SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

     For the fiscal year ended March 31, 2001 Commission file number 1-12850

                                   XDOGS, INC.
                        Formerly known as XDOGS.COM, INC.
                        ---------------------------------
        (Exact name of small business issuer as specified in its charter)

                         126 North 3rd Street, Suite 407
                          MINNEAPOLIS, MINNESOTA 55402
                          ----------------------------
                    (Address of principal executive offices)

Incorporated under the laws of                                84-1168832
the State of Nevada                                 ----------------------------
                                                    I.R.S. Identification Number


(Small Business Issuer's telephone number including area code): (612) 359-9020

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

Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.01
PAR VALUE PER SHARE (Title of Class)

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

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

The issuer's revenues for its most recent fiscal year were: $134,963

The aggregate market value of the Company's common stock held by non-affiliates
of the Company on June 30, 2001 was approximately $1,730,000 computed by
reference to the average of the closing bid and ask prices as quoted on that
date.

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

The Company has one class of equity securities outstanding: Common Stock, $.01
par value per share. On June 30, 2001, there were 5,589,242 shares outstanding.
As of June 30, 1998, the date of our reorganization in Bankruptcy, our common
shares were subject to a 54 for 1 reverse split. As of August 23, 2000, our
common shares were subject to a 5 for 1 reverse split. All references to our
shares in this Form 10-KSB include the effect of these reverse splits of our
common stock.

<PAGE>

Explanatory Note: This Amendment to our Form 10-KSB filed July 20, 2001 is being
filed to primarily supply Management's Discussion and Analysis of Operations and
our Financial Statements required by Items 6 and 7 of Form 10-KSB. We also
updated Item 1 on our business plan.

                                   XDOGS, INC.

          FORM 10-KSB/A ANNUAL REPORT FOR THE YEAR ENDED MARCH 31, 2001

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----
PART I
          ITEM 1.    BUSINESS                                                1
          ITEM 2.    PROPERTIES                                              7
          ITEM 3.    LEGAL PROCEEDINGS                                       8
          ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF
                     SECURITY HOLDERS                                        8

PART II
          ITEM 5.    MARKET FOR THE COMPANY'S COMMON EQUITY
                     AND RELATED STOCKHOLDER MATTERS                         9
          ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     FINANCIAL CONDITION AND RESULTS OF OPERATIONS          11
          ITEM 7.    FINANCIAL STATEMENTS                                   12
          ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE                 12

PART III
          ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                     CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
                     OF THE EXCHANGE ACT                                    12
          ITEM 10.   EXECUTIVE COMPENSATION                                 13
          ITEM 11.   SECURITY OWNERSHIP OF CERTAIN
                     BENEFICIAL OWNERS AND MANAGEMENT                       15
          ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS         16
          ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K                       16

SIGNATURES


References in this document to "us," "we," "the Registrant" or "the Company"
refer to XDOGS, Inc., and its predecessors.

FORWARD-LOOKING STATEMENTS

When used in this Annual Report on Form 10-KSB/A, the words "believes",
"anticipates", "expects", "estimates" and similar expressions are intended to
identify, in certain circumstances, forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance or achievements to differ materially from
the predicted results, performance or achievements. Such factors include, among
others, the following: general economic and business conditions, the ability to
secure financing for working capital and operations, the acceptance in the
marketplace of new products, changes in business strategy or development plans,
availability of qualified personnel, currency fluctuations, changes in
political, social and economic conditions and local regulations, particularly in
Europe, and other factors outlined in the Company's previously filed public
documents, copies of which may be obtained without cost from the Company. Given
these uncertainties, prospective investors are cautioned not to place undue
reliance on such statements. The Company also undertakes no obligation to update
these forward-looking statements

<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

INTRODUCTION

We are the exclusive North America distributors of high-end European outdoor
apparel and equipment for the outdoor enthusiast. Our mission is to have every
outdoors enthusiast live a "Life Without Limits"(TM) and to possess their own
personal vision of adventure, challenge, discovery and freedom. To accomplish
this, we bring "best-in-class" European sporting goods brands to the North
American marketplace via a traditional wholesale to retail business model. With
exclusive marketing and distribution rights for some of Europe's premier brands,
we are able to provide outdoor enthusiasts with the specialized apparel and gear
they need to enhance their experience. These products come from respected brands
including Lumen Eyewear from Austria, Oxbow surf and snowboarding apparel from
France, and Gaastra sailing and casual wear from the Netherlands. These premium
brands will require the building of brand awareness to assure their success in
the North American market.

Due to general economic conditions and the ensuing downturn in e-commerce and
internet-based businesses generally, we have abandoned our prior business plan
to exploit our exclusive distribution rights via the internet and have re-focus
our strategy and adopted a traditional wholesale to retail sales distribution
model which we have been implementing since August, 2000. Our only division is
our International Brands Division for wholesale to retail distribution of
well-known European brands of outdoor apparel and equipment. All of these
products are European products manufactured in Europe and elsewhere.

We will generate most of our sales primarily in the United States, Canada and
Mexico. We will sell our European brands initially to high-end, specialty retail
stores in key markets such as prestigious outdoor sports resorts and major
metropolitan areas. Eventually, and assuming the success of initial sales and
acceptance in the American market, we anticipate selling to larger retail chain
operations that will provide us with broader market penetration. At that time,
we also expect to sell directly to consumers via the Internet.

To maintain our best-in-class image, we anticipate entering into an agreement
with a well-established proprietor of close-out higher priced inventory. Selling
end-of-season inventory and offering a venue for returns from retail partners
will give us an opportunity to attempt to better manage gross margins and more
importantly guard against the stigma of "close-out bargain basement" sales.

Following our Chapter 11 bankruptcy reorganization finalized on September 10,
1998, and discussed in more detail below, we had limited operations and as of
March 31, 2001 we still should be considered to have limited operations and to
be under capitalized. We have minimal revenues from our International Brands
Division.

HISTORY

We were originally incorporated in Colorado in April 1991 under the name Snow
Runner (USA), Inc. We were the general partner of Snow Runner (USA) Ltd., a
Colorado limited partnership to sell proprietary snow skates under the name
"Sled Dogs" which was dissolved in August 1992 and our name was changed to Snow
Runner (USA), Inc. In late 1993, we relocated our operations to Minnesota and in
January 1994 changed our name to Snow Runner, Inc. In November 1994 we changed
our name to the Sled Dogs Company. All assets owned by the Sled Dogs Company
were transferred in a full and final settlement with Norwest Credit, Inc., in
March, 1999, in connection with a Chapter 11 Reorganization filed by us. In May,
1999, we changed our state of domicile to Nevada and our name to XDOGS.com, Inc.
With our decision to re-focus to a traditional wholesale to retail distributor,
we further changed our name to XDOGS, Inc. in August 2000.

Prior to our bankruptcy reorganization, we had historically marketed,
manufactured and distributed Sled Dog(TM) brand snow skates and related
accessories. All of our inventory and distribution rights to the Sled Dog brand
snow skates were transferred to Norwest Credit, Inc. in the Reorganization.

We had filed for protection under Chapter 11 of the U.S. Bankruptcy Code on
November 5, 1997 principally because we went into default on our loan agreement
with our senior lender, Norwest Credit, Inc. We eventually entered into a
settlement agreement with Norwest Credit, Inc. The terms of the settlement
agreement required us to surrender our inventory (which consisted primarily of
snow skates) and related intellectual property and to pay $280,000 in additional
cash over a defined period. The final cash payment was made on May 1, 1999.

Following our bankruptcy, we obtained the exclusive North American rights to
distribute high-end European outdoor apparel and equipment. We first intended to
exploit these rights over the Internet under the name XDOGS.com, Inc. However,
due to the general economic conditions and the ensuing downturn in e-commerce
and internet-based businesses generally, we abandoned this approach to preserve
our core assets and adopted a more traditional strategy under our new name
XDOGS, Inc.

PROPOSED BUSINESS

We have revised our business plan and see opportunity as a traditional wholesale
to retail sales of European best-in-class outdoor apparel and equipment. Our
revenues to date are minimal.

International Brands Division with Exclusive Distribution Rights

The Company has secured the exclusive North American wholesale and retail
distribution rights to best-in-class outdoor apparel and equipment from Oxbow,
Lumen and Gaastra, and intends to continue to obtain similar exclusive rights to
other top-class European sporting good brands. These arrangements comprise our
International Brands Division. These manufacturers are new to the North American
market but have dominant market share in their respective home markets. We
believe our exclusive access to these brands combined with our specialty sales
organization (discussed below under caption "Specialty Sales Organization") we
intend to implement differentiates us from our competitors and are the key to a
competitive advantage. These premium brands, however, will require the building
of brand awareness to assure their success in the North American market. We
intend to build brand awareness primarily through traditional wholesale
distribution to retail stores.

                                       2
<PAGE>


Best-in-Class European Products

We sell the following products in approximately 20 specialty stores in the
United States.

Oxbow is a premium brand of surfing, snowboarding, motorbike racing and
windsurfing clothing manufactured in France. Oxbow is considered the top-tier in
all these categories, successfully combining functionality with high fashion.
The multi-faceted options within the Oxbow brand represent substantial potential
for sales development and brand growth. The Oxbow link to the same casual beach
lifestyle images which fueled the growth of such brands as Quicksilver, Rusty,
OP, O'Neil, and Tommy Bahama to a national scale, suggest potential distribution
across a wide variety of specialty retail as well as a larger department store
accounts. An elite international mix of wind and water sport athletes endorse
the Oxbow brand creating the necessary beach image. Equally, the winter sports
presence for the brand, with its snowboard and freestyle ski products and
promotions, also offer the brand a counter-seasonal boost of activity and
business potential to keep the brand vibrant year-around. We have the exclusive
Internet and wholesale distribution rights to Oxbow products in North America.
As part of our distribution arrangement with Oxbow, we inherited Oxbow's limited
wholesale distribution in North America (fewer than 40 retail accounts). Despite
this limited distribution, there is high brand recognition and appeal among
participants in the sports specific for Oxbow products. Oxbow's demographic is
more upscale than their closet competitor, Quicksilver (NYSE:ZQK)

Lumen is an Austrian manufacturer of high-end sport-specific eyewear for golf,
biking, driving, skiing, snowboarding, beach and shooting sports. Lumen products
equal or exceed their competition in quality and design, with a very competitive
price point. We expect a tremendous reception for this brand with its launch in
North America. Competitors in the highly fragmented market include Vuarnet,
Oakley (NYSE:OO), Bolle (AMEX:BLE) and Gargoyles (OTCBB:GOYL), and many others.
We have the exclusive Internet and wholesale distribution rights to Lumen
products in North America.

The latest addition to XDOGS' collection of exclusive brands is Gaastra, a
Netherlands based manufacturer of top quality technical and lifestyle sailing
apparel. Gaastra was founded in 1897 as a manufacturer of top-quality sails.
They now offer recreational and professional sailors worldwide the gear best
equipped to fight the elements of wind and water. Gaastra offers both foul
weather gear comparable to Gill, Helly Hansen, Henry Lloyd and Musto and
sportswear comparable to Polo Ralph Lauren (NYSE:RL), Tommy Hilfiger (NYSE:TOM)
and Nautica (NasdaqNM:NAUT).

All of our distribution agreements with these manufacturers are for limited time
periods and territories with certain performance criteria on our part. We expect
these relationships to lead to more revenue in the next fiscal year.

Berghaus Limited terminated our exclusive distribution agreement with them.
Consequently, we currently no longer sell Berghaus outdoor sporting goods
including performance clothing, footwear, and equipment.

                                       3
<PAGE>


Other and Expanding European Product Lines

We intend to negotiate exclusive distribution agreements with several other
best-in-class, well-branded, European-based sporting goods and apparel
manufacturers for the exclusive North American distribution rights to their
products. These arrangements we believe will make us the unique vendor for
obtaining these top quality products in North America. Additional brands enhance
the level of consumer awareness of XDOGS products by offering a wide selection
of outdoor sports-related products from one source. We anticipate obtaining the
exclusive North American distribution rights of 20 to 30 best-in-class,
non-North American brands in the next three years.

Plan of Wholesale to Retail Distribution of European Brands

We need to build brand awareness of these top-class products to assure their
success in the North American market and have developed a traditional wholesale
distribution plan. Initially, we intend to focus our selling efforts to select,
high-end specialty retailers, in four key market-types: prestigious outdoor
sports resorts, major metropolitan areas, top college and university towns, and
key geographical regions. Currently, we sell our lines to approximately 20
specialty stores in the United States, including Nordstroms(R). Our goal is to
strategically position our lines in approximately 200 quality retail specialty
stores by the end of fiscal year 2002. We will target those specialty retailers
located in resorts and major metropolitan areas first where we believe the brand
will receive exposure to a more geographically dispersed clientele resulting in
broader distribution in future seasons.

As specialty retail sales solidify, we then intend to expand our selling efforts
to larger retail chain operations for broader market penetration. We anticipate
our account base to vary in this market depending on the brand and the
demographic group served. With a broader market penetration we feel we would be
in a position to resume direct sales to consumers via the Internet.

To maintain our best-in-class image, we are currently negotiating and anticipate
entering into an agreement with a well-established proprietor of closeout higher
priced inventory. Selling end-of-season inventory and offering a venue for
returns from retail partners will give us an opportunity to attempt to better
manage gross margins and more importantly guard against the stigma of "close-out
bargain basement" sales.

No assurance can be given that we will successfully meet any or all of these
desired goals.

Specialty Sales Organization for European Brands

We recognizes the primary need for wholesale representatives who focus their
selling and retail service efforts on specific niches of the sports lifestyle
industry. The XDOGS family of brands will be matched with sales representatives
who specialize in specific sport product areas and clearly delineated
geographical territories to increase the authenticity and credibility of the
XDOGS brands' images. The Company's initial priority is to establish retail
sales in each key influential marketplace across the country. As specialty
retail sales solidify, broader general sports lifestyle retail chain store
venues will become increasingly viable for the brands.

The Company has twelve sales territories within the United States, seven of
which are deemed areas of highest potential. We establish territories based on
the product lines and how they best address the four key market types. We have
hired six independent sales representatives in eight of the territories. We
expect to hire sales representatives for all twelve territories by the
spring/summer 2002 season. We have selected our sales representatives because
they each exhibit industry experience and enthusiasm for the active sports
lifestyle which we believe is critical to our selling success. All sales
representatives are generally compensated based on commissions.

Jim Johnston, our Chief Operating Officer with over 20 years in the sporting
goods and sportswear industry, will train our sales representatives with
manufacturer participation. Our strategy is to continue to promote our "Life
Without Limits" image associated with the active sports lifestyle. Training will
occur at our headquarters in Minneapolis, Minnesota upon obtaining a new product

                                       4
<PAGE>


line and prior to important trade shows. Our training focuses on three items:
(1) comprehensive sales, product and customer service training, (2) building
solid, long-term customer relationships, and (3) gaining product, marketing
strategy and market conditions feedback from the sales representatives. We
believe Mr. Johnston's experience in hiring and training sales teams for the
sports apparel industry is a strong asset to our sales initiative.

Business-to-Business E-commerce

We intend to support our retail dealers from our website by means of a dealer
locator, as well as placing store specific content regarding news, events and
promotions on the website. We intend to survey leading retailers from across the
outdoor sporting goods industry to determine the features and functionality that
will be mutually beneficial to both us and the dealers we supports.

We plan to develop a "Dealers only" section on our website to streamline the
retailer purchase process. This section will allow dealers to examine and
research our products, compare them with similar products (both ours and
competitors' products) and place on-line purchase orders for products. It will
also allow retailers to double-check inventory, ordering and delivery status and
schedules so they can more efficiently plan their buying cycles. This section
will also allow for "ASAP" purchase orders from retailers who have sold their
initial inventory of our products.

PROMOTION AND ADVERTISING

We believe marketing is a key to our success. We intend to spend 10% of top line
revenues to promote our product lines, website, and to build XDOGS brand
awareness. We will use both traditional and non-traditional marketing and
advertising vehicles such as trade show participation, print advertisements,
promotions, sponsorships, Internet marketing, direct mail, and cross-promotion
with retail and manufacturing partners. Most of the proceeds will be spent on
trade shows and print advertising.

Trade Shows

We attend approximately four trade shows a year. Trade shows are the most
expeditious venue for rapidly elevating buyer awareness of the image,
characteristics, and energy of an unknown brand or company. Established
businesses also attend to maintain industry "viability". Trade shows also
support and elevate the independent selling efforts of sales representatives as
they cover their territories in the weeks prior to and following a show.
Currently, we will primarily focus on the following shows in the next several
years, adapting presentations to the needs of each our brands:

                                       5
<PAGE>


          MAGIC (Men's Apparel Guild in California) - February and August each
     year in Las Vegas. The largest apparel show of all types, from formal wear
     to urban street brands to sport

          ASR (Action Sports Retailer) - February in Long Beach and September in
     San Diego each year. Noted for "revealing" the cutting edge new brands of
     the young active apparel industry

          Surf Expo - January and September in Orlando each year. Similar in
     impact to ASR, with a little more aquatic influence and much better
     coverage of eastern USA retailers

          SIA (Snowsports Industry America) - January in Las Vegas. Particularly
     appropriate for XDOGS brands with winter sports products in their
     Fall/Winter collections.


Print Advertising

The Company's history is in the snowskate and snowboard culture, and it has
continued to be associated with extreme sports brands that are cutting edge
driven from this snowskate heritage. Currently, our target consumer is the
"active outdoor participant" who partakes in at least six outdoor-related
activities per year, has some college experience, is a full-time professional,
aged 18 to 39, has an annual income in excess of $50,000, and lives in either an
urban or suburban setting. As the Company grows and adds complementary product
lines, we expect to appeal to the broader market of recreational outdoor people.

We will place print ads in targeted, high-circulation, outdoor magazines whose
readership fits the required demographic such as Outside, Men's Health, Men's
Journal, Ski, Skiing, Sports Illustrated for Women, Sailing Magazine, Longboard
Magazine, Surfing, Wahine and the Association of Surfing Professionals' Tour
Guide. In addition, we will target regional publications like Rocky Mountain
Sports and Fitness and Windy City ports, which have demographic and regional
desirability.

Sponsorships

An integral part of our marketing effort is sponsorship of, and website content,
contributed by leading personalities in the outdoor sports field. Such high
profile personalities include Josh Mohr, a surfer and longboard designer who
promotes Oxbow and Lumen products, Laird Hamilton, acclaimed big wave surfer,
and Jason Polakow, world renown Australian wind surfer and action photographer,
each of whom promote Oxbow products.

COMPETITION

The market for surfing, snowboarding and windsurfing clothing, eyewear and
sailing apparel is highly competitive. Direct competitors in the United States
are different depending on the product and the distribution channel. Oxbow
surfing, snowboarding and windsurfing clothing compete with the QuickSilver
brand of outdoor wear. Lumen eyewear competes with Vuarnet, Oakley, Bolle and
Gargoyles brands of eyewear. Gaastra foul weather gear competes with Gill, Halle
Henson, Henry Lloyd and Musto brands and its sportswear competes with Polo Ralph
Lauren, Tommy Hillfiger and Nautica brands. It is expected that most, if not all
of our current and potential competitors have greater financial resources and
longer operating histories than ours. Although we expect ultimately to be
competitive in the markets in which we compete, there can be no assurance that
we will have the necessary resources to be competitive.

                                       6
<PAGE>


LOCALITY AND SEASONALITY

During the fiscal year ended March 31, 2001, most of our sales were made to
customers located on the East and West coasts. We generally sell our products on
a net-30 to net-60 day basis in the United States. We have no cooperative
advertising programs with our customers and do not reimburse our customers for
marketing expenses.

Our sales fluctuate from quarter to quarter primarily due to seasonal consumer
demand patterns for different categories of the Company's products. Most of our
sales occur in the third calendar quarter, resulting from purchases for fall
products.

PATENTS, TRADEMARKS, AND PROPRIETARY RIGHTS

As of March 31, 2001, we have pending with the U.S. Patent and Trademark Office
applications to register the marks "Life Without Limits" and the "Life Without
Limits" logo. We have common law rights to the mark "XDOGS" and will be seeking
federal registration of this mark. These marks are the marks we are currently
exploiting. While we are not aware of any conflicting trademark rights owned by
other parties, no assurance can be given that no such rights exist.

IMPORTS AND IMPORT RESTRICTIONS

The Company imports all of its European products from foreign countries. We do
not anticipate that any restrictions will materially or adversely impact our
operations since we have always operated under such constraints.

ENVIRONMENTAL MATTERS

During the last three fiscal years, compliance with environmental laws and
regulations did not have a specific impact on the Company's operations. The
Company does not anticipate that it will incur any material capital expenditures
for environmental control facilities for environmental facilities during the
next fiscal year.

EMPLOYEES

As of March 31, 2001, we had five employees, consisting of one executive and
four staff members, four of which are full time employees. Our employees are not
represented by any collective bargaining organization.

RESEARCH AND DEVELOPMENT

During the last three fiscal years, we did not incur research and development
expenses.

ITEM 2. PROPERTIES

As of July 31, 2001 our corporate office is located at 126 North 3rd Street,
Suite 407, Minneapolis, Minnesota 55402. This office space is leased from an
unaffiliated third party for $950.00 per month. We do not manufacture any of the
products we sell. The majority of the products we sell are manufactured in
Southeast Asia, Europe and elsewhere. We have a sales showroom at our
headquarters in Minneapolis where we display sample garments and products and
point of purchase display systems.

                                       7
<PAGE>


ITEM 3. LEGAL PROCEEDINGS

Mr. Henry Furst filed a complaint against us in the U.S. District Court for the
District of Minnesota, alleging that the Company breached its contractual
obligations to him and seeking $144,000 in damages. The parties subsequently
negotiated a settlement whereby the Company agreed to pay Mr. Furst $94,000 in
installments and executed a confession of judgment in favor of Mr. Furst for
that amount. The Company has failed to pay Mr. Furst in accordance with the
settlement agreement.

Millennium Holdings Group, Inc. filed a complaint against us in the State Court
of Palm Beach County, Florida alleging breach of contract, slander and lost
opportunity damages arising out of a contract dispute. The Company has filed a
motion to dismiss the action for lack of jurisdiction, which is currently
pending. The Company intends to vigorously defend against this matter.

On or about March 14, 2000, the Company's former adviser consultant, Stephen
Carlson, loaned the Company $100,000. We executed a note in favor of Mr.Carlson
which required payment in full on December 31, 2000. We are in default and Mr.
Carlson on March 9, 2001, initiated a legal action against us in the District
Court of Hennepin County to collect the loan. We also granted to Mr. Carlson
options to purchase 60,000 shares of Common Stock, all of which are not-in-the
money.

On November 29, 2000, Berghaus Ltd., informed the Company it would continue its
distribution upon payment of $120,000 in three installments with the first
installment due March 1, 2001. The Company has not made the first payment and we
no longer sell Berghaus products.

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

No matters were submitted to a vote of the Company's shareholders during the
fiscal year ended March 31, 2001.




                                       8
<PAGE>


                                     PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Principal Market or Markets

Our Common Stock was listed on the NASDAQ Small Cap Market under the symbol SNOW
and on the Boston Stock Exchange under the symbol SNW. Effective with the close
of business on June 19, 1997, our Common Stock was delisted from the NASDAQ
Small Cap Market. After this date, we began trading on the NASD Bulletin Board.
Market makers and other dealers provided bid and ask quotations of our Common
Stock. We trade under the symbol "XDGI".

The table below represents the range of high and low bid quotations of our
Common Stock as reported during the reporting period herein. The following bid
price market quotations represent prices between dealers and do not include
retail markup, markdown, or commissions; hence, they may not represent actual
transactions.

                                   High       Low
                                   ----       ---
Twelve Months Ended
March 31, 2001

First Quarter
Common Shares                    $20.00      $7.185

Second Quarter
Common Shares                     $8.125      $.437

Third Quarter
Common Shares                     $1.50       $.312

Fourth Quarter
Common Shares                     $1.00       $.218


Fiscal Year
ended 2000                         High       Low
                                   ----       ---

First Quarter
Common Shares                     $4.50      $2.187

Second Quarter                    $4.375     $2.75
Common Shares

Third Quarter                     $6.25      $2.062
Common Shares

Fourth Quarter                    $4.625     $3.125
Common Shares


                                       9
<PAGE>


(b) Approximate Number of Holders of Common Stock

As of June 30, 2001 5,589,242 shares of our common stock were outstanding and
the number of holders of record of our common stock at that date was
approximately 1,000. However, we estimate that it has a significantly greater
number of shareholders because a substantial number of our shares are held in
nominee names by our market makers.

(c) Dividends

Holders of Common Stock are entitled to receive such dividends as may be
declared by our Board of Directors. No dividends on the Common Stock were paid
by us during the periods reported herein nor do we anticipate paying dividends
on Common Stock in the foreseeable future.

(d) Sales of Unregistered Shares

Fiscal 01

On August 10, 2000, the Company issued to Imaginet, LLC one hundred twenty
thousand (120,000) shares of Common Stock for past services rendered in
connection with building our website.

On August 15, 2000, we issued 40,000 of our Common Stock to Lloyd M. Claycomb
pursuant to a Consulting Agreement.

On September 1, 2000, we issued 58,000 of our Common Stock to C. Hans Figi
pursuant to a Consulting Agreement, 10,000 of which were returned to our
treasury.

On September 15, 2000, we issued 45,000 shares of our Common Stock to Alliance
Corporate Services, Inc., pursuant to a Consulting Agreement.

On September 19, 2000, the Company issued to each of Bruce Beaty and Scott
Anderson, five thousand (5,000) shares of common stock in connection with their
$50,000 investment to the Company.

From time to time, we have granted options to purchase shares of our Common
Stock as compensation to our employees and consultants for past, present or
future services rendered, as determined by our Board of Directors. In fiscal
year 2001, we granted a total of 615,000 options to purchase shares of our
Common Stock as follows: (a) 280,000 options to purchase shares of Common Stock
were granted to eight of our employees, including 150,000 options to Mr.
Rodriguez our Chairman and President, (b) 30,000 options to purchase shares of
our Common Stock were granted to our three outside directors, and (c) 305,000
options to purchase shares of our Common Stock were granted to four consultants,
including 100,000 shares each to Jim Johnston our acting Chief Operating Officer
(at $.50 per share) and Robert Corliss, our director (at $.01 per share). Most
if not all of the options we issued are not in-the-money.

Fiscal 00

During fiscal 2000, we issued in the aggregate 1,476,000 options and warrants to
our distributors Berghaus and Oxbow in connection with entering into exclusive
distribution agreements.

Fiscal 99

In April 1999, we issued an aggregate of 34,900 shares of our Common Stock to
five employees or consultants for past, present or future services rendered.

In April and November 1999, in connection with certain transactions we issued
warrants and options to purchase an aggregate of 18,500 shares of our Common
Stock to three parties at exercise prices ranging from $.01 to $.70. Infinity
Sports and Leisure Group, LLC, of which our director Mr. Corliss is President,
received warrants to purchase 10,000 shares at an exercise price of $.01.

In issuing all of the above securities, we relied on the exemption from
registration under Section 4(2) of the Securities Act of 1922, as amended.

                                       10
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

     As of March 31, 2001, we had limited operations with minimal revenues that
generated a loss. Due to general economic conditions and the ensuing downturn in
e-commerce and internet-based businesses generally, we abandoned our prior
business plan to exploit our exclusive distribution rights via the internet and
re-focused our strategy and adopted a traditional wholesale to retail sales
distribution model which we have been implementing since August, 2000.

     Our most significant accomplishment for the period ended March 31, 2001 was
our execution of a distribution agreement with Gaastra of the Netherlands.

     We currently have no significant orders pending.

     As of March 31, 2000, we had current assets of $325,332 and total assets of
$607,700. As of March 31, 2001, we had outstanding liabilities of $1,674,472. We
had current assets of $16,636 and total assets of $69,153.

     We had net sales of $2,432 for the period ended March 31, 2000. We had net
sales of $134,963 for the period ended March 31, 2001. We had no cost of goods
sold during the year ended March 31, 2000 and had selling, general, and
administrative expenses of $6,469,714. This amount included $3,485,341 in
stock-based consulting and compensation expense relating to stock issued for
services and options granted to non-employees and $1,146,343 in distribution
right expenses relating to a warrant issued to a distributor. We had cost of
goods sold during the year ended March 31, 2001 of $195,616 and had selling,
general, and administrative expenses of $1,373,581. We had an interest expense
of $300,000 during the period ended March 31, 2000 and interest expense of
$91,314 for the year ended March 31, 2001. We had a net loss for the year ended
March 31, 2000, which only included losses from continuing operations, of
$6,463,817, or a loss of $0.71 per share. We had a net loss for the year ended
March 31, 2001, which only included losses from continuing operations, of
$5,820,739, or a loss of $2.24 per share.

     Our plan for the fiscal year ended March 31, 2002 is to continue to
implement our development into a traditional wholesale to retail seller of
specialty action sports hard goods and related apparel. We plan to continue
developing our relationship with the companies with whom we have developed
contracts during the last fiscal year. While we anticipate generating some
revenues during the fiscal year ended March 31, 2002, we still do not expect to
be profitable during this period.

LIQUIDITY AND CAPITAL RESOURCES

     Our cash and cash equivalents were $-0- on March 31, 2001, compared to
$282,795 on March 31, 2000. For the year ended March 31, 2001, our operations
decreased net cash by $282,795.

     During the twelve months ended March 31, 2000, we used $302,485 in
investing activities, which consisted of $106,792 for the purchase of equipment
and $195,693 for the acquisition of distribution rights. During the twelve
months ended March 31, 2001, we used $10,395 in investing activities, which
consisted of $10,395 for the purchase of equipment

     Our financing activities for the period ended March 31, 2000 provided cash
of $1,838,794. Our financing activities for the period ended March 31, 2001
provided cash of $844,013.

     As of March 31, 2001, we were developing our business plan to reflect the
changing environment of retail and wholesale sales. We plan to raise additional
capital during the coming fiscal year, but currently have not located additional
funding. Our ability to continue operations is highly dependent upon our ability
to obtain immediate additional financing or generate revenues from operations,
neither of which can be guaranteed. Unless additional funding is located, it is
highly unlikely that we can continue to operate. Ultimately, our success is
dependent upon our ability to generate revenues from operations and to achieve
profitability which is dependent upon a number of factors including acceptance
in the U.S. of European products, There is no assurance that even with adequate
financing, we will generate revenues and be profitable.

                                       11
<PAGE>


ITEM 7. FINANCIAL STATEMENTS.

The financial statements begin on page F-1.

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

We previously reported in a Form 8-K originally filed November 1, 2000, as
amended by Forms 8-K/A filed on November 20, 2000, December 15, 2000 and
December 29, 2000, that our former certified public accountants, McGladrey &
Pullen, LLP, resigned effective August 8, 2000, and that on August 9, 2000, we
engaged the firm of Cordovano and Harvey, CPA's, 201 Steele Street, Suite 300,
Denver, Colorado 80206, as our independent accountants for the fiscal year ended
March 31, 2001. The change of accountants was approved by our Board of
Directors.

During the two most recent fiscal years and up to the date of their resignation
we and our former certified public accounts, McGladrey & Pullen, LLP, had a
disagreement in the most recent fiscal year related to the measurement of
compensation expenses resulting from equity instruments granted to employees and
non-employees at prices below the quoted market price of the stock on the date
of the grant. The equity instruments consisted of 824,500 shares of stock issued
with a value between $2.687 and $3.285 based upon publicly traded stock prices.
The disagreement arose as the Company believed the value of these shares should
be at less than the traded price of the common stock at the date of issuance.
McGladrey & Pullen, LLP's position was that the traded price was in fact the
value to be used to measure compensation expense.

Also included in the equity instruments granted were 1,476,000 options and
warrants issued that the Company believed should be valued at less than the fair
value as determined using the Black Scholes method which was the position taken
by McGladrey & Pullen, LLP. The Company initially disagreed as the equity
instruments were all issued with a restrictive legend. Theses matters were not
discussed with any committee of the Board of Directors. These matters were
ultimately resolved to the satisfaction of McGladrey & Pullen, LLP and recorded
based on McGladrey & Pullen's position. The Company has authorized McGladrey &
Pullen, LLP to respond fully to the inquiries of the successor accountant
concerning the subject matter of such disagreement.

There were no other disagreements or other events reportable under this item
during our most recent two fiscal years and preceding the date of resignation.
Further, the former auditor's report on the financial statements for the two
most recent fiscal years did not contain an adverse, opinion a disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope, or
accounting principles.

                                    PART III

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

Our Directors and Executive Officers are shown below:

Name                         Age             Position
----                         ---             --------

Kent Rodriguez               43              Chairman, Chief Executive Officer,
                                             President and Director

Robert Corliss               48              Director

Douglas Barton               59              Director

Craig Avery                  52              Secretary and Director

Each Director is serving a term of office which will continue until the next
annual meeting of shareholders and until the election and qualification of his
respective successor.

KENT RODRIGUEZ

Mr. Rodriguez joined the Company as Chairman, President, and Chief Executive
Officer in January, 1997. Since 1995, he has been the Managing Partner of Weyer
Capital Partners, a Minneapolis-based venture capital corporation. From 1985 to
1995, he was employed by the First National Bank of Elmore, Minnesota in various
capacities. He has a B.A. degree from Carleton College.

ROBERT CORLISS

Mr. Corliss has served as a Director of the Company since July, 1997. Since 1993
until September, 1998, he has been the President of Infinity Sports and Leisure
Group of Lebanon, New Jersey, a designer, manufacturer and distributor of
athletic products under the Bike Athletic and Marksman brand names. He was also
President and Chief Executive Officer of Herman's Sporting Goods, Inc. which he
sold in 1993. In September, 1998, he was named Chief Executive officer of The
Athlete's Foot, a chain of retail athletic footwear stores. He has an MBA degree
from the University of Maryland. Mr. Corliss shall devote such time as is
necessary to carry out his responsibilities as an Officer and Director of the
Company.

                                       12
<PAGE>


DOUGLAS BARTON

Mr. Barton has served as a Director of the Company since November, 1998. From
1987 to the present, he has been the President and sole owner of Douglas
Communications, Inc., a private promotion, development, and marketing consulting
firm. He has a B.S. degree in Economics/History from the University of
Minnesota. Mr. Barton shall devote such time as is necessary to carry out his
responsibilities as a Director of the Company.

CRAIG AVERY

Mr. Avery has served as Secretary of the Company since August, 1997. For the
past several years, he has been the owner of Craig C. Avery Company, a
Minneapolis-based real estate development and investment company, which has
developed apartments, senior housing, office buildings, and industrial and
residential land subdivisions. Mr. Avery currently serves on the Boards of Call
4 Wireless, Rock Cliff Development, Cash-N-Pawn, and Host Partners. He has a
B.A. and MBA degree in Finance from the University of Minnesota. Mr. Avery shall
devote such time as is necessary to carry out his responsibilities as an Officer
of the Company.

The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. There are no family relationships among the Company's
officers and directors, nor are there any arrangements or understanding between
any of the directors or officers of the Company or any other person pursuant to
which any officer or director was or is to be selected as an officer or
director. The Directors held four meetings in 2001.

In 1999, the Board of Directors established a Compensation Committee comprised
of Messrs. Avery and Barton. The Compensation Committee held one meeting in
2001. In May 2000, the Board of Directors established an Audit Committee
comprising Messrs. Avery, Barton and Corliss.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.

Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act") requires our
officers and directors and persons owning more than ten percent of our Common
Stock to file initial reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Additionally, Item 405 of Regulation
S-B under the 34 Act requires us to identify in its Form 10-KSB and proxy
statement those individuals for whom one of the above referenced reports was not
filed on a timely basis during the most recent fiscal year or prior fiscal
years. Given these requirements, we have the following report to make under this
section. All of our officers or directors, and all persons owning more than ten
percent of its shares have filed the subject reports, if required, on a timely
basis during the past fiscal year.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF BOARD OF DIRECTORS

Members of the Board of Directors receive no cash compensation for their service
on the Board of Directors, the Compensation Committee or the Audit Committee but
are reimbursed for any out-of-pocket expenses incurred by them in connection
with our business. On September 19, 2000, three members of the Board of
Directors were granted options to purchase 10,000 shares of common stock at an
exercise price of $1.00 per share, all of which are currently exercisable.

                                       13
<PAGE>


EXECUTIVE COMPENSATION

The following table sets forth the compensation received for the three fiscal
years ended March 31, 2001, by the Company's Chief Executive Officer (the "Named
Executive Officer"). No other executive officer of the Company received in
excess of $100,000 during that period. Compensation does not include minor
business-related and other expenses paid by us for our officers. Such amounts in
the aggregate do not exceed $10,000.

                                                         Annual Compensation
                                                     ---------------------------
                 Name and                     Year     Salary(1)     Securities
            Principal Position                                       Underlying
                                                                       Options
-----------------------------------------     ----   --------------  -----------
Kent A. Rodriguez, Chairman and President     2001   $105,000(2)      260,000(3)
                                              2000    $60,000(2)      110,000(4)
                                              1999    $60,000(2)      110,000(4)
----------
(1)  No bonuses were paid for the years ended March 31, 2001, 2000, and 1999.
(2)  Effective on November 23, 1999, Mr. Rodriguez became subject to an
     employment agreement pursuant to which he accrues $5,000 per month in
     salary. Mr. Rodriguez received an additional $45,000 worth of compensation
     as consideration for past, present and future services rendered.
(3)  Options were granted in September 1999 and September 2000 and all are
     currently exercisable with an exercise price of $.375.
(4)  All options were granted in September 1999 and all are currently
     exercisable with an exercise price of $.375.

Mr. Rodriguez did not receive any other annual compensation, long-term
compensation or other compensation during the Company's fiscal years ended March
31, 2001, 2000 or 1999.

OPTION GRANTS IN LAST FISCAL YEAR

                        Number of
       Name and         Securities   Percentage of Total   Exercise   Expiration
  Principal Position    Underlying   Options Granted to      Price       Date
                         Options     Employees in Fiscal
                         Granted            Year
--------------------------------------------------------------------------------
   Kent Rodriguez,      150,000(1)        24.8%(2)           .375       3/30/04
Chairman and President

----------
(1)  Represents options to purchase shares of common stock granted for
     employment compensation all of which are currently exercisable.
(2)  Based upon a total of 605,000 options to purchase common stock granted
     during fiscal 2001.

<TABLE>
<CAPTION>

AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

<S>                    <C>                      <C>        <C>                   <C>
       Name and        Common Shares Acquired    Value      # of Unexercised     Value of Unexercised
  Principal Position         on Exercise        Realized       Securities        in-the-money Options
                                                           Underlying Options   at Fiscal Year End ($)
                                                           at Fiscal Year End        Exercisable/
                                                              Exercisable/           Unexercisable
                                                              Unexercisable
-----------------------------------------------------------------------------------------------------
    Kent Rodriguez,              ___               ___         260,000(1)/0             $0/$0(2)
Chairman and President

----------

(1) The exercise price for all options is $.375 per share.
(2) Calculations are based upon the closing bid price of $.25 per share as of March 31, 2001.


                                       14
</TABLE>
<PAGE>


EMPLOYMENT AGREEMENTS

We have an employment agreement with Kent Rodriguez, our Chairman and President
dated November 23, 1999. The employment agreement extends through November 23,
2004, unless terminated earlier. If we terminate Mr. Rodriguez without cause, we
are required to pay him. Under the employment agreement, Mr. Rodriguez earns a
base salary of $60,000. Since November 1999, Mr. Rodriguez has agreed to allow
the Company to accrue such amount. Mr. Rodriguez was also granted options to
purchase 90,000 shares of common stock at an exercise price of $.375. All
options have vested and terminate November 23, 2004. He is also entitled to
health, life and disability benefits. If Mr. Rodriguez's employment is
terminated for any reason, he is entitled to a severance payment equal to one
year's salary.

Mr. Rodriguez was also granted for his serviceship as a director options to
purchase 20,000 shares of common stock at an exercise price of $.375. This
option has also vested and terminates November 23, 2004.

During the term of his employment, if Mr. Rodriguez is responsible for obtaining
financing for the Company, we agreed to grant him a stock option in an amount
equal to a five percent of the funds raised by him.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding ownership of our
Common Stock as of June 30, 2001 by (i) each person known by us to be the
beneficial owner of more than five percent of our outstanding common stock; (ii)
each director of our Company; and (iii) all executive officers and directors of
our Company as a group. As of June 30, 2001, we had a total of 5,589,242 common
shares issued and outstanding.

Names and Addresses             Beneficial            Percent
of Beneficial Owner             Ownership             of Class
-------------------             ---------             --------

Kent Rodriguez                    940,200(1)           16.82%
527 Marquette Avenue South
Suite 2100
Minneapolis, MN 55402

Craig Avery                        20,000(2)           .0036%
527 Marquette Avenue South
Suite 2100
Minneapolis, MN 55402

Robert Corliss                    244,000(2)(3)         4.36%
527 Marquette Avenue South
Suite 2100
Minneapolis, MN 55402

Douglas Barton                     60,000(2)            1.07%
527 Marquette Avenue South
Suite 2100
Minneapolis, MN 55402

Officers and Directors          1,264,200              22.62%
as a Group (4 persons)

----------
(1) Includes 200,000 shares of Common Stock owned by Weyer Capital, an affiliate
of Mr. Rodriguez and options to acquire 260,000 shares of Common Stock.

(2) Includes options to acquire 10,000 shares of Common Stock issued to outside
directors.

(3) Includes options to acquire 100,000 shares of Common Stock.

                                       15
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We paid to Douglas Communications Inc., owned by Mr. Barton, our director,
$4,000 for consulting services rendered to us.

Mr. Rodriguez, our Chairman and President, loaned us an aggregate of $375,000 in
April and May of 2000. We issued to him three notes representing this amount
bearing interest at 12%. All of the notes were due September 1, 2000 and all
remain unpaid. Our obligations under these notes are secured by security
agreements in favor of Mr. Rodriguez.

Steven Carlson, our former advisor consultant loaned us $100,000 in March of
2000. We issued to him a note representing this amount bearing interest at 12%.
This note was due September 1, 2000. Our obligations are secured by a security
agreement in favor of Mr. Carlson. Mr. Carlson has started an action in Hennepin
County Court, Minnesota, to collect the amount we owe him under the note.

Rock Cliff Development, an affiliate of one of our directors, loaned us $100,000
in April 2000. We issued to it a note representing this amount bearing interest
at 12%. This note was due September 1, 2000 and remains unpaid. Our obligations
are secured by a security agreement in favor of Rock Creek Development.

We issued Mr. Rodriguez, our Chairman and President, a total of 674,820 shares
in 1999 in exchange for compensation of $105,000 and a personal guaranty by him
of $843,500 on one of our debts.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits. See "Exhibit Index" immediately following the signatures on
     this report on Form 10-KSB/A.

     (b) Reports on Form 8-K. During the fiscal year ended March 31, 2001, we
     filed one report on Form 8-K, and three amendments thereto, as discussed in
     Item 8 above, regarding changes in and disagreements with our accountants.



                                       16
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Company has caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated: August 17, 2001.                      XDOGS, INC.


                                             /s/ Kent Rodriguez
                                             ------------------
                                             Kent Rodriguez, Chairman, President
                                             and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this

Report has been signed by the following persons on behalf of the Company in the
capacities and on the dates indicated.

Signature and Title                          Date
-------------------                          ----


/s/ Kent Rodriguez                           August 17, 2001
------------------
Kent Rodriguez, Chairman, President,
Chief Executive Officer and
Director (Principal Executive Officer
and Chief Financial Officer)


/s/ Craig Avery                              August 17, 2001
---------------
Craig Avery, Secretary


/s/                                          August 17, 2001
------------------
Robert Corliss, Director


/s/ Douglas Barton                           August 17, 2001
------------------
Douglas Barton, Director



                                       17
<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   XDOGS, INC.
                          EXHIBIT INDEX TO FORM 10-KSB

                    For the fiscal year ended March 31, 2001
                         Commission File Number 1-12850


Exhibit     Description                                              Page Number
-------     -----------                                              -----------

3.1         Restated Articles of Incorporation (Incorporated by            *
            reference to Exhibit 3.1 to Registration Statement on
            Form SB-2, Registration No. 33-74240C).
3.2         Restated Bylaws (Incorporated by reference to Exhibit 3.2      *
            to Registration Statement on Form SB-2, Registration No.
            33-74240C).
3.3         Articles of Incorporation for the State of Nevada.             *
            (Incorporated by reference to Exhibit 2.2 to Form 10-KSB
            filed February 2000)
3.4         Articles of Merger for the Colorado Corporation and the        *
            Nevada Corporation (Incorporated by reference to Exhibit
            3.4 to Exhibit 3.4 to Form 10-KSB filed February 2000)
3.5         Bylaws of the Nevada Corporation (Incorporated by              *
            reference to Exhibit 3.5 to Form 10-KSB filed February
            2000)
4.1         Specimen of Common Stock (Incorporated by reference to         *
            Exhibit 4.1 to Registration Statement on Form SB-2,
            Registration No. 33-74240C).
10.1        Contract of Sale between Hannes Jacob and Allrounder Idea      *
            Realization, S.A. and Snow Runner (Properties) Inc. dated
            September 3, 1993 (Incorporated by reference to Exhibit
            10.1 to Registration Statement on Form SB-2, Registration
            No. 33-74240C).
10.2        License Agreement between Snow Runner (Properties) Inc.        *
            and Snow Runner (USA) Inc. effective September 3, 1993
            (Incorporated by reference to Exhibit 10.10 to
            Registration Statement on Form SB-2, Registration No.
            33-74240C).
10.3        License Agreement between Hannes Jacob and Allrounder          *
            Realization SA and Snow Runner (USA) Inc. dated June 26,
            1992 (Incorporated by reference to Exhibit 10.11 to
            Registration Statement on Form SB-2, Registration No.
            33-74240C).
10.4        Amended and Restated Distribution Agreement between Snow       *
            Runner (USA) Inc. and DalBello Sport S.R.L. dated June
            26, 1992 (Incorporated by reference to Exhibit 10.12 to
            Registration Statement on Form SB-2, Registration No.
            33-74240C). Registration No. 33-74240C).
10.5        Reorganization Agreement by and among Snow Runner (USA)        *
            Ltd., Snow Runner Holdings, Inc., Nigel Alexander,
            Steven Clarke and Harbour Settlement dated July 23, 1992
            (Incorporated by reference to Exhibit 10.19 to
            Registration Statement on Form SB-2, Registration No.
            33-74240C).
10.6        Credit and Security Agreement dated June 30,1995 between       *
            the Company and Norwest Credit, Inc.
10.7        Revolving Note for $2,000,000 dated June 30, 1995 between      *
            the Company and Norwest Credit, Inc.
10.8        Patent and Trademark Security Agreement dated June 30,         *
            1995 between the Company and Norwest Credit, Inc.
10.9        Agreement with Berghaus Limited dated (Incorporated by         *
            reference to Exhibit 10.42 to Form 10-KSB filed February
            2000)
10.10       Agreement with Oxbow, S.A. dated January 24, 2000              *
            (Incorporated by reference to Exhibit 10.43 to Form 10KSB
            filed July 13, 2000).
10.11       Agreement with Gaastra International Sportswear, B.V.          *
            (Incorporated by reference to Exhibit 10.43 to Form 10KSB
            filed July 13, 2000).
10.12       Incentive Compensation and Employment Agreement for Kent
            A. Rodriguez

--------
* Incorporated by reference to a previously filed exhibit or report.


             XDOGS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>


                                   XDOGS, INC.
                   Index to Consolidated Financial Statements



                                                                            Page
                                                                            ----

Independent auditors' reports .............................................  F-2

Consolidated balance sheet, March 31, 2001.................................  F-4

Consolidated statements of operations, for the years
   ended March 31, 2001 and 2000 ..........................................  F-5

Consolidated statement of shareholders' deficit,
   April 1, 1999 through March 31, 2001 ...................................  F-6

Consolidated statements of cash flows, for the years
   ended March 31, 2001 and 2000 ..........................................  F-7

Notes to consolidated financial statements.................................  F-8




                                      F-1
<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
XDOGS, Inc.


We have audited the consolidated balance sheets of XDOGS, Inc. as of March 31,
2001, and the related consolidated statements of operations, shareholders'
deficit, and cash flows for the year ended March 31, 2001. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides 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 XDOGS, Inc. as of
March 31, 2001, and the results of their operations and their cash flows for the
year ended March 31, 2001, in conformity with accounting principles generally
accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in the Summary of
Significant Accounting Policies, the Company has a working capital deficit at
March 31, 2001 and has suffered significant operating losses from inception
through March 31, 2001, which raise a substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in the Summary of Significant Accounting Policies. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



/s/ Cordovano and Harvey, P.C.
------------------------------
Cordovano and Harvey, P.C.
Denver, Colorado
August 1, 2001


                                      F-2
<PAGE>


                          Independent Auditor's Report

Board of Directors and Stockholders
Xdogs.com (formerly The Sled Dogs Company)
Minneapolis, Minnesota

We have audited the accompanying balance sheets of Xdogs.com (formerly The Sled
Dogs Company) as of March 31, 2000 and 1999 (not separately included herein),
and the related consolidated statements of operations, changes in stockholders
deficit, and cash flows for the year then ended, the nine months ended March 31,
1999 (not separately included herein), and the three months ended June 30, 1998
(not separately included herein). 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Xdogs.com
(formerly The Sled Dogs Company) as of March 31, 2000 and 1999, and the
consolidated results of its operations and its cash flows for the year then
ended, the nine months ended March 31, 1999, and the three months ended June 30,
1998, in conformity with generally accepted accounting principles.

On June 30, 1998, the Company emerged from bankruptcy. As discussed in Note 2 to
the consolidated financial statements, the Company accounted for the
reorganization using fresh-start reporting. Thus, the postreorganization
consolidated financial statements are not comparable to the prereorganization
consolidated financial statements.


/s/ McGladrey & Pullen, LLP
---------------------------
McGladrey & Pullen, LLP
Minneapolis, Minnesota
June 26, 2000


                                       F-3
<PAGE>
<TABLE>
<CAPTION>

                                              XDOGS, INC.
                                      Consolidated Balance Sheets


                                                                                           March 31,
                                                                                             2001
                                                                                         ------------
<S>                                                                                      <C>
ASSETS
Current assets:
     Cash ............................................................................   $       --
     Accounts receivable, net of allowance for doubtful accounts of $25,014 and $ 0 ..          2,899
     Inventory (Note C) ..............................................................         13,737
                                                                                         ------------
                                                                  Total current assets         16,636

     Equipment, at cost, net of accumulated depreciation of $12,776 (Note D) .........         52,517
     Other assets (Note E) ...........................................................           --
                                                                                         ------------
                                                                                         $     69,153
                                                                                         ============

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
     Accounts and notes payable:
        Accounts payable and accrued expenses ........................................   $    646,946
        Notes payable related party (Note B) .........................................        731,433
        Notes payable (Note F) .......................................................        200,000
        Litigation liabilities (Note F) ..............................................         96,093
                                                                                         ------------
                                                             Total current liabilities      1,674,472
                                                                                         ------------

Commitments and contingencies (Note A, B, J and K) ...................................           --

Shareholders' deficit (Note G)
        Common stock, $0.01 par value, 20,000,000 shares authorized,
          4,131,742 shares issued and outstanding ....................................         41,317
        Additional paid-in capital ...................................................     11,842,806
        Common stock paid for but not issued .........................................        159,839
        Retained deficit .............................................................    (13,649,280)
                                                                                         ------------
                                                           Total shareholders' deficit     (1,605,318)
                                                                                         ------------
                                                                                         $     69,154
                                                                                         ============


 See accompanying summary of significant accounting policies and notes to the financial statements.

                                                  F-4
<PAGE>


                                           XDOGS, Inc.
                             Consolidated Statements of Operations

                                                                         For the Years Ended
                                                                               March 31,
                                                                     --------------------------
                                                                         2001           2000
                                                                     -----------    -----------

Net sales ........................................................   $   134,963    $     2,342
Cost of goods sold ...............................................      (195,616)          --
                                                                     -----------    -----------
                                               Gross (loss) margin       (60,653)         2,342
                                                                     -----------    -----------

Operating expenses:
    Selling, general and administrative expenses .................     1,373,581      1,838,030
    Stock based consulting & compensation expense (Note B and G) .     3,564,497      3,485,341
    Asset impairment (Note C, D and E) ...........................       647,570           --
    Loss on litigation (Note K) ..................................        96,093           --
    Accounts payable settlement ..................................        (6,735)          --
    Distribution rights expense (Note H) .........................          --        1,146,343
                                                                     -----------    -----------
                                                Operating expenses     5,675,006      6,469,714
                                                                     -----------    -----------

                                                    Operating loss    (5,735,659)    (6,467,372)

Non-operating income (expense):
    Interest expense (Note B and F) ..............................       (91,314)      (300,000)
    Other income .................................................         6,234         28,555
                                                                     -----------    -----------
                                          Loss before income taxes    (5,820,739)    (6,738,817)

Provision (benefit) for income taxes (Note I) ....................          --             --
                                                                     -----------    -----------
                                                          Net loss   $(5,820,739)   $(6,738,817)
                                                                     ===========    ===========

Basic and diluted loss per common share ..........................   $     (2.24)   $     (3.57)
                                                                     ===========    ===========

Basic and diluted weighted average
   common shares outstanding (Note G) ............................     2,600,663      1,889,041
                                                                     ===========    ===========


See accompanying summary of significant accounting policies and notes to the financial statements.

                                               F-5
<PAGE>

                                                            XDOGS, Inc.
                                         Consolidated Statements of Shareholders' Deficit
                                               April 1, 1999 through March 31, 2001


                                                   Common Stock           Additional   Common Stock
                                             ------------------------      Paid-in     Paid For, but     Retained
                                                Shares       Amount        Capital      Not Issued         Loss            Total
                                             -----------   ----------    ------------   -----------    ------------    ------------
                    Balance, March 31, 1999    6,604,625   $   66,046    $ 513,828.00   $564,514.00    $(1,089,724.00) $     54,664

Common stock issued for services (Note F) .      824,500        8,245       2,402,133          --              --         2,410,378

Consulting expense recorded with issuance
   of options and warrants (Note F) .......         --           --         2,220,306          --              --         2,220,306

Common stock issued, net of commissions
   of $60,986 (Note F) ....................    2,716,263       27,163       1,893,023      (564,514)           --         1,355,672

Shares redeemed ...........................     (460,284)      (4,603)           --            --              --            (4,603)

Beneficial conversion feature on
   shareholder debt (Note F) ..............         --           --           300,000          --              --           300,000

Common stock to be issued .................         --           --              --         187,725            --           187,725

Net loss ..................................         --           --              --            --        (6,738,817)     (6,738,817)
                                             -----------   ----------    ------------   -----------    ------------    ------------
                    Balance, March 31, 2000    9,685,104       96,851       7,329,290       187,725      (7,828,541)       (214,675)

Shares issued from subscription ...........       90,000          900          86,575       (87,475)           --

Common stock issued for services (Note F) .    3,002,862       30,028       2,208,449          --              --         2,238,477

Common stock issued for cash (Note F) .....      157,350        1,574         145,776          --              --           147,350

Common stock issued for debt (Note F) .....      605,000        6,050         447,373          --              --           453,423

5 to 1 Reverse split (Note F) .............  (10,832,253)    (108,323)        108,323          --              --

Common stock to be issued .................         --           --              --         264,827            --           264,827

Shares issued from subscription ...........      172,179        1,722         203,516      (205,238)           --              --

Common stock issued for services (Note F) .    1,251,500       12,515       1,133,483          --              --         1,145,998

Consulting expense recorded with issuance
   of options and warrants (Note F) .......         --           --           180,021          --              --           180,021

Net loss ..................................         --           --              --            --        (5,820,739)     (5,820,739)
                                             -----------   ----------    ------------   -----------    ------------    ------------
                    Balance, March 31, 2001    4,131,742   $   41,317    $ 11,842,806   $   159,839    $(13,649,280)   $ (1,605,318)
                                             ===========   ==========    ============   ===========    ============    ============


              See accompanying summary of significant accounting policies and notes to the financial statements.

                                                                F-6
<PAGE>

                                                  XDOGS, Inc.
                                     Consolidated Statements of Cash Flows

                                                                                       For the Year Ended
                                                                                           March 31,
                                                                                   --------------------------
Cash flow from operating activities:                                                   2001           2000
                                                                                   -----------    -----------
    Net loss ...................................................................   $(5,820,739)   $(6,738,817)

      Transactions not requiring cash:
        Depreciation and amortization ..........................................       115,225         18,224
        Asset impairment .......................................................       647,570           --
        Payable settlement gain ................................................        (6,735)          --
        Noncash expense related to stock issued (Note B & G) ...................     3,335,416      2,410,378
        Noncash expense related to options and warrants issued (Note G) ........       180,021      2,220,306
        Noncash expense related to benenficainal conversion feature (Note ) ....          --          300,000

      Changes in operating assets and liabilities:
        Current assets .........................................................        12,163        (25,204)
        Accounts payable and other accrued expenses ............................       420,665        472,787
                                                                                   -----------    -----------
                                         Net cash (used in) operating activities    (1,116,414)    (1,342,326)
                                                                                   -----------    -----------

Cash flow from investing activities:
      Purchases of equipment ...................................................       (10,395)      (104,899)
      Acquisition of distribution rights .......................................          --         (195,693)
                                                                                   -----------    -----------
                                         Net cash (used in) investing activities       (10,395)      (300,592)
                                                                                   -----------    -----------

Cash flow from financing activities:
       Net proceeds from sale of common stock ..................................       412,177      1,538,794
       Payment of notes payable to shareholder (Note B) ........................       (11,567)          --
       Proceeds from notes payable to shareholders (Note B) ....................       443,403        300,000
                                                                                   -----------    -----------
                                       Net cash provided by financing activities       844,013      1,838,794
                                                                                   -----------    -----------

                                       Net increase in cash and cash equivalents      (282,796)       195,876

Cash at beginning of year ......................................................       282,795         86,919
                                                                                   -----------    -----------

Cash at end of year ............................................................   $      --      $   282,795
                                                                                   ===========    ===========

Supplemental cash flow information:
      Cash paid for interest ...................................................   $    17,645    $      --
                                                                                   ===========    ===========
      Cash paid for income taxes ...............................................   $      --      $      --
                                                                                   ===========    ===========

      Noncash investing and financing activities:
          Liability accrued for Web site development ...........................   $   200,000    $      --
                                                                                   ===========    ===========


     See accompanying summary of significant accounting policies and notes to the financial statements.

                                                      F-7
</TABLE>
<PAGE>


                                   XDOGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS:

The Company was incorporated in Colorado in 1991 as a distributor of SnowRunner
snow skates. Between 1991 and 1994, the Company was restructured, and the name
of the Company was changed several times, including such names as SnowRunner
(USA) Inc., SnowRunners, Inc., and The Sled Dogs Company. The Company filed for
bankruptcy protection in 1997. As a result of the bankruptcy, the Company was
reorganized and in 1999 was renamed XDOGS, Inc. The intent of the Company is to
develop into a "clicks and mortar" seller of action sports hard goods and
related apparel and to create an Internet destination site for active outdoor
lifestyle enthusiasts. However, thus far this effort has proven unsuccessful.
The Company's ability to generate revenues from operations and achieve
profitability is dependent upon a number of factors, including acceptance in the
United States of the European products. The ability to sustain future operations
is ultimately dependent upon the Company's ability to obtain additional
financing, generate significant revenues and attain profitability. The President
of the Company has agreed to provide funding for short-term cash needs through
March 2001. The Company is currently dependent upon this shareholder financing.

CONSOLIDATION:

The financial statements include the accounts of the Company and its wholly
owned subsidiary, SnowRunner (Properties) Inc., which was established and
incorporated in April 1993. The subsidiary was inactive in fiscal 2001 and 2000.

CASH:

The Company maintains deposits at banks which, at times, exceed federally
insured limits. The Company has not experienced any losses in such accounts.

INVENTORY:

The Company records inventory at cost. The Company uses average costs method to
record cost of goods sold.

INTANGIBLE ASSETS:

Intangibles consist of cash paid for a four year distribution agreement and
liabilities incurred and stock issued for the Company's website. The cost is
being amortized over the term of the agreement.

ACCOUNTING FOR LONG-LIVED ASSETS:

The Company reviews its long-lived assets periodically to determine if any
potential impairment exists.

REVENUE RECOGNITION:

The Company recognizes revenue when products are shipped.

                                      F-8
<PAGE>


                                   XDOGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


DEPRECIATION:

The Company depreciates its office equipment using the straight-line method over
a period of five to seven years.

INCOME TAXES:

Deferred taxes are provided on an asset and liability method whereby deferred
tax assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards, and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax basis.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.

INCOME (LOSS) PER SHARE:

The Company computes net income (loss) per share based upon the weighted-average
number of common shares outstanding during each year. As described in Note F, at
March 31, 2001, the Company had stock options outstanding to purchase 955,260
shares of common stock. However, because the Company incurred a net loss the
inclusion of those potential common shares in the calculation of diluted loss
per share would have an antidilutive effect. Therefore, basic and diluted lass
per share amounts are the same.

USE OF ESTIMATES:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

FAIR VALUE:

The Company's financial instruments consist of cash and short-term debt. The
current carrying amount of cash approximates fair value. The fair value of the
Company's short-term debt is estimated based on the quoted market prices for the
same or similar issues or on the current rates offered to the Company for debt
of the same remaining maturities with similar collateral requirements.

STOCK-BASED COMPENSATION:

SFAS No. 123, "Accounting for Stock-Based Compensation" was issued in October
1995. This accounting standard permits the use of either a "fair value based
method" or the "intrinsic value method" defined in Accounting Principles Board
Opinion 25, "Accounting for Stock Issued to Employees" (APB 25) to account for
stock-based compensation arrangements. Companies that elect to use the method
provided in APB 25 are required to disclose pro forma net income and pro forma
earnings per share information that would have resulted from the use of the fair
value based method. The Company adopted SFAS No. 123 during the period ended
September 30, 1999; however, the Company has elected to continue to determine
the value of stock-based compensation arrangements with employees under the
provisions of APB 25. Pro forma disclosures have been included with the
accompanying consolidated financial statements at Note F.

                                      F-9
<PAGE>


                                   XDOGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B. TRANSACTIONS WITH OFFICERS/STOCKHOLDERS

During the year ended March 31, 2001, the Company signed several notes with its
President, Mr. Rodriguez, for additional $317,000 in proceeds. These notes were
due in full on September 1, 2000, December 1, 2000 and March 1, 2001
respectively. These notes accrue interest at 12 percent per annum. During the
year ended March 31, 2001, the Company made $17,648 in interest payment.

During the year ended March 31, 2001, the Company signed a note with a Director,
dba Rock Cliff Development, Inc. for $100,000. The note was due in full on
December 1, 2000 and accrues interest at 12 percent per annum.

During the year ended March 31, 2001, the Company advanced $26,000 from an
unrelated shareholder collateralized by its receivables. The Company made
$11,567 in principal payments during the year ended March 31, 2001.

On March 10, 2000 the Company signed a $200,000 note with an
officer/stockholder. The note accrues interest at 12 percent and is due in full
September 1, 2000. Accrued interest on the note is payable in stock and will be
valued by the market price of the stock on the date of payment. On March 14,
2000 the Company signed a $100,000 note with a stockholder. The note accrues
interest at 12 percent and is due in full September 1, 2000. Accrued interest on
the note is payable in stock and will be valued by the market price of the stock
on the date of payment.

Both of these notes allow the note holder to convert, at any time during the
term of the agreement, the note into common stock at $1.50 per share through
June 30, 2000 and $1.00 per share thereafter. Because these notes can be
converted to common stock at a discount from market price a "beneficial
conversion feature" of $300,000 was recorded by the Company. The beneficial
conversion feature was recorded by increasing additional paid in capital and
charging interest expense with no effect on ending stockholders' equity.

NOTE C. INVENTORY OBSOLESCENCE

Due to changing market conditions, a thorough review was made of the Company's
apparel inventory. As a result, a provision for inventory losses of $128,996 was
charged against operations in fiscal year 2001. As of March 31, 2001, the
allowance for inventory obsolescence is $128,996.

NOTE D: EQUIPMENT

The Company owns two tradeshow booths for use during regular business
operations. As of March 31, 2001, one of the tradeshow booths was no longer
utilized by the Company for its intended purposes. Accordingly, the Company
recorded an impairment charge of $50,000 and wrote off related accumulated
amortization of $9,524.

The Company incurred $7,290 during fiscal year ended March 31, 2001 for
leasehold improvement. As of March 31, 2001, the Company operates on a monthly
lease and intends to move its headquarter office. Accordingly, the Company
recorded an impairment charge of $7,290 and wrote off related accumulated
depreciation of $156.

                                      F-10
<PAGE>


                                   XDOGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE E. INTANGIBLE ASSETS

The Company incurred liabilities during 2000 and 2001 for the development of the
company's web site. Web-site Impairment in the amount of $684,423. The Company
entered into a settlement agreement with its vendor by issuing 600,000 shares of
pre split common stock and entering into a $200,000 notes payable. The Company
capitalized expenses in the amount of $385,348 incurred during 2001 fiscal year
for the construction of its web site. As of March 31, 2001, the web site is not
operational. Accordingly, the Company recorded an impairment charge of $385,348.

The Company has a history of operating losses triggered an impairment review of
its distribution agreement. The Company calculated the present value of expected
cash flows of its Berghaus distribution agreement to determine the fair value of
the assets. Accordingly, at March 31, 2001, the Company recorded an impairment
charge of $195,693 and wrote off the related accumulated amortization of
$12,231.

NOTE F. COMMON STOCK

REVERSE SPLIT

On August 24, 2000, the shareholders approved a reverse split of its common
stock. Weighted average shares outstanding for fiscal 2000 has been adjusted to
reflect changes in shares outstanding. Common stock account was adjusted to
reflect the change in the number of outstanding shares. After the reverse split,
the Company is authorized to issue 20,000,000 shares of its $.01 par value
common stock.

STOCK ISSUED FOR COMPENSATION:

During the year ended March 31, 2001, the Company issued 1,852,072 shares of
post split common stock to its officers, directors, various employees and
outside service providers, in exchange for compensation. The value of the stock
issued was recorded at quoted market price on the date of issuance and totaled
$3,384,476.

During the year ended March 31, 2000, 150,000 shares were issued to an officer
in exchange for compensation. The value of the stock issued was recorded at
quoted market price on the date of issuance and totaled $492,750.

In addition, the Company issued 674,500 of additional common shares in the year
ended March 31, 2000 in lieu of cash for various expenses. The expense recorded
was based upon quoted market price of the stock issued and totaled $1,918,628.

PRIVATE PLACEMENT:

During fiscal year ended March 31, 2001, the Company issued additional common
stock through private offering. The total number of shares issued was 203,649
after split common stock with gross proceeds of approximately $349,293.

In June 2000, the Company completed additional private offerings of common
stock. The total number of shares issued in conjunction with the offerings was
1,532,929, with gross proceeds of approximately $1,030,000 before offering costs
and commissions. $564,514 was received prior to March 31, 1999, net of
commissions of $60,986.

                                      F-11
<PAGE>


                                   XDOGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


EMPLOYEE GRANTS:

The Company has granted nonqualified options for shares of common stock to
certain officers, directors, and employees of the Company. As permitted under
generally accepted accounting principles, these grants are accounted for
following APB Opinion No. 25 and related interpretations. Accordingly
compensation cost has been recognized for those grants whose exercise price is
less than the fair market value of the stock on the date of grant.

OPTIONS AND WARRANTS--NONEMPLOYEE GRANTS:

The Company also grants options to nonemployees for services and in conjunction
with certain agreements. These grants are accounted for under FASB Statement No.
123 based on the grant date fair values. Total expense recorded by the Company
related to option and warrants totaled $180,021, $2,220,306 in 2001 and 2000
respectively. The rights granted under the warrant vested immediately upon
issuance so the entire amount of the expense was recorded during the year ended
March 31, 2001 and 2000.

                                           Warrants & Options
                                       -------------------------     Weighted
                                                     Number of        Average
                                        Number of   Excercisable  Exercise Price
                                         Shares        Shares        Per Share
                                       ----------    ----------      ---------
Balance at March 31, 1999 ..........    1,476,300     1,476,300      $   3.29
   Warrants/Options issued .........         --            --         --
   Warrants/Options exercised ......         --            --         --
   Warrants/Options canceled .......         --            --         --
                                       ----------    ----------      --------

Balance at March 31, 2000 ..........    1,476,300     1,476,300      $   3.29
   Warrants issued .................      300,000
   Reverse Split ...................   (1,421,040)
   Warrants issued .................      775,000
   Warrants exercised ..............         --
   Warrants canceled ...............     (175,000)
                                       ----------    ----------      --------

Balance at March 31, 2001 ..........      955,260       955,260      $   6.15
                                       ----------    ----------      --------


OPTIONS AND WARRANTS--PRO FORMA INFORMATION:

Had compensation cost for all of the stock-based compensation grants and
warrants issued been determined based on grant date fair values of awards,
reported net loss per share would have been increased to the pro forma amounts
shown below.



                                      F-12
<PAGE>


                                   XDOGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                      For the Years Ended
                                                            March 31,
                                                -------------------------------
                                                    2001               2000
                                                -----------       -------------

Net loss, as reported ....................      $(5,820,740)      $  (6,738,816)
                                                ===========       =============
Pro forma net loss .......................      $(5,820,740)      $  (7,666,974)
                                                ===========       =============

Basic and diluted loss per common
   share, as reported ....................      $     (2.24)      $       (3.57)
                                                ===========       =============
Pro forma basic and diluted loss
   per common share ......................      $     (2.24)      $       (4.06)
                                                ===========       =============


Pro forma information regarding net income and earnings per share is required by
SFAS 123 as if the Company had accounted for its issued warrants under the fair
value method of that Statement. The fair value for these warrants was estimated
at the date of issuance using the Black-Scholes option-pricing model with the
following assumptions:

Risk-free interest rate........................     5.00%
Dividend yeild.................................     0.00%
Volatility factor..............................    17.00%
Weighted average expected life.................   5 years

The above pro forma effects on net loss are not likely to be representative of
the effects on reported net loss for future years because options vest over
several years and additional awards are generally made each year.

NOTE G. INCOME TAXES

At March 31, 2000, the Company has accumulated a net operating loss of
approximately $18,140,000, which may be used to reduce future taxable income
through 2020. A valuation allowance has been recognized to completely reserve
for the deferred tax assets related to the loss carryforwards. The reserve has
been established because of the uncertainty of future taxable income, which is
necessary in order to realize the benefits of the net operating loss
carryforwards. Any tax benefits realized in the future from preconfirmation
operating loss carryforwards will be reported as a direct addition to additional
paid-in capital. The Company's ability to utilize these carryforwards to offset
future taxable income is subject to restrictions under Section 382 of the
Internal Revenue Code due to certain changes in the equity ownership of the
Company. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for tax purposes. Components of the
Company's deferred tax assets are:

Loss carryforwards for tax purposes as of March 31, 2000, have the following
expiration dates:

Income tax benefit is different from that which would be computed by applying
U.S. federal income tax rate (35 percent) to pretax loss as follows:

                                      F-13
<PAGE>


                                   XDOGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                               March 31,
                                                         ---------------------
                                                          2001           2000
                                                         -------       -------
U.S. federal statutory graduated rate ..............      18.18%        15.00%
State income tax rate,
   net of federal benefit ..........................       3.89%         4.04%
Net operating loss for which no tax
   benefit is currently available ..................     -22.07%       -19.04%
                                                         -------       -------
                                                           0.00%         0.00%
                                                         =======       =======

NOTE H: MAJOR SUPPLIER AND DISTRIBUTORSHIPS

The Company's principal product lines are franchised under different major
distributor sales agreements. These agreements expire at varying times through
December 2005. In addition, these agreements require that certain operating and
product pricing policies of the Company comply with provisions contained in the
agreements.

The Company is an authorized distributor for Berghaus International (Berghaus),
and Oxbow S.A. (Oxbow). Berghaus and Oxbow manufacture outdoor sporting goods.
The Company distributes products for Berghaus and Oxbow throughout most of North
America. To acquire this territory, the Company agreed to make royalty payments
to each supplier based upon a percentage of net sales. Royalties have been
accrued as of March 31, 2001 and 2000.

The Company is the authorized distributor of Lumen Eyeware products for Metzler
Design (Metzler) in the United States, Canada, Mexico and the Caribbean basin.
To acquire this territory, the Company agreed to pay Metzler a set percentage
over base for products and guaranteed minimum levels of sales for calendar years
beginning January 1, 2000 through the end of the agreement term. At March 31,
2001 and 2000, royalties have been accrued.

NOTE I. LITIGATION

The Company is a defendant in three lawsuits for claims related to breach of
contract and nonpayment of note. We have booked two of the three lawsuits in the
financial statements. These recorded claims include $96,093 related to a breach
of contract lawsuit and approximately $118,000 in non-payment of notes, accrued
interest and accrued expenses to a former Director. Management is not able at
this time to predict the ultimate effect these matters may have on the Company's
financial position or results of operations, but they will vigorously defend
against them.




                                      F-14