<PAGE>   1

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

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

                     For the fiscal year ended May 31, 1999

                                       or

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

        For the transition period from ____________ to ________________

                        Commission file number 000-24847

                           CURTIS INTERNATIONAL LTD.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                  <C>
Ontario                                                              98-0154299
-------                                                              ----------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                              Identification No.)

315 Attwell Drive
Etobicoke, Ontario                                                      M9W 5C1
------------------                                                    ---------
(Address of principal executive offices)                             (Zip Code)
</TABLE>

      (416) 674-2123 (Registrant's telephone number, including area code)
      --------------
      Securities registered pursuant to Section 12 (b) of the Exchange Act

<TABLE>
<S>                                   <C>
Title of each class                        Name of exchange on which registered
-------------------                        ------------------------------------
None                                                                       None
</TABLE>

          Securities registered pursuant to Section 12 (g) of the Act:
                           Common Stock, no par value
                           --------------------------
                                (Title of Class)

<PAGE>   2
     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]  No [_]

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

     The aggregate market value of the voting stock held by non-affiliates of
the issuer as of August 25, 1999 was $6,844,294.

ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [_] No [_]

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     The number of shares outstanding of the registrant's Common Stock, No Par
Value, on August 25, 1999 was 5,373,145 shares.

     Documents incorporated by reference: None



<PAGE>   3

                           CURTIS INTERNATIONAL LTD.
                        1999 ANNUAL REPORT ON FORM 10-K

                               TABLE OF CONTENTS

<TABLE>

<S>          <C>                                                                                <C>
                                     PART I
Item 1.      Business.......................................................................     1
Item 2.      Properties.....................................................................     7
Item 3.      Legal Proceedings..............................................................     7
Item 4.      Submission of Matters to Vote of Security Holders..............................     7

                                     PART II

Item 5.       Market for Registrant's Common Equity and Related Stockholder Matter..........     8
Item 6.       Selected Financial Data.......................................................    10
Item 7.       Management's Discussion and Analysis of Financial Condition and Results of
                   Operations...............................................................    11
Item 7A.      Quantitative and Qualitative Disclosures About Market Risk....................    15
Item 8.       Financial Statements and Supplementary Data...................................    15
Item 9.       Changes in and Disagreements with Accountants on Accounting and Financial
              Disclosures...................................................................    15

                                    PART III

Item 10.      Directors and Executive Officers of the Registrant............................    16
Item 11.      Executive Compensation........................................................    18
Item 12.      Security Ownership of Certain Beneficial Owners and Management................    24
Item 13.      Certain Relationships and Related Transactions................................    25

                                     PART IV

Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K...............    26

Signatures..................................................................................    27

</TABLE>


<PAGE>   4

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Certain statements contained herein including, without limitation, those
concerning (i) the Company's strategy, (ii) the Company's expansion plans and
(iii) the Company's capital expenditures, contained forward-looking statements
(within the meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act") and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) concerning the Company's operations, economic
performance and financial condition. Because such statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause such
differences include, but are not limited to, those discussed under "Business."
The Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.




<PAGE>   5

                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

SUMMARY

     Curtis International Ltd. designs, distributes and markets quality,
value-priced consumer electronics products. The Company offers a broad line of
telecommunication, audio, video and computer products including, telephones,
answering machines, caller ID systems, CD and cassette systems, portable
televisions and computer accessories. The Company's products are primarily sold
under the brand names "Curtis" and "CTP Worx," as well as private labels. The
Company's strategy has been to build a portfolio of diverse consumer electronics
products which offers retailers flexible merchandising programs. The Company's
products are available in approximately 2,300 stores throughout Canada and
10,000 stores in the United States through approximately 35 retail chains in
Canada and the United States. All of the Company's products are manufactured by
independent manufacturers.

     The Company's customers include mass merchandisers such as Pic n Save,
Consolidated Stores, Value City, Family Dollar, Bradlees, Dollar General and
Bi-Way Stores; drug store chains such as Rite-Aid, London Drugs, Thrifty
Payless, Jean Coutu and Ker Drugs; specialty marketers such as QVC, the Home
Shopping Network, Shop at Home, ValueVision and Amway; consumer electronic
retailers such as Future Shop, Fry's and ABC Warehouse; and appliance and
department stores such as Boscov. The Company has operated profitably and has
recently undergone a period of rapid sales growth. In Fiscal 1999, the Company's
sales increased by $11,837,449, or 43.1% to $39,309,062 from $27,471,613 in
Fiscal 1998 and $14,914,142 in Fiscal 1997. The Company only entered the United
States market in 1996 and has since opened accounts with approximately 25 retail
chains in the United States. The Company's sales in the United States were
$19,766,469 in Fiscal 1999 as compared to $11,716,935 in Fiscal 1998 and
$2,217,058 in Fiscal 1997, an increase of approximately 791% from Fiscal 1997 to
Fiscal 1999. The Company believes there is an opportunity to continue to
significantly increase its business in the United States through both its
current customers and potential new customers.

THE CONSUMER ELECTRONICS INDUSTRY

     The consumer electronics industry is large and diverse, encompassing a wide
variety of technologies and products, including televisions, VCRs, audio
systems, CD players, cassette players and telephones. The Consumer Electronics
Manufacturers Association ("CEMA") estimates that total factory sales of
consumer electronics products in 1997 were approximately $72 billion, an
increase of 4.0% from 1996. CEMA estimates that factory sales will grow to
approximately $92 billion by the year 2001, an increase of 115% in ten years,
and believes that the consumer electronics industry is one of the fastest
growing sectors of the United States economy.

GROWTH STRATEGY

     The Company plans to establish itself as a leading supplier of quality,
value-priced consumer electronics products. The Company believes that its broad
portfolio of products, superior design capabilities, flexible and low-cost
sourcing and superior service offered both prior to and after-sale provide it
with distinct competitive advantages. The Company plans to continue to grow its
business using a strategy comprised of the following principal elements:

     --   CONTINUE TO OFFER VALUE-PRICED, QUALITY PRODUCTS. The Company designs
          and markets products which are value-priced, yet fill a market void
          through their design and up-to-date style. The Company's packaging
          further distinguishes its products in the marketplace from those of
          its competitors. In addition to increasing its product offering (as
          described below), the Company plans to continue to offer its customers
          quality products at competitive prices.

                                       1
<PAGE>   6
     --   EXPAND CUSTOMER BASE. The Company believes that it has significant
          opportunities to expand its customer base both in Canada and the VK
          Fund United States. The Company intends to use its existing
          relationships in Canada with retailers such as Wal-Mart, Staples and
          Toys "R" Us, to penetrate the United States market in such retailers'
          stores. In addition, the Company continually seeks to expand its
          distribution channels through various means. For example, the
          Company's initial promotion with the Home Shopping Network proved
          extremely successful resulting in a growing relationship and numerous
          other major planned promotions. In addition, the Company will attempt
          to enter selected international markets in Mexico, South America and
          Central America in the year 2000. Management believes there are
          significant opportunities in such markets. To date, the Company has
          not entered such markets due to limited financial and human resources.
          With the increased growth of the middle class in such countries, the
          Company believes that there are significant opportunities in such
          markets. To gain entrance in such markets, the Company intends to hire
          additional sales representatives to focus on such markets and to
          utilize its contacts with existing customers who already have a
          presence in such areas.

     --   EXPAND INTERNET OPERATIONS. The Company recently began selling its
          products over the internet through several auction sites, including
          Bid.com and Amazon.com, and is in the process of establishing its own
          web-site "www.buyrefurb.net" through which the Company will offer both
          its products as well as refurbished brand-name electronics products
          directly to the consumer. Through such internet operations, the
          Company intends to become the one stop destination for quality and
          value priced consumer electronics products.

     --   INCREASE PENETRATION AND SALES TO EXISTING UNITED STATES CUSTOMERS.
          In the short period in which the Company has focused significant
          marketing efforts in the United States, it has established
          relationships with several major retailers. The Company plans to focus
          its efforts on broadening its product selection being sold by these
          retailers and substantially increasing the dollar volume of sales to
          these existing customers.

     --   ACQUIRE AND LICENSE ADDITIONAL PRODUCTS. Discount retail chains and
          mass merchants limit the number of vendors with which they deal,
          preferring to deal with a limited number of vendors with a wide range
          of products. However, the Company has an extensive line of products
          and strives to fill substantially all of its customers' electronic
          requirements. The Company believes that there are a number of
          companies which have a superior niche type product, but have a limited
          line of customer electronics products, which makes it difficult to
          sell their product to mass merchants and discount chain stores because
          of their reluctance to deal with a supplier with a limited number of
          products. By entering into arrangements with or acquiring these small
          companies, the Company can add to its already wide selection of
          consumer electronic products.

     --   DEVELOP STRATEGIC ALLIANCES. The Company intends to develop strategic
          alliances with large discount chain stores and mass merchants.
          Management believes that many retailers whose primary business is not
          consumer electronics look for a strategic alliance with a vendor who
          has the experience, customer service and product selection to create a
          successful consumer electronics program in their stores. Development
          of strategic alliances whereby the Company provides these services in
          exchange for commitments to stock and sell the Company's products will
          assist the Company in the establishment of long-term relationships
          with such discount chain stores and mass merchants.

                                       2





<PAGE>   7

PRODUCTS

     The Company designs, distributes and markets quality value-priced consumer
electronics products, including telephones, audio equipment, personal
televisions, radios and computer accessories, to a wide variety of customers.
The Company currently offers over 150 models of consumer electronic products.
The Company's core business currently consists of the following consumer
electronic products:

<TABLE>
<S>                                 <C>
TVs                                 HOME AND PORTABLE AUDIO PRODUCTS

- Portable black and white TVs     - Home audio systems with single
- Portable combination TV/Audio      CD player
  products                         - Home audio systems with
                                     CD changer systems
TELEPHONE PRODUCTS
- Corded and cordless telephones   - Portable AM/FM cassette systems
- "Feature" telephones             - Portable CD systems with detachablespeakers
- Answering machines               - Portable CD stereo systems
- Combination telephone/           - Portable CD changer stereo systems
  answering machines               - Personal CD players
- Telephone clock radios           - Personal cassette players
- Caller ID systems                - Personal sports electronics products
                                     designed for use when exercising
                                     or traveling
COMPUTER ACCESSORIES               - Portable radios
- Ergonomically designed           - Electronic clock radios
  keyboards                        - Electronic clock radios with CD players
- Mouse attachments                - Electronic clock radios with cassette
                                     players
                                   - Hand-held micro cassette recorders

</TABLE>

PRODUCT DESIGN AND DEVELOPMENT

     Value-priced consumer electronic products typically do not have unique or
innovative technical features. Competition in this segment is therefore more
dependent on product design, visual appeal and price. As such, the Company
recognizes that superior product design provides an important competitive
advantage. The Company believes that the superior design and style of its
products distinguish them from those of its competitors in the value-priced
category and help drive consumer purchasing decisions.

     Management believes that the enhancement and extension of the Company's
existing products and the development of new product categories have contributed
significantly to the Company's growth to date and are necessary for the
Company's continued success and growth. The Company's product design and
engineering team, along with its outside graphic and design artists, evaluate
new ideas and seek to develop new products and improvements to existing products
to satisfy industry requirements and changing consumer preferences. The Company
selects design and manufacturing specifications that adapt and implement
available technology features to satisfy its customers' requirements for
quality, product mix and pricing. Company employees work closely with both
retailers and suppliers to identify trends in consumer preferences and to
generate new product ideas.

     In addition, the Company highlights the design and style features of its
products with detailed descriptions and illustrations on packaging, which the
Company believes further distinguishes its products from those of its
competitors. The Company believes that this packaging strategy makes its
products more attractive to consumers and facilitates an understanding of the
product features in retail locations where salespersons may not be available to
provide detailed explanations and demonstrations.

                                       3
<PAGE>   8
SALES AND DISTRIBUTION

     The Company sells its products in Canada and the United States to mass
merchandisers such as Pic n Save, Consolidated Stores, Value City and Bradlees;
drug store chains such as Rite-Aid and London Drugs; and specialty marketers
such as QVC, Shop at Home, Amway, ValueVision and the Home Shopping Network. The
Company does not have long-term contracts with any of its customers, but rather
receives orders on an ongoing basis. Products imported by the Company are
shipped by ocean freight and stored in the Company's warehouse or contracted
public warehouse facilities, for shipment to customers. All merchandise received
by the Company is automatically updated into the Company's inventory system.

     The Company has implemented an integrated system to coordinate purchasing,
sales and distribution segments of its operations. The Company is equipped to
receive orders from its major accounts electronically or by the conventional
modes of facsimile, telephone or mail. The Company is in the process of
upgrading its management information system ("MIS"), which management believes
will increase the efficiency of the Company's distribution efforts. The
Company's new MIS will allow the Company to track its customers inventory levels
and help its customers identify their more popular and profitable items. This
added service will allow the Company to take a more active role in its
customers' electronics business and will help them maintain sufficient inventory
levels.

     The Company also makes available to its customers a direct import program,
pursuant to which products are imported directly by the Company's customers. The
Company has increased this activity due to the fact that its introduction to
customers has been received with much success. Sales under such plan are made at
a reduced cost but also result in savings to the Company. These savings result
from the customer opening its line of credit directly to the manufacturer,
allowing the manufacturer to ship the goods directly to the customer. Under such
arrangement the Company does not incur any interest cost under its line of
credit or any shipping costs.

MARKETING

     The Company's strategy is to initially gain entrance to new accounts with
one or two of its products, and thereafter develop such account. The Company's
goal is to ultimately become its customers' primary consumer electronics
supplier.

     The Company does not undertake any direct advertising. However, the
Company's retail customers place advertisements that generally promote the
Company's brand names in newspapers and other publications, catalogs, flyers and
by displaying point-of-purchase advertising. Under such co-op advertising
arrangements, the Company generally pays the customer a small percentage of
sales by the retailer of the Company's products featured in such advertising.
The Company markets its products to retailers at trade shows, including the
Consumer Electronics Show held in Las Vegas, Nevada in January of each year.

     Aaron Herzog, the Company's President, has established significant contacts
and is directly responsible for handling the accounts of the Company's primary
customers.

     A portion of the Company's sales are made through independent sales
representatives, which receive sales commissions and work closely with Company
sales personnel. The Company has 11 independent sales representatives based in
Canada and the United States. The outside sales representatives also sell, in
addition to the Company's products, allied, but generally non-competitive
products. In most instances, either party may terminate a sales representative
relationship on 30 days prior notice in accordance with customary industry
practice.

                                       4

<PAGE>   9
MANUFACTURING

     The Company is responsible for the final design and specifications of all
of its products. Actual assembly is performed by one of its independent
manufacturers in accordance with specifications mandated by the Company.

     During Fiscal 1999 and Fiscal 1998, the Company's three largest independent
manufacturers, which are located in China, supplied approximately 44% and 17.0%
of the Company's total products, respectively. The Company changes suppliers
from time to time as market conditions require. Substantially all of these
suppliers assemble products with components that they purchase from third
parties who manufacture these types of components. The Company has no agreement
with the component suppliers. The Company believes that this is the standard
method of operating and contracting for the manufacture of products in the
consumer electronics industry. During production,  the Company's employees
coordinate with the independent manufacturers' facilities to monitor and
facilitate timely manufacture and delivery of products produced to the Company's
specifications.

     The Company considers its relationships with its independent manufacturers
and component suppliers to be good and believes that, absent extreme
circumstances affecting the supply of materials or the demand on manufacturing
time, the supply of products will be available when needed. The Company does not
maintain long-term purchase contracts with manufacturers and operates
principally on a purchase order basis. The Company believes that it is not
currently dependent on any single manufacturer for any of its products, and that
the loss of any one manufacturer would not have a long-term material adverse
effect on the Company because other independent manufacturers with which the
Company does business would be able to increase production to fulfill the
Company's requirements. However, the loss of a significant supplier could, in
the short-term, materially and adversely affect the Company's business until
alternative supply arrangements could be secured.

QUALITY CONTROL

     The Company employs a quality control inspector who inspects the Company's
products before each shipment is sent from its manufacturers to ensure that such
products meet both the Company's quality standards and industry standards.
Additionally, the Company's quality control team does a second quality control
inspection when its products arrive in either the United States or Canada. If
the Company's quality control team feels that the tested products do not meet
both the Company's standards and industry standards, such products are not
accepted by the Company for shipment to its customers and are returned to the
manufacturer, without any expense to the Company.

PRODUCT RETURNS AND WARRANTY CLAIMS

     The Company offers its customers limited warranties comparable to those
offered to retailers by its competitors and accepts returns from its customers
in accordance with customary industry practices, on most of its products. If a
low priced item is returned, the Company generally does not repair the item, but
will generally return it to the manufacturer for either credit or exchange.
Higher priced items returned to the Company are generally repaired with parts
supplied by the manufacturer. The Company generally has the ability to return
all defective products to the manufacturer for either credit or exchange.

Backlog

     From time-to-time, the Company has substantial orders from customers on
hand. Management believes, however, that backlog is not a significant factor in
its operations. As of August 26, 1999, the Company had a backlog of
approximately $8,050,000. Backlog consists of purchase orders and commitments
which are to be filled within the next two months. However, since orders and
commitments may be rescheduled or canceled, management believes that

                                       5

<PAGE>   10
backlog is an inconclusive indicator of future financial performance.
Notwithstanding the foregoing, the ability of management to correctly anticipate
and provide for inventory requirements is essential to the successful operation
of the Company's business. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Certain Transactions."

TRADEMARKS

     The Company has trademarked the names "Curtis" and "CTP Worx" in Canada and
has applied for such trademarks in the United States and other countries. The
Company intends to renew all such trademarks before their expiration. The
Company does not consider the "Curtis" and "CTP Worx" trademarks to be of
material importance to its business.

REGULATION

     Most of the Company's customers (as well as several state and local
authorities) require that the Company's products meet the electrical safety
standards of the Underwriters Laboratories, Inc. The Company ensures that all of
its products sold in Canada and the United States which require electrical
safety approval are registered with either the Underwriters Laboratories, Inc.,
Canadian Standards Association or Warnock Hersey. Certain of the Company's
products sold for use in the United States must be registered with and approved
by the FCC. Products sold in Canada must comply with the standards of the
Canadian Standards Association. The Company has not experienced difficulty in
satisfying such standards.

COMPETITION

     The consumer electronics industry is extremely competitive and is dominated
by large well-capitalized companies. The Company competes with the entire
electronics industry for consumer dollars, shelf space and promotional displays
for products and sales support. The Company's competitors may not rely on
external financing or relationships with independent manufacturers to the same
extent as the Company. Furthermore, the Company's competitors may have cost
advantages depending on labor costs, currency exchange rates and other factors
in the countries where their manufacturing operations take place, relative to
the countries where the Company's products are manufactured. The Company has
adopted a marketing strategy that targets the value-priced segment of the
consumer electronics market, which is particularly price sensitive. There is
competition among a number of brands in this market, including Emerson and GPX,
as well as foreign-based manufacturers and distributors. In addition, although
General Electric, Sony, Aiwa and Panasonic brand products are not currently
emphasized in the value-priced segment of the market, they do compete with the
Company's products for consumer dollars, shelf space and sales support. To the
extent that these brands compete directly with the Company's brands on the basis
of price, or their product prices were otherwise reduced, the Company's ability
to market and sell competitive products could be severely affected, which would
have a material adverse effect on the Company's business, financial condition
and results of operations.

EMPLOYEES

     As of July 31, 1999, the Company employs 57 persons, which include two
senior executives, six administrative personnel, and 49 full-time non-unionized
hourly laborers. One of the Company's employees is located in Asia. The Company
believes that its relationships with its employees are good. The Company is not
party to any collective bargaining agreement, nor is the Company aware of any
effort to organize employees of the Company into any union or similar
organization.

                                       6



<PAGE>   11

ITEM 2.   PROPERTIES

     The Company leases the following premises:

<TABLE>
<CAPTION>
                                                                                                                 Current
    Location                        Address                    Expiration Date           Square Feet           Annual Rent
----------------        --------------------------------      ----------------           -----------          ------------
<S>                     <C>                                   <C>                        <C>                  <C>
Toronto, Ontario        315 Attwell Road (Principal           May 31, 2002                  76,290             Cdn$228,876
                        Executive Offices and Warehouse)

Montreal, Quebec        8170 Montview
                        (Sales and  Marketing)                October 31, 2000               2,500             Cdn$ 20,375

</TABLE>

     All of the premises the Company presently occupies are leased. In January
1999, the Company successfully completed its consolidation of all of its
warehouse space with its principal executive offices, resulting in significant
operating efficiencies.  Management believes its current facilities are adequate
and suitable for its present business and its expected growth.

     The Company also receives shipment of its products from its manufacturers
at 100 Sonwil Drive, Buffalo, New York, an independently operated distribution
center which ships the Company's products to certain of the Company's
customers. The Company does not lease or own such facility but rather pays a
usage charge for each case of product shipped to such location. The Company
owns a condominium in Florida which it is seeking to sell.

ITEM 3.   LEGAL PROCEEDINGS

     The Company is not involved in any material legal proceedings.

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

     Not required.

                                       7

<PAGE>   12
                                    PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company's Common Stock is traded on The Nasdaq National Market System
("Nasdaq NMS") under the symbol "CURT." The following table sets forth, for the
periods indicated,  the high and low sales prices per share of the Common Stock
as reported by the Nasdaq NMS.  The Company's Common Stock began trading on the
Nasdaq NMS on November 13, 1999.  The Company's fiscal year ends on May 31.

<TABLE>
<CAPTION>
                                                       COMMON STOCK
         FISCAL 2000                                  HIGH        LOW
         -----------                                 ------      -----
         <S>                                         <C>          <C>
         First Quarter(through August 25, 1999)      7.125       3.75

         Fiscal 1999                                  High        Low
         -----------                                 ------      -----
         Second Quarter(from November 13, 1998)      5.75        5.188
         Third Quarter                               6.125       5.25
         Fourth Quarter                              6.25        5.50
</TABLE>

     As of August 25, 1999, there were approximately 12 holders of record of the
Company's 5,373,145 outstanding shares of Common Stock.  On August 25, 1999, the
last sales price for the Common Stock as reported on the Nasdaq SmallCap was
$3.75.

     The Company completed an initial public offering of its Common Stock, no
par value ("Common Stock") pursuant to a registration statement declared
effective by the Securities and Exchange Commission on November 12, 1998, File
No. 333-56661 ("Registration Statement").

     The following are the Company's expenses incurred in connection with the
issuance and distribution of the Securities in the offering from the effective
date of the Registration Statement to the ending date of the reporting period of
this 10-K.

<TABLE>
<CAPTION>
             EXPENSE                                       AMOUNT
             -------                                     ----------
             <S>                                         <C>
             Underwriter's Discounts and Commission      $  836,573
             Financial Advisory Fee                      $   82,500
             Expenses Paid To or For Underwriters        $   35,950
             Other Expenses(1)                           $  644,291
             Total Expenses                              $1,599,314
</TABLE>

     None of the foregoing expenses were paid, directly or indirectly, to any
director or officer of the Company or their associates, to any person who owns
10 percent or more of any class or equity of securities of the Company, or to
any affiliate of the Company.

     On December 14, 1998, the Underwriter exercised a portion of the
over-allotment option resulting in additional net proceeds of $754,171 to the
Company.

     The net offering proceeds to the Company after deducting the foregoing
expenses were approximately $6,766,411.

                                        8
<PAGE>   13
     To date the Company has utilized the net proceeds from its initial public
offering as follows: repayment of loan $900,000, upgrading of M.I.S $80,000,
relocation to new facilities $100,000, sales and marketing $50,000.  The balance
of approximately $5,636,411 has been used to temporarily reduce the outstanding
balance on the Company's line of credit with CIBC and for working capital and
general corporate purposes.  The Company's temporary reduction of its line of
credit reduces the interest expense payable by the Company, while keeping open
such line of credit for immediate use by the Company.

                                DIVIDEND POLICY

     The Company has never paid or declared dividends on its Common Stock. The
payment of cash dividends, if any, in the future is within the discretion of the
Board of Directors and will depend upon the Company's earnings, its capital
requirements, financial condition and other relevant factors. The Company
intends, for the foreseeable future, to retain future earnings for use in the
Company's business. The Company's line of credit with CIBC prohibits the payment
of any dividends without CIBC's consent while there is any outstanding balance
on the line of credit.

                           DESCRIPTION OF SECURITIES

     The total authorized capital stock of the Company consists of 15,000,000
shares of Common Stock, with no par value, and 1,000,000 shares of Preferred
Stock, with no par value per share. The following descriptions contain all
material terms and features of the Securities of the Company, are qualified in
all respects by reference to the Articles of Incorporation and Bylaws of the
Company, copies of which are filed as Exhibits to the Registration Statement of
which this Prospectus is a part.

COMMON STOCK

     The Company is authorized to issue up to 15,000,000 of shares of Common
Stock, no par value per share, of which as August 25, 1999, 5,373,145 shares of
Common Stock are outstanding. All outstanding Shares of common stock are validly
authorized and issued, fully paid, and non-assessable.

     The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Holders of Common
Stock are entitled to receive ratably dividends as may be declared by the Board
of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock are entitled to share ratably in all assets remaining, if any, after
payment of liabilities. Holders of Common Stock have no preemptive rights and
have no rights to convert their Common Stock into any other securities.

     Pursuant to the Business Corporation Act, Ontario ("BCA"), a stockholder of
an Ontario Corporation has the right to have the corporation pay the stockholder
the fair market value for his shares of the corporation in the event such
stockholder dissents to certain actions taken by the corporation such as
amalgamation or the sale of all or substantially all of the assets of the
corporation and such stockholder follows the procedures set forth in the BCA.

PREFERRED STOCK

     The Company's Articles of Incorporation authorize the issuance of up to
1,000,000 shares of Preferred Stock with designations, rights and preferences
determined from time to time by its Board of

                                       9

<PAGE>   14
Directors. Accordingly, the Company's Board of Directors is empowered, without
stockholder approval, to issue Preferred Stock with dividend, liquidation,
conversion, or other rights that could adversely affect  the rights of the
holders of the Common Stock. Although the Company has no present intention to
issue any shares of its Preferred Stock, there can be no assurance that it will
not do so in the future.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for the Common Stock is Continental Stock
Transfer & Trust Company.

ITEM 6.   SELECTED FINANCIAL DATA

     The following summary financial information for the fiscal years 1999, 1998
and 1997 have been derived from the audited financial statements of the Company
percent are percent of Net Sales

INCOME STATEMENT DATA:

<TABLE>
<CAPTION>
                                                                                    Year ended May 31,
                                                        ---------------------------------------------------------------------------
                                                           1999           %           1998           %           1997           %
                                                        -----------      ----      -----------      ----      -----------      ----
<S>                                                     <C>              <C>       <C>              <C>       <C>              <C>
Net Sales                                               $39,309,062      100%      $27,471,613      100%      $14,914,142      100%
---------                                               -----------      ----      -----------      ---       -----------      ---
Gross Margin.....................................         7,266,563        18        5,121,646       19         2,740,394       18
Other Expenses...................................         4,814,041        12        3,654,299       13         2,617,015       17
Income from continuing operations................         2,452,522         6        1,467,347        5           123,379        1
Net income.......................................         1,343,757         3          864,905        3            93,001        1
                                                        -----------      ----      -----------      ---       -----------      ---
Basic Earnings Per Share.........................              0.29                       0.23                       0.02
                                                        -----------                -----------                -----------
</TABLE>

BALANCE SHEET DATA:

<TABLE>
<CAPTION>
                                                          May 31,
                                           -----------------------------------

                                                1999                  1998
                                           ------------           ------------
<S>                                         <C>                    <C>
Total assets...........................     $14,663,946            $13,685,372
Total liabilities......................       4,494,470             12,248,664
Working capital........................       9,283,274              1,416,422
Stockholders' equity...................      10,169,476              1,436,708
</TABLE>

                                       10



<PAGE>   15

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with Company's
Financial Statements and the Notes thereto and the other financial data included
elsewhere in this Form 10-K. This Form 10-K may contain forward-looking
statements regarding the plans and objectives of management for future
operations. The forward-looking statements included herein are based on current
expectations and assumptions that involve numerous risks and uncertainties.
Although management believes that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the forward-looking statements
included herein will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved.

GENERAL

     The company designs, distributes and markets quality, value-priced consumer
electronics products.  The Company offers a broad line of telecommunication,
audio, and video products including telephones, answering machines, caller ID
systems, CD and cassette systems, and portable televisions. The Company's
products are primarily sold under the brand name "Curtis" as well as private
labels.  The Company's strategy has been to build a portfolio of diverse
consumer electronics products, which offers retailers flexible merchandising
programs.  The company's products are available in approximate 2,300 stores
throughout Canada and 10,000 stores in the United States through approximately
35 retail chains in Canada and the United States.

     Curtis International Ltd. was incorporated in the Province of Ontario on
December 12, 1990.  The Company subsequently amalgamated (or merged) with Unique
Investments Limited and AEG Trading Limited on January 26, 1998 and Worldwide
Holdings Limited on May 31, 1998.  In both cases, the Company was the surviving
entity.  The Company's principal executive offices are located at 315 Attwell
Drive, Etobicoke, Ontario M9W 5C1 and its telephone number is (416) 674-2123.

RESULTS OF OPERATIONS

Fiscal Year Ended May 31, 1999 ("Fiscal 1999") Compared to Fiscal Year Ended
May 31, 1998 ("Fiscal 1998").

     Sales for Fiscal 1999 were $39,309,062 a 43.1% increase over sales of
$27,471,613 for Fiscal 1998.  This increase was primarily due to an increase of
68.7% in sales in the United States and to a lesser degree, a 22.3% increase in
sales in Canada.  The Company's strategy is to continue to increase sales in the
United States while maximizing sales in Canada.

     As a result of the 43.1% increase in sales, cost of sales for Fiscal 1999
were $32,042,499 a 43.4% increase over cost of sales of $22,349,967 for Fiscal
1998.

     Gross profit margin for Fiscal 1999 was 18.5% of sales as compared to 18.6%
in Fiscal 1998. Lower prices charged to customers who purchased items in large
quantities were offset by the Company's increased purchasing power, which
resulted in slightly lower per item costs.  The Company

                                       11
<PAGE>   16
expects that its increased buying power and broadened customer base will lead to
a slight increase in gross profit in the coming periods.

     Selling expenses increased by $1,023,047 in Fiscal 1999 over Fiscal 1998 as
a result of continuing increased sales efforts particularly in the United
States.  These expenses include salaries and  commission, delivery charges and
advertising and promotion.  The Company expects to further increase its
marketing efforts in the United States, but expects increased sales will offset
such costs.  As a percentage of sales, selling expenses increased slightly from
4.6% to 5.8% of sales as a result of higher customer allowances and rebates.
Administrative expenses of $1,644,825 in Fiscal 1999 were $113,488 lower than in
Fiscal 1998.  As a percentage of sales, administrative expenses continued to
decline from 6.4% to 4.2%, as a result of relatively stable expenses coupled
with the Company's sales growth.  The Company believes that it can continue to
increase sales with only a minor increase in administrative expenses.  Financial
expenses increased from $474,154 to $880,263 a 85.6% increase which was the
result of lower interest expense, from $329,922 to $261,490 as a result of
reduced borrowing, due to proceeds from the initial public offering, and an
increase from $144,232 to $618,773 in the Company's reserve for bad debts.  As a
result of the Company's higher sales volume (43.1% increase), increased
marketing efforts, and certain one-time charges, total operating expenses
increased from $3,654,299 in Fiscal 1998 to $4,814,041(31.7%) in Fiscal 1999.
The Company expects that sustained sales growth and increased marketing efforts
coupled with stable costs will promote further increases in net income.

     Earnings before income taxes ("EBIT") increased by $985,175 to $2,452,522
(67.1%) for Fiscal 1999 versus Fiscal 1998.  As a percentage of sales, EBIT for
Fiscal 1999 was 6.2% compared to 5.3% in Fiscal 1998.  As a result of the
Company's increased income, the provision for income taxes increased from
$602,442 to $1,108,765 in Fiscal 1999. Net income increased from $864,905 in
Fiscal 1998 to $1,343,757 in Fiscal 1999. This increase in income is directly a
result of continued sales growth with stable administrative costs, which more
than offset the increase in selling expenses.  Management believes, although
there can be no assurance, that the Company can continue this trend in the
future.

Fiscal Year Ended May 31, 1998 ("Fiscal 1998") Compared to Fiscal Year Ended
May 31, 1997 ("Fiscal 1997").

     Sales for Fiscal 1998 were $27,471,613, an 84.2% increase over sales of
$14,914,142 for Fiscal 1997. This increase was primarily due to an increase of
428% in sales in the United States and to a lesser degree, a 24.1% increase in
sales in Canada. The Company's strategy is to continue to increase sales in the
United States, while maintaining and maximizing sales in Canada.

     As a result of the 84.2% increase in sales, cost of sales for Fiscal 1998
were $22,349,967, an 83.6% increase over cost of sales of $12,173,748 for Fiscal
1997.

     Gross profit margin for Fiscal 1998 was 18.6% of net revenues as compared
to 18.4% in Fiscal 1997. The Company's increased purchasing power which resulted
in slightly lower per item costs was largely offset by lower prices charged to
customers who purchased items in large quantities. The Company expects that its
increased buying power and broadened customer base will lead to a slight
increase in gross profit in the coming periods.

     As a result of the Company's increased marketing efforts and certain
one-time charges, expenses increased from $2,617,015 in Fiscal 1997 to
$3,654,299 in Fiscal 1998. Selling expenses increased by $610,928 (93.3%) in
Fiscal 1998 over Fiscal 1997 as a result of increased sales efforts particularly
in the

                                       12
<PAGE>   17
United States. These expenses include salaries and commissions, delivery charges
and advertising costs. The Company expects to further increase its marketing
efforts in the United States, but expects increased sales to offset such costs.
As a percentage of sales, selling expenses remained relatively stable at
approximately 4% of sales. Administrative expenses of $1,758,313 were $27,721
higher than in Fiscal 1997. However, as a percentage of sales, administrative
expenses were significantly reduced (from 11.6% to 6.4%), as a result of
relatively stable expenses coupled with the Company's sales growth. The Company
believes that it can continue to increase sales with only a minor increase in
administrative expenses. Financial expenses rose from $231,445 to $474,154, a
105% increase which was the result of  higher interest expense, from $161,041 to
$329,922 as a result of increased borrowing to sustain the Company's growth and
an increase of $73,828 in the Company's reserve for bad debts. Management
believes that the proceeds of the Offering will allow the Company to increase
sales without increasing borrowing expenses which the Company has historically
incurred in order to fund its growth. In Fiscal 1998, the Company also incurred
a one-time lease cancellation fee of $155,926.

     Earnings before income taxes ("EBIT") increased $1,343,968 to $1,467,347
(1,089%) for Fiscal 1998 versus Fiscal 1997. As a percentage of sales, EBIT for
Fiscal 1998 was 5.3% compared to .9% in Fiscal 1997. As a result of the
Company's increased income, the provision for income taxes increased from
$30,378 to $602,442. Net income increased from $93,001 for Fiscal 1997 to
$864,905 for Fiscal 1998. This increase in net income is directly a result of
continued sales growth with stable administrative costs, which more than offset
the increase in selling expenses. Management believes, although there can be no
assurance, that the Company can continue this trend in the future.

LIQUIDITY AND CAPITAL RESOURCES

     Historically, the Company has funded its operations from cash flow, its
credit line with Canadian Imperial Bank of Commerce ("CIBC"), and advances from
affiliates.  As of May 31, 1999 the Company had net deposits of $2,927,886. The
$2,927,866 represents short term deposits maintained at the bank ($4,613,209)
less actual bank indebtedness ($1,685,323). The Company's executive officers,
either directly or through their affiliated corporations, loaned the Company an
aggregate of $656,762 in order to finance the Company's expansion.  These loans
were memorialized into notes which bear interest at 8% and are repayable
quarterly over the next 12 months, provided the Company is profitable on a post
tax basis during each quarter.

     The Company had a favorable change in the use of cash for operations of
$773,447 for Fiscal 1999.  The principle use of cash was due to a reduction in
accounts payable and accrued expenses.  This was partially offset by a decrease
in inventory.

     The Company received net proceeds from its initial public offering in the
amount of $7,342,083.  The proceeds were primarily used to pay down the
outstanding line of credit with CIBC.  The Company believes that the proceeds of
the initial public offering, coupled with income from operations will fulfill
the Company's working capital needs for the next two years.  It is the Company's
intention to utilize a significant portion of its financing to aggressively seek
synergistic acquisitions.  The Company also intends to support its business
through increased marketing, advertising and distribution throughout North
America.  As the Company continues to grow, bank borrowing, other debt
placements and equity offerings may be considered, in part, or in combination,
as the situation warrants.

                                       13

<PAGE>   18

YEAR 2000 PREPARATION

     Many computer systems and software products worldwide and throughout all
industries will not function properly as the year 2000 approaches unless
changed, due to a once-common programming standard that represents years using
two-digits. This is the "Year 2000 problem" that has received considerable media
coverage. The Company is in the process of upgrading its management information
systems. As part of this program, the Company will identify those systems and
applications that require modification, redevelopment or replacement. The
Company expects to be Year 2000 compliant by September 30, 1999 with respect to
its internal systems. Management of the Company does not believe that failure of
the Company's vendors or other third-party providers' systems to be Year 2000
compliant will have a material adverse effect upon the Company.

                                       14

<PAGE>   19
ITEM 7A.  QUANTITATIVE AND QUALITATIVE MARKET RISK

     Not Applicable.

ITEM 8.   FINANCIAL STATEMENTS

     The financial statements are included at the end of this Annual Report on
Form 10-K at the pages included below.
<TABLE>
<CAPTION>
                                                                           Page
                                                                          Number
                                                                         -------
<S>                                                                      <C>
Financial Statements:

Report of Independent Accountants..........................................F - 1

Balance Sheets as at May 31, 1999 and 1998................................ F - 2

Statements of Operations for the years ended
     May 31, 1999, 1998 and 1997...........................................F - 4

Statements of Cash Flows for the years ended
     May 31, 1999, 1998 and 1997...........................................F - 5

Statements of Stockholders' Equity for the years ended
     May 31, 1999, 1998 and 1997...........................................F - 7

Notes to Financial Statements..............................................F - 8
</TABLE>

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE

     Not applicable.

                                       15


<PAGE>   20
                                    PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth certain information concerning the Directors
and Executive Officers of the Company:

<TABLE>
<CAPTION>

     Name                Age      Position
     -------------       ---      -----------------------------------------------
     <S>                 <C>      <C>
     Aaron Herzog        38       President, Chief Executive Officer and Director
     Jacob Herzog        47       Chairman, Treasurer, Secretary and Director
     Louis Drazin        63       Director
     David Ben David     37       Director
     </TABLE>

     Set forth below is a biographical description of each director and
executive officer of the Company based on information supplied by each of them.

     AARON HERZOG is a co-founder of Curtis International Ltd., and has served
as the Company's President, Chief Executive Officer and Director since its
formation in 1990. Mr. Herzog also acts as sales director of the Company.
Mr. Herzog earned a degree in Management from McGill University in 1981.

     JACOB HERZOG is a co-founder of Curtis International Ltd., and has served
as the Company's Chairman, Treasurer, Secretary and Director since its formation
in 1990. Mr. Herzog has been in the consumer electronics business since the
early 1970's.

     LOUIS DRAZIN has been a Director of the Company since August 1998. From
1961 - present, Mr. Drazin has been a Senior Partner at Drazin, Ouaknine &
Friedman, Notaries. From 1990 - present he has been a senior executive at
Shutam Canada Inc., a real estate acquisition, investment and development
company. Mr. Drazin graduated from McGill University in 1957 with a B.A. with
honors in economics and political science. Mr. Drazin earned a Bachelor of
Civil Law from McGill University in 1960.

     DAVID BEN DAVID has been a Director of the Company since August 1998. From
July 1990 - June 1997, Mr. David served as Vice President and Chief Financial
Officer of NSI Communications, Inc. From June 1997 - present, Mr. David has
served as President and Chief Operating Officer of NSI Communications, Inc. NSI
Communications, Inc. is a manufacturer of communications products. Mr. David
earned a B.A. in Economics in 1983 from Bar Ilan University in Israel, an M.B.A.
in 1987 from McGill University and a Public Accountant degree in 1989 from
McGill University.

     Aaron Herzog and Jacob Herzog are brothers. There are no other family
relationships among the Company's directors and executive officers.

     The term of office of each Director is until the next annual meeting of
stockholders and until a successor is elected and qualified or until the
Director's earlier death, resignation or removal from office.

                                       16

<PAGE>   21
Executive officers hold office until their successors are chosen and qualified,
subject to earlier removal by the Board of Directors.

     For the period of five years from November 12, 1999, Joseph Stevens &
Company, the representative of the Company's initial public offering, has been
granted the right to designate a nominee to the Company's Board of Directors.

COMMITTEES OF THE BOARD

     The Company's Board of Directors has an Audit Committee, comprised of Jacob
Herzog, Louis Drazin and David Ben David, and a Compensation Committee,
comprised of Aaron Herzog, Louis Drazin and David Ben David.  Neither the Audit
Committee nor the Compensation Committee met during the fiscal year ended
May 31, 1999.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The Compensation Committee of the Board of Directors is responsible for
making all compensation decisions with respect to the executive officers of the
Company.  The Compensation Committee consists of Aaron Herzog, the Company's
President and Chief Executive Officer, Louis Drazin and David Ben David, each of
whom are independent outside directors.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

     To the knowledge of the Company, no officers, directors, beneficial owner
of more than ten percent of any class of equity securities of the Company
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any other person subject to Section 16 of the
Exchange Act with respect to the Company, failed to file on a timely basis
reports required by Section 16(a) of the Exchange Act during the most recent
fiscal year, which ended May 31, 1999.

                                       17



<PAGE>   22

ITEM 11.  EXECUTIVE COMPENSATION

     The following table sets forth certain information regarding compensation
paid by the Company during each of the last three fiscal years to the Company's
Chief Executive Officer and to each of the Company's executive officers who
earned in excess of $100,000.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                Annual Compensation                                  Long Term Compensation
                          --------------------------------       ---------------------------------------------------------------
                                                                                            Securities
Name and                                                          Other Annual              Underlying               All Other
Principal Position         Year        Salary        Bonus       Compensation(1)          Options/ SARs(#)          Compensation
------------------        ------       ------        -----       ----------------         -----------------         ------------
<S>                        <C>        <C>           <C>           <C>                     <C>                       <C>
Aaron Herzog(2)            1999       $175,000      $25,000      $   -0-                        -0-                    $12,000
CEO and Director           1998         28,000        -0-          177,192                      -0-                      -0-
                           1997         28,000        -0-          213,962                      -0-                      -0-


Jacob Herzog(3)            1999       $175,000      $25,000      $   -0-                        -0-                    $12,000
Chairman, Treasurer        1998         34,000        -0-          177,192                      -0-                      -0-
Secretary and              1997         33,000        -0-          213,963                      -0-                      -0-
Director

</TABLE>



(1)  Represents compensation paid to corporations (AEG Trading Limited and
     Worldwide Holdings Limited) controlled by such persons solely for providing
     the full time services of Messrs. Aaron and Jacob Herzog. See "Certain
     Transactions."

(2)  In addition, Aaron Herzog's wife received annual compensation of $35,000 in
     each of the years 1997, 1998 and 1999 in her capacity as an administrative
     assistant at the Company. "All Other Compensation" for 1999 includes a
     car allowance of $1,000 per month.

(3)  In addition, Jacob Herzog's wife received annual compensation of $35,000 in
     each of the years 1997, 1998 and 1999 in her capacity as an administrative
     assistant at the Company. "All Other Compensation" for 1999 includes a
     car allowance of $1,000 per month.


                                       18
<PAGE>   23

                       OPTION GRANTS IN LAST FISCAL YEAR

     The following table sets forth information concerning stock options granted
to each of the executives named in the Summary Compensation Table for the fiscal
year ending May 31, 1999:

<TABLE>
<CAPTION>
                                                                                                   POTENTIAL REALIZABLE
                                                                                                  VALUE AT ASSUMED ANNUAL
                                                                                                   RATES OF STOCK PRICE
                                                                                                  APPRECIATION FOR OPTION
                                                                                                           TERM(1)
                                                                                                 --------------------------
                                                PERCENTAGE OF
                                                  TOTAL OF
                              NUMBER OF            OPTIONS
                               SHARES            GRANTED TO
                             UNDERLYING           EMPLOYEES         EXERCISE
                              OPTIONS               DURING           PRICE       EXPIRATION
NAME                          GRANTED            FISCAL YEAR         SHARE          DATE            5%             10%
----                          --------          ------------        -------      -----------       -----           ----
<S>                           <C>                <C>                 <C>         <C>              <C>            <C>
Aaron Herzog                   25,000              35.7%             $5.00         11/1/08        $73,750        $309,500
Jacob Herzog                   25,000              35.7%             $5.00         11/1/08        $73,750        $309,500
</TABLE>
__________
(1)  The amounts shown in these columns represent the potential realizable
     values using the options granted and the exercise price. The assumed rates
     of stock price appreciation are set by the Securities and Exchange
     Commission's executive compensation disclosure rules and are not intended
     to forecast appreciation of the Common Stock.

                         FISCAL YEAR-END OPTION VALUES

     To date, no options have been exercised by the executives named in the
Summary Compensation Table.  The following table sets forth certain information
concerning the number of shares covered by both exercisable and unexercisable
stock options as of May 31, 1999. Also reported are values of "in-the-money"
options that represent the positive spread between the respective exercise
prices of outstanding stock options and the fair market value of the Company's
Common Stock as of May 31, 1999.

<TABLE>
<CAPTION>
                                        NUMBER OF SHARES SUBJECT TO
                                       UNEXERCISED OPTIONS AT FISCAL              VALUE OF IN-THE-MONEY OPTIONS
                                                  YEAR-END                           AT FISCAL YEAR END(1)
NAME                                   EXERCISABLE      UNEXERCISABLE             EXERCISABLE      UNEXERCISABLE
----                                   -----------      -------------             -----------      -------------
<S>                                       <C>              <C>                         <C>               <C>
Aaron Herzog                             6,250            18,750                      $6,250            $18,750
Jacob Herzog                             6,250            18,750                      $6,250            $18,750
</TABLE>

__________
(1)  Based on the closing bid price of the Company's Common Stock of $6.00 per
     share on May 28, 1999.

                                       19









<PAGE>   24

EMPLOYMENT AGREEMENTS

     Effective June 1, 1998, the Company entered into two year employment
agreements with each of Aaron Herzog and Jacob Herzog. Such employment
agreements provide for annual salaries of $175,000 with an annual bonus of
$25,000 provided the Company meets certain performance criteria. In addition,
each is entitled to a $1,000 per month car allowance.

STOCK OPTION PLAN

     The Plan will be administered by the compensation committee or the Board of
Directors, who determine among other things, those individuals who shall receive
options, the time period during which the options may be partially or fully
exercised, the number of shares of Common Stock issuable upon the exercise of
the options and the option exercise price.

     The Plan is effective for a period for ten years, expiring in 2008. Options
may be granted to officers, directors, consultants, key employees, advisors and
similar parties who provide their skills and expertise to the Company. The Plan
is designed to enable management to attract and retain qualified and competent
directors, employees, consultants and independent contractors. Options granted
under the Plan may be exercisable for up to ten years, require a minimum two
year vesting period, and shall be at an exercise price all as determined by the
Board. Options are non-transferable except by the laws of descent and
distribution or a change in control of the Company, as defined in the Plan, and
are exercisable only by the participant during his or her lifetime. Change in
control includes (i) the sale of substantially all of the assets of the Company
and merger or consolidation with another Company, or (ii) a majority of the
Board changes other than by election by the stockholders pursuant to Board
solicitation or by vacancies filled by the Board caused by death or resignation
of such person.

     If a participant ceases affiliation with the Company by reason of death,
permanent disability or retirement at or after age 70, the option remains
exercisable for one year from such occurrence but not beyond the option's
expiration date. Other types of termination allow the participant three months
to exercise, except for termination for cause which results in immediate
termination of the option.

     The exercise price of an option may not be less than the fair market value
per share of Common Stock on the date that the option is granted in order to
receive certain tax benefits under the Income Tax Act of Canada (the "ITA"). The
ITA requires that the exercise price of all future options will be at least 85%
of the fair market value of the Common Stock on the date of grant of the
options. A benefit equal to the amount by which the fair market value of the
shares at the time the employee acquires them exceeds the total of the amount
paid for the shares or the amount paid for the right to acquire the shares shall
be deemed to be received by the employee in the year the shares are acquired
pursuant to paragraph 7(1) of the ITA. Where the exercise price of the option is
equal to the fair market value of the shares at the time the option is granted,
paragraph 110(1)(d) of the ITA allows a deduction from income equal to one
quarter of the benefit as calculated above. If the exercise price of the option
is less than the fair market value at the time it is granted, no deduction under
paragraph 110(1)(d) is permitted. Options granted to any non-employees, whether
directors or consultants or otherwise will confer a tax benefit in contemplation
of the person becoming a stockholder pursuant to subsection 15(1) of the ITA.
The Company, however, has agreed not to grant any options under the Plan at less
than 100% of the fair market value of the Common Stock. Additionally, the
Company has agreed to limit the amount of options granted pursuant to the Plan
to Aaron Herzog and Jacob Herzog to an aggregate of 100,000 options,

                                       20
<PAGE>   25
50,000 of which options have been granted and vest over a two-year period but
are not exercisable for at least six months from November 12, 1998. The options
are exercisable at $5.00 per share.

     Options may not be transferred by an optionee other than by will or the
laws of descent and distribution, and, during the lifetime of an optionee, the
option will be exercisable only the optionee.

     Options under the Plan must be issued within ten years from the effective
date of the Plan.

     Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by the Company become available again for issuance under
the Plan.

     The Plan may be terminated or amended at any time by the Board of
Directors, except that the number of shares of Common Stock reserved for
issuance upon the exercise of options granted under the Plan may not be
increased without the consent of the stockholders of the Company.  As of May 31,
1999, the Company issued an aggregate of 70,000 options pursuant to the Plan.

DIRECTORS COMPENSATION AND COMMITTEES

     The Company has two formal committees; the Audit Committee, which consists
of Jacob Herzog, Louis Drazin and David Ben David and the Compensation
Committee, which consists of Aaron Herzog, Louis Drazin and David Ben David.
The Company does not currently have a Stock Option Committee or a Nominating
Committee.

     The functions of the Audit Committee include: (i) recommending for approval
by the Board of Directors a firm of certified public accountants whose duty it
will be to audit the financial statements of the Company for the fiscal year in
which they are appointed, and (ii) to monitor the effectiveness of the audit
effort, the Company's internal financial and accounting organization and
controls and financial reporting.  The Audit Committee will also consider
various capital and investment matters.

     The Compensation Committee is responsible for establishing compensation
arrangements for officers and directors of the Company, reviewing benefit plans
and administering each of the Company's stock option plans.

EXECUTIVE COMPENSATION POLICY

     The Company's executive compensation policy is designed to attract,
motivate, reward and retain the key executive talent necessary to achieve the
Company's business objectives and contribute to the long-term success of the
Company. In order to meet these goals, the Company's compensation policy for its
executive officers focuses primarily on determining appropriate salary levels
and providing long-term stock-based incentives. To a lesser extent, the
Company's compensation policy also contemplates performance-based cash bonuses.

     Cash Compensation. In determining its recommendations for adjustments to
officers' base salaries the Company focuses primarily on the scope of each
officer's responsibilities, each officer's

                                       21
<PAGE>   26
contributions to the Company's success in moving toward its long-term goals
during the fiscal year, the accomplishment of goals set by the officer and
approved by the Board for that year, the Company's assessment of the quality of
services rendered by the officer, comparison with compensation for officers of
comparable companies and an appraisal of the Company's financial position. In
certain situations, relating primarily to the completion of important
transactions or developments, the Company may also pay cash bonuses, the amount
of which will be determined based on the contribution of the officer and the
benefit to the Company of the transaction or development.

     Equity Compensation. The grant of stock options to executive officers
constitutes an important element of long-term compensation for the executive
officers. The grant of stock options increases management's equity ownership in
the Company with the goal of ensuring that the interests of management remain
closely aligned with those of the Company's stockholders. The Board believes
that stock options in the Company provide a direct link between executive
compensation and stockholder  value. By attaching vesting requirements, stock
options also create an incentive for executive officers to remain with the
Company for the long term. See "Stock Option Plan."


                                     22
<PAGE>   27

                          CORPORATE PERFORMANCE GRAPH

     The following graph shows a comparison of cumulative total stockholder
return from the Company's initial public offering on November 12, 1998 through
May 31, 1999 for the Company, the Nasdaq Stock Market - U.S. Index ("Nasdaq
U.S.") and the Nasdaq Non-Financial Index ("Nasdaq Non-Financial").

Graphic Omitted

<TABLE>
<CAPTION>
                                                             Nasdaq
                              Curtis      Nasdaq U.S.      Non-Financial
                              ------      -----------      -------------
<S>                           <C>         <C>              <C>

November 12, 1998             100         100              100
February 1999                 107         124              133
May 1999                      114         126              136

</TABLE>

     The graph assumes that the value of the investment in the Company's Common
Stock, the Nasdaq U.S. and the Nasdaq Non-Financial was $100 on November 12,
1998 and that all dividends were reinvested. No dividends have been declared or
paid on the Company's Common Stock.

                                       23



<PAGE>   28
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information, as of the date hereof,
and as adjusted to give effect to the Offering and the transactions contemplated
thereby, with respect to the beneficial ownership of the Common Stock by (i)
each person known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) each executive officer and director of
the Company and (iii) all executive officers and directors of the Company as a
group.

     Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares beneficially owned.  Unless
otherwise indicated, the address of each person listed below is c/o Curtis
International Ltd., 315 Attwell Drive, Etobicoke, Ontario M9W 5C1.

Name and Address of
Beneficial Owner(1)                        Number                  Percentage
------------------                      -----------                ----------
<TABLE>
<S>                                     <C>                        <C>
Aaron Herzog(2)(4)                        1,780,250                   33.1%
Jacob Herzog(3)(4)                        1,780,250                   33.1%
Louis Drazin(5)                               2,500                   *
David Ben David(6)                            2,500                   *
All Executive Officers and
Directors as a
Group (4 persons)                         3,565,500                   66.1%

</TABLE>

---------------
*less than one percent

(1)  Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities and includes Shares of Common Stock issuable
upon conversion of outstanding preferred stock, or subject to options, or
warrants exercisable or convertible within 60 days.

(2)  Consists of: (i) 1,689,208 shares of Common Stock owned directly by Aaron
Herzog; (ii) 84,792 shares of Common Stock owned by the A&E Herzog Family Trust
of which Aaron Herzog and Evelyn Fisher Herzog are the Trustees; and (iii) 6,250
shares of common stock issuable upon the exercise options granted under the
Company's Stock Option plan.

(3)  Consists of: (i) 1,663,882 shares of Common Stock owned by Jacob Herzog;
(ii) 110,118 shares of Common Stock owned by the Herzog Family Trust of which
Jacob Herzog, Beatrice Herzog and Aaron Grubner are the Trustees; and (iii)
6,250 shares of common stock issuable upon the exercise of options granted under
the Company's Stock Option plan.

(4)  Aaron and Jacob Herzog are parties to a voting trust agreement which
provides that they will vote their shares together.

(5)  Consists of 2,500 shares of common stock issuable upon the exercise of
options granted under the Company's Stock Option Plan.

(6)  Consists of 2,500 shares of common stock issuable upon the exercise of
options granted under the Company's Stock Option Plan.


                                       24
<PAGE>   29
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Aaron Herzog and Jacob Herzog, and companies controlled by them, advanced
monies to the Company, which advances are evidenced by promissory notes which
are non-interest bearing to May 31, 1998. Had such advances been valued at the
current value of cash flows at the Company's current rate of borrowing, the
advances would have been valued at $725,303 in 1998 and $832,295 in 1997. As of
June 1, 1998 the advances bear interest at the rate of 8% per annum and are
repayable in six quarterly installments in the 18 month period after the
Offering.  The repayment of such loans on a quarterly basis is contingent on the
Company reporting profitability for such quarter on a post-tax. The loans were
utilized for working capital to fund the Company's expansion.

     During Fiscal 1998 and Fiscal 1997, the Company paid an aggregate of
$354,384 and $427,925, respectively, to companies controlled by Aaron Herzog and
Jacob Herzog. These fees were in consideration solely for such companies
providing the Company with the services of Messrs. Aaron and Jacob Herzog. See
"Management#Executive Compensation."

     During 1996 and 1997, the Company occupied office and warehouse space which
was owned by Worldwide Holdings Limited ("Worldwide"), a company owned by Jacob
Herzog. The Company paid rent of $102,767 during 1996, $102,587 during 1997 and
$8,548 for the month of January 1998, to Worldwide. Additionally, the Company
guaranteed the mortgage payments due from Worldwide to a mortgage corporation in
the principal amount of $1,305,000. The guarantee was also secured by the issue
of a collateral debenture containing a fixed charge and a floating charge on the
assets of the Company. On January 30, 1998, Worldwide sold the office and
warehouse space to an independent third party. The Company paid Worldwide a
lease cancellation fee of $155,926. Thus, Worldwide no longer acts as landlord
to the Company. In addition, on May 31, 1998, Worldwide was amalgamated with and
into the Company.

     The Company has secured a line of credit facility with Canadian Imperial
Bank of Commerce bank, which bears interest at the bank's prime lending rate
plus 0.50% per annum. As security, the Company has provided a general assignment
of accounts receivable, a general security agreement and an assignment of fire
insurance on the business assets, with personal guarantees by Aaron Herzog and
Jacob Herzog and companies they control. The Company's line of credit extends to
$8,140,000.

     In July 1998, Jacob Herzog's father-in-law loaned the Company $900,000 at
7.5% per annum, which was repaid on November 24, 1998.

     In August 1998, Aaron and Jacob Herzog and their affiliates returned an
aggregate of 300,000 shares of Common Stock to the Company for cancellation, for
which they received no consideration.

     Aaron Grubner, a former director, is a partner with the law firm of
Grubner, Krauss, which serves as counsel to the Company. The Company has paid
legal fees to Grubner, Krauss for services rendered.

     All future transactions between the Company and its officers, directors or
5% stockholders, and their affiliates, will be on terms no less favorable than
could be obtained from unaffiliated third parties.


                                       25
<PAGE>   30

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)   Financial Statements.
<TABLE>
   <S>                                                                      <C>
          Report of Independent Accountants..............................   F-1
          Balance Sheets as at May 31, 1999 and 1998.....................   F-2
          Statements of Operations
            for the years ended May 31, 1999, 1998 and 1997..............   F-4
          Statements of Cash Flows
            for the years ended May 31, 1999, 1998 and 1997..............   F-5
          Satements of Stockholders' Equity
            for the years ended May 31, 1999, 1998 and 1997..............   F-7
          Notes to Financial Statements..................................   F-8
</TABLE>

(b)  Reports on Form 8-K.

     None.

(c)  Exhibits.

<TABLE>
<S>       <C>
**3.1     Bylaws of Registrant
**3.2     Articles of Amalgamation dated January 23, 1998
**3.3     Articles of Amalgamation dated May 29, 1998
**4.3     Specimen Common Stock Certificate
**10.2    1998 Stock Option Plan
**10.4    Employment Agreement with Aaron Herzog
**10.5    Employment Agreement with Jacob Herzog
**10.6    Credit Facility with Canadian Imperial Bank of Commerce
**10.7    Promissory note dated July 15, 1998
**10.8    Promissory notes dated June 1, 1998
 *27      Financial Data Schedule
</TABLE>
__________
 *Filed herewith.
**Incorporated by reference to Curtis International Ltd. Registration
  Statement No. 333-56661.

                                       26


<PAGE>   31

                                   SIGNATURES

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

                                    CURTIS INTERNATIONAL LTD.
                                    By: /s/ Aaron Herzog
                                        --------------------------------------
                                        Aaron Herzog
                                        President and Chief Executive Officer

                                    Dated: August 29, 1999

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

                                    By: /s/ Aaron Herzog
                                        -------------------------------------
                                        Aaron Herzog
                                        President and Chief Executive Officer

                                    Date: August 29, 1999

                                    By: /s/ Jacob Herzog
                                        --------------------------------------
                                        Jacob Herzog
                                        Chairman, Principal Accounting Officer
                                        Treasurer and Secretary

                                    Date: August 29, 1999

                                    By:_______________________________________
                                       Louis Drazin
                                       Director

                                    Date: August 29, 1999

                                    By: /s/ David Ben David
                                        --------------------------------------
                                        David Ben David
                                        Director

                                    Date: August 29, 1999

                                       27
<PAGE>   32

                           CURTIS INTERNATIONAL LTD.

                              FINANCIAL STATEMENTS

                          AS OF MAY 31, 1999 AND 1998

                         TOGETHER WITH AUDITORS' REPORT

<PAGE>   33

                           CURTIS INTERNATIONAL LTD.

                              FINANCIAL STATEMENTS

                          AS OF MAY 31, 1999 AND 1998

                         TOGETHER WITH AUDITORS' REPORT

                               TABLE OF CONTENTS

<TABLE>

<S>                                      <C>

Report of Independent Auditors                    F - 1

Balance Sheets                           F - 2 to F - 3

Statements of Income                              F - 4

Statements of Cash Flows                 F - 5 to F - 6

Statements of Stockholders' Equity                F - 7

Notes to Financial Statements           F - 8 to F - 18

</TABLE>

<PAGE>   34
[Schwartz Levistky Letterhead]


                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Curtis International Ltd.

We have audited the accompanying balance sheets of Curtis International Ltd.
(incorporated in Canada) as of May 31, 1999, and 1998 and the related statements
of income, cash flows and changes in stockholders' equity for each of the years
ended May 31, 1999, 1998 and 1997.  These financial statements are the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Curtis International Ltd. as of
May 31, 1999, and 1998 and the results of its operations and its cash flows for
each of the years ended May 31, 1999, 1998 and 1997, in conformity with
generally accepted accounting principles in the United States of America.



Toronto, Ontario
August 13, 1999                                            Chartered Accountants


                                     F - 1

<PAGE>   35
CURTIS INTERNATIONAL LTD.
Balance Sheets
As at May 31
(Amounts expressed in US dollars)

<TABLE>
<CAPTION>
                                                           1999             1998
                                                    $                $
<S>                                                   <C>              <C>
                                   ASSETS
CURRENT ASSETS

     Cash                                             4,613,209        3,401,181
     Accounts receivable (notes 3 & 7)                4,108,487        4,084,729
     Inventory (notes 4 & 7)                          4,997,296        5,853,118
     Prepaid expenses and sundry assets                  58,752            8,737
     Mortgage receivable (note 5)                             -           75,553
                                                    -----------      -----------
                                                     13,777,744       13,423,318

DEFERRED ISSUE COSTS                                          -           89,845

PROPERTY, PLANT AND EQUIPMENT (note 6)                  310,530          172,209

DEFERRED INCOME TAXES (note 10)                         575,672                -
                                                    -----------      -----------
                                                     14,663,946       13,685,372
                                                    ===========      ===========
</TABLE>


                                     F - 2

<PAGE>   36
CURTIS INTERNATIONAL LTD.
Balance Sheets
As at May 31
(Amounts expressed in US dollars)

<TABLE>
<CAPTION>
                                                          1999             1998

                                                    $                $

<S>                                                <C>              <C>

                               LIABILITIES
CURRENT LIABILITIES

     Bank indebtedness (note 7)                      1,685,323        8,729,357
     Accounts payable (note 8)                       1,042,253        2,259,681
     Income taxes payable                            1,110,132          534,323
     Current portion of advances from
        affiliated parties (note 9)                    656,762          483,535
                                                   -----------      -----------
                                                     4,494,470       12,006,896

ADVANCES FROM AFFILIATED PARTIES (note 9)                    -          241,768
                                                   -----------      -----------
                                                     4,494,470       12,248,664
                                                   -----------      -----------


                        SHAREHOLDERS' EQUITY

CAPITAL STOCK (note 10)                              7,342,163               80

CUMULATIVE TRANSLATION ADJUSTMENT                      (47,062)         (93,990)

RETAINED EARNINGS                                    2,874,375        1,530,618
                                                   -----------      -----------
                                                    10,169,476        1,436,708
                                                   -----------      -----------
                                                    14,663,946       13,685,372
                                                   ===========      ===========

</TABLE>

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

                                     F - 3

<PAGE>   37
CURTIS INTERNATIONAL LTD.
Statements of Income
For the years ended May 31
(Amounts expressed in US dollars)

<TABLE>
<CAPTION>
                                       1999                1998             1997

                                 $                   $                $

<S>                             <C>                  <C>                  <C>
SALES (note 17)                  39,309,062          27,471,613       14,914,142

     Cost of sales               32,042,499          22,349,967       12,173,748
                                -----------          ----------      -----------
GROSS PROFIT                      7,266,563           5,121,646        2,740,394
                                -----------          ----------      -----------

EXPENSES

     Administrative               1,644,825           1,758,313        1,730,592
     Selling                      2,288,953           1,265,906          654,978
     Financial                      880,263             474,154          231,445
     Lease cancellation fee               -             155,926                -
                                -----------          ----------      -----------
                                  4,814,041           3,654,299        2,617,015
                                -----------          ----------      -----------

INCOME BEFORE INCOME TAXES        2,452,522           1,467,347          123,379

     Income taxes (note 13)       1,108,765             602,442           30,378
                                -----------          ----------      -----------
NET INCOME                        1,343,757             864,905           93,001
                                ===========          ==========      ===========

NET INCOME PER WEIGHTED
     AVERAGE SHARE (note 12)           0.29                0.23             0.03
                                -----------          ----------      -----------

WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES OUTSTANDING
     (note 10)                    4,591,692           3,700,000        3,700,000
                                ===========          ==========      ===========

</TABLE>

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

                                     F - 4

<PAGE>   38
CURTIS INTERNATIONAL LTD.
Statements of Cash Flows
For the years ended May 31
(Amounts expressed in US dollars)

<TABLE>
<CAPTION>
                                                                         1999              1998            1997
                                                                     $                $                $

<S>                                                                  <C>              <C>              <C>
Cash flows from operating activities:

     Net income                                                     1,343,757           864,905           93,001
          Adjustments to reconcile net income to net cash
            provided by (used in) operating activities:

          Amortization                                                 51,586            17,172           17,346
          Decrease (increase) in accounts receivable                  (15,740)       (2,446,164)         113,840
          Decrease (increase) in inventory                            566,982        (4,734,388)          10,675
          Decrease (increase) in income taxes recoverable                  --            11,419           (7,113)
          Decrease (increase) in prepaid expenses and
            sundry assets                                             (48,942)             (524)          (2,182)
          Increase (decrease) in accounts payable and
           accrued expenses                                        (1,163,492)          749,617          826,231
          Increase (decrease) in income taxes payable                 601,476           551,772               --
          Increase (decrease) in deferred income taxes               (562,180)               --               --
                                                                  ------------       ----------        ---------
     Net cash generated by operating activities                       773,447        (4,986,191)       1,051,798
                                                                  ------------       -----------       ---------

     Cash flows from investing activities:

          Purchases of property, plant and equipment                 (188,612)          (35,730)              --
          Payment of mortgage receivable                              (72,929)           (3,389)             872
                                                                  ------------       -----------       ---------
     Net cash used in investing activities                           (261,541)          (39,119)             872
                                                                  ------------       -----------       --------
-
</TABLE>

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

                                     F - 5

<PAGE>   39

CURTIS INTERNATIONAL LTD.
Statements of Cash Flows
For the years ended May 31
(Amounts expressed in US dollars)

<TABLE>
<CAPTION>
                                                                         1999             1998             1997

                                                                   $                 $                 $

<S>                                                                <C>               <C>              <C>

Cash flows from financing activity:

     Increase (decrease) in bank indebtedness                      (6,780,298)       7,504,507         (463,749)
     Increase (decrease) in advances from affiliated
       parties                                                        (58,781)         (92,517)          16,271
     Deferred issuance costs                                           86,724          (92,779)              --
     Redemption of Class B share                                           --               (1)              --
     Issuance of common stock, net                                  7,342,083               --               --
                                                                    ---------        ---------        ---------
                                                                      589,728        7,319,210         (447,478)
                                                                    ---------        ---------        ---------
Effect of foreign currency exchange rate changes                      110,394         (144,261)           1,260
                                                                    ---------        ---------        ---------
Net increase (decrease) in cash and cash equivalents                1,212,028        2,149,639          606,452

Cash and cash equivalents
     --   Beginning of year                                         3,401,181        1,251,542          645,090
                                                                    ---------        ---------        ---------
     --   End of year                                               4,613,209        3,401,181        1,251,542
                                                                    =========        =========        =========
Interest paid, net                                                    255,357          408,649          142,792
                                                                    =========        =========        =========
Income taxes paid                                                     490,765           50,670           44,221
                                                                    =========        =========        =========

</TABLE>

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

                                     F - 6

<PAGE>   40
CURTIS INTERNATIONAL LTD.
Statements of Stockholders' Equity
For the years ended May 31
(Amounts expressed in US dollars)

<TABLE>
<CAPTION>
                                  Common
                                   Stock                            Cumulative
                               Number of                Retained   Translation
                                  Shares     Amounts    Earnings   Adjustments
                               ---------   ---------   ---------   -----------

                                           $           $           $
<S>                            <C>         <C>         <C>         <C>
Balance as of May 31, 1996     3,700,000          80     572,712       (29,415)

Foreign currency translation           -           -           -        14,874

Net income for the year                -           -      93,001             -
                               ---------   ---------   ---------   -----------

Balance as of May 31, 1997     3,700,000          80     665,713       (14,541)

Foreign currency translation           -           -           -       (79,449)

Net income for the year                -           -     864,905             -
                               ---------   ---------   ---------   -----------

Balance as of May 31, 1998     3,700,000          80   1,530,618       (93,990)

Foreign currency translation           -           -           -        46,928

Issuance of capital stock      1,673,145   7,342,083           -             -

Net income for the year                -           -   1,343,757             -
                               ---------   ---------   ---------   -----------

Balance as of May 31, 1999     5,373,145   7,342,163   2,874,375       (47,062)
                               =========   =========   =========   ===========

</TABLE>

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

                                     F - 7

<PAGE>   41
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)

1.   BASIS OF PRESENTATION

     On January 26, 1998,  Curtis International Ltd. amalgamated with Unique
     Investments Ltd. and AEG Trading Ltd. to form Curtis International Ltd. On
     May 31, 1998, the company amalgamated with Worldwide Holdings Ltd. to form
     Curtis International Ltd. At the time of the amalgamations the only assets
     of the holding companies were shares of Curtis International Ltd. These
     financial statements reflect the operations of Curtis International Ltd.
     for each of the years ended May 31, 1999, 1998 and 1997.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     i)    Principal Activities

           The company was incorporated in Canada on December 12, 1990. The
           company is principally engaged in the distribution and sales of
           electronics, audio visual products and computer accessories in Canada
           and the United States of America.

     ii)   Cash, Cash Equivalents and Bank indebtedness

           Cash, cash equivalents and bank indebtedness includes cash in bank,
           amounts due to banks, and any other highly liquid investments
           purchased with a maturity of three months or less. The carrying
           amount approximates fair value because of the short maturity of those
           instruments.

     iii)  Other Financial Instruments

           The carrying amount of the company's other financial instruments
           approximate fair value because of the short maturity of these
           instruments or the current nature of interest rates borne by these
           instruments.

     iv)   Inventory

           Inventory is valued at the lower of cost and net realizable value.
           Cost is determined on the average cost basis.

     v)    Property, Plant and Equipment

           Property, plant and equipment are recorded at cost and are amortized
           on the declining balance basis over their estimated useful lives.

           Leasehold improvements are amortized on the straight-line basis over
           the term of the lease.

                                     F - 8

<PAGE>   42
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

     vi)   Sales

           Sales represent the invoiced value of goods supplied to customers.
           Sales are recognized upon delivery of goods and passage of title to
           customers.

     vii)  Income taxes

           The company accounts for income tax under the provisions of Statement
           of Financial Accounting Standards No. 109, which requires recognition
           of deferred tax assets and liabilities for the expected future tax
           consequences of events that have been included in the financial
           statements or tax returns. Deferred income taxes are provided using
           the liability method. Under the liability method, deferred income
           taxes are recognized for all significant temporary differences
           between the tax and financial statement bases of assets and
           liabilities.

     viii) Accounting Changes

           On January 1, 1997, the company adopted the provision  of SFAS No.
           121, Accounting for the Impairment of Long-Lived Assets and for
           Long-Lived Assets to be Disposed Of. SFAS No. 121 requires that
           long-lived assets to be held and used by an entity be reviewed for
           impairment whenever events or changes in circumstances indicate that
           the carrying amount of an asset may not be recoverable. SFAS No. 121
           is effective for financial statements for fiscal years beginning
           after December 15, 1995. Adoption of SFAS No. 121 did not have  a
           material impact on the company's result of operations.

           In December 1995, SFAS No. 123, Accounting for Stock-Based
           Compensation, was issued. It introduced the use of a fair
           value-based method of accounting f0r stock-based compensation. It
           encourages, but does not require, companies to recognize compensation
           expense for stock-based compensation to employees based on the new
           fair value accounting rules. Companies that choose not to adopt the
           new rules will continue to apply the existing accounting rules
           contained in Accounting Principles Board Opinion No. 25, Accounting
           for Stock Issued to Employees. However, SFAS No. 123 requires
           companies that choose not to adopt the new fair value accounting
           rules to disclose pro forma net income and earnings per share under
           the new method. SFAS No. 123 is effective for financial statements
           for fiscal years beginning after December 15, 1995. The company has
           adopted the disclosure provisions of SFAS No. 123.

                                     F - 9

<PAGE>   43
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   (cont'd)

     ix)  Net Income and Fully Diluted Net Income Per Weighted Average Common
          Stock

          Net income per common stock is computed by dividing net income for the
          year by the weighted average number of common stock outstanding during
          the year.

          Fully diluted net income per common stock is computed by dividing net
          income for the year by the weighted average number of common stock
          outstanding during the year, assuming that all dilutive stock options
          granted as described in note 10 were exercised. Stock warrants as
          described in note 10 have not been included in the fully diluted net
          income per common stock calculations as their inclusion would have
          been anti-dilutive.

     x)   Foreign Currency Translation

          The translation of the financial statements from Canadian dollars into
          United States dollars is performed for the convenience of the reader.
          Balance sheet accounts are translated using closing exchange rates in
          effect at the balance sheet date and income and expense accounts are
          translated using an average exchange rate prevailing during each
          reporting period. No representation is made that the Canadian dollar
          amounts could have been, or could be, converted into United States
          dollars at the rates on the respective dates and or at any other
          certain rates. Adjustments resulting from the translation are included
          in the cumulative translation adjustments in stockholders' equity.

     xi)  Use of Estimates

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

3.   ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                                            1999           1998

                                                       $              $
<S>                                                    <C>            <C>
     Accounts receivable                               4,981,727      4,514,714
     Less: Allowance for doubtful accounts               873,240        429,985
                                                       ---------      ---------
     Accounts receivable, net                          4,108,487      4,084,729
                                                       =========      =========
</TABLE>

                                     F - 10


<PAGE>   44
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)

4.   INVENTORY

     Inventory is comprised entirely of finished goods.

5.   MORTGAGE RECEIVABLE

     The company sold land and building owned by it on February 10, 1994 and
     took back a mortgage due February 10, 1999. The mortgage was repaid during
     the year.

6.   PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                              1999                        1998
                             --------------------------------------      -------
                                           Accumulated
                              Cost        Amortization        Net          Net
                             -------      ------------      -------      -------
                               $               $               $            $
<S>                          <C>          <C>               <C>          <C>
     Land                     29,574                         29,574       29,920
     Condominium             118,297          33,510         84,787       90,293
     Furniture and
       equipment             154,744          53,608        101,136       15,838
     Automobile               33,970          31,592          2,378        3,437
     Computer equipment       97,127          40,146         56,981       31,778
     Leasehold
       improvements           53,511          17,837         35,674          943
                             -------      ------------      -------      -------
                             487,223           176,693      310,530      172,209
                             =======      ============      =======      =======

</TABLE>

     Amortization for the year amounted to $51,586; ($17,172 in 1998 and 7,346
     in 1997).

7.   BANK INDEBTEDNESS

     The bank indebtedness bears interest at the bank's prime lending rate plus
     0.50% per annum. As security, the company has provided a general assignment
     of accounts receivable, a general security agreement and an assignment of
     fire insurance on the business assets, guarantees by the directors and
     affiliated companies, and assignment of life insurance totalling
     $1,325,000. The company's line of credit extends to $8,140,000 and is
     limited based on a formula which relates to receivables and inventory held
     by the company as at May 31, 1999. The company met all covenants imposed by
     the bank.

                                     F - 11

<PAGE>   45
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)

8.   ACCOUNTS PAYABLE

<TABLE>
<CAPTION>
                                            1999           1998

                                       $              $
                 <S>                   <C>            <C>
     Trade payables                      318,069        322,327
     Accrued expenses                    724,184      1,937,354
                                       ---------      ---------
                                       1,042,253      2,259,681
                                       =========      =========

</TABLE>

9.   ADVANCES FROM AFFILIATED PARTIES

     The advances from affiliated parties bear interest at 8% per annum
     commencing June 1, 1998. The principal sums shall be repaid in  equal
     quarter yearly installments and the last payment is due and payable on
     February 28, 2000. Had the advances been valued at the current value of
     cash flows at the companies current rate of borrowing the advances would
     have been valued at $725,303 in 1998 and $832,295 in 1997. Interest of
     $54,448 would have been imputed for 1998 and interest of $49,823 would have
     been imputed for 1997.

10.  CAPITAL STOCK

     a)   Authorized

      1,000,000   Preference shares
     15,000,000   Common shares

     Issued

<TABLE>
<CAPTION>
                                                             1999      1998

                                                        $              $
     <S>         <C>                                    <C>              <C>
     5,373,145   Common shares (3,700,000 in 1998)      7,342,163        80
                                                        =========     =====

</TABLE>

     Curtis International Ltd. amalgamated with Unique Investments Ltd. and AEG
     Trading Ltd. on January 26, 1998 and with Worldwide Holdings Limited on May
     31, 1998. There was no substantive effect to the amalgamations which
     reorganized companies under common control. The outstanding shares of
     4,000,000 issued on the amalgamations are treated as stock splits and
     subsequent to May 31, 1998, the company redeemed 300,000 common shares at
     no consideration. As a result 3,700,000 common shares were outstanding and
     therefore the shares have been retroactively restated as of May 31, 1996.

                                     F - 12

<PAGE>   46

                           CURTIS INTERNATIONAL LTD.
                         NOTES TO FINANCIAL STATEMENTS
                          MAY 31, 1999, 1998 AND 1997
                       (AMOUNTS EXPRESSED IN US DOLLARS)

10.  CAPITAL STOCK   (cont'd)

     b)   During 1998, the company issued 1,673,145 common shares and 165,000
          warrants as follows:

<TABLE>
          <S>                                                         <C>
          Proceeds received from issuance                            $8,365,725
          Issue costs (net of deferred income taxes of $575,672)      1,023,642
                                                                     ----------
          Net proceeds                                               $7,342,083
                                                                     ==========
</TABLE>

          Net proceeds include the non-cash items of deferred issue costs and
          deferred income tax recoverable.

          As at May 31, 1999, the company had 165,000 warrants outstanding to
          purchase 165,000 shares of the common stock at $8.25 per share.  The
          warrants expire in 2003.

     c)   In 1998, the board of directors and stockholders adopted a Stock
          Option Plan, pursuant to which 400,000 shares of Common Stock are
          provided for issuance.  The Plan is administered by the compensation
          committee or the board of directors.

          The Plan is effective for a period of ten years, expiring in 2008.
          Options may be granted to officers, directors, consultants, key
          employees, advisors and similar parties who provide their skills and
          expertise to the Company.  Options granted under this Plan may be
          exercisable for up to ten years, require a minimum two year vesting
          period, and shall be at an exercise price as determined by the board.

          The exercise price of an option may not be less than the fair market
          value per share of Common Stock on the date the option is granted in
          order to receive certain tax benefits under the Income Tax Act of
          Canada (the "ITA").  The exercise price of all future options will be
          at least 85% of the fair market value of the Common Stock on the date
          of granting of the options.

          Any unexercised options that expire or that terminate upon an
          employee's ceasing to be employed by the Company become available
          again for issuance under the Plan.

          The Plan may be terminated or amended at any time by the board of
          directors, except that the number of shares of Common Stock reserved
          for issuance upon the exercise of options granted under the Plan may
          not be increased without the consent of the stockholders of the
          Company.

          The Board has granted 70,000 Options to date under the Plan to 4
          persons, including officers, directors and key employees.  The options
          are exercisable at $5.00 to 5.50 per share.

                                     F - 13

<PAGE>   47

CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999, 1998 AND 1997
(AMOUNTS EXPRESSED IN US DOLLARS)


11.  COMPREHENSIVE INCOME

     The company has adopted Statement of Financial Accounting Standards No. 130
     "Reporting Comprehensive Income" as of June 1, 1998 which requires new
     standards for reporting and display of comprehensive income and its
     components in the financial statements.  However, it does not affect net
     income or total stockholders' equity.  The components of comprehensive
     income are as follows:
<TABLE>
<CAPTION>
                                                      1999       1998       1997
                                                 ---------    -------    -------
<S>                                                 <C>         <C>      <C>
                                                 $            $          $
Net income                                       1,343,757    864,905     93,001
Other comprehensive income (loss):
  Foreign currency translation adjustments          46,928    (79,449)    14,874
                                                 ---------    -------    -------
Comprehensive income                             1,390,685    785,456    107,875
                                                 =========    =======    =======
</TABLE>

The components of accumulated other comprehensive income (loss) are as follows:
<TABLE>
<S>                                                                     <C>
Accumulated other comprehensive loss, May 31, 1996                     $(29,415)

Foreign currency translation adjustments for the year ended
  May 31, 1997                                                           14,874
                                                                       ---------
Accumulated other comprehensive loss, May 31, 1997                      (14,541)
Foreign currency translation adjustments for the year ended
  May 31, 1998                                                          (79,449)

Accumulated other comprehensive loss, May 31, 1998                      (93,990)

Foreign currency translation adjustments for the year ended
  May 31, 1999                                                           46,928
                                                                       --------
Accumulated other comprehensive loss, May 31, 1999                     $(47,062)
                                                                       ========
</TABLE>

     The foreign currency translation adjustments are not currently adjusted for
     income taxes since the company is situated in Canada and the adjustments
     relate to the translation of the financial statements from Canadian dollars
     into United States dollars which is done only for the convenience of the
     reader as disclosed in note 2(x).

                                     F - 14

<PAGE>   48
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)

12.  EARNINGS PER COMMON SHARE

     The company has adopted Statement No. 128, Earnings Per Share, which
     requires presentation, in the consolidated statement of income, of both
     basic and diluted earnings per share.

     The stock options granted and outstanding warrants were not included in a
     computation of earnings per common stock assuming dilution because the
     exercise prices were greater than the average market price of the common
     stock.

13.  INCOME TAXES

<TABLE>
<CAPTION>
                                                     1999         1998        1997
                                                     $            $           $
     <S>                                             <C>           <C>         <C>

     a)   Current                                     1,108,765     602,442     30,378
     b)   Current income taxes consist of:            =========     =======     ======

          Amount calculated at basic Federal and
             Provincial rates                         1,079,110     611,490     28,179
             Permanent and other differences             29,655          --      2,199
             Timing differences                              --      (9,048         --
                                                      ---------     -------     ------
                                                      1,108,765     602,442     30,378
                                                      =========     =======     ======

</TABLE>

                                     F - 15

<PAGE>   49
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)

14.  LEASE COMMITMENT

     Minimum annual payments under the company's operating leases for premises,
     exclusive of certain operating costs for which the company is responsible
     is $151,630.  The lease expires May 31, 2002.

15.  TRANSACTIONS WITH AFFILIATED COMPANIES

<TABLE>
<CAPTION>
                                               1999         1998         1997

                                             $           $            $
  <S>                                        <C>         <C>          <C>
     Management fees                              -      354,384      427,933
     Rent expense                                 -       66,154      102,587
     Occupancy costs                              -       51,114       71,132
     Interest paid to affiliated companies   56,010            -            -

</TABLE>

16.  CONTINGENT LIABILITIES

     The company's products are purchased overseas.  The payment arrangement is
     done through a letter of credit.  Once the product leaves the country of
     origin, the liability is recognized by the Company and results in an
     accepted letter of credit.  The company was contingently liable to the bank
     for unaccepted letters of credit of approximately $2,540,000 as at May 31,
     1999.

                                     F - 16

<PAGE>   50
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)

17.  SEGMENTED INFORMATION

     a)   Sales to Major Customers

<TABLE>
<CAPTION>
                                                                  1999             1998             1997
                                                            $                $                $
          <S>                                               <C>              <C>              <C>
          Combined sales of top five customers              27,384,141       17,350,197        8,532,338
                                                            ===========      ===========      ===========

          Percentage of total sales                                 70%              63%              57%

          Accounts receivable due from major customers       3,016,080         2,814,165        1,448,283
          Percentage of total accounts receivable                   73%              69%              80%

</TABLE>

          Ongoing credit evaluations of each customer's financial condition are
          performed and, generally, no collateral is required.  The company
          maintains reserves for potential credit losses and such losses, in the
          aggregate, have not exceeded management's expectations.

     b)   Sales by Geographic Area

<TABLE>
<CAPTION>
                                                               1999             1998             1997
                                                                $                $                $
          <S>                                               <C>              <C>              <C>
          Canada                                            19,260,580      15,754,678      12,697,084
          United States of America                          19,762,638      11,716,935       2,217,058
                                                            ----------      ----------      ----------
                                                            39,023,218      27,471,613      14,914,142
                                                            ==========      ==========      ==========

</TABLE>

                                     F - 17


<PAGE>   51
CURTIS INTERNATIONAL LTD.
Notes to Financial Statements
May 31, 1999, 1998 and 1997
(Amounts expressed in US dollars)

17.   SEGMENTED INFORMATION   (cont'd)

      c)  Net Income by Geographic Area

          The company's accounting records do not readily provide information on
          net income by geographic area.  Management is of the opinion that the
          proportion of net income based principally on sales, presented below,
          would fairly present the results of operations by geographic area.

<TABLE>
<CAPTION>
                                            1999           1998           1997
                                       $              $             $
        <S>                            <C>              <C>           <C>
        Canada                           663,234        495,782        80,860
        United States of America         680,523        369,123        12,141
                                       ---------        -------        ------
                                       1,343,757        864,905        93,001
                                       =========        =======        ======
</TABLE>

     d)   Identifiable Assets by Geographic Area

          All identifiable assets were located in Canada for 1999, 1998 and
          1997.

     e)   Purchases From Major Suppliers

<TABLE>
<CAPTION>
                                                   1999            1998            1997
                                             $                $               $
<S>                                          <C>              <C>             <C>
Purchases from major suppliers               13,740,209       3,754,794       2,093,884
Percentage of total purchases                        44%             17%             17%

Accounts payable due to major suppliers         292,118         368,141         288,629
Percentage of total accounts payable                 28%             16%             18%

</TABLE>

18.  UNCERTAINTY DUE TO THE YEAR 2000 ISSUE

     The Year 2000 Issue arises because many computerized systems use two digits
     rather than four to identify a year.  Date-sensitive systems may recognize
     the year 2000 as 1900 or some other date, resulting in errors when
     information using year 2000 dates is processed.  In addition, similar
     problems may arise in some systems which use certain dates in 1999 to
     represent something other than a date.  The effects of the Year 2000 Issue
     may be experienced before, on, or after January 1, 2000, and, if not
     addressed, the impact on operations and financial reporting may range from
     minor errors to significant systems failure which could affect a company's
     ability to conduct normal business operations.  It is not possible to be
     certain that all aspects of the Year 2000 Issue affecting the company,
     including those related to the efforts of customers, suppliers, or other
     third parties, will be fully resolved.

                                     F - 18
<PAGE>   52
                                EXHIBIT INDEX


Exhibit No.           Description
-----------           -------------------------------------------------------
**3.1                 Bylaws of Registrant
**3.2                 Articles of Amalgamation dated January 23, 1998
**3.3                 Articles of Amalgamation dated May 29, 1998
**4.3                 Specimen Common Stock Certificate
**10.2                1998 Stock Option Plan
**10.4                Employment Agreement with Aaron Herzog
**10.5                Employment Agreement with Jacob Herzog
**10.6                Credit Facility with Canadian Imperial Bank of Commerce
**10.7                Promissory note dated July 15, 1998
**10.8                Promissory notes dated June 1, 1998
 *27                  Financial Data Schedule
__________
 *Filed herewith.
**Incorporated by reference to Curtis International Ltd. Registration
  Statement No. 333-56661.