|
|

|**SECURITIES AND EXCHANGE COMMISSION**
|--------------------------------------
|                                      
|**Washington, DC 20549**              
|                                      
|**FORM 10-KSB**                       

||X| |  | Annual Report Pursuant to Section 13 or 15(d)
      of the Securities Exchange  Act of 1934    
|--- |  | -----------------------------------------------------------------------------------------------
|    |  | For the fiscal year ended May 31, 2003, or                                                     
|    |  |                                                                                                
|    |  |                                                                                                
||_| |  | Transition report pursuant to Section 13 or 15(d) of the
      Securities  Exchange Act of 1934
|    |  | For the transition period from_____________ to_____________                                    
|    |  |                                                                                                




|Commission File No. 0-15030
|---------------------------

|**WINTER SPORTS, INC.**(Exact name of registrant as specified in its
        charter)
|-------------------------------------------------------------------------------------

|**Montana**              | **81-0221770**            
|------------------------ | --------------------------
|(State of Incorporation) | (I.R.S. Employer I.D. No.)

|P. O. Box 1400, Whitefish, Montana   
        59937
|---------------------------------------------------

|Registrants telephone number, including area
        code  (406) 862-1900
      Securities registered pursuant to Section 12(b) of the
        Act:
      None
      Securities registered pursuant to Section 12(g) of the
        Act:
      Common Stock, No Par Value
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Check whether the registrant (1) has filed all reports
        required to be filed by Section 13 or 15(d) of the Securities Exchange
        Act of 1934 during the preceding 12 months, and (2) has been subject to
        such filing requirements for the past 90 days.  Yes |X|   
        No |_|
      Check if there is no disclosure of delinquent filers pursuant
        to Item 405 of Regulation S-K contained herein, and no disclosure will
        be contained, to the best of registrants knowledge, in definitive
        proxy or information statements incorporated by reference in Part III
        of this Form 10-KSB or any amendment to this Form 10-KSB. |_|
      Registrants revenues in its most recent fiscal
        year were $10,312,046.
      Approximate aggregate market value of the voting stock
        held by non-affiliates of the registrant as of August 16, 2003 was $12,852,684. 
        As of August 16, 2003, the number of shares outstanding of the registrants
        common stock, no par value, was 988,668.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|DOCUMENTS INCORPORATED BY REFERENCE
|-----------------------------------

|Location in Form 10-KSB   | Incorporated Document                                                                                                   
|------------------------- | ------------------------------------------------------------------------------------------------------------------------
|Part III, Item 9, Item 10 | Proxy Statement dated     , 2003                                                                                        
|Item 11, Item 12, Item 14 | to be filed with the Securities and Exchange Commission
      for the annual meeting of shareholders to be held on ,2003

|Total number of pages, including cover page 45   
       Exhibit Index - page 35-36
|-----------------------------------------------------------------------------------

|- 1 -
|-----

|
|

|WINTER SPORTS, INC.
      Form 10-KSB
      Table of Contents
|-------------------------------------------------------------

|Part I          |                                                                                                   | Page
|--------------- | ------------------------------------------------------------------------------------------------- | ----
|                |                                                                                                   |     
|Item  1 -       | Business                                                                                          | 3   
|                |                                                                                                   |     
|Item  2 -       | Properties                                                                                        | 5   
|                |                                                                                                   |     
|Item  3 -       | Legal Proceedings                                                                                 | 7   
|                |                                                                                                   |     
|Item  4 -       | Submission of Matters to a
      Vote of Security Holders                                         | 7   
|                |                                                                                                   |     
|                |                                                                                                   |     
|Part II         |                                                                                                   |     
|                |                                                                                                   |     
|Item  5 -       | Market for Common Stock and
      Related Stockholder Matters                                     | 8   
|                |                                                                                                   |     
|Item  6 -       | Managements Discussion
      and Analysis of Financial Condition and Results of
      Operations | 8   
|                |                                                                                                   |     
|Item  7 -       | Financial Statements                                                                              | 17  
|                |                                                                                                   |     
|Item  8 -       | Changes in and Disagreements
      with Accountants on Accounting and Financial
      Disclosure  | 33  
|                |                                                                                                   |     
|Item 8A -       | Controls and Procedures                                                                           | 33  
|                |                                                                                                   |     
|                |                                                                                                   |     
|Part III        |                                                                                                   |     
|                |                                                                                                   |     
|Item  9
      - | Directors and Executive Officers
      of the Registrant                                          | 34  
|                |                                                                                                   |     
|Item 10 -       | Executive Compensation                                                                            | 34  
|                |                                                                                                   |     
|Item 11 -       | Security Ownership of Certain
      Beneficial Owners and Management                              | 34  
|                |                                                                                                   |     
|Item 12 -       | Certain Relationships and
      Related Transactions                                              | 34  
|                |                                                                                                   |     
|                |                                                                                                   |     
|Part IV         |                                                                                                   |     
|                |                                                                                                   |     
|Item 13 -       | Exhibits and Reports on Form
      8-K                                                            | 35  
|                |                                                                                                   |     
|Signatures      | 36                                                                                               

|2
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|
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|Part I                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1.  Business
      Winter Sports, Inc. d/b/a Big Mountain Resort (the Company
        or Big Mountain), was organized in 1947 as a Montana corporation,
        for the purpose of developing and operating a ski resort at Big Mountain,
        located eight miles north of Whitefish, Montana.
      Operations are carried out on nearly 4,000 acres of land
        at that location, approximately 3,073 acres of which are utilized under
        permits from, and the supervision of, the U.S. Department of Agriculture,
        U.S. Forest Service (the Forest Service).  The balance
        of the land is owned by the Company.  Revenues are generated from
        lift ticket sales, ancillary services, management agreements and fees
        and rentals charged concessionaires and other parties leasing space for
        buildings and concessions.  In fiscal 1993, real estate sales became
        a significant business segment with the creation of Big Mountain Development
        Corporation.  The Company owns over 900 acres in and around its base
        area which is available for resort activities as well as commercial and
        residential development.
      The ski facilities include nine chairlifts and two T-bar
        lifts, which service approximately 45 miles of ski slopes and trails. 
        In addition to the skiing facilities, the Company also operates the Hibernation
        House (hotel facilities), Big Mountain Sports (ski rental, repair and
        ski shop) and a Ski School, all located in the base area, as well as the
        Summit House (retail) located at the summit of the mountain and the Outpost
        (ski shop and skier services operation) at the lower village near the
        lower parking lots.  The Company also operates a property management
        business.  The Company has leased to concessionaires food and beverage
        operations, a day-care center, a photography shop, a snowmobile operation,
        horse operations and sleigh and wagon rides. Revenues derived by the Company
        from these ancillary operations, other than the ski facilities and real
        estate, represented 47.3%, 42.2%, and 33.26%  of total revenues in
        2002/03, 2001/02, and 2000/01, respectively.  The Company has an
        all beverage liquor license and is designated as a resort area
        for the issuance of additional resort retail liquor licenses.
      The Company operates its facilities for skiing and related
        winter activities from approximately mid-November until the following
        mid-April of each year.  During the ski season, the Companys
        facilities are operated seven days a week.  For more than 50 years,
        Big Mountain has averaged approximately 140 days of skiing operations
        annually.  A snowmaking system and improved grooming equipment and
        technology have lessened the reliance on natural snowfall in recent years;
        however, sufficient snowfall to operate the lifts and slopes remains a
        primary consideration.
      The Company also operates on a limited basis from early
        June through early October.  The summer operation consists of a chairlift/gondola
        ride to the summit for sightseeing, hiking, biking, rental and retail,
        hotel and recreational facilities and activities.
      The Companys business is primarily seasonal. 
        A significant portion of its gross revenue is derived during the winter
        ski season.  Real estate sales have occurred on a year-round basis
        in the past.  The Company maintains a year-round staff of approximately
        80 employees.  During the peak ski season, approximately 450 persons
        are employed.  During the summer operations, approximately 130 persons
        are employed.

|3
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|
|

|Located at or near the base area and on the access road
        to Big Mountain are privately owned condominium developments and a number
        of private homes and town homes, many of which are available for public
        rental.  Other accommodations are available in the Flathead Valley. 
        The Resort is served by an all weather secondary highway.  Glacier
        Park International Airport, located in Kalispell, MT, is 20 miles from
        the village core.
      The ski resort business is highly competitive.  The
        success of Big Mountains business is predicated on skiing, which
        is affected by weather and other factors, such as the economy, cost and
        availability of transportation, the effects of September 11, 2001 and
        any related events and the Canadian exchange rate.  The profitability
        and growth of Big Mountains ski operation is largely determined
        by the number of skiers attracted to the area.  The Company believes
        that its principal competition for skiers comes from other destination
        resorts throughout the western United States and western Canada. 
        Some of the ski resorts continuing to be competitive with Big Mountain
        are Whistler-Blackcomb in British Columbia, Sun Valley and Schweitzer
        Basin in Idaho and Big Sky of Montana.  In addition, Canadian ski
        resorts such as Lake Louise and Sunshine in Banff are considered strong
        competition.  The Company also experiences competition from a number
        of smaller regional ski areas, but believes it has a competitive advantage
        over them because of the greater variety of skiing it offers, its larger
        facilities, the length of its season and its extensive snowmaking and
        grooming operations.
      The land occupied by the Summit House and the Companys
        lift sites are subject to a 38-year term, special-use permit from the
        Forest Service expiring December 31, 2038, covering approximately 18 acres. 
        Approximately 3,055 acres are covered by a year-to-year Forest Service
        permit.  These permits do not create a legal interest in favor of
        the Company on the subject lands.  The continued use of these Forest
        Service lands is subject to certain hazards, common to all ski areas developed
        on such lands, including federal business guidelines.  The Forest
        Service at any time may terminate the permits under which the Company
        operates, upon payment of an equitable consideration for the improvements. 
        Both permits require the allowed use to be actually exercised at least
        90 days per year.  The Company is obligated to pay yearly fees to
        the Forest Service on a graduated rate based on certain income. 
        Such rates are adjustable every year.  The current rate is 1.96%
        of applicable revenues.  Payments for fiscal year 2003 were $106,266.
        Payments in 2002 and 2001 were $95,319 and $91,596, respectively.
      In carrying out its business, the Company must comply
        with a number of requirements concerning environmental quality. 
        Advance approval from the Forest Service must be obtained for all construction,
        land alteration and significant repair, in addition to obtaining approval
        from other state and federal agencies regarding the protection of the
        environment and wildlife within the permitted areas.  In 1985-86,
        the Company undertook a major expansion to build a chairlift and ski slopes
        on the previously undeveloped northern slope of Big Mountain.  As
        a result of this expansion, restrictions for lifts on north slopes were
        imposed by the Forest Service covering the length of the ski season on
        those slopes, time periods for construction and restriction of outdoor
        cooking at the mountain top restaurant during the summer season. 
        Since 1990, the Company has pursued additional expansion of ski terrain
        and additional amenities to offer customers within its permit area and
        in 1996 a Record of Decision was issued by the Forest Service approving
        most of the expansion items requested.
      The Company has three wholly owned subsidiaries. 
        Big Mountain Water Co., a regulated utility, supplies water to all base
        area facilities and nearby properties.  Big Mountain Development
        Corporation was activated in September 1991 to oversee and coordinate
        the planning and real estate activities of certain land parcels owned
        by the Company.  The Company formed Big Mountain Club LLC during
        the end of fiscal year 2003.  This entity was formed as negotiations
        with the owner of the golf course in the Flathead Valley became substantial
        in order to properly accumulate the start up costs for this company. 
        This entity is expected to become a non-equity membership club providing
        access to alpine facilities at Big Mountain as well as golf amenities
        at the golf course.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4
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|
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|Item 2.  Properties
      The properties owned or leased by the Company are located
        eight miles north of the City of Whitefish, in the northwest corner of
        the State of Montana, in the Whitefish Range overlooking the Flathead
        Valley.  The Flathead Valley lies on the western slope of the continental
        divide of the United States and is bordered on the north by the Canadian
        provinces of British Columbia and Alberta.
      In the winter of 1947, the Company opened a T-Bar lift,
        ski slopes, day facilities and parking lots for use by the public. 
        Since 1947, chairlifts, ski slopes, trails, a cross-country course, dining
        and lodging accommodations were added periodically.
      In 1997-98 the Company replaced Chair 7, a fixedgrip
        triple chairlift, with a high-speed quad chairlift.  The former fixed-grip
        triple chairlift was redeployed into the Hellroaring Basin which allows
        guest access to an additional 500 acres of terrain.  During the year
        a lift was installed which transports guests to the top of the Companys
        tubing hill.  The Company also purchased two new grooming vehicles
        to add to the existing fleet of front-line groomers.  A second 4.5
        million gallon reservoir was completed near the summit of the mountain. 
        In the first quarter of the year, Big Mountain Development Corporation
        began construction of a 52,000 square foot mixed-use condominium project
        at the entrance of the Companys core village.  The project,
        known as the Kintla Lodge, contains 20 residential condominium units,
        an owners lounge and lobby, and five commercial condominium units.
      During 1998-99 the Company replaced the liner in its primary
        upper-mountain snowmaking reservoir, replaced the haul rope on its Glacier
        Chaser chairlift, installed new underground fuel tanks, purchased a new
        Bombardier groomer for its front-line fleet and replaced approximately
        33% of its rental inventory of skis, snowboards and related items. 
        The Company also finished construction of Kintla Lodge.
      In fiscal year 2000, the Company remodeled its guest services
        building, completed a turnaround at the entrance of the base area village,
        replaced approximately 33% of its rental inventory of skis, snowboards
        and related items.  The Company also installed a fiber optic backbone
        and T-1 line to enhance communications throughout the Company.
      For the fiscal year ending May 31, 2001, the Company implemented
        an integrated  resort-wide ticketing software package.  This
        has allowed the Company to achieve better guest demographics at the resort
        as well as give the Company the opportunity to provide a more seamless
        experience for the guest.  The Company also installed a new T-Bar
        lift which gives access to approximately 20 acres of new terrain on the
        eastside of the mountain.  Improvements were made to the Hibernation
        House, an economy hotel-like property owned by the Company.  Three
        units were purchased in the Alpinglow condominium building in the village
        core.  These units will be placed in the rental pool.  A new
        groomer was added to the existing fleet as well as replacement of some
        of the computers, rental inventory, and vehicles.  The Company also
        invested in new activities for guests to enjoy while visiting the mountain
        throughout the year.  A mechanical bull was added to one of the concessionaires
        facilities; archery, new mountain bike trails as well as Thrill Sleds
        were added.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5
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|
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|On March 19, 2001, the Company announced that Hines
        Resorts, a division of international real estate firm, Hines, was selected
        as the developer for the village at Big Mountain Resort.  Plans call
        for a pedestrian-scale village with more than 700 residential/lodging
        units, at least one hotel, condominiums and town homes, employee housing,
        as well as additional commercial space and a conference center.
      On May 1, 2001, the Company purchased an existing property
        management company which managed properties adjacent to and in the village
        core.  The Company entered into a non-compete agreement with the
        former owners.  The Company also retained one of the former owners
        in the role of a consultant for a period of one year from the date of
        sale.  The Company plans to continue operating the business as it
        had been in the past.  With this acquisition, the Company performs
        property management services for approximately 200 properties in the village
        area.
      On December 21, 2001, the Company purchased 120 acres
        of land contiguous to the Companys southeastern boundaries. 
        The Company is looking at this purchase as the first in three potential
        purchases under an option agreement entered into with the property owner. 
        The company plans to include this parcel into a larger activity area at
        the Resort.
      During 2002, the Company added a 2500 square foot meeting
        room to the Outpost facility.  This room allows an additional potential
        for group bookings.  The Company began an expansion of its snowmaking
        capability along the Chair 2 ski trails.  The Company completed this
        project during the current fiscal year with the filling of a seven million
        gallon reservoir near the upper terminal.  The Company also installed
        a triple chairlift, which services the beginner terrain for skiers and
        snowboarders just learning their respective sport.  This lift replaced
        an old platter lift located at the site.  The chairlift allowed the
        Company to expand the beginner terrain available.
      Toward the end of fiscal year 2002, the Company began
        development of a new activity called Walk in the Tree Tops.  This
        activity is a half day activity in which the participant embarks on a
        guided tour to learn about plants, trees and wildlife while suspended
        in the air.  This adventure also provides some spectacular views
        of the mountain and valley, previously not seen before.  This activity
        is the first in a series of new activities the Company is planning to
        phase in over the next five years.  It is hoped that these activities
        will appeal to the guests and provide new ways of enjoying their time
        at the Resort.
      The Company became involved in the planning of a conference
        center during fiscal year 2003.  This process involved not only completed
        construction drawings, but also the marketing and furnishing plan for
        the facility.  The Board of Directors decided to place the project
        on hold while researching the various options available to secure a hotelier
        for the Resort.
      Other improvements during the recently completed fiscal
        year included additional upgrades to the rental fleet and computer upgrades.
      Also during fiscal year 2003, the Company purchased an
        additional 52 acres of land adjacent to the 120 acres purchased in 2001
        as part of the continuing plan to incorporate this area into additional
        Resort activities.
      The Company also sold a small tract of land to a 501(c)(3)
        entity who plans to engage a developer to construct 10 affordable housing
        units.  As compensation for this bargain sale, the Company was able
        to raise cash and received a charitable donation.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6
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|
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|The Company operates on 4,000 acres, approximately 3,073
        acres of which are owned by the United States Forest Service and are subject
        to their special-use permits.  All of the Companys ski resort
        assets are encumbered to secure the Companys line of credit. 
        See Note 6 of the Notes to Consolidated Financial Statements.
      The lengths and capacities of the Companys ski
        lifts are as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Lifts             | Type         | Number * | Vertical
Rise | Rides/Hour
|----------------- | ------------ | -------- | ------------- | ----------
|                  |              |          |               |           
|                  |              |          |               |           
|Glacier Chaser    | Quad Chair   | #1       | 2,088 ft.     |           
|Swift Creek       | Double Chair | #2       | 1,116 ft.     |           
|Tenderfoot        | Triple Chair | #3       | 434 ft.       |           
|Great Northern    | Triple Chair | #4       | 1,360 ft.     |           
|Glacier View      | Triple Chair | #5       | 840 ft.       |           
|Village Lift      | Quad Chair   | #6       | 280 ft.       |           
|Big Creek Express | Quad Chair   | #7       | 1,216 ft.     |           
|Hellroaring       | Triple Chair | #11      | 1,281 ft.     |           
|Easy Rider        | Triple Chair |          | 139 ft.       |           
|T-Bar #1          | T-bar        |          | 572 ft.       |           
|T-Bar #2          | T-Bar        |          | 400 ft.       |           
|Powder Puff       | Rope Tow     |          | 25 ft.        |           

|*  Chair numbers refer to numbers assigned in Big
      Mountains Resort Area Master Plan.
|-------------------------------------------------------------------------------------------
|                                                                                           
|The Companys major buildings are as follows:                                              

|                                         | **Square
Footage** | 
|---------------------------------------- | ------------------ | 
|Building                                 | **Floor**          | 
|                                         |                    | 
|Chalet                                   | 11,428             | 
|Bierstube                                | 3,860              | 
|Big Mountain Ski
      Shop              | 8,928              | 
|Hibernation House                        | 15,360             | 
|Summit House                             | 14,400             | 
|Ski Hut                                  | 896                | 
|Maintenance Building                     | 5,250              | 
|Warehouse and Maintenance
      Building | 15,360             | 
|Ticket Sales Building                    | 850                | 
|Barn                                     | 1,800              | 
|Maintenance Shop
      on mountaintop    | 1,800              | 
|Outpost Building                         | 11,404             | 
|Events Building                          | 1,440              | 
|Kintla Lodge Retail
      Space          | 6,526              | 
|Sherpa Pool                              | 2,850              | 
|GVPM Office building                     | 3,892              | 

|Item 3.  Legal Proceedings
      The information appearing in Note 12 of the Notes to Consolidated
        Financial Statements is incorporated herein by reference.
      Item 4.  Submission
        of Matters to a Vote of Security Holders
      No matters were submitted to a vote of security holders
        during the fourth quarter of the fiscal year ended May 31, 2003.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7
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|Part II                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Item 5.  Market for
        Common Stock and Related Stockholder Matters
      The Companys common stock is currently traded on
        the NASDAQ Over The Counter Electronic Bulletin Board under the symbol
        WSKI.
      The following table sets forth the range of quarterly
        high and low bid quotations for the Companys common stock for the
        last two fiscal years.  High and low bid quotations have been supplied
        by D. A. Davidson & Co., Inc., a registered broker-dealer.  Such
        over-the-counter market quotations reflect inter-dealer prices, without
        retail mark-up, markdown or commissions and may not necessarily represent
        actual transactions.

| |         | 2003  | 2002  |      
| | ------- | ----- | ----- | -----
| | Quarter | High  | Low   | High 
| |         |       |       |      
| | 1st     | 16.50 | 15.00 | 19.50
| | 2nd     | 16.50 | 14.00 | 20.50
| | 3rd     | 14.25 | 12.00 | 19.00
| | 4th     | 13.50 | 8.00  | 18.00

|No cash dividends have been paid on the Companys
        common stock since 1984.  The declaration of dividends is subject
        to certain restrictions contained in the loan agreement between Bank of
        America and the Company.  These restrictions prohibit the payment
        of cash dividends, other than for preferred dividends or fractional shares,
        without prior written consent of the Bank.
      The Companys Board of Directors authorized a stock
        repurchase program on May 19, 2000.  Under this program the Company
        could repurchase up to 40,000 shares of the Companys outstanding
        common stock at prevailing market prices from time to time over the next
        six to eight months.  The Board of Directors renewed this program
        on December 20, 2000 for an additional six month time period.  The
        program ended June 19, 2001. The Company repurchased 19,700 shares under
        this program.
      The approximate number of shareholders of record for the
        Companys common stock as of August 16, 2003 was 691.
      Equity Compensation Plan Information
      The Company does not have any equity compensation plans
        at this time.
      Item 6.  Managements
        Discussion and Analysis of Financial Condition and Results of Operations
      All statements, other than statements of historical fact
        contained herein constitute Forward-looking Statements within
        the meaning of Section 27A of the Securities Act of 1933, as amended(the
        Securities Act) and Section 21E of the Securities Exchange
        Act of 1934, as amended(the Exchange Act).  These forward
        statements are not based on historical facts, but rather reflect the Companys
        current expectations concerning future results and events.  Similarly,
        statements that describe the Companys objectives, plans or goals
        are or may be forward-looking statements.  Such forward-looking statements
        involve a number of risks and uncertainties.  The Company has tried
        wherever possible to identify such statements by using words such as anticipate,
        assume, believe, expect, intend,
        plan, and words and terms similar in substance in connection
        with any discussion of operating or financial performance.  In addition
        to factors discussed above, other factors that could cause actual results,
        performances or achievements to differ materially from those projected
        include, but are not limited to, the following:  general business
        and economic conditions, both regionally and nationally; weather and snow
        conditions; the changes in the visitation habits of travelers as a result
        of September 11th, related events thereafter and the Canadian
        exchange rate; and other factors listed from time-to-time in the Companys
        documents filed by the Company with the Securities Exchange Commission. 
        The forward-looking statements included in the document are made only
        as of the date of this document and under Section 27A of the Securities
        Act and Section 21E of the Exchange Act, the Company does not have or
        undertake any obligation to publicly update any forward-looking statements
        to reflect subsequent events or circumstances.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8
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|
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|CRITICAL ACCOUNTING POLICIES AND ESTIMATES
      The Companys discussion and analysis of its financial
        condition and results of operations are based upon the Companys
        consolidated financial statements, which have been prepared in accordance
        with generally accepted accounting principles.
      The Company believes certain accounting policies to be
        critical due to the estimation process involved in each.  The Company
        records season pass revenue as it is earned.  The Company has a ticketing
        system which scans the ticket of each person who accesses the chair lifts. 
        A portion of the season pass revenue is recognized as revenue each day
        that the pass holder accesses the lifts.  Property management associated
        revenue is recognized when the guest checks out and/or at the end of each
        accounting cycle, whichever occurs first on a unit by unit basis. 
        The Company, under a development agreement with Hines Resorts, will from
        time to time sell parcels of land.  One of the Companys subsidiaries
        is recognizing any gain on the sale of these parcels under the cost recovery
        method.  The Company chose this method because the sale of land during
        the current fiscal year has been accomplished through a note which is
        subordinate to other loans of the purchasing entity.  Under this
        method, the gain is unrecognized until such time as the basis of the land
        and the associated costs of the sale have been has invested in four LLCs. 
        Revenue from these entities is being recognized under the equity method. 
        The Companys subsidiary, Big Mountain Development Corporation, does
        not have day-to-day management control of these LLCs and does not guarantee
        any borrowings of the LLC.  Depreciation is computed using the straight-line
        method for book purposes using the applicable useful life of the asset. 
        For tax purposes, the Company uses the appropriate tax life as defined
        in the Internal Revenue Code.  The Company recognizes deferred tax
        assets and liabilities based on the differences between the financial
        statement carrying amounts and the tax bases of assets and liabilities. 
        The Company regularly reviews its deferred tax assets for recoverability
        and establishes a valuation allowance based on historical income, projected
        future taxable income, and expected timing of the reversal of existing
        temporary differences.
      The Company adopted FASB 142 at the beginning of the 2003
        fiscal year.  Under this FASB, goodwill will no longer be permitted
        to be amortized.  Instead, goodwill and other intangibles will be
        subject to an annual test for impairment of value.  This statement
        will not have a material effect on the Companys financial statements
        as presented.
      Statement of Financial Accounting Standards No. 143 was
        adopted by the Company in 2003.  Under this standard, asset retirement
        and the obligations associated with the retirement of tangible long-lived
        assets will change.  This statement will not have a material effect
        on the Companys financial statements as presented.
      The Company adopted FASB 144 at the beginning of the 2003
        fiscal year.  This standard sets forth guidelines for accounting
        and reporting for the impairment of long-lived assets and for long-lived
        assets to be disposed of.  This pronouncement will not have a material
        effect on the financial statements as presented.
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|9
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|
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|In July 2002, the FASB issued SFAS No. 146, Accounting
        for Costs Associated with Exit or Disposal Activities.  SFAS
        146 requires that a liability for a cost that is associated with an exit
        or disposal activity be recognized when the liability is incurred. 
        SFAS 146 also establishes that fair value is the objective for the initial
        measurement of the liability.  SFAS 146 is effective for exit or
        disposal activities that are initiated after December 31, 2002. 
        The Company did not have any such activities during the current year.
      In November 2002, the FASB issued FASB Interpretation
        No. 45 (FIN 45),an interpretation of FASB Statement No.
        5, Accounting for Contingencies.  This interpretation
        elaborates on the disclosures to be made by a guarantor in its interim
        and annual financial statements about its obligations under certain guarantees
        that it has issued.  The initial recognition and initial measurement
        provisions of FIN 45 are applicable on a prospective basis to guarantees
        issued or modified after December 31, 2002, irrespective of the guarantors
        fiscal year-end.  The disclosure requirements of FIN 45 are effective
        for financial statements of interim or annual periods ending after December
        15, 2002.  The adoption of this standard had no material impact on
        the Companys financial statements.
      In January 2003, the FASB issued FIN 46, Consolidation
        of Variable Interest Entities.  FIN 46 explains the concept of a
        variable interest entity and requires consolidation by the primary beneficiary
        where the variable interest entity does not have sufficient equity at
        risk to finance its activities without additional subordinated financial
        support from other parties.  FIN 46 also required an investor with
        a majority of the variable interests in a variable interest entity to
        consolidate the entity and also requires majority and significant variable
        interest investors to provide certain disclosures.  This interpretation
        applies immediately to variable interest entities created after January
        31, 2003, and applies in the first year or interim period beginning after
        June 15, 2003 to variable interest entities in which an enterprise holds
        a variable interest that it acquired before February 1, 2003.  Subsequent
        to January 31, 2003, one of the Companys subsidiaries became a
        member in Glades Development LLC.  The Company believes that Glades
        Development LLC is a variable interest entity; however it has determined
        that the Company is not the primary beneficiary and under FIN 46, the
        Company will not consolidate the entity.  Prior to January 31, 2003
        the same subsidiary became a member in Moose Run II LLC, Northern Lights
        LLC and Morning Eagle LLC.  The Company has initially determined
        that under FIN 46, Moose Run II LLC is a variable interest entity and
        the Companys subsidiary, Big Mountain Development Corporation,
        could be the primary beneficiary, therefore the entity will be consolidated
        in the first interim period beginning after June 15, 2003, due to the
        date of the initial involvement with this entity.  See Note 4 for
        the required disclosures.
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|10
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|
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|RESULTS OF OPERATIONS
      Revenues
      In 2003 consolidated revenues decreased by 21% from the
        prior year.  The Company saw a decrease of 17% in Lease, Management
        and other fees.  Lodging revenue at the Companys economy hotel
        property decreased by 14%, while Equipment rental and repair saw a 6%
        decrease from 2002.  Retail experienced a decrease of 8% over last
        year.   The Company also saw a decrease in Real Estate Sales
        of $2,004,186 from fiscal year 2002 as the Company is no longer involved
        in that business.
      Skier visits decreased by over 30,200 or 11% in 2003.
        During the fiscal years ending May 31, 2003, 2002 and 2001, the Company
        offered for a limited time a discounted season pass program.  The
        lack of early season snow and the effects of the war in the Middle East
        affected guest visitation.  During the time of the conflict, ridership
        decreased and then increased again after much of the conflict was reduced. 
        The Company continues to feel the effects of September 11, 2001 through
        the change in traveler behavior.  Guests are booking their vacations
        closer to the time they plan to travel and are utilizing the internet
        more to analyze their options.  The Resort saw more local and regional
        skiers and fewer destination skiers.  Destination skiers tend to
        stay in lodging at the Resort, rent equipment and take lessons to learn
        their sport.  The Company also experienced a decline in visitation
        due to the perception of lower than average snowfall.  The northwestern
        portion of the United States in some parts had low snow conditions. 
        The Resort, although having adequate snowfall, was not perceived by the
        traveler as having good conditions.  The Company saw improvement
        in its Canadian markets over last year, but the weakness of the Canadian
        dollar still contributes to lower visits than were previously experienced. 
        The Company does not believe the weakness in the Canadian dollar is permanent;
        however, it is unclear as to when an improvement in the Canadian exchange
        rate will occur.    The Companys four major markets
        are:  the local drive market, the Pacific Northwest, the Midwest
        and Canada. The Company plans to continue expanding its marketing programs
        in all of its markets.
      In 2002 consolidated revenues increased by $140,331 over
        2001.  The increase is primarily due to the increase in retail income
        of $320,157 or 40% from 2001.  An increase in lift revenue of $157,894
        or 3% from 2001 to 2002 also contributed to the increase in revenues.   
        Revenue from Lease, Management and other fees increased by $881,776 or
        38%.  The increase was due to increased reservations and property
        management fees as a result of the addition of the property management
        company purchased in 2001.
      Operating Cost & Expenses
      Operating costs and expenses in 2003 were $11,390,520
        compared to $12,766,645 in 2002.  The $1,376,125 or 11% decrease
        was primarily attributable to the decrease in Cost of real estate sales. 
        The decrease in Direct expenses  lifts is due to the Company actively
        managing the timing of operations of lifts during the early ski season
        as well as during lower visitation periods.  The Resort is able to
        enjoy excess lift rider capacity and is able to operate some lifts on
        an as needed basis.  The Company anticipates continuing to utilize
        a staggered opening of its available lifts during the early ski season. 
        General and administrative costs increased by 13% or $153,070 partially
        as a result of an increase in its insurance costs.  Most companies
        have experienced an increase in insurance premiums as a result of September
        11.  The ski industry is also experiencing an increase in premiums
        due to the level of claims insurance carriers have seen related to terrain
        park and half-pipe injuries.  The Company is actively working with
        its insurance provider to see what can be done to minimize the effect
        of even more premium increases.  The Company expects, due to the
        insurance market overall, another increase in premiums during the current
        fiscal year.
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|11
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|
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|Interest Income/Expense and Other Income/Expense
      Interest income as of May 31, 2003 was $76,175. 
        This income is associated with notes held by the Company for land sale
        transactions.  Interest income in 2002 was $203,317.  This income
        was earned from a note receivable related to the sale of 16 acres earlier
        in the fiscal year.
      In 2003, interest expense was $338,770 compared to $489,287
        in 2002, a 31% decrease.  The decrease was due to favorable interest
        rates on the companys line of credit.  During fiscal year
        2002, the Company purchased 120 acres of land adjacent to the Companys
        eastern boundary.  The purchase was funded with a five-year term
        loan at Wall Street Prime plus 1%.  The Companys line of credit
        with Bank of America remained relatively the same at May 31, 2003 as it
        was at the same time last year.   Capitalized interest during
        2003 was $6,996 compared to $15,232 in 2001.
      The Company recognized a portion of the gain on the sale
        of land during 2002 in the amount of $2,368,737.  The Company sold
        approximately 16 acres during the first quarter of this fiscal year. 
        The Company is recognizing the gain on the sale of the land under the
        cost recovery method.  Under this method, the gain is unrecognized
        until such time as the basis of the land and the associated costs of the
        sale of land have been recovered.  During the year, these costs were
        recovered through proceeds received and the gain will continue to be recognized
        as proceeds continue to be received.  The Company expects this to
        continue through the second quarter of the current fiscal year.
      The Companys subsidiary, Big Mountain Development
        Corporation, is a member of Morning Eagle LLC, The Glades LLC, Moose Run
        II LLC and Northern Lights LLC.  In each of these LLCs, the subsidiary
        does not participate in the day-to-day operating activities of these entities,
        nor does it guarantee any debt of the entities.  The manager of each
        LLC prepares an annual plan for approval of all members as to the type
        of development that is envisioned for the tract of land owned by the LLC. 
        Each LLC undergoes an independent financial audit of its transactions. 
        The Companys subsidiary receives a portion of the profit from each
        of these entities.  The profit is residual, if any, of the sales
        of real estate product over the costs of developing that product, including
        marketing.  The Companys subsidiary is accounting for this
        investment under the equity method of accounting, as it will receive 60%
        of the residual profit generated in each of these LLCs, except for Morning
        Eagle LLC, in which the Companys subsidiary will receive 22% of
        any residual profit.  The Companys subsidiary has recognized
        income of $144,234 this year, which is found on the Income Statement labeled,
        Equity in Earnings-LLCs.  During the first interim
        period beginning after June 15, 2003, Moose Run II LLC will be consolidated
        under the provisions of FIN 46.  It has been determined by the Company
        that this is the only variable interest entity in which the Companys
        subsidiary is the primary beneficiary.
      Other income (expenses) decreased to $2,330 in 2003 compared
        to $95,514 in 2002. During 2002, the Company collected $243,505 which
        was received from an adjacent landowner under the terms of a legal agreement,
        in which the landowner would be responsible for the costs related to construction
        of a road on the Companys property where the landowner would have
        egress.  It was previously unclear when and if this would be collected
        as well as what the actual dollar amount that the landowner would be liable
        for. This type of revenue is not expected in the future.
      Also included in Other income (expenses) during 2002,
        are amounts which were incurred during the preparation of the mountain
        plan to include installing another chair lift on the mountain.  The
        Board of Directors and management incurred costs of $105,670 during this
        planning and subsequently decided not to install the lift.  This
        decision was made as the current lift utilization is not close to reaching
        its upper capacity limit.   It was decided the Company could
        benefit from a different use of the capital it would have taken to install
        this lift.  The Company also expensed the Environmental Impact Statement
        (EIS) of $57,306 as it was determined that the useful life of the Statement
        had expired.
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|12
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|Income Taxes and Net Income
      Fiscal year 2003 is reporting pre-tax net loss of ($1,036,919). 
        The income tax benefit generated from this is $470,446, producing an effective
        tax rate of (45%).  The Company will carryback this years
        net operating loss to May 31, 2001 and 2002 for Federal purposes, resulting
        in refundable taxes of $203,370.  The remaining $583,626 of Federal
        net operating loss is available to offset future taxable income, with
        the loss expiring May 31, 2023.  For state purposes, the net operating
        loss was $1,233,720, which was carried back to May 31, 2000 and was fully
        utilized.  This resulted in a refund of $83,276.
      The pre-tax net income in 2002 was $2,636,120 compared
        to pre-tax net loss of ($15,028) in 2001.  The income tax expense
        generated from the pre-tax net income in 2002 was $1,037,603, producing
        an effective tax rate of 39% compared to an effective tax benefit of (38%)
        in 2001.
      Net income in 2002 was $1,598,517 or $1.62 per common
        share up from ($9,328) or ($.01) per common share in 2001.
      Deferred Taxes Long term
        deferred income taxes increased to $2,448,191 in 2003 from $2,422,153
        in 2002.  The noncurrent deferred tax asset increased by $228,952
        to $469,593 in fiscal year 2003 from $240,641 in 2002.  As described
        in Note 7, temporary differences exist in the computation of income for
        financial and tax-reporting purposes, giving rise to deferred taxes.
      LIQUIDITY AND CAPITAL RESOURCES At
        the end of 2003 working capital was ($973,585), a decrease of $228,886
        from May 31, 2002.  The decrease is primarily due to a decrease in
        the Cash available as well as a decrease in Accounts Receivable.
      From mid-March through mid-May of the last three fiscal
        years, the Company has offered a limited time reduced season pass price. 
        The effect of this, is that the Company is able to generate cash flow
        toward the end of the fiscal year, while it does not recognize the revenue
        until it is actually earned(as the season pass holder skis).  The
        Company did not experience as high a level of season pass sales for the
        upcoming 2004 season.  The Flathead Valley had three of its larger
        employers announce layoffs during the time of the early season pass sales. 
        The Company expects to capture some of these guests through the 
        frequent skier card product or day ticket sales.  During 2002, the
        Company increased the season pass price by 13%, thus generating a higher
        level of unearned income.  The Company expects to continue with this
        program, although it is expected that the price will probably increase
        in the coming years.
      As the village core and surrounding lands are developed,
        property management is seen as a vehicle to help guests of the Resort
        have a good experience, on and off the slopes.  As such, property
        management is a critical source of on-going revenue, year round. 
        The Company is actively looking for growth opportunities, such as property
        management, which are complementary to the Resort business, to successfully
        operate the Resort on a less seasonal, more year round basis.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13
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|Short term liquidity needs for the Company involve funding
        seasonal working capital requirements and funding our limited 2004 capital
        expenditure program.  Long term, liquidity needs are to fund skiing-related
        capital improvements.  Capital expenditures are funded through the
        Companys line of credit with Bank of America.  The size and
        scope of the capital improvement program will generally be determined
        annually depending upon the strategic importance and expected financial
        return of the projects, future cash flow availability from Resort operations
        and future borrowing availability.  The Resort is well positioned
        for the next couple of years and should not have to expend large amounts
        on mountain improvements.  Continued growth of skier visits, revenues
        and profitability will require periodic capital investment in on-mountain
        improvements.
      Specifically during 2003, the Company took a conservative
        approach to capital expenditures.  It completed the seven million
        gallon water reservoir it began last fiscal year in order to have snowmaking
        along the Chair 2 ski trails.  Snowmaking helps to mitigate the weather
        conditions that impact the Resort during the ski months.  A lower
        level of capital expenditures continues in fiscal year 2004, including
        computer upgrades, equipment rental upgrades and a software package to
        enhance retail purchase capabilities for our guests.
      Long-term debt at the end of 2003 increased to $7,539,876
        from $6,013,705 at the end of 2002.  Long-term debt levels at the
        end of 2003 and 2002 were 73% and 55%, respectively, of stockholders
        equity.
      The Company provides for its cash requirements primarily
        through cash generated by operating activities, supplemented by borrowing
        under a revolving, reducing credit facility.  The Company currently
        has a loan agreement with Bank of America.  The agreement provides
        for a $13,500,000 revolving, reducing line of credit which matures on
        May 31, 2009.  The agreement provides funds for seasonal working
        capital, capital projects and restructuring of long-term debt.  The
        agreement calls for reducing availability of funds in the amount of $1,200,000
        each May 31 beginning May 31, 2004.  Principal reductions are required
        on any outstanding balances above the available amount.  The agreement
        allows any mandatory principal payment otherwise due to be skipped should
        annual gross revenues (excluding real estate related revenues) drop below
        $8.5 million due to conditions beyond the control of the Company. 
        The provision is limited to two such skip payments during the term of
        the loan.  The interest rate on the facility is at or below Bank
        of Americas reference rate.  The Company may obtain funds
        below the reference rate by utilizing a London Interbank Offered Rate
        based option.  Standby letters of credit also reduce the amount available
        under the revolving agreement. There were $7,300,829 of unused funds on
        the Bank of America line of credit at May 31, 2003.
      The Company entered into an agreement with the landowner
        contiguous to the Companys eastern boundary during fiscal year
        2002.  Under this agreement, the Company obtained an option to purchase
        approximately 183.5 acres during the next four years at a specified price. 
        This parcel may be divided into no more than three separate parcels and
        may be acquired in as many as three separate closings.  The Company
        is required to make specified option payments during the time of this
        agreement.  The first three option payments will be credited proportionally
        to parcels as they are purchased.  The remaining option payments
        will not be applied to the purchase price of any parcel.  The Company
        made option payments totaling $171,000 during fiscal year 2002. 
        During fiscal year 2003, the Company exercised part of this option by
        purchasing 52 acres.  As a part of that purchase, the Company was
        given credit for $44,204 of previously made option payments.  The
        Company made an additional $30,000 of option payments during the year
        just ended which is reflected in Other Assets in Note 5.
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|14
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|During the fiscal year ended May 31, 2003, the Company
        sold a .75-acre tract of land to a Hines Resorts entity for the purpose
        of developing a condominium building in the village core.  Located
        on this tract of land, was the Companys marketing department, Big
        Drift Coffee House and Alpine Lodge, which contained Kiddie Korner and
        a day lodge with related locker facilities.  The Company has moved
        its marketing department to facilities located near the property management
        offices.  Kiddie Korner is operating out of temporary facilities
        slope side, until a permanent location has been determined.  Big
        Drift moved its building near Chair 1, behind Alpinglow.  A new location
        for the day lodge is planned for the upper floor of the Big Mountain Sports
        building for the upcoming winter season.  The Company expects to
        recognize the gain on the sale of this parcel of land using the cost recovery
        method as with other parcels of land it has sold.  It is expected
        that this condominium project will contain 49 condominium units of varying
        sizes.  It will also contain approximately 10,000 square feet of
        retail space.  The Company expects to purchase this retail space
        in late summer 2003 and lease the space to a varying mix of tenants. 
        The project broke ground in June, 2002 and is expected to be completed
        during the fall of 2003.  Land sales of this nature will occur based
        on a detailed plan presented by Hines Resorts to management and the Board
        of Directors and the prevailing economic climate.  The proposed development
        is being analyzed for a number of important factors, one of the most important
        being whether the project is in compliance with the Master Plan for the
        village core and surrounding area as well as with the vision statement
        for the Resort.
      Also during 2003, the Companys subsidiary, Big
        Mountain Development Corporation, became a member of Morning Eagle LLC. 
        The subsidiary does not participate in the day-to-day operating activities
        of this entity, nor does it guarantee any debt of the entity.  The
        manager of the LLC prepares an annual plan for approval of all members
        as to the type of development that is envisioned for the tract of land
        owned by the LLC.   The Companys subsidiary receives
        a portion of the profit from this entity.  The profit is the residual,
        if any, of the sales of real estate product over the costs of developing
        that product, including marketing.  The Companys subsidiary
        is accounting for this investment under the equity method of accounting,
        as it will receive 22% of the residual profit generated.
      On August 14, 2002, the Company filed Form 8K to announce
        that the Companys Board of Directors authorized management to seek
        financing and pursue design documents for a conference center to be built
        in the village core of the Resort.  The new facility is currently
        being planned to measure 41,000 square feet, including parking, with approximately
        27,000 square feet of useable meeting space.  At this time, the Board
        of Directors and management have decided to vigorously investigate the
        options available to enable the conference center to be constructed at
        the same time as the currently planned hotel adjacent to the conference
        center site.  It is believed that the conference center and the hotel
        property will both become viable entities quickly if operations begin
        consecutively rather than separately. The Company is currently exploring
        the various options available with a limited partnership structure or
        limited liability company to raise capital for a hotel or a combination
        hotel/conference center package with a third party(ies).  The Company
        continues to have a funding mechanism in place in which a portion of lot
        sales are allocated to assist in the funding of the conference center. 
        The Company will continue to use this funding mechanism as well as others
        that are currently under investigation.  For the upcoming winter
        season, the Company has entered into an agreement with an operator to
        lease the Bierstube restaurant/bar.  It is hoped that this operator
        will be interested in moving to the new location of the Bierstube once
        that is determined as the conference center is completed.
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|During June, 2003, the Company entered into two interest
        rate swaps.  These swaps were entered into for a three and four year
        period of time at one million dollars each.  The objective of the
        hedge is to eliminate the variability of cash flows in the interest payments
        for the debt, the sole source of which is due to changes in the LIBOR
        benchmark interest rate.  Changes in the cash flows of the interest
        rate swap are expected to exactly offset the changes in cash flows(i.e.,
        changes in interest rate payments) attributable to fluctuations in the
        LIBOR.
      The Company has also commenced discussions with its line
        of credit lender, Bank of America.  During January, 2003, the Company
        renegotiated its line of credit to $13.5 million on the assumption that
        the conference center would be breaking ground in the near future. 
        As it has been determined to wait on the conference center, pending investigation
        of a hotel property, the Company has decided to reduce the available amount
        on the outstanding portion of its line of credit.  It is currently
        planning to reduce the total amount available on the line of credit from
        $13.5 million to $10 million.  It is further expected that after
        the first of calendar year 2004, the amount available will be reduced
        to $9 million.  The interest rate is expected to remain the same.
      The Board of Directors has continued its ongoing discussion
        regarding the economic viability of the Company continuing to operate
        under the rules and regulations of the Securities and Exchange Commission. 
        In the last 18 months, following the well publicized corporate scandals,
        the Securities and Exchange Commission has implemented numerous regulations
        that are a significant new burden on all public companies.  In particular,
        the Sarbanes-Oxley Act of 2002 imposes further public reporting requirements
        and has had a dramatic effect on the cost of Director and Officer (D &
        O) insurance for companies whose stock is registered under the Exchange
        Act.  Winter Sports, a relatively small company, has the same reporting
        requirements as companies that are 10-100 times larger.  The Company
        has experienced a significant cost increase in the D & O insurance
        as well as in audit fees and reporting requirements.  At this time
        the Company anticipates that additional new reporting requirements may
        be forth coming and may have a further burden on the Company.
      The above costs which can be quantified also do not include
        the substantial attention management must devote to compliance with federal
        securities laws that would be inapplicable if the Company were to deregister
        its common stock under the Exchange Act.  The Board of Directors
        believes the intangible benefits that would be derived if the management
        of the Company were allowed to focus additional attention on operations
        and financial management which would further enhance Winter Sports financial
        performance and allow the Company to provide improved services to its
        guests.
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|Item 7. 
      Financial Statements        |                                   
|------------------------------------------ | ----------------------------------
|                                           |                                   
|Index to Consolidated Financial Statements | Page                              
|                                           |                                   
|                                           | Independent Auditors
      Report
|                                           |                                   
|                                           | Financial Statements:             
|                                           |                                   
|                                           |                                   
|                                           |                                   
|                                           |                                   
|                                           |                                   
|                                           |                                   
|                                           |                                   
|                                           |                                   
|                                           |                                   
|                                           |                                   

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|INDEPENDENT AUDITORS
        REPORT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|To the Board of Directors and StockholdersWinter Sports, Inc.Whitefish, Montana
      We have audited the accompanying consolidated balance
        sheets of Winter Sports, Inc. (a Montana Corporation) as of May 31, 2003
        and 2002, and the related consolidated statements of income and retained
        earnings, and cash flows for each of the three years in the period ended
        May 31, 2003.  These consolidated financial statements are the responsibility
        of the Companys management. Our responsibility is to express an
        opinion on these consolidated financial statements based on our audits.
      We conducted our audits in accordance with auditing standards
        generally accepted in the United States of America.  Those standards
        require that we plan and perform the audit to obtain reasonable assurance
        about whether the consolidated financial statements are free of material
        misstatement.  An audit includes examining, on a test basis, evidence
        supporting the amounts and disclosures in the consolidated financial statements. 
        An audit also includes assessing the accounting principles used and significant
        estimates made by management, as well as evaluating the overall financial
        statement presentation.  We believe that our audits provide a reasonable
        basis for our opinion.
      In our opinion, the consolidated financial statements
        referred to above present fairly, in all material respects, the financial
        position of Winter Sports, Inc. as of May 31, 2003 and 2002 and the results
        of its operations and its cash flows for each of the three years in the
        period ended May 31, 2003, in conformity with accounting principles generally
        accepted in the United States of America.
      
      Jordahl & Sliter PLLCKalispell, MontanaJuly 3, 2003

|18
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|
|

|WINTER SPORTS, INC.
      CONSOLIDATED BALANCE
        SHEETS
|-------------------------------------------------------------

|                                                 |   | May
31      |   | 
|------------------------------------------------ | - | ----------- | - | 
|                                                 |   |             |  
|ASSETS                                           |   | 2003        |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|Current Assets                                   |   |             |   | 
|Cash
      and cash equivalents                  | $ | 475,288     |   | 
|Cash
      - restricted                          |   | 76,595      |   | 
|Accounts
      receivables                       |   | 209,339     |   | 
|Accounts
      receivables - related parties     |   | 65,855      |   | 
|Interest
      receivable  related parties      |   | 68,110      |   | 
|Income
      tax refund receivable               |   | 290,163     |   | 
|Current
      deferred tax asset                 |   | 36,514      |   | 
|Inventories                                      |   | 560,634     |   | 
|Prepaid
      expenses                           |   | 450,523     |   | 
|                                                 |   |             |   | 
|Total Current Assets                             |   | 2,233,021   |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|Property and Equipment,
      at cost            |   | 29,996,638  |   | 
|Accumulated depreciation
      and amortization  |   | (17,515,325 | ) | 
|                                                 |   |             |   | 
|                                                 |   | 12,481,313  |   | 
|Construction in progress                         |   | 765,141     |   | 
|Land and development costs                       |   | 7,157,338   |   | 
|                                                 |   |             |   | 
|Net Property and Equipment                       |   | 20,403,792  |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|Investment in LLCs                               |   | (239,023    | ) | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|Other Assets                                     |   | 1,128,722   |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|TOTAL ASSETS                                     | $ | 23,526,512  |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|LIABILITIES AND STOCKHOLDERS
      EQUITY       |   |             |   | 
|                                                 |   |             |   | 
|Current
      Liabilities                        |   |             |   | 
|Accounts
      payable                           | $ | 556,496     |   | 
|Accounts
      payable - related parties         |   | 4,666       |   | 
|Employee
      compensation and related expenses |   | 201,403     |   | 
|Taxes
      other than payroll and income        |   | 95,009      |   | 
|Interest
      payable                           |   | 44,903      |   | 
|Interest
      payable  related parties         |   | 34,062      |   | 
|Current
      deferred tax liability             |   | 28,314      |   | 
|Current
      portion long-term debt             |   | 45,304      |   | 
|Deposits
      and other unearned income         |   | 2,193,551   |   | 
|Other
      current liabilities                  |   | 2,898       |   | 
|                                                 |   |             |   | 
|Total current liabilities                        |   | 3,206,606   |   | 
|Long-term debt                                   |   | 7,539,876   |   | 
|Deferred income taxes                            |   | 2,448,191   |   | 
|                                                 |   |             |   | 
|Total Liabilities                                |   | 13,194,673  |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|Stockholders Equity                             |   |             |   | 
|Common
      stock (5,000,000 shares authorized; |   |             |   | 
|988,668
      shares outstanding                 |   |             |   | 
|in
      2003 and 2002)                          |   | 3,887,676   |   | 
|Retained
      earnings                          |   | 6,444,163   |   | 
|                                                 |   |             |   | 
|Total stockholders
      equity                 |   | 10,331,839  |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 
|TOTAL LIABILITIES AND STOCKHOLDERS
      EQUITY | $ | 23,526,512  |   | 
|                                                 |   |             |   | 
|                                                 |   |             |   | 

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

|19
|--

|
|

|WINTER SPORTS, INC.
      CONSOLIDATED STATEMENTS
        OF INCOME AND RETAINED EARNINGS
|-----------------------------------------------------------------------------------------

|                                       |  |                    |                    
|-------------------------------------- |  | ------------------ | -------------------
|                                       |  |                    | Year Ending May 31,
|                                       |  | 2003               |                    
|                                       |  |                    |                    
|Revenue                                |  |                    |                    
|Lifts                                  |  | $   5,434,446      |                    
|Retail                                 |  | 1,027,529          |                    
|Equipment rental and repair            |  | 639,187            |                    
|Lodging                                |  | 237,130            |                    
|Lease, management and other fees       |  | 2,628,109          |                    
|Lease, management and other fees       | 
|- related parties                      |  | 345,645            |                    
|Real estate sales                      |  | 0                  |                    
|                                       |  |                    |                    
|Total Revenue                          |  | 10,312,046         |                    
|                                       |  |                    |                    
|Operating Costs & Expenses             |  |                    |                    
|Direct expenses - lifts                |  | 2,072,921          |                    
|Depreciation expense - lifts           |  | 907,640            |                    
|Cost of retail                         |  | 656,974            |                    
|Cost of real estate sales              |  | 0                  |                    
|Payroll and related expenses           |  | 3,366,862          |                    
|Direct expenses                        |  | 1,393,284          |                    
|Direct expenses - related parties      |  | 13,321             |                    
|Marketing                              |  | 905,920            |                    
|Marketing - related parties            |  | 1,281              |                    
|Depreciation and amortization          |  | 716,919            |                    
|General and administrative             |  | 1,321,218          |                    
|General and administrative -           | 
|related parties                        |  | 34,180             |                    
|                                       |  |                    |                    
|Total Operating Costs & Expenses       |  | 11,390,520         |                    
|                                       |  |                    |                    
|Operating Income (Loss)                |  | (1,078,474         | )                  
|                                       |  |                    |                    
|Other Income (Expense)                 |  |                    |                    
|Interest income                        |  | 8,065              |                    
|Interest income  related parties      |  | 68,110             |                    
|Interest expense                       |  | (253,087           | )                  
|Interest expense  related parties     |  | (85,683            | )                  
|Sale of land                           |  | 3,445,989          |                    
|Unrecognized gross profit on land sale |  | (3,376,468         | )                  
|Cost of land sale                      |  | (69,521            | )                  
|Gain on land sale previously           | 
|Unrecognized                           |  | 141,938            |                    
|Gain on land sale                      |  | 15,648             |                    
|Equity in Earnings-LLCs                |  | 144,234            |                    
|Other income (expense)                 |  | 2,330              |                    
|                                       |  |                    |                    
|Total Other Income (Expense)           |  | 41,555             |                    
|                                       |  |                    |                    
|Income (Loss) before income taxes      |  | (1,036,919         | )                  
|Provision for (Recovery of)            | 
|income taxes                           |  | (470,446           | )                  
|                                       |  |                    |                    
|Net Income (Loss)                      |  | (566,473           | )                  
|Retained earnings - beginning of year  |  | 7,010,636          |                    
|                                       |  |                    |                    
|Retained earnings - end of year        |  | $   6,444,163      |                    
|                                       |  |                    |                    
|Earnings (Loss) per common share       |  | $             (.57 | )                  
|                                       |  |                    |                    
|Weighted average shares outstanding    |  | 988,688            |                    

|The accompanying notes are an integral part of these financial
      statements
|-------------------------------------------------------------------------------

|20
|--

|
|

|WINTER SPORTS, INC.
      CONSOLIDATED STATEMENTS
        OF CASH FLOWS
|-----------------------------------------------------------------------

|                                               |  |                     |                    
|---------------------------------------------- |  | ------------------- | -------------------
|                                               |  |                     | Year Ending May 31,
|                                               |  | 2003                |                    
|                                               |  |                     |                    
|Cash flows from operating activities:          |  |                     |                    
|Net income (loss)                              |  | $         (566,473  | )                  
|                                               |  |                     |                    
|Adjustments to reconcile net income            | 
|to cash provided by                            | 
|operating activities:                          | 
|Depreciation and amortization                  |  | 1,580,858           |                    
|Increase (decrease)
      in deferred          | 
|income
      taxes                             |  | (180,282            | )                  
|(Gain) loss on disposition
      of assets     |  | 0                   |                    
|(Gain) on sale of land                         |  | 0                   |                    
|Equity in Earnings-LLCs                        |  | 421,345             |                    
|Write-off of intangible
      asset            |  | 11,299              |                    
|Changes in operating
      assets              | 
|and liabilities:                               | 
|Cash-restricted                                |  | (76,595             | )                  
|Receivables                                    |  | 132,024             |                    
|Refundable
      income taxes                  |  | (135,928            | )                  
|Inventories                                    |  | 13,139              |                    
|Prepaid
      expenses                         |  | (203,266            | )                  
|Construction
      in progress                 |  | (193,535            | )                  
|Land
      and development costs               |  | 3,795               |                    
|Other
      assets                             |  | 43,351              |                    
|Accounts
      payable                         |  | (74,246             | )                  
|Employee
      compensation and                | 
|related
      expenses                         |  | (103,153            | )                  
|Interest
      payable                         |  | 35,933              |                    
|Taxes
      other than payroll and             | 
|income
      taxes                             |  | (1,967              | )                  
|Deposits
      and other                       | 
|unearned
      revenue                         |  | (205,489            | )                  
|Other
      liabilities                        |  | (294                | )                  
|                                               |  |                     |                    
|Total adjustments                              |  | 1,066,989           |                    
|                                               |  |                     |                    
|Net cash provided by                           | 
|operating activities                           |  | 500,516             |                    
|                                               |  |                     |                    
|Cash flows from investing activities:          |  |                     |                    
|Proceeds from sale of assets
         and land |  | 69,869              |                    
|Option payments                                |  | (30,000             | )                  
|Property and equipment acquisitions            |  | (1,479,011          | )                  
|                                               |  |                     |                    
|Net cash provided by (used in)                 |  |                     |                    
|investing activities                           |  | (1,439,142          | )                  
|                                               |  |                     |                    
|Cash flows from financing activities:          |  |                     |                    
|Proceeds from issuance of                      |  |                     |                    
|long-term debt                                 |  | 9,070,075           |                    
|Payments of long-term debt                     |  | (8,381,491          | )                  
|Loan fees paid                                 |  | (15,000             | )                  
|Stock Repurchase Plan                          |  | 0                   |                    
|                                               |  |                     |                    
|Net cash provided by (used
        in)         |  |                     |                    
|financing activities                           |  | 673,584             |                    
|                                               |  |                     |                    
|Net increase (decrease) in
        cash        |  |                     |                    
|and cash equivalents                           |  | (265,042            | )                  
|Cash and cash equivalents
        - beginning  |  |                     |                    
|of year                                        |  | 740,330             |                    
|                                               |  |                     |                    
|Cash and cash equivalents
        - end        |  |                     |                    
|of year                                        |  | $           475,288 |                    
|                                               |  |                     |                    
|                                               |  |                     |                    

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

|22
|--

|
|

|NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|NOTE 1.  Summary
        of Significant Accounting Policies
      The consolidated financial statements include the amounts
        of Winter Sports, Inc. and its wholly owned subsidiaries, Big Mountain
        Water Company, Big Mountain Development Corporation and Big Mountain Club
        LLC.    All significant intercompany accounts and transactions
        have been eliminated in consolidation.  Certain amounts in 2002 have
        been reclassified to conform with 2003 presentation.
      The preparation of financial statements in conformity
        with generally accepted accounting principles requires management to make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the
        date of the financial statements and the reported amounts of revenues
        and expenses during the reporting period.  Actual results could differ
        from those estimates.
      In order to secure the obligation to provide water to
        a planned affordable housing community to be built by another developer,
        the Company is required to maintain a restricted cash bank account and
        balance of $76,595, wherein the Flathead County Board of Commissioners
        has joint control until completion of the improvements.
      Property and equipment is stated at cost.  Additions
        and betterments are capitalized, while maintenance and repairs are expensed
        as incurred.  For financial reporting purposes, depreciation is provided
        for by the straight-line method over estimated useful lives.  Accelerated
        depreciation methods are used for tax purposes.  Gains and losses
        from the sale or retirement of assets are included in other income (expense).
      Land is stated at the lower of cost or net realizable
        value.  All direct and indirect costs related to land (including
        land acquisition costs, land improvement, surveying, engineering and legal
        fees) are capitalized.
      Interest is capitalized in connection with the construction
        of major projects.  The capitalized interest is recorded as part
        of the asset to which it relates and is amortized over the assets useful
        life.  Capitalized interest during fiscal year 2003 was $6,996. 
        In 2002 and 2001, $15,231 and $0 of interest was capitalized, respectively.
      The Company, under a development agreement with another
        entity, will from time to time sell parcels of land.  The Company
        is recognizing any gain on the sale of these parcels under the cost recovery
        method.  Under this method, the gain is unrecognized until such time
        as the basis of the land and the associated costs of the sale of these
        parcels have been recovered.
      The Company adopted FASB 142 at the beginning of the 2003
        fiscal year.  Under this FASB, goodwill will no longer be permitted
        to be amortized.  Instead, goodwill and other intangibles will be
        subject to an annual test for impairment of value.  This statement
        will not have a material effect on its financial statements as presented.
      Statement of Financial Accounting Standards No. 143 was
        adopted by the Company in 2003.  Under this standard, asset retirement
        and the obligations associated with the retirement of tangible long-lived
        assets will change.  This statement will not have a material effect
        on its financial statements as presented.
      The Company adopted FASB 144 at the beginning of the 2003
        fiscal year.  This standard sets forth guidelines for accounting
        and reporting for the impairment of long-lived assets and for long-lived
        assets to be disposed of.  This statement will not have material
        effect on the financial statements as presented.

|23
|--

|
|

|In July 2002, the FASB issued SFAS No. 146, Accounting
        for Costs Associated with Exit or Disposal Activities.  SFAS
        146 requires that a liability for a cost that is associated with an exit
        or disposal activity be recognized when the liability is incurred. 
        SFAS 146 also establishes that fair value is the objective for the initial
        measurement of the liability.  SFAS 146 is effective for exit or
        disposal activities that are initiated after December 31, 2002. 
        The Company did not have any such activities during the current year.
      In November 2002, the FASB issued FASB Interpretation
        No. 45 (FIN 45),an interpretation of FASB Statement No.
        5, Accounting for Contingencies.  This interpretation
        elaborates on the disclosures to be made by a guarantor in its interim
        and annual financial statements about its obligations under certain guarantees
        that it has issued.  The initial recognition and initial measurement
        provisions of FIN 45 are applicable on a prospective basis to guarantees
        issued or modified after December 31, 2002, irrespective of the guarantors
        fiscal year-end.  The disclosure requirements of FIN 45 are effective
        for financial statements of interim or annual periods ending after December
        15, 2002.  The adoption of this standard had no material impact on
        the Companys financial statements.
      Revenue from investments in limited liability companies
        has been accounted for under the Equity method of accounting.  Under
        this method, earnings are recognized at the time they are earned through
        the LLC.  In January 2003, the FASB issued FIN 46, Consolidation
        of Variable Interest Entities.  FIN 46 explains the concept of a
        variable interest entity and requires consolidation by the primary beneficiary
        where the variable interest entity does not have sufficient equity at
        risk to finance its activities without additional subordinated financial
        support from other parties.  FIN 46 also required an investor with
        a majority of the variable interests in a variable interest entity to
        consolidate the entity and also requires majority and significant variable
        interest investors to provide certain disclosures.  This interpretation
        applies immediately to variable interest entities created after January
        31, 2003, and applies in the first year or interim period beginning after
        June 15, 2003 to variable interest entities in which an enterprise holds
        a variable interest that it acquired before February 1, 2003.  Subsequent
        to January 31, 2003, one of the Companys subsidiaries, Big Mountain
        Development Corporation, became a member in Glades Development LLC. 
        The Company believes that Glades Development LLC is a variable interest
        entity; however, it has determined that the Companys subsidiary,
        Big Mountain Development Corporation, is not the primary beneficiary and
        under FIN 46, it will not consolidate the entity.  Prior to January
        31, 2003 the same subsidiary became a member in Moose Run II LLC, Northern
        Lights LLC and Morning Eagle LLC.  The Company has determined that
        under FIN 46, Moose Run II LLC is a variable interest entity and the Companys
        subsidiary, Big Mountain Development Corporation, is the primary beneficiary;
        therefore the entity will be consolidated in the first interim period
        beginning after June 15, 2003.  See also Note 4.
      Advertising costs are expensed as incurred.  Advertising
        expenses were $795,642, $897,528 and $910,595 in 2003, 2002 and 2001,
        respectively.
      The Company uses the allowance method to account for uncollectible
        accounts receivable.  The Company considers accounts receivable to
        be fully collectible at year-end, accordingly, no allowance for doubtful
        accounts is required.
      For purposes of the Consolidated Statements of Cash Flows,
        the Company considers all highly liquid investments purchased with a maturity
        of three months or less to be cash equivalents.
      Inventories are stated at the lower of cost or market
        value on a first-in, first-out method.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|24
|--

|
|

|Loan costs, included in Other Assets, are being amortized
        ratably over the term of the loan.  The Covenant Not to Compete is
        being amortized on a straight-line basis over a sixty-month period. 
        Goodwill was being amortized on a straight-line basis over fifteen years
        until the current fiscal year.  During the year ending May 31, 2003,
        the Company adopted FAS 142.  It has been determined that there has
        not been an impairment of this asset and so no write down has occurred
        during the past year.
      On September 9, 1995, the Company received approval from
        the U.S. Forest Service for the Final Environmental Impact Statements
        (EIS) for The Big Mountain Resort.  The Company has previously amortized
        the costs of the EIS over its useful life. During fiscal year 2002, it
        was determined that there was no value left in the EIS and so the Company
        wrote off the remaining balance.
      The Company estimates that the fair value of all financial
        instruments at May 31, 2003 and 2002, do not differ materially from the
        aggregate carrying values of its financial instruments recorded in the
        accompanying balance sheets.
      NOTE 2.  Business Segment Information
      In 2003, 2002 and 2001, the Company operated principally
        in two industries, the operation of a resort area and the investment of
        real estate.  Winter Sports is involved in operations in the resort
        area industry to develop and provide recreational and related services
        to guests. Big Mountain Development Corporation participates in various
        LLC activities as described in Note 4.
      Financial information by industry segment for 2003, 2002
        and 2001 is summarized as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              |  |                              |  
|----------------------------- |  | ---------------------------- | -
|                              |  | Winter Sports                |  
|                              |  |                              |  
|2003                          |  |                              |  
|Revenue                       |  | $          10,212,649        |  
|Operating profit(loss)        |  | $              (888,626      | )
|Depreciation and amortization |  | $            1,602,806       |  
|Interest income               |  | $                 54,977     |  
|Interest expense              |  | $              (338,770      | )
|Equity in Earnings LLCs      |  | $                          0 |  
|Income tax expense (benefit)  |  | $              (488,727      | )
|Identifiable assets           |  | $          20,022,608        |  
|Capital expenditures          |  | $            1,597,016       |  

|                              |  |                                |  
|----------------------------- |  | ------------------------------ | -
|2002                          |  |                                |  
|Revenue                       |  | $            10,893,082        |  
|Operating profit (loss)       |  | $                (703,676      | )
|Depreciation and amortization |  | $              1,617,414       |  
|Interest income               |  | $                   60,963     |  
|Interest expense              |  | $                (489,287      | )
|Equity in Earnings-LLCs       |  | $                            0 |  
|Income tax expense            |  | $                 695,840      |  
|Identifiable assets           |  | $            19,077,997        |  
|Capital expenditures          |  | $              1,108,696       |  

|25
|--

|
|

|                              |   |            |  
|----------------------------- | - | ---------- | -
|2001                          |   |            |  
|Revenue                       | $ | 9,473,285  |  
|Operating profit(loss)        | $ | (1,210,402 | )
|Depreciation and amortization | $ | 1,492,742  |  
|Interest income               | $ | 0          |  
|Interest expense              | $ | (287,388   | )
|Equity in Earnings-LLCs       | $ | 0          |  
|Income tax expense (benefit)  | $ | (648,471   | )
|Identifiable assets           | $ | 14,761,052 |  
|Capital expenditures          | $ | 3,534,396  |  





|NOTE 3.  Property
      and Equipment
|-------------------------------------
|                                     

|                             |                   |       |     
|---------------------------- | ----------------- | ----- | ----
|                             | Asset 
Life Years |       | 2003
|                             |                   |       |     
|Leasehold improvements       |                   | 30    |     
|Buildings and grounds        |                   | 10-30 |     
|Lifts                        |                   | 10-15 |     
|Machinery and equipment      |                   | 3-25  |     
|Furniture and fixtures       |                   | 3-10  |     
|Water system                 |                   | 10-25 |     
|                             |                   |       |     
|Total property and equipment |                   |       |     
|                             |                   |       |     



|NOTE 4.  Investment in LLCs
       The Companys
        subsidiary, Big Mountain Development Corporation has become a member of
        four limited liability companies, Northern Lights LLC, Morning Eagle LLC,
        The Glades LLC and Moose Run II LLC. In each of these LLCs, the subsidiary
        does not participate in the day-to-day operating activities of these entities,
        nor does it guarantee any debt. The manager of each LLC prepares an annual
        plan for approval of all members as to the type of development that is
        envisioned for the tract of land owned by the LLC. The Companys
        subsidiary receives a portion of the profit from each of these entities.
        The profit is residual, if any, of the sales of real estate product over
        the costs of developing that product, including marketing. The Companys
        subsidiary is accounting for this investment under the equity method of
        accounting, as it will receive 60% of the residual profit generated in
        each LLC, except for Morning Eagle LLC in which it will receive 22% of
        any residual.
       As a result
        of FIN 46, the Company is evaluating its subsidiarys investment
        in each of these limited liability companies to determine whether these
        entities meet the definition of Variable Interest Entities under this
        provision. If the Companys subsidiary, Big Mountain Development
        Corporation, is determined to be the primary beneficiary of any of these
        LLCs, the Company would then be required to consolidate that entity,
        rather than reporting on the equity method as has been done in the past.
       Moose Run II
        LLC was entered into in November, 2001. This entity sold land to another
        developer for a lump sum plus a portion of the gross proceeds of any sales.
        The entity had total assets of $85,181 and total liabilities of $540,657
        as of May 31, 2003. The Companys maximum exposure is limited to
        its equity contribution of $10, its ratable share of any income/loss and
        the remaining portion of a note receivable in the amount of $477,090 plus
        accrued interest. The Company has initially determined that the Companys
        subsidiary, Big Mountain Development Corporation, could be the primary
        beneficiary of this variable interest entity. Due to the date of involvement
        with this entity, the Company is not required at this time to consolidate
        this entity.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|26                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|
|

|The Glades Development
        LLC was entered into in April, 2003. This entity is involved in a project
        for single family home sites. The total assets of this entity were $3,356,486
        and total liabilities of $3,549,994 as of May 31, 2003. The Companys
        maximum exposure to loss is the ratable portion of income/loss. The Company
        has determined that the Companys subsidiary, Big Mountain Development
        Corporation, is not the primary beneficiary of this entity. Therefore,
        it will not be consolidated, but rather reported by the equity method.
       Condensed financial
        information of the LLCs are as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                   | 
|---------------------------------- | 
|COMBINED
      BALANCE SHEET      
|COMBINED ASSETS                    | 
|Land held for development and sale | 
|Cash                               | 
|Other Assets                       | 
|                                   | 
|                                   | 
|                                   | 
|                                   | 
|                                   | 

|                                   | 
|---------------------------------- | 
|COMBINED LIABILITIES AND EQUITY    | 
|Notes and other payables           | 
|Equity                             | 
|                                   | 
|                                   | 
|                                   | 
|                                   | 
|COMBINED
      STATEMENT OF INCOME

|Net Income from sales | $ (360,345) | 
|--------------------- | ----------- | 
|                      |             | 

|                                                                       |  |  | 
|---------------------------------------------------------------------- |  |  | 
|                                                                      
|NOTE 5.
      Other Assets                                            
|                                                                      
|Other assets
      at May 31, 2003 and 2002 are summarized as follows:
|                                                                      

|                                             |  |             
|-------------------------------------------- |  | ------------
|                                             |  | 2003        
|                                             |  |             
|Loan costs, net of amortization              |  | $     14,732
|Planning and development - long-term         |  | 41,460      
|Noncurrent deferred tax asset                |  | 469,593     
|Option Payments                              |  | 156,796     
|Note receivable                              |  | 100,870     
|Goodwill, net of amortization                |  | 158,469     
|Covenant Not to Compete, net of amortization |  | 14,148      
|Other long-term assets                       |  | 172,654     
|                                             |  |             
|Total other assets                           |  | $1,128,722  
|                                             |  |             
|                                             |  |             
|27                                          
|                                            

|
|

|NOTE
        6. Notes Payable                                          
|-----------------------------------------------------------------------
|Long-term debt at May
      31, 2003 and 2002 is summarized as follows:
|                                                                       
|                                                                       
|                                                                       



|                                                           |  |            
|---------------------------------------------------------- |  | -----------
|                                                           |  | 2003       
|                                                           |  |            
|Bank of America National Trust and Savings                 |  | $ 6,199,171
|Association, revolving, reducing term loan with            | 
|initial $13,500,000 availability decreasing
      by       | 
|$1,200,000 each year beginning May 31, 2004.               | 
|Mandatory principal reductions are required
      on       | 
|outstanding balances above amounts available               | 
|Interest at or below banks reference rate                 | 
|Interest rate at May 31, 2003 and 2002 was 2.1934%         | 
|and 3.7713%, respectively. Secured by all ski
      area   | 
|operation real and personal property and                   | 
|assignment in trust of all U.S. Forest Service             | 
|special use permits. Matures May 31, 2009.                 | 
|                                                           |  |            
|Whitefish Credit Union, a related party,                   |  | 1,386,009  
|Term loan. Interest reviewed annually and                  | 
|Set at Wall Street Prime +1%, with a floor of              | 
|5% and a cap of 8.5%. Interest at May 31, 2003             | 
|is 5.75%. Secured by land purchase. Maturity               | 
|date of January 1, 2007. Five annual payments
      of     | 
|$125,000(principal and interest) due each January
      1. | 
|Less current maturities                                    |  | (45,304    
|                                                           |  |            
|Total long-term debt                                       |  | $ 7,539,876
|                                                           |  |            



|Mandatory reductions
      of long-term debt are as follows:
|------------------------------------------------------------
|                                                            

|                            |       
|--------------------------- | ------
|For
the Year Ending May 31, | Amount
|                           
|2004                        |       
|2005                        |       
|2006                        |       
|2007                        |       
|2008                        |       
|2009                        |       
|                            |       
|                            |       
|                            |       

|The Bank of America
        loan agreement contains covenants that require a debt service coverage
        ratio, health ratio as defined, disposition of assets, capital expenditures,
        outside borrowing and payment of dividends. During fiscal year 2003, the
        Company exceeded its health ratio, but was given a written waiver by Bank
        of America. During fiscal year 2002, the Company exceeded its capital
        expenditures provision, but was given a written waiver by Bank of America.
       At May 31,
        2003 and 2002, $7,300,829 and $2,871,405 respectively, were unused and
        available for borrowing on the Bank of America line of credit.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|28                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|
|

|NOTE 7.
        Income Taxes
       Income taxes
        (credits) consist of the following:
|--------------------------------------------------------------------------------------------



|                                        |  |            |  
|--------------------------------------- |  | ---------- | -
|                                        |  | 2003       |  
|                                        |  |            |  
|Current                                 | 
|Federal                                 |  | $(203,370  | )
|Fuel tax credit                         |  | (3,517     | )
|                                        |  |            |  
|                                        |  | (206,887   | )
|State                                   |  | (83,276    | )
|                                        |  |            |  
|                                        |  | (290,163   | )
|Deferred                                | 
|Federal                                 |  | (179,866   | )
|State                                   |  | (417       | )
|                                        |  |            |  
|Provision for(Recovery of) income taxes |  | $ (470,446 | )
|                                        |  |            |  



|Temporary differences
      exist in the computation of income for financial and tax-reporting purposes
      which gives rise to deferred taxes. The source of these differences for
      the year ended May 31 is as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                

|                                      |  |             |  
|------------------------------------- |  | ----------- | -
|                                      |  |             |  
|                                      |  | 2003        |  
|                                      |  |             |  
|Depreciation                          |  | $ 3,746,501 |  
|Uniform capitalization for income tax |  | (28,625     | )
|Bad debt reserve                      |  | 0           |  
|Vacation allowance                    |  | (66,326     | )
|Land and LLC Basis                    |  | 2,142,787   |  
|State tax refund                      |  | 83,276      |  
|Federal tax net operating loss        | 
|Carryforward                          |  | (583,626    | )
|Charitable contribution carryforward  |  | (228,047    | )

|                                                                                                    
|----------------------------------------------------------------------------------------------------
|The significant components
      of Deferred Taxes in the accompanying Balance Sheet are as follows:
|                                                                                                    

|                                  |  |             
|--------------------------------- |  | ------------
|                                  |  | 2003        
|                                  |  |             
|Current deferred tax liability    |  | $     28,314
|Noncurrent deferred tax liability |  | 2,448,191   
|                                  |  |             
|Total deferred tax liability      |  | $2,476,505  
|                                  |  |             
|Current deferred tax assets       |  | $     36,514
|Noncurrent deferred tax asset     |  | 469,593     
|                                  |  |             
|Net deferred tax assets           |  | $   506,107 
|                                  |  |             

|                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------
|The difference between
      the Companys effective income tax rate and the statutory Federal income
      tax rate is as follows:
|                                                                                                                                   

|                                      |  |             |   
|------------------------------------- |  | ----------- | --
|                                      |  | 2003        |   
|                                      |  |             |   
|Income (loss) before taxes            |  | $(1,036,919 | ) 
|Statutory federal rate                |  | (34         | %)
|Increased (decreases) resulting from: | 
|State tax at statutory rate           |  | (7          | %)
|Other (net)                           |  | (4          | %)
|                                      |  |             |   
|Effective tax rate                    |  | (45         | %)
|                                      |  |             |   
|                                     
|29                                   
|                                     

|
|

|At May 31, 2003,
        the Company incurred a Federal net operating loss of $1,210,831 and a
        State net operating loss of $1,233,720. The State loss was carried back
        three years to May 31, 2000 and fully utilized, resulting in State refundable
        taxes of $83,276. The Federal loss was carried back to May 31, 2001 and
        2002 with $627,205 of the total loss was utilized, resulting in refundable
        taxes of $203,370. The Company has a Federal net operating loss carryforward
        of $583,626 that can be used to offset future taxable income. The net
        operating loss will expire on May 31, 2023. The Company also has a charitable
        contribution carryforward of $228,047 that will expire on May 31, 2008.
       At May 31,
        2002, the Company utilized an alternative minimum tax credit carryforward
        of $17,202 to reduce current income taxes. The credit had been recognized
        in 2001 as a noncurrent deferred tax asset.
       At May 31,
        2001 the Company had an alternative minimum tax credit carryforward of
        $17,202 which was carried forward to 2002.
       NOTE
        8. Supplemental Cash Flow Disclosures
       Supplemental
        cash flow information is as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                               |  |               | 
|------------------------------ |  | ------------- | 
|Cash paid during the year for: |  | 2003          | 
|                               |  |               | 
|Interest (net of capitalized)  |  | $295,841      | 
|Income taxes (net of refunds)  |  | $           0 | 
|                               |  |               | 

|                                                   |  |            
|-------------------------------------------------- |  | -----------
|Schedule of non-cash investing and
      financing |  |            
|Transactions                                       |  | 2003       
|                                                   |  |            
|Acquisition of land                                |  | $ 888,058  
|Less option payment
      credit                   |  | (44,204    
|Less notes payable                                 |  | (840,000   
|                                                   |  |            
|Cash paid                                          |  | $     3,854
|                                                   |  |            



|NOTE 9.
        Special Use Permits
       The operation
        of ski lifts and trails involves the use of U.S. Forest Service lands
        located in the Flathead National Forest. Winter Sports, Inc. is licensed
        by special use permits issued by the U.S. Forest Service, which expire
        December 21, 2038. Charges to income for fees paid, based on the Graduated
        Rate Fee System set by the U.S. Forest Service were $106,266, $95,319
        and $91,596 for 2003, 2002 and 2001, respectively.
       NOTE
        10. Employee Benefit Plans
       The Company
        maintains a 401(k) Salary Deferred Plan that covers substantially all
        full-time employees meeting minimum requirements. Plan benefits are limited
        to the participants vested share of plan contributions, earnings
        and forfeitures. All enrolled employees contribute a minimum of 2% of
        their gross compensation. The Company contributes a matching 2% for those
        employees who contribute between 2% and 3%. The Company contributes a
        matching 3% for any employee who contributes 4% or more. The plan is currently
        100% funded. The Companys contributions to the Plan and charges
        to income for 2003, 2002 and 2001 amounted to $55,270, $61,955 and $46,639
        respectively.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|
|

|NOTE 11.
        Related Party Transactions
       Revenues are
        derived and expenses incurred as a result of transactions with executive
        officers, stockholders and directors of Winter Sports, Inc. or companies
        controlled by them or parties which can significantly influence management
        or the operating policies of the transacting parties.
       Related party
        transactions are summarized as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                        |  |                  |  
|--------------------------------------- |  | ---------------- | -
|                                        |  | 2003             |  
|                                        |  |                  |  
|Revenue received                        | 
|Rent and lease revenue                  |  | $              0 | $
|Interest income                         |  | $     68,110     | $
|Other revenue                           |  | $   298,732      | $
|Expenses incurred                       | 
|Dues and memberships                    |  | $     10,455     | $
|Direct Expenses                         |  | $     13,321     | $
|Marketing                               |  | $       1,281    | $
|General and administrative              |  | $     23,725     | $
|Interest Expense                        |  | $     85,683     | $
|Amounts due to and from related parties | 
|Accounts receivable                     |  | $     65,855     | $
|Interest receivable                     |  | $     68,110     | $
|Accounts payable                        |  | $       4,666    | $
|Interest payable                        |  | $     34,062     | $
|Note payable                            |  | $1,386,009       | $



|NOTE 12.
        Commitments and Contingencies
       The Company
        entered into an agreement with the landowner contiguous to the Companys
        eastern boundary during the current fiscal year. Under this agreement,
        the Company obtained an option to purchase approximately 183.5 acres during
        the next four years at a specified price. This parcel may be divided into
        no more than three separate parcels and may be acquired in as many as
        three separate closings. The Company is required to make specified option
        payments during the time of this agreement. The first three option payments
        will be credited proportionally to parcels as they are purchased. The
        remaining option payments will not be applied to the purchase price of
        any parcel. The Company made option payments totaling $30,000 and $171,000
        during fiscal years 2003 and 2002, respectively, which is reflected in
        Other Assets in Note 5.
       From time to
        time, the Company has been a defendant in unrelated lawsuits filed by
        individuals who are each seeking damages of specified amounts for alleged
        personal injuries resulting from accidents occurring on the Companys
        property or while skiing. The Companys insurance carrier provides
        defense and coverage for these claims and the Companys participation
        has been limited to its policy deductible. Such amounts are charged to
        General and Administrative expense upon settlement.
       The Company
        is a defendant in two lawsuits filed on behalf of individuals who are
        seeking damages of unspecified amounts for alleged personal injuries resulting
        from an accident occurring on the Companys property. The Company
        intends to vigorously defend the claims. Outside counsel for the Company
        has advised that at this stage in the proceedings they cannot offer an
        opinion as to the probable outcome or estimate the amount or range of
        a potential loss.
       Financial instruments
        that potentially subject the Company to credit risk consist of cash balances
        in one financial institution in excess of the Federal Deposit Insurance
        Corporations $100,000 limit.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|31                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|
|

|Other potential credit
        risks to the Company consist of trade receivables. The Company grants
        credit to customers for group banquets and retail inventory sales, most
        of whom are located in the northwest United States.
       NOTE
        13. Other Income and Expense
       During fiscal
        year 2002, the Company recognized a portion of the gain on the sale of
        land during this fiscal year in the amount of $2,368,737. The Company
        sold approximately 16 acres during the first quarter of this fiscal year.
        The Company is recognizing the gain on the sale of the land under the
        cost recovery method. Under this method, the gain is unrecognized until
        such time as the basis of the land and the associated costs of the sale
        of land have been recovered. During the year, these costs were recovered
        through proceeds received and the gain will continue to be recognized
        as proceeds continue to be received. The Company expects this to continue
        through the second quarter of the current fiscal year.
       Included in
        Other income for fiscal year 2002, is income received from an adjacent
        landowner under the terms of a legal agreement, in which the landowner
        would be responsible for the costs related to construction of a road on
        the Companys property where the landowner would have egress. It
        was previously unclear when and if this would be collected as well as
        what the actual dollar amount for which the landowner would be liable.
        During 2002, the Company collected $243,505. This type of revenue is not
        expected in the future.
       Also included
        in Other income (expenses) during 2002, are amounts which were incurred
        during the planning of installing another Chair lift on the mountain.
        The Board of Directors and management incurred costs of $105,670 during
        this planning and subsequently decided not to install the lift. This decision
        was made as the current lift capacity is not close to reaching its upper
        limit and it was decided the Company could benefit from a different use
        of the capital it would have taken to install this lift. The Company also
        expensed the EIS of $57,306 as it was determined that the useful life
        of the Statement had expired.
       During 2002,
        the Company thinned a minor portion of its slopeside lands and earned
        $4,021 from the sale of the timber. During 2001, no income was earned
        from the sale of timber.
       The Company
        periodically reviews its master plan for long-term resort development.
        During 2003, the Company charged against income $11,299 of planning costs
        included in Other Assets that were not expected to be utilized within
        the foreseeable future.
       Other Income
        (Expense) included in the Consolidated Statements of Income consists of
        the following:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                  |  |         |  
|--------------------------------- |  | ------- | -
|                                  |  | 2003    |  
|                                  |  |         |  
|Gain on sale/retirement of assets |  | $ 2,791 |  
|Other                             |  | (461    | )
|                                  |  |         |  
|Total other income (expense)      |  | $ 2,330 |  
|                                  |  |         |  
|                                  |  |         |  
|32                               
|                                  |  |         |  

|
|

|Note
        14. Subsequent Events
       During June,
        2003, the Company entered into two interest rate swaps. These swaps were
        entered into for periods of three and four years, respectively, at one
        million dollars each. The objective of the hedge is to eliminate the variability
        of cash flows in the interest payments for the debt, the sole source of
        which is due to changes in the LIBOR benchmark interest rate. Changes
        in the cash flows of the interest rate swap are expected to exactly offset
        the changes in cash flows(i.e., changes in interest rate payments) attributable
        to fluctuations in the LIBOR.
       The Company
        has also commenced discussions with its line of credit lender, Bank of
        America. During January, 2003, the Company renegotiated its line of credit
        to $13.5 million on the assumption that the conference center would be
        breaking ground in the near future. As it has determined to wait on the
        conference center, pending investigation of a hotel property, the Company
        has decided to reduce the available amount on the outstanding portion
        of its line of credit. It is currently planning to reduce the total amount
        available on the line of credit from $13.5 million to $10 million. It
        is further expected that after the first of the calendar year, the amount
        available will be reduced to $9 million. The interest rate is expected
        to remain the same.
       The Board of
        Directors has continued its ongoing discussion regarding the economic
        viability of the Company continuing to operate under the rules and regulations
        of the Securities and Exchange Commission. In the last 18 months, following
        the well publicized corporate scandals, the Securities and Exchange Commission
        has implemented numerous regulations that are a significant new burden
        on all public companies. In particular, the Sarbanes-Oxley Act of 2002
        imposes further public reporting requirements and has had a dramatic effect
        on the cost of Director and Officer (D & O) insurance for companies
        whose stock is registered under the Exchange Act. Winter Sports, a relatively
        small company has the same reporting requirements as companies that are
        10-100 times larger. The Company has experienced a significant cost increase
        in the D & O insurance as well as in audit fees and reporting requirements.
        At this time the Company anticipates that additional new reporting requirements
        may be forth coming and may have a further burden on the Company.
       The above costs
        which can be quantified also do not include the substantial attention
        management must devote to compliance with federal securities laws that
        would be inapplicable if the Company were to deregister its common stock
        under the Exchange Act. The Board of Directors believes the intangible
        benefits that would be derived if the management of the Company were allowed
        to focus on the additional attention on operations and financial management
        would further enhance Winter Sports financial performance and allow the
        Company to provide improved services to its guests.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Item 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|The Company
      has had no disagreements with its accountants on accounting or financial
      disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|33                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|
|

|Item
      8A.                         Controls
      and Procedures
|--------------------------------------------------------------------
|                                                                    

|(a) |  | Evaluation of disclosure controls and procedures. The Companys Chief
        Executive Officer and Chief Financial Officer, based on their evaluation
        within 90 days prior to the date of this report of the Companys
        disclosure controls and procedures are adequate and effective in ensuring
        that material information relating to the Company is required to be included
        in the Companys filings with the SEC under the Securities Exchange
        Act of 1934 is made known to them.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|(b)            |  | Changes in internal controls. There were no significant changes in the
        Companys internal controls or in other factors that in managements
        examination could significantly affect the Companys disclosure controls
        and procedures subsequent to the date of the evaluation, including any
        corrective actions with regards to significant deficiencies and material
        weaknesses.
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|Part
      III

|Item
      9.                                                                                                                                                                                                               |  | Directors
        and Executive Officers of the Registrant          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------
|                                                                                                                                                                                                                            |  |                                                                     
|Incorporated
      by reference from the Companys definitive proxy statement dated ,
      2003 to be filed with the Securities and Exchange Commission for the annual
      meeting of shareholders to be held on 2003.  
|                                                                                                                                                                                                                            |  |                                                                     
|                                                                                                                                                                                                                           
|Item
      10.                                                                                                                                                                                                              |  | Executive
      Compensation                                        
|                                                                                                                                                                                                                            |  |                                                                     
|Incorporated
      by reference from the Companys definitive proxy statement dated ,
      2003 to be filed with the Securities and Exchange Commission for the annual
      meeting of shareholders to be held on , 2003.
|                                                                                                                                                                                                                            |  |                                                                     
|Item
      11.                                                                                                                                                                                                              |  | Security
      Ownership of Certain Beneficial Owners and Management
|                                                                                                                                                                                                                            |  |                                                                     
|Incorporated
      by reference from the Companys definitive proxy statement dated ,
      2003 to be filed with the Securities and Exchange Commission for the annual
      meeting of shareholders to be held on , 2003.
|                                                                                                                                                                                                                            |  |                                                                     
|Item
      12.                                                                                                                                                                                                              |  | Certain
      Relationships and Related Transactions                
|                                                                                                                                                                                                                            |  |                                                                     
|Incorporated
      by reference from the Companys definitive proxy statement dated 2003
      to be filed with the Securities and Exchange Commission for the annual meeting
      of shareholders to be held on , 2003.  
|                                                                                                                                                                                                                           
|34                                                                                                                                                                                                                         
|                                                                                                                                                                                                                           

|
|

|Item
      13. |  | Exhibits
        and Reports on Form 8-K
|-------------- |  | ----------------------------------------
|               |  |                                         

|                                                                                                                                                                            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)                                                                                                                                                                         
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|All other
      schedules are omitted because they are not applicable for the required information
      as shown in the Consolidated Financial Statements or Notes thereto.

|                        |       | Footnote                                                                                           
|----------------------- | ----- | ---------------------------------------------------------------------------------------------------
|(c)    
      Exhibits: |       |                                                                                                    
|                        |       |                                                                                                    
|                        | 3.1   | Restated Articles of Incorporation and Articles
      of Amendment to the Articles of Incorporation
|                        |       |                                                                                                    
|                        | 3.2   | By-Laws                                                                                            
|                        |       |                                                                                                    
|                        | 3.3   | Fifth Amendment to By-Laws                                                                         
|                        |       |                                                                                                    
|                        | 3.4   | Sixth Amendment to By-Laws                                                                         
|                        |       |                                                                                                    
|                        | 3.5   | Seventh Amendment to By-Laws                                                                       
|                        |       |                                                                                                    
|                        | 3.6   | Tenth Amendment to By-Laws                                                                         
|                        |       |                                                                                                    
|                        | 10.3  | Business
      Loan Agreement between Bank of America andWinter Sports, Inc. dated January 7, 2003.
|                        |       |                                                                                                    
|                        | 10.4  | Employment
      Agreement between Michael Collins and WinterSports, Inc. as of September 1, 2000  
|                        |       |                                                                                                    
|                        | 10.5  | Limited Liability Company Agreement of Northern Lights
      Development LLC                       
|                        |       |                                                                                                    
|                        | 10.6  | Limited Liability Company Agreement of Moose Run II LLC                                            
|                        |       |                                                                                                    
|                        | 10.7  | Limited Liability Company Agreement of Morning Eagle Development
      LLC                         
|                        |       |                                                                                                    
|                        | 10.13 | Limited
      Liability Company Agreement of GladesDevelopment LLC                                 
|                        |       |                                                                                                    
|                        | 10.14 | Big Mountain Club LLC                                                                              
|                        |       |                                                                                                    
|                        | 21.1  | Subsidiaries of the Company                                                                        
|                        |       |                                                                                                    
|35                     
|                        |       |                                                                                                    

|
|

| | 31.1 | Certification of Michael J. Collins pursuant
      to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of he Sarbanes-Oxley
      Act 0f 2002. | (1)
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ---
| |      |                                                                                                                                                          |    
| | 31.2 | Certification of Jami M. Phillips pursuant
      to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of he Sarbanes-Oxley
      Act 0f 2002.   | (1)
| |      |                                                                                                                                                          |    
| | 32.1 | Certification of Michael J. Collins pursuant
      to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of he Sarbanes-Oxley
      Act 0f 2002. | (1)
| |      |                                                                                                                                                          |    
| | 32.2 | Certification of Jami M. Phillips pursuant
      to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of he Sarbanes-Oxley
      Act 0f 2002.   | (1)
| |      |                                                                                                                                                          |    

|(1) |  | Filed herewith.
|--- |  | ---------------

|(2) |  | Incorporated by reference from the Companys Form 10-KSB for fiscal
        year ended May 31, 1995.
|--- |  | ----------------------------------------------------------------------------------------------------

|(3) |  | Incorporated by reference from the Companys Form 10-KSB for fiscal
        year ended May 31, 1987.
|--- |  | ----------------------------------------------------------------------------------------------------

|(4) |  | Incorporated by reference from the Companys Form 10-KSB for fiscal
        year ended May 31, 1991.
|--- |  | ----------------------------------------------------------------------------------------------------

|(5) |  | Incorporated by reference from the Companys Form 10-QSB for the
        quarter ended September 6, 1992.
|--- |  | ---------------------------------------------------------------------------------------------------------

|(6) |  | Incorporated by reference from the Companys Form 10-QSB for the
        quarter ended December 11, 1994.
|--- |  | ---------------------------------------------------------------------------------------------------------

|(7) |  | Incorporated by reference from the Companys Form 10-KSB for the
        year ended May 31, 1998.
|--- |  | -------------------------------------------------------------------------------------------------

|(8) |  | Incorporated by reference from the Companys Form 10-QSB for the
        quarter ended September 10, 2000.
|--- |  | ----------------------------------------------------------------------------------------------------------

|(9) |  | Incorporated by reference from the Companys Form 10-QSB for the
        quarter ended September 9, 2001.
|--- |  | ---------------------------------------------------------------------------------------------------------

|(10) |  | Incorporated by reference from the Companys Form 10-QSB for the
        quarter ended December 2, 2002.
|---- |  | --------------------------------------------------------------------------------------------------------

|(11) |  | Incorporated by reference from the Companys Form 10-QSB for the
        quarter ended May 31, 2002.
|---- |  | ----------------------------------------------------------------------------------------------------

|(12) |  | Incorporated by reference from the Companys Form 10-QSB for the
        quarter ended February 23, 2003.
|---- |  | ---------------------------------------------------------------------------------------------------------

|(11) |  | Incorporated by reference from the Companys Form 8-K on July 8,
        2003.
|---- |  | ------------------------------------------------------------------------------
|     |  |                                                                               
|     |  | 21.1 Subsidiaries of the Company                                              
|     |  |                                                                               
|36  
|    

|
|

|(b) | Reports on Form 8-K:                                                                                                                                                                                                                                                                                      
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | One report
      on Form 8-K was filed by the registrant during the last quarter of the period
      covered by this report. On May 29, 2003, the Company filed a Form 8-K reporting
      its decision to place a temporary hold on plans to construct a conference
      center in Big Mountain Village.

| | Subsequent
      to the end of the fiscal year, on July 8, 2003, the Company filed a Form
      8-K to announce the formation of a joint venture with Northern Pines Golf
      Club to form the Big Mountain Club. This non-equity members club will allow
      members preferred access to the Big Mountain Golf Club (formerly Northern
      Pines Golf Club) and the soon to be developed members golf facilities as
      well as access to the members alpine facilities at Big Mountain Resort.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 14.                   Principal
      Accountant Fees and Services                                                                                                                                                     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                            
|Incorporated bye reference
      from the Companys definitive proxy statement dated , 2003 to be filed
      with the Securities and Exchange Commission for the annual meeting of shareholders
      to be held on , 2003.
|                                                                                                                                                                                                                            

|
|

|Signatures                                                                                                                                                                                                      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                
|In accordance
      with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
      has caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized:
|                                                                                                                                                                                                                

|                                                                                                                                                                                                                            | WINTER SPORTS, INC.                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------
|                                                                                                                                                                                                                            |                                      
|                                                                                                                                                                                                                            | By /s/ Michael J.
      Collins      
|                                                                                                                                                                                                                            | Michael J. Collins,                  
|                                                                                                                                                                                                                            | President and Chief Executive Officer
|                                                                                                                                                                                                                            | (Principal Executive Officer)        
|                                                                                                                                                                                                                            | Date: August 28, 2003                
|                                                                                                                                                                                                                            |                                      
|Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report
      has been signed below by the following persons on behalf of the registrant
      and in capacities and on the dates indicated:
|                                                                                                                                                                                                                           

|                             
|-----------------------------
|/s/ Charles R. Abell         
|                             
|Charles
      R. Abell       
|                             
|/s/ Brian T. Grattan         
|                             
|Brian T.
      (Tim) Grattan 
|                             
|/s/ Dennis L. Green          
|                             
|Dennis L. Green              
|                             
|/s/ Charles P. Grenier       
|                             
|Charles
      P. Grenier     
|                             
|/s/ Jerry J. James           
|                             
|Jerry J.
      James         
|                             
|/s/ Michael T. Jenson        
|                             
|Michael
      T. Jenson      
|                             
|/s/ Darrel R. Martin         
|                             
|Darrel R.
      (Bill) Martin
|                             
|/s/ Michael J. Muldown       
|                             
|Michael
      J. Muldown     
|                             
|/s/ Jerome T. Broussard      
|                             
|Jerome Broussard             
|                             
|/s/ Jami M Phillips          
|                             
|Jami M.
      Phillips       
|                             
|38                           
|                             
|