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

                                   FORM 10-KSB
                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED FEBRUARY 29, 2000

                                       or

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                           COMMISSION FILE NO. 0-27057

                                   DITA, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


           Nevada                                               33-0696051
-------------------------------                           ----------------------
(State or other jurisdiction of                             (I.R.S.  Employer
 incorporation or organization)                           Identification Number)



                  2214 Beverly Boulevard, Los Angeles, CA 90057
                  ---------------------------------------------
                    (Address of principal executive offices)

                                  213-368-3968
                           ---------------------------
                           (Issuer's Telephone Number)

         Securities registered under Section 12(b) of the Exchange Act:

                           Title of each class: None.

                Name of each exchange on which registered: None.

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

                          Common Stock, $0.01 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 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


<PAGE>



definitive proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year:  $875,892.

        State the  aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common  equity  was sold,  or the  average  bid and asked  price of such  common
equity,  as of a specified  date within the past 60 days:  $923,295  computed by
reference  to the  $1.50  average  of the bid and asked  price of the  Company's
Common Stock on May 12, 2000.

        State the number of shares  outstanding of each of the issuer's  classes
of common equity, as of the latest practicable date:  3,140,000 shares of Common
Stock, $0.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE

        If the  following  documents  are  incorporated  by  reference,  briefly
describe them and identify the part of the Form 10-KSB  (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders;  (3) any proxy or information  statement;  and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The list  documents  should be clearly  described  for  identification  purposes
(e.g.,  annual  report to security  holders for fiscal year ended  December  24,
1990). None.

        Transitional Small Business Disclosure Format (check one): Yes[ ] No[X]

                                        2

<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Item 1.        Description of Business ..................................     1
               Business Development .....................................     1
               Business of the Company ..................................     1
                      Products ..........................................     1
                      Raw Materials, Supplies and Manufacturing .........     2
                      Distribution Methods ..............................     3
                      Competition .......................................     3
                      Advertising and Promotion .........................     3
                      Dependence on Major Customers .....................     4
                      Patents, Trademarks and Licenses ..................     4
                      Government Approval and Regulations ...............     4
                      Year 2000 Computer Problems .......................     4
                      Research and Development ..........................     5
                      Cost of Compliance with Environmental Laws ........     5
                      Seasonality .......................................     5
                      Employees .........................................     5
                      New Products ......................................     5

Item 2.        Properties ...............................................     6

Item 3.        Legal Proceedings ........................................     6

Item 4.        Submission of Matters to a Vote of Security
                      Holders ...........................................     6

Item 5.        Market for Common Equity and Related Stockholder
                      Matters ...........................................     6
               Holders ..................................................     7
               Dividends ................................................     7
               Recent Sales of Unregistered Securities ..................     7

Item 6.        Management's Discussion and Analysis of Financial
                      Condition and Results of Operations ...............     7
               Results of Operations ....................................     7
               Sales ....................................................     8
                      Gross Margin ......................................     8
                      Selling, General and Administrative Expenses ......     8
                      Net Loss ..........................................     9
                      Balance Sheet Items ...............................     9
                      Liquidity and Outlook .............................     9
                      Possibility of a Reverse Acquisition and
                             Reorganization .............................    10

Item 7.        Financial Statements .....................................    10

Item 8.        Changes in and Disagreements With Accountants On
                      Accounting and Financial Disclosure ...............    11

Item 9.        Directors, Executive Officers, Promoters and
                      Control Persons; Compliance with
                      Section 16(a) of the Exchange Act .................    11
                      Section 16(a) Beneficial Ownership
                             Reporting Compliance .......................    13

Item 10.       Executive Compensation ...................................    13


                                        i
<PAGE>



Item 11.       Security Ownership of Certain Beneficial Owners
                      and Management ....................................    13
               Changes in Control .......................................    14

Item 12.       Certain Relationships and Related Transactions ...........    14

Item 13.       Exhibits and Reports on Form 8-K .........................    15
               (a)    Exhibits ..........................................    15
               (b)    Reports on Form 8-K ...............................    16

Signatures ..............................................................    17




                                       ii
<PAGE>



ITEM 1.        DESCRIPTION OF BUSINESS

Business Development

        Dita,  Inc. (the  "Company") was  incorporated on October 3, 1995 in the
State of Nevada.  Our original assets consisted of 4,572 sunglasses and sunglass
frames.  We raised  $185,800 in a  non-registered  public offering of our common
stock  during  the first  half of 1996 and  commenced  the  distribution  of our
sunglasses.  We initially operated out of offices in Dana Point, California.  In
April,  1997,  we moved  our  offices  to  Hollywood,  California.  We first had
revenues from operations in 1996.

Business of the Company

        The Company

        o      wholesales fashion sunglasses and optical frames;

        o      designs,  markets,  and  distributes  these  products  from   our
               Hollywood headquarters; and

       o       distributes  our  products  in  "high-end"  optical, boutique and
               department  store  accounts  throughout  the  U.S. and in Canada,
               Japan, New Zealand and Australia.  "High-end" refers to retailers
               that  offer  products  at  the  high  end  of the  price scale in
               relationship to the sunglasses market as a whole. The percentages
               of our  revenues  attributable  to sales  in these  countries are
               approximately as follows:

               o       United States - 59%
               o       Canada - 16%
               o       Japan - 14%
               o       New Zealand and Australia - 11%.

        Products
        --------

        We have two principal products -

        o      sunglasses, and

        o      optical frames.

        We offer our sunglasses in two ranges:

        o      fashion, at mid-range prices, and

        o      couture, at high-end prices.

        We offer our optical  frames in seven frame  styles and each frame style
in three colors.

                                        1

<PAGE>




        Raw Materials, Supplies and Manufacturing
        -----------------------------------------

        Our frames are 100 percent plastic. The plastic to produce the frames is
ordered  by us from the  Mazzucchelli  factory in Italy.  Mazzucchelli  supplies
approximately  60 percent of the plastic for the high-end  sunglass and eyeglass
brands in the world.

        When our plastic orders are ready for delivery,  Mazzucchelli  ships the
plastic  to sunglass  and eyeglass  manufacturers  we designate.   Our  sunglass
products are then manufactured in China  by subcontractors  selected  by Glance,
Inc.   The optical  frames are  manufactured in the U.S. by Golden Gate Optical.
Glance is an  affiliated company located  in  New York and  under the control of
Bendar  Wu,  a  director  of  Dita.   See  "Certain  Relationships  and  Related
Transactions."

        We have no  written  agreement  with any of  Mazzucchelli,  Golden  Gate
Optical or Glance.  We operate  under a standard  contractor  relationship  with
Mazzucchelli  and Golden Gate Optical.  As for  Mazzucchelli,  we order products
from its catalog.  Mazzucchelli  confirms  our purchase  orders and delivers the
products, f.o.b. Calalzo, Italy, to destinations we designate.

        We provide  each of Golden Gate  Optical and Glance with designs made by
us by hand. Each company then provides us a price for production of samples.  We
then place purchase  orders for  supplies.  Once  the samples are delivered  and
approved  by us, we submit a purchase  order for the  production  of the frames,
outlining our delivery requirements, prices and timing.

        The typical  turnaround  time for our orders is four to six  months,  as
follows:

        o      two to four months for Mazzucchelli to  manufacture and  ship the
               plastic, and

        o      one-and-a-half to two months for the assembly of the frames.

Four months is the longest period of time  Mazzucchelli has taken to manufacture
and ship to assemblers the plastic we ordered.  Despite its slowness in delivery
of plastic, Mazzucchelli is dependable.

        We purchase  more than 90 percent of our sunglass  lenses from Glance as
part of the frame that is  assembled  in China,  or we purchase  the frames from
Glance  without a lens and purchase  the lens from either of two  separate  lens
manufacturers.  The  sunglass  lens  manufacturers  that we buy from are Sola in
Florida, from whom we usually purchase directly from their stock, and

                                        2

<PAGE>



Christian Dalloz in France, from whom we purchase both from stock and on special
order.

        Distribution Methods
        --------------------

        We distribute our products through independent contractors:

        o      Planet 3 Australais, in New Zealand and Australia;

        o      Levante, in Japan;

        o      Overdrive, in Canada; and

        o      Paul Baltiste,  Jeff Chiuminatto,  and  Steven Choen, independent
               contracts  in the U.S.  who  work  under  the  direction  of  our
               in-house sales manager and of our president, Troy Schmidt.

        The international  distributors are responsible for all aspects of sales
and  marketing  in their  respective  territories.  They each  manage  their own
inventory, warranty, billings, sales and customer service departments.

        Competition
        -----------

        The fashion optical industry is highly competitive. Well- known designer
brands  such as Bausch & Lomb,  Luxottica  and Bolla  occupy a  majority  of the
sunglass  market.  We believe  that the demand for optical  frames has  somewhat
deteriorated due to the development of corrective laser eye surgery.

        Dita holds a special niche in the optical and sunglass  market.  We have
established an upscale image of fashion and innovative  style at prices that are
aggressively competitive.  We offer, for $100 to $200 at retail, sunglasses that
are  comparable in style,  quality and image to those of the leading brands that
are offered at $250 to $400 at retail. We offer optical glasses for $180 to $221
at  retail  that are  comparable  in  style,  quality  and image to those of the
leading brands that are offered at $180 to $400 at retail.

        Advertising and Promotion
        -------------------------

        The market we target and sell to  consists  of  fashion-forward  men and
women between the ages of 19 and 35 with average  household incomes from $40,000
and up. We estimate  that 65% of our products are  purchased by women and 35% by
men. Our average  customer is very concerned about fashion and usually  somewhat
educated about current  fashion.  Our designs are usually more forward than some
of our  competitors,  and the  wearer is usually  more  forward in the manner in
which she or he dresses.


                                        3
<PAGE>



        All  our  advertising  and  promotional   materials   employ   striking,
fashion-forward and edgy photography to project our image.

        We price our products  significantly lower than our competitors do. Yet,
our quality,  image and design are comparable - and sometimes  better - than the
leaders in the sunglass industry.

        We  design  our   sunglasses  to  be  extremely   wearable,   yet  still
fashionable. Our philosophy is to give the average consumer of designer products
a sunglass  product that is  fashionable,  yet  suitable for everyday  use, at a
price that is most  competitive.  We protect our upscale  image by limiting  the
retail  distribution  of our  sunglasses  to the high-end  boutiques and outlets
where sunglasses are sold.

        Dependence on Major Customers
        -----------------------------

        We are  not  dependent  on any  major  customers  in the  U.S.  However,
approximately  29 percent of our sales are  international  sales and are divided
among two customers - Levante  in  Japan - 14 percent, and Overdrive in Canada -
16 percent.

        Patents, Trademarks and Licenses
        --------------------------------

        We have registered the trademark "Dita" in the U.S. and
internationally.

        Government Approval and Regulations
        -----------------------------------

        We  need no  governmental  approval  for the  design  and  marketing  of
sunglasses  made  for us by  manufacturing  companies.  We are not  aware of any
proposed governmental regulations that would affect our operations.

        Year 2000 Computer Problems
        ---------------------------

        We have  determined  that we do not face  material  costs,  problems  or
uncertainties  about the year 2000 computer  problem.  This problem affects many
companies and  organizations and stems from the fact that many existing computer
programs  use only two  digits to  identify  a year in the date field and do not
consider the impact of the year 2000. We are newly organized, use off- the-shelf
and  easily  replaceable  software  programs,  and  have yet to  devise  our own
software programs.

        We have  been  advised  by our  manufacturers  that  they are Year  2000
compliant.  Our  worst-case  scenario  would  be that  they  are not  Year  2000
compliant and they would not be able to access information concerning our orders
or concerning their own

                                        4

<PAGE>

suppliers. Our computer system backs up all data every night. We can provide our
manufacturers  with all information  concerning our orders on a moment's notice.
As  for  a  manufacturer's   inability  to  access  information  concerning  its
suppliers,  we  would  have  to  wait  for  this  problem  to be  solved  by the
manufacturer or its suppliers.  Should a significant  delay become apparent,  we
would replace our order with a different manufacturer.

        Our contingency  plans are to produce manual invoices and packing slips,
if these are needed, and to shift our orders to other sunglass and optical glass
manufacturers if necessary and if the plastic produced for us by Mazzucchelli is
able to be diverted to other manufacturers.

        Research and Development
        ------------------------

        We  expended  approximately  $6,098 in fiscal  1999 and $1,000 in fiscal
2000 researching new materials for sunglass frames.

        Cost of Compliance with Environmental Laws
        ------------------------------------------

        There are no environmental laws that impact our operations of designing,
marketing and distributing sunglasses made for us by manufacturing companies.

        Seasonality
        -----------

        Our  sales of  sunglasses  in the U.S.,  Canada  and Japan are 50 to 100
percent  higher  in the  period  from  March to  September.  Sales are 50 to 100
percent  higher in New Zealand and  Australia  in the period from  September  to
March.

        Employees
        ---------

        We employ seven persons full time. We have no part-time employees.

        New Products
        ------------

        We have  designed  a new  handbag  line that we  propose to offer to our
sunglass accounts. We are currently talking to several manufacturers about their
producing  our line.  We are also  seeking a source of capital  to finance  such
production,  but we have not  located  the  capital.  As an  alternative  to our
raising capital to enable us to contract out the production of our handbag line,
we are also seeking a partnership with a handbag manufacturer that would produce
the handbags  with our "Dita" trade name on them and for us to distribute in the
markets we have established for our sunglasses and optical glasses.  We have not
located or identified such a prospective partner.


                                        5

<PAGE>


        We have no time frame for the commercialization of our handbag line.

ITEM 2.        PROPERTIES

        We lease  approximately  3,200 square feet of office and warehouse space
in Los Angeles,  California for a monthly rental of $3,200.  The lease is a term
lease that expires December 31, 2002.

ITEM 3.        LEGAL PROCEEDINGS

        Neither  the Company  nor our  property is a party to any pending  legal
proceeding  or  any  known   proceeding   that  a   governmental   authority  is
contemplating.

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        The Company's Common Stock is quoted on the OTC Bulletin
Board.  Its symbol is "DITA."

        During  the  last  two  calendar  years,  the  range of high and low bid
information  for our  Common  Stock  is set  forth  below.  The  source  of this
information  is the OTC Bulletin  Board.  The  quotations  reflect  inter-dealer
prices  without  markup,  markdown or commissions  and may not represent  actual
transactions.
<TABLE>
<CAPTION>

                                            High                 Low
                                            ----                 ---
        1998
        ----
<S>                                         <C>                  <C>
               1st Qtr.                     0.1875               0.1875
               2nd Qtr.                     0.21875              0.1875
               3rd Qtr.                     0.21875              0.15625
               4th Qtr.                     0.1563               0.1563

        1999
        ----
               1st Qtr.                     1.7500               0.0900
               2nd Qtr.                     1.0000               0.5000
               3rd Qtr.                     1.4375               1.0000
               4th Qtr.                     1.7500               1.2500

        2000
        ----
               1st Qtr.                     1.625                1.25
</TABLE>

        On May 12, 2000 there were 3,142,530 shares of Common Stock outstanding.
No shares  are  subject  to  outstanding  options  to  purchase,  or  securities
convertible into, such shares of stock.


                                        6
<PAGE>


Holders

        As of May 12,  2000 there  were  approximately  thirty-three  holders of
record of our Common  Stock.  Some  476,650  shares of Common  Stock are held in
brokerage accounts under the record name of "Cede & Co."

Dividends

        We have paid no cash dividends since inception,  and it is unlikely that
any  cash  dividend  will  be  paid  in the  foreseeable  future.  There  are no
restrictions that would or are likely to limit the ability of the company to pay
dividends  on its  common  stock,  but it has no plans to pay  dividends  in the
foreseeable  future  and  intends  to use  earnings  for  the  expansion  of its
business.  The  declaration in the future of any cash or stock dividends will be
at the discretion of the board depending upon the earnings, capital requirements
and financial  position of the company,  general  economic  conditions and other
pertinent  factors.  There are no dividend  restrictions held by any creditor or
other agreement to which the company is a party.

Recent Sales of Unregistered Securities

        During the last fiscal year the company sold no securities.

ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL  CONDITION AND
               RESULTS OF OPERATIONS

Results of Operations

        The following table presents, as a percentage of sales, certain selected
financial data for the two fiscal years ended February 29, 2000 and February 28,
1999:
<TABLE>
<CAPTION>

                                                          Year Ended
                                                          ----------
                                                    2-29                 2-28
                                                    2000                 1999
                                                   ------               ------

<S>                                                <C>                  <C>
        Sales                                      100.0%               100.0%
        Cost of sales                               42.9                 47.2
                                                   -----                -----
        Gross margin                                57.1                 52.8
        Selling, general and
          administrative
          expenses                                  72.1                 73.9
                                                   -----                -----

        Net income (loss)                          (15.0)               (21.1)

        Sales
</TABLE>

        Sales  decreased  slightly to $875,892 in the fiscal year ended February
29, 2000 from $882,921 in the fiscal year ended

                                        7
<PAGE>


February 28, 1999, a decrease of less than one percent.  Of  significance is the
increase in  international  sales of  $166,113 - from  $180,329  in FY 1999,  or
an increase of 92 percent in international sales,  to  $346,442,  or  40 percent
of  total  sales  in FY 2000.  Boutique  sales  remained  fairly  constant,  but
optical sales decreased from $438,131 in FY 1999 or  49.6 percent of total sales
to $258,351 in FY 2000 or 29.5 percent of total sales.

        We are not  exposed to currency  risks with regard to our  international
sales,  which  account  for  approximately 39.6 percent of our sales.   All  our
contracts are  expressed in U.S.  dollars and require  payment in U.S.  dollars.
However,  we generally discount our prices by approximately 50 percent for sales
made to Australia and New Zealand,  due to the high price our distributor  there
has to pay for the U.S. dollar and due to high sales taxes in effect there. This
results  in a lower  gross  margin  on sales  made in Austrialia and New Zealand
than on sales in Japan, Canada and the U.S.

        Gross Margin
        ------------

        Gross margin  improved to $500,557,  or 57.1 percent of sales, in fiscal
year 2000 from  $465,889,  or 52.8  percent of sales,  in fiscal  year 1999,  an
improvement    of   4.3   percent.    This    improvement   is   attributed   to
the negotiation of lower product cost with the company's major supplier, Glance,
Inc.

        Selling, General and Administrative Expenses
        --------------------------------------------

        Selling,  general and  administrative  expenses decreased to $631,645 in
fiscal year 2000,  or 72.1 percent of sales,  from $652,159 in fiscal year 1999,
or 73.9 percent of sales.  The decrease  reflects a preponderance of significant
decreases over significant increases in line item expenses, as follows:
<TABLE>
<CAPTION>

                                                              Fiscal Year
        Operating Expenses                                2000           1999
        ------------------                              --------       --------

        Decreases:
<S>                                                     <C>            <C>
               Bad debt                                 $  8,458       $ 35,827
               Equipment rental                            5,320         10,066
               Freight out                                17,180         25,482
               Postage and delivery                        2,093          8,203
               Printing and reproduction                     877         18,306
               Research and development                    1,017          6,098
               Telephone                                  15,662         20,447

        Increases:
               Auto                                       18,622            117
               Interest expense                           34,658         15,687
               Office expenses and supplies               22,622         13,358
               Professional fees                          50,960         33,822
</TABLE>

                                        8
<PAGE>


        Net Loss
        --------

        We had a net loss from operations in fiscal year 2000 of $131,088, or 15
percent of sales and $0.04 a share of our common  stock.  In fiscal year 1999 we
had a net loss from operations of $186,270, or 21.1 percent of sales and $0.06 a
share of common stock.

        Balance Sheet Items
        -------------------

        Our current  assets  decreased  from  $284,455 at the end of fiscal year
1999 to  $241,212  at the end of fiscal  year 2000 and  represented  a much less
liquid financial  posture.  Cash was reduced from $121,516 to $17,234.  Accounts
receivable were reduced from $71,249 to $60,283.  Prepaid  expenses were reduced
from $20,103 to $1,697. Inventory, however, increased from $71,587 to $161,998.

        None of the $161,998 in  inventory  represented sales awaiting delivery.

        Accounts payable and accrued expenses increased from $209,578 at the end
of fiscal year 1999 to $283,783 at the end of fiscal year 2000.

        Liquidity and Outlook
        ---------------------

        We have  been  able to stay in  operation  only (1)  from  the  services
provided by Glance,  Inc., a  manufacturer  of  sunglasses  under the control of
Bendar Wu, the  chairman  of our board of  directors,  which  company  funds and
warehouses a  considerable  portion of our  inventory  and (2) from the proceeds
realized from the sale of capital stock.

        With respect to the sales of stock,  we covered our loss from operations
in fiscal 1999 by the sale of $200,000 in capital stock.  In fiscal 1999 we also
borrowed  $19,000  on our bank line of credit and  increased  this to $25,113 in
fiscal 2000.

        Glance  provides  liquidity as follows:  standard  payment  terms in our
industry are to provide a secured letter of credit to the  manufacturer  for the
entire amount of a purchase order  submitted.  The letter of credit matures upon
the manufacturer's  shipment of the product. Glance requires no letter of credit
or deposit of any type to secure a purchase  order from us. In addition,  Glance
takes shipment of the inventory ordered and warehouses it until we need it. Once
we order the inventory to be delivered from Glance's warehouse,  we have 30 days
to pay for it.

        We perceive our long-term solution to our continuing losses
to be an improvement in our gross margin.  The essential services

                                        9

<PAGE>



provided by Glance,  Inc. come at a cost to us - they increase our cost of goods
sold from 20 to 30 percent  above  industry  standard.  Yet, it is impossible to
dispense with these  services  without the cash to pay for and warehouse all our
inventory. We are working on obtaining lines of credit from lending institutions
that cater to small businesses.  When we have exhausted these possibilities,  we
will attempt to obtain capital through the sale of shares of common stock.

        Unfortunately,  our inability to demonstrate profitable operations makes
it difficult to sell capital  stock.  At this time, we have not  identified  the
sources of additional  lines of credit or of equity capital we need to break out
of our  dilemma.  Short term,  we need to increase  our bank line of credit from
$45,000 to  approximately  $100,000  to help pay for the  implementation  of new
prescription glasses lines.

        Long  term,  we  need an  additional  line of  credit  of  approximately
$150,000 to decrease our dependence on Glance, Inc.
and thereby improve our profit margins.

        Possibility of a Reverse Acquisition and Reorganization
        -------------------------------------------------------

        We have been approached by several development-stage  companies that are
interested  in acquiring  our  corporate  shell.  Each proposes that our present
sunglasses  business either be spunoff to our shareholders or sold,  leaving the
company as a trading  public shell.  Our management is open to the proposals but
none of the  development-stage  companies  has  secured  adequate  financing  or
commenced  meaningful  operations.  Until  such  occurs,  there  is no  point in
negotiating a contract with a company that is not viable.


                                       10
<PAGE>






Board of Directors
Dita, Inc.
Los Angeles, California


We have audited the accompanying balance sheets of Dita, Inc. as of February 29,
2000  and  February  28,  1999,  and  the  related   statements  of  operations,
stockholders'  equity  (deficit) and cash flows for the years then ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Dita, Inc. as of February 29,
2000 and February 28, 1999, and the results of its operations and its cash flows
for the years then ended,  in  conformity  with  generally  accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. As shown in the financial  statements,
the Company has incurred  net losses from  operations,  has negative  cash flows
from  operations  and  has  a  net  capital  deficiency.   These  factors  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in regard to these  matters  are also  described  in Note 1.
These  financial  statements  do not  include  any  adjustments  that  might  be
necessary should the Company be unable to continue as a going concern.




/s/Stonefield Josephson, Inc.
----------------------------------
CERTIFIED PUBLIC ACCOUNTANTS

Santa Monica, California
April 11, 2000

                                      F-1
<PAGE>


                                   DITA, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                     February 29,   February 28,
                    ASSETS                               2000           1999
                                                     ------------   ------------

Current assets:
<S>                                                  <C>            <C>
  Cash                                               $    17,234    $    65,822
  Cash - restricted                                            -         55,694
  Accounts receivable - trade, net of allowance
    for doubtful accounts of $27,363 and $37,160,
    respectively                                          60,283         71,249
  Inventory                                              161,998         71,587
  Prepaid expenses                                         1,697         20,103
                                                     -----------    -----------

          Total current assets                           241,212        284,455

Property and equipment, net of
  accumulated depreciation and amortization               68,333         87,732

Other assets                                               3,396          2,434
                                                     -----------    -----------

                                                     $   312,941    $   374,621
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable and accrued expenses             $    283,783    $   209,578
  Advances from officers-stockholders                     23,474         36,531
  Note payable, bank                                      25,113         19,000
  Current maturities of obligations under
    capital lease                                         16,241         14,600
                                                    ------------    -----------

          Total current liabilities                      348,611        279,709
                                                    ------------    -----------

Obligations under capital lease,
  less current maturities                                  1,628        17,869
                                                    ------------    -----------

Note payable                                              16,747             -
                                                    ------------    -----------

Stockholders' equity (deficit):
  Common stock; $.01 par value, 10,000,000
    shares authorized, 3,140,000 shares issued
    and outstanding                                       31,400        31,400
  Additional paid-in capital                             613,339       613,339
  Deficit                                               (698,784)     (567,696)
                                                    ------------   -----------

          Total stockholders' equity (deficit)           (54,045)       77,043
                                                    ------------   -----------

                                                    $    312,941   $   374,621
                                                    ============   ===========
</TABLE>

See accompanying independent auditors' report and notes to financial statements.

                                      F-2
<PAGE>

                                   DITA, INC.

                            STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>

                                     Year ended                Year ended
                                  February 29, 2000         February 28, 1999
                                  -----------------         -----------------
                                 Amount      Percent      Amount       Percent
                                 ------      -------      ------       -------
<S>                             <C>            <C>      <C>              <C>
Net sales                       $   875,892    100.0%   $   882,921      100.0%

Cost of sales                       375,335     42.9        417,032       47.2
                                -----------  -------    -----------     ------

Gross profit                        500,557     57.1        465,889       52.8

Operating expenses                  631,645     72.1        652,159       73.9
                                -----------  -------    -----------     ------

Net loss                        $  (131,088)   (15.0)%  $  (186,270)     (21.1)%
                                ===========  =======    ===========     ======


Net loss per share -
  basic and diluted             $     (0.04)            $     (0.06)
                                ===========             ===========

Weighted average shares
  outstanding - basic
  and diluted                     3,140,000               2,980,000
                                ===========             ===========
</TABLE>

See accompanying independent auditors' report and notes to financial statements.

                                      F-3
<PAGE>

                                   DITA, INC.

                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

               YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999

<TABLE>
<CAPTION>

                                                                 Additional                  Total
                                              Common stock         paid-in                stockholders'
                                              ------------
                                          Shares      Amount       capital     Deficit   equity/(deficit)
                                          ------      ------       -------     -------   ----------------

<S>                                    <C>          <C>         <C>          <C>            <C>
Balance at March 1, 1998               2,740,000    $  27,400   $  417,339   $ (381,426)    $  63,313

Issuance of common stock                 400,000        4,000      196,000                    200,000

Net loss for the year ended
  February 28, 1999                                                            (186,270)     (186,270)
                                      ----------    ---------   ----------   ----------     ---------

Balance at February 28, 1999           3,140,000       31,400      613,339     (567,696)       77,043

Net loss for the year ended
  February 29, 2000                                                            (131,088)     (131,088)
                                      ----------    ---------   ----------   ----------     ---------

Balance at February 29, 2000           3,140,000    $  31,400   $  613,339   $ (698,784)    $ (54,045)
                                      ==========    =========   ==========   ==========     =========
</TABLE>

See accompanying independent auditors' report and notes to financial statements.

                                      F-4
<PAGE>

                                   DITA, INC.

                            STATEMENTS OF CASH FLOWS

                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


                                                      February 29,  February 28,
                                                          2000          1999
                                                      ------------  ------------
Cash flows provided by (used for)
  operating activities:
    Net loss                                          $  (131,088)   $ (186,270)
                                                      -----------    ----------

  Adjustments to reconcile net loss to
    net cash provided by (used for)
    operating activities:
      Depreciation and amortization                        22,158        22,249
      Provision for doubtful accounts                       8,458        35,827

Changes in assets and liabilities:
    (Increase) decrease in assets:
        Accounts receivable                                 2,508         4,669
        Inventory                                         (90,411)       (6,866)
        Prepaid expenses                                   18,405       (19,053)

    Increase (decrease) in liabilities -
        accounts payable and accrued
        expenses                                           74,207        52,354

          Total adjustments                                35,325        89,180
                                                      -----------    ----------

          Net cash used for operating
            activities                                    (95,763)      (97,090)
                                                      -----------    ----------

Cash flows used for investing activities:
  Acquisition of property and equipment                    (2,759)      (22,761)
  Increase in other assets                                   (963)            -
                                                      -----------    ----------

          Net cash used for investing activities           (3,722)      (22,761)
                                                      -----------    ----------

Cash flows provided by (used for) financing activities:
  (Payments on) advances from officer-stockholders        (13,057)        8,013
  (Payments on) proceeds from note payable, bank            6,113        19,000
  Proceeds from other current liabilities                       -         5,519
  (Payments on) obligations under capital lease           (14,600)       (8,971)
  Proceeds from note payable                               16,747             -
  Proceeds from issuance of common stock                        -       200,000
                                                      -----------    ----------

          Net cash provided by (used for)
            financing activities                           (4,797)      223,561
                                                      -----------   -----------

Net increase (decrease) in cash                           (48,588)       48,016
Net increase (decrease) in cash - reserve                 (55,694)       55,694
Cash, beginning of year                                   121,516        17,806
                                                      -----------    ----------

Cash, end of year                                     $    17,234    $  121,516
                                                      ===========    ==========

Supplemental disclosure of cash flow information:
    Income taxes paid                                 $       800    $      800
                                                      ===========    ==========
    Interest paid                                     $    34,658    $   15,687
                                                      ===========    ==========

Supplemental disclosure of non-cash financing
  activities -
    capital lease obligation incurred for use
    of equipment                                      $        -     $   15,232

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

See accompanying independent auditors' report and notes to financial statements.

                                      F-5
<PAGE>


                                   DITA, INC.

                          NOTES TO FINANCIAL STATEMENTS

               YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999


(1)   Summary of Significant Accounting Policies:

      Going Concern:

            The Company's financial  statements are prepared using the generally
            accepted accounting principles applicable to a going concern,  which
            contemplates   the   realization   of  assets  and   liquidation  of
            liabilities  in the  normal  course of  business.  The  Company  has
            negative cash flows from operations.  This factor raise  substantial
            doubt about the Company's ability to continue as a going concern.

            Management  recognized  that the Company  must  generate  additional
            resources  to enable it to  continue  operations.  The Company has a
            revolving  line of credit  through  their bank to be used as working
            capital.  Further,  the Company is in the process of  negotiating to
            sell its  corporation  to a third  party.  There can be no assurance
            that the Company will achieve  profitability  or positive cash flow.
            If  management is unable to achieve  profitability  or positive cash
            flow, the Company will not be able to meet its  obligations and will
            have to cease operations.

      Business Activity:

            The Company is a wholesaler of unique,  alternative  and fashionable
            women's  sunglasses  and sells to  retailers  throughout  the United
            States, Japan and Europe.

      Use of Estimates:

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

      Fair Value:

            Unless otherwise  indicated,  the fair values of all reported assets
            and liabilities which represent financial instruments (none of which
            are held for trading  purposes)  approximate  the carrying values of
            such amounts.

      Cash:

            Equivalents
            -----------

            For  purposes  of the  statement  of cash  flows,  cash  equivalents
            include all highly liquid debt instruments with original  maturities
            of  three  months  or less  which  are not  securing  any  corporate
            obligations.

            Concentration
            -------------

            The Company  maintains its cash in bank deposit  accounts  which, at
            times,  may exceed  federally  insured  limits.  The Company has not
            experienced any losses in such accounts.


                                      F-6

See accompanying independent auditors' report.
<PAGE>


                                   DITA, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

               YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999


(1)   Summary of Significant Accounting Policies, Continued:

      Inventory:

            Inventory is valued at the lower of cost  (first-in,  first-out)  or
market.

      Income Taxes:

            Deferred  income  taxes are  reported  using the  liability  method.
            Deferred  tax  assets  are  recognized   for  deductible   temporary
            differences  and deferred tax liabilities are recognized for taxable
            temporary  differences.  Temporary  differences  are the differences
            between the reported amounts of assets and liabilities and their tax
            bases.  Deferred  tax assets are  reduced by a  valuation  allowance
            when, in the opinion of management,  it is more likely than not that
            some portion or all of the deferred tax assets will not be realized.
            Deferred tax assets and  liabilities are adjusted for the effects of
            changes  in tax laws and  rates on the date of  enactment  (see Note
            10).

      Recent Accounting Pronouncements Effective Subsequent to 1998:

            In June 1998, the United States Financial Accounting Standards Board
            (FASB) issued SFAS No. 133,  "Accounting for Derivative  Instruments
            and Hedging  Activities",  the effective date for which was deferred
            by SFAS No. 137 until  fiscal years  beginning  after June 15, 1999.
            The Company  anticipates  that due to its limited use of  derivative
            instruments,  the  adoption of SFAS No. 133 will not have a material
            effect on its financial statements.


(2)   Major Customers:

      Total sales to two customers  amounted to  approximately  $256,000 for the
      year ended February 29, 2000.  Included in accounts receivable at February
      29, 2000 is approximately  $5,000 due from these customers.  There were no
      major customers for the year ended February 28, 1999.


(3)   Property and Equipment:

<TABLE>
<CAPTION>
                                                   February 29,     February 28,
                                                       2000             1999
                                                   ------------     ------------

<S>                                                <C>              <C>
            Display cases                          $    73,854      $    73,854
            Computers and software                      34,939           34,939
            Furniture and fixtures                       9,670            9,670
            Leasehold improvements                       2,000                -
                                                   -----------       ----------

                                                       120,463          118,463
            Less accumulated depreciation
              and amortization                          52,130           30,731
                                                   -----------       ----------

                                                   $    68,333       $   87,732
                                                   ===========       ==========
</TABLE>

                                      F-7

See accompanying independent auditors' report.
<PAGE>


                                   DITA, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

               YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999


(4)   Advances from Officer-Stockholders:

      This  amount  represents  the  unpaid  balance  of  non-interest   bearing
      short-term advances received from officer-stockholders.  Such advances are
      unsecured and payable on demand.


(5)   Note Payable, Bank:

      The  Company  has a line of credit  with its bank in the amount of $35,000
      and is  unsecured.  As of  February  29,  2000,  the line of credit  had a
      remaining balance in the amount of $25,113.

      Interest  paid on all  corporate  borrowings,  exclusive of related  party
      interest and other bank interest amounted to $3,912 and $798 for the years
      ended February 29, 2000 and February 28, 1999, respectively.


(6)   Obligations under Capital Lease:

      The Company leases computer  equipment,  software,  lens cutters and trade
      show booths  under the terms of a capital  lease,  which is secured by the
      related equipment costing $41,440. The following is a schedule by years of
      future minimum lease payments required under the capital leases,  together
      with the present value of the net minimum lease payments:
<TABLE>
<CAPTION>

                                                   February 29,     February 28,
                                                       2000             1999
                                                   -----------      ------------
            Year ending:
<S>                                                <C>              <C>
                February 29, 2000                  $        -       $    14,600
                February 28, 2001                      16,241            16,431
                February 28, 2002                       1,628             1,438
                                                   ----------        ----------

            Present value of minimum
              lease payments                           17,869            32,469
            Less current maturities                    16,241            14,600
                                                   ----------        ----------

                                                   $    1,628        $   17,869
                                                   ==========        ==========
</TABLE>

      Interest expense  for the  years ended  February 29, 2000 and February 28,
      1999 amounted to $4,559 and $3,492, respectively.


(7)   Note Payable:

      Note  payable  is  non-interest  bearing  and is due  upon the sale of the
corporation.

                                      F-8

See accompanying independent auditors' report.
<PAGE>

                                   DITA, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

               YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999




(8)   Related Party Transactions:

      The Company's principal supplier of sunglasses is also a shareholder and a
      member  of the  Board of  Directors.  Total  product  purchased  from this
      supplier  for the year ended  February  29, 2000 and February 28, 1999 was
      $339,997 and $313,746, respectively. Accounts payable and accrued expenses
      at February 29, 2000 and  February 28, 1999 include  $229,807 and $131,162
      payable to this supplier,  respectively. The Company also pays interest on
      outstanding accounts payable balances at a rate of 1.25% per month to this
      related party.


(9)   Income Taxes:

      For federal  income tax return  purposes,  the Company has  available  net
      operating loss carryforwards of approximately $687,000 and $556,000, which
      expire through 2014 and 2013 and are available to offset future income tax
      liabilities  for the years ended  February 29, 2000 and February 28, 1999,
      respectively.

      Temporary   differences  which  give  rise  to  deferred  tax  assets  and
      liabilities at February 28, 1999 are as follows:
<TABLE>
<CAPTION>

                                                   February 29,     February 28,
                                                       2000             1999
                                                   ------------     ------------

<S>                                                <C>              <C>
            Net operating loss carryforwards       $   274,835      $   226,548
            Valuation allowance                       (274,835)        (226,548)
                                                   -----------      -----------

                 Net deferred taxes                $         -      $         -
                                                   ===========      ===========
</TABLE>


(10)  Commitments and Other:

      The  following is a schedule by years of future  minimum  rental  payments
      required under an operating lease that has a noncancellable  lease term in
      excess of one year as of February 29, 2000:
<TABLE>
<CAPTION>

            Year ending February 28,
<S>                                                <C>
                2001                               $    36,720
                2002                                    30,600
                                                   -----------

                                                   $    67,320
                                                   ===========
</TABLE>

      Rent amounted to $28,375 and $24,518 for the years ended February 29, 2000
      and February 28, 1999, respectively.

      A deposit consisting of $3,060 was paid upon signing of the lease.

      Advertising Costs

      Advertising expense for the years ended February 29, 2000 and February 28,
      1999 amounted to $92,809 and $33,491, respectively.

                                      F-9

See accompanying independent auditors' report.
<PAGE>

                                   DITA, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

               YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999




(11)  Subsequent Event:

      The Company is in the process of negotiating to sell its  corporation to a
      third party.  As of April 11, 2000, no  negotiations  have been finalized.
      Upon  completion of the proposed  sale,  the Company will  reorganize  and
      continue to operate under a different entity.


                                      F-10

See accompanying independent auditors' report.
<PAGE>



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

        There  has  been  no  change  in  the  company's  principal  independent
accountant during the last two fiscal years.

ITEM 9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
               PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
               ACT

        The company's  directors,  officers and significant  employees occupying
executive officer positions, their ages as of May 15, 2000, the directors' terms
of office and the period each director has served are set forth in the following
table:
<TABLE>
<CAPTION>
                                                                      Director's
                                                       Director          Term
   Person             Positions and Offices              Since          Expires
   ------             ---------------------            --------       ----------

<S>                   <C>                                 <C>             <C>
Bendar Wu, 54         Chairman of the Board               1996            2000
                      of Directors

Troy Schmidt, 34      President and Director              1996            2000

Jeff Solorio, 30      Secretary, Director of              1996            2000
                      Operations, and Director

Micky Dhillon, 34     Director                            1998            2000

John Juniper, 30      Director of Marketing, and          1996            2000
                      Director
</TABLE>

        BENDAR WU. Mr. Wu has been in the optical  industry for over 23 years as
        ---------
a distributor or manufacturer. Mr. Wu is the founder, owner and is the president
of Glance  Eyewear,  a  worldwide  distributor  of  eyewear  with  annual  sales
exceeding $20 million.  The company has been in business for over fifteen years.
Glance has  manufactured  eyewear  for  companies  such as J. Crew,  Limited and
Nordstrom.  Mr. Wu received a law decree in Taiwan at Soo Chow University and an
MBA from Wager College in New York.

        TROY SCHMIDT.  For five years prior to starting Dita,  Inc., Mr. Schmidt
        ------------
managed a better than $53 million  real  estate  portfolio  owned by Ox Pierside
Corporation,  Haseko Marina Development Inc., Shin-Ei  Corporation and Echo Usa.
Mr.  Schmidt  has  extensive   experience  in  financial   management  including
budgeting,  accounting  and cash  flow  management,  implementation  of  expense
minimization   procedures,   collection  and  collection-   related  litigation,
inventory  control,  financial  reporting  and  supervision  of  investment  and
operation accounts. Mr. Schmidt received a degree in business management with an
emphasis  in finance  from Point Loma  Nazarene  College in 1990.  Over the last
three and a half years Mr.  Schmidt  has acted as a director  and  president  of
Dita, Inc. Mr. Schmidt's responsibilities include

                                       11

<PAGE>



financial  management,  supervision  of the Dita staff,  corporation  direction,
product,  pricing,  securing new investment and alternative sources of cash flow
to fund growth,  overseeing  all company  operations,  product  development  and
design, and management of both domestic and international sales.

        JEFF  SOLORIO.  Prior to starting Dita Mr.  Solorio  founded a marketing
        -------------
firm,  Hollywood died Independence.  Mr. Solorio acted as president of Hollywood
died Independence for three years and produced creative marketing  materials for
companies such as Rusty, Capital Distribution (Spare, Ezekiel, Blond) and Herbie
Fletcher.  Mr.  Solorio  also  provided  film  production  and  other  marketing
materials for action sports related companies such as Rusty,  Morrow Snowboards,
Purged Snowboards,  Lib-Tech, Herbie Fletcher, Capital Distribution,  Black Flys
and Arnet. Mr. Solorio's marketing and promotional work has won several industry
awards. Over the last three and a half years Mr. Solorio has acted as a director
and vice  president of operations  of Dita,  Inc. Mr.  Solorio's  duties at Dita
include  inventory  management,  product  development and design,  processing of
accounts  payable,  management  of warehouse  staff,  processing  of payroll and
pricing.

        MICKY DHILLON.  Mr. Dhillon is the founder of, and has been the chairman
        -------------
of the board of directors and chief  executive  officer of, Main Street  Trading
Company for the past eight  years.  Main Street  Trading  Company is a privately
held, Mission Viejo,  California based,  retail commodities  brokerage firm with
more than 260  employees.  Mr. Dhillon  provides  guidance to the directors with
respect to financial growth, cash flow management and new sources of funding.

        JOHN JUNIPER.  Prior to joining Dita,  Mr. Juniper was employed by Crown
        ------------
Distribution  and  was  responsible  for  creating  and  implementing  marketing
programs and sales materials for Crown Distribution's family of companies, which
included  Purged  Snowboards,  BPS  Binding  Company,  Mantle  Snowboards,  1159
Snowboards,  Dynamics  Sled  Manufacturing  and  Holly  Grail  Productions.  Mr.
Juniper's  responsibilities included all advertising concepts, design and layout
of advertisements, selection of models, photographers, cinematographers, graphic
artists,  photography and coordination of media publication  advertisements.  He
produced over 150 full-page color advertisements and editorials in both national
and  international  publications  in a  twelve-month  period.  In addition,  Mr.
Juniper is a freelance  photographer and has worked with action sports companies
including Morrow Snowboards,  Black Flys, Evol Casuals,  Blond, Spare,  Ezekiel,
Original Sin and Rusty Clothes. Over the last three and a half years Mr. Juniper
has acted as a director  and vice  president  of  marketing  for Dita,  Inc. Mr.
Juniper's  duties at Dita as marketing  director  include  development of annual
advertising campaigns, selection of photographers, models,

                                       12

<PAGE>



stylists,  hair and makeup artists,  development of company catalogs,  print and
outdoor ads, selection of graphic artists and development of all mailers,  trade
show invitations, public relations and product development and design.

        Section 16(a) Beneficial Ownership Reporting Compliance
        -------------------------------------------------------

        There was no person who, at any time during the 2000 fiscal year,  was a
director,  officer or  beneficial  owner of more than ten  percent of our common
stock,  and who failed to file on a timely  basis  reports  required  by Section
16(a) of the 1934  Exchange Act during fiscal year 1999, as disclosed on Forms 3
and 4 and  amendments  thereto  furnished  to our  company  under the SEC's Rule
16a-3(c) during fiscal year 1999 and Forms 5 and amendments thereto furnished to
our company  with  respect to fiscal  year 1999 and any written  representations
furnished to our company.

ITEM 10.       EXECUTIVE COMPENSATION

        Set forth below is the aggregate  compensation during fiscal years 1998,
1999 and 2000 of the chief executive officer of the Company.  During the period,
no  executive  officer  of  the  Company  received  compensation  that  exceeded
$100,000.
<TABLE>
<CAPTION>
                              Fiscal                Annual           Other
       Name                    Year                 Salary        Compensation
       ----                   ------                ------        ------------

<S>                             <C>                <C>                <C>
   Troy Schmidt,                2000               $45,000            None
   President
                                1999               $45,000            None

                                1998               $45,000            None
</TABLE>

        During the last three fiscal years, no executive  officer of the company
has been granted  stock  options or stock  appreciation  rights and no executive
officer,  other than its  president,  Troy  Schmidt,  has been granted  stock in
exchange for services.  The company has no long-term  incentive plan intended to
serve as incentive for performance to occur over a period longer than one fiscal
year.

        Directors of the company receive no  compensation  for their services as
directors.

ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT

        The table below sets forth,  as of May 10, 2000, the number of shares of
common stock of the company  beneficially  owned by each officer and director of
the  company,  individually  and as a  group,  and by each  person  known to the
company  to be the  beneficial  owner of more than five  percent  of the  common
stock.

                                       13
<PAGE>



<TABLE>
<CAPTION>

                                           Number of
                                           Shares of
        Name and Address                  Common Stock         Percent
        ----------------                  ------------         -------

<S>                                         <C>                   <C>
        Bendar Wu                             650,000             20.7
        384 East Shore Road
        Great Neck, NJ 11024

        Troy Schmidt                          325,000             10.4
        942 Alandale Avenue
        Los Angeles, CA 90036

        Jeff Solorio                          576,000             18.4
        336 North Sycamore Avenue
        Los Angeles, CA 90036

        Micky Dhillon(1)                      400,000             12.7
        6 Liberty
        Aliso Viejo, CA 92656

        John Juniper                          576,000             18.4
        336 North Sycamore Avenue
        Los Angeles, CA 90036

        Officers and Directors              2,527,000             80.5
        as a group (5 persons)
        -------------------------
</TABLE>

        (1)    These  shares  are owned of record  by the Micky  Dhillon  Trust,
               which is under the control of Micky Dhillon.

Changes in Control

        There are no arrangements which may result in a change in control of the
Company.

ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        We buy a  substantial  portion of our  inventory  from  Glance,  Inc., a
manufacturing  company under the direction of and owned by Bendar Wu, a director
and major stockholder of the Company.  Due to our lack of sufficient  capital to
pay for inventory and then warehouse it, Glance, Inc.  manufactures our sunglass
orders in China, pays for the product when it arrives in the U.S. and warehouses
the product for us until the product is needed.

        When we need the product,  we place  orders for it with  Glance.  Glance
ships the product to us and bills us net, 30 days for each invoice.  In exchange
for Glance's  funding and  warehousing  these  inventories,  Glance charges us a
premium.  This  premium  increases  our cost of goods sold from 20 to 30 percent
above industry standard. Our purchases from Glance in fiscal

                                       14

<PAGE>



year  1999  were  $313,746   and  in  fiscal  year  2000  were   $337,122.   Our
accounts  payable and accrued  expenses  owed to Glance at fiscal  year-end 1999
were $131,162 and at fiscal year-end  2000 were  $229,806.  The interest rate we
pay on outstanding payable balances to Glance is fifteen percent a year.

        Mr. Bendar Wu advises us that he has no economic  interest in any of the
manufacturers he chooses to manufacture sunglasses or frames. He further advises
us that his  dealings  with such  manufacturers  are at arm's  length and do not
involve  any  rebate to him of the  amounts  paid  them for their  manufacturing
efforts.

        These  transactions  with Glance are as fair to us as we could make with
an  unaffiliated  party. A leading  manufacturer  of eyewear  advises us that we
cannot get comparable terms anywhere.

        In 1997 we  obtained  $100,000  in equity  capital  from  Bendar Wu, the
chairman of our board of directors then and now. He purchased  425,000 shares of
our common  stock at a price of $0.24 a share.  At the time of the  transaction,
our common stock was trading only  sporadically and in a price range of $0.25 to
$0.5625.  He was given a discount  from the market price due to the fact that he
was purchasing "restricted securities" and could not transfer them for value for
one year. We could not have sold these securities to any other person we knew at
that time.

        In 1998 we obtained  $200,000 in equity capital from Micky  Dhillon,  an
owner of a commodities market brokerage firm and a friend of two of our officers
and  directors,  Jeff Solorio and John Juniper.  Mr. Dhillon  purchased  400,000
shares of our common  stock at a price of $0.50 a share,  which  price was above
the  prevailing  market price.  Mr. Dhillon agreed to pay this premium under the
condition  that he be elected a director of the company and under the assumption
that his purchase of 400,000  shares in the open market would cause the stock to
jump to a price far higher than $0.50 a share.

ITEM 13.       EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

        The following exhibits are filed as part of this Form 10-KSB:

        Exhibit No.                       Description
        -----------                       -----------

           3             -      Articles of Incorporation of Dita, Inc.*

           3.1           -      Bylaws of Dita, Inc.*

          10             -      Dita, Inc. Distributor Agreement of
                                September 1, 1999, between Dita, Inc. and

                                       15
<PAGE>


                                Levante, a representative distributorship
                                agreement of the Registrant**

          27             -      Financial Data Schedule

*    Previously filed with Form 10-SB; Commission File No. 0-27057, incorporated
     herein by reference.

**   Previously filed with Amendment No. 1 to Form 10- SB;   Commission File No.
     0-27057, incorporated herein by reference.

(b)  Reports on Form 8-K

        None

                                       16

<PAGE>


                                   SIGNATURES

        In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant  caused this to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                        BAD TOYS, INC.



Date:  May 30, 2000                        By /s/ Troy Schmidt
                                           -------------------------------------
                                           Troy Schmidt, President

        In accordance  with the Exchange Act, this report has been signed by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.



Date:  May 30, 2000                     /s/ Troy Schmidt
                                        ----------------------------------------
                                        Troy Schmidt, Chief Financial
                                        Officer and Director



Date:  May 30, 2000                     /s/ Bendar Wu
                                        ----------------------------------------
                                        Bendar Wu, Director



Date:  May 30, 2000                     /s/ Jeff Solorio
                                        ----------------------------------------
                                        Jeff Solorio, Secretary and Director



Date:  May 30, 2000                     /s/ John Juniper
                                        ----------------------------------------
                                        John Juniper, Director



Date:  May ____, 2000
                                        ----------------------------------------
                                        Micky Dhillon, Director


                                       17