<PAGE>

                            UNITED STATES OF AMERICA
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934 for the Fiscal year ended December 31, 1999.

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT the
    transition period from __________ to ___________

                        Commission file number: 333-29295

                               RETROSPETTIVA, INC.
                 (Name of small business issuer in its charter)

       California                                         95-4298051
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                       Identification No.)

                           8825 West Olympic Boulevard
                             Beverly Hills, CA 90211
                    (Address of principal executive offices)

                                 (310) 657-1745
                           (Issuer's telephone number)

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

         Securities registered under Section 12(g) of the Exchange Act:

   NO PAR VALUE COMMON STOCK          REDEEMABLE COMMON STOCK PURCHASE WARRANTS
     Title of Class                                  Title of Class

Check whether the issue (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

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

State issuer's revenues for its most recent fiscal year. $20,207,460.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date within the
past 60 days. As of March 24, 2000, 3,177,916 shares of the Registrant's no
par value common stock were outstanding and the aggregate market value of the
shares held by non-affiliates based on that days market close of $1.62 was
approximately $5,148,224.

     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by court. Yes [ ] No [ ]

Transitional Small Business Disclosure Format:  Yes  [ ]   No  [X]

                                       1
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                                          PAGE
                                                                                                ----
<S>                                                                                             <C>
          Item 1     Description of Business                                                     3
          Item 2     Description of Property                                                     7
          Item 3     Legal Proceedings                                                           7
          Item 4     Submission of Matters to a Vote of Security Holders                         8

PART II
          Item 5     Market for Common Equity and Related Stockholder Matters                    8
          Item 6     Management's Discussion and Analysis or Plan of Operation                   9
          Item 7     Financial Statements                                                       14
          Item 8     Changes in and Disagreements with Accountants on Accounting and            15
                     Financial Disclosure

PART III
          Item  9    Directors, Executive Officers, Promoters and Control Persons;              15
                     Compliance with section 16(a) of the exchange act
          Item 10    Executive Compensation                                                     17
          Item 11    Security Ownership of Certain Beneficial Owners and Management             19
          Item 12    Certain Relationships                                                      20

PART IV
          Item 13    Exhibits and Reports on Form 8-K                                           21

SIGNATURES                                                                                      22

</TABLE>

                                       2

<PAGE>

ITEM 1.  DESCRIPTION OF BUSINESS

INTRODUCTION

The Company was organized in November 1990 initially to manufacture and
import textile products from Italy including finished garments and fabrics.
By 1993, the Company was purchasing fabrics from firms and factories around
the world and contracting for the manufacture of finished garments in
Macedonia for importation into the United States.

The Company contracts for the manufacture of a variety of garments, primarily
basic women's sportswear which includes suits, skirts, blouses, blazers,
pants, shorts, vests and dresses, using assorted fabrics including rayons,
linens, cotton and wool. The Company arranges for the manufacture of garments
for customers under private labels selected by its customers. It markets its
products exclusively in the United States directly to large wholesalers,
national retailers and buying organizations, and directly to women's chain
clothing stores, boutiques and catalogues.

Most of the Company's garments are sold on a "package" basis pursuant to
which the Company markets at fixed prices finished garments to the customer's
specifications and quantity requirements, arranges for production of the
garments and delivers the garments directly to the customer at the port of
entry. In its marketing, the Company emphasizes these package arrangements
and what it believes to be the better quality and lower prices of garments
produced by skilled Macedonian workers as compared to lower paid workers in
certain other regions.

As a package provider, the Company sources and purchases fabrics and trims,
arranges for cutting and sewing, and coordinates any other services required
to provide a completed garment. The Company manufactures its finished
products only upon receipt of purchase orders from its wholesale and retail
customers, which the Company believes minimizes the marketing and fashion
risk generally associated with the apparel industry. Fabrics and trims are
purchased from suppliers in China, India, Russia, Romania, Italy and the
United States. After dying the fabric, if necessary, the fabric and trim are
shipped to factories selected by the Company (primarily located in Macedonia)
where they are manufactured into completed garments under the Company's
management and quality control guidance. The finished products are then
shipped directly to New York City where the Company's customers claim the
goods either at the port in New York City or at a consolidating warehouse in
Astoria, New York.

STRATEGY

The Company intends to continue to offer better quality, popular priced
women's apparel in a wide variety of styles, patterns, colors and fabrics.
The Company's business strategy is as follows:

MAINTAIN FOCUS ON THE COMPANY'S CORE BUSINESS. The Company plans to continue
to contract for the manufacture and market basic women's sportswear on a
package basis. This strategy emphasizes concentrating on `cut-to-order'
business where the customer provides the specifications and design of the
garments which have historically been less fashion oriented. The Company
believes that by avoiding the production of trendier fashion apparel ordered
by customers it will be able to reduce costs commonly associated in the
industry with discounts, returns and allowances. Consistent with this
strategy, the Company will focus on the sale of private label apparel using
the brand names ordered by its customers. The Company, however, will continue
to evaluate the marketplace in an effort to assess its current market
strategies and manage those strategies to remain responsive to market demand.

INCREASE PENETRATION OF CURRENT MARKETS. The Company seeks to further
penetrate its current markets by offering lower product prices while
maintaining a high degree of quality control.

                                       3
<PAGE>

Lower transportation costs compared to other parts of the world (e.g.; the
Pacific Rim) offer a competitive advantage.

Many countries have quotas that can apply to different types of manufactured
fabrics, trim and finished goods. These quotas are imposed on goods and
components imported to and exported from those countries and contribute to
the overall cost of the apparel imported to and exported from those
countries. In comparison, Macedonia has a quota imposed on only one category
of finished goods which the Company is currently not subject to and
contributes to the Company's ability to offer competitive prices

In the event that Macedonia or the United States enacts quota restrictions
and charges to export or import apparel, then the costs associated with that
quota could increase the unit cost of the goods exported from Macedonia and
imported into the United States.

The Company constantly looks at other parts of the world to explore new
opportunities for quality affordable manufacturing.

EXPAND DISTRIBUTION CHANNELS AND PRODUCT LINES. The Company plans to continue
to expand to new geographic markets within the United States for its existing
products while expanding its existing product lines within the basic women's
sportswear market and exploring possibilities to enter new markets as women's
knitwear and men's suits and shirts.

PRODUCTS

The Company offers to its customers a variety of women's sportswear. Its
apparel includes many styles manufactured in rayon and linen mixes, linen and
cotton mixes, all cotton, wool and other materials. The Company's garments
are moderately priced ranging at retail from $12.99 to $49.99 and are
marketed by the Company's customers and the Company to working women.

During 1999 the Company formed a subsidiary, Hamilton Toys, LLC (Hamilton),
for the manufacture of toys related to motion pictures. The Company acquired
licenses from Universal pictures to manufacture certain toys related to "The
Adventures of Rocky and Bullwinkle" film.

The Company is developing both a Business to Business and a Business to
Consumer web site in order to offer its products for sale to whole sellers,
distributors and consumers.

MARKETING

The Company arranges for the manufacture of garments for customers under
private labels selected by its customers. It markets its products exclusively
in the United States directly to large wholesalers, directly and indirectly
to national retailers and buying organizations, directly to women's chain
clothing stores and catalogues and to retail stores.

Marketing is conducted through three in-house salespersons that call directly
upon customers, as well as outside sales associates, through customer
referrals and through the efforts of the Company's executive officers. The
Company also maintains a sales office in New York.

The Company's customers include United States retailers and wholesalers as
described above. The Company's customers for the year ended December 31, 1999
included three that accounted for more than 10% of sales (Customer A at 12%,
Customer B at 21% and Customer C 29% or a total of 62%). A loss of any of
these customers would have a material adverse effect on the Company's results
of operations.

MANUFACTURING AND SUPPLIERS

                                       4
<PAGE>

The Company arranges for the manufacture of garments based on the fabric,
design, styling and quality specifications of individual customer orders. The
Company does not own or operate any manufacturing facilities. It obtains its
products from manufacturers in Macedonia who contract with the Company to
manufacture specific items of apparel in predetermined amounts and for agreed
upon unit prices. The Company contracts for the purchase of fabric and the
manufacture and sewing of its products with Yucan Trade International
("Yucan") a manufacturing agent.

The Company believes that outsourcing allows it to enhance production
flexibility and capacity while reducing capital expenditures and avoiding the
costs of managing a large production work force. In addition, the Company
believes that outsourcing allows the Company to utilize the expertise of its
suppliers and manufacturers in fabric selection and manufacturing processes.
The Company is currently assessing the viability of expanding and
geographically diversifying its manufacturing resources in regions other than
Macedonia.

The Company arranges for the production of its products based on orders
received. The Company obtains all of its customers' orders prior to placement
of its contract manufacturing orders. The Company's customer orders may
change with respect to colors, sizes, allotments or assortments prior to
commencement of production of the garments, and any costs associated with
such a change will be borne by the Company. Accordingly, there is some risk
associated with the Company's practice of allowing change orders after fabric
is purchased. However, costs associated with change orders have not been
material in the past and the Company does not believe that they will be
material in the future.

The Company purchases fabric and trim from the manufacturers of these garment
components. These manufacturers ship their products directly to the Company's
manufacturing agent or to fabric dyers (currently in Slovenia) who in turn
ship the fabric per the instructions of the agent. The Company does not have
written contracts with any of its fabric or trim suppliers or contractors,
however, the Company believes that its relationships with its suppliers and
contractors are good.

The Company has retained Yucan as its manufacturing agent in Macedonia. Yucan
is responsible for selecting the factories that will manufacture the
Company's finished goods, to oversee this production and to warehouse and
arrange for shipping the finished goods to the Company in the United States.
Yucan is paid a fee that ranges from $0.15 to $0.50 per garment manufactured.
Although Yucan is currently responsible for the manufacture, warehousing and
shipping of all of the Company's finished goods, the Company believes that
there are other manufacturing agents in Macedonia which the Company could
retain for the same purpose on substantially similar terms. The Company does
not have written contracts with Yucan or any of its suppliers or contractors.
Although the loss of certain suppliers or contractors (including Yucan) could
have a significant material adverse effect on the Company's operating
results, the Company believes it would be able to replace such suppliers and
contractors within a reasonable amount of time if required to do so.

The Company delivers finished goods directly from its manufacturing agent to
its customers at the port of entry in New York City or at the Company's
consolidating warehouse in Astoria, New York or ships from the warehouse to
the customers' warehouses. Since the Company assumes the risk of loss when
the finished goods leave its manufacturer, the goods are insured until
delivery is made to the customer.

For the year ended December 31, 1999, Newbel Inc. ("Newbel"), Yucan and W/P
Trading accounted for 26%, 31% and 12% respectively, of the Company's total
fabric and finished goods purchases.

QUALITY CONTROL

                                      5
<PAGE>

The Company's quality control program is designed to provide that all of the
Company's products meet the Company's and its customer's standards. The
Company maintains a staff of three quality control employees in the United
States and four such employees in Macedonia. The Company develops and
inspects samples of each product prior to production, establishes fittings
based on the sample and inspects sample fabric prior to cutting and several
times during the production process. The Company, Yucan and (in the case of
private label products) representatives of the Company's customers inspect
final products prior to shipment.

COMPETITION

The apparel industry is highly competitive and consists of numerous
manufacturers, importers and distributors. Many of the Company's competitors
are significantly larger, more diversified and have significantly greater
financial, distribution, marketing, name recognition and other resources than
the Company. The Company believes it has certain competitive advantages
resulting from its contractual relationships with Macedonian manufacturers.
These advantages include the availability in Macedonian factories of highly
skilled workers at relatively lower costs than in more economically developed
regions. They also include a lack of quotas and lower tariffs in the
importation into the United States of finished goods from Macedonia. Finally
they also include lower shipping costs as a result of the closer geographical
proximity to the United States of the Company's Macedonian contract
manufacturers compared to manufacturers in the Pacific Rim nations.

TRADE NAMES

The Company has developed two apparel trade names, "Magellan" and
"Retrospettiva" in connection with the marketing of its apparel. The Company
regards its trade names as assets although no trade name registrations have
been filed in the United States or in foreign countries. While the use of a
trade name may provide certain common law rights of further usage, there can
be no assurance the Company could prohibit the use of its trade names by
others. The Company currently does not actively use either trade name since
its current business is private label utilizing the trade names ordered by
its customers.

CREDIT POLICY AND CREDIT CONTROL

Prior to accepting a purchase order and purchasing fabric and components, the
Company investigates the customer's credit history through traditional credit
reporting services, through asset-based lenders of the customer and through
other contract partners of the customer. The Company sometimes obtains a
deposit or advance payment before purchasing fabric or commencing garment
production for the customer.

The Company accepts commercial letters of credit for the purchase of raw
materials. This is similar to a progress payment from the customer whereby
they pay for the cost of the materials used in the manufacture of their
order. The Company also accepts arrangements whereby a customer will purchase
directly the raw materials and or trim used in the production of their order.

The Company also accepts commercial letters of credits from customers
covering existing orders. When the order is shipped and all of the
requirements of the letter of credit are met, the Company presents the letter
of credit for payment by the customer's authorized bank. The Company also
utilizes its own line of credit facility to request commercial documentary
letters of credit naming suppliers as beneficiaries in an effort to obtain
more favorable credit terms. The line of credit facility enables the Company
to receive extended credit terms while not drawing on its line of credit
until the supplier presents the letter of credit for payment to the Company's
bank.

In December 1997, the Company entered into a factoring agreement with a New
York based Factoring Company to factor its accounts receivable. The Company
will receive up to 80% of the receivables at the time of factoring. This is a
non-recourse factoring agreement and the

                                       6
<PAGE>

Company assigns the responsibility of the factored receivables to the Factor,
except in cases of charge backs due to quality and shipping.

GOVERNMENT REGULATION

The Company's import operations are subject to constraints imposed by
bilateral textile agreements between the United States and a number of
foreign countries. These agreements, which have been negotiated bilaterally
either under the framework established by the Arrangement Regarding
International Trade in Textiles, known as the Multifiber Agreement, or other
applicable statutes, impose quotas on the amounts and types of merchandise
which may be imported into the United States from these countries. However,
apparel imported from Macedonia is not subject to such quotas. These
agreements also allow the signatories to adjust the quantity of imports for
categories of merchandise that, under the terms of the agreements, are not
currently subject to specific limits. The Company's imported products are
also subject to United States customs' duties that may comprise a material
portion of the cost of the merchandise.

Apparel products are subject to regulation by the Federal Trade Commission in
the United States. Regulations relate principally to the labeling of the
Company's products. The Company believes that it is in substantial compliance
with such regulations, as well as applicable federal, state, local and
foreign rules and regulations governing the discharge of materials hazardous
to the environment. There are no significant capital expenditures for
environmental control matters either estimated in the current year or
expected in the near future.

EMPLOYEES

As of December 31, 1999, the Company employed 17 individuals in Los Angeles,
California, New York, New York and Macedonia including but not limited to its
four executive officers, three inventory management and order control
personnel, three administrative personnel and four quality control workers.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company leases approximately 2,200 square feet for its executive and
administrative offices at 8825 West Olympic Boulevard, Beverly Hills,
California 90211 at $2,378 per month pursuant to a lease expiring December
31, 2003. At the present time, the Company's current facility provides
adequate space to conduct its operations.

The Company subleases 2,000 square feet of office and showroom facilities at
1359 Broadway, Suite 2102, New York, New York 10018, on a month to month
basis at $2,575 per month. The Company subleases a New York apartment on a
month to month basis for use by its employees traveling from Los Angeles,
California and Macedonia to New York City.

The Company leases approximately 16,500 square feet for its New York
warehouse at 4-05 26th Avenue, Astoria, New York at $8,250 per month.

ITEM 3.  LEGAL PROCEEDINGS

The Company is subject to litigation and claims that arise in the normal
course of business. In the opinion of management, the ultimate disposition of
these matters will not have a material adverse effect on the financial
position, capital resources, liquidity or results of operations of the
Company.

                                       7
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS AND USE OF
         PROCEEDS

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the calendar year ended December 31, 1999.

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKKHOLDER MATTERS

MARKET INFORMATION

The Company's common stock has been traded on the NASDAQ Small Cap ("NASDAQ
SC") under the symbol "RTRO" since September 24, 1997. On March 18, 1999, the
closing bid price for the Company's common stock was $3.09 per share. The
following table sets forth for the quarters indicated, the range of high and
low bid prices of the Company's common stock as reported by NASDAQ.

<TABLE>
<CAPTION>
BY QUARTER ENDED:                                                        COMMON STOCK
                                                                        HIGH       LOW
                                                                        ----       ---
<S>                                                                   <C>       <C>
Calendar 1997
          September 30, 1997......................................     $7.25      $6.63
          December 31, 1997.......................................     $7.25      $5.75
Calendar 1998
          March 31, 1998..........................................     $7.81      $5.50
          June 30, 1998...........................................     $6.88      $5.50
          September 30, 1998......................................     $6.19      $1.63
          December 31, 1998.......................................     $4.19      $1.53
 Calendar 1999
          March 31, 1999..........................................     $4.88      $3.06
          June 30, 1999  .........................................     $1.63      $1.38
          September 30, 1999......................................     $1.94      $1.50
          December 31, 1999.......................................     $1.38      $1.13
 Calendar 2000
          March 31, 2000..........................................     $1.56      $1.50

</TABLE>

The above quotations were reported by NASDAQ and reflect inter-dealer prices,
without retail mark-up, markdown or commission and may not necessarily
represent actual transactions.

HOLDERS

The approximate number of the Company's record and beneficial stockholders as
of March 31, 2000 was 850.

DIVIDENDS

The Company has not paid any dividends on its common stock since inception
and does not plan to pay dividends in the foreseeable future. The Company
anticipates that any future earnings will be retained to finance growth.

                                       8
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and is incorporating this
statement into this report in order to do so. This report includes
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended which represent the Company's expectations of beliefs
concerning future events that involve risks and uncertainties.

All statements (other than statements of historical facts) included in the
Company's SEC filings, including its Proxy Statements and this Report may
include forward-looking statements that are subject to risks and uncertainty
that may cause actual results to differ materially.

Such forward-looking statements that may be contained in this Report could
include in particular statements concerning business back-logs, operating
efficiencies and capacities, capital spending, and other expenses. Other
factors that could also cause actual results to differ materially include
dependence upon unaffiliated manufacturers and fabric suppliers, dependence
on certain customers, foreign operations, competition, risks associated with
significant growth, uncertainties in the apparel industry, general economic
conditions, seasonality, political instability, inflation and monetary
fluctuations, import and other charges or taxes, changes in laws and
regulations, other activities of governments, agencies and similar
organizations, trade restrictions or prohibitions, concentration of accounts
receivable, possible fluctuations in operating results, effects of changes
within the Company's organization or in compensation and benefit plans, the
amount, type and cost of the Company's financing and any changes to that
financing, the amount, and rate of growth in, the Company's selling, general
and administrative expenses, changes in accounting policies and practices and
the application of such policies and practices and nationalizations and
unstable governments and legal systems and intergovernmental disputes.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations are
disclosed in this Report to the extent that the Company is currently aware of
them. There may be additional factors that could arise that are not listed
above that could also result in having a material adverse impact on the
Company's liquidity, capital resources and results of operations.

OVERVIEW

                                       9
<PAGE>

The Company contracts for the manufacture of a variety of garments, primarily
basic women's sportswear which includes skirts, blouses, blazers, pants,
shorts, vests and dresses, using assorted fabrics including rayon, linens,
cotton and wool. The Company arranges for the manufacture of garments for
customers under private labels selected by its customers. It markets its
products exclusively in the United States directly to large wholesalers,
directly and indirectly to national retailers and buying organizations, and
directly to women's chain clothing stores and catalogues.

Most of the Company's garments are sold on a "package" basis pursuant to
which the Company markets at fixed prices finished garments to the customer's
specifications and quantity requirements, arranges for production of the
garments and delivers the garments directly to the customer. In its
marketing, the Company emphasizes these package arrangements and what it
believes to be the better quality and lower prices of garments produced by
skilled Macedonian workers as compared to lower paid workers in certain other
regions. See Item 1.

As a package provider, the Company sources and purchases fabrics and trims,
arranges for cutting and sewing, and coordinates any other services required
to provide a completed garment. Since the Company manufactures its finished
products only upon receipt of purchase orders from its wholesale and retail
customers, it therefore does not maintain an inventory of finished products.
The Company believes that in this way it minimizes the marketing and fashion
risk generally associated with the apparel industry.

Fabrics and trims are purchased from suppliers in China, India, Russia,
Romania, Italy and the United States. After dying the fabric, if necessary,
the fabric and trim are shipped to factories selected by the Company
(primarily located in Macedonia) where they are manufactured into completed
garments under the Company's management and quality control guidance. The
finished products are then shipped directly to New York City where the
Company's customers claim the goods either at the port in New York City or at
a consolidating warehouse in Astoria, New York or the Company arranges for
direct shipping of goods to retailers.

The following is a discussion of the financial condition and results of
operations of the Company for the years ended December 31, 1999, 1998 and
1997. This discussion should be read in conjunction with the Company's
financial statements, the notes related thereto, and the other financial data
included elsewhere in this filing.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
NOTE: ALL FIGURES IN PERCENTAGES
EXCEPT EARNINGS PER SHARE                    1999              1998            1997
                                            ------             -----         --------
<S>                                         <C>                <C>           <C>
Net sales                                     100%              100%           100.0%
Cost of goods sold                            86.7              87.1             85.8
Gross profit                                  13.3              12.9             14.2
Selling, general and admin. Exp.              12.1               7.6              4.6
Interest expense                               1.1              0.39             0.02
Net income                                     0.5               3.0              5.8
Earnings per share                         $  0.03              0.28         $   0.55

</TABLE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1999, AND 1998 (THE
"1999 YEAR" AND "1998 YEAR", RESPECTIVELY.)

SALES

                                       10
<PAGE>

Sales for the 1999 Year were $20,207,460 which represented a decrease of
$7,327,076 or 26.6% over the 1998 Year net sales of $27,534,536. The decrease
in sales was primarily attributable to the decrease in the volume of business
ordered by existing customers and new customers. This was in part attributed
to the out break of the conflict in the Balkans which had an adverse effect
on the Company's second quarter sales.

The Company intends to continue to evaluate its strategies to remain
competitively responsive to the market. The Company may in the future elect
to adopt different market strategies including but not limited to start
manufacturing under its own labels. It is one of the Company's strategies to
continue to simultaneously increase productive capacity to meet the growth in
orders and to create a more diverse and less concentrated portfolio of
business. This strategy is designed to reduce the extent of impact, which
could be material and adverse, that the loss of any one or more customers
might have on the Company's overall results of operations and capital
resources. The Company currently can not assess the extent to which this
strategy will be successful.

GROSS PROFIT

Gross profit was $2,685,363 for the 1999 Year, a decrease of $857,267 from
$3,542,630 for the 1998 Year. The gross profit percentage was 13.3% in the
1999 Year, an increase from 12.9% in the 1998 Year. The decrease in gross
profit was primarily attributable to decrease in gross sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ("SG&A") expenses were $2,444,841 or
12.1% of sales for the 1999 Year, an increase of $344,957 from $2,099,884 or
7.6% of sales for the 1998 Year. The increase in expenses was attributable to
the increase in commission expenses, trade show expenses, printing, license
fees, office salaries, officer salaries, bank charges and factor charges.

INTEREST EXPENSE

Interest expense for the 1999 Year was $236,718 an increase of $131,278
compared to $105,440 for the 1998 Year. Interest expense was primarily
attributable to the Company's utilization of its line of credit and factoring
arrangement.

PROVISION FOR INCOME TAXES

The provision for income taxes was $46,000 and $629,363 for the 1999 and 1998
Years, respectively. The marginal tax rate experience of the Company has been
approximately 40%.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998, AND 1997 (THE
"1998 YEAR" AND "1997 YEAR", RESPECTIVELY.)

SALES

Sales for the 1998 Year were $27,534,536 which represented an increase of
$7,809,785 or 39.6% over the 1997 Year net sales of $19,724,751. The increase
in sales was primarily attributable to the increase in the volume of business
ordered by existing customers and new customers.

The Company intends to continue to evaluate its strategies to remain
competitively responsive to the market. The Company may in the future elect
to adopt different market strategies including but not limited to start
manufacturing under it's own labels.It is one of the Company's strategies to
continue to simultaneously increase productive capacity to meet the growth in
orders and to

                                       11
<PAGE>

create a more diverse and less concentrated portfolio of business. This
strategy is designed to reduce the extent of impact, which could be material
and adverse, that the loss of any one or more customers might have on the
Company's overall results of operations and capital resources. The Company
currently can not assess the extent to which this strategy will be successful.

GROSS PROFIT

Gross profit was $3,542,630 for the 1998 Year, an increase of $742,444 from
$2,800,186 for the 1997 Year. The gross profit percentage was 12.9% in the
1998 Year, a decrease from 14.2% in the 1997 Year. The decrease in gross
profit was primarily attributable to increased cost of freight forwarding as
a result of air freight costs, an increase in costs related to technicians,
inspection, merchandise repairs, warehouse expenses and sample expenses

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ("SG&A") expenses were $2,099,884 or 7.6%
of sales for the 1998 Year, an increase of $1,190,629 from $909,255 or 4.6%
of sales for the 1997 Year. The increase in expenses was attributable to the
increase in commission expenses, trade show expenses, printing, license fees,
office salaries, officer salaries, bank charges and factor charges.

INTEREST EXPENSE

Interest expense for the 1998 Year was $105,440 an increase of $60,154
compared to $45,286 for the 1997 Year. Interest expense was primarily
attributable to the Company's utilization of its line of credit. Also,
interest expenses increased due to utilization of its factoring arrangement.

PROVISION FOR INCOME TAXES

The provision for income taxes was $629,363 and $775,000 for the 1998 and
1997 Years, respectively. The marginal tax rate experience of the Company has
been approximately 40%.

LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY

The Company has 575,000 warrants outstanding with an exercise price of $7.50
per warrant expiring September 23, 2002. The Company has 50,000 underwriter
warrants outstanding with an exercise price of $14.40 per unit. Each unit
consists of two shares of the Company's common stock and one warrant as
described above. The Company does not know whether the warrants will be
exercised in 2000. Without exercise of those warrants, the Company may need
to limit its growth in order to more efficiently manage its available funds
and funds generated by operations.

The Company is utilizing a $3.5 million line of credit and its credit
facility arrangement with a New York factoring company.

CASH FLOWS USED BY OPERATING ACTIVITIES

                                       12
<PAGE>

Operating activities used net cash of $884,450. Cash flows used by operating
activities were primarily attributable to purchases of raw materials, trim
and finished goods required to support the Company's corresponding increase
in customer orders, increases in accounts payable and utilization of customer
advances.

CASH FLOWS USED FOR INVESTING ACTIVITIES

The Company's cash flow used by investing activities totaled $65,104. Cash
flows used by investing activities were primarily attributable to the
purchase of equipment.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash flows from financing activities totaled $919,521. Cash flows from
financing activities were primarily attributable to the Company's use of its
line of credit.

CAPITAL RESOURCES

Since its formation, the Company has financed its operations and met its
capital requirements primarily through its public offering, cash flows from
operations, customer advances, exercise of Stock Options and credit
facilities.

The initial use of IPO funds was to repay certain debt and to purchase raw
materials for working capital and the eventual purchase of wool manufacturing
equipment. The Company's primary need for cash is for working capital
purposes. The Company may raise capital through the issuance of long-term or
short-term debt, or the issuance of securities in private or public
transactions to fund future expansion of its business. There can be no
assurance that acceptable financing for future transactions can be obtained.

INFLATION AND CURRENCY VOLATILITY

The Company does not anticipate a significant increase in inflation in the
United States over the short-term. All of the Company's transactions
worldwide are conducted on a dollar-denominated basis which is intended to
mitigate the possible impact of volatile currencies that may arise as a
result of global corporations crowding emerging markets in search of growth.

SEASONALITY

The Company's revenues and operating results have exhibited some degree of
seasonality in past periods. Typically, the Company experiences its highest
sales in the first and fourth quarters and its lowest sales in the second and
third quarters. In 1999 the Company experienced its highest sales in the
first and third quarters.

YEAR 2000 ISSUES

Many computer systems in use today were designed and developed using two
digits, rather than four, to specify the year. As a result, such systems will
recognize the year 2000 as "00". This could cause many computer applications
to fail completely or to create erroneous results unless corrective measures
are taken. The Company currently uses software and related computer
technologies essential to its operations that the Company believes will not
be affected by the year 2000 issue.

The Company, however, can not determine the extent to which its vendors and
customers may be affected by the year 2000 issue. The Company is in the
process of implementing a plan to obtain information from its external
service providers, significant suppliers and customers, and financial
institutions to confirm their plans and readiness to become Year 2000
compliant, in order to better understand and evaluate how their Year 2000
issues may affect the Company's

                                       13
<PAGE>

operations. The Company currently is not in a position to assess this aspect
of the Year 2000 issue. The Company intends over the next 2 years to
establish relationships with customers that may require the use of EDI
(electronic data interchange) whereby all invoicing and payments will take
place electronically over the internet through computers. The Company
believes that since these prospective customers already utilize EDI, that
they either have in place now, or will have successfully taken whatever steps
are necessary to solve the year 2000 issue.

While the Company believes that its own internal assessment and planning
efforts with respect to external service providers, suppliers, customers and
financial institutions are and will be adequate to address its year 2000
concerns there can be no assurance that these efforts will be successful or
will not have a material adverse affect on the Company's operations.

ITEM 7.  FINANCIAL STATEMENTS

                                       14
<PAGE>

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

None.



PART III

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

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, KEY EMPLOYEES AND CONTROL PERSONS

<TABLE>
<CAPTION>
                                                                                           OFFICER OR
    NAME                    AGE                 POSITION                                 DIRECTOR SINCE
    ----                    ---                 --------                                 --------------
<S>                         <C>   <C>                                                    <C>
Borivoje Vukadinovic        41    Chief Executive Officer, President, Chairman of the         1991
                                  Board (1)
Hamid Vaghar                35    Chief Financial Officer, Director                           1998
Ivan Zogovic                41    Chief Operations Officer, Director                          1996
Mojgan Keywanfar            36    Controller, Director, Corporate Secretary                   1996
S. William Yost             71    Director (1), (2)                                           1996
Donald E. Tormey            68    Director (1), (2)                                           1996
Sol Schalman                75    Director (1), (2)                                           1999

KEY EMPLOYEES
Jovica Kecman               39    General Manager-International Quality Control

</TABLE>

(1) Member of the compensation committee.

(2) Member of the audit committee.

DIRECTORS AND EXECUTIVE OFFICERS

BORIVOJE VUKADINOVIC has been a director and executive officer of the Company
since January 1991, and its Chief Executive Officer since January 1993. From
June 1990 to August 1993, he was Vice President and a principal stockholder
of Celtex ENT, a Los Angeles, California based company that established and
administered production of yarns and raw textiles in Yugoslavia, Turkey and
Macedonia. From May 1988 to June 1990, he was founder, owner and President of
DUTY OFF, Inc., a Los Angeles, California based company that produced young
men's apparel. He earned a Bachelor of Arts degree in Business from the
University of Banja Luka in Yugoslavia and a Bachelor of Arts degree in Art
from Bern University in Switzerland.

                                       15
<PAGE>

HAMID VAGHAR has served as Controller of Retrospettiva since the Company's
inception and was promoted to Chief Financial Officer in October 1998. From
March 1990 to January 1993, he was an accountant with EB Accounting a
California based accounting firm which conducted various accounting services
for companies in the garment district of Los Angeles. In January 1993 he
became a partner in Mid-West Consultants and continued his accounting career
in that capacity until 1998. He earned a Bachelor degree in Natural Sciences
and an MBA from University of Poona, India.

IVAN B. ZOGOVIC has been employed by the Company as its Manager-Export/Import
since January 1994 and was appointed a director in May 1996. Mr. Zogovic is
responsible for the export and import of raw materials and finished goods
including customs clearing, scheduling and freight forwarding, between the
United States and the Company's contract manufacturers in Eastern Europe. He
earned a law degree from the University of Belgrade Law School and practiced
law in Yugoslavia from 1984 until 1992.

MOJGAN KEYWANFAR has been employed by the Company as its accounting manager
since February 1991 and was appointed a director in December 1996. Ms.
Keywanfar manages the Company's bookkeeping and management information
systems. She holds a B.A. degree in Economics from the California State
University, Northridge.

S. WILLIAM YOST became a director of the Company in May 1996. He has been an
adjunct professor of Operations and Technology Management at the Anderson
Graduate School of Management of the University of California, Los Angeles,
since 1986. During his tenure at Anderson, Dr. Yost has developed two new
graduate courses, Managing Service and Managing Entrepreneurial Operations.
In addition, he has over 20 years experience in industrial positions together
with four years as a presidential appointee in the executive branch of the
federal government, three years in Management Consulting and in the early
1980's as the Assistant Commissioner of the Trademark and Patent Office of
the United States Government in Washington, D.C.. Dr. Yost holds a doctorate
in Business Administration (DBA) from the Harvard Business School, and MBA
from the Anderson Graduate School of Management at the University of
California, Los Angeles, and a B.A. from the University of California,
Berkeley. He serves on the Board of Directors of a number of small privately
held companies and is a consultant to a variety of public and private clients.

DONALD TORMEY became a director of the Company in May 1996. From 1958 until
he retired in 1995, Chevron Corporation employed him in a number of positions
culminating as the Refinery General Manager in El Segundo, California from
1994 until his retirement. He holds a BSCE degree in engineering from the
University of Wisconsin School of Engineering.

SOL SCHALMAN became a director of the Company in September 1999. He received
a Bachelors degree in Business Administration with a major in accounting from
UCLA in 1940. He served in the US Army from 1941 to 1946 and was discharged
in 1964 with rank of Captain in the Finance Dept. He was licensed as a
Certified Public Accountant in California in June 1948 and practiced as a
sole practitioner ever since. He was involved in Real Estate development from
1955 to 1962, owned and operated the Beverly Comstock Hotel in LA from 1962
to 1976 and also is licensed as a Certified Public Accountant in Nevada.

KEY EMPLOYEES

JOVICA KECMAN has been employed by the Company as general manager of
international quality control since 1990. Mr. Kecman earned a degree in
economics from the University of Banja Luka. He is Mr. Vukadinovic's
brother-in-law.

                                       16
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

The following table discloses all compensation awarded to, received by, and
paid to the Chief Executive Officer of the Company for the year ended
December 31, 1999. No other executive officer's annual compensation exceeded
$100,000 in 1999.

<TABLE>
<CAPTION>
                                                                                            LONG TERM COMPENSATION
                                                                      -------------------------------------------------------------
                       ANNUAL COMPENSATION                                AWARDS                         PAYOUTS
                      -------------------------------------------------------------------------------------------------------------
        (a)            (b)       (c)       (d)           (e)              (f)            (g)               (h)           (j)
                                                        OTHER          RESTRICTED                                        ALL
 NAME AND PRINCIPAL                                     ANNUAL           STOCK                            LTIP          OTHER
      POSITION         YEAR   SALARY($)   BONUS($)  COMPENSATION($)    AWARD(S)($)   OPTIONS/SARS(#)    PAYOUTS($)  COMPENSATION($)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>     <C>         <C>       <C>              <C>            <C>                <C>          <C>
Borivoje Vukadinovic   1999    150,000     12,500         -0-             -0-               -0-           -0-           -0-
                       1998     95,000     7,917          -0-             -0-           100,000           -0-           -0-
   Chief Exe.Officer   1997     80,001       -0-          -0-             -0-               -0-           -0-           -0-
                       1996     40,928       -0-          -0-             -0-         1,358,067(1)        -0-           -0-
                       1995     26,500       -0-      34,258(2)           -0-               -0-           -0-           -0-
                       1994     46,576       -0-      25,886(2)           -0-               -0-           -0-           -0-

</TABLE>

(1) See "1996 Stock Option Plan" for description of the options and certain
    re-pricing information.

(2) Represents sales commission paid to Mr. Vukadinovic.

1996 STOCK OPTION PLAN

In May 1996, the Company adopted a stock option plan for officers, directors,
employees and consultants (the "Plan") which provides for the grant of
options intended to qualify as "incentive stock options" and "nonqualified
stock options" within the meaning of Section 422 of the United States
Internal Revenue Code of 1986 (the "Code"). Incentive stock options are
issuable only to eligible officers and key employees of the Company, and
nonqualified options may be granted to officers, employees, directors and
consultants.

The Plan is administered by at least three members of the Board, at least two
of whom are not executive officers or salaried employees of the Company. As
of May 1996, the Company had reserved 1,786,930 shares of Common Stock for
issuance under the Plan. Under the Plan, the Board of Directors determines
which individuals shall receive options, the time period during which the
options may be partially or fully exercised, the number of shares of Common
Stock that may be purchased under each option and the option price. Each
option granted under the Plan shall be evidenced by a stock option agreement.

The per share exercise price of options granted under the Plan may not be
less than the fair market value of the Common Stock on the date the options
are granted. No person who owns, directly or indirectly, at the time of the
granting of an incentive stock option, more than 10% of the total combined
voting power of all classes of stock of the Company is eligible to receive
incentive stock options under the Plan unless the option price is at least
100% of the fair market value of the Common Stock subject to the option on
the date of grant.

No options may 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 may only be exercisable by the optionee. Options under the Plan must
be granted within 10 years from the effective date of the Plan and the
exercise date of an option cannot be later than 10 years from the date of
grant. Any

                                       17
<PAGE>

options that expire unexercised or that terminate upon an optionee's ceasing
to be employed by the Company become available once again for issuance.
Shares issued upon exercise of an option will rank equally with other shares
then outstanding.

As of the date of this filing, 2,736,635 options have been granted under the
Plan to officers, directors, employees and consultants including 1,577,195
options granted to Messrs. Vukadinovic and Silberman, an aggregated 71,478
options granted to the Company's three non-employee directors and 1,087,962
options to other employees and consultants. The per share exercise prices
range from $0.63 to $6.25, which prices represent at least the fair market
value of Company's Common Stock on the respective dates the options were
granted, based on prior sales of the Company's Common Stock. The table below
sets forth the total number of options issued to each executive officer and
director of the Company and the exercise price. Messrs. Vukadinovic's and
Silberman's options are exercisable until April 2006. The remaining options
expire at various times in 2006 and 2008. There was an amendment filed to the
1996 Stock Option Plan which provided for an additional 1,000,000 options.

In May 1996, the Board granted to Mr. Silberman (I) a stock option to
purchase 238,440 shares of Common Stock at an exercise price of $3.04 per
share, (ii) a stock option to purchase 59,610 shares of Common Stock at an
exercise price of $2.91 per share, and (iii) a stock option to purchase
59,610 shares of Common Stock at an exercise price of $3.88 per share.

In November 1996, the Board amended Mr. Silberman's option grant to reduce
the number of stock options granted to Mr. Silberman from 357,657 to 119,128
options. 59,564 of these options were re-priced to the exercise price of
$3.15 per share. The remaining 59,564 options were re-priced to the exercise
price of $3.78 per share. In December 1996, the Company amended Mr.
Silberman' stock option grants to provide for an adjustment of the exercise
price of both of his stock option grants in the event of an initial public
offering of the Company's securities, a merger or acquisition. In June 1997,
the Board re-priced all 119,128 of Mr. Silberman's options to the current
exercise price of $6.25 per share.

In June 1997, the exercise prices of 1,191,290 of Mr. Vukadinovic's options
were re-priced from $2.83 per share to $6.75 per share.

In December 1998, the Board granted 600,000 options to Frank Trible. 85,000
options were vested immediately and the remaining 515,000 will vest in twelve
monthly installments of 42,916 options per month starting March 1999. The
Board also approved incentive option grants to various officers, employees
and consultants. The following table sets forth all stock options granted to
the Company's executive officers and directors through December 31, 1999.

                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                                    PERCENT OF
                                                                  TOTAL OPTIONS
                                                TOTAL NUMBER OF     GRANTED TO    EXERCISE   EXPIRATION
NAME OF EXECUTIVE OFFICER OR DIRECTOR           OPTIONS ISSUED      EMPLOYEES       PRICE       DATE
-------------------------------------------------------------------------------------------------------
<S>                                            <C>                <C>           <C>         <C>
Borivoje Vukadinovic                               1,458,067 [1]       53.3         (1)        (1)
Ivan Zogovic                                          81,712            3.0         [2]        [3]
Mojgan Keywanfar                                      81,712            3.0         [2]        [3]
Hamid Vaghar                                          50,000            1.8        $ 1.25      2008
S. William Yost                                       23,826            0.9        $ 2.94      2006
Donald E. Tormey                                      23,826            0.9        $ 2.94      2006
Sol Schalman                                          23,826            0.9        $ 2.25      2004
                                                  ----------        -------
Totals                                             1,862,097           68.2

</TABLE>

(1)  Consists of 166,777 options exercisable at $.63 per share, 1,191,290
     options exercisable at $6.00 per share and 100,000 options exercisable at
     $1.25 per share.

(2)  Number of options and exercise prices; consists of 35,739 options
     exercisable at $2.94 per share and 30,973 options exercisable at $1.68
     per share and 15,000 options exercisable at $1.25 per share as to each
     individual.

(3)  Represents stock options to purchase up to 11,913 shares exercisable
     until May 2006, 30,973 shares exercisable until April 2006, 23,826
     shares exercisable until April 2006 and 15,000 shares exercisable until
     December 16, 2008.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
ownership of the Company's common stock as of December 31, 1999, by (i) each
person who is known by the Company to own of record of beneficially more than
5% of the Company's common stock, (ii) the Company's Chief Executive Officer
and each of the Company's directors and (iii) all directors and officers of
the Company as a group. The persons listed in the table have sole voting and
investment powers with respect to the shares of common stock and the address
of each person is in care of the Company at 8825 West Olympic Boulevard,
Beverly Hills, California 90211.

<TABLE>
<CAPTION>
                         NAME                              AMOUNT OF     PERCENT OF
                                                           OWNERSHIP       CLASS
<S>                                                     <C>              <C>
Borivoje Vukadinovic(1)                                     2,404,054       46.3%
Hamid Vaghar(2)                                                50,000        1.0%
Ivan Zogovic(3)                                                81,712        1.6%
Mojgan Keywanfar(3)                                            81,712        1.6%
S. William Yost(4)                                             23,826        0.4%
Donald E. Tormey(4)                                            23,826        0.4%
Sol Schalman(5)                                                23,826        0.4%
                                                          -----------
All officers and directors as a group (8 persons)           2,688,956

</TABLE>

(1)  Includes stock options to purchase up to 1,191,290 shares of common stock
     at $6.00 per share, 166,777 shares at $.63 per share exercisable until
     April 2006 and 100,000 shares at $1.25 until December 2008.

(2)  Includes stock options to purchase up to 50,000 shares of common stock at
     $1.25 until December 2008

(3)  Represents stock options to purchase up to 30,973 shares at $1.68 per share
     exercisable until April 2006, 11,913 shares at $2.94 per share exercisable
     until May 2006, 23,826 shares at $2.94 per share exercisable until April
     2006 and 15,000 share at $1.25 exercisable until December 2008 .

(4)  Represents stock options to purchase up to 23,826 shares of common stock at
     $2.94 per share exercisable until May 2006.

(5)  Represents stock options to purchase up to 23,826 shares of common stock at
     $2.25 per share exercisable until September 2004.

                                       19
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In April 1996, the Company executed a three-year employment agreement with
Mr. Vukadinovic, its Chief Executive Officer, and Mr. Silberman, its Chief
Financial Officer until October 1998, providing for annual salaries of
$95,000 and $60,000 respectively, upon an IPO or merger of the Company with a
publicly-traded company. In connection with their employment, Messrs.
Vukadinovic and Silberman received options under the plan to purchase
1,191,290 shares and 119,128 shares, respectively, of the Company's common
stock. Mr. Silberman also received 81,007 shares of common stock for services
rendered valued at $.0042 per share on the date of grant, or an aggregate
value on such date of $34,000.

At December 31, 1999, Mr. Vukadinovic was indebted to the Company in the
amount of $300,160 advanced by the Company under a credit facility granted to
Mr. Vukadinovic in the maximum amount of $300,000 and evidenced by a
promissory note. The promissory note is unsecured, bears no interest and is
due on demand. The sums advanced to Mr. Vukadinovic were primarily used by
him to pay certain medical and related expenses of a family member.

Until December 31, 1996, Mr. Vukadinovic was a 22.5% stockholder in Easy
Concepts, Inc. ("ECI"), an apparel customer of the Company. At December 31,
1996 and December 31, 1997, ECI was indebted to the Company for apparel
purchases on open account in the amounts of $1,182,202 and $218,457
respectively. On January 1, 1997 Mr. Vukadinovic returned all of his ECI
stock to ECI for no consideration. He elected to do so because he had
received his ECI stock for nominal consideration in the form of services
rendered and he wanted to eliminate any potential for conflict of interest
caused by his ECI stockholdings. He was never an officer or director of ECI
and ECI is no longer a customer of the Company.

The Company used a portion of a consolidating warehouse in Astoria, New York
for short term storage and for consolidating services in connection with
finished goods imported from Macedonia pending pick up by the Company's
customers. Positive Influence, Inc. ("PII"), the owner of the warehouse and
the provider of the consolidating services, is a non-affiliated former
customer of the Company which was indebted to the Company in the amount of
$86,851 at December 31, 1999 for goods previously purchased from the Company.
The Company was charged an average of approximately $10,000 per month for use
of the warehouse and for consolidating services provided by PII which amount
is deducted from the amount owed by PII to the Company. PII also provides
Easy Concepts, Inc. ("ECI"), a former affiliate of the Company, with
warehouse space and consolidating services. Charges due from ECI to PII were
also deducted from the amount owed by PII to the Company and ECI paid such
amounts directly to the Company. Consolidating services involved accepting
finished goods shipments, combining the goods into larger quantities for
pickup by, or delivery to, customers and storage of the goods prior to
customer acceptance.

In July 1997, Mr. Vukadinovic personally guaranteed the Company's line of
credit with Merrill Lynch Business Financial Services Inc. in the amount of
up to $500,000. In November 1997, the line of credit was increased to a
maximum of $1,500,000 based on a formula. In July 1998 this line of credit
was paid off and Mr. Vukadinovic guarenteed the Company's line of credit with
Imperial Bank in the maximum amount of $3,500,000 based on a formula.

At December 31, 1997, ECI's indebtedness to the Company was $218,457 The
amount related to apparel purchased through February 1997 and at that time
was more than 180 days past due. As the indebtedness was incurred on open
account for apparel purchases, the amount was not evidenced by a promissory
note, no interest had been charged and there was no maturity date for full
payment. However, the Company believed that ECI would pay off the remaining
amount due by December 1997 but if it failed to do so, the Company was
prepared to take such legal action as was necessary to enforce its claim
against ECI. At December 31, 1997, ECI had $106,000 worth of pants at cost in
the PII warehouse. The market value of the pants was estimated to be $150,000
and it was ECI's intention to sell those goods to pay the indebtedness to the
Company.

                                       20
<PAGE>

The Company believed that the goods would be sold by June 30, 1998 and the
proceeds would be paid to the Company in its entirety. At December 31, 1999
the balance of this indebtness was $46,854.

In December 1998 the Company executed a one year employment agreement with
Mr. Trible as its Vice President of Investor Relations providing for an
annual salary of $54,000 and the issuance of 600,000 stock options. See "1996
Stock Option Plan". As of February 15, 2000, Mr. Trible is no longer an
employee of the Company and all 322,084 Stock Options not exercised by him
have been forfeited. In addition Mr. Trible is indebted to the Company in
amount of $164,790 which is past due and may require litigation to collect.

The Company believes that the transactions described above were fair,
reasonable and consistent with the terms of transactions that the Company
could have entered into with non-affiliated third parties. All future
transactions with affiliates will be approved by a majority of the Company's
disinterested directors.

PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Financial Statements and Schedules

(b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the last quarter of the year ended
December 31, 1999.

(c)  Exhibit Listing

<TABLE>
<CAPTION>
 EXHIBIT NO.   TITLE
<S>            <C>
    1.01       Form of Underwriting Agreement (1)
    1.02       Form of Agreement Among Underwriters(1)
    1.03       Form of Selected Dealer Agreement (1)
    1.04       Form of Representatives' Warrant(1) 1.05 Form of Amended Underwriting Agreement (1)
    3.01       Restated Articles of Incorporation of the Registrant (1)
    3.02       Bylaws of the Registrant (1)
    4.01       Form of Warrant (1)
    4.02       Form of Common Stock Certificate (1)
    5.01       Opinion of Gary A. Agron, regarding legality of the Units (includes Consent) (1)
   10.01       1996 Employee Stock Option Plan (1)
   10.02       Office Lease and Amendments thereto (Beverly Hills, California) (1)
   10.03       Employment Agreement with Mr. Vukadinovic, as amended (1)
   10.04       Employment Agreement with Mr. Silberman, as amended (1)
   10.05       Promissory Note issued by Mr. Vukadinovic (1)
   10.06       License Agreement with J.G. Hook, Inc(1)
   10.07       Consulting Agreement with Kevin Dieball(1)
   10.08       Factoring Agreement with Commodore Factors, Inc.(1)
   10.09       Agreement with David N (1)
   10.10       Agreement with Frank Trible
   11.01       Computation of Earnings Per Share (1)
   11.02       Computation of Earnings Per Share (1)
   23.02       Consent of Gary A. Agron (See 5.01, above) (1)
   23.03       Consent of AJ. Robbins, P.C. (1)
   27          Financial Data Schedule

</TABLE>

                                       21
<PAGE>

(1) Previously filed

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report be signed on behalf by the undersigned, thereunto duly
authorized on April 10, 2000.


                                       RETROSPETTIVA, INC.


                                       By: /s/ Borivoje Vukadinovic
                                          --------------------------------
                                          Borivoje Vukadinovic
                                          President and Chief Executive Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated
on April 7, 2000.


           SIGNATURE                                                CAPACITY


/s/ Borivoje Vukadinovic
----------------------------------     Chairman of the Board of Directors,
Borivoje Vukadinovic                   President, Chief Executive Officer


/s/ Hamid Vaghar
----------------------------------     Chief Financial Officer (Principal
Hamid Vaghar                           Financial Officer)


/s/ Ivan Zogovic
----------------------------------     Director
Ivan Zogovic


/s/ Mojgan Keywanfar
----------------------------------     Director
Mojgan Keywanfar


/s/ S. William Yost
----------------------------------     Director
S. William Yost


/s/ Donald Tormey
----------------------------------     Director
Donald Tormey


/s/ Sol Schalman
----------------------------------     Director
Sol Schalman


                                       22
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                      PAGE
                                                                      ----
<S>                                                                   <C>
Independent Auditors' Report                                           F-2

Consolidated Balance Sheet                                             F-3

Statements of Income                                                   F-5

Statements of Changes in Stockholders' Equity                          F-6

Statements of Cash Flows                                               F-7

Notes to Consolidated Financial Statements                             F-8

</TABLE>


                                      F-1

<PAGE>

                         INDEPENDENT AUDITORS' REPORT



TO THE BOARD OF DIRECTORS
RETROSPETTIVA, INC.
BEVERLY HILLS, CALIFORNIA


We have audited the accompanying consolidated balance sheet of
Retrospettiva, Inc. and subsidiary as of December 31, 1999 and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the year then ended. We have also audited the statements of income,
changes in stockholders' equity and cash flows of Retrospettiva, Inc. for the
year ended December 31, 1998. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our 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 1999 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Retrospettiva, Inc. and subsidiary as of December 31, 1999 and the results of
its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles. Also, in our opinion, the 1998
financial statements referred to above present fairly, in all material
respects, the results of operations and cash flows of Retrospettiva, Inc. for
the year ended December 31, 1998, in conformity with generally accepted
accounting principles.


                                       AJ. ROBBINS, P.C.
                                       CERTIFIED PUBLIC ACCOUNTANTS
                                       AND CONSULTANTS


DENVER, COLORADO
FEBRUARY 22, 2000


                                      F-2

<PAGE>

                      RETROSPETTIVA, INC. AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEET
                               DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                    ASSETS
                                    ------

<S>                                                                             <C>
CURRENT ASSETS:
     Cash                                                                       $    85,857
     Accounts receivable, net, pledged                                            1,088,811
     Due from factor                                                                742,950
     Note receivable, current portion, pledged                                       36,000
     Note receivable, stockholder, pledged                                          300,160
     Inventories, pledged                                                        10,253,949
     Income taxes receivable                                                         72,949
     Accrued interest receivable - stockholder                                       78,551
     Due from vendors                                                               580,882
     Product development costs                                                      179,721
     Other current assets                                                            87,812
                                                                                -----------

           Total Current Assets                                                  13,507,642

PROPERTY AND EQUIPMENT, at cost, net, pledged                                     1,085,117

NOTES RECEIVABLE, net of current portion, pledged                                    50,851

DEFERRED TAX ASSETS, net of current portion                                          47,000

OTHER ASSETS                                                                         18,295
                                                                                -----------

                                                                                $14,708,905
                                                                                ===========

</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                      F-3

<PAGE>

                      RETROSPETTIVA, INC. AND SUBSIDIARY
                    CONSOLIDATED BALANCE SHEET (CONTINUED)
                               DECEMBER 31, 1999

<TABLE>
<CAPTION>
                     LIABILITIES AND STOCKHOLDERS' EQUITY
                     ------------------------------------
<S>                                                                             <C>
CURRENT LIABILITIES:
   Accounts payable, trade                                                      $ 3,126,098
   Line of credit                                                                 2,110,817
   Accrued expenses                                                                  45,621
                                                                                -----------

         Total Current Liabilities                                                5,282,536
                                                                                -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock - authorized 1,000,000 shares- none issued or
     outstanding                                                                          -

   Common stock - authorized 15,000,000 shares, no par value;
     issued and outstanding 3,177,916 shares                                      6,765,480

   Subscription receivable                                                         (164,790)

   Additional paid-in capital                                                       230,000

   Retained earnings                                                              2,595,679
                                                                                -----------

         Total Stockholders' Equity                                               9,426,369
                                                                                -----------

                                                                                $14,708,905
                                                                                ===========

</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                      F-4

<PAGE>

                      RETROSPETTIVA, INC. AND SUBSIDIARY
                             STATEMENTS OF INCOME
             FOR THE YEARS ENDED DECEMBER 31, 1999 (CONSOLIDATED)
                           AND 1998 (UNCONSOLIDATED)

<TABLE>
<CAPTION>

                                                                 1999           1998
                                                             -----------    -----------
<S>                                                          <C>            <C>
SALES                                                        $20,207,460    $27,534,536

COST OF SALES                                                 17,522,097     23,991,906
                                                             -----------    -----------

GROSS PROFIT                                                   2,685,363      3,542,630
                                                             -----------    -----------

OPERATING EXPENSES:
     Selling expenses                                            729,189        638,893
     General and administrative                                1,715,652      1,460,991
                                                             -----------    -----------

     Total Operating Expenses                                  2,444,841      2,099,884
                                                             -----------    -----------

INCOME FROM OPERATIONS                                           240,522      1,442,746
                                                             -----------    -----------

OTHER INCOME (EXPENSE):
     Interest income - related party                              15,788         34,332
     Interest expense                                           (236,718)      (105,440)
     Other income                                                122,354         73,272
                                                             -----------    -----------

     Net Other Income (Expense)                                  (98,576)         2,164
                                                             -----------    -----------

INCOME BEFORE INCOME TAXES                                       141,946      1,444,910

INCOME TAX PROVISION                                              46,000        629,363
                                                             -----------    -----------

NET INCOME                                                   $    95,946    $   815,547
                                                             ===========    ===========

BASIC EARNINGS PER COMMON SHARE                              $       .03    $       .28
                                                             ===========    ===========

AVERAGE NUMBER OF BASIC COMMON SHARES OUTSTANDING              3,103,198      2,900,000
                                                             ===========    ===========

DILUTED EARNINGS PER COMMON SHARE                            $       .03    $       .22
                                                             ===========    ===========

AVERAGE NUMBER OF DILUTED COMMON SHARES OUTSTANDING            3,648,157      3,682,828
                                                             ===========    ===========

</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                      F-5

<PAGE>


                       RETROSPETTIVA, INC. AND SUBSIDIARY
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999 (CONSOLIDATED)
                            AND 1998 (UNCONSOLIDATED)


<TABLE>
<CAPTION>
                                        Common Stock                      Additional
                                  ----------------------- Subscription     Paid-In      Retained
                                    Shares      Amount     Receivable      Capital      Earnings       Total
                                  ----------  -----------  ----------    -----------   -----------  -----------
<S>                               <C>         <C>          <C>            <C>           <C>          <C>

BALANCES, DECEMBER 31, 1997        2,900,000  $ 6,258,190  $     -        $   230,000   $ 1,684,186  $ 8,172,376

Net income for the year                 -            -           -               -          815,547      815,547
                                  ----------  -----------  -----------    -----------   -----------  -----------

BALANCES, DECEMBER 31, 1998        2,900,000    6,258,190        -            230,000     2,499,733    8,987,923

Stock options exercised              277,916      507,290    (164,790)           -             -         342,500

Net income for the year                 -            -           -               -           95,946       95,946
                                  ----------  -----------  -----------    -----------   -----------  -----------


BALANCES, DECEMBER 31, 1999        3,177,916  $ 6,765,480  $ (164,790)    $   230,000   $ 2,595,679  $ 9,426,369
                                  ==========  ===========  ===========    ===========   ===========  ===========

</TABLE>



           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                 F-6


<PAGE>



                       RETROSPETTIVA, INC. AND SUBSIDIARY
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1999 (CONSOLIDATED)
                            AND 1998 (UNCONSOLIDATED)


<TABLE>
<CAPTION>
                                                                                         1999              1998
                                                                                    ------------      ------------
<S>                                                                                 <C>               <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net income                                                                          $     95,946      $    815,547
   Adjustments to reconcile net income to net cash provided (used) by operating
     activities:
     Bad debt expense                                                                     79,481           102,699
     Depreciation and amortization                                                       136,907            27,940
     Deferred income taxes                                                                (6,000)           (7,000)
     Services and rent provided to reduce note receivable                                 13,482           102,824
     Changes in:
       Accounts receivable                                                               548,405         1,139,374
       Product development costs                                                        (179,721)           -
       Due from joint venturer                                                           (20,000)           -
       Due from factor                                                                  (409,897)         (333,053)
       Inventories                                                                    (1,783,247)       (2,080,806)
       Accrued interest - related party                                                  (23,181)          (34,328)
       Due from vendors                                                                 (134,362)         (322,811)
       Other current assets                                                                6,708             5,479
       Prepaid income taxes                                                                9,067           (82,016)
       Accounts payable and accrued expenses                                           1,049,416          (825,457)
       Accrued income taxes                                                               -               (160,966)
       Customer advances                                                                (267,454)          130,069
                                                                                    ------------      ------------

         Cash flows (used) by operating activities                                      (884,450)       (1,522,505)
                                                                                    ------------      ------------

CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
   Purchase of property and equipment                                                    (57,497)       (1,132,883)
   Loans to stockholder                                                                 (112,892)          (91,189)
   Collections on note receivable, stockholder                                           104,470            -
   Other assets                                                                              815           (14,501)
                                                                                    ------------      ------------

         Cash flows (used) by investing activities                                       (65,104)       (1,238,573)
                                                                                    ------------      ------------

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
   Payments on note payable                                                              (26,580)         (104,544)
   Proceeds from line of credit                                                        5,841,382         3,827,106
   Payments on line of credit                                                         (5,237,781)       (2,415,499)
   Proceeds from issuance of common stock                                                342,500              -
                                                                                    ------------      ------------

         Cash flows provided by financing activities                                     919,521         1,307,063
                                                                                    ------------      ------------

NET (DECREASE) IN CASH                                                                   (30,033)       (1,454,015)

CASH AND CASH EQUIVALENTS, beginning of period                                           115,890         1,569,905
                                                                                    ------------      ------------

CASH AND CASH EQUIVALENTS, end of period                                            $     85,857      $    115,890
   SEE NOTE 13                                                                      ============      ============
</TABLE>



           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                      F-7
<PAGE>


                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


ACTIVITY
Retrospettiva, Inc. (the Company) located in Beverly Hills, California was
organized in November 1990 to manufacture and import textile products from
Europe including finished garments and fabrics.

The Company designs, contracts for manufacture and markets a variety of
garments. Fabrics are purchased from suppliers worldwide including firms in
China, India, Russia, Romania, Italy and the United States. The fabrics are
shipped to contractor factories primarily in Macedonia to be manufactured
into finished garments for shipment to the Company's customers in the United
States.

During 1999 the Company formed a subsidiary, Hamilton Toys, LLC (Hamilton),
for the manufacture of toys related to "The Adventures of Rocky and
Bullwinkle" film.

CONSOLIDATION AND MINORITY INTEREST
The Company and its subsidiary Hamilton, in which it exercises control
through majority ownership are consolidated and all inter-company accounts
and transactions are eliminated. The Company's percentage of ownership for
the year ended December 31, 1999 was 60%.

The consolidated financial statements of the Company include 100% of the
assets, liabilities, equity and operations of the subsidiary. The remaining
ownership interests of the other venturer will be recorded as minority
interests when the venturer contributes equity.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and investments with original
maturities of three months or less.

ACCOUNTS RECEIVABLE
The Company provides an allowance for doubtful accounts, as needed, for
accounts deemed uncollectible. Allowance for uncollectible accounts was
$205,653 at December 31, 1999.

INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out) or market.


                                     F-8


<PAGE>


                       RETROSPETTIVA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation and amortization
expense is generally provided on a straight-line basis using estimated useful
lives of 5-10 years for equipment. Leasehold improvements are amortized over
the lesser of the estimated useful life of the asset or the term of the
lease. Depreciation and amortization expense of property and equipment was
$136,907 and $27,940 for the years ended December 31, 1999 and 1998,
respectively.

PRODUCT DEVELOPMENT COSTS
At December 31, 1999 the Company had $179,721 of unamortized product
development costs related to specific products of Hamilton. These costs are
capitalized until sales are generated. These costs will be amortized over one
year, the expected sale period.

REVENUE RECOGNITION
Revenue is recognized when sold merchandise has cleared customs in the United
States and is available to be shipped to customers from a port of entry or
when the goods are consolidated and shipped from the Company's warehouse in
New York.

INCOME TAXES
The Company accounts for income taxes under the asset and liability method.
Under this method, deferred income taxes are recorded to reflect the tax
consequences in future years of temporary differences between the tax basis
of assets and liabilities and their financial statement amounts at the end of
each reporting period. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized. Income tax
expense represents the tax payable for the current period and the change
during the period in deferred tax assets and liabilities. Deferred tax assets
and liabilities have been netted to reflect the tax impact of temporary
differences. (See Note 11)

EARNINGS PER COMMON SHARE
Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS
No. 128) was issued in February 1997 (effective for financial statements
issued for periods ending after December 15, 1997). This Statement simplifies
the standards for computing earnings per share (EPS) previously found in
Accounting Principles Board Opinion No. 15, Earnings Per Share, and makes
them more comparable to international EPS standards. SFAS No. 128 replaces
the presentation of primary EPS with a presentation of basic EPS. In
addition, the Statement requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation.


                                     F-9


<PAGE>


                     RETROSPETTIVA, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In 1999 the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. The adoption by the Company of Statement
133 did not impact the Company's financial statements.

RECLASSIFICATION
Certain amounts reported in the Company's financial statements for the year
ended December 31, 1998 have been reclassified to conform to the current year
presentation.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting periods. Actual results could
differ from those estimates and assumptions.

IMPAIRMENT OF LONG LIVED ASSETS
The Company evaluates its long lived assets by measuring the carrying amount
of the assets against the estimated undiscounted future cash flows associated
with them. At the time such evaluations indicate the future undiscounted cash
flows of certain long lived assets are not sufficient to cover the carrying
value of such assets, the assets are adjusted to their fair values. No
adjustment to the carrying value of the assets have been made.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments, which principally
include cash, trade receivables, notes receivable, accounts payable and
accrued expenses, approximates fair value due to the relatively short
maturity of such instruments. The fair value of the Company's debt
instruments are based on the current borrowing rates available for financings
with similar interest rates. At December 31, 1999 the carrying value of all
financial instruments was not materially different from fair value.

YEAR 2000 ISSUES
Many computer systems and other equipment with embedded chips or
microprocessors may not be able to appropriately interpret dates after
December 31, 1999 because such systems use only two digits to indicate a year
in the date field rather than four digits. If not corrected, many computers
and computer applications could fail or create miscalculations, causing
disruptions to the Company's operations. In addition, the failure of customer
and supplier computer systems could result in interruption of sales and
deliveries of key supplies or utilities. Because of the complexity of the
issues and the number of parties involved, the Company cannot reasonably
predict with certainty the nature or likelihood of such impacts.


                                     F-10


<PAGE>


                     RETROSPETTIVA, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

While the Company believes that its own internal assessment and planning
efforts with respect to its external service providers, suppliers, customers
and financial institutions are and will be adequate to address its Year 2000
concerns, there can be no assurance that these efforts will be successful or
will not have a material adverse effect on the Companies' operations. Costs
in connection with compliance were not significant.

To date, the Company has not experienced any interruptions with respect to
the Year 2000 issue, but cannot reasonably predict with certainty that they
will not experience any interruptions.

CREDIT RISK
The Company sells its merchandise principally to customers throughout the
United States. Management performs regular evaluations concerning the ability
of its customers to satisfy their obligations and records a provision for
doubtful accounts based upon these evaluations. The Company's credit losses
for the periods presented have not exceeded management's estimates.

Three customers accounted for 93% of the non-factored accounts receivable
balance at December 31, 1999.

The Company maintains all cash in bank deposit accounts, which at times may
exceed federally insured limits. The Company has not experienced a loss in
such accounts.

SIGNIFICANT CUSTOMERS
Individual customers aggregating in excess of 10% of net sales are as follows:

<TABLE>
<CAPTION>
                                                          FOR THE YEARS ENDED
                                                              DECEMBER 31,
                                                      --------------------------
                                                          1999           1998
                                                      -----------    -----------
<S>                                                   <C>            <C>
SALES
Customer A                                            $ 2,333,366    $      -
Customer B                                            $ 4,297,956    $ 9,414,735
Customer C                                            $ 5,898,082    $ 8,126,760
Customer D                                            $      -       $ 4,486,144
</TABLE>


NOTE 2 - DUE FROM VENDORS

Due from vendors consist of funds advanced by the Company to vendors and
chargebacks to vendors for merchandise in prior years. The amounts will be
recouped within one year in the form of vendor credits.


                                     F-11


<PAGE>


                      RETROSPETTIVA, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                               1999
                                                          ------------
<S>                                                       <C>
Finished goods                                            $  2,917,406
Work-in-process                                              4,053,545
Raw materials                                                3,282,998
                                                          ------------

                                                          $ 10,253,949
                                                          ============
</TABLE>

The Company's import operations are subject to constraints imposed by
bilateral textile agreements between the United States and a number of
foreign countries. These agreements impose quotas on the amount and type of
goods which can be imported into the United States from these countries and
can limit or prohibit importation of products on very short notice. The
Company's imported products are also subject to United States customs duties
which are a material portion of the Company's cost of imported goods. A
substantial increase in customs duties or a substantial reduction in quota
limits applicable to the Company's imports could have a material adverse
effect on the Company's financial condition and results of operations.

NOTE 4 - EARNINGS PER SHARE

<TABLE>
<CAPTION>
                                                     FOR THE YEAR ENDED DECEMBER 31, 1999
                                                   ----------------------------------------
                                                     INCOME          SHARES       PER SHARE
                                                   (NUMERATOR)    (DENOMINATOR)     AMOUNT
                                                   -----------    -------------   ---------
<S>                                                <C>            <C>             <C>
BASIC EPS
     Income available to common stockholders        $  95,946       3,103,198     $     .03

EFFECT OF DILUTIVE SECURITIES
     Options and warrants                                -            544,959          *
                                                    ---------      ----------     ---------

DILUTED EPS
     Income available to common stockholders
      including assumed conversions                 $  95,946       3,648,157     $     .03
*Less than $.01                                     =========      ==========     =========
</TABLE>




                                     F-12

<PAGE>


                 RETROSPETTIVA, INC. AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
                                                        FOR THE YEAR ENDED DECEMBER 31, 1998
                                                    --------------------------------------------
                                                       INCOME           SHARES         PER SHARE
                                                    (NUMERATOR)     (DENOMINATOR)        AMOUNT
                                                    -----------     -------------    -----------
<S>                                                 <C>             <C>              <C>

BASIC EPS
     Income available to common stockholders        $   815,547        2,900,000     $      0.28

EFFECT OF DILUTIVE SECURITIES
     Options and warrants                                  -             782,828            (.06)
                                                    -----------      -----------     -----------
DILUTED EPS
     Income available to common stockholders
      including assumed conversions                 $   815,547        3,682,828     $       .22
                                                    ===========      ===========     ===========
</TABLE>



NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                                1999
                                                            ------------
<S>                                                         <C>
Automobile                                                  $     20,568
Furniture and fixtures                                           113,286
Factory equipment                                              1,125,271
Leasehold improvements                                            57,246
                                                            ------------

         Total                                                 1,316,371

Less accumulated depreciation and amortization                   231,254
                                                            ------------

                                                            $  1,085,117
                                                            ============
</TABLE>


                                     F-13


<PAGE>


                     RETROSPETTIVA, INC. AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - NOTE RECEIVABLE

In 1996, a $196,000 account receivable was converted to a note receivable,
bearing interest at 10%, and requiring 24 monthly payments of $10,000 in
consolidation services. Services are valued at the market value of
comparative consolidation services in the area. The Company realized $25,519
and $-0- in services during 1998 and 1999, respectively.

A former related party customer also used the consolidation services during
1998 and reimbursed the Company for these services in the amount of $72,373
which were also applied to the balance of the note. The former related party
customer did not use the services during 1999.

The Company signed a 24 month lease agreement for its New York warehouse,
owned and operated by the payor of the note receivable, commencing on
September 1, 1998. The monthly lease payment was $6,875 and increased to
$8,250 in December 1999. The Company is realizing $3,000 a month in rent to
reduce the above note. The Company realized $13,482 in rent during 1999.

NOTE 7 - NOTE RECEIVABLE FROM STOCKHOLDER

The Company's note receivable ($350,000 maximum) due from an
officer/stockholder is unsecured, due on demand and bore interest at 10% per
annum. The balance at December 31, 1999 is $300,160. Interest was accrued
through September 1999 when the note was amended to be non-interest bearing.

NOTE 8 -LINE OF CREDIT

On July 16, 1998 the Company obtained a line of credit for $2,500,000 with
Imperial Bank. In May 1999 the line was increased to $3,500,000. The debt is
collateralized by accounts receivable, inventories, property and equipment,
notes receivable and the personal guarantee of an officer/stockholder.
Interest is payable at the banks announced prime rate which ranged from 7.75%
to 8.50% during 1999. The line of credit contains various restrictive
covenants among which include maintaining a certain level of tangible net
worth, current ratio and working capital.


                                     F-14


<PAGE>


                       RETROSPETTIVA, INC. AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 9 - STOCK OPTION PLAN

STOCK OPTION PLAN
On May 1, 1996 the Company adopted the Stock Option Plan (the Plan) which
provides for the granting of options to officers, directors, employees and
consultants. The plan was amended in 1998 to increase the number of shares
reserved for options. 2,786,930 shares of common stock are reserved under the
plan for the granting of options. The Plan is in effect until April 30, 2006,
unless extended by the Company's stockholders. The options are exercisable to
purchase stock for a period of ten years from the date of grant.

Incentive Stock Options granted pursuant to this Plan may not have an option
price that is less than the fair market value of the stock on the date the
option is granted. Incentive stock options granted to significant
stockholders shall have an option price of not less than 110% of the fair
market value of the stock on the date of the grant.

On September 23, 1999 the Company granted options to purchase 23,826 shares
of the Company's common stock at a price of $2.25 per share expiring on
September 23, 2004 to a new director. In April and August 1999, certain
options were repriced to $1.25 to reflect the current market price of the
Company's common stock.

<TABLE>
<CAPTION>
                                                          OUTSTANDING OPTIONS
                                                      ---------------------------
                                          OPTIONS                     PRICE PER
                                         AVAILABLE       NUMBER         SHARE
                                       ------------   -----------    ------------
<S>                                    <C>            <C>            <C>
Balance, December 31, 1997                   85,295     1,701,635    $   .63-6.75
Additional shares reserved                1,000,000        -               -
Granted during 1998                      (1,035,000)    1,035,000            2.50
                                       ------------   -----------    ------------

Balance, December 31, 1998                   50,295     2,736,635        .63-6.75
Expired during 1999                         142,954      (142,954)      2.94-6.75
Exercised                                    -           (277,916)      1.25-2.50
Granted during 1999                         (23,826)       23,826            2.25
                                       ------------   -----------    ------------

Balance, December 31, 1999                  169,423     2,339,591    $  .63 -6.00
                                       ============   ===========    ============
</TABLE>

At  December  31,  1999 and 1998,  2,339,591  and  2,301,635  options
granted  under  the plan  were  exercisable, respectively.


                                     F-15


<PAGE>


                      RETROSPETTIVA, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASES
The Company signed a 61 month lease agreement for its offices expiring on
January 31, 2000. The lease has been extended to July 31, 2000. The monthly
lease payment is $2,378.

The Company rents office and showroom space from a major supplier in New York
on a month to month basis. The Company subleases an apartment in New York on
a month to month basis.

Rent expense for the years ended December 31, 1999 and 1998 was $188,629 and
$142,371, respectively.

EMPLOYMENT AGREEMENTS
The Company has an employment agreement with its President/Chief Executive
Officer providing for a minimum annual salary of $155,000, which renews
annually.

In December 1998, the Company entered into an employment agreement with a
Vice President of investor relations, providing for a minimum annual salary,
stock options to purchase shares of the Company's common stock exercisable
upon execution of the agreement and additional options to be granted during
the term of his employment. This employment agreement expired in December
1999.

LITIGATION
The Company is a party to various claims, complaints, and other legal actions
that have arisen in the ordinary course of business. The Company believes
that the outcome of all pending legal proceedings, in the aggregate, will not
have a material adverse effect on the Company's financial condition or the
results of its operation or cash flows.

PENDING ACQUISITIONS
In October 1999 the Company entered into an agreement to purchase AAA
Computer Solutions for 25,000 shares of common stock. The purchase has not
yet closed. The Company intends to issue the shares in 2000.



                                     F-16


<PAGE>


                      RETROSPETTIVA, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - INCOME TAXES

The components of deferred tax assets and (liabilities) are as follows:

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                                          1999
                                                                      ------------
<S>                                                                   <C>
Total deferred tax assets - bad debt allowance                        $     76,000

Total deferred tax (liabilities) - other                                   (29,000)
                                                                      ------------

Net deferred tax assets                                               $     47,000
                                                                      ============
</TABLE>

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                 FOR THE YEARS ENDED
                                                     DECEMBER 31,
                                            -----------------------------
                                                 1999            1998
                                            -------------    ------------
<S>                                         <C>              <C>
Current                                     $      52,000    $    636,363
Deferred (benefit)                                 (6,000)         (7,000)
                                            -------------    ------------
Provision                                   $      46,000    $    629,363
                                            =============    ============
</TABLE>

Following is a reconciliation of the amount of income tax (benefit) expense
that would result from applying the statutory federal income tax rates to
pre-tax income and the reported amount of income tax expense for the periods:

<TABLE>
<CAPTION>
                                                      FOR THE YEARS ENDED
                                                           DECEMBER 31,
                                                  ----------------------------
                                                      1999            1998
                                                  ------------    ------------
<S>                                               <C>             <C>
Tax expense at federal statutory rates            $     38,000    $    492,000
State tax, net of federal benefit                       10,000          93,000
Other                                                    4,000          51,363
                                                  ------------    ------------

                                                  $     52,000    $    636,363
                                                  ============    ============
</TABLE>


                                     F-17


<PAGE>


NOTE 11 - INCOME TAXES (CONTINUED)

The components of deferred income tax (benefit) expense are as follows:

<TABLE>
<CAPTION>
                                               FOR THE YEARS ENDED
                                                    DECEMBER 31,
                                           --------------------------
                                               1999           1998
                                           -----------    -----------
<S>                                        <C>            <C>
Bad debts                                  $   (13,000)   $   (16,000)
Depreciation                                         -          2,000
Other                                            7,000          7,000
                                           -----------    -----------

                                           $    (6,000)   $    (7,000)
                                           ===========    ===========
</TABLE>

NOTE 12 - STOCK-BASED COMPENSATION

The Company accounts for stock based compensation under Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). The standard requires the Company to present the
"fair value" method with respect to stock-based compensation of consultants
and other non-employees.

The Company did not change its method of accounting with respect to stock
options; the Company continues to account for these under the "intrinsic
value" method.

On December 16, 1998 the Company granted options to purchase 600,000 shares
of the Company's common stock to an employee exercisable at $2.50 per share.
In 1999 472,084 options were repriced to $1.25 per share. Had the Company
adopted the fair value method with respect to options issued to employees an
additional charge to income of $10,500 would have been required in 1998 and
$63,000 in 1999; proforma net income would have been $805,047 and earnings
per share would have been $.28 on a basic basis and $.22 on the diluted
basis. In estimating the above expense, the Company used the Modified
Black-Scholes European pricing model. The average risk-free interest rate
used was 5.5%, volatility was estimated at 65%, the expected life was less
than two years.

On September 23, 1999 the Company granted options to purchase 23,826 shares
of the Company's common stock to a director exercisable at $2.25 per share.
Had the Company adopted the fair value method with respect to options issued
to employees/directors an additional charge to income of $72,000 would have
been required in 1999; proforma net income would have been $22,946 and
earnings per share would have been $.01 on a basic basis and $.01 on the
diluted basis. In estimating the above expense, the Company used the Modified
Black-Scholes European pricing model. The average risk-free interest rate
used was 5.8%, volatility was estimated at 41%; the expected life was two
years.


                                     F-18


<PAGE>


                    RETROSPETTIVA, INC. AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS FOR NONCASH
INVESTING AND FINANCING ACTIVITIES

<TABLE>
<CAPTION>
                                                       FOR THE YEARS ENDED
                                                           DECEMBER 31,
                                                   ----------------------------
                                                       1999            1998
                                                   ------------    ------------
<S>                                                <C>             <C>

Cash paid for interest                             $    236,718    $    105,440
                                                   ============    ============

Cash paid for income taxes                         $     42,933    $    796,000
                                                   ============    ============
</TABLE>

NOTE 14 - SUBSCRIPTION RECEIVABLE

During 1999 an employee exercised 277,916 stock options at prices ranging
from $1.25 to $2.50 per share. The unpaid balance of the exercise price was
$164,790 at December 31, 1999.

NOTE 15 - FACTORING AGREEMENT

The Company has a factoring agreement with Commodore Factors to factor its
accounts receivable up to $2,000,000. The Company will receive up to 80% of
the receivables at the time of factoring. Interest on the factored
receivables will be at the prime rate plus 2%, but never less than 10% per
annum.

The Company assigns a portion of its accounts receivable to the factor
without recourse. Under the terms of the agreement, the factor has a
continuing security in the Company's receivables and inventories. Personal
and cross-corporate guarantees have been given to the factor by certain
stockholders. The agreement provides for a letter of credit facility and
periodic overadvances based on negotiated lines of credit

NOTE 16 - RELATED PARTY TRANSACTIONS

An officer of the Company provided consulting services for $26,000 during
1999.

NOTE 17 - SEGMENT REPORTING

The Company organized its business into two reportable segments: garment
manufacturing and toy manufacturing during 1999. The Company only operated in
the garment manufacturing segment prior to 1999.

The segment's accounting policies are the same as those described in the
summary of significant accounting policies included in Note 1. No sales or
revenues were recognized for the toy manufacturing segment during 1999. All
revenues, expenses and assets relate to the garment manufacturing segment
with the exception of product development costs of $179,721.



                                     F-19