SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

              [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            (I.R.S Employer Identifcation No.)
of 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  1,400,000 shares of
Common Stock and 920,000 shares of Series 1 Preferred  Stock,  is  approximately
$370,000  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 as of March 30, 2001 was 3,625,001
shares and 920,000 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  $3,236,304  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.

     During 2000, the Company's sales by product area were as follows:
<PAGE>
         [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 six  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.

     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.
<PAGE>
     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.

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.
<PAGE>
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.

     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.
<PAGE>
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. 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.
<PAGE>
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.  Presently,  however,  the Company is not a
party to any  litigation,  whether  routine or incidental  to its  business,  or
otherwise.

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

         Not applicable.


                                     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
<PAGE>
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 $0.16 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.

     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
<PAGE>
$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.

                                 Preferred Units
<TABLE>
<CAPTION>
                                                                         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>

     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).
<PAGE>
     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 expects to
meet its  dividend  obligations  of $.495 per share to its Series One  Preferred
Shareholders.

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.  At
January 1, 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 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
60 month 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 September 30, 1999 was 8.78%. 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.  Prior to
March 31, 2001, the Company made all required payments of principal and interest
under all of its 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
$1,632,000.  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 104,145  shares of common  stock issued in payment of dividends on
preferred stock.

         For the  year  ended  December  31,  2000,  operating  activities  used
$1,179,818  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  $417,603  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 $286,658 in cash for property and equipment  additions.  For the
year ended  December 31,  2000,  the  Company's  financing  activities  provided
$662,856 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  $1,179,818,  net  cash  used  by  investing
activities  of  $286,658,  and net cash  provided  by  financing  activities  of
$662,856  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>

                                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


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>            <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>                <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

                    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.
<S>                                                                                                          <C>          <C>
                                                                                                             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, 2000 (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.











                                      F-17

<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.
<PAGE>
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.

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  30,000 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
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
<PAGE>
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.

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.
<PAGE>
<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             60.4%          5,000,000               100%

William L. Miller and Jeanne E. Miller (4)(5)                2,533,075             69.9%       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             71.5%       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 3,625,001 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 .

         (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.

         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.
<PAGE>
         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)
         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)
<PAGE>
         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.

     (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 16, 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 16, 2001

/s/ Jeanne E. Miller                     President and
Jeanne E. Miller                         Director                                       April 16, 2001

/s/ Roger Kittelson
Roger Kittelson                          Director                                       April 16, 2001

/s/ Theodore Pamperin
Theodore Pamperin                        Director                                       April 16, 2001
</TABLE>