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, 1999

                                       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)

<TABLE>
<CAPTION>
<S>                                                                                         <C>
          Delaware                                                                          34-1843520
------------------------------------                                                   -------------------
(State or other jurisdiction of                                                           (I.R.S. Employer
incorporation or organization                                                            (Identification No.)
</TABLE>

                           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 [ ].




<PAGE>
As of February 29, 2000 at 4:00 P.M.,  the aggregate  market value of the voting
stock held by non-affiliates  1,332,781 shares of Common Stock, $.001 par value,
with a market value of approximately  $4,238,244 based on the last sale price of
$3.18 was  $7,688,244  for one share of Common Stock on such date. The number of
shares issued and outstanding of the  Registrant's  Common Stock, as of February
29, 2000 was  3,520,856  and 920,000  shares of Series 1 Preferred  Stock with a
market value of approximately $3,450,000 based on the last sale of $3.75 for one
share of Series 1 Preferred Stock.
<PAGE>
Item 1.           Description of Business

THE COMPANY

         Kids Stuff, a Delaware  corporation,  is a specialty  direct  marketer,
which  publishes  four  catalogs  and  maintains  a web site,  which  emphasizes
children's  hardgood  products from prenatal to age three.  Our publications are
"Perfectly  Safe," "Jeannie's Kids Club," "The Natural Baby," and "Little Feet."
Our  web  site is  accessible  at  www.kidsstuff.com  or on  Yahoo!(R)  Shopping
(http://shopping.yahoo.com)  a popular  one-stop  Internet  shopping service and
part of  Yahoo!(R)s  branded  network  of global  Internet  properties.  We also
maintain a retail  store  carrying a full line of our products as they appear in
the  catalogs,  along  with  discontinued  products  and  overstock  items.  Our
principal  executive  offices are located at 7835  Freedom  Avenue  N.W.,  North
Canton, OH 44720; our telephone number is (330) 492-8090.

HISTORY OF DUNCAN HILL

         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. J. 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.


<PAGE>
         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.

Company's Operations

         The Company is a specialty direct marketer which publishes two catalogs
with an emphasis on children's  hardgood products (i.e.,  products not primarily
made from  fabrics)  from  prenatal  to age  three.  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  nation's  only  catalog  devoted  to child  safety,
child-proofing the home, and safety-related products for the family. Since 1990,
the Company has  published  over 20 million  Perfectly  Safe catalogs and helped
childproof over 350,000 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.

KIDS CATALOG OUTLET

         The  Company  has  recently  leased a  retail  store  in  Canton,  Ohio
consisting of  approximately  3,300 square feet of space.  In November 1998, the
Company  completed the  installation  of leasehold  improvements  and opened the
retail store. 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.



<PAGE>
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.  There can be no  assurance  that the Company is correct in
such belief.

STRATEGIES

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

         EXPAND THE  MEMBERSHIP OF JEANNIE'S KIDS CLUB.  Because  Jeannie's Kids
Club offers popular children's products for up to 60% less than other children's
catalogs,  the Company believes that there is a substantial market for this type
of home  shopping  service and an  opportunity  to  substantially  increase  the
membership  of Jeannie's  Kids Club,  which went from  inception in July 1995 to
over 39,000 current members.  Although there are costs associated with acquiring
the initial $18  membership  fee, the $18 annual  renewal of such  membership is
approximately  90% profit to the Company.  Under the terms of the Jeannie's Kids
Club  membership,  renewals are  automatically  billed to a member's credit card
prior to the expiration of the  membership.  The Company intends to continue its
marketing efforts to expand Jeannie's Kids Club membership.

         MAINTAIN  THE  GROWTH OF THE  NATURAL  BABY  CATALOG.  Revenues  of The
Natural Baby Catalog have  increased  from  $3,876,555  in 1992 to $6,833,299 in
1999. The Company will endeavor to maintain  continuity in the merchandising and
marketing of this catalog.

         CUSTOMER ACQUISITION PROGRAMS. In the past, the Company has relied upon
catalog circulation as the sole method to acquire new customers.  Recently,  the
Company has  established a web site as described  above to attract new customers
and increase sales.

         CATALOG  ACQUISITIONS.  The Company believes that,  because of the cost
driven  pressures to consolidate,  there may be  opportunities  to acquire other
children's niche catalogs. The Company, however, has no short term plans to make
any further  acquisitions  and no assurances can be given that any  acquisitions
will be successfully completed in the future.

         STABILIZE THE  PERFORMANCE OF PERFECTLY  SAFE. In the past, many of the
safety  products  carried by the Perfectly  Safe Catalog were  generally hard to
find and were not well stocked by retail stores.  That is no longer the case. As
a  consequence  of this  competition,  the  inability  of the  Company to access
certain  profitable  mailing  lists  following  the  Company's  introduction  of
Jeannie's  Kids Club,  and the  decision  of the  Company to devote  more of its
available  resources  to  building  the  mailing  list  and  membership  base of
Jeannie's Kids Club,  the future  performance of the Perfectly Safe Catalog will
be highly dependent upon the Company's  ability to more  efficiently  obtain new
customers through substantially reduced catalog mailings.


<PAGE>
MERCHANDISING

         Through its Perfectly Safe Catalog,  the Company emphasizes quality and
safety and provides full price merchandise tested by the Company and backed by a
full satisfaction  warranty. The Perfectly Safe Catalog currently consists of 40
pages   containing   approximately   250   products,    principally   hardgoods,
approximately  55% of which directly  relates to child safety and child proofing
the home, with the balance consisting 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.  The
merchandising  function for  Perfectly  Safe is handled by one of the  Company's
founders, J. Miller, the author of "The Perfectly Safe Home."

         During 1995, the Company used its  merchandise  expertise in children's
products to launch its Jeannie's Kids Club Catalog.  The target market  selected
by the Company 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  hardgoods  products from other  children's  catalogs offered at
discounts of up to 60%.  Jeannie's  Kids Club Catalog  currently  consists of 40
pages containing approximately 250 products.

         The Natural  Baby  Catalog  emphasizes  alternative  hard and  softgood
products  for babies and their  parents.  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
is exclusive or private label products.

         The ratio  between  hardgoods to softgoods  contained in the  Company's
three catalogs is approximately 3:1. Substantially all of the products contained
in The  Perfectly  Safe and  Jeannie's  Kids Club  Catalogs are  hardgoods.  The
Company continually identifies and tests new product categories that are natural
extensions  of the core  business  of its  catalogs.  Each  product  and product
category is measured for its revenue and  profitability,  with advertising costs
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.  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 customer.

         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.

<PAGE>
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  for its  catalog  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 1998 was over 84,000 for  Perfectly  Safe,  and over
21,000 member and non-member buyers for Jeannie's Kids Club.  (Non-member buyers
are not entitled to purchase Jeannie's Kids Club merchandise at a discount.) The
Company also rents mailing lists which meet the Company's  criteria from outside
sources,  which consist of independent list compilers,  as well as directly from
other children's  catalogs.  The Company's present cost of renting mailing lists
is $.10 per  household  per use.  The Company  believes  that The  Natural  Baby
Catalog's  mailing list rentals are  primarily  from  certain  other  children's
catalogs based upon a proven history of recent mail order purchases.

         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 systems  increases the rate of percentage
response and profitability of The Natural Baby Catalog, although there can be no
assurance that the Company is correct in such belief.

         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 in  approximately  equal  quantities,  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 1999,  the  catalog  mailings  for
Perfectly  Safe and  Jeannie's  Kids  Club  were 2.8  million  and 1.5  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 4.2 million catalogs during 1999.

         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.

         Due to a  continuing  increase  in  catalog  advertising  costs and the
relatively  short  customer  life,  the Company  believes  that it can no longer
afford to use catalog mailings as the sole method of customer name  acquisition.
The Company has established a website to advertise and sell its products.

<PAGE>
CUSTOMER SERVICE AND TELEMARKETING

         The Company  derives the vast  majority of its revenue  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.

         The Company  employs 45 full-time  and 5 part-time  warehouse  customer
service and  telemarketing  employees at March 1, 2000. During 1999, the Company
processed  over  444,000   telephone   orders,   catalog  requests  and  service
requirements.  The Company also processes  orders,  catalog requests and service
requests for Havana Group,  Inc., an affiliate of the Company.  In January 1998,
the  Company  contracted  with  Havana to provide  Havana  with  administrative,
executive,  and accounting services at an annual cost of approximately  $206,100
as outlined  below and $2.40 per order  processed.  Havana was also obligated to
pay 5% of its 1998  pre-tax  profits  to Kids  Stuff in  connection  with  these
administrative and fulfillment services;  however, Havana had no pre-tax profits
for 1998.  Total costs  charged to Havana in 1999 and 1998  amounted to $225,086
and $293,432,  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's  pay to the  Company  an  accounting,  data
processing,  and administrative  charge of $15,000 per year plus $1.75 per order
processed for shipment for warehouse  services.  Havana is also obligated to pay
5% of its 1999 pretax profits to the Company in connection  with these services,
however  Havana had no pre-tax  profits  for 1999.  This  agreement  is still in
effect, but as of this printing, the Company has started providing some of these
services themselves.

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
357,000 shipments and 325,000 shipments in 1999 and 1998, respectively.

INVENTORY/PURCHASING

         The Company  conducts its purchasing  operations at its general offices
in North Canton,  Ohio. Each catalog  contains  several hundred  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. Products are ordered as required for "just in time" arrival into
the Company's inventory.



<PAGE>
PRODUCT SOURCING

         The Company acquires  products for resale in its catalogs from numerous
domestic  vendors.  No single  source  supplied  more than 10% of the  Company's
products in 1999.

SEASONALITY

         Perfectly  Safe's revenues are not  significantly  impacted by seasonal
fluctuations,  as compared  to many other  retail and  catalog  operations.  The
Perfectly  Safe customer is believed to be generally the end user of the product
so purchases  are spread  throughout  the year,  rather than being  concentrated
between October and December,  as are traditional gift purchases.  The Company's
limited experience does not indicate that Jeannie's Kids Club's revenues will be
subject to significant seasonal  fluctuation.  Natural Baby Products, a division
of the Company, has a seasonal increase in the fourth quarter. During 1999, 1998
and  1997,   The  Natural  Baby  Catalog  sales  in  the  fourth   quarter  were
approximately  46%,  28% and 34% of The Natural Baby  Catalog  total  respective
1999, 1998 and 1997 sales.

COMPETITION

         The mail order catalog and retail clothing outlet industries are highly
competitive.  The Company's business competes with other mail order catalogs and
retail stores,  including department stores,  specialty stores, discount stores,
mass  merchants  and  website  stores.   Many  general  and  specialty   catalog
competitors,  as well as retail and website stores,  have substantially  greater
financial,  distribution  and marketing  resources  than the Company.  There are
numerous  website stores,  general and specialty  catalogs  selling infants' and
children's  items.  However,  based  upon  type of goods  offered,  the  Company
considers  its  primary  hardgood  catalog  competition,  to be "The Right Start
Catalog," "One Step Ahead,"  "Sensational  Beginnings," and "Hand in Hand." "The
Right Start  Catalog" and "One Step Ahead" have  substantially  larger  revenues
than the Company,  even as adjusted to reflect  consolidation of the revenues of
The Natural Baby Catalog.

         Other mail order  catalogs for children's  hardgood  products which the
Company  believes are  competitors  to a lesser  extent are "Current  Children's
Products," "Troll Learn and Play," "Just for Kids,"  "Childcraft," "Toys to Grow
On," "Hearthsong,"  "Constructive Playthings," "Music for Little People," "Great
Kids," "The Great Kids Company,"  "Ultimate Baby Catalog," "San Francisco  Music
Box," "Stork Kit/Bundle of Joy," "Play Fair Toys," "Animal Town," "Alvin and the
Chipmunks,"  "Livonia Catalog," "Plus and Company," "Disney Catalog," "Storybook
Heirlooms,"  and "F.A.O.  Schwartz."  Many of those catalogs have  substantially
higher revenues than the Company.

         Certain 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.  Other mail  order  catalogs  for  children's
softgoods  products  which the Company  believes are  competitors of The Natural
Baby Catalog to a lesser extent are "Playclothes,"  "After the Stork," "Talbot's
Kids," "Spiegel Children's  Clothing," "Brights Creek," "Gymboree," "Eddie Bauer
Children's  Fashions,"  and "Spiegel  Kids." The Company  believes  that many of
these catalogs have substantially higher revenues than The Natural Baby Catalog.


<PAGE>
        In the past, many of the safety products  carried by the Perfectly Safe
Catalog  were  generally  hard-to-find,  lower price items,  such as  electrical
outlet  guards,  appliance cord  shorteners and appliance door latches.  Many of
these  items  are now  stocked  by  retail  stores,  discount  stores  and  mass
merchants.

         In  1995,  the  Company  experienced  a  competitive  reaction  to  its
introduction  of  Jeannie's  Kids Club  Catalog  which  resulted  in three other
children's  catalogs  refusing to exchange with, or rent their mailing lists to,
the Company, resulting in a decrease in sales of the Perfectly Safe Catalog from
$5.0  million  in 1994  to $4.7  million  in  1995.  During  1997,  the  Company
identified other mailing lists which have helped to increase the circulation and
revenues of the Perfectly Safe Catalog.  The Company has not experienced  such a
reaction from its acquisition of The Natural Baby Catalog, although there can be
no assurance that such a competitive  reaction will not occur in the future,  or
that such an occurrence would not have an adverse effect upon the  profitability
of The Natural Baby Catalog.

TRADEMARKS AND TRADE NAMES

         The Company owns federally  registered  trademarks:  "Perfectly  Safe";
"Perfectly  Safe, The Catalog For Parents Who Care" with logo;  "Perfectly  Safe
Guarantee"  with logo;  and,  logo.  The Company  recently  registered its mark,
"Jeannie's  Kids Club," as a unique  identification  of its Jeannie's  Kids Club
Catalog.  With the recent  acquisition of The Natural Baby Catalog,  the Company
acquired the ownership of the trademark  "The Natural Baby Co., Inc." with logo,
which is a federally registered  trademark.  There can be no assurance as to the
extent of the  protection  that will be  provided  to the Company as a result of
having  such  trademarks  and trade  names or that the  Company  will be able to
afford the expenses of any complex  litigation which may be necessary to enforce
the proprietary rights.

REGULATORY MATTERS

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


<PAGE>
         Due to increasing  popularity  and use of the Internet,  it is possible
that a  number  of laws and  regulations  may be  adopted  with  respect  to the
Internet,  covering issues such as user privacy, pricing,  content,  copyrights,
distribution  and  characteristics  and quality of products  and  services.  The
growth  and  development  of  the  electronic   commerce  market  may  calk  for
initiatives  for  more  stringent  consumer  protection  laws  that  may  impose
additional  burdens on  companies  conducting  on-line  business.  Additionally,
taxation of Internet use or electronic commerce transactions may be imposed. Any
regulation  imposing fees for Internet use or electronic  commerce  transactions
could  result in a  decline  in the use of the  Internet  and the  viability  of
Internet  commerce,  which could have a material adverse effect on the Company's
business.

         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 1, 2000.

PRODUCT LIABILITY INSURANCE

         Since 1990,  the Company's  parent,  Duncan Hill,  has carried  product
liability  insurance  for the  Company and  Havana.  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 and Havana as named  insureds.  The policies are
issued for a period of one year and are  currently in effect  through  September
17, 2000. 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, 2000,  the Company had 77 full time  employees  and 10
part time  employees.  Of this total,  13  employees  or 15% of total  full-time
employees,  hold positions of managers;  56 employees or 64% 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
47 employees or 54% 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.

         The Company's principal offices, telemarketing center and warehouse are
located in North Canton,  Ohio. The Company purchased this facility in July 1999
at a purchase price of $2,200,000. The facility consists of approximately 39,000
square feet of space.

         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 will pay a monthly rent of  approximately  $2,250
commencing  30 days after the Company  takes  possession of the premises and the
landlord notifies the Company that the space is ready for occupancy.

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.


<PAGE>
                                     PART II

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

         In June 1997,  the Company sold Units to the public  consisting  of two
shares of Common Stock and eight Class A Warrants.  The  Company's  Common Stock
and Class A Common Stock Purchase Warrants ("Class A Warrants") have been quoted
since June 1997 on the OTC Electronic Bulletin Board of the National Association
of  Securities  Dealers,  Inc.  ("NASD")  under the  symbols  "KDST" and "KDSTW,
respectively." Each Class A Warrant entitles the holder to purchase one share of
Common Stock at an exercise price of $5.00 per share until the close of business
on June 26, 2002. As of February 29, 2000 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 $3.18 and $.33,  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, 1998:
         -----------------------------------
<S>                                                                    <C>                              <C>
              First Quarter                                            $6.50........................... $3.63
              Second Quarter                                           $5.14............................$2.38
              Third Quarter                                            $4.50............................$2.13
              Fourth Quarter                                           $3.25............................$1.88

         Fiscal Year Ended December 31, 1999:
         -----------------------------------
              First Quarter                                            $4.00........................... $2.63
              Second Quarter                                           $3.50............................$1.75
              Third Quarter                                            $2.25............................$1.00
              Fourth Quarter                                           $2.25............................$0.44

                                                  Class A Warrants

         Fiscal Year Ended December 31, 1998:
         -----------------------------------
              First Quarter                                            $2.25............................$0.25
              Second Quarter                                           $1.75............................$0.50
              Third Quarter                                            $0.81............................$0.09
              Fourth Quarter                                           $0.75........................... $0.13


         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


</TABLE>
          The quotations in the tables above reflect inter-dealer prices without
retail markups, markdowns or commissions.


<PAGE>
         In March 1999,  the Company  completed a public  offering of securities
through  Fairchild  Financial  Group,  Inc. In the  offering,  the Company  sold
460,000  Units at the public  offering  price of $5.50 per Unit (the  "Preferred
Units").  Each Preferred Unit consisted of one share of Series 1 Preferred Stock
and two Series 1 Preferred  Stock  Purchase  Warrants.  Commencing  September 3,
2000, each share of Series 1 Preferred  Stock is convertible  into two shares of
Common Stock.  Commencing September 3, 2000, each Preferred Warrant entitles the
holder to purchase one share of Series 1 Preferred Stock at an exercise price of
$6.00 per share  until the close of  business  on March 3, 2002.  The  Preferred
Units,  Series 1 Preferred Stock and Series 1 Preferred Stock Warrants commenced
trading on the OTC Electronic Bulletin Board on March 4, 1999 under the symbols,
"KDSPU,"  "KDSPP"  and  "KDSPW,"  respectively.  As of the close of  business on
February 29, 2000, the closing sales prices of the Series 1 Preferred  Stock and
Preferred Warrants were $3.75 and $.84, respectively.
<TABLE>
<CAPTION>

                                                   Preferred Units

         Fiscal Year Ended December 31, 1999:                        HIGH                              LOW
         -----------------------------------

<S>                 <C>                                             <C>                                <C>
              March 1999                                            $9.25..............................$7.00
              Second Quarter                                         8.88.............................  7.75


                                                   Preferred Stock

         Fiscal Year Ended December 31, 1999:                        HIGH                               LOW
         ------------------------------------
                                                 LOW

              March 1999                                            $7.00..............................$6.00
              Second Quarter                                         7.38.............................. 6.75
              Third Quarter                                          7.13...............................4.81
              Fourth Quarter                                         6.25...............................1.00



                                                 Preferred Warrants

         Fiscal Year Ended December 31, 1999:                        HIGH                               LOW
         ------------------------------------

                                                       ---
              March 1999                                            $1.13..............................$1.00
              Second Quarter                                         1. 25...........................    .88
              Third Quarter                                          1.50............................    .47
              Fourth Quarter                                         1.44............................    .06
</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  February  29, 2000 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.   Managements' Discussion and Analysis or Plan of Operation.
          ----------------------------------------------------------

RESULTS OF OPERATIONS

1999 versus 1998

     Total net sales for 1999 increased  $2,557,087,  or 18.0%,  to $16,729,951,
compared with  $14,172,864  for 1998. Net sales include sales from  merchandise,
Jeannie's Kids Club memberships, shipping and handling charges, and mailing list
rentals.

     The increase in sales is mainly  attributable  to The Natural Baby Catalog,
which  recorded 1999 sales of $6,833,300  compared with  $6,188,586 in 1998. The
Natural baby Catalog accounted for 40% of the Company's overall sales increase.

     The net sales of the Perfectly Safe Catalog increased to $6,100,254 in 1999
compared with  $4,932,732 in 1998.  This  increase is  attributable  to improved
catalog  sales which  permitted  a 4.4%  decrease  in catalog  circulation  from
2,804,194 catalogs mailed in 1999 compared with 2,933,037 catalogs mailed during
1998 while increasing the sales per catalog ratio. The increases in sales of The
Natural Baby Catalog and  Perfectly  Safe  Catalog  were  partially  offset by a
decrease  in net  sales of  Jeannie's  Kids Club  Catalog,  which  decreased  to
$2,833,292  in 1999  compared  with  $3,051,546  for 1998.  Cost of sales,  as a
percentage of net sales, decreased from 61.5% for 1998 to 60.1% for 1999.

     Selling expenses,  which consist of advertising and other marketing related
expenses  expressed as a percentage of sales,  increased  from 28.0% for 1998 to
29.9% for 1999.  The increase  was due to higher  catalog cost as a component of
advertising expense.

     General and administrative expenses were $1,603,808,  or 9.6% of net sales,
for 1999,  and  $1,486,889,  or 10.5% of net sales,  for 1998.  The  decrease in
administrative  expense was attributable to decreased wages and related costs of
employment due to company cost control measures.

     Effective January 1, 1998, The Havana Group, Inc. entered into an agreement
with the Company whereby the Company provided administrative functions to Havana
at an annual cost of $206,100  consisting of: $34,000 for accounting and payroll
services, $51,600 for administration and human resource management,  $34,900 for
data  processing,  $32,200 for office  equipment and facilities use, $38,100 for
merchandising and marketing services,  $15,300 for purchasing services and $2.40
per order processed for order fulfillment.  While management believes these fees
would represent  actual costs should Havana  undertake to provide these services
itself,  cancellation  or modification of the agreement would have the impact of
altering the general and administrative expense structure of the Company.

<PAGE>
     Total costs  charged to Havana in 1999 and 1998  amounted  to $225,086  and
$293,432,  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's  pay to the  Company  an  accounting,  data
processing,  and administrative  charge of $15,000 per year plus $1.75 per order
processed for shipment for warehouse  services.  Havana is also obligated to pay
5% of its 1999 pretax profits to the Company in connection  with these services,
however  Havana had no pre-tax  profits  for 1999.  This  agreement  is still in
effect, but as of this printing, the Company has started providing some of these
services themselves.

     Net profit for the year ended  December 31, 1999 was $48,059 or 0.3% of net
sales,  compared  to a net loss of  $35,788,  or 0.3% of net  sales for the same
period of 1998.  The Company  attributes  this  change  primarily  to  decreased
general and administrative  expenses,  with slightly lower than expected cost of
sales.

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 Company's
previously  outstanding $800,000 line of credit was retired with the proceeds of
the new  borrowings.  The new 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.

     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 profit of $48,059. For the year ended December
31, 1999,  operating activities provided $10,346 in cash. Funds were provided by
decreases in accounts payable,  customer advance,  and accrued expenses of $245,
increases  in  accounts   receivable  of  $6,030,   and  non-cash   expenses  of


<PAGE>
depreciation  and  amortization  of $337,180.  Funds were  consumed by primarily
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.

     At December  31,  1998,  the Company had a deficit in retained  earnings of
$1,438,371,  compared with a deficit of  $1,402,583  at December 31, 1997.  This
change  resulted from the 1998 net loss of $35,788.  For the year ended December
31, 1998, operating activities provided $120,094 in cash. Funds were provided by
increases  in  accounts  payable,  customer  advances  and  accrued  expenses of
$724,861,  decreases in accounts receivable of $83,469, and non-cash expenses of
depreciation  and  amortization  of $181,932.  Funds were  consumed by inventory
increases  of  $536,903,  increases in deferred  advertising  of  $155,435,  and
increases in prepaid expenses and other assets totaling  $142,042.  For the year
ended December 31, 1998,  the Company's  investing  activities  used $351,027 in
cash.  Property and equipment additions used $130,035 for increases in equipment
and the  establishment of the "Kids Catalog outlet" retail store.  Additionally,
the Company invested  $220,992 in catalog  development and redesign to alter the
format, appearance, design, and presentation of its products.

     For the year ended  December 31, 1998, the Company's  financing  activities
provided $154,465 in cash. This consisted of borrowings on its line of credit in
the amount of $91,000,  increases in prepaid expenses for its anticipated public
offering of $77,008, and decreases in amounts due from affiliates of $140,473.

     For the year ended  December  31,  1998,  the  combined  effect of net cash
provided  by  operating  activities  of  $120,094,  net cash  used by  investing
activities  of  $351,027,  and net cash  provided  by  financing  activities  of
$154,465  decreased  cash from  $101,894  at  December  31,  1997 to  $25,426 at
December 31, 1998.



<PAGE>
      The  Company  uses  the  intrinsic   value-based  method  for  stock-based
compensation to employees.  As a result,  this standard does not have any effect
to the Company's  financial  statements other than to require  disclosure of the
pro forma effect on net income  (loss) of using the fair  value-based  method of
accounting.

     Effective  January 1, 1998 the Company  adopted  SFAS No.  130,  "Reporting
Comprehensive  Income."  SFAS No. 130  establishes  new  standards for reporting
comprehensive  income and its  components.  The effect of the  adoption  was not
material.

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related  Information."  SFAS No.
131 changes the standards for reporting financial results by operating segments,
related products and services, geographic areas and major customers. The Company
adopted SFAS No. 131 for the fiscal year ended  December 31, 1998. The effect of
such adoption in 1998 was not material.

      In March  1998,  Statement  of  Position  98-1,  Accounting  for  Costs of
Computer  Software  Developed or Obtained for Internal Use, was issued.  The SOP
provides  guidance on  accounting  for costs of computer  software  based on the
project stage and other  criteria and is effective for financial  statements for
fiscal years  beginning  after December 15, 1998. The Company  believes that the
effect of adoption will not be material.


<PAGE>
      In June 1998, the Financial  Accounting  Standards  Board issued SFAS 133,
"Accounting for Derivative  Instruments and Hedging  Activities." This statement
established  accounting  and  reporting  standards for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging activities.  It requires recognition of all derivatives as either assets
or liabilities on the balance sheet and measurement of those instruments at fair
value. The Company does not anticipate  engaging in such transactions,  but will
comply with  requirements of SFAS 133 when adopted.  This statement is effective
for all fiscal  quarters  beginning  after June 15, 1999. The effect of adopting
SFAS 133 is not expected to be material.

      The  Company  intends  to meet its cash  requirements  over the next 12-15
months  from cash  generated  from  operations  and  proceeds  of its March 1999
completed offering.

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










<PAGE>
                                KIDS STUFF, INC.

                                    CONTENTS

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

                                                                                                          Page

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

FINANCIAL STATEMENTS
    Balance sheet                                                                              F-4 through F-5
    Statements of operations                                                                               F-6
    Statements of stockholders' equity                                                                     F-7
    Statements of cash flows                                                                   F-8 through F-9
    Notes to financial statements                                                            F-10 through F-22

</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,  1999,  and the related
statements of  operations,  stockholders'  equity,  and cash flows for the years
ended  December  31,  1999  and  1998.   These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects,  the financial position of Kids Stuff, Inc. as
of December 31, 1999,  and the results of its  operations and its cash flows for
the years  ended  December  31,  1999 and 1998,  in  conformity  with  generally
accepted accounting principles.

Canton, Ohio
March 24, 2000





                                      F-3
<PAGE>

                                KIDS STUFF, INC.
                                  BALANCE SHEET

                               December 31, 1999
<TABLE>
<CAPTION>

         ASSETS

         CURRENT ASSETS
<S>                                                                                      <C>
         Cash                                                                            $           859,431
         Accounts receivable                                                                         257,574
         Due from affiliates                                                                         234,390
         Inventories                                                                               2,045,005
         Deferred catalog expense                                                                    740,425
         Prepaid expenses                                                                            170,871
                                                                                                   ---------
             Total current assets                                                                  4,307,696


         PROPERTY AND EQUIPMENT
         Land                                                                                        214,000
         Building and improvements                                                                 2,026,172
         Leasehold improvements                                                                       34,074
         Machinery and equipment                                                                      86,901
         Data processing equipment                                                                   401,182
         Website development                                                                         132,891
         Furniture and fixtures                                                                      126,211
                                                                                                   ---------
                                                                                                   3,021,431

         Less accumulated depreciation and amortization                                              206,652
                                                                                                   ---------
                                                                                                   2,814,779

         OTHER ASSETS, net of accumulated amortization

         Goodwill                                                                                  1,015,805
         Catalog development and other                                                               368,995
         Customer lists                                                                              330,655
         Deferred financing fees                                                                      82,055

                                                                                                   1,797,510
                                                                                                   ---------
                                                                                         $         8,919,985
                                                                                                   =========
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       F-4

<PAGE>
                                KIDS STUFF, INC.
                                  BALANCE SHEET

                                December 31, 1999
<TABLE>
<CAPTION>

         LIABILITIES AND STOCKHOLDERS' EQUITY

         CURRENT LIABILITIES
<S>                                                                                      <C>
         Line of credit                                                                  $           500,000
         Current portion of long-term debt                                                           157,000
         Accounts payable                                                                          2,352,318
         Customer advances                                                                            15,302
         Accrued expenses                                                                            111,393
                                                                                                   ---------
             Total current liabilities                                                             3,136,013

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

         COMMITMENTS AND CONTINGENCIES                                                                     -

         STOCKHOLDERS' EQUITY
         Preferred stock, $.001 per share, 10,000,000 shares
         authorized:
         Series A, 5,000,000 shares issued and outstanding,
         voting, without dividend                                                                      5,000
         Series 1, 460,000  shares  issued and  outstanding,  voting,  aggregate
         liquidation of $2.53 million plus
         cumulative unpaid dividends of $227,700                                                         460
         Common stock - $.001 par value, 25,000,000 shares
            authorized, 3,512,856 shares issued
             and outstanding                                                                           3,513
         Additional paid-in capital                                                                5,167,189
         Retained earnings (deficit)                                                              (1,390,312)
                                                                                                   ---------
             Total stockholders' equity                                                            3,785,850
                                                                                                   ---------
                                                                                         $         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, 1999 and 1998
<TABLE>
<CAPTION>

                                                                                  1999                 1998
                                                                                  ----                 ----

<S>                                                                       <C>                  <C>
         SALES                                                            $        16,729,951  $        14,172,864

         COST OF SALES                                                             10,051,665            8,712,876
                                                                                   ----------           ----------
         GROSS PROFIT                                                               6,678,286            5,459,988

         SELLING EXPENSES                                                           4,968,552            3,966,452

         GENERAL AND ADMINISTRATIVE EXPENSES                                        1,603,808            1,486,889
                                                                                   ----------           ----------
         INCOME FROM OPERATIONS                                                       105,926                6,647

         NET OTHER (EXPENSE) INCOME
         Interest expense                                                            (132,649)             (60,630)

         Other                                                                         74,782               18,195
                                                                                   ----------           ----------
                                                                                      (57,867)             (42,435)
                                                                                   ----------           ----------
         NET INCOME (LOSS)                                                $            48,059  $           (35,788)
                                                                                   ==========           ==========
         BASIC AND DILUTED INCOME (LOSS)
             PER SHARE AFTER CONSIDERING
             PREFERRED STOCK CUMULATIVE
             DIVIDENDS                                                    $             (0.05) $             (0.01)
                                                                                   ==========           ==========

</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, 1999 and 1998
<TABLE>
<CAPTION>

                                     Common     Preferred     Paid-In       Retained
                                     Stock        Stock       Capital       Earnings        Total

<S>               <C>             <C>        <C>        <C>           <C>            <C>
BALANCE - JANUARY 1, 1998         $    3,513 $    5,000 $   3,216,734 $   (1,402,583)$   1,822,664

NET LOSS                                   -          -             -        (35,788)      (35,788)
                                    ---------  ---------  -----------   -------------  ------------
BALANCE - DECEMBER 31, 1998            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
                                    =========  =========  ===========   =============  ============
</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, 1999 and 1998
<TABLE>
<CAPTION>

                                                                    1999           1998
                                                                    ----           ----

      CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                            <C>            <C>
    Net income (loss) ......................................   $    48,059    $   (35,788)
    Adjustments to reconcile net income (loss) to net
       cash provided by operating activities:
          Depreciation and amortization ....................       337,180        181,932
           Loss on disposal of assets ......................         5,893           --
           (Increase) decrease in accounts receivable ......        (6,030)        83,469
           (Increase) in inventories .......................      (119,090)      (536,903)
           (Increase) in deferred catalog expense ..........      (325,398)      (155,435)
           (Increase) in prepaid expenses ..................        (4,374)       (67,691)
           Decrease (increase) in other assets .............        74,351        (74,351)
           (Decrease) increase in accounts payable, customer
              advances and accrued expenses ................          (245)       724,861
                                                                -----------     ----------
Net cash provided by operating activities ..................        10,346        120,094

CASH FLOWS FROM INVESTING ACTIVITIES
    Investment in property and equipment and other assets ..    (2,570,643)      (130,035)
    Amount paid for catalog development ....................      (253,213)      (220,992)
                                                                -----------     ----------
Net cash (used) by investing activities ....................    (2,823,856)      (351,027)

CASH FLOWS FROM FINANCING ACTIVITIES
     (Payments) borrowings on line of credit - net .........      (262,000)        91,000
    Borrowing on long-term debt ............................     2,740,000           --
    Payments on long-term debt .............................      (584,878)          --
    Amounts paid for deferred financing fees ...............      (102,624)
    Sale of preferred stock ................................     1,950,915           --
    (Increase) in prepaid amounts for public offering ......          --          (77,008)
    (Increase) decrease in due from affiliates .............       (93,898)       140,473
                                                                -----------     ----------
Net cash provided by financing activities ..................   $ 3,647,515    $   154,465
                                                                -----------     ----------
</TABLE>
   The accompanying notes are an integral part of these financial statements

                                       F-8


<PAGE>
                               KIDS STUFF, INC.

                     STATEMENTS OF CASH FLOWS (CONTINUED)

                    Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>

                                                                                               1999                  1998
                                                                                               ----                  ----

<S>                                                                             <C>                    <C>
      NET INCREASE (DECREASE) IN CASH                                           $            834,005   $           (76,468)

      CASH - BEGINNING                                                                        25,426               101,894
                                                                                             -------               --------
      CASH - ENDING                                                             $            859,431   $            25,426
                                                                                             =======               ========
      SUPPLEMENTAL DISCLOSURE OF CASH FLOW

          INFORMATION

             Cash paid during the year for interest                            $             122,163 $              60,630
                                                                                             =======               ========
      SUPPLEMENTAL DISCLOSURE OF NON-CASH

          FINANCING ACTIVITY

      The Havana Group, a subsidiary of Duncan Hill,
      Inc., issued 110,000 shares of its Series B
      Preferred Stock to Duncan Hill.  In return, Duncan
      Hill assumed a $300,000 liability due to Kids Stuff,
      Inc.  This $300,000 liability to Kids Stuff, Inc. was
      used to satisfy the $300,000 debt owed from Kids
      Stuff, Inc. to Duncan Hill.                                              $                   -  $            300,000

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

                                       F-9
<PAGE>

                                KIDS STUFF, INC.

                          NOTES TO FINANCIAL STATEMENTS

Business Description and Summary of Significant Accounting Policies

          A.  Business  Description  - Kids  Stuff,  Inc.  ("Kids  Stuff" or the
     "Company") is in the mail order business and sells to customers  throughout
     the United States.  Duncan Hill, Inc. owns 80% of the Company's outstanding
     voting capital stock as of December 31, 1999. 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 shares 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, 1999. Bad debt
     expense was $58,300 and $49,199 for the years ended  December  31, 1999 and
     1998, 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 periods  ranging from four weeks to
     six months,  the estimated  length of time customers  utilize  catalogs and
     other mail order mailings from the Company.  Catalog expense was $4,163,448
     and   $3,317,565   for  the  years  ended   December  31,  1999  and  1998,
     respectively.

                                      F-10
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)




Business Description and Summary of Significant Accounting Policies (continued)

          During 1999, the Company changed its amortization  estimates  relating
     to deferred catalog  expenses in order to better reflect expenses  relating
     to catalog sales.

          G. December 31, 1998 prepaid  expenses include $77,008 relative to the
     preferred stock public offering which occurred in 1999 (see Note 11).

          H. 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 $88,391 and $46,457
     for the years ended December 31, 1999 and 1998, respectively.

          Maintenance,  repairs, and minor renewals are charged against earnings
     when incurred. Additions and major renewals are capitalized.

          I.  Intangible  Assets - During 1997,  the Company  purchased  the net
     assets  and  operations  of  The  Natural  Baby  Company.   Management  has
     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 $1,148,692 and was
     recorded  as  goodwill.  The  customer  list is being  amortized  using the
     straight-line  method over seven years.  Goodwill is being  amortized using
     the straight-line  method over twenty years.  Accumulated  amortization was
     $174,345 and $135,287,  respectively, for the customer list and goodwill as
     of December 31, 1999.

          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 $417,696 were capitalized and are being amortized over 48
     months  using  the  straight-line  method.   Accumulated  amortization  was
     $102,566 as of December 31, 1999.

          During 1999,  the Company  designed the Little Feet  catalog.  Cost of
     designing  this  catalog  totaling  $39,283  were  capitalized  and will be
     amortized over 48 months using the  straight-line  method commencing in the
     first quarter of 2000.

          J. 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.


                                      F-11
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)




Business Description and Summary of Significant Accounting Policies (continued)

          K. 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 1999 and 1998 were 3,512,856.  There were no dilutive  effects of
     any other  outstanding  securities  in 1999 or 1998.  Cumulative  dividends
     incurred on the Series 1 preferred  stock of $227,700  were  deducted  from
     1999 net income in the calculation of earnings per share.

          L. New Authoritative Pronouncements

          In June 1998,  the Financial  Accounting  Standards  Board issued SFAS
     133,  "Accounting for Derivative  Instruments and Hedging Activities." This
     statement  established  accounting  and reporting  standards for derivative
     instruments,  including certain  derivative  instruments  embedded in other
     contracts,  and for  hedging  activities.  It requires  recognition  of all
     derivatives  as  either  assets or  liabilities  on the  balance  sheet and
     measurement of those  instruments at fair value.  The Company  adopted this
     new standard during 1999. The effect of adopting SFAS 133 was not material.

          In March 1998,  Statement of Position  98-1,  Accounting  for Costs of
     Computer Software  Developed or Obtained for Internal Use, was issued.  The
     SOP provides guidance on accounting for costs of computer software based on
     the  project  stage  and  other  criteria.  The  Company  adopted  this new
     statement in 1999. The effect of adopting SOP 98-1 was not material.

          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 second
     quarter of 2000. The Company is evaluating the effect the adoption may have
     on the Company's results of operations and financial position.

                                      F-12
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


 Note 1. Agreement with Affiliated Company

                  Duncan Hill, Inc. owns 89% 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 as outlined  below and $2.40 per order
                  processed.  Havana is 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. 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  accounting,
                  data  processing,  and  administrative  charges of $15,000 per
                  year  plus  shipment  and  warehouse  services  on a per order
                  basis. Total costs charged to Havana in 1999 and 1998 amounted
                  to $225,086 and $293,432,  respectively.  Management  believes
                  that this is  substantially  the same cost that it would incur
                  should it procure these services itself.
<TABLE>
<CAPTION>

<S>                                                                                          <C>
                            Accounting and Payroll Services                                  $   34,000
                            Administrative and Human Resource Management                         51,600
                            Data Processing                                                      34,900
                            Office Equipment and Facilities Use                                  32,200
                            Merchandising and Marketing Services                                 38,100
                            Purchasing Services                                                  15,300
                                                                                               --------
                            Total                                                             $ 206,100
                                                                                                =======
</TABLE>

   Note 2.        Stockholders' Equity

         A.       Common Stock

                  In connection with a  reorganization  effective June 30, 1996,
                  the Company  issued to its parent,  Duncan Hill Co., Ltd. (the
                  Predecessor of Duncan Hill, Inc.),  2,400,000 shares of Common
                  Stock at a value of $.125 per share.  Commencing October 1996,
                  the Company sold an  aggregate  of 1,300,000  shares of Common
                  Stock to eight private  investors  for the aggregate  purchase
                  price of  $162,500.  These  3,700,000  shares of  unregistered
                  securities were issued by the Company at its inception.  There
                  were  no  underwriting   discounts  and  commissions  paid  in
                  connection with the issuance of any said securities.

                  In June 1997,  the Company  repurchased  857,144 of the shares
                  sold to five of the eight  private  investors  at a repurchase
                  price of $.125 per share. The Company's repurchase payment was
                  in the form of promissory notes totaling $107,143. These notes
                  were  paid off in July 1997 with the  proceeds  of the  public
                  offering.

                                      F-13
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)




   Note 2.        Stockholders' Equity (continued)

                  In July 1997, the Company completed an initial public offering
                  (see Note 7) in which 600,000 common shares were issued.

                  In  July  1997,   the  Company   issued  70,000   unregistered
                  restricted shares which represented $245,000 of the $2,066,829
                  purchase cost of The Natural Baby Company.

         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.

                  During January 1997, the Company  issued  5,000,000  shares of
                  Series A  Preferred  Stock,  $.001 par value to Duncan Hill as
                  part  of the  reorganization.  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 11) 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-14
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


   Note 2.        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 $.45  per  share or  $227,700  in
                  aggregate at December 31, 1999.

         C.       Warrants

                  In conjunction  with the public offering  discussed in Note 7,
                  the Company issued  2,400,000  Class A warrants.  Each warrant
                  entitles the holder to purchase one share of common stock at a
                  price of $5.00 for a period of four years  commencing one year
                  after the date of the  Company's  prospectus.  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 3.        Line of Credit

                  Kids Stuff,  Inc. has a $500,000  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 9.25% at December 31,  1999.  The line of credit had a
                  balance of $500,000 at December 31, 1999.  The line is secured
                  by assets of the Company and expires July 2001.  The repayment
                  of the facility is  guaranteed by Mr.  William L. Miller,  the
                  Company's Chief Executive Officer,  and Mrs. Jeanne E. Miller,
                  the  Company's  President.  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,  1998,  the  Company had an $800,000  line of
                  credit from United Bank,  payable on demand,  bearing interest
                  at the  bank's  prime  rate plus 1% for an  effective  rate of
                  8.75%.  The line of credit  had a balance  of  $762,000  as of
                  December 31, 1998. The United Bank line of credit was paid off
                  during 1999.

                                      F-15
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

   Note 4.        Long-Term Debt

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

                                                                                       1999              1998
                                                                                       ----              ----
<S>                                       <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 install- ments of $6,213,  including interest of 8.7%
                   on the first $250,000 and 5.78% on the remaining
                   balance, maturing July 2004.                                   $    279,383 $         -

                   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 interest
                   rate based on the 30 day LIBOR plus 2.75%  (9.2% at  December
                   31, 1999), balloon
                   payment due July 2009.                                            1,125,739           -

                   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.                                             750,000           -
                                                                                    ----------   ---------
                                                                                     2,155,122           -
                   Less current portion                                                157,000           -
                                                                                    ----------   ---------
                                                                                   $ 1,998,122 $         -
                                                                                     =========   =========
</TABLE>
                  Scheduled  principal  repayments on long-term debt for each of
                  the next five years are:
<TABLE>
<CAPTION>

                                    Year                                              Amount

                                    <S>                                          <C>
                                    2000                                          $    157,000
                                    2001                                               160,900
                                    2002                                               167,500
                                    2003                                               174,700
                                    2004                                               149,200
                                    Thereafter                                       1,345,822

</TABLE>


                                      F-17
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


   Note 4.        Long-Term Debt (continued)

                  The Company incurred  interest expense of $132,700 and $60,630
                  for the years ended December 31, 1999 and 1998, respectively.

                  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.

                  The Bank  One  loan  agreements  contain  covenants  regarding
                  certain financial statement amounts,  ratios and activities of
                  the  Company.  At  December  31,  1999,  the  Company  was  in
                  compliance with all such covenants.

   Note 5.        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 1.
                  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:

                                    2000                               $  81,307
                                    2001                                  52,866
                                    2002                                  17,604

   Note 6.        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, 1999 and 1998:

                                      F-17
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)



   Note 6.        Income Tax (continued)
<TABLE>
<CAPTION>
                                                                                          1999            1998

                        Deferred tax assets:
<S>                                                                                   <C>              <C>
                            Net operating loss carryforward                           $ 330,974        $ 172,832
                            Inventory obsolescence                                      -                 11,900
                                                                                       --------         --------
                        Total deferred tax assets                                       330,974          184,732
                        Valuation allowance                                             (25,606)         (22,552)
                                                                                       --------         --------
                        Net deferred tax asset                                          305,368          162,180

                        Deferred tax liabilities:
                            Deferred catalog expense                                   (251,745)        (141,109)
                            Amortization                                                (19,015)          (8,200)
                            Depreciation                                                (34,608)         (12,871)
                                                                                       --------         --------
                        Total deferred tax liabilities                                 (305,368)        (162,180)
                                                                                        -------          -------
                        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.

                  The Company's  tax loss in 1999 was $344,158.  The Company has
                  net operating loss carryforwards of approximately  $973,000 as
                  of December 31, 1999 for tax purposes.  The loss carryforwards
                  expire in varying amounts through the year 2019.

   Note 7.        Public Offering

                  In July 1997, the Company completed an initial public offering
                  in  which  300,000  units  were  sold for  $2,619,890,  net of
                  issuance costs of $980,110.  Each unit consisted of two common
                  shares and eight redeemable Class A warrants, and sold for $12
                  per  unit.  The  common  stock  and  warrants  are  separately
                  transferable.

                  The proceeds of the public  offering  were used to acquire net
                  assets and  operations  of The Natural  Baby  Catalog,  to pay
                  accounts payable,  to repay indebtedness to bridge lenders, to
                  repay  indebtedness to the Company's  parent,  Duncan Hill, to
                  consolidate  the  operations of The Natural Baby Catalog,  and
                  for general corporate purposes.

                                      F-18
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


   Note 8.        Employment Agreement

                  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.

                                      F-19
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

   Note 8.        Employment Agreement (continued)

                  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  two  of its
                  directors  under  a  non-qualified   Stock  Option   Agreement
                  discussed in Note 10.

                  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 by  approximately
                  $338,100  or $.09 per share in 1999 and  $319,000  or $.09 per
                  share in 1998.

                  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.

                  The Company computed the fair values of options granted during
                  1998 using the Black-Scholes  option pricing model assuming no
                  dividends,  119%  volatility,  an expected  life of 50% of the
                  ten-year option terms, and a risk-free  interest rate of 5.0%.
                  The fair value of options granted during 1998 was $334,000. No
                  options have been exercised as of December 31, 1999.

                                      F-20


<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


   Note 9.        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.









                                      F-21
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

   Note 9.        Incentive Plans (continued)

                  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 1998 or 1999.

         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 1998 or 1999.

   Note 10.       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 vest 25% on August 1, 1998
                  and 25% on each January 1, 1999,  January 1, 2000, and January
                  1, 2001. The vested  options will be  immediately  exercisable
                  and will expire 10 years from the date of the  agreement.  The
                  exercise  price of the  options  is $2.50  per share of common
                  stock.  The pro forma disclosure in Note 8 includes the effect
                  of the 15,000 options vesting in 1999 and 1998.

                                      F-22
<PAGE>
                                KIDS STUFF, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

   Note 11.       Public Offering

                  In March  1999,  the Company  completed  a public  offering of
                  securities  through  Fairchild  Financial Group, Inc. 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  are to be 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.



                                      F-23
<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                    63          (1)               1981                 Chairman of the
                                                                                        Board, Chief
                                                                                        Executive Officer
                                                                                        and Principal
                                                                                        Financial Officer of
                                                                                        the Company

Jeanne E. Miller (2)                 52          (1)               1982                 President of the
                                                                                        Company

Clark D. Swisher                     48          (1)               1971                 Senior Vice
                                                                                        President of the
                                                                                        Employee Benefits
                                                                                        Division of the
                                                                                        Leonard-McCormick
                                                                                        Agency

Alfred M. Schmidt                    66          (1)               1998                 President of Schmidt
                                                                                        Group International,
                                                                                        Inc.

Debra P. Gibbs                       46          (1)               1999                 Attorney
</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.


<PAGE>
(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.

(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.

     CLARK D. SWISHER is a director of the Company since July 1996.  Mr. Swisher
has  been  Vice   President   of  the   Employee   Benefits   Division   of  the
Leonard-McCormick  Agency, a general insurance agency, since 1984. Mr. Swisher's
professional  background includes membership in the National Association of Life
Underwriters and the University of Akron Business Advisory Council.  Mr. Swisher
has been a director of Duncan Hill since 1995.

<PAGE>
     ALFRED M. SCHMIDT,  JR., a director of the Company since  September 1998 is
President of The Schmidt Group International,  Inc., direct marketing/management
consultants.  Mr.  Schmidt was the  entrepreneur  owner of New  Hampton  General
Store, a consumer catalog  company.  Mr. Schmidt was a Vice President of Hanover
House,  then the first Vice  President of Brooks  Brothers,  a national chain of
apparel  specialty  stores  with 65  stores in the U.S.  and six in  Japan.  Mr.
Schmidt  subsequently  was the  first  Vice  President  of Direct  Marketing  of
Bergdorf Goodman,  N.Y., a designer apparel retailer,  and Senior Vice President
in charge of catalogs at the Franklin Mint, Franklin Center,  Pennsylvania.  Mr.
Schmidt finished his public career as President of Myron Manufacturing  Company,
a direct  marketing  firm  selling  advertising  specialty  products by catalog,
direct mail, and  telemarketing.  For the past twelve years, Mr. Schmidt has led
his company in catalog  consulting  with clients from Europe to the Pacific Rim.
Mr. Schmidt is a member of the Direct Marketing Association,  the 1982 winner of
the prestigious Henry Hoke Award and the DMA Echo Leader Award. He was a founder
of the  Catalog  Leader's  Group.  Mr.  Schmidt  has  served on the DMA  Catalog
Council, The Direct Marketing Educational Council, and the Direct Marketing Idea
Exchange.  Mr. Schmidt has been a  contributing  writer to Catalog Age Magazine,
Catalog  Business,  Direct  Marketing  Magazine and D.M.  News.  Mr. Schmidt has
addressed audiences extensively in the U.S. as well as Europe and the Far East.

     DEBRA P. GIBBS, a director of the Company since  September  1999,  received
her Masters of Law and Taxation in May 1980 from the  University of Miami School
of Law and her J.D.  Degree in February 1979 from the Ohio Northern  University,
Ada, Ohio. From 1980 - 1983, she was employed as an attorney by Aluminum Company
of America in their corporate  tax/legal  department.  From  1983-1985,  she was
employed as an attorney by Firestone Tire & Rubber Company, Akron, Ohio in their
tax department.  From 1986-1999,  she has performed  various  volunteer work and
raised her  children.  During the past five years,  she has not been  associated
with any firms outside of her volunteer work.

     The Board of Directors has recently  established a  Compensation  Committee
and an Audit Committee  consisting of Alfred M. Schmidt, Jr. and Debra P. Gibbs.
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  consists  of Alfred M.  Schmidt,  Jr. and Debra P.
Gibbs.  The  Compensation  Committee  reviews  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  Committee  also  administers  the  Company's  1997
Long-Term Stock Incentive Plan.

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

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

     Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange Act"), requires the Company's officers and directors,  and persons who
own  more  than ten  percent  of a  registered  class  of the  Company's  equity
securities,  to file  reports of  ownership  and changes in  ownership  with the
Securities and Exchange Commission (the "Commission").  Officers,  directors and
greater  than  ten  percent   stockholders  are  required  by  the  Commission's
regulations  to furnish the Company with copies of all Section  16(a) forms they
file. To Management's knowledge, no officer, director or person owning more than
10% of the Company's  Common Stock filed any reports late during its fiscal year
ended December 31, 1999,  except that Duncan Hill, W. Miller and J. Miller filed
a combined Form 4 late for the months of October 1999.

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.


<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 Compen-
          and                                                 Compen-     Stock                          LTIP          sation
       Principal                                              sation     Award(s)      Number of        Payouts           ($)
       Position             Year    Salary ($)   Bonus ($)    ($) (1)    ($) (2)       Options (3)        ($)

<S>                        <C>      <C>             <C>       <C>           <C>        <C>                 <C>             <C>
W. Miller,                 1999     125,000        -0-        4,000        -0-         100,000            -0-             -0-
Chief Executive Officer
                           1998     125,000        -0-        4,000        -0-           -0-              -0-             -0-
                           1997     125,000        -0-        4,000        -0-         100,000            -0-             -0-

J. Miller,                 1999     105,000        -0-        4,000        -0-         200,000            -0-             -0-
President
                           1998      94,000        -0-        4,000        -0-         100,000            -0-             -0-
                           1997      90,000        -0-        4,000        -0-           -0-              -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)      Does not include  2,400,000  shares of the  Company's  Common Stock and
         5,000,000  shares of the Company's  Series A Preferred  Stock issued to
         Duncan Hill in connection with a reorganization.

(3)      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 1999
of each of the executive officers named in the summary compensation table above.
The Company did not grant any stock appreciation rights during 1999.

                        Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>

                                                                                                                   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>            <C>
W. Miller                   100,000                  22                1.33           10/16/08               79,000         152,000

J. Miller                   200,000                  44                1.33           01/01/07               90,000         206,000
</TABLE>

(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 1999 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-         75,000/25,000                      -0-

Jeanne E. Miller                -0-            -0-        175,000/25,000                      -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  (i.e.   $46  per  share),
         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.
<PAGE>
         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.

         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  consists  of Debra P.  Gibbs  and  Alfred  M.
Schmidt,  Jr. The Committee has granted options to purchase 80,000 shares of the
Company's Common Stock as of February 29, 2000.
<PAGE>

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
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, 1999,  the Company has not issued such
insurance for W. Miller and/or J. Miller, but intends to do so). 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.
<PAGE>
     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 vests 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.

     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. See "Risk Factors."

     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 Havana, Duncan Hill and the Company. W. Miller's employment
agreement  with the Company  provides  that he shall be permitted to devote such
time to managing Duncan Hill and Havana as he deems appropriate. Accordingly, W.
Miller will not be devoting his full-time  attention to managing the  operations
of the Company. Thus, conflicts of interest could potentially develop (i) to the
extent that W. Miller is not able to devote his  full-time  and  attention  to a
matter that would  otherwise  require the  full-time and attention of a business
chief executive officer, (ii) involving competition for business  opportunities,
(iii) involving  transactions between the Company and its affiliated  companies;
and (iv) due to the relationship  between W. Miller and J. Miller as husband and
wife and as directors  and officers of the Company.  The Company has not adopted
any  procedure  for dealing with such  conflicts  of  interest,  except that the
Company's  Board of  Directors  has adopted a policy  that all new  transactions
between the Company and Duncan Hill, Havana or any other affiliated company must
be approved by at least a majority of the Company's disinterested directors.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth as of March 1, 2000, certain information
with respect to the beneficial  ownership of Common Stock and Series A Preferred
Stock by each person or entity known by the Company to be the  beneficial  owner
of 5% or more of such shares, each officer and director of the Company,  and all
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
                                                                 Shares of                        Shares of Series A
                                                               Common Stock                         Preferred Stock
                                                            Beneficially Owned                    Beneficially Owned

NAME AND ADDRESS OF
BENEFICIAL OWNER(1)                                       NUMBER           PERCENT(2)          NUMBER           PERCENT(3)
------------------                                        ------           ----------          ------           ----------
<S>         <C>                                         <C>                   <C>            <C>                     <C>
Duncan Hill (4)                                         2,188,075             62.2%          5,000,000               100%

William L. Miller and Jeanne E. Miller (4)(5)           2,438,075             64.7           5,000,000(6)            100

Clark D. Swisher (7)                                       15,000               *                 -0-                 -0-

Alfred M. Schmidt(7)                                       15,000               *                 -0-                 -0-

Debra P. Gibbs   (8)                                       15,000               *                 -0-                 -0-

All Officers and Directors

as a Group (5 Persons)                                  2,483,075             65.1%          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 3,520,856 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 and options to purchase 250,000 shares.

         (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.  Swisher and Schmidt have options to purchase 30,000 shares
         each, which options vest in four equal annual installments beginning in
         1999. The table includes only options vesting through January 1, 1999.

         (8) Debra P. Gibbs has options to purchase 30,000 shares, which options
         will vest in four equal  installments on September 21, 1999, January 1,
         2000, January 1, 2001 and January 1, 2002.
<PAGE>
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,  Havana and Duncan Hill.  Reference is also
made to Kids Stuff's Form 10-KSB (Item 12) for its year ended  December 31, 1998
for a description of additional related party transactions.

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

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

(a)  Exhibits

<TABLE>
<CAPTION>
<S>      <C>                                                  <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)


<PAGE>
         10.13    Incentive Compensation Plan (2)
         10.14    1997 Long-Term Stock Incentive Plan (2)
         10.15    Amendment to Asset Purchase Agreement between the Company
                  and its Parent (2)
         10.16    Form of Amendment to Bridge Loan Agreement (4)
         10.17    Amended Form of Stock Repurchase Agreement and Note (5)
         10.18    Second Addendum to Acquisition Agreement (5)
         10.19    First Addendum to Escrow Agreement (6)
         10.20    Third Addendum to Acquisition Agreement (6)
         10.21    Agreement with The Havana Group, Inc. (8)
         10.22    Form of new Financial Consulting Agreement with Fairchild Financial
                  Group, Inc. (7)
         10.23    Other Leases (7)
         10.24    Amendment to 1997 Long Term Stock Incentive Plan (10)
         23.01    Consent of Hausser + Taylor LLP (10)
         27.00    Revised Financial Data Schedule (10)
</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) Filed herewith.

(b)      Reports on Form 8-K

         During the three months ended  December 31, 1999, 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
         March 30, 2000

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<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                March 30, 2000



/s/ Jeanne E. Miller                     President and
Jeanne E. Miller                         Director                               March 30, 2000


/s/ Clark D. Swisher
Clark D. Swisher                         Director                               March 30, 2000



/s/ Alfred M. Schmidt
Alfred M. Schmidt                        Director                               March 30, 2000

/s/ Debra P. Gibbs
Debra P. Gibbs                           Director                               March 30, 2000

</TABLE>