FORM 10-KSB
                            -------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934 FOR THE FISCAL YEAR ENDED JANUARY 31, 2000 OR

[ ]  TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         Commission file number: 0-26439

                             KidsToysPlus.com, Inc.
--------------------------------------------------------------------------------
              (Exact name of small business issuer in its charter)

              Nevada                                     98-0203927
--------------------------------------      -----------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


1000-355 Burrard Street
Vancouver, British Columbia                               V6C 2G8
----------------------------------------     -----------------------------------
(Address of principal executive offices)                  (Zip Code)

                    Issuer's telephone number: 1-877-566-1212

         Securities Registered Under Section 12(b) of the Exchange Act:
                                      None
                                      ----

         Securities Registered Under Section 12(g) of the Exchange Act:
                          Common Stock, 0.001 par value
                          -----------------------------
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 the  registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for most recent fiscal year:                $0
                                                                    --

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  based on the average bid and asked price as of March 31, 2000
being $1.06 per share: $4,630,169

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable date:  9,968,084 shares of Common Stock as
of March 31, 2000.

Documents  Incorporated  by  Reference:  Portions  of issuer's  Proxy  Statement
relating to its 2000 Annual Meeting of  Shareholders to be filed on May 26, 2000
on Schedule 14A is incorporated by reference into Part III of this Form 10-KSB.

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


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                              <C>
PART I............................................................................................................1

Item 1.  Description of Business..................................................................................1

Item 2.  Description of Property.................................................................................22

Item 3.  Legal Proceedings.......................................................................................22

Item 4.  Submission of Matters to a Vote of Security Holders.....................................................22


PART II..........................................................................................................23

Item 5.  Market for Common Equity and Related Stockholder Matters................................................23

Item 6.  Management's Discussion and Analysis of Financial Condition And Results of Operations...................24

Item 7.  Financial Statements....................................................................................29

Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....................29


PART III.........................................................................................................30

Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance With
         Section 16(a) of the Exchange Act ......................................................................30

Item 10.  Executive Compensation.................................................................................30

Item 11.  Security Ownership of Certain Beneficial Owners and Management.........................................30

Item 12.  Certain Relationships and Related Transactions.........................................................30

Item 13.  Exhibits and Reports on Form 8-K.......................................................................31
</TABLE>



<PAGE>

NOTE REGARDING FORWARD LOOKING STATEMENTS

Except for statements of historical fact, certain  information  contained herein
constitutes   "forward-looking   statements,"   including   without   limitation
statements containing the words "believes,"  "anticipates," "intends," "expects"
and words of similar import, as well as all projections of future results.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors which may cause the actual results or  achievements of the Company
to be  materially  different  from any  future  results or  achievements  of the
Company expressed or implied by such  forward-looking  statements.  Such factors
include,  but  are  not  limited  to the  following:  the  Company's  lack of an
operating history, the Company's lack of revenues and unpredictability of future
revenues;  the Company's  lack of  functional  operating  systems,  distribution
infrastructure and website;  the seasonality of the toy industry;  the Company's
future  capital  requirements  to develop our  operating  systems,  distribution
facilities, website and administrative support systems; intense competition from
established  competitors  with  greater  resources;  the  Company's  reliance on
internally  developed systems and system  development risks; the risks of system
failure; the Company's dependence on the Internet and continued growth of online
commerce; the uncertainty of participating in developing a market; the Company's
reliance on merchandise  suppliers and third parties and lack of agreements with
such third  parties;  the risks  associated  with rapidly  changing  technology;
intellectual property risks; risks associated with online commerce security; the
risks associated with governmental regulations and legal uncertainties;  and the
other risks and  uncertainties  described under  "Description of Business - Risk
Factors"  in  this  Form  10-KSB.  Certain  of the  forward  looking  statements
contained in this annual report are  identified  with  cross-references  to this
section and/or to specific risks  identified  under  "Description  of Business -
Risk Factors".


<PAGE>

PART I

Item 1.  Description of Business.

(a)  Business Development

History of the Registrant

Kidstoysplus.com,  Inc. was  organized  and  incorporated  under the laws of the
State of Nevada on February 4, 1999.  Kidstoysplus.com,  Inc.'s principal office
is located at 2924 Cliffe Avenue,  Courtenay,  British Columbia, Canada V9N 2L7.
Kidstoysplus.com,  Inc.  maintains an administrative  office at Suite 1000 - 355
Burrard Street, Vancouver,  British Columbia, Canada V6C 2G8.  Kidstoysplus.com,
Inc.'s URL is www.kidstoysplus.com.

Kidstoysplus.com,  Inc. was organized to develop and operate a retail website on
the Internet  specializing  in children's  products that will initially  include
children's  toys,  collectable  toy  items and hobby  related  products.  In the
future, we may offer books, music, story line CD's,  audio-tapes,  movies, video
games and educational  products.  The terms "we",  "us", "our" and the "Company"
refer to Kidstoysplus.com, Inc.

(b)  Business of Issuer

General Overview

We plan to operate a retail website on the Internet  specializing  in children's
products and to offer information about children's toys,  entertainment products
and other related topics of interest to children and their parents. We intend to
initially  target the  collectable  toy (including die cast metal toys,  limited
edition dolls, toy cars and other  collectable  items) and hobby item (including
train sets,  remote  control planes and cars,  models and other hobby  products)
segments of the children's toy market.  In the future, we may expand our product
offerings to include  other toys and  children's  products.  We intend to fill a
majority  of  our  customer's   orders  through   strategic   affiliations  with
"fulfillment  vendors," who we anticipate will own,  inventory and ship products
directly to our customers.

We are currently in the development stage of our business and are in the process
of entering into  arrangements and agreements to implement our business plan. In
June 1999, we retained  Reticular  Consulting of Victoria,  British  Columbia to
design  our  website   (hereinafter  the   "Kidstoysplus.com   Website"  or  the
"website").

Our website was posted on the Internet for initial public viewing and testing in
late November 1999. Our website is nearing completion and we anticipate that the
official  release will be on or about May 15, 2000. We leased an  administrative
office at 2924 Cliffe Avenue,  Courtenay,  British Columbia,  Canada and we have
leased  a  distribution  and  warehouse  facility  at  4767  Headquarters  Road,
Courtenay, British Columbia, Canada.


<PAGE>

Our toll free phone  number is  1-877-566-1212,  and our toll free fax number is
1-877-897-0403.

Industry Background

Growth of the Internet and E-commerce

The Internet is an increasingly  significant  global medium for  communications,
content and online  commerce.  According to a June 1999 report  published by the
U.S. Department of Commerce,  NUA, an Internet strategy firm, estimated that 171
million  people had  access to the  Internet,  97  million  users of them in the
United States and Canada.  The growth in Internet usage can likely be attributed
to factors such as:

     i)   the large and growing  base of  installed  personal  computers  in the
          workplace and at home,
     ii)  advances  in the  performance  and  speed of  personal  computers  and
          modems,
     iii) improvements in network infrastructure, and
     iv)  easier and cheaper  access to the Internet and increased  awareness of
          the Internet among businesses and consumers.

The  Internet  has become an  attractive  commercial  medium for business as the
functionality,  accessibility  and overall usage has increased over the last few
years. The Internet and other online services are evolving into unique sales and
marketing  channel.  In  theory,  electronic  retailers  are not  limited by the
traditional  constraints of physical shelf space and have the potential to offer
customers a vast selection of products  through  efficient  search and retrieval
interfaces.  Moreover, electronic retailers can interact directly with customers
by frequently adjusting their featured selections,  editorial insights, shopping
interfaces, pricing and visual presentations.

Beyond  the  benefits  of  selection,  purchasing  can be more  convenient  than
shopping in a physical retail store as electronic  shopping can be done 24 hours
a  day  and  eliminates  physical  travel  to  a  store.  Websites  can  present
advertising and marketing materials, display hundreds or thousand of products in
catalog form,  process  transactions and fulfill orders,  provide customers with
rapid and accurate  responses to their  questions and gather  customer  feedback
efficiently.  Generally  the cost of  publishing  on the  Internet is lower than
traditional  advertising  and  marketing  mediums  and the  Internet  offers the
ability to reach and serve a large and global customer base  electronically from
a central location.

As the field known as "e-commerce"  develops,  becomes more sophisticated and is
accepted by a wider range of  consumers,  we  anticipate  that the potential for
personalized  low-cost  customer  interaction will provide  additional  economic
benefits and economies that are unique to the Internet. Additionally, e-commence
may  eliminate  several of the  burdensome  costs of managing and  maintaining a
retail store infrastructure,  the need for continuous printing and mailing costs
of catalog marketing and the costs of maintaining customer service personnel and
support  in  several  locations.  Based on  these  advantages  over  traditional
retailers,  we believe that  e-commerce  retailers  have the  potential to build
large,  global customer bases quickly and to achieve  superior  economic returns
over the long term.  Currently,  there are an increasing number of products that
are being sold online, including computers, travel services, brokerage services,
automobiles,  music,  and books.  We believe the number of products and services
sold over the Internet and the volume of products will increase substantially in
the future.




                                       2
<PAGE>

We believe that marketing children's toys and related products over the Internet
presents an excellent  business  opportunity.  Our business  strategy to compete
with  traditional   facilities   based  retailers  using  e-commerce   marketing
techniques.  We intend to compete with other e-commerce  marketers of children's
toys and related products by  differentiating  our offerings through focusing on
collectible  toys and hobby  items and by  establishing  a  reputation  for high
quality  customer  service.  Despite our optimism about the future of e-commerce
and our  ability to  compete,  we cannot  assure  you that we will  successfully
implement our business plan or that we will be able to compete with  established
retailers of children's  toys and related  products.  Our business is subject to
considerable risks. See "Risk Factors."

The Traditional Toy Industry

The retail toy industry is large, growing and fragmented.  Several large "bricks
and mortar" retailers with physical retail stores,  such as Toys "R" Us, Kay Bee
Toys,  Target  Stores,  Sears,  Wal-Mart,  K-Mart and others,  dominate  the toy
industry and carry a large  selection of toys.  Many  retailers in this industry
also carry  specialty  toy  products.  We believe that most large  retailers are
located in  metropolitan  areas and that there is a large  potential  e-commerce
target markets for children's toys and related products in customers that reside
in suburban and rural areas.

According to Play Things Magazine,  the International  Council of Toy Industries
and the NDP Group  estimate  worldwide toy industry  sales in 1998 totaled $67.8
billion, a 2.7 percent increase from 1997 sales of $66 billion.  There can be no
assurance  that we will  directly or  indirectly  benefit from the growth of the
retail toy  market or that  growth of the toy market  will  continue.  We cannot
assure you that we will  successfully  launch our website or that consumers will
purchase   toys  from  our   website  in   sufficient   quantities   to  achieve
profitability, if at all.

The Traditional Distribution Channels

Toy  manufacturers  generally sell their products directly to retailers and to a
network of  distributors.  Distributors  serve as the  primary  vendors for most
retailers and generally carry 1,000 to 3,000 of the  best-selling  products.  We
believe small  independent  toy retailers sell a large portion of all toys sold.
These small  retailers  generally  sell  products that fit into the market niche
that each store has created and carry a limited  selection  of toys at any given
time. We intend to compete with  retailers that target the  collectible  toy and
hobby item markets.  The toy market has several  retail chains that dominate the
large superstore category. The largest U.S. retailers,  including Wal-Mart, Toys
"R" Us, Kay Bee Toys, Target Stores, Sears and K-Mart, together are estimated to
account for over 25% of total United  States toy sales.  Toys "R" Us and Kay Bee
Toy, both traditional retailers, have focused aggressively on superstore growth.
Based on publicly  available  data,  we estimate  that each  superstore  carries
approximately  5,000 products,  with the largest stores carrying  between 10,000
and 12,000 products on site.  Independent  toy retailers  typically carry a more
limited  selection of products in smaller  retailing  spaces and we believe they
face increasing competitive pressures from the superstore format.



                                       3
<PAGE>

We believe that several  characteristics  of the  traditional  toy industry have
created inefficiencies that may be eliminated by e-commerce including:

     (i)       the capital intensive  investments  required for inventory,  real
               estate and personnel for each retail location;
     (ii)      limits  in the  amount  of  inventory  that  can be  economically
               carried  in a retail  location  (we  estimate  that  the  average
               superstore stocks less than 25% of the toy products available);
     (iii)     difficulties implementing uniform operating policies and managing
               customer  service  levels,  customer  satisfaction  programs  and
               customer expectations in all locations;
     (iv)      risks  associated  with  managing  demand and  inventory for each
               retail store;
     (v)       high cost of maintaining inventories spread across several retail
               locations;
     (vi)      inability managing human and managerial resources;
     (vii)     inability to use customer specific  information to develop unique
               marketing communications to individual customers;
     (viii)    high costs of disseminating marketing materials to customers; and
     (ix)      high costs of offering individualized customer services.

We believe that we can use e-commerce marketing to build strategic relationships
with fulfillment vendors that will reduce these  inefficiencies,  while allowing
us to develop a distribution  channel that will capitalize on opportunities  for
direct marketing.  We intend to develop strategic relationships with fulfillment
vendors  that  inventory  collectible  toy and hobby  items.  We may also  offer
popular toys and children's products  inventoried by our fulfillment vendors and
through  participation in affiliate programs of other web retailers,  which will
allow us to offer their  inventory  on our website and to receive a fee for each
transaction that we originate. We cannot assure you that we will ever be able to
offer the breadth of products offered by facilities based superstores or that we
will be capable of achieving  operating  efficiencies to compete on the basis of
price.

Competition

Retailing children's toys and entertainment  products is intensely  competitive.
We will  compete  with a  variety  of  competitors  with  significantly  greater
experience and with greater  financial,  human and technical  resources than us.
These competitors include:

     (i)       traditional store-based toy and children's product retailers such
               as Toys "R" Us, Kay-Bee Stores, FAO Schwarz, and others;
     (ii)      major discount retailers such as Wal-Mart,  Target Stores, Sears,
               Kmart and others;
     (iii)     independent and specialty children's toy stores including Disney,
               Warner Bros. and others;
     (iv)      catalog retailers;
     (v)       Internet portals such as AOL and YAHOO etc;
     (vi)      specialty toy stores  featuring  collectable toys and hobby items
               and
     (vii)     various  online  competitors  such as  eToys,  Toys  "R" Us,  and
               Amazon.com.

Marketing toys over the Internet is new, rapidly evolving and becoming intensely
competitive.  Barriers to entry are minimal and new  competitors  can launch new
sites at a relatively low cost. In addition, traditional retailers have begun to
launch websites and online  services that are expected to compete  directly with
our website and us. Competitive pressures created by any one of these companies,
singularly  or  collectively,  could  have  a  material  adverse  effect  on our
business, prospects, financial condition and results of operations.



                                       4
<PAGE>

We believe that the principal  competitive factors for on-line toy retailers are
brand recognition, selection, convenience, price, speed, accessibility, customer
service, reliability and speed of fulfillment.

Currently,  we estimate  that there are  approximately  130 toy  retailers  with
Internet  websites.  We  believe  that  eToys.com,  Toys  "R" Us and  Amazon.com
currently  dominate the on-line market for children's toys and related  products
and that they are  likely  to face  significant  competition  from  other  major
on-line retailers in the future.

Toys "R" Us,  Inc.  is one of the  world's  largest  toy  resellers  with  gross
revenues of approximately  $11 billion in 1998. Toys "R" Us launched its website
in 1997.

"eToys" is a toy  retailer  that markets its  products  exclusively  through the
Internet.  eToys  launched  its  website in 1997 and has sold toys  through  its
distribution  and customer  service  system on a commercial  basis since October
1997. eToys had gross sales revenues of approximately  $22.9 million in 1998. We
believe that eToys has a significant competitive advantage over most on-line toy
retailers,  including  us, based on its  established  website;  brand name;  and
customer base. eToys also has a competitive advantage in the marketplace because
it has  penetrated  the market and developed the  infrastructure  and technology
support systems required for marketing, distribution and customer service. eToys
has also  established  relationships  with toy  manufactures and distributors as
well as advertisers that purchase banner advertisements on the eToys website.

Amazon.com is one of the largest retails of merchandise on the Internet, selling
a variety of products  and  services.  Amazon.com  began  selling  toys over the
Internet in 1999.

We  believe  that  most of toy  retailers  with  Internet  websites  are  small,
specialized  companies marketing specific categories or lines of toys. We intend
to compete  directly against these companies by offering a line of products that
features  collectable toys and hobby items at competitive  prices.  We intend to
attract  visitors and  potential  customers  to our website by offering  special
content and  information  of interest  to buyers of  collectable  toys and hobby
items.  We  also  intend  to  offer  popular  toy  products  through   strategic
relationships with fulfillment  vendors and through affiliate programs that will
allow us to offer the  inventory of other on line  retailers to our visitors and
to receive a fee for transactions originated on our website.

There can be no assurance we will be able to develop  successfully  our website,
the technologies  and/or the distribution  systems required to market children's
toys over the Internet in a timely manner,  if at all. We also cannot assure you
that our  target  market  will  accept  our  business  concepts  or that we will
successfully  differentiate  our website and product offerings from those of our
competitors.  We may be  unable  to  enter  into  strategic  relationships  with
fulfillment  vendors to procure a product  line and mix that will  appeal to our
target markets or to the  marketplace.  If we fail to develop our website or any
of the technologies,  systems, or strategic relationships necessary to implement
our  business  plan in a  timely  manner,  we will  not be able to  successfully
compete in the marketplace and such failure will have a material  adverse effect
on our business and results of operations.



                                       5
<PAGE>

We believe that the principal competitive factors in our market will be:

     o    ease in access to the website;
     o    brand recognition;
     o    product selection and availability;
     o    personalized services and free services;
     o    user friendly shop and browse web features;
     o    a comprehensive easy to use search engine and tools;
     o    superior   graphics  and   technical   support;
     o    combination of entertainment and unique product offerings;
     o    quality of editorial and other site content;
     o    highly  visible order buttons on every screen and easy to use ordering
          systems;
     o    immediate access to a sales consultant either by phone or e-mail;
     o    customer focus with superior support and service;
     o    experienced knowledgeable management and personnel; and
     o    reliability and speed of order fulfillment.

We believe  that we will  differentiate  our  website  from our  competitors  by
considering these factors in developing  marketing and systems strategies and by
offering a sufficiently differentiated product line featuring non-mainstream toy
products,  including  collectable  toys, hobby items, and a wide range of unique
imaginative  toy  products  manufactured  by small toy  manufactures  across the
country that are not typically carried by mainstream retailers.

Many of our current and potential  competitors have experience in the retail toy
industry,  experience in the e-commerce  industry,  longer operating  histories,
customer bases, brand recognition and significantly greater financial, marketing
and other  resources  than us. We have no revenues,  no  established  history of
operations  and no  experience  marketing  toys over the  Internet.  We have not
completed  development  of the systems or  technologies  required to operate our
business,  and there can be no assurance that we are capable of developing  such
systems or technologies.

In addition,  our  competitors may be acquired by, receive  investments  from or
enter into other  commercial  relationships  with larger,  well-established  and
well-financed  companies,  which could increase their competitive advantage over
us. Some of our  competitors may be able to secure  merchandise  from vendors on
more  favorable  terms,  devote greater  resources to marketing and  promotional
campaigns,  adopt more aggressive pricing or inventory availability policies and
devote  substantially more resources to website and systems development than us.
We  cannot  assure  you  that we will be able to  compete  successfully  against
current and future competitors, and competitive pressures faced by us may have a
material  adverse  effect on our business,  prospects,  financial  condition and
results  of  operations.  Further,  as a  strategic  response  to changes in the
competitive environment,  we may from time to time make certain pricing, service
or marketing  decisions that may affect our business.  New  technologies and the
expansion of existing technologies may increase the competitive pressures on our
business.  In addition,  companies that control access to  transactions  through
network access or Web browsers could promote our competitors  websites or charge
us a substantial fee for access through their in their portals.



                                       6
<PAGE>

Our Marketing Strategy

Our  marketing  strategy is to market  children's  toys and related  products to
niche market segments over the Internet.  We initially plan to target the market
for (i) collectable toys,  including die cast metal toys, limited edition dolls,
toy cars and other  collectable items and (ii) hobby items including train sets,
remote control  planes and cars,  models and other hobby  products.  Our initial
target  markets  consist of Internet  users that are searching  for  collectable
toys,  hobby items or other  related  products,  or  searching  for  information
related to such  products  on the  Internet.  We intend to market  our  products
through our website which is anticipated to resemble a traditional  toy store in
an electronic  or "virtual"  setting.  Our pricing  strategy will be to sell our
products  at prices  that are  competitive  with or below the prices  charged by
physical  facilities  based toy stores.  We intend to process and deliver orders
for our products in one to three business days.

Our Technology

We intend to develop and use  technology to deliver  outstanding  service and to
achieve the economies we believe are inherent in our online virtual store model.
Our strategy is to build strong brand recognition, customer loyalty and supplier
relationships,  while creating an economic model that is superior to that of the
capital and real estate-intensive traditional toy retailing business. We believe
that our success  will depend on our ability to develop  technology  to offer an
online  experience that is easy to use,  useful,  functional,  entertaining  and
educational.  We believe  that our  technology  must meet or exceed the  general
expectations of the virtual shopper who we believe will have experience shopping
with  other  online  retailers  and who will  expect a high  level of  technical
sophistication from our website.

Reticular  Consulting  of Victoria,  British  Columbia was engaged to design and
develop our website. We began testing our website in late November 1999. Towards
the end of January, 2000 Reticular Consulting began final software modifications
for the Company to anticipate an official opening of the website on or about May
15,  2000.  Under the terms of our  agreement,  we  agreed  to pay  Reticular  a
consulting  fee of  $3,000  per  month  for the  initial  planning  stage of the
development  of our website.  This work was completed on January 31, 2000 and we
subsequently  entered into a development  agreement  with  Reticular in February
2000 to complete  further  development and refinement of our website.  Long-term
refinements  and  development  will be carried out in-house with  consulting and
special projects being the responsibility of Reticular. We estimate that we will
need to spend  approximately  $15,000 to $20,000 to complete  development and to
successfully  launch our website for commercial  use. We also anticipate we will
spend  approximately  $50,00 to  $75,000  to  enhance,  develop  and  modify the
software  technology  related  to our  customer  service  and  support  systems,
inventory  control systems,  distribution and logistical  facilitation  systems,
accounting systems and other internal control systems.

The cost for  developing  technology  is expensive  and the process will require
testing and  refinement.  Our  commercial  success will depend on our ability to
attract  visitors and  shoppers to our website.  This will require us to develop
and use increasing sophisticated  technologies to generate, sustain and maintain
user interest and satisfaction. See "Note Regarding Forward Looking Statements."




                                       7
<PAGE>

We are in the process of negotiating  with  consultants  to further  develop the
technologies,  software  and systems for the  website.  We have hired a internal
programmer to develop the software  technologies related to our internal control
and distribution systems through advice provided by Reticular Consulting.  There
can be no assurance that we will successfully  develop and test the technologies
related to the website or  contemplated  in our business plan on a timely basis,
if at all.

We will need to complete the development of our website and our support services
before May 15, 2000 to successfully  launch our website and that we will require
additional  financing during 2000 to provide working capital for our operations.
If we fail to  develop  our  website  or our  support  systems  or fail to raise
additional  capital as planned,  our business and results of operations  will be
materially adversely affected. See "Note Regarding Forward Looking Statements."

Online Service and Internet Advertising

We intend advertise on various high-traffic  Internet portals to build awareness
of our  website.  We also  intend to offer  banner ads on our  website  that are
anticipated to encourage  readers to click directly to a our toy offering or one
of our sponsoring toy manufacturer's website.

Advertising and Public Relations

We intend  to  engage in a  coordinated  program  of print  advertising  through
specialized and general  circulation  newspapers and magazines.  The Company may
also  advertise  in other  media.  As a result of our planned  public  relations
activities and current Internet e-commerce  interest,  we may receive publicity.
There can be no assurance  that we will have  sufficient  resources to carry out
our promotional and advertising strategy or that we will receive any publicity.

Personalized Shopping Services

We plan to offer  personalized  notification  and shopping  services  through an
automated  email  reminder  service and gift wish list service.  Visitors may be
allowed to request email reminders of specific dates (holidays, birthdays, etc.)
via email or have a toy wish list sent to an email  address.  We also  intend to
add a match filtering service that can monitor editorials on children's toys and
the toy industry and email messages to visitors that request this information.

Customer Service

We believe that our ability to establish  and maintain  long-term  relationships
with our customers and encourage repeat visits and purchases  depends,  in part,
on the  strength  of our  customer  support and  service  operations  and staff.
Furthermore,  we intend to use frequent communication with and feedback from our
customers in order to continually improve the store and our services.  We intend
to offer an e-mail  address to enable  customers to request  information  and to
encourage  feedback  and  suggestions.  We also  intend to  establish  a team of
customer  support and service  personnel  who will be  responsible  for handling




                                       8
<PAGE>

general  customer  inquiries,  answering  customer  questions about the ordering
process, and investigating the status of orders, shipments and payments.

We intend to staff a toll-free  line with "toy product  consultants,"  personnel
who we plan to train to provide  product  information,  assurances  to customers
related to their purchase decision and general customer support for our website.
We anticipate we will  automate  certain tools used by our customer  support and
service staff.

Warehouse and Fulfillment

We  plan  to  source  our  products  from a  network  of toy  manufacturers  and
distributors.  We plan to carry minimal  inventory and rely to a large extent on
"fulfillment  vendors" to fill orders for the products we offer.  We  anticipate
that  most of our  inventory  will be owned  and  inventoried  by these  outside
fulfillment vendors and shipped directly from these vendors to our customers. We
intend to update our site daily with  inventory  information  received  from our
fulfillment  vendors,  which will enable  customers to check the availability of
products  before  ordering.   We  expect  that  our  systems  will  be  able  to
electronically transmit orders to our fulfillment vendors at least once daily.

We plan to stock a limited  "in-house"  inventory of products including products
that  are  unavailable   from  our   fulfillment   vendors   including   certain
collectibles,  limited edition toys, toys offered  exclusively by  manufacturers
through  Kidstoysplus.com and merchandise that we obtain for special promotions.
We anticipate we will hire  personnel that  specialize in sourcing  hard-to-find
"special  request"  toy products and fill  special  request  orders,  subject to
availability. We will ship our in-house inventory directly from our distribution
facility to our customers.

Back End System Support

We have  obtained  a  software  system  that  integrates  and that we believe is
capable of managing all of our website  functionality,  marketing,  distribution
and other  information.  The  information  captured  by the  software  system we
believe will include:  product offerings,  consumer  information on products and
manufacturers,  promotions,  pricing,  margin, customer lists and customer data,
shipping  and  handling  data,  customer  support  information,  procedures  and
policies,  credit  information,  inventory control,  procurement and distributor
information,  catalogues,  news and other information  required to integrate our
operations. We anticipate that we will develop a system will allow us to collect
and analyze  information in a single  cohesive  system that allows us to use and
exchange  information  within our  organization.  We may also integrate  certain
parts of our systems with strategic partners.

Initial Launch Phase of Our Kidstoysplus.com Website

As of January 31, 2000 we were in the final stages of  completing  agreements or
arrangements with respect to:

     o    inventory   procurement  or  order   fulfillment   for  our  web-based
          inventory;
     o    credit card processing;



                                       9
<PAGE>

     o    hiring additional staff for one of our distribution facilities and the
          customer support and service systems office; or
     o    procuring  shipping  labels,  invoices  or  other  materials  to  ship
          products from our fulfillment vendors and our distribution facility to
          our customers.

We have (i)  secured  a license  to  operate  our  distribution  facility,  (ii)
purchased  computer  systems and  software  for our  distribution  and  customer
service facilities and (iii) finalized our policies and procedures for inventory
procurement,   internal  and  outside  order  fulfillment,   inventory  control,
financing and accounting controls.

We plan to launch our  updated  and to begin  accepting  orders for  merchandise
prior to the end of May 2000, our "Initial  Launch Phase." We anticipate that we
will continue testing internal operating systems, including customer order entry
and credit transaction  processing,  final fulfillment,  shipping,  and delivery
prior to the beginning of the 2000 Christmas season.

Provided  adequate  financing is available,  the year 2001 will be the Company's
first full year of operations as an Internet retailer. There can be no assurance
that we will be able to launch our website as  anticipated  or that we will have
sufficient  financing to implement our business plan. Any  substantial  delay in
the launch of our website  will have a material  adverse  affect on our business
and results of operation.

Capital Requirements

Capital  requirements  of a high  technology  start-up  company are  continuous,
especially  in the early  years,  or until the company  can  establish a revenue
stream from product sales.

We have not entered into any  arrangements  or agreements  to obtain  additional
financing,  although we have commenced an additional private placement discussed
herein. There can be no assurance that the necessary financing will be available
to the Company on terms  acceptable to us, if at all. If we are  unsuccessful in
obtaining the financing  required to implement our business  plan, an investment
in our common shares may result in a loss of the investment made.

For the fiscal year ending  January 31, 2000, we completed  two initial  private
placements of our common shares providing us approximately $243,642. See "Recent
Sales of Unregistered Securities." We are in the process of commencing a private
placement offering of units,  consisting of common stock and warrants to acquire
common stock.  In April 2000, we closed a portion of this private  placement for
proceeds of $738,000 to the Company.  See "Management's  Discussion and Analysis
of Financial  Conditions  and Results of Operations  -- Subsequent  Events." The
proceeds from the private placements were used to establish our website,  offset
some of the costs required to establish our distribution and warehouse facility,
purchase  inventories  of select and limited toy lines during the Initial Launch
Phase,  offset the cost of establishing  our  distribution  and customer service
systems;  and  begin to fund our  brand  identity  marketing  activities.  These
proceeds  will not be  sufficient  to establish  all of the systems that we will
need to fully implement our business plan.



                                       10
<PAGE>

During the second, third and fourth calendar quarter of 2000, we need additional
financing  to develop our website and  distribution  systems and to continue our
marketing activities.  We anticipate we will need to obtain additional financing
in the  amount of at least  $1.5  million  during  the  second  to third  fiscal
quarters of 2000 to increase and diversify our initial product  offerings and to
maintain  adequate  inventory  to  satisfy  customer  expectations  and to  meet
customer demands.  There can be no assurance that we will successfully raise any
additional  capital.  See  "Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations."

Consultants

As of January 31, 2000, we had four  full-time  personnel.  Albert R. Timcke,  a
director and our President, assists with strategic corporate planning, financing
activities  and  product  research  and  development.  Axel  Miedbrodt  was  our
operations  manager  responsible for  establishing our distribution and customer
service  facilities.  Pat Morris assists with our corporate  communications  and
marketing.  Trish  Reader  of  Reticular  Consulting  is a  consultant  that  is
designing our website and assisting us with developing our internal distribution
and customer service systems.

As of  January  31,  2000,  we also  had one  part-time  consultant,  Gerald  W.
Williams.

Brian C. Doutaz,  a part-time  consultant as of January 31, 2000,  resigned as a
director of and a consultant to the Company on April 7, 2000.

In the  future,  we may  engage  additional  consultants  to  assist us with the
development   or  licensing  of  software  and   information   systems  and  the
implementation of our business plan.

We anticipate  we will hire up to six (6) employees  during the second and third
quarters  of 2000 to provide  1-800  phone  number  consumer  support  services,
including  one (1)  employee to provide  marketing  and sales  support,  two (2)
employees  to staff our  distribution  warehouse,  one (1)  information  systems
employee and two (2) administration employees.

Our  success  will  depend in large part on our  ability  to attract  and retain
skilled and experienced  employees and consultants.  We do not anticipate any of
our employees will be covered by a collective  bargaining  agreement.  We do not
currently  have any key man life  insurance on any of our directors or executive
officers.

Intellectual Property

We have not  registered  any  trademarks in the United  States or elsewhere.  We
intend to submit an application to register the name  "Kidstoysplus.com"  as our
trademark during the second calendar quarter 2000.

We believe that we currently have no technologies that are patentable.



                                       11
<PAGE>

Risk Factors

Our business is subject to a number of risks that are generally  associated with
start-up  companies in the  development  stage of their  business and  companies
engaged in  business  through the  Internet.  These risks could cause our actual
results to differ materially from the results we project and any forward-looking
statement we make in this registration statement. Below is a description of some
of the risks that we  anticipate  will be  associated  with our  business and an
investment in our company.

Our lack of an operating history makes future forecasting difficult.

We were incorporated on February 4, 1999, to engage in the business of marketing
children's  toys and related  products over the  Internet.  We are a development
stage company,  which means we are in the process of developing our business and
have not  generated  any  revenues  from our  operations.  However,  we have not
entered  into all of the  agreements  or  arrangements  that will be required to
conduct our business including,  among others: agreements for the development of
all of the technologies required to operate our business;  arrangements to lease
a server for our website;  agreements to equip and furnish our warehouse,  order
processing center or any other physical facility that we will require to market,
sell and  deliver  products;  agreements  with  fulfillment  vendors  to provide
merchandise  to sell on our  website;  agreements  to procure our  inventory  of
in-house products; arrangements to hire employees; arrangements for shipping and
packaging of orders;  or agreements for credit facility or other  financing.  We
cannot assure you that we will  successfully  enter into these  arrangements  or
agreements in a timely  manner,  if at all, and our failure to do so will have a
material adverse affect on our business and results of operations.

As a result of our lack of an operating  history,  it is difficult to accurately
forecast our net sales and we have limited meaningful  historical financial data
upon which to base planned  operating  expenses.  We base our current and future
expense  levels on our operating  plans and  estimates of future net sales,  and
several of our expenses  are  anticipated  to be fixed  because of the amount of
capital  required to establish our business and the  expenditures  we anticipate
will be  necessary  to  maintain  a  minimum  level of  capacity.  Our sales and
operating  results are difficult to forecast  because they will generally depend
on the volume and timing of the orders we receive. As a result, we may be unable
to adjust our  spending  in a timely  manner to  compensate  for any  unexpected
revenue shortfall.  This inability could cause our net losses in a given quarter
to be greater than expected.

We anticipate future losses and negative cash flow.

We  expect  operating  losses  and  negative  cash  flow  to  continue  for  the
foreseeable  future. We anticipate our losses will increase  significantly  from
current levels because we expect to incur  additional costs and expenses related
to:

     -    brand development, marketing and other promotional activities;
     -    the expansion of our inventory management and distribution operations;
     -    the continued  development of our website,  the systems that we use to
          process customers' orders and payments, and our computer network;



                                       12
<PAGE>

     -    increased marketing activities;
     -    increased inventory carrying costs;
     -    increased administrative costs;
     -    cost related to financings;
     -    the expansion of our product offerings and our website content; and
     -    development of relationships with strategic business partners.

As of January 31, 2000, we had an  accumulated  deficit of $270,449.  Our losses
will increase  substantially in 2000 as we anticipate costs will increase due to
a number of factors including:

     -    an increase in the number of employees;
     -    an increase in sales and marketing activities;
     -    addition of warehouse facilities and infrastructure;
     -    increased inventory carrying costs;
     -    increase administrative costs; and
     -    increased training costs.

Our ability to become profitable  depends on our ability to generate and sustain
substantial net sales while maintaining reasonable expense levels. See "Selected
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

Our operating results are difficult to predict.

Our  operating  results are  anticipated  to  fluctuate  significantly  due to a
variety of factors,  many of which are outside of our control.  Factors that may
harm our  business  or cause our  operating  results to  fluctuate  include  the
following:

     -    our  inability to obtain new  customers  at  reasonable  cost,  retain
          existing customers, or encourage repeat purchases;
     -    decreases in the number of visitors to our website or our inability to
          convert visitors into customers;
     -    the mix of toys and other products sold by us;
     -    our ability to offer  products  and content that appeals to our target
          markets;
     -    seasonality of the toy industry and certain product lines;
     -    our inability to manage inventory levels;
     -    our inability to manage our distribution operations;
     -    our inability to adequately maintain, upgrade and develop our website,
          the systems that we use to process  customers'  orders and payments or
          our computer network;
     -    the  ability of our  competitors  to offer new or  enhanced  websites,
          services or products;
     -    price competition;
     -    an increase in the level of our product returns;
     -    fluctuations  in the demand for children's  products  associated  with
          movies, television and other entertainment events;
     -    our  inability  to  obtain  popular   children's  toys,  video  games,
          software, videos and music from our vendors;
     -    fluctuations  in the amount of consumer  spending on children's  toys,
          video games, software, videos and music;



                                       13
<PAGE>

     -    the failure to develop new marketing  relationships  with key business
          partners;
     -    the  extent  to which we are not able to  participate  in  advertising
          campaigns such as those conducted by strategic partners;
     -    increases in the cost of online or offline advertising;
     -    the amount  and timing of  operating  costs and  capital  expenditures
          relating to expansion of our operations;
     -    unexpected increases in shipping costs or delivery times, particularly
          during the holiday season;
     -    technical difficulties, system downtime or Internet brownouts;
     -    government  regulations related to use of the Internet for commerce or
          for sales and distribution of toys, video games, software,  videos and
          music; and
     -    economic conditions specific to the Internet,  online commerce and the
          children's toy and related product industries.

A number of factors will cause our gross margins to fluctuate in future periods,
including the mix of toys and other products sold by us,  inventory  management,
inbound and outbound  shipping and handling costs,  the level of product returns
and the level of discount  pricing and promotional  coupon usage.  Any change in
one or more of these factors could reduce our gross margins in future periods.

We expect our sales to experience seasonal fluctuations that may affect our cash
flow  and our  ability  to  manage  our  inventory  effectively.

We  expect  to  experience  seasonal  fluctuations  in our net  sales,  with the
heaviest demand for toys  anticipated to be during the Christmas  season.  These
seasonal patterns will cause quarterly fluctuations in our operating results. In
particular,  a disproportionate  amount of our net sales will be realized during
the fourth calendar quarter and we expect this trend to continue in the future.

In anticipation of increased sales activity during the fourth calendar  quarter,
we  anticipate  that we will hire  temporary  employees to bolster our permanent
staff and we will significantly  increase our inventory levels. For this reason,
if our net sales were below  seasonal  expectations  during  this  quarter,  our
annual operating results could be below our expectations.

Due to our lack of an operating  history,  it is difficult to predict the extent
that  seasonal  patterns  will have on our sales or the impact such  seasonality
will have on our  business  and  financial  results.  In the  future,  trends in
seasonal sales patterns may be more pronounced than others, which may strain our
personnel,  warehousing and order shipment  activities and may cause a shortfall
in net sales as compared to expenses in a given  period.  Seasonal  fluctuations
may have a material  adverse  effect on our ability to manage our operations and
inventories.

We may face  significant  inventory risk because  consumer demand can change for
products  between the times that we order  products and the time that we receive
them.

We may carry a  significant  level of  inventory  if we are unable to enter into
satisfactory  arrangements with fulfillment  vendors that offer merchandise that
we elect to offer on our website or as our business grows. We may also inventory
merchandise  that we  believe  will be  popular  to assure  availability  to our
customers. As a result, the changing trends in consumer tastes in the market for
collectable   toys,  hobby  items  and  related  products  will  subject  us  to




                                       14
<PAGE>

significant  inventory  risks.  It is critical to our success that we accurately
predict these trends and to not  overstock  unpopular  products.  The demand for
specific  products can change  between the time the products are ordered and the
date of receipt. We are particularly  exposed to this risk because we anticipate
that we will derive a majority of our net sales in the fourth  calendar  quarter
of each year. Our failure to sufficiently  stock popular toys and other products
in advance of such fourth calendar quarter would harm our operating  results for
the entire fiscal year.

In the  event  that one or more  products  do not  achieve  widespread  consumer
acceptance,  we may be required to take significant  inventory markdowns,  which
could reduce our net sales and gross margins.  We anticipate  that this risk may
be  greatest  in the  first  calendar  quarter  of  each  year,  after  we  have
significantly increased inventory levels for the holiday season. We believe that
this  risk  will  increase  as we open  new  departments  or enter  new  product
categories  due to our lack of  experience  in  purchasing  products  for  these
categories.  In addition,  to the extent that demand for our  products  increase
over time,  we may be forced to increase  inventory  levels.  Any such  increase
would subject us to additional inventory risks.

Because we do not intend to have long-term or exclusive vendor contracts, we may
not be able to obtain sufficient  quantities of popular children's products in a
timely manner and we could lose sales.

If we are not able to offer our customers sufficient quantities of toys or other
products in a timely manner,  we could lose customers and our net sales could be
below our  expectations.  Our success depends on our ability to purchase or make
available products in sufficient quantities at competitive prices,  particularly
for the  holiday  shopping  season.  Based  on our  discussions  with  potential
fulfillment vendors,  distributors and suppliers, we believe it is common in the
industry  not to have  long-term or  exclusive  arrangements  with any vendor or
distributor  that will guarantee the  availability  of toys or other  children's
products.  In  addition,  popular  collectable  toys,  hobby  items,  children's
merchandise  and other toys are often ordered  months in advance of delivery and
may not be available to us through  fulfillment  vendors or may require  minimum
quantity  orders  that  exceed  our  demand.  Therefore,  we  will  not  have  a
predictable or guaranteed supply of popular toys or other products on acceptable
terms.  If our product  selection is limited or the most popular  merchandise is
unavailable through our website, we may be unable to compete effectively.

If we are  unable to  obtain  sufficient  quantities  of  products  from our key
vendors,  our net sales will be adversely affected.

If we were  unable to obtain  sufficient  quantities  of  products  from our key
fulfillment  vendors,  we could lose  customers and our net sales could be below
expectations.  From time to time, we anticipate we may experience  difficulty in
obtaining sufficient product allocations from key fulfillment vendors due to the
high demand for  specific  product  selections  or in the event our  fulfillment
vendors are unable to obtain sufficient inventory to fill our orders. All of our
fulfillment  vendors are distributors to other retailers and, from time to time,
such vendors may receive firm orders for specific  product  selections  from our
competitors,  which may make the availability of such selections  unavailable to
us. Because we anticipate our  arrangements  for order  fulfillment  through our
fulfillment vendors will initially be on a "just-in-time" or "as ordered" basis,
we may be unable to make  available  the most popular  products to our customers
unless we place firm orders and accept  delivery  for such  products,  which may
increase our inventory carrying costs. The unavailability of popular products or



                                       15
<PAGE>

or increases in carrying costs may have a material adverse affect on our results
of operations and our business.

In addition, we believe our key vendors will have established,  and may continue
to expand,  their own online retailing efforts,  which may impact our ability to
get  sufficient  product  allocations  from such vendors.  We currently  have no
agreements  or  arrangements  to  acquire   inventory  from   manufacturers   or
distributors.

To  manage  our  growth  and  expansion,  we need  to  implement  financial  and
managerial  controls and reporting systems and procedures,  and our inability to
do so successfully will adversely affect our business.

Our  anticipated  growth in personnel  and  operations  will place a significant
strain on our management,  information systems and resources. In order to manage
this growth  effectively,  we need to develop financial and managerial  controls
and reporting systems and procedures.  If we experience significant increases in
the number of our personnel,  our existing  management  team will not be able to
effectively train,  supervise and manage all of our personnel.  In addition, our
information  systems must be able to handle adequately the anticipated volume of
information  and  transactions  that would  result from our  operations  and our
anticipated growth. Our failure to successfully implement, improve and integrate
these systems and  procedures  would cause our results of operations to be below
expectations.

We  may  not  be  able  to  compete  successfully  against  current  and  future
competitors.

The online commerce market is new, rapidly  evolving and intensely  competitive.
Increased  competition  is likely to result in price  reductions,  reduced gross
margins  and loss of market  share,  any of which could  seriously  harm our net
sales and results of  operations.  We expect  competition  to  intensify  in the
future  because  current  and new  competitors  can enter our market with little
difficulty  and can launch new websites at a relatively  low cost.  In addition,
should we decide to expand our  product  lines to offer video  games,  software,
videos and music, such retailing industries are intensely competitive.

We currently or potentially intend to compete with a variety of other companies,
including:

     -    traditional  store-based  retailers  of  collectable  toys  and  hobby
          products;
     -    traditional  store-based toy and children's  product retailers such as
          Toys "R" Us, FAO Schwarz, Zany Brainy and Noodle Kidoodle;
     -    major  discount  retailers such as Wal-Mart,  Kmart,  Sears and Target
          Stores;
     -    online stores operated by eToys,  Toys "R" Us,  Wal-Mart,  FAO Schwarz
          and Amazon.com;
     -    physical and online  stores of  entertainment  entities  that sell and
          license  children's  products,  such as The Walt  Disney  Company  and
          Warner Bros.;
     -    catalog retailers of children's products;
     -    vendors or  manufacturers  of children's  products that currently sell
          some of their products directly online, such as Mattel and Hasbro;
     -    other online  retailers  that include  children's  products as part of
          their  product  offerings,  such  as  Amazon.com,  Barnesandnoble.com,
          CDnow, Beyond.com and Reel.com;



                                       16
<PAGE>

     -    Internet  portals and online service  providers that feature  shopping
          services such as AOL, Yahoo!, Excite, Shopnow.com and Lycos; and
     -    various  smaller  online  retailers of  children's  products,  such as
          BrainPlay.com, Red Rocket and Toysmart.com.

Many  traditional   store-based  and  online  competitors  have  long  operating
histories,  large  customer or user  bases,  brand  recognition  and loyalty and
significant  financial,  marketing  and  other  resources.  Many of our  primary
competitors,  including  specialty  toy stores that offer  collectable  toys and
hobby  items,  have  knowledgeable   personnel  and  substantial  experience  in
retailing  collectable  toys and hobby items.  These  competitors  may establish
their own  websites  and may  devote  substantially  more  resources  to website
development  than we can,  which may  adversely  affect  our  ability to attract
visitors to our website. In addition, larger, well-established and well-financed
entities  may join with  online  competitors  or  children's  toy,  video  game,
software, video and music publishers or suppliers as the use of the Internet and
other online services increases.

Our  competitors  may be able to secure  products from vendors on more favorable
terms,  fulfill  customer  orders  more  efficiently  and adopt more  aggressive
pricing or inventory availability policies than we can. Traditional  store-based
retailers also enable customers to see and feel products in a manner that is not
possible over the Internet.

We may expand our product lines and enter new business  categories  that may not
achieve  market  acceptance.

Any new department or product category that is launched or acquired by us, which
is not  favorably  received by consumers  could damage our brand or  reputation.
This damage could impair our ability to attract new customers, which could cause
our net sales to fall below  expectations.  An expansion  of our  business  into
other new departments or product categories will require significant  additional
expenses, and strain our management,  financial and operational resources.  This
type of expansion  would also subject us to increased  inventory  risk and could
adversely  affect our levels of  customer  service.  We may choose to expand our
operations by developing other new departments or product categories,  promoting
new or complementary  products,  expanding the breadth and depth of products and
services  offered or expanding our market presence  through  relationships  with
third parties.

If we  experience  problems  in  our  distribution  operations,  we  could  lose
customers.

We intend to primarily  rely on  fulfillment  vendors to inventory,  package and
ship products to our customers. We also intend to rely upon third-party carriers
for shipping our products to our  customers and to ship products to and from our
distribution  facility.  Consequently,  we are  subject to the risks,  including
employee strikes and inclement  weather,  associated with such carriers' ability
to provide delivery services to meet our shipping needs. In addition, failure to
deliver products to our customers in a timely manner would damage our reputation
and brand. We also intend to depend upon temporary employees to adequately staff
our distribution  facility,  particularly during the holiday shopping season. If
we do not  have  sufficient  sources  of  temporary  employees,  we  could  lose
customers.



                                       17
<PAGE>

If we do not successfully establish the Kidstoysplus.com Website and the systems
that process  customers'  orders,  we will be unable to  implement  our business
plan.

If we fail to establish our website, we will be unable to carry out our business
plan.  Furthermore,  we must establish computer and information  systems that we
will use to process and ship customer orders and process  payments or we may not
be able to successfully  distribute  customer orders. Any failure of our systems
to act in an integrated manner could result in the loss of customers and our net
sales will be adversely affected.

In addition, our failure to rapidly upgrade our website or expand these computer
systems  without  system  downtime,  particularly  during  the  fourth  calendar
quarter,  would further reduce our net sales.  We may  experience  difficulty in
improving  and  maintaining  such systems if our employees or  contractors  that
develop or maintain  our  computer  systems  become  unavailable  to us. We also
expect  periodic  systems  interruptions  while  enhancing and  expanding  these
computer systems that will affect the quality of our customer service.

The occurrence of a natural disaster or other unexpected problem,  which affects
our  facilities or systems,  could damage our reputation and brand and adversely
affect our net sales.

The  occurrence  of an earthquake  or other  natural  disaster or  unanticipated
problems at our planned  facilities in British Columbia and Washington state, or
at the third-party  location that we anticipate will house  substantially all of
our computer and communications  hardware systems,  could cause interruptions or
delays in our  business,  loss of data or render us unable to accept and fulfill
customer orders.  Any such interruptions or delays at either of these facilities
would reduce our net sales.  In  addition,  we  anticipate  that our systems and
operations will be vulnerable to damage or interruption from fire, flood,  power
loss,  telecommunications failure, break-ins,  earthquake and similar events. We
have no formal disaster  recovery plan and our business  interruption  insurance
may not  adequately  compensate us for losses that may occur.  In addition,  the
failure by the third-party facility to provide the data communications  capacity
required  by  us,  as a  result  of  human  error,  natural  disaster  or  other
operational  disruptions,  could result in  interruptions  in our  service.  The
occurrence of any or all of these events could damage our  reputation  and brand
and impair our business.

Our net sales could decrease if our online security measures fail.

Our relationships  with our customers may be adversely  affected if the security
measures that we use to protect their personal information,  such as credit card
numbers, are ineffective. If, as a result, we lose many customers, our net sales
could decrease. We intend to rely on security and authentication technology that
we intend to license  from third  parties.  With this  technology,  we intend to
perform  real-time credit card  authorization and verification with our bank. We
cannot predict that whether events or  developments  will result in a compromise
or breach of the technology we use to protect a customer's personal information.

Furthermore,  the  servers we intend to rely on may be  vulnerable  to  computer
viruses,  physical or electronic break-ins and similar disruptions.  We may need
to expend significant  additional capital and other resources to protect against
a security  breach or to alleviate  problems  caused by any breaches.  We cannot
assure you that we can prevent all security breaches.



                                       18
<PAGE>

Our net sales will be adversely  affected if we  experience  significant  credit
card fraud.

A failure to adequately control fraudulent credit card transactions would reduce
our net sales and our gross margins  because we do not intend to carry insurance
against this risk.  We intend to use  developed  technology to help us to detect
the fraudulent use of credit card information.  Nonetheless, we expect to suffer
losses as a result of orders placed with fraudulent credit card data even though
the  associated  financial  institution  approved  payment of the orders.  Under
currently  contemplated  credit  card  practices,  we are liable for  fraudulent
credit card transactions because we do not obtain a cardholder's signature.

If we do not respond to rapid technological  changes,  our services could become
obsolete and we could lose customers.

If  we  face  material  delays  in  introducing   new  services,   products  and
enhancements,  our customers may forego the use of our services and use those of
our competitors.  To remain competitive, we must continue to enhance and improve
the  functionality and features of our online store. The Internet and the online
commerce  industry are rapidly changing.  If competitors  introduce new products
and  services  embodying  new  technologies,  or if new industry  standards  and
practices  emerge,  our website and our  proprietary  technology and systems may
become obsolete.

The  development  of our website and other  proprietary  technology  will entail
significant   technical  and  business  risks.  We  may  use  new   technologies
ineffectively  or we may fail to adapt our  website  or  systems  that we use to
process  customers'  orders and payments  and our  computer  network to customer
requirements or emerging industry standards may fail.

Intellectual  property  claims  against  us can be costly  and could  impair our
business.

Other parties may assert  infringement or unfair  competition claims against us.
We cannot  predict  whether  third  parties will assert  claims of  infringement
against us, or whether any assertions or prosecutions will harm our business. If
we are  forced to  defend  against  any such  claims,  whether  they are with or
without  merit  or are  determined  in  our  favor,  then  we  may  face  costly
litigation, diversion of technical and management personnel, or product shipment
delays.  As a result of such a dispute,  we may have to  develop  non-infringing
technology  or enter  into  royalty or  licensing  agreements.  Such  royalty or
licensing agreements, if required, may be unavailable on terms acceptable to us,
or at all. If there is a successful claim of product infringement against us and
we are unable to develop  non-infringing  technology or license the infringed or
similar technology on a timely basis, it could impair our business.

If the protection of our trademarks and  proprietary  rights is inadequate,  our
brand and reputation could be impaired and we could lose customers.

We  intend  to take  steps to  protect  our  proprietary  rights,  which  may be
inadequate.  We intend to file an  application  to register  our  "Kidstoysplus"
trademark  for sales of toys,  games and  playthings  during the second or third
quarter  2000 if we have  sufficient  financial  resources to do so. We may also
file  applications for patent protection of our technology,  if patentable,  and
additional  trademarks  in the  future.  We  anticipate  our future  copyrights,
service marks,  trademarks,  trade dress, trade secrets and similar intellectual
property  will be critical to our success.  We intend to rely on  trademark  and
copyright law, trade secret protection andconfidentiality or license agreements



                                       19
<PAGE>

with our employees,  customers,  partners and others to protect our  proprietary
rights.

Effective trademark, service mark, copyright and trade secret protection may not
be  available  in every  country in which we will sell our products and services
online. Furthermore, the relationship between regulations governing domain names
and laws  protecting  trademarks  and  similar  proprietary  rights is  unclear.
Therefore, we may be unable to prevent third parties from acquiring domain names
that are  similar  to,  infringe  upon or  otherwise  decrease  the value of our
trademarks and other proprietary rights.

The loss of the services of one or more of our key personnel,  or our failure to
attract,  assimilate and retain other highly qualified  personnel in the future,
could disrupt our operations.

The loss of the  services of one or more of our key  personnel  could  seriously
interrupt our business.  We depend on the continued  services and performance of
our senior  management and other key personnel,  particularly  Albert R. Timcke,
our President, Chief Executive Officer and Chairman of the Board, and Timothy J.
Anderson, a director of the Company. Mr. Timcke is a full-time consultant to the
Company and dedicates 100% of his attention to the development of our business.

We have appointed Axel Miedbrodt to Vice President of Operations.  Mr. Miedbrodt
has manufacturing,  distribution,  and management  experience.  Our inability to
retain the continued  services of Mr.  Miedbrodt  could have a material  adverse
effect on the Company.

We continue to seek other key  employees  and continue  discussion to expand the
Board of Directors  with  additional  professionals  from the toy and e-business
industries.  We hope to  establish an Advisory  Council made up of  professional
advisors and knowledgeable  consumers to provide  constructive  criticism of our
operations.

Our  future  success  will in large part  depend  upon our  ability to  recruit,
attract,   hire,  and  retain  qualified  key  employees  and  other  additional
professionals.  There can be no assurance that we will be successful in doing so
and our failure to do so could have a material adverse effect on the Company.

Our  future  success  will also  depend  upon the  service  of other key  sales,
marketing and support personnel, individuals which we have not as of yet hired.

Our  relationships  with  the  directors,   officers  and  other  key  employees
identified above may be characterized as "at will."

We do  not  have  "key  person"  life  insurance  policies  covering  any of our
employees.  The death or permanent  disability  of a key  employee  could have a
material adverse effect on the Company.



                                       20
<PAGE>

Executive officers and directors have substantial control over the company.

Executive  officers,  directors  and entities  affiliated  with them,  if acting
together,  would  be able  to  significantly  influence  all  matters  requiring
approval  by our  stockholders,  including  the  election of  directors  and the
approval  of  mergers  or  other  business   combination   transactions.   These
stockholders,  in the aggregate,  beneficially own a majority of our outstanding
common stock.

Risks Related To the e-commence Industry

If we are unable to  acquire  the  necessary  web  domain  names,  our brand and
reputation could be damaged and our business may be adversely  affected.

We may be unable to acquire or maintain Web domain  names  relating to our brand
in the United States and other countries in which we may conduct business.  As a
result,  we may be unable to prevent  third  parties  from  acquiring  and using
domain  names  relating  to our  brand.  Such use  could  damage  our  brand and
reputation and take  customers away from our website.  We currently hold various
relevant   domain   names,   including  the   "Kidstoysplus.com"   domain  name.
Governmental agencies and their designees generally regulate the acquisition and
maintenance of domain names. The regulation of domain names in the United States
and in foreign  countries is subject to change in the future.  Governing  bodies
may also establish additional top-level domains,  appoint additional domain name
registrars or modify the requirements for holding domain names.

We may need to change the manner in which we intend to conduct  our  business if
government regulation increases,  which may increase our costs of doing business
and adversely affect our ability to earn a profit.

The adoption or  modification  of laws or  regulations  relating to the Internet
could adversely affect the manner in which we currently conduct our business. In
addition,  the growth and development of the market for online commerce may lead
to more  stringent  consumer  protection  laws,  both in the  United  States and
abroad, that may impose additional burdens on us. Laws and regulations  directly
applicable  to  communications  or commerce  over the Internet are becoming more
prevalent. The United States recently enacted Internet laws regarding children's
privacy,  copyrights,   taxation  and  the  transmission  of  sexually  explicit
material.  The European Union recently enacted privacy  regulations.  The law of
the Internet,  however, remains largely unsettled, even in areas where there has
been some  legislative  action.  It may take years to determine  whether and how
existing laws such as those governing intellectual property,  privacy, libel and
taxation  apply to the  Internet.  In order to comply with new or existing  laws
regulating  online  commerce,  we may need to modify  the  manner in which we do
business, which may result in additional expenses. We may need to spend time and
money revising the process by which we fulfill  customers' orders to ensure that
each shipment  complies  with  applicable  laws. We may need to hire  additional
personnel to monitor our compliance with applicable laws.

We may be subject to liability for the Internet  content that we publish,  which
could adversely affect our business.

As a publisher of online  content,  we face potential  liability for defamation,
negligence,  copyright, patent or trademark infringement,  or other claims based
on the nature and content of materials that we publish or distribute. If we face
liability,  then our  reputation  and our  business  may  suffer.  In the  past,
plaintiffs  have  brought  these  types of  claims  and  sometimes  successfully
litigated  them against  online  services.  Although we carry general  liability




                                       21
<PAGE>

insurance,  our  insurance  currently  does not  cover  claims  of these  types.
However, this insurance is available,  and we intend to obtain this insurance in
the near future.  There can be no assurance  that we will be able to obtain such
insurance or that it will be adequate to indemnify us for all liability that may
be imposed on us.

Our net sales could decrease if we become subject to sales and other taxes.

If one or more states or any foreign country successfully asserts that we should
collect  sales or other  taxes on the sale of our  products,  our net  sales and
results of operations  could be harmed.  We do not  currently  intend to collect
sales or other similar taxes for physical  shipments of goods.  However,  one or
more  local,  state or  foreign  jurisdictions  may  seek to  impose  sales  tax
collection  obligations on us. In addition,  any new operation in states outside
Washington State could subject our shipments in such states to state sales taxes
under current or future laws. If we become  obligated to collect sales taxes, we
will need to update our system that processes customers' orders to calculate the
appropriate  sales tax for each customer order and to remit the collected  sales
taxes to the appropriate authorities. These upgrades will increase our operating
expenses. In addition, our customers may be discouraged from purchasing products
from us because  they have to pay sales tax,  causing our net sales to decrease.
As a result, we may need to lower prices to retain these customers.

Item 2.  Description of Property.

Our  principal  office and customer  service  facility is located at 2924 Cliffe
Avenue, Courtenay, B.C., effective September 1, 1999, and is approximately 3,200
square  feet,  which is  leased  for a term of one  year,  at a  rental  rate of
approximately $1,000 per month.

We have  entered  into a lease  agreement  for our  distribution  and  warehouse
facility  at  4767  Headquarters  Road,  Courtenay,  B.C.,  V9N  7J3,  effective
September  1, 1999.  This  facility is  approximately  7,200  square feet and is
leased for a term of one year at approximately  $1,650 per month,  renewable for
an additional one-year term.

Item 3.  Legal Proceedings

None.

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

None.  No matters were  submitted  during the fourth  quarter of the fiscal year
covered by this report to a vote of security holders.



                                       22
<PAGE>

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

Our  common  stock  trades  on the  OTCBB  under the  symbol  "KTYP".  The OTCBB
constitutes  a limited and sporadic  trading  market and does not  constitute an
"established  trading market." See "Risk Factors - An established public trading
market for our securities  does not exist.  The range of high and low bid prices
per share for our common  stock for each fiscal  quarter  during the period from
January  21,  2000,  the first day our  common  stock was  quoted on the  OTCBB,
through  January 31, 2000,  as  published  by the OTCBB is set forth below.  The
quotations merely reflect the prices at which transactions were proposed, and do
not necessarily represent actual transactions.

                        Quarterly Common Stock Price Ranges

    ----------------------------------------------------------------------------
    Fiscal Quarter Ended                                   2000
    ----------------------------------------------------------------------------
                                                  High                Low
    ----------------------------------------------------------------------------
    January 31                                   $1.03               $0.875
    ----------------------------------------------------------------------------

There were 34 record holders of our common stock as of January 31, 2000.

We have not paid dividends on our common stock since our inception. Dividends on
common stock are within the discretion of the Board of Directors and are payable
from profits or capital  legally  available for that purpose.  It is our current
policy to retain any future earnings to finance the operations and growth of our
business. Accordingly, we do not anticipate paying any dividends on common stock
in the foreseeable future.

Recent Sales of Unregistered Securities

During the fiscal  year ended on January  31,  2000,  we  completed  two initial
private placements.

On April 6, 1999,  the Company issued  5,600,000 and 3,960,000  shares of common
stock under Rule 506 of Regulation D of the  Securities Act of 1933, as amended,
for total proceeds of $5,600 and $39,000, respectively.

On April 7, 1999,  the Company  issued 408,084 shares of common stock under Rule
504 of  Regulation  D of the  Securities  Act of 1933,  as  amended,  for  total
proceeds of $204,042.

Subsequent  to our fiscal year ended  January  31,  2000 we  commenced a private
placement  of our units to raise up to $2.5 million at $1.25 per unit under Rule
506 of  Regulation D and under  Regulation S. In this private  placement  round,
each  "unit"   offered   consists   of  one  share  of  common   stock  and  one
non-transferable  warrant  exercisable  at a price  of  $1.625  to  acquire  one
additional  share of common stock for a period  extending one year from the date
of issuance. As of April 14, 2000, we closed a portion (approximately $738,000



                                       23
<PAGE>

representing  590,400  units) of this private  placement  to 7 non-U.S.  persons
outside the United  States.  We intend to use the proceeds  from the offering to
purchase  product  inventory  and  for  general  working  capital  purposes.  We
anticipate  that some of the general  working capital will be used to hire staff
for operations to begin. We anticipate that we will close additional portions of
the private placement during our fiscal quarter ending July 31, 2000. We believe
this will  provide us with  sufficient  working  capital to finance our on-going
capital  requirements  through  January  of 2001.  We cannot  assure you we will
successfully  complete  the final  portion of the private  placement in a timely
manner, if at all.

Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

General Overview

We were  organized  and  incorporated  under  the laws of the State of Nevada on
February 4, 1999. We have not fully  commenced  operations of our core business.
We were was  organized  to develop and operate a retail  website on the Internet
specializing  in  marketing  children's  products  that will  initially  include
children's  toys,  collectable  toy  items and hobby  related  products.  In the
future, we may offer books, music, story line CD's,  audio-tapes,  movies, video
games and  educational  products on our  website.  We believe  that by combining
expertise in children's products, Internet website development and marketing and
a commitment to excellent customer service through Internet  retailing,  we will
be able to deliver a unique shopping experience to consumers.

The following discussion and analysis explains our results of operations for our
past fiscal year ending January 31, 2000, our financial condition,  and our plan
of operation for the next twelve  months.  You should review our  discussion and
analysis of financial  condition and our plan of operation in  conjunction  with
our financial statements and the related notes.

Results of Operations

     The Period from February 4, 1999 (inception) to January 31, 2000:

We were  incorporated on February 4, 1999 and had no results of operations prior
to that date.

Revenues.  During the period since our  inception on February 4, 1999 to January
31, 2000, we did not generate any revenues from our operations.  We had interest
income in the amount of $4,389.  We do not anticipate  that we will generate any
material  revenues from our  operations  until at least our third fiscal quarter
2000.

Expenses.  We incurred expenses of $274,838 during the fiscal year ended January
31, 2000, which were related  primarily to organizing our  corporation,  raising
financing,  filing a  registration  statement  with the  Securities and Exchange




                                       24
<PAGE>

Commission,  developing  our website,  consulting  fees,  and  establishing  our
warehouse and service center in Courtenay,  British Columbia,  Canada. Since our
inception to January 31, 1999, we paid or accrued  consulting fees in the amount
of $116,853, which primarily consisted of fees paid to Reticular Consulting, our
website  developer;   third  party  software   contractors  hired  by  Reticular
Consulting;  Brian C. Doutaz,  our former  director and secretary and treasurer;
Albert R. Timcke, our President; Axel Miedbrodt, our operations manager; and Pat
Morris,  our marketing  director.  We paid legal and accounting  fees of $44,656
since  our  inception  to  January  31,  2000,  which  expenses  related  to the
preparation  of  our  filings  with  the  Securities  and  Exchange  Commission,
preparation of documents and  statements for our financing  activities and other
legal and accounting  matters.  We incurred other expenses related to developing
our website and establishing our warehouse and service  facilities in Courtenay,
including office and miscellaneous expenses of $28,638, rent expenses of $9,258,
entertainment  and  promotional  expenses of $6,234,  web design and maintenance
expenses of $30,027,  telephone  expenses of $9,301 (for installation and set-up
of our new North  American toll free order numbers and fax lines) and travel and
automobile  expenses of $14,842.  We also paid transfer agent and filing fees of
$5,708 related to our Standard and Poor's filing.

Several of the  expenses  related to  establishing  our  warehouse  and  service
facilities and filing fees are non-reoccurring expenses. We anticipate, however,
that our operating and  administrative  expenses will increase during our fourth
quarter  and  into  our next  fiscal  year as we  launch  our  website  and hire
additional personnel for our operations.

Net Loss.  We had a loss of $270,499 for the fiscal year ended January 31, 2000.
We expect  net losses to  increase  during  2000  until we are able to  generate
sufficient revenue from our operations to become profitable.

Plan of Operation

Subsequent to our fiscal year end of January 31, 2000, we  experienced  delay in
the  development  of our  website  technologies  and the  closing of our private
placement  financing.  Our  delay in  development  of our  technologies  and our
inability  to close  our  private  placement  resulted  in a delay in  acquiring
inventory  for the launch of our website.  As such, we were unable to launch our
website or acquire inventory prior to the Christmas retail season as planned. We
have entered into arrangements to participate in the affiliate programs of other
Internet toy retailers such as Amazon.com,  eToys and eHobbies.  We believe that
this will allow us to supplement  the inventory that we intend to offer and will
allow us to  commercially  launch our  website  to the  public in May 2000.  The
affiliate programs of Amazon.com, eToys and eHobbies will allow us to earn a fee
based on the purchases  originated from our website. Our ability to complete the
launch of our  website and to  continue  as a going  concern  will depend on our
ability to obtain future financing.

We  anticipate  we will have no sales  until at least the  latter  end of May of
2000,  following  the  launch  of  our  website.  We  anticipate  our  operating
activities during the next few months will focus primarily on our efforts to:



                                       25
<PAGE>

     c)   secure additional financing general working capital purposes,  and for
          the purchase of our initial  inventory and in order to facilitate  our
          efforts to begin the initial implementation of our marketing plan;

     d)   establish  additional  strategic  relationships  with our  fulfillment
          vendors, toy manufacturers, merchandisers and distributors;

     e)   continue  development  of  our  computer  infrastructure  and  systems
          related to our website;

     f)   complete installation of our internal system hardware and software for
          our distribution and customer service facilities;

     g)   enhance our inventory management system;

     h)   continue  testing our internal  operating,  distribution  and customer
          service systems;

     i)   promoting the initial launch of our website; and

     j)   hiring and training our customer service and distribution personnel.

Capital Requirements

We anticipate  that the following  expenditures  are required to fully implement
our business plan and to meet our financial  obligations  during our fiscal year
ending January 31, 2001:

<TABLE>
                                                                           PERIOD
                                                                       Fiscal Quarter Ended
                                                --------------------------------------------------------------------
                 DESCRIPTION                      April 30,           July 31,        October 31,      January 31
                                                     2000               2000              2000            2001
                                                --------------     ------------      -------------    --------------
<S>                                                  <C>              <C>                <C>               <C>
Accounting and legal expenses.                       $7,000           $10,000            $10,000           $10,000
Office and administration                           $20,000           $30,000            $40,000           $40,000
Website design and posting                          $10,000           $50,000            $25,000           $10,000
Web maintenance and software upgrades               $10,000            $5,000            $10,000           $20,000
Warehouse and office facilities                      $2,000            $5,000            $10,000           $20,000
Company marketing expense                                            $100,000           $300,000           $50,000
Selective product inventory for                     $20,000          $200,000           $300,000           $50,000
  Beginning Inventory. 2000
Working capital                                     $10,000           $50,000            $50,000           $50,000
                                                --------------     ------------      -------------    --------------
Totals                                              $79,000          $450,000           $735,000          $250,000
</TABLE>


                                       26
<PAGE>

Liquidity and Capital Resources

As of January 31, 2000, we had a working capital  deficiency of $37,030.  We had
cash or cash  equivalents  of $11,372 and prepaid  expenses  and deposits in the
amount of $8,017. We had accounts payable and accrued  liabilities in the amount
of $56,419.

As of April 14, 2000,  we raised  approximately  $738,000  pursuant to a private
placement of units. See "Subsequent Events."

Subsequent Events

The following transactions occurred subsequent to January 31, 2000:

     a)   The Company completed a private placement  financing of 590,400 units,
          consisting  of one  common  share  and  one  non-transferable  warrant
          exercisable to acquire one additional  common share, at $1.25 per unit
          for total  proceeds to the Company of $738,000.  See "Recent  Sales of
          Unregistered Securities."

     b)   Brian C.  Doutaz  resigned  as a  director  and as our  secretary  and
          treasurer on April 7, 2000, and we terminated our consulting agreement
          with  him,  which  relieved  us of our  obligation  to pay Mr.  Doutaz
          consulting  fees of $2,000 per month.  During his tenure as a director
          of the Company,  Mr.  Doutaz  acquired two options for Company  common
          stock,  each  exercisable to acquire 400,000 shares.  These options to
          purchase a combined total of 800,000 common shares of stock  contained
          two separate  strike prices,  one with a strike price set at $0.10 per
          share and the other at $0.25 per share. Mr. Doutaz has given us notice
          of exercise of these options.

     c)   Pursuant to our Stock Option Plan,  we granted  options to a director,
          Timothy J. Anderson,  and an employee,  Axel  Miedbrodt,  to acquire a
          total of 350,000 shares at an exercise price of $1.00 per share.

     d)   We appointed Mr. Timothy J. Anderson as a director of the Company.

Inflation

Our results of operations  have not been  affected by inflation  and  management
does not expect inflation to have a significant  effect on our operations in the
future.



                                       27
<PAGE>

Outlook

Initial Financing

Our business activities and operations have been funded to date through issuance
of shares of our common stock in the following transactions:

<TABLE>
           Summary of Financing Transactions Undertaken During the Fiscal Year
-------------------------------------------------------------------------------------------
                                                          Number of         Total Price Of
                                                            Shares             Shares ($)
                                                       ---------------     ----------------
<S>                                                     <C>                  <C>
April 06, 1999 - Regulation D Offering                      5,600,000             5,600
April 06, 1999 - Regulation D Offering                      3,960,000            39,600
April 07, 1999 - Regulation D Offering                        408,084           204,042

                                                       ===============     ================
                                                            9,968,084           249,242
                                                       ===============     ================
</TABLE>


Financing Required for the Next 12 Months

As of March 31, 2000,  we anticipate  that our working  capital is sufficient to
satisfy our cash requirements through  approximately July 2000. We anticipate we
will be required to raise addition  financing of at least $750,000 to $1,000,000
prior to the end of our third fiscal  quarter  ending October 31, 2000, in order
to  continue  as a going  concern.  We  anticipate  that  we will be  adequately
financed  upon  raising  an  additional  $750,000  to  $1,000,000  to  meet  our
anticipated cash  requirements  related to the launch of our website and selling
merchandise,  including  acquiring  additional  inventory,  marketing  expenses,
hiring  additional  personnel and refining our website and  distribution  center
technologies and to finance our operations and anticipated marketing activities.
We are in the process of raising additional capital.

There can be no assurance that we will be able to obtain additional financing in
a timely  manner or on acceptable  terms,  if at all. If we are unable to obtain
financing  necessary  in order to purchase  sufficient  inventory,  we intend to
offer the products of other Internet  retailers through their affiliate programs
on our website.  There is a substantial risk that such a strategy will adversely
affect our ability to build value in our  "Kidstoysplus"  brand name,  which may
have an adverse  affect on our business and our ability to compete  effectively.
We cannot assure you that we will successful  launch our website or that we will
ever be able to successfully compete against established competitors.

Year 2000 Compliance

The Year  2000  issue  arises  with the  change  in  century  and the  potential
inability  of  information  systems  to  correctly  "rollover"  dates to the new
century.  To save on  computer  storage  space,  many  systems  were  originally
programmed  with a two-digit  century  (i.e.,  December 31, 1999 would appear as
12/31/99), assuming that all years would be part of the 20th century.



                                       28
<PAGE>

On January 1, 2000,  systems with this  programming  will default to  01/01/1900
instead of  01/01/2000,  calculations  using or  reporting  the date will not be
correct  and errors  will arise (the "Year 2000  issue").  To prevent  this from
occurring, information systems need to be updated to ensure they recognize dates
during and after the year 2000.

On January 3, 2000, we conducted tests of our systems for Year 2000  compliance.
Based on our tests,  we believe our  systems and the systems of our  third-party
vendors and service providers are Year 2000 compliant.  We intend to continue to
monitor  our systems  for Year 2000  compliance,  and in the event that we incur
expenses  associated with resolving Year 2000  compliance  issues that arise, we
intend to expense the operating  costs as they are incurred and  capitalize  the
capital costs as they are  incurred.  For the next fiscal year, we do not expect
to incur any major operating or capital  expenditures that would have a material
impact on our financial condition or results of operations.

Quantitative and Qualitative Disclosures About Market Risks

Our  financial  results  are  quantified  in U.S.  dollars and a majority of our
obligations and expenditures with respect to our operations are incurred in U.S.
dollars. Although we do not believe we currently have any materially significant
market risks relating to our operations  resulting from foreign  exchange rates,
if we  enter  into  financing  or other  business  arrangements  denominated  in
currency other than the U.S.  dollar or the Canadian  dollar,  variations in the
exchange  rate may give rise to  foreign  exchange  gains or losses  that may be
significant.

We  currently  have  no  material  long-term  debt  obligations.  We do not  use
financial  instruments  for  trading  purposes  and we are  not a  party  to any
leverage  derivatives.  In the  event we  experience  substantial  growth in the
future,  our business and results of operations  may be  materially  effected by
changes in interest  rates and certain  other  credit risk  associated  with its
operations.

Acquisition of Plant and Equipment

We do not own any plant facilities or equipment.  Our premises are rented. It is
our intention to acquire our own servers and computers prior to the end of April
2000.  We are in the  process  of  acquiring  furniture  and  fixtures  for  our
warehouse/distribution facility and for our offices.

Item 7.  Financial Statements

Reference is made to the financial  statements,  the reports thereon,  the notes
thereto,  and  supplementary  data  commencing  at page F-1 of this Form 10-KSB,
which financial statements,  reports, notes, and data are incorporated herein by
reference.

Item 8.  Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure.

Not Applicable.



                                       29
<PAGE>

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act

The information set forth under the caption "Election of Directors",  "Executive
Officers",  and "Section 16(a)  Beneficial  Ownership  Reporting  Compliance" in
Kidstoysplus.com,  Inc.'s definitive Proxy Statement for its 2000 Annual Meeting
of  Shareholders,  expected  to  be  filed  with  the  Securities  and  Exchange
Commission on Schedule 14A on or before May 26, 2000 is  incorporated  herein by
reference.

Item 10.  Executive Compensation

The information set forth under the captions  "Executive  Compensation and Other
Information"  and   "Compensation  of  Directors"  in  the  Proxy  Statement  is
incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

The  information set forth under the captions  "Securities  Ownership of Certain
Beneficial  Owners"  and  "Securities  Ownership  of  Management"  in the  Proxy
Statement to be filed with the  Securities  and Exchange  Commission on Schedule
14A on or before May 26, 2000 is incorporated herein by reference.

Item 12.  Certain Relationships and Related Transactions

The information set forth under the caption "Certain  Relationships  and Related
Transactions  between  Management and the Company" in the Proxy  Statement to be
filed with the Securities  and Exchange  Commission on Schedule 14A on or before
May 26, 2000 is incorporated herein by reference.



                                       30
<PAGE>

Item 13.  Exhibits and Reports on Form 8-K

(a)  Exhibits


Exhibit Number      Description
--------------      -----------

Exhibit 3.1(1)      Articles of Incorporation of Kidstoysplus.com, Inc. filed on
                    February 4, 1999.

Exhibit 3.2(1)      Bylaws of Kidstoysplus.com, Inc.

Exhibit 10.1(1)     Independent Contractor Agreement by and between Rick Timcke,
                    Kidstoysplus.com,   Inc.   and   Trish   Reader,   Reticular
                    Consulting   dated   June  9,   1999,   related  to  website
                    development.

Exhibit 10.2(1)     Consulting Agreement by and Between  Kidstoysplus.com,  Inc.
                    and Albert R. Timcke dated May 1, 1999.

Exhibit 10.3(1)     Consulting Agreement by and between  Kidstoysplus.com,  Inc.
                    and Brian C. Doutaz dated May 1, 1999.

Exhibit 10.4(1)     Consulting Agreement by and between  Kidstoysplus.com,  Inc.
                    and Gerald Wayne Williams dated May 1, 1999.

Exhibit 10.5(1)     Form   of   Indemnification   Agreement   by   and   between
                    Kidstoysplus.com, Inc. and certain officers and directors of
                    Kidstoysplus.com, Inc.

Exhibit 10.6(1)     Form of Founder Subscription Agreement dated March 9, 1999.

Exhibit 10.7(1)     Form of  Private  Placement  Subscription  Agreement  by and
                    between KIDSTOYSPLUS.COM, INC. and various subscribers.

Exhibit 10.8(1)     Kidstoysplus.com, Inc. 1999 Stock Option Plan.

Exhibit 10.9(2)     Commercial  Lease dated September 1, 1999 by and between Mr.
                    Rick Timcke D.B.A. KidsToysPlus.com and Mr. W. Rautenberg.

Exhibit 10.10(2)    Lease Agreement  effective  September 1, 1999 by and between
                    KidsToysPlus.com,  Inc.  and S.G.  Mechanical  Installations
                    Inc.

Exhibit 10.11(2)    Form of  pooling  agreement  by and among  Kidstoysplus.com,
                    Inc.,  certain  Kidstoysplus.com  shareholders and Albert R.
                    Timcke effective April 6, 1999.

Exhibit 27.1        Financial Data Schedule.

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

(1) Previously filed on June 18, 1999.
(2) Previously filed on September 23, 1999.

(b)  Reports on Form 8-K

None.



                                       31
<PAGE>

                                   SIGNATURES

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

Date:  May 11, 2000

                                          /s/ Albert R. Timcke
                                          --------------------------------------
                                          Albert R. Timcke, President


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 and on the
dates indicated.

Signature                        Title                                 Date
---------                        -----                                 ----


/s/ Albert R. Timcke
-----------------------------
Albert R. Timcke                 President and Director             May 11, 2000
                                 (Principal Executive Officer)

/s/ Timothy J. Anderson
-----------------------------
Timothy J. Anderson              Director                           May 11, 2000




<PAGE>





                             KIDSTOYSPLUS.COM, INC.

                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                      (Expressed in United States Dollars)

                                JANUARY 31, 2000


<PAGE>

                                                                A Partnership of
                                                      Incorporated Professionals
DAVIDSON & COMPANY=========Chartered Accountants================================


                          INDEPENDENT AUDITORS' REPORT

To the Stockholders and Directors of
Kidstoysplus.com, Inc.
(A Development Stage Company)


We have audited the accompanying balance sheet of  Kidstoysplus.com,  Inc. as at
January  31,  2000  and  the  related  statements  of  operations,   changes  in
stockholders'  equity  and cash  flows  for the  period  from  incorporation  on
February 4, 1999 to January 31, 2000. These financial  statements,  expressed in
United States dollars, are the responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
in the  United  States of  America.  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  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of  Kidstoysplus.com,  Inc. as at
January  31, 2000 and the results of its  operations,  changes in  stockholders'
equity and its cash flows for the period from  incorporation on February 4, 1999
to January 31, 2000 in conformity with generally accepted accounting  principles
in the United States of America.

The  accompanying   financial   statements  have  been  prepared  assuming  that
Kidstoysplus.com,  Inc. will continue as a going concern. As discussed in Note 2
to the  financial  statements,  unless the  Company  attains  future  profitable
operations and/or obtains additional financing, there is substantial doubt about
the  Company's  ability to continue as a going  concern.  Management's  plans in
regards to these matters are  discussed in Note 2. The  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


                                                         /s/ Davidson & Company
Vancouver, Canada                                         Chartered Accountants
April 18, 2000

                   A Member of Accounting Group International
                   ==========================================

     Suite 1270, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372,
                Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
                Telephone (604) 687-0947   Fax (604) 687-6172


<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
BALANCE SHEET
(Expressed in United States Dollars)
AS AT JANUARY 31, 2000
================================================================================

<TABLE>
<S>                                                                                     <C>
ASSETS

Current
    Cash and equivalents                                                                $       11,372
    Prepaid expenses and deposits                                                                8,017
                                                                                        --------------
    Total current assets                                                                        19,389

Capital assets (Note 5)                                                                         10,323
                                                                                        --------------
Total assets                                                                            $       29,712
=======================================================================================================


LIABILITIES AND STOCKHOLDERS' EQUITY

Current
    Accounts payable and accrued liabilities                                            $       56,419
                                                                                        --------------
    Total current liabilities                                                                   56,419
                                                                                        --------------
Stockholders' equity
    Capital stock (Note 6)
       Authorized
            25,000,000  common shares with a par value of $0.001
       Issued and outstanding
             9,968,084  common shares                                                            9,968
    Additional paid-in capital                                                                 239,274
    Stock subscriptions receivable (Note 8)                                                     (5,500)
    Deficit, accumulated during the development stage                                         (270,449)
                                                                                        --------------
    Total stockholders' equity                                                                 (26,707)
                                                                                        --------------

Total liabilities and stockholders' equity                                              $       29,712
=======================================================================================================
</TABLE>


History and organization of the Company (Note 1)

Commitments (Note 11)

Subsequent events (Note 13)

 On behalf of the Board:

/s/ Timothy J. Anderson          Director   /s/ Albert R. Timcke       Director
---------------------------------          ----------------------------


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


<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Expressed in United States Dollars)
PERIOD FROM INCORPORATION ON FEBRUARY 4, 1999 TO JANUARY 31, 2000
================================================================================


<TABLE>

<S>                                                                             <C>
INTEREST INCOME                                                                 $        4,389
                                                                                --------------
EXPENSES
    Amortization                                                                           828
    Consulting fees                                                                    116,853
    Entertainment and promotion                                                          6,234
    Equipment rental                                                                     3,013
    Investor relations                                                                   2,680
    Legal and accounting                                                                44,656
    Management fees                                                                      2,800
    Office and miscellaneous                                                            28,638
    Rent                                                                                 9,258
    Telephone and utilities                                                              9,301
    Transfer agent and filing fees                                                       5,708
    Travel and automobile                                                               14,842
    Website design and maintenance                                                      30,027
                                                                                --------------

                                                                                       274,838

Loss for the period                                                             $     (270,449)
===============================================================================================

Basic and diluted loss per share                                                $        (0.03)
===============================================================================================

Weighted average number of shares of common stock outstanding                        8,259,140
===============================================================================================
</TABLE>





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

<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Expressed in United States Dollars)
================================================================================


<TABLE>

                                                                                                 Deficit,
                                                                                                Accumulated
                                    Common Shares Issued        Additional          Stock       During the
                                  -----------------------        Paid-in        Subscriptions   Development
                                    Number        Amount         Capital          Receivable        Stage         Total
--------------------------------------------------------------------------------------------------------------------------

<S>                               <C>           <C>              <C>              <C>            <C>           <C>
Balance, February 4,
   1999                                   -     $         -      $        -       $       -      $       -     $         -

hares issued for cash
   at $0.001 per share              100,000             100               -               -              -             100

Shares subscribed for
  cash at $0.001 per
  share                           5,500,000           5,500               -          (5,500)             -               -

Shares issued for cash
  at $0.01 per share              3,960,000           3,960          35,640               -              -          39,600
  at $0.50 per share                408,084             408         203,634               -              -         204,042

Loss for the period                       -               -               -               -       (270,449)       (270,449)
                                 -----------    ------------     -----------      -----------    -----------   ------------

Balance, January 31,
  2000                            9,968,084     $     9,968      $  239,274       $  (5,500)     $(270,449)    $   (26,707)
===========================================================================================================================

</TABLE>





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

<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Expressed in United States Dollars)
PERIOD FROM INCORPORATION ON FEBRUARY 4, 1999 TO JANUARY 31, 2000
================================================================================


<TABLE>
<S>                                                                                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Loss for the period                                                                $     (270,449)
    Item not affecting cash:
       Amortization                                                                               828

    Changes in other operating assets and liabilities:
       Increase in prepaid expenses and deposits                                               (8,017)
       Increase in accounts payable and accrued liabilities                                    56,419
                                                                                       --------------
    Net cash used in operating activities                                                    (221,219)
                                                                                       --------------

CASH FLOWS FROM INVESTING ACTIVITY
    Capital assets acquired                                                                   (11,151)
                                                                                       --------------

CASH FLOWS FROM FINANCING ACTIVITY
    Capital stock issued for cash                                                             243,742
                                                                                       --------------

Cash and equivalents, end of period                                                    $       11,372
======================================================================================================

Cash paid during the period for interest                                               $            -
======================================================================================================

Cash paid during the period for income taxes                                           $            -
======================================================================================================
</TABLE>


Supplemental disclosure with respect to cash flows (Note 10)



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


<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development  Stage Company)
NOTES TO THE FINANCIAL  STATEMENTS
(Expressed in United States Dollars)
JANUARY 31, 2000
================================================================================


1.   HISTORY AND ORGANIZATION OF THE COMPANY

     The  Company  was  incorporated  on  February 4, 1999 under the laws of the
     state of Nevada. The Company is considered a development stage company,  in
     accordance with SFAS #7.

     The  Company is  currently  developing  a retail web site  specializing  in
     children's toys and collectible products.

2.   GOING CONCERN

     The  Company's  financial  statements  are  prepared  using  the  generally
     accepted  accounting  principles  applicable  to  a  going  concern,  which
     contemplates  the  realization of assets and  liquidation of liabilities in
     the normal course of business.  However,  the company has no current source
     of revenue. Without realization of additional capital, it would be unlikely
     for the Company to continue as a going concern.  It is management's plan to
     seek additional capital through a private placement.

     =========================================================================
                                                                         2000
     -------------------------------------------------------------------------
     Deficit accumulated during the development stage          $     (270,449)
     Working capital deficiency                                       (37,030)
     =========================================================================

3.   SIGNIFICANT ACCOUNTING POLICIES

     Cash and equivalents

     Cash and  equivalents  include  highly  liquid  investments  with  original
     maturities of three months or less.

     Revenue recognition

     Revenues  from  products and services are  recognized at the time the goods
     are  shipped or  services  provided to the  customer,  with an  appropriate
     provision for returns and allowances.

     Stock-based compensation

     Statement  of  Financial  Accounting  Standards  No. 123,  "Accounting  for
     Stock-Based  Compensation",  encourages, but does not require, companies to
     record  compensation cost for stock-based  employee  compensation  plans at
     fair value. The Company has chosen to account for stock-based  compensation
     using  Accounting  Principles  Board Opinion No. 25,  "Accounting for Stock
     Issued to Employees".  Accordingly,  compensation cost for stock options is
     measured as the excess, if any, of the quoted market price of the Company's
     stock at the date of the grant over the amount an  employee  is required to
     pay for the stock.

     Capital assets

     Capital  assets are  recorded at cost.  Amortization  is provided  over the
     estimated useful life using the following methods:

        Computer equipment                          3 years straight-line
        Furniture and fixtures                      5 years straight-line


<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JANUARY 31, 2000
================================================================================


3.   SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)

     Income taxes

     Income  taxes are  provided  in  accordance  with  Statement  of  Financial
     Accounting Standards No. 109, "Accounting for Income Taxes". A deferred tax
     asset or  liability  is  recorded  for all  temporary  differences  between
     financial and tax reporting and net operating loss carryforwards.  Deferred
     tax  expenses  (benefit)  results  from the net  change  during the year of
     deferred tax assets and liabilities.

     Deferred  tax assets are  reduced by a  valuation  allowance  when,  in the
     opinion of management,  it is more likely than not that some portion or all
     of the deferred  tax assets will not be  realized.  Deferred tax assets and
     liabilities  are  adjusted for the effects of changes in tax laws and rates
     on the date of enactment.

     Use of estimates

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

     Reporting comprehensive income

     The Company  adopted  Statement of Financial  Accounting  Standards No. 130
     ("SFAS 130"), "Reporting  Comprehensive Income". This statement establishes
     rules for the reporting of  comprehensive  income and its  components.  The
     adoption  of SFAS 130 had no  impact  on total  stockholders'  equity as at
     January 31, 2000.

     Disclosure about segments of an enterprise and related information

     Statement  of  Financial   Accounting   Standards  No.  131  ("SFAS  131"),
     "Disclosure  About  Segments  of an  Enterprise  and  Related  Information"
     requires use of the "management approach" model for segment reporting.  The
     management  approach  model  is  based  on the way a  company's  management
     organizes  segments within the company for making  operating  decisions and
     assessing  performance.  Reportable  segments  are  based on  products  and
     services,  geography,  legal structure,  management structure, or any other
     manner in which management disaggregates a company. Currently, SFAS 131 has
     no effect on the Company's financial statements as substantially all of the
     Company's operations are conducted in one industry segment in Canada.

     Accounting for derivative instruments and hedging activities

     In June 1998, the Financial  Accounting Standards Board issued Statement of
     Financial  Accounting  Standards  No.  133  ("SFAS   133"),"Accounting  for
     Derivative Instruments and Hedging Activities" which establishes accounting
     and  reporting  standards  for  derivative   instruments  and  for  hedging
     activities.  SFAS 133 is effective for all fiscal  quarters of fiscal years
     beginning  after June 15, 1999. In June 1999, FASB issued SFAS 137 to defer
     the  effective  date of SFAS No.  133 to fiscal  quarters  of fiscal  years
     beginning  after June 15, 2000.  The Company does not  anticipate  that the
     adoption of the statement  will have a significant  impact on its financial
     statements.


<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JANUARY 31, 2000
================================================================================


3.   SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)

     Reporting on costs of start-up activities

     The American Institute of Certified Public Accountant's issued Statement of
     Position 98-5 "Reporting on the Costs of Start-Up  Activities" ("SOP 98-5")
     which  provides  guidance on the financial  reporting of start-up costs and
     organization   costs.   It  requires  costs  of  start-up   activities  and
     organization costs to be expensed as incurred. The Company adopted SOP 98-5
     during the current period.

     Foreign currency translation

     The Company accounts for foreign currency  transactions  under Statement of
     Financial  Accounting  Standards No. 52,  "Foreign  Currency  Translation".
     Transaction  amounts  denominated  in foreign  currencies are translated at
     exchange rates prevailing at transaction dates. Carrying values of monetary
     assets and  liabilities  are adjusted at each balance sheet date to reflect
     the exchange rate at that date.  Non monetary  assets and  liabilities  are
     translated at the exchange rate on the original transaction date. Gains and
     losses from  restatement  of foreign  currency  monetary  and  non-monetary
     assets and  liabilities  are included in income.  Revenues and expenses are
     translated at the rates of exchange  prevailing on the dates such items are
     recognized in earnings.

     Loss per share

     Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings
     Per Share"  requires basic and diluted  earnings per share to be presented.
     Basic earnings per share is computed by dividing income available to common
     shareholders  by the  weighted  average  number of  shares of common  stock
     outstanding  during  the  period.  Diluted  earnings  per share  takes into
     consideration  shares of common  stock  outstanding  (computed  under basic
     earnings per share) and potentially dilutive shares of common stock.

4.   FINANCIAL INSTRUMENTS

     The Company's  financial  instruments  consist of cash and  equivalents and
     accounts payable.  Unless otherwise noted, it is management's  opinion that
     the  Company is not  exposed to  significant  interest,  currency or credit
     risks  arising from these  financial  instruments.  The fair value of these
     financial  instruments  approximate their carrying values, unless otherwise
     noted.

5.   CAPITAL ASSETS

<TABLE>
        ================================================================================================
                                                                            Accumulated              Net
                                                                     Cost   Amortization      Book Value
        ----------------------------------------------------------------- -------------- ---------------
        <S>                                               <C>             <C>            <C>
        Computer equipment                                $        4,438  $          380 $        4,058
        Furniture and fixtures                                     6,713             448          6,265
                                                          --------------  -------------- --------------
                                                          $       11,151  $          828 $       10,323
        ================================================================================================
</TABLE>


<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JANUARY 31, 2000
================================================================================


6.   CAPITAL STOCK

     On April 6, 1999,  the Company  issued  5,600,000 and  3,960,000  shares of
     common stock under Rule 504 of Regulation D of the  Securities  Act of 1933
     for total proceeds of $5,600 and $39,600, respectively.

     On April 7, 1999,  the Company  issued 408,084 shares of common stock under
     Rule 504 of Regulation D of the  Securities  Act of 1933 for total proceeds
     of $204,042.

     Common shares

     The common shares of the Company are of the same class,  voting and entitle
     shareholders  to  dividends.  Upon  liquidation,  dissolution  or  wind-up,
     shareholders are entitled to the residual  business proceeds of the Company
     after all of its debts, obligations and liabilities are settled.

     Additional paid-in capital

     The excess of proceeds  received for common  shares over their par value of
     $0.001, less share issue costs, is credited to additional paid in capital.

     Escrow shares

     Included in issued  capital  stock as at January 31,  2000,  are  1,980,000
     common shares held in escrow pursuant to a pooling agreement dated April 6,
     1999. Under the terms of the agreement,  330,000 shares of common stock are
     being released from escrow monthly.

7.   STOCK-BASED COMPENSATION

     On May 1, 1999,  pursuant to  Consulting  Agreements,  the Company  granted
     options to directors  and  employees  to acquire up to 1,000,000  shares of
     common stock of the Company at an exercise  price of $0.10 per share and up
     to 1,000,000  shares of common stock of the Company at an exercise price of
     $0.25 per share.

     Following is a summary of the status of the plan during the period:

<TABLE>
         ==================================================================================================

                                                                                                  Weighted
                                                                                                   Average
                                                                                    Number        Exercise
                                                                                 of Shares           Price
         --------------------------------------------------------------------------------------------------
         <S>                                                                  <C>           <C>
         Outstanding, February 4, 1999                                                   -     $         -
         Granted                                                                 2,000,000            0.17
                                                                               -----------     -----------
         Outstanding, January 31, 2000                                           2,000,000     $      0.17
                                                                               ===========     ===========
         Weighted average fair value of options granted during the period                $ Nil
         ==================================================================================================
</TABLE>



<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JANUARY 31, 2000
================================================================================


7.   STOCK-BASED COMPENSATION (cont'd.....)

     Following is a summary of the status of options  outstanding at January 31,
     2000:

<TABLE>
     =================================================================================================================
                         Outstanding Options                                            Exercisable Options
     ---------------------------------------------------------------          ----------------------------------------
                              Weighed Average
                                    Remaining              Exercise                                          Exercise
                 Number      Contractual Life                 Price                        Number               Price
     -----------------------------------------------------------------------------------------------------------------
         <S>                   <C>                         <C>                        <C>                   <C>
              2,000,000            5.26 years                $ 0.17                     2,000,000             $  0.17
     =================================================================================================================
</TABLE>


     The  Company  applies  Accounting   Principles  Board  Opinion  No.  25  in
     accounting  for its stock  option plan which  follows the  intrinsic  value
     based method for accounting for compensation resulting from the granting of
     options.  There  was no  compensation  expense  incurred  based on  options
     granted.  Since the fair value of these options was $Nil upon granting, net
     loss and loss per share would not have been adjusted had compensation  cost
     been  recognized  on the  basis of fair  value  pursuant  to  Statement  of
     Financial  Accounting  Standards  No.  123.  The fair value of each  option
     granted is estimated on the grant date using the Black Scholes Model.

     The assumptions used in calculating fair value are as follows:

     ==================================================================

                                                                  1999

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

     Risk-free interest rate                                      7.0%
     Expected life of options                                  6 years
     Expected volatility                                        0.001%
     Expected dividend yield                                      0.0%
     ==================================================================

     The Company has also approved a Stock Option Plan for  officers,  employees
     and consultants of the Company.  The Company has reserved  1,500,000 common
     shares of its unissued  share  capital for this plan.  No options have been
     granted under the plan.  The plan  provides for vesting of options  granted
     pro-rata over four years from the date of grant.

     The exercise price of options granted under the plan will be as follows:

          i)   not less than the fair market  value per common share at the date
               of grant.
          ii)  not less than 110% of the fair market  value per common  share at
               the date of grant for  options  granted  to  shareholders  owning
               greater than 10% of the Company.

     Options granted under the plan will expire the earlier of:

          i)   ten years from the date of grant.

          ii)  five  years  from  the  date of  grant  for  options  granted  to
               shareholders owning greater than 10% of the Company.

          iii) the  termination  of the officer,  employee or  consultants  upon
               cause.

          iv)  three months after the  termination  of the officer,  employee or
               consultant other than by cause, death or disability.  v) one year
               after  the  date  of  termination  of the  officer,  employee  or
               consultant due to death or disability.


<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JANUARY 31, 2000
================================================================================


8.   STOCK SUBSCRIPTIONS RECEIVABLE

     Pursuant to Stock Subscription  Agreements dated March 9, 1999, the Company
     issued  5,600,000  shares of common  stock for  proceeds  of $5,600.  As at
     January 31, 2000,  $100 of the proceeds have been  received.  The remaining
     $5,500 is due from the president of the Company. The $5,500 was paid to the
     Company by the president subsequent to January 31, 2000.

9.   RELATED PARTY TRANSACTIONS

     During the period  ended  January 31,  2000,  the Company  entered into the
     following transactions with related parties:

     a)   Paid $2,800 in management fees to the president of the Company.

     b)   Paid  consulting  fees of $51,600 to the  president  and  $18,000 to a
          director of the Company.

     Included  in  accounts  payable as at January  31, 2000 is $18,000 due to a
     director of the Company.

10.  SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

     The significant  non-cash transaction for the period ended January 31, 2000
     consisted of the Company  issuing  5,500,000  shares of common stock in the
     amount of $5,500 in exchange for a stock subscription receivable.

11.  COMMITMENTS

     a)   The Company  entered into  Consulting  Agreements  with  directors and
          employees of the  Company,  effective  May 1, 1999,  for terms of five
          years.  The agreements call for consulting  fees totalling  $9,000 per
          month to be paid.  Monthly  hours worked by the directors or employees
          in excess of the base hourly  commitments  in the  agreements  will be
          paid at a rate of $100 per hour.

          Subsequent  to January 31,  2000,  the Company  terminated  one of the
          Consulting Agreements described above, with a director of the Company.
          The agreement called for consulting fees totalling $2,000 per month to
          be paid.

     b)   The Company has stock option plans as disclosed in Note 7.

     c)   The  Company  is  committed  to  future  minimum  lease  payments  for
          operating leases for premises and office equipment of:

           Year ended January 31, 2001                            $       20,365
           Year ended January 31, 2002                                     1,485
                                                                  --------------
                                                                  $       21,850


<PAGE>

KIDSTOYSPLUS.COM, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JANUARY 31, 2000
================================================================================


12.  INCOME TAXES

     The Company's total deferred tax asset is as follows:

        Tax benefits of net operating loss carryforward         $      101,586
        Valuation allowance                                           (101,586)
                                                                ---------------
                                                                $           -
                                                                ===============


     The  Company  has  a  net  operating  loss  carryforward  of  approximately
     $267,332.  The  valuation  allowance  increased  to $101,586 for the period
     ended  January  31,  2000  since  the  realization  of the  operating  loss
     carryforwards  are doubtful.  It is reasonably  possible that the Company's
     estimate  of the  valuation  allowance  will  change.  The  operating  loss
     carryforwards will expire in the 2007 fiscal year.

13.  SUBSEQUENT EVENTS

     The following transactions occurred subsequent to January 31, 2000:

     a)   The Company completed a private  placement  financing of 590,400 units
          at $1.25 per unit for total  proceeds of $738,000.  Each unit consists
          of one share of common stock and one non-transferrable  share purchase
          warrant.  Each  warrant  entitles  the holder to purchase one share of
          common  stock of the  Company at $1.625 per common  share for one year
          from the date of issuance.

     b)   Options to purchase  400,000 shares of common stock at $0.10 per share
          and 400,000 shares of common stock at $0.25 per share were exercised.

     c)   Pursuant to its Stock Option Plan,  the Company  granted  options to a
          director  and  employee  of the Company to acquire  350,000  shares of
          common  stock at a price of $1.00 per share,  exercisable  to April 5,
          2010.

14.  UNCERTAINTY DUE TO THE YEAR 2000 ISSUE

     The Year 2000 Issue arises because many computerized systems use two digits
     rather than four to identify a year.  Date-sensitive  systems may recognize
     the  year  2000 as 1900  or some  other  date,  resulting  in  errors  when
     information  using  year 2000  dates is  processed.  In  addition,  similar
     problems  may  arise in some  systems  which use  certain  dates in 1999 to
     represent  something  other  than a date.  Although  the change in date has
     occurred,  it is not possible to conclude that all aspects of the Year 2000
     Issue that may affect the entity,  including  those  related to  customers,
     suppliers, or other third parties, have been fully resolved.



<PAGE>

Exhibit Number      Description
--------------      -----------

Exhibit 3.1(1)      Articles of Incorporation of Kidstoysplus.com, Inc. filed on
                    February 4, 1999.

Exhibit 3.2(1)      Bylaws of Kidstoysplus.com, Inc.

Exhibit 10.1(1)     Independent Contractor Agreement by and between Rick Timcke,
                    Kidstoysplus.com,   Inc.   and   Trish   Reader,   Reticular
                    Consulting   dated   June  9,   1999,   related  to  website
                    development.

Exhibit 10.2(1)     Consulting Agreement by and Between  Kidstoysplus.com,  Inc.
                    and Albert R. Timcke dated May 1, 1999.

Exhibit 10.3(1)     Consulting Agreement by and between  Kidstoysplus.com,  Inc.
                    and Brian C. Doutaz dated May 1, 1999.

Exhibit 10.4(1)     Consulting Agreement by and between  Kidstoysplus.com,  Inc.
                    and Gerald Wayne Williams dated May 1, 1999.

Exhibit 10.5(1)     Form   of   Indemnification   Agreement   by   and   between
                    Kidstoysplus.com, Inc. and certain officers and directors of
                    Kidstoysplus.com, Inc.

Exhibit 10.6(1)     Form of Founder Subscription Agreement dated March 9, 1999.

Exhibit 10.7(1)     Form of  Private  Placement  Subscription  Agreement  by and
                    between KIDSTOYSPLUS.COM, INC. and various subscribers.

Exhibit 10.8(1)     Kidstoysplus.com, Inc. 1999 Stock Option Plan.

Exhibit 10.9(2)     Commercial  Lease dated September 1, 1999 by and between Mr.
                    Rick Timcke D.B.A. KidsToysPlus.com and Mr. W. Rautenberg.

Exhibit 10.10(2)    Lease Agreement  effective  September 1, 1999 by and between
                    KidsToysPlus.com,  Inc.  and S.G.  Mechanical  Installations
                    Inc.

Exhibit 10.11(2)    Form of  pooling  agreement  by and among  Kidstoysplus.com,
                    Inc.,  certain  Kidstoysplus.com  shareholders and Albert R.
                    Timcke effective April 6, 1999.

Exhibit 27.1        Financial Data Schedule.

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

(1) Previously filed on June 18, 1999.
(2) Previously filed on September 23, 1999.