FULL TILT SPORTS INC, 10KSB, 1999-03-31

FULL TILT SPORTS INC
10KSB, 1999-03-31
KNIT OUTERWEAR MILLS

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FORM 10-KSB

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934

For the fiscal year ended December 31, 1998 or

[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934

Commission File Number 0-24829

FULL TILT SPORTS, INC.
----------------------
(Exact name of registrant as specified in its charter)

Colorado 84-1416864
- -------- ----------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) identification No.)

5525 Erindale Drive, Suite 200 Colorado Springs, Colorado 80918
- ---------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (719) 535-0260
---------------
Securities registered pursuant to Section 12(b) of the Act:
None

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

Title of each class

Common Shares, $.001 par value
----------------------------------

Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No -----
-----

<PAGE>

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

The Registrant's revenues for the most recent fiscal year were $19,006.

The aggregate market value of the 358,275 Common Shares held by
nonaffiliates of the Company as of March 30, 1999, was approximately
$985,256.25 based upon the last reported sale of the Company's Common
Shares of $2.75 per share.

The total number of Common Shares outstanding as of December 31, 1998
was 3,136,261.

DOCUMENTS INCORPORATED BY REFERENCE:

None

Transitional Small Business Disclosure Format: Yes No X
----- -----

<PAGE>

TABLE OF CONTENTS

PART I
Page
----
Items 1 and 2. Business and
Properties.............................. 1

Item 3. Legal
Proceedings............................. 9

Item 4. Submission of Matters to a Vote of
Security Holders ....................... 9

PART II

Item 5. Market for Registrant's Securities
and Related Shareholders Matters........ 10

Item 6. Management's Discussion and Analysis
or Plan of Operation.................... 11

Item 7. Financial Statements and Supplementary
Data.................................... 14

Item 8. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure.............................. 14

PART III

Item 9. Directors, Executive Officers and
Compliance with Section 16(a) of the
Exchange Act ........................... 15

Item 10. Executive Compensation.................. 17

Item 11. Security Ownership of Certain Beneficial
Owners and Management................... 18

Item 12. Certain Relationships and Related
Transactions............................ 20

PART IV

Item 13. Exhibits, Reports on Form 8-K and
And Financial
Statements.............................. 21

Signature Page.................................... 23

Index to Financial Statements..................... 24

iii

<PAGE>

Additional Information

Descriptions in this Report are qualified by reference to the
contents of any contract, agreement or other documents and are not
necessarily complete. Reference is made to each such contract,
agreement or document filed as an exhibit to this Report, or
previously filed by the Company pursuant to regulations of the
Securities and Exchange Commission (the "Commission"). (See "Item 13.
Exhibits, Financial Statements, Schedules and Reports on Form 8-K.")

Special Note Regarding Forward Looking Statements

Certain statements contained herein constitute "forward looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements include without
limitation statements regarding the Company's plan of business
operations and related expenditures, potential contractual
arrangements, anticipated revenues and related expenditures. Factors
that could cause actual results to differ materially include, among
others, the following: acceptability of the Company's products in the
retail market place, general economic conditions, tax legislation and
the overall state of the retail clothing industry. Most of these
factors are outside the control of the Company. Investors are
cautioned not to put undue reliance on forward looking statements.
Except as otherwise required by applicable securities statutes or
regulations, the Company disclaims any intent or obligation to update
publicly these forward looking statements, whether as a result of new
information, future events or otherwise.

<PAGE>

ITEMS 1. AND 2. BUSINESS AND PROPERTIES

General
- -------

Full Tilt Sports, Inc. (the "Company") is a Colorado corporation
incorporated on June 30, 1997. The Company was organized to
manufacture and distribute an apparel line of sportswear capitalizing
on the attitude encompassed in its name "Full Tilt Sports". The
Company completed its initial capitalization in June, 1998. The
Company raised $261,400 in two private placements exempt from the
registration requirements of the Securities Act of 1933. Proceeds
from those offerings, together with other recent financing, have been
used for organization and administration expenses, and working capital
for inventory and other operating expenses.

The Company filed a Form 10-SB Registration Statement pursuant to
Section 12 (g) of the Securities Exchange Act of 1934, to register its
shares of Common Stock, par value $.001 per share, effective October
23, 1998. As of March 8, 1999, the Company's Common Stock began
trading in the over-the-counter market and is quoted on the NASD
Bulletin Board under the symbol "FTSX". Prior to that, there was no
established trading market for the Common Shares. The Company
currently has approximately 60 shareholders.

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

The Company has developed a line of casual sportswear for the
retail clothing market bearing the trademark and logo "Full Tilt"
and/or "Flip The Switch" (the "Apparel Line"). The Company's initial
focus has been production of lifestyle and athletic apparel which
management intends to be distributed through department stores and
sporting goods retail stores. The Company's target market for sales
of the Apparel Line is retail purchasers of casual and sports
apparel, of both sexes and of all ages. Current products include t-
shirts, golf shirts, sweat shirts, hats and fleece items. The Company
has very limited revenues to date, as the Company has been in the
organizational stage and a only a limited number of apparel items have
been distributed for promotional purposes. Activities to date have
been limited to the manufacture of sample products, test marketing,
advertising, promotional distribution, obtaining endorsement contracts
and contacting potential distributors. The Company must be
considered in the promotional stage and in the very early phases of
its development, embarking upon a new venture. Prospective investors
should be aware of the difficulties encountered by such enterprises,
as the Company faces all the risks inherent in any new business,
including the absence of any prior operating history, need for working
capital, lack of market recognition and intense competition. The
Company operates exclusively in one industry, the retail apparel
industry.

The design of the Company's current products has been developed
through product research by the Company. For future product design,
the Company has retained the services of Fine Products, Inc. and
Majestic West Custom Embroidery & Screenprinting. These companies
have experience in the retail industry and will assist the Company in
designing and manufacturing products to specifications that are
desirable in the marketplace. These companies will further assist the
Company in determining the pricing of the its products to insure
competitive pricing.

<PAGE>

To date, the Company has taken significant steps toward achieving
its goals, although they are not yet generating profit. These steps
include developing an appealable logo and trademark, and negotiating
to secure the rights to those marks. Manufacturers have been engaged
to produce initial sample inventories which received favorable reviews
from customers and retailers. The Company enhanced the quality of its
initial products and retained experienced assistance for future
design, manufacturing and sales. Professional athletes have promoted
the Company's products and several high profile athletes have executed
endorsement contracts with the Company. Additional athletes are
negotiating with the Company for such endorsements. The Company's
products have been advertised in the media and additional future
advertisement has been contracted. The Company had its first order
placed by a committed retailer for distribution and is in the process
of obtaining additional commitments.

Production As with most apparel companies of the size of the
Company, the Company does not manufacture its products itself, but
contracts with independent third party manufacturers to produce its
products as a private label. This allows the Company to preserve its
working capital by not having to acquire manufacturing equipment,
although this may result in higher costs for inventory and less profit
than if the Company performed the manufacturing itself. However, the
Company does plan to eventually manufacture the products itself in
order to increase its profit margins when demand exists and working
capital permits.

Presently, the Company is dependant on the third party manufacturers
and there can be no assurance of a continued supply of products.
However, as there are many different alternative manufacturers and
alternative product supplies available, the Company is confident that
an adequate supply of its products will be able to be maintained in order
to meet market demands.

The Company initially produced a sample inventory of the Apparel
Line of approximately 50 dozen items with its trademark logo. These
items include t-shirts, golf shirts, sweat shirts, caps and fleece
items. The Company engaged the services of independent third party
manufacturers to manufacture this sample inventory which consisted of
existing styles and colors. After manufacturing, the items were
shipped to another party who embroidered or silkscreened the Full Tilt
logo onto the item, and added the Company's label.

After the initial sample inventory was manufactured and the
Company received favorable responses from potential retail buyers and
consumers, the Company engaged the services of additional third party
manufactures to produce additional merchandise of superior quality,
including approximately 60 golf shirts, 100 fleece items, 1000 hats,
1000 t-shirts and mock t-shirts and a samples of windshirts. All of
these items were of superior quality than the initial sample
inventory. Certain items, such as t-shirts, were of existing styles
and colors available from the manufacturers. Other items such as caps
and some fleece items were custom made to the Company's design and
specifications.

In the future, only final product inventory will be produced.
The final product inventory shall be produced directly for the Company
by one or more manufacturers who are capable of producing all items

<PAGE>

required by the Company and to the Company's specifications. The
items shall be of a higher quality, superior to the quality of the
initial sample inventory and shall be produced with the Full Tilt logo
and label. The Company is in the process of arranging for these
manufacturers to produce its initial orders of inventory of the
Company's final product. Future inventories may be expanded to
include additional casual and athletic apparel and accessories, as
determined by consumer demands.

Manufacturers typically deliver their merchandise between four
and six weeks after an order is placed. The manufacturers usually
require payment within 30 days of delivery. The Company has
sufficient working capital to make payments for the initial planned
orders. Sportsfan, the first retailer placing an order for the
Company's products, has agreed to make payment for its orders 30 days
from delivery. Payment arrangements with future retailers will vary
depending upon the size of the order. Larger orders may require a
deposit which will assist the Company in making payments to the
manufacturers and preserve working capital. Department stores
typically make large orders four to six months in advance at trade
shows. There is a risk that the Company may not have sufficient
working capital to place very large orders for inventory.

The Company does not have a contract with any manufacturer for
continued supply, but will place individual orders for inventory as
needed. While management believes that the Company will have a ready
source of materials and manufacturers for its apparel items, there is
no assurance that such inventory can be acquired at desired costs and
quality standards. The lack of a long term contract and business
relationship with current sources of supply present a risk that the
Company may not be able to acquire future inventory to meet demand.

Marketing Management of the Company believes that marketing
and future sales of the Apparel Line depend to a large degree on the
uniqueness and attraction of the Full Tilt and Flip The Switch
trademark and concept. Marketing efforts to date have included
distribution of promotional apparel items to professional athletes
such as members of the Denver Broncos football team and Colorado
Rockies professional baseball team, sales at sports events such as
golf tournaments, promotion through personal contacts of the
management of the Company and sponsorship of sports teams who use
promotional clothing items. Radio advertisements have been broadcast
for several months on a syndicated radio show on over 200 AM and FM
radio stations nationally. All of these efforts are designed to
develop market recognition of the Full Tilt trade name and logo.

Future marketing is anticipated to be centered on endorsement and
exposure by high profile professional athletes. As of January 2,
1999, the Company has entered into Personal Services Endorsement
Contracts with Bill Romanowski, Ed McCaffrey and Rod Smith, football
players with the Denver Broncos Professional Football Team. The
initial term of these agreements are for one year and require these
athletes to provide appearances on behalf of the Company and to
otherwise endorse the Company's products through various appearances
in the media and at promotions, including providing autographs. The
Company believes these athletes will appeal to both distributers and
consumers. Several professional athletes with the Broncos Professional
Football Team have made appearances on national television wearing the
Company's products. Appearances have been made on ESPN, ESPN II, Fox

<PAGE>

Sports, and CNBC. Additional appearances have been made on local
news stations including channels 4 and 9 in Denver and channels 11 and
13 in Colorado Springs.

The Company is also in the process of entering into endorsement
contracts with Rick "Goose" Gossage, a potential candidate for
induction into the Baseball Hall of Fame, and Mike DeJean, a baseball
player with the Colorado Rockies Professional Baseball Team. The
Company has contacted, and will continue to contact, as many other
professional athletes as possible, to give them complimentary items
and encourage their wear and use in a highly visible manner.

The Company has employed Robert (Bobby) Stephenson as Vice
President of Sales and Marketing, effective January 2, 1999. Mr.
Stephenson will provide services to the Company to enhance sales and
promotion of the Company's products, including special events and
trade shows. Mr. Stephenson's employment contract is for a one year
term commencing January 2, 1999, which shall be automatically renewed
for additional terms unless terminated by the Company or Mr.
Stephenson.

Additional future marketing, subject to available working
capital, will be made through advertising mediums such as television,
print, catalogue distribution, Internet and a toll free telephone
number for order intake. A catalogue has been planned for initial
distribution in the Colorado Springs area, that will allow for direct
purchase of the Apparel Line from the Company. The Company is
presently completing design and lay-out of its first catalogue, which
will carry the Company's complete line and provide for placement of
orders through a toll free telephone number. The Company is in the
process of having a Web Site deigned for Internet advertising on
personal computers logged onto the Internet. The Web Site will be
initially for advertisement only, but may be used for taking orders at
a later time.

As the Company is seeking to limit its cash expenditures where
ever possible, the Company is attempting to enter into agreements
whereby advertisements are provided in exchange for merchandise and
appearances by the athletes. On February 28, 1999 the Company entered
into an agreement with radio station KKFN (AM 950) known as "The Fan",
whereby the Company will receive advertising in exchange for
merchandise and professional athlete appearances.

Distribution The Company's present method of distribution
has been of the sample inventory, as promotional gifts to members of
numerous professional sports teams nationwide, sales and promotional
gifts to personal contacts of the Company's management, sales at
sporting events such as golf tournaments, and sales to sports teams
such as soccer teams and clubs. In addition, items are provided to
the sports teams and clubs for promotion of the Company.
Approximately 30 dozen items of the sample inventory have been sold
and 30 dozen items have been distributed as promotional items,
primarily in the Colorado Springs and Denver metropolitan areas.

The Company's future distribution plans are for the Apparel Line
to be distributed primarily through department stores and retail
sporting goods stores. The Company has already contacted the buyers

<PAGE>

for several retail outlets such as Gart Sports, Just for Feet,
Nordstrom's and Dillard's department stores, and has received
favorable responses. Management has been advised that such buyers are
interested in its products subject to review of the final inventory of
the Apparel Line and if sufficient advertisement is provided by the
Company.

As of fiscal year end December 31, 1998, the Company had not
entered into any agreements with retailers, nor had any orders placed
for merchandise. However, effective April 2, 1999, the Company has
entered into an agreement for an order of merchandise with Sportsfan,
a retailer of professional sports team merchandise and other sports
apparel and accessories with several locations in Colorado. Payment
shall be made by Sportsfan 30 days after delivery of the products by
the Company. The products are planned to go on sale in the Sportsfan
stores on April 4, 1999. Sportsfan has 10 stores in Colorado, one
store in Wyoming and one store in Arizona. The Company plans media
coverage on television and radio of its product debut. This is the
first major order of the Company's merchandise.

The Company anticipates distributing a catalogue for direct
sales, initially in the Colorado Springs area and then nationwide if
favorable results are achieved. The catalogue may include pictures
and descriptions of the Company's apparel line products and
instructions to place orders. A toll free telephone number may be
provided, which customers can telephone to place orders, or orders may
be made through the mail. The catalogue customers may then be
billed directly for the desired items and the items may be shipped
directly to the customer.

While the Company has a firm commitment for distribution with one
retailer, there is no assurance that the Company will have an assured
source of distribution for its products. In addition, due to the
recent entry of the Company into the retail clothing market, retailers
may be reluctant to accept its products pending future demonstration
of consumer demand and a ready source of inventory.

Trademark The Company has developed the word and logo trademark
"Full Tilt" and "Flip The Switch" with stylized lettering that they
believe portrays an aggressive sports attitude. The Company would
like to capitalize on the popularity of similar sports slogans, such
as "No Fear" and Nike's "Just Do It". Therefore, the value of the
Apparel Line will depend to a large degree on name recognition of the
Full Tilt and Flip The Switch trademarks, and a substantial effort
will be made to exploit the names and logo in marketing the products.
The Company has taken what it believes are appropriate steps to ensure
that these trademarks will be protected and not challenged. These
protective steps include use of the trademark in interstate commerce,
applying for federal trademark registration with the U.S. Patent and
Trademark Office (the "PTO) and registering the trademark with the
Colorado Department of State.

The Company has applied for trademark registration with the PTO
for the Company's logo and for the words "Flip The Switch", "FTS" and
"Full Tilt". As the Company is aware of a PTO registration of the

<PAGE>

trademark "Full Tilt" by World of Tops, Inc., a California corporation,
for a similar use to the Company's use, the Company is in the process
of negotiating a license agreement with World of Tops, Inc. for use of
the word trademark. Full Tilt Wake Boards of Washington may have some
rights in the word trademark and the Company has been negotiating with
this company as well. The Company is of the opinion that rights to
the word trademarks will be obtained.

To apply for federal registration, the Company must first use the
word or logo trademark in interstate commerce or commerce between the
U.S. and another country. Before issuing a federal registration, the
PTO determines whether there would be a conflict with an existing word
or logo. If a conflict is determined to exist, the word or logo
trademark application may be rejected by the PTO. A conflict exists
when there would be a likelihood of confusion, that is, whether
relevant consumers would be likely to associate the goods or services
of one party with those of another party. To find a conflict, the
word or logo trademark need not be identical, and the goods do not
have to be the same. There are no assurances that the Company's logo
trademark application will be accepted.

Once the word or logo trademark is registered with the PTO, the
Company is presumed to be the owner of the trademark for the goods and
services specified in the registration, and to be entitled to use the
trademark nationwide. The U.S. registration provides protection only
in the United States and its territories. To obtain protection in
other countries, the trademark must be registered in those counties.
The federal trademark registration is good for ten years, but can be
renewed.

The Company has filed its corporate name "Full Tilt Sports" with
the State of Colorado Secretary of State. This filing protects the
name from registration by any other parties in Colorado. This
registration, along with the use of the trademark, provides some
protection of the Company's use of the trademark in Colorado.

The Company has made use of the trademark in Arizona, Colorado
and Texas through distribution of the Apparel Line in those states.
The Company has also used the trademark in interstate commerce by
manufacturing and distributing the Full Tilt Apparel Line between
several states.

The registration and use of the trademark does not assure that
other prior users of the trademark do not exist. If a prior user
exists, that user may request a court-ordered injunction prohibiting
the Company's use of the trademark in that locale in a manner that
conflicts with the prior user. However the federal registration of
the trademark will protect the Company's use of the trademark in all
other locations in the United States and its territories.

The Company is aware of other uses of the trademark Full Tilt for
purposes unrelated to the Company's use but does not anticipate a
challenge from these users. There is a state registered "Full Tilt"
trademark in Massachusetts for clothing and a common law use of the
trademark by Full Tilt Wake Boards, a snowboard manufacturer
Washington. As above mentioned, the Company has already contacted
Full Tilt Wake Boards, and the Company does not consider the use of

<PAGE>

the trademark in these two states a detriment to marketing Full Tilt
Apparel Line on a national basis. However, the Company cannot
guarantee that a challenge will not arise in the future to the use of
the name in a particular location.

Research and Development The Company did not commission a
formal market or feasibility study as part of its research and
development in regard to sale of the Full Tilt Apparel Line. Due to
the cost and delay inherent in obtaining such a market study, the
Company has determined to proceed on the basis of its own estimates.
Estimates as to sale of the Full Tilt Apparel Line, and projected
revenues were made by officers and directors. The Company designed
the initial inventory of products after consulting with various
manufactures and distributors. The Company has distributed the
sample inventory of the Apparel Line through sales and promotions, and
has received a favorable response as to the acceptability of the
Apparel Line in the marketplace and that items will be sold, and
refined latter inventories accordingly. Future design of products
shall be made with the assistance of companies specializing in design,
manufacturing and sales of this type of product. However, there is
no assurance that the Apparel Line will be accepted by the public.

Risk Factors In addition to its status as a development
stage enterprise, the Company faces numerous risks in connection with
the operation of its business. These risks include competition from
established entities, lack of a proven market for the Company's
merchandise, lack of an assured manufacturer for its product, dependance
on endorsements with professional athletes and dependence on key personnel.
While management will do its best to mitigate these risks through
implementation of the Company's business plan, there is no assurance
such efforts will be successful.

1. Limited Capitalization and Lack of Working Capital. The
Company has extremely limited capitalization and is dependent on the
proceeds of offerings, achieving profitable operations and receipt
of additional financing to continue as a going concern. Proceeds from
offerings have been budgeted for a limited period of time and the
Company will likely require additional capital from outside sources.
Although the Company will endeavor to finance its working capital
needs through additional debt or equity financing, there is no
assurance that this financing can be obtained on terms acceptable to
the Company.

2. No Assurance of Product Acceptance. The Company has no
certainty that the marketplace will accept their products as a
desirable retail clothing and accessory item, or if the Company's Full
Tilt trademark and concept as endorsed by professional athletes will
be accepted and desired by consumers. The Company has no assurance
that the acceptance of the Company's products will be in sufficient
numbers to achieve sufficient revenues and profit.

3. Dependence on Key Personnel; Lack of Operating Experience.
Due in part to its lack of operating history, success of the Company
will depend upon the management efforts and expertise of certain of
its officers, Messrs. Roger Burnett and Joseph DeBerry. Such
individuals will be responsible for overseeing manufacturing,
marketing and distribution of the Company's products and merchandise,
operation of the business and expansion into additional markets.
However, such individuals have little experience in the operation of a
business such as that of the Company. All of these individuals are

<PAGE>

former members of professional baseball organizations and have spent a
majority of their adult life participating in baseball. Messrs.
Burnett and DeBerry may retain the services of outside consultants to
assist in management and operation of the business where appropriate.
While management believes it has the requisite expertise to operate
the Company's business, there is no assurance that those efforts will
result in profit to the Company. Further, the loss of any of these
individuals could adversely effect the conduct of the Company's
business. The Company does not intend to obtain key man insurance on
the life of any of its officers or directors.

4. Intense Competition. Competition in the
apparel industry is very intense. There are numerous manufacturers
and distributors marketing sporting apparel throughout the United
States, most with personnel and financial resources substantially
greater than the Company. There already exists many apparel lines
which base their marketing on a name or slogan, such as Nike, Mossimo,
No Fear and Reebok which currently dominate the industry. Many of
these apparel lines are well established in the marketplace with the
consumers and the retail outlets. The Company's general concept is
not unique and the Company will have to establish itself as a
desirable apparel line of clothing in an established marketplace. Due
to the Company's status as a development stage enterprise, the Company
is at a competitive disadvantage with regard to financial and
personnel resources, vis-a-vis its competitors. Investors should be
aware of the competitive environment in which the Company operates.

Employees As of fiscal year end December 31, 1998, the
Company employed three individuals, all of whom are also officers of
the Company. Roger Burnett, President and Joseph DeBerry, Vice
President currently serve on a full-time basis and are responsible for
day-to-day operation of the Company and the marketing, production and
distribution of the Full Tilt Apparel Line, as well as strategic
planning and expansion of the Company's business. Fisher DeBerry,
Executive Vice President and a director of the Company, currently
devotes only a minor portion of his time to the Company and assists in
marketing and promotion.

Messrs. Burnett and Joseph DeBerry currently serve pursuant to
one year employment agreements executed with the Company effective
September 1, 1998. Each of these individuals will be compensated at
the rate of $30,000 per annum, plus health insurance and other benefit
plans maintained for the benefit of all employees of the Company.
Shares of Common Stock of the Company has also been issued to these
individuals in lieu of a salary of salary in an effort to minimize
cash expenditures by the Company.

As of the date of this Report, the Company entered into an
employment agreement with Bobby Stephenson for the position of Vice
President of Sales and Marketing. Mr. Stephenson will provide
services to enhance the sales and marketing of the Company's products
and merchandise, and will be compensated with an annual salary of
$48,000, plus commissions and 80,000 shares of Common Stock of the
Company.

The Company does not expect any additional significant changes in
the number of employees over the next twelve months. Manufacturing
will be contracted to outside entities. From time-to-time, the
Company also engages the services of outside consultants to assist in

<PAGE>

the Company's business, including attorneys, accountants, and
marketing and advertising personnel. The Company may engage the
services of additional individuals in the future as the needs of its
business dictate and the financial resources of the Company permit.

ITEM 3. LEGAL PROCEEDINGS

No material legal proceedings to which the Company (or any of its
officers or directors in their capacities as such) is a party or to
which the property of the Company is subject is pending and no such
legal proceeding is known by management of the Company to be
contemplated.

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

The Company held no shareholder's meetings during the fiscal year
covered by this Report.

<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SHAREHOLDER
MATTERS

As of March 8, 1999, the Company's Common Shares were traded in
the over-the-counter market and were quoted on the NASD Bulletin Board
under the symbols "FTSX ". Prior to that, there was no established
trading market for the Common Stock. The following table sets forth
the range of high and low bid quotations as reported for the Common
Shares of the Company, for the period from January 1 to the date of
the filing of this Report. Quotations represent prices between
dealers, do not include retail markups, markdowns or commissions and
do not necessarily represent prices at which actual transactions were
effected.

Common Shares
FISCAL YEAR 1999 High Low
---------------------------------------------
First Quarter $3.00 $2.00
(Jan. 1 through March 31)

The number of record holders of the Common Shares as of December
31, 1998 was approximately 25, including nominees of beneficial
owners. The Company estimates that there are approximately 90
beneficial owners of its Common Shares, as of the filing of this
Report.

Holders of Common Shares are entitled to receive such dividends
as may be declared by the Company's Board of Directors. No dividends
on the Common Shares have been paid or declared by the Company to
date, nor does the Company anticipate that dividends will be paid in
the foreseeable future.

As of the date of this filing, a total of 150,000 shares were
designated Series A Preferred Stock, of which 50,000 were issued. All
of the issued shares have an issue price and preference on liquidation
equal to $1.00 per share. The Series A Preferred Shares accrue
dividends at the rate of 10% per annum during the first two years
following issuance, which dividend is payable in cash and is
cumulative. During the third through fifth year in which the Series A
Preferred Shares are outstanding, the holders are entitled to 3.75% of
the net profits of the Company, also payable in cash. The Company may
redeem this preferred stock at any time following notice to the holder
for an amount equal to the issue price, plus any accrued but unpaid
dividends.

<PAGE>

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

Introduction

Certain statements contained herein constitute "forward looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements include, without
limitation, statements regarding the Company's plan of business
operations, potential contractual arrangements, anticipated revenues
and related expenditures. Factors that could cause actual results to
differ materially include, among others, the following: acceptability
of the Company's products in the retail market place, general economic
conditions, tax legislation and the overall state of the retail
clothing industry. Most of these factors are outside the control of
the Company. Investors are cautioned not to put undue reliance on
forward looking statements. Except as otherwise required by
applicable securities statutes or regulations, the Company disclaims
any intent or obligation to update publicly these forward looking
statements, whether as a result of new information, future events or
otherwise.

Plan of Operation

The Company's plan of operation for the twelve months ending
December 31, 1999, is to produce superior quality merchandise, gain a
market for its products, secure additional endorsements by
professional athletes, and to otherwise gain acceptance in the
marketplace and establish the long-term viability of its Full Tilt
Apparel Line. The Company hopes to generate its first measurable
revenues from sale of the Apparel Line in 1999, anticipated to be
through retail sporting goods and department stores. Major components
of that plan of operation include marketing and distribution of the
merchandise and production of inventory sufficient to meet the
anticipated demand. With the completion of two private placements in
the first half of calendar 1998, and the private placement in the
first half of 1999, management believes the Company is positioned to
continue pursuing its plan.

As of the date of the filing of this Report, the Company has made
significant strides in fulfilling it business plan. The Company has
entered into Endorsement Contracts with three Denver Bronco football
players, and is in the process of negotiating endorsement agreements
with two additional professional athletes including one member of the
Colorado Rockies professional baseball team and a baseball hall of
fame inductee. The Company has arranged for approximately $100,000
worth of advertising in exchange for merchandise and endorsements by
the Bronco players. The Company has obtained an additional employee
for sales development, and has entered into agreements with two
companies to provide services in manufacturing, distribution and
sales. The Company's product line has been increased with the
addition of superior quality apparel. Of most importance, the
Company has secured its first order for merchandise from a retailer
specializing in sports apparel and accessories. The Company
anticipates that the revenue from anticipated sales, along with
proceeds from the private placement currently being offered, and its
existing cash assets will be sufficient for the Company's operations
for the next twelve months.

<PAGE>

The Company no longer plans to actively purse construction of a
sports facility in order to preserve its working capital to further
its objective of manufacturing, promoting and distributing its
products. Therefore, the Company has no plans for third party
financing to construct a sports facility. The Company may in the
future consider this objective, but has no present plans concerning a
sports facility.

Liquidity and Capital Resources

Total shareholder's equity increased from $17,388 at December
31, 1997 to $100,266 as of December 31, 1998. From fiscal year end
December 31, 1997 to December 31, 1998, the working capital of the
Company increased an aggregate of $80,627. At December 31, 1998, the
Company had working capital of $95,732, consisting of $122,639 of
current assets and $26,907 of current liabilities. Coupled with the
proceeds of the private placements completed subsequent to fiscal year
end, management believes the Company has sufficient liquidity and
capital to meet its requirements for the next 12 months.

The Company completed two private placements during the twelve
months ended December 31, 1998, and raised approximately $270,000. In
April, 1998, the Company sold 50,000 shares of a newly created series
of Preferred Stock to a single, accredited investor in a transaction
exempt from the registration requirements of the 1933 Act. The Series
A Preferred Stock was issued at a price of $1 per share and maintains
a preference in liquidation over the Common Stock equal to $1 per
share, and pays dividend of 10% per annum. The holder of the
Preferred Stock will also share in any profits of the Company
beginning 2 years after issuance, if not sooner converted.

The Company also completed a private placement to a small group
of investors pursuant to Regulation D, Rule 504 of the 1933 Act. The
Company sold an aggregate of 21,140 units ("Units") for aggregate
gross proceeds of $211,400 in an offering which was completed June,
1998. Each Unit sold in the offering consisted of 10 shares of Common
Stock and 5 Common Stock Purchase Warrants (the "Warrants"). Each
Warrant, in turn, enabled the holder to acquire an additional share of
Common Stock for an exercise price of $1.50 per share through and
including April 30, 1999. As a result of these two offerings, the
Company received $269,333 from financing activities, which offset the
$189,459 in cash used in operations during the year.

The Company just conducted an offering through a private
placement pursuant to Regulation D, Rule 505 of the 1933 Act. The
offering of up to 500,000 shares of Common Stock of the Company, with
an offering price of $1.50 per share, was offered to qualified
individuals and entities on a best efforts basis. The proceeds of the
offering are to be utilized for working capital and acquisition of
inventory. The offering expired March 20, 1999, and the Company
raised $360,000.

The Company's liquidity is high relative to its needs, with total
current assets comprised of $101,716 in cash, $10,303 in accounts
receivable, and $10,037 in inventory, since it has not yet incurred
significant expenses or cash outlays in the promotion or production of
its products. However, the Company's expenses are expected to

<PAGE>

increase as the Company engages in increased marketing and promotion
of its products. It is also anticipated that cash requirements for
inventory will increase as orders for the Company's products are
received.

The Company shall attempt to conserve its cash by making payments
in stock in limited circumstances. The Company has used stock to
compensate the professional athletes who endorse the Company's
products and will use stock in the future for such compensation when
deemed in the Company's best interest. Partial compensation for
employment, manufacturing and sales services agreements and
advertisement have been in the form of stock. However, to meet the
anticipated cash demands for the purchase of inventory, the Company is
negotiating for a line of credit, which shall also be useful to
demonstrate the financial strength of the Company to potential
purchasers of its products.

The Company's operations presently continued to use rather than
provide cash. During the twelve months ended December 31, 1998, the
Company used $189,459 in cash. Nonetheless, management is of the
opinion that the Company has sufficient working capital to continue
for the next twelve months. Thereafter, additional cash shall be
required and the Company contemplates a possible public offering to
meet that objective. Therefore, the Company will remain dependent on
obtaining additional assets and achieving profitable operations and/or
obtaining additional debt or equity financing to continue as a going
concern.

Results of Operations

During the fiscal year ended December 31, 1998, the Company
realized a net loss of $182,866 (or $0.06 per share) on revenues of
$19,006, compared to a net loss of $52,612 and no revenue for the
fiscal year ended December 31, 1997. Revenues increased from the
prior fiscal year 1997 due to sale of the Company's products at
several promotional events and sales to individuals, as well as the
Company being relatively inactive during the prior fiscal year.

The Company was incorporated and started operations on June
30,1997. Accordingly, the fiscal year ended December 31, 1998 is
compared to the period ended December 31, 1997, which is a six-month
period from June 30, 1997 (date of inception) through December 31,
1997. As the prior period was of a shorter duration and the Company
was relatively inactive during this period, expenses during the prior
period were significantly less than during the latter period.

During the prior fiscal year, the Company was only engaged in
developing its product, exploring manufacturing options and test
marketing its product. In fiscal year 1998, the Company became more
aggressive in product promotion, as reflected in the significant
increases in advertisement and promotion expenses. Advertising
increased from $350 to $25,922 in fiscal year 1998. This increased
advertising expense was due primarily to radio advertisements.
Promotional expenses increased from $0 to $20,636 during this period
as well. Expenses for sponsorship to promote the Company's products
increased from $0 to $5,287 in the latter fiscal year. These increased
expenses associated with advertisement and promotion are considered by

<PAGE>

management to be normal anticipated start-up costs associated with
selling a new product line in the retail market.

Expenses associated with overhead also increased from the prior
fiscal year. This increase was anticipated as the Company was
relatively inactive during the prior period. Administrative services
increased approximately $27,500 from the prior fiscal period. During
the prior period, the Company's employees were only working part time.
Therefore, salaries increased from $20,000 to $60,000 during the later
period as full time employment was implemented. Professional fees
increased from $8,476 in the former fiscal year to $24,442 in 1998 due
to costs associated with the two private placements and Commission
filing requirements These additional expenses in the latter period
caused the Company to have a net loss before taxes of $182,866 for
fiscal year 1998 compared to net loss of $52,612 for the prior fiscal
year, when the Company's activities were limited.

Management anticipates that the Company will continue losses
until such time, if ever, the Company generates revenues from retail
sales in an amount adequate to cover cost of goods and expenses.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the Index to Financial Statements following
Part IV of this Report for a listing of the Company's financial
statements and notes thereto.

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

During the two most recent fiscal years, there have been no
changes in the Company's certified public accountants of the nature
requiring disclosure pursuant to this item.

<PAGE>

PART III

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

The following individuals presently serve as officers and
directors of the Company.

Name Age Position
- ---- --- --------
Roger K. Burnett 29 President, Chief Executive Officer,
Chief Financial Officer and Director

J. Fisher DeBerry 60 Executive Vice President and Director

Joseph F. DeBerry 28 Vice President, Secretary, Treasurer and
Director

Bill M. Conrad 42 Director

Raymond E. McElhaney 42 Director

Messrs. Burnett, Joseph DeBerry, J. Fisher DeBerry, Conrad and
McElhaney should be considered "founders" and "parents" of the Company
(as such terms are defined by rule under the Securities Exchange Act
of 1934, as amended), inasmuch as each has taken initiative in
founding and organizing the business of the Company.

Messrs. Burnett, and Joseph DeBerry presently serve the Company
pursuant to written employment contracts, effective September 1, 1998,
for a term of 12 months, which shall continue thereafter on a year to
year basis, unless terminated by the Company or employee. Mr. Fisher
DeBerry serves at the will of the Board of Directors. All of the
directors are currently serving a term of office until the next annual
meeting of shareholders and until their successors are duly elected
and qualified, or until they resign or are removed. Each of the
foregoing individuals has served in his current position since the
Company's inception in June, 1997.

The following represents a summary of the business history of
each of the foregoing individuals for the last five years:

ROGER K. BURNETT. Mr. Burnett graduated from Stanford
University, in Palo Alto, California, with a Bachelor of Arts in
Business, where he was a two time Collegiate All-American at
shortstop. From 1991 to 1995, Mr. Burnett was a member of the New
York Yankees farm organization, playing short stop at the Single A and
Double A level of that organization. From 1996 until inception of
the Company, Mr. Burnett worked on researching and developing the
concept and feasibility of the Company.

<PAGE>

In his position as President, Mr. Burnett will be responsible
for overseeing all of the Company's activities and strategic planning
for future development.

J. FISHER DeBERRY. Fisher DeBerry has been the head football
coach for the Air Force Academy in Colorado Springs for fourteen
years. In that capacity, he oversees a staff of assistant coaches,
and together with the athletic director and university president, is
responsible for all decisions affecting the football team. During his
tenure with the Air Force Falcons, Mr. DeBerry has compiled a record
of 104 wins and 56 losses, eleven of his thirteen teams having
achieved a winning record and nine receiving a bowl bid. Prior to his
position as head football coach, Mr. DeBerry was an assistant from
1980 to 1983. Mr. DeBerry will assist in marketing and program
development for the Company.

JOSEPH F. DeBERRY. Mr. DeBerry also played professional baseball
from 1991 to 1995, as a member of the Cincinnati Reds and New York
Yankees farm organizations. His most recent position was with the
Kansas City Royals Double A farm organization, which he concluded
early in 1997. During his two year assignment with the Yankees
organization, Mr. DeBerry was responsible for establishing and
overseeing weekly baseball camps with local area youths in Albany, New
York. Mr. DeBerry attended college at Clemson University where he was
twice named to the College All-American baseball team and participated
in the 1991 College Baseball World Series. Prior to that, he was a
stand-out athlete at Air Academy High School in Colorado Springs.

As Vice President of the Company, Mr. DeBerry will be in charge
of marketing, production and other day-to-day operations of the
Company.

BILL M. CONRAD. Mr. Conrad is active in a number of business
endeavors, where he serves primarily in the area of corporate finance.
He is presently vice-president, secretary, treasurer and a director of
Wallstreet Racing Stables, Inc., a publicly traded Colorado
corporation engaged in the acquisition, training, racing and sale of
thoroughbred race horses. He has occupied that position since 1995.
Mr. Conrad is the vice president of privately-held MCM Capital
Management, Inc., a financial public relations company. From 1989 to
early 1997, Mr. Conrad was the vice president of corporate
development, secretary and a director of Consolidated Capital of North
America, Inc., a publicly traded corporation at that time engaged in
the real estate business.

RAYMOND E. McELHANEY. Mr. McElhaney also has a diverse
business background. He is presently president and a director of
Wallstreet Racing Stables, Inc. He is also president of MCM Capital
Management and was the president of Consolidated Capital of North
America, Inc. from its inception in 1987 to 1997.

Joseph DeBerry is the son of J. Fisher DeBerry. No other family
relationships exist between any of the officers and directors of the
Company.

<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The following table is a summary of the compensation paid to all
executive officers of the Company during the period from inception of
the Company, June 30, 1997, to the end of the fiscal year, December
31, 1998. No other executive officer receives compensation of any
kind. Except as listed below, there are no bonuses, other annual
compensation, restricted stock awards or stock options/SARs or any
other compensation paid to the executive officers.

Summary Compensation Table

Name and Position Year Salary
- ----------------- ---- ------

Roger K. Burnett 1997 $10,000
President, Chief Executive Officer, 1998 $30,000
and Chief Financial Officer

Joseph F. DeBerry 1997 $10,000
Vice President, Secretary 1998 $30,000
and Treasurer

Each of Messrs. Burnett and Joseph DeBerry presently serve the
Company pursuant to one year employment contracts effective September
1, 1998. Pursuant to those contracts, each individual is entitled to
annual compensation in the amount of $30,000. Each individual is also
entitled to participate in health insurance and other benefit plans
maintained for the employees of the Company, and to be reimbursed for
reasonable out-of-pocket expenses incurred on behalf of the Company.
The employment agreements may also be terminated by the Company for
cause, or by the employee upon not less than sixty days advance
written notice. Such individuals are also entitled to participate in
the Non-Qualifying Stock Option and Stock Grant Plan discussed below.

Employees receive no additional compensation for their services
as directors of the Company. Directors are not currently compensated,
although each is entitled to be reimbursed for reasonable and
necessary expenses incurred on behalf of the Company. The Company
reserves the right to enter into compensation arrangements with its
directors in the future.

Stock Option Plan The Company has adopted a Non-Qualified
Stock Option and Stock Grant Plan (the "Plan") for the benefit of key
personnel and others providing significant services to the Company.
An aggregate of 1,000,000 shares of Common Stock has been reserved for
issuance under the Plan.

The Plan is administered by the Board of Directors, which selects
optionees and recipients of any stock grants, the number of shares and
the terms and conditions of any options or grants to key persons
defined in the Plan. In determining the value of services rendered to
the Company for purposes of awards under the Plan, the Board
considers, among other things, such person's employment position and
relationship with the Company, his duties and responsibilities,

<PAGE>

ability, productivity, length of service or association, morale,
interest in the Company, recommendation by supervisors and the value
of comparable services rendered by others in the community. All
options granted pursuant to the Plan are exercisable at a price not
less than the fair market value of the shares of Common Stock on the
date of grant.

There is no taxable income to an optionee as a result of the
grant of a Non-Qualified Stock Option unless the grant is at less than
fair market value. However, an optionee incurs taxable income upon
the exercise of a Non-Qualified Stock Option based on the difference
between the fair value of the stock at the time of exercise and the
exercise price. The Company is not entitled to a tax deduction upon
the grant of a Non-Qualified Stock Option, but is entitled to a tax
deduction upon exercise corresponding to the optionee's taxable
income.

There are no options outstanding under the Plan as of December
31, 1998.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

As of December 31, 1998, there were a total of 3,136,261 shares
of Common Stock of the Company and 50,000 Series A Preferred Shares of
the Company outstanding, the only classes of voting securities of the
Company currently outstanding. The Common Stock and the Series A
Preferred Shares vote together as a single class, and each share is
entitled to one vote.

The following tabulates holdings of Common Stock of the Company
by each person who holds of record or is known by management of the
Company to own beneficially more than 5% of the voting securities
outstanding and, in addition, by all directors and officers of the
Company individually and as a group. There are no officers or
directors who own Preferred Stock and no holders of Preferred Stock of
the Company who own beneficially more than 5% of the voting securities
outstanding, and the table does not reflect up to 1,000,000 shares of
Common Stock underlying the Company's Stock Option Plan. There are no
officers or directors that are holders of Warrants, and therefore the
table does not reflect 105,700 shares of Common Stock underlying
Warrants currently exercisable at a price of $1.50 until April 13,
2000. The shareholders listed below have sole voting and investment
power. The address of each of the beneficial owners is 5525 Erindale
Drive, Suite 200, Colorado Springs, Colorado 80918. All ownership of
securities is direct ownership unless otherwise indicated.

Name Number of Shares Percent of Voting Securities
- ---- ---------------- ----------------------------

Roger K. Burnett 704,618 22.5%

Joseph F. DeBerry 704,618 22.5%

J. Fisher DeBerry 800,000 25.6%

<PAGE>

Bill M. Conrad(1) 323,125 10.3%

Raymond E. McElhaney(1) 245,625 7.9%

All Officers and Directors
as a Group (5 persons) 2,777,986 88.8%

(1) Includes 5,625 shares held by MCM Capital Management, Inc.
of which Messrs. McElhaney and Conrad are officers, directors and
principal shareholders.

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

All of the individuals listed in the foregoing table are either
officers or directors of the Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Recent Private Financing. The Company commenced its
capitalization on June 30, 1997 by issuing 700,00 shares of its
Common Stock each to Messrs. Burnett, Joseph DeBerry, Fisher
DeBerry and Stephen K. Anderson, a former officer and director,
for aggregate consideration of $20,000, or approximately $.007
per share. Messrs. McElhaney and Conrad, the sole members of the
Board of Directors not involved in that transaction, approved the
sale on behalf of the Company.

Subsequently, on July 10, 1997, Messrs. McElhaney and Conrad
acquired 250,000 shares of Common Stock each for aggregate
consideration of $10,000, or $.02 per share. That transaction was
approved by a majority of the disinterested directors at that time.

In December, 1997, Messrs. Fisher DeBerry and Conrad each
acquired an additional 100,000 shares of Common stock for aggregate
consideration of $40,000, or $0.20 per share. This transaction was
also approved by a majority of the disinterested directors.

Finally, on August 1, 1998, Mr. Anderson resigned his position as
officer, director and employee of the Company, and returned 600,000
shares to the Company treasury. Of the remaining shares, 95,000 were
transferred to Mr. Conrad, and 5,000 shares were retained by Mr.
Anderson. It was anticipated that Mr. Anderson would act as head of
marketing for the Company, but he never acted as a founder, organizer
or otherwise. Mr. Anderson decided to resign his position to pursue
other business opportunities, and his employment agreement with the
Company was terminated. Mr. Anderson received no compensation and all
stock issued to him, with the exception of 5,000 common shares, were
returned to the Company.

Miscellaneous The Company executed an Administrative
Services Agreement with MCM Capital Management, Inc. of Colorado
Springs to assist with the Company's administrative needs. The
Agreement provides the Company with storage and warehouse space as

<PAGE>

well as bookkeeping, secretarial and other services on an as-needed
basis for a period of one year at a rate of $2,500 per month beginning
January 1, 1998. During the years ended December 31, 1997 and 1998,
$32,500 was paid to MCM under this agreement. Messrs. McElhaney and
Conrad, directors of the Company, are also officers, directors and
principal shareholders of MCM Capital Management, Inc. The Company's
offices are located in 2,500 sq. ft of office space that is subleased
from MCM for the monthly rental of $2000. The Company signed a one year
lease on February 1, 1999 for this space. The Company anticipates that
this office space will be adequate for the term of the lease.

The Company has an option to acquire property in Colorado Springs
from an affiliate of the Company for a purchase price of $132,500, in
order to construct an indoor sports facility. This real estate was
acquired by J. Fisher DeBerry, Executive Vice President and a director
of the Company, in anticipation of constructing this sports facility.
In the event the Company acquires the property, it will be acquired by
the Company for the same price paid by Mr. DeBerry, along with accrued
interest to date. A portion of the purchase price would be paid with
debt financing anticipated to be acquired by the Company.

In July, 1998, Messrs. Joseph DeBerry and Burnett each acquired
an additional 4,618 shares of Common Stock of the Company in
consideration for services rendered to the Company in the months of
May and June, 1998. Said consideration was in lieu of salary payable
under the Employment Agreements that Messrs. Joseph DeBerry and
Burnett have entered into with the Company. That transaction was
approved by a majority of the disinterested directors at that time.

In July, 1998, MCM Capital Management, Inc. acquired 5,625 shares
of Common Stock of the Company for consideration of service and
satisfaction of accounts payable under the Administrative Services
Agreement. The Board of Directors is of the opinion that each of
these transactions were no less favorable than could be obtained from
an unaffiliated third party.

<PAGE>
PART IV

ITEM 13. EXHIBITS, REPORTS ON FORM 8-K AND FINANCIAL STATEMENTS

(a) Exhibits.

Except as otherwise indicated, each of the following
documents were included as exhibits to the Company's
Registration Statement on Form 10-SB filed under the
Securities Act of 1934, File No. 0-24829 and are
incorporated herein by this reference.

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

2 Not applicable.

3.1 Articles of Incorporation of the Company as filed
June 30, 1997 with the Secretary of State of the State
of Colorado.

3.2 Articles of Amendment of the Articles of
Incorporation of the Company as filed April, 15, 1998
with the Secretary of State of the State of Colorado.

3.3 Bylaws of the Company.

4.1 Form of Certificate for Common Shares, $.0001 par
value per share.

4.2 Form of Warrant Certificate

9 Not applicable.

10.1 Employment Agreement, by and between the Company
and Roger K. Burnett, dated August 5, 1997

10.2 Employment Agreement, by and between the Company
and Joseph F. DeBerry, dated August 5, 1997

10.3 Non-Qualified Stock Option and Stock Grant Plan,
dated July 1, 1998

10.4 Stock Option Agreement

10.6 Administrative Services Agreement, dated January
1, 1998

11 Not applicable.

13 Not applicable.

<PAGE>

16 Not applicable.

18 Not applicable.

21 Not applicable.

22 Not applicable.

23 Not applicable.

24 Not applicable.

27 Financial Data Schedule*

99 Not applicable.

(b) Reports on Form 8-K

The Company filed no reports on Form 8-K during the fourth
quarter of the period covered by this report.

The Financial Statements filed herein are described in the
Index to Financial Statements following Part IV of this
Report.

* filed herein

<PAGE>

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned thereunto duly
authorized in Colorado Springs, Colorado on the 30th day of March,
1999.

FULL TILT SPORTS, INC.

By: /s/ Roger K. Burnett
-------------------------------------
Roger K. Burnett, President,
Chief Executive Officer, Chief
Financial Officer and Chairman of
the Board

Pursuant to the requirements of the Security Exchange Act of
1934, as amended, this Report has been signed by the following persons
in the capacities and on the dates indicated.

Signatures Title Date
- ---------- ----- ----

/s/ Roger K. Burnett President, Chief Executive Officer, March 30, 1999
- ------------------------ Chief Financial Officer and Chairman --------------
Roger K. Burnett of the Board of Directors

/s/ J. Fisher DeBerry Executive Vice President and Director March 30, 1999
- ------------------------ --------------
J. Fisher DeBerry

/s/ Joseph F. DeBerry Vice President, Secretary, Treasurer March 30, 1999
- ------------------------ and Director --------------
Joseph F. DeBerry

/s/ Bill M. Conrad Director March 30, 1999
- ------------------------ --------------
Bill M. Conrad

/s/ Raymond E. McElhaney Director March 30, 1999
- ------------------------ --------------
Raymond E. McElhaney

<PAGE>

FULL TILT SPORTS, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS

Page
----

Independent Auditors Report............................ F-1

Balance Sheet at December 31, 1998..................... F-2

Income Statements...................................... F-3

Statement of Shareholders' Equity...................... F-4

Cash Flow Statements................................... F-5

Notes to Financial Statements.......................... F-6 to F-11

<PAGE>

FULL TILT SPORTS, INC.
(A Development Stage Company)

FINANCIAL STATEMENTS

With Independent Auditors' Report

For The Year Ended December 31, 1998
And The Period June 30, 1997 (Inception) Through December 31, 1998

<PAGE>

Independent Auditors' Report
----------------------------

We have audited the accompanying balance sheet of Full Tilt Sports,
Inc.(a development stage company), as of December 31, 1998, and the
related statements of income, shareholders' equity and cash flows for
the period June 30, 1997 (inception) through December 31, 1998. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Full Tilt
Sports, Inc. at December 31, 1998 and the results of its operations
and its cash flows for the period June 30, 1997 (inception) through
December 31, 1998 in conformity with generally accepted accounting
principles.

Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
March 1, 1999

F-1

<PAGE>

Full Tilt Sports, Inc.
(A Development Stage Company)
Balance Sheet
- ------------------------------------------------------------------------

December
31, 1998
ASSETS --------

Current Assets
Cash $101,716
Accounts Receivable (Less an Allowance of $-0-) 10,303
Inventory - Merchandise 8,573
Prepaid Supplies 1,464
Deposits 50
Organizational Costs (Less amortization of $228) 533
---

Total Current Assets 122,639
-------

Property, Plant, and Equipment
Furniture and Equipment 6,845
-----

Total Property, Plant, and Equipment 6,845
Less Accumulated Depreciation (2,311)
-----
Net Property, Plant, and Equipment 4,534
-----

TOTAL ASSETS 127,173
=======

LIABILITIES

Current Liabilities
Accounts Payable 18,600
Accrued Salaries 2,500
Preferred Dividends Payable 3,589
Other Accrued Expenses 2,218
-----

Total Current Liabilities 26,907
======

STOCKHOLDERS' EQUITY

Preferred Stock (Authorized 5,000,000 Shares
Par Value $.01; 50,000 Shares Issued And Outstanding) 500

Common Stock (Authorized 25,000,000 Shares
Par Value $.001; 3,136,261 Shares Issued and Outstanding) 3,136

Additional Paid In Capital 335,697
Retained Deficit Accumulated During the Development Stage (239,067)
-------

Total Stockholders' Equity 100,266
-------

TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $127,173
=======

The Accompanying Notes Are An Integral Part Of These Financial Statements.

F-2

<PAGE>

Full Tilt Sports, Inc.
(A Development Stage Company)
Income Statements
- ------------------------------------------------------------------------------

June 30, 1997 June 30, 1997
Year (Inception) (Inception)
Ended Through Through
December December December
31, 1998 31, 1997 31, 1998
-------- -------- --------

REVENUE $19,006 $0 $19,006
------- -- -------

COST OF GOODS SOLD 15,622 0 15,622
------ - ------

GROSS PROFIT 3,384 0 3,384
----- - -----

GENERAL AND ADMINISTRATIVE EXPENSES
Administrative Services 30,000 2,500 32,500
Advertising 25,922 350 26,272
Amortization 152 76 228
Depreciation 1,512 799 2,311
Design Expense 2,540 0 2,540
Entertainment 1,211 0 1,211
Offering Expense 0 14,877 14,877
Office and Miscellaneous Expenses 4,773 2,062 6,835
Payroll Tax 5,082 1,766 6,848
Professional Fees 24,442 8,476 32,918
Promotion 20,636 0 20,636
Salary 60,000 20,000 80,000
Samples Expense 1,548 0 1,548
Sponsorships 5,287 0 5,287
Telephone 4,834 1,275 6,109
Travel 1,433 366 1,799
----- --- -----

Total General and Administrative Expense 189,372 52,547 241,919

INCOME (LOSS) FROM OPERATIONS (185,988) (52,547) (238,535)
--------- -------- ---------

OTHER INCOME (EXPENSE)
Interest Income 3,285 0 3,285
Interest (Expense) (163) (65) (228)
----- ---- -----

Total Other Income (Expense) 3,122 (65) 3,057
----- ---- -----

INCOME (LOSS) BEFORE TAXES (182,866) (52,612) (235,478)
--------- -------- ---------

Provision for Income Taxes 0 0 0
- - -

NET (LOSS) ($182,866) ($52,612) ($235,478)
---------- --------- ----------

Preferred Stock Dividends Applicable
to the Period (3,589) 0
------- -

Net (Loss) Applicable to Common
Stockholders (186,455) 0
--------- -

Basic (Loss) Per Common Share ($0.05) ($0.02)

Weighted Average Shares Outstanding 3,972,830 3,333,333
========= =========

The Accompanying Notes Are An Integral Part Of These Financial Statements.

F-3

<PAGE>

<TABLE>

Full Tilt Sports, Inc.
(A Development Stage Company)
Statement of Shareholders' Equity
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Preferred Stock Common Stock
Number of Number of Capital Paid Capital Paid
Common Preferred Preferred Common In Excess Of In Excess Of Accumulated
Shares Shares Stock Stock Par Value Par Value (Deficit) Total
------ ------ ----- ----- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 0 0 $0 $0 $0 $0 $0 $0

July 5, 1997 For Cash
@ $.0071 Per Share 2,800,000 0 2,800 17,200 20,000
July 7, 1997 For Cash
@ $.02 Per Share 500,000 0 500 9,500 10,000

December 1997 For Cash
@ $.20 Per Share 200,000 200 39,800 40,000

Net (Loss) December 31, 1997 (52,612) (52,612)
--------- --------- --------- -------- --------- --------- -------- --------

Balance At December 31, 1997 3,500,000 0 0 3,500 0 66,500 (52,612) 17,388

April 14, 1998 For Cash
@ $1 Per Share 50,000 500 0 49,500 50,000

Private Stock Offering:
June 30, 1998 For Cash
@ $1 Per Share 211,400 211 211,189 211,400
(Less Deferred Offering Costs) (11,927) (11,927)

June 30, 1998 Services Valued
@ $1 Per Share 14,861 15 14,845 14,860

August 1, 1998 Cancelled Shares
@.001 Par Value (600,000) (600) 600 0

November 3, 1998 Services
Valued @ $.50 Per Share 10,000 10 4,990 5,000

Preferred Dividends Declared (3,589) (3,589)

Net (Loss) December 31, 1998 (182,866) (182,866)

Balance at December 31, 1998 3,136,261 50,000 $500 $3,136 $49,500 $286,197 ($239,067) $100,266
========= ====== ==== ====== ======= ======== ========== ========

The Accompanying Notes Are An Integral Part Of These Financial Statements.

</TABLE>

<PAGE>

Full Tilt Sports, Inc.
(A Development Stage Company)
Statements of Cash Flows
- ------------------------------------------------------------------------------

June 30, 1997 June 30, 1997
Year (Inception) (Inception)
Ended Through Through
Decembe December December
31, 1998 31, 1997 31, 1998
-------- -------- --------

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) ($182,866) ($52,612) ($235,478)
Adjustments to Reconcile Net Loss to Net
Cash Provided By Operating Activities

Items Not Affecting Cash Flows:
Depreciation Expense 1,512 799 2,311
Amortization Expense 153 76 229

(Increase) In Accounts Receivable (10,303) 0 (10,303)
(Increase) In Inventory (10,037) 0 (10,037)
(Increase) Decrease In Stock S
ubscriptions Receivable 10,000 (10,000) 0
Decrease In Other Assets 0 (812) (812)
Increase In Accounts Payable 2,557 16,043 18,600
Increase (Decrease) In Accrued Salaries 0 2,500 2,500
Increase (Decrease) In Other Accrued
Expenses (475) 2,693 2,218

Net Cash Used By Operating Activities (189,459) (41,313) (230,772)
--------- -------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (4,449) (2,396) (6,845)
------- ------- -------

Net Cash Used By Investing Activities (4,449) (2,396) (6,845)
------- ------- -------

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock 219,333 70,000 289,333
Issuance of Preferred Stock 50,000 0 50,000
------ - ------

Net Cash Provided By Financing Activities 269,333 70,000 339,333
------- ------ -------

Net Increase In Cash 75,425 26,291 101,716

Cash At Beginning Of Year 26,291 0 0

Cash At End Of Year $101,716 $26,291 $101,716
======== ======= ========

Non-Cash Activities:

Common Stock Issued For Services $19,860 $0 $19,860
======= == =======

The Accompanying Notes Are An Integral Part Of These Financial Statements.

F-5

<PAGE>

Full Tilt Sports, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Period June 30, 1997 (Inception) Through December 31, 1998
- ------------------------------------------------------------------

Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------

Organization

On June 30, 1997 Full Tilt Sports, Inc. (the Company) was incorporated
under the laws of Colorado. The Company's primary purposes are to
develop and market the Full Tilt line of clothing apparel and secondly
to organize and develop one or more indoor multi-sport facilities in
the United States.

Developmental Stage

The Company is currently in the developmental stage and has no
significant revenues from operations to date.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities 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.

Depreciation

Property and equipment is depreciated using the straight line method
over the estimated economic lives ranging from 3 to 7 years.

Statement of Cash Flows

For purposes of the statement of cash flows, the Company considered
demand deposits and highly liquid-debt instruments purchased with a
maturity of three months or less to be cash equivalents.

Cash paid for interest during the year ended December 31, 1998 and
1997 was $163 and $65, respectively. Cash paid for income taxes for
the year ended December 31, 1998 and 1997 was $ -0-. There were no
noncash investing and financing transactions.

F-6

<PAGE>

Note 1 - Organization and Summary of Significant Accounting Policies (Cont'd)
- -----------------------------------------------------------------------------

Basic Earnings (Loss) Per Common Share

The net income (loss) per common share is computed by dividing the net
income (loss) for the year by the weighted average number of common
shares outstanding at December 31, 1998 and 1997. The effect of the
outstanding common stock warrants would be antidilutive, therefore,
they are not included in the basic earnings per share calculation.

Advertising

Advertising is expensed when incurred.

Inventory

Inventories are stated at the lower of cost or market using the first-
in, first-out (FIFO) method.

Note 2 - Equity
- ---------------

The Company initially authorized 30,000,000 shares of stock, of which
5,000,000 shares are $.01 par value preferred stock and 25,000,000
shares are $.001 par value common stock. On July 5, 1997 the Company
issued 2,800,000 shares of common stock for $.0071 or $20,000. On
July 7, 1997 the Company issued 500,000 shares of common stock for
$.02 per share or $10,000. On December 31, 1997 the Company issued
200,000 shares of common stock for $.20 per share or $40,000.

In September 1997 the Company offered to sell up to 500,000 shares of
common stock for $1.00 per share, based on a best efforts basis to
Colorado residents only. The minimum was 300,000 shares and the
maximum 500,000 shares for a total offering of $500,000. The shares of
common stock were proposed to be issued pursuant to an exemption from
registration under Section 3(b) and Regulation D, Rule 504, of the
Securities Act of 1933, as amended, and from an exemption to registration
provided by Section 11-51-308(l)(p) of the Colorado Securities Act.

F-7

<PAGE>

Note 2 - Equity (continued)
- ---------------------------

In November 1997 the Company decided to terminate this offering.
The offering costs were deducted as part of operations in 1997.

In April 1998 the Company offered to sell up to 50,000 units (the
"Units") at $10.00 per Unit, based on a best efforts basis. Each Unit
was comprised of 10 shares of $.001 par value common stock and 5 common
stock purchase warrants. The warrants can be exercised at anytime to
purchase 1 share of common stock for $1.50 until April 13, 2000. The
minimum was 15,000 Units and the maximum 50,000 Units for a total offering
of $500,000. The shares of common stock contained in the Units were to be
issued pursuant to an exemption from registration under Section 3(b) and
Regulation D, Rule 504, of the Securities Act of 1933, as amended, and to
an exemption to registration provided by Section 11-51-308(l)(p) of the
Colorado Securities Act.

In June 1998 the Company completed the offering and sold 21,140 units
including 211,400 shares of common stock and 105,700 warrants for
$211,400. After deferred offering costs of $11,927, the Company netted
$199,473 from the offering.

In June 1998 the Company issued 14,861 shares of common stock valued
at $1 per share for services rendered to the Company.

In August 1998 a shareholder of the Company donated 600,000 shares of
common stock back to the Company at which time the shares were
canceled.

In November 1998 the Company issued 10,000 shares of common stock
valued at $.50 per share for services rendered to the Company.

F-8

<PAGE>

Note 2 - Equity (continued)
- ---------------------------

In April 1998 the Articles of Incorporation were amended to authorize
the issuance of 150,000 shares of Series A Voting Convertible
Preferred Stock to be issued at the discretion of the Board of
Directors for $1 per share. The Series A Convertible Preferred Stock
has senior preferential fixed dividends at the rate of 10% per annum
($.10 per year) pro rated to the date of issuance, for a period of 24
months after issuance, payable annually on or before December 31 of
each such calendar year before any dividend shall be declared or paid
upon or set apart for the Common Stock. Beginning on the first day of
the 25th month and continuing until the expiration of 60 months from
the date of issuance, unless sooner converted, the dividend shall be
calculated as 3.75% of the "net profits" of the Corporation and
payable annually on or before 90 days from the closing of the
Corporation's fiscal year. The Series A Convertible Preferred Stock
automatically converts to common stock in 5 years from the date of
issuance. The conversion rate will be subject to adjustments in
certain events, including stock splits and dividends.

The Board of Directors is authorized to divide the class of preferred
shares into series and to fix and determine the relative rights and
preferences of those shares.

On April 14, 1998, the Company sold 50,000 shares of series A
preferred stock for $50,000 or $1.00 per share.

At December 31, 1998 Preferred Dividends of $3,589 were declared.

Note 3 - Stock Option Plan
- --------------------------

The Company has adopted a Non-Qualified Stock Option and Stock Grant
Plan for the benefit of key personnel and others providing significant
services to the Company. An aggregate of 1,000,000 shares of common
stock has been reserved for issuance under this plan. There are no
options outstanding under this plan as of December 31, 1998 and 1997.

F-9

<PAGE>

Full Tilt Sports
(A Development Stage Company)
Notes To Financial Statements
For The Period June 30, 1997 (Inception) Through December 31, 1998
- ------------------------------------------------------------------

Note 4 - Income Taxes
- ---------------------

The Company follows Financial Accounting Standards Board Statement No.
109, "Accounting For Income Taxes" (SFAS #109), which requires, among
other things, an asset and liability approach to calculating deferred
income taxes. The components of the deferred income tax assets and
liabilities arising under FASB Statement No. 109 were as follows:

Deferred tax asset $47,032
Valuation allowance 47,032
------
$ -0-
======

The net change in the valuation allowance for the year ended December
31, 1998 was $35,510.

The types of temporary differences between the tax basis of assets and
their financial reporting amounts that give rise to a significant
portion of the deferred tax asset are as follows:

Temporary Tax
Difference Effect
---------- ------
Net operating loss carry forward: $235,158 $47,032
======== =======

The net operating loss carry forward will expire in the years 2012 and
2013.

Note 5 - Related Party Events
- -----------------------------

The Company has executed an Administrative Service Agreement with a
company owned by directors of the Company for $2,500 per month for a
twelve year period beginning January 1, 1998.

The Company has an option to acquire property purchased by an
officer/director.

The Company entered into employment agreements for $30,000 per year
with two of its officers. The initial term of this agreement
commenced September 1, 1998 and will terminate on August 31, 1999, and
shall continue thereafter on a year to year basis unless terminated by
the Company.

F-10

<PAGE>

Note 6 - Subsequent Events
- --------------------------

In January 1999 the Company commenced another private placement for
500,000 shares of common stock for $1.50 per share for a maximum of
$750,000. There has been $360,000 received as a result of this
placement.

In January 1999 the Company signed endorsement contracts with
professional athletes in exchange for common stock.

Additionally, the Company issued common stock shares in exchange for
employee services and consulting.

F-11

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 12/31/98
FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-KSB.
</LEGEND>
<CIK> 0001062663
<NAME> FULL TILT SPORTS, INC.
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 101,716
<SECURITIES> 0
<RECEIVABLES> 10,303
<ALLOWANCES> 0
<INVENTORY> 8,573
<CURRENT-ASSETS> 122,639
<PP&E> 6,845
<DEPRECIATION> (2,311)
<TOTAL-ASSETS> 127,173
<CURRENT-LIABILITIES> 26,907
<BONDS> 0
0
500
<COMMON> 3,136
<OTHER-SE> 96,630
<TOTAL-LIABILITY-AND-EQUITY> 127,173
<SALES> 19,006
<TOTAL-REVENUES> 19,006
<CGS> 15,622
<TOTAL-COSTS> 15,622
<OTHER-EXPENSES> 189,372
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163
<INCOME-PRETAX> (182,866)
<INCOME-TAX> 0
<INCOME-CONTINUING> (182,866)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (3,589)
<NET-INCOME> (186,455)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)

</TABLE>