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, 2000

                                       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)


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)

      (416) 674-2123 (Registrant's telephone number, including area code)
      --------------

Securities registered pursuant to Section 12 (b) of the Exchange Act

TITLE OF EACH CLASS                         NAME OF EXCHANGE ON WHICH REGISTERED
--------------------------------------------------------------------------------
None                                                                       None

          Securities registered pursuant to Section 12 (g) of the Act:
                           Common Stock, No Par Value
                           --------------------------
                                (Title of Class)

           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 |_|


<PAGE>


           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, 2000 was $1,879,663.

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, 2000 was 5,373,145 shares.

           Documents incorporated by reference: None


<PAGE>


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

                                TABLE OF CONTENTS


                                     PART I

Item 1.    Business                                              1
Item 2.    Properties                                           10
Item 3.    Legal Proceedings                                    10
Item 4.    Submission of Matters to Vote of Security Holders    10

                                     PART II

Item 5.    Market for Registrant's Common Equity and Related
                Stockholder Matter                              11
Item 6.    Selected Financial Data                              13
Item 7.    Management's Discussion and Analysis of Financial
              Condition and Results of Operations               14
Item 7A.   Quantitative and Qualitative Disclosures
              About Market Risk                                 17
Item 8.    Financial Statements and Supplementary Data          17
Item 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial
            Disclosures                                         17

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant   18
Item 11.   Executive Compensation                               20
Item 12.   Security Ownership of Certain Beneficial
               Owners and Management                            26
Item 13.   Certain Relationships and Related Transactions       27

                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules and
               Reports on Form 8-K                              28

Signatures                                                      29


<PAGE>


                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>





                                     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 Kerr 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 $3,303,144, or 8.4% to $42,612,206 from $39,309,062 in Fiscal
1999 and $27,471,613 in Fiscal 1998. The Company 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 $28,487,773
in Fiscal 2000 as compared to $19,766,469 in Fiscal 1999 and $11,716,935 in
Fiscal 1998, an increase of approximately 243% from Fiscal 1998 to Fiscal 2000.
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.

                                       4
<PAGE>

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.

     -   EXPAND CUSTOMER BASE. The Company believes that it has significant
         opportunities to expand its customer base both in Canada and the 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
         consumer 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.



                                       5
<PAGE>


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:


TVS                                       HOME AND PORTABLE AUDIO PRODUCTS
- Portable black and white TVs            - Home audio systems with single CD
- Portable combination TV/Audio products    Player
                                          - Home audio systems with CD changer
                                            systems

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


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.

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.


6



<PAGE>

     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 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.

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 2000 and Fiscal 1999, the Company's three largest independent
manufacturers, which are located in China, supplied approximately 37% and 44% 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.


                                       7



<PAGE>

     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 25, 2000, the Company had a backlog of
approximately $8,160,070. 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 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.



                                       8



<PAGE>

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, 2000, the Company employs 60 persons, which include three
senior executives, eight administrative personnel, and 48 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.
















                                       9



<PAGE>


     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 4600 Witmer Industrial Estates, Niagara Falls, 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.








                                       10
<PAGE>


                                     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.

                                                           COMMON STOCK
           FISCAL 2001                                   HIGH         LOW
           -----------                                   ----         ---
           First Quarter(through August 26, 2000)        1.31         0.91

           FISCAL 2000                                   HIGH         LOW
           -----------                                   ----         ---
           First Quarter                                 7.125        2.94
           Second Quarter                                2.69         1.53
           Third Quarter                                 3.22         1.56
           Fourth Quarter                                2.31         1.03

           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


           On August 25, 2000, the last sales price for the Common Stock as
reported on the Nasdaq SmallCap was $1.03.

           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.


           EXPENSE                                              AMOUNT
           -------                                              ------

           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

           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.





                                       11





<PAGE>

         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.

         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.

                            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, 2000, 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.


                                       12



<PAGE>


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 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
2000, 1999 and 1998 have been derived from the audited financial statements of
the Company (percent are percent of Net Sales)




<TABLE>
<CAPTION>

INCOME STATEMENT DATA:
-------------------------------------------------------------------------------------------------------------
                                           YEAR ENDED MAY 31,
-------------------------------------------------------------------------------------------------------------
                                   2000           %        1999            %           1998               %
                                   ----           -        ----            -           ----               -
<S>                             <C>             <C>     <C>               <C>      <C>                 <C>
Net Sales                         $42,612,206     100%    $39,309,062       100%     $27,471,613         100%
-------------------------------------------------------------------------------------------------------------
Gross Margin....................    7,670,593      18       7,266,563        18        5,121,646          19
 Other Expenses.................    4,878,426      11       4,814,041        12        3,654,299          13

Income from continuing operations
                                    2,792,167       6       2,452,522         6        1,467,347           5
-------------------------------------------------------------------------------------------------------------
Net income                         $1,649,105       4      $1,343,757         3         $864,905           3
-------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share                $0.31                   $0.29                      $0.23
-------------------------------------------------------------------------------------------------------------
</TABLE>

BALANCE SHEET DATA:


                                                             MAY 31,
                                                             -------
                                                     2000              1999
                                                     ----              ----
                                                 $14,079,208       $14,663,946
Total assets...............................
                                                   2,512,157         4,494,470
Total liabilities..........................
                                                  10,990,943         9,283,274
Working capital............................
                                                 $11,567,051       $10,169,476
Stockholders' equity.......................






                                       13

<PAGE>


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, 2000 ("FISCAL 2000") COMPARED TO FISCAL YEAR ENDED MAY
31, 1999 ("FISCAL 1999").

           Sales for Fiscal 2000 were $42,612,206 a 8.4% increase over sales of
$39,309,062 for Fiscal 1999. This increase was primarily due to an increase of
39.7% in sales in the United States partially offset by a decrease of 30.5% in
sales in Canada. The decrease in Canada was specifically due to the withdrawal
from the electronics category of one the Company's largest customers. The
Company's strategy is to continue to increase sales in the United States while
maximizing sales in Canada.

           As a result of the 8.4% increase in sales, cost of sales for Fiscal
2000 were $34,941,613 a 9.0% increase over cost of sales of $32,042,499 for
Fiscal 1999.

           Gross profit margin for Fiscal 2000 was 18.0% of sales as compared to
18.5% in Fiscal 1999. Lower prices charged to customers who purchased items in
large quantities or direct to customer shipments resulted in slightly lower per
item margin. The Company expects that its increased buying power and broadened




                                       14


<PAGE>


customer base will lead to a slight increase in gross profit in the future,
although there can be no assurance thereof. Selling expenses decreased by
$267,061 in Fiscal 2000 over Fiscal 1999 as a result of reduced travel and
promotion costs. 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 decreased from
5.8% to 4.7% of sales as a result of fixed costs being amortized over a greater
sales base. Administrative expenses of $2,256,847 in Fiscal 2000 were $612,022
higher than in Fiscal 1999. This increase was primarily due to higher warehouse
payroll costs associated with increased sales volume, and increased depreciation
related to the installation of a new management information system. The Company
believes that it can continue to increase sales with only a minor increase in
administrative expenses. Financial expenses decreased from $880,263 to $599,687
a 31.9% decrease which was the result of lower interest costs from $261,490, to
a net revenue of $9,063 as a result of reduced borrowing, due to proceeds from
the initial public offering. As a result of the Company's higher sales volume
(8.4% increase), and increased amortization, total operating expenses increased
from $4,814,041 in Fiscal 1999 to $4,878,426 (1.3%) in Fiscal 2000. The Company
expects 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 $339,645 to
$2,792,167 (13.8%) for Fiscal 2000 versus Fiscal 1999. As a percentage of sales,
EBIT for Fiscal 2000 was 6.6% compared to 6.2% in Fiscal 1999. As a result of
the Company's increased income, the provision for income taxes increased from
$1,108,765 to $1,143,062 in Fiscal 2000. Net income increased from $1,343,757 in
Fiscal 1999 to $1,649,105 in Fiscal 2000. This increase in income is directly a
result of continued sales growth with stable selling costs. Management believes,
although there can be no assurance, that the Company can continue this trend in
the future.

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 expects that its
increased buying power and broadened customer base will lead to a slight
increase in gross profit in the future 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



                                       15



<PAGE>

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.

LIQUIDITY AND CAPITAL RESOURCES

           Historically, the Company has funded its operations from cash flow,
its credit line with HSBC Bank of Canada ("HSBC"), which extends to $13,282,000,
and advances from affiliates. As of May 31, 2000 the Company had net deposits of
$1,393,547. The $1,393,547 represents short-term deposits maintained at the
bank. The company was not using any of its line of credit as of May 31, 2000.

           The Company had an unfavorable change in the use of cash for
operations of $3,219,662 for Fiscal 2000. The principle use of cash was an
increase inventory. This was partially offset by a increase in accounts payable
and accrued liabilities.

           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. 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.



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 has upgraded its management information systems and is
Year 2000 compliant. 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.



                                       16

<PAGE>


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.

                                                                    PAGE
Financial Statements:                                              NUMBER
                                                                   ------

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

Balance Sheets as at May 31, 2000 and 1998 .........................F - 2

Statements of Operations for the
           years ended May 31, 2000, 1999 and 1998..................F - 4

Statements of Cash Flows
     for the years ended May 31, 2000, 1999 and 1998................F - 5

Statements of Stockholders' Equity
     for the years ended May 31, 2000, 1999 and 1998................F - 7

Notes to Financial Statements.......................................F - 8


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

           Not applicable.








                                       17
<PAGE>




                                    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:

        NAME         AGE               POSITION
        ----         ---               --------
Aaron Herzog         39       President, Chief Executive Officer and Director
Jacob Herzog         48       Chairman, Treasurer, Secretary and Director
Louis Drazin         64       Director
David Ben David      38       Director

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


                                       19


<PAGE>


           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, 2000.


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, 2000.










                                       19



<PAGE>


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.


<TABLE>
<CAPTION>

                                          SUMMARY COMPENSATION TABLE

                                   ANNUAL COMPENSATION                 LONG TERM COMPENSATION
                                   -------------------                 ----------------------
                                                                                           SECURITIES
NAME AND                                                                                   UNDERLYING
PRINCIPAL POSITION                                                      OTHER ANNUAL        OPTIONS/      ALL OTHER
                                 YEAR     SALARY        BONUS          COMPENSATION(1)       SARS(#)     COMPENSATION
                                 ----     ------        -----          ---------------       -------     ------------
<S>                             <C>      <C>           <C>             <C>                  <C>     <C>
Aaron Herzog(2)                  2000     $175,000      $ 25,000         $    -0-            -0-      $   12,000
CEO and Director                 1999      175,000      $ 25,000              -0-            -0-          12,000
                                 1998       28,000          -0-            177,192           -0-            -0-
Jacob Herzog(3)                  2000     $175,000       $25,000          $   -0-            -0-      $   12,000
Chairman, Treasurer, Secretary   1999      175,000        25,000              -0-            -0-          12,000
and Director                     1998       34,000          -0-            177,192           -0-            -0-


<FN>
(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 1998, 1999 and 2000 in her capacity as an
      administrative assistant at the Company. "All Other Compensation" for 2000
      and 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 1998, 1999 and 2000 in her capacity as an
      administrative assistant at the Company. "All Other Compensation" for 2000
      and 1999 includes a car allowance of $1,000 per month.
</FN>
</TABLE>










                                       20



<PAGE>


                        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, 2000:

<TABLE>
<CAPTION>

                                                                                                    POTENTIAL REALIZABLE
                                                                                                    VALUE AT ASSUMED
                                                                                                    ANNUAL RATES OF STOCK
                                                                                                    PRICE APPRECIATION
                                                                                                    FOR OPTION TERM(1)
                                                                                                    ------------------
                                                   PERCENTAGE OF
                                                     TOTAL OF
                                   NUMBER OF      OPTIONS GRANTED
                                    SHARES         TO EMPLOYEES
                                  UNDERLYING         DURING           EXERCISE
                                   OPTIONS           FISCAL           PRICE PER        EXPIRATION
             NAME                  GRANTED            YEAR             SHARE             DATE              5%               10%
             ----                  -------            ----             -----             ----              --               ---
<S>                              <C>                <C>               <C>             <C>            <C>               <C>
Aaron Herzog                       25,000             29.4%             $1.75           11/1/08         $10,625           $59,400

Jacob Herzog                       25,000             29.4%             $1.75           11/1/08         $10,625           $59,400

<FN>
------------
(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.
</FN>
</TABLE>


                          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, 2000. 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, 2000.

<TABLE>
<CAPTION>

                   NUMBER OF SHARES SUBJECT TO UNEXERCISED OPTIONS AT    VALUE OF IN-THE-MONEY OPTIONS AT FISCAL YEAR
                                     FISCAL YEAR-END                                        END(1)

NAME                   EXERCISABLE                  UNEXERCISABLE             EXERCISABLE             UNEXERCISABLE
----                   -----------                  -------------             -----------             -------------
<S>                       <C>                          <C>                      <C>                  <C>
Aaron Herzog              25,000                       25,000                   $  -0-                   $ -0-

Jacob Herzog              25,000                       25,000                   $  -0-                   $  -0-

-------------
<FN>
(1)   Based on the closing bid price of the Company's Common Stock of $1.25 per
      share on May 31, 2000.
</FN>
</TABLE>





                                       21


<PAGE>

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. The company is currently
negotiating the extension of such agreements.

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, all of


                                       22

<PAGE>


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.

           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,
2000, the Company issued an aggregate of 155,000 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 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.



                                       24


<PAGE>


            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."




















                                       25
<PAGE>


                           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, 2000 for the Company, the Nasdaq Stock Market - U.S. Index
("Nasdaq U.S.") and the Nasdaq Non-Financial Index ("Nasdaq Non-Financial").


Graphic Omitted

                                                               NASDAQ
                      CURTIS              NASDAQ U.S.       NON-FINANCIAL
                      ------              -----------       -------------

  November 12, 1998    100                 100                  100
  February 1999        107                 124                  133
  May 1999             114                 126                  136
  August 1999           56                 154                  149
  November 1999         33                 191                  181
  February 2000         39                 277                  253
  May 2000              24                 196                  183






















           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.









                                       26



<PAGE>


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
-------------------                          ------               ----------
Aaron Herzog(2)(4)                            1,799,000             32.9%
Jacob Herzog(3)(4)                            1,799,000             32.9%
Louis Drazin(5)                                  12,500                *
David Ben David(6)                               12,500                *
All Executive Officers and Directors
as a Group (4 persons) (2)-(6)                3,623,000             66.5%
---------
*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)
25,000 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)
25,000 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 12,500 shares of common stock issuable upon the exercise of
options granted under the Company's Stock Option Plan.

(6) Consists of 12,500 shares of common stock issuable upon the exercise of
options granted under the Company's Stock Option Plan.







                                       26
<PAGE>


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 $13,282,000.

           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.








                                       27
<PAGE>








                                     PART IV

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


(a)        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

(b)Reports on Form 8-K.

None.

(c)Exhibits.

**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
  *23.2    Financial Data Schedule
--------------------------------------------------------------------------------

 * Filed herewith.
** Incorporated by reference to Curtis International Ltd. Registration
   Statement No. 333-56661.

<PAGE>


                                   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:  October 16, 2000

           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: October 16, 2000

                                  By: /S/ JACOB HERZOG
                                      -----------------------------------------
                                      Jacob Herzog
                                      Chairman, Principal Accounting Officer
                                      Treasurer and Secretary

                                      Date: October 16, 2000


                                  By: _____________________________
                                      Louis Drazin
                                      Director

                                      Date: October 16, 2000

                                  By:  /S/ DAVID BEN DAVID
                                       ---------------------------------------
                                       David Ben David
                                       Director

                                      Date: October 16, 2000


<PAGE>


                            CURTIS INTERNATIONAL LTD.

                              FINANCIAL STATEMENTS

                           AS OF MAY 31, 2000 AND 1999

                         TOGETHER WITH AUDITORS' REPORT









































<PAGE>


                            CURTIS INTERNATIONAL LTD.

                              FINANCIAL STATEMENTS

                           AS OF MAY 31, 2000 AND 1999

                         TOGETHER WITH AUDITORS' REPORT




                                TABLE OF CONTENTS


        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 - 19






<PAGE>










                         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, 2000, and 1999 and the
        related statements of income, cash flows and changes in stockholders'
        equity for each of the years ended May 31, 2000, 1999 and 1998. These
        financial statements are the responsibility of the company's management.
        Our responsibility is to express an opinion on these financial
        statements based on our 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, 2000, and 1999 and the results of its
        operations and its cash flows for each of the years ended May 31, 2000,
        1999 and 1998, in conformity with generally accepted accounting
        principles in the United States of America.





        Toronto, Ontario
        August 13, 2000

                                                Schwartz Levitsky Feldman llp
                                                        Chartered Accountants




                                      F - 1

<PAGE>
<TABLE>
<CAPTION>


CURTIS INTERNATIONAL LTD.
BALANCE SHEETS
AS AT MAY 31
(AMOUNTS EXPRESSED IN US DOLLARS)
                                                           2000             1999
                                                           ----             ----

                                                             $                $
                                     ASSETS
        CURRENT ASSETS

<S>                                                   <C>               <C>
             Cash                                       1,393,547         4,613,209
             Accounts receivable (notes 3 & 6)          4,444,740         4,108,487
             Inventory (notes 4 & 6)                    7,283,553         4,997,296
             Prepaid expenses and sundry assets           106,084            58,752
                                                       ----------        ----------

                                                       13,227,924        13,777,744

        PROPERTY, PLANT AND EQUIPMENT (note 5)            428,631           310,530

        DEFERRED INCOME TAXES (note 9)                    422,653          575,672
                                                       ----------        ----------






           TOTAL ASSETS                               14,079,208        14,663,946
                                                      ==========        ==========






</TABLE>
















                                      F - 2


<PAGE>

<TABLE>
<CAPTION>

CURTIS INTERNATIONAL LTD.
BALANCE SHEETS
AS AT MAY 31
(AMOUNTS EXPRESSED IN US DOLLARS)
                                                         2000              1999
                                                         ----              ----

                                                           $                 $
                                   LIABILITIES
        CURRENT LIABILITIES

<S>                                                 <C>                <C>
             Bank indebtedness (note 6)                     -            1,685,323
             Accounts payable (note 7)                 2,131,049         1,042,253
             Income taxes payable                         19,865         1,110,132
             Advances from affiliated parties (note 8)   361,244           656,762
                                                     -----------        ----------


        TOTAL LIABILITIES                              2,512,157         4,494,470
                                                     -----------        ----------

                              SHAREHOLDERS' EQUITY

        CAPITAL STOCK (note 9)                         7,342,163         7,342,163

        CUMULATIVE TRANSLATION ADJUSTMENT               (298,592)          (47,062)

        RETAINED EARNINGS                              4,523,480         2,874,375
                                                     -----------        ----------

        SHAREHOLDERS' EQUITY                          11,567,051        10,169,476
                                                     -----------        ----------

        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    14,079,208        14,663,946
                                                      ==========        ==========

</TABLE>



















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


                                      F - 3


<PAGE>

<TABLE>
<CAPTION>

CURTIS INTERNATIONAL LTD.
STATEMENTS OF INCOME
FOR THE YEARS ENDED MAY 31
(AMOUNTS EXPRESSED IN US DOLLARS)
                                                       2000              1999              1998
                                                       ----              ----              ----
                                                         $                 $                 $

<S>                                              <C>               <C>               <C>
        SALES (note 16)                            42,612,206        39,309,062        27,471,613

             Cost of sales                         34,941,613        32,042,499        22,349,967
                                                   ----------         ---------         ---------

        GROSS PROFIT                                7,670,593         7,266,563         5,121,646
                                                    ---------         ---------         ---------
        EXPENSES

             Administrative                         2,256,847         1,644,825         1,758,313
             Selling                                2,021,892         2,288,953         1,265,906
             Financial                                599,687           880,263           474,154
             Lease cancellation fee                        -                 -            155,926
                                                    ---------         ---------         ---------

                                                    4,878,426         4,814,041         3,654,299
                                                    ---------         ---------         ---------

        INCOME BEFORE INCOME TAXES                  2,792,167         2,452,522         1,467,347

             Income taxes (note 12)                 1,143,062         1,108,765           602,442
                                                    ---------         ---------         ---------


        NET INCOME                                  1,649,105         1,343,757           864,905
                                                    =========         =========         =========

        NET INCOME PER WEIGHTED
             AVERAGE SHARE (note 11)                     0.31              0.29              0.23
                                                    =========         =========         =========
        WEIGHTED AVERAGE NUMBER OF
             COMMON SHARES OUTSTANDING
             (note 9)                               5,373,145         4,591,692         3,700,000
                                                    =========         =========         =========



</TABLE>






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



                                      F - 4

<PAGE>

<TABLE>
<CAPTION>

CURTIS INTERNATIONAL LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MAY 31
(AMOUNTS EXPRESSED IN US DOLLARS)
                                                                        2000              1999              1998
                                                                        ----              ----              ----

                                                                          $                 $                 $
        Cash flows from operating activities:
<S>                                                               <C>               <C>                 <C>
             Net income                                              1,649,105         1,343,757           864,905
             Adjustments to reconcile net income to net cash
                 provided by (used in) operating activities:
                 Amortization                                          162,634            51,586            17,172
                 Increase in accounts receivable                      (432,547)          (15,740)       (2,446,164)
                 Decrease (increase) in inventory                   (2,446,406)          566,982        (4,734,388)
                 Decrease in income taxes recoverable                        -                -             11,419
                 Increase in prepaid expenses and
                   sundry assets                                       (49,683)          (48,942)             (524)
                 Increase (decrease) in accounts payable and
                  accrued expenses                                   1,136,222        (1,163,492)          749,617
                 Increase (decrease) in income taxes payable        (1,091,319)          601,476           551,772
                 Increase (decrease) in deferred income taxes          153,019          (562,180)                -
                                                                     ---------         ---------           -------

             Net cash generated by operating activities               (918,974)          773,447        (4,986,191)
                                                                      ---------         ---------           -------


        Cash flows from investing activities:

             Purchases of property, plant and equipment               (290,136)         (188,612)          (35,730)
             Payment of mortgage receivable                                -             (72,929)           (3,389)
                                                                     ---------         ---------           -------


             Net cash used in investing activities                   (290,136)          (261,541)          (39,119)
                                                                     ---------         ---------           -------



</TABLE>





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




                                      F - 5

<TABLE>
<CAPTION>

CURTIS INTERNATIONAL LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MAY 31
(AMOUNTS EXPRESSED IN US DOLLARS)
                                                                                      2000              1999              1998
                                                                                      ----              ----              ----
                                                                                       $                 $                 $
        Cash flows from financing activity:
<S>                                                                             <C>               <C>                 <C>
             Increase (decrease) in bank indebtedness                             (1,687,608)       (6,780,298)         7,504,507
             Increase (decrease) in advances from affiliated
                  parties                                                           (103,089)          (58,781)           (92,517)
             Deferred issuance costs                                                      -              86,724           (92,779)
             Redemption of Class B share                                                  -                   -                (1)
             Issuance of common stock, net                                                -           7,342,083                -
                                                                                  -----------         ---------         ---------

                                                                                  (1,790,697)           589,728         7,319,210
                                                                                  -----------         ---------         ---------

        Effect of foreign currency exchange rate changes                            (219,855)           110,394          (144,261)
                                                                                  -----------         ---------         ---------

        Net increase (decrease) in cash and cash equivalents                      (3,219,662)         1,212,028         2,149,639

        Cash and cash equivalents
             -  Beginning of year                                                   4,613,209         3,401,181         1,251,542
                                                                                  -----------         ---------         ---------


             -  End of year                                                         1,393,547         4,613,209         3,401,181
                                                                                  ===========         =========         =========


        Interest paid                                                                   7,838           255,357           408,649
                                                                                  ===========         =========         =========


        Income taxes paid                                                           1,887,677           490,765            50,670
                                                                                  ===========         =========         =========


</TABLE>







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



                                      F - 6

<PAGE>


<TABLE>
<CAPTION>
CURTIS INTERNATIONAL LTD.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MAY 31
(AMOUNTS EXPRESSED IN US DOLLARS)
                                                                     COMMON
                                                                      STOCK                                            CUMULATIVE
                                                                  NUMBER OF                            RETAINED       TRANSLATION
                                                                     SHARES           AMOUNTS          EARNINGS       ADJUSTMENTS
                                                            ---------------   ---------------   ---------------   ---------------
                                                                                        $                 $                 $
<S>                                                            <C>                <C>           <C>              <C>
        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)

        Foreign currency translation                                    -                  -                 -          (251,530)

        Net income for the year                                         -                  -          1,649,105                -
                                                                -----------       -----------        ----------         ------------

        Balance as of May 31, 2000                                5,373,145         7,342,163         4,523,480         (298,592)
                                                                ===========       ===========        ==========         ===========



</TABLE>







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



                                      F - 7


<PAGE>



CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
(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, 2000, 1999 and 1998.


        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>



CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
(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.

                  In June 1998 SFAS No. 133, as amended, "Accounting for
                  Derivative Instruments and Hedging Activities" was issued, to
                  be effective for fiscal quarters and fiscal years beginning
                  after June 15, 2000. The Company does not have any derivative
                  instruments or hedging activities therefore, the Company
                  believes that SFAS No. 133 will have no material impact on the
                  Company's financial statements or notes thereto.







                                      F-9



<PAGE>





CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
 (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
                                                        2000           1999
                                                        ----           ----
                                                          $              $
             Accounts receivable                      5,447,076      4,981,727
             Less: Allowance for doubtful accounts    1,002,336        873,240
                                                      ---------        -------

             Accounts receivable, net                 4,444,740      4,108,487
                                                      =========      =========



                                     F - 10


<PAGE>


CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
(AMOUNTS EXPRESSED IN US DOLLARS)




        4.   INVENTORY

             Inventory is comprised entirely of finished goods.


        5.   PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                             2000                                      1999
                                     ---------------------------------------------------        ---------------
                                                              ACCUMULATED
                                              COST           AMORTIZATION          NET               NET
                                         ---------------     ---------------   ---------------   ---------------
                                               $                   $                 $                 $
<S>                                      <C>                                 <C>               <C>
             Land                             28,951               -              28,951            29,574
             Condominium                     115,804            36,952            78,852            84,787
             Furniture and
                  equipment                  232,541            80,385           152,155           101,136
             Automobile                       33,253            31,624             1,629             2,378
             Computer equipment              121,501            59,997            61,504            56,981
             Leasehold
                  improvements                71,871            44,665            27,206            35,674
             Computer Software               156,668            78,334            78,334                 -
                                             -------            ------            ------           -------

                                             760,588           331,958           428,631           310,530
                                             =======           =======           =======           =======
</TABLE>



             Amortization for the year amounted to $162,634; ($51,586 in 1999
             and $17,172 in 1998).


        6.   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 $13,282,000 and is limited based on a
             formula which relates to receivables and inventory held by the
             company as at May 31, 2000. The company met all covenants imposed
             by the bank.







                                      F-11



<PAGE>




CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
 (AMOUNTS EXPRESSED IN US DOLLARS)




        7.   ACCOUNTS PAYABLE
                                                    2000              1999
                                                    ----              ----
                                                      $                 $

             Trade payables                        664,887           318,069
             Accrued expenses                    1,466,162           724,184
                                                 ---------           -------
                                                 2,131,049         1,042,253
                                                 =========         =========



        8.   ADVANCES FROM AFFILIATED PARTIES

             The advances from affiliated parties are non interest bearing, due
             on demand, and have no specific repayment terms.


        9.   CAPITAL STOCK
<TABLE>
<CAPTION>

             a) Authorized

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

                Issued
<S>                                                      <C>        <C>
                                                              2000       1999
                                                              ----       ----
                                                               $          $

               5,373,145 Common shares (5,373,145 in 1999) 7,342,163  7,342,163
                                                          ==========  ==========
</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>



CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
(AMOUNTS EXPRESSED IN US DOLLARS)




        9.   CAPITAL STOCK   (cont'd)

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

                <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, 2000, 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 155,000 Options to date under the Plan
                  to 6 persons, including officers, directors and key employees.
                  The options are exercisable at $1.75 to $5.50 per share


                                     F - 13


<PAGE>


CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
(AMOUNTS EXPRESSED IN US DOLLARS)




             9.   CAPITAL STOCK (cont'd)

                  A summary of the status of the Company's Stock Option as of
                  May 31, 2000 and 1999,and changes during the years ending on
                  those dates is presented below:

<TABLE>
<CAPTION>

                                                                  Number of     Weighted Avg.     Number of     Weighted Avg.
                                                                    Options    Exercise Price       Options    Exercise Price
                                                                    -------    --------------       -------    --------------

<S>                                                                 <C>            <C>             <C>             <C>
                  Outstanding at beginning of year                   70,000         $5.14              -                -

                  Granted                                            85,000          1.81            70,000          $5.14
                  Exercised                                            -              -               -                 -
                  Cancelled/Expired                                    -              -               -                 -
                                                                    -------           ----           ------           ----


                  Outstanding at end of year                        155,000           3.31           70,000           5.14
                                                                    -------           ----           ------           ----

                  Options exercisable at end of year                 82,500                          17,500
                                                                    -------           ----           ------           ----

                  Options available for issuance                    245,000                         330,000
                                                                    -------           ----          -------            ----

</TABLE>


                  Pro-forma information regarding net income and earnings per
                  share is required by FAS No. 123 "Accounting for Stock based
                  Compensation" and has been determined as if the company had
                  accounted for its employee stock options based on fair values
                  at the grant date for options granted under the 1998 Plan. The
                  company's pro-forma information for the year ended May 31,
                  2000 would have been as follows:

<TABLE>
<CAPTION>

                                                                                     AS REPORTED       PRO-FORMA
                                                                                    ---------------   ----------

<S>                                                                                 <C>              <C>
                  Income from continuing operations                                   $1,649,105       $1,609,285
                  Basic and diluted EPS from continuing operations                       0.31            0.30
</TABLE>

                  The fair value of each option grant used for purposes of
                  estimating the pro-forma amounts summarized above is based on
                  the grant date using the Black-Sholes option pricing model.


                                     F - 14


<PAGE>


CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
 (AMOUNTS EXPRESSED IN US DOLLARS)




        10.  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>


                                                                                2000              1999              1998

                                                                                $                  $                 $

<S>                                                                          <C>               <C>                <C>
             Net income                                                       1,649,105         1,343,757          864,905
             Other comprehensive income (loss):
                  Foreign currency translation adjustments                      251,530            46,928          (79,449)
                                                                              ---------         ---------           -------

             Comprehensive income                                             1,397,575         1,390,685          785,456
                                                                              =========         =========          =======


             The components of accumulated other comprehensive income (loss) are
             as follows:

             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)

             Foreign currency translation adjustments for the year ended
                  May 31, 2000                                                                                    (251,530)
                                                                                                                  --------


             Accumulated other comprehensive loss May 31, 2000                                                    (298,592)
                                                      === ====                                                    ========

</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 - 15

<PAGE>



CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
(AMOUNTS EXPRESSED IN US DOLLARS)




        11.  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.


        12.  INCOME TAXES

<TABLE>
<CAPTION>

                                                               2000          1999        1998
                                                               ----          ----        ----
                                                                 $             $         $

<S>                                                         <C>           <C>         <C>
             a)   Current                                     1,143,062     1,108,765   602,442
                                                              =========     =========   =======


             b)   Current income taxes consist of:
                  Amount calculated at basic Federal and
                        Provincial rates                      1,256,470     1,079,110   611,490
                  Permanent and other differences              (113,408)       29,655        -
                  Timing differences                                             -      (9,048)
                                                              ---------     ---------   -------

                                                              1,143,062     1,108,765   602,442
                                                              =========     =========   =======

</TABLE>










                                     F - 16



<PAGE>


CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
 (AMOUNTS EXPRESSED IN US DOLLARS)




        13.  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.


        14.  TRANSACTIONS WITH AFFILIATED COMPANIES

                                                       2000      1999      1998
                                                       ----      ----      ----
                                                         $         $         $

             Management fees                              -        -    354,384
             Rent expense                                 -        -     66,154
             Occupancy costs                              -        -     51,114
             Interest paid to affiliated companies    8,032    56,010        -


        15.  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 $8,697,376 as at May 31, 2000.









                                     F - 17


<PAGE>


CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
 (AMOUNTS EXPRESSED IN US DOLLARS)




        16.  SEGMENTED INFORMATION


<TABLE>
<CAPTION>

             a)   Sales to Major Customers
                                                                                      2000              1999              1998
                                                                                      ----              ----              ----

                                                                                       $                 $                 $

<S>                                                                             <C>               <C>               <C>
                  Combined sales of top five customers                             16,604,779        27,384,141        17,350,197
                                                                                   ==========        ==========        ==========



                  Percentage of total sales                                               39%               70%               63%
                  Accounts receivable due from major customers                      2,507,834         3,016,080         2,814,165
                 Percentage of total accounts receivable                                  56%               73%               69%

                  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
                                                                                      2000              1999              1998

                                                                                       $                 $                 $

                  Canada                                                           14,124,434        19,260,580        15,754,678
                  United States of America                                         28,487,772        19,762,638        11,716,935
                                                                                   ----------        ----------        ----------

                                                                                   42,612,206        39,023,218        27,471,613
                                                                                   ==========        ==========        ==========

</TABLE>



                                     F - 18


<PAGE>


CURTIS INTERNATIONAL LTD.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000, 1999 AND 1998
 (AMOUNTS EXPRESSED IN US DOLLARS)




        16.  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.

                                                  2000          1999      1998
                                                  ----          ----      ----
                                                    $             $         $

                  Canada                       546,620       663,234   495,782
                  United States of America   1,102,485       680,523   369,123
                                             ---------       -------   -------

                                             1,649,105     1,343,757   864,905
                                             =========     =========   =======
             d)   Identifiable Assets by Geographic Area

                  All identifiable assets were located in Canada for 2000, 1999,
                  and 1998.

             e)   Purchases From Major Suppliers
<TABLE>
<CAPTION>

                                                                 2000          1999       1998
                                                                     $             $          $

<S>                                                        <C>           <C>         <C>
                  Purchases from major suppliers             12,060,419    13,740,209  3,754,794
                  Percentage of total purchases                     32%           44%        17%
                  Accounts payable due to major suppliers       306,724       292,118    368,141
                  Percentage of total accounts payable              14%           28%        16%
</TABLE>


        17.  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. Although the change in date has occurred, it is not possible
             to conclude that all aspects of the Year 2000 Issue that may affect
             the entity, including those related to customers, suppliers, or
             other third parties, have been fully resolved.





                                     F - 19