<PAGE>

                            UNITED STATES OF AMERICA

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934 for the Fiscal year ended December 31, 2000.

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
     the transition period from __________  to ___________

                        Commission file number: 333-29295

                               RETROSPETTIVA, INC.
                 (Name of small business issuer in its charter)


                California                                  95-4298051
     (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                     Identification No.)


                           8825 West Olympic Boulevard
                             Beverly Hills, CA 90211
                    (Address of principal executive offices)


                                 (310) 657-1745
                           (Issuer's telephone number)


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


         Securities registered under Section 12(g) of the Exchange Act:

     NO PAR VALUE COMMON STOCK    REDEEMABLE COMMON STOCK PURCHASE WARRANTS
     -------------------------    -----------------------------------------
          Title of Class                          Title of Class

Check whether the issue (1) filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act 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 [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year. $17,438,305.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. As of April 11, 2001, 3,479,916 shares of the Registrant's no par value
common stock were outstanding and the aggregate market value of the shares held
by non-affiliates based on that days market close of $0.10 was approximately
$347,992.

     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes [ ] No [ ]

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

                                       1
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                          PAGE
                                                                                ----
<S>                                                                             <C>
     Item 1   Description of Business                                             3

     Item 2   Description of Property                                             7

     Item 3   Legal Proceedings                                                   8

     Item 4   Submission of Matters to a Vote of Security Holders                 8

PART II

     Item 5   Market for Common Equity and Related Stockholder Matters            8

     Item 6   Management's Discussion and Analysis or Plan of Operation           9

     Item 7   Financial Statements                                               13

     Item 8   Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure                                           13


PART III

     Item  9  Directors, Executive Officers, Promoters and Control Persons;      13
              Compliance with section 16(a) of the exchange act

     Item 10  Executive Compensation                                             14

     Item 11  Security Ownership of Certain Beneficial Owners and Management     16

     Item 12  Certain Relationships                                              17


PART IV

     Item 13  Exhibits and Reports on Form 8-K                                   18

SIGNATURES                                                                       19

</TABLE>


                                       2
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS

INTRODUCTION

The Company was organized in November 1990 initially to manufacture and import
textile products from Italy including finished garments and fabrics. By 1993,
the Company was purchasing fabrics from firms and factories around the world and
contracting for the manufacture of finished garments in Macedonia for
importation into the United States.

The Company contracts for the manufacture of a variety of garments, primarily
basic women's sportswear which includes suits, skirts, blouses, blazers, pants,
shorts, vests and dresses, using assorted fabrics including rayons, linens,
cotton and wool. The Company arranges for the manufacture of garments for
customers under private labels selected by its customers. It markets its
products exclusively in the United States directly to large wholesalers,
national retailers and buying organizations, and directly to women's chain
clothing stores, boutiques and catalogues.

Much of the Company's garments are sold on a "package" basis pursuant to
which the Company markets at fixed prices finished garments to the customer's
specifications and quantity requirements, arranges for production of the
garments and delivers the garments directly to the customer at the port of
entry. In its marketing, the Company emphasizes these package arrangements
and what it believes to be the better quality and lower prices of garments
produced by skilled Macedonian workers as compared to lower paid workers in
certain other regions.

As a package provider, the Company sources and purchases fabrics and trims,
arranges for cutting and sewing, and coordinates any other services required to
provide a completed garment. The Company manufactures its finished products only
upon receipt of purchase orders from its wholesale and retail customers, which
the Company believes minimizes the marketing and fashion risk generally
associated with the apparel industry. Fabrics and trims are purchased from
suppliers in China, India, Russia, Romania, Italy and the United States. After
dying the fabric, if necessary, the fabric and trim are shipped to factories
selected by the Company (primarily located in Macedonia) where they are
manufactured into completed garments under the Company's management and quality
control guidance. The finished products are then shipped directly to New York
City where the Company's customers claim the goods either at the port in New
York City or at a consolidating warehouse in Astoria, New York.

Since early 2001, when hostilities commenced in Macedonia, the Company has
experienced a significant reduction in new purchase orders for its products.
This reduction in new purchase orders, together with a substantial loss incurred
by the Company for the year ended December 31, 2000, has required the Company to
reduce its operations and overhead expenses. Such overhead reductions have
included the layoff of nine employees and the reduction of general and
administrative expenses in the amount of approximately $500,000 on an annualized
basis.

     The Company is in default on its credit facility with the Imperial Bank.
The current amount outstanding on the credit facility is $1,200,000 and the
authorized maximum amount of the credit facility is $3,300,000. The Company
anticipates repaying the remaining amount due under the credit facility from its
existing cash flow, during the second quarter of 2001.

     Should hostilities in Macedonia continue, with a corresponding decrease in
new purchase orders, the Company expects that it will be required to further
reduce or even discontinue its operations.

                                       3
<PAGE>

STRATEGY

The Company will continue to offer better quality, popular priced women's
apparel in a wide variety of styles, patterns, colors and fabrics. The Company's
business strategy is as follows:

MAINTAIN FOCUS ON THE COMPANY'S CORE BUSINESS. The Company plans to continue to
contract for the manufacture and market basic women's sportswear. This strategy
emphasizes concentrating on the `cut-to-order' business where the customer
provides the specifications and design of the garments which have historically
been less fashion oriented. The Company believes that by avoiding the production
of trendier fashion apparel ordered by customers it will be able to reduce costs
commonly associated in the industry with discounts, returns and allowances.
Consistent with this strategy, the Company will focus on the sale of private
label apparel using the brand names ordered by its customers. The Company,
however, will continue to evaluate the marketplace in an effort to assess its
current market strategies and manage those strategies to remain responsive to
market demand.

INCREASE PENETRATION OF CURRENT MARKETS. The Company seeks to further penetrate
its current markets by offering lower product prices while maintaining a high
degree of quality control. Lower transportation costs compared to other parts of
the world (e.g.; the Pacific Rim) offer a competitive advantage.

Many countries have quotas that can apply to different types of manufactured
fabrics, trim and finished goods. These quotas are imposed on goods and
components imported to and exported from those countries and contribute to the
overall cost of the apparel imported to and exported from those countries. In
comparison, Macedonia has a quota imposed on only one category of finished goods
which the Company is currently not subject to and contributes to the Company's
ability to offer competitive prices

In the event that Macedonia or the United States enacts quota restrictions and
charges to export or import apparel, then the costs associated with that quota
could increase the unit cost of the goods exported from Macedonia and imported
into the United States.

EXPAND DISTRIBUTION CHANNELS AND PRODUCT LINES. The Company will seek to expand
to new geographic markets within the United States for its existing products
while expanding its existing product lines within the basic women's sportswear
market and exploring possibilities to enter new markets.

PRODUCTS

The Company offers to its customers a variety of men's and women's sportswear.
Its apparel includes many styles manufactured in rayon and linen mixes, linen
and cotton mixes, all cotton, wool and other materials. The Company's garments
are moderately priced ranging at retail from $12.99 to $49.99 and are marketed
primarily to working women.

MARKETING

The Company arranges for the manufacture of garments for customers under private
labels selected by its customers. It markets its products exclusively in the
United States directly to large wholesalers, directly and indirectly to national
retailers and buying organizations, directly to women's chain clothing stores
and catalogues and to retail stores.

                                       4
<PAGE>

Marketing is conducted through in-house salespersons that call directly upon
customers, as well as outside sales associates, through customer referrals and
through the efforts of the Company's executive officers. The Company also
maintains a sales office in New York.

The Company's customers include United States retailers and wholesalers as
described above. The Company's customers for the year ended December 31, 2000
included three that accounted for more than 10% of sales (Customer A at 11%,
Customer C 24% and Customer D at 10% or a total of 45%). A loss of any of these
customers would have a material adverse effect on the Company's results of
operations.

MANUFACTURING AND SUPPLIERS

The Company arranges for the manufacture of garments based on the fabric,
design, styling and quality specifications of individual customer orders. The
Company does not own or operate any manufacturing facilities. It obtains its
products from manufacturers in Macedonia who contract with the Company to
manufacture specific items of apparel in predetermined amounts and for agreed
upon unit prices. The Company contracts for the purchase of fabric and the
manufacture and sewing of its products with Yucan Trade International ("Yucan")
a manufacturing agent.

The Company believes that outsourcing allows it to enhance production
flexibility and capacity while reducing capital expenditures and avoiding the
costs of managing a large production work force. In addition, the Company
believes that outsourcing allows the Company to utilize the expertise of its
suppliers and manufacturers in fabric selection and manufacturing processes. The
Company is currently assessing the viability of expanding and geographically
diversifying its manufacturing resources in regions other than Macedonia,
especially in light of the hostilities in Macedonia, which has significantly
adversely affected the Company.

The Company arranges for the production of its products based on orders
received. The Company obtains all of its customers' orders prior to placement of
its contract manufacturing orders. The Company's customer orders may change with
respect to colors, sizes, allotments or assortments prior to commencement of
production of the garments, and any costs associated with such a change will be
borne by the Company. Accordingly, there is some risk associated with the
Company's practice of allowing change orders after fabric is purchased. However,
costs associated with change orders have not been material in the past and the
Company does not believe that they will be material in the future.

The Company purchases fabric and trim from the manufacturers of these garment
components. These manufacturers ship their products directly to the Company's
manufacturing agent or to fabric dyers who in turn ship the fabric per the
instructions of the agent. The Company does not have written contracts with any
of its fabric or trim suppliers or contractors, however, the Company believes
that its relationships with its suppliers and contractors are good.

The Company has retained Yucan as its manufacturing agent in Macedonia. Yucan is
responsible for selecting the factories that will manufacture the Company's
finished goods, to oversee this production and to warehouse and arrange for
shipping the finished goods to the Company in the United States. Yucan is paid a
fee that ranges from $0.15 to $0.50 per garment manufactured. Although Yucan is
currently responsible for the manufacture, warehousing and shipping of all of
the Company's finished goods, the Company believes that there are other
manufacturing agents in Macedonia which the Company could retain for the same
purpose on substantially similar terms. The Company does not have written
contracts with Yucan or any of its suppliers or contractors. Although the loss
of certain suppliers or contractors (including Yucan) could have a significant
material adverse effect on the Company's operating results, the Company believes
it would be able to replace such suppliers and contractors within a reasonable
amount of time if required to do so.

                                       5
<PAGE>

The Company delivers finished goods directly from its manufacturing agent to its
customers at the port of entry in New York City or at the Company's
consolidating warehouse in Astoria, New York or ships from the warehouse to the
customers' warehouses. Since the Company assumes the risk of loss when the
finished goods leave its manufacturer, the goods are insured until delivery is
made to the customer.

For the year ended December 31, 2000, Newbel Inc. ("Newbel") and Yucan accounted
for 23%, 34% respectively, of the Company's total fabric and finished goods
purchases.

QUALITY CONTROL

The Company's quality control program is designed to provide that all of the
Company's products meet the Company's and its customer's standards. The Company
maintains a staff of three quality control employees in the United States and
four such employees in Macedonia. The Company develops and inspects samples of
each product prior to production, establishes fittings based on the sample and
inspects sample fabric prior to cutting and several times during the production
process. The Company, Yucan and (in the case of private label products)
representatives of the Company's customers inspect final products prior to
shipment.

COMPETITION

The apparel industry is highly competitive and consists of numerous
manufacturers, importers and distributors. Many of the Company's competitors are
significantly larger, more diversified and have significantly greater financial,
distribution, marketing, name recognition and other resources than the Company.
The Company believes it has certain competitive advantages resulting from its
contractual relationships with Macedonian manufacturers. These advantages
include the availability in Macedonian factories of highly skilled workers at
relatively lower costs than in more economically developed regions. They also
include a lack of quotas and lower tariffs in the importation into the United
States of finished goods from Macedonia. Finally they also include lower
shipping costs as a result of the closer geographical proximity to the United
States of the Company's Macedonian contract manufacturers compared to
manufacturers in the Pacific Rim nations.

TRADE NAMES

The Company has developed two apparel trade names, "Magellan" and
"Retrospettiva" in connection with the marketing of its apparel. The Company
regards its trade names as assets although no trade name registrations have been
filed in the United States or in foreign countries. While the use of a trade
name may provide certain common law rights of further usage, there can be no
assurance the Company could prohibit the use of its trade names by others. The
Company currently does not actively use either trade name since its current
business is private label utilizing the trade names ordered by its customers.

CREDIT POLICY AND CREDIT CONTROL

Prior to accepting a purchase order and purchasing fabric and components, the
Company investigates the customer's credit history through traditional credit
reporting services, through asset-based lenders of the customer and through
other contract partners of the customer. The Company sometimes obtains a deposit
or advance payment before purchasing fabric or commencing garment production for
the customer.

The Company accepts commercial letters of credit for the purchase of raw
materials. This is similar to a progress payment from the customer whereby they
pay for the cost of the materials used in the manufacture of their order. The
Company also accepts arrangements whereby a customer will purchase directly the
raw materials and or trim used in the production of their order.

                                       6
<PAGE>

The Company also accepts commercial letters of credits from customers covering
existing orders. When the order is shipped and all of the requirements of the
letter of credit are met, the Company presents the letter of credit for payment
by the customer's authorized bank. The Company also utilizes its own line of
credit facility to request commercial documentary letters of credit naming
suppliers as beneficiaries in an effort to obtain more favorable credit terms.
The line of credit facility enables the Company to receive extended credit terms
while not drawing on its line of credit until the supplier presents the letter
of credit for payment to the Company's bank.

The Company has a factoring agreement with a New York based Factoring Company to
factor its accounts receivable. The Company receives up to 80% of the
receivables at the time of factoring. This is a non-recourse factoring agreement
and the Company assigns the responsibility of the factored receivables to the
Factor, except in cases of charge backs due to quality and shipping.

GOVERNMENT REGULATION

The Company's import operations are subject to constraints imposed by bilateral
textile agreements between the United States and a number of foreign countries.
These agreements, which have been negotiated bilaterally either under the
framework established by the Arrangement Regarding International Trade in
Textiles, known as the Multifiber Agreement, or other applicable statutes,
impose quotas on the amounts and types of merchandise which may be imported into
the United States from these countries. However, apparel imported from Macedonia
is not subject to such quotas. These agreements also allow the signatories to
adjust the quantity of imports for categories of merchandise that, under the
terms of the agreements, are not currently subject to specific limits. The
Company's imported products are also subject to United States customs' duties
that may comprise a material portion of the cost of the merchandise.

Apparel products are subject to regulation by the Federal Trade Commission in
the United States. Regulations relate principally to the labeling of the
Company's products. The Company believes that it is in substantial compliance
with such regulations, as well as applicable federal, state, local and foreign
rules and regulations governing the discharge of materials hazardous to the
environment. There are no significant capital expenditures for environmental
control matters either estimated in the current year or expected in the near
future.

EMPLOYEES

As of December 31, 2000, the Company employed 17 individuals in Los Angeles,
California, New York, New York and Macedonia including but not limited to its
four executive officers, three inventory management and order control personnel,
three administrative personnel and four quality control workers.

ITEM 2. DESCRIPTION OF PROPERTY

The Company leases approximately 2,200 square feet for its executive and
administrative offices at 8825 West Olympic Boulevard, Beverly Hills, California
90211 at $2,750 per month pursuant to a lease expiring April 30, 2005. At the
present time, the Company's current facility provides adequate space to conduct
its operations.

The Company subleases 2,000 square feet of office and showroom facilities at
1359 Broadway, Suite 2102, New York, New York 10018, on a month to month
basis at $2,575 per month. The Company subleases a New York apartment from
the majority stockholder on a month to month basis for use by its employees
traveling from Los Angeles, California and Macedonia to New York City.

                                       7
<PAGE>

The Company leases approximately 16,500 square feet for its New York warehouse
at 4-05 26th Avenue, Astoria, New York at $8,250 per month.

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to litigation and claims that arise in the normal course
of business. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the financial position,
capital resources, liquidity or results of operations of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS AND USE OF PROCEEDS

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the calendar year ended December 31, 2000.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKKHOLDER MATTERS

MARKET INFORMATION

The Company's common stock has been traded on the OTC BB under the symbol
"RTRO.OB" since January 24, 2001. On April 10, 2001, the closing bid price for
the Company's common stock was $.098 per share. The following table sets forth
for the quarters indicated, the range of high and low bid prices of the
Company's common stock as reported by NASDAQ.

<TABLE>
<CAPTION>
By Quarter Ended:                                 Common Stock
                                                High       Low
                                              --------   --------
<S>                                           <C>        <C>
Calendar 1999
            March 31, 1999 .............      $   4.88   $   3.06
            June 30, 1999 ..............      $   1.63   $   1.38
            September 30, 1999 .........      $   1.94   $   1.50
            December 31, 1999 ..........      $   1.38   $   1.13
 Calendar 2000
            March 31, 2000 .............      $   1.56   $   1.50
            June 30, 2000 ..............      $   1.50   $   0.69
            September 2000 .............      $   1.22   $   0.63
            December 2000 ..............      $   0.81   $   0.13
Calendar 2001
            March 2001 .................      $   0.31   $   0.09
</TABLE>

The above quotations were reported by NASDAQ and OTC BB and reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not necessarily
represent actual transactions.

HOLDERS

The approximate number of the Company's record and beneficial stockholders as of
March 31, 2001 was 850.

                                       8
<PAGE>

DIVIDENDS

The Company has not paid any dividends on its common stock since inception and
does not plan to pay dividends in the foreseeable future. The Company
anticipates that any future earnings will be retained to finance growth.

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

The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and is incorporating this
statement into this report in order to do so. This report includes
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended which represent the Company's expectations of beliefs concerning
future events that involve risks and uncertainties.

All statements (other than statements of historical facts) included in the
Company's SEC filings, including its Proxy Statements and this Report may
include forward-looking statements that are subject to risks and uncertainty
that may cause actual results to differ materially.

Such forward-looking statements that may be contained in this Report could
include in particular statements concerning business back-logs, operating
efficiencies and capacities, capital spending, and other expenses. Other factors
that could also cause actual results to differ materially include dependence
upon unaffiliated manufacturers and fabric suppliers, dependence on certain
customers, foreign operations, competition, risks associated with significant
growth, uncertainties in the apparel industry, general economic conditions,
seasonality, political instability, inflation and monetary fluctuations, import
and other charges or taxes, changes in laws and regulations, other activities of
governments, agencies and similar organizations, trade restrictions or
prohibitions, concentration of accounts receivable, possible fluctuations in
operating results, effects of changes within the Company's organization or in
compensation and benefit plans, the amount, type and cost of the Company's
financing and any changes to that financing, the amount, and rate of growth in,
the Company's selling, general and administrative expenses, changes in
accounting policies and practices and the application of such policies and
practices and nationalizations and unstable governments and legal systems and
intergovernmental disputes. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. Important
factors that could cause actual results to differ materially from the Company's
expectations are disclosed in this Report to the extent that the Company is
currently aware of them. There may be additional factors that could arise that
are not listed above that could also result in having a material adverse impact
on the Company's liquidity, capital resources and results of operations.

OVERVIEW

The Company contracts for the manufacture of a variety of garments, primarily
basic women's sportswear which includes skirts, blouses, blazers, pants, shorts,
vests and dresses, using assorted fabrics including rayon, linens, cotton and
wool. The Company arranges for the manufacture of garments for customers under
private labels selected by its customers. It markets its products exclusively in
the United States directly to large wholesalers, directly and indirectly to
national retailers and buying organizations, and directly to women's chain
clothing stores and catalogues.

                                       9
<PAGE>

Most of the Company's garments are sold on a "package" basis pursuant to which
the Company markets at fixed prices finished garments to the customer's
specifications and quantity requirements, arranges for production of the
garments and delivers the garments directly to the customer. In its marketing,
the Company emphasizes these package arrangements and what it believes to be the
better quality and lower prices of garments produced by skilled Macedonian
workers as compared to lower paid workers in certain other regions. See Item 1.

As a package provider, the Company sources and purchases fabrics and trims,
arranges for cutting and sewing, and coordinates any other services required to
provide a completed garment. Since the Company manufactures its finished
products only upon receipt of purchase orders from its wholesale and retail
customers, it therefore does not maintain an inventory of finished products. The
Company believes that in this way it minimizes the marketing and fashion risk
generally associated with the apparel industry.

Fabrics and trims are purchased from suppliers in China, India, Russia, Romania,
Italy and the United States. After dying the fabric, if necessary, the fabric
and trim are shipped to factories selected by the Company (primarily located in
Macedonia) where they are manufactured into completed garments under the
Company's management and quality control guidance. The finished products are
then shipped directly to New York City where the Company's customers claim the
goods either at the port in New York City or at a consolidating warehouse in
Astoria, New York or the Company arranges for direct shipping of goods to
retailers.

The following is a discussion of the financial condition and results of
operations of the Company for the years ended December 31, 2000, 1999 and 1998.
This discussion should be read in conjunction with the Company's financial
statements, the notes related thereto, and the other financial data included
elsewhere in this filing.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,

NOTE: ALL FIGURES IN PERCENTAGES
EXCEPT EARNINGS PER SHARE                 2000           1999          1998
                                          ----           ----          ----
<S>                                   <C>            <C>           <C>
Net sales                                 100%           100%          100.0%
Cost of goods sold                         96.87          86.7          87.1
Gross profit                                3.13          13.3          12.9
Selling, general and admin. Exp            21.23          12.1           7.6
Interest expense                            2.38           1.1           0.39
Net income (Loss)                         (17.66)          0.5           3.0
Earnings (loss) per share               $  (0.95)      $   0.03      $   0.28
</TABLE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000, AND 1999 (THE "2000
YEAR" AND "1999 YEAR", RESPECTIVELY.)

                                       10
<PAGE>

SALES

Sales for the 2000 Year were $17,438,305 which represented a decrease of
$2,769,155 or 13.71% over the 1999 Year net sales of $20,207,460. The decrease
in sales was primarily attributable to the decrease in the volume of business
ordered by existing customers and new customers.

GROSS PROFIT

Gross profit was $546,807 for the 2000 Year, a decrease of $2,138,556 from
$2,685,363 for the 1999 Year. The gross profit percentage was 3.13% in the 2000
Year, a decrease from 13.3% in the 1999 Year. The decrease in gross profit was
primarily attributable to writing off of obsolete and slow moving inventory.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ("SG&A") expenses were $3,701,688 or 21.23%
of sales for the 2000 Year, an increase of $1,256,847 from $2,444,841 or 6.2% of
sales for the 1999 Year. The increase in expenses was attributable to the
increase in write offs of vendor credits of approximately $403,000, bad debt
expenses of approximately $859,000, trade show expenses, promotion, utilities,
professional fees, outside help, insurance and factor charges.

INTEREST EXPENSE

Interest expense for the 2000 Year $413,542 an increase of $176,824 compared to
$236,718 for the 1999 Year. Interest expense was primarily attributable to the
Company's utilization of its line of credit and factoring arrangement.

PROVISION (BENEFIT) FOR INCOME TAXES

The Company anticipates a tax (benefit) of $836,000 for the 2000 year verses
$46,000 provision for taxes in year 1999. The marginal tax rate experience of
the Company has been approximately 40%.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1999, AND 1998 (THE "1999
YEAR" AND "1998 YEAR", RESPECTIVELY.)

SALES

Sales for the 1999 Year were $20,207,460 which represented a decrease of
$7,327,076 or 26.6% over the 1998 Year net sales of $27,534,536. The decrease in
sales was primarily attributable to the decrease in the volume of business
ordered by existing customers and new customers. This was in part attributed to
the out break of the conflict in the Balkans which had an adverse effect on the
Company's second quarter sales.

GROSS PROFIT

Gross profit was $2,685,363 for the 1999 Year, a decrease of $857,267 from
$3,542,630 for the 1998 Year. The gross profit percentage was 13.3% in the 1999
Year, an increase from 12.9% in the 1998 Year. The decrease in gross profit was
primarily attributable to decrease in gross sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ("SG&A") expenses were $2,444,841 or 12.1%
of sales for the 1999 Year, an increase of $344,957 from $2,099,884 or 7.6% of
sales for the 1998 Year. The

                                       11
<PAGE>

increase in expenses was attributable to the increase in commission expenses,
trade show expenses, printing, license fees, office salaries, officer salaries,
bank charges and factor charges.

INTEREST EXPENSE

Interest expense for the 1999 Year was $236,718 an increase of $131,278 compared
to $105,440 for the 1998 Year. Interest expense was primarily attributable to
the Company's utilization of its line of credit and factoring arrangement.

PROVISION FOR INCOME TAXES

The provision for income taxes was $46,000 and $629,363 for the 1999 and 1998
Years, respectively. The marginal tax rate experience of the Company has been
approximately 40%.

LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY

The Company has 575,000 warrants outstanding with an exercise price of $7.50 per
warrant expiring September 23, 2002. The Company has 50,000 underwriter warrants
outstanding with an exercise price of $14.40 per unit. Each unit consists of two
shares of the Company's common stock and one warrant as described above. The
Company does not know whether the warrants will be exercised in 2000. Without
exercise of those warrants, the Company may need to limit its growth in order to
more efficiently manage its available funds and funds generated by operations.

The Company is utilizing a $3.3 million line of credit and its credit facility
arrangement with a New York factoring company. At April 11, 2001 the Company was
not in compliance with the covenants of the loan and expects to pay off the loan
during the second quarter of 2001.

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

Operating activities provided net cash of $23,023. Cash flows provided by
operating activities were primarily attributable to decreased purchases of raw
materials, trim and finished goods required to support the Company's
corresponding decrease in customer orders, decreases in accounts payable and
increases in income taxes receivable for net operating loss carrybacks.

CASH FLOWS USED FOR INVESTING ACTIVITIES

The Company's cash flow used by investing activities totaled $246,370. Cash
flows used by investing activities were primarily attributable to the purchase
of equipment and investment in a certificate of deposit as collateral for the
Company's line of credit.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash flows from financing activities totaled $163,559. Cash flows from financing
activities were primarily attributable to the Company's use of its line of
credit.

                                       12
<PAGE>

CAPITAL RESOURCES

Since its formation, the Company has financed its operations and met its capital
requirements primarily through its public offering, cash flows from operations,
customer advances, exercise of Stock Options and credit facilities.

The initial use of IPO funds was to repay certain debt and to purchase raw
materials for working capital and the eventual purchase of wool manufacturing
equipment. The Company's primary need for cash is for working capital purposes.
As a result of the Macedonian hostilities, Company's revenue has been
significantly reduced, causing it to significantly cut all operations in order
to reduce overheads. If revenues does not improve the Company will be required
to further reduce or even discontinue its operations.

INFLATION AND CURRENCY VOLATILITY

The Company does not anticipate a significant increase in inflation in the
United States over the short-term. All of the Company's transactions worldwide
are conducted on a dollar-denominated basis which is intended to mitigate the
possible impact of volatile currencies that may arise as a result of global
corporations crowding emerging markets in search of growth.

SEASONALITY

The Company's revenues and operating results have exhibited some degree of
seasonality in past periods. Typically, the Company experiences its highest
sales in the first and fourth quarters and its lowest sales in the second and
third quarters. In 2000 the Company experienced its highest sales in the first
and third quarters.

ITEM 7. FINANCIAL STATEMENTS

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

None.

PART III

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

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, KEY EMPLOYEES AND CONTROL PERSONS

<TABLE>
<CAPTION>
                                                                                                         OFFICER OR
                                                                                                          DIRECTOR
        NAME                   AGE                               POSITION                                   SINCE
<S>                            <C>     <C>                                                               <C>
Borivoje Vukadinovic            42     Chief Executive Officer, President, Chairman of the Board (1)         1991
Hamid Vaghar                    36     Chief Financial Officer, Director                                     1998
Ivan Zogovic                    42     Chief Operations Officer, Director                                    1996
Mojgan Keywanfar                37     Controller, Director, Corporate Secretary                             1996
Sol Schalman                    76     Director (1). (2)                                                     1999
</TABLE>

                                       13
<PAGE>

DIRECTORS AND EXECUTIVE OFFICERS

BORIVOJE VUKADINOVIC has been a director and executive officer of the Company
since January 1991, and its Chief Executive Officer since January 1993. From
June 1990 to August 1993, he was Vice President and a principal stockholder of
Celtex ENT, a Los Angeles, California based company that established and
administered production of yarns and raw textiles in Yugoslavia, Turkey and
Macedonia. From May 1988 to June 1990, he was founder, owner and President of
DUTY OFF, Inc., a Los Angeles, California based company that produced young
men's apparel. He earned a Bachelor of Arts degree in Business from the
University of Banja Luka in Yugoslavia and a Bachelor of Arts degree in Art from
Bern University in Switzerland.

HAMID VAGHAR has served as Controller of Retrospettiva since the Company's
inception and was promoted to Chief Financial Officer in October 1998. From
March 1990 to January 1993, he was an accountant with EB Accounting a California
based accounting firm which conducted various accounting services for companies
in the garment district of Los Angeles. In January 1993 he became a partner in
Mid-West Consultants and continued his accounting career in that capacity until
1998. He earned a Bachelor degree in Natural Sciences and an MBA from University
of Poona, India.

IVAN B. ZOGOVIC has been employed by the Company as its Manager-Export/Import
since January 1994 and was appointed a director in May 1996. Mr. Zogovic is
responsible for the export and import of raw materials and finished goods
including customs clearing, scheduling and freight forwarding, between the
United States and the Company's contract manufacturers in Eastern Europe. He
earned a law degree from the University of Belgrade Law School and practiced law
in Yugoslavia from 1984 until 1992.

MOJGAN KEYWANFAR has been employed by the Company as its accounting manager
since February 1991 and was appointed a director in December 1996. Ms. Keywanfar
manages the Company's bookkeeping and management information systems. She holds
a B.A. degree in Economics from the California State University, Northridge.

SOL SCHALMAN became a director of the Company in September 1999. He received a
Bachelors degree in Business Administration with a major in accounting from UCLA
in 1940. He served in the US Army from 1941 to 1946 and was discharged in 1964
with rank of Captain in the Finance Dept. He was licensed as a Certified Public
Accountant in California in June 1948 and practiced as a sole practitioner ever
since. He was involved in Real Estate development from 1955 to 1962, owned and
operated the Beverly Comstock Hotel in LA from 1962 to 1976 and also is licensed
as a Certified Public Accountant in Nevada.

ITEM 10. EXECUTIVE COMPENSATION

The following table discloses all compensation awarded to, received by, and paid
to the Chief Executive Officer of the Company for the year ended December 31,
2000. No other executive officer's annual compensation exceeded $100,000 in
2000.

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                                              LONG TERM COMPENSATION
                                                                        ----------------------------------------------------------
                                      ANNUAL COMPENSATION                             AWARDS           PAYOUTS
                        ----------------------------------------------------------------------------------------------------------
          (a)             (b)       (c)         (d)           (e)             (f)             (g)        (h)              (j)
                                                                            RESTRICTED
  NAME AND PRINCIPAL                                      OTHER ANNUAL        STOCK        OPTIONS/     LTIP          ALL OTHER
       POSITION          YEAR    SALARY($)     BONUS($)   COMPENSATION($)   AWARD(S)($)     SARS(#)   PAYOUTS($)   COMPENSATION($)
----------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>      <C>          <C>        <C>              <C>             <C>        <C>          <C>
Borivoje Vukadinovic     2000     150,000        -0-           -0-             -0-             -0-        -0-           -0-
Chief executive officer  1999     150,000       12,500         -0-             -0-             -0-        -0-           -0-
                         1998      95,000        7,917         -0-             -0-           100,000      -0-           -0-
</TABLE>

1996 STOCK OPTION PLAN

In May 1996, the Company adopted a stock option plan for officers, directors,
employees and consultants (the "Plan") which provides for the grant of options
intended to qualify as "incentive stock options" and "nonqualified stock
options" within the meaning of Section 422 of the United States Internal Revenue
Code of 1986 (the "Code"). Incentive stock options are issuable only to eligible
officers and key employees of the Company, and nonqualified options may be
granted to officers, employees, directors and consultants.

The Plan is administered by at least three members of the Board, at least two of
whom are not executive officers or salaried employees of the Company. As of May
1996, the Company had reserved 1,786,930 shares of Common Stock for issuance
under the Plan. Under the Plan, the Board of Directors determines which
individuals shall receive options, the time period during which the options may
be partially or fully exercised, the number of shares of Common Stock that may
be purchased under each option and the option price. Each option granted under
the Plan shall be evidenced by a stock option agreement.

The per share exercise price of options granted under the Plan may not be less
than the fair market value of the Common Stock on the date the options are
granted. No person who owns, directly or indirectly, at the time of the granting
of an incentive stock option, more than 10% of the total combined voting power
of all classes of stock of the Company is eligible to receive incentive stock
options under the Plan unless the option price is at least 100% of the fair
market value of the Common Stock subject to the option on the date of grant.

No options may be transferred by an optionee other than by will or the laws of
descent and distribution, and during the lifetime of an optionee, the option may
only be exercisable by the optionee. Options under the Plan must be granted
within 10 years from the effective date of the Plan and the exercise date of an
option cannot be later than 10 years from the date of grant. Any options that
expire unexercised or that terminate upon an optionee's ceasing to be employed
by the Company become available once again for issuance. Shares issued upon
exercise of an option will rank equally with other shares then outstanding.

As of the date of this filing, 2,736,635 options have been granted under the
Plan to officers, directors, employees and consultants including 1,458,067
options granted to Mr. Vukadinovic, an aggregated 23,826 options granted to the
Company's one non-employee director and 1,087,962 options to other employees and
consultants. The per share exercise prices range from $0.63 to $6.00, which
prices represent at least the fair market value of Company's Common Stock on the
respective dates the options were granted, based on prior sales of the Company's
Common Stock. The table below sets forth the total number of options issued to
each executive officer and director of the Company and the exercise price. Mr.
Vukadinovic's options are exercisable until April 2006. The remaining options
expire at various times in 2006 and 2008. There was an amendment filed to the
1996 Stock Option Plan which provided for an additional 1,000,000 options.

                                       15
<PAGE>

In June 1997, the exercise prices of 1,191,290 of Mr. Vukadinovic's options were
re-priced from $2.83 per share to $6.75 per share.

In December 1998, the Board granted 600,000 options to Frank Trible. 85,000
options were vested immediately and the remaining 515,000 will vest in twelve
monthly installments of 42,916 options per month starting March 1999. Upon
termination of Mr. Trible's employment on February 15, 2000, 322,084 of the
unexercised options of his was cancelled. The Board also approved incentive
option grants to various officers, employees and consultants. The following
table sets forth all stock options granted to the Company's executive officers
and directors through December 31, 2000.

<TABLE>
<CAPTION>
                                                                  PERCENT OF
                                                                 TOTAL OPTIONS
                                             TOTAL NUMBER OF       GRANTED TO     EXERCISE     EXPIRATION
NAME OF EXECUTIVE OFFICER OR DIRECTOR        OPTIONS ISSUED        EMPLOYEES        PRICE         DATE
-------------------------------------        ----------------    -------------    --------     ----------
<S>                                          <C>                 <C>              <C>          <C>
Borivoje Vukadinovic                           1,458,067 (1)          53.3            (1)          (1)
Ivan Zogovic                                      81,712               3.0            (2)          (3)
Mojgan Keywanfar                                  81,712               3.0            (2)          (3)
Hamid Vaghar                                      50,000               1.8          $ 1.25         2008
Sol Schalman                                      23,826               0.9          $ 2.25         2004
                                             ------------           ------
Totals                                         1,695,317              62.0
</TABLE>

(1)  Consists of 166,777 options exercisable at $.63 per share, 1,191,290
     options exercisable at $6.00 per share and 100,000 options exercisable at
     $1.25 per share.

(2)  Number of options and exercise prices; consists of 35,739 options
     exercisable at $2.94 per share and 30,973 options exercisable at $1.68 per
     share and 15,000 options exercisable at $1.25 per share as to each
     individual.

(3)  Represents stock options to purchase up to 11,913 shares exercisable until
     May 2006, 30,973 shares exercisable until April 2006, 23,826 shares
     exercisable until April 2006 and 15,000 shares exercisable until December
     16, 2008.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the ownership
of the Company's common stock as of December 31, 2000, by (i) each person who is
known by the Company to own of record of beneficially more than 5% of the
Company's common stock, (ii) the Company's Chief Executive Officer and each of
the Company's directors and (iii) all directors and officers of the Company as a
group. The persons listed in the table have sole voting and investment powers
with respect to the shares of common stock and the address of each person is in
care of the Company at 8825 West Olympic Boulevard, Beverly Hills, California
90211.

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                       AMOUNT OF      PERCENT OF
             NAME                                      OWNERSHIP        CLASS
             ----                                      ---------      ----------
<S>                                                    <C>            <C>
Borivoje Vukadinovic(1)                                2,404,054        46.3%
Hamid Vaghar(2)                                           50,000         1.0%
Ivan Zogovic(3)                                           81,712         1.6%
Mojgan Keywanfar(3)                                       81,712         1.6%
S. William Yost(4)                                        23,826         0.4%
Donald E. Tormey(4)                                       23,826         0.4%
Sol Schalman(5)                                           23,826         0.4%
                                                       ---------
All officers and directors as a group (8 persons)      2,688,956
</TABLE>

(1)  Includes stock options to purchase up to 1,191,290 shares of common stock
     at $6.00 per share, 166,777 shares at $.63 per share exercisable until
     April 2006 and 100,000 shares at $1.25 until December 2008.

(2)  Includes stock options to purchase up to 50,000 shares of common stock at
     $1.25 until December 2008

(3)  Represents stock options to purchase up to 30,973 shares at $1.68 per share
     exercisable until April 2006, 11,913 shares at $2.94 per share exercisable
     until May 2006, 23,826 shares at $2.94 per share exercisable until April
     2006 and 15,000 share at $1.25 exercisable until December 2008 .

(4)  Represents stock options to purchase up to 23,826 shares of common stock at
     $2.94 per share exercisable until May 2006.

(5)  Represents stock options to purchase up to 23,826 shares of common stock at
     $2.25 per share exercisable until September 2004.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

At December 31, 2000, Mr. Vukadinovic was indebted to the Company in the amount
of $156,997 advanced by the Company under a credit facility granted to Mr.
Vukadinovic in the maximum amount of $350,000 and evidenced by a promissory
note. The promissory note is unsecured, bears no interest and is due on demand.
The sums advanced to Mr. Vukadinovic were primarily used by him to pay certain
medical and related expenses of a family member.

The Company used a portion of a consolidating warehouse in Astoria, New York
for short term storage and for consolidating services in connection with
finished goods imported from Macedonia pending pick up by the Company's
customer Positive Influence, Inc. ("PII"), the owner of the warehouse and the
provider of the consolidating services, is a non-affiliated former customer
of the Company which was indebted to the Company in the amount of $86,851 at
December 31, 1999 for goods previously purchased from the Company. The
Company was charged an average of approximately $10,000 per month for use of
the warehouse and for consolidating services provided by PII which amount is
deducted from the amount owed by PII to the Company. Consolidating services
involved accepting finished goods shipments, combining the goods into larger
quantities for pickup by, or delivery to, customers and storage of the goods
prior to customer acceptance. In December 2000, the Company deemed the
remaining balance uncollectible and wrote off approximately $75,000.

In July 1997, Mr. Vukadinovic personally guaranteed the Company's line of credit
with Merrill Lynch Business Financial Services Inc. in the amount of up to
$500,000. In November 1997, the line of credit was increased to a maximum of
$1,500,000 based on a formula. In July 1998 this line of credit was paid off and
Mr. Vukadinovic guaranteed the Company's line of credit with Imperial Bank in
the maximum amount of $3,500,000 based on a formula.

In December 1998 the Company executed a one year employment agreement with Mr.
Trible as its Vice President of Investor Relations providing for an annual
salary of $54,000 and the issuance of 600,000 stock options. See "1996 Stock
Option Plan". As of February 15, 2000, Mr.

                                       17
<PAGE>

Trible is no longer an employee of the Company and all 322,084 sock otions
not exercised by him have been forfeited. In addition Mr. Trible is indebted
to the Company in amount of $164,790 which is past due and is in litigation
to collect.

The Company believes that the transactions described above were fair, reasonable
and consistent with the terms of transactions that the Company could have
entered into with non-affiliated third parties. All future transactions with
affiliates will be approved by a majority of the Company's disinterested
directors.

PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Financial Statements and Schedules

(b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the last quarter of the year ended
     December 31, 2000.

(c)  Exhibit Listing

<TABLE>
<CAPTION>
EXHIBIT NO.    TITLE
-----------    -----
<S>            <C>
    1.01       Form of Underwriting Agreement(1)
    1.02       Form of Agreement Among Underwriters(1)
    1.03       Form of Selected Dealer Agreement(1)
    1.04       Form of Representatives' Warrant(1)
    1.05       Form of Amended Underwriting Agreement(1)
    3.01       Restated Articles of Incorporation of the Registrant(1)
    3.02       Bylaws of the Registrant(1)
    4.01       Form of Warrant(1)
    4.02       Form of Common Stock Certificate(1)
    5.01       Opinion of Gary A. Agron, regarding legality of the Units
               (includes Consent)(1)
   10.01       1996 Employee Stock Option Plan(1)
   10.02       Office Lease and Amendments thereto (Beverly Hills,
               California)(1)
   10.03       Employment Agreement with Mr. Vukadinovic, as amended(1)
   10.04       Employment Agreement with Mr. Silberman, as amended(1)
   10.05       Promissory Note issued by Mr. Vukadinovic(1)
   10.06       License Agreement with J.G. Hook, Inc(1)
   10.07       Consulting Agreement with Kevin Dieball(1)
   10.08       Factoring Agreement with Commodore Factors, Inc.(1)
   10.09       Agreement with David N(1)
   10.10       Agreement with Frank Trible(1)
   11.01       Computation of Earnings Per Share(1)
   11.02       Computation of Earnings Per Share(1)
   23.02       Consent of Gary A. Agron (See 5.01, above)(1)
   23.03       Consent of AJ. Robbins, P.C.(1)
   27.01       Financial Data Schedule(1)
   27.02       Financial Data Schedule(1)

</TABLE>

(1)  Previously filed

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report be signed on behalf by the undersigned, thereunto duly
authorized on April 11, 2001.

                                       18
<PAGE>

                                       RETROSPETTIVA, INC.


                                       By: /s/ Borivoje Vukadinovic
                                           ---------------------------
                                           Borivoje Vukadinovic
                                           President and Chief Executive Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated on
April 17, 2001.


         SIGNATURE                                     CAPACITY


/s/ Borivoje Vukadinovic
-----------------------------      Chairman of the Board of Directors,
Borivoje Vukadinovic               President, Chief Executive Officer


/s/ Hamid Vaghar
-----------------------------      Chief Financial Officer (Principal Financial
Hamid Vaghar                       Officer) and Director


/s/ Ivan Zogovic
-----------------------------      Chief Operations Officer and Director
Ivan Zogovic


/s/ Mojgan Keywanfar
-----------------------------      Controller and Director
Mojgan Keywanfar


/s/ Sol Schalman
-----------------------------      Director
Sol Schalman



                                       19
<PAGE>


                    INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                 Page
                                                                 ----
<S>                                                              <C>
Independent Auditors' Report                                      F-2

Consolidated Balance Sheet                                        F-3

Consolidated Statements of Operations                             F-5

Consolidated Statements of Changes in Stockholders' Equity        F-6

Consolidated Statements of Cash Flows                             F-7

Notes to Consolidated Financial Statements                        F-8

</TABLE>


                                       F-1
<PAGE>

                                 AJ. ROBBINS, PC
                  CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
                              3033 EAST 1ST AVENUE
                                    SUITE 201
                             DENVER, COLORADO 80206

                          INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS
RETROSPETTIVA, INC.
BEVERLY HILLS, CALIFORNIA

We have audited the accompanying consolidated balance sheet of Retrospettiva,
Inc. and subsidiary as of December 31, 2000 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for
each of the years in the two year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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
Retrospettiva, Inc. and subsidiary as of December 31, 2000 and the results of
its operations and its cash flows for each of the years in the two year
period then ended in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 2 to the consolidated financial statements, the Company has incurred a
significant operating loss in the current year which resulted in an
accumulated deficit. The geographic area where the Company manufactures its
products has experienced significant political unrest. The Company is also in
default of certain loan covenants. These conditions raise substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The consolidated
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

                                      AJ. ROBBINS, P.C.
                                              CERTIFIED PUBLIC ACCOUNTANTS
                                                           AND CONSULTANTS
DENVER, COLORADO
FEBRUARY 2, 2001

                                       F-2
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000


                                    ASSETS
<TABLE>

<S>                                                    <C>
CURRENT ASSETS:
     Cash                                              $         26,069
     Accounts receivable, net, pledged                          247,084
     Due from factor                                            164,471
     Note receivable, stockholder, pledged                      156,997
     Inventories, pledged                                     8,368,237
     Income taxes receivable                                    955,714
     Other current assets                                       112,537
                                                       ----------------

           Total Current Assets                              10,031,109
                                                       ----------------


PROPERTY AND EQUIPMENT, at cost, net, pledged                 1,030,565


RESTRICTED INVESTMENT, pledged                                  300,000


OTHER ASSETS                                                     18,845
                                                       ----------------

                                                       $     11,380,519
                                                       ================
</TABLE>


      SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       F-3
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                     CONSOLIDATED BALANCE SHEET (CONTINUED)
                                DECEMBER 31, 2000


                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>

<S>                                                   <C>
CURRENT LIABILITIES:
   Accounts payable, trade                            $      2,530,447
   Line of credit                                            2,274,376
   Accrued expenses                                            101,859
                                                      ----------------

         Total Current Liabilities                           4,906,682
                                                      ----------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock - authorized 1,000,000
     shares - none issued or outstanding                             -

   Common stock - authorized 15,000,000
     shares, no par value; 3,479,916 shares
     issued and outstanding                                  6,892,820

   Subscription receivable                                    (164,790)

   Additional paid-in capital                                  230,000

   Accumulated (deficit)                                      (484,193)
                                                      ----------------

         Total Stockholders' Equity                          6,473,837
                                                      ----------------

                                                      $     11,380,519
                                                      ================
</TABLE>


       SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       F-4
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                2000                1999
                                                         ------------------  ------------------
<S>                                                      <C>                 <C>
SALES                                                    $       17,438,305  $       20,207,460

COST OF SALES                                                    16,891,498          17,522,097
                                                         ------------------  ------------------

GROSS PROFIT                                                        546,807           2,685,363
                                                         ------------------  ------------------

OPERATING EXPENSES:
     Selling expenses                                               794,954             729,189
     General and administrative                                   2,906,734           1,715,652
     Loss on product development costs                              357,235               -
                                                         ------------------  ------------------

     Total Operating Expenses                                     4,058,923           2,444,841
                                                         ------------------  ------------------

INCOME (LOSS) FROM OPERATIONS                                    (3,512,116)            240,522
                                                         ------------------  ------------------

OTHER INCOME (EXPENSE):
     Interest income - related party                                 -                   15,788
     Interest expense                                              (413,542)           (236,718)
     Other income                                                     9,786             122,354
                                                         ------------------  ------------------

     Net Other Income (Expense)                                    (403,756)            (98,576)
                                                         ------------------  ------------------

INCOME (LOSS) BEFORE INCOME TAXES                                (3,915,872)            141,946

INCOME TAX PROVISION (BENEFIT)                                     (836,000)             46,000
                                                         ------------------  ------------------

NET INCOME (LOSS)                                        $       (3,079,872) $           95,946
                                                         ==================  ==================

BASIC EARNINGS (LOSS) PER COMMON SHARE                   $             (.95) $              .03
                                                         ==================  ==================

AVERAGE NUMBER OF BASIC COMMON SHARES OUTSTANDING                 3,241,438           3,103,198
                                                         ==================  ==================

DILUTED EARNINGS (LOSS) PER COMMON SHARE                 $             (.95) $              .03
                                                         ==================  ==================

AVERAGE NUMBER OF DILUTED COMMON SHARES OUTSTANDING               3,241,438           3,648,157
                                                         ==================  ==================
</TABLE>


          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       F-5
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                                 RETAINED
                                                                                ADDITIONAL       EARNINGS
                                    COMMON STOCK             SUBSCRIPTION        PAID-IN        ACCUMULATED
                              SHARES          AMOUNT          RECEIVABLE         CAPITAL         (DEFICIT)             TOTAL
                           ------------ ----------------- ----------------- ----------------- -----------------  ----------------
<S>                        <C>          <C>               <C>               <C>               <C>                <C>
BALANCES,
  DECEMBER 31, 1998           2,900,000 $       6,258,190 $          -      $        230,000  $       2,499,733  $      8,987,923

Stock options exercised         277,916           507,290         (164,790)            -                 -                342,500

Net income for the year           -                -                 -                 -                 95,946            95,946
                           ------------ ----------------- ----------------- ----------------- -----------------  ----------------

BALANCES,
  DECEMBER 31, 1999           3,177,916         6,765,480         (164,790)           230,000         2,595,679         9,426,369

Stock issued for services       302,000           127,340            -                  -                 -               127,340

Net (loss) for the year           -                -                 -                  -            (3,079,872)       (3,079,872)
                           ------------ ----------------- ----------------- ----------------- -----------------  ----------------

                              3,479,916 $       6,892,820 $       (164,790) $         230,000 $        (484,193) $      6,473,837
                           ============ ================= ================= ================= =================  ================
</TABLE>


              SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       F-6
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                         2000                1999
                                                                                 ------------------  ------------------
<S>                                                                              <C>                 <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net income (loss)                                                                $       (3,079,872) $           95,946
   Adjustments to reconcile net income (loss) to net cash provided (used) by
     operating activities:
     Bad debt expense                                                                       960,834              79,481
     Depreciation and amortization                                                          143,535             136,907
     Deferred income taxes                                                                   47,000              (6,000)
     Services and rent provided to reduce note receivable                                    11,395              13,482
     Stock based compensation                                                               127,340              -
     Changes in:
       Accounts receivable                                                                  (43,651)            548,405
       Product development costs                                                            179,721            (179,721)
       Due from joint venturer                                                               20,000             (20,000)
       Due from factor                                                                      578,479            (409,897)
       Inventories                                                                        1,885,711          (1,783,247)
       Accrued interest - related party                                                      78,551             (23,181)
       Due from vendors                                                                     580,882            (134,362)
       Other current assets                                                                 (44,725)              6,708
       Prepaid income taxes                                                                  72,949               9,067
       Income taxes receivable                                                             (955,714)             -
       Accounts payable and accrued expenses                                               (539,412)          1,049,416
       Customer advances                                                                      -                (267,454)
                                                                                 ------------------  ------------------

         Cash flows provided (used) by operating activities                                  23,023            (884,450)
                                                                                 ------------------  ------------------

CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
   Purchase of property and equipment                                                       (88,983)            (57,497)
   Investment in certificate of deposit                                                    (300,000)             -
   Loans to stockholder                                                                     (91,612)           (112,892)
   Collections on note receivable, stockholder                                              234,775             104,470
   Other assets                                                                                (550)                815
                                                                                 ------------------  ------------------

         Cash flows (used) by investing activities                                         (246,370)            (65,104)
                                                                                 ------------------  ------------------

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
   Payments on note payable                                                                   -                 (26,580)
   Proceeds from line of credit                                                           7,519,739           5,841,382
   Payments on line of credit                                                            (7,356,180)         (5,237,781)
   Proceeds from issuance of common stock                                                     -                 342,500
                                                                                 ------------------  ------------------

         Cash flows provided by financing activities                                        163,559             919,521
                                                                                 ------------------  ------------------

NET (DECREASE) IN CASH                                                                      (59,788)            (30,033)

CASH AND CASH EQUIVALENTS, beginning of year                                                 85,857             115,890
                                                                                 ------------------  ------------------

CASH AND CASH EQUIVALENTS, end of year                                           $           26,069  $           85,857
                                                                                 ==================  ==================
</TABLE>

SEE NOTE 17


           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       F-7
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BUSINESS ACTIVITY

Retrospettiva, Inc. (the Company) located in Beverly Hills, California was
organized in November 1990 to manufacture and import textile products from
Europe including finished garments and fabrics.

The Company designs, contracts for manufacture and markets a variety of
garments. Fabrics are purchased from suppliers worldwide including firms in
China, India, Russia, Romania, Italy and the United States. The fabrics are
shipped to contractor factories primarily in Macedonia to be manufactured
into finished garments for shipment to the Company's customers in the United
States.

During 1999 the Company formed a subsidiary, Hamilton Toys, LLC (Hamilton),
for the manufacture of toys related to "The Adventures of Rocky and
Bullwinkle" film. A New York manufacturing firm failed to produce goods as
required by the Company's purchase order. The Company is seeking legal
remedies for its loss.

NOTE 2 - GOING CONCERN AND MANAGEMENTS' PLANS

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern which contemplates
the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has incurred a significant operating loss
during the year ended December 31, 2000, which resulted in an accumulated
deficit. The Company is in default of certain loan covenants including
maintenance of specified levels of tangible net worth, current ratio and
working capital. The geographic area where the Company manufactures its
products has experienced significant political unrest. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow from operations to meet its obligations on a timely
basis, and/or obtain financing as may be required. In addition, the Company
may be required to locate alternative manufacturing facilities if the
political unrest is not resolved soon. The Company may not be able to find
suitable alternative manufacturing facilities without increased costs, if at
all. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Management intends to reduce operations and overhead expenses by laying off
nine employees and cutting costs of approximately $500,000.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION AND MINORITY INTEREST
The Company and its subsidiary Hamilton, in which it exercises control
through majority ownership are consolidated and all inter-company accounts
and transactions are eliminated. The Company's percentage of ownership for
the year ended December 31, 2000 was 100%.

The consolidated financial statements of the Company include 100% of the assets,
liabilities, equity and operations of the subsidiary. The remaining ownership
interests of the other venturer will be recorded as minority interests when the
venturer acquires an equity interest.

                                       F-8
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers all short term,
interest bearing deposits with original maturities of three months or less to be
cash equivalents.

RESTRICTED CASH
The restricted cash was invested in a certificate of deposit which was used as
collateral for a line of credit increase. This security is reported as a
restricted investment. The classification is determined based on the expected
term of the collateral requirement and not necessarily the maturity date of the
underlying security.

ACCOUNTS RECEIVABLE
The Company provides an allowance for doubtful accounts, as needed, for accounts
deemed uncollectible. Allowance for uncollectible accounts was $25,991 at
December 31, 2000.

INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out) or market.

PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation and amortization
expense is generally provided on a straight-line basis using estimated useful
lives of 5-10 years for equipment. Leasehold improvements are amortized over the
lesser of the estimated useful life of the asset or the term of the lease.
Depreciation and amortization expense of property and equipment was $143,535 and
$136,907 for the years ended December 31, 2000 and 1999, respectively.

PRODUCT DEVELOPMENT COSTS
At December 31, 2000 the Company had $357,235 of unamortized product development
costs related to specific products of Hamilton. These costs were to be
capitalized until sales were generated, at which time they would be amortized
over one year, the expected sale period. The Company is uncertain of the
recoupment of these costs and has elected to record an allowance of $357,235
against the costs, until it is assured of realization.

REVENUE RECOGNITION
Revenue is recognized when sold merchandise has cleared customs in the United
States and is available to be shipped to customers from a port of entry or when
the goods are consolidated and shipped from the Company's warehouse in New York.

ADVERTISING EXPENSES
The Company expenses advertising costs as incurred. During the years ended
December 31, 2000 and 1999, the Company did not have significant advertising
costs.

                                       F-9
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES
The Company accounts for income taxes under the asset and liability method.
Under this method, deferred income taxes are recorded to reflect the tax
consequences in future years of temporary differences between the tax basis of
assets and liabilities and their financial statement amounts at the end of each
reporting period. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax expense
represents the tax payable for the current period and the change during the
period in deferred tax assets and liabilities. Deferred tax assets and
liabilities have been netted to reflect the tax impact of temporary differences.
(See Note 15)

The Company has a net operating loss carryforward of approximately $2,100,000,
expiring in 2020. Since it is more likely than not that the Company will not
utilize the net operating loss in the near term, a valuation allowance equal to
the deferred tax asset, which consisted primarily of the net operating loss
carryforwards, has been provided.

EARNINGS PER COMMON SHARE
Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS
No. 128) was issued in February 1997 (effective for financial statements issued
for periods ending after December 15, 1997). This Statement simplifies the
standards for computing earnings per share (EPS) previously found in Accounting
Principles Board Opinion No. 15, Earnings Per Share, and makes them more
comparable to international EPS standards. SFAS No. 128 replaces the
presentation of primary EPS with a presentation of basic EPS. In addition, the
Statement requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In 1999 the FASB issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities. The adoption by the Company of Statement 133 did not
impact the Company's financial statements.

The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin
(SAB) 101, Revenue Recognition in Financial Statements, in December 1999. The
SAB summarizes certain of the SEC staff's views in applying generally accepted
accounting principles to revenue recognition in financial statements. In June
2000, the SEC issued SAB 101B, which delays the implementation date of SAB 101
until no later than the fourth fiscal quarter of fiscal years beginning after
December 15, 1999. The Company does not believe that adoption of this SAB will
have a material impact on its financial statements.

RECLASSIFICATION
Certain amounts reported in the Company's financial statements for the year
ended December 31, 1999 have been reclassified to conform to the current year
presentation.

                                       F-10
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting periods. Actual results could differ
from those estimates and assumptions.

IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates its long-lived assets by measuring the carrying amounts of
assets against the estimated undiscounted future cash flows associated with
them. At the time the carrying value of such assets exceeds the fair value of
such assets, impairment is recognized. To date, no adjustments to the carrying
value of the assets has been made.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments, which principally
include cash, trade receivables, note receivable, accounts payable and accrued
expenses, approximates fair value due to the relatively short maturity of such
instruments. The fair value of the Company's debt instruments are based on the
current borrowing rates available for financings with similar interest rates. At
December 31, 2000 the carrying value of all financial instruments was not
materially different from fair value.

GEOGRAPHIC RISK
The Company manufacturers substantially all of its goods in the Balkan region of
Europe (primarily Madedonia). Historically, there has been political unrest in
the Balkan region, but not in Macedonia. During 2001, there has been political
unrest in Macedonia. Media coverage of this unrest has caused some of the
Company's customers to reduce or cancel orders for the manufacturing of goods.
Management believes that it may be required to locate alternative manufacturing
facilities.

CREDIT RISK
The Company sells its merchandise principally to customers throughout the United
States. Management performs regular evaluations concerning the ability of its
customers to satisfy their obligations and records a provision for doubtful
accounts based upon these evaluations. (See Note 4)

Two customers accounted for 73% of the non-factored accounts receivable balance
at December 31, 2000.

The Company maintains all cash in bank deposit accounts, which at times may
exceed federally insured limits. The Company has not experienced a loss in such
accounts.

                                       F-11
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SIGNIFICANT CUSTOMERS
Individual customers aggregating in excess of 10% of net sales are as follows:

<TABLE>
<CAPTION>
                                        FOR THE YEARS ENDED
                                            DECEMBER 31,
                             ----------------------------------------
                                     2000                  1999
                             ------------------    ------------------
<S>                          <C>                   <C>
SALES
Customer A                   $        2,000,661    $        2,333,366
Customer B                   $           -         $        4,297,956
Customer C                   $        4,173,156    $        5,898,082
Customer D                   $        1,763,880    $           -

</TABLE>

NOTE 4 - BAD DEBT EXPENSE

During the fourth quarter of 1999 "David N", which had previously been a
major customer of the Company, suspended its operations. The Company
continued to make sales on behalf of the customer to third parties. The
Company entered into negotiations and had an agreement with the management of
the customer and its informal Committee of Unsecured Creditors to acquire the
trade name of the customer in exchange for the outstanding account receivable
of $889,428 and $20,000 cash. The Company believed the trade name had value
in excess of those amounts. As a result, the Company believed that the
account receivable was realizable and that at December 31, 1999 it had not
sustained a bad debt loss. In September of 2000, the Company became aware
that the former management of the customer had acquired the trade name for
their own account and refused to transfer the trade name to the Company for
its future use. In October 2000, the Company received notice that the
customer would be unable to make any additional payments other than a 5%
payment on the outstanding balance of approximately $43,000. The Company
wrote off the remaining balance of approximately $859,000 as of September 30,
2000 to bad debt expense. The Company was able to recover nearly all of the
sales lost from this customer by selling directly to the large department
store chains previously serviced by the customer.

NOTE 5 - FOURTH QUARTER ADJUSTMENT

Due from vendors consisted of chargebacks to vendors for merchandise claims
and defects and the amounts were anticipated to be recouped within one year
in the form of vendor credits. During the fourth quarter of the year ended
December 31, 2000, management determined that the Company would not realize
any benefits from the chargebacks and has expensed the remaining balance of
$402,670.

                                       F-12
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>

                        DECEMBER 31,
                            2000
                    ------------------
<S>                 <C>
Finished goods      $        1,963,065
Work-in-process              4,415,970
Raw materials                1,989,202
                    ------------------
                    $        8,368,237
                    ==================
</TABLE>

During the year ended December 31, 2000, the Company produced small quantity
orders under an informal agreement with a company that sold such orders to
individual retailers. The orders were produced from leftover raw materials
from the Company's larger orders. The Company paid commissions on these
sales. The Company determined at December 31, 2000 that these sales did not
produce enough revenues to be profitable and elected to take an allowance
against certain raw materials and finished goods totaling approximately
$836,000 and suspended sales under the agreement.

The Company's import operations are subject to constraints imposed by
bilateral textile agreements between the United States and a number of
foreign countries. These agreements impose quotas on the amount and type of
goods which can be imported into the United States from these countries and
can limit or prohibit importation of products on very short notice. The
Company's imported products are also subject to United States customs duties
which are a material portion of the Company's cost of imported goods. A
substantial increase in customs duties or a substantial reduction in quota
limits applicable to the Company's imports could have a material adverse
effect on the Company's financial condition and results of operations.

NOTE 7 - LOSS ON PRODUCT DEVELOPMENT COSTS

During 1999, the Company's subsidiary, Hamilton Toys, LLC, entered into a
license agreement to produce dolls based upon the movie, "The Adventures of
Rocky and Bullwinkle". The Company incurred development costs of $357,235
during 1999 and 2000. The Company received purchase orders for the dolls from
national discount retail stores during 2000. The Company placed orders for
the production based upon these purchase orders with a production company in
New York. The production company did not produce the dolls as required by its
agreement. The Company had all financing and distribution channels in place
for the production and sale of the dolls and intends to seek financial
recovery of its costs from the production company by legal means. Management
believes that it will prevail and recover at a minimum its costs incurred to
date. However, due to the uncertainty of collection, the Company has elected
to reduce the carrying amount of the costs, until it is assured of collection.

                                       F-13
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8 - EARNINGS PER SHARE

<TABLE>
<CAPTION>

                                                                  FOR THE YEAR ENDED DECEMBER 31, 1999
                                                    ------------------------------------------------------------
                                                                                                        PER
                                                          INCOME                SHARES                 SHARE
                                                        (NUMERATOR)          (DENOMINATOR)             AMOUNT
                                                    -----------------     -----------------     ----------------
<S>                                                 <C>                   <C>                   <C>
BASIC EPS
     Income available to common stockholders        $          95,946             3,103,198     $            .03

EFFECT OF DILUTIVE SECURITIES
     Options and warrants                                     -                     544,959              *
                                                    -----------------     -----------------     ----------------

DILUTED EPS
     Income available to common stockholders
       including assumed conversions                $          95,946             3,648,157     $            .03
                                                    =================     =================     ================
</TABLE>

*Less than $.01

For the year ended December 31, 2000, the affect of outstanding options and
warrants was anti-dilutive, and therefore not considered.

NOTE 9 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                             DECEMBER 31,
                                                 2000
                                         -----------------
<S>                                      <C>
Automobile                               $          20,568
Furniture and fixtures                             115,784
Factory equipment                                1,147,271
Leasehold improvements                              62,881
Software                                            37,152
                                         -----------------

         Total                           $       1,383,656

Less accumulated depreciation and
   amortization                                   (353,091)
                                         -----------------

                                         $       1,030,565
                                         =================
</TABLE>

                                       F-14
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - NOTE RECEIVABLE

In 1996, a $196,000 account receivable was converted to a note receivable,
bearing interest at 10%, and requiring 24 monthly payments of $10,000 in
consolidation services. Services are valued at the market value of
comparative consolidation services in the area. The Company did not realize
any services during 1999 and 2000.

The Company signed a 24 month lease agreement for its New York warehouse,
owned and operated by the payor of the note receivable, commencing on
September 1, 1998. The monthly lease payment was $6,875 and increased to
$8,250 in December 1999. The Company is realizing $3,000 a month in rent to
reduce the above note. The Company realized $11,395 in rent during 2000.

At December 31, 2000, management determined that the note receivable was
impaired and has elected to write-off the remaining balance of $75,456 to bad
debt expense.

NOTE 11 - NOTE RECEIVABLE FROM STOCKHOLDER

The Company's note receivable ($350,000 maximum) due from an
officer/stockholder is unsecured, due on demand and bore interest at 10% per
annum. Accrued interest of $78,551 was added to the note. The balance at
December 31, 2000 is $156,997. Interest was accrued through September 1999
when the note was amended to be non-interest bearing.

NOTE 12 -LINE OF CREDIT

The Company had a line of credit with Imperial Bank for up to $3,500,000.
$300,000 was placed in a short term certificate of deposit as collateral for
the available funds and is shown as a restricted investment at December 31,
2000. In June 2000 the line was renegotiated to $3,300,000. The debt is
collateralized by accounts receivable, inventories, property and equipment,
notes receivable and the personal guarantee of an officer/stockholder.
Interest is payable at the banks announced prime rate which ranged from 8.75%
to 9.50% during 2000. The line of credit contains various restrictive
covenants among which include maintaining a certain level of tangible net
worth, current ratio and working capital. The Company is currently in default
of the loan covenants. The Company has not obtained waivers of the default
and is attempting to reduce outstanding balances and will attempt to work
with the lender to reach a mutually agreeable resolution with respect to the
loan.

                                       F-15
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - STOCK OPTION PLAN

STOCK OPTION PLAN
On May 1, 1996 the Company adopted the Stock Option Plan (the Plan) which
provides for the granting of options to officers, directors, employees and
consultants. The plan was amended in 1998 to increase the number of shares
reserved for options. 2,786,930 shares of common stock are reserved under the
plan for the granting of options. The Plan is in effect until April 30, 2006,
unless extended by the Company's stockholders. The options are exercisable to
purchase stock for a period of ten years from the date of grant.

Incentive Stock Options granted pursuant to this Plan may not have an option
price that is less than the fair market value of the stock on the date the
option is granted. Incentive stock options granted to significant stockholders
shall have an option price of not less than 110% of the fair market value of the
stock on the date of the grant.

On September 23, 1999 the Company granted options to purchase 23,826 shares of
the Company's common stock at a price of $2.25 per share expiring on September
23, 2004 to a new director. In April and August 1999, certain options were
repriced to $1.25 to reflect the current market price of the Company's common
stock.

<TABLE>
<CAPTION>
                                                                        OUTSTANDING OPTIONS
                                                             ----------------------------------------
                                              OPTIONS                                    PRICE PER
                                             AVAILABLE             NUMBER                  SHARE
                                       ------------------    ------------------    ------------------
<S>                                    <C>                   <C>                   <C>
Balance, December 31, 1998                         50,295             2,736,635    $         .63-6.75
Expired during 1999                               142,954              (142,954)            2.94-6.75
Exercised                                          -                   (277,916)            1.25-2.50
Cancelled during 1999                             322,084              (322,084)                 1.25
Granted during 1999                               (23,826)               23,826                  2.25
                                       ------------------    ------------------    ------------------
Balance, December 31, 1999 and 2000               491,507             2,017,507    $         .63-6.00
                                       ==================    ==================    ==================
</TABLE>

At December 31, 2000 and 1999 2,339,591 options granted under the plan were
exercisable.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASES
The Company signed a 57 month lease agreement for its offices expiring on April
30, 2005. The annual minimum lease obligations created by this lease are:

<TABLE>
<S>                                            <C>
             2001                               $33,000
             2002                               $33,000
             2003                               $33,000
             2004                               $33,000
             2005                               $11,000
</TABLE>

                                       F-16
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

The Company rents an apartment in New York on a month to month basis from the
majority stockholder.

The Company rents office and showroom space from a major supplier in New York
on a month to month basis. The Company subleases an apartment in New York on
a month to month basis.

Rent expense for the years ended December 31, 2000 and 1999 was $200,139 and
$188,629, respectively.

EMPLOYMENT AGREEMENTS
The Company has an employment agreement with its President/Chief Executive
Officer providing for a minimum annual salary of $155,000, which renews
annually.

LITIGATION
The Company is a party to various claims, complaints, and other legal actions
that have arisen in the ordinary course of business. The Company believes that
the outcome of all pending legal proceedings, in the aggregate, will not have a
material adverse effect on the Company's financial condition or the results of
its operation or cash flows.

TERMINATED ACQUISITIONS
In October 1999 the Company entered into an agreement to purchase AAA Computer
Solutions (AAA) for 25,000 shares of common stock. The stockholder of AAA
provided website design services. The Company issued the shares in 2000 and
recorded an expense for services of $17,188.

LICENSING AGREEMENT
In November of 2000, effective July 1, 2000, the Company entered into a product
name licensing agreement for an initial term expiring on July 31, 2003,
extendable at the option of the licensor. The Company is required to pay a
royalty of 5-6% of specified net sales. During the year ended December 31, 2000,
the Company had generated no sales under the licensing agreement and has not
incurred any royalty fees. The Company is required to have net sales under the
licensing agreement of $3,000,000 in the first year, $5,000,000 in the second
year and $8,000,000 in the third year.

INVESTOR RELATIONS AGREEMENT
In December 2000, the Company entered into a 90 day agreement for investor
relations. The Company issued 200,000 shares of restricted common stock in
exchange for the services, valued at $50,000, which it has recorded as a prepaid
expense at December 31, 2000. The Company will expense the cost of the services
over the term of the agreement.

                                       F-17
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - INCOME TAXES - (BENEFIT)

The components of the deferred tax assets and (liabilities) as of December 31,
2000 were as follows:

<TABLE>

<S>                                                       <C>
Temporary differences:
     Allowance for doubtful accounts                      $           9,000
     Inventory valuation allowance                                  284,000
     Effect of prior year carrybacks                               (127,000)
     Tax depreciation in excess of book depreciation                  3,000
     Net operating loss carryforward                                715,000
     Less valuation allowance                                      (884,000)
                                                          ------------------

     Net long-term deferred tax asset                     $            -
                                                          ==================
</TABLE>

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED
                                                 DECEMBER 31,
                                  ----------------------------------------
                                          2000                  1999
                                  ------------------    ------------------
<S>                               <C>                   <C>
Current provision (benefit)       $         (836,000)   $           52,000
Deferred (benefit)                             -                    (6,000)
                                  ------------------    ------------------

Provision (benefit)               $         (836,000)   $           46,000
                                  ==================    ==================
</TABLE>

Following is a reconciliation of the amount of income tax (benefit) expense that
would result from applying the statutory federal income tax rates to pre-tax
income and the reported amount of income tax expense (benefit) for the periods:

<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED
                                                 DECEMBER 31,
                                  ----------------------------------------
                                          2000                  1999
                                  ------------------    ------------------
<S>                               <C>                   <C>

Computed expected income tax
  provision (benefit)             $       (1,325,000)   $           38,000
State tax, net of federal
  benefit                                     -                     10,000
Inventory valuation allowance                284,000                -
Net operating loss carryforward              715,000                -
Net operating loss carryback                (474,000)               -
Other                                        (36,000)                4,000
                                  ------------------    ------------------

                                  $         (836,000)   $           52,000
                                  ==================    ==================
</TABLE>

                                       F-18
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - INCOME TAXES - (BENEFIT) (CONTINUED)

The components of deferred income tax (benefit) expense are as follows:

<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED
                                                 DECEMBER 31,
                                  ----------------------------------------
                                          2000                  1999
                                  ------------------    ------------------
<S>                               <C>                   <C>
Bad debts                         $          68,000     $          (13,000)
Depreciation                                 (3,000)                -
Inventory valuation allowance              (284,000)                -
Other                                        98,000                  7,000
Net operating loss carryforward            (715,000)                -
Valuation allowance                         836,000                 -
                                  ------------------    ------------------

                                  $          -          $           (6,000)
                                  ==================    ==================
</TABLE>

NOTE 16 - STOCK-BASED COMPENSATION

The Company accounts for stock based compensation under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
123). The standard requires the Company to present the "fair value" method with
respect to stock-based compensation of consultants and other non-employees.

The Company did not change its method of accounting with respect to stock
options; the Company continues to account for these under the "intrinsic value"
method.

On September 23, 1999 the Company granted options to purchase 23,826 shares of
the Company's common stock to a director exercisable at $2.25 per share and
repriced certain employee options to $1.25 to reflect the current market price
of the Company's common stock. Had the Company adopted the fair value method
with respect to options issued to employees/directors an additional charge to
income of $72,000 would have been required in 1999; proforma net income would
have been $22,946 and earnings per share would have been $.01 on a basic and
diluted basis. In estimating the above expense, the Company used the Modified
Black-Scholes European pricing model. The average risk-free interest rate used
was 5.8%, volatility was estimated at 41%, the expected life was less than two
years.

                                       F-19
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 17 - SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS FOR NONCASH
INVESTING AND FINANCING ACTIVITIES

<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED
                                                 DECEMBER 31,
                                  ----------------------------------------
                                          2000                  1999
                                  ------------------    ------------------
<S>                               <C>                   <C>
Cash paid for interest            $          413,542    $          236,718
                                  ==================    ==================

Cash paid for income taxes        $           -         $           42,933
                                  =================     ==================
</TABLE>

NOTE 18 - SUBSCRIPTION RECEIVABLE

During 1999 a former employee exercised 277,916 stock options at prices ranging
from $1.25 to $2.50 per share. The unpaid balance of the exercise price was
$164,790 at December 31, 2000. The Company has initiated litigation to collect
this amount. Management anticipates obtaining a default judgement against the
former employee.

NOTE 19 - FACTORING AGREEMENT

The Company has a factoring agreement with Commodore Factors to factor its
accounts receivable up to $2,000,000. The Company receives up to 80% of the
receivables at the time of factoring. Interest on the factored receivables is at
the prime rate plus 2%, but never less than 10% per annum.

The Company assigns a portion of its accounts receivable to the factor without
recourse. Under the terms of the agreement, the factor has a continuing security
in the Company's receivables and inventories. Personal and cross-corporate
guarantees have been given to the factor by certain stockholders. The agreement
provides for a letter of credit facility and periodic overadvances based on
negotiated lines of credit

NOTE 20 - RELATED PARTY TRANSACTIONS

An officer of the Company provided consulting services for $30,915 and $26,000
during 2000 and 1999.

NOTE 21 - SEGMENT REPORTING

The Company organized its business into two reportable segments: garment
manufacturing and toy manufacturing during 1999. The Company only operated in
the garment manufacturing segment prior to 1999.

                                       F-20
<PAGE>

                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 21 - SEGMENT REPORTING (CONTINUED)

The segment's accounting policies are the same as those described in the summary
of significant accounting policies included in Note 1. No sales or revenues were
recognized for the toy manufacturing segment during 1999 and 2000. All revenues,
expenses and assets relate to the garment manufacturing segment with the
exception of product development costs of $357,235.


                                       F-21