SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               FORM 10-KSB/A No. 1

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
               THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                   For the fiscal year ended December 31, 2000

                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
              THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

               For the transition period from ________ to ________

                        Commission File Number: 000-29334

                                KIDS STUFF, INC.
          -------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

        Delaware                                34-1843520
(State or other jurisdiction of        (I.R.S Employer Identifcation No.)
incorporation or organization

                           7835 Freedom Avenue, N.W.
                            North Canton, Ohio 44720
       --------------------------------------------------- -------------
               (Address of principal executive offices) (Zip Code)

                         Registrant's telephone number,
                      including area code: (330) 492-8090
                                 --------------

     Securities registered pursuant to Section 12(b) of the Act: None

     Securities registered pursuant to Section 12(g) of the Act:

     Common  Stock,  $.001 par value,  Class A Common Stock  Purchase  Warrants,
Series 1 Preferred Stock,  Series 1 Preferred Stock Purchase  Warrants (Title of
Class)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes x . No ___.

     Indicate by check mark if there is no disclosure  of  delinquent  filers in
response to Item 405 of  Regulation  S-B is not  contained in this form,  and no
disclosure  will  be  contained,  to the  best  of  Registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in part III
of this Form 10-KSB or any amendment to this Form 10-KSB [ ].

     As of March 22, 2001 at 4:00 P.M., the aggregate market value of the voting
stock held by  non-affiliates,  consisting of approximately  1,679,000 shares of
Common Stock and 366,300 shares of Series 1 Preferred  Stock,  is  approximately
$343,425  based upon last sales of the Common Stock and Preferred  Stock of $.15
per share and $.25 per  share,  respectively.  The  number of shares  issued and
outstanding of the Registrant's Common Stock and Preferred Stock as of March 30,
2001 was 3,912,442 shares and 366,300 shares, respectively.
<PAGE>
Item 1.           Description of Business

The Company

         Kids Stuff, Inc. (the "Company") is a direct marketing company formed
under the laws of the state of Delaware. The Company sells and distributes
products for children, principally from prenatal to age three, from its catalogs
and from its Internet site, www.kidsstuff.com. The Company's sales are derived
from the following sources:

o        The Natural Baby Catalog. Natural Baby specializes in products for
         natural childcare, breast-feeding, cloth diapering, and natural fiber
         clothing for children from prenatal to age three.

o        The Perfectly Safe Catalog. Perfectly Safe is the nation's only catalog
         devoted to child safety, child-proofing the home, and safety-related
         products for the family.

o        Jeannie's Kids Club Catalog. Jeanne's Kids Club consists of selected
         popular quality hardgoods products from other children's catalogs
         offered at discounts of up to 60%, in return for an annual membership
         fee of $18.00 per year.

o        Healthy Feet. Healthy Feet is a "kids shoe catalog" which features
         quality shoes from brands such as Sketchers, Converse, Keds and Bear
         Feet. In January, 2000, Healthy Feet was renamed to LittleFeet, and
         reintroduced as an Internet only catalog.

o        Internet Marketing.  Kids Stuff, Inc.'s web site is a marketing
         partnership with Yahoo!(R)Shopping.  The site is accessible at
         www.kidsstuff.com  or on Yahoo!(R)Shopping (http://shopping.yahoo.com).
         The web site  contains  all  four of the catalogs, Jeannie's Kids Club,
         Natural Baby, Perfectly Safe and Little Feet.

o        Retail Store. The Company owns and operates a 3,300 square foot retail
         store, which is named "Kids Catalog Outlet," which features the
         Company's children's clothing and other merchandise selected primarily
         from its catalog merchandise.

         The Company distributes its products directly to consumers from its
sole location in North Canton, Ohio. The facility, which is owned by the
Company, consists of 38,760 square feet. Major functions performed at this
facility consist of marketing, merchandising, creative catalog design, inbound
telemarketing, electronic data processing of orders, warehousing, shipping, and
all administrative functions. The Company's Internet site, www.kidsstuff.com, is
managed and operated from this facility. During 2000, the Company received and
processed approximately 346,000 orders from this location. The Company's
Internet site began operations in the fourth quarter of 1999, and recorded sales
of approximately $3.4 million during 2000. Total sales for 2000 were $15,899,473
as compared to $16,729,951 for 1999. Net loss for the year ended December 31,
2000 was $3,418,811 as compared to a net profit of $48,059 for the same period
in 1999. The Company needs immediate and substantial additional financing for
its operations. See "Item 6."

<PAGE>
         Our principal executive offices are located at 7835 Freedom Avenue
N.W., North Canton, OH 44720; our telephone number is (330) 492-8090.

History

         Perfectly Safe, Inc. ("Perfectly Safe") was formed by Duncan Hill, Inc.
("Duncan Hill"), a principal stockholder of the Company in 1990 under Ohio law
for the purpose of publishing The Perfectly Safe Catalog, which was acquired
from Jeanne Miller, an executive officer and director of the Company, in January
1990. Jeanne Miller purchased the Perfectly Safe Catalog in 1988 from the
catalog's creator. In July 1995, Perfectly Safe began to publish its second
catalog, Jeannie's Kids Club.

         Effective June 30, 1996, the Company succeeded to the catalog business
of Jeannie's Kids Club and Perfectly Safe as a result of a reorganization in
which the Company acquired from Duncan Hill the assets and liabilities of
Perfectly Safe, which was dissolved. The Company, which was incorporated by
Duncan Hill in July 1996, had no operations prior to the reorganization.

         Effective June 30, 1996, the Company also acquired from Duncan Hill the
assets used by Duncan Hill to perform the telemarketing, order fulfillment, data
processing and administrative functions, so that the Company could perform those
functions itself. The Company then entered into a six-month transition period
ended December 31, 1996 in which telemarketing, data processing, order
fulfillment, and administrative functions were transferred from Duncan Hill to
the Company in a manner consistent with the operational requirements of the
various subsidiaries of Duncan Hill. During this period certain costs were
allocated by Duncan Hill to the Company, and in return, certain costs were
allocated by the Company to Duncan Hill and its other subsidiaries, depending
upon the transition status of the cost area involved. In either case, the costs
were allocated pro rata in a manner consistent with Duncan Hill's practices in
existence prior to June 30, 1996. The purchase price of Perfectly Safe and the
aforementioned Duncan Hill assets acquired by the Company was $2,613,404.

         In July 1997, the Company acquired the net assets and operations of The
Natural Baby Catalog from The Natural Baby Company, Inc. ("Baby Co."), a mail
order retailer of children's clothing and toys at a total purchase price of
$2,066,829. This acquisition was funded with the net proceeds of the Company's
initial public offering and was accounted for as a purchase.

         All references to the Company include the operations acquired by it
from Perfectly Safe, Duncan Hill and Baby Co. unless the context indicates
otherwise.


<PAGE>
Company's Operations

         The Company is a direct marketing company formed under the laws of the
  state of Delaware. The Company sells and distributes products for children,
  principally from prenatal to age three, from its catalogs and from its
  Internet site, www.kidsstuff.com.

         Based upon a review of the catalog trade publication called "SRDS
Direct Marketing List Service," the Company believes that its first catalog,
"Perfectly Safe, The Catalog For Parents Who Care," is the nations only catalog
devoted to child safety, child-proofing the home, and safety-related products
for the family. Since 1990, the Company has published over 23 million Perfectly
Safe catalogs and helped childproof over 425,000 homes.

         During July, 1995 the Company introduced "Jeannie's Kids Club" catalog
to broaden its market through a new direct marketing concept in children's
products. Jeannie's Kids Club offers parents who become club members the
opportunity of saving up to 60% compared with the same products in other popular
children's catalogs. The current annual membership fee is $18.00.

         In July 1997, the Company acquired from Baby Co. its third catalog, The
Natural Baby Catalog, which specializes in products made of natural fiber, for
children from prenatal to age three. The Natural Baby Catalog carries both
hardgood products and softgood products (i.e., products primarily made from
fabrics).

         In September 1999, the Company introduced a new catalog called "Healthy
Feet" offering over 1,200 selections and sizes of shoes, with an emphasis on
ages birth to age six. To support this new venture, Kids Stuff, Inc. mailed
402,000 catalogs to its target audiences. Healthy Feet, a "kids shoe catalog"
features quality shoes from brands such as Sketchers, Converse, Keds and Bear
Feet.

         In November, 1998, the Company leased a retail store in Canton, Ohio.
The retail store, which is named "Kids Catalog Outlet," features the Company's
children's clothing and other merchandise which have not been sold through the
Company's catalogs. During 2000, the retail store generated less than 2% of the
Company's sales; the retail store is currently being re-evaluated by the
Company.

         In October,  1999, Kids Stuff, Inc.  launched its new web site in a
marketing  partnership with Yahoo!  Shopping.  The site is accessible at
www.kidsstuff.com  or on Yahoo!  Shopping  (http://shopping.yahoo.com). The web
site contains all four of the catalogs, Jeannie's Kids Club,  Natural Baby,
Perfectly Safe and Little Feet.
<PAGE>
         During 2000, the Company's sales by product area were as follows:

         [OBJECT OMITTED]

         The Market

         The Company's market for children's goods is affected by the number of
births as well as women in the work force. The Company believes that a birth
rate of an estimated 3.8 million births per year and the high percentage of
women in the work force place an emphasis on the convenience and value of
shopping by catalog and through the Internet, although there can be no assurance
that the Company is correct in such belief.

Strategies

         The Company believes that its expertise in the merchandising and direct
marketing of children's products will provide the basis for future growth by the
use of the following strategies:

         DIVERSIFY DIRECT MARKETING EFFORTS. During 1999, Kids Stuff, Inc.
generated over 95% of its sales exclusively through catalog distribution. Year
2000 results indicate that Kids Stuff, Inc. generated approximately 78% of its
sales through traditional catalog orders, 11% from consumers who received
catalogs and elected to order through the Internet, and 11% through pure
Internet marketing efforts. The Company desires to expand on this trend, and to
further diversify its sales by non-traditional means, such as co-operative
mailings, package inserts, and joint marketing agreements.

         DIVERSIFY PROGRAMS TO ACQUIRE NEW CUSTOMERS. The Company has
historically relied upon traditional catalog circulation to acquire new
customers to replenish the attrition from its customer base. This has been from
catalog mailings to mailing lists rented from other sources, such as baby
magazine subscription lists, other baby catalogs, etc. During 2000, outside
rental lists became less responsive and caused higher than normal advertising
costs. The Company believes that it can acquire new customers through the
Internet and other sources at more attractive rates than catalog distribution,
and desires to balance its efforts in this area so that no more than 50% of new
customers are acquired from catalog sources.
<PAGE>
         REDUCE CATALOG CIRCULATION. The Company believes that it can increase
sales and reduce catalog circulation through the diversification of its
marketing efforts and use of less expensive media to generate sales. The Company
will achieve this by elimination of the less profitable segments of its
mailings, while placing more emphasis on the more lucrative segments of its
diversified marketing programs.

         INTERNET SALES. During 2000, the Company generated over $3.2 million of
its sales through the Internet site, www.kidsstuff.com. Approximately 90% of
this business is from consumers who have received catalogs, and the balance from
consumers acquired by Internet marketing. At present the Company's Internet site
is a part of Yahoo! Shopping, and the Company's Internet business has been
largely derived as a result of that arrangement. The Company believes that by
expanding its presence on other sites, it can increase its Internet business
from outside sources and reduce its dependence upon catalog distribution to
drive Internet sales.

         EXPAND INTERNET INFRASTRUCTURE. The Company's Internet site at
www.kidsstuff.com was developed using certain software and processing systems
from Yahoo! Shopping. The Company desires to establish its own independent
Internet site as well, and link to Yahoo! Shopping. By doing this the Company
achieves additional flexibility and can incorporate features not now available.
Additionally, certain other Internet sites such as AOL cannot function using the
Yahoo! system, and the Company is precluded from entering into an agreement with
AOL until it has an independent Internet site available to it.

Five  Point Operations Plan

         During fiscal 2001, Kids Stuff will seek to implement a five point
operations plan to increase sales and reduce overhead. These include the
following:

1.       Contact manufacturers where Kids Stuff experiences a high rate
         of return and ask manufacturers to correct deficiencies in
         their product(s) to reduce returns.

2.       Reduce general and administrative overhead.

3.       Structure catalog mailings to an average of ten mailings per
         catalog per year, instead of eleven mailings at present.

4.       Conduct merchandising tests to determine if a single catalog can
         be successful with all three product groupings.

5.       Improve purchasing and inventory controls to reduce the number
         of times that the Company is out of stock on products
         resulting in partial shipments and unnecessary additional
         delivery costs.
<PAGE>
Merchandising

         The merchandising function for the Company is primarily handled by one
of the Company's founders and current President, Jeanne E. Miller. Mrs. Miller
was previously President of Perfectly Safe, Inc., and responsible for the
development of its business. She is the author of "The Perfectly Safe Home" an
authoritative book on child safety. Two of the catalogs, Perfectly Safe and the
Natural Baby Catalog, have won national awards for excellence in their field.
Mrs. Miller is also a past judge for national catalog awards in fields other
than children's products.

         The Company emphasizes quality and safety in the selection of its
products, and provides full price merchandise tested by the Company. The sale of
its products is backed by a full satisfaction warranty.

         The Perfectly Safe Catalog currently consists of 40 pages containing
approximately 250 products. Products are principally hard-goods, and
approximately 55% directly relate to child safety and child proofing the home.
The balance consists of safety tested convenience products and toys. Unlike
fashion catalogs which change their mix of products offered based upon trends
and seasonality, Perfectly Safe retains proven products with only seasonal
changes.

         During 1995, the Company used its merchandise expertise in children's
products to design and launch its Jeannie's Kids Club Catalog. The target market
is upper income parents who want quality, value and convenience in products for
their children. Jeannie's Kids Club Catalog consists of selected, popular
quality hard-goods products offered at discounts of up to 60%, in return for an
annual club membership fee, currently $18.00 per year. Jeannie's Kids Club
Catalog currently consists of 40 pages containing approximately 250 products.

         Purchased by the Company in 1997, the Natural Baby Catalog emphasizes
primarily softgood products for babies and their parents. Product selections
include natural cotton diapers, products for breast feeding, natural fiber
clothing, and wooden toys. The catalog is 48 pages and contains approximately
350 products, all of which are natural fiber, non-toxic and environmentally
safe. Approximately 30% of The Natural Baby Catalog product line are exclusive
or private label products.

         In September 1999, the Company introduced a new catalog called "Healthy
Feet", offering over 1,200 selections and sizes of shoes, with an emphasis on
ages birth to age six. Healthy Feet Catalog features quality shoes from brands
such as Sketchers, Converse, Keds and Bear Feet. At the beginning of the year
2000, the catalog was renamed to "Little Feet", and reintroduced as an Internet
catalog only, without traditional catalog mailing support.

         Products on the Company's Internet site, www.kidsstuff.com, are
selections from the Company's traditional catalogs. The Internet site acts as a
children's portal, and each of the Company's catalogs carry its own identity
within www.kidsstuff.com, and accepts its own unique orders. The Company
believes that its merchandising expertise and experience in its children's
catalogs will translate directly to Internet merchandising, and that products
popular in one media will prove similarly popular in another media. However,
costs of offering and maintaining products on the Internet will be substantially
less than in traditional catalogs.
<PAGE>
         The Company continually identifies and tests new product categories
that are natural extensions of the core business. In traditional catalogs each
product and product category is measured for its revenue and profitability. To
do this advertising costs are allocated to the product based upon the number of
square inches of catalog pages consumed in its presentation. Products are then
rated by profitability performance with weaker products either removed or
altered in their presentation. In Internet merchandising no such advertising
analysis exists. The Company anticipates that it will offer more products over
the Internet than in catalogs for this reason.

         Test products are selected based upon the data contained in the
analysis of similar or related products, or sales and feature benefits that the
Company's merchandising team feels will appeal to the demographics of the
intended catalog or Internet customer.

Marketing

         The Company serves the children's market at an age where the child
changes rapidly and many of the products become functionally obsolete within
months of the date of purchase. The Company's market is primarily from prenatal
to age three. The Company maintains proprietary mailing lists of households with
an average income in excess of $50,000 per year, a proven history of mail order
purchases and a newborn in the house. The number of customers who purchased in
2000 was over 185,000 households.

         The Company also rents mailing lists from outside sources, which
consist of independent list compilers, as well as directly from other children's
catalogs. The Company's present average cost of renting mailing lists is $0.10
per household per use.

         In order to select those households most likely to purchase, the
Company uses a statistical modeling system. The Company believes that the
application of a statistical modeling system, increases the rate of percentage
response and profitability of its catalogs, although there can be no assurance
that the Company is correct in such belief.

         For its Perfectly Safe and Kids Club catalogs, the Company uses a
selling strategy built around two basic selling seasons: fall/winter and
spring/summer. Each season requires changes of products appropriate to the time
period for the life of the catalog. Catalogs are mailed on a monthly basis, with
clearance sales advertised on wrappers of selected catalog mailings. Monthly
mailing quantities, however, are subject to significant variations due to
changes in timing and availability of rental mailing lists. In 2000, the catalog
mailings for Perfectly Safe and Jeannie's Kids Club were 3.5 million and 1.8
million, respectively.
<PAGE>
         The Natural Baby Catalog uses a selling strategy based upon three basic
selling seasons: spring, summer and fall/winter. While catalogs are mailed
monthly, lesser quantities are mailed monthly in the period February-June, with
quantities increasing during the fall/winter season. The Natural Baby Catalog
mailed approximately 3.8 million catalogs during 2000.

         In September 1999, the Company introduced a new catalog called "Healthy
Feet" offering over 1,200 selections and sizes of shoes, with an emphasis on
ages birth to age six. Healthy Feet, a "kids shoe catalog" features quality
shoes from brands such as Sketchers, Converse, Keds and Bear Feet. At the
beginning of the year 2000, the catalog was re-evaluated, renamed "Little Feet
Catalog", and reintroduced as an Internet only venture.

         In October 1999, the Company introduced its Internet site,
www.kidsstuff.com, and followed a strategy of mirroring its offerings in its
catalogs. The Company believes that this initial strategy has been successful,
as sales have developed in accordance with the Company's initial plan. However,
the Company believes that as its experience and tests with Internet marketing
develop, the Company will develop separate Internet marketing strategies that
utilize the inherent advantages of the Internet.

Customer Service and Telemarketing

         The Company derives approximately 78% of its catalog orders through
orders placed over the telephone, and emphasizes superior customer service and
friendliness in its sales representatives. The Company's method of receipt of
payment includes major credit cards and checks. The Company's return policy is
unconditional, and provides that if a customer is not satisfied with his or her
purchase for any reason, it may be returned within 30 days for a full refund or
exchange. If a shipping error has occurred the Company will issue call tags to
pick up merchandise shipped in error and will send a corrected shipment. During
2000, the Company processed over 358,000 telephone calls, including product
orders, catalog requests, and service requirements.

Business Systems

Telephone

         The Company has a Fujitsu F9600 PBX system with switching for 64
digital ports and 48 analog ports. The switch is fully programmable to change
the phones and features to meet various requirements. The system controls 34
programmable digital phones for the office personnel and 50 programmable digital
phones for order entry, conference rooms and warehouse. The Software allows the
Company to monitor the call activity coming into order entry and customer
service.

         Outside connection uses four T1's and one PRI, a Primary Rate
Interface, which runs on a digital network for local service, with one T1
dedicated to Internet activity.

         The Company currently has 29 toll free numbers that are used mainly for
order entry and customer service functions. Additionally, the Company has 50
toll free numbers that are not in use, but are reserved for later use, as well
as 49 corporate numbers that are used for modems, faxes, customer service,
outbound, etc.
<PAGE>
Network

         The Company's network utilizes a Pentium based server and Windows NT
software. The Company's 46 office computers are interconnected through Windows
NT, and have Internet access through a separate secured gateway T1 interface
with a dedicated Pentium server. This allows all users with a network connection
to gain access to the Internet.

         The Company is running on an NT network platform across four servers
with 69 NT user licenses. Navision, the Company's accounting software, also runs
on Windows NT, as does the Company's timecard system. All computers run Windows
98, and currently use Microsoft Office 2000.

Data Processing

         The Company's data processing system uses an ADDS-Mentor server with a
Pick-MvBase database with 74 user licenses. This machine is also a backup to the
main NT server. Application software was purchased by the Company in 1991 and
modified over time to meet the Company's changing requirements. At this time ,
the Company considers that its application software is proprietary. The system
serves 46 PC's for office personnel, 25 terminals for order entry and 16
terminals for the warehouse with capacity for 23 more order entry terminals and
6 more warehouse terminals.

Fulfillment and Delivery

         The Company's fulfillment and delivery objective is to provide
excellent customer service within a low cost structure. Its fulfillment
operations consist of 30,000 square feet of owned facilities in North Canton,
Ohio. Orders shipped are individually recorded and posted through the use of
barcode scanners, so that sales records and credit card deposits are
electronically posted. The Company's fulfillment center processed approximately
346,000 and 357,000 shipments in 2000 and 1999, respectively.

Inventory and Purchasing

         The Company conducts its purchasing operations at its general offices
in North Canton, Ohio. Each catalog contains between 250 and 350 products. Each
product is reviewed weekly through the use of computerized reports that provide
detailed information regarding inventory value, unit sales, and purchasing
delivery times.



<PAGE>
Product Sourcing

         The Company acquires products for resale in its catalogs from numerous
domestic vendors. No single source supplied more than 10% of the Company's
products during the last three years.

Seasonality

         The Company's business incurs limited seasonal variations, and the
Company's three catalogs tend to offset each other to smooth out seasonal
variations. As a result, the Company projects that quarterly sales of its
catalogs will provide approximately 23% to 27% of total annual catalog sales,
with only a small overall increase in the fourth quarter.

         The Company's Internet sales have limited historical experience from
which to base seasonality, and as a result the Company has used the projection
of historical quarterly sales. The fourth quarter of 2000, accounted for 27% of
total annual Internet sales.

         On a consolidated basis, the Company's overall seasonality is projected
to approximately 30% of total Company sales in the fourth quarter, with the
remaining three quarters approximately equal; however, fourth quarter sales in
2000 were approximately 24% of total year sales.

Competition

         The Company's business competes with other mail order catalogs, retail
stores, and most recently Internet based retailers. These include department
stores, specialty stores, discount stores, mass merchants and Internet stores.
Many general and specialty catalog competitors, as well as retail and Internet
stores have substantially greater financial, distribution and marketing
resources than the Company. However, catalogs such as "Hanna Anderson" and
"Biobottoms," compete with The Natural Baby Catalog in selected product areas,
but do not compete across the entire product line. The same is true of Perfectly
Safe and Kids Club catalogs, where "One Step Ahead," and "Sensational
Beginnings" compete directly in certain product areas but do not compete across
the entire product line.

         Internet stores have grown substantially since 1999, and offer
substantial competition due to their business models. Offerings include
discounted prices, free shipping and handling, and free gift wrapping that
produce strong competitive pressure. Management believes that it should not
follow these competitive strategies, but adhere to its full margin pricing
policies with selected sales and price discounts or "specials."

Trade Marks and Trade Names

         The Company owns ten federally registered trademarks such as "Perfectly
Safe", "Jeannie's Kids Club", and the "The Natural Baby Co., Inc." Additionally,
the Company owns 28 Internet Domain identities, such as Kidsstuff.com and
Perfectlysafe.com.
<PAGE>
         While the Company believes that its trademarks provide adequate
protection for its business purposes, there can be no assurance as to the extent
of the protection that will be provided to the Company, or that the Company will
be able to afford the expenses of any complex litigation which may be necessary
to enforce the proprietary rights.

Regulatory Matters

         The Company's business, and the catalog industry in general, is subject
to regulation by a variety of state and federal laws relating to, among other
things, advertising and sales taxes. The Federal Trade Commission regulates the
Company's advertising and trade practices and the Consumer Product Safety
Commission has issued regulations governing the safety of the products which the
Company sells in its catalogs. No assurances can be given that the Company will
comply with all state and federal laws affecting its business in the future.

         Under current law catalog retailers are permitted to make sales in
states where they do not have a physical presence without collecting sales tax.
The Company believes that it collects sales taxes in states where it is required
to do so. However, since 1987, legislation has been introduced periodically in
the U.S. Congress which would permit states to require sales tax collection by
mail order companies. To date, this proposed legislation has not been passed.
Should Congress, however, pass such legislation in the future, most states could
be expected to require sales tax collection by out-of-state mail order
companies. This would increase the cost of purchasing the Company's products in
those states and eliminate whatever competitive advantage that the Company may
currently enjoy with respect to in-state competitors in terms of sales taxation,
as well as increasing the administrative and overhead costs to the Company in
connection with the collection of such sales tax. There can be no assurances
given that these state sales tax laws will not be changed in the future to the
detriment of the Company. The Company has no claims or regulatory matters in
process or pending as of March 30, 2001.

Product Liability Insurance

         Since 1990, the Company's parent, Duncan Hill, has carried product
liability insurance for the Company. The current coverage is $1 million per
occurrence with an aggregate limit of $2 million. The policy is supplemented by
an umbrella liability policy providing coverage of an additional $1 million per
occurrence, $2 million aggregate. The policies are carried by Duncan Hill, with
the Company as a named insured. The policies are issued for a period of one year
and are currently in effect through September 17, 2001. The Company may, in the
future, procure the same coverage in its name, alone. Although the Company
believes that its present insurance coverage is sufficient for its current level
of business operations, there is no assurance that such insurance will be
sufficient to cover potential claims, or that adequate, affordable insurance
coverage will be available to the Company in the future. An uninsured successful
claim against the Company or a successful claim in excess of the liability
limits or relating to an injury excluded under the policy could have a material
adverse effect on the Company.
<PAGE>
Employees

         As of January 1, 2001, the Company had 74 full time employees and 9
part time employees. Of this total, 7 employees or 10% of total full-time
employees, hold positions of managers; 58 employees or 78% of the total, hold
hourly paid positions. The largest single segment of the Company's employment is
in direct labor involving order entry, customer service, and distribution, where
49 employees or 59% of total Company employment is involved. The work force is
non-union, and the Company does not anticipate a union presence in the
foreseeable future.

Item 2.  Description of Property.

                  In September 1999, the Company purchased and relocated to its
present corporate office and distribution center in North Canton, Ohio. The
facility is adjacent to Interstate 77 and approximately five minutes from the
Akron Canton Airport. The facility consists of 38,760 square feet, with 10,880
square feet of office and 27,880 square feet of warehouse facilities. The entire
facility is sprinklered and air-conditioned. All business functions are under
this one roof with the exception of the Retail Outlet Store. The office includes
facilities for Marketing, Merchandising, Purchasing, Customer Service, and
Administration functions. Also included is a special section for Internet
Administration and another area for Macintosh based Creative and Graphics
functions. Orders processed in the Customer Service and Internet departments are
entered directly into the main computer, processed, and printed in the warehouse
for shipment. In 2000, the Company processed over 346,000 orders from this
facility.

         Management believes that the Company's facility is scalable without
physical expansion to sales of $25 to $30 million per year. Further expansion
beyond that could require an added warehouse facility, connected by T-1
telephone lines from our Customer Service operation. Space is available within a
five mile radius of the present facility, and the Company has the technology to
handle the connections.

         In August 1998, the Company entered into a lease for retail space at
4418 Belden Village Street, Canton, OH, containing approximately 3,400 square
feet of space. This lease, which amends an earlier lease, has a term expiring
December 31, 2002. The Company pays a monthly rent of approximately $2,250.

Item 3.  Legal Proceedings

         In the normal course of business, the Company may be involved in
various legal proceedings from time to time. Management evaluates each claim and
provides for any potential loss when the claim is probable and estimable. In the
opinion of management, the ultimate liability with respect to these actions will
not materially affect the financial position of the Company.

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

         Not applicable.
<PAGE>
                                     PART II

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

         In June 1997, the Company sold Units to the public consisting of two
shares of Common Stock and eight Class A Warrants. The Company's Common Stock
and Class A Common Stock Purchase Warrants ("Class A Warrants") have been quoted
since June 1997 on the OTC Electronic Bulletin Board of the National Association
of Securities Dealers, Inc. ("NASD") under the symbols "KDST" and "KDSTW,
respectively." Each Class A Warrant entitles the holder to purchase one share of
Common Stock at an exercise price of $5.00 per share until the close of business
on June 26, 2002. As of March 22, 2001, at 4:00 P.M. Eastern Standard Time, the
last sale price of the Common Stock and Class A Warrants in the over-the-counter
market were $0.15 and $0.01, respectively. The following table reflects the high
and low sales prices for the Company's Common Stock and Class A Warrants for the
periods indicated as reported by the NASD.
<TABLE>
<CAPTION>

                                  Common Stock

                                                                         High                Low
Fiscal Year Ended December 31, 1999:
<S>                                                                       <C>               <C>
         First Quarter                                                    $4.00.............$2.63
         Second Quarter                                                    3.50..............1.75
         Third Quarter                                                     2.25..............1.00
         Fourth quarter                                                    2.25..............0.44

Fiscal Year Ended December 31, 2000:
         First Quarter                                                    $3.50.............$0.46
         Second Quarter                                                    2.75..............0.38
         Third Quarter                                                     0.59..............0.38
         Fourth Quarter                                                    0.50..............0.16

                                Class A Warrants

Fiscal Year Ended December 31, 1999:
         First Quarter                                                    $0.94.............$0.22
         Second Quarter                                                    0.75..............0.19
         Third Quarter                                                     0.38..............0.13
         Fourth Quarter                                                    0.28..............0.06

Fiscal Year Ended December 31, 2000:
         First Quarter                                                    $0.55.............$0.07
         Second Quarter                                                    0.25..............0.04
         Third Quarter                                                     0.06..............0.03
         Fourth Quarter                                                    0.04..............0.01

</TABLE>

     The quotations in the table above reflect inter-dealer prices without
retail markups, markdowns or commissions.
<PAGE>
     In March 1999, the Company completed a public offering of securities
through Fairchild Financial Group, Inc. In the offering, the Company sold
460,000 Units at the public offering price of $5.50 per Unit (the "Preferred
Units"). Each Preferred Unit consisted of one share of Series 1 Preferred Stock
and two Series 1 Preferred Stock Purchase Warrants. Commencing September 3,
2000, each share of Series 1 Preferred Stock is convertible into two shares of
Common Stock. Commencing September 3, 2000, each Preferred Warrant entitles the
holder to purchase one share of Series 1 Preferred Stock at an exercise price of
$6.00 per share until the close of business on March 3, 2002. The Preferred
Units, Series 1 Preferred Stock and Series 1 Preferred Stock Warrants commenced
trading on the OTC Electronic Bulletin Board on March 4, 1999 under the symbols,
"KDSPU," "KDSPP" and "KDSPW," respectively. As of the close of business on March
22, 2001, the closing sales prices of the Series 1 Preferred Stock and Preferred
Warrants were $0.25 and $0.02, respectively.
<TABLE>
<CAPTION>

                                 Preferred Units
                                                                         High                Low
Fiscal Year Ended December 31, 1999
<S>            <C>                                                        <C>               <C>
         March 1999                                                       $9.25.............$7.00
         Second Quarter                                                    8.88..............7.75

                                 Preferred Stock

Fiscal Year Ended December 31, 1999:
         March 1999                                                       $7.00.............$6.00
         Second Quarter                                                    7.38..............6.75
         Third Quarter                                                     7.13..............4.81
         Fourth Quarter                                                    6.25..............1.00

Fiscal Year Ended December 31, 2000:
         First Quarter                                                    $3.75.............$1.12
         Second Quarter                                                    3.00..............0.88
         Third Quarter                                                     1.00..............0.75
         Fourth Quarter                                                    0.81..............0.31

                               Preferred Warrants

Fiscal Year Ended December 31, 1999:
         March 1999                                                       $1.13.............$1.00
         Second Quarter                                                    1.25..............0.88
         Third Quarter                                                     1.50..............0.47
         Fourth Quarter                                                    1.44..............0.06

Fiscal Year Ended December 31, 2000:
         First Quarter                                                    $0.84.............$0.06
         Second Quarter                                                    0.62..............0.12
         Third Quarter                                                     0.12..............0.06
         Fourth Quarter                                                    0.09..............0.02
</TABLE>
<PAGE>
          The quotations in the tables above reflect inter-dealer prices without
retail markups, markdowns or commissions.

          The Company had 17 and 1 record holders of its Common Stock and Series
1 Preferred Stock, respectively, as of March 22, 2001, as reported by its
transfer agent (American Stock Transfer & Trust Company). The foregoing does not
include beneficial holders of the Company's Common Stock which are held in
"street name" (i.e. nominee accounts such as Depository Trust Company).

         No cash dividends have been paid by the Company on its Common Stock and
no such payment is anticipated in the foreseeable future. The Company is
obligated to make an annual dividend on its Series 1 Preferred Stock of $.495
per share to its Series 1 Preferred shareholders in cash or common stock. In
April 2000, the Company met its first dividend obligation of $.495 per share to
its Series 1 Preferred Shareholders via the issuance of approximately 104,000
shares of the Company's Common Stock. The General Corporation Law of the State
of Delaware prohibits the Company's declaration of dividends except out of
surplus or net profits for the fiscal year in which the dividend is declared
and/or the proceeding fiscal year. In April 2001, the Board of Directors
determined that its surplus/net profits in accordance with Delaware Law was
insufficient to declare its dividend payment to its Series 1 Preferred
Shareholders and no such dividend has been declared.

Item 6.      Management's' Discussion and Analysis of Financial Condition and
             Results of Operations
<PAGE>
RESULTS OF OPERATIONS

Year Ended December 31, 2000 Compared to December 31, 1999

         Net loss for the year ended December 31, 2000 was $3,418,811 compared
to a net profit of $48,059 for the same period of 1999. The Company attributes
this change to a decrease in net sales and increases in costs of sales, selling
expenses, general and administrative expenses, and interest expense; as well as,
a write-down in intangible assets and the cumulative effect of the adoption of a
change in accounting.

Net Sales:

         Total net sales for 2000 decreased $830,478, or 5.0%, to $15,899,473,
compared with $16,729,951 for 1999. Net sales include sales from merchandise,
Jeannie's Kids Club memberships, shipping and handling charges, and mailing list
rentals.

         The decrease in sales is mainly attributable to The Natural Baby
Catalog, which recorded 2000 sales of $5,813,236 compared with $6,835,766 in
1999, a decrease of $1,022,530, or 15.0%.

         The net sales of the Perfectly Safe Catalog also decreased by $179,747
to $5,153,021 in 2000 compared with $5,332,768 in 1999. Net sales of Jeannie's
Kids Club Catalog, also decreased to $2,563,493 in 2000 compared with $2,583,447
for 1999.

Cost of Sales:

         Cost of sales, as a percentage of net sales, increased from 60.1% for
1999 to 60.8% for 2000. Gross profit decreased by $448,105, or 6.7%, to
$6,230,181 in 2000 compared to $6,678,286 in 1999.

Selling Expenses:

         Selling expenses, which consist of advertising and other marketing
related expenses expressed as a percentage of sales, increased from 29.7% for
1999 to 36.8% for 2000. The increase of $889,826, from $4,968,552 in 1999 to
$5,858,378 in 2000, was due to higher catalog costs and a decrease in the sales
per catalog ratio. Total catalog circulation was approximately 9.1 million for
2000 compared to 8.9 million for 1999.

Other Expenses:

         General and administrative expenses were $2,751,623, or 17.3% of net
sales, for 2000, and $1,603,808, or 9.6% of net sales, for 1999. The increase in
general and administrative expense was attributable to increased costs related
to the new building, web site development, including additional employees and
equipment, an increase in professional fees, and a decrease in total costs
charged to The Havana Group, Inc., an affiliated company. Total costs charged to
Havana in 2000 and 1999 amounted to $35,247 and $225,086, respectively. During,
1999, the agreement was modified and extended on a month-to-month basis as
Havana began to incur direct costs for its administrative functions. Havana
currently pays to the Company an accounting, data processing, and administrative
charge of $30,000 per year.
<PAGE>
         During the fourth quarter of 2000, the Company determined that the
remaining unamortized costs of certain intangible assets were impaired and the
balances amounting to $594,131 were written-off.

         Interest expense increased to $249,051 in 2000 from $132,649 in 1999 as
a result of the increase in borrowings.

         During 2000, the Company recorded a charge of $239,726 (an increase in
deferred revenue) representing the cumulative effect on prior years (to December
31, 1999) for the adoption of Staff Accounting Bulletin No. 101, Revenue
Recognition.

LIQUIDITY AND CAPITAL RESOURCES

         In March 1999, the Company completed a public offering of securities
through Fairchild Financial Group, Inc. In the offering, the Company sold
460,000 Units at the public offering price of $5.50 per Unit. Each Preferred
Unit consisted of one share of Series 1 Preferred Stock and two Series 1
Preferred Stock Purchase Warrants. The Company realized net proceeds of
approximately $1,960,000 from this Offering.

         In July 1999 Kids Stuff obtained a new credit facility from Bank One,
N.A. Bank One extended a 24 month revolving credit line in the amount of
$500,000, bearing interest at prime plus 1%. Additionally, Bank One extended a
term loan to the Company for $300,000, bearing interest at 8.78%. The due date
of the note was extended to March 31, 2001 and is currently in arrears. The
Company's previously outstanding $800,000 line of credit was retired with the
proceeds of the new borrowings. The Bank One revolving credit line which becomes
due and payable on April 30, 2001 was increased to $1,000,000 on May 10, 2000.
These loans are secured by the assets of the Company, a third mortgage on the
Company's real estate, cross collateralization of life insurance on the lives of
Mr. and Mrs. Miller, and carry unconditional and unlimited guarantees of Mr.
William Miller and Mrs. Jeanne Miller.

         In July 1999, the Company finalized an agreement to purchase a building
located in North Canton, Ohio, which will serve as the office and warehouse
facilities for the Company, Havana, and Duncan Hill. The purchase price of the
building was $2,200,000. The purchase was partially financed through a
commercial real estate loan from Bank One, N.A. in the amount of $1,690,000. The
loan has a 20 year amortization period with an expiration date of July 7, 2009,
and carries a variable interest rate based upon the 30 day LIBOR plus 2.75%. The
rate of interest at December 31, 2000 was 9.5%. The loan is secured by a first
mortgage on the Company's real estate, guaranteed by Duncan Hill, Inc., Mr.
William Miller, Mrs. Jeanne Miller, and is cross collateralized with assignment
of life insurance.
<PAGE>
         As of April 10, 2001, the Company has violated various covenants of its
line-of-credit and has not paid its $300,000 term note that became due and
payable on March 31, 2001. Bank One N.A. has the right to declare the entire
unpaid balance of its outstanding notes to be immediately due and payable. Bank
One N.A., pursuant to an agreement dated January 24, 2001, entered into a
forbearance agreement until March 31, 2001, that was conditioned upon the
Company not further defaulting on any of its existing loan agreements. The
Company is in discussions with Bank One N.A. to enter into a new forbearance
agreement and extension of the Company's existing credit facilities and notes
thereunder. The Company is also currently seeking to obtain a new institutional
lender to replace its existing lending facilities. No assurances can be given
that these efforts will be successful.

         At February 28, 2001, the Company had a working capital deficit of
$3,516,000. As of February 28, 2001, the Company owed Bank One N.A. a total of
approximately $2,148,000, including $300,000 under its note and $747,000 under
its line-of-credit. The Company has not been able to make timely payments to all
of its trade creditors. As of year end and February 28, 2001, the Company had
past-due payables in the amount of $1,555,000 and $2,035,000, respectively.
Certain vendors have suspended merchandise deliveries to the Company without
cash payments in advance. As a result, the Company was not always able to make
all shipments on new orders on a timely basis. The Company will require
significant cash outlays for the foreseeable future to fund its delinquent trade
credit balances and to meet ongoing trade and other debt obligations. The
Company will require and is currently seeking sources of additional equity or
debt financing in amounts that could be substantial. The type, timing and terms
of financing the Company may obtain will depend upon its total cash needs, the
availability of other financing sources and the prevailing conditions in the
financial markets. The Company cannot guarantee that it will be able to find any
such financing sources at any given time on favorable terms, if at all, or that,
if such additional sources of financing cannot be obtained, that it will be able
to continue to operate as a going concern.

         At December 31, 2000, the Company had a deficit in retained earnings of
$5,036,823, compared with a deficit of $1,390,312 at December 31, 1999. This
change resulted from the 2000 net loss of $3,418,811 and a charge $227,700 as a
result of the cumulative dividends charge relative to the preferred stock.

         For the year ended December 31, 2000, operating activities used
$1,115,924 in cash. Funds were provided primarily by increases in accounts
payable, customer advances, and accrued expenses of $736,902, decreases in
accounts receivable of $122,247 and inventories of $197,092, and non-cash
expenses in depreciation and amortization of $523,744 and impairment of
intangible assets of $594,131. Funds were consumed primarily by the net loss of
$3,418,811. For the year ended December 31, 2000, the Company's investing
activities used $311,098 in cash for property and equipment additions. For the
year ended December 31, 2000, the Company's financing activities provided
$623,402 in cash. This consisted of borrowings on its line of credit in the
amount of $395,000, increases in notes payable of $300,000, a decrease in
amounts due from affiliates of $124,998, and payments on long-term debt of
$157,142. For the year ended December 31, 2000, the combined effect of net cash
used by operating activities of $1,115,924, net cash used by investing
activities of $311,098, and net cash provided by financing activities of
$623,402 decreased cash from $859,431 at December 31, 1999 to $55,811 at
December 31, 2000.
<PAGE>
         At December 31, 1999, the Company had a deficit in retained earnings of
$1,390,312, compared with a deficit of $1,438,371 at December 31, 1998. This
change resulted from the 1999 net income of $48,059. For the year ended December
31, 1999, operating activities provided $10,346 in cash. Funds were provided
primarily by net income of $48,059, non-cash expenses of depreciation and
amortization of $337,180, and a decrease in other assets of $80,244. Funds were
consumed primarily by inventory increases of $119,090, and increases in deferred
advertising of $325,398. For the year ended December 31, 1999, the Company's
investing activities used $2,823,856 in cash. Property and equipment additions
used $2,570,643 for increases in equipment and the purchase of corporate office
warehouse complex. Additionally, the Company invested $253,213 in catalog
development and redesign to alter the format, appearance, design, and
presentation of its products. For the year ended December 31, 1999, the
Company's financing activities provided $3,647,515 in cash. This consisted of
repayments on its line of credit in the amount of $262,000, increases in notes
payable of $2,740,000, the sale of common stock fees of $102,624, and increases
in amounts from affiliates of $93,898. For the year ended December 31, 1999, the
combined effect of net cash provided by operating activities of $10,346, net
cash used by investing activities of $2,823,856, and net cash provided by
financing activities of $3,647,515 increased cash from $25,426 at December 31,
1998 to $859,431 at December 31, 1999.

Forward Looking Statements and Associated Risks

This Form 10-KSB contains forward looking statements which reflect management's
current views and estimates of future economic circumstances, industry
conditions, company performance and the financial results. These forward-looking
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, many of which are beyond the Company's
control, including, without limitation, competition and possible future changes
to state sales tax laws. Actual results could differ materially from these
forward looking statements as a result of changes in the trends in the
children's mail order catalog industry, competition, availability and price of
goods and other factors. Any changes in such assumptions or factors could
produce significantly different results.

Item 7.  Financial Statements

         The information required by Item 8, and an index thereto commences on
page F-1, which pages follow this page.

Item 8.

         Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. Not applicable.
<PAGE>
                                    PART III

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

(a)      Identification of Directors

         The names, ages and principal occupations of the Company's present
directors, and the date on which their term of office commenced and expires, are
as follows:
<TABLE>
<CAPTION>

                                                                   First
                                               Term of             Became                 Principal
Name                                Age        Office              Director               Occupation
----                                ---        --------            --------             --------------

<S>                                 <C>          <C>               <C>                  <C>
William L. Miller                   64           (1)               1981                 Chairman of the
                                                                                        Board, Chief
                                                                                        Executive Officer
                                                                                        and Principal
                                                                                        Financial Officer of
                                                                                        the Company

Jeanne E. Miller (2)                53           (1)               1982                 President of the
                                                                                        Company

Theodore Pamperin                   60           (1)               2001                 Chairman of American
                                                                                        Catalog Partnerships
                                                                                        LLC

Roger A. Kittelson                  56           (1)               2001                 Chief Financial Officer
                                                                                        of NuPath
                                                                                        Technologies Limited
</TABLE>

     (1) Directors are elected at the annual meeting of stockholders and hold
office until the following annual meeting.

     (2) Mr. and Mrs. Miller are married.

(b)      Identification of Executive Officers.

         William L. Miller is Chairman of the Board, Chief Executive Officer,
Principal Financial Officer, Treasurer and Secretary of the Company. Jeanne E.
Miller is President of the Company.

         The terms of all officers expire at the annual meeting of directors
following the annual stockholders meeting. Subject to their contract rights to
compensation, if any, officers may be removed, either with or without cause, by
the Board of Directors, and a successor elected by a majority vote of the Board
of Directors, at any time.
<PAGE>
(c)      Business Experience

     WILLIAM L. MILLER, Chairman of the Board, Chief Executive Officer,
Principal Financial and Accounting Officer, Treasurer and Secretary of the
Company since its formation in July 1996. Mr. Miller serves as Chairman of the
Board, President and Chief Executive Officer of Havana since December 1997.
Previously, he was the sole director and an executive officer of E.A. Carey of
Ohio, Inc. from 1984 to December 1997. Mr. Miller had been a director of
Perfectly Safe, Inc. and its vice President since it was formed by Duncan Hill
in 1990 until July 1996. Mr. Miller is President, Founder and a director of
Duncan Hill, a company he formed in 1977, Mr. Miller founded the MBI
Corporation, which designed and developed packaging machinery (1975-78). Mr.
Miller served in executive capacities in the direct marketing industry from 1971
to 1975. He holds a Bachelors Degree in Mechanical Engineering from Purdue
University and a Masters Degree in Business Administration from Indiana
University

     JEANNE E. MILLER has been a director of the Company since July 1996, and
its President since January 1998. Previously, she served as Executive Vice
President of the Company from July 1996 until January 1998. Since July 1996,
Mrs. Miller had been a director of Perfectly Safe, Inc., and its President since
its formation in 1990 until July 1996. Mrs. Miller co-founded Duncan Hill in
1977 and has been a director and its Vice President since 1977. Mrs. Miller is
the author of the child safety book THE PERFECTLY SAFE HOME, published by Simon
and Schuster in 1991 and has appeared on network television to speak on that
subject. Mrs. Miller served as Vice President and a director of Carey and
Highland Pipe Company, both of which are subsidiaries of Duncan Hill, from 1984
to 1996.

     THEODORE PAMPERIN has been a director of the Company since February 2001.
Since 1995 , Mr. Pamperin has been the Chairman of American Catalog
Partnerships, LLC. a consulting services firm serving the Direct Marketing
industry. Previously, Mr. Pamperin founded and headed up several major catalogs,
including J. Crew, Tweeds and One212. He is an experienced catalog CEO and
possesses an in-depth understanding of the elements critical to creating and
operating a successful direct marketing business. During his 30-year career in
the industry he has also headed up catalogs at General Mills and Fingerhut, and
served as Group Executive Vice-President at Hanover Direct. He has been a member
of the Board of Directors of E&B Marine and Exposures and is a member of the
Operating Committee of the DMA Catalog Council, as well as the Catalog Segment
Advisory Board of the Direct Marketing Association. Mr. Pamperin received a BBA
and MBA from the University of Wisconsin.

     ROGER A. KITTELSON has been a director of the Company since February 2001.
He has over thirty years of senior financial experience and is currently Chief
Financial Officer of NuPath Technologies, Limited, a company engaged in the
business of providing solutions for returning injured employees back to work
safely. Mr. Kittelson is a CPA and a former partner with Arthur Andersen LLP,
one of the world's largest international public accounting and management
consulting firms, where he gained diversified experience in several different
industries including banking and financial services, manufacturing, health care,
colleges and universities, law firms, golf and other sports clubs. Mr. Kittelson
has been an entrepreneur/owner of Precision Custom Plastics Incorporated, a
specialized manufacturing company and has also been the CFO, COO and/or CEO of
several other companies, both public and private. Mr. Kittelson has considerable
knowledge and expertise in management reporting, financial reporting, computer
systems, acquisitions, financing, IPO's, employee benefit programs, human
resources and operations. He holds a Bachelor of Arts Degree in Business
Administration (with dual majors in Accounting and Economics) from Luther
College in Decorah, Iowa.
<PAGE>
          The Board of Directors had recently established a Compensation
Committee and an Audit Committee consisting of Alfred M. Schmidt, Jr. and Debra
P. Gibbs. However, Alfred M. Schmidt Jr. and Debra P. Gibbs resigned from the
Board of Directors and Committees thereof in October and July 2000,
respectively, and as of March 30, the Board of Directors has not filled the
vacancies in the Audit and Compensation Committees. At such time as such
vacancies are replaced, the Audit Committee will, among other things, make
recommendations to the Board of Directors regarding the independent auditors for
the Company, approve the scope of the annual audit activities of the independent
auditors and review audit results and have general responsibility for all
auditing related matters. The Compensation Committee will review and recommends
to the Board of Directors the compensation structure for the Company's officers
and other management personnel, including salary rates, participation in
incentive compensation and benefit plans, fringe benefits, non-cash perquisites
and other forms of compensation.

         The Company's Certificate of Incorporation contains a provision
eliminating the personal monetary liability of directors to the extent allowed
under the General Corporation Law of the State of Delaware. Under the provision,
a stockholder is able to prosecute an action against a director for monetary
damages only if he can show a breach of the duty of loyalty, a failure to act in
good faith, intentional misconduct, a knowing violation of law, an improper
personal benefit or an illegal dividend or stock repurchase, as referred to in
the provision, and not "negligence" or "gross negligence" in satisfying his duty
of care. In addition, the provision applies only to claims against a director
arising out of his role as a director or not, if he is also an officer, his role
as an officer or in any other capacity or to his responsibilities under any
other law, such as the federal securities laws. The provision, however, does not
affect the availability of seeking equitable relief against a director of the
Company. In addition, the Company's Bylaws provide that the Company will
indemnify its directors, officers, employees and other agents to the fullest
extent permitted by Delaware law. Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended (the "Securities Act") may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission"). Officers, directors and
greater than ten percent stockholders are required by the Commission's
regulations to furnish the Company with copies of all Section 16(a) forms they
file. To Management's knowledge, no officer, director or person owning more than
10% of the Company's Common Stock filed any reports late during its year ended
December 31, 2000, except that three former directors namely, Clark D. Swisher,
Debra Gibbs and Alfred Schmidt, did not file Form 4's to reflect their
resignations from the Company and a former officer, Stephen Musin, did not make
the required filings of a Form 3 to reflect his appointment as an officer or a
Form 4 to show his resignation.
<PAGE>
Compensation of Directors

         The Company pays its directors who are not also employees of the
Company $500 for each meeting attended and reimburses such directors for travel
and other expenses incurred by them in connection with attending Board of
Directors meetings. Directors are eligible to participate in 1997 Stock
Incentive Plan. Roger Kittelson and Theodore Pamperin each received outside the
Plan options to purchase 60,000 shares of the Company's Common Stock in February
2001, with one-half of the options immediately exercisable and vested and the
balance vested in February 2002. The options are exercisable at $.27 per share
and expire in February 2006.


<PAGE>
Item 10. Executive Compensation

         The following table provides a summary compensation table with respect
to the compensation of W. Miller, the Company's Chief Executive Officer (CEO),
and J. Miller, the Company's President for the past three years.
<TABLE>
<CAPTION>

                                                                   SUMMARY COMPENSATION TABLE

                                                                             Long Term Compensation
                                  Annual Compensation                             Awards                     Payouts
          (a)                  (b)       (c)          (d)          (e)         (f)           (g)              (h)             (i)
                                                                  Other                                                       All
         Name                                                     Annual    Restricted                                       Other
          and                                                     Compen-     Stock                          LTIP           Compen-
       Principal                                                  Sation     Award(s)      Number of         Payouts         sation
       Position             Year     Salary ($)     Bonus ($)     ($) (1)      ($)        Options (2)          ($)            ($)
-----------------------   ------  -------------  -------------  ---------- ------------  -------------      ----------   -----------
<S>                        <C>       <C>               <C>        <C>            <C>          <C>              <C>             <C>
W. Miller,
Chief Executive Officer    2000      125,000          -0-         4,000         -0-          -0-              -0-             -0-
                           1999      125,000          -0-         4,000         -0-        100,000            -0-             -0-
                           1998      125,000          -0-         4,000         -0-          -0-              -0-             -0-

J. Miller,
President                  2000      105,000          -0-         4,000         -0-          -0-              -0-             -0-
                           1999      105,000          -0-         4,000         -0-         200,000           -0-             -0-
                           1998       94,000          -0-         4,000         -0-         100,000           -0-             -0-
=======================   ======  =============  =============  ========== ============  =============      ===========   ==========
</TABLE>

(1)      Does not include the value of leased automobiles used almost
         exclusively for the Company's business or key man life insurance on the
         lives of each of W. Miller and J. Miller in the amount of $1,000,000,
         payable to the Company in the event of death. W. Miller is provided
         with a leased automobile by Havana with a monthly cost of approximately
         $1,100 and J. Miller is provided with a leased automobile by the
         Company at a monthly cost of approximately $800. The foregoing table
         does not include the value of any personal use of such automobiles.

 (2)     See "Employment Contracts" for a description of these options. Options
         granted in 1999 include the cancellation of all options granted in past
         three years and regrant of an equal number, thereby lowering the
         exercise price to $1.33 per share.
<PAGE>
                               OPTION GRANTS TABLE

         The information provided in the table below provides information with
respect to individual grants of the Company's stock options during fiscal 2000
of each of the executive officers named in the summary compensation table above.
The Company did not grant any stock appreciation rights during 2000.
<TABLE>
<CAPTION>

                        Option Grants in Last Fiscal Year

                                                                                                                      Potential
                                                                                                                 Realizable Value at
                                                                                                                    Assumed Annual
                                       Individual Grants                                                        Rates of Stock Price
                                                                                                                     Appreciation
                                                                                                                 for Option Term (2)
        (a)                        (b)                 (c)                 (d)                (e)               (f)           (g)
                                                       % of
                                                      Total
                                                     Options/
                                                    Granted to
                                 Options            Employees            Exercise           Expira-
                                 Granted            in Fiscal             Price               Tion
       Name                        (#)               Year (1)             ($/Sh)              Date             5% ($)       10% ($)

<S>                                 <C>               <C>                  <C>              <C>                 <C>           <C>
W. Miller                          -0-                N/A                  N/A              N/A                  N/A          N/A

J. Miller                          -0-                N/A                  N/A              N/A                  N/A          N/A
</TABLE>

N/A      Not applicable.

(1)      The percentage of total options  granted to the Company's  employees in
         fiscal year is based upon options  granted to officers,  directors  and
         employees.

(2)      The potential  realizable value of each grant of the Company's  options
         assumes that the market price of its Common Stock  appreciates in value
         from  the date of grant  to the end of the  option  term at  annualized
         rates of 5% and 10%,  respectively,  and after subtracting the exercise
         price from the potential realizable value.
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES

         The information  provided in the table below provides  information with
respect to each  exercise of the  Company's  stock option  during fiscal 2000 by
each of the executive  officers named in the summary  compensation table and the
fiscal year end value of the Company's unexercised options.
<TABLE>
<CAPTION>


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

           (a)                  (b)            (c)                  (d)                         (e)

                                                                                              Value of
                                                                 Number of                  Unexercised
                              Shares                            Unexercised                 In-the-Money
                            Acquired on                           Options at                  Options
                           Exercise (#)       Value              FY-End (#)                 at Fy-End($)
                                             Realized           Exercisable/                Exercisable/
          Name                                ($)(1)            Unexercisable             Unexercisable(1)
-------------------------- -------------- --------------- ------------------------- -----------------------------
<S>                              <C>            <C>          <C>      <C>                      <C>
William L. Miller               -0-            -0-           100,000/-0-                      -0-
-------------------------- -------------- --------------- ------------------------- -----------------------------
Jeanne E. Miller                -0-            -0-           200,000/-0-                      -0-
========================== ============== =============== ========================= =============================
</TABLE>


(1)      The  aggregate  dollar  values in column (c) and (e) are  calculated by
         determining the difference  between the fair market value of the Common
         Stock  underlying  the options and the exercise  price of the Company's
         options at exercise or fiscal year end,  respectively.  In  calculating
         the dollar value  realized upon  exercise,  the value of any payment of
         the exercise price is not included.

         INCENTIVE COMPENSATION PLAN. The Company's Incentive Compensation Plan
(the "Plan") is designed to motivate employee participants to achieve the
Company's annual strategic goals. Eligibility for participation in the Plan is
limited to the executive officers of the Company, and such other employees of
the Company as may be designated by the Board of Directors from time to time.
The amount of such plan with respect to any year shall be determined subsequent
to the end of that year upon the determination of the Company's operating income
for that year. Each participant in the Plan is eligible to receive from the
bonus plan an annual award of up to 50% of the participant's base salary. The
Compensation Committee is responsible for recommending to the Board of Directors
performance objectives and awards for participants. W. Miller and J. Miller are
expected to be the principal participants in the Plan and they control the
election of all directors. Payouts are to be determined annually following
determination of the Company's fiscal year-end results. The Plan is subject to
amendment of termination at any time, but no such action may adversely affect
any rights or obligations with respect to any awards theretofore made under the
Plan. As of the date of this Form 10-KSB, no compensation has been paid under
the Plan.
<PAGE>
         1997 STOCK INCENTIVE PLAN. Under the Plan which was adopted in 1997 and
amended on September 21, 1999, the Compensation Committee of the Board of
Directors, may grant stock incentives to key employees and the directors of the
Company pursuant to which a total of 400,000 shares of Common Stock may be
issued; provided, however, that the maximum amount of Common Stock with respect
to which stock incentives may be granted to any person during any calendar year
shall be 20,000 shares, except for a grant made to a recipient upon the
recipients initial hiring by the Company, in which case the number shall be a
maximum of 40,000 shares. These numbers are subject to adjustment in the event
of a stock split and similar events. Stock incentive grants may be in the form
of options, stock appreciation rights, stock awards or a combination thereof.
The Plan is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974.

         Options granted under the Plan may be either "incentive stock options,"
which qualify for special tax treatment under Section 422 of the Internal
Revenue Code (the "Code"), or nonstatutory stock options, which do not qualify.
Incentive stock options may only be granted to persons who are employees of the
Company. Options will expire at such time as the Compensation Committee
determines, provided that no stock option may be exercisable later than ten
years from its grant, except that the maximum term of any incentive stock option
granted to a person who owns, directly or indirectly, 10% or more of the
combined voting power of the Company's capital stock (a "10% Shareholder") shall
be five years. If an optionee ceases to be an employee or director by reason of
death, incapacity of retirement, the option shall terminate fifteen months after
the optionee ceases to be an employee. If an optionee ceases to be an employee
because of resignation with the consent of the Compensation Committee, the
option will terminate three months after the optionee ceases to be an employee.
If an optionee ceases to be an employee or director for any other reason, the
option will expire thirty days after the optionee ceases to be an employee.

         The option price per share is determined by the Compensation Committee,
except for incentive stock options which cannot be less than 100% of the fair
market value of the Common Stock on the date such option is granted or less than
110% of such fair market value if the optionee is a 10% shareholder. Payment of
the exercise price may be made in cash, or unless otherwise provided by the
Compensation Committee in shares of Common Stock delivered to the Company by the
optionee or by the withholding of shares issuable upon exercise of the option or
in a combination thereof. Options cannot be exercised until the date determined
by the Compensation Committee. Each option shall be exercised in full or in
part. Options are not transferable other than by will or the laws of descent and
distribution, and may be exercised during the life of the employee or director
only by him or her. No options may be granted under the Plan after March 27,
2007. However, any options outstanding on March 27, 2007 will remain in effect
in accordance with their terms.

         The Plan also provides for the granting of stock appreciation rights
("SAR"), which entitle the holder to receive upon exercise an amount in cash
and/or stock which is equal to the appreciation in the fair market value of the
Common Stock between the date of the grant and the date of exercise. The number
of shares of Common Stock to which a SAR relates, the period in which it can be
exercised, and other terms and conditions shall be determined by the
Compensation Committee, provided however, that such expiration date shall not be
later than ten years from the date of the grant. SARS are not transferable other
than by will or the laws of descent and distribution, and may be exercised
during the life of the grant only by the grantee. The SARS are subject to the
same rules regarding expiration upon a grantee's cessation of employment or
directorship, as pertains to options, discussed above.
<PAGE>
         The Compensation Committee may also award shares of Common Stock
("stock awards") in payment of certain incentive compensation, subject to such
conditions and restrictions as the Committee may determine. All shares of Common
Stock subject to a stock award will be valued at not less than 100% of the fair
market value of such shares on the date the stock award is granted. The number
of shares of Common Stock which may be granted as a stock award in any calendar
year may not exceed 80,000.

         The Plan will be administered by the Compensation Committee, which has
the authority to prescribe, amend and rescind rules and regulations relating to
the Plan, to accelerate the exercise date of any option, to interpret the Plan
and to make all necessary determinations in administering the Plan.

         The Plan will remain in effect until such time as it is terminated by
the Board of Directors. The Plan may be amended by the Board of Directors upon
the recommendation of the Compensation Committee, except that, without
stockholder approval, the Plan may not be amended to: increase the number of
shares subject to issuance under the Plan; change the class of persons eligible
to participate under the Plan; withdraw the administration of the Plan from the
Compensation Committee; or, to permit any option to be exercised more than ten
years after the date it was granted.

         The Compensation Committee consisted of Debra P. Gibbs and Alfred M.
Schmidt, Jr. until they resigned from the Board and Committees thereof in July
and October, 2000, respectively. The Committee has granted under the Plan
options to purchase 80,000 shares of the Company's Common Stock as of March 31,
2001.

EMPLOYMENT AGREEMENTS

         The Company has entered into separate five-year employment agreements
with William Miller ("W. Miller") and Jeanne Miller ("J. Miller"), effective
January 1, 1997, pursuant to which W. Miller is serving as Chief Executive
Officer of the Company and J. Miller served as its Executive Vice President. In
January 1998, the Company elected J. Miller President of the Company. In October
1998, the Company and J. Miller entered into an amended agreement. The
employment agreements. as amended, provide for an annual base salary of $125,000
for W. Miller and $105,000 for J. Miller, subject to annual review for increase
by the Company. The employment agreements also provide for the eligibility of
these executives to receive annual cash bonuses under the Company's Incentive
Compensation Plan discussed above. Each of these executives is provided with
automobiles, at the Company's expense, for their exclusive use, the make and
model of which is to be mutually agreed upon by the executive and the Company,
from time to time. These automobiles are used almost exclusively for business
purposes. Each of these executives is also to be reimbursed for certain personal
<PAGE>
expenses up to $6,500, which amount shall be subject to increase to pay for any
personal income tax liability should such reimbursements be deemed taxable to
the executive. Each of these executives is also entitled to participate in any
employee benefit plan which the Company may create in the future. The Company
has also agreed to maintain in force, at its expense, during the term of the
employment agreements, life insurance for the benefit of each of the executives
in an amount equal to twice the base salary of W. Miller and five times the base
salary of J. Miller. (As of December 31, 2000, the Company has not issued such
insurance for W. Miller and/or J. Miller). Pursuant to the employment
agreements, each of these executives has agreed not to compete with the Company
during employment and for a period of one year following termination of
employment and has further agreed to maintain as confidential, the Company's
proprietary information.

         Each of the employment agreements provide for severance compensation to
be paid in all instances other than the executive's termination for cause. In
the event that the executive becomes disabled or dies, the Company, in the case
of W. Miller, is required to pay an amount equal to the product of (x) and (y)
where (x) is the sum of the executive's salary and bonus paid in the prior year
multiplied by 2.99 and (y) the percentage of the employment agreement's five
year term remaining from the date of death of disability; provided, however,
that such severance compensation will not be less than the officer's salary and
bonus paid in the year prior to the year in which the officer dies or becomes
disabled. The foregoing benefit is provided in the employment agreement of J.
Miller, but only in the event of disability. Each executive is also entitled to
be paid severance compensation in an amount equal to the sum of the executive's
salary and bonus paid in the prior year multiplied by 2.99 in the event that the
executive elects to terminate the employment agreement upon the Company's
material breach of the employment agreement or upon the Company's reduction of
the executive's responsibilities, duties, functions or dignity of position
resulting from a change of control, or otherwise. Assuming that severance
payments were due to each of the executive officers as of the date of the Form
10-KSB under the immediately preceding sentence, the amount of the severance
payment to each of W. Miller and J. Miller would be $299,000 and $194,350,
respectively. Each executive is further entitled to be paid severance
compensation in the amount equal to the sum of the executive's salary and bonus
paid in the last year of the executive's employment agreement in the event that
the executive is not rehired upon terms acceptable to him or her or, in the case
of W. Miller, a successor chief executive officer is hired with W. Miller's
consent to replace W. Miller prior to the expiration of the term of his
employment agreement. Additionally, any executive entitled to severance
compensation, above, will also be entitled to participate in any
Company-sponsored employee health benefit plan at the Company's expense, for a
maximum of eighteen months from the date of termination.

         Each of W. Miller and J. Miller was granted under their respective
employment agreements an option to purchase 100,000 shares of the Company's
Common Stock, which option vested 25% on each of the first four anniversary
dates commencing January 1, 1998, regardless of whether the executive is
employed on such dates by the Company. The vested options will be immediately
exercisable and will expire on January 1, 2007. Miller also received immediately
vested and exercisable options to purchase an additional 100,000 shares in
October 1998. The aforesaid options were canceled in September 1999 and were
regranted at an exercise price of $1.33 per share on almost identical terms as
the original options.
<PAGE>
         W. Miller is permitted under his agreement to devote such time to
managing the affairs of the various other Duncan Hill entities as he deems
appropriate, and to retain any compensation that he receives from those entities
for providing those services.

         The Company also provides W. Miller and J. Miller and all other
employees with health insurance on a non-discriminatory basis. The Company
provides its executive officers and employees with certain fringe benefits and
may, in the future, offer additional stock or cash incentive bonus plans, and
other employer benefits on such amounts and upon such conditions as the
Company's Board of Directors may, in its sole discretion, determine.

POTENTIAL CONFLICTS OF INTEREST

         W. Miller is a co-founder, Chairman of the Board of Directors and Chief
Executive Officer of The Havana Group, Inc., Duncan Hill, Inc. and the Company.
W. Miller's employment agreement with the Company provides that he shall be
permitted to devote such time to managing Duncan Hill and Havana as he deems
appropriate. Accordingly, W. Miller will not be devoting his full-time attention
to managing the operations of the Company. Thus, conflicts of interest could
potentially develop (i) to the extent that W. Miller is not able to devote his
full-time and attention to a matter that would otherwise require the full-time
and attention of a business chief executive officer, (ii) involving competition
for business opportunities, (iii) involving transactions between the Company and
its affiliated companies; and (iv) due to the relationship between W. Miller and
J. Miller as husband and wife and as directors and officers of the Company. The
Company has not adopted any procedure for dealing with such conflicts of
interest, except that the Company's Board of Directors has adopted a policy that
all new transactions between the Company and Duncan Hill, Havana or any other
affiliated company must be approved by at least a majority of the Company's
disinterested directors.


<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth as of March 31, 2001, certain
information with respect to the beneficial ownership of Common Stock and Series
A Preferred Stock by each person or entity known by the Company to be the
beneficial owner of 5% or more of such shares, each officer and director of the
Company, and all officers and directors of the Company as a group.
<TABLE>
<CAPTION>
                                                                 Shares of                        Shares of Series A
                                                               Common Stock                         Preferred Stock
                                                            Beneficially Owned                    Beneficially Owned
                                                   -------------------------------------- ------------------------------------
NAME AND ADDRESS OF
BENEFICIAL OWNER(1)                                            NUMBER           PERCENT(2)          NUMBER           PERCENT(3)

<S>         <C>                                              <C>                   <C>            <C>                     <C>
Duncan Hill (4)                                              2,188,075             55.9%          5,000,000               100%

William L. Miller and Jeanne E. Miller (4)(5)                2,533,075             60.1%       5,000,000(6)                100

Theodore Pamperin (7)                                           30,000                 *                -0-                -0-

Roger Kittelson (7)                                             30,000                                  -0-                -0-
                                                                                       *
All Officers and Directors
as a Group (4 Persons)                                       2,593,075             60.7%       5,000,000(6)               100%
</TABLE>
         ---------------
* Represents less than one percent of the outstanding shares.

         (1) Beneficial ownership as reported in the table above has been
         determined in accordance with Rule 13d-3 of the Securities Exchange
         Act. Accordingly, except as noted, all of the Company's securities over
         which the officers and directors and nominees named, or as a group,
         directly or indirectly have, or share voting or investment power, have
         been deemed beneficially owned. All addresses are c/o Kids Stuff, Inc.,
         7835 Freedom Avenue N.W., North Canton, OH 44720.

         (2) Calculated based upon 3,912,442 shares of Common Stock outstanding
         without giving effect to the possible exercise of outstanding Class A
         Warrants.

         (3) Calculated based upon 5,000,000 shares of Series A Preferred Stock
         outstanding. The holders of the Series A Preferred Stock are entitled
         to one vote for each share held of record on all matters submitted to a
         vote of the stockholders. The Series A Preferred Stock has no
         conversion rights or rights to participate in dividend payments.

         (4) The Millers may be deemed to beneficially own all of Duncan Hill's
         shares for purposes of Rule 13d-3 of the Exchange Act based upon their
         controlling ownership of its common stock. The Millers together control
         approximately 68% of Duncan Hill.

         (5) Includes the Miller's deemed beneficial ownership of 2,188,075
         shares of Common Stock, options to purchase 300,000 shares and 45,000
         shares of Common Stock purchased in the open market in January 2001 .
<PAGE>
         (6) Represents the Miller's deemed  beneficial  ownership of 5,000,000
         shares of Series A Preferred  Stock, the record holder of which is
         Duncan Hill.

         (7) Messrs. Pamperin and Kittelson have options to purchase 60,000
         shares each, which options vest one-half in February 2001 and the
         balance in February 2002. The table includes only options vested
         through March 31, 2001.


Item 12.          Certain Relationships and Related Transactions.

         On July 21, 2000, the company entered into a financial consulting
agreement with National Financial Corporation for consulting services until
December 31, 2001. Compensation of approximately $60,000 was payable via the
issuance of 100,000 shares of the Company's Common Stock.

         Reference is made to "Business" and "Management's Discussion and
Analysis or Plan of Operation" for a description of various related party
transactions involving the Company, The Havana Group, Inc. and Duncan Hill, Inc.
Reference is also made to Kids Stuff's Form 10-KSB (Item 12) for its year ended
December 31, 1998 for a description of additional related party transactions.

         It is the policy of the Company that future transactions with
affiliates will be on terms no less favorable than could be obtained from
unaffiliated parties.


Item 13. Exhibits and Reports on Form 8-K.

(a)  Exhibits

<TABLE>
<CAPTION>

         <S>      <C>
         3.01     Certificate of Incorporation of the Company (1)
         3.02     Certificate of Amendment of Certificate of  Incorporation  of the
                  Company(1)
         3.03     By-Laws  of  the  Company(1)
         3.04     Certificate  of Designation  of  Series  A  Preferred  Stock  (2)
         3.05     Certificate  of Designation of Series 1 Preferred  Stock (9)
         4.01     Specimen  Certificate for Shares of Common Stock (2)
         4.02     Specimen  Certificate for Shares of Series A Preferred Stock (2)
         4.03     Revised Form of Common Stock Purchase Warrant  Agreement (5)
         4.04     Revised  Specimen  Certificate  for Common Stock Purchase Warrants (3)
         4.05     Revised Form of Underwriters' Purchase Option - 1997 Offering (5)
         4.06     Form of Representative's Lock-up Letter (2)
         4.07     Form of  Representative's  Purchase Option  Agreement (7)
         4.08     Preferred  Stock Agency  Agreement (7)
         4.09     Preferred  Warrant  Agency Agreement (7)
         4.10     Specimen of Preferred  Warrant (7)
         4.11     Specimen of Series 1 Preferred  Stock (7)
         10.01    Agreement to Acquire the Assets of The Natural Baby Company, Inc., (the
                  "Acquisition Agreement")(1)
         10.02    Addendum to Acquisition Agreement (1)
<PAGE>
         10.03    Escrow Agreement under the Acquisition Agreement (1)
         10.04    Form of Consulting Agreement with Jane Martin (1)
         10.05    Asset Purchase Agreement between the Company and its Parent (1)
         10.06    Promissory Note from the Company and its Parent (1)
         10.07    Form of Bridge Loan Agreement (1)
         10.08    Form of Financial Consulting Agreement with Fairchild Financial
                  Group, Inc. (1)
         10.09    Credit Facility with United National Bank and Trust Company (2)
         10.10    Lease for Company's principal offices and telemarketing center (2)
         10.11    Employment Agreement with William L. Miller (2)
         10.12    Revised Employment Agreement with Jeanne E. Miller (7)
         10.13    10.13 Incentive Compensation Plan (2)
         10.14    1997 Long-Term Stock Incentive Plan (2)
         10.15    Amendment to Asset Purchase Agreement between the Company
                  and its Parent (2)
         10.16    Form of Amendment to Bridge Loan Agreement (4)
         10.17    Amended Form of Stock Repurchase Agreement and Note (5)
         10.18    Second Addendum to Acquisition Agreement (5)
         10.19    First Addendum to Escrow Agreement (6)
         10.20    Third Addendum to Acquisition Agreement (6)
         10.21    Agreement with The Havana Group, Inc. (8)
         10.22    Form of new Financial Consulting Agreement with Fairchild Financial
                  Group, Inc. (7)
         10.23    Other Leases (7)
         10.24    Amendment to 1997 Long Term Stock Incentive Plan (10)
         23.01    Consent of Hausser + Taylor LLP (11)
</TABLE>
 -----------
     (1) Incorporated by reference to the Registrant's Form SB-2 Registration
Statement, file no. 333-19423, filed with the Securities and Exchange Commission
on January 8, 1997.

     (2) Incorporated by reference to the Registrant's Amendment No. 1 to Form
SB-2 Registration Statement, file no. 333-19423, filed with the Securities and
Exchange Commission on March 14, 1997.

     (3) Incorporated by reference to the Registrant's Amendment No. 2 to Form
SB-2 Registration Statement, file no. 333-19423, filed with the Securities and
Exchange Commission on April 2, 1997.

     (4) Incorporated by reference to the Registrant's Amendment No. 3 to Form
SB-2 Registration Statement, file no. 333-19423, filed with the Securities and
Exchange Commission on April 14, 1997.

     (5) Incorporated by reference to the Registrant's Amendment No. 4 to Form
SB-2 Registration Statement, file no. 333-19423, filed with the Securities and
Exchange Commission on June 3, 1997.

     (6) Incorporated by reference to the Registrant's Amendment No. 5 to Form
SB-2 Registration Statement, file no. 333-19423, filed with the Securities and
Exchange Commission on June 25, 1997.

     (7) Incorporated by reference to Form SB-2 Registration Statement, File No.
333-61463.
<PAGE>
     (8) Incorporated by reference to the Registrant's Form 10-KSB filed for its
fiscal year ended December 31, 1997.

     (9) Incorporated by reference to the Registrant's Form 10-KSB filed for its
fiscal year ended December 31, 1998.

     (10) Incorporated by reference to the Registrant's Form 10-KSB filed for
its fiscal year ended December 31, 1999.

     (11) Filed herewith.


(b)      Reports on Form 8-K

         During the three months ended December 31, 2000, no Form 8-K was filed
or required to be filed.
<PAGE>
                                   SIGNATURES

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

                                                     KIDS STUFF, INC.



                                                 By: /s/ William L. Miller
                                                         William L. Miller,
                                                         Chief Executive Officer


Dated:   North Canton, Ohio
         April 25, 2001


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>

           Signatures                    Titles                                            Date

<S>                                      <C>                                            <C>
/s/ William L. Miller                    Chairman of the
    William L. Miller                    Board, Chief Executive Officer,
                                         Principal Financial Officer,
                                         Treasurer and Secretary                        April 25, 2001

/s/ Jeanne E. Miller                     President and
    Jeanne E. Miller                     Director                                       April 25, 2001

/s/ Roger Kittelson
    Roger Kittelson                      Director                                       April 25, 2001

/s/ Theodore Pamperin
    Theodore Pamperin                    Director                                       April 25, 2001

</TABLE>
<PAGE>
















                                KIDS STUFF, INC.


                                FINANCIAL REPORT











                                       F-1
<PAGE>








                                KIDS STUFF, INC.

                                    CONTENTS

<TABLE>
<CAPTION>





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



                                                                                                       Page


<S>                                                                                                      <C>
INDEPENDENT AUDITORS' REPORT                                                                           F-3

FINANCIAL STATEMENTS
     Balance sheets                                                                                    F-4 through F-5
     Statements of operations                                                                          F-6
     Statements of stockholders' equity                                                                F-7
     Statements of cash flows                                                                          F-8
     Notes to financial statements                                                                     F-9 through F-17
</TABLE>











                                       F-2
<PAGE>
                          Independent Auditors' Report



         To the Stockholders and Board of Directors
         Kids Stuff, Inc.
         Canton, Ohio

                  We have audited the accompanying balance sheet of Kids Stuff,
         Inc. (a subsidiary of Duncan Hill, Inc.) as of December 31, 2000 and
         1999, and the related statements of operations, stockholders' equity,
         and cash flows for the years then ended. These financial statements are
         the responsibility of the Company's management. Our responsibility is
         to express an opinion on these financial statements based on our
         audits.

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

                  In our opinion, the financial statements referred to above
         present fairly, in all material respects, the financial position of
         Kids Stuff, Inc. as of December 31, 2000 and 1999, and the results of
         its operations and its cash flows for the years then ended, in
         conformity with generally accepted accounting principles.

                  The accompanying financial statements have been prepared
         assuming that the Company will continue as a going concern. The Company
         incurred a net loss of $3,418,811 during the year ended December 31,
         2000, had a working capital deficit of $3,515,874 as of December 31,
         2000, is in default on its loan agreements, and is in arrears on
         accounts with certain vendor creditors, all of which raise substantial
         doubt about its ability to continue as a going concern. The Company's
         liquidity and management's plans in regard to these matters are
         described in Note 1.L and 6. The financial statements do not include
         any adjustments that might result from the outcome of this uncertainty.

                                                            HAUSSER + TAYLOR LLP

         Canton, Ohio
         April 10, 2001



                                       F-3
<PAGE>
                                KIDS STUFF, INC.

                                 BALANCE SHEETS

                           DECEMBER 31, 2000 and 1999
<TABLE>
<CAPTION>



                                                            2000         1999
ASSETS

CURRENT ASSETS
<S>                                                    <C>            <C>
     Cash ........................................     $   55,811     $  859,431
     Accounts receivable .........................        135,327        257,574
     Inventories .................................      1,847,913      2,045,005
     Deferred catalog expense ....................        699,091        740,425
     Due from affiliates .........................        109,392        234,390
     Prepaid expenses ............................         45,487        170,871
                                                       ----------     ----------
        Total current assets .....................      2,893,021      4,307,696

PROPERTY AND EQUIPMENT
     Land ........................................        214,000        214,000
     Building and improvements ...................      2,041,553      2,026,172
     Data processing equipment and software ......        596,419        401,182
     Leasehold improvements ......................         36,779         34,074
     Web site development ........................        184,883        132,891
     Machinery and equipment .....................         96,599         86,901
     Furniture and fixtures ......................        137,856        126,211
                                                       ----------     ----------
                                                        3,308,089      3,021,431
     Less accumulated depreciation ...............        379,581        206,652
                                                       ----------     ----------
                                                        2,928,508      2,814,779
OTHER ASSETS,net of accumulated amortization
     Goodwill ....................................        958,705      1,015,805
     Catalog development and other ...............              0        368,995
     Customer list ...............................              0        330,655
     Deferred financing fees .....................              0         82,055
                                                       ----------     ----------
                                                          958,705      1,797,510
                                                       ----------     ----------
                                                       $6,780,234     $8,919,985
                                                       ==========     ==========
</TABLE>
   The accompanying notes are an integral part of these financial statements.




                                       F-4

<PAGE>
                                KIDS STUFF, INC.

                                 BALANCE SHEETS

                           DECEMBER 31, 2000 and 1999
<TABLE>
<CAPTION>


                                                                  2000          1999
                                                                  ----          ----
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                           <C>            <C>
     Current portion of long-term debt ....................   $   160,949    $   157,000
     Long-term debt reclassified due to loan
            covenant violations (Notes 5 & 6) .............     1,837,031
         Accounts payable .................................     2,786,879      2,352,318
     Line of credit .......................................       895,000        500,000
     Note payable .........................................       300,000           --
     Deferred revenue .....................................       318,322         15,302
     Accrued expenses .....................................       110,714        111,393
                                                              -----------    -----------
        Total current liabilities .........................     6,408,895      3,136,013

LONG-TERM DEBT, net of current portion ....................          --        1,998,122

Commitments and Contingencies .............................          --             --

STOCKHOLDERS' EQUITY
     Preferred stock, $.001 per share,
           10,000,000 shares authorized:
             Series A, 5,000,000 shares issued
                  and outstanding, voting, without dividend         5,000          5,000
             Series 1, 460,000 shares issued and
                  outstanding, voting, aggregate
                  liquidation of $2.53 million plus
                  cumulative unpaid dividends of $227,700 .           460            460
     Common stock, $.001 par value,
           25,000,000 shares authorized,
           3,625,001 shares issued and outstanding ........         3,625          3,513
                  at 12/31/00 and 3,512,856 issued
                  and outstanding at 12/31/99
     Additional paid-in capital ...........................     5,399,077      5,167,189
     Retained earnings (deficit) ..........................    (5,036,823)    (1,390,312)
                                                              -----------    -----------
         Total stockholders' equity .......................       371,339      3,785,850

                                                              -----------    -----------
                                                              $ 6,780,234    $ 8,919,985
                                                              ===========    ===========

</TABLE>
   The accompanying notes are an integral part of these financial statements.


                                       F-5
<PAGE>
                                KIDS STUFF, INC.

                            STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 2000 and 1999
<TABLE>
<CAPTION>

                                                    2000        1999

<S>                                              <C>             <C>
SALES ........................................   $ 15,899,473    $ 16,729,951

COST OF SALES ................................      9,669,292      10,051,665
                                                 ------------    ------------
GROSS PROFIT .................................      6,230,181       6,678,286

SELLING EXPENSES .............................      5,858,378       4,968,552

GENERAL AND ADMINISTRATIVE EXPENSES ..........      2,751,623       1,603,808

WRITE-DOWN FOR IMPAIRMENT OF INTANGIBLE ASSETS        594,131            --
                                                 ------------    ------------
(LOSS) INCOME FROM OPERATIONS ................     (2,973,951)        105,926

NET OTHER (EXPENSE) INCOME
     Interest expense ........................       (249,051)       (132,649)

     Other ...................................         43,917          74,782
                                                 ------------    ------------
                                                                     (205,134)
                                                                      (57,867)
                                                 ------------    ------------
NET (LOSS) INCOME BEFORE CUMULATIVE
   EFFECT OF A CHANGE IN ACCOUNTING
   PRINCIPLE .................................   $ (3,179,085)   $     48,059

CUMULATIVE EFFECT ON PRIOR YEARS (TO
   DECEMBER 31, 1999) FOR THE ADOPTION
   OF STAFF ACCOUNTING BULLETIN #101,
   REVENUE RECOGNITION .......................       (239,726)           --
                                                 ------------    ------------

NET (LOSS) INCOME ............................   $ (3,418,811)   $     48,059
                                                 ============    ============

BASIC AND DILUTED LOSS PER SHARE
     AFTER CONSIDERING PREFERRED
         STOCK CUMULATIVE DIVIDENDS

            NET LOSS BEFORE CUMULATIVE
         EFFECT OF CHANGE IN ACCOUNTING
             PRICIPLE ........................   $      (0.95)   $      (0.05)

            CUMULATIVE EFFECT OF CHANGE IN
            ACCOUNTING PRINCIPLE .............   $      (0.07)           --

            NET LOSS .........................   $      (1.02)   $      (0.05)
</TABLE>

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

                                       F-6
<PAGE>
                                KIDS STUFF, INC.

                       STATEMENTS OF STOCKHOLDERS' EQUITY

                     YEARS ENDED DECEMBER 31, 2000 and 1999

<TABLE>
<CAPTION>



                                     Common     Preferred     Paid-In       Retained
                                      Stock       Stock       Capital       Earnings    Total

<S>                                 <C>        <C>        <C>           <C>            <C>
BALANCE - JANUARY 1, 1999           $  3,513   $  5,000   $ 3,216,734   $ (1,438,371)  $ 1,786,876

NET PROCEEDS FROM THE
   ISSUANCE OF 460,000
   PREFERRED SHARES IN
   PUBLIC OFFERING                         -        460     1,950,455              -     1,950,915

NET INCOME                                 -          -             -         48,059        48,059
                                    ---------  ---------  -----------   -------------  ------------
BALANCE - DECEMBER 31, 1999            3,513      5,460     5,167,189     (1,390,312)    3,785,850

ISSUANCE OF 104,145 COMMON
   SHARES IN PAYMENT OF DIVIDENDS
   ON PREFERRED STOCK                    104          -       227,596       (227,700)            -

ISSUANCE OF 8,000 SHARES
   OF COMMON STOCK                         8          -         4,292              -         4,300

NET LOSS                                   -          -             -     (3,418,811)   (3,418,811)
                                    ---------  ---------  -----------   -------------  ------------
BALANCE - DECEMBER 31, 2000         $  3,625  $   5,460  $  5,399,077  $  (5,036,823) $    371,339
                                    =========  =========  ===========   =============  ============


</TABLE>

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


                                       F-7
<PAGE>
                                KIDS STUFF, INC.

                            STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 2000 and 1999
<TABLE>
<CAPTION>


                                                                                    2000             1999
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                             <C>            <C>
    Net (loss) income .......................................................   $(3,418,811)   $    48,059
    Adjustments to reconcile net (loss) income to net cash provided (used) by
       operating activities:
          Depreciation and amortization .....................................       523,744        337,180
           Impairment of intangible assets ..................................       594,131           --
          Loss on disposal of assets ........................................          --            5,893
            Common Stock issued for services ................................         4,300           --
            Decrease (increase) in receivables ..............................       122,247         (6,030)
            Decrease (increase) in inventories ..............................       197,092       (119,090)
          Decrease (increase) in deferred catalog expense ...................        41,334       (325,398)
          Decrease (increase) in prepaid expenses ...........................        83,137         (4,374)
          Decrease in other assets ..........................................          --           74,351
            Increase (decrease) in accounts payable,
               deferred revenue, and accrued expenses .......................       736,902           (245)
                                                                                -----------    -----------
Net cash (used) provided by operating activities ............................    (1,115,924)        10,346

CASH FLOWS FROM INVESTING ACTIVITIES
    Investment in property and equipment and other assets ...................      (311,098)    (2,570,643)
    Amount paid for catalog development .....................................          --         (253,213)
                                                                                -----------    -----------
Net cash (used) by investing activities .....................................      (311,098)    (2,823,856)

CASH FLOWS FROM FINANCING ACTIVITIES
    Borrowings (repayment) on line of credit - net ..........................       395,000       (262,000)
    Borrowing on note payable - current .....................................       300,000           --
    Sale of preferred stock .................................................          --        1,950,915
    Amount paid for deferred financing fees .................................       (39,454)      (102,624)
    Payment on long-term debt ...............................................      (157,142)      (584,878)
    Borrowings on long-term debt ............................................          --        1,050,000
    Borrowings - Real Estate Mortgage .......................................          --        1,690,000
    Decrease (increase) in due from affiliates ..............................       124,998        (93,898)
                                                                                -----------    -----------
Net cash  provided by financing activities ..................................       623,402      3,647,515
                                                                                -----------    -----------

NET (DECREASE) INCREASE IN CASH .............................................      (803,620)       834,005

CASH - BEGINNING ............................................................       859,431         25,426
                                                                                -----------    -----------
CASH - ENDING ...............................................................   $    55,811    $   859,431
                                                                                ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
         Cash paid during the year for interest .............................   $   246,083    $   122,163
                                                                                ===========    ===========


</TABLE>

    The accompanying notes are an integral part of these financial statements

                                       F-8
<PAGE>
                                KIDS STUFF, INC.

                          NOTES TO FINANCIAL STATEMENTS


Note 1. Business Description and Summary of Significant Accounting Policies

                  A. Business Description - Kids Stuff, Inc. ("Kids Stuff" or
         the "Company") is in the direct marketing business and sells to
         customers throughout the United States. Duncan Hill, Inc. owns 81% of
         the Company's outstanding voting capital stock as of December 31, 2000.
         Perfectly Safe, a division of the Company, primarily sells children's
         safety products for use up to age 3. Jeannie's Kids Club, a division of
         the Company, sells hard good products for children primarily up to the
         age of 3. Natural Baby, a division of the Company, sells clothing and
         toys for children primarily up to the age of 3. Little Feet, a division
         of the Company, sells shoes primarily for children up to the age of 3.
         Products are purchased from a variety of vendors.

                  B. 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.

                  C. Fair Value of Financial Instruments - The fair value of
         cash, accounts receivable, accounts payable and other short-term
         obligations approximate their carrying values because of the short
         maturities of those financial instruments. In accordance with Statement
         of Accounting Standards No.107, "Disclosure About Fair Value of
         Financial Instruments," rates available at balance sheet dates to the
         Company are used to estimate the fair value of existing debt. The
         carrying values of the Company's long-term obligations approximate
         their fair value. In accordance with Statement of Financial Accounting
         Standards No. 107, "Disclosure About Fair Value of Financial
         Instruments," rates available at balance sheet dates to the Company are
         used to estimate the fair value of existing debt.

                  D. Trade Receivables - It is the Company's policy to record
         accounts receivable net of an allowance for doubtful accounts.
         Management has determined that no allowance is necessary as of December
         31, 2000. Bad debt expense was $95,167 and $58,300 for the years ended
         December 31, 2000 and 1999, respectively.

                  E. Inventories consist of finished goods held for resale and
         are stated at the lower of cost or market with cost being determined by
         the first-in, first-out (FIFO) method.

                  F. Deferred catalog expenses are costs of catalogs mailed to
         customers which are deferred and amortized over approximately six
         months, the estimated length of time customers utilize catalogs and
         other mail order mailings from the Company. Catalog expense was
         $5,045,699 and $4,163,448 for the years ended December 31, 2000 and
         1999, respectively.

                  G. Property and equipment are carried at cost and depreciated
         using the straight-line method over their estimated useful lives
         ranging from five to forty years. Depreciation expense amounted to
         $172,929 and $88,391 for the years ended December 31, 2000 and 1999,
         respectively. Maintenance, repairs, and minor renewals are charged
         against earnings when incurred. Additions and major renewals are
         capitalized.


                                       F-9
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 1. Business Description and Summary of Significant Accounting Policies
        (continued)

                  H. Intangible Assets - During 1997, the Company purchased the
         net assets and operations of The Natural Baby Company. Management
         determined the fair value of the customer list acquired in that
         acquisition to be $505,000. The excess purchase price over the value
         allocated to the specifically identifiable assets acquired amounted to
         $1,151,092 and was recorded as goodwill. The customer list was being
         amortized using the straight-line method over seven years and the
         accumulated amortization was $174,345 as of December 31, 1999. During
         2000, the Company determined that the remaining unamortized cost of the
         mailing list was impaired and the balance was written-off. Goodwill is
         being amortized using the straight-line method over twenty years and
         the accumulated amortization was $192,387 and $135,287 as of December
         31, 2000 and 1999, respectively. The Company periodically assesses the
         goodwill for impairment based on the anticipated cash flows of the
         Company.

                  During 1999 and 1998, the Company redesigned the Natural Baby
         Company, the Perfectly Safe and the Kids Club catalogs. Costs of
         redesigning these catalogs totaling $411,461 were capitalized and were
         being amortized over 48 months using the straight-line method.
         Accumulated amortization was $102,566 as of December 31, 1999. During
         2000, the Company determined that the remaining unamortized cost was
         impaired, and the balance was written-off.

                  I. The Company developed and maintains a mailing list of
         customers who have purchased merchandise in the recent past. The cost
         of developing, maintaining, and updating this list is expensed in the
         period incurred.

                  J. Per Share Amounts - Net income per share is calculated
         using the weighted average number of shares outstanding during the year
         for basic earnings per share. Diluted earnings per share are calculated
         to include the dilutive effect of stock options and warrants. The
         weighted average number of shares outstanding in computing basic and
         diluted earnings per share for 2000 and 1999 were 3,589,619 and
         3,512,856, respectively. There were no dilutive effects of any other
         outstanding securities in 2000 or 1999. Cumulative dividends incurred
         on the Series 1 preferred stock of $227,700 were deducted from 2000 and
         1999 net income in the calculation of earnings per share.

                  K. New Authoritative Pronouncements -- In December 1999, the
         Securities and Exchange Commission issued Staff Accounting Bulletin
         (SAB) 101, "Revenue Recognition in Financial Statements." SAB 101
         provides guidance on applying accepted accounting principles to revenue
         recognition issues in financial statements. This statement is effective
         for all fiscal quarters beginning in the fourth quarter of 2000 and was
         adopted by the Company in that quarter.

                  L. Going Concern - The financial statements have been prepared
          on the basis that the Company will continue as a going concern.
          However, the Company incurred a net loss of $3,418,811 during the year
          ended December 31, 2000, had a working capital deficit of $3,515,874
          as of December 31, 2000, is in default on its loan agreements, and is
          in arrears on accounts with certain vendor creditors which raises
          substantial doubt about its ability to continue as a going concern.

                  Certain vendors have suspended merchandise deliveries to the
         Company without cash payments in advance. As a result, the Company was
         not always able to make all shipments on new orders on a timely basis.
         The Company will require significant cash outlays for the foreseeable
         future to fund its delinquent trade credit balances and to meet ongoing
         trade and other debt obligations. The Company will require and is
         currently seeking sources of additional equity or debt financing in
         amounts that could be substantial. The type, timing and terms of
         financing the Company may obtain will depend upon its total cash needs,
         the availability of other financing sources and the prevailing
         conditions in the financial markets. The Company cannot guarantee that
         it will be able to find any such financing sources at any given time on
         favorable terms, if at all, or that, if such additional sources of
         financing cannot be obtained, that it will be able to continue to
         operate.

                                      F-10
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 1. Business Description and Summary of Significant Accounting Policies
        (continued)

                  The company is not assured of any alternative sources of
         capital to satisfy all amounts owed to its creditors. Accordingly, the
         Company's ability to continue as a going concern is dependent on the
         ability to develop working capital to meet creditors' and lenders'
         demands for payment, and to attain future profitable operations. The
         financial statements do not include any adjustments to its assets,
         including goodwill, or its liabilities that might result from the
         outcome of this uncertainty.

Note 2. Agreement with Affiliated Company

                  Duncan Hill, Inc. owns 79% of the outstanding voting capital
                  stock of the Havana Group, Inc. (Havana). In January 1998, the
                  Company contracted with Havana to provide administrative,
                  executive, and accounting services at an annual cost of
                  approximately $206,100 and $2.40 per order processed. Havana
                  was also obligated to pay 5% of its 1999 and 1998 pre-tax
                  profits to Kids Stuff in connection with these administrative
                  and fulfillment services. However, Havana had no pre-tax
                  profits for 1999 or 1998. During 1999, the agreement was
                  modified and extended on a month-to-month basis as Havana
                  began to incur costs directly for its administrative
                  functions. Havana currently pays to the Company accounting,
                  data processing, and administrative charges of $30,000 per
                  year. Total costs charged to Havana in 2000 and 1999 amounted
                  to $35,247 and $225,086, respectively.

Note 3. Stockholders' Equity

                  A.  Common Stock

                  During 2000, the Company issued 104,145 unregistered
                  restricted shares which represented payment of $227,700 of
                  dividends on the Series 1 Preferred Stock; in addition, the
                  Company issued 8,000 shares valued at $4,300 as payment for
                  professional advisory services.

                  B.  Preferred Stock

                  The Board of Directors has the authority, without further
                  action by the stockholders, to issue up to 10,000,000 shares
                  of Preferred Stock in one or more series and to fix the
                  rights, preferences, privileges, and restrictions thereof,
                  including dividend rights, conversion rights, voting rights,
                  terms of redemption, liquidation preferences, and the number
                  of shares constituting any series or the designation of such
                  series.

                  Duncan Hill holds the 5,000,000 outstanding shares of Series A
                  Preferred Stock, $.001 par value. The holders of the Series A
                  Preferred Stock are entitled to one vote for each share held
                  of record on all matters submitted to a vote of the
                  stockholders.

                  The Series A Preferred Stock is not subject to redemption and
                  has no conversion rights or rights to participate in dividend
                  payments. In the event of any voluntary or involuntary
                  liquidation, dissolution or winding up of the affairs of the
                  Company, each share of Series A Preferred Stock has a
                  liquidation preference of $.001 per share.

                  In March 1999, the Company completed a public offering (see
                  Note 12) in which 460,000 shares of Series 1 Preferred Stock
                  were issued. The holders of the Series 1 Preferred Stock are
                  entitled to one vote for each share held of record on all
                  matters submitted to a vote of the stockholders.


                                      F-11
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 3. Stockholders' Equity (continued)

                  The Series 1 Preferred Stock is redeemable at the option of
                  the Company at a price of $7.20 per share commencing September
                  3, 2000. Each share is convertible into two shares of common
                  stock at the option of the holder, commencing September 3,
                  2000. Each share receives a cumulative annual dividend of
                  $0.495, or 9.0% of the liquidation preference per share,
                  payable in cash or common stock at the option of the Company.
                  In the event of any voluntary or involuntary liquidation,
                  dissolution or winding up of the affairs of the Company, each
                  share of Series 1 Preferred Stock has a liquidation preference
                  of $5.50 per share. Dividends in arrears on the Series 1
                  Preferred Stock amount to $.495 per share or $227,700 in
                  aggregate at December 31, 2000.

                  C.  Warrants

                  The Company has outstanding 2,400,000 Class A warrants. Each
                  warrant entitles the holder to purchase one share of common
                  stock at a price of $5.00. The warrants expire June 26, 2002.
                  The Company may redeem the Warrants at a price of $.05 per
                  Warrant, at any time after they become exercisable, upon not
                  less than 30 days' prior written notice, if the closing bid
                  price of the Common Stock has been at least $14.40 per share
                  for 20 consecutive trading days ending on the fifth day prior
                  to the date on which the notice of redemption is given.

Note 4. Line of Credit and Note Payable

                  Kids Stuff, Inc. has a line of credit from Bank One which is
                  payable on demand, bearing interest payable monthly at the
                  bank's prime lending rate plus 1%, for an effective rate of
                  10.5% at December 31, 2000. The amount available on the line
                  of credit is subject to an asset-based formula with a maximum
                  of $1,000,000. The line of credit had a balance of $895,000 at
                  December 31, 2000. The line is secured by assets of the
                  Company and expires April 30, 2001. The repayment of the
                  facility is guaranteed by Mr. William L. Miller, the Company's
                  Chief Executive Officer, and Mrs. Jeanne E. Miller. Due to the
                  current nature of the liability, the carrying amount of the
                  line approximates fair value. The line of credit is guaranteed
                  by Havana and Duncan Hill, Inc. At December 31, 2000, the
                  Company had $55,500 available on the line of credit based on
                  the agreement's asset-based formula.

                  The Company also has a Note Payable to Bank One of $300,000
                  which is payable on demand, had an effective rate of interest
                  of 8.78% at December 31, 2000, and is secured by the Company's
                  accounts receivable, inventory, and equipment, and the
                  personal residence of the President and CEO.

Note 5. Long-Term Debt

                   Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>

                                                                                              2000        1999
<S>                                                                                      <C>          <C>
                         Bank One - $300,000 term loan, secured by the Company's
                              accounts receivable, inventory, and equipment, and
                              the personal residence of the President and CEO,
                              payable in monthly installments of $6,213,
                              including interest of 8.7% on the first $250,000
                              and 5.78% on the remaining balance, maturing July 2004.    $   227,142  $  297,383
                         Bank One - $1,690,000 commercial real estate loan,
                              secured by a first lien on the Company's land and
                              real estate, and an assignment of key man life
                              insurance on the lives of the Company's President
                              and CEO, principal payable in monthly installments
                              of $7,131, plus interest at a variable rate based
                              on the 30 day LIBOR plus 2.75% (9.5% at December
                              31, 2000), balloon payment due July 2009.                    1,040,169   1,125,739

</TABLE>
                                      F-12
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 5. Long-Term Debt (continued)
<TABLE>
<CAPTION>

                                                                                              2000        1999
                                                                                              ----        ----
<S>                                                                                          <C>         <C>
                          Stark Development Board Finance Corporation - $750,000
                              note, secured by a second lien of the Company's
                              land and real estate, guaranteed by Duncan Hill,
                              Havana, and the Company's President and CEO,
                              bearing interest at 7.3%, maturing December 2019.              730,669     750,000
                                                                                         -----------   ---------
                                                                                           1,997,980   2,155,122

                          Less current portion                                             1,997,980     157,000
                                                                                         -----------   ---------
                                                                                       $          -   $1,988,122
                                                                                         ===========   =========
</TABLE>
                                    .

                  Scheduled principal repayments on long-term debt for each of
                  the next five years are:

                  Year            Amount
                  2001        $  160,949
                  2002           167,500
                  2003           174,700
                  2004           149,100
                  2005           110,300
                  Thereafter   1,235,431

                  The Company incurred interest expense of $249,051 and $132,649
                  for the years ended December 31, 2000 and 1999, respectively.

                  The Bank One loan agreements contain covenants regarding
                  certain financial statement amounts, ratios and activities of
                  the Company including debt to tangible net worth, debt service
                  coverage and a minimum net worth. At December 31, 2000, the
                  Company was not in compliance with these covenants. This
                  non-compliance was not waived by the bank; however, the bank
                  allowed a forbearance agreement through March 31, 2001 (see
                  Note 6).

                  The Stark County Development Board Finance Corporation loan
                  contains various covenants including that the Company will not
                  declare or pay any dividend on any capital stock of the
                  Company without the prior written consent of the lender.
                  Additionally, this loan agreement requires the Company to
                  maintain compliance with covenants in all other loan
                  agreements. At December 31, 2000, the Company was not in
                  compliance with the covenants in its Bank One loan agreements
                  and, therefore, was not in compliance with this covenant.

                  The entire balance of the Company's long-term debt has been
                  classified as a current liability on the accompanying balance
                  sheet due to the non-compliance with the loan covenants.

Note 6. Liquidity

                  As of April 10, 2001, the Company continues to be in default
                  on its loan agreements and has not paid its $300,000 term note
                  that became due and payable on March 31, 2001. Bank One N.A.
                  has the right to declare the entire unpaid balance of its
                  outstanding notes to be immediately due and payable. Bank One
                  N.A., pursuant to an agreement dated January 24, 2001, entered
                  into a forbearance agreement until March 31, 2001, that was
                  conditioned upon the Company not further defaulting on any of
                  its existing loan agreements. The Company is in discussions
                  with Bank One N.A. to enter into a new forbearance agreement
                  and extension of the Company's existing credit facilities and
                  notes thereunder.

                                      F-13
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 6. Liquidity (continued)

                  The Company is also currently seeking to obtain a new
                  institutional lender to replace its existing lending
                  facilities. No assurances can be given that these efforts will
                  be successful.

Note 7. Lease Commitments

                  Duncan Hill, Inc., the parent company of Kids Stuff, has
                  entered into several operating leases for retail space and
                  equipment. Kids Stuff currently makes the required lease
                  payments and allocates a portion of the cost to the Havana
                  Group under the terms of the agreement discussed in Note 2.
                  Duncan Hill is dependent on Kids Stuff to meet monthly lease
                  obligations. Future minimum lease payments required by Duncan
                  Hill, Inc. under noncancellable operating leases for the years
                  ending December 31 are as follows:

                                    2001                              $  64,650
                                    2002                                 55,135
                                    2003                                 50,535
                                    2004                                 45,480

Note 8. Income Tax

                  The Company accounts for income taxes in accordance with
                  Statement of Financial Accounting Standard No. 109, Accounting
                  for Income Taxes. The Company files its Federal income tax
                  return as part of a consolidated group.

                  Deferred income taxes reflect the effects of temporary
                  differences between the carrying amount of assets and
                  liabilities for financial reporting purposes. Deferred tax
                  assets (liabilities) consisted of the following at December
                  31:
<TABLE>
<CAPTION>

                                                                                        2000           1999
                                                                                        ----           ----
                           Deferred tax assets:
<S>                                                                                   <C>          <C>
                                            Net operating loss carryforward           $1,397,564   $   330,974
                                                                                    -------------  ------------
                                    Total deferred tax assets                          1,397,564       330,974
                                    Valuation allowance                               (1,062,093)     ( 25,606)
                                                                                    -------------  ------------
                                    Net deferred tax asset                               335,471       305,368

                           Deferred tax liabilities:
                                            Deferred catalog expense                    (237,691)     (251,745)
                                            Amortization                                 (25,908)      (19,015)
                                            Depreciation                                 (71,872)      (34,608)
                                                                                    -------------  ------------
                           Total deferred tax liabilities                               (335,471)     (305,368)
                                                                                    -------------  ------------
                           Net deferred income taxes                               $           -   $         -
                                                                                    =============  ============
</TABLE>

                  The Company's ability to recognize deferred tax assets is
                  dependent on generating future regular taxable income. In
                  accordance with the provisions of SFAS 109, management has
                  provided a valuation allowance.


                                      F-14
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 8. Income Tax (continued)

                  The Company's tax loss in 2000 was $3,137,031. The Company has
                  net operating loss carryforwards of approximately $4,110,000
                  as of December 31, 2000 for tax purposes. The loss
                  carryforwards expire in varying amounts through the year 2020.

Note 9. Employment Agreements

                  The Company has entered into separate five-year employment
                  agreements with Mr. William L. Miller and Mrs. Jeanne E.
                  Miller, effective January 1, 1997, pursuant to which Mr.
                  Miller is to serve as Chairman of the Board and Chief
                  Executive Officer of the Company and Mrs. Miller is to serve
                  as its President. The employment agreements provide for an
                  annual base salary of $125,000 for Mr. Miller and $105,000 for
                  Mrs. Miller, subject to annual review for increase by the
                  Company. The employment agreements also provide for the
                  eligibility of these executives to receive annual cash bonuses
                  under the Company's Incentive Compensation Plan.

                  Each of the employment agreements provides a severance
                  compensation to be paid in all instances other than the
                  executive's termination for cause. In the event that the
                  executive becomes disabled or dies, the Company, in the case
                  of W. Miller, is required to pay an amount equal to the
                  product of (x) and (y) where (x) is the sum of the executive's
                  salary and bonus paid in the prior year multiplied by 2.99 and
                  (y) the percentage of the employment agreement's five-year
                  term remaining from the date of death or disability; provided,
                  however, that such severance compensation will not be less
                  than the officer's salary and bonus paid in the year prior to
                  the year in which the officer dies or becomes disabled. The
                  foregoing benefit is provided in the employment agreement of
                  J. Miller, but only in the event of disability. Each executive
                  is also entitled to be paid severance compensation in an
                  amount equal to the sum of the executive's salary and bonus
                  paid in the prior year multiplied by 2.99 in the event that
                  the executive elects to terminate the employment agreement
                  upon the Company's material breach of the employment agreement
                  or upon the Company's reduction of the executive's
                  responsibilities, duties, functions, or dignity of position
                  resulting from a change of control, or otherwise.

                  Each of Mr. Miller and Mrs. Miller were granted under their
                  respective employment agreements an option to purchase 100,000
                  shares of the Company's Common Stock, which will vest 25% on
                  each of the first four anniversary dates commencing January 1,
                  1998, regardless of whether the executive is employed on such
                  dates by the Company. The vested options will be immediately
                  exercisable and will expire ten years from the date of the
                  agreement. The exercise price of the options shall be $5.00
                  per share, subject to downward adjustments in the exercise
                  price if the Company meets certain performance goals.

                  Mrs. Miller also received the option to purchase 100,000
                  shares of the Company's unregistered common stock as a signing
                  bonus on October 16, 1998. The exercise price of the options
                  shall be $2.50 per share, and the options will expire 10 years
                  from the date of the grant.

                  During 1999, the Company cancelled the 200,000 options granted
                  to Mrs. Miller as described in the two preceding paragraphs.
                  The Company concurrently issued 200,000 options to Mrs. Miller
                  exercisable at $1.33 per share. The fair value of the options
                  granted to Mrs. Miller was $228,000, as calculated using the
                  Black-Scholes option pricing model assuming no dividends, 123%
                  volatility, an expected life of five years, and a risk-free
                  interest rate of 6.0%

                  Additionally, the Company granted options to some of its
                  directors under a non-qualified Stock Option Agreement
                  discussed in Note 11.

                                      F-15
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 9. Employment Agreements (continued)

                  The Company accounts for employee stock options under APB 25
                  and, accordingly, no compensation cost has been recognized. If
                  the Company had elected to recognize compensation cost
                  consistent with the method prescribed by SFAS 123, the
                  Company's net income would have been reduced (or its net loss
                  increased) by approximately $131,475 or $.04 per share in 2000
                  and $338,100 or $.09 per share in 1999.

                  The Company computed the fair value of options granted during
                  1999 using the Black-Scholes option pricing model assuming no
                  dividends, 123% volatility, an expected life of 50% of the
                  ten-year option terms, and a risk-free interest rate of 6.0%.
                  The fair value of options granted during 1999 was $302,100,
                  including the options issued to Mrs. Miller in replacement of
                  cancelled options.


Note 10. Incentive Plans

                  A.       Incentive Compensation Plan

                  The Company maintains an Incentive Compensation Plan (the
                  "Plan"). The Plan is designed to motivate employee
                  participants to achieve the Company's annual strategic goals.
                  Eligibility for participation in the Plan is limited to the
                  Chief Executive Officer and the Executive Vice President of
                  the Company, and such other employees of the Company as may be
                  designated by the Board of Directors from time to time. For
                  each fiscal year of the Company, the Board will establish a
                  bonus pool not to exceed 10% of the Company's operating
                  income.

                  The amount of such pool with respect to any year shall be
                  determined subsequent to the end of that year upon the
                  determination of the Company's operating income for that year.
                  Each participant in the Plan is eligible to receive from the
                  bonus pool an annual award of up to 50% of the participant's
                  base salary. There were no awards in 1999 or 2000.

                  B.       Stock Incentive Plan

                  The Company maintains a Stock Incentive Plan (Incentive Plan).
                  Under the Incentive Plan, the Compensation Committee of the
                  Board of Directors may grant stock incentives to key employees
                  and the directors of the Company pursuant to which a total of
                  400,000 shares of Common Stock may be issued; provided,
                  however, that the maximum amount of Common Stock with respect
                  to which stock incentives may be granted to any person during
                  any calendar year shall be 20,000 shares, except for a grant
                  made to a recipient upon the recipients initial hiring by the
                  Company, in which case the number shall be a maximum of 40,000
                  shares. These numbers are subject to adjustment in the event
                  of a stock split and similar events. Stock incentive grants
                  may be in the form of options, stock appreciation rights,
                  stock awards or a combination thereof. No stock incentives
                  were granted under the Incentive Plan in 1999 or 2000.



                                      F-16
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 11. Non-Qualified Stock Option Agreement

                  During 1998, the Company entered into a non-qualified stock
                  option agreement with Clark D. Swisher and Alfred M. Schmidt,
                  Jr., directors of the Company. Each of Mr. Swisher and Mr.
                  Schmidt were granted the option to purchase 30,000 shares of
                  the Company's common stock, which vested 25% on August 1, 1998
                  and 25% on each January 1, 1999, January 1, 2000, and January
                  1, 2001. The vested options were immediately exercisable and
                  will expire 10 years from the date of the agreement. The
                  exercise price of the options was originally $2.50, later
                  repriced to $1.33 per share of common stock. The pro forma
                  disclosure in Note 9 includes the effect of the 15,000 options
                  vesting in 2000 and 1999. Both directors resigned in 2000 and
                  therefore forfeit these options in January 2001.

Note 12. Public Offering

                  In March 1999, the Company completed a public offering of
                  securities in which 460,000 units were sold for $1,950,915,
                  net of issuance costs of $579,085. Each unit consisted of one
                  share of Series 1 Preferred Stock and two Series 1 Preferred
                  Stock Purchase Warrants, and sold for $5.50 per unit. The
                  preferred stock and warrants are separately transferable.
                  Commencing September 3, 2000, each share of Series 1 Preferred
                  Stock is convertible into two shares of Common Stock.
                  Commencing September 3, 2000, each Preferred Warrant entitles
                  the holder to purchase one share of Series 1 Preferred Stock
                  at an exercise price of $6.00 per share until the close of
                  business on March 3, 2002.

                  The proceeds of the public offering were used for the purchase
                  of inventory, accounts payable reduction, establishment of a
                  new operations center, web site production and development,
                  leasehold improvements for the "Kids Catalog Outlet" retail
                  store, and general corporate purposes.

Note 13. Change in Accounting for Revenue Recognition

                  In 1999, the Securities and Exchange Commission issued Staff
                  Accounting Bulletin (SAB) 101, "Revenue Recognition in
                  Financial Statements." SAB 101 provides guidance on applying
                  accepted accounting principles to revenue recognition issues
                  in financial statements. The Company adopted SAB 101 in the
                  fourth quarter of 2000. The SAB relates to the Company in
                  regard to Jeanne's Kids Club membership fees, which allows a
                  customer to purchase products from its catalog at a discounted
                  price. These annual memberships are sold for $18.The SAB
                  requires that membership fees be recognized ratably over the
                  membership period. Prior to adoption, the Company recognized
                  the revenue upon receipt of the initial membership purchase
                  and upon billing for subsequent renewals of the membership.
                  The effect of the change in 2000 was to decrease the net loss
                  by approximately $57,000, or $.02 per share. Deferred revenue
                  relating to SAB 101 of approximately $182,508 is included in
                  Deferred revenue and customer advances on the accompanying
                  balance sheet as of December 31, 2000.

Note 14. Commitments and Contingencies

                  The Company is subject to legal proceedings and claims which
                  arise in the ordinary course of business. Management evaluates
                  each claim and provides for any potential loss when the claim
                  is probable and estimable. In the opinion of management, the
                  ultimate liability with respect to these actions will not
                  materially affect the financial position of the Company.



                                      F-17