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 December 31, 2003

                                       or

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

For the transition period from ______________ to _________________


                        Commission file number: 000-29611


                          THE CHILDREN'S INTERNET, INC.
                          -----------------------------
           (Name of Small Business Issuer as specific in its Charter)


                    NEVADA                                 88-0370247
                    ------                                 ----------
        (State or Other Jurisdiction of                 (I.R.S. Employer
        Incorporation or Organization)                 Identification No.)


2401 CROW CANYON RD., SUITE 201, SAN RAMON, CA                94583
----------------------------------------------                -----
   (Address of Principal Executive Offices)                 (Zip Code)


         Issuer's telephone number, including area code: (925) 406-2364

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

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

                          COMMON STOCK, $.001 PAR VALUE
                          -----------------------------
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein,  and will not be contained herein, 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[ ]

For the fiscal year ended December 31, 2003, the Company's revenue was $0.00.

<PAGE>


As of March 10,  2004,  the  number of shares of Common  Stock  outstanding  was
2,287,755.  The  aggregate  market value of the  Company's  Common Stock held by
non-affiliates  as of March 10, 2004 was $-0- as the  Company's  Common Stock is
not presently quoted or trading on any quotation system or exchange.


                       DOCUMENTS INCORPORATED BY REFERENCE

The following  documents  are  incorporated  herein by  reference:  Registration
Statement on Form SB-2, filed on February 10, 2003, as amended (Registration No.
333-103072) is incorporated in Part IV, Item 13(a).

<PAGE>


                                TABLE OF CONTENTS
                                -----------------
                                                                           PAGE
                                                                           ----
ITEM 1   DESCRIPTION OF BUSINESS..........................................    1

ITEM 2   DESCRIPTION OF PROPERTY..........................................    5

ITEM 3   LEGAL PROCEEDINGS................................................    6

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............    6

ITEM 5   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS .............................................    6

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

ITEM 7   FINANCIAL STATEMENTS.............................................   17

ITEM 8   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE .............................   18

ITEM 8A  CONTROLS AND PROCEDURES..........................................   18

ITEM 9   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
         PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT ......   18

ITEM 10  EXECUTIVE COMPENSATION...........................................   20

ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...   22

ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................   22

ITEM 13  EXHIBITS AND REPORTS ON FORM 8K..................................   24

ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES...........................   24

SIGNATURES ...............................................................   25


                                        i

<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

BUSINESS DEVELOPMENT

We were  incorporated  in  the State of Nevada on  September  25, 1996 as D.W.C.
Installations.  We changed our name to The Children's Internet, Inc. on December
27, 2002.  We are a development  stage  company and currently  have no revenues,
only minimal assets, and have incurred losses since our inception.

On July 3, 2002, Shadrack Films, Inc. purchased 1,166,755 newly issued shares of
our common stock for $150,000,  thereby obtaining a majority  ownership interest
and becoming our parent company.

On September  10, 2002,  we entered into a License  Agreement  with Two Dog Net,
Inc.  for an  exclusive  worldwide  license  to market  and sell The  Children's
Internet(R)  service.  We were  required  to pay Two Dog Net a  monthly  royalty
payment of 7% of net sales of The Children's  Internet(R)  product.  We acquired
the license for $2,000,000 required to be paid no later than September 10, 2004.
We paid $15,500 of this amount during the quarter ended September 30, 2002.

This  original  agreement  did not reflect the true intent of the parties and on
March 3, 2003,  we replaced  the  License  Agreement  with a  Wholesale  Sales &
Marketing  Agreement with the same  effective  date of September 10, 2002.  This
Wholesale Sales and Marketing  Agreement gives us the exclusive  worldwide right
to market, sell, and distribute The Children's Internet(R) service and wholesale
dial-up  Internet  service  of Two Dog  Net.  We will pay Two Dog Net a per user
charge of $3.00 per month for each user  accessing  The  Children's  Internet(R)
service.  The Wholesale Sales & Marketing Agreement has a term of five years and
renews for additional five year terms automatically  unless either we or Two Dog
Net give written  notice of  termination of the agreement not less than one year
before the end of any five year term.  We are moving  ahead with  marketing  The
Children's  Internet(R) but have no plans to offer dial-up services,  as allowed
by our agreement with Two Dog Net.

Our  President,  Chief  Executive  Officer,  and  one of our  Directors,  Sholeh
Hamedani,  was President of Two Dog Net, Inc. until August 1, 2002. Ms. Hamedani
also owns  approximately 10% of the total outstanding  shares of Common Stock of
Two Dog Net,  Inc.  Ms.  Hamedani  is also the sole  shareholder  of our  parent
company,  Shadrack Films, Inc. Ms. Hamedani's  father,  Nasser Hamedani,  is the
current President, Chairman and majority shareholder of Two Dog Net, Inc.

PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS

The  Children's  Internet(R)  offers  access to  pre-selected  and  pre-approved
educational and entertaining age appropriate web pages as well as secure e-mail,
homework help, games, news, super portals to learning activities and educational
resources  all  within,  protected  online  environment.  We  believe  that  the
proprietary,  patent-pending security software, Safe Zone

                                        1

<PAGE>


Technology(R),  offers security against Internet  predators and Internet content
that is  inappropriate  for  children.  The  target  market  for The  Children's
Internet(R)  is the 48 million  children  on-line in 2002 (Report from  Internet
Commerce  &  Communications  Division,  Information  Technology  Association  of
America,  February,  2002), as well as America's schools, which are connected to
the Internet.  The rate of general Internet use in the United States is expected
to grow by 2 million  new users per  month.  (Report  from  Internet  Commerce &
Communications   Division,   Information   Technology  Association  of  America,
February,  2002.) Nearly two-thirds (62%) of US families have computers at home,
but roughly 1 out of 5 (17%) of those with computers do not have Internet access
due  to  safety  concerns.  (Report  from  Internet  Commerce  &  Communications
Division, Information Technology Association of America, February, 2002) Surveys
tell us that  85% of all  parents  with  children  under  11  years  of age have
expressed  concern for their child's  safety on the Internet by overseeing  each
and  every  click and 45% of all  parents  feel the  Internet  is  critical  for
educational purposes. (Greenfield Online, Inc. April 1999)

COMPETITION

In the  past  three  years,  competition  has  significantly  declined  as  many
providers have gone out of business.

However,  the  market  for  Internet  products  and  services  is  still  highly
competitive  and  competition is expected to increase.  There are no substantial
barriers to entry in these  markets.  Although  we  currently  believe  that the
diverse segments of the Internet market provide  opportunities for more than one
supplier of products and services  similar to ours, it is possible that a single
supplier may dominate one or more market segments.

Our management believes that the principal competitive factors in our market are
brand  recognition,   ease  of  use,  comprehensiveness  of  available  content,
customization by the consumer, quality and responsiveness of search results, the
availability  of  high-quality,  focused  value  added  services,  and  required
technology  to offer  access to end users  with few  interruptions.  Competition
among current and future suppliers of Internet  navigational  and  informational
services,  high-traffic  websites  and ISPs could  result in  significant  price
competition  and reductions in revenues.  There can be no assurance that we will
be able to compete successfully.

We compete with other providers of security software,  information and community
services.  Many  companies  offer  competitive  products or services  addressing
filtering of Internet  content,  including,  among others,  Net Nanny (Net Nanny
Software,  Inc.),  Cyber  Patrol (The  Learning  Company),  Cyber  Snoop  (Pearl
Software,  Inc.), Cyber Sentinel (Security Software Systems, Inc.),  Cybersitter
97  (Solid  Oak  Software,   Inc.),   SurfWatch  (SurfWatch   Software,   Inc.),
WebChaperone  (WebCo  International,  Inc.), EdView Channel Lock and EdViewsmart
Zone (EdView, Inc.) and X-Stop (Log-On Data, Inc.). In addition, we compete with
online services such as Yahooligans!  (Yahoo!),  an Internet  navigator designed
for children in grades K-12; America Online (America Online, Inc.), which offers
parental control options for Internet access;  and Disney's Blast Online,  which
also offers child-oriented Internet navigation.  These companies already have an
established  market  presence,  and are far ahead of us in gaining market share.
Also, entities that sponsor or maintain high-traffic websites or that provide an
initial point of entry for Internet  users,  such as the Regional Bell Operating
Companies or commercial  online  services such as the Microsoft  Network ("MSN")
and America Online

                                        2

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("AOL"),  currently offer and could further develop, acquire or license Internet
search and navigation functions that could compete with our product.

Many  of our  existing  competitors,  as  well  as a  number  of  potential  new
competitors,  have  significantly  greater financial,  technical,  marketing and
distribution  resources.  In addition,  providers of Internet tools and services
may be acquired by,  receive  investments  from, or enter into other  commercial
relationships with larger, well-established and well-financed companies, such as
Microsoft or AOL. Greater  competition  resulting from such relationships  could
have a material adverse effect on our business,  operating results and financial
condition.

SOURCES AND AVAILABILITY OF RAW MATERIALS AND PRINCIPAL SUPPLIERS

We currently offer one product, The Children's Internet(R) service,  through our
agreement with Two Dog Net. We have no plans to offer dial-up  Internet  service
as allowed by our agreement with Two Dog Net, nor do we anticipate being able to
offer any other products for at least the next twelve months, if not longer. Any
events  adversely  affecting  Two Dog Net will also affect us as we are entirely
dependent on our  agreement  with Two Dog Net for any  revenues.  If Two Dog Net
were to cease its  operations,  we would  need to find  alternative  sources  of
revenues,  which we may be unable to do. In such an event, we could be forced to
cease operations entirely.

We are also dependent upon private third party  providers such as EmeryTech Data
Center to host our servers and provide the principal  Internet  connections  for
The Children's  Internet(R).  Any disruption in the Internet  access provided by
third-party  providers or any failure of third-party  providers to handle higher
volumes of user traffic  could have a material  adverse  effect on our business,
operating results, and financial condition.

DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS

We currently do not have any customers.

INTELLECTUAL PROPERTY

Our success is dependent on the  proprietary  technology  from Two Dog Net, Inc.
that we  market  and  sell.  Two Dog Net,  Inc owns the  proprietary  technology
underlying  The  Children's  Internet(R)  service.  We do not have any  patents,
pending or otherwise.  Following is a list of the intellectual  property we have
the rights to use from Two Dog Net, Inc.:

     -   "The Children's Internet(R)" registered trademark;

     -   Safe Zone Technology(R) registered trademark;

     -   The Safe Zone Technology(R) software patent application pending; and

     -   "Two Dog Net(TM)" trademark.

"Children's  Internet" is a service mark of Two Dog Net, Inc. and was registered
with the U.S.  Patent and  Trademark  Office on October 9, 2001 as  Registration
Number Serial Number  75378450.  We do not hold any registered  service marks or
trademarks.

                                        3

<PAGE>


Two Dog Net, Inc. filed U.S. Patent Application No. 08/971,447 for the Safe Zone
Technology(R) software on or about December 1, 1997 and on or about November 20,
2000 they filed a continuation  application.  They have advised us that there is
no assurance that the patent will ever be issued and that the patent application
process may continue through the year 2004.

Despite our efforts to protect our proprietary rights,  unauthorized parties may
attempt to copy  aspects of  products or to obtain and use  information  that we
regard as proprietary.  Policing  unauthorized use of our products is difficult,
and while we  cannot  determine  the  extent  to which  piracy  of our  software
products  exists,  such  piracy  can be  expected  to be a  persistent  problem,
particularly in international  markets and as a result of the growing use of the
Internet. Some courts have held that shrink-wrap licenses,  because they are not
signed  by the  licensee,  are not  enforceable.  In  addition,  there can be no
assurance  that patent  applications  filed by Two Dog Net,  Inc. will result in
patents  being  issued,  and any patents that may be issued to it in the future,
will afford  protection  against  competitors with similar  technology;  nor can
there be any  assurance  that patents  issued to Two Dog Net,  Inc.  will not be
infringed  upon or  designed  around by others or that  others  will not  obtain
patents  that we would  need to  license  or design  around.  Impairment  of our
intellectual property rights could negatively affect our business or could allow
competitors to minimize any advantage that our  proprietary  technology may give
us.

GOVERNMENT APPROVAL AND EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL  REGULATIONS
ON THE BUSINESS

Due to the increasing  popularity and use of the Internet,  laws and regulations
with respect to the Internet may be adopted at federal,  state and local levels,
covering  issues  such  as  user  privacy,   freedom  of  expression,   pricing,
characteristics  and quality of products and  services,  taxation,  advertising,
intellectual  property  rights,  information  security  and the  convergence  of
traditional telecommunications services with Internet communications.  We cannot
predict  the nature of future  legislation  and the  manner in which  government
authorities may interpret and enforce that legislation. As a result, we could be
subject to potential  liability  under future  legislation,  which in turn could
restrict our operations or cause additional  expenses or losses. For example, if
legislation were adopted in the U.S. or  internationally  that makes transacting
business  over the Internet less  favorable or otherwise  curtails the growth of
the Internet,  this could reduce demand for our products and services and reduce
sales and profits.

In addition,  applicability  to the Internet of existing laws  governing  issues
such as property  ownership,  copyright and other intellectual  property issues,
taxation,  libel,  obscenity  and  personal  privacy  is  uncertain.  These laws
generally pre-date the advent of the Internet and related technologies and, as a
result, do not consider or address the unique issues of the Internet and related
technologies.  Changes to laws  intended to address  these  issues  could create
uncertainty in the  marketplace,  reducing demand for our services or increasing
the cost of doing business as a result of litigation costs or increased  service
delivery costs.

                                        4

<PAGE>


RESEARCH AND DEVELOPMENT

Based on our  agreement  with Two Dog  Net,  we will  look to Two Dog Net as our
research  and  development  partner and will  continue to rely on Two Dog Net to
keep The Children's Internet(R) technology current. To date, all of the research
and development efforts have been performed by Two Dog Net.

Over the  course  of the past six  years,  Two Dog Net has been  focused  on the
development  of Safe Zone  Technology(R),  The Children's  Internet(R),  and the
creation of unique user interfaces and feature  functionality for The Children's
Internet(R).  In the future,  in  association  with Two Dog Net, we will explore
ways to leverage our current knowledge on compatible product  enhancements.  For
example,  some of the development may focus on interactive  learning systems,  a
parent's  portal,   multiple  participant  interactive  games  for  children,  a
companion product to The Children's  Internet(R)  aimed at the teen market,  and
on-line books.

We will  only  begin  development  of new  products  after we have  successfully
launched The Children's  Internet(R) and feel  comfortable that the research and
development  effort will not dilute our focus and resources  from the success of
The Children's Internet(R).

EMPLOYEES AND CONSULTANTS

We currently employ five employees:  Sholeh Hamedani,  Soraiya  Hamedani,  Roaya
Hamedani,  Jamshid  Ghosseiri  and Tyler  Wheeler.  Four of these are  full-time
employees: Sholeh Hamedani, Soraiya Hamedani, Roaya Hamedani, and Tyler Wheeler.
Additionally,  we have retained Jim Lambert as a full time financial consultant.
We do not anticipate hiring any additional  employees during calendar year 2004.
We  hire  independent  contractors  on an "as  needed"  basis  only.  We have no
collective  bargaining  agreements  with  our  employees.  We  believe  that our
employee relationships are satisfactory.

ITEM 2. DESCRIPTION OF PROPERTY

On February 19, 2004, we entered into a settlement  agreement with our landlord,
Hill  Physicians  Medical Group,  Inc., a California  corporation to continue to
occupy office space  consisting of 2,759 square feet on a rent-free  basis until
March 22, 2004. The initial term of this sublease  commenced on July 1, 2003 and
expired on January 31, 2004.

Our parent company,  Shadrack Films, Inc. has agreed to allow us to operate from
its offices located at 5000 Hopyard Rd., Suite 320, Pleasanton, CA 94588 under a
verbal  license  revocable at any time without prior  notice.  These offices are
2,059 square feet and are leased by Shadrack Films from Principal Life Insurance
Company,  an Iowa corporation.  From March 22, 2004 until April 30, 2004 we will
occupy  the  office  space on a  rent-free  basis.  From month two (May 1, 2004)
through thirteen the basic rent per month is $3,603, for months fourteen through
twenty five the basic rent per month is $3,706 and for months twenty-six through
thirty-seven  the basic rent per month is $3,809  under a lease  agreement  that
expires on May 1, 2007.

                                        5

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ITEM 3. LEGAL PROCEEDINGS

On February  13, 2004 we received  notice  that our  landlord,  Hill  Physicians
Medical Group, Inc. had filed an unlawful detainer action against us on February
6, 2004 in the Contra Costa County Superior Court as case number WS04-0238.  Our
landlord  alleges that the lease for our office space  expired  January 31, 2004
and was  requesting the court to award it possession of the premises and pay the
sum of  $8,746.52  for rent and other  charges  due  pursuant  to the lease.  On
February 19, 2004 we signed a Mutual  Settlement  Agreement and Release allowing
us to continue to occupy our office space on a rent-free basis through March 22,
2004 and  providing  for a  Stipulation  for Entry of  Judgment in the amount of
$8,746.52  against us in the event we fail to vacate this office  space on March
22, 2004.  Other then this dispute  with our  landlord,  we are not aware of any
other pending or threatened litigation that could have a material adverse effect
on our business.

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

None.

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS.

The  Company's  Common  Stock is not  currently  quoted or traded on any  public
securities quotation system or exchange.

HOLDERS

As  of  March  10,  2004,  there  were  89  shareholders   holding  certificated
securities.  The Company's  transfer  agent is Transfer  Online,  227 S.W. Pine,
Suite 300, Portland, OR 97204.

DIVIDENDS

The Company has not paid any  dividends on its Common Stock since its  inception
and does not anticipate or contemplate  paying cash dividends in the foreseeable
future.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's consolidated financial statements have been prepared in accordance
with accounting  principles  generally accepted in the United States of America,
which  contemplate   continuation  of  the  Company  as  a  going  concern.  The
preparation of these financial  statements requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
the 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.

                                        6

<PAGE>


SELECTED FINANCIAL DATA

The  following  selected  statement  of  operations  data  for the  period  from
September 25, 1996, the date of our inception, through December 31, 2003 and for
the  fiscal  year  ended  December  31,  2003 were  derived  from our  financial
statements  and notes thereto  included in this annual report which are audited.
Historical  results  are not  necessarily  indicative  of  results  that  may be
expected for any future period. The following data should be read in conjunction
with "Plan of Operation"  and our audited  financial  statements,  including the
related footnotes.

                                                           For the period from
                                         For the year       September 25, 1996
                                      ended December 31,   (inception) through
                                             2003           December 31, 2003
                                      ------------------   -------------------
STATEMENT OF OPERATIONS DATA
Net sales                                              -                     -
Operating expenses:                             $478,000              $879,000
Operating loss                                  (478,000)             (879,000)
Net Loss                                       ($478,000)            ($879,000)


                                                  As of December 31, 2003
                                                  -----------------------
BALANCE SHEET DATA:
Total assets                                                                 -
Current liabilities                                                   $304,000
Total stockholders' deficit                                          ($304,000)


PLAN OF OPERATION

You should read the  following  plan of operation  together  with our  financial
statements and related notes appearing  elsewhere in this prospectus.  This plan
of  operation   contains   forward-looking   statements   that  involve   risks,
uncertainties,  and assumptions.  The actual results may differ  materially from
those  anticipated  in these  forward-looking  statements as a result of certain
factors,  including, but not limited to, those presented under "Risk Factors" on
page 4 and elsewhere in this prospectus.

On September  10, 2002,  we entered into a License  Agreement  with Two Dog Net,
Inc.  for an  exclusive  worldwide  license  to market  and sell The  Children's
Internet(R) service.  However, because this agreement did not reflect the intent
of the parties,  we replaced the royalty and license  agreement with a wholesale
sales & marketing  agreement with the same effective date of September 10, 2002.
The new agreement provides for us to be the exclusive marketers of Two Dog Net's
proprietary and patent pending secured internet service for pre-school to junior
high  school  aged  children  called  The  Children's  Internet(R).  We  plan to
introduce an Internet  service  designed  specifically  for children that allows
them to have  completely  safe,  unrestricted  live access to the Internet.  The
cornerstone of our consumer marketing plan is a national television  advertising
campaign  which  includes  a  30-minute  infomercial  that was  produced  over a
two-year period of time by Two Dog Net and is ready to air. We intend to utilize
the infomercial to introduce The Children's  Internet(R)  service to the public,
as well as build brand recognition and

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<PAGE>


generate customer subscriptions. We  plan  to first  conduct a media test in the
fourth  quarter of 2003. We believe the results from the media test will give us
the platform to launch the advertising  campaign on a national basis  thereafter
and be the basis for the ongoing infomercial media schedule 2003.

In a Stock Purchase Agreement dated October 11, 2002, our original  shareholders
sold 1,118,500 of their shares of our common stock to various purchasers, two of
whom are related parties to our management,  Nasser Hamedani,  Sholeh Hamedani's
father, and Soraiya Hamedani, Sholeh Hamedani's sister. Some of these purchasers
were introduced to the original shareholders by Sholeh Hamedani,  our President,
Chief Financial Officer,  and a Director.  Some of these purchasers resold their
shares to unrelated third parties.  A portion of the proceeds  received from the
stock sales by the  purchasers was in turn loaned to Shadrack  Films,  Inc., our
parent  company,  to finance our initial  operations thus far. These amounts are
reflected on the financial statements as "Due to Parent Company". Our President,
Chief Executive Officer, and one of our Directors,  Sholeh Hamedani, is the sole
shareholder of our parent company, Shadrack Films, Inc.

As of  December  31,  2003,  we had net loss  from  inception  of  approximately
$879,000. Of this amount,  approximately  $415,000 represents the estimated fair
market value for the cost of wages,  if paid,  for the services  rendered by our
President,  Chief Executive Officer and an outside  consultant (we have recorded
these amounts for the cost of wages,  since they did not charge the Company,  as
contributed  capital),  $308,000 represents  professional fees such as legal and
accounting  expenses and the balance of $153,000 consists primarily of occupancy
and  telecommunications  costs  including  internet  costs.  To date, our parent
company, Shadrack Films, has funded all of our expended costs.

Currently,  we do not have any cash on hand and are  dependent  on funding  from
Shadrack Films, our parent company for our current  operations and for providing
office space and utilities  that,  for the year ended December 31, 2003 averaged
$8,000 per month in  operating  costs  exclusive of  professional  fees and time
donated  by  employees.  The  amount  currently  due to parent is  approximately
$205,000.  Our parent  company is under no  obligation  to  continue to fund our
operations and could stop at any time without notice. We estimate that we need a
minimum of  $180,000  in cash to  continue  our  operations  for the next twelve
months.

Where  practicable we plan to contract with third party  companies to market The
Children's  Internet  Service  as  well  as to  provide  administrative  support
services  such as billing,  level one technical  support,  and the like. We have
already entered into two agreements with Infolink  Communications,  Ltd, a third
party company, for the marketing of our service.  However, there is no assurance
that we will be able to enter into  additional  arrangements  for  marketing and
administrative support services.

We have applied for  registration of 4,000,000  shares of our common stock to be
sold by us at a price of $2.00  per  share in a direct  public  offering.  If we
raise the maximum offering,  our working capital needs,  including  expansion of
marketing  and technical  operations,  will be met for  approximately  24 months
without regard to any subscription revenue.  However, we can offer no assurances
that the  offering  will ever take place or that we will raise any funds.  We do
not currently have any arrangements for alternative  financing in the event that
we raise less then the maximum offering.

                                        8

<PAGE>


We plan to scale our  expenditures  depending upon the amount of funds raised in
our planned  offering,  with  initial  funds being used  primarily to market the
services  in an effort to  develop a revenue  base  sufficient  to  support  our
operations.  Following is a discussion of how we to plan to proceed at different
levels of funding in the planned offering.

FUNDING AT THE 10% LEVEL IN THE PLANNED OFFERING:

If we receive net proceeds of $755,000, which is the approximate net proceeds we
will  receive if we raise ten percent of the funds we are hoping to raise in our
planned   offering,   we  anticipate  using  the  funding  to  cover  occupancy,
telecommunication  and other office costs for a twelve month period.  We plan to
spend the majority of the funds raised on marketing and sales  initiatives in an
effort to achieve sufficient  revenues to help support the company on an ongoing
basis.  The  infomercial  television  campaign  would be the  primary  marketing
vehicle to generate sales.

At this level of funding we  anticipate  that our  employees  will  continue  to
donate the necessary time as they have in the past for approximately six months.
However,  they are under no  obligation to continue to do so and they could stop
at any time without notice.

At this level of funding we plan to expend  approximately  $90,000 in  marketing
funds in the  initial  ninety  days as  follows:

-       Approximately $10,000 for creating,  printing and duplicating collateral
marketing  materials  including sales  brochures and The Children's  Internet(R)
installation CD's with packaging.

-       Approximately  $10,000 to  re-edit and update the  infomercial  with new
testimonials  and create  additional  versions of the infomercial with different
price points and special free trial offers based on consumer  feedback  from the
media test

-       Approximately  $70,000  to  conduct a  television  media  test to assess
consumer  response,  test  various  price points and to fine tune the media plan
prior to "rolling-out" or launching the media schedule.

We expect the $70,000  media test  conducted  in the first ninety days to secure
approximately  140  thirty-minute  infomercial  time slots, in  approximately 40
markets,  airing on both family oriented national television  networks,  such as
Pax TV  (Paxson  Communications  Corporation)  and on  various  local  affiliate
broadcast stations.  This approach should allow us to test a broad range of time
periods, various markets and multiple national and local stations.

In the fourth through twelfth month upon  completion of the initial  three-month
media test phase we will enter the roll-out phase. During this roll-out phase we
plan to re-book all airings that achieved or exceeded the pre-determined  target
goal as well as expand  the media mix to  include  additional  time  periods  on
proven  stations and include other stations in proven  markets.  In the roll-out
phase it is estimated that on average  approximately $44,000 would be spent each
month on media time.

                                        9

<PAGE>


Technical  operations' costs at the 10% level of funding include our data center
co-location  facility and contingent  technical  reserve costs of  approximately
$41,000 plus license fees paid to Two Dog Net and for  technical  support  based
upon subscribers.  Working capital and general corporate  purposes at this level
of funding are for occupancy  costs,  telecommunications  costs and other office
costs, which approximate  $5,000 per month.  Although we owe our parent company,
Shadrack Films, approximately $205,000 in accrued costs for expenses incurred in
the past,  we do not plan to repay this amount in the first twelve months at the
10% level of funding.

FUNDING AT THE 25% LEVEL IN THE PLANNED OFFERING

If we receive net proceeds of $1,955,000,  which is the approximate net proceeds
we will  receive if we raise  twenty-five  percent of the funds we are hoping to
raise  in our  planned  offering,  we  anticipate  using  the  funding  to cover
occupancy,  telecommunication  and other office costs for a twelve-month period.
We plan to spend  the  majority  of the  funds  raised  on  marketing  and sales
initiatives  in an effort to achieve  sufficient  revenues  to help  support the
company on an ongoing basis.  The  infomercial  television  campaign will be our
primary marketing vehicle to generate sales.

At this level of funding we  anticipate  that our  employees  will  continue  to
donate the necessary time as they have in the past for approximately six months.
However,  they are under no  obligation to continue to do so and they could stop
at any time without notice.

At this level of funding we plan to expend  approximately  $90,000 in  marketing
funds in the  initial  ninety  days as  follows:

-       Approximately $10,000 for creating,  printing and duplicating collateral
marketing  materials  including sales  brochures and The Children's  Internet(R)
installation CD's with packaging.

-       Approximately  $10,000 to  re-edit and update the  infomercial  with new
testimonials  and create  additional  versions of the infomercial with different
price points and special free trial offers based on consumer  feedback  from the
media test.

-       Approximately  $70,000  to  conduct  a media  test  to  assess  consumer
response,  test  various  price  points and to fine tune the media plan prior to
"rolling-out" or launching the media schedule.

We expect the $70,000 media test  conducted in the first ninety days will secure
approximately  140  thirty-minute  infomercial  time slots, in  approximately 40
markets,  airing on both family oriented national television  networks,  such as
Pax TV  (Paxson  Communications  Corporation)  and on  various  local  affiliate
broadcast stations.  This approach should allow us to test a broad range of time
periods, various markets and multiple national and local stations.

In the fourth through twelfth month upon  completion of the initial  three-month
media test phase we will enter the roll-out phase. During this roll-out phase we
plan to re-book all airings that achieved or exceeded the pre-determined  target
goal as well as expand  the media mix to  include

                                       10

<PAGE>


additional  time periods on proven stations and include other stations in proven
markets.  In the roll-out  phase it is estimated  that on average  approximately
$125,000 would be spent each month on media time.

In addition to infomercial  marketing we would spend  approximately  $240,000 in
the same time period on other support  advertising  and  promotional  activities
including, public relations, direct mail campaigns,  newspaper and magazine ads,
and online marketing all focused on publications,  events and regions that reach
our target market of parents.

Technical  operations' costs at the 25% level of funding include our data center
co-location  facility and contingent  technical  reserve costs of  approximately
$83,000 plus license fees paid to Two Dog Net and for  technical  support  based
upon  subscribers.  We further  anticipate  spending at this level an additional
$160,000 for the  development of new web pages of The Children's  Internet daily
features  like the Fun  Facts of the Day,  Surveys,  Grab Bag and new home  room
environments  to give the child  more  choices  and keep them  engaged.  Working
capital  and  general  corporate  purposes  at this  level  of  funding  are for
occupancy  costs,   telecommunications  costs  and  other  office  costs,  which
approximate  $5,000 per month.  In addition,  we would incur  personnel costs of
approximately  $7,000  per month and other  contingent  costs of $900 per month.
Although we owe our parent company,  Shadrack Films,  approximately  $205,000 in
accrued  costs for expenses  incurred in the past,  we do not plan to repay this
amount in the first twelve months at the 25% level of funding.

FUNDING AT THE 50% LEVEL IN THE PLANNED OFFERING

If we receive net proceeds of $3,955,000,  which is the approximate net proceeds
we will receive if we raise fifty percent of the funds we are hoping to raise in
our  planned  offering,  we  anticipate  using the  funding to cover  occupancy,
telecommunication  and other office costs for a twelve-month  period. We plan to
spend the majority of the funds raised on marketing and sales  initiatives in an
effort to achieve sufficient  revenues to help support the company on an ongoing
basis. The infomercial television campaign will be our primary marketing vehicle
to generate sales.

At this level of funding,  we  anticipate  that our  employees  will continue to
donate  the  necessary  time as they  have in the past for  approximately  three
months.  However,  they are under no  obligation  to  continue to do so and they
could stop at any time without notice.

At this level of funding we plan to expend  approximately  $90,000 in  marketing
funds in the  initial  ninety  days as  follows:

-       Approximately $10,000 for creating,  printing and duplicating collateral
marketing  materials  including sales  brochures and The Children's  Internet(R)
installation CD's with packaging.

-       Approximately  $10,000 to  re-edit and update the  infomercial  with new
testimonials  and create  additional  versions of the infomercial with different
price points and special free trial offers based on consumer  feedback  from the
media test.

-       Approximately  $70,000  to  conduct  a  media  test to  assess  consumer
response,  test  various

                                       11

<PAGE>


price points and to fine tune the media plan prior to "rolling-out" or launching
the media schedule.

We expect the $70,000 media test  conducted in the first ninety days will secure
approximately  140  thirty-minute  infomercial  time slots, in  approximately 40
markets,  airing on both family oriented national television  networks,  such as
Pax TV  (Paxson  Communications  Corporation)  and on  various  local  affiliate
broadcast stations.  This approach should allow us to test a broad range of time
periods, various markets and multiple national and local stations.

In the fourth through twelfth month upon  completion of the initial  three-month
media test phase we will enter the roll-out phase. During this roll-out phase we
plan to re-book all airings that achieved or exceeded the pre-determined  target
goal as well as expand  the media mix to  include  additional  time  periods  on
proven  stations and include other stations in proven  markets.  In the roll-out
phase it is estimated that on average approximately $258,000 would be spent each
month on media time.

An  additional  $20,000  would  be  spent  in  producing  30,  60 and 90  second
commercial  spots to support the infomercial as well as broadcast the commercial
spots in new markets as a stand alone advertising campaign. In addition we would
spend  approximately   $240,000  in  the  same  time  period  on  other  support
advertising and promotional activities including,  public relations, direct mail
campaigns,  newspaper  and  magazine  ads, and online  marketing  all focused on
publications, events and regions that reach our target market of parents.

Technical  operations' costs at the 50% level of funding include our data center
co-location  facility and contingent  technical  reserve costs of  approximately
$103,000 plus license fees paid to Two Dog Net and for  technical  support based
upon  subscribers.  We further  anticipate  spending at this level an additional
$510,000 for the  development of new web pages of The Children's  Internet daily
features  like the Fun  Facts of the Day,  Surveys,  Grab Bag and new home  room
environments  to give the child  more  choices  and keep them  engaged.  Working
capital  and  general  corporate  purposes  at this  level  of  funding  are for
occupancy  costs,   telecommunications  costs  and  other  office  costs,  which
approximate  $5,000 per month.  In addition,  we would incur  personnel costs of
approximately  $26,000 per month and other contingent costs of $3,000 per month.
We owe our parent  company,  Shadrack Films,  approximately  $205,000 in accrued
costs for expenses incurred in the past. At the 50% level of funding, we plan to
repay this amount in the first twelve months.

At this level of funding, we believe would have sufficient  operating capital to
currently pay  management  employees,  at close to market  rates,  and all other
employees at market rates for their time.

FUNDING AT THE 75% LEVEL IN THE PLANNED OFFERING

If we receive net proceeds of $5,955,000,  which is the approximate net proceeds
we will receive if we raise fifty percent of the funds we are hoping to raise in
our  planned  offering,  we  anticipate  using the  funding to cover  occupancy,
telecommunication  and other office costs for a twelve month period.  We plan to
spend the majority of the funds raised on marketing and sales  initiatives in an
effort to achieve sufficient  revenues to help support the company on an ongoing

                                       12

<PAGE>


basis. The infomercial television campaign will be our primary marketing vehicle
to generate sales.

At this level of funding,  we  anticipate  that our  employees  will continue to
donate  the  necessary  time as they  have in the past for  approximately  three
months.  However,  they are under no  obligation  to  continue to do so and they
could stop at any time without notice.

At this level of funding we plan to expend  approximately  $90,000 in  marketing
funds in the  initial  ninety  days as  follows:

-       Approximately $10,000 for creating,  printing and duplicating collateral
marketing  materials  including sales  brochures and The Children's  Internet(R)
installation CD's with packaging.

-       Approximately  $10,000 to update and  re-edit the  infomercial  with new
testimonials  and create  additional  versions of the infomercial with different
price points and special free trial offers based on consumer  feedback  from the
media test.

-       Approximately  $70,000  to  conduct  a media  test  to  assess  consumer
response,  test  various  price  points and to fine tune the media plan prior to
"rolling-out" or launching the media schedule.

We expect the $70,000 media test  conducted in the first ninety days will secure
approximately  140  thirty-minute  infomercial  time slots, in  approximately 40
markets,  airing on both family oriented national television  networks,  such as
Pax TV  (Paxson  Communications  Corporation)  and on  various  local  affiliate
broadcast stations.  This approach should allow us to test a broad range of time
periods, various markets and multiple national and local stations.

In the fourth through twelfth month upon  completion of the initial  three-month
media test phase we will enter the roll-out phase. During this roll-out phase we
plan to re-book all airings that achieved or exceeded the pre-determined  target
goal as well as expand  the media mix to  include  additional  time  periods  on
proven  stations and include other stations in proven  markets.  In the roll-out
phase it is estimated that on average approximately $258,000 would be spent each
month on media time.

An  additional  $20,000  would  be  spent  in  producing  30,  60 and 90  second
commercial  spots to support the infomercial as well as broadcast the commercial
spots in new markets as a stand alone advertising campaign. In addition we would
spend  approximately   $440,000  in  the  same  time  period  on  other  support
advertising and promotional activities including,  public relations, direct mail
campaigns,  newspaper  and  magazine  ads, and online  marketing  all focused on
publications, events and regions that reach our target market of parents.

Technical  operations' costs at the 75% level of funding include our data center
co-location  facility and contingent  technical  reserve costs of  approximately
$118,000 plus license fees paid to Two Dog Net for technical  support based upon
subscribers. We further anticipate spending at this level an additional $800,000
for the  development of new web pages of The Children's  Internet daily features
like the Fun Facts of the Day, Surveys,  Grab Bag and new home room environments
to give the child  more  choices  and keep them  engaged.  Working  capital  and

                                       13

<PAGE>


general  corporate  purposes at this level of funding are for  occupancy  costs,
telecommunications  costs and other office costs,  which approximate  $5,000 per
month. In addition,  we would incur personnel costs of approximately $42,000 per
month and  other  contingent  costs of  $3,000  per  month.  We owe our  parent,
Shadrack  Films,  company  approximately  $205,000 in accrued costs for expenses
incurred in the past. At the 75% level of funding, we plan to repay this amount.

At this level of funding, we believe would have sufficient  operating capital to
currently pay management  employees,  who previously  donated a portion of their
time,  at close to market  rates,  and all other  employees  at market rates for
their time.

FUNDING AT THE 100% LEVEL IN THE PLANNED OFFERING

If we receive net proceeds of $7,955,000,  which is the approximate net proceeds
we will  receive if we raise one  hundred  percent of the funds we are hoping to
raise  in our  planned  offering,  we  anticipate  using  the  funding  to cover
occupancy,  telecommunication  and other office costs for a twelve month period.
We plan to spend  the  majority  of the  funds  raised  on  marketing  and sales
initiatives  in an effort to achieve  sufficient  revenues  to help  support the
company on an ongoing basis.  The  infomercial  television  campaign will be our
primary marketing vehicle to generate sales.

At this level of funding, we believe would have sufficient  operating capital to
currently pay management  employees,  who previously  donated a portion of their
time, at market rates and all other employees at market rates for their time.

At this level of funding we plan to expend  approximately  $90,000 in  marketing
funds in the  initial  ninety  days as  follows:

-       Approximately $10,000 for creating,  printing and duplicating collateral
marketing  materials  including sales  brochures and The Children's  Internet(R)
installation CD's with packaging.

-       Approximately  $10,000 to update and  re-edit the  infomercial  with new
testimonials  and create  additional  versions of the infomercial with different
price points and special free trial offers based on consumer  feedback  from the
media test.

-       Approximately  $70,000  to  conduct  a media  test  to  assess  consumer
response,  test  various  price  points and to fine tune the media plan prior to
"rolling-out" or launching the media schedule.

We expect the $70,000 media test  conducted in the first ninety days will secure
approximately  140  thirty-minute  infomercial  time slots, in  approximately 40
markets,  airing on both family oriented national television  networks,  such as
Pax TV  (Paxson  Communications  Corporation)  and on  various  local  affiliate
broadcast stations.  This approach should allow us to test a broad range of time
periods, various markets and multiple national and local stations.

In the fourth through twelfth month upon  completion of the initial  three-month
media test phase we will enter the roll-out phase. During this roll-out phase we
plan to re-book all airings that achieved or exceeded the pre-determined  target
goal as well as expand  the media mix to  include

                                       14

<PAGE>


additional  time periods on proven stations and include other stations in proven
markets.  In the roll-out  phase it is estimated  that on average  approximately
$515,000 would be spent each month on media time.

An  additional  $20,000  would  be  spent  in  producing  30,  60 and 90  second
commercial  spots to support the infomercial as well as broadcast the commercial
spots in new markets as a stand alone advertising campaign. In addition we would
spend  approximately   $580,000  in  the  same  time  period  on  other  support
advertising and promotional activities including,  public relations, direct mail
campaigns,  newspaper  and  magazine  ads, and online  marketing  all focused on
publications, events and regions that reach our target market of parents.

Technical operations' costs at the 100% level of funding include our data center
co-location  facility and contingent  technical  reserve costs of  approximately
$146,000 plus license fees paid to Two Dog Net for technical  support based upon
subscribers.  We  further  anticipate  spending  at  this  level  an  additional
$1,200,000 for the development of new web pages of The Children's Internet daily
features  like the Fun  Facts of the Day,  Surveys,  Grab Bag and new home  room
environments  to give the child  more  choices  and keep them  engaged.  Working
capital  and  general  corporate  purposes  at this  level  of  funding  are for
occupancy  costs,   telecommunications  costs  and  other  office  costs,  which
approximate  $5,000 per month.  In addition,  we would incur  personnel costs of
approximately $48,000 per month and other contingent costs of $14,000 per month.
We owe our parent  company,  Shadrack Films,  approximately  $205,000 in accrued
costs for expenses  incurred in the past. At the 100% level of funding,  we plan
to repay this amount in the first twelve months.

POSSIBLE NEED FOR ADDITIONAL FUNDS

We may be wrong in our estimates of revenue  generated from marketing  costs and
additional  funds may also be  required in order to proceed  with our  marketing
plan and our business plan.  Additionally,  we will likely need additional funds
in the event Shadrack Films discontinues funding our operations.  Should we need
additional  funds,  we would  attempt to raise  these funds  through  additional
private  placements or by borrowing money. We do not have any arrangements  with
potential  investors  or lenders to provide such funds and there is no assurance
that such  additional  financing  will be  available  when  required in order to
proceed with the business plan or that our ability to respond to  competition or
changes in the market place or to exploit  opportunities  will not be limited by
lack of available  capital  financing.  If we are  unsuccessful  in securing the
additional  capital needed to continue  operations within the time required,  we
will not be in a position to continue operations.

Although this Plan of Operation describes our planned use of the net proceeds of
our offering at different  funding  levels,  we can offer no assurance  that the
offering will ever take place or that we will raise any funds in the offering.

If we are unsuccessful in securing the capital needed to continue  operations or
if initial sales of  subscriptions  do not fund  continued  operations,  we will
continue to look to our parent  company to fund  operations  and to employees to
donate their time. If our parent company,  Shadrack Films, a company  controlled
by Sholeh Hamedani, discontinues the funding of our operations and/or if our key
employees  discontinue  donating  their  time,  we will not be in a position  to

                                       15

<PAGE>


continue operations. In this event, we would attempt to sell the company or file
for bankruptcy.

OFF-BALANCE SHEET ARRANGEMENTS

None.

                                       16

<PAGE>


ITEM 7. FINANCIAL STATEMENTS.

The financial  statements  required to be filed pursuant to this Item 7 begin on
page F-1 of this report.


INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS OF THE CHILDREN'S INTERNET, INC.:

We have audited the accompanying balance sheet of The Children's  Internet,  Inc
(A Development Stage Company) as of December 31, 2003 and the related statements
of operations, stockholders' deficit and cash flows for each of the two years in
the period ended  December 31, 2003 and for the period from  September  25, 1996
(inception)  to  December  31,  2003.   These   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of the Children's  Internet,
Inc. as of December  31,  2003 and the  results of its  operations  and its cash
flows for each the two years in the period  ended  December 31, 2003 and for the
period from  September 25, 1996  (inception)  to December 31, 2003 in conformity
with generally accepted accounting principles in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 of the
accompanying  financial  statements,  the Company has no  established  source of
revenue  and has no funds to pay its current  liabilities.  These  issues  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plan in  regard  to these  matter is  discussed  in Note 1.  These
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


/s/Stonefield Josephson, Inc.

STONEFIELD JOSEPHSON, INC.

Certified Public Accountants

Santa Monica, California
February 26, 2004

                                       F-1

<PAGE>


                          THE CHILDREN'S INTERNET, INC.
                          (A Development Stage Company)
                                  BALANCE SHEET

                                                     December 31,
                                                         2003
                         ASSETS

TOTAL ASSETS                                         $          -
                                                     ============

            LIABILITIES AND STOCKHOLDERS' DEFICIT

Accounts Payable and Accrued Expenses                $     99,000
Due to Parent Company                                     205,000
                                                     ------------
Total Current Liabilities                                 304,000
                                                     ------------


STOCKHOLDERS' DEFICIT

Preferred Stock, $0.001 par value; 10,000,000
 shares authorized;
zero shares issued and outstanding.
Common stock, $0.001 par value; 75,000,000
 shares authorized;
2,287,755 shares issued and outstanding                     2,000
Additional paid-in capital                                573,000
Deficit accumulated during the development stage         (879,000)

                                                     ------------
TOTAL STOCKHOLDERS' DEFICIT                              (304,000)
                                                     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT          $          -
                                                     ============

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

                                       F-2

<PAGE>


                          THE CHILDREN'S INTERNET, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                             For the period
                                                                                           September 25, 1996
                                                                                             (inception) to
                                                     For the year ended december 31,          December 31,
                                                     -------------------------------       ------------------
                                                        2003                2002                 2003
                                                     ------------        -----------         -------------
<S>                                                  <C>                 <C>                 <C>
REVENUE                                              $          -        $         -         $           -

General Selling and Administrative Expenses               478,000            392,000              (879,000)

                                                     ------------        -----------         -------------
Operating Loss before provision for income taxes         (478,000)          (392,000)             (879,000)


Provision for Income taxes                                      -                  -                     -

                                                     ------------        -----------         -------------
NET LOSS                                             $   (478,000)       $  (392,000)        $    (879,000)
                                                     ============        ===========         =============

Net Loss per Common Share
          - basic and diluted                        $      (0.21)       $     (0.23)        $       (0.64)
                                                     ============        ===========         =============
Weighted Average Number of Common
           Shares Outstanding
          - basic and diluted                           2,287,755          1,715,267             1,367,379
                                                     ============        ===========         =============
</TABLE>

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

                                       F-3

<PAGE>


                          THE CHILDREN'S INTERNET, INC.
                          (A Development Stage Company)
                       STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
                                                                           Deficit
                                                                         Accumulated
                                                           Additional     During the
                                                            Paid-In      Development    Stockholders'
                                      Common Stock          Capital         Stage          Deficit
                                 ----------------------    ----------    -----------    -------------
                                   Shares       Amount
                                 -----------   --------
<S>                                <C>         <C>         <C>           <C>            <C>
Balance, September 25, 1996                -   $      -    $        -    $         -    $           -

Issuance of common stock
for cash on September 24, 1996
at $0.005 per share                1,121,000      1,000         4,000              -            6,000

Net Loss                                                                      (6,000)          (6,000)
                                 -----------   --------    ----------    -----------    -------------

Balance, December 31, 1996         1,121,000      1,000         4,000         (6,000)               -


Net Loss                                   -          -             -              -                -

                                 -----------   --------    ----------    -----------    -------------
Balance, December 31, 1997         1,121,000      1,000         4,000         (6,000)               -


Net Loss                                   -          -             -              -                -

                                 -----------   --------    ----------    -----------    -------------
Balance, December 31, 1998         1,121,000      1,000         4,000         (6,000)               -


Net Loss                                   -          -             -              -                -

                                 -----------   --------    ----------    -----------    -------------
Balance, December 31, 1999         1,121,000      1,000         4,000         (6,000)               -

Net Loss                                   -          -             -         (3,000)          (3,000)
Expenses paid by former
 office on behalf of company                                    3,000                           3,000

                                 -----------   --------    ----------    -----------    -------------
Balance, December 31, 2000         1,121,000      1,000         7,000         (9,000)               -


Net Loss                                   -          -             -              -                -

                                 -----------   --------    ----------    -----------    -------------
Balance, December 31, 2001         1,121,000      1,000         7,000         (9,000)               -

Issuance of common stock
for cash on July 3, 2002
at $0.1286 per share               1,166,755      1,000       149,000                         150,000

Expenses paid by former
 officer on behalf of company                                   2,000                           2,000

Services performed as
 capital contribution                                         125,000                         125,000
Net Loss                                   -          -             -       (392,000)        (392,000)

                                 -----------   --------    ----------    -----------    -------------
Balance, December 31, 2002         2,287,755      2,000       283,000       (401,000)        (116,000)

Services performed as
 capital contribution                                         290,000                         290,000
Net Loss                                   -          -             -       (478,000)        (478,000)

                                 -----------   --------    ----------    -----------    -------------
Balance, December 31, 2003         2,287,755   $  2,000    $  573,000    $  (879,000)   $    (304,000)
                                 ===========   ========    ==========    ===========    =============
</TABLE>

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

                                       F-4

<PAGE>


                          THE CHILDREN'S INTERNET, INC.
                         (Formerly D.W.C. Installations)
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                           For the Period
                                                                                            September 25,
                                                                                                1996
                                                                                           (inception)to
                                                           For The Year Ended December 31,  December 31,
                                                          -------------------------------- --------------
                                                               2003            2002            2003
                                                            -----------     -----------     -----------

<S>                                                         <C>             <C>             <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:

Net Loss                                                    $  (478,000)    $  (392,000)    $  (879,000)

Adjustments to reconcile net loss to net cash
used in operating activities:

Services performed as capital contribution                      290,000         125,000         414,000
Expenses paid by former officer on behalf of company                              2,000           5,000
Increase in liabilities

                 Accounts payable and accrued expenses           36,000          62,000          99,000
                 Due to Parent Company                          152,000          53,000         205,000
                                                            -----------     -----------     -----------
Net cash used in operating activities                                 -        (150,000)       (156,000)
                                                            -----------     -----------     -----------


CASH PROVIDED BY FINANCING ACTIVITIES:
                 Issuance of common stock                                       150,000         156,000
                                                            -----------     -----------     -----------

Net cash provided by financing activities                             -         150,000         156,000
                                                            -----------     -----------     -----------


Net change in cash and cash equivalents                               -               -               -

Cash and cash equivalents - beginning of period                       -               -               -

                                                            -----------     -----------     -----------
Cash and cash equivalents - end of period                   $         -     $         -     $         -
                                                            ===========     ===========     ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
          Cash paid during the year-
                                      Interest paid         $         -     $         -     $         -
                                                            ===========     ===========     ===========

                                      Income taxes paid     $         -     $         -     $         -
                                                            ===========     ===========     ===========

</TABLE>

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

                                       F-5

<PAGE>


                          THE CHILDREN'S INTERNET, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2003

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

The Children's  Internet,  Inc.  (formerly D.W.C.  Installations  ("Company") is
currently a  development  stage  company  under the  provisions  of Statement of
Financial  Accounting  Standards  ("SFAS")  No. 7. The Company was  incorporated
under the laws of the State of Nevada on September 25, 1996.

On July 3, 2002, Shadrack Films, Inc. purchased 1,166,755 newly issued shares of
our common stock for $150,000,  thereby obtaining a majority  ownership interest
and  becoming  our parent  company.  Total  issued and  outstanding  shares were
increased to 2,287,755 as a result of this sale.

BASIS OF PRESENTATION

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States, which contemplate
continuation of the Company as a going concern. At present, although the Company
has signed contracts establishing revenue sources, the Company has not generated
any  revenues  from these  established  sources of revenue.  This factor  raises
substantial  doubt about the Company's  ability to continue as a going  concern.
Without  realization of additional  capital or established  revenue sources,  it
would be unlikely for the Company to continue as a going concern.  The financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of  recorded  asset  amount,  or amounts and  classification  of
liabilities  that might be necessary should the Company be unable to continue in
existence.  It is management's  objective to seek  additional  capital through a
SB-2  Registration  Statement  which the Company has filed with the SEC and they
hope will raise additional capital (see Note 4 - SB-2 Registration Statement).

USE OF ESTIMATES

The preparation of financial statement in conformity with accounting  principals
generally  accepted in the United States  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.  The Company has
estimated the fair market value of the cost of wages,  if paid, for the services
rendered by its officer and an outside consultant.

CASH AND CASH EQUIVALENTS

The Company  considers all highly  liquid  investments  purchased  with original
maturities of three months or less to be cash equivalents.

                                       F-6

<PAGE>


NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

INCOME TAXES

Income  taxes are  provided  for  based on the  liability  method of  accounting
pursuant to SFAS No. 109, "Accounting for Income Taxes".  Deferred income taxes,
if any,  are  recorded  to  reflect  the tax  consequences  on  future  years of
differences  between the tax bases of assets and liabilities and their financial
reporting amounts at each year-end.

LOSS PER SHARE

SFAS No. 128,  "Earnings  (Loss) Per Share",  requires the presentation of basic
loss per share and diluted  loss per share.  The  computation  of basic loss per
share is computed by  dividing  loss  available  to common  stockholders  by the
weighted average number of outstanding common shares during the period.  Diluted
loss per share gives effect to all dilutive  potential common shares outstanding
during the  period.  As of December  31,  2003,  the Company has no  potentially
dilutive common shares outstanding.

COMPREHENSIVE INCOME

As of December 31, 2003, the Company has no items that  represent  comprehensive
income and therefore,  has not included a Statement of  Comprehensive  Income in
the accompanying financial statements.

SEGMENT REPORTING

The Company identifies its operating segments based on how management internally
evaluates separate financial information (if available), business activities and
management responsibility. The Company believes it operates in a single business
segment. Through December 31, 2003 there have been no foreign operations.

NEW ACCOUNTING PRONOUNCEMENTS

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest Entities" (an  interpretation of Accounting  Research Bulletin
(ARB) No. 51, Consolidated  Financial  Statements).  Interpretation 46 addresses
consolidation  by business  enterprises of entities to which the usual condition
of consolidation  described in ARB-51 does not apply. The Interpretation changes
the criteria by which one company  includes  another entity in its  consolidated
financial  statements.  The general  requirement to consolidate  under ARB-51 is
based  on the  presumption  that an  enterprise's  financial  statements  should
include all of the  entities in which it has a  controlling  financial  interest
(i.e., majority voting interest). Interpretation 46 requires a variable interest
entity to be  consolidated  by a company  that does not have a  majority  voting
interest,  but  nevertheless,  is subject to a majority of the risk of loss from
the variable interest  entity's  activities or entitled to receive a majority of
the entity's  residual  returns or both. A company that  consolidates a variable
interest entity is called the primary beneficiary of that entity.

In  December  2003 the FASB  concluded  to revise  certain  elements  of FIN 46,
primarily to clarify the required  accounting for interests in variable interest
entities.  FIN-46R  replaces  FIN-46,  that was issued in January 2003.  FIN-46R
exempts  certain  entities  from  its  requirements  and  provides  for  special
effective  dates for entities that have fully or partially  applied FIN-46 as of
December 24, 2003. In certain  situations,  entities have the option of applying
or  continuing  to apply  FIN-46  for a short  period  of time  before  applying
FIN-46R.  In general,  for all entities that were previously  considered special
purpose entities,  FIN 46 should be applied in periods ending after December 15,
2003.  Otherwise,  FIN  46 is to be  applied  for  registrants  who  file  under
Regulation SX in periods  ending after March 15, 2004, and for  registrants  who
file under Regulation SB, in periods ending after December 15, 2004. The Company
does  not  expect  the  adoption  to have a  material  impact  on the  Company's
financial position or results of operations.

During  April 2003,  the FASB issued SFAS 149 - "Amendment  of Statement  133 on
Derivative  Instruments and Hedging Activities," effective for contracts entered
into or modified  after June 30,  2003,  except as stated  below and for hedging
relationships  designated  after June 30, 2003.  In  addition,  except as stated
below,  all provisions of this Statement  should be applied  prospectively.  The
provisions of this Statement that relate to Statement 133 Implementation  Issues
that have been effective for fiscal  quarters that began prior to June 15, 2003,
should

                                       F-7

<PAGE>


continue to be applied in accordance with  their respective effective  dates. In
addition,  paragraphs  7(a) and 23(a),  which relate  to  forward  purchases  or
sales of when  issued  securities  or other  securities  that do not yet  exist,
should be applied to both  existing  contracts  and new  contracts  entered into
after June 30, 2003.  The Company  does not  participate  in such  transactions,
however,  is evaluating the effect of this new  pronouncement,  if any, and will
adopt FASB 149 within the prescribed time.

During May 2003,  the FASB issued SFAS 150 - "Accounting  for Certain  Financial
Instruments with  Characteristics of both Liabilities and Equity," effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective for public  entities at the  beginning of the first interim  period
beginning after June 15, 2003. This Statement  establishes  standards for how an
issuer   classifies   and   measures   certain   financial    instruments   with
characteristics  of both  liabilities  and equity.  It  requires  that an issuer
classify  a  freestanding  financial  instrument  that is within  its scope as a
liability (or an asset in some  circumstances).  Many of those  instruments were
previously  classified as equity.  Some of the  provisions of this Statement are
consistent with the current definition of liabilities in FASB Concepts Statement
No. 6, Elements of Financial Statements. The Company is evaluating the effect of
this new pronouncement and will adopt FASB 150 within the prescribed time.

In  December  2003,  the  FASB  issued  a  revised  SFAS  No.  132,  "Employers'
Disclosures about Pensions and Other Postretirement Benefits" which replaces the
previously  issued  Statement.  The revised  Statement  increases  the  existing
disclosures  for  defined  benefit  pension  plans  and  other  defined  benefit
postretirement plans. However, it does not change the measurement or recognition
of those  plans as  required  under  SFAS No.  87,  "Employers'  Accounting  for
Pensions," SFAS No. 88, "Employers'  Accounting for Settlements and Curtailments
of Defined  Benefit  Pension Plans and for  Termination  Benefits," and SFAS No.
106,  "Employers'  Accounting for Postretirement  Benefits Other Than Pensions."
Specifically,  the revised Statement  requires  companies to provide  additional
disclosures  about pension plan assets,  benefit  obligations,  cash flows,  and
benefit  costs of  defined  benefit  pension  plans  and other  defined  benefit
postretirement  plans.  Also,  companies  are required to provide a breakdown of
plan assets by category,  such as debt,  equity and real estate,  and to provide
certain  expected rates of return and target  allocation  percentages  for these
asset  categories.  The  Company  has  implemented  this  pronouncement  and has
concluded that the adoption has no material impact to the financial statements.

NOTE 2 - SALES AND MARKETING AGREEMENT

On September 10, 2002,  the Company  entered into a renewable  five year royalty
and licensing agreement with Two Dog Net, Inc. ("TDN").  Under the terms of that
license  agreement with TDN, in addition to the monthly royalty payment due, the
Company was required to pay an additional $2,000,000 no later than September 10,
2004.  The  Company  capitalized  this  amount for the  technology  license  and
established an amortization  period of three years,  the expected useful life of
the license.  On November 5, 2002,  the Company  exchanged two million shares of
its Series A Convertible Preferred Stock for the long-term debt owed.

This  original  agreement  did not reflect the true intent of the parties and on
March 3, 2003,  the parities  replaced the royalty and license  agreement with a
wholesale sales & marketing  agreement with the same effective date of September
10,  2002.  The new  agreement  was for an  exclusive  and  renewable  five year
wholesale sales and marketing  agreement with TDN to be the exclusive  marketers
of their  proprietary and patent pending secured  internet  service for children
pre-school  to junior high  called The  Children's  Internet(R)  and an internet
dial-up service. Under the terms of the agreement,  the Company can continue the
agreement  for an  additional  five years on the same terms unless  either party
terminates by written notice to the other party no less than one year before the
end of the term. Under the terms of the sales and marketing  agreement with TDN,
the  Company  will  pay TDN a fee per  month  per  subscriber  for the  services
subscribed.  The  effect  of the  change  was to  remove  long  term debt and an
intangible asset net of accumulated  amortization  from the balance sheet and to
reduce the net loss for the three months ended  September 30, 2002 by the amount
of the amortization  ($53,118) and to reduce stockholders'  deficit at September
30,  2002 by a like  amount.  All  financial  statements  for the  period  ended
September 30, 2002 were restated.

NOTE 3 - RELATED PARTY TRANSACTIONS

In the first half of the year, the Parent Company  provided for the office space
utilized by the Company and paid for the Companies  utility  costs.  The Company
has accrued a payable, included in Due to Parent Company, for

                                       F-8

<PAGE>


reimbursement  of  such costs. In  the second half of  the year when  the Parent
Company's  lease expired,  the Company  entered into a lease agreement with Hill
Physicians Medical Group,  Inc., a California  corporation to continue to occupy
the same office space  consisting of 2,759 square feet. The initial term of this
sublease  commenced on July 1, 2003 and expired on January 31, 2004. On February
19, 2004, the Company entered into a settlement agreement with their landlord to
continue to occupy the office  space on a  rent-free  basis until March 22, 2004
(see Note 7 - Subsequent Events).

The  Company's  President,  Chief  Executive Officer, Chief  Financial  Officer,
and Director,  Sholeh Hamedani and an outside financial consultant have provided
services to the Company at a fair market value of $290,000  and $125,000  during
the twelve months ended  December 31, 2003 and 2002  respectively,  and will not
seek payment for the services provided.

The  Company,  Shadrack  and TDN are related  parties,  in that,  the  Company's
President,  Chief  Executive  Officer,  Chief Financial  Officer,  and Director,
Sholeh  Hamedani,  is the sole  shareholder  of  Shadrack  which owns 51% of the
Company's  common stock. Ms. Hamedani was President of TDN until August 1, 2002.
In  addition,  the  current  President,  Chairman  and  Founder  of TDN,  Nasser
Hamedani,  is the father of the Company's  President,  Chief Executive  Officer,
Chief Financial Officer, and Director, Sholeh Hamedani.

On June 28, 2002,  the Company  entered into a  Consulting  Agreement  with Alan
Schram.  This agreement provides for Alan Schram to provide consulting  services
to the Company.  In return for his services,  the agreement entitles Alan Schram
to receive 25,000 shares of the Company's  common stock at the completion of the
agreement's four month term. The consulting  services have been accrued in other
expenses. The Company is currently in negotiations with Mr. Schram to settle its
obligations  under the terms of this  agreement.  As of the date  hereof,  these
shares have not been  issued.  Alan Schram is the  Company's  former  President,
Secretary, Chief Financial Officer and Director.

NOTE 4 - SB-2 REGISTRATION STATEMENT

On February  10,  2003,  the Company  filed a Form SB-2  registration  statement
offering for sale of up to a maximum of 4,000,000 shares of the Company's common
stock directly to the public. There is no underwriter involved in this offering.
The shares are being offered without any underwriting  discounts or commissions.
The  purchase  price is $2.00 per  share.  If all of the  shares  offered by the
Company are sold,  the  proceeds  will be  $8,000,000.  The Company has received
comments  from the SEC on their filing and has  responded to those  comments and
filed amendments to the registration  statement in July,  September and December
2003 and February 2004.

NOTE 6 - COMMITMENT

On September  30, 2003,  the Company  signed a 13-month  colocation to house the
Company's  search  engine,  servers  and related  equipment.  For the year ended
December 31, 2003 the total amount paid was $5,800.

NOTE 7 - SUBSEQUENT EVENTS

On February  13,  2004 the Company  received  notice that their  landlord,  Hill
Physicians  Medical Group,  Inc. had filed an unlawful  detainer  action against
them on  February  6, 2004 in the Contra  Costa  County  Superior  Court as case
number  WS04-0238.  The  landlord  alleges  that the lease for the office  space
expired  January 31, 2004 and was requesting the court to award it possession of
the  premises  and pay the sum of  $8,746.52  for rent  and  other  charges  due
pursuant  to the  lease.  On  February  19,  2004  the  Company  signed a Mutual
Settlement  Agreement and Release allowing the Company to continue to occupy the
office space on a rent-free  basis  through  March 22, 2004 and  providing for a
Stipulation for Entry of Judgment in the amount of $8,746.52 against the Company
in the event they fail to vacate this office space on March 22, 2004. Other then
this dispute with the landlord, the Company is not aware of any other pending or
threatened litigation that could have a material adverse effect on the financial
statements.

                                       F-9


                                       17

<PAGE>


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

None.

ITEM 8A CONTROLS AND PROCEDURES

Our  President  and Chief  Financial  Officer (the  "Certifying  Officers")  are
responsible for establishing and maintaining  disclosure controls and procedures
for the Company.  The Certifying Officers have designed such disclosure controls
and  procedures  to ensure  that  material  information  is made  known to them,
particularly during the period in which this report was prepared. The Certifying
Officers have evaluated the effectiveness of the Company's  disclosure  controls
and  procedures  as of the end of the period  covered by this report and believe
that the Company's disclosure controls and procedures are effective based on the
required  evaluation.  During the period  covered by this report,  there were no
changes in internal controls that materially affected,  or are reasonably likely
to materially affect, the Company's internal control over financial reporting.

                                    PART III

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

Our directors and executive officers are as follows:

Name                       Age        Position
-----------------------   -----       ------------------------------------------
Sholeh Hamedani            36         President, Chief Executive Officer, Chief
                                      Financial Officer, Chairman of the Board
                                      of Directors
Jamshid Ghosseiri          64         Secretary, Director
Tyler Wheeler              33         Director
Roger Campos, Esq.         57         Director
Dale Boehm                 35         Director

Ms. SHOLEH  HAMEDANI,  has been our President,  Chief Executive  Officer,  Chief
Financial Officer and Chairman of the Board since August 23, 2002. From May 2002
through  the  present,  she has  served as the  President,  CEO and  founder  of
Shadrack Films, Inc., our parent company. From July 1995 to August 2002, she was
President and co-founder of Two Dog Net, Inc., a security solutions provider and
software developer.  She was responsible for managing product development of new
technologies,  as well as creating and implementing their marketing  strategies.
Ms. Hamedani's  experience includes local and national advertising  campaigns on
television,  radio,  and print as well as  producing,  scripting  and  directing
educational  video programs and television  infomercials.  Prior to Two Dog Net,
Inc., Ms.  Hamedani was part of the founding team at SyberVision  Systems in the
Production  and TV Media  Department  from 1985 to 1989. Ms.  Hamedani  attended
California State University,  Hayward majoring in Business  Administration  from
1985 to 1988.

                                       18

<PAGE>


Mr. JAMSHID  GHOSSEIRI has  been a director  since August 23, 2002 and Secretary
since January 2, 2003.  From January 9, 1989 through the present,  he has served
as Chief of the  Microbiology  Department  at Mt.  Diablo  Medical  Center.  Mr.
Ghosseiri has over 35 years of experience in the field of clinical  microbiology
and  research in  infectious  diseases.  He received a B.S.  from San Jose State
University  in 1966  and  completed  his Post  Graduate  Studies  in  Infectious
Diseases at Stanford University in 1969.

Mr. TYLER WHEELER has been our Chief  Software  Architect  and a director  since
August 23, 2002. He  co-founded  Micro Tech Systems in 1989. In 1993, he and his
father  founded  Integrative  Systems,  Inc., a hardware  and software  computer
consulting  firm.  From January 1996 to August 2002 , Mr. Wheeler served as Vice
President of Technology at Two Dog Net, Inc. a security  solutions  provider and
software  developer.  Mr. Wheeler  completed a BA in Finance and Business Law at
California State University, Fresno in May of 1996.

Mr. ROGER  CAMPOS,  ESQ. has been a director  since August 23, 2002.  Mr. Campos
received his J.D. (law) degree in June 1972 from the United States International
University  (San  Diego,  CA) and  received  his BA in June  of  1969  from  the
University  of  California  at Santa  Barbara.  From  February  2002 through the
present, he serves as President and CEO of the Minority Business  Roundtable,  a
national  membership  organization,  based  in  Washington  DC,  for CEOs of the
nation's largest minority-owned  companies.  From January 2000 to February 2002,
Mr.  Campos was Executive  Director of the Minority  Business  Roundtable.  From
January  1997 to  January  2000,  he  served  as Vice  President  of  government
relations for the Hispanic Association of Colleges and Universities.  Mr. Campos
provides  consulting  services  in the  areas  of  contracting,  marketing,  and
business transactions.

Mr. DALE BOEHM has been a director  since August 23, 2002.  Since March 17, 2003
continuing to the present Mr. Boehm is the President of MasterLink  Corporation.
MasterLink  Corporation  is a project  management  based  professional  services
organization  with a focus on network and system  integration,  carrier services
brokering  and network  management  services.  From  September  2002  continuing
through  today Mr.  Boehm is the Founder  and  President  of Caspian  Technology
Concepts,  a  consulting  firm  specializing  in  network  management  services.
Previous   to  this,   Mr.   Boehm   served  as   Director  of  Sales  at  Qwest
Telecommunications,  Inc from July 2001 continuing until August 2002where he was
responsible  for 90+  direct  reports  and all of the  revenue  in the  National
Accounts  division in Illinois and  Wisconsin.  From December 2000 to July 2001,
Mr. Boehm was the Regional Vice  President of Central  Region Sales at OneSecure
Inc.,  a managed  security  services  provider  enabling  clients  to  co-manage
firewalls.  Mr.  Boehm was  Regional  Vice  President  Enterprise  Solutions  of
GlobalCenter  from  November  1999  through  December  2000 prior to its sale to
Exodus.  He was also the Manager of IP Network  Solutions at AT&T from  February
1997 through November 1999. From January 2000 through the present, Mr. Boehm has
been an instructor of TCP/IP, Business-to-Business e-Commerce, and IP Technology
programs at the  University of  Wisconsin-Milwaukee  where he is the Chairman on
the Executive Steering Committee for the University Outreach Program. He is also
a member of the Information Systems Security  Association  (ISSA)(R).  Mr. Boehm
received his Certificate of  Telecommunications  Analysis from the University of
Wisconsin-Milwaukee  in 1994 and is currently enrolled at Concordia  University,
Mequon, Wisconsin for a Bachelor of Arts, Management & Communication degree.

                                       19

<PAGE>


Directors are elected to serve until the next annual meeting of stockholders and
until their  successors  have been  elected  and have  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.

MEETINGS OF THE BOARD OF DIRECTORS AND INFORMATION REGARDING COMMITTEES

There  currently  are no  committees  of the  Board of  Directors.  The Board of
Directors held no meetings in fiscal year 2003.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities  Exchange Act of 1934 requires our directors and
officers,  as  well as  persons  who  own  more  than  10% of our  common  stock
("Reporting  Persons") to file reports of ownership  and changes in ownership on
Forms  3, 4 and 5 with the  Securities  and  Exchange  Commission.  The  Company
believes  that all  Reporting  Persons have  complied on a timely basis with all
filing requirements applicable to them.

ITEM 10. EXECUTIVE COMPENSATION.

GENERAL COMPENSATION DISCUSSION

All decisions  regarding  compensation for our executive  officers and executive
compensation  programs  are  reviewed,  discussed,  and approved by the Board of
Directors. All compensation decisions are determined following a detailed review
and assessment of external  competitive data, the individual's  contributions to
our success,  any significant  changes in role or  responsibility,  and internal
equity of pay relationships.

                                       20

<PAGE>


SUMMARY COMPENSATION TABLE

The following table sets forth the total  compensation  earned by or paid to the
executive  officers for the last three fiscal years. None of our officers earned
more than $100,000 in the last three fiscal years.

<TABLE>
<CAPTION>
                                       ANNUAL
                                     COMPENSATION             LONG TERM COMPENSATION
============================================================================================================
                                                                    Awards          Payouts
============================================================================================================
                                                   Other                Securities
                                                  Annual    Restricted  Underlying
                                                  Compen-     Stock     Options/     LTIP        All Other
                              Salary     Bonus    sation      Awards      SARs      Payouts    Compensation
                   Year        ($)        ($)       ($)        ($)         (#)        ($)            ($)
============================================================================================================
<S>                <C>      <C>           <C>        <C>        <C>       <C>         <C>             <C>
Sholeh             2002     $ 75,000[1]   $0         $0         $0        -0-         $0              $0
Hamedani,          2003     $180,000[1]              $0         $0        -0-         $0              $0
President,
CEO, CFO
============================================================================================================
Alan Schram,       2002     $142,848      $0         $0         $0        -0-         $0              $0
President,
Secretary and
Treasurer[2]
                   2001        $0         $0         $0         $0        -0-         $0              $0
Hagit              2000        $0         $0         $0         $0        -0-         $0              $0
Bernstein,
President and
Secretary[3]
                   1999        $0         $0         $0         $0        -0-         $0              $0

Raphi Shram,       2000        $0         $0         $0         $0        -0-         $0              $0
Treasurer[4]
                   1999        $0         $0         $0         $0        -0-         $0              $0
============================================================================================================
</TABLE>

No options or SARs (Stock  Appreciation  Rights)  where granted to any executive
officers.

EMPLOYMENT AND RELATED AGREEMENTS

We have not entered into any employment agreements.

________________________
[1]  The officer  did not charge the Company for her  services - this amount was
     the estimated fair market value for comparable services and was recorded as
     contributed to capital as of December 31, 2002.

[2]  Resigned August 12, 2002.

[3]  Resigned January 1, 2001.

[4]  Resigned January 1, 2001.

                                       21

<PAGE>


COMPENSATION OF DIRECTORS

Directors of the Company do not receive any cash compensation,  but are entitled
to reimbursement of their reasonable  expenses incurred in attending  directors'
meetings.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth the  shareholdings  of those persons who: (i) own
more  than 5% of our  common  stock as of March  10,  2004  with the  number  of
outstanding shares at 2,287,755;  (ii) are our officers or directors;  and (iii)
all officers and directors as a group:

                                                               Percentage
                                                              Beneficially
              Name                     Number of Shares         Owned[1]
              ----                     ----------------       ------------
Sholeh Hamedani, President, CEO,         1,166,755[3]            51.0%
CFO, Director[2]
Jamshid Ghosseiri, Ph.D.,                      -0-                -0-
Secretary, Director[2]
Tyler Wheeler, CTO, Director[2]                -0-                -0-
Roger Campos, Esq., CTO,                       -0-                -0-
Director[2]
Dale Boehm, Director[2]                        -0-                -0-
All Officers and Directors as a
group (5 people)                         1,166,755               51.0%
Shadrack Films, Inc.                     1,166,755[3]            51.0%
Steve Sowieja[4][5]                        210,000                9.2%

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Our  President,  Chief  Executive  Officer,  and one of  our  Directors,  Sholeh
Hamedani,  is the sole shareholder of our parent company,  Shadrack Films,  Inc.
Ms.  Hamedani  was  also  President  of Two Dog  Net,  Inc.,  the  owner  of The
Children's  Internet(R)technology  until August 1, 2002. Ms.  Hamedani also owns
approximately  10% of the total  outstanding  shares of Common  Stock of Two Dog
Net, Inc.

________________________
[1]  Except as otherwise  indicated,  we believe that the  beneficial  owners of
     Common Stock listed above,  based on information  furnished by such owners,
     have sole investment and voting power with respect to such shares,  subject
     to  community  property  laws where  applicable.  Beneficial  ownership  is
     determined in accordance  with the rules of the SEC and generally  includes
     voting or  investment  power with respect to  securities.  Shares of Common
     Stock subject to options or warrants currently exercisable,  or exercisable
     within 60 days,  are deemed  outstanding  for  purposes  of  computing  the
     percentage  of the person  holding such  options or  warrants,  but are not
     deemed  outstanding  for purposes of computing the  percentage of any other
     person.

[2]  c/o 5000 Hopyard Rd., Suite 320, Pleasanton, CA 94588.

[3]  Consists of 1,166,755  shares of common stock owned by Shadrack Films,  Inc
     formerly known as The Children's Internet,  Inc., a California corporation,
     of which Sholeh Hamedani is the sole shareholder.

[4]  Benefical owner of shares held by Cities Electric.

[5]  c/o Cities Electric, 3100 225th St. West, Farmington, MN 55024

                                       22

<PAGE>


Ms Hamedani's father,  Nasser Hamedani,  is the current President,  Chairman and
majority shareholder of Two Dog Net, Inc.

On June 28, 2002, we entered into a Consulting  Agreement with Alan Schram. This
agreement  provided  for Alan  Schram to provide  consulting  services to us. In
return for his services,  the agreement  entitled Alan Schram to receive  25,000
shares of our common stock at the completion of the agreement's four month term.
We are currently in negotiations with Mr. Schram to settle our obligations under
the terms of this agreement.  As of the date hereof,  these shares have not been
issued. Alan Schram is our former President,  Secretary, Chief Financial Officer
and Director.

On July 3, 2002, we entered into an agreement with Shadrack Films, Inc. Pursuant
to the agreement,  we sold 1,166,755  newly issued shares of our common stock to
Shadrack  Films,  Inc. in exchange for an aggregate  purchase price of $150,000.
Sholeh Hamedani is the sole shareholder of Shadrack Films, Inc.

On September  10, 2002,  we entered into a License  Agreement  with Two Dog Net,
Inc. to license The Children's Internet(R) technology and intellectual property.
We  paid  $15,500  in  cash to Two  Dog  Net in  consideration  for the  License
Agreement.  This agreement was  subsequently  cancelled and on March 3, 2003, we
entered into a new Wholesale Sales & Marketing Agreement with Two Dog Net. Under
the terms of this  agreement,  we will pay Two Dog  Net$3.00  per month for each
user accessing The Children's  Internet(R)  service. The Agreement also provides
that we will pay Two Dog Net $3.79 per  month for each user  accessing  Internet
dial-up service, but we have no plans to offer dial-up service.

In a Stock  Purchase  Agreement  dated  October  11,  2002 and in reliance on an
exemption  from  registration  pursuant to Section 4(1) of the Securities Act of
1933,our  original  shareholders  sold  1,118,500  of their shares of our common
stock to various  purchasers,  two of who are related to our management,  Nasser
Hamedani,  Sholeh Hamedani's  father,  and Soraiya  Hamedani,  Sholeh Hamedani's
sister. Some of these purchasers were introduced to the original shareholders by
Sholeh Hamedani, our President, Chief Financial Officer, and a Director. Some of
these purchasers  resold their shares to unrelated third parties,  relying on an
exemption  from  registration  pursuant to Section 4(1) of the Securities Act of
1933. A portion of the proceeds  received from the stock sale by the  purchasers
was in turn loaned to Shadrack Films,  Inc., our parent company.  Shadrack Films
used these funds to finance our initial  operations  thus far. These amounts are
reflected on the financial  statements as "Due to Parent  Company." The original
shareholders  received  their shares from us in reliance on the  exemption  from
registration pursuant to Section 4(2) of the Securities Act of 1933.

One of our shareholders,  Tim Nash was an independent  authorized distributor of
The  Children's   Internet(R)   and  promoted  our  product  on  his  web  site,
www.kidssafenet.com. Mr. Nash is no longer an independent authorized distributor
for us since July 15,  2003 and he has since  taken down his web site.  Mr. Nash
owns 10,000 shares of our common stock.

                                       23

<PAGE>


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS

      3.1    Articles of Incorporation, dated September 25, 1996[1]

      3.2    Certificate   of  Amendment of  Articles   of  Incorporation, dated
             February 10, 2000[1]

      3.3    Certificate  of   Amendment of   Articles of   Incorporation, dated
             December 27, 2002[1]

      3.4    Certificate  of   Designation  of  Series A  Preferred Stock, dated
             November 8, 2002[1]

      3.5    Bylaws[1]

      10.1   Plan of Reorganization and Acquisition, July 3, 2002[1]

      10.2   Consulting Agreement with Alan Schram, dated June 28, 2002[1]

      10.3   License Agreement dated September 10, 2002[1]

      10.4   Amendment to License Agreement, dated November 5, 2002[1]

      10.5   Wholesale Sales & Marketing Agreement, dated March 3, 2003[2]

      10.6   Stock Purchase Agreement, dated October 11, 2002[3]

      10.7   Co-Location Agreement, dated July 11, 2003[4]

      10.8   Independent Sales Agreement with Infolink, dated August 14, 2003[3]

      10.9   Licensing Agreement with Infolink, dated August 14, 2003[3]

      10.10  Co-Location Agreement, dated September 26, 2003[5]

      31.1   Certification of Chief Executive Officer Pursuant to the Securities
             Exchange Act of 1934,  Rules 13a-14 and 15d-14, as adopted pursuant
             to Section 302 of the Sarbanes-Oxley Act of 2002

      31.2   Certification of Chief Financial Officer Pursuant to the Securities
             Exchange  Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant
             to Section 302 of the Sarbanes-Oxley Act of 2002

      32     Certification   Pursuant  to  18 U.S.C.  Section 1350,  as  Adopted
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) REPORTS ON FORM 8-K

None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Stonefield  Josephson,  Inc. is the  Company's  independent  auditor. Stonefield
Josephson, Inc. performed the services listed below and was paid the fees listed
below.

________________________
[1]  Incorporated by reference from the Company's Registration Statement on Form
     SB-2, filed on February 10, 2003, as amended (Registration No. 333-103072).

[2]  Incorporated  by reference from the Company's  Annual Report on Form 10-KSB
     for the fiscal year ended  December 31, 2002,  filed on March 31, 2003 (SEC
     File No. 000-29611).

[3]  Incorporated  by reference from  Amendment 2 to the Company's  Registration
     Statement  on  Form  SB-2,   filed  on  September   11,  2003,  as  amended
     (Registration No. 333-103072).

[4]  Incorporated by reference to the Company's  Quarterly Report on Form 10-QSB
     for the  quarter  ended June 30, 2003 (File No.  000-29611)  filed on EDGAR
     August 14, 2003.

[5]  Incorporated by reference from the Company's Registration Statement on Form
     SB-2, filed on February 2, 2004, as amended (Registration No. 333-103072).

                                       24

<PAGE>


AUDIT FEES

Stonefield  Josephson,  Inc. billed aggregate fees of approximately  $30,000 for
year ended December 31, 2003 and  approximately  $10,000 for year ended December
31,  2002 for  professional  services  rendered  for the audit of the  Company's
annual financial  statements and review of the financial  statements included in
the  Company's  Quarterly  Reports on Form 10-QSB and on Form SB-2  Registration
Statement.

TAX FEES

Stonefield Josephson, Inc. did not provide or bill for any professional services
during the  two years ended December 31, 2003 in connection with tax advise, tax
compliance or tax planning

ALL OTHER FEES

Stonefield Jospehson, Inc. did  not provide or  bill for  any other professional
services during the two years ended December 31, 2003.

                                   SIGNATURES

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

                                        THE CHILDREN'S INTERNET, INC.


DATED: March 22, 2004                   By: /s/ Sholeh Hamedani
                                            ------------------------------------
                                            Sholeh Hamedani
                                            President, Director
                                            (Principal Executive Officer)


DATED: March 22, 2004                   By: /s/ Sholeh Hamedani
                                            ------------------------------------
                                            Sholeh Hamedani
                                            Chief Financial Officer, Director
                                            (Principal Financial Officer and
                                            Principal Accounting Officer)

                                       25