U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

               /X/ ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For
                    the fiscal year ended: DECEMBER 31, 2003

              / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
                    REQUIRED) For transition period from to .

                        Commission File Number: 333-48746

                            TORPEDO SPORTS USA, INC.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

NEVADA                                                                87-0567853
-------------------------------                           ----------------------
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                            Identification Number)


        2401 PGA BOULEVARD, SUITE 190, PALM BEACH GARDENS, FLORIDA 33410
        ----------------------------------------------------------------
               (Address of principal executive offices)(Zip Code)

                    Issuer's telephone number: (561) 624-0885

                  Securities registered under Section 12 (b) of
                               the Exchange Act:
                                      NONE

                  Securities registered under Section 12 (g) of
                               the Exchange Act:
                          COMMON STOCK, $.001 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 Exchange during the past 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 / / No /X/

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained in this form, 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-KSB or any
amendment to this Form 10-KSB: /X/

The aggregate market value of the voting stock held by non-affiliates of the
Registrant was $1,461,648 based on the last sale price of the Registrant's
common stock on December 23, 2003, ($.12 per share) as reported by the OTC
Bulletin Board.

The Registrant had 13,265,999 shares of common stock outstanding as of December
23, 2003.

Documents incorporated by reference: None
<PAGE>

                            TORPEDO SPORTS USA, INC.
                                   FORM 10-KSB

This report may contain certain "forward-looking" statemenTs as such term is
defined in the private securities litigation reform act of 1995 or by the
securities and exchange commission in iTs rules, regulations and releases, which
represent the registrant's expectations or beliefs, including but not limited
to, statemenTs concerning the registrant's operations, economic performance,
financial condition, growth and acquisition strategies, investmenTs, and future
operational plans. For this purpose, any statemenTs contained herein that are
not statemenTs of historical fact may be deemed to be forward-looking
statemenTs. Without limiting the generality of the foregoing, words such as
"may", "will", "expect", "believe", "anticipate", "intent", "could", "estimate",
"might", or "continue" or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statemenTs. These
statemenTs by their nature involve substantial risks and uncertainties, certain
of which are beyond the registrant's control, and actual resulTs may differ
materially depending on a variety of important factors, including uncertainty
related to acquisitions, governmental regulation, managing and maintaining
growth, the operations of the company and iTs subsidiaries, volatility of stock
price and any other factors discussed in this and other registrant filings with
the securities and exchange commission.

                                     PART I

ITEM 1.       DESCRIPTION OF BUSINESS

(a)   Business Development

The Registrant was originally organized under the laws of the State of Nevada in
1996 as Zacman Enterprises, Inc. and subsequently changed its name to
eNutrition, Inc. ("eNutrition"). eNutrition was a direct mail marketing company
engaged in the development and marketing of nutritional supplements. Operations
commenced in June 2000 by securing the exclusive rights to market the
nutritional supplement, HI-Q. In September 2001, eNutrition entered into a
License Agreement with HI-Q Nutrition, Inc., a Nevada corporation, granting them
the exclusive right to engage in the business of marketing and distributing
nutritional products under the trade name HI-Q.

On April 30, 2002, the Registrant entered into an agreement with HI-Q Nutrition,
Inc. for the sale of all of the Registrant's assets relating to its HI-Q brand
of nutritional supplements, including the brand name, trademark, product
formulations, customer base and marketing ideas, which comprised all of the
assets and business of the Registrant. The HI-Q Agreement closed and became
effective on May 20, 2002, immediately prior to the Registrant's acquisition of
the Torpedo business described below. The Registrant received cash consideration
of $10,000, plus forgiveness of any uncollected royalties of Registrant owed to
HI-Q Nutrition, Inc. In addition, HI-Q Nutrition, Inc. assumed all liabilities
relating to the HI-Q brand products. The president of HI-Q, Inc. is Howard J.
Ruff, with whom eNutrition had a marketing, consulting and licensing agreement
for sales of HI-Q brand products prior to the disposition. That agreement was
also terminated as part of the disposition of the HI-Q brand business.

                                      -1-
<PAGE>

At a special shareholders' meeting held on May 17, 2002, our shareholders
approved the sale of all of eNutrition's assets, and the assumption of all
liabilities, to HI-Q Nutrition, Inc. Our shareholders also approved a one share
for 1.8870314 share reverse stock split and the purchase and retirement of
4,478,430 post-reverse-split shares.

On May 17, 2002, the shareholders also approved the Registrant's acquisition of
all of the issued and outstanding securities of Torpedo Sports USA, Inc., a
Delaware corporation ("Torpedo Delaware"), in exchange for 8,000,000 shares of
the Registrant's common stock issued to the Torpedo Delaware stockholders. This
transaction also occurred on May 20, 2002. At this time we merged Torpedo Sports
with and into eNutrition and changed our name to Torpedo Sports USA, Inc.
("Torpedo Sports"). Torpedo Delaware, through its wholly-owned subsidiary
Torpedo Sports Inc. of Quebec, Canada ("Torpedo"), is and will continue to be a
manufacturer and distributor of outdoor recreational products for children, such
as, toboggans, baby sleds, snowboards, tricycles, scooters and skateboards.

Although the former eNutrition, Inc. was the surviving corporation in the merger
transaction, the stockholders and management of Torpedo Delaware acquired
control of eNutrition at the effective date of the exchange. The transaction has
been recorded as a reverse acquisition based on factors demonstrating that
Torpedo Delaware constitutes the accounting acquirer. The management and board
of directors of Torpedo Sports USA manage the post-acquisition entity.

The purchase price applied to the reverse acquisition was based on the net book
value of the underlying assets of eNutrition prior to the transaction. The
historical stockholders' equity of Torpedo Delaware prior to the merger has been
retroactively restated (a recapitalization) for the equivalent number of shares
received in the merger after giving effect to any differences in the par value
of the eNutrition and Torpedo Delaware common stock, with an offset to
additional paid in capital. The restated consolidated retained earnings of the
accounting acquirer (Torpedo Delaware) have been carried forward after the
acquisition.

 (b)  Business of Issuer

GENERAL

Torpedo Sports USA, Inc. is a holding company that operates through our
wholly-owned subsidiary Torpedo. Torpedo is a sporting goods company that is a
manufacturer and distributor of outdoor recreational products for children
including toboggans, baby sleds, snowboards, tricycles, scooters and
skateboards.

HISTORY AND PRODUCTS

Torpedo was established in 1942 and its principal products today are plastic
injected molded and wood products for winter outdoor recreational activities.
The line of winter products is comprised of five basic groups of products: wood
toboggans, wood baby sleds, steel runner sleds, plastic sleds and snowboards.

Torpedo manufactures 85% of its product sales from two manufacturing facilities
located in Quebec, Canada. Wood products, which account for approximately 35% of
sales, are produced in a company-owned 55,000 square foot plant. Plastic
products, approximately 50% of sales, are produced via injection molding in a
leased building that is also utilized for warehousing and our Canadian office
administration functions. Imported product consisting of tricycles, wagons,
skateboards and inflatables are approximately 15% of sales.

                                       -2-
<PAGE>

RAW MATERIALS

The basic raw material components of Torpedo are resin and wood. For its plastic
products, the Company purchases its resin domestically in Canada. The Company
currently works with 3 major suppliers. The wood or raw lumber is mostly
purchased in thick lumber boards 8, 10 and 12 feet long. The Company uses select
maple wood purchased in Canada and the United States. Due to the natural drying
process necessary to the wood, the Company must commit to buying certain
quantities at fixed prices in January and February of each year. Typically, the
wood is delivered to the Company in June or July, at the beginning of its
production season.

The Company believes that there is a sufficient supply of raw materials
available to it in the marketplace.

MARKETING AND DISTRIBUTION

The products are distributed to the United States through hardware chains and
sporting goods stores and in Canada through large mass merchant retailers.
Torpedo utilizes independent outside contractors in addition to its own sales
personnel to sell to its customer base.

SEASONALITY AND CUSTOMERS

Currently, approximately 95% of Torpedo's sales occur in its first two fiscal
quarters ending October 31 and January 31, respectively. This seasonality
requires the Company to obtain raw materials and begin production in May and
June of each year. This is necessary to build to the appropriate inventory
levels required to fill customer booking orders, predominately in the August
through November months. Repeat and fill-in business typically ships to its
customers October through January.

Due to the seasonality of the products sold, the Company offers extended payment
terms to its US customers. Booking orders shipped August through October are
normally due either December 10th or January 10th. For the fiscal year ended
July 31, 2003, two customers, Ace Hardware and Canadian Tire, accounted for
approximately $892,000 and $767,000, respectively or 15% and 13%, respectively
of total sales. For the year July 31, 2002, one customer, Ace Hardware accounted
for $1,078,000 or 13% of sales. Two other customers accounted for approximately
$817,000 and $648,000 or 10% and 8%, respectively. The loss of any one of these
three customers could have an effect on our revenues, and the loss of such
customer(s) could have a material adverse effect on the Company.

COMPETITION

The significant competitive conditions of the business include product design
and product quality. The product is sold to mass merchant retailers, hardware
distribution chains, internet and mail order catalogues and sporting goods
specialty retailers. The industry is comprised of three major companies,
including Torpedo. Torpedo maintains its market share position by offering
competitive pricing to customers and developing new and innovative products from
year to year.

                                      -3-
<PAGE>

EMPLOYEES

In the peak manufacturing and shipping season, June through November, the
Company employs up to 90 persons. Off peak, the Company has 20 employees. The
Company believes its relationship is good with its employees.

ITEM 2.       DESCRIPTION OF PROPERTIES

Our principal executive office is located in Palm Beach Garden, Florida
consisting of approximately 980 square feet, which we sublease from a related
party, Equitex 2000, Inc. The lease payment is currently $3,274 per month, and
the lease expires in February 2004.

Torpedo owns a 55,000 square foot plant utilized for woodworking and metal
stamping. It is located approximately 75 miles from Montreal. At this facility,
raw lumber is purchased, cut to size, slatted, steamed, bent, stained, assembled
and finished. The metal stamping section is used to produce metal parts for baby
sleds, steel runner sleds and wood wagons. There are various loans
collateralized by the building and equipment of Torpedo. The outstanding total
balance on these loans as of July 31, 2003, is $656,250 CAD (approximately
$468,500 US at July 31, 2003).

Torpedo also leases a 63,000 square foot facility, utilized for its injection
molded product, as well as warehousing and Canadian sales and administrative
operations. In this facility, the Company has seven injection molding machines
ranging in capacity from 750 to 1,200 tons. The current monthly rent is $19,328
CAD ($13,798 U.S.) through January 21, 2004, and $20,617 CAD ($14,718 U.S.) per
month through January 31, 2007.

Torpedo leases a distribution center in Maine that is also utilized for customer
service. Rent is $8,519 per month and the lease expires February 28, 2005. In
September 2003, as part of the new distribution agreement with Paricon, Inc.
("Paricon") Paricon assumed responsibility for the lease.

ITEM 3.       LEGAL PROCEEDINGS

The Company is involved in various claims and legal actions arising in the
course of its business acquisitions. Due to the Company's inability to meet its
obligations timely, certain creditors have initiated legal action against the
Company, some of which have received judgments for payment. Management believes
that it has adequately accrued for these matters at July 31, 2003.

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

None

                                      -4-
<PAGE>


                                     PART II

ITEM 5.     MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

(a)   Market Information

Our common stock is not listed on any exchange; however, market quotes for the
Company's common stock (under the symbol "TPDO") may be obtained from the OTC
Bulletin Board ("OTCBB"). The OTCBB is a regulated quotation service that
displays real-time quotes, last-sale prices and volume information in
over-the-counter ("OTC") securities. In connection with the May 20, 2002,
acquisition of Torpedo Sports USA, Inc. by eNutrition, Inc., the fiscal year end
was changed from December 31 to July 31. The following table sets forth, for the
indicated fiscal periods, the high and low bid prices (as reported by the OTCBB)
for the Company's common stock based on the new fiscal year end and all
historical quotes are revised for the 1 for 1.8870314 reverse stock split. Our
stock began trading August 2, 2001, and accordingly, no quotes are available
prior to that date.

                                                            BID PRICE
                                                   HIGH                   LOW
2002 Fiscal Year
  First Quarter (October 31, 2001)                $1.038                 $.472
  Second Quarter (January 31, 2002)               $0.491                 $.491
  Third Quarter (April 30, 2002)                  $1.698                 $.491
  Fourth Quarter (July 31, 2002)                   $1.99                 $1.50

2003 Fiscal Year
  First Quarter (October 31, 2002)                 $1.50                 $0.45
  Second Quarter (January 31, 2003)                $0.67                 $0.30
  Third Quarter (April 30, 2003)                   $0.40                 $0.15
  Fourth Quarter (July 31, 2003)                   $0.40                 $0.13

The prices set forth in this table represent quotes between dealers and do not
include commissions, mark-ups or mark-downs, and may not represent actual
transactions.

(b)   Holders

The number of record holders of our common stock as of July 31, 2003, was 51
according to our transfer agent. This amount excludes an indeterminate number of
shareholders whose shares are held in "street" or "nominee" name.

(c)   Dividends

We have never declared or paid cash dividends on our common stock, nor do we
anticipate paying any cash dividends in the foreseeable future. We currently
intend to retain any future earnings to fund operations and for the continued
development of our business.

                                      -5-
<PAGE>

(d)   Recent Sales of Securities

In the quarter ended July 31, 2002, we issued 45,000 unregistered shares of our
$.001 par value common stock in the transactions described below.

For each of the following transactions, we relied upon the exemptions from
registration provided by Section 4(6) or 4(2) of the Securities Act and Rule 506
promulgated thereunder based upon (i) representations from each investor that it
is an accredited or sophisticated investor with experience in investing in
securities such that it could evaluate merits and risks related to our
securities; (ii) that no general solicitation of the securities was made by us;
(iii) each investor represented to us that it was acquiring the securities for
its own account and not with a view towards further distribution; (iv) the
securities issued were "restricted securities" as that term is defined under
Rule 144 promulgated under the Securities Act; and (v) we placed appropriate
restrictive legends on the certificates representing the securities regarding
the restricted nature of these securities; and (vi) prior to the completion of
the transaction, each investor was informed in writing of the restricted nature
of the securities, provided with all information regarding Torpedo Sports as
required under Rule 502 of Regulation D and were given the opportunity to ask
questions of and receive additional information from us regarding our financial
condition and operations. The shares were issued as follows:

On June 5, 2002, we issued 35,000 shares of our $.001 par value common stock to
our attorney for services performed. The shares were valued at $52,500 or $1.50
per share (the market price of the common stock on the date of issuance).

On June 5, 2002, we issued 10,000 shares of our $.001 par value common stock to
a consultant for services valued at $17,500 or $1.75 per share (the market price
of the common stock on the date of issuance).

In the year ending July 31, 2003, we issued the following shares of our $.001
par value common stock.

In September 2002, the Company issued 5,000 shares of common stock for legal
services. The shares were valued at $1.10 per share (the market price of the
common stock on the date of issuance), and $5,500 was recorded as general and
administrative expense.

In September 2002, the Company also issued 95,000 shares of common stock upon
the exercise of stock options, and received total proceeds of $24,700.

During the year ended July 31, 2003, the Company issued 20,000 shares of common
stock for consulting services. The shares were valued at an average of $0.65 per
share (the market price of the common stock on the dates of the common stock
issuances) and $13,000 has been recorded as general and administrative expenses.

In July 2003 the Company issued 1,100,000 shares of its common stock in a
private placement and received proceeds of $110,000.

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and notes thereto for the years ended July 31, 2003 and 2002. The
financial results presented for the year ended July 31, 2003, are those of
Torpedo Sports Inc. on a consolidated basis with those of Torpedo Sports USA,
Inc. for the period May 20, 2002 through July 31, 2002. The financial results
presented for the year ended July 31, 2002 are those of Torpedo Sports Inc. on a
consolidated basis with those of Torpedo Sports USA, Inc. for the period May 22,
2002 through July 31, 2003.

                                      -6-
<PAGE>


The independent auditors' report on the Company's financial statements as of
July 31, 2003, and for each of the years in the two year period then ended,
includes a "going concern" explanatory paragraph, that describes substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to the factors prompting the explanatory paragraph are discussed
below and also in Note 1 in the notes to the consolidated financial statements.

(a)   Liquidity and Capital Resources

The Company's primary capital requirements are for the purchase of raw materials
and the costs associated with manufacturing and administrative functions. For
the fiscal year ended July 31, 2003, our cash generated from operations and from
borrowings under our credit facility have not been sufficient to stay current
with our obligations. We borrow money under a credit facility up to a maximum of
$4,500,000 CAD (approximately $3,212,550 U.S. based on the July 31, 2003,
exchange rate) based on accounts receivable being purchased at 85% of face
value. Additionally, the Company has a seasonal inventory line up to a maximum
of $800,000 CAD (approximately $571,120 U.S. based on the July 31, 2003,
exchange rate) between the months of June and September. The balance owed on
purchased accounts receivable bears interest at 2% per month and amounts
borrowed on inventory bear interest at the Canadian prime rate plus 7.5%. As of
July 31, 2003 there was $34,233 CAD (approximately $24,452 U.S.) outstanding on
the inventory line and $299,204 CAD (approximately $213,717 U.S.) outstanding on
purchased accounts receivable.

Cash provided by operating activities in fiscal 2003 was primarily the result of
the net loss for the year adjusted for depreciation and amortization, stock
based compensation expense, decrease in accounts receivable, increases in
accounts payable and accrued liabilities offset by deferred income taxes and
increases in inventories and prepaid expenses.

Cash used in investing activities in fiscal 2003 was for additions to capital
equipment. Cash provided by financing activities in fiscal 2003 represents
repayments of borrowings on the Company's credit facility, proceeds from the
exercises of options, proceeds from related party receivables and a private
placement of common stock.

For fiscal year ending July 31, 2004, we anticipate that our liquidity and
capital resource needs will not be satisfied from cash flows generated from our
operating activities, or from the credit facility arrangement described above.
It will be necessary to rely on other sources available to us, including the
sale of equity securities through private placements of common or preferred
stock, the exercise of stock options or warrants, advances or loans from
shareholders and/or other related parties, some of which may cause dilution to
our stockholders. Additionally, the Company can give no assurances that it will
be successful in continuing to raise the capital required to pay its past due,
as well as continuing obligations.

(b)   Results of Operations

    Results of Operations for the Year Ended July 31, 2003 vs. July 31, 2002

SALES

Consolidated revenues for the year ended July 31, 2003, were $6,075,549 compared
to $8,209,400 for the year ended July 31, 2002, representing a decrease in
$2,133,851 or 26%. As the table below illustrates, sales in the U.S. decreased
by $2,701,414, while Canadian sales increased by $567,563. Plastic products
accounted for the biggest part of the U.S. decrease as sales decreased by
$1,396,917. Wood goods and imported goods sales in the U.S. decreased by
$1,051,921 and $200,073 respectively for the year ended July 31, 2003 compared
to July 31, 2002.

                                      -7-
<PAGE>


                                                  2003              2002
                                            -------------      -------------

US Sales:           Plastic goods           $   1,789,176      $   3,186,093
                    Wood products               1,143,197          2,195,118
                    Imported goods                785,194            981,267
                    Discounts                    (232,003)          (175,900)
                                            -------------      -------------
                                                3,485,564          6,186,978
                                            -------------      -------------
Canadian Sales:     Plastic products            1,354,279          1,129,657
                    Wood products                 841,220          1,011,029
                    Other                         594,418            182,989
                    Discounts                    (199,932)          (301,253)
                                            -------------      -------------
                                                2,589,985          2,022,422
                                            -------------      -------------
Total Sales                                 $   6,075,549      $   8,209,400
                                            =============      =============

The overall sales decrease in the U.S. was primarily due to retailers being
substantially in stock at the beginning of the 2002/2003 winter selling season.
This resulted in our customers buying less product in the fall of 2002.

The sales decrease that occurred in the fall of 2002 has caused the Company to
not be able to pay its obligations to trade creditors when due. Accordingly, the
Company was not able to secure sufficient raw materials in a timely manner to
meet its order demand in the first quarter of fiscal year ending July 31, 2004.
Therefore, the Company anticipates a significant decrease in sales for the year
ending July 31, 2004, compared to July 31, 2003.

COST OF SALES

For the year ended July 31, 2003, cost of sales decreased to $4,875,697 from
$5,443,160 for the year ended July 31, 2002. As a percentage of sales, cost of
sales increased to 80% from 66% for the 2003 fiscal year compared to fiscal year
2002. The primary reason for the increase as a percent of sales resulted from
factory overhead expenses. As a percent of sales, factory overhead increased
to 18.2% from 12.8%. This increase was caused by the factory overhead expenses
remaining approximately the same, $1,646,728 for the year ended July 31, 2003
compared to $1,647,007 for the year ended July 31, 2002 in Canadian dollars (the
operating currency), while sales decreased $2,133,851 or 26%. The Company
believes its raw material costs as a percentage of sales will be consistent with
prior periods in the near term.


OPERATING EXPENSES

Operating expenses for the year ended July 31, 2003, increased to $4,124,651
compared to $2,146,608 for the year ended July 31, 2002. Included in the 2003
amounts are expenses of $1,566,230 related to Torpedo Sports USA, Inc. Included
in these expenses are impairment charges of $1,243,582 and non-cash stock-based
compensation of $643,498 for services performed. Product liability insurance
expense had a net increase as a result of an increase in the rate, offset by the
decrease in sales. These increases were offset by a reduction in selling expense
of $194,379 as a direct result in the decrease in U.S. sales. The Company pays
its independent sales representatives a commission on all sales they generate.

                                      -8-
<PAGE>

OTHER INCOME (EXPENSE)

Interest expense, other, decreased for the year ended July 31, 2003 to $356,023
from $445,595 for the year ended July 31, 2002. The decrease was attributable
to the Company being financed through a credit facility that bears interest
at the effective rate of 2% per month on purchased accounts receivable. Since
sales decreased for the year ended July 31, 2003, compared to the prior year
period, the Company financed fewer accounts receivable. The Company also had
foreign currency transaction gains of $136,998 for the year ended July 31, 2003
compared to $41,500 for the year ended July 31, 2002.

SEASONALITY

The following table sets forth the Company's unaudited consolidated condensed
quarterly results of operations for each of the quarters in fiscal 2002 and
2001. This information is unaudited, but is prepared on the same basis as the
annual financial information and, in the opinion of management, reflects a fair
presentation of the information for the periods presented. The results of
operations for any quarter are not necessarily indicative of the results for any
future period.

                                   Fiscal 2002
                             (dollars in thousands)

                                        First     Second      Third     Fourth
                                       Quarter    Quarter    Quarter    Quarter
                                       -------    -------    -------    -------
Net sales                              $ 4,589    $ 3,422    $    25    $   173
% of full year net sales                  55.9%      41.7%        .3%       2.1%
Earnings (loss) before income taxes    $   721    $   266    $  (456)   $  (435)

                                   Fiscal 2003
                             (dollars in thousands)

                                        First     Second      Third     Fourth
                                       Quarter    Quarter    Quarter    Quarter
                                       -------    -------    -------    -------
Net sales                              $ 3,189    $ 2,411    $   311    $   165
% of full year net sales                  52.5%      39.7%       5.1%       2.7%
Earnings (loss) before income taxes    $   305    $  (634)   $  (739)   $(2,196)


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2003, the Financial Accounting Standards Board ("FASB") issued SFAS No.
150, ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY. SFAS No. 150 establishes new standards on how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. Under previous guidance, issuers could account for
many of those instruments as equity. SFAS No. 150 requires that those
instruments be classified as liabilities in statements of financial position.
SFAS No. 150 is effective for all financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did
not have an impact on the Company's consolidated results of operations,
financial position or cash flows.

                                      -9-
<PAGE>


In January 2003, the FASB issued FASB Interpretation No. 46 CONSOLIDATION OF
VARIABLE INTEREST ENTITIES. In general, a variable interest entity is a
corporation, partnership, trust, or any other legal structure used for business
purposes that either does not have equity investors with voting rights or has
equity investors that do not provide sufficient financial resources for the
entity to support its activities. Interpretation No. 46 requires a variable
interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities or
is entitled to receive a majority of the entity's residual returns or both. The
consolidation requirements of Interpretation No. 46 apply immediately to
variable interest entities created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim period
beginning after December 15, 2003. Certain of the disclosure requirements apply
in all financial statements issued after January 31, 2003, regardless of when
the variable interest entity was established. The adoption of Interpretation No.
46 did not have an impact on the Company's consolidated results of operation,
financial position or cash flows.

In November 2002, the FASB issued FASB Interpretation No. 45, GUARANTOR'S
ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT
GUARANTEES OF INDEBTEDNESS OF OTHERS. This standard established financial
statement disclosure requirements for companies that enter into or modify
certain types of guarantees subsequent to December 31, 2002. Beginning in
calendar 2003, the standard requires that companies record the fair value of
certain types of guarantees as a liability in the financial statements. The
adoption of this interpretation did not have an impact on the Company's
consolidated results of operations, financial position or cash flows.

In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR
DISPOSAL OF LONG LIVED ASSETS, which addresses accounting and financial
reporting for the impairment or disposal of long-lived assets. The Company
adopted SFAS No. 144 effective August 1, 2002, and has applied the provisions of
SFAS No. 144 in connection with its accounting for the impairment of long-lived
assets (Notes 5). Management does not believe the application of SFAS No. 144
resulted in a 2003 impairment charge different from that under previous
accounting standards.

In December 2002, the FASB issued SFAS No. 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION TRANSITION AND DISCLOSURE. This statement amends SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, and establishes two alternative methods
of transition from the intrinsic value method to the fair value method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
requires prominent disclosure about the effects on reported net income (loss)
and requires disclosure for these effects in interim financial information. The
company adopted the disclosure-only provisions of SFAS No. 148 in 2003 and plans
to continue accounting for stock-based compensation under APB 25.

                   Critical Accounting Policies and Estimates

Our accounting policies are described in Note 2 to Notes to Consolidated
Financial Statements in Item 7. We prepare our consolidated financial statements
in conformity with accounting principles generally accepted in the United States
of America ("U.S. GAAP"), which require us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the year. Actual results
could differ from those estimates. We consider the following policies to be most
critical in understanding the judgments that are involved in preparing our
financial statements and the uncertainties that could impact our results of
operations, financial condition and cash flows.

                                      -10-
<PAGE>

REVENUE RECOGNITION

Sales are recorded at the time of shipment to our customers. Net revenue
consists of product revenue reduced by sales returns and allowances, discounts,
rebates and cooperative advertising. Provisions for estimated sales returns and
allowances which are based on historical trends and contractual terms are
recorded at the time of sale.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company's estimate for its allowance for doubtful accounts related to trade
receivables is based on two methods. The amounts calculated from each of these
methods are combined to determine the total amount reserved. First, the Company
evaluates specific accounts where we have information that the customer may have
an inability to meet its financial obligations (bankruptcy, etc.). In these
cases, the Company uses its judgment, based on the best available facts and
circumstances, and records a specific reserve for that customer against amounts
due to reduce the receivable to the amount that is expected to be collected.
These specific reserves are reevaluated and adjusted as additional information
is received that impacts the amount reserved. Second, a general reserve is
established for all customers based on a range of percentages applied to aging
categories. These percentages are based on historical collection and write-off
experience. If circumstances change (i.e. higher than expected defaults or an
unexpected material adverse change in a major customer's ability to meet its
financial obligation to the Company), the Company's estimates of the
recoverability of amounts due the Company could be reduced by a material amount.

INVENTORIES

The Company ensures inventory is valued at the lower of cost or market, and
continually reviews the book value of any discontinued product lines and stock
keeping units ("SKU's") to determine if these items are properly valued. The
Company identifies these items and assesses the ability to dispose of them at a
price greater than cost. If it is determined that cost is less than market
value, then cost is used for inventory valuation. If market value is less than
cost, then the Company writes down the related inventory to that value. If a
write down to the current market value is necessary, the market value cannot be
greater than the net realizable value, or ceiling, (defined as selling price
less costs to complete and dispose) and cannot be lower than the net realizable
value less a normal profit margin, also called the floor. The Company also
continually evaluates the composition of its inventory and identifies
slow-moving inventories. Inventory items identified as slow-moving are evaluated
to determine if reserves are required. Generally, the Company does not
experience issues with obsolete inventory due to the nature of its products. If
the Company is not able to achieve its expectations of the net realizable value
of the inventory at its current value, the Company will adjust its reserves
accordingly.

ACCOUNTING FOR INCOME TAXES

As part of the process of preparing our consolidated financial statements, we
are required to estimate our income taxes in each of the jurisdictions in which
we operate. This process involves estimating our current tax exposure together
with assessing temporary differences resulting from differing treatment of items
for tax and accounting purposes. These differences result in deferred tax assets
and liabilities, which are included in our consolidated balance sheet. We must
then assess the likelihood that our deferred tax assets will be recovered from
future taxable income, and, to that extent we believe that recovery is not
likely, we must establish a valuation allowance. To the extent we establish a
valuation allowance or increase this allowance in a period, we must include an
expense within the tax provision in the statement of operations.

                                      -11-
<PAGE>


Significant management judgment is required in determining our provision for
income taxes, deferred tax assets and liabilities and any valuation allowance
recorded against our net deferred tax assets. At July 31, 2003, deferred tax
assets primarily represent net operating loss carry forwards which have been
fully allowed for.

DETERMINING FUNCTIONAL CURRENCIES FOR THE PURPOSE OF CONSOLIDATION

Our operating subsidiary is a Quebec Company, which maintains its books and
records in the local currency (Canadian dollars).

In preparing our consolidated financial statements, we are required to translate
the financial statements of the foreign subsidiary from the currency in which
they keep their accounting records, generally the local currency, into United
States dollars. This process results in exchange gains and losses which, under
the relevant accounting guidance are either included within the statement of
operations or as a separate component of comprehensive income.

Under the relevant accounting guidance the treatment of these translation gains
or losses is dependent upon our management's determination of the functional
currency. The functional currency is determined based on management judgment and
involves consideration of all relevant economic facts and circumstances
affecting the subsidiary. Generally, the currency in which the subsidiary
transacts a majority of its transactions, including billings, financing, payroll
and other expenditures would be considered the functional currency but any
dependency upon the parent and the nature of the subsidiary's operations must
also be considered.

Based on our assessment of the factors discussed above, we consider our
subsidiary's local currency to be the functional currency. Accordingly we had a
cumulative translation loss of $108,735 included as part of accumulated other
comprehensive loss within our balance sheet at July 31, 2003. During 2003 and
2002, translation adjustments of $(120,591) and $9,866, respectively, were
included in accumulated other comprehensive income. Had we determined that the
functional currency of our subsidiary was the United States dollar, these
amounts would have increased our net income and decreased our net loss for the
years ended July 31, 2003 and 2002, respectively.

The magnitude of these gains or losses is dependent upon movements in the
exchange rates of the Canadian dollar in which we transact business against the
United States dollar. Any future translation gains or losses could be
significantly higher than those noted in each of these years. In addition, if we
determine that a change in the functional currency has occurred at any point in
time, we would be required to include any translation gains or losses from the
date of change in our statement of operations.

ITEM 7.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and related information required to be filed are
indexed and begin on page F-1 and are incorporated herein.

                                      -12-
<PAGE>


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

Effective May 20, 2002, eNutrition, Inc. completed the acquisition of Torpedo
Sports USA, Inc. in a reverse acquisition. As a result, for accounting purposes,
Torpedo Sports USA, Inc. is treated as the continuing reporting entity for
purposes of financial reporting. Prior to the acquisition, eNutrition, Inc.'s
independent certified public accountant was Pritchett, Siler and Hardy, P.C. and
Torpedo Sports USA, Inc.'s independent certified public accountant was Horwath
Gelfond Hochstadt Pangburn, P.C.

On July 31, 2002, our board of directors, appointed Horwath Gelfond Hochstadt
Pangburn, P.C. to serve as our independent certified public accountant for the
year ended July 31, 2002. As a result, on July 31, 2002, we notified Pritchett,
Siler and Hardy, P.C. that it will no longer serve as the independent certified
public accountant of the Company. There have been no adverse opinions,
disclaimers of opinion or qualifications or modifications as to uncertainty,
audit scope or accounting principles regarding the reports of Pritchett, Siler
and Hardy, P.C. financial statements for each of the fiscal years ended December
31, 2001 and 2000, or any subsequent interim period. During the two most recent
fiscal years and through July 31, 2002, there were no disagreements with
Pritchett, Siler and Hardy, P.C. on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of Pritchett, Siler and
Hardy, P.C., would have caused it to make a reference to the subject matter of
the disagreements in connection with its report.

There were no reportable events, in each case, during either of eNutrition,
Inc.'s or Torpedo Sports USA, Inc.'s two most recent fiscal years or any
subsequent interim period.

During our two most recent fiscal years or subsequent interim periods we have
not consulted Horwath Gelfond Hochstadt Pangburn. P.C. regarding the application
of accounting principles to a specified transaction, either completed or
proposed of eNutrition, Inc.'s, or the type of audit opinion that might be
rendered on eNutrition, Inc.'s financial statements, or any matter that was the
subject of a disagreement or a reportable event.

ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS;
              COMPLIANCE WITH SECTION 16(a) OF THE CONTROL ACT

The Company has adopted a Code of Ethics for its financial management staff.
The Code of Ethics is attached herewith as Exhibit 99.1.

(a)   Identification of Directors and Executive Officers

                           Positions and       Length of
     Name           Age       offices           service
--------------     -----   -------------       ---------

Henry Fong           67    Director, Chief     Since 2002
                           Executive Officer

Edward E. Shake      59    Chief Operating     Since 2002  resigned October 2003
                           Officer

Barry S. Hollander   46    Chief Financial     Since 2002
                           Officer

Thomas B. Olson      37    Secretary           Since 2002


                                      -13-
<PAGE>

Our directors are elected to hold office until the next annual meeting of the
stockholders and until their respective successors have been elected and
qualified. Officers are elected by our Board of Directors and hold office until
their successors are duly elected and qualified.

No arrangement exists between any of the above officers and directors pursuant
to which any one of those persons were elected to such office or position.

HENRY FONG
Mr. Fong has been the president, treasurer and a director of Equitex, Inc. since
its inception. Since 1999 Mr. Fong has been a director of iGenisys, Inc., a
business project management Software Company. From December 2000 to January
2002, Mr. Fong was a director of PopMail.com, Inc., a publicly traded Internet
marketing company. From July 1996 to October 1997, Mr. Fong was a director of
Stellant, Inc. (f/k/a Intranet Solutions, Inc.), a publicly-held investee
company which provides internet/intranet solutions to Fortune 1000 companies and
was the chairman of the board and treasurer of its predecessor company,
MacGregor Sports and Fitness, Inc. from February 1991 until the two companies
merged in July 1996. From January 1993 to January 1999, Mr. Fong was chairman of
the board and chief executive officer of California Pro Sports, Inc., a publicly
traded manufacturer and distributor of in-line skates, hockey equipment and
related accessories. From 1959 to 1982, Mr. Fong served in various accounting,
finance and budgeting positions with the Department of the Sir Force. During the
period from 1972 to 1981, he was assigned to senior supervisory positions at the
Department of Air Force headquarters in the Pentagon. In 1978, he was selected
to participate in the Federal Executive Service. In 1970 and 1971, he attended
the Woodrow Wilson School, Princeton University and was a Princeton Fellow in
Public Affairs. Mr. Fong has passed the uniform certified public accountant
exam. In March 1994, Mr. Fong was one of twelve CEOs selected as Silver Award
winners in FINANCIAL WORLD magazine's corporate American "Dream Team."

EDWARD E. SHAKE
Mr. Shake has spent the past twenty-five years in the sporting goods industry.
Mr. Shake has been the president and chief operating officer of VP Sports, Inc.
("VP") since 1999. VP is a US sporting goods holding company that through its
wholly owned Canadian subsidiary owned 100% of Victoria Precision, Inc. ("VPI")
and Torpedo Sports, Inc. From September 1996 to 1999 he served as a divisional
president of Brunswick Corporation. Prior to that Mr. Shake was president of
Roadmaster Corporation until 1996 when the business was sold to Brunswick.
During his tenure at Roadmaster, Mr. Shake was responsible for the formulation,
development and implementation of a business plan that built Roadmaster into one
of the leading domestic bicycle producers. Mr. Shake holds a BS and MS from
University of Tennessee and completed the Harvard University Advanced Management
Program. Mr. Shake resigned in October 2003.

BARRY S. HOLLANDER
Mr. Hollander has been the chief financial officer of VP Sports since March
1999. From 1994 to 1999, Mr. Hollander was the chief financial officer of
California Pro Sports, Inc., an in-line skate importer, marketer and
distributor. In 1999 California Pro merged with Imaginon, Inc. Mr. Hollander has
been the sporting goods industry since 1980 in various accounting, senior
management and executive positions. Mr. Hollander has a BS from Fairleigh
Dickinson University and passed the uniform certified public accountant exam.

                                      -14-
<PAGE>

THOMAS B. OLSON
Mr. Olson has served as secretary to Torpedo Sports USA, Inc. since April 2002.
Mr. Olson has been secretary of Equitex, Inc. since January 1988. From February
1990 to February 2000, Mr. Olson was a director, and from May 1994 to February
2000, secretary of Immune Response, Inc., a publicly held investee of Equitex
which merged with Opticon Medical, Inc., in February 2000. Since March 2003, Mr.
Olson has been a director of Chex Services, Inc., a wholly owned subsidiary of
Equitex, Inc. Mr. Olson has attended Arizona State University and the University
of Colorado at Denver.

(b)   Significant Employees

Not applicable.

(c)   Involvement in Certain Legal Proceedings

Not applicable.

                COMPLIANCE WITH SECTION 16(a) OF THE CONTROL ACT

Section 16(a) of the Securities Exchange Act of 1934 ("Section 16") requires our
officers, directors and persons who own more than ten percent of our voting
securities to file reports of their ownership and changes in such ownership with
the Securities and Exchange Commission (the "Commission"). Commission
regulations also require that such persons provide us with copies of all Section
16 reports they file. Based solely upon its review of such reports received by
us, or written representation from certain persons that they were not required
to file any reports under Section 16, we believe that, during the fiscal years
ending July 31, 2003 and 2002, our officers and directors have complied with all
Section 16 filing requirements.


ITEM 10.      EXECUTIVE COMPENSATION

(a)   General

Henry Fong, our chief executive officer, received a salary of $30,000 during the
year ended July 31, 2003.

Edward E. Shake, our chief operating officer, received $75,000 in salary for
each of the fiscal years ended July 31, 2003 and 2002.

Barry S. Hollander, our chief financial officer received $45,000 in salary for
each of the fiscal years ended July 31, 2003 and 2002.

(b)   Summary Compensation Table

The following table sets forth information regarding compensation paid to our
officers during the year ended July 31, 2003 and 2002.

<TABLE>
<CAPTION>
                                    Annual Compensation            Long-Term
Name and                                           Other Annual   Compensation     All Other
Principal Position        Year   Salary    Bonus   Compensation   Options/SARs   Compensation
------------------        -----  ------    -----   ------------   ------------   ------------
<S>                       <C>    <C>       <C>     <C>            <C>            <C>
Henry Fong, Chief         2003   $30,000      -               -
Executive Officer         2002     -          -               -

Edward E. Shake,
Chief Operating Officer   2003   $75,000      -               -
                          2002   $75,000      -               -

Barry S. Hollander,
Chief Financial Officer   2003   $45,000      -               -
                          2002   $45,000      -               -

Thomas B. Olson
Secretary                 2003   $30,000      -               -
                          2002   $ 5,000      -               -
</TABLE>
                                      -15-
<PAGE>

(c)   Option/SAR Grants Table

The following table sets forth information regarding Options/SAR grants to the
named executive officers during the year ended July 31, 2003.

<TABLE>
<CAPTION>
                                                 Percent of Total Options
                       Number of Securities         /SARS Granted to        Exercise or   Expiration
      Name          Underlying Options Granted   Employees in Fiscal Year   Base Price       Date
----------------    --------------------------   ------------------------   ----------    ----------
<S>                           <C>                          <C>                 <C>          <C>  <C>
Henry Fong                    365,000                      36.5%               $.26         3/29/06
Edward E. Shake               300,000                      30.0%               $.26         3/29/06
Barry S. Hollander            200,000                      20.0%               $.26         3/29/06
Thomas B. Olson                20,000                       2.0%               $.26         3/29/06
</TABLE>

(d) Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values

<TABLE>
<CAPTION>
                                                                                     Value
                                                          Number of             of Unexercised
                                                      Securities Underlying         in the
                                                       Unexercised Options        Money Options
                                                        /SARs at FY-End         /SARs at FY-End
                     Shares Acquired      Value         Exercisable/             Exercisable
      Name             on Exercise      Received(1)     /Unexercisable         /Unexercisable(1)
----------------     ---------------    -----------    -----------------       -----------------
<S>                       <C>           <C>                  <C>               <C>
Barry S. Hollander        75,000                             122,000/0
</TABLE>

(1)   Based on July 31, 2003, closing bid price of $0.19, less exercise price
      of $.26.

(e)   Compensation of Directors

Our sole director did not receive any compensation during the years ended July
31, 2003 and 2002.

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

(a) (b) Security Ownership of Certain Beneficial Owners and Security Ownership
of Management

The following table contains information as of July 31, 2003, for any person,
known to us, to be the beneficial owner of more than five (5) percent or more of
the outstanding shares of the class, each person who is a director or executive
officer of us and all persons as a group who are directors and executive
officers and as to the percentage of outstanding shares so held by them as of
July 31, 2003.

                          Name                  Amount
  Title of           and Address of          and Nature of         Percent of
    Class           Beneficial Owner       Beneficial Owner         Class(1)
-----------         ----------------       ----------------        -----------

Common Stock       Equitex 2000, Inc.
                   7315 E Peakview Ave
                   Englewood CO 80111         1,046,056                 9.3%

                                      -16-
<PAGE>

Common Stock           Wayne Mills
                     5020 Blake Rd S
                     Edina MN 55436           1,490,630                13.2%

Common Stock      Gulfstream Financial
                      Partners, LLC
                   7315 E Peakview Ave
                   Englewood CO 80111         1,023,065                 9.1%

Common Stock      USA Skate Corporation
                   2401 PGA Blvd #190
                 Palm Bch Grdns FL 33410      1,060,673                 9.4%

Common Stock           Henry Fong
                   7315 E Peakview Ave
                   Englewood CO 80111         2,450,046(2)             21.0%

Common Stock         Edward E. Shake
                   5354 N Lakewood Rd
                     Olney IL 62450           1,070,440(3)              9.2%

Common Stock       Barry S. Hollander
                   2401 PGA Blvd #190
                 Palm Bch Grdns FL 33410        381,335(4)              3.3%

Common Stock         Thomas B. Olson
                   7315 E Peakview Ave
                   Englewood CO 80111            54,520                  .5%

Common Stock     Pyramid Partners, L.P.
                 c/o Perkins Capital Mgmt
                    730 East Lake St
                    Wayzata MN 55391          1,000,000                 8.9%

Common Stock        All officers and
                  directors as a group
                       (4 persons)            1,872,603(5)             15.5%

(1)   As of July 31, 2003, 11,282,999 shares of our common stock were
      outstanding.
(2)   Includes 365,000 shares underlying options granted under our 2002 Stock
      Option Plan; includes 1,023,065 shares of common stock owned by a
      partnership in which Mr. Fong is a partner; includes 1,060,673 shares
      owned by a corporation in which Mr. Fong is an 80% shareholder.
(3)   Includes 123,900 shares in the Edward E. Shake SEP, 192,000 shares in the
      Edward E. Shake IRA and 300,000 shares underlying options granted under
      our 2002 Stock Option Plan.
(4)   Includes 122,000 shares underlying options granted under our 2002 Stock
      Option Plan.
(5)   Includes 787,000 shares underlying options granted under our 2002 Stock
      Option Plan.
(c)   Changes in Control

We are unaware of any arrangements that may, at a subsequent date, result in a
change in control of our company.

                                      -17-
<PAGE>

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In June 2002, an employee loaned us $85,000 CAD ($53,975 U.S.). The loan bore
interest at 2% per month, was unsecured and was due on demand. The loan was
repaid in October 2002. In July 2003, the same employee loaned us $50,000 CAD
($35,695U.S.). In July 2003, $13,000 CAD ($9,281U.S.) of this loan was repaid.

In April 2002 we issued 8,000,000 warrants to purchase our common stock to the
shareholders of VP Sports, Inc. ("VP"). The warrants were exercisable at $.10
per share. The Company received $193,215 and issued 1,932,150 shares of its
common stock from the exercise of these warrants. In addition, the Company
issued 5,429,290 shares of its common stock in exchange for subscription and
related party receivables from VP. VP recorded the payable to Torpedo in lieu of
making payments for amounts owed to the shareholders who received the warrants.
At July 31, 2003, the Company analyzed the ability to collect the receivable
from VP Sports and determined that it was necessary to reserve the entire
amount. Accordingly, $542,929 has been recorded as impairment of a related party
receivable in the financial statements.

The Company also issued 638,560 shares of its common stock in exchange for
subscription and related party receivable from officers and affiliates of the
Company for $60,133 and $3,723, respectively.

In 2000, three separate affiliated companies advanced Torpedo $245,000, $200,000
and $100,000, respectively. The advances bear interest at 9% per annum and have
no specific due date. During the year ended July 31, 2003, additional advances
were made to Torpedo or for its benefit from two of the same affiliated
companies of $96,500 and $313,660, respectively. These amounts are classified as
related party advances and notes payable on the July 31, 2003, balance sheet. A
separate affiliate company advanced Torpedo $60,000 in June 2003. As of July 31,
2003, Torpedo owes VP $664,343 for advances substantially made in 2000,and
$1,169,821 to other affiliated companies. These amounts are included in related
party advances and notes payable. Management has received confirmations from
these affiliated companies stating that although the amounts are due on demand
that they do not anticipate making such demand during the fiscal year ending
July 31, 2004.

ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits required by Item 601 of Regulation S-B

        Exhibit 31 - Certification pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002

        Exhibit 32 - Certification pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002

        Exhibit 99.1 - Torpedo Sports USA, Inc. Code of Ethics for Senior
        Financial Management

    (b) Reports on Form 8-K
        nONE

                                      -18-
<PAGE>

ITEM 14.   CONTROLS AND PROCEDURES

A review and evaluation was performed by the Company's management, including the
Company's Chief Executive Officer (the "CEO") and Chief Financial Officer (the
"CFO"), of the effectiveness of the design and operation of the Company's
disclosure controls and procedures as of a date within 90 days prior to the
filing of this annual report. Based on that review and evaluation, the CEO and
CFO have concluded that the Company's current disclosure controls and
procedures, as designed and implemented, were effective. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect the Company's internal controls subsequent to the
date of their evaluation. There were no significant material weaknesses
identified in the course of such review and evaluation and, therefore, no
corrective measures were taken by the Company.




                                      -19-
<PAGE>



                                   SIGNATURES

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



Date: December 29, 2003          TORPEDO SPORTS USA, INC.
                                 (Registrant)


                                  By /S/ HENRY FONG
                                    ------------------------
                                     Henry Fong, Chief Executive Officer



                                  By  /S/ BARRY S. HOLLANDER
                                    ------------------------
                                    Barry S. Hollander, Chief Financial and
                                    Accounting Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



Date: December 29, 2003             /S/ HENRY FONG
                                    --------------
                                    Henry Fong, Chief Executive Officer
                                    and Director


                                      -20-

<PAGE>
                     TORPEDO SPORTS USA, INC. AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                       YEARS ENDED JULY 31, 2003 AND 2002




                                                                            Page
                                                                            ----


Independent auditors' report                                                 F-1

Consolidated financial statements:

  Consolidated balance sheet                                                 F-2

  Consolidated statements of operations                                      F-3

  Consolidated statements of comprehensive (loss) income                     F-4

  Consolidated statements of changes in shareholders' equity (deficit)       F-5

  Consolidated statements of cash flows                                      F-6

  Notes to consolidated financial statements                                 F-7


<PAGE>

                          INDEPENDENT AUDITORS' REPORT


Board of Directors
Torpedo Sports USA, Inc.

We have audited the accompanying consolidated balance sheet of Torpedo Sports
USA, Inc. and subsidiary as of July 31, 2003, and the related consolidated
statements of operations, comprehensive (loss) income, changes in shareholders'
equity (deficit), and cash flows for each of the years in the two-year period
ended July 31, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Torpedo Sports USA,
Inc. and subsidiary as of July 31, 2003, and the results of their operations and
their cash flows for each of the years in the two-year period ended July 31,
2003, in conformity with accounting principles generally accepted in the United
States of America.

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, the Company reported a net loss of $3,458,072
for the year ended July 31, 2003, and a shareholders' deficit of $2,152,023 as
of July 31, 2003. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.



HORWATH GELFOND HOCHSTADT PANGBURN, P.C.

Denver, Colorado
December 22, 2003

                                      F-1
<PAGE>
             TORPEDO SPORTS USA, INC. AND SUBSIDIARY

                    CONSOLIDATED BALANCE SHEET

                          JULY 31, 2003

                              ASSETS

Current assets:
  Cash                                                            $     18,910
  Accounts receivable, net (Note 3)                                     71,044
  Inventories (Note 4)                                                 711,279
  Prepaid expenses                                                     291,997
                                                                  ------------
      Total current assets                                           1,093,230
                                                                  ------------
Property, plant and equipment, net (Note 5, 6 and 7)                 1,028,933
                                                                  ------------
                                                                  $  2,122,163
                                                                  ============

                   LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
  Current portion of long-term debt (Note 6)                      $    706,666
  Current portion of obligations under capital lease                    33,288
  Accounts payable                                                   1,038,411
  Accrued expenses                                                     316,913
  Related party payables and accruals (Notes 7 and 8)                  254,014
  Related party advances and note payable (Note 7)                   1,860,455
                                                                  ------------
      Total current liabilities                                      4,209,747
                                                                  ------------
  Obligations under capital lease, net of current portion               64,439
                                                                  ------------
      Total liabilities                                              4,274,186
                                                                  ------------

Commitments and contingencies (Note 9)

Shareholders' deficit (Note 11):
  Common stock, par value $.001 per share, 50,000,000 shares
    authorized; 11,282,999 shares issued and outstanding                11,283
  Additional paid-in capital                                         2,022,507
  Stock subscriptions and related party receivable (Note 8)            (24,056)
  Accumulated deficit                                               (4,053,022)
  Accumulated other comprehensive loss                                (108,735)
                                                                  ------------
      Total shareholders' deficit                                   (2,152,023)
                                                                  ------------
                                                                  $  2,122,163
                                                                  ============

                See notes to consolidated financial statements.
                                      F-2
<PAGE>
             TORPEDO SPORTS USA, INC. AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF OPERATIONS

                YEARS ENDED JULY 31 2003 AND 2002

                                                         2003           2002
                                                    ------------   ------------
Net sales                                           $  6,075,549    $ 8,209,400
Cost of sales                                          4,875,697      5,443,160
                                                    ------------   ------------
   Gross profit                                        1,199,852      2,766,240
                                                    ------------   ------------

Operating expenses:
   Selling expense                                       879,694      1,074,073
   General and administrative expense                  1,116,484        881,335
   Related party management fees (Note 8)                241,391        191,200
   Stock-based compensation expense                      643,500
   Impairment of related party receivables (Note 8)      924,836
   Impairment of machinery and equipment (Note 2)        318,746
                                                    ------------   ------------
                                                       4,124,651      2,146,608
                                                    ------------   ------------
(Loss) income from operations                         (2,924,799)       619,632
                                                    ------------   ------------
Other income (expense):
   Interest expense:
     Related parties (Note 7)                           (120,465)      (119,392)
     Other (Note 6)                                     (356,023)      (445,595)
   Foreign currency transaction gains                    136,998         41,500
                                                    ------------   ------------
                                                        (339,490)      (523,487)
                                                    ------------   ------------

(Loss) income before income taxes                     (3,264,289)        96,145
Income tax (expense) benefit (Note 10)                  (193,783)       184,211
                                                    ------------   ------------
Net (loss) income                                   $ (3,458,072)     $ 280,356
                                                    ============   ============


Basic and diluted net (loss) income  per share           $ (0.34)        $ 0.06
                                                    ============   ============

Weighted average number of common
  shares outstanding:
    Basic                                             10,241,109      4,683,021
                                                    ============   ============
    Diluted                                           10,241,109      4,818,058
                                                    ============   ============

                See notes to consolidated financial statements.
                                      F-3
<PAGE>
             TORPEDO SPORTS USA, INC. AND SUBSIDIARY

      CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

                YEARS ENDED JULY 31, 2003 AND 2002



                                                         2003           2002
                                                    ------------    ------------
Net (loss) income                                   $ (3,458,072)   $    280,356

Change in foregin currency translation adjustments      (120,591)          9,866
                                                    ------------    ------------

Comprehensive (loss) income                         $ (3,578,663)   $    290,222
                                                    ============    ============

                See notes to consolidated financial statements.
                                      F-4
<PAGE>
             TORPEDO SPORTS USA, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
                YEARS ENDED JULY 31, 2003 AND 2002
                             (NOTE 1)

<TABLE>
<CAPTION>
                                                                    Stock
                                                                 subscriptions
                                                                    and
                                  Common Stock       Additional    related       Accumulated other
                               --------------------   paid-in       party          comprehensive     Accumulated
                                 Shares     Amount    capital     receivable       income (loss)       deficit         Total
                               ----------  --------  ----------  -------------   -----------------   -----------   ------------

<S>                            <C>         <C>       <C>         <C>             <C>                 <C>           <C>
Balances, August 1, 2001        1,999,999  $  2,000  $  428,920                  $           1,990   $  (875,306)  $   (442,396)

Common stock issued in
 exchange for cash and
 receivables                    8,000,000     8,000     741,990  $    (606,985)                                         143,005

                               ----------  --------  ----------  -------------    ----------------   -----------   ------------
Balances as of May 20,
 2002, date of reverse
 acquisition (Note 1)           9,999,999    10,000   1,170,910       (606,985)              1,990      (875,306)      (299,391)

Common stock issued for
 services                          45,000        45      69,955                                                          70,000

Common stock issued upon
 exercise of stock options         18,000        18       4,662                                                           4,680

Change in cumulative currency
 translation adjustment                                                                      9,866                        9,866

Net income                                                                                               280,356        280,356

                               ----------  --------  ----------  -------------    ----------------   -----------   ------------
Balances, July 31, 2002        10,062,999    10,063   1,245,527       (606,985)             11,856      (594,950)        65,511

Common stock issued for
 services                          25,000        25      18,475                                                          18,500

Warrants issued for services                             75,000                                                          75,000

Impairment of related party
 receivable                                                            582,929                                          582,929

Amortization of deferred
 compensation cost in
 connection with warrants
 issued for services                                    550,000                                                         550,000

Common stock issued upon
 exercise of stock options         95,000        95      24,605                                                          24,700

Common stock issued in private
 placement                      1,100,000     1,100     108,900                                                         110,000

Change in cumulative currency
 translation adjustment                                                                   (120,591)                    (120,591)

Net loss                                                                                              (3,458,072)    (3,458,072)

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

Balances, July 31, 2003        11,282,999  $ 11,283  $2,022,507  $     (24,056)   $       (108,735)  $(4,053,022)   $(2,152,023)
                               ==========  ========  ==========  =============    ================   ===========   ============
</TABLE>
                See notes to consolidated financial statements.
                                      F-5
<PAGE>
              TORPEDO SPORTS USA, INC. AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                 YEARS ENDED JULY 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                               2003           2002
                                                            -----------   -----------
<S>                                                         <C>             <C>
Cash flows provided by operating activities:
Net (loss) income                                           $(3,458,072)    $ 280,356
                                                            -----------   -----------
Adjustments to reconcile net (loss) income
  to net cash provided by operating activities:
    Provision for doubtful accounts receivable                   48,832
    Depreciation and amortization                               236,728       188,168
    Impairment of related party receivables                     924,836
    Impairment of machinery and equipment                       318,746
    Stock-based compensation expense                            643,500        70,000
    Deferred income taxes                                       193,783      (184,211)
    Changes in assets and liabilities:
       Decrease in accounts receivable                          131,552       197,476
       Decrease (increase) in inventories                       891,496      (207,304)
       Increase in prepaid expenses                             (51,460)      (74,269)
       Increase in acounts payable and accrued liabilities      136,878       295,550
      Decrease in related party payables                         39,374
                                                            -----------   -----------
Total adjustments                                             3,514,265       285,410
                                                            -----------   -----------
Net cash provided by operating activities                        56,193       565,766
                                                            -----------   -----------

Cash flows from investing activities:
  Capital expenditures                                         (143,473)     (344,710)
                                                            -----------   -----------
Net cash used in investing activities                          (143,473)     (344,710)
                                                            -----------   -----------

Cash flows from financing activities:
  Retirement of common stock                                                  (50,000)
  (Decrease) increase in bank indebtedness                     (321,442)      163,173
  Repayment of loan, related party                              (65,712)     (270,253)
  Repayment of long-term debt and capital lease obligation     (165,266)     (164,556)
  Proceeds from notes payable, related parties                  497,047        54,184
  Proceeds from exercise of stock options                        24,700       197,685
  Proceeds from private placement of common stock               110,000
  Decrease (increase) in related party receivables              115,850      (210,446)
  Advances to related parties                                   (71,700)      (69,500)
                                                            -----------   -----------
Net cash provided by (used in) financing activities             123,477      (349,713)
                                                            -----------   -----------

Effect of foreign exchange rate changes on cash                 (26,459)       (3,583)
                                                            -----------   -----------

Increase (decrease) in cash                                       9,738      (132,240)
Cash, beginning of year                                           9,172       141,412
                                                            -----------   -----------

Cash, end of year                                           $    18,910       $ 9,172
                                                            ===========   ===========

Supplemental disclosure of cash flow information:
  Cash paid for interest                                    $   486,000   $   577,400
                                                            ===========   ===========

Supplemental disclosure of non-cash investing and
  financing activities:
     Capital lease obligation incurred for
       machinery and equipment                              $   105,887
                                                            ===========
</TABLE>

                See notes to consolidated financial statements.
                                      F-6
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------


1.   BUSINESS, ORGANIZATION, BASIS OF PRESENTATION, AND GOING CONCERN:

     BUSINESS:

     Torpedo Sports USA, Inc., a Delaware corporation ("Torpedo Sports" or, the
     "Company"), through its wholly-owned Canadian subsidiary Torpedo Sports
     Inc. ("Torpedo") manufactures and distributes outdoor recreational products
     for children, including toboggans, sleds, saucers and snowboards for sale
     in Canada and the United States. In 2003, the Company also introduced a new
     spring/summer line of products, including tricycles, bicycles, wagons, and
     inflatables for sale in Canada and the United States. The Company operates
     in one business segment.

     ORGANIZATION:

     The Company was previously organized as eNutrition, Inc. ("eNutrition"), a
     Nevada corporation (formerly known as Zacman Enterprises, Inc., formed in
     1996).

     At a special shareholders' meeting held on May 17, 2002, the shareholders
     of eNutrition approved the sale of all of eNutrition's assets, and the
     assumption of all liabilities, to HI-Q Nutrition, Inc. ("HI-Q") in exchange
     for $10,000 and forgiveness of uncollected royalties owed to HI-Q. The
     shareholders also approved a one share for 1.8870314 share reverse stock
     split and the purchase and retirement of 4,478,430 post-reverse-split
     shares. These transactions occurred on May 20, 2002.

     On May 20, 2002, immediately following the HI-Q transaction described
     above, eNutrition acquired all of the issued and outstanding common shares
     of Torpedo Sports and its subsidiary Torpedo in exchange for 8,000,000
     shares of eNutrition common stock issued to the Torpedo Sports
     shareholders. eNutrition was subsequently merged into Torpedo Sports, with
     Torpedo Sports representing the surviving entity.

     The Torpedo Sports transaction has been recorded as a reverse acquisition
     based on factors demonstrating that Torpedo Sports constitutes the
     accounting acquirer. The shareholders of Torpedo Sports received 80% of the
     post-acquisition outstanding common stock of eNutrition. In addition,
     post-acquisition management personnel and board members of the Company now
     consist of individuals previously holding positions with Torpedo Sports.
     The purchase price applied to the reverse acquisition was based on the net
     book value of the underlying assets of eNutrition prior to the transaction.
     The historical shareholders' equity of Torpedo Sports prior to the exchange
     has been retroactively restated (a recapitalization) for the equivalent
     number of shares received in the merger after giving effect to any
     differences in the par value of the eNutrition and Torpedo Sports common
     stock, with an offset to additional paid-in capital. The restated
     consolidated accumulated deficit of the accounting acquirer (Torpedo
     Sports) has been carried forward after the exchange.

                                      F-7
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

1.   BUSINESS, ORGANIZATION, BASIS OF PRESENTATION, AND GOING CONCERN
     (CONTINUED):

     BASIS OF PRESENTATION:

     The accompanying consolidated financial statements present the consolidated
     financial position of Torpedo Sports and its subsidiary Torpedo as of July
     31, 2003, and the results of operations and cash flows of Torpedo Sports
     and Torpedo for the years ended July 31, 2003 and 2002. All significant
     intercompany accounts and transactions have been eliminated in
     consolidation. The consolidated financial statements have been prepared in
     accordance with accounting principles generally accepted in the United
     States of America.

     GOING CONCERN AND MANAGEMENT'S PLANS:

     The Company's financial statements for the year ended July 31, 2003 have
     been prepared on a going concern basis, which contemplates the realization
     of assets and the settlement of liabilities and commitments in the normal
     course of business.

     The Company incurred a net loss of $3,458,072 for the year ended July 31,
     2003, and reported a shareholders' deficit of $2,152,023 at July 31, 2003.
     The Company has not been able to meet its obligations in a timely manner
     and has not been able to procure significant quantities of raw materials in
     the first quarter of fiscal year ending July 31, 2004, in order to meet its
     customers' orders. These factors raise substantial doubt about the
     Company's ability to continue as a going concern. The consolidated
     financial statements do not include any adjustments relating to the
     recoverability and classification of assets or the amounts and
     classification of liabilities that might be necessary should the Company be
     unable to continue at a going concern.

     Management has implemented several plans and initiatives it believes, but
     cannot assure, will allow the Company to maintain some of its core
     business. These plans and initiatives include the following:

     a.  In September 2003, Torpedo signed an exclusive distributor agreement
         with a South Paris, Maine based Company (the "Distribution Agreement").
         Under the terms of the Distribution Agreement, the distributor is to
         open transferable letters of credit to Torpedo, which Torpedo can then
         transfer to a third party supplier. The third party supplier is to ship
         directly to the distributor. The distributor will be responsible for
         all U.S. warehouse, distribution and selling costs. The anticipated
         effect of the Distribution Agreement on the Company is reduced sales,
         as it will sell to the distributor at lower prices than it was selling
         directly, offset by reduced costs, as costs of the warehouse
         distribution center and selling costs will be eliminated. Gross margins
         may also be reduced, as the Company is now outsourcing certain
         production, which was previously manufactured at its leased facility.

                                      F-8
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

1.   BUSINESS, ORGANIZATION, BASIS OF PRESENTATION, AND GOING CONCERN
     (CONTINUED):

     GOING CONCERN AND MANAGEMENT'S PLANS (CONTINUED):

         The Distribution Agreement also provides for royalties on products
         purchased by the Distributor from other suppliers.

     b.  In order to reduce fixed costs, Torpedo negotiated for an early
         termination of its Montreal facilities lease with its lessor in
         November 2003 (originally through February 2007) and anticipates a
         termination fee of approximately $125,000 CDN. Torpedo intends to
         operate its own wood manufacturing facility, outsource plastic product
         in Canada, and share office space with a related Montreal based
         company.

     c.  In July 2003, the Board of Directors approved a private placement of up
         to 3,000,000 shares of the Company's common stock at $0.10 per share
         (Note 11).

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     USE OF ESTIMATES:

     The preparation of consolidated financial statements in conformity with
     accounting principles generally accepted in the United States of America
     requires management to make estimates and assumptions that affect the
     reported amounts of assets and liabilities and disclosures of contingent
     assets and liabilities at the date of the balance sheet and the reported
     amounts of revenues and expenses during the reporting periods. Management
     makes these estimates using the best information available at the time
     these estimates are made; however, actual results could differ from those
     estimates.

     INVENTORIES:

     Inventories are stated at the lower of cost or market. Cost is determined
     by the first-in, first-out (FIFO) method. The elements of cost in
     inventories include materials, labor and overhead.

     PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment are stated at cost. Depreciation expense is
     provided by use of accelerated and straight-line methods over the estimated
     useful lives of the related assets. Leasehold improvements are depreciated
     over the shorter of the useful lives of the assets or the length of the
     respective leases, whichever period is shorter. The estimated useful lives
     of property, plant and equipment are as follows:

                                      F-9
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     PROPERTY, PLANT AND EQUIPMENT (CONTINUED):


             Building                                           25 years
             Machinery, furniture and equipment                  5 years
             Molds, tools and dies                               5 years
             Leasehold improvements                              5 years
             Vehicles                                            3 years

     Management assesses the carrying values of its long-lived assets for
     impairment when circumstances warrant such a review. In performing this
     assessment, management considers projected cash flow data and available
     appraisal information. The Company recognizes impairment losses when
     undiscounted cash flows estimated to be generated from the long-lived
     assets are less than the amount of unamortized assets. Based on its
     evaluation, which considered management's decision to cease manufacturing
     plastic injected products, the Company reduced the carrying value of
     certain machinery and equipment used in plastic injection production by
     recording an impairment charge of $318,746 for the year ended July 31,
     2003.

     FAIR VALUE OF FINANCIAL INSTRUMENTS:

     The estimated fair values of financial instruments have been determined by
     the Company using available market information and appropriate
     methodologies; however, considerable judgment is require in interpreting
     information necessary to develop these estimates. Accordingly, the
     Company's estimates of fair values are not necessarily indicative of the
     amounts that the Company could realize in a current market exchange.

     The estimated fair value of cash, accounts receivable and accounts payable
     approximate their carrying amounts due to the short maturities of these
     instruments. The fair value of the Company's long-term debt approximates
     carrying value due to the short maturities of these instruments or based on
     market rates currently available to the Company. The fair values of related
     party receivables and payables are not practicable to estimate due to the
     related party nature of the underlying transactions.

     REVENUE RECOGNITION:

     Revenue is recognized when products are shipped to customers. Net revenues
     consist of sales revenue reduced by sales returns and allowances,
     discounts, rebates and cooperative advertising.

                                      F-10
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     FOREIGN CURRENCY TRANSACTIONS:

     The financial statements of the Company's foreign subsidiary, Torpedo, are
     measured using the local currency (the Canadian Dollar "CAD") as the
     functional currency. Assets and liabilities of Torpedo are translated to
     U.S. dollars at exchange rates as of the balance sheet date. Revenues and
     expenses are translated at average rates of exchange in effect during the
     period. The resulting cumulative translation adjustments have been recorded
     as a component of comprehensive income (loss), included as a separate item
     in shareholders' equity (deficit).

     Gains and losses from foreign currency transactions are included in net
     income (loss).

     ADVERTISING:

     Advertising costs are expensed as incurred and were approximately $229,700
     and $165,700 during the years ended July 31, 2003 and 2002, respectively.

     STOCK-BASED COMPENSATION:

     Statement of Financial Accounting Standards ("SFAS") No. 123, ACCOUNTING
     FOR STOCK- BASED COMPENSATION, defines a fair-value-based method of
     accounting for stock-based employee compensation plans and transactions in
     which an entity issues its equity instruments to acquire goods or services
     from non-employees, and encourages but does not require companies to record
     compensation cost for stock-based employee compensation plans at fair
     value.

     The Company accounts for employee stock-based compensation using the
     intrinsic value method prescribed in Accounting Principles Board Opinion
     No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB No. 25") and related
     interpretations. Accordingly, compensation cost for stock options is
     measured as the excess, if any, of the quoted market price of the Company's
     common stock at the date of the grant over the amount an employee must pay
     to acquire the stock.

     Had compensation cost for the Company's stock-based compensation plan been
     determined based on the fair value at the grant dates consistent with the
     provisions of SFAS No. 123, the Company's net income (loss) and net income
     (loss) per share would have changed to the pro forma amounts indicated
     below:

                                      F-11
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     STOCK-BASED COMPENSATION (CONTINUED):
                                                         2003           2002
                                                    -----------    ------------
      Net (loss) income, as reported                $(3,458,072)   $    280,356
      Total stock-based employee compensation
       expense determined under fair value based
       method forall awards                                            (178,000)
                                                    -----------    ------------

      Net (loss) income, pro forma                  $(3,458,072)   $    102,356
                                                    ===========    ============

      Net (loss) income per share, as reported      $     (0.34)   $       0.06
      Net (loss) income per share, pro forma        $     (0.34)   $       0.02

     No stock options were granted in 2003. The fair value of options granted
     during 2002 was estimated on the date of grant using the Black-Scholes
     option-pricing model with the following weighted average assumptions:

                  Expected dividend yield                           0%
                  Expected stock price volatility                  139%
                  Risk-free interest rate                          3.2%
                  Expected life of options                        2 years

     COMPREHENSIVE INCOME:

     SFAS No. 130, REPORTING COMPREHENSIVE INCOME, requires the reporting and
     display of comprehensive income (loss) and its components. SFAS No. 130
     requires foreign currency translation adjustments to be included in
     comprehensive income (loss).

     INCOME TAXES:

     Income taxes are provided for the tax effects of transactions reported in
     the consolidated financial statements, and a deferred income tax asset or
     liability is recognized for temporary differences between the Company's
     financial statements and tax returns. Deferred tax assets and liabilities
     are measured using enacted tax rates expected to apply to taxable income
     (loss) in the years in which those temporary differences are expected to
     reverse. The effect on deferred tax assets and liabilities of a change in
     tax rates is recognized in the statement of operations in the period that
     includes the enactment date.

                                      F-12
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     INCOME (LOSS) PER SHARE:

     SFAS No. 128, EARNINGS PER SHARE, requires dual presentation of basic and
     diluted earnings or loss per share (EPS) with a reconciliation of the
     numerator and denominator of the basic EPS computation to the numerator and
     denominator of the diluted EPS computation. Basic EPS excludes dilution.
     Diluted EPS reflects the potential dilution that could occur if securities
     or other contracts to issue common stock were exercised or converted into
     common stock or resulted in the issuance of common stock that then shared
     in the earnings of the entity.

     Income (loss) per share is computed based on the weighted average number of
     common shares outstanding during the year. Stock options and warrants are
     not considered in the 2003 calculation, as the impact of the potential
     common shares (1,387,000 shares at July 31, 2003) would be to decrease loss
     per share. The historical loss per share of Torpedo Sports prior to the
     merger has been presented to reflect the new capital structure. Torpedo did
     not have any equity instruments outstanding prior to the date of the
     merger.

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

     In May 2003, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 150, ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS
     OF BOTH LIABILITIES AND EQUITY. SFAS No. 150 establishes new standards on
     how an issuer classifies and measures certain financial instruments with
     characteristics of both liabilities and equity. Under previous guidance,
     issuers could account for many of those instruments as equity. SFAS No. 150
     requires that those instruments be classified as liabilities in statements
     of financial position. SFAS No. 150 is effective for all financial
     instruments entered into or modified after May 31, 2003, and otherwise is
     effective at the beginning of the first interim period beginning after June
     15, 2003. The adoption of SFAS No. 150 did not have an impact on the
     Company's consolidated results of operations, financial position or cash
     flows.

                                      F-13
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED):

     In January 2003, the FASB issued FASB Interpretation No. 46 CONSOLIDATION
     OF VARIABLE INTEREST ENTITIES. In general, a variable interest entity is a
     corporation, partnership, trust, or any other legal structure used for
     business purposes that either does not have equity investors with voting
     rights or has equity investors that do not provide sufficient financial
     resources for the entity to support its activities. Interpretation No. 46
     requires a variable interest entity to be consolidated by a company if that
     company is subject to a majority of the risk of loss from the variable
     interest entity's activities or is entitled to receive a majority of the
     entity's residual returns or both. The consolidation requirements of
     Interpretation No. 46 apply immediately to variable interest entities
     created after January 31, 2003. The consolidation requirements apply to
     older entities in the first fiscal year or interim period beginning after
     December 15, 2003. Certain of the disclosure requirements apply in all
     financial statements issued after January 31, 2003, regardless of when the
     variable interest entity was established. The adoption of Interpretation
     No. 46 did not have an impact on the Company's consolidated results of
     operation, financial position or cash flows.

     In November 2002, the FASB issued FASB Interpretation No. 45, GUARANTOR'S
     ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT
     GUARANTEES OF INDEBTEDNESS OF OTHERS. This standard established financial
     statement disclosure requirements for companies that enter into or modify
     certain types of guarantees subsequent to December 31, 2002. Beginning in
     calendar 2003, the standard requires that companies record the fair value
     of certain types of guarantees as a liability in the financial statements.
     The adoption of this interpretation did not have an impact on the Company's
     consolidated results of operations, financial position or cash flows.

     In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT
     OR DISPOSAL OF LONG LIVED ASSETS, which addresses accounting and financial
     reporting for the impairment or disposal of long-lived assets. The Company
     adopted SFAS No. 144 effective August 1, 2002, and has applied the
     provisions of SFAS No. 144 in connection with its accounting for the
     impairment of long-lived assets (Notes 5). Management does not believe the
     application of SFAS No. 144 resulted in a 2003 impairment charge different
     from that under previous accounting standards.

                                      F-14
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED):

     In December 2002, the FASB issued SFAS No. 148, ACCOUNTING FOR STOCK-BASED
     COMPENSATION TRANSITION AND DISCLOSURE. This statement amends SFAS No. 123,
     ACCOUNTING FOR STOCK-BASED COMPENSATION, and establishes two alternative
     methods of transition from the intrinsic value method to the fair value
     method of accounting for stock-based employee compensation. In addition,
     SFAS No. 148 requires prominent disclosure about the effects on reported
     net income (loss) and requires disclosure for these effects in interim
     financial information. The company adopted the disclosure-only provisions
     of SFAS No. 148 in 2003 and plans to continue accounting for stock-based
     compensation under APB 25.

3.   RISK CONSIDERATIONS:

     INTERNATIONAL OPERATIONS:

     The Company's subsidiary operations (Torpedo) are primarily located in
     Montreal Canada. Torpedo transactions are primarily conducted in Canadian
     dollars (the currency into which Torpedo's historical financial statements
     has been translated). As a result, the Company is exposed to adverse
     movements in foreign currency exchange rates. In addition, the Company is
     subject to risks including adverse developments in the foreign political
     and economic environment, trade barriers, managing foreign operations, and
     potentially adverse tax consequences. There can be no assurance that any of
     these factors will not have a material adverse effect on the Company's
     financial condition or results of operations in the future.

     CREDIT RISK AND SIGNIFICANT CONCENTRATIONS:

     Financial instruments, which potentially subject the Company to
     concentrations of credit risk, consist primarily of cash and accounts
     receivable. The Company places its cash with high credit quality financial
     institutions and, by policy, limits the amount of credit exposure to any
     one financial institution. The Company sells its products principally to
     retailers. Accounts receivable credit risk is mitigated through the
     Company's use of credit reviews that are considered in determining credit
     policies and the allowance for doubtful accounts. The Company provides
     allowances for expected sales returns, discounts, rebates and cooperative
     advertising. At July 31, 2003, the Company has recorded an allowance for
     doubtful accounts receivable of approximately $44,800. During the year
     ended July 31, 2003, two customers accounted for approximately 14% and 13%,
     respectively of net sales. During the year ended July 31, 2002, one
     customer accounted for approximately 13% of net sales, two other customers
     accounted for 10% and 8% of net sales, respectively.

                                      F-15
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

4.   INVENTORIES:

     Inventories consist of the following at July 31, 2003:

             Raw materials                             $    296,489
             Work-in-process                                 88,653
             Finished goods                                 326,137
                                                       ------------
                                                       $    711,279
                                                       ============

5.   PROPERTY, PLANT, AND EQUIPMENT:

     Property, plant and equipment is comprised of the following at July 31,
     2003:

             Land                                      $     19,705
             Building                                       264,349
             Machinery, furniture and equipment             792,379
             Molds                                          570,962
             Tools and dies                                  47,542
             Vehicles                                        50,228
             Leasehold improvements                          15,420
                                                       ------------
                                                          1,760,585
             Less accumulated depreciation                 (731,652)
                                                       ------------
                                                       $  1,028,933
                                                       ============

     Depreciation and amortization expense for the years ended July 31, 2003 and
     2002 was $236,728 and $188,168, respectively.

                                      F-16
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

6.   LONG-TERM DEBT:

     At July 31, 2003, the Company has the following long-term debt outstanding:

       Torpedo lines of credit [A]                                  $   238,169

       Note payable to bank; interest at the Canadian prime rate
       (4.5% at July 31, 2003); principal and interest payable
       monthly in installments of CAD$11,425 (US$8,119) through
       December 2009, at which time remaining unpaid principal
       and interest is due; collateralized by inventories and
       accounts receivable; at July 31, 2003, the Company was in
       arrears on certain principal payments [B]                        457,788

       Notes payable bank; interest at the Canadian prime rate
       (4.5% at July 31, 2003) plus .5%; principal and interest
       payable monthly in installments of CAD$1,961 (U.S.$1,393);
       maturity date is February 2004, loan is collateralized by
       inventories, receivables, and certain machinery and
       equipment; at July 31, 2003, the Company was in arrears on
       certain principal payments [B]                                    10,709
                                                                    -----------
         Current long-term debt (all current)                       $   706,666
                                                                    ===========


       [A] Torpedo has available a line of credit under which it can borrow up
           to a maximum of CAD$4,500,000 (U.S.$3,212,550 at July 31, 2003)
           through November 2004. Advances under this line of credit are made at
           85% of the face value of eligible accounts receivable, as defined,
           and as accepted by the lender. Borrowings under this line of credit
           are collateralized by accounts receivable, inventories, and certain
           machinery and equipment, and bear interest at 2% per month. The
           outstanding balance on this line of credit was $213,717 at July 31,
           2003.

           Torpedo also has available an inventory line of credit under which it
           can borrow up to a maximum of CAD$800,000 (U.S.$571,120 at July 31,
           2003) through November 2004. This line of credit is available to
           Torpedo between the months of June and September, or later if
           extended. Borrowings under this line of credit are collateralized by
           inventories, and bear interest at the Canadian prime rate (4.5% at
           July 31, 2003) plus 7.5%. The outstanding balance on this line of
           credit was $24,452 at July 31, 2003.

                                      F-17
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

6.   LONG-TERM DEBT (CONTINUED):

           At July 31, 2003, Torpedo was in default on certain covenants related
           to the lines of credit.

       [B] At July 31, 2003, the Company is in arrears on principal and interest
           payments due on these notes payable, and the bank has initiated legal
           proceedings against the Company. The Company is in negotiations with
           the bank to settle the amounts due; however, the Company can make no
           assurance that such negotiations will be successful. Accordingly, the
           entire loan balances are classified as current.

       Scheduled payments of long-term debt are as follows:

               2004                                                 $   340,257
               2005                                                      68,534
               2006                                                      68,534
               2007                                                      68,534
               2008                                                      68,534
               Thereafter                                                92,273
                                                                    -----------
                                                                    $   706,666
                                                                    ===========

7.   RELATED PARTY NOTES AND ADVANCES PAYABLE:

     Related party notes and advances payable at July 31, 2003, consist of the
     following:

       Advances payable to VP Sports, Inc., a company affiliated
       through common control; interest at 9%; unsecured and due
       on demand                                                    $   664,343

       Advances payable to companies affiliated through common
       ownership and control by an officer of the Company;
       interest at 8% to 10%; collateralized by substantially
       all assets of the Company, and due on demand [A]               1,169,821

       Note payable to employee of Torpedo; interest at 2% per
       month; unsecured and due on demand                                26,291
                                                                    -----------
                                                                    $ 1,860,455
                                                                    ===========

                                      F-18
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

7.   RELATED PARTY NOTES AND ADVANCES PAYABLE (CONTINUED):

       [A]In August 2002, the Company's Chief Executive Officer loaned the
          Company $15,000, at an interest rate of 10%. This amount was repaid
          in October 2002. At August 1, 2002, the Company had related party
          notes and advances payable of $548,661 In June 2003, the Company's
          Chief Executive Officer loaned the company $40,000 at an interest rate
          of 10%. This loan is due on demand. During the year ended July 31,
          2003, the Company also received $581,160 of loans and advances from
          parties affiliated through common ownership. These loans and advances
          bear interest at 8% and are due on demand.

     Related party interest expense for the years ended July 31, 2003 and 2002,
     is $120,465 and $119,392. Interest payable to related parties at July 31,
     2003, is $141,435.

8.   OTHER RELATED PARTY TRANSACTIONS:

     ADVANCES RECEIVABLE:

     During the year ended July 31, 2002, the Company advanced $341,907 to Vic
     Hockey Company, Inc., a company affiliated through common control, located
     in Quebec, Canada ("Vic"). Approximately $209,000 of these advances were
     collateralized by second positions of certain machinery and equipment. At
     July 31, 2003, the Company determined that it was unlikely it would receive
     any proceeds from these advances, and as a result, $341,907 is included in
     the impairment of related party receivables for the year ended July 31,
     2003.

     At July 31, 2002, the Company had unsecured advances receivable of $69,500
     from VP Sports, Inc. ("VP Sports"), a company affiliated through common
     ownership. During the year ended July 31, 2003, the Company advanced an
     additional $16,400 to VP Sports and its subsidiary, Victoria Precision,
     Inc. ("Victoria Precision"), located in Quebec, Canada. The Company
     received $94,250 from VP Sports and its subsidiary in 2003. At July 31,
     2003, the Company has a payable to VP Sports of $8,350, which is included
     in related party payables and accruals.

     STOCK SUBSCRIPTIONS AND RELATED PARTY RECEIVABLE:

     In April 2002, the Company issued 5,429,290 shares of its common stock in
     exchange for subscription and related party receivables from VP Sports. At
     July 31, 2003, the Company analyzed the ability to collect the receivable
     from VP Sports and determined that it was necessary to allow for the entire
     amount. Accordingly, $582,929 has been recorded as an impairment of related
     party receivables in the financial statements.

                                      F-19
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

8.   OTHER RELATED PARTY TRANSACTIONS (CONTINUED):

     INVENTORY PURCHASES:

     During the years ended July 31, 2003 and 2002, the Company purchased $3,054
     and $59,500 of inventory materials from Victoria Precision. At July 31,
     2003, the Company has an unsecured, non-interest bearing payable to
     Victoria Precision of $5,112.

     MANAGEMENT AGREEMENT:

     The Company has a month-to-month management agreement with VP Sports for
     executive management and administrative services. During the years ended
     July 31, 2003 and 2002, the Company incurred management fees of $241,391
     and $191,200. At July 31, 2003, management fees payable are $104,229.

9.   COMMITMENTS AND CONTINGENCIES:

     LEASES:

     The Company leases its Canadian manufacturing and office facilities under a
     non-cancellable operating lease, which expires in January 2007. This lease
     provides for an option to renew for an additional five-year term In
     November 2003, the Company negotiated with the lessor for an early
     termination of the lease. Under the terms of the termination agreement, the
     Company is to occupy the premises and pay rent through January 31, 2004, at
     which time the Company will vacate the premises. The Company will be
     responsible to pay an additional three months rent, as well as attorney
     costs, the total of which will be approximately $125,000 CAD (US$89,237).
     After January 31, 2004 the Company plans to share office space with a
     related Montreal company.

     The Company leases its U.S. sales and distribution facility under an
     operating lease that expired in February 2003 with an option to renew for a
     two-year period. The lease was cancelled in conjunction with a Distribution
     Agreement with the Company's exclusive U.S. distributor. The Company has no
     future obligations regarding these premises.

     Torpedo Sports' executive office space is leased through March 2004, with a
     monthly rental of $3,064.


                                      F-20
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

9.   COMMITMENTS AND CONTINGENCIES (CONTINUED):

     CONSULTING AGREEMENTS:

     In May 2002, the Company entered into a three-month agreement for marketing
     and promotional services, with options to renew the agreement for up to one
     year. For the first three months of service, the Company issued 10,000
     shares of common stock valued at $1.50 per share, the market price of the
     common stock on the date of issuance. In August 2002, the Company extended
     the agreement to December 31, 2002, and issued 10,000 shares of common
     stock valued at $1.10 per share (the market price of the common stock on
     the date of the issuance). The Company recorded $11,000 as general and
     administrative expenses. In April 2003 the Company extended the agreement
     for an additional three months and issued 10,000 shares of common stock
     valued at $.20 per share (the market price of the common stock on the date
     of the issuance). The Company recorded $2,000 as general and administrative
     expenses.

     In September 2002, the Company entered into a one-year business consulting
     and financial advisory agreement, which provides for services to be
     provided in phases. Compensation under the agreement is based in part on
     the completion of stated objectives. Upon exercise of the agreement, the
     Company granted a warrant to the consultant to purchase up to 1,000,000
     shares of common stock at $1.25 per share, the market price of the
     Company's common stock on the date of issuance. This warrant is exercisable
     through September 2004, and was valued at approximately $550,000 utilizing
     the Black Scholes option pricing model. The agreement also provides for a
     financing commission to be paid in cash, equal to 10% of the aggregate
     amount of cash received by the Company in a financing agreement resulting
     from the direct efforts of the consultant. The Company has amortized the
     $550,000 as of July 31, 2003 as the stated objectives have been
     substantially completed.

                                      F-21
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

9.   COMMITMENTS AND CONTINGENCIES (CONTINUED):

     LITIGATION:

     The Company is involved in various claims and legal actions arising in the
     course of its business acquisitions. Due to the Company's inability to meet
     its obligations timely, certain creditors have initiated legal action
     against the Company, some of which have received judgments for payment.
     Management believes that it has adequately accrued for these matters at
     July 31, 2003.

10.  INCOME TAXES:

     At July 31, 2003, the Company's net deferred tax assets consist of the
     following:

     Long-term deferred tax assets:
         Net operating loss carry forwards - Canadian               $   580,000
         Net operating loss carry forwards - U.S.                       400,000
         Equipment                                                       70,000
         Allowances for doubtful receivables                            255,000
                                                                    -----------
                                                                      1,305,000
         Valuation allowance                                         (1,305,000)
                                                                    -----------
       Net deferred tax assets                                      $         -
                                                                    ===========

     The following table reconciles the difference between the U.S statutory tax
     rate and the effective tax rate:

                                                         2003           2002
                                                      -----------   -----------
     Statutory tax rate                                      (34)%          34%
     Effect of Canadian tax rate                              (3)%         (3)%
     Change in valuation allowance                            43%        (146)%
                                                      -----------   -----------
                                                               6%        (115)%
                                                      ===========   ===========

     At July 31, 2003, the Company has approximately $1,865,000 of Canadian and
     approximately $1,000,000 of U.S. net operating loss carryforwards (NOL's),
     which may be used to offset respective future Canadian or US taxable
     income, if any. Canadian NOL's expire between 2007 and 2010, and US NOL's
     expire in 2023.

                                      F-22
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

11.  SHAREHOLDERS' (DEFICIT):

     ISSUANCES OF COMMON STOCK PRIOR TO THE MAY 20, 2002, MERGER:

     In April 2002, the Company issued to the shareholders of VP Sports, Inc.
     ("VP Sports") warrants to purchase 8,000,000 shares of Torpedo Sports
     common stock. The shareholders of VP Sports exercised these warrants in
     exchange for the forgiveness of liabilities due them by VP Sports of
     $542,929. As a result, the Company issued 5,429,290 shares and had recorded
     a subscription and related party receivable from VP Sports for $542,929.
     Also included in subscription and related party receivable was $64,056 due
     from employees and other related parties in exchange for the issuance of
     640,562 shares of common stock. In July 2003, the Company recorded an
     impairment of $582,929 of related party receivables, resulting in a
     remaining subscription receivable of $24,056.

     ISSUANCES OF COMMON STOCK SUBSEQUENT TO MAY 20, 2002:

     In June 2002, the Company issued 35,000 shares of common stock for legal
     services. The shares were valued at $1.50 per share (the market price of
     the common stock on the date of issuance), and $52,500 was recorded to
     general and administrative expense. In June 2002, the Company also issued
     10,000 shares of common stock to a consultant for services. The shares were
     valued at $1.75 per share (the market value of the common stock at the date
     of the agreement), and $17,500 was recorded to general and administrative
     expense.

     In July 2002, the Company issued 18,000 shares of common stock upon the
     exercise of stock options. The Company received $4,680 in proceeds from the
     exercise. During the year ended July 31, 2003, the Company issued 95,000
     shares of common stock upon the exercise of stock options. The Company
     received total proceeds of $24,700.

     In July 2003, the Company reduced the exercise price of warrants to
     purchase 1,000,000 shares of the Company's common stock. The exercise price
     was reduced from $1.25 to $0.20 in order to induce the holder(s) to
     exercise their warrants and raise working capital for the Company.

     In July 2003, the Board of Directors of the Company approved a private
     placement of up to 3,000,000 shares of the Company's common stock at $.10
     per share. Under this private placement the Company issued 1,100,000 shares
     of its common stock and received proceeds of $110,000 in July 2003. Through
     November 2003, the Company has issued an additional 1,543,000 shares for
     proceeds of $154,300.

                                      F-23
<PAGE>

TORPEDO SPORTS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 31, 2003 AND 2002
--------------------------------------------------------------------------------

11.  SHAREHOLDERS' (DEFICIT) (CONTINUED):

     STOCK OPTIONS:

     In March 2002, the Company adopted the 2002 Stock Option Plan, covering up
     to 1,000,000 shares of the Company's common stock. In April 2002, the
     Company granted options to purchase 1,000,000 shares of common stock to
     officers, directors and employees, exercisable at $0.26 per share, which
     represented the market price of the Company's common stock at the date of
     the grant.

     Options to purchase 18,000 and 95,000 shares of common stock were exercised
     during the years ended July 31, 2002 and 2003, respectively. Options to
     purchase 887,000 shares are outstanding and exercisable at July 31, 2003.
     The options expire in March 2007.

     In July 2003, the Company adopted the 2003 Stock Option Plan covering up to
     1,000,000 shares of the Company's common stock.

     WARRANTS:

     In July 2003, the Company issued warrants to purchase 500,000 shares of the
     Company's common stock at $0.10 per share. The warrants were issued to
     third parties who provided consulting services to the Company. The warrants
     are exercisable through July 1, 2008, and were valued at approximately
     $75,000 utilizing the Black Scholes option pricing model. The Company has
     recorded $75,000 to general administration and expense in 2003.

12.  FOREIGN AND DOMESTIC OPERATIONS:

     Long-lived assets of $1,028,933 as of July 31, 2003 are located in Canada.
     Operating results the years ended July 31, 2003 and 2002, by geographic
     area, are presented in the table below. There were no significant amounts
     of transfers between geographic areas.

                                            2003                   2002
                                      ----------------      ------------------
         Revenues (a):
                United States         $      3,485,564      $        6,186,978
                Canada                       2,589,985               2,022,422
                                      ----------------      ------------------

                                      $      6,075,549      $        8,209,400
                                      ================      ==================

         (a) Revenues are attributed to countries based on location of customer.

                                      F-24