SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-KSB

(Mark one)
[X] Annual Report Under Section 13 or 15(d) of The Securities Exchange Act
    of 1934

    For the fiscal year ended January 31, 2006

[ ] Transition Report Under Section 13 or 15(d) of The Securities Exchange Act
    of 1934

    For the transition period from ______________ to _____________

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

                         Commission File Number: 0-30197


                       KIK Technology International, Inc.
        (Exact name of small business issuer as specified in its charter)

      California                                               91-2021602
(State of incorporation)                                (IRS Employer ID Number)

                  590 Airport Road, Oceanside, California 92054
                    (Address of principal executive offices)

                                 (760) 967-2777
                           (Issuer's telephone number)

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

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

            Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock $.001 par value

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of Company'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. [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): Yes [ ] No [X]

The  issuer's  revenues  for  the  fiscal  year  ended  January  31,  2006  were
$1,947,069.

The aggregate market value of the voting common equity held by non-affiliates as
of  May  1,  2006  was  approximately  $154,438  based  upon  25,171,865  shares
outstanding of which 7,721,865 are held by  non-affiliates  and a share price of
$0.02. No non-voting common equity is outstanding.

As of May 1,  2006,  there were  25,171,865  shares of Common  Stock  issued and
outstanding.

Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
                       KIK TECHNOLOGY INTERNATIONAL, INC.

                                INDEX TO CONTENTS

                                                                     Page Number
                                                                     -----------
PART I

Item 1   Description of Business                                           3
Item 2   Description of Property                                           6
Item 3   Legal Proceedings                                                 7
Item 4   Submission of Matters to a Vote of Security Holders               7

PART II

Item 5   Market for Company's Equity and Related Stockholder Matters       7
Item 6   Management's Discussion and Analysis or Plan of Operation         9
Item 7   Financial Statements                                             12
Item 8   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosures                         12
Item 8A  Controls and Procedures                                          12

PART III

Item 9   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16(a) of the Exchange Act               12
Item 10  Executive Compensation                                           13
Item 11  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters                                 13
Item 12  Certain Relationships and Related Transactions                   14
Item 13  Exhibits and Reports on 8-K                                      14
Item 14  Principal Accountant Fees and Services                           15

SIGNATURES                                                                16

                                       2
<PAGE>
                  CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain  statements  contained  in  this  annual  filing,   including,   without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

Such factors include, among others, the following:  international,  national and
local general economic and market conditions:  demographic  changes; the ability
of the Company to sustain,  manage or  forecast  its growth;  the ability of the
Company to successfully make and integrate acquisitions;  raw material costs and
availability;  new product  development and  introduction;  existing  government
regulations  and  changes  in,  or  the  failure  to  comply  with,   government
regulations;  adverse publicity;  competition; the loss of significant customers
or suppliers;  fluctuations  and  difficulty in forecasting  operating  results;
changes in business strategy or development  plans;  business  disruptions;  the
ability  to attract  and  retain  qualified  personnel;  the  ability to protect
technology; and other factors referenced in this and previous filings.

Given  these  uncertainties,  readers  of this Form  10-KSB  and  investors  are
cautioned not to place undue reliance on such  forward-looking  statements.  The
Company  disclaims  any  obligation  to update any such  factors or to  publicly
announce the result of any  revisions to any of the  forward-looking  statements
contained herein to reflect future events or developments.

                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

KIK Technology  International,  Inc. (KTII) was incorporated on February 1, 2000
under   the  laws  of  the   State   of   California   as   Russian-Imports.com.
Russian-Imports.com  was  initially  founded to develop an  internet  e-commerce
website which would sell handmade  lacquer  boxes,  Matroshka  dolls and crystal
imported  from Russia.  This  business plan was  unsuccessful  and  subsequently
terminated.

On September 4, 2001,  KTII  (formerly  Russian-Imports.com)  issued  16,700,000
shares of restricted,  unregistered common stock to KIK Tire Technologies,  Inc.
(a  publicly-owned  Canadian  corporation)  (KTTI)  for 100.0% of the issued and
outstanding stock of KIK Technology,  Inc. (a wholly-owned  subsidiary of KTTI).
By  virtue of this  transaction,  KIK  Technology,  Inc.  became a  wholly-owned
subsidiary of KTII and KTTI became an  approximate  73.6%  shareholder  in KTII.
Concurrent  with this  transaction,  Russian-Imports.com  changed it's corporate
name to KIK Technologies International, Inc.

KIK  Technology,  Inc (KTI) was  incorporated in June 1988 under the laws of the
State of California.  KTI manufactures and markets an extensive and high quality
line of off-highway micro-cellular polyurethane tires for the healthcare,  light
industrial,  lawn and garden and  recreational  industries.  KTI operates from a
sole manufacturing plant and marketing offices located in Oceanside, CA.

The Company operates through it's wholly-owned subsidiary, KIK Technology,  Inc.
(KTI). KTI operates from its  manufacturing  plant and marketing offices located
at  Oceanside,  California  and  manufactures  and markets an extensive and high
quality  line  of  off-highway   micro-cellular   polyurethane   tires  for  the
healthcare, light industrial, lawn and garden and recreational industries.

The current KIK production processes, formulations, manufacturing equipment, and
line of some 150  products  are the  result  of over ten years of  research  and
development,  funded by over $5 million of invested  capital,  and  protected by
trade secrets and licensing agreements.

In its formative  years,  KIK,  through it's research and  development  efforts,
developed new and tougher varieties of urethane  formulations for it's products;
obtained tooling for new products; and added extensive production capacity.

Revenues  are  generated  through  direct  sales to the medical  market  segment
(primarily  wheelchair  tires),  through  a  network  of third  party  marketing
distributors  and, in recent  periods,  through nominal direct sales to dealers.
KIK  continues  to develop the  implementation  of other  marketing  strategies,

                                       3
<PAGE>
directly and through carefully  selected new strategic partners as the necessary
funds  are  available.  The  manufacturing  infrastructure  sufficient  to  meet
projected demand through the next few years is in place.

The Company has generated revenues for the preceding years as follows:

         Year ended January 31, 2006 - approximately $1.9 million
         Year ended January 31, 2005 - approximately $2.4 million
         Year ended January 31, 2004 - approximately $3.6 million
         Year ended January 31, 2003 - approximately $3.2 million
         Year ended January 31, 2002 - approximately $2.6 million
         Year ended January 31, 2001 - approximately $3.7 million

During  Fiscal  2006,  the  Company  felt the full  impact  of a change  in it's
relationship  with ARNCO, a Los Angeles,  California based producer of pneumatic
tire sealants and foam-fill compounds. In prior years, KIK private-labeled tires
for ARNCO under ARNCO's registered  trademark "Carefree Tire". This relationship
ceased  during  Fiscal  2006  and is  reflected  in  the  Company's  results  of
operations.

In prior years,  the Company  relied upon Section 4(2) of the  Securities Act of
1933, as amended (the "Act") and Rule 506 of Regulation D promulgated thereunder
("Rule 506") for issuances of unregistered  securities.  In each instance,  such
reliance  was based  upon the fact that (I) the  issuance  of the shares did not
involve  a public  offering,  (ii)  there  were no more  than  thirty-five  (35)
investors (excluding "accredited investors"), (iii) each investor who was not an
accredited  investor  either alone or with his purchaser  representative(s)  has
such  knowledge  and  experience  in financial  and business  matters that he is
capable of evaluating the merits and risks of the prospective investment, or the
issuer  reasonably  believes  immediately  prior to  making  any sale  that such
purchaser comes within this description,  (iv) the offers and sales were made in
compliance  with Rules 501 and 502, (v) the securities  were subject to Rule 144
limitations on resale and (vi) each of the parties was a sophisticated purchaser
and had full  access to the  information  on the  Company  necessary  to make an
informed  investment  decision by virtue of the due  diligence  conducted by the
purchaser or  available  to the  purchaser  prior to the  transaction  (the "506
Exemption").

BUSINESS STRATEGY

KIK is a  manufacturer  of  micro-cellular  polyurethane  (MCP)  tires  with the
technology  and equipment to take  advantage of the growing market for flat-free
tires. It has developed what it considers is an excellent  reputation within the
industry.

It is the objective of the Company to become a major force  throughout the world
as a MCP tire producer. The Company believes the tire industry is looking for an
alternative to pneumatic  tires and that the KIK tires provide a viable,  "value
added"  alternative.  The  Company's  initial focus is to determine the needs of
existing and potential customers and supplying a superior product at competitive
prices.

The  Company   will  also   continue  to  pursue  and   evaluate   new  business
diversification opportunities available to it using its technology.

PRODUCT

KIK  manufactures  polyurethane  tires  by  blending  hydrocarbon-based  quality
isocyanate  intermediates  with  glycol-based  polyols and other chemicals.  The
resulting  compound makes a light but tough tire. KIK tires are  environmentally
friendly,  puncture  and leak  proof  and  maintenance  free.  They  ride like a
pneumatic tire but last much longer due to their tough polymer construction.

THE COMPANY'S EQUIPMENT AND PRODUCTION LINE CAPABILITIES

KIK owns  all the  equipment  necessary  to turn raw  material  to the  finished
product - including tires and completed wheel assemblies.

The Company's  technology and equipment  enable it to produce a large variety of
tires and other  products.  Although the Company is licensed  for three  variant
features of MCP tire  technologies,  it has  developed  its own unique  chemical
formulations  and  manufacturing  processes.  The Company's  production  process
requires the dispensing of catalyzed liquid chemicals into a spinning mold. This
centrifugal  casting of mixed,  activated  polyurethane base stock raw materials
results in a tough molded  polymer with smooth,  solid outer skin and a lighter,
uniformly  dense  porous  foam  core.  KIK tires can be  designed  and molded to
virtually any tread  specification and are available in a variety of colors. The
spin casting results in perfectly balanced tires. The Company has the production
capacity to produce between  1,500,000 and 2,500,000  tires annually,  depending
upon the size of the tire being manufactured.

                                       4
<PAGE>
The Company's facilities include a machine shop and it's own testing and quality
assurance  equipment and program.  Completed tires must meet specific  protocols
such as weight and pressure.  Whenever possible,  the Company purchases bulk raw
materials in volumes to produce  significant  cost savings in the  manufacturing
process.

The Company is  constantly  looking into  developing  new products and modifying
existing  products for its production  lines, and is evaluating  improvements to
its technology designed to lower production costs and improve competitiveness in
its markets.

PROPRIETARY TECHNOLOGY

The Company  operates under perpetual  licensing  agreements with patent holders
that cover various aspects of tire and equipment designs,  chemical formulations
and manufacturing processes.

MARKETING AND SALES DISTRIBUTION

The Company has grouped the  worldwide  market for  off-highway  tires into four
major market segments,  each possessing  identifiable  business  characteristics
requiring separate sales strategies.

HEALTHCARE:  The Company's focus in this area is directed  towards a penetration
of the existing  wheelchair  and power scooter  pneumatic  tire  business,  with
emphasis at the OEM level.  This has been the "prototype"  industry around which
the Company has developed and perfected its MCP tire  technology.  Through trade
shows, trade magazine  advertising,  distributors and direct sales contacts,  an
excellent base has been established to facilitate  future growth in this sector.
Unfortunately,  due to foreign  competition and lack of capital for an effective
marketing campaign, the Company has not been able to complete the penetration of
this market as  originally  anticipated.  Management  remains  hopeful that this
market will be viable and profitable to the Company.

INDUSTRIAL:  During Fiscal 2006, the Company felt the full impact of a change in
it's  relationship  with ARNCO,  a Los  Angeles,  California  based  producer of
pneumatic tire sealants and foam-fill compounds. KIK marketed light, off-highway
industrial  and utility tires through its strategic  alliance with ARNCO,  a Los
Angeles,  California  based  producer of pneumatic  tire  sealants and foam-fill
compounds.  In prior years,  KIK  private-labeled  tires for ARNCO under ARNCO's
registered  trademark  "Carefree Tire". This  relationship  ceased during Fiscal
2006 and is reflected in the Company's results of operations.

RECREATIONAL: Although the Company has products for recreational devices such as
golf carts and skate boards,  this market is dominated by bicycles.  Previously,
KIK has  discussed  the  manufacture  of bicycle  tires outside of North America
through selected  strategic (joint venture)  partners in countries such as China
active in export  markets,  and where  users are reliant on the bicycle as basic
transportation.  During  Fiscal  2004,  the Company  became aware of the Chinese
manufacture of products of comparable  quality which  directly  compete with the
Company's  products.  During Fiscal 2006, the effect of this  competition in the
Company's domestic marketplace became apparent and is reflected in the Company's
financial results.

LAWN & GARDEN:  KIK will  attack  the  international  lawn and garden OEM market
directly and through  established  distributors.  Most of Carefree  Tire's North
American downstream tire distribution network services this industry parallel to
the  industrial  market.  Initial  results  indicate that users embrace this new
technology enthusiastically for such applications as wheelbarrows,  powered lawn
mowers,  snow blowers,  and farm carts,  etc.  OEMs are also being  aggressively
pursued in the United States, Canada and Europe.

ADVERTISING & PROMOTION

As the Company has  available  capital,  the Company  anticipates  developing  a
variety of  collateral  materials  to support  sales  efforts.  These  materials
include  informational  and  instructional  video  tapes  ,  brochures,  product
catalogs with data sheets,  flyers,  sample  presentations etc. The Company also
advertises and markets its products on its website - www.kiktire.com.

COMPETITION

Currently  the  Company  knows of  several  tire  manufacturers  that  utilize a
manufacturing  process similar to its own,  including  ARNCO,  Green Tire, U.K.,
Alshin Tire, U.S.A., and Amerityre Corporation, U.S.A. The Company is also aware
of growing  manufacturing  and sales  competition from both China and India. The
Chinese  competition is of serious  concern to the Company's  management as more
and more of domestic  manufacturing,  which uses the Company's tire products, is
being   transferred   to  the  Pacific  Rim  where  the  Company   loses  market
opportunities due to price and shipping  distances.  Competition also comes from
firms that  manufacture and market tires and tubes made from rubber.  Several of

                                       5
<PAGE>
these competitors are large well-established companies with considerably greater
financial,  marketing, sales and technical resources than those available to the
Company.

Because of these factors, any expansion of manufacturing  outside the Oceanside,
California  plant is  uncertain.  Further,  many of the  Company's  present  and
potential  competitors have capabilities  which are allowing such competitors to
offer its products at prices which may compete with the Company's products.  The
Company's  products  could  be  made  uneconomical  by the  introduction  of new
products  or  marketing  or  pricing  actions  by one or more  of the  Company's
competitors, including foreign competition.

However, the Company believes that once the superior  characteristics of the MCP
tires have been properly  communicated to the consumers,  an increasingly  large
percentage of consumers will switch to the Company's tires.

SOURCES AND AVAILABILITY OF RAW MATERIALS

The Company's  principal raw  materials are produced from  petroleum  feedstocks
and,  therefore,  are subject to disruption and price  variances  related to the
global availability of crude oil.

In prior years,  a significant  supplier of these raw materials was also a major
customer for the  Company's  products.  The purchase  side of this  relationship
began to dissolve during the year ended January 31, 2005 and further  diminished
significantly in the year ended January 31, 2006.

During 2005, the Company incurred an  unanticipated  disruption of raw materials
as Hurricanes Katrina and Rita impacted the U. S. Gulf Coast causing a temporary
shutdown of refineries in this region.  The Company's raw material  supply chain
was also  impacted  by the effect of rising  prices in the  worldwide  crude oil
markets.  In the  event of any  future  disruption  in the  availability  of raw
materials or a market for the Company's  products,  as occurred  during the year
ended January 31, 2006, the Company will experience a negative economic impact.

The  Company  has  developed  additional  sources  of  supply  of  it's  key raw
materials; however, still experiences fluctuations in pricing due to the current
world market  conditions  for crude oil.  Management is seeking other avenues of
distribution  of the  Company's  products  to  consumers.  Management  is of the
opinion that no  interruption  of either raw  materials  or product  demand will
occur.

RESEARCH AND DEVELOPMENT

The  Company  constantly  seeks to improve  its MCP  technology  and develop new
products.  However,  the Company does not anticipate that it will be required to
commit  any  substantial  funds for  existing  development  projects  or for new
research and development.

REGULATION AND ENVIRONMENTAL COMPLIANCE

The Company is subject to general local, state and federal regulations governing
environmental  concerns.  Management  believes  the  Company has always been and
continues to be in compliance with all such laws.

EMPLOYEES

As of May 1,  2006,  the  Company  has  approximately  15  full-time  employees,
including  2  management/clerical   personnel.   None  of  these  employees  are
represented  by a labor union.  The Company  considers  its  relations  with its
employees  to be  excellent.  The Company may employ  additional  personnel,  as
necessary, to accommodate future expansion.

KEY CUSTOMERS/SUPPLIERS

During the years ended January 31, 2006 and 2005, respectively,  the Company had
four and three separate customers who were responsible for a significant portion
of the Company's net revenues,  accounts receivable and suppliers of various raw
materials and components to the Company's  manufacturing  process. The following
table shows the significance of these entities:

                                       6
<PAGE>
                                                    Accounts          Accounts
                                  Revenues         Receivable         Payable
                                  --------         ----------         -------
Year ended January 31, 2006
   Customer A                       28.98%           10.74%           48.05%
   Customer B                       25.73             3.48               --
   Customer C                        5.62            15.36             0.06
   Customer D                        6.28            11.08               --
   Others                           33.39            59.34            51.89
                                   ------           ------           ------

     Totals                        100.00%          100.00%          100.00%
                                   ======           ======           ======

Year ended January 31, 2005
   Customer A                       49.18%           35.02%           59.37%
   Customer B                       16.09             7.42             0.12
   Customer C                        6.59            18.32             0.52
   Others                           28.14            39.24            39.99
                                   ------           ------           ------

     Totals                        100.00%          100.00%          100.00%
                                   ======           ======           ======

ITEM 2 - DESCRIPTION OF PROPERTY

The Company maintains its executive offices at 590 Airport Road,  Oceanside,  CA
92054. Its telephone number is (760) 967-2777.

The Company leases its facilities under a non-cancellable operating lease, which
expires in May 2008. The lease requires monthly payments as follows:  $8,307 for
the first 12  months;  $8,639  for the next 12 months and $8,984 for the next 12
months.  Rent expense incurred under this lease was  approximately  $108,597 and
$106,428 for each of the years ended January 31, 2006 and 2005, respectively.

Future amounts due under this agreement are as follows:

                                             Year ending
                                             January 31,         Amount
                                             -----------         ------
                                                2007           $110,680
                                                2008            105,391
                                                2009             48,585
                                                               --------

                                               Totals          $264,656
                                                               ========

ITEM 3 - LEGAL PROCEEDINGS

The Company may become  involved in various claims and legal actions  arising in
the ordinary  course of  business.  In the opinion of  management,  the ultimate
disposition  of these  matters will not have a material  adverse  impact  either
individually  or  in  the  aggregate  on  consolidated  results  of  operations,
financial position or cash flows of the Company.  As of the date of this filing,
the Company is not involved in any legal proceeding.

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

The Company has not conducted any meetings of shareholders  during the preceding
quarter or periods subsequent thereto.

                                     PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of May 1, 2006, there were 25,171,865 shares of $0.001 par value common stock
(the "Common Stock") of the Company  outstanding and owned by  approximately  62
shareholders of record,  exclusive of shareholders holding their certificates in
street name.

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<PAGE>
Our Certificate of Incorporation  authorizes the issuance of 100,000,000  shares
of $0.001 par value common stock.  Our  Certificate  of  Incorporation  does not
allow for the  issuance of any class of  preferred  stock.  Holders of shares of
common  stock are entitled to one vote for each share on all matters to be voted
on by the  stockholders.  Holders of common stock have cumulative voting rights.
Holders of shares of common stock are entitled to share ratably in dividends, if
any,  as may be  declared,  from time to time by the Board of  Directors  in its
discretion,   from  funds  legally  available  therefor.   In  the  event  of  a
liquidation, dissolution, or winding up of the company, the holders of shares of
common stock are entitled to share pro rata all assets  remaining  after payment
in full of all liabilities.  Holders of common stock have no preemptive or other
subscription rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to such shares.

During 2001,  the Company filed a request for clearance of quotations on the OTC
Bulletin Board under SEC Rule 15c2-11,  Subsection  (a)(5) with NASD  Regulation
Inc. A  Clearance  Letter was issued to the  Company  and was issued the trading
symbol "KKTI".

The ask/high and bid/low  information for each calendar  quarter since September
4, 2001,  noting that the  over-the-counter  quotations  provided herein reflect
inter-dealer prices, without retail markup,  mark-down or commission and may not
represent actual transactions.

                                                              High         Low
                                                              ----         ---
Fiscal Year ended January 31, 2004
  First quarter 2004 (February 1, 2003 - April 30, 2003)      $0.06       $0.04
  Second quarter 2004 (May 1, 2003 - July 31, 2003)           $0.06       $0.04
  Third quarter 2004 (August 1, 2003 - October 31, 2003)      $0.07       $0.04
  Fourth quarter 2004 (November 1, 2003 - January 31, 2004)   $0.05       $0.02

Fiscal Year ended January 31, 2005
  First quarter 2005 (February 1, 2004 - April 30, 2004)      $0.05       $0.03
  Second quarter 2005 (May 1, 2004 - July 31, 2004)           $0.11       $0.04
  Third quarter 2005 (August 1, 2004 - October 31, 2004)      $0.08       $0.03
  Fourth quarter 2005 (November 1, 2004 - January 31, 2005)   $0.05       $0.02

Fiscal Year ended January 31, 2006
  First quarter 2006 (February 1, 2005 - April 30, 2005)      $0.04       $0.02
  Second quarter 2006 (May 1, 2005 - July 31, 2005)           $0.045      $0.02
  Third quarter 2006 (August 1, 2005 - October 31, 2005)      $0.03       $0.02
  Fourth quarter 2006 (November 1, 2005 - January 31, 2006)   $0.025      $0.012

DIVIDENDS

The Company has never paid or declared  any  dividends  on its common  stock and
does not anticipate paying cash dividends in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

On July 22, 2004, the Company issued 150,000 restricted,  unregistered shares of
common  stock  to The  Compeller  Group,  LTD.  in  payment  of a  contract  for
professional  services.  This  transaction was valued at  approximately  $6,000,
which was equal to or in excess of the discounted closing price of the Company's
common  stock  on the  NASDAQ  Electronic  Bulletin  Board  on the  date of each
respective  transaction.  The Company relied upon Section 4(2) of The Securities
Act of 1933, as amended, for an exemption from registration on these shares.

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

OVERVIEW

During  Fiscal  2006,  2005,  2004 and 2003,  the Company  achieved  revenues of
approximately $1,947,000,  $2,463,000, $3,639,000 and $3,155,000,  respectively.
These revenues were derived primarily from the sale of tire products.

Net  losses for the years  ended  January  31,  2006,  2005,  2004 and 2003 were
approximately $(381,000),  $(435,000),  $(199,000) and ($12,700),  respectively.
The net losses for Fiscal 2006, 2005 and 2004 each include a $120,000 charge for
administrative  services to the Company  from KIK Tire  Technologies  Inc.,  the
Company's  publicly-owned Canadian majority shareholder.  The net loss per share
of common stock  outstanding for Fiscal 2006,  2005 and 2004 were  approximately
$(0.02), $(0.02) and $(0.01) per share, respectively.

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<PAGE>
RESULTS OF OPERATIONS

The following  discussion and analysis of our financial condition and results of
operations  should  be read  in  conjunction  with  the  consolidated  financial
statements and notes.

YEAR ENDED JANUARY 31, 2006 AS COMPARED TO JANUARY 31, 2005

The Company  posted net sales of  approximately  $1,947,000  for the fiscal year
ended January 31, 2006 as compared to net sales of approximately  $2,463,000 for
the fiscal year ended January 31, 2005.  This decrease  reflects a change in the
Company's  product demand and  distribution  and the negative  impact of foreign
competition.

The Company's cost of sales decreased by approximately $512,000 to approximately
$1,729,000  for the year ended  January 31,  2004 as  compared to  approximately
$2,241,000 for the year ended January 31, 2005. This decrease profiles favorably
to the decrease in sales volume  during  Fiscal 2006 and  increases in prices in
raw  materials  during the year.  The  Company  has  experienced  certain  price
increases  in key raw  materials  which  have not been  passed  through in their
entirety due to competitive pressures from comparable products produced in Asian
markets.  All other costs related to production  were  relatively  stable during
Fiscal 2005. In spite of competitive pressures and difficulties in obtaining raw
feedstock  materials as a result of the effects of Hurricane Katrina and Rita on
refineries  located  on the U. S.  Gulf  Coast,  the  Company  managed  a slight
increase in it's gross  profit  margin to  approximately  11.19%  (approximately
$218,000)  for Fiscal  2006 as compared to  approximately  8.94%  (approximately
$222,000) for Fiscal 2005. The Company continues to experience  economic pricing
pressures  caused by foreign  competition and increases in domestic raw material
costs, which are directly related to the cost of crude oil from both foreign and
domestic  markets.  Management  is aware  of this  situation  and is  evaluating
various  remedies to restore the gross profit  percentages  experienced in prior
years.

General and  administrative  expenses declined from  approximately  $655,000 for
Fiscal 2005 to  approximately  $593,000  in Fiscal  2006.  At the KIK  operating
subsidiary  level,  all general and  administrative  costs  experienced a slight
decrease as a result of  constant  management  spending  controls  and  diligent
monitoring  (approximately  $471,000 for Fiscal 2005 versus  $527,000 for Fiscal
2004).  The  difference  reflects  various  overhead  expenses at the  corporate
administrative level which are subject to random fluctuation based upon business
and  overhead  activities,  including  a new  administrative  support  charge of
$120,000  which  was  assessed  by KIK Tire  Technologies  Inc.,  the  Company's
publicly-owned Canadian majority shareholder, starting during Fiscal 2004.

Overall,  the Company  experienced a net loss of  approximately  $(381,000)  and
$(435,000) for Fiscal 2006 and 2005,  respectively and recognized a net loss per
weighted-average   share  outstanding  of  approximately  $(0.02)  and  $(0.02),
respectively.

The Company's management continues to be of the opinion that consumer demand for
the Company's flat free tires will remain strong and,  potentially,  increase in
the next operating year. The Company's  products  continue to have strong demand
at  the  consumer  level  and,  although,   the  Company's  raw  feedstocks  are
petrochemical  based,  that the Company will be able to meet product demands and
generate  sufficient  cash from regular  product  sales to support the Company's
operations  for the next twelve  months.  In the event that daily  normal  sales
activities do not generate  sufficient  cash,  management is of the opinion that
alternative  sources of working capital exist either from existing  shareholders
making a capital infusion or from new third party sources,  including receivable
financing or secured bank lines of credit.

RESTRUCTURED CONVERTIBLE NOTE

On February 16, 2004, the Company  restructured  the $50,000  convertible  note.
Under the restructured terms, the Company paid all accrued interest and a $3,000
principal  reduction on March 16, 2004, as of February 16, 2004.  The Company is
obligated to pay $2,000 per month,  plus accrued  interest,  for the period from
March 16,  2004  through  August 16,  2004 and $1,000  per month,  plus  accrued
interest, on the 16th of each month thereafter until all outstanding amounts are
paid in full.  The  restructured  note bears  interest  at 10.0% per annum.  The
Company is making  interest-only  payments of approximately  $314, which is less
than the interest  accruing and is delinquent  in making the required  principal
payments.  Accordingly,  the  entire  debt is  classified  as  "current"  in the
accompanying consolidated financial statements.

The  $50,000  restructured  note is  convertible  into  shares of  unregistered,
restricted  common stock at the discretion of the Noteholder  with the Company's
consent,  provided that the daily average  (calculated  from the last sale price
daily) of the market price of the Company's common stock for any 30 calendar day
period equals or exceeds $1.00 per share,  with the conversion  being calculated
at a 50% discount of such 30 day average.

The $50,000  Noteholder  also has the  election to receive the monthly  interest
payments in  restricted,  unregistered  common stock of the Company at the daily
average  (calculated  from the last sale price daily) of the market price of the

                                       9
<PAGE>
Company's  common stock for the 30 calendar day period prior to the interest due
date,  with the number of shares to be issued  calculated  at a 50%  discount of
such 30 day average.

Through January 31, 2006, the Company has paid approximately $7,000 in principal
and  $10,438  in  cumulative  accrued  interest  on  the  $50,000   restructured
convertible note.

The  $25,000  convertible  note is in default and no demand for payment has been
made  to  the  Company.  The  Company  continues  to  accrue  interest  on  this
convertible note in accordance with the original terms and conditions.

The aggregate maturities of the notes are as follows:

     Balance as of January 31, 2006                               $ 68,000
     Less current portion                                          (68,000)
                                                                  --------

     Long-term portion                                            $     --
                                                                  ========

CRITICAL ACCOUNTING POLICIES

Financial  Reporting  Release  No.  60,  of the U. S.  Securities  and  Exchange
Commission,   requires  all  companies  to  include  a  discussion  of  critical
accounting policies or methods used in the preparation of financial  statements.
Note D to the Company's  Consolidated Financial Statements includes a summary of
the significant  accounting  policies and methods used in the preparation of the
Company's Consolidated Financial Statements. The following is a brief discussion
of the more significant accounting policies and methods used by the Company.

REVENUE RECOGNITION

Our  revenue  recognition  policy is  significant  because  our revenue is a key
component of our results of operations.  The Company recognizes revenue from the
sale of tires and  accessories.  Revenue  is  recognized  upon  shipment  to, or
receipt by  customers,  depending  upon  contractual  terms and when there is no
significant  uncertainty  regarding  the  consideration  to be received  and the
associated  costs to be  incurred.  Additionally,  we  provide  a  reduction  of
recorded revenue for billing adjustments and billing corrections.

ACCOUNTS RECEIVABLE

The Company  continuously  monitors  collections and payments from its customers
and  maintains an allowance  for  estimated  uncollectible  accounts  based upon
historical  experience and specific customer  collections  issues that have been
identified.   Depending   upon   management's   assessment   of   a   customer's
creditworthiness and order size, certain shipments are made on "COD" terms using
common carriers.

Since accounts  receivable  are  concentrated  in a relatively few customers,  a
significant  change in the  liquidity or financial  position of any one of these
customers  could have a material  adverse  impact on the  collectibility  of the
Company's  accounts  receivable and future  operating  results.  In the event of
complete  non-performance by any customer or customers,  the maximum exposure to
the Company would be the recorded amount of trade accounts  receivable  shown on
the balance sheet at the date of non-performance.

INVENTORIES

Inventories  are  valued  at the  lower of cost or  market.  Cost is  determined
principally on the average cost method.  The Company regularly reviews inventory
quantities  on hand and  records,  when  necessary,  a provision  for excess and
obsolete  inventory  based  primarily  on the  Company's  estimated  forecast of
product demand and production  requirements  for the next twelve months.  Demand
for the Company's products can fluctuate  significantly.  A significant increase
in the demand for the Company's  products could result in a short-term  increase
in the cost of inventory purchases while a significant  decrease in demand could
result in an increase in the amount of excess  inventory  quantities on hand. In
addition, the Company's industry is characterized by rapid technological change,
frequent  new product  development  and rapid  product  obsolescence  that could
result in an increase in the amount of obsolete  inventory  quantities  on hand.
Additionally,  the Company's  estimate of future  product demand may prove to be
inaccurate,  in which case the Company may have  understated  or overstated  the
provision required for excess and obsolete  inventory.  Therefore,  although the
Company  makes every  effort to ensure the  accuracy of its  forecasts of future
product demand, any significant unanticipated changes in demand or technological
developments  could have a significant  impact on the Company's  inventory value
and reported operating results.

                                       10
<PAGE>
STOCK-BASED COMPENSATION

Statement of Financial  Accounting Standards No. 123, Accounting for Stock Based
Compensation,  defines a fair-value  based method of accounting for  stock-based
employee  compensation  plans and  transactions  in which an entity  issues  its
equity  instruments  to  acquire  goods and  services  from  non-employees,  and
encourages  but does not  require  companies  to  record  compensation  cost for
stock-based employee compensation plans at fair value.

For periods  prior to  November  1, 2002,  the Company has chosen to account for
employee stock-based compensation using the intrinsic value method prescribed in
Accounting  Principles  Board Opinion No. 25 (APB No. 25),  Accounting for Stock
Issued  to  Employees,  and  related  interpretations.   Accordingly,   employee
compensation  cost for stock options and warrants is measured as the excess,  if
any, of the market  price of the  Company's  stock at the date of the grant over
the amount an employee must pay to acquire the stock. This treatment was allowed
under Statement of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation" (SFAS 123).

In December 2002, FASB issued  Statement of Financial  Accounting  Standards No.
148 "Accounting for Stock-Based  Compensation - Transition and Disclosure" (SFAS
148).  This  statement  amends  SFAS 123 and  provides  alternative  methods  of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee compensation. This statement also amends the disclosure
requirements  of SFAS 123 to require more prominent and frequent  disclosures in
financial  statements  about  the  effects  of  stock-based  compensation.   The
transition  guidance and annual disclosure  provisions of SFAS 148 are effective
for financial statements issued for fiscal years ending after December 15, 2002.
Effective November 1, 2003, the first day of the reporting quarter including the
effective  date of SFAS 148, the Company's  Board of Directors,  in  conjunction
with public  opinion and SFAS 148,  elected to expense the imputed  compensation
cost  related to any stock  options  granted  during  Fiscal 2003 and for future
periods.  The Company did not issue any stock options during Fiscal 2003 and the
adoption of SFAS 148 did not have a material impact on our results of operations
or financial condition.

In December  2004,  the FASB issued SFAS 123(R)),  "Share-Based  Payment."  SFAS
123(R)) amends SFAS 123,  "Accounting  for  Stock-Based  Compensation,"  and APB
Opinion 25,  "Accounting for Stock Issued to Employees."  SFAS 123(R))  requires
that  the  cost  of  share-based  payment  transactions  (including  those  with
employees and  non-employees)  be recognized in the financial  statements.  SFAS
123(R))  applies  to all  share-based  payment  transactions  in which an entity
acquires  goods or services by issuing (or offering to issue) its shares,  share
options,  or other equity  instruments  (except for those held by an ESOP) or by
incurring  liabilities  (1) in amounts  based (even in part) on the price of the
entity's  shares  or  other  equity  instruments,  or (2) that  require  (or may
require)  settlement  by the  issuance  of an  entity's  shares or other  equity
instruments.  This statement is effective (1) for public companies qualifying as
SEC small  business  issuers,  as of the  first  interim  period or fiscal  year
beginning after December 15, 2005, or (2) for all other public companies,  as of
the first interim  period or fiscal year  beginning  after June 15, 2005, or (3)
for all nonpublic entities, as of the first fiscal year beginning after December
15,  2005.  Management  anticipates  no  significant  impact  to  the  Company's
financial statements upon the adoption of SFAS No. 123(R)).

NEW AND PENDING ACCOUNTING PRONOUNCEMENTS

In November 2004, the Financial  Accounting  Standards Board (the "FASB") issued
SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4." SFAS No.
151  clarifies the  accounting  for abnormal  amounts of idle facility  expense,
freight,  handling  costs and wasted  materials.  SFAS No. 151 is effective  for
inventory  costs incurred during fiscal years beginning after June 15, 2005. The
initial application of SFAS No. 151 is not expected to have a significant impact
on the Company's financial position or results of operations.

In December 2004,  the FASB issued SFAS 123(R)),  "Share-Based  Payment,"  which
addresses the accounting for employee  stock options.  SFAS 123(R))  revises the
disclosure  provisions of SFAS 123 and supersedes APB 25. SFAS 123(R))  requires
that the  cost of all  employee  stock  options,  as well as other  equity-based
compensation  arrangements,  be reflected in financial  statements  based on the
estimated  fair value of the awards.  In March 2005,  the  Securities & Exchange
Commission (the "SEC") issued Staff  Accounting  Bulletin No. 107,  "Share-Based
Payment," which  summarizes the views of the SEC staff regarding the interaction
between SFAS 123(R)) and certain SEC rules and  regulations,  and is intended to
assist in the initial  implementation.  SFAS(R)) is effective  for all companies
that file as small business  issuers as of the beginning of the first interim or
annual  reporting  period that begins after  December 15, 2005. The Company does
not expect  the  adoption  of this  statement  to have a material  impact on its
financial statements.

In December 2004, the FASB issued SFAS 153, "Exchanges of Nonmonetary Assets, an
amendment of APB 29, Accounting for Nonmonetary  Transactions." This statement's
amendments  are based on the  principle  that  exchanges of  nonmonetary  assets
should be  measured  based on the fair value of the assets  exchanged.  Further,
SFAS 153 eliminates the narrow  exception for  nonmonetary  exchanges of similar

                                       11
<PAGE>
productive  assets and  replaces it with a broader  exception  for  exchanges of
nonmonetary  assets that do not have  commercial  substance.  Provisions of this
statement are effective for fiscal  periods  beginning  after June 15, 2005. The
Company does not expect the adoption of this statement to have a material impact
on its financial statements.

In March 2005,  the FASB  issued FASB  Interpretation  No. 47,  "Accounting  for
Conditional Asset Retirement  Obligations"("FIN 47"), which is an interpretation
of SFAS 143,  "Accounting for Asset  Retirement  Obligations."  FIN 47 clarifies
terminology  within SFAS 143 and requires an entry to recognize a liability  for
the fair value of a conditional asset retirement obligation when incurred if the
liability's  fair value can be  reasonably  estimated.  FIN 47 is effective  for
fiscal  years ending  after  December 15, 2005.  The Company does not expect the
adoption  of  this  statement  to  have  a  material  impact  on  its  financial
statements.

In June 2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections,"  which will require  entities  that  voluntarily  make a change in
accounting  principle  to apply  that  change  retroactively  to prior  periods'
financial statements unless this would be impracticable. SFAS No. 154 supersedes
Accounting Principles Board Opinion No. 20, "Accounting Changes" ("APB No. 20"),
which previously required that most voluntary changes in accounting principle be
recognized by including in the current period's net income the cumulative effect
of  changing  to the  new  accounting  principle.  SFAS  No.  154  also  makes a
distinction between  "retrospective  application" of an accounting principle and
the "restatement" of financial statements to reflect the correction of an error.
Another  significant  change in  practice  under SFAS No. 154 will be that if an
entity  changes  its method of  depreciation,  amortization,  or  depletion  for
long-lived,  non-financial  assets, the change must be accounted for as a change
in accounting  principle.  SFAS No. 154 applies to accounting  changes and error
corrections that are made in fiscal years beginning after December 15, 2005. The
provisions of SFAS No. 154 are not expected to affect the Company's consolidated
financial statements.

ITEM 7 - FINANCIAL STATEMENTS

The  required  consolidated  financial  statements  begin  on  Page  F-1 of this
document.

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

None

ITEM 8A - CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the  participation  of our management,  including
our principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure  controls and  procedures,  as such term is defined
under Rule 13a-15(e)  promulgated under the Securities  Exchange Act of 1934, as
amended  (Exchange Act), as of January 31, 2005. Based on this  evaluation,  our
principal  executive officer and principal  financial officer concluded that our
disclosure  controls and  procedures  are effective in alerting them on a timely
basis to material information relating to our Company required to be included in
our reports filed or submitted under the Exchange Act.

(b) Changes in Internal Controls

There were no significant  changes (including  corrective actions with regard to
significant  deficiencies or material  weaknesses) in our internal controls over
financial  reporting that occurred during the fourth quarter of fiscal 2004 that
has  materially  affected,  or is reasonably  likely to materially  affect,  our
internal control over financial reporting.

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

            Name                   Age              Position
            ----                   ---              --------
      Donald P. Dean               70       Chairman and Director
  William M. Knooihuizen           62       President and Director
      Kuldip C. Baid               58       Chief Financial Officer and Director

                                       12
<PAGE>
DONALD P. DEAN,  P. ENG.  Donald P. Dean  serves as  Secretary,  Chairman of the
Board and Director of KIK  Technology  International,  Inc. He has been with KIK
Technology,  Inc. since 1987.  From 1984 to 1987, he served as President of Jade
Marble Crafts Ltd., a manufacturer of polyester resin-based plastic products and
Twin Top  Industries  Ltd.  Twin Top was a  manufacturer  of  polyurethane  foam
insulated  fiberglass  well-head  shelters and buildings.  During the 1960's Mr.
Dean worked as an engineer,  distribution  supervisor  and plant  manager of the
Toronto Marketing and Chemical  Distribution  Terminal for Shell Canada Limited.
Subsequently,  he was  President of a  subsidiary  of Trimac  Limited  providing
worldwide  transportation  and logistics  planning,  and  management  consulting
services to  government  and  industry.  Mr. Dean is a  registered  professional
engineer.  He  received a B.Sc.  in civil  engineering  from the  University  of
Saskatchewan  in  1960.  Mr.  Dean is  also an  executive  officer  of KIK  Tire
Technologies Inc., the Company's publicly-owned Canadian majority shareholder.

WILLIAM M.  KNOOIHUIZEN,  PE  William M.  Knooihuizen  serves as  President  and
Director of KKTI. He joined KIK Technology, Inc. in May, 1993, and was appointed
President  and CEO of that company in 1996.  He has over 34 years  experience in
urethane processing technology,  where he has held the positions of V.P./General
Manager  for  Dam  Industries,   Inc.,   United  Foam  Corporation  and  Evanite
Permaglass.  He  received  a degree in  Chemical  Engineering  from  Penn  State
University in 1966.

KULDIP C. BAID,  CA Kuldip C. Baid serves as CFO and  Director  of KKTI.  He has
been with KIK  Technology,  Inc.  since 1987.  Mr. Baid is a Canadian  Chartered
Accountant  who from 1981 to 1986 was Manager of Tax with Turbo  Resources  Ltd.
Previous work  experience  includes public  accounting  practice with Deloitte &
Touche; employment as a financial analyst for Oxford Development Group Ltd.; and
Manager of Accounting for Carma Developers Ltd.. Mr. Baid received a B. Commerce
degree from the University of Alberta in 1976 and completed his certification as
a Chartered  Accountant  in 1979.  Mr. Baid is also an executive  officer of KIK
Tire  Technologies   Inc.,  the  Company's   publicly-owned   Canadian  majority
shareholder.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

No Director,  Officer,  Beneficial  Owner of more than ten percent  (10%) of any
class of  securities of the Company  failed to file reports  required by Section
16(a) of the  Exchange  Act during the most recent  fiscal year or prior  fiscal
years.

ITEM 10 - EXECUTIVE COMPENSATION

The  following  summary   compensation  table  sets  forth  the  aggregate  cash
compensation  paid or accrued by the Company to each of the Company's  executive
officers for services  rendered to the Company during the Company's fiscal years
ended 2004,  2003 and 2002 and all plan and  non-plan  compensation  awarded to,
earned by or paid to certain designated executive officers.

<TABLE>
<CAPTION>
                                                                     Long-Term
                                                                   Compensation
                                    Annual Compensation               Awards              Payouts
                                  ------------------------   -------------------------    -------
                                                 Other       Restricted    Securities                    All
                                  Salary/        Annual         Stock      Underlying      LTIP         Other
Name/Title                Year     Bonus      Compensation     Awards     Options/SARs    Payouts    Compensation
----------                ----    -------     ------------     ------     ------------    -------    ------------
<S>                       <C>      <C>            <C>           <C>           <C>           <C>          <C>
Donald P. Dean            2006     $-0-           $-0-          $-0-          $-0-          $-0-         $-0-
Chairman and Secretary    2005     $-0-           $-0-          $-0-          $-0-          $-0-         $-0-
                          2004     $-0-           $-0-          $-0-          $-0-          $-0-         $-0-

William P. Knooihuizen    2006   $143,000       $15,000         $-0-          $-0-          $-0-         $-0-
President                 2005   $143,000       $15,000         $-0-          $-0-          $-0-         $-0-
                          2004   $143,000       $15,000         $-0-          $-0-          $-0-         $-0-

Kuldip C. Baid            2006    $72,000         $-0-          $-0-          $-0-          $-0-         $-0-
Chief Financial Officer   2005    $72,000         $-0-          $-0-          $-0-          $-0-         $-0-
                          2004    $72,000         $-0-          $-0-          $-0-          $-0-         $-0-
</TABLE>

KIK entered  into an  employment  agreement  with  William M.  Knooihuizen,  the
Company's current President and Director.  The agreement started in May 2000 and
was for an initial period of five (5) years at an annual salary in the amount of
$143,000,  to be paid weekly.  Upon expiration in May 2005, the Company and it's
officer  agreed to continue this agreement in an unwritten form on an undefined,
indefinite basis.

                                       13
<PAGE>
COMPENSATION OF DIRECTORS

The Company has no  standard  arrangements  for  compensating  directors  of the
Company for their attendance at meetings of the Board of Directors.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  shows,  as of May 1,  2006,  the  shares of Common  Stock
beneficially owned by all of the persons who served as the directors or officers
of the Company during Fiscal 2005 as well as the principal shareholders (greater
than 5%) of the Company individually and, as to the directors and officers, as a
group. The address of each person or entity,  unless otherwise noted, is c/o KIK
Technology International, Inc., 590 Airport Road, Oceanside, California 92054.

The number of shares  beneficially  owned by each person or entity is determined
under rules of the Securities and Exchange  Commission,  and the  information is
not necessarily  indicative of beneficial ownership for any other purpose. Under
such rules,  beneficial ownership includes any shares as to which the person has
the sole or shared  voting power or  investment  power and also any shares which
the  person  has the right to  acquire  as of a date  within  60 days  after the
relevant date through the exercise of any stock option or other right.

                                                                 % of Class
     Name and address                 Number of Shares        Beneficially Owned
     ----------------                 ----------------        ------------------
KIK Tire Technologies Inc. (1)          16,700,000                  65.95%
Donald P. Dean                             250,000                   0.99%
William M. Knooihuizen                     250,000                   0.99%
Kuldip C. Baid                             250,000                   0.99%

All officers and directors              17,450,000                  68.91%
 as a group (1)

----------
(1)  Donald  P.  Dean and  Kuldip C.  Baid are  Executive  Officers  of KIK Tire
     Technologies  Inc.,  and as such, may be deemed to have voting control over
     the above listed shares by attribution.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In May 2001, the Company advanced $53,400 to its President, William Knooihuizen,
to hold in trust as a  contingency  fund for the sole use of the  Company in the
event of a  unanticipated  cash  shortfall.  The advance bears  interest at 4.0%
annually and is unsecured.  The original documentation required repayment of the
advance and accrued,  but unpaid,  interest in May 2003. As of January 31, 2006,
with the approval of the Company's Board of Directors,  the Company's  President
continues to maintain these funds as trustee on behalf of the Company.

During each of the years ended  January 31, 2006 and 2005,  the Company  accrued
$120,000  payable to its majority  shareholder,  KIK Tire  Technologies  Inc. (a
publicly-owned Canadian corporation) for administrative services.

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

Exhibits
   2.1    Acquisition agreement (3)
   3.1    Articles of Incorporation  (1)
   3.2    Amendment to Articles of Incorporation (1)
   3.4    By-Laws (1)
   4.1    Form of Common Stock Certificate (2)
   4.2    Subscription Agreement of Rene Dervaes (3)
   5.1    Opinion of Kenneth G. Eade, Attorney at Law (including consent) (2)
   6.1    Specimen of Stock Certificate (2)
   10.1   Employee/Consultant Stock Compensation Plan (4)
   14.1   Code of Ethics
   21.1   Subsidiaries of the Registrant
   23.1   Consent of Independent Accountant (2)

                                       14
<PAGE>
   23.2   Consent of Kenneth G. Eade (filed as part of Exhibit 5.1) (2)
   31.1   Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 -
          Chief Executive Officer
   31.2   Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 -
          Chief Financial Officer
   32.1   Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
   98.1   Subscription Agreement of Rene Dervaes (3)

----------
(1)  Incorporated herein by reference to the Company's Registration Statement on
     Form 10-SB filed with the SEC on April 30, 2000.
(2)  Incorporated herein by reference to the Company's Registration Statement on
     Form SB-2 filed with the SEC on April 4, 2000.
(3)  Incorporated  herein by reference to the Company's 8-K current report filed
     with the SEC on December 18, 2000.
(4)  Incorporated herein by reference to the Company's Registration Statement on
     Form S-8 filed with the SEC on December 29, 2000.

Reports on Form 8-K

None

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Company paid or accrued the  following  fees in each of the prior two fiscal
years to it's principal accountant, S. W. Hatfield, CPA of Dallas, Texas:

                                                   Year ended        Year ended
                                                   January 31,       January 31,
                                                      2006              2005
                                                     -------           -------
       a) Audit fees                                 $18,905           $18,644
       b) Audit-related fees                              --                --
       c) Tax fees                                        --                --
       d) All other fees                                  --                --
                                                     -------           -------

          Totals                                     $18,905           $18,644
                                                     =======           =======

The Company has no formal audit committee. However, as defined in Sarbanes-Oxley
Act of 2002,  the entire  Board of  Directors  is the  Company's  defacto  audit
committee.

In discharging its oversight  responsibility as to the audit process,  the Board
obtained from the independent auditors a formal written statement describing all
relationships  between  the  auditors  and the  Company  that  might bear on the
auditors'  independence as required by Independence Standards Board Standard No.
1,  "Independence  Discussions with Audit  Committees." The Board discussed with
the  auditors  any   relationships   that  may  impact  their   objectivity  and
independence,  including fees for non-audit services, and satisfied itself as to
the  auditors'  independence.  The Board also  discussed  with  management,  the
internal  auditors and the independent  auditors the quality and adequacy of the
Company's  internal controls.  The Board reviewed with the independent  auditors
their management letter on internal controls, if one was issued by the Company's
auditors.

The Board  discussed  and  reviewed  with the  independent  auditors all matters
required to be discussed by auditing standards  generally accepted in the United
States of America,  including those described in Statement on Auditing Standards
No. 61, as amended, "Communication with Audit Committees".

The Board reviewed the audited consolidated  financial statements of the Company
as of and for the year ended January 31, 2006 and 2005,  with management and the
independent  auditors.  Management has the sole ultimate  responsibility for the
preparation of the Company's financial  statements and the independent  auditors
have the responsibility for their examination of those statements.

Based  on the  above-mentioned  review  and  discussions  with  the  independent
auditors and management,  the Board of Directors  approved the Company's audited
consolidated  financial  statements and recommended that they be included in its
Annual  Report on Form 10-KSB for the year ended  January 31,  2006,  for filing
with the Securities and Exchange Commission.

The Company's principal accountant, S. W. Hatfield, CPA did not engage any other
persons or firms  other than the  principal  accountant's  full-time,  permanent
employees.

                        (Signatures follow on next page)

                                       15
<PAGE>
                                   SIGNATURES

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

                                              KIK TECHNOLOGY INTERNATIONAL, INC.


Dated: May 1, 2006                            /s/ Kuldip C. Baid
                                              ----------------------------------
                                                                  Kuldip C. Baid
                                                         Chief Financial Officer
                                                                    and Director

In accordance with the Securities Exchange Act of 1934, as amended,  this report
has been signed below by the  following  persons on behalf of the Company and in
the capacities and on the date as indicated.


Dated: May 1, 2006                         by /s/ Donald P. Dean
                                              ----------------------------------
                                                                  Donald P. Dean
                                                          Chairman and Secretary


Dated: May 1, 2006                            /s/ William M. Knooihuizen
                                              ----------------------------------
                                                          William M. Knooihuizen
                                                          President and Director


Dated: May 1, 2006                            /s/ Kuldip C. Baid
                                              ----------------------------------
                                                                  Kuldip C. Baid
                                                         Chief Financial Officer
                                                                    and Director

                                       16
<PAGE>

                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----

REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM            F-2

CONSOLIDATED FINANCIAL STATEMENTS

   Consolidated Balance Sheets
      as of January 31, 2006 and 2005                                        F-3

   Consolidated Statements of Operations and Comprehensive Loss
      for the years ended January 31, 2006 and 2005                          F-4

   Consolidated Statement of Changes in Stockholders' Equity (Deficit)
      for the years ended January 31, 2006 and 2005                          F-5

   Consolidated Statements of Cash Flows
      for the years ended January 31, 2006 and 2005                          F-6

   Notes to Consolidated Financial Statements                                F-7

                                      F-1
<PAGE>
                        LETTERHEAD OF S. W. HATFIELD, CPA

        REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholders
KIK Technology International, Inc.

We have audited the  accompanying  consolidated  balance sheet of KIK Technology
International,  Inc. and Subsidiary (California  corporations) as of January 31,
2006  and  2005  and the  related  consolidated  statements  of  operations  and
comprehensive loss, changes in stockholders' equity (deficit) and cash flows for
each  of the  years  ended  January  31,  2006  and  2005,  respectively.  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 the standards of the Public  Company
Accounting Oversight Board (United States). 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. The Company
is not  required  to  have,  nor were we  engaged  to  perform,  an audit of its
internal control over financial reporting.  Our audits included consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over financial reporting. Accordingly, we express no such opinion. An audit also
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 consolidated  financial statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

The consolidated financial statements referred to above, in our opinion, present
fairly, in all material  respects,  the consolidated  financial  position of KIK
Technology  International,  Inc. and  Subsidiary as of January 31, 2006 and 2005
and the results of their consolidated  operations and cash flows for each of the
years  ended  January  31,  2006 and  2005,  respectively,  in  conformity  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note C to the
financial statements, the Company's revenues have been declining and the Company
has been using  cash in  operating  activities.  The  Company  has begun to seek
additional  outside  sources of working  capital to  support  that  raised  from
operations.  The Company's  future  existence is dependent upon achieving  sales
volumes  sufficient to sustain the Company's cash  requirements  on a day-to-day
basis and to raise working  capital from outside  sources.  These  circumstances
create  substantial  doubt  about the  Company's  ability to continue as a going
concern and Management's  plans in regard to these matters are also described in
Note C. The  financial  statements  do not  contain any  adjustments  that might
result from the outcome of these uncertainties.



                                                /s/ S. W., Hatfield, CPA
                                                ------------------------------
                                                S. W. HATFIELD, CPA

Dallas, Texas
April 21, 2006

                                      F-2
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                            January 31, 2006 and 2005
<TABLE>
<CAPTION>
                                                                         January 31,           January 31,
                                                                            2006                  2005
                                                                         -----------           -----------
<S>                                                                      <C>                   <C>
                                     ASSETS
CURRENT ASSETS
   Cash on hand and in bank                                              $    10,191           $    59,905
   Accounts receivable
     Trade, net of allowance for doubtful accounts
       of approximately $15,758 and $13,882, respectively                    164,973               303,508
     Other                                                                    10,146                 9,679
   Inventories                                                               215,429               253,434
   Prepaid expenses                                                              223                   384
                                                                         -----------           -----------
      TOTAL CURRENT ASSETS                                                   400,962               626,910
                                                                         -----------           -----------

PROPERTY AND EQUIPMENT - AT COST                                             638,363               646,801
   Less Accumulated depreciation                                            (534,479)             (517,661)
                                                                         -----------           -----------
      NET PROPERTY AND EQUIPMENT                                             103,884               129,140
                                                                         -----------           -----------

OTHER ASSETS
   Funds held in trust by officer                                             53,400                53,400
   Refundable deposits                                                         4,800                 4,800
                                                                         -----------           -----------
        TOTAL OTHER ASSETS                                                    58,200                58,200
                                                                         -----------           -----------

TOTAL ASSETS                                                             $   563,046           $   814,250
                                                                         ===========           ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
   Notes payable to investors                                            $    68,000           $    49,000
   Current maturities of long-term debt                                        4,517                 4,500
   Accounts payable - trade                                                  383,736               421,805
   Other accrued expenses                                                     43,278                39,762
   Management fee payable to majority shareholder                            360,000               240,000
   Advances from majority shareholder                                         66,000                16,000
                                                                         -----------           -----------
      TOTAL CURRENT LIABILITIES                                              925,531               771,067
                                                                         -----------           -----------

LONG-TERM DEBT
   Notes payable to investors, net of current maturities                          --                19,000
   Capital lease payable                                                         425                 5,806
                                                                         -----------           -----------
      TOTAL LIABILITIES                                                      925,956               795,873
                                                                         -----------           -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock - $0.001 par value
     100,000,000 shares authorized
     25,171,865 shares issued and outstanding, respectively                   25,172                25,172
   Additional paid-in capital                                              5,152,423             5,152,423
   Accumulated deficit                                                    (5,540,505)           (5,159,218)
                                                                         -----------           -----------
      TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                  (362,910)               18,377
                                                                         -----------           -----------
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY (DEFICIT)                                          $   563,046           $   814,250
                                                                         ===========           ===========
</TABLE>
                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                      F-3
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                      Years ended January 31, 2006 and 2005

<TABLE>
<CAPTION>
                                                                Year ended             Year ended
                                                                January 31,            January 31,
                                                                   2006                   2005
                                                               ------------           ------------
<S>                                                            <C>                    <C>
REVENUES - net of returns and allowances                       $  1,947,069           $  2,462,977

COST OF SALES
   Raw materials                                                  1,086,153              1,462,211
   Direct labor and other costs                                     614,362                742,730
   Depreciation                                                      28,539                 36,006
                                                               ------------           ------------
      TOTAL COST OF SALES                                         1,729,054              2,240,947
                                                               ------------           ------------

GROSS PROFIT                                                        218,015                222,030
                                                               ------------           ------------
OPERATING EXPENSES
   Selling and marketing expenses                                        --                    625
   General and administrative expenses
   Salaries and related expenses                                     94,428                 91,336
   Other operating expenses                                         377,227                440,262
   Administrative service fee to majority shareholder               120,000                120,000
   Depreciation and amortization                                      1,583                  2,428
                                                               ------------           ------------
      TOTAL OPERATING EXPENSES                                      593,238                654,651
                                                               ------------           ------------

LOSS FROM OPERATIONS                                               (375,223)              (432,621)

OTHER INCOME
   Interest expense                                                  (7,483)                (7,875)
   Interest and other income                                          1,419                  5,780
                                                               ------------           ------------

LOSS BEFORE PROVISION FOR INCOME TAXES                             (381,287)              (434,716)

PROVISION FOR INCOME TAXES                                               --                     --
                                                               ------------           ------------

NET LOSS                                                           (381,287)              (434,716)

OTHER COMPREHENSIVE INCOME                                               --                     --
                                                               ------------           ------------

COMPREHENSIVE LOSS                                             $   (381,287)          $   (434,716)
                                                               ============           ============
Net loss per weighted-average share
 of common stock outstanding, calculated
 on Net Loss - basic and fully diluted                         $      (0.02)          $      (0.02)
                                                               ============           ============
Weighted-average number of shares
 of common stock outstanding                                     25,171,865             25,101,373
                                                               ============           ============
</TABLE>

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

                                      F-4
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                      Years ended January 31, 2006 and 2005


<TABLE>
<CAPTION>
                                        Common Stock            Additional
                                    ---------------------        paid-in        Accumulated
                                    Shares         Amount        capital         deficit           Total
                                    ------         ------        -------         -------           -----
<S>                              <C>             <C>          <C>             <C>               <C>
BALANCES AT FEBRUARY 1, 2004      25,021,865      $25,022      $5,146,573      $(4,724,502)      $ 447,093

Issuance of common stock for
 payment of consulting fees          150,000          150           5,850               --           6,000

Net loss for the year                     --           --              --         (434,716)       (434,716)
                                  ----------      -------      ----------      -----------       ---------

BALANCES AT JANUARY 31, 2005      25,171,865       25,172       5,152,423       (5,159,218)         18,377

Net loss for the year                     --           --              --         (381,287)       (381,287)
                                  ----------      -------      ----------      -----------       ---------

BALANCES AT JANUARY 31, 2006      25,171,865      $25,172      $5,152,423      $(5,540,505)      $(362,910)
                                  ==========      =======      ==========      ===========       =========
</TABLE>

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

                                      F-5
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      Years ended January 31, 2006 and 2005

<TABLE>
<CAPTION>
                                                                  Year ended          Year ended
                                                                  January 31,         January 31,
                                                                     2006                2005
                                                                   ---------           ---------
<S>                                                                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss for the year                                           $(381,287)          $(434,716)
   Adjustments to reconcile net loss to net cash
    provided by operating activities
      Depreciation and amortization                                   30,122              38,434
      Provision for doubtful accounts receivable                       2,071               4,158
      Expenses paid with common stock                                     --               6,000
   (Increase) Decrease in
      Accounts receivable - trade and other                          135,997              62,384
      Inventory                                                       38,005              69,629
      Prepaid expenses and other                                         161               2,308
   Increase (Decrease) in
      Accounts payable                                               (38,069)            135,032
      Other accrued expenses                                           3,516              (2,692)
      Accrued management fees to parent company                      120,000             120,000
                                                                   ---------           ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                  (89,484)                537
                                                                   ---------           ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                 (4,866)            (10,021)
                                                                   ---------           ---------
NET CASH USED IN INVESTING ACTIVITIES                                 (4,866)            (10,021)
                                                                   ---------           ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Cash received from parent company                                  50,000                  --
   Payments on notes payable to investors                                 --              (7,000)
   Payments on long-term capital lease                                (5,364)             (4,125)
                                                                   ---------           ---------
NET CASH USED IN FINANCING ACTIVITIES                                 49,636             (11,125)
                                                                   ---------           ---------

INCREASE (DECREASE) IN CASH                                          (44,714)            (20,609)

Cash at beginning of period                                           59,905              80,514
                                                                   ---------           ---------

CASH AT END OF PERIOD                                              $  10,191           $  59,905
                                                                   =========           =========
SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
   Interest paid for the period                                    $     733           $   8,573
                                                                   =========           =========
   Income taxes paid for the period                                $      --           $      --
                                                                   =========           =========
</TABLE>

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

                                      F-6
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

KIK Technology  International,  Inc. (KTII) was incorporated on February 1, 2000
under   the  laws  of  the   State   of   California   as   Russian-Imports.com.
Russian-Imports.com  was  initially  founded to develop an  internet  e-commerce
website which would sell handmade  lacquer  boxes,  Matroshka  dolls and crystal
imported from Russia.  This business plan was  unsuccessful  and,  subsequently,
terminated.  On September 4, 2001,  KTII (formerly  Russian-Imports.com)  issued
16,700,000  shares  of  restricted,   unregistered  common  stock  to  KIK  Tire
Technologies,  Inc. (a publicly-owned Canadian corporation) (KTTI) for 100.0% of
the  issued  and  outstanding  stock of KIK  Technology,  Inc.  (a  wholly-owned
subsidiary of KTTI). By virtue of this transaction,  KIK Technology, Inc. became
a  wholly-owned  subsidiary  of  KTII  and  KTTI  became  an  approximate  73.6%
shareholder  in KTII.  Concurrent  with  this  transaction,  Russian-Imports.com
changed it's corporate name to KIK Technologies International, Inc.

KIK  Technology,  Inc (KTI) was  incorporated in June 1988 under the laws of the
State of California.  KTI manufactures and markets an extensive and high quality
line of off-highway micro-cellular polyurethane tires for the healthcare,  light
industrial,  lawn and garden and  recreational  industries.  KTI operates from a
sole manufacturing plant and marketing offices located in Oceanside, CA.

The Company's  principal raw  materials are produced from  petroleum  feedstocks
and,  therefore,  are subject to disruption and price  variances  related to the
global availability of crude oil.

NOTE B - PREPARATION OF FINANCIAL STATEMENTS

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America and has
adopted a year-end of January 31.

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

Management further acknowledges that it is solely responsible for adopting sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented

For  segment  reporting  purposes,  the Company  operated  in only one  industry
segment during the periods represented in the accompanying  financial statements
and makes all  operating  decisions and  allocates  resources  based on the best
benefit to the Company as a whole.

These  financial  statements  reflect  the books and  records of KIK  Technology
International,  Inc. (formerly  Russian-Imports.com)  (KTII) and KIK Technology,
Inc.  (KTI)  as  of  and  for  the  years  ended  January  31,  2004  and  2003,
respectively.  All significant intercompany transactions have been eliminated in
consolidation. The consolidated entities are referred to as Company.

NOTE C - GOING CONCERN UNCERTAINTY

The Company's  principal raw  materials are produced from  petroleum  feedstocks
and,  therefore,  are subject to disruption and price  variances  related to the
global availability of crude oil.

In prior years,  a significant  supplier of these raw materials was also a major
customer for the  Company's  products.  The purchase  side of this  relationship
began to dissolve during the year ended January 31, 2005 and further  diminished
significantly in the year ended January 31, 2006.

                                      F-7
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE C - GOING CONCERN UNCERTAINTY - CONTINUED

In the event of any disruption in the  availability of raw materials or a market
for the Company's products,  as occurred during the year ended January 31, 2006,
the Company will experience a negative economic impact.

The  Company  has  developed  additional  sources  of  supply  of  it's  key raw
materials; however, still experiences fluctuations in pricing due to the current
world market  conditions  for crude oil.  Management is seeking other avenues of
distribution  of the  Company's  products  to  consumers.  Management  is of the
opinion that no  interruption  of either raw  materials  or product  demand will
occur.

The  Company's  continued  existence is  dependent  upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.

The Company  anticipates  that  additional  working capital will be necessary to
support and preserve the integrity of the corporate entity. However, there is no
assurance  that the Company will be able to obtain  additional  funding  through
either bank lines-of-credit or the sale of additional equity securities or, that
such funding, if available, will be obtained on terms favorable to or affordable
by the Company.

If no additional  operating  capital is received  during the next twelve months,
the  Company  will be forced  to rely on  existing  cash in the  bank,  the cash
generated  from  operating  activities  and/or  additional  funds  loaned by the
Company's  majority parent to preserve the integrity of the corporate  entity at
this  time.  In the  event,  the  Company  is unable to  acquire  advances  from
management and/or  significant  stockholders,  the Company's ongoing  operations
would be  negatively  impacted to the point that all  operating  activities  are
ceased.

While the Company is of the opinion that good faith  estimates of the  Company's
ability to secure additional  capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive  sufficient funding to
sustain operations or implement any future business plan steps.

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.   CASH AND CASH EQUIVALENTS

     For  Statement of Cash Flows  purposes,  the Company  considers all cash on
     hand  and  in  banks,  certificates  of  deposit  and  other  highly-liquid
     investments with maturities of three months or less, when purchased,  to be
     cash and cash equivalents.

     Cash  overdraft  positions may occur from time to time due to the timing of
     making bank deposits and releasing checks, in accordance with the Company's
     cash management policies.

2.   ACCOUNTS RECEIVABLE AND REVENUE RECOGNITION

     In the normal course of business,  the Company extends  unsecured credit to
     virtually  all of its  customers  which are located  throughout  the United
     States  and are  principally  concentrated  in the  midwest  region  of the
     country.  Depending upon management's  assessment of  creditworthiness  and
     order  size,  certain  shipments  are  made on  "COD"  terms  using  common
     carriers.  Because of the credit risk involved,  management has provided an
     allowance for doubtful accounts which reflects its opinion of amounts which
     will   eventually   become   uncollectible.   In  the  event  of   complete
     non-performance, the maximum exposure to the Company is the recorded amount
     of trade  accounts  receivable  shown on the  balance  sheet at the date of
     non-performance.

     The Company  recognizes revenue from the sale of tires and accessories upon
     shipment to, or receipt by customers,  depending upon contractual terms and
     when there is no significant  uncertainty regarding the consideration to be
     received and the associated costs to be incurred. Additionally, the Company
     recognizes   reductions  of  recorded  revenue  for  product  returns  from
     unsatisfied customers and other billing adjustments or corrections,  at the
     point that the  returned  products  are received by the Company or upon the
     completion of negotiations between the Company and it's customer.

                                      F-8
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

3.   INVENTORY

     Inventory consists of raw materials,  principally chemical feedstocks,  and
     finished  goods,  principally  tires and  accessories  manufactured  by the
     Company and other minor  miscellaneous  items  purchased  from  third-party
     vendors for resale as a component of the Company's products.

     Inventory is valued at the lower of cost or market value, using principally
     the average cost method.

4.   PROPERTY AND EQUIPMENT

     Property and  equipment are recorded at  historical  cost.  These costs are
     depreciated over the estimated useful lives, generally two (2) to seven (7)
     years, of the individual assets using the straight-line  method.  Gains and
     losses from the  disposition  of property  and  equipment  are  included in
     operations as incurred.

     In accordance  with  Statement of Financial  Accounting  Standards No. 144,
     "Accounting  for the  Impairment  or Disposal of  Long-Lived  Assets",  the
     Company  follows the policy of evaluating  all property and equipment as of
     the end of each reporting quarter.  For each of the years ended January 31,
     2006 and 2005, no charges to operations  were made for  impairments  in the
     future benefit or recoverability of property and equipment.

5.   INCOME TAXES

     The Company uses the asset and liability  method of  accounting  for income
     taxes.  At January 31, 2006 and 2005,  the  deferred tax asset and deferred
     tax  liability  accounts,  as  recorded  when  material  to  the  financial
     statements,  are entirely the result of  temporary  differences.  Temporary
     differences   represent  differences  in  the  recognition  of  assets  and
     liabilities for tax and financial reporting purposes, primarily accumulated
     depreciation and amortization, allowance for doubtful accounts and vacation
     accruals.

     As of January  31, 2006 and 2005,  the  deferred  tax asset  related to the
     Company's net operating loss carryforward is fully reserved.

6.   ADVERTISING COSTS

     The Company does not conduct any direct  response  advertising  activities.
     For non-direct response advertising, the Company charges the costs of these
     efforts  to  operations  at the  first  time  the  related  advertising  is
     published.

7.   EARNINGS (LOSS) PER SHARE

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) available to common shareholders by the  weighted-average  number of
     common shares  outstanding  during the respective  period  presented in our
     accompanying financial statements.

     Fully diluted earnings (loss) per share is computed similar to basic income
     (loss) per share  except that the  denominator  is increased to include the
     number of common  stock  equivalents  (primarily  outstanding  options  and
     warrants).

     Common  stock  equivalents  represent  the  dilutive  effect of the assumed
     exercise of the outstanding stock options and warrants,  using the treasury
     stock method, at either the beginning of the respective period presented or
     the date of  issuance,  whichever  is later,  and only if the common  stock
     equivalents  are  considered  dilutive  based upon the Company's net income
     (loss) position at the calculation date.

     As of January  31,  2006 and 2005,  the  Company's  issued and  outstanding
     warrants,  options and convertible debt are considered  antidilutive due to
     the Company's net operating loss position.

                                      F-9
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

8.   EMPLOYEE STOCK OPTIONS

     For periods  prior to November  1, 2002,  the Company  chose to account for
     employee   stock-based   compensation  using  the  intrinsic  value  method
     prescribed  in  Accounting  Principles  Board  Opinion No. 25 (APB No. 25),
     Accounting  for Stock  Issued to  Employees,  and related  interpretations.
     Accordingly,  employee  compensation cost for stock options and warrants is
     measured as the excess,  if any, of the market price of the Company's stock
     at the date of the grant  over the amount an  employee  must pay to acquire
     the  stock.  This  treatment  was  allowed  under  Statement  of  Financial
     Accounting  Standards No. 123,  "Accounting  for Stock Based  Compensation"
     (SFAS 123).

     In December 2002, FASB issued Statement of Financial  Accounting  Standards
     No.  148  "Accounting   for  Stock-Based   Compensation  -  Transition  and
     Disclosure"  (SFAS  148).  This  statement  amends  SFAS  123 and  provides
     alternative  methods of transition for a voluntary change to the fair value
     based method of accounting  for  stock-based  employee  compensation.  This
     statement  also amends the disclosure  requirements  of SFAS 123 to require
     more prominent and frequent  disclosures in financial  statements about the
     effects of stock-based  compensation.  The  transition  guidance and annual
     disclosure  provisions of SFAS 148 are  effective for financial  statements
     issued for fiscal years ending after December 15, 2002.  Effective November
     1, 2003,  the first day of the  reporting  quarter  including the effective
     date of SFAS 148, the Company's  Board of Directors,  in  conjunction  with
     public  opinion and SFAS 148,  elected to expense the imputed  compensation
     cost related to any stock options granted during Fiscal 2003 and for future
     periods.  The Company did not issue any stock options during Fiscal 2004 or
     Fiscal 2003 and the adoption of SFAS 148 did not have a material  impact on
     our results of operations or financial condition.

9.   NEW AND PENDING ACCOUNTING PRONOUNCEMENTS

     In November 2004,  the Financial  Accounting  Standards  Board (the "FASB")
     issued SFAS No. 151,  "Inventory Costs, an amendment of ARB No. 43, Chapter
     4." SFAS No. 151  clarifies  the  accounting  for abnormal  amounts of idle
     facility expense,  freight,  handling costs and wasted materials.  SFAS No.
     151 is effective for inventory costs incurred during fiscal years beginning
     after  June 15,  2005.  The  initial  application  of SFAS  No.  151 is not
     expected to have a significant  impact on the Company's  financial position
     or results of operations.

     In December 2004, the FASB issued SFAS 123(R), "Share-Based Payment," which
     addresses the accounting  for employee  stock options.  SFAS 123(R) revises
     the  disclosure  provisions of SFAS 123 and  supersedes APB 25. SFAS 123(R)
     requires  that the cost of all  employee  stock  options,  as well as other
     equity-based   compensation   arrangements,   be   reflected  in  financial
     statements based on the estimated fair value of the awards.  In March 2005,
     the Securities & Exchange  Commission  (the "SEC") issued Staff  Accounting
     Bulletin No. 107, "Share-Based  Payment," which summarizes the views of the
     SEC staff  regarding  the  interaction  between SFAS 123(R) and certain SEC
     rules  and   regulations,   and  is  intended  to  assist  in  the  initial
     implementation.  SFAS 123(R) is effective  for all  companies  that file as
     small  business  issuers as of the beginning of the first interim or annual
     reporting  period that begins after December 15, 2005. The Company does not
     expect the  adoption  of this  statement  to have a material  impact on its
     financial statements.

     In  December  2004,  the FASB issued SFAS 153,  "Exchanges  of  Nonmonetary
     Assets, an amendment of APB 29,  Accounting for Nonmonetary  Transactions."
     This  statement's  amendments  are based on the principle that exchanges of
     nonmonetary assets should be measured based on the fair value of the assets
     exchanged.   Further,   SFAS  153  eliminates  the  narrow   exception  for
     nonmonetary  exchanges of similar  productive assets and replaces it with a
     broader  exception  for  exchanges of  nonmonetary  assets that do not have
     commercial substance. Provisions of this statement are effective for fiscal
     periods  beginning  after June 15,  2005.  The Company  does not expect the
     adoption  of this  statement  to have a  material  impact on its  financial
     statements.

                                      F-10
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

9.   NEW AND PENDING ACCOUNTING PRONOUNCEMENTS - continued

     In March 2005, the FASB issued FASB  Interpretation No. 47, "Accounting for
     Conditional   Asset   Retirement   Obligations"("FIN   47"),  which  is  an
     interpretation of SFAS 143, "Accounting for Asset Retirement  Obligations."
     FIN 47  clarifies  terminology  within  SFAS 143 and  requires  an entry to
     recognize a liability for the fair value of a conditional  asset retirement
     obligation  when incurred if the  liability's  fair value can be reasonably
     estimated.  FIN 47 is effective for fiscal years ending after  December 15,
     2005.  The Company does not expect the adoption of this statement to have a
     material impact on its financial statements.

     In June 2005, the FASB issued SFAS No. 154,  "Accounting  Changes and Error
     Corrections," which will require entities that voluntarily make a change in
     accounting  principle to apply that change  retroactively to prior periods'
     financial  statements  unless  this  would be  impracticable.  SFAS No. 154
     supersedes Accounting Principles Board Opinion No. 20, "Accounting Changes"
     ("APB No. 20"),  which previously  required that most voluntary  changes in
     accounting principle be recognized by including in the current period's net
     income the cumulative  effect of changing to the new accounting  principle.
     SFAS No. 154 also makes a distinction between  "retrospective  application"
     of an accounting principle and the "restatement" of financial statements to
     reflect the correction of an error.  Another significant change in practice
     under  SFAS  No.  154  will be that if an  entity  changes  its  method  of
     depreciation,  amortization,  or depletion  for  long-lived,  non-financial
     assets,  the  change  must  be  accounted  for as a  change  in  accounting
     principle. SFAS No. 154 applies to accounting changes and error corrections
     that are made in fiscal  years  beginning  after  December  15,  2005.  The
     provisions  of SFAS  No.  154 are not  expected  to  affect  the  Company's
     consolidated financial statements.

NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash,  accounts  receivable,  accounts  payable and notes
payable, as applicable,  approximates fair value due to the short term nature of
these items  and/or the current  interest  rates  payable in relation to current
market conditions.

Interest  rate risk is the risk  that the  Company's  earnings  are  subject  to
fluctuations  in interest  rates on either  investments  or on debt and is fully
dependent  upon  the  volatility  of  these  rates.  The  Company  does  not use
derivative instruments to moderate its exposure to interest rate risk, if any.

Financial  risk  is  the  risk  that  the  Company's  earnings  are  subject  to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the  volatility  of  these  rates.  The  company  does  not use  derivative
instruments to moderate its exposure to financial risk, if any.

NOTE F - CONCENTRATIONS OF CREDIT RISK

KTII and KTI maintain their  respective cash accounts in financial  institutions
subject  to  insurance   coverage  issued  by  the  Federal  Deposit   Insurance
Corporation  (FDIC).  Under  FDIC  rules,  both  KTII  and KTI are  entitled  to
aggregate  coverage of $100,000 per account  type per separate  legal entity per
financial  institution.  During  the  years  ended  January  31,  2006 and 2005,
respectively,  the  various  entities,  from  time-to-time,  had  deposits  in a
financial  institution  with credit risk  exposures in excess of statutory  FDIC
coverage.  The Company has incurred no losses during  Fiscal 2006 and 2004,  and
subsequent thereto, as a result of any unsecured situations.

                                      F-11
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE G - INVENTORIES

Inventories consist of the following at January 31, 2006 and 2005:

                                            January 31,           January 31,
                                               2006                  2005
                                             --------              --------

     Raw materials                           $ 60,557              $ 42,408
     Finished goods                           154,872               211,026
                                             --------              --------

     Total                                   $215,429              $253,434
                                             ========              ========

NOTE H - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at January 31, 2006 and 2005:

                                     January 31,    January 31,
                                        2006           2005       Estimated life
                                      ---------      ---------    --------------

     Machinery and Equipment          $ 602,766      $ 597,901         7 years
     Office furniture and fixtures       12,138         25,441         5 years
     Leasehold improvements              14,180         14,180         2 years
     Vehicles                             9,279          9,279         5 years
                                      ---------      ---------
                                        638,363        646,801
     Less accumulated depreciation     (534,479)      (517,661)
                                      ---------      ---------

     Net property and equipment       $ 103,884      $ 129,140
                                      =========      =========

Depreciation  expense  for the  years  ended  January  31,  2006  and  2005  was
approximately $30,122 and $38,434, respectively.

NOTE I - FUNDS HELD IN TRUST BY OFFICER

In May 2001, the Company advanced $53,400 to its President to hold in trust as a
contingency fund for the sole use of the Company in the event of a unanticipated
cash  shortfall.  The advance bears  interest at 4.0% annually and is unsecured.
The original  documentation  required repayment of the advance and accrued,  but
unpaid, interest in May 2003. As of January 31, 2006, and subsequently, with the
approval of the Company's Board of Directors,  the Company's President continues
to maintain these funds as trustee on behalf of the Company.

NOTE J - NOTES PAYABLE TO INVESTORS

Pursuant to the terms of a private placement agreement, the Company attempted to
raise up to $600,000  through the  placement of two-year  senior  notes  bearing
interest  at 10%  payable  quarterly.  This  Private  Placement  Memorandum  was
terminated by the Company during the fiscal quarter ended October 31, 2002.

                                      F-12
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE J - NOTES PAYABLE TO INVESTORS - CONTINUED

In November  2001,  the Company  entered  into an agreement  with an  investment
banker whereby the investment  banker would act as exclusive  dealer-manager  in
this private  placement of  securities  to be issued by the Company  pursuant to
Regulation D of the Securities  Act of 1933, as amended.  As  compensation,  the
investment banker was paid $15,000 for professional fees,  received a commission
equal to 10% of the gross proceeds,  an unaccountable expense allowance equal to
4% of the gross proceeds,  and for every $500,000 raised,  150,000 shares of the
Company's restricted, unregistered common stock. Such shares will be issued upon
completion of the private  placement.  In addition,  the investment  banker will
have the option to nominate one person to the Company's Board of Directors if at
least  $2,000,000 is raised.  As of the  termination  of this Private  Placement
Memorandum, in prior years, only $75,000 was raised.

Note  holders can elect,  with the  consent of the  Company,  to accept  Company
common stock in lieu of cash interest payments.  Such payments in stock would be
calculated  at 50% of the daily  average of the market price of the common stock
for the 30-calendar  days preceding the interest due date. After six months from
the date of issue of the notes,  the  Company  can  convert  the notes to common
stock if the daily average  market price of the  Company's  common stock for any
30-calendar days after the initial six-month period equals or exceeds $1.00. The
conversion  of the notes to common stock would also be  calculated at 50% of the
daily average market price for the 30 days prior to the Company giving notice of
its plan to convert.

In  conjunction  with the offering of the notes,  each note holder was given one
warrant for each $1.00 invested.  Each warrant allows the holder to purchase one
share of the Company's  common stock at an initial  exercise  price of $0.60 per
share, and is exercisable for two years. In March 2002, the Company repriced the
outstanding warrants to an exercise price of $0.40 per share.

Pursuant to the private placement,  the Company sold a $50,000  convertible note
on November 12, 2001 and a $25,000  convertible note on December 26, 2001 to two
unrelated  investors.  Warrants to purchase a combined total of 75,000 shares of
the Company's common stock at $0.60 per share were also issued to the investors.
The  warrants  were  valued at $11,789  using the  Black-Scholes  option-pricing
model, and therefore $11,789 of the total debt proceeds of $75,000 was allocated
to the warrants, resulting in a discount on the notes, was amortized to interest
expense over the initial term of the underlying  debt. This calculated  discount
was  amortized  to  interest  expense  in  prior  years.  The  weighted  average
assumptions   utilized   to  value  the   warrants   using   the   Black-Scholes
option-pricing model were as follows:

Expected life of the option:    The  initial  life of the  corresponding option,
                                generally two (2) years
Expected volatility in
 the Company's stock price:     150.0%,  which was based on  fluctuations of the
                                Company's stock price over the past Fiscal year.
Expected dividends:             Zero (0.00) based on past performance
Anticipated risk free
 interest rate:                 Estimated to be 2.80%.

The  convertible  notes  contained a beneficial  conversion  feature valued at a
combined  total  of  approximately  $63,000.  However,  because  the  conversion
features were fully contingent upon the occurrence of certain future events, the
Company  did not  record a discount  resulting  from the  beneficial  conversion
feature.

The notes  matured  on  November  12,  2003  ($50,000)  and  December  26,  2003
($25,000), respectively.

On February 16, 2004, the Company  restructured  the $50,000  convertible  note.
Under the restructured terms, the Company paid all accrued interest and a $3,000
principal  reduction on March 16, 2004, as of February 16, 2004.  The Company is
obligated to pay $2,000 per month,  plus accrued  interest,  for the period from
March 16,  2004  through  August 16,  2004 and $1,000  per month,  plus  accrued
interest, on the 16th of each month thereafter until all outstanding amounts are
paid in full.  The  restructured  note bears  interest  at 10.0% per annum.  The
Company is making  interest-only  payments of approximately  $314, which is less
than the interest  accruing and is delinquent  in making the required  principal
payments.  Accordingly,  the  entire  debt is  classified  as  "current"  in the
accompanying consolidated financial statements.

                                      F-13
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE J - NOTES PAYABLE TO INVESTORS - CONTINUED

The  $50,000  restructured  note is  convertible  into  shares of  unregistered,
restricted  common stock at the discretion of the Noteholder  with the Company's
consent,  provided that the daily average  (calculated  from the last sale price
daily) of the market price of the Company's common stock for any 30 calendar day
period equals or exceeds $1.00 per share,  with the conversion  being calculated
at a 50% discount of such 30 day average.

The $50,000  Noteholder  also has the  election to receive the monthly  interest
payments in  restricted,  unregistered  common stock of the Company at the daily
average  (calculated  from the last sale price daily) of the market price of the
Company's  common stock for the 30 calendar day period prior to the interest due
date,  with the number of shares to be issued  calculated  at a 50%  discount of
such 30 day average.

Through January 31, 2006, the Company has paid approximately $7,000 in principal
and  $10,438  in  cumulative  accrued  interest  on  the  $50,000   restructured
convertible note.

The  $25,000  convertible  note is in default and no demand for payment has been
made  to  the  Company.  The  Company  continues  to  accrue  interest  on  this
convertible note in accordance with the original terms and conditions.

The aggregate maturities of the notes are as follows:

     Balance as of January 31, 2006                               $ 68,000
     Less current portion                                          (68,000)
                                                                  --------

     Long-term portion                                            $     --
                                                                  ========

NOTE K - CAPITAL LEASE PAYABLE

Capital lease payable is as follows:

<TABLE>
<CAPTION>
                                                                January 31,        January 31,
                                                                   2006               2005
                                                                 --------           --------
<S>                                                              <C>                <C>
$21,080 capital lease payable to a finance corporation
   Interest at 8.60%.  Payable in monthly installments
   of approximately $432, including accrued interest
   Final maturity due in April 2007.  Collateralized by
   equipment                                                     $  4,942           $ 10,306

     Less current maturities                                       (4,517)            (4,500)
                                                                 --------           --------

     Long-term portion                                           $    425           $  5,806
                                                                 ========           ========
</TABLE>

Future maturities of long-term capital leases payable are

                                                  Year ending
                                                  January 31,        Amount
                                                  -----------        ------
                                                     2007            $4,517
                                                     2008               425
                                                                     ------

                                                     Total           $4,942
                                                                     ======

                                      F-14
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE L - INCOME TAXES

The  components of income tax (benefit)  expense for the years ended January 31,
2006 and 2005, respectively, are as follows:

                                             January 31,           January 31,
                                                2006                  2005
                                              -------               -------
      Federal:
       Current                                $    --               $    --
       Deferred                                    --                    --
                                              -------               -------
                                                   --                    --
                                              -------               -------
      State:
       Current                                     --                    --
       Deferred                                    --                    --
                                              -------               -------
                                                   --                    --
                                              -------               -------

       Total                                  $    --               $    --
                                              =======               =======

The Company has a net operating loss carryforward of approximately $5,200,000 to
offset future taxable income. Subject to current regulations, components of this
cumulative  carryforward  will at the end of each fiscal year through 2026.  The
amount and availability of the net operating loss  carryforwards  may be subject
to  limitations  set forth by the  Internal  Revenue  Code.  Factors such as the
number of shares ultimately issued within a three year look-back period; whether
there is a deemed  more  than 50  percent  change  in  control;  the  applicable
long-term  tax  exempt  bond  rate;  continuity  of  historical  business;   and
subsequent  income of the  Company  all enter  into the  annual  computation  of
allowable annual utilization of the carryforwards.

The Company's  income tax expense for the years ended January 31, 2006 and 2005,
respectively, are as follows:

                                                     January 31,     January 31,
                                                        2006            2005
                                                      --------        --------

Statutory rate applied to loss before income taxes    $(130,000)      $(148,000
Increase (decrease) in income taxes resulting from:
 State income taxes                                          --              --
 Other, including reserve for deferred tax asset        130,000         148,000
                                                      ---------       ---------

    Income tax expense                                $      --       $      --
                                                      =========       =========

Temporary differences, consisting primarily of net operating loss carryforwards,
statutory  deferrals  of expenses  for  organizational  costs and  accrued,  but
unpaid,  accruals for officer  compensation  and  statutory  differences  in the
depreciable  lives for property and equipment,  between the financial  statement
carrying  amounts and tax bases of assets and liabilities  give rise to deferred
tax assets and liabilities as of January 31, 2006 and 2005, respectively:

                                              January 31,           January 31,
                                                 2006                  2005
                                              -----------           -----------
  Deferred tax assets
  Net operating loss carryforwards            $ 1,768,000           $ 1,700,000
  Less valuation allowance                     (1,768,000)           (1,700,000)
                                              -----------           -----------

Net Deferred Tax Asset                        $        --           $        --
                                              ===========           ===========

During the Fiscal  years  ended  January 31,  2006 and 2005,  respectively,  the
valuation  allowance  for the  deferred  tax asset  increased  by  approximately
$68,000 and $136,000.

                                      F-15
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE M - COMMON STOCK TRANSACTIONS

In July 2004,  the Company  issued 150,000  restricted,  unregistered  shares of
common  stock  in  payment  of  a  contract  for  professional  services.   This
transaction was valued at approximately  $6,000, which was equal to or in excess
of the  discounted  closing  price of the  Company's  common stock on the NASDAQ
Electronic  Bulletin  Board  on the  date of each  respective  transaction.  The
Company relied upon Section 4(2) of The Securities Act of 1933, as amended,  for
an exemption from registration on these shares.

NOTE N - STOCK WARRANTS

At  January  31,  2004,  the  75,000  warrants  sold  in  conjunction  with  the
convertible notes private placement had expired.

In conjunction  with the reverse  acquisition,  which was concluded in September
2001, The Company granted  2,300,000  warrants to certain  shareholders of KTTI.
These  warrants  have an  exercise  price of  approximately  $0.05 per share and
expired in April 2004.

The  following  table  lists the issued and  outstanding  stock  warrants  as of
January 31, 2006 and 2005, respectively:

                                                      Warrants        Exercise
                                                       issued           price
                                                       ------           -----
Balance at February 1, 2004                           2,300,000         $0.05
   Granted                                                   --
   Exercised                                                 --
   Forfeited/Expired                                 (2,300,000)        $0.05
                                                     ----------

Balance at January 31, 2005                                  --
   Granted                                                   --
   Exercised                                                 --
   Forfeited/Expired                                         --
                                                     ----------

Balance at January 31, 2006                                  --
                                                     ==========

Warrants exercisable at January 31, 2006                     --
                                                     ==========

Weighted-average exercise price per warrant                 N/A
                                                     ==========

NOTE O - RELATED PARTY TRANSACTIONS

During each of the years ended  January  31,  2006 and 2005,  respectively,  the
Company accrued approximately $120,000 in administrative service fees payable to
KTTI.

During Fiscal 2006, KTTI advanced KTI $50,000 for working capital purposes. This
advance is non-interest bearing and has no scheduled repayment date.

NOTE P - COMMITMENTS AND CONTINGENCIES

LEASED FACILITIES

The Company leases its facilities under a non-cancellable operating lease, which
expires in May 2008. The lease requires monthly payments as follows:  $8,307 for
the first 12  months;  $8,639  for the next 12 months and $8,984 for the next 12
months.  Rent expense incurred under this lease was  approximately  $108,597 and
$106,428 for each of the years ended January 31, 2006 and 2005, respectively.

                                      F-16
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE P - COMMITMENTS AND CONTINGENCIES - CONTINUED

Future amounts due under this agreement are as follows:

                                             Year ending
                                             January 31,             Amount
                                             -----------             ------
                                                2007                $110,680
                                                2008                 105,391
                                                2009                  48,585
                                                                    --------

                                               Totals               $264,656
                                                                    ========

EMPLOYMENT CONTRACT

KIK entered  into an  employment  agreement  with  William M.  Knooihuizen,  the
Company's current President and Director.  The agreement started in May 2000 and
was for an initial period of five (5) years at an annual salary in the amount of
$143,000,  to be paid weekly.  Upon expiration in May 2005, the Company and it's
officer  agreed to continue this agreement in an unwritten form on an undefined,
indefinite basis.

NOTE Q - SIGNIFICANT CUSTOMERS

During the years ended January 31, 2006 and 2005, respectively,  the Company had
four and three separate customers who were responsible for a significant portion
of the Company's net revenues,  accounts receivable and suppliers of various raw
materials and components to the Company's  manufacturing  process. The following
table shows the significance of these entities:

                                                      Accounts         Accounts
                                    Revenues         Receivable        Payable
                                    --------         ----------        -------
Year ended January 31, 2006
   Customer A                         28.98%           10.74%           48.05%
   Customer B                         25.73             3.48               --
   Customer C                          5.62            15.36             0.06
   Customer D                          6.28            11.08               --
   Others                             33.39            59.34            51.89
                                     ------           ------           ------

     Totals                          100.00%          100.00%          100.00%
                                     ======           ======           ======

Year ended January 31, 2005
   Customer A                         49.18%           35.02%           59.37%
   Customer B                         16.09             7.42             0.12
   Customer C                          6.59            18.32             0.52
   Others                             28.14            39.24            39.99
                                     ------           ------           ------

     Totals                          100.00%          100.00%          100.00%
                                     ======           ======           ======

                (Remainder of this page left blank intentionally)

                                      F-17
<PAGE>
                KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE R - SELECTED FINANCIAL DATA (UNAUDITED)

The following is a summary of the quarterly  results of operations for the years
ended January 31, 2005 and 2004, respectively.

<TABLE>
<CAPTION>
                                     Quarter ended     Quarter ended    Quarter ended    Quarter ended       Year ended
                                       April 30,         July 31,        October 31,       January 31,       January 31,
                                       ---------         --------        -----------       -----------       -----------
<S>                                  <C>               <C>               <C>               <C>               <C>
YEAR ENDED JANUARY 31, 2006
   Sales                             $   375,216       $   541,296       $   560,849       $   469,708       $ 1,947,069
   Gross profit                              577           147,853            40,488            29,097           218,015
   Net earnings after
    provision for
    income taxes                        (148,144)            3,207          (105,991)         (130,359)         (381,287)
   Basic and fully diluted
    earnings per share               $     (0.01)              nil               nil               nil       $     (0.01)
   Weighted average
    number of shares
    issued and outstanding            25,171,865        25,171,865        25,171,865        25,171,865        25,171,865

YEAR ENDED JANUARY 31, 2005
   Sales                             $   791,111       $   511,720       $   704,469       $   455,677       $ 2,462,977
   Gross profit                          107,642            14,866           119,193           (19,671)          222,030
   Net earnings after
    provision for
    income taxes                         (56,101)         (142,464)          (32,265)         (203,886)         (434,716)
   Basic and fully diluted
    earnings per share                       nil       $     (0.01)              nil       $     (0.01)      $     (0.02)
   Weighted average
    number of shares
    issued and outstanding            25,021,865        25,038,169        25,171,865        25,171,865        25,101,375

YEAR ENDED JANUARY 31, 2004
   Sales                             $   792,156       $   929,571       $   990,843       $   926,719       $ 3,639,289
   Gross profit                          122,215           137,817           116,462           145,738           522,232
   Net earnings after
    provision for
    income taxes                         (61,636)          (40,059)          (49,959)          (47,483)         (199,137)
   Basic and fully diluted
    earnings per share                       nil               nil               nil               nil       $     (0.01)
   Weighted average
    number of shares
    issued and outstanding            24,311,934        24,990,579        25,021,865        25,021,865        24,840,873
</TABLE>

NOTE S - SUBSEQUENT EVENT

During the First Quarter of Fiscal 2007, KTTI advanced an additional  $50,000 to
KTI for working capital purposes.

                                      F-18