average shares outstanding       17,703,341      9,057,556
     Earnings per share                      $       (.22)     $    (.31)

     These  unaudited  pro forma  results of  operations  have been prepared for
     comparative  purposes  only  and do not  purport  to be  indicative  of the
     results  of  operations   which   actually  would  have  resulted  had  the
     acquisition  occurred  on the date  indicated,  or which may  result in the
     future.


3. SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation
     ---------------------------

     The consolidated  financial statements include the accounts of the Company,
     and its wholly-owned subsidiaries: IDW (a Delaware Corporation),  Westbeach
     Canada  ULC  (a  Nova  Scotia  unlimited   liability  company)  and  Morrow
     International,  Inc. (a Guam foreign sales  corporation).  All  significant
     intercompany   accounts   and   transactions   have  been   eliminated   in
     consolidation.

     Fiscal Year
     -----------

     The  Company  previously  used a 52 or 53 week  fiscal  year  ending on the
     Saturday  nearest December 31.  Accordingly,  the 2000 fiscal year ended on
     December  30,  2000,  the 1999 fiscal year ended on January 1, 2000 and the
     1998 fiscal year ended on December 26, 1998.

     Cash and Cash Equivalents
     -------------------------

     Cash and cash equivalents consist of cash on hand and on deposit and highly
     liquid  investments  purchased with a maturity of three months or less. The
     Company  maintains its cash in bank deposit  accounts which, at times,  may
     exceed federally insured limits.

     Financial Instruments
     ---------------------

     A  financial  instrument  is cash or a contract  that  imposes or conveys a
     contractual  obligation,  or right,  to deliver or receive  cash or another
     financial instrument.  The fair value of financial instruments approximated
     their carrying value as of December 30, 2000 and January1, 2000.

     Inventories
     -----------

     Inventories  for  continuing  operations are stated at the lower of cost or
     market.  Costs included in the valuation of inventory are labor,  materials
     (including freight and duty) and manufacturing overhead.


<PAGE> 35

     Investments
     -----------

     Investments as of and January 1, 2000 consist of equity  securities  deemed
     by management to be available-for-sale  and are reported at fair value with
     net   unrealized   gains  or  losses,   if  applicable,   reported   within
     shareholders' equity.

     Depreciation and Amortization
     -----------------------------

     Property,  plant  and  equipment  are  carried  at  cost.  Depreciation  of
     property,  plant and equipment is provided using the  straight-line  method
     over the estimated useful lives of the assets, which are 10 to 35 years for
     buildings and  improvements  and 3 to 12 years for equipment,  fixtures and
     other.  Amortization of leasehold  improvements and equipment under capital
     leases is provided using the straight-line  method over the expected useful
     lives of the assets or the  initial  term of the lease  (including  periods
     related to renewal  options which are expected to be exercised),  whichever
     is  shorter.   Amortization  of  leasehold   improvements  is  included  in
     depreciation expense.

     Goodwill and Other Long-Lived Assets
     ------------------------------------

     Goodwill  resulting  from the IDW  acquisition  is being  amortized over 15
     years using the straight-line method and is recorded net of amortization of
     $395,000 at December 30, 2000.

     Goodwill and other long-lived assets are periodically  evaluated when facts
     and  circumstances  indicate that the value of such assets may be impaired.
     Evaluations  are  based  on  non-discounted   projected  earnings.  If  the
     valuation  indicates  that  non-discounted  earnings  are  insufficient  to
     recover the recorded assets,  then the projected earnings are discounted to
     determine the revised carrying value and a write-down for the difference is
     recorded.  In 1999  and  prior  to the sale of  Westbeach  operations,  the
     Company  recorded a loss for impairment of goodwill related to Westbeach of
     $1,135,000 which is reflected in loss from discontinued apparel operations.
     Goodwill of Westbeach was  previously  being  amortized over 15 years using
     the straight-line method.

     Warranty Costs
     --------------

     The Company asks that the customer  report  defects  within fifteen days of
     receipt of product. All products are fully replaceable if defective. As the
     Company manufactures custom products to customer specifications and has not
     experienced  significant  returns,  the Company does not anticipate it will
     incur a material amount of warranty expense.

     Advertising and Promotion Costs
     -------------------------------

     Advertising  and  promotion  costs are expensed as incurred and included in
     selling, marketing and customer service expenses.  Advertising expenses for
     the year ended December 30, 2000 were approximately  $73,000. There were no
     advertising  and promotion  expenses for  continuing  operations in 1999 or
     1998.

     Revenue Recognition
     -------------------

     The  Company  recognizes  revenue  from the sale of its  products  when the
     products are shipped to customers.

     Income Taxes
     ------------

     The Company  accounts  for income  taxes using the  liability  method.  The
     estimated future tax effects of differences between the basis in assets and
     liabilities  for tax and  accounting  purposes is accounted for as deferred
     taxes.  Deferred tax assets are also  recognized  for operating  losses and
     unused tax credits that are available to offset future  taxable  income.  A
     valuation allowance is established to reduce deferred tax assets when it is
     more likely than not that all, or some portion, of such deferred tax assets
     will not be realized. A valuation allowance

<PAGE> 36

     for  substantially  all of the  Company's  deferred  tax  assets  has  been
     established due to the uncertainty of realizing these deferred tax assets.

     Stock Options and Warrants
     --------------------------

     The Company has elected to measure and record  compensation  costs relative
     to  employee  stock  option  and  purchase  plans  in  accordance  with the
     provisions of Accounting  Principles  Board Opinion No. 25,  Accounting for
     Stock Issued to Employees,  and make pro forma disclosure of net income and
     earnings  per share as if the fair  value  based  method of  valuing  stock
     options has been applied.

     Warrants and stock options granted to  third-parties  for goods or services
     are valued using the Black-Scholes model.

     Product Development Costs
     -------------------------

     Expenditures   associated   with  the   development  of  new  products  and
     improvements  to  existing  products  are  expensed  as  incurred.  Product
     development  costs for the year ended December 30, 2000 were  approximately
     $314,000.  There  were  no  product  development  expenses  for  continuing
     operations in 1999.

     Net Loss Per Share
     ------------------

     The shares used in the  calculation  of net loss per share are  computed as
     follows:

                                                       Years Ended
                                          --------------------------------------
                                          December 30,   January 1, December 26,
                                             2000         2000         1998
                                          ------------   ---------- ------------
     Shares:
       Weighted average shares out-
          standing for basic earnings
          per share                        17,482,583    6,377,556    6,176,556
       Dilutive effect of stock options
          and warrants (1)                          -            -            -
                                          ------------   ---------- ------------

       Weighted average shares out-
           standing for diluted earnings
           per share                       17,482,583    6,377,556    6,176,556
                                          ============   ========== ============

     (1)  The effect of potential  common  securities of 1,915,509,  584,448 and
          432,998  shares for 2000,  1999 and 1998,  respectively,  are excluded
          from the diluted earnings per share  calculation as their effect would
          be antidilutive.

     Foreign Currency Translation
     ----------------------------

     The value of the U.S. dollar rises and falls day-to-day on foreign currency
     exchanges.  Since the Company does business in certain  foreign  countries,
     these fluctuations  affect the Company's  financial position and results of
     operations.  All foreign assets and liabilities have been translated in the
     preparation of the consolidated  financial statements at the exchange rates
     prevailing at the respective  balance sheet dates, and all income statement
     items have been translated using the weighted average exchange rates during
     the respective  periods.  The net gain or loss  resulting from  translation
     upon  consolidation of the financial  statements is reported as a component
     of  comprehensive  income  of each  period  with  the  accumulated  foreign
     currency  gain or loss  reported as a component of the equity  category for
     comprehensive  income  (loss).  Some  transactions  of the  Company and its
     foreign  subsidiaries  are made in  currencies  different  from  their own.
     Translation gains and losses from these  transactions in foreign currencies
     are included in income as they occur.

<PAGE> 37

     The cash flows of the Company's  foreign  subsidiaries are translated using
     the weighted  average  exchange  rates during the respective  period.  As a
     result, amounts in the statement of cash flows related to changes in assets
     and  liabilities  will  not  necessarily  agree  with  the  changes  in the
     corresponding  balances on the balance  sheet which were  translated at the
     exchange rate at the end of the period. The effect of exchange rate changes
     on foreign cash and cash  equivalents is reported as a separate  element of
     the statement of cash flows, if significant.

     Use of Estimates
     ----------------

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

4. INVENTORY

     Inventories consisted of the following (in thousands):

                                                  December 30,     January 1,
                                                      2000            2000
                                               -----------------  ------------

     Finished goods                               $      614
     Work-in-process                                     443
     Raw materials                                     1,075
     Less: reserve for obsolete inventory               (666)
                                               -----------------  ------------

     Total continuing operations
       inventories, net                           $    1,466       $
                                               =================  ============
     Total discontinued operations
       inventories, net                           $        -       $       70
                                               =================  ============

5. PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following (in thousands):

                                                  December 30,     January 1,
                                                      2000            2000
                                               -----------------  ------------
     Property:
       Building and improvements                  $    2,286       $    3,300
       Plant, equipment, furniture
         and fixtures                                  5,809              500

                                                       8,095            3,800

         Less accumulated depreciation                  (904)            (739)
                                               -----------------  ------------

     Property and equipment for continuing
       operations, net                            $    7,191       $    3,061
                                               =================  ============

     Equipment, fixtures and other assets
       for discontinued operations, net           $        -       $       72
                                               =================  ============

     In  December  2000,  the  Company  sold  its  Salem,  Oregon  facility  for
     $2,700,000  and recorded a loss on the sale of $348,565.  The proceeds were
     used to  retire  the  outstanding  note  payable  (Note 8) and for  working
     capital. The loss is included in loss on disposition of apparel operations.

<PAGE> 38

     As more fully  discussed in Note 1, the Company  performed an evaluation of
     its  machinery,  equipment  and other  assets and, as a result,  recognized
     impairment  write-downs  primarily  related to  discontinued  operations of
     $2,659,000 and $2,745,000 in 1999 and 1998, respectively.

6. INVESTMENTS

     Investments consisted of the following (in thousands):

                                                  December 30,     January 1,
                                                      2000            2000
                                                  ------------     ----------

     Investment in Globalgate                       $       -      $1,000,000
                                                  ============     ==========

     In  November  and  December  1999,  the  Company  purchased  $1,000,000  in
     preferred shares of Globalgate e-Commerce, Inc. ("Globalgate"),  a company
     formed to build a  dominant  scalable  e-commerce  platform  for  merchants
     selling to businesses and consumers.  The financial condition of Globalgate
     has severely  deteriorated  and the Company  believes that their investment
     has little market value, if any. Accordingly, the Company has recorded a $1
     million  unrealized  loss  which is  included  in the loss from  continuing
     operations   for  the  year  ended  December  30,  2000  in  the  Company's
     consolidated statement of operations.

7. ACCRUED LIABILITIES

     Accrued liabilities consisted of the following (in thousands):

                                                  December 30,     January 1,
                                                      2000            2000
                                                  ------------     ----------

     Accrued commissions                            $      62      $       46
     Accrued payroll and related liabilities                               27
     Accrued inventory purchases                          325             128
     Accrued warranty                                                      17
     Other                                                969             284
                                                  ------------     ----------

        Total accrued liabilities                   $   1,356      $      502

                                                  ============     ==========

<PAGE> 39

8. NOTES PAYABLE

     Notes payable consisted of the following (in thousands):

                                                  December 30,     January 1,
                                                      2000            2000
                                                  ------------     ----------
     Notes payable,  interest only payments
     due in monthly  installments  of
     $4,993 at 12%  interest;  principal
     balance  due and payable in full
     December  15,  2001,  collateralized
     by all shares of the  Company's
     common stock, and the accounts receivable,
     inventory,  equipment and other tangible
     assets the Company.                            $     499

     Note payable  interest  only  payments
     due in monthly  installments  of
     $6,750  at 12%  interest;  collateralized
     by first  deed of trust on property
     held for rent; retired in 2000.                $     675

     Note payable, unsecured short-term at 6%
     interest per annum; payable on demand; due
     for purchase of the PRC Companies.                   821
                                                  ------------     ----------

                                                    $   1.320       $     675
                                                  =============    ==========

     In the quarter ended December 30, 2000,  the Company  issued  approximately
     $499,000 of  collateralized  notes  payable due  December 15, 2001 to a key
     employee, board members and other individual investors. The related parties
     received  warrants to purchase 99,861 shares of the Company's  common stock
     at $.75 per share. The proceeds were used for general working capital.

     Put Option
     ----------

     In  connection  with a private  sale of 133,333  shares of common stock for
     $201,000  during the quarter ended  September 30, 2000, the Company entered
     into an agreement with a shareholder where the shareholder has the right to
     require the Company,  beginning August 24, 2001, and continuing  thereafter
     for a period  of thirty  days,  to redeem  all or a stated  portion  of the
     shares of common stock issued to the  shareholder at a redemption  price of
     $2.25 per share (put option).  The amount related to the Company's $300,000
     potential  repurchase  obligation has been reclassified from  shareholders'
     equity to put options.

9. CAPITAL LEASE OBLIGATIONS

     Substantially  all of the Company's  capital lease obligations were related
     to the discontinued snowboard operations.  K2 assumed the snowboard-related
     obligations during the purchase that occurred on March 26, 1999.

10. COMMITMENTS AND CONTINGENCIES

     Commitments
     -----------

         The  Company is  obligated  under a single  operating  lease for office
         space at $8,817  per month  plus the cost of common  area  maintenance,
         commencing March 1, 2000 for thirty-two months, and then for $9,259 per
         month through April 2005.

<PAGE> 40

     Legal Matters
     -------------

     The Company is subject to legal  proceedings  and claims which arise in the
     ordinary  course of business.  In the opinion of management,  the amount of
     ultimate  liabililty  with  respect  to such actions,  will not  materially
     affect the financial  position or results of the operaitons of the Company.

     11. SHAREHOLDERS' EQUITY

     Changes in Securities
     ---------------------

     On January  31,  2000,  the  Company,  pursuant  to a  Securities  Purchase
     Agreement, exchanged 2,680,000 shares of its no par value common stock (the
     "common  stock") for all the  outstanding  securities and rights to acquire
     securities of IDW, a Delaware  corporation with offices and headquarters in
     Rocklin,   California.   Following  such  share  exchange,   IDW  became  a
     wholly-owned  subsidiary of the Company.  Shares were exchanged in reliance
     on the  exemptions  under  Sections 4(2) and 4(6) of the  Securities Act of
     1933,  as amended,  and Rule 506 of Regulation  D,  promulgated  by the SEC
     under  federal  securities  laws and  comparable  exemptions  for  sales to
     accredited   investors   and/or   private/limited   offerings  under  state
     securities  laws.  The Board set the exchange ratio based on its evaluation
     of the  value of IDW and the then  market  price for the  Company's  common
     stock and other factors.

     Also,  in January  2000,  the  Company,  in a private  placement  ("Private
     Offering"), sold 5,800,000 shares of common stock at $.75 per share. Shares
     were sold to  "accredited"  investors in reliance on the  exemptions  under
     Sections 4(2) and 4(6) of the Securities Act of 1933, as amended,  and Rule
     506 of Regulation D,  promulgated by the SEC under federal  securities laws
     and comparable  exemptions for sales to "accredited"  investors under state
     securities  laws. The Board set the offering price on the then market price
     for the Company's common stock and other factors.

     The Company  engaged  Capitol Bay  Securities,  Inc. (CBS) as the placement
     agent for the Private  Offering.  As placement  agent, the Company paid CBS
     sales commissions of $435,000 and an expense allowance of $14,000, equal to
     an aggregate of 12% of the proceeds raised,  and issued warrants to acquire
     580,000  shares of the Company's  common stock at an exercise price of $.75
     per share.  CBS is a wholly  owned  subsidiary  of Capitol Bay Group,  Inc.
     which is wholly owned by a director of the Company.

     In June 2000, the Company,  in a private placement,  sold 334,000 shares of
     common stock at $1.50 per share to a single accredited investor in reliance
     on the  exemptions  under  Sections 4(2) and 4(6) of the  Securities Act of
     1933,  as amended,  and Rule 506 of Regulation  D,  promulgated  by the SEC
     under  federal  securities  laws and  comparable  exemptions  for  sales to
     "accredited"  investors  under  state  securities  laws.  The Board set the
     offering  price on the then market price of the Company's  common stock and
     other factors.

     In August 2000, the Company,  in another  private  placement,  sold 134,000
     shares of common stock at $1.50 per share to a single  accredited  investor
     in  reliance  on  the  exemptions  under  Sections  4(2)  and  4(6)  of the
     Securities  Act  of  1933,  as  amended,  and  Rule  506 of  Regulation  D,
     promulgated  by the  SEC  under  federal  securities  laws  and  comparable
     exemptions for sales to "accredited" investors under state securities laws.
     The Board set the offering  price on the then market price of the Company's
     common stock and other factors.

     In the third and fourth  quarters of 2000, the Company,  in another private
     placement,  sold 983,601  shares of common stock in the  aggregate at $1.50
     per share to  accredited  investors  in  reliance on the  exemptions  under
     Sections 4(2) and 4(6) of the Securities Act of 1933, as amended,  and Rule
     506 of Regulation D,  promulgated by the SEC under federal  securities laws
     and comparable  exemptions for sales to "accredited"  investors under state
     securities  laws. The Board set the offering price on the then market price
     of the Company's common stock and other factors.

<PAGE> 41

     Stock Option Plans
     ------------------

     The Company has a stock option plan (the  "Plan") for selected  executives,
     employees  and directors  for which  1,102,500  shares of common stock have
     been reserved for issuance under the Plan. The Plan permits the granting of
     options  for  terms not to exceed  ten  years  from the date of grant.  The
     options  generally vest ratably over a four-year period and are exercisable
     subject to terms  established in the Plan  document.  The exercise price of
     the  options  granted  under the Plan must be equal to or greater  than the
     fair market  value of the shares on the date of grant for  incentive  stock
     options  and  not  less  than 85  percent  of the  fair  market  value  for
     nonqualified  stock options.  The exercise price of the options  granted by
     the Company has  generally  been equal to or greater than fair market value
     at the date of grant.  Fair market value for periods prior to the Company's
     initial public offering were  determined by the Board of Directors  without
     an independent valuation.

     In September  2000, the Company  established  the Granite Bay  Technologies
     2000 Equity  Incentive  Plan for certain key employees of the Company.  The
     plan also  permits the grant of stock  options,  restricted  stock  awards,
     stock  appreciation  rights,  stock units and other stock grants to certain
     persons  with  a   relationship   with  the  Company,   including   agents,
     consultants,  advisors,  independent  contractors,  sales  representatives,
     distributors,  principals and retail distribution outlets for the Company's
     products.  The plan  provides  for up to  882,000  shares of stock that are
     authorized for issue. The price of each share of stock covered by an option
     shall not be less than 100% of the fair value of the Company's common stock
     on the date of grant. Each option certificate shall have an exercise period
     of 6 months to ten years.

     In October 1999, the Board of Directors adopted the Morrow Snowboards, Inc.
     1999 Stock Option Plan for non-employee  directors.  This plan provides for
     the  issuance  of up to 300,000  shares of the  Company's  common  stock to
     existing  directors  and in the  case of extra  services  or  duties,  past
     directors.  Unless otherwise provided in the option grant, the options vest
     over the year  following  the date of grant and  expire  after the later of
     five years  after the date of grant or five years  after  termination  as a
     director.

     A summary of the activity within the plans follows:

                                                 Weighted
                                                 Average
                                    Number       Exercise    Aggregate
                                    of Shares    Price       Price
                                   ----------    --------    -----------

     Options outstanding at
         December 27, 1997           544,424     $  4.68     $2,548,000

         Options granted             116,250        1.33        154,600
         Options lapsed/canceled    (261,676)       4.57     (1,194,600)
                                   ----------    --------    -----------

     Options outstanding at
         December 26, 1998           398,998        3.78      1,508,000

         Options granted             280,000         .25         70,000
         Options lapsed/canceled    (128,550)       4.41       (566,819)
                                   ----------    --------    -----------

     Options outstanding at
         January 1, 2000             550,448        1.84      1,011,181

         Options exercised           (42,350)        .43        (18,401)
         Options granted             858,500        1.64      1,409,230
         Options lapsed/canceled    (231,250)       3.69       (852,501)
                                   ----------    --------    -----------

     Options outstanding at
         December 30, 2000         1,135,348     $  1.34     $1,549,510
                                   ==========    ========    ===========

<PAGE> 42

     The following table summarizes  information about stock options outstanding
     at December 30, 2000:

     Total  options  exercisable  at  December  30,  2000,  January  1, 2000 and
     December  26, 1998 were  665,707,  538,882 and  275,648,  respectively,  at
     weighted  average  exercise  price  per  share of $.79,  $1.87  and  $4.38,
     respectively.
<TABLE>
<S>     <C>            <C>            <C>          <C>         <C>            <C>

                       Number of      Weighted     Weighted    Number of      Weighted
        Range of       Shares Out-    Average      Average     Shares Exer-   Average
        Exercise       standing at    Remaining    Exercise    cisable at     Exercise
        Prices         December 31,   Contractual  Price       December 31,   Price
        Per Share      2000           Life (Years) per Share   2000           per Share
     --------------    ------------   ------------ ---------   ------------   ---------

     $ .01 - $ 5.00    1,095,348           5.01    $  1.19        665,707       $  .79
     $5.01 - $10.00       40,000           4.65       6.20
     --------------    ------------   ------------ ---------   ------------   ---------

     Total/average     1,135,348           5.00    $   .79        665,707       $  .79
                       ============   ============ =========   ============   =========

</TABLE>

     In 1995, the  shareholders  approved the Stock Option Plan for Non-Employee
     Directors (the "Directors Plan"), which plan reserved 122,500 shares of the
     Company's common stock for future grants to eligible  Directors (as defined
     in the Directors  Plan).  Options  granted  pursuant to the Directors  Plan
     reduced  the  number of  underlying  shares  available  under the Plan on a
     one-to-one  basis. The Directors Plan provided for an annual grant of 2,450
     shares of common stock to each eligible Director immediately following each
     annual meeting of  shareholders  commencing  with the 1996 annual  meeting.
     Grants were made at the fair market  value of the common  stock on the date
     of grant and were fully vested  after six months.  The  Directors  Plan was
     discontinued in October 1999.

     Pro forma Results of Operations
     -------------------------------

     The Company has computed,  for pro forma disclosure purposes,  the value of
     all options  granted  during  2000,  1999 and 1998 using the  Black-Scholes
     option pricing model, and the following  weighted  average  assumptions for
     grants for the years ended:

                                December 30,  January 1,  December 26,
                                    2000         2000        1998
                                ------------  ----------  ------------
     Risk-free interest rate        6.0%         5.7%          5.3%
     Expected dividend yield        0.0%         0.0%          0.0%
     Expected lives (years)         5            6             6
     Expected volatility           90.0%        53.8%         99.1%

     Statement of Financial Accounting Standards No. 123
     ---------------------------------------------------

     Using the  Black-Scholes  methodology,  the total value of options  granted
     during  2000,   1999  and  1998  was   $777,374,   $34,000  and   $114,000,
     respectively,  which  would be  amortized  on a pro  forma  basis  over the
     vesting period of the options  (typically four years). The weighted average
     fair  value per share of options  granted  during  2000,  1999 and 1998 was
     $.91, $.14, $.98, respectively.

     Had the  measurement  provisions of SFAS No. 123 been  adopted,  results of
     operations  computed  on a pro forma  basis  would have been as follows (in
     thousands, except per share information):

<PAGE> 43
<TABLE>
<S>                        <C>       <C>         <C>       <C>         <C>        <C>

                                                     Years Ended
                           -----------------------------------------------------------------
                           December 30, 2000     January 1, 2000       December 26, 1998
                           ------------------    ------------------    ---------------------
                              As        Pro         As       Pro          As          Pro
                           Reported    Forma     Reported   Forma      Reported      Forma

     Net loss              $(4,065)  $(4,726)    $(3,650)  $(3,893)    $(14,588)  $ (14,898)
     Net loss per share:
         Basic             $  (.23)  $  (.27)    $  (.57)  $  (.61)    $  (2.36)  $   (2.41)
         Diluted           $  (.23)  $  (.57)    $  (.61)  $ (2.36)    $  (2.41)  $   (2.41)

</TABLE>

     The effects of applying the  measurement  provision of SFAS No. 123 in this
     pro forma  disclosure  are not indicative of future  amounts.  SFAS No. 123
     does not apply to awards prior to January 1, 1995,  and  additional  awards
     are anticipated in future years.

     Stock Warrants
     --------------

     The Company,  from time to time,  has issued stock  warrants as payment for
     fees, interest and services rendered. At December 30, 2000, January 1, 2000
     and  December 26, 1998,  the Company had  outstanding  warrants to purchase
     780,161,  34,300  and  34,300  shares of common  stock,  respectively.  The
     warrants are exercisable at a weighted  average price per share of $.87. In
     2000,  1999 and 1998, no warrants to purchase  common stock were exercised.
     During 2000, 745,861 warrants were granted and none lapsed. During 1999 and
     1998, no warrants were granted or lapsed.

12. RELATED PARTY TRANSACTIONS

     Related party  transactions  not previously  disclosed in other sections of
     this report include the following:

     A member of the Company's  Board of Directors was issued 20,000 warrants to
     purchase the Company's  common stock at an exercise price of $.85 per share
     as  compensation  for assisting in the sale of the Salem,  Oregon  building
     during 2000.  Another  director was issued  21,000  warrants at an exercise
     price of $1.50  per  share as a fee for  personally  guaranteeing  the debt
     refinancing project on the Salem, Oregon building.

     During 1999 and 1998, the Company purchased certain  manufacturing  tooling
     and supplies  from Morrow  Aircraft  Corporation  (MAC) a company  owned by
     certain  shareholders,  including  a  shareholder  who is  also  a  Company
     Director.  The Company recorded  $72,000 of manufacturing  expenses in 1998
     and  capitalized   $47,000  and  $245,000  for  tooling  related  to  these
     transactions  in 1999  and  1998,  respectively.  All such  purchases  were
     related to the discontinued snowboard operations. The Company believes that
     the agreement with MAC was made on terms  comparable to those in the market
     place.

     Capital  Bay  Management,  Inc.  (CBM)  purchased  3,000,000  shares of the
     Company  during 1999.  Subsequent to the purchase of the stock,  one of the
     owners of CBM became a director of the Company.

13. INCOME TAXES

     The  provisions  for  income  taxes  consist  of taxes  currently  due plus
     deferred  taxes  for the net  change  in items  with  different  bases  for
     financial and income tax reporting purposes. The items with different bases
     are  primarily  fixed  assets,  allowance  for doubtful  accounts,  accrued
     liabilities for discontinued  operations,  employee vacation, and inventory
     and warranty  reserves.  The deferred tax assets and liabilities  represent
     the future tax  consequences  of those  differences,  which will  either be
     deductible  or taxable  when the assets and  liabilities  are  recovered or
     settled,  using  enacted  marginal  income  tax  rates in  effect  when the
     differences are expected to reverse. Deferred tax assets are recognized for
     operating  losses  and tax  credits  that are  available  to offset  future
     federal  income  taxes.  Net deferred  taxes  consist of the  following tax
     effects relating to temporary differences and carryforwards (in thousands):

<PAGE> 44
                                                 December 30,      January 1,
                                                     2000             2000
                                               --------------     ------------
     Deferred tax assets:
         Accrued expenses and reserves             $    105         $    494
         Depreciation                                                    145
         Net operating loss and tax credit
             carryforwards                           10,970            8,827
                                               --------------     ------------

                Deferred tax assets before
                valuation allowance                  11,075            9,466

              Valuation allowance                   (11,067)          (9,466)
                                               --------------     ------------

                Total deferred tax assets                 8

         Deferred tax liabilities:
             Depreciation and amortization               (8)
                                               --------------     ------------

             Net deferred tax assets               $      -         $      -
                                               ==============     ============


     At  December  30, 2000 and  January 1, 2000,  the Company had an  estimated
     federal net operating loss  carryforward of  approximately  $28,128,000 and
     $22,636,000,    respectively,   expiring   through   2020.   Due   to   the
     discontinuation  of its snowboard and apparel  operations (Note 18) and the
     purchase of IDW and the PRC  Companies  (Note 2), the Company does not meet
     the continuity of operations  requirement of Internal  Revenue Code Section
     382.  Accordingly,  approximately  $22,636,000 in net operating losses will
     not be available to offset future  Federal  income  taxes,  if any. For the
     years ended  December 30, 2000 and January 1, 2000,  the Company  increased
     its  valuation  allowance by $1,601,000  and  $1,337,000,  respectively.  A
     valuation  allowance  has  been  established  due  to  the  uncertainty  of
     realizing deferred tax assets.

     The  components of income tax  (benefit)  expense for both  continuing  and
     discontinued operations are as follows (in thousands):

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

                                                         Years Ended
                                           ---------------------------------------
                                           December 30,   January 1,  December 26,
                                               2000          2000         1998
                                           ------------   ----------  ------------

     (Benefit) expense for income taxes:
        Current:
            Federal
            Foreign                                                     $     30
                                           ------------   ----------  ------------

                     Total                                                    30
                                           ------------   ----------  ------------

                Deferred                     $  (1,601)     $(1,337)      (5,171)
                Valuation allowance              1,601        1,337        5,141
                                           ------------   ----------  ------------

     Total benefit for income taxes          $       -      $     -      $     -
                                           ============   ==========  ============

       Tax (benefit) expense recorded in:
            Continued operations             $       -      $     -      $     -
            Discontinued operations          $       -      $     -      $     -

</TABLE>

<PAGE> 45

     A reconciliation of the income tax at the federal statutory income tax rate
     to the income tax benefit as reported is as follows:

                                                        Years Ended
                                         ---------------------------------------
                                         December 30,   January 1,  December 26,
                                             2000          2000         1998
                                         ------------   ----------  ------------

     Benefit computed at statutory rates    (34.0)%       (34.0)%       (34.0)%
     State taxes, net of federal benefit     (4.4)         (4.4)         (4.4)
     Change in valuation allowance           38.4          38.4          35.2
     Other                                                                3.2
                                         ------------   ----------  ------------

              Income tax benefit as
                reported                        - %           - %           - %
                                         ============   ==========  ============


14. CASH FLOW DISCLOSURES

     Supplemental cash flow disclosures are as follows (in thousands):

                                                    Years Ended
                                      ---------------------------------------
                                      December 30,   January 1,  December 26,
                                            2000        2000         1998
                                      ------------   ----------  ------------

     Supplemental disclosure:
         Cash paid for interest         $   442        $   100      $   483
         Cash paid for income taxes                                 $    54
     Noncash investing transactions:
         Assets acquired under capital
               lease                    $ 4,272


     In 2000,  IDW HK purchased all of the  outstanding  securities of MULCD and
     IDWT for  cash.  In  conjunction  with the  acquisition,  liabilities  were
     assumed as follows (in thousands):

     Fair value of assets acquired                           $ 12,017
     Liabilities  assumed                                      (2,213)
     Deposit paid in 1999 by IDW HK                            (1,000)
     Payment due to complete acquisition (Note 2)              (4,532)
     Less: cash acquired                                          (64)
                                                             ----------
     Cash paid to acquire PRC Companies                      $  4,208
                                                             ==========

15. CONCENTRATIONS

     Credit Risks
     ------------

     Financial   instruments,   which   potentially   subject   the  Company  to
     concentration  of  credit  risk,  consist  principally  of  temporary  cash
     investments,  short-term  investments  and trade  receivables.  The Company
     places its temporary cash investments and short-term  investments with high
     quality financial institutions.

     Major Customer
     --------------

     Sales to one customer for the year ended  December 30, 2000  accounted  for
     approximately 28% of total sales.

<PAGE> 46

16. EMPLOYEE SAVINGS PLAN

     The Company created an employee  savings plan (the 'Plan") on July 1, 1996,
     under the  provisions of Section  401(k) of the Internal  Revenue Code. The
     plan covered substantially all full-time employees.  The Company's matching
     contributions  took two forms; a basic matching  contribution of 30 percent
     of  employee  contributions,  and  a  discretionary  supplemental  matching
     contribution based upon parameters set by management on an annual basis.

     The Company  terminated the Plan in December 2000.  Participants  are fully
     vested in their 401(k)  contributions and matching  contribution  accounts.
     Company  matching  contributions in 1999 and 1998 were $11,372 and $27,000,
     respectively.

17. SEGMENT AND GEOGRAPHIC INFORMATION

     Under  Statement of Financial  Accounting  Standards  No. 131,  Disclosures
     about Segments of an Enterprise and Related  Information (SFAS 131), public
     companies  are  required  to  disclose   certain   information   about  the
     enterprise's  reportable segments.  The Company's subsidiaries produce only
     displays  or  display  modules  for  end  products  of  original  equipment
     manufacturers.  However,  the Company has two major geographic  territories
     where  it  sells  and  distributes   essentially  the  same  products.  The
     geographic  territories  are the  United  States  and Asia.  The  following
     represents  continuing  operations  geographical  data for the  year  ended
     December 30, 2000 (in thousands).

                                               Year Ended December 30, 2000
                                         ---------------------------------------

                                           Asia           USA           Total
                                          -------        ------        -------
     Revenue form external customers      $10,479        $7,325        $17,804
     Cash                                 $   795        $  119        $   914
     Fixed assets, net of accumulated
          depreciation                    $ 6,998        $  193        $ 7,191
     Total assets                         $11,116        $7,757        $18,873


18. DISCONTINUED OPERATIONS

     On March 26, 1999, the Company sold all of its right, title and interest in
     and to the "Morrow" and "Morrow Snowboards" names and the other trademarks,
     trade names and service marks to K2  Acquisitions,  Inc. (K2). In addition,
     K2  purchased  all  of  the  machinery,  equipment  and  tooling  used  for
     manufacture of snowboards and bindings; rights to the machinery,  equipment
     and tooling that is leased by the Company;  all of the Company's  snowboard
     inventory for the 1999/2000 season; purchase orders reflecting sales orders
     received and accepted by the Company  prior to the date of sale;  trademark
     licensing agreement and international distribution agreement and all of the
     Company's rights,  claims,  credits,  causes of action or rights of set-off
     against third parties relating to the assets. In consideration of the sale,
     conveyance,  assignment,  transfer and delivery of the assets,  the Company
     received $3.2 million.

     In October  1999,  Westbeach's  Bellevue,  Washington  retail  store lease,
     inventory and trade fixtures were sold for approximately $196,000.  Payment
     included  the  assumption  of  accounts  payable  related  to that  store's
     inventory,  assumption  of the retail  store lease  (including a release of
     Westbeach) and  approximately  $48,000 in cash, based on subsequent  sales,
     payable in  interest-free  installments on January 5, 2000 and December 30,
     2000.

     On  November  12,  1999,  Westbeach  sold  substantially  all  its  assets,
     including  its  remaining  two retail  stores in  Vancouver  and  Whistler,
     British  Columbia,  and its  apparel  line,  together  with  the  Westbeach
     trademarks, to Westbeach Sports, Inc., a British Columbia corporation,  not
     affiliated  with either the Company or Westbeach.  The assets were sold for

<PAGE> 47

     $2,680,000  pursuant to an Asset Purchase  Agreement that contained certain
     representations   and   warranties   by   Westbeach   to  the   buyer   and
     indemnification  of the Buyer by  Westbeach  in certain  events for certain
     liabilities or any inaccuracies in such representations and warranties. The
     sales price was subject to adjustment based on final inventory and accounts
     receivable  verifications.  A $100,000 holdback to fund certain adjustments
     has since been refunded to the Company.

     As a result of these transactions,  the following net book values of assets
     purchased and liabilities  assumed at January 1, 2000 and December 26, 1998
     have been  shown as net  current  and  non-current  assets of  discontinued
     operations in the Consolidated Balance Sheet (in thousands):


                                              December 30,      January 1,
                                                  2000             2000
                                              ------------      ----------

     Accounts receivable, net                   $     24          $  1,504
     Inventory                                                          70
     Other assets                                                      758
                                              ------------      ----------

        Net current assets of
          discontinued operations                     24             2,332
                                              ------------      ----------

     Equipment, fixtures, and other
       assets (net of accumulated
       depreciation and allowance
       for write-downs of $218                                          72
                                              ------------      ----------

        Net non-current assets of
          discontinued operations                                       72
                                              ------------      ----------

     Total net assets of discontinued
            operations                          $     24          $  2,404
                                              ------------      ----------

     Operating  results of the snowboard and apparel  operations for 2000,  1999
     and 1998 are shown separately in the  consolidated  statement of operations
     as loss from  discontinued  operations,  net of taxes.  The net loss on the
     sale  of  the  snowboard   operations   has  been  reflected  in  the  1998
     consolidated  statement of operations as loss from  discontinued  snowboard
     operations,  as has the accrued operating loss of the snowboard segment for
     the period from  year-end to the date of sale.  The net loss on the sale of
     the  apparel  operations  has  been  reflected  in  the  1999  consolidated
     statement of operations as loss from discontinued  apparel  operations,  as
     has the accrued  operating loss of the apparel  segment for the period from
     year-end to the date of sale. The discontinued  snowboard operating results
     include an allocation  of  consolidated  net interest  expense based on net
     assets. The allocated net interest expense was $96,000 and $483,000 in 1999
     and 1998,  respectively.  Sales from discontinued  snowboard  operations of
     $86,000 and $15,991,000 in 1999 and 1998, respectively,  were excluded from
     revenues  and  included  in loss from  discontinued  snowboard  and apparel
     operations.  The net interest expense  allocated for  discontinued  apparel
     operations was $27,000 in 1999. Sales from discontinued  apparel operations
     of $9,022,000 in 1999 were excluded from revenues and included in loss from
     discontinued  snowboard and apparel operations.  The consolidated statement
     of cash flows has not been restated to reflect the discontinued  operations
     presentation.

19. SUBSEQUENT EVENTS

     Credit Facility
     ---------------

     On March 23, 2001, IDW executed a one year $3,000,000  credit facility from
     BFI Business  Finance,  under which the Company can borrow up to 80% of the
     value of its U.S.  accounts  receivable.  The facility bears interest at 3%
     above the prime rate of Comerica Bank of California  and is  collateralized
     by the assets of IDW and the  receivables  of IDW HK. On April 4, 2001, the
     Company drew $634,000 on this credit facility.

<PAGE> 48

     Subordinated Debt
     -----------------

     Granite Bay Technologies recorded a total of $600,000 in new debt, which is
     subordinated to the BFI credit facility and is collateralized by the assets
     of IDW and its  subsidiaries.  The debt bears  interest at 12.68% per annum
     and is due in installments starting in October 2001 and ending April 2002.

     Final Settlement with Judicial Managers
     ---------------------------------------

     On April 11, 2001, IDW completed a settlement with the Judicial Managers of
     Vikay  Industrial Ltd. for all remaining  amounts owing under the Sales and
     Purchase  Agreement (Note 2) and the Supplemental Deed and Charge,  thereby
     finalizing all matters  relating to the  acquisition on February 1, 2000 of
     MULCD   Microelectronics   Company  Ltd.  and  Vikay  Shenzhen   Technology
     Development  Company  Ltd.  The final  amount  paid  under the terms of the
     settlement was $820,948.  This amount has been included in Short Term Notes
     payable at December 30, 2000 (Note 8).

<PAGE> 49
                              SUPPLEMENTAL SCHEDULE


                       SUPPLEMENTARY INFORMATION REQUIRED

                        UNDER THE SECURITIES AND EXCHANGE

                                   ACT OF 1934

                    AS OF DECEMBER 30, 2000, JANUARY 1, 2000
      AND DECEMBER 26, 1998GRANITE BAY TECHNOLOGIES, INC. AND SUBSIDIARIES

                              SUPPLEMENTAL SCHEDULE

                        VALUATION AND QUALIFYING ACCOUNTS


                As of and for the years ended December 30, 2000,
                      January 1, 2000 and December 26, 1998


The  following  schedule  has not  been  restated  to  conform  to  discontinued
operations presentation:

                             Balance at  Charged to                  Balance
                             Beginning   Costs and                   at End
Description                  of Period   Expenses    Deductions *    of Period
-------------------------    ---------   --------    ------------    ---------
December 26, 1998

Allowances deducted from
asset accounts:
  Allowance for doubtful
  accounts                   $   659     $   550       $   (143)      $ 1,066
  Obsolete inventory
  allowance                  $   535     $ 2,806       $   (549)      $ 2,792

January 1, 2000

Allowances deducted from
asset accounts:
  Allowance for doubtful
  accounts                   $ 1,066         220       $   (280)      $ 1,006
  Obsolete inventory
  allowance                  $ 2,792     $(2,750)      $     42

December 30, 2000

Allowances deducted from
asset accounts:
  Allowance for doubtful
  accounts                   $ 1,006     $             $              $ 1,006
  Obsolete inventory
  allowance                  $    42     $             $              $    42


*  Balances written off, net of recoveries

<PAGE> 50

Item  9.  Changes  In and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

     On January 14, 2000,  and as  previously  reported in our Annual  Report on
Form 10-K for the year ended  January 1, 2000,  Arthur  Andersen,  LLP  ("Arthur
Andersen") resigned as outside auditors for the Company.  The Company's Board of
Directors  accepted Arthur  Andersen's  resignation and appointed the accounting
firm of  Perry-Smith  LLP  ("Perry-Smith")  of  Sacramento,  California,  as the
Company's new outside auditors and the shareholders  ratified the appointment at
the Annual  Shareholders'  Meeting held on September 28, 2000. Based on a review
of several  accounting  firms,  the Board  selected  Perry-Smith  which has both
public company and international auditing experience.

     Arthur  Andersen  included  a "going  concern"  qualification  in its audit
report on the  financial  statements  for the  Company's  two fiscal years ended
December 27, 1997 and December 26, 1998,  but did not in either of the financial
statements  include  an  adverse  opinion  or  a  disclaimer  of  opinion  or  a
qualification  or  modification  as to  uncertainty,  audit scope or  accounting
principles.  During the two most recent fiscal years and any subsequent  interim
period  preceding  Arthur  Andersen's  resignation,  there were no disagreements
between  the  Company  and the  former  auditors  on any  matter  of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure  which, if not resolved to the  satisfaction  of the former  auditors,
would have caused Arthur  Andersen to make a reference to the subject  matter of
the  disagreement  in  connection  with  its  audit  reports  in such  financial
statements.  Prior to Arthur  Andersen's  resignation,  Arthur  Andersen did not
express  a  difference   of  opinion   regarding   any  events  listed  in  Item
304(a)(2)(v)(A)  through (D) of Regulation  S-K.  Arthur  Andersen sent a letter
evidencing no objection to the Company's responses to the SEC.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Directors
---------

     On October 24, 2000, the Company  increased the size of its Board from five
(5) to seven (7) directors and two new directors were added to the Board.  Below
is information on the current directors of the Company:

     Stephen  C.  Kircher,  age 47,  has  served  as  Chairman  of the  Board of
Directors of the Company  since  February  2000 and as a director  since October
1999. He has served as a director of International Display Works, Inc. since its
formation  in June 1999.  Since 1993,  he has served as Chairman and is majority
owner of Capitol Bay Group, Inc. (holding  company),  and as Chairman of Capitol
Bay  Securities,  Inc.  (securities  and  investment  banking)  and  Capitol Bay
Management,  Inc. (investment  company).  Both Capitol Bay Securities,  Inc. and
Capitol Bay Management, Inc. are wholly-owned subsidiaries of Capitol Bay Group,
Inc. He was a founding  Director of  Burlingame  Bancorp and served on its Board
from  1984 to 1991.  Prior to 1993,  Mr.  Kircher  formed  and  managed  Spinner
Corporation,  which  engaged in  leveraged  buyouts of troubled  companies.  Mr.
Kircher has extensive  experience as a principal in equity  private  placements,
sale and  leaseback  financing,  multiple  forms of debt  financing  and initial
public  offerings.  Mr. Kircher began his career with Dean Witter in 1975 before
joining Bateman, Eichler, Hill & Richards, a regional investment-banking firm in
1978. Mr. Kircher has a BA degree from the University of California, San Diego.

     William H.  Hedden,  age 46, has served as  President  and Chief  Executive
Officer of Consolidated Adjusting, Inc. (construction insurance adjusting) since
1992. From 1985 to 1992, Mr. Hedden served as Director of Burlingame Bancorp and
its  subsidiary,  Burlingame  Bank & Trust Co.  In 1984,  Mr.  Hedden  served as
Chairman  of the  Board of  Bayhill  Service  Corporation,  a  mortgage  banking
subsidiary of Delta Federal Savings & Loan. From 1983 to 1987, Mr. Hedden served
as Chairman of the Board and majority  shareholder  of Delta  Federal  Savings &
Loan. Mr. Hedden has a Juris Doctor degree from Hastings College of the Law, San
Francisco in 1979 and a BA degree from Stanford  University,  Palo Alto in 1975.
He has been a director of the Company since October 1999.

     Thomas J.  Manz,  age 50, has served as a  Director  of the  Company  since
October 1999.  Mr. Manz has been Owner,  Director or Managing  Member of various
businesses,  primarily  involved  with real  estate  development  and  financial
services,  over the last  twenty  years.  Mr.  Manz  has  been  involved  in the
construction and development of millions of square feet of real estate, property
management and sales. He also served as an operating officer and

<PAGE> 51

founding Director of M. L. Oates Insurance Co., which was sold in 1993; Director
of United Way of Sacramento from 1989 to 1992; a founding  Director of Roseville
First  National Bank from 1990 and Chairman of the Board from 1993 to 2000 until
the Bank  merged with  Western  Sierra  Bancorp.  Mr.  Manz has  continued  as a
Director of Western  Sierra Bancorp and is currently the  Co-Chairman;  he was a
founding  Director of Pacific  Coast  Banker's  Bank since 1995 and has been the
Vice-Chairman  since 1999.  Mr. Manz received a Bachelor of Science  degree from
Iowa State University.

     Anthony G. Genovese, 58, has been a Director of Granite Bay since September
2000.  He is presently  the Chairman and Chief  Technology  Officer of IDW since
October  2000.  He founded IDW in June 1999 to purchase  the shares of MULCD and
Vikay Industrial (Shenzhen) Limited ("IDWT").  IDW operated MULCD and IDWT under
a management  contract  with Vikay  Industrial  (Singapore)  Limited  ("Vikay"),
MULCD's and IDWT's parent  company,  from August 1, 1999. From 1997 to 1999, Mr.
Genovese was  President,  joint member of the Office of the Chief  Executive and
Director of Vikay.  Vikay  entered  Judicial  Management,  a form of  bankruptcy
proceeding  in  Singapore,  in December  1997.  The  Judicial  Managers of Vikay
selected Mr. Genovese for this position. In 1986, Mr. Genovese founded VGI, Inc,
a joint venture company with Vikay to market Vikay LCD's and to help Vikay enter
the LCD module business in the United States.  He introduced  custom products to
major  companies  such as ADEMCO,  GE,  Honeywell,  Schlumberger,  AT&T,  Milton
Bradley,  Lifescan and  White-Rogers.  In 1992, VGI became a subsidiary of Vikay
and was renamed Vikay America,  Inc. Mr. Genovese continued as President and CEO
of  Vikay  America  from  1992 to 1997.  Prior  to  Vikay,  Mr.  Genovese  was a
technologist and Marketing Executive for PCI Displays (1977 to1986), and founded
the  LCD   operations  at  Beckman   Instruments   (1972  to1976)  and  Rockwell
International  (1966 to  1969).  Mr.  Genovese  received  a BS in  Physics  from
Manhattan  College in 1964,  an MS in Physics &  Mathematics  from NYU & Courant
Institute  of  Mathematical  Sciences in 1966 and  attended  USC for 18 graduate
credits towards a Master Degree in Systems Management in 1975 and 1976.

     P.  Blair  Mullin,  47,  is the  President,  Chief  Financial  Officer  and
Secretary  of  Granite  Bay and has served as a  Director  of Granite  Bay since
October 1998.  Mr. Mullin has served as Granite Bay's  President  since May 1998
and as Chief  Financial  Officer since Granite  Bay's  acquisition  of Westbeach
Snowboard  Canada Ltd.  ("Westbeach")  in November  1997.  Mr.  Mullin served as
Chairman of the Board of Granite Bay from April 1999 to  February  2000.  He has
been Director of IDW since  February 2000 and was appointed the Chief  Operating
Officer  of IDW in  October,  2000.  In  addition,  he served as  Treasurer  and
Secretary of Granite Bay since  January  1998.  Mr. Mullin was the President and
Chief  Executive  Officer of Westbeach  from July 1995 to November  1997 and the
Chief Executive Officer of Westbeach Canada, ULC, from May 1998 to present.  Mr.
Mullin was  responsible for the sale of the snowboard  manufacturing  assets and
the snowboard  apparel  trademarks in 1999.  From 1992 to 1995, Mr. Mullin was a
private  business  consultant,  serving  companies in distress  situations.  Mr.
Mullin  received  an MBA from the  University  of Western  Ontario in 1982 and a
Bachelor of Arts degree in Economics from Wilfrid Laurier University in 1975.

     Timothy B. Nyman,  50, has served as a Director of Granite Bay Technologies
since  October  2000.  Mr.  Nyman is the Vice  President of  Operations  for the
Western  United States at GTECH  Corporation,  the world's  largest  supplier of
online  lottery  systems and services.  In 1979, Mr. Nyman went to work with the
predecessor  company  of GTECH  Corporation,  which was the gaming  division  of
Datatrol,  Inc. In his  twenty-one  years with GTECH and its  predecessors,  Mr.
Nyman has  performed  in various  operations  and  marketing  functions.  He has
directed a full range of corporate marketing  activities and participated in the
planning  and  installation  of new  online  lottery  systems  domestically  and
internationally.  Mr. Nyman received a Bachelor of Science degree with majors in
Marketing, Accounting and Finance from Michigan State University in 1973.

     Ronald A. Cohan,  59, has served as a Director of Granite Bay  Technologies
since  October  2000.  Since 1995,  Mr. Cohan has served as a consultant to High
Integrity Systems,  Inc., a subsidiary of Equifax, Inc. Mr. Cohan joined the law
office of Pettit & Martin as an  Associate in 1968 and was admitted as a Partner
in 1972. He opened the Los Angeles  office of Pettit & Martin in October of 1972
and was Partner In Charge until March of 1983. Mr. Cohan left Pettit & Martin in
February  of 1992 and  became  Principal  of his own law  firm.  Mr.  Cohan  has
specialized in government  procurement matters for various institutional clients
such as Honeywell, 3M, Mitsui, Sentax and Equifax. Mr. Cohan received a Bachelor
of Arts degree from  Occidental  College in 1963 and a Juris Doctor  degree from
the University of California, Berkeley (BOALT Hall) Law School in 1966.

<PAGE> 52

Executive Officers and Significant Employees

     Set forth below is information on the executive officers of the Company:

Name                   Age   Position
----                   ---   --------
Stephen C. Kircher(1)  47    Chairman of the Board
P. Blair Mullin(1)     47    President, Chief Financial Officer, Treasurer and
                             Secretary and Chief Operating Officer of IDW

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

(1) For  information  regarding  Messrs.  Kircher  and  Mullin,  see  "Item  10.
Directors," above.

Key Employees of the Company's Subsidiary - International DisplayWorks ("IDW")

     Anthony G. Genovese (see "Item 10. Directors" above.)

     Alan Lefko, Chief Financial Officer, joined IDW in February 2000. From July
1999 to January 2000, Mr. Lefko was the Chief Financial  Officer of The Original
Bungee Company ("Bungee") in Oxnard,  California, a manufacturer and distributer
of  stretch  cord and  webbing  products.  Mr.  Lefko  was  responsible  for the
reorganization of Bungee's financing structure,  establishment of an asset based
lending program and implementation of cost accounting systems and controls. From
1989 to 1999,  Mr. Lefko served as Chief  Financial  Officer and  Controller  of
Micrologic,  a manufacturer  and distributor of Global  Positioning  Systems and
Vikay America, Inc., a subsidiary of Vikay Industrial (Singapore) Limited, based
in Chatsworth,  California. Mr. Lefko has a BA degree in Business Administration
and Accounting from California State University, Northridge, California.

     Philip  Gregory,  Vice  President,  Manufacturing,  joined IDW in November,
1999. Mr. Gregory has over 30 years'  experience in the electronics  industry in
areas  of  product  and  process   development,   equipment  design,   equipment
maintenance,   installation  and  automation,  in  both  high  and  low  volume,
manufacturing  environments.  From  1996  to  1999,  Mr.  Gregory  served  as  a
manufacturing  consultant to Three-Five Systems,  Micro Display Corp.,  Accudyne
and Villa Precision International. From 1994 to 1995, he was Product Development
Manager for Villa Precision International,  responsible for product development,
customer  process  improvements and sales support.  Mr. Gregory  experience also
includes CEO of Dove Communications,  General Manager of the telecom division of
Elteck, VP of Operations for PCI, Operations Manager of National Semi-conductor,
and various positions with Texas  Instruments.  Mr. Gregory attended North Texas
State University, majoring in business.

Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's  executive  officers and directors,  and persons who own more than
ten percent (10%) of the Company's Common Stock, to file reports of ownership on
Form 3 and changes in ownership on Form 4 or 5 with the  Securities and Exchange
Commission (the "SEC"). Such executive officers, directors and ten percent (10%)
shareholders  are also  required by SEC rules to furnish the Company with copies
of all Section 16(a) forms they file.  Based solely upon its review of copies of
such forms received by it, or on written  representations from certain reporting
persons  that no other  filings  were  required  for such  persons,  the Company
believes  that,  during the year ended  December 30, 2000,  all of its executive
officers,  directors  and ten  percent  (10%)  shareholders  complied  with  all
applicable  Section 16(a) filing  requirements,  except the initial  filings for
Messrs.  Cohan and Nyman. These reports were delayed due to confusion during the
holidays. These reports have been filed.

<PAGE> 53

Item 11. Executive Compensation

                              Compensation Summary

     The following table  summarizes all  compensation  earned by or paid to our
President and Chief Financial Officer and the former Chief Executive Officer. No
other executive officer's total annual compensation for services rendered in all
capacities for 1998 and 1999 and 2000 exceeded $100,000.

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

                                                                      Summary Compensation Table
                                                                      --------------------------
                                                         Annual Salary                             Long-Term Compensation
                                          --------------------------------------------  --------------------------------------------
                                                                                              Securities
Name and                                                                                      Underlying             Other
Principal Position                             Year           $             Bonus            Options (#)          Compensation
------------------                             ----           -             -----            -----------          ------------

P. Blair Mullin(1)                             2000        $124,224          --                 80,000                --
Chairman of the Board                          1999        $121,774          --                 70,000               117(3)
President, Chief Financial Officer, and        1998        $118,218          --                 --(2)               2,402(4)
Secretary and Chief Operating Officer of
IDW
Anthony Genovese,                              2000        $200,833          --                260,000              9,000(5)
                                               1999          --              --                  --                   --
                                               1998          --              --                  --                   --
Phil Gregory                                   2000        $114,583          --                 60,000              5,000(6)
                                               1999          --              --                  --                   --
                                               1998          --              --                  --                   --

Alan Lefko                                     2000        $109,375          --                 50,000             $13,250(7)
                                                              --               --                   --                    --
                                                              --               --                   --                    --
Ben Tang                                       2000        $169,233          --                 25,000             $19,694(8)
                                               1999          --              --                  --                   --
                                               1998          --              --                  --                   --

--------------------------
</TABLE>

(1)  Blair Mullin was appointed President of the Company effective May 18, 1998.
     He is also serving as Chief Financial  Officer and  Secretary/Treasurer  of
     the  Company  and  served as  Chairman  of the Board  from April 1, 1999 to
     February 2000.
(2)  50,000 options granted in 1998 were cancelled.
     Represents medical insurance reimbursement
(4)  Represents reimbursement of moving expenses.
     Represents vehicle allowance.
     Represents moving allowance.
     Represents $8,000 moving allowance and $5,250 vehicle allowance. Represents
     vehicle allowance.

<PAGE> 54

Option Grants in 2000
---------------------

     The following table provides  information relating to stock options granted
during the year ended December 30, 2000.
<TABLE>
<S>                  <C>                    <C>                   <C>           <C>             <C>              <C>

                                                               Individual Grants
                                                                                                 Potential Realizable Value
                                                                                                   at Assumed Annual Rates
                                              Percent of Total                                          of Stock Price
                     Number of Securities    Options Granted to    Exercise                              Appreciation
                          Underlying              Employees          Price       Expiration            For Option Terms
                                                                                                       ----------------
        Name          Options Granted (#)      In Fiscal Year      Per Share        Date             5%               10%
        ----          -------------------      --------------      ---------       ------         --------        ---------
P. Blair Mullin             70,000                  12.66            $  .75        1/7/10         $ 33,017         $ 83,671
                            10,000                   1.81            $  .75      12/15/05         $  2,072         $  4,579
Anthony Genovese           250,000                  45.21            $ 1.70       8/25/05         $117,420         $259,467
                            10,000                   1.81            $  .75      12/15/05         $  2,072         $  4,579
Phil Gregory                50,000                   9.04            $ 1.70       8/25/05         $ 23,484         $ 51,893
                            10,000                   1.81            $  .75      12/15/05         $  2,072         $  4,579
Alan Lefko                  50,000                   9.04            $ 1.70       8/25/05         $ 23,484         $ 51,893
Ben Tang                    25,000                   4.52            $ 1.70       8/25/05         $ 11,742         $ 25,947
</TABLE>


     The exercise price of each option was equal to the fair market value of our
Common Stock on the date of the grant. Percentages shown under "Percent of Total
Options  Granted to Employees in the Last Fiscal Year" are based on an aggregate
of 553,000  options  granted to our employees  under the 1998 Stock Option Plan,
2000  Equity  Incentive  Plan and  outside  of this plan  during  the year ended
December 30, 2000.

     Potential realizable value is based on the assumption that our Common Stock
appreciates  at the annual rate  shown,  compounded  annually,  from the date of
grant until the expiration of the five-year  term.  These numbers are calculated
based on Securities and Exchange Commission  requirements and do not reflect our
projection or estimate of future stock price growth. Potential realizable values
are computed by:

     o    Multiplying  the number of shares of Common  Stock  subject to a given
          option by the exercise price;

     o    Assuming that the aggregate stock value derived from that  calculation
          compounds  at the  annual  5% or 10% rate  shown in the  table for the
          entire five-year term of the option; and

     o    Subtracting from that result the aggregate option exercise price.

                          Fiscal Year End Option Values

     The following table sets forth for each of the executive  officers named in
the  Summary  Compensation  Table  the  number  and  value  of  exercisable  and
unexercisable options for the year ended December 30, 2000.
<TABLE>
<S>                         <C>               <C>               <C>               <C>               <C>               <C>

                                                                       Number of Securities
                                                                       Underlying Unsecured                Value of Unexercised
                               Shares                                         Options                      In-The-Money Options
                             Acquired on          Value                At December 30, 2000                at December 30, 2000
                                                             ------------------------------------    -------------------------------
Name                        Exercise (#)       Realized ($)       Exercisable       Unexercisable    Exercisable       Unexercisable
----                        ------------       ------------       -----------       -------------    -----------       -------------
                                  -                 -               150,000                -            24,500                -
P. Blair Mullin
Anthony Genovese                  -                 -                93,166             175,000            -                  -
Phil Gregory                      -                 -                30,000              30,000            -                  -
Alan Lefko                        -                 -                25,000              25,000            -                  -
Ben Tang                          -                 -                12,500              12,500            -                  -


</TABLE>

     Amounts shown under the column "Value of Unexercised  In-The-Money  Options
at December 30, 2000," represent the difference between the fair market value of
the shares of Common Stock  underlying  the options at December 29, 2000,  $0.60
per share (the closing price on the first day of trading of 2000, as reported by
the Pinksheets) less the corresponding exercise price of such options.

<PAGE> 55

Performance Measurement Comparison

[Please   update  to   December   30,  2000  and  change  name  to  Granite  Bay
Technologies.]

              COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT*

             Compensation Committee Report on Executive Compensation

     The executive  compensation  policies and programs developed by the Company
are designed to retain and motivate  executive officers and to ensure that their
interests  are aligned with the  interests of the  Company's  shareholders.  The
Company's  policy is to offer  competitive  compensation  opportunities  for its
employees based on a combination of factors, including Company growth, corporate
performance and the individual's personal contribution to the business.

     The Company's  compensation  programs are  implemented by the  Compensation
Committee of the Board of Directors  ("Board").  Such  programs  consist of base
salary, annual incentives and long-term  incentives.  Executive officers who are
also directors do not participate in decisions affecting their own compensation.

Base Salary

     The Compensation  Committee considered its own assessment of the individual
performances of each executive officer and its own subjective  assessment of the
Company's overall financial performance.  There is no fixed relationship between
base salary and corporate performance or between base salary and the competitive
range of salaries that may be offered by competitive companies. The Compensation
Committee  members   considered  their  business  judgment  in  light  of  their
experience to be an important factor in establishing executive compensation.

Annual Incentives

     On an annual  basis,  the  Compensation  Committee  considers  the grant of
annual  incentive  bonuses to each  executive  officer.  Incentive  bonuses  are
discretionary and are determined  subjectively,  with the Compensation Committee
taking  into  consideration  the  individual's  performance,   contribution  and
accomplishments  during  the  past  fiscal  year  and  the  Company's  financial
performance. Neither the decision to award a bonus, nor the specific size of the
incentive bonus, is based on any specific measure of corporate  performance.  In
fiscal 2000, no incentive bonuses were awarded to any executive officer.

Stock Incentive Compensation

     The Board  believes  that stock  ownership  by  executive  officers and key
employees  provides  valuable  incentives  for those  persons  to benefit as the
Company's Common Stock price increases,  and that stock  option-based  incentive
compensation arrangements help align the interests of executives,  employees and
shareholders.  To  facilitate  these  objectives,  the Board has  granted  stock
options to executives and key employees  through the Company's  Employee  Equity
Incentive Plan (formerly,  the 1990 Amended and Restated Stock Option Plan) (the
"Plan"), approved by the shareholders in 1991. The Plan was amended by the Board
in 1995 to increase the number of shares  available under the Plan to 1,102,500,
which amendment was approved by the Company's  shareholders.  The Plan was again
amended  by the  Board in 1997 to  change  the  name of the  Plan,  add  certain
additional  types of equity  grants,  provide  for  acceleration  of  vesting on
certain changes in control or sale of substantially all the Company's assets and
a number of immaterial  changes to update,  modernize and  reorganize  the Plan,
which amendment was also approved by the Company's  shareholders.  This Plan has
now expired.

     Effective  October 12, 1999,  the Board  adopted the 1999 Stock Option Plan
for Non-Employee  Directors (the "Directors'  Plan").  The Plan provides for the
issuance of up to 300,000  shares of the  Company's  Common Stock (as  presently
constituted) to existing  directors and, in the case of extra service or duties,
to prior  directors.  Options may be awarded in such amounts,  at such times, at
such exercise prices and on such other terms as the Board determines, subject to
any limitations in the Plan. Unless otherwise designated, options vest uniformly
over the year  following  the date of grant.  The  options,  subject  to earlier
termination  under the Plan or option grant,  expire after the later of (i) five
years  after  the  date of grant  or (ii)  five  years  after  termination  as a
director. In 2000, the Board issued fully-vested options for 180,000 shares to 6
persons who were  directors over the past year, all at an exercise price of $.75
per share.

     Effective September 28, 2000, the Board and the shareholders of the Company
approved the 2000 Employee Equity  Incentive Plan ("Equity  Incentive  Plan"). A
total of 882,800  shares of Common Stock were  reserved  for issuance  under the
Equity  Incentive Plan. The purpose of the Equity  Incentive Plan to attract and
retain the services of key employees, directors, officers and consultants and to
help such individuals  realize a direct  proprietary  interest in the Company. A
total of 882,800  shares of Common Stock were  reserved  for issuance  under the
Equity  Incentive  Plan. In 2000, the Board issued  options to purchase  553,000
shares at exercise prices ranging from $.75 to $1.70.

     In determining the number of options granted to executive  officers and key
employees,  the Board  considered  the person's  opportunity to affect the share
price of the Company's Common Stock, the level of the person's performance based
on past  performance,  future  contribution  to the Company and the  anticipated
incentive effect of the number of options granted.

     The Board  believes  that the policies and plans  described  above  provide
competitive   levels  of  compensation   and  effectively  link  executives  and
shareholder interests.  Moreover, the Board believes such policies and plans are
consistent with the long-term investment objectives  appropriate to the business
in which the Company is engaged.

<PAGE> 56
                    Respectfully  Submitted,

                    Compensation Committee of Granite Bay Technologies, Inc.

                    Stephen C. Kircher
                    William H. Hedden
                    Thomas J. Manz
                    Ronald Cohan
                    Timothy Nyman

Compensation of Directors

     Board members are  currently not  compensated  for  participation  in Board
meetings. This policy may change in the future. All directors are reimbursed for
expenses incurred in attending Board and committee meetings.  Additionally,  the
Board may grant stock  options to its members for service as  directors.  During
the fiscal year ended  December 30, 2000,  non-employee  directors  were granted
options  to  purchase  180,000  shares  at an  exercise  price of $0.75  vesting
immediately.  All options were granted at an exercise  price equal to or greater
than the fair market  value.  Mr. Manz was granted  warrants to purchase  20,000
shares of Common  Stock of the Company at $0.75 per share for his  extraordinary
efforts in selling the Salem, Oregon building.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The following  table sets forth certain  information  as of April 10, 2001,
with  respect  to the  beneficial  ownership  of our  Common  Stock for (i) each
director,  (ii) all of our  directors  and  officers as a group,  and (iii) each
person  known  to us to own  beneficially  five  percent  (5%)  or  more  of the
outstanding shares of our Common Stock.

     Unless  otherwise  indicated,  the address for each listed  shareholder is:
Granite Bay Technologies,  Inc., 599 Menlo Drive, Suite 200, Rocklin, California
95765.  To our knowledge,  except as indicated in the footnotes to this table or
pursuant to applicable  community  property laws, the persons named in the table
have sole voting and investment power with respect to the shares of Common Stock
indicated.

                                      Number of
Name of Beneficial Owner               Shares(1)            Percent(2)
                                    ------------            ----------
Stephen C. Kircher                  2,675,861(3)              13.67%
William H. Hedden                      65,000(4)                  *%
P. Blair Mullin                       159,797(5)                  *%
Anthony Genovese                    1,405,000(6)               7.31%
Thomas Manz                           279,000(7)               1.45%
Ronald Cohan                          154,000(8)                  *%
Timothy Nyman                         336,664(9)               1.76%
All directors and
executive officers
as a group (six persons)            5,075,322(10)             25.38%


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

* Does not exceed 1% of the class.

(1)  "Beneficial  Ownership"  is defined  pursuant to Rule 13d-3 of the Exchange
     Act,  and  generally  means any person who  directly or  indirectly  has or
     shares  voting or  investment  power with  respect to a security.  A person
     shall be deemed to be the beneficial owner of a security if that person has
     the right to acquire  beneficial  ownership of the security within 60 days,
     including,  but not limited to, any right to acquire the  security  through
     the  exercise  of any  option or warrant or  through  the  conversion  of a
     security.  Any  securities not  outstanding  that are subject to options or
     warrants shall be deemed to be outstanding for the purpose of computing the
     percentage of outstanding securities of the class owned by that person, but
     shall not be deemed to be  outstanding  for the  purpose of  computing  the
     percentage of the class owned by any other person.

(2)  Based on  19,150,507shares  of the Company's  Common Stock  outstanding  at
     December  30,  2000,   plus  that  number  of  shares  subject  to  options
     exercisable  within 60 days of April 10, 2001,  owned by each individual or
     group of individuals.

(3)  Includes 2,000,000 shares,  options to purchase 85,000 shares  and warrants
     to purchase 335,861 shares in Mr. Kircher's  name;  35,000  shares  held by
     Capital Bay Securities, Inc. ("CBS"), 220,000 shares held by Eureka Capital
     Corporation  Ltd.  held  for the  benefit  of CBS.  CBS is a  wholly  owned
     subsidiary  of  Capital  Bay Group  ("CBG")  and Mr.  Kircher is a majority
     shareholder in CBG.

(4)  Includes 65,000 shares subject to options  exercisable within 60 days after
     April 10, 2001.

(5)  Includes  9,797 shares and 150,000  shares  subject to options  exercisable
     within 60 days after April 10, 2001.

(6)  Includes  670,000  shares held in joint tenancy with Mr.  Genovese's  wife,
     Sharon Genovese,  670,000 shares held by an individual  retirement  account
     for Anthony Genovese by Delaware trust and 35,000 shares subject to options
     and 30,000  shares  subject to  warrants  exercisable  within 60 days after
     April 10, 2001.

(7)  Includes  174,000 shares and 65,000 shares  subject to options  exercisable
     within 60 days  after  December  30,  2000 and  40,000  shares  subject  to
     warrants exercisable within 60 days after April 10, 2001.

(8)  Includes  134,000 shares and options to purchase 20,000 shares  exercisable
     within 60 days  after  April 10,  2001.

(9)  Includes  316,664 shares and options to purchase 20,000 shares  exercisable
     within 60 days  after  April 10,  2001.

(10) Includes 4,229,461 shares,  options to purchase 440,000 shares and warrants
     to purchase 405,861 shares exercisable within 60 days after April 10, 2001.

<PAGE> 57

Item 13.  Certain Relationships and Related Transactions

     The Company engaged Capitol Bay Securities,  Inc.  ("CBS") as the placement
agent for a private  placement on January 31,  2000.  As  placement  agent,  CBS
received  sales  commissions  of $435,000  and an expense  allowance of $87,000,
equal to 12% of the proceeds raised, and received warrants to acquire 580,000 of
the  Company's  Common  Stock at an exercise  price of $.75 per share.  CBS is a
wholly-owned   subsidiary  of  Capitol  Bay  Group,  Inc.  ("CBG")  and  CBG  is
wholly-owned by Stephen Kircher, a director of the Company.

     On August 1, 2000, Mr. Kircher and his wife personally  guaranteed the $2.1
million  re-finance of the Company's Oregon property.  The board granted Mr. and
Mrs.  Kircher  warrants to purchase  21,000  shares at $1.50 per share  expiring
August 10,  2005 for their  efforts in  re-financing  the  Oregon  Property  and
exposure assumed through the guarantee.

     On September 8, 2000, the Company loaned Thomas Lauer, $150,000 pursuant to
a promissory note to purchase 100,000 shares of Common Stock of the Company. Mr.
Lauer  was the Vice  President  of Sales &  Marketing  of IDW at the time of the
loan. Mr. Lauer is no longer  employed by the Company.  The shares and note were
cancelled.

     On December 22, 2000,  the Company  closed a  unit  offering  consisting of
debt  instruments and warrants to purchase shares of Common Stock of the Company
equal 20% of the investment amount. Under the debt instruments, the Company will
pay interest  only  payments each month at a rate of 12.68 percent per year with
the total amount  borrowed due on December 30, 2001.  The Company's net proceeds
from the offering were  $499,303.  Mr.  Kircher,  the Company's  Chairman of the
Board, invested $99,303. Directors,  Messrs. Manz and Genovese invested $100,000
and $150,000, respectively.

     Subsequent to the year end, on February 23, 2000, Mr. and Mrs.  Cohan,  one
of the Company's Directors and his wife, loaned the Company $200,000 pursuant to
a secured  promissory note. Under the secured  promissory note, the total amount
borrowed  together with an interest  payment at a rate of 12.68 percent per year
is due on April 2, 2001.  As  security  for the loan,  the  Company  pledged the
shares of Common Stock of IDW and Mr. and Mrs. Kircher,  the Company's  Chairman
and his wife, guaranteed the debt.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a)  The following documents are filed as part of this report:

     1.   Financial Statements (see Item 8.)

          o    Report of Independent Public Accountants (Perry-Smith LLP)

          o    Consolidated  Balance  Sheets - December  30, 2000 and January 1,
               2000

          o    Consolidated  Statements of Operations - Years Ended December 30,
               2000, January 1, 2000 and December 16, 1998

          o    Consolidated  Statements  of  Shareholders'  Equity - Years Ended
               December 30, 2000, January 1, 2000 and December 26, 1998

          o    Consolidated  Statements of Cash Flows - Years Ended December 30,
               2000, January 1, 2000 and December 26, 1998

          o    Notes to Consolidated Financial Statements

     2.   Financial Statement Schedules

          o    Schedule II - Valuation  and  Qualifying  Accounts  (accounts not
               required or not material have been omitted)

     3.   Exhibits

          See  Exhibit Index.

     (b)  Reports on Form 8-K

          The  following  reports on Form 8-K were filed during the last quarter
          of the period covered by this report:

         Date of Report     Item Reported
         ----------------   -------------

         November 6, 2000   Reincorporation into California effected by a merger
                            of Morrow Snowboards, Inc. dba Granite Bay
                            Technologies, an Oregon corporation into Granite Bay
                            Technologies, Inc, a California corporation

<PAGE> 58

                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  Registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Rocklin, State of California, on April 16, 2001.

                                    GRANITE BAY TECHNOLOGIES, INC.,
                                    a California corporation


Dated:   April 13, 2001    By:      /s/ P. BLAIR MULLIN
        ----------------            --------------------------------------------
                                    P. Blair Mullin, President and Chief
                                    Financial Officer

Pursuant to the  requirements of the Securities Act of 1933,  this  registration
statement has been signed by the following  persons in the capacities and on the
date indicated.

                                    GRANITE BAY TECHNOLOGIES, INC.,
                                    a California corporation


Dated:   April 13, 2001    By:      /s/ P. BLAIR MULLIN
        ----------------            --------------------------------------------
                                    P. Blair Mullin, President and Chief
                                    Financial Officer (Principal Executive and
                                    Chief Financial Officer)


Dated:   April 13, 2001    By:      /s/ STEPHEN C. KIRCHER
        ----------------            --------------------------------------------
                                    Stephen C. Kircher, Chairman of the Board


Dated:   April 13, 2001    By:      /s/ THOMAS J. MANZ
        ----------------            --------------------------------------------
                                    Thomas J. Manz, Director


Dated:   April 13, 2001    By:      /s/ RONALD A. COHAN
        ---------------             --------------------------------------------
                                    Ronald A. Cohan, Director


Dated:   April 13, 2001    By:      /s/ TIM NYMAN
        ----------------            --------------------------------------------
                                    Tim Nyman, Director


Dated:   April 13, 2001    By:      /s/ WILLIAM H. HEDDEN
        ----------------            --------------------------------------------
                                    William H. Hedden, Director


Dated:   April 13, 2001    By:      /s/ ANTHONY G. GENOVESE
        ----------------            --------------------------------------------
                                    Anthony G. Genovese, Director

<PAGE> A-I



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                           --------------------------

                                    EXHIBITS

                                 Filed with the

                                ANNUAL REPORT ON

                                    FORM 10-K

                   FOR THE FISCAL YEAR ENDED DECEMBER 30, 2000

                                      UNDER

                       THE SECURITIES EXCHANGE ACT OF 1934
                            ------------------------

                         GRANITE BAY TECHNOLOGIES, INC.



<PAGE> A-II



                                                            EXHIBIT INDEX


Exhibit No.         Description
-----------         -----------

2.1   Agreement and Plan of Merger merging Morrow  Snowboards, Inc. into Granite
      Bay Technologies, Inc. (1)

3.1   Articles of Incorporation (1)

3.2   Bylaws [Note: The Bylaws need to be attached as an exhibit.]

4     Registration Rights Agreement dated April 20, 1994  among  the  Registrant
      and the investors named therein (2)

4.2   Securities Purchase Agreement dated October31,  1997 among the Registrant,
      Morrow, LLC, Morrow  Snowboards  ULC,  Westbeach Snowboard Canada Ltd. and

      the security holders of Westbeach Snowboard Canada Ltd. listed therein (5)

10.1  Lease and Option Agreement among PR Investors  Limited  Liability Company,
      the Registrant, Ray E. Morrow,  Jr. and Sharon Morrow dated July 25, 1994,
      as amended by Amendment to Lease and Option Agreement dated August 1, 1995
      (2)

10.2  Forms of Warrant (2)

10.3  Employment Agreement  between Ray E. Morrow,  Jr. and the Registrant dated
      April 20, 1994, as amended (2-3)

10.4  Noncompete Agreement  between Ray E.  Morrow,  Jr. and  Nicollett  Limited
      Partners Partnership dated April 20, 1994 (2)

10.5  Assignment Agreement  by  and  among  the  Registrant,  Nicollett  Limited
      Partners, James V. Zaccaro, Gregory M. Eide, Dennis R. Shelton and Erik J.
      Krieger dated December 19, 1995 (4)

10.6  Morrow Snowboards,  Inc.  Employee  Equity  Incentive  Plan as amended and
      restated February 13, 1997 (3)

10.7  Form of Nonqualified Stock Option Agreement (2-3)

10.8  Form of Incentive Stock Option Agreement (2-3)

10.9  Manufacturing  Agreement  between  the  Registrant  and Plasticos Duramas,
      S.A., dated July 20, 1995 (2)

10.10 Form of Sales Representative Agreement (2)

10.11 Letter Agreements between the Registrant and Pacific Crest Securities Inc.
      dated February 22, 1994,  January 27, 1995,  August 4, 1995 and October 4,
      1995 (2)

10.12 Form of Indemnification Agreement (2-3)

10.13 Stock Option Plan for Non-Employee Directors (2-3)

10.14 Purchase and Sales Agreement dated February 29, 1996 (4)

10.15 Securities Purchase Agreement dated October 31, 1997 among the Registrant,
      Morrow, LLC, Morrow  Snowboards  ULC, Westbeach  Snowboard Canada Ltd. and
      the Security holders of Westbeach Snowboard Canada Ltd. listed therein (5)

10.16 Loan and Security Agreement  dated as of May 7, 1998 among the  Registrant
      and Westbeach Snowboard U.S. A., Inc., as Borrower,  and Foothill  Capital
      Corporation as Lender (as assigned to Capitol Bay Management, Inc.) (8)

10.17 Guarantee and  Postponement  of Claim by Morrow  Westbeach  Canada  ULC in
      favor of Foothill Capital Corporation dated as of May 7, 1998 (as assigned
      to Capitol Bay Management, Inc.) (18)

10.18 Intellectual Property  and  Security  Agreement  dated as of May 7,  1998,
      between Morrow  Snowboards,  Inc. and  Foothill  Capital  Corporation  (as
      assigned to Capitol Bay Management, Inc.)(18)

10.19 General Security  Agreement  dated  as of  May  7,  1998,  between  Morrow
      Westbeach Canada ULC and  Foothill  Capital  Corporation  (as  assigned to
      Capitol Bay Management, Inc.)(18)

10.20 Security Agreement-Stock  Pledge dated as of May 7, 1998,  between  Morrow
      Snowboards, Inc. and Foothill Capital  Corporation (as assigned to Capitol
      Management, Inc.)(18)

10.21 Assignment and Acknowledgment Agreement dated May 7, 1999, between Capitol
      Bay Management, Inc. and Foothill Capital Corporation,  the Registrant and
      Westbeach Snowboard U.S.A. Inc.(18)

10.22 Apparel Design  and  Manufacturing  Agreement  dated  December  31,  1996,
      between the Registrant and Marmot Mountain Ltd. (6)

10.23 "Terms of Instrument - Part 2", dated April 1, 1994,  as amended by "Terms
      of Instrument - Part 2", Modification  Agreement,  dated October 17, 1997,
      between  Westbeach Snowboard Canada Ltd. (now Morrow Westbeach Canada ULC)
      and Western IMMO Holdings Inc. (7)

10.24 International Distribution  Agreement dated as of January 1, 1998, between
      the Registrant and K.K. Morrow Japan (7)

10.25 Acquisition Agreement  dated as of  March  26,  1999,  by and  between  K2
      Acquisitions, Inc. and the Registrant (9)

10.26 Memorandum of  Understanding between Capitol Bay Management,  Inc. and the
      Company (10)

10.27 Payment Agreement effective June 17, 1999 among Morrow  Snowboards,  Inc.,
      certain Petitioning Creditors named therein and Robert K. Morrow,  Inc., a
      Disbursing Agent for the Petitioning Creditors (11)

10.28 Promissory Note dated August 25, 1999, given by Morrow Snowboards, Inc. to
      Dennis and Carol Pekkola (12)

10.29 Trust Deed dated August 25,  1999,  given by Morrow  Snowboards,  Inc.  to
      Robert Smejkel, as Trustee, with Dennis and Carol Pekkola as beneficiaries
      (12).

10.30 Subordination Agreement  dated August 25, 1999,  among Morrow  Snowboards,
      Inc.,  Robert K. Morrow,  as Escrow  Agent for  certain  creditors  of the
      Company and the Pekkolas (12)

10.31 Morrow Snowboards, Inc. 1999 Stock Option Plan for Non-Employee  Directors
      (13)

10.32 Asset Purchase Agreement  dated as of November 12, 1999,  among  Westbeach
      Canada ULC and Westbeach Sports Inc. (14)

10.33 General Assignment  dated as of November 12, 1999,  among Westbeach Canada
      ULC and Westbeach Sports Inc.(14)

10.34 Assignment of Lease and Consent  among  Westbeach  Canada  ULC,  Westbeach
      Sports Inc. and Western Immo  Holdings, Inc. dated as of November 12, 1999
      (14)

10.35 Assignment of Lease and Consent  among  Westbeach  Canada  ULC,  Westbeach
      Sports Inc. and Welf Arne Von Dehn dated as of November 12, 1999 (14)

10.36 Bill of Sale between  Westbeach Canada ULC and Westbeach Sports Inc. dated
      as of November 12, 1999 (14)




<PAGE> A-III



10.37 Letter from Arthur Andersen, LLP dated January 24, 2000 (15)

10.38 Placement Agent   Agreement   dated  January  13,  2000,   between  Morrow
      Snowboards, Inc. and Capitol Bay Securities, Inc (16)

10.39 Securities Purchase  Agreement  effective  as of January 31,  2000,  among
      Morrow Snowboards, Inc. and the Sellers (17).

10.40 Sale and Purchase Agreement  February 1, 2000 among Vikay Industrial (Hong
      Kong) Ltd. And International DisplayWorks, Inc. (18)

10.41 Supplemental Deed and Charge dated February 1, 2000, between International
      DisplayWorks (Hong Kong) Ltd. And  International  DisplayWorks,  Inc.,  as
      Chargors, and Vikay  Industrial  Ltd. (in Judicial  Management)  and Vikay
      Industrial (Hong Kong) Ltd. as Chargees (17)

21    Subsidiaries of the Registrant

27    Financial Data Schedule


(1)  Incorporated  herein by reference from the Company's Current Report on Form
     8-K dated November 6, 2000 (File No. 0-753683.
(2)  Incorporated herein by reference from the Company's  Registration Statement
     on Form S-1 (File No. 33-97800).
(3)  Management contract or compensatory plan or arrangement.
(4)  Incorporated  herein by reference  from the Company's 1995 Annual Report on
     Form 10-K (File No. 0-27002).
(5)  Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated October 31, 1997 (File No. 0-27002).
(6)  Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated November 11,1997 (File No. 0-27002).
(7)  Incorporated  by reference  from the  Company's  1997 Annual Report on Form
     10-K (File No. 0-27002).
(8)  Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated May 8, 1998 (File No. 0-27002).
(9)  Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated March 26, 1999 (File No. 0-27002).
(10) Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated April 27, 1999 (File No. 0-27002).
(11) Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated June 28, 1999 (File No. 0-27002).
(121)Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated August 25, 1999 (File No. 0-27002).
(13) Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated September 30, 1999 (File No. 0-27002).
(14) Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated November 12, 1999 (File No. 0-27002).
(15) Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated January 14, 2000 (File No. 0-27002).
(16) Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated January 31, 2000 (File No. 0-27002).
(17) Incorporated  by reference  from the Company's  Current  Report on Form 8-K
     dated January 31, 2000 (File No. 0-27002).
(18) Incorporated by reference from the Company's Annual Report on Form 10-K for
     the year ended January 1, 2000 (File No.0-27002).