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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Year Ended September 30, 2001
Commission File Number 0-30923

AMERICAN TOY VENDING, INC.
(Name of Small Business Issuer in Its Charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|NEVADA                                                         |  | 88-0455326                          
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)
|                                                              
|13640 White Rock Station Road, Poway, CA                       |  | 92064                               
|(Address of principal Executive Offices)                       |  | (Zip Code)                          
|                                                              
|(619) 692-2406
(Issuers Telephone Number)                     |  |                                     

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

Common Stock  .001 Par Value
(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

Yes [X]          No [   ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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.

Yes [X]           No [   ]

The issuer had no revenues for the year ended September 30, 2001.

As of September 30, 2001, the registrant had 10,985,000 shares of common stock,
$.001 par value, issued and outstanding.





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TABLE OF CONTENTS



|           |                                                                                                                           |  |  |  |  |  |  | 
|---------- | ------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1    
|           | ITEM 1 DESCRIPTION OF THE BUSINESS                                                                                       
|           | ITEM 2 DESCRIPTION OF PROPERTY                                                                                           
|           | ITEM 3 LEGAL PROCEEDINGS                                                                                                 
|           | ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                               
|PART II   
|           | ITEM 5 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY                      AND OTHER SHAREHOLDER MATTERS
|           | ITEM 6 PLAN OF OPERATION                                                                                                 
|           | ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                       
|           | ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING                      CONTROL AND FINANCIAL DISCLOSURE 
|PART III  
|           | ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS                                                     
|           | ITEM 10 EXECUTIVE COMPENSATION                                                                                           
|           | ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                      AND MANAGEMENT                              
|           | ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                   
|           | ITEM 13 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                                                 
|SIGNATURES
|EXHIBIT 23



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PART 1




ITEM 1
DESCRIPTION OF THE BUSINESS

DESCRIPTION OF BUSINESS

Form and Year of Organization

American Toy Vending, Inc. was incorporated in Nevada on March 10, 1999. From
inception until the date of this filing we have had no material operating
activities. We are a development stage company with essentially no revenues or
operating history.

Bankruptcy or Similar Proceedings

There have been no bankruptcy, receivership or similar proceedings.

Reorganizations, Purchase or Sale of Assets

There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course
of business.

Principal Products or Services and their Markets

We intend to become a primary developer and operator of computer-controlled
skill crane game machines, (skill cranes) in the United States. Current
versions of skill cranes involve one players skilled manipulation of a joy
stick to guide a mechanical claw or metal paddle to extract one prize such as
a piece of jewelry or plush (stuffed toy animals such as teddy bears, or dolls)
from a large stack of prizes prominently displayed inside the glass walls of
the skill crane. The player wins the prize by directing the claw or metal
paddle to move the prize from the large stack of prizes in the crane into a
chute for delivery to the winning player. Normally, the longer a player
practices and plays, the more adept he or she becomes at winning a prize.

Our proprietary skill crane software is designed to precisely monitor inventory
levels at skill crane sites on a daily basis to lower our costs while
increasing sales by eliminating out of stock problems at the skill crane sites
and determine revenue flows at skill crane sites to differentiate good sales
sites from under performing sites.

We plan to use direct marketing sales calls to arrange revenue sharing
contracts with business that use skill
cranes at their sites. We plan to operate, supply plush prizes, maintain, and
clean our skill cranes on a weekly basis at their sites. We plan to pay
approximately thirty-three

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percent of crane gross revenues to business site
owners for their permission allowing us to operate skill cranes at their sites.
Businesses that use skill cranes for supplemental revenue sources include
bars, restaurants, amusement game centers, shopping malls, grocery stores,
movie theaters, department store chains, hotels, bingo halls, and gambling
casinos. Based upon our managements experience in the skill crane business,
skill crane players are willing to pay an average of $15.00, at a cost of $.50
to $1.00 per play, each time they play in order to win a prize. Average weekly
gross sales for one skill crane range from $200 at a bar or restaurant to over
$1,000 at a bingo hall or gambling casino.

The skill crane business has the following four industry-specific components:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1) Prizes (products) used in skill cranes, such as plush and jewelry,
are purchased through distributors or manufacturing trade group
representatives in the United States. Company buyers make their
purchases through trade shows held in locations such as Las Vegas and New
York (the largest is Toy Fair held each February in Manhattan), as well
as their contacts with Chinese manufacturing reps and U. S. distributors
making local sales calls. Plush is often designed in the form of unique
pieces for specific events such as local football or baseball team
mascots, or seasonal pieces such as Valentines Day stuffed bears, or
Christmas season oriented designs.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2) Although plush may appear to be very durable to the consumer, it is
in fact a perishable commodity when kept in containers or warehouses.
Inventory control is critical as plush prize items may not be packed too
closely together, require large storage areas, and have a useful shelf
life of approximately one year before they must be discounted or
discarded due to accumulation of dirt, odors, mildew, etc. In
managements experience, purchasing agents often order too much plush for
inventory based solely upon manufacturing reps and distributors offers
of large volume purchase discounts. Typical large volume discount
purchase orders result in excessive warehouse storage costs and annual
write-offs of worthless inventory.

| |                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3) The business is labor intensive as skill crane machines require daily
or weekly service from route drivers, depending on their sales volume, in
order to collect money, pay commissions to the owners of the sites,
replenish the inventory in the skill cranes, and clean and adjust the
skill cranes.

| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4) Route drivers usually report sales and inventory activity to
management through telephone or facsimile means on a monthly basis. This
system leads to problems with route driver theft and a lag in inventory
replenishment. Because of this lag in inventory replenishment, route
drivers tend to over-order and maintain a larger than necessary supply of
local inventory in order to avoid running out of plush.

We intend to rely on our managements knowledge, experience, and abilities in
the skill crane business to successfully integrate our following key
competitive elements:

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Purchasing

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Virtually all prizes offered in skill cranes are products manufactured in
China. In managements experience, over 90% of all skill cranes offer
plush manufactured in Southern and Southeastern China, with primary
contact companies located in the cities of Shenzhen and Shanghai.
Management will use its knowledge of direct purchasing arrangements with
manufacturers in China and utilize in-house buying to purchase direct
from Chinese factories instead of through U. S. distributors in order to
achieve lower plush costs. Management has experience with the
utilization of Internet communications with Chinese factory contacts for
ordering and shipping.

Inventory Control

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We intend to utilize inventory management systems that link purchasing to
warehouse daily inventory balances, and link shipping of plush from the
warehouse to field crane sites via daily sales and inventory reporting.
American Toy will use its copyrighted communications software that will
interface with standard inventory control systems in order to link the
warehouse with each skill crane site via a paging system for inventory
usage and by interface via the Internet for direct factory ordering.

Route Reports

| |                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | American Toy plans to utilize a skill crane game machine design that
integrates our unique copyrighted software allowing centrally controlled
communications through paging systems with skill cranes installed at
field sites for daily polling of sales and inventory usage. This
software was developed by our management, licensed by management to
American Toy, and copyrighted by us.

The first markets American Toy intends to service are the high skill crane
usage states of New York, Florida, and California. Management is already
familiar with skill crane operations in each of these states.

Distribution Methods of Products or Services

American Toy plans to own and operate all of our own skill cranes. We plan to
use direct marketing sales calls to arrange revenue sharing contracts with
business that use skill cranes at their sites. We plan to operate, supply
plush prizes, maintain, and clean our skill cranes on a weekly basis at their
sites. We plan to pay approximately thirty-three percent of crane gross
revenues to business site owners for their permission allowing us to operate
skill cranes at their sites.

Our proprietary skill crane software is designed to reduce the cost of goods
sold in the skill crane business. The direct plush costs and labor associated
with ordering, warehousing, and servicing sites comprises the
bulk of our cost of goods sold. We intend to operate our new generation of

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skill cranes that use our software to utilize paging systems to poll the
inventory for each skill crane at a site. This allows us to integrate that
information into our inventory and factory purchasing systems. Our goals
include reducing route driver servicing time as drivers will know which sites
need new inventory, and focusing on site sales levels to eliminate the current
industry common problems with out of stock situations and time delays in
removing a crane from a non-performing or under-performing site. Our
proprietary skill crane software is designed to precisely monitor inventory
levels at skill crane sites on a daily basis to lower our costs while
increasing sales by eliminating out of stock problems at the skill crane sites.

In order to encourage use of our skill cranes, we intend to offer information
about American Toy, its plush (stuffed toy animals, dolls, etc.) prizes, and
its new generation of electronic skill cranes to the public and to prospective
site owners on its web site, www.smartcrane.net. This web site address is an
inactive textual reference only. Instructions printed on each skill crane will
encourage players to visit the companys web site to learn about trading in
their plush items at their skill crane site for coupons allowing them to earn
even larger plush items.

American Toy will utilize our managements knowledge in its initial operating
areas to secure smart skill crane sites, hire route drivers and local managers,
ship smart skill cranes and plush inventory to each site.

Status of Any Publicly Announced New Products or Services

American Toy has no new product or service planned or announced to the public.

Competition and Competitive Position

The size and financial strength of our primary competitors, traditional skill
crane companies, American Coin Merchandising, Inc. (d.b.a. Sugarloaf), Soft
Toys, Inc., and Atlantic Skill Cranes, Inc. are substantially greater than
those of our company. In examining major competitors, we have found they all
face the same industry-specific components that reduce profitability: sole
dependence on manufacturing reps and U. S. distributors for products, excess
inventory in warehouses, and less than optimum field communications resulting
in problems with theft and excess field inventory.

Any consideration of competitors products and related product reviews should
include the facts that American Toys competitors have longer operating
histories, larger customer bases, and greater brand recognition than American
Toy. We are not aware of any significant barriers to American Toys entry into
the skill crane market, however, American Toy at this time has no market share
of this market.

We plan to use this industrys overriding marketing method of making direct
sales calls to locations which utilize skill cranes at their locations: bars,
restaurants, amusement game centers, shopping malls, grocery stores, movie
theaters, department store chains, hotels, bingo halls, and gambling casinos.
In order to effectively compete, we intend to emphasize superior service than
our competitors by utilizing our software
which will allow us to check site inventories on a daily basis. Our goal is to
eliminate low stock or out of stock situations which cause lower site sales.

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Suppliers and Sources of Raw Materials

Management will rely on their experience and knowledge in the skill crane
machine business for purchasing skill crane machines and plush products. While
we have no current contracts with skill crane machine suppliers, management is
familiar with these manufacturers and suppliers such as Rainbow Cranes, Inc.,
Vend Tech Industries, Inc., and Smart Industries. Management feels that skill
crane machine availability will not be a problem, as Rainbow Crane, Inc. is
already the primary supplier of existing skill crane machines in the United
States, and Canada. Management has successfully tested the software interface
application of the companys copyrighted software with existing skill crane
technology. We intend to deal directly with Chinese manufacturers such as
Guang Lai Industrial, Sun Rex Products, and Sung Wah Sun, Ltd. for all of the
products used in its skill crane machines. Although we have no current
relationship with Chinese manufacturers and suppliers, we intend to enter into
agreements with manufacturers and suppliers per our business plan after raising
capital during the first six months of our plan.

Dependence on One or a Few Major Customers

American Toy will not depend on any one or a few major customers. Management
has experience in the setup up process and long term operations of skill crane
business sites in the United States. Management has in-depth experience in
operating skill crane businesses and site setups in American Toys first three
targeted markets: New York, Florida, and California. We intend to operate
over five hundred skill crane sites by the end of the first two years of our
business plan.

Patents, Trademarks, Franchises, Concessions, or Royalty Agreements

American Toy has been granted copyright protection for its skill crane
software. We own our Internet domain name, and we have setup a simple one page
web site, smartcrane.net. We intend to greatly expand our web site as we
receive funding per our business plan. We have no current plans for any
additional registrations such as patents, trademarks, additional copyrights,
franchises, concessions, royalty agreements or labor contracts. We will assess
the need for any additional copyright, trademark or patent applications on an
ongoing basis.

On March 15, 1999, the company signed an exclusive license agreement with its
president for use of his skill crane control communications software in
exchange for 3,250,000 (post split basis) restricted shares of the companys
common stock. We issued 3,250,000 (post split basis) shares of our common
stock in exchange for a ten year exclusive right to development, manufacturing,
marketing, sale, sublicensing, and any and all usages of the skill crane
control communications software in the United States and throughout the world.
All development and modifications to this software that we perform belongs to
the licensor (our president). The term of the license agreement is for ten
years. After ten years the license is subject to
automatic

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renewal each year thereafter, subject to written notification, sixty
days in advance of the renewal, by both parties of the license agreement, and
commencing on the effective date of the license agreement, unless sooner
terminated. This agreement may be terminated by either party after the
occurrence of any of the following events within ninety days of receipt of
notice, unless a mutual remedy is reached: a material breach or default of any
obligation specified in the agreement, and the failure to correct the material
breach or default, the direct or indirect acquisition of control or
substantially all of the assets of our company, bankruptcy, insolvency, or
reorganization of our company, or a liquidation caused by insolvency of our
company. If we cause the material breach or default, we must cease all use of
the software and we will remain subject to any payment obligations to the
licensor. The license includes a limited warranty from the licensor that
warranty service for correction of errors we report will begin within twenty
four hours of notification of business-impacting errors and seventy two hours
of notification of non business-impacting errors. The licensor does not
warranty that all errors in the software will be corrected. The licensor is
not responsible for our loss of profit or other expenses or damages resulting
from the use of the licensed software. While we have a license for use of this
software for the United States and throughout the world, we must receive
written consent from the licensor before we may sell and export this software
outside of the United States. Our license includes a confidentially provision
between us and the licensor.

Need for Government Approval for its Products or Services

American Toy is not required to apply for or have any government approval for
its products or
services.

Effect of Governmental Regulations on the Companys Business

American Toy will not be subject to federal laws and regulations that relate
directly or indirectly to its operations. We will be subject to common
business and tax rules and regulations pertaining to the operation of our
business in the State of California.

Research and Development Costs During the Last Two Years

American Toy has not expended funds for research and development costs since
inception.

Costs and Effects of Compliance with Environmental Laws

Environmental regulations have had no materially adverse effect on American
Toys operations to date, but no assurance can be given that environmental
regulations will not, in the future, result in a curtailment of service or
otherwise have a materially adverse effect on our business, financial condition
or results of operation. Public interest in the protection of the environment
has increased dramatically in recent years. The trend of more expansive and
stricter environmental legislation and regulations could continue. To the
extent that laws are enacted or other governmental action is taken that imposes
environmental protection requirements that result in increased costs, the
business and prospects of American Toy could be adversely
affected.

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Number of Employees

American Toys only current employees are its two officers who will devote as
much time as the board of directors determines is necessary to manage the
affairs of the company. The officers intend to work on a full time basis when
American Toy raises capital per its business plan. Our business plan calls for
hiring thirty five new full-time employees during the next twelve months.

Reports To Securities Holders

We provide an annual report that includes our financial information to our
shareholders. We make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules of
Regulation S-B for a small business issuer under the Securities Exchange Act of
1934. American Toy became subject to disclosure filing requirements effective
August 28, 2000, and is current in its required filings, including Form 10-KSB
annually and Form 10-QSB quarterly. In addition, we will file Form 8-K and
other proxy and information statements from time to time as required. We do
not intend to voluntarily file the above reports in the event our obligation to
file such reports is suspended under the Exchange Act. The public may read and
copy any materials that we file with the Securities and Exchange Commission,
(SEC), at the SECs Public Reference Room at 450 Fifth Street NW, Washington
D. C. 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC.

RISK FACTORS

Investors in American Toy should carefully consider the following risk factors
associated with our plans and product:

American Toy is a development stage company with no operating history. This
will make it difficult for our shareholders to evaluate our future plans and
prospects.

| |                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Investors should carefully evaluate any investment in our company due to
the inherent risks, expenses, delays, and difficulties that will likely
be a part of our development. As we are implementing a business plan
with no near-term revenues, we expect to incur net losses in the
foreseeable future.

Our financial status creates a doubt whether we will continue as a going
concern. Our independent auditors have issued an audit opinion for American
Toy which includes a statement describing our
going concern status. If our business plan for the future is not successful,
investors will likely lose all of their investment in our stock.
8Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As noted in our accompanying financial statements, our current financial
condition of nominal assets and no current operating business activities
necessary for revenues and operating capital create substantial doubt as
to our ability to continue as a going concern. If our business plan does
not work, we could remain as a start-up company with no material
operations, revenues, or profits.

American Toys skill crane product has no sales, proven market, or consumer
demand. Without significant user demand for our product, the company could
have continued negative cash flow and be unable to remain in business.

| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The lack of a proven market for our product means that the true market
for this product may be minor or nonexistent. This could result in
little or no product sales.

American Toys business is dependent upon our March 15, 1999 ten year renewable
exclusive licensing agreement with our president for use of his skill crane
communications software. If we were to lose this license, we would be unable
to implement our business plan or continue in business.

| |                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The success of our business plan is dependent upon maintaining our core
software license agreement with our president. Without this license
agreement, we would have to abandon our business plan, and investors
would face the loss of their entire investment in our stock.

Our business strategy requires us to raise cash of $5,000,000. Without this
funding, we could remain as a development stage company with no material
operations, revenues, or profits.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We require new funding of $5,000,000 in order to implement our business
plan. We have not determined a source of this funding. We currently
have no funding commitments from any individuals or entities. If we use
equity capital as a source of funding, potential new shareholders may be
unwilling to accept either the likely dilution of their per share value
or the high level of risk involved with our unproven new product.
Without this funding, we may be only partially successful or completely
unsuccessful in implementing our business plan, and our shareholders may
lose part or all of their investment.

We have no current relationships with manufacturers or suppliers needed for our
business plan. If we are unable to secure skill cranes or products distributed
through our skill cranes, or if planned
manufacturers or suppliers are unwilling to sell to us at favorable price
levels, we could suffer a possible halt of our business or material costs and
expenses greater than provided in our business plan.
9Table of Contents

As the costs and expenses associated with our skill cranes and products
distributed through those skill cranes are a primary component of our costs and
expenses of doing business, we might be forced to completely curtail or greatly
reduce our business plan goals due to an increase in costs, reduction of
profits, and decrease in cash flow.

Our competitors have been in business longer then we have and have
substantially greater resources than we do. Should we be unable to achieve
enough customer market share in our industry, we may experience lower levels of
revenue than our business plan anticipates.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In our development stage, we will have size and market share
disadvantages as we attempt to implement our marketing plan. We plan to
use our managements experience by implementing this industrys
overriding marketing method of making direct sales calls to locations
which utilize skill cranes at their locations: bars, restaurants,
amusement game centers, shopping malls, grocery stores, movie theaters,
department store chains, hotels, bingo halls, and gambling casinos.
However, we may be unsuccessful in achieving our sales goals and market
share and, therefore, be unable to ever become a competitive force in our
industry.

Our current officers and directors are involved in other business activities.
American Toys future plans for increased use of their services could conflict
with their other business activities. This could directly interfere with out
business plan goals and cause us to remain a start-up company with no material
operations, revenues, or profits.

| |                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have not formally adopted any plan to resolve potential or actual
conflicts of interest that exist or that may arise. Investors should be
aware that our business plan implementation depends upon the performance
of our existing officers and directors. Even with adequate funding for
American Toy, our officers and directors may choose not to work for us.

The trading of American Toys shares on the OTC Electronic Bulletin Board may
be regulated by Securities and Exchange Commission Rule 15g-9 which established
the definition of a penny stock.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Securities and Exchange Commission Rule 15g-9 establishes the
definition of a penny stock, for the purposes relevant to American Toy,
as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to
certain
exceptions. For any transaction involving a penny stock, unless exempt,
the rules require: (a) that a broker or dealer approve a persons account
for transactions in penny stocks; and (b) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth
the identity and quantity of the penny stock to be purchased. In order
to approve a persons account for transactions in penny stocks, the
broker or dealer must (a) obtain financial information and investment

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| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | experience objectives of the person; and (b) make a reasonable
determination that the transactions in penny stocks are suitable for that
person and the person has sufficient knowledge and experience in
financial matters to be capable of evaluating the risks of transactions
in penny stocks. The broker or dealer must also deliver, prior to any
transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form,
(a) sets forth the basis on which the broker or dealer made the
suitability determination; and (b) that the broker or dealer received a
signed, written agreement from the investor prior to the transaction.
Before you trade a penny stock your broker is required to tell you the
offer and the bid on the stock, and the compensation the salesperson and
the firm receive for the trade. The firm must also mail a monthly
statement showing the market value of each penny stock held in you
account. The effective result of this Rule 15g-9, is that if the share
price is below $5.00 there will be less purchasers qualified by their
brokers to purchase shares of American Toy, and therefore a less liquid
market for the securities.




ITEM 2
DESCRIPTION OF PROPERTY

The Companys principal executive office address is 13640 White Rock Station
Road, Poway, CA 92064. The principal executive office and telephone number are
provided by an officer of the corporation. The costs associated with the use
of the telephone and mailing address were deemed by Management to be immaterial
as the telephone and mailing address were almost exclusively used by the
officer for other business purposes. Management considers the Companys
current principal office space arrangement adequate until such time as the
Company achieves its business plan goal of raising capital of $5,000,000 and
then begins hiring new employees per its business plan.




ITEM 3
LEGAL PROCEEDINGS

The Company is not currently involved in any legal proceedings and is not aware
of any pending or potential legal actions.




ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year ended September 30, 2001, there
were no submissions of matters to a vote of security holders.

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PART II




ITEM 5
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS

The Company was approved for trading on the OTC Electronic Bulletin Board
which is sponsored by the National Association of Securities Dealers (NASD) on
September 20, 2001. The OTC Electronic Bulletin Board is a network of security
dealers who buy and sell stock. The dealers are connected by a computer
network which provides information on current bids and asks as well as
volume information.

Although the company has been approved for trading on the OTC Bulletin Board,
as of the date of this filing there has not been a sufficient level of market
activity needed to establish a market price for the companys stock. As of
September 30, 2001, the Company had 54 shareholders of record. The Company has
paid no cash dividends. The Company has no outstanding options. The Company
has no plans to register any of its securities under the Securities Act for
sale by security holders. There is no public offering of equity and there is
no proposed public offering of equity.




ITEM 6
PLAN OF OPERATION

The Companys current cash balance is $99. Management believes the current
cash balance is sufficient to fund the current minimum level of operations
through the first quarter of 2002, however, in order to advance the Companys
business plan the Company must raise capital through the sale of equity
securities. To date, the Company has sold $6,900 in equity securities. Sales
of the Companys equity securities have allowed the Company to maintain a
positive cash flow balance.

The Companys business plan encompasses the following steps to implement its
computer-controlled skill crane game business plan: after raising capital of
$5,000,000 during the first six months, the Company intends to order 500 skill
cranes with the Companys new communications system from the manufacturer at a
cost of $950,000, and begin securing space for its smart skill cranes in New
York, Florida, and California. During months seven through twelve, in order to
operate its smart skill crane sites, the Company intends to expend $500,000 for
inventory, $50,000 for set-up and maintenance of the Companys web site,
$200,000 for advertising, $90,000 for three regional managers, $300,000 for
thirty route drivers, $25,000 for two office clerical employees, $80,000 for
purchase of computers and fixed assets, and $175,000 for rent and other
operating expenses.

Management has made initial progress in implementing its business plan by
setting-up its first

12



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##### Table of Contents



web page smartcrane.net, filing for copyright protection
of its copyrightable skill crane control communications
software, and plans to expand its web site in the first quarter of 2002.

The Company will only be able to continue to advance its business plan after it
receives capital funding through the sale of equity securities. After raising
capital, Management intends to hire employees, rent commercial space in San
Diego, purchase equipment, and begin development of its skill crane machine
operations. The Company intends to use its equity capital to fund the
Companys business plan during the next twelve months as cash flow from sales
is not estimated to begin until year two of its business plan. The Company
will face considerable risk in each of its business plan steps, such as
difficulty of hiring competent personnel within its budget, longer than
anticipated deployment of its skill crane machines at suitable sites, and a
shortfall of funding due to the Companys inability to raise capital in the
equity securities market. If no funding is received during the next twelve
months, the Company will be forced to rely on its existing cash in the bank and
funds loaned by the directors and officers. The Companys officers and
directors have no formal commitments or arrangements to advance or loan funds
to the Company. In such a restricted cash flow scenario, the Company would be
unable to complete its business plan steps, and would, instead, delay all cash
intensive activities. Without necessary cash flow, the Company may be dormant
during the next twelve months, or until such time as necessary funds could be
raised in the equity securities market.

There are no current plans for additional product research and development.
The Company plans to purchase approximately $80,000 in furniture, computers,
software during the next twelve months from proceeds of its equity security
sales. The Companys business plan provides for an increase of thirty five
employees during the next twelve months.




ITEM 7
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The required financial statements begin on page F-1 of this document.




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

None.

13



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PART III




ITEM 9
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS

The Directors and Officers of the Company, all of those whose one year terms
will expire 12/31/02, or at such a time as their successors shall be elected
and qualified are as follows:

|                                                             |  |     |    |          |  |                               |  |              |  |         
|------------------------------------------------------------ |  | --- | -- | -------- |  | ----------------------------- |  | ------------ |  | --------
|Name & Address                                               |  | Age |    | Position |  | Date First Elected            |  | Term Expires
|                                                             |  |     |    |          |  |                               |  |             
|Alastair Knott
13640 White Rock Station
Poway, CA 92064      |  |     | 36 |          |  | President,
Director           |  | 3/15/99      |  | 12/31/02
|                                                            
|Kathleen Sturtevant
13640 White Rock Station
Poway, CA 92064 |  |     | 34 |          |  | Secretary,
Treasurer
Director |  | 3/15/99      |  | 12/31/02

Each of the foregoing persons may be deemed a promoter of the Company, as
that term is defined in the rules and regulations promulgated under the
Securities and Exchange Act of 1933.

Directors are elected to serve until the next annual meeting of stockholders
and until their successors have been elected and qualified. Officers are
appointed to serve until the meeting of the Board of Directors following the
next annual meeting of stockholders and until their successors have been
elected and qualified.

No Executive Officer or Director of the Corporation has been the subject of any
Order, Judgement, or Decree of any Court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring, suspending or
otherwise limiting him or her from acting as an investment advisor,
underwriter, broker or dealer in the securities industry, or as an affiliated
person, director or employee of an investment company, bank, savings and loan
association, or insurance company or from engaging in or continuing any conduct
or practice in connection with any such activity or in connection with the
purchase or sale of any securities.

No Executive Officer or Director of the Corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.

No Executive Officer or Director of the Corporation is the subject of any
pending legal proceedings.

14



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##### Table of Contents



Resumes

Alastair Knott, President & Director

|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1998  Current |  | Independent Consultant for a variety of industries.
Specializing in software design for Internet web pages, design and
implementation of e-commerce revenue strategies, conversion of in-house
tax and regulatory agency reporting to electronic filing systems, design
and implementation of field operations electronic reporting and control
systems.                                                                                                                                                           
|              
|1995  1998    |  | Director of Operations, Atlantic Skill Cranes, Inc., a designer
and operator of computer-controlled skill crane game machines in ten
states. Responsibilities included design and maintenance of electronic
and mechanical systems for computer-controlled skill crane game machines,
design of electronic warehouse receiving, shipping, inventory control
systems, maintenance of corporate web site, design and implementation of
field operations electronic asset, inventory, and maintenance control
systems.

Kathleen Sturtevant, Secretary, Treasurer & Director

|               |  |                                                                                                                                                                                                                                                                                      
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1999  Current |  | Independent contractor providing accounting and management
information services for manufacturing, skill crane, and service
businesses. Responsibilities include financial statement reporting,
inventory control, data processing, billings, and selection of
applications software.
|              
|1993  1998    |  | Equus Financial Services, Inc.  Senior statistical analyst in a
commercial and residential loan company. Responsible for loan analysis
modeling for institutional lenders.                                                                                                          




ITEM 10
EXECUTIVE COMPENSATION

The companys current officers receive no compensation.

Summary Compensation Table

|             |  |      |      |     |  |        |     |           |  |           |     |       |  |         |     |            |  |         |       |  |  |  |     |           |  |  |     |  |  |  |     | 
|------------ |  | ---- | ---- | --- |  | ------ | --- | --------- |  | --------- | --- | ----- |  | ------- | --- | ---------- |  | ------- | ----- |  |  |  | --- | --------- |  |  | --- |  |  |  | --- | 
|             |  |      |      |     |  |        |     |           |  |           |     |       |  | Other   |     |            |  |         |       |  |  |  |     |           |  |  |     |  |  | 
|Name &       |  |      |      |     |  |        |     |           |  |           |     |       |  | annual  |     | Restricted |  | Options |       |  |  |  |     | All other
|principle    |  |      |      |     |  | Salary |     | Bonus     |  | compen-   |     | stock |  | SARs    |     | LTIP       |  | compen-
|position     |  | Year |      | ($) |  | ($)    |     | sation($) |  | awards($) |     | ($)   |  | Payouts |     | sation($) 
|             |  |      |      |     |  |        |     |           |  |           |     |       |  |         |     |           
|A Knott      |  |      | 1999 |     |  |        | -0- |           |  |           | -0- |       |  |         | -0- |            |  |         | 5,000 |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|President    |  |      | 2000 |     |  |        | -0- |           |  |           | -0- |       |  |         | -0- |            |  |         | -0-   |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|             |  |      | 2001 |     |  |        | -0- |           |  |           | -0- |       |  |         | -0- |            |  |         | -0-   |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|            
|K Sturtevant |  |      | 1999 |     |  |        | -0- |           |  |           | -0- |       |  |         | -0- |            |  |         | 5,000 |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|Director     |  |      | 2000 |     |  |        | -0- |           |  |           | -0- |       |  |         | -0- |            |  |         | -0-   |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|             |  |      | 2001 |     |  |        | -0- |           |  |           | -0- |       |  |         | -0- |            |  |         | -0-   |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 

15



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There are no current employment agreements between the Company and its
executive officers.

The Board agreed to pay Mr. Knott 5,000 shares of the Companys common stock
for an exclusive license agreement on March 15, 1999. The stock was valued at
the price unaffiliated investors paid for stock sold by the Company, $1.00 per
share. 45,000 shares of the Companys common stock were issued to him per a 10
for 1 stock split on March 25, 2000. 3,200,000 shares of the Companys common
stock were issued to him per a 65 for 1 stock split on May 31, 2000.

The Board agreed to pay Ms. Sturtevant for administrative services and services
related to the Companys business plan 5,000 shares of the Companys common
stock on March 15, 1999. The stock was valued at the price unaffiliated
investors paid for stock sold by the Company, $1.00 per share. 45,000 shares
of the Companys common stock were issued to her per a 10 for 1 stock split on
March 25, 2000. 3,200,000 shares of the Companys common stock were issued to
her per a 65 for 1 stock split on May 31, 2000.

The terms of these stock issuances were as fair to the Company, in the Boards
opinion, as could have been made with an unaffiliated third party.

The Officers currently devote an immaterial amount of time to manage the
affairs of the Company. The Directors and Principal Officers have agreed to
work with no remuneration until such time as the Company receives sufficient
revenues necessary to provide proper salaries to all Officers and compensation
for Directors participation. The Officers and the Board of Directors have the
responsibility to determine the timing of remuneration for key personnel based
upon such factors as positive cash flow to include stock sales, product sales,
estimated cash expenditures, accounts receivable, accounts payable, notes
payable, and a cash balance of not less than $20,000 at each month end. When
positive cash flow reaches $20,000 at each month end and appears sustainable
the board of directors will readdress compensation for key personnel and enact
a plan at that time which will benefit the Company as a whole. At this time,
management cannot accurately estimate when sufficient revenues will occur to
implement this compensation,
or the exact amount of compensation.

There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the Corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the Corporation or any of its subsidiaries, if any.

16



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ITEM 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth information on the ownership of the Companys
voting securities by Officers, Directors and major shareholders as well as
those who own beneficially more than five percent of the Companys common stock
through the most current date  September 30, 2001:

|                                                      |  |                                                              |  |                 |    |         |    |  
|----------------------------------------------------- |  | ------------------------------------------------------------ |  | --------------- | -- | ------- | -- | -
|Title Of                                              |  | Name &                                                       |  | Amount &        |    | Percent
|Class                                                 |  | Address                                                      |  | Nature of owner |    | Owned  
|                                                      |  |                                                              |  |                 |    |        
|Common                                                |  | Alastair Knott
13640 White Rock Station
Poway, CA 92064      |  | 3,250,000(a)    |    |         | 30 | %
|                                                     
|Common                                                |  | Kathleen Sturtevant
13640 White Rock Station
Poway, CA 92064 |  | 3,250,000(b)    |    |         | 30 | %
|                                                     
|Total Shares
Owned by Officers & Directors As a Group |  | 6,500,000                                                    |  |                 | 60 | %      

(a)  Mr. Knott received 5,000 shares of the Companys common stock on March 15,
1999 for a license agreement related to the Companys business plan. 45,000
shares of the Companys common stock were issued to him per a 10 for 1 stock
split on March 25, 2000. 3,200,000 shares of the Companys common stock were
issued to him per a 65 for 1 stock split on May 31, 2000.

(b)  Ms. Sturtevant received 5,000 shares of the Companys common stock on March
15, 1999 for administrative services and services related to the Companys
business plan. 45,000 shares of the Companys common stock were issued to her
per a 10 for 1 stock split on March 25, 2000. 3,200,000 shares of the
Companys common stock were issued to her per a 65 for 1 stock split on May 31,
2000.




ITEM 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The principal executive office and telephone number are provided by Mr. Knott,
an officer of the
corporation. The costs associated with the use of the telephone and mailing
address were
deemed by management to be immaterial as the telephone and mailing
address were almost exclusively used by the officer for other business
purposes.

17



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ITEM 13
EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

|                                                         |  | 
|-------------------------------------------------------- |  | 
|Exhibit 23     Consent of Experts and counsel            |  | 
|                                                        
|Reports filed on Form 8-K: None                          |  | 
|                                                        
|Reports required to be filed by Regulation S-X:     None |  | 




SIGNATURES

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



| |  | American Toy Vending, Inc.
| |  | --------------------------



|Date    December 27, 2001 | By | /s/ Alastair Knott
Alastair Knott, President & Director
|------------------------- | -- | -------------------------------------------------------



|Date    December 27, 2001 | By | /s/ Katie Sturtevant
Katie Sturtevant, Secretary, Treas. & Dir.
|------------------------- | -- | ---------------------------------------------------------------

18



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American Toy Vending, Inc.
(A Development Stage Company)

Balance Sheets
as of
September 31, 2001 and 2000

and

Statements of Income,
Stockholders Equity, and
Cash Flows
for the
the years ended
September 30, 2001 and 2000,
and the period
March 10, 1999 (inception) to
September 31, 2001





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TABLE OF CONTENTS

|                                  |  |      |           | 
|--------------------------------- |  | ---- | --------- | 
|                                  |  | PAGE
|                                  |  |     
|Independent Auditors Report      |  |      | F-1       | 
|Balance Sheet                     |  |      | F-2       | 
|Income Statement                  |  |      | F-3       | 
|Statement of Stockholders Equity |  |      | F-4       | 
|Statement of Cash Flows           |  |      | F-5       | 
|Footnotes                         |  |      | F-6 - F-8 | 





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G. BRAD BECKSTEAD

Certified Public Accountant


330 E. Warm Springs
Las Vegas, NV 89119
702.257.1984
702.362.0540 (fax)

INDEPENDENT AUDITORS REPORT

December 26, 2001

Board of Directors
American Toy Vending, Inc.
Poway, CA

I have audited the Balance Sheet of American Toy Vending, Inc. (the Company) (a
development stage company), as of September 31, 2001 and 2000 and the related Statements of
Operations, Stockholders Equity, and Cash Flows for the years ended September 30, 2001 and
2000, and for the period from March 10, 1999 (date of inception) through September 31,
2001. These financial statements are the responsibility of the Companys management. My
responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally accepted auditing standards. Those
standards require that I 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
statement presentation. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of American Toy Vending, Inc. (a development stage company)
as of September 31, 2001 and 2000 and the results of its operations and its cash flows for
years ended September 30, 2001 and 2000, and for the period March 10, 1999 (date of
inception) through September 31, 2001, in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming the Company will continue
as a going concern. As discussed in Note 4 to the financial statements, the Company has had
limited operations and have not commenced planned principal operations. This raises
substantial doubt about its ability to continue as a going concern. Managements plan in
regard to these matters are also described in Note 4. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

-s- G. Brad Beckstead, CPA

G. Brad Beckstead, CPA




F-1



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American Toy Vending, Inc.
(A Development Stage Company)
Balance Sheet

|                                     |                                                                                                        |                           |    |               |    |               |       |         |       | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------ | ------------------------- | -- | ------------- | -- | ------------- | ----- | ------- | ----- | 
|                                     |                                                                                                        |                           |    | September 30, |    | September 30,
|                                     |                                                                                                        |                           |    | 2001          |    | 2000         
|                                     |                                                                                                        |                           |    |               |    |              
|Assets                               |                                                                                                        |                           |    |               |    |               |       |        
|Current assets:                      |                                                                                                        |                           |    |               |    |               |       |        
|                                     | Cash and equivalents                                                                                   |                           | $  | 99            |    |               | $     | 1,295   |      
|                                     |                                                                                                        |                           |    |               |    |               |       |        
|                                     |                                                                                                        | Total current assets      |    |               | 99 |               |       |         | 1,295 | 
|                                     |                                                                                                        |                           |    |               |    |               |       |        
|                                     |                                                                                                        | $                         | 99 |               |    | $             | 1,295 |        
|                                     |                                                                                                        |                           |    |               |    |               |       |        
|Liabilities and Stockholders Equity |                                                                                                        |                           |    |               |    |               |       |        
|Current liabilities:                 |                                                                                                        | $                         |   |               |    | $             |      |        
|                                     |                                                                                                        |                           |    |               |    |               |       |        
|                                     |                                                                                                        | Total current liabilities |    |               |   |               |       |         |      | 
|                                     |                                                                                                        |                           |    |               |    |               |       |        
|Stockholders equity:                |                                                                                                        |                           |    |               |    |               |       |        
|                                     | Common stock, $0.001 par value, 50,000,000 shares
authorized, 10,985,000 shares issued and outstanding |                           |    | 10,985        |    |               |       | 10,985  |      
|                                     | Additional paid-in capital                                                                             |                           |    | 5,915         |    |               |       | 5,915   |      
|                                     | (Deficit) accumulated during development stage                                                         |                           |    | (16,801       | )  |               |       | (15,605 | )    
|                                     |                                                                                                        |                           |    |               |    |               |       |        
|                                     |                                                                                                        |                           | 99 |               |    |               | 1,295 |        
|                                     |                                                                                                        |                           |    |               |    |               |       |        
|                                     |                                                                                                        | $                         | 99 |               |    | $             | 1,295 |        
|                                     |                                                                                                        |                           |    |               |    |               |       |        

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

F-2



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##### Table of Contents



American Toy Vending, Inc.
(A Development Stage Company)
Statement of Operations

|                                                     |                                 |                |            |               |       |                |            |       |       |   |            |        |        | 
|---------------------------------------------------- | ------------------------------- | -------------- | ---------- | ------------- | ----- | -------------- | ---------- | ----- | ----- | - | ---------- | ------ | ------ | 
|                                                     |                                 |                |            | Year ending   |       | March 10, 1999
|                                                     |                                 |                |            | September 30, |       | (inception) to
|                                                     |                                 |                |            |               |       | September 30, 
|                                                     |                                 |                |            | 2001          |       | 2000           |            | 2001 
|                                                     |                                 |                |            |               |       |                |            |      
|Revenue                                              |                                 | $              |           |               |       | $              |           |       |       | $ |           |       
|                                                     |                                 |                |            |               |       |                |            |       |       |   |            |       
|Expenses:                                            |                                 |                |            |               |       |                |            |       |       |   |            |       
|                                                     | General administrative expenses |                |            | 1,196         |       |                |            | 5,605 |       |   |            | 6,801  |       
|                                                     | Management fees                 |                |            |              |       |                |            |      |       |   |            | 10,000 |       
|                                                     |                                 |                |            |               |       |                |            |       |       |   |            |       
|                                                     |                                 | Total expenses |            |               | 1,196 |                |            |       | 5,605 |   |            |        | 16,801 | 
|                                                     |                                 |                |            |               |       |                |            |       |       |   |            |       
|Net (loss)                                           |                                 | $              | (1,196     | )             |       | $              | (5,605     | )     |       | $ | (16,801    | )     
|                                                     |                                 |                |            |               |       |                |            |       |       |   |            |       
|Weighted average number of
common shares outstanding |                                 |                | 10,985,000 |               |       |                | 10,513,302 |       |       |   | 10,695,492 |       
|                                                     |                                 |                |            |               |       |                |            |       |       |   |            |       
|Net (loss) per share                                 |                                 | $              | (0         | )             |       | $              | (0         | )     |       | $ | (0         | )     
|                                                     |                                 |                |            |               |       |                |            |       |       |   |            |       

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

F-3



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American Toy Vending, Inc.
(A Development Stage Company)
Statement of Changes in Stockholders Equity
For the period March 10, 1999 (Date of Inception) to September 30, 2001

|                                                   |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   |             |   |  |   |         |        | 
|-------------------------------------------------- | ----------------------------------- |  | ------------ | --------- | ---------- | - | ----------- | ------ | ------------- | - | ------ | - |  | - | ----------- | - |  | - | ------- | ------ | 
|                                                   |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   | (Deficit)   |   |  |   |        
|                                                   |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   | Accumulated |   |  |   |        
|                                                   |                                     |  | Common Stock |           | Additional |   | During      |        | Total        
|                                                   |                                     |  |              |           | Paid-in    |   | Development |        | Stockholders'
|                                                   |                                     |  | Shares       |           | Amount     |   | Capital     |        | Stage         |   | Equity
|                                                   |                                     |  |              |           |            |   |             |        |               |   |       
|March 15, 1999                                     |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   |             |   |  |   |         |       
|                                                   | Founders shares issued
for services |  |              | 6,500,000 |            |   | $           | 10,000 |               |   | $      |  |  |   | $           |  |  |   | $       | 10,000 | 
|April 30, 1999                                     |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   |             |   |  |   |         |       
|                                                   | Shares issued for cash              |  |              | 4,485,000 |            |   |             | 6,900  |               |   |        |  |  |   |             |   |  |   |         | 6,900  | 
|Net (loss) for the period ended
September 30, 1999 |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   | (10,000     | ) |  |   | (10,000 | )     
|                                                   |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   |             |   |  |   |         |       
|Balance, September 30, 1999                        |                                     |  | 10,985,000   |           |            |   | 16,900      |        |               |   |       |   |  |   | (10,000     | ) |  |   | 6,900   |       
|Reclassification of paid-in capital                |                                     |  |              |           |            |   | (5,915      | )      |               |   | 5,915  |   |  |   |             |   |  |   |        |       
|Net (loss) for the year ended
September 30, 2000   |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   | (5,605      | ) |  |   | (5,605  | )     
|                                                   |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   |             |   |  |   |         |       
|Balance, September 30, 2000                        |                                     |  | 10,985,000   |           |            |   | 10,985      |        |               |   | 5,915  |   |  |   | (15,605     | ) |  |   | 1,295   |       
|Net (loss) for the period ended
September 30, 2001 |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   | (1,196      | ) |  |   | (1,196  | )     
|                                                   |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   |             |   |  |   |         |       
|Balance, September 30, 2001                        |                                     |  | 10,985,000   |           |            | $ | 10,985      |        |               | $ | 5,915  |   |  | $ | (16,801     | ) |  | $ | 99      |       
|                                                   |                                     |  |              |           |            |   |             |        |               |   |        |   |  |   |             |   |  |   |         |       

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

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##### Table of Contents



American Toy Vending, Inc.
(A Development Stage Company)
Statement of Cash Flows

|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |       |           | 
|----------------------------------------- | -------------------------------------------- | ------------------------------------ | ------ | ------------- | - | -------------- | ------ | ---- | - | - | ------- | ----- | --------- | 
|                                          |                                              |                                      |        | Year ending   |   | March 10, 1999
|                                          |                                              |                                      |        | September 30, |   | (inception) to
|                                          |                                              |                                      |        |               |   | September 30, 
|                                          |                                              |                                      |        | 2001          |   | 2000           |        | 2001
|                                          |                                              |                                      |        |               |   |                |        |     
|Cash flows from operating activities      |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|Net (loss)                                |                                              | $                                    | (1,196 | )             |   | $              | (5,605 | )    |   | $ | (16,801 | )    
|Shares issued for services                |                                              |                                      |        |               |   |                |        |      |   |   | 10,000  |      
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|Net cash (used) by operating activities   |                                              |                                      | (1,196 | )             |   |                | (5,605 | )    |   |   | (6,801  | )    
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|Cash flows from investing activities      |                                              |                                      |       |               |   |                |       |      |   |   |        |      
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|Cash flows from financing activities      |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|                                          | Issuance of common stock                     |                                      |        |              |   |                |        |     |   |   |         | 6,900 |          
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|Net cash provided by financing activities |                                              |                                      |       |               |   |                |       |      |   |   | 6,900   |      
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|Net increase (decrease) in cash           |                                              |                                      | (1,196 | )             |   |                | (5,605 | )    |   |   | 99      |      
|Cash  beginning                          |                                              |                                      | 1,295  |               |   |                | 6,900  |      |   |   |        |      
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|Cash  ending                             |                                              | $                                    | 99     |               |   | $              | 1,295  |      |   | $ | 99      |      
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|Supplemental disclosures:                 |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|                                          | Interest paid                                |                                      | $      |              |   |                | $      |     |   |   | $       |      |          
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|                                          | Income taxes paid                            |                                      | $      |              |   |                | $      |     |   |   | $       |      |          
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|                                          | Non-cash investing and financing activities: |                                      |        |               |   |                |        |      |   |   |         |       |          
|                                          |                                              | Common stock issued for services     |        | $             |  |                |        | $    |  |   |         | $     | 10,000    | 
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      
|                                          |                                              | Number of shares issued for services |        |               |  |                |        |      |  |   |         |       | 6,500,000 | 
|                                          |                                              |                                      |        |               |   |                |        |      |   |   |         |      

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

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##### Table of Contents



American Toy Vending, Inc.
Notes

Note 1  Significant accounting policies and procedures

Organization

The Company was organized March 10, 1999 (Date of Inception) under the laws of
the State of Nevada, as American Toy Vending, Inc. The Company is authorized to
issue 50,000,000 shares of $0.001 par value common stock. The Company has
limited operations, and in accordance with SFAS #7, the Company is considered a
development stage company.

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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.

Cash and cash equivalents

The Company maintains a cash balance in a non-interest-bearing account that
currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments with an original
maturity of three months or less are considered to be cash equivalents.

Revenue recognition

The Company recognizes revenue on an accrual basis as it invoices for services.

Reporting on the costs of start-up activities

Statement of Position 98-5 (SOP 98-5), Reporting on the Costs of Start-Up
Activities, which provides guidance on the financial reporting of start-up
costs and organizational costs, requires most costs of start-up activities and
organizational costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the adoption of SOP 98-5,
there has been little or no effect on the Companys financial statements.

Loss per share

Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS #128) Earnings Per Share. Basic loss per
share is computed by dividing losses available to common stockholders by the
weighted average number of common shares outstanding during the period. The
Company had no dilutive common stock equivalents, such as stock options or
warrants as of September 30, 2001.

Advertising Costs

The Company expenses all costs of advertising as incurred. There were no
advertising costs included in selling, general and administrative expenses for
the period ended September 30, 2001.

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of September 30, 2001. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash and
accounts payable. Fair values were assumed to approximate carrying values for
cash and payables because they are short term in nature and their carrying
amounts approximate fair values or they are payable on demand.

Impairment of long lived assets

Long lived assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying amount of an
asset may not be recoverable or is impaired. No such impairments have been
identified by management at September 30, 2001.

Segment reporting

The Company follows Statement of Financial Accounting Standards No. 130,
Disclosures About Segments of an Enterprise and Related Information. The
Company operates as a single segment and will evaluate additional segment
disclosure requirements as it expands its operations.

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##### Table of Contents



American Toy Vending, Inc.
Notes

Dividends

The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid or declared since inception.

Income taxes

The Company follows Statement of Financial Accounting Standard No. 109,
Accounting for Income Taxes (SFAS No. 109) for recording the provision for
income taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability each
period. If available evidence suggests that it is more likely than not that some
portion or all of the deferred tax assets will not be realized, a valuation
allowance is required to reduce the deferred tax assets to the amount that is
more likely than not to be realized. Future changes in such valuation allowance
are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related to an
asset or liability are classified as current or non-current depending on the
periods in which the temporary differences are expected to reverse.

Recent pronouncements

The FASB recently issued Statement No. 137, Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB Statement
No. 133. The Statement defers for one year the effective date of FASB Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. The
rule now will apply to all fiscal quarters of all fiscal years beginning after
June 15, 2000. In June 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. The Statement will require the
company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income,
if the derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of derivatives will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivatives change in fair value will be
immediately recognized in earnings. The company does not expect SFAS No. 133 to
have a material impact on earning s and financial position.

In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
No. 101), which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. SAB No. 101 did not impact the
companys revenue recognition policies.

Note 2  Income taxes

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS No. 109), which
requires use of the liability method. SFAS No. 109 provides that deferred tax
assets and liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the currently
enacted tax rates applied to taxable income in the periods in which the deferred
tax assets and liabilities are expected to be settled or realized.

The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:

|                           |  |  |       |   
|-------------------------- |  |  | ----- | --
|U.S federal statutory rate |  |  | (34.0 | %)
|Valuation reserve          |  |  | 34.0  | % 
|                           |  |  |       |   
|Total                      |  |  |      | % 
|                           |  |  |       |   

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##### Table of Contents



American Toy Vending, Inc.
Notes

As of September 30, 2001, the Company has a net operating loss carryforward of
approximately $17,000 for tax purposes, which will be available to offset future
taxable income. If not used, this carryforward will expire in 2020 and 2021. The
deferred tax asset relating to the operating loss carryforward of approximately
$6,000 has been fully reserved at September 30, 2001.

Note 3  Stockholders equity

The Company is authorized to issue 50,000,000 shares of its $0.001 par value
common stock.

All references to shares issued and outstanding reflect the 10-for-1 forward
stock split effected March 25, 2000, and the 65-for-1 forward stock split
effected May 31, 2000.

On March 15, 1999, the Company issued 3,2500,000 shares of its $.001 par value
common stock to its officers as founders stock issued for services valued at
$5,000. The Company also issued 3,250,000 shares of its $.001 par value common
stock to the Companys president in exchange for an exclusive license agreement
to use skill crane control communication software owned by the Companys
president.

On April 30, 1999, the Company issued 4,485,000 shares of its $.001 par value
common stock for cash in the amount of $6,900.

There have been no other issuances of common stock.

Note 4  Going concern

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern which contemplates the recoverability
of assets and the satisfaction of liabilities in the normal course of business.
As noted above, the Company is in the development stage and, accordingly, has
not yet generated revenues from operations. Since its inception, the Company has
been engaged substantially in financing activities and developing its product
line, incurring substantial costs and expenses. As a result, the Company
incurred accumulated net losses from March 10, 1999 (inception) through the year
ended September 30, 2001 of $16,801. In addition, the Companys development
activities since inception have been financially sustained by capital
contributions.

The ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. The accompanying
financial statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets or satisfy its
liabilities.

Note 5  Related party transactions

Office space and services are provided without charge by a director and
shareholder. Such costs are immaterial to the financial statements and,
accordingly, have not been reflected therein.

The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.

On March 15, 1999, the Company issued 3,250,000 shares of its $.001 par value
common stock to the Companys president in exchange for an exclusive license
agreement to use skill crane control communication software owned by the
Companys president. The license agreement gives the Company a ten year
exclusive right to development, manufacturing, marketing, sale, sublicensing,
and any and all usages of the skill crane control communications software in the
United States and throughout the world. After twenty years, the license is
subject to automatic renewal each year thereafter, subject to written
notification, sixty days in advance of the renewal, by both parties of the
license agreement.

Note 6  Warrants and options

There are no warrants or options outstanding to acquire any additional shares of
common stock.

F-8