Edgar Filing: INVENTOY COM INC

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

FORM 10-KSB

(Mark One)

|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For Fiscal Year Ended: July 31, 2001

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

For the transition period from ________________ to ________________

Commission file number 333-61714

Inventoy.com
-----------------------------------------------------
(Exact name of small business issuer as
specified in its charter)

Delaware 13-418563
--------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)

6786 Willowood Drive, Suite G1006, Boca Raton, Florida 33434
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Issuer's telephone number (561) 482-6952
-------------------------------------------------------

Securities registered under Section 12(b) of the Act: None
---------------------------

Securities registered under Section 12(g) of the Act: Common Stock, par value
$0.001 per share
---------------------------

Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

State registrant's revenues for its most recent fiscal year: None.

As of October 22, 2001 there were 5,211,000 shares of the registrant's
common stock, par value $0.001, issued and outstanding. Of these shares,
1,601,000, approximately 31%, are held by non-affiliates of the registrant. The
registrant's common stock has never traded on any public market and has never
received any bids and therefore the registrant is unable to estimate the market
value of its common stock held by non-affiliates.

Transitional Small Business Disclosure Format (check one): Yes |_|; No |X|

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933, as amended ("Securities Act")
-- N/A.

TABLE OF CONTENTS

Item Number and Caption Page
----

Forward-Looking Statements...........................................4

PART I

1. Description of Business.............................................4

2. Description of Property.............................................7

3. Legal Proceedings...................................................8

4. Submission of Matters to a Vote of Security Holders.................8

PART II

5. Market for Common Equity and Related Stockholder Matters............8

6. Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................9

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

8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................10

PART III

9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act..................10

10. Executive Compensation.............................................12

11. Security Ownership of Certain Beneficial Owners and Management.....12

12. Certain Relationships and Related Transactions.....................13

13. Exhibits and Reports on Form 8-K...................................14

FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements involve risks and uncertainties, including, among other things,
statements regarding our business strategy, future revenues and anticipated
costs and expenses. Such forward-looking statements include, among others, those
statements including the words "expects," "anticipates," "intends," "believes"
and similar language. Our actual results may differ significantly from those
projected in the forward-looking statements. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
in the section "Management's Discussion and Analysis of Financial Condition and
Results of Operations". You should carefully review the risks described in other
documents we file from time to time with the Securities and Exchange Commission.
You are cautioned not to place undue reliance on the forward-looking statements,
which speak only as of the date of this report. We undertake no obligation to
publicly release any revisions to the forward-looking statements or reflect
events or circumstances after the date of this document.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

Inventoy.com, Inc. was incorporated August 11, 1999 in the state of
Delaware. We seek to license toy designs to toy manufacturers and to act as a
toy inventor's agent in licensing toy designs developed by others. Our licensing
efforts will begin with 27 toy designs which we acquired from Kaplan Design
Group, a New Jersey general partnership. Our president, Ed Kaplan, is a ten
percent partner of Kaplan Design Group and his sons Douglas Kaplan, our
Secretary, and Michael Kaplan are each forty-five percent partners. We expect to
market these toy designs by both direct meetings with toy manufacturers'
representatives and through a web site that will give the manufacturers an
opportunity to review pictures and descriptions of new inventions at a single
source to decide whether a face-to-face meeting would be useful. In both
face-to-face meetings and disclosure of toy designs over the Internet, a
submission sheet will be used that describes the toy design and who the
authorized manufacturer is who is viewing the toy design. We have had no
operations to date.

Initially we will look at the toy design concept to see if it makes sense
or has been done before. Then we will evaluate the toy design to determine if it
is something we think a toy manufacturer and retailer can and would manufacture
and market. Then we will evaluate whether the toy design is expandable into a
brand, whether it may be suitable for a series of related toys.

Industry Background

We believe that the business of most toy companies relies on the
continuing development of new products as well as the redesigning of existing
products for continuing market acceptance. We believe that the leading toy
companies maintain a staff of designers, artists, model makers and engineers,
and that much of this work is performed by that staff internally. However, we
believe that most leading toy manufacturers also deal with a number of
independent toy designers.

We believe that in recent years, the toy industry has experienced rapid
consolidation. This is in part because the manufacturers want to offer a range
of products across a broader variety of categories. The toy industry is also
experiencing a shift toward greater consolidation of retail distribution
channels, such as large specialty toy stores and discount retailers, including
Toys R Us, Wal-Mart, Kmart and Target, which have increased their overall share
of the retail market. Large retailers in turn are relying more and more on the
large toy companies because of their financial stability and ability to support
products through advertising and promotion and to distribute products on a
national basis.

We believe that the larger toy companies have pursued a strategy of
focusing on core product lines. Core product lines are those lines that are
expected to be marketed for an extended period of time, and that historically
provided relatively consistent growth in sales and profitability. By focusing on
core product lines, toy manufacturers have been able to reduce their reliance on
new product introductions and the associated risk and volatility. The
combination of fewer manufacturers and decreased emphasis on new designs rather
than the tried and true means that the independent toy inventor has fewer and
fewer outlets for his inventions, and that each outlet is larger and therefore
more difficult to "break into." We believe that these trends make the role of
the inventor's agent increasingly important if a new design is to reach the
marketplace. Larger manufacturers, particularly, maintain large internal
development staffs, and getting a new idea before the decision-makers
increasingly require an introduction by someone with a track record in the
industry.

We believe that rights to designs and ideas developed by independent toy
designers are usually acquired on an exclusive basis. Licensing agreements
generally require the manufacturer to pay the designer a royalty on the
manufacturer's net sales of the item. The royalty agreements usually also
provide for advance royalties and minimum guarantees to the designer.

The Role of a Toy Inventor's Agent

We believe that the vast majority of new toy designs developed outside the
large toy manufacturers are developed by professional toy inventors. However, a
significant number of new designs do come from amateur inventors. Some of these
inventors may have developed only a single product, and most of them don't have
experience in dealing with toy manufacturers. We believe that for a variety of
reasons the major toy manufacturers prefer to deal through a broker in
negotiating arrangements with amateur inventors. We believe that many amateur
inventors often suspect that the manufacturer may "steal" his or her invention
once it is disclosed. However, often when a

concept is presented to a toy manufacturer, the manufacturer has seen the idea
before or has developed itself. The manufacturer will state this, usually in
writing on a disclosure form. Toy agents and professional inventors are
accustomed to this process; and there is a level of trust. We believe that an
amateur, on the other hand, often doesn't trust the toy manufacturer and may
think his or her idea has been stolen if it shows up on toy shelves the next
year. The result is often a lawsuit with the toy manufacturer being portrayed as
the "big company" against the "little guy." There is always a risk that a jury
will side with the "little guy" no matter what the facts may be. An experienced
toy agent is accustomed to the process by which existing inventions are
disclosed and as an outsider can explain to the new inventor that if a toy
manufacturer steals ideas from toy agents and professional inventors the
manufacturer will stop having access to new ideas from this important source.

In addition, we believe that the inventor may have unrealistic
expectations concerning the potential value of his invention or may
underestimate the amount of additional, development plans required to bring to
market. The professional toy agent is familiar with the process of developing
the invention from the initial idea through the completion of a prototype. The
toy agent also knows the prevailing amounts of royalties and other practices in
the industry. The toy agent can independently confirm to the inventor the
problems that may be facing the manufacturer in bringing the idea to market, or,
if appropriate, persuade the manufacturer that a higher royalty is appropriate.

Sources of Revenue

We expect to earn money primarily from two sources. First, we will seek to
license the inventory of 27 toy designs we currently have and possibly
additional designs that may be developed by Ed Kaplan in the future. Second, we
will receive a portion of the royalties paid to the inventors we expect to
represent as agent. Additionally, we will also seek revenue from the sale of
banner ads on the web page we are planning to create. We expect that any revenue
from the sale of banner ads to be minimal.

We believe that toy inventors usually are paid for their inventions
through a royalty on sales of the products they design. We believe that typical
royalties range from 3% to 10% of the wholesale price charged by the
manufacturer, with most royalties falling at or near 5%. The royalty is based on
the price the manufacturer charges to its customers -- usually the wholesale
cost. Manufacturers also pay advances, sometimes called earnest money, to show
that they are committed to the idea. Usually the advance is based on the
royalties that would be earned in the first quarter of shipments. We believe
that typically the advance ranges from $5,000 to $50,000. The advance is
subtracted from future royalties. Generally, royalties are paid quarterly.

Where we are licensing our own inventions, we will receive the entire
royalty. Where we are acting as a broker for another inventor, our percentage
will be subject to negotiation with the inventor. We believe that it will
generally range from 40% to 50% of the royalty received by the inventor, with
the actual percentage negotiated on a case-by-case basis depending upon, among
other

things, the amount of assistance we have to give the inventor in order to bring
his product to a marketable state.

Selection Criteria

Toy designs for which we will act as agent will be selected based
primarily on our judgment of the chances of their achieving commercial success
and yielding significant royalties. Considerations will include how unique the
toy design is, the likelihood of getting meaningful patent protection, the
amount of any additional work required to bring the designs to a production
stage and management's subjective "feel" for whether the design is in line with
current consumer desires. These same considerations will affect the prominence
we give to a particular design on our Web pages and the degree of effort put
into marketing that design to toy manufacturers.

Importance of Relationships and Reputation

We believe that one of the most important factors that will make our
business succeed or fail is the reputation of our president. One of the key
hurdles faced by any independent toy inventor is getting his design before the
appropriate decision maker at the manufacturer's level. We believe that an
inventor with an established track record in the field is far more likely to be
able to get the attention of these decision makers in order to present new
designs. In addition, our experience is that knowing the key decision makers on
a personal level goes a long way toward successfully arranging a personal
meeting to present new designs. Our president, Ed Kaplan, has been a toy
manufacturing executive for 26 years and ran a toy design company for 16 years,
and is well known to most of the major toy manufacturers.

Employees

As of October 22, 2001 we had no employees, other than our two officers
and directors, Ed Kaplan and Douglas Kaplan, and director Ron Beit-Halachmy.

ITEM 2. DESCRIPTION OF PROPERTY

At present, we own no real property. We are currently operated out of Ed
Kaplan's home in Boca Raton, Florida. We believe our present office space will
be adequate for our needs for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to nor are we aware of any existing, pending or
threatened lawsuits or other legal actions.

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

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

There is no public trading market on which our common stock is traded. We
have engaged a broker/dealer to file a Form 211 with the National Association of
Securities Dealers in order to allow the quote of our common stock on the NASD
Over the Counter-Bulletin Board (OTCBB). There is no assurance that our common
stock will be included on the OTCBB.

Holders

As of October 22, 2001 there are approximately 47 record holders of our
common stock.

Dividends

We have never declared or paid any cash dividends on our common stock. We
anticipate that any earnings will be retained for development and expansion of
our business and we do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has sole discretion to pay cash
dividends based on our financial condition, results of operations, capital
requirements, contractual obligations and other relevant factors.

Recent sales of securities

None.

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

The following discussion contains forward-looking statements involving risks and
uncertainties based on our current expectations and the development of our
business. All statements in this registration statement related to our intended
business plans, prospective financial operations and expected future growth or
profitability constitute forward-looking statements. Forward-looking statements
are subject to a number of risks and uncertainties. Our actual results may
differ significantly from those anticipated or expressed in these statements.
You should read the following discussion and analysis in conjunction with the
audited financial statements (and notes thereto) and other financial information
of our company appearing elsewhere in this report.

Overview

Inventoy was incorporated on August 11, 1999, and seeks to license toy
designs to toy manufacturers and to act as a toy inventor's agent in licensing
toy designs developed by others. Additionally Inventoy will seek revenue from
the sale of banner ads on the web page it plans to create. However, the
expectation is that any revenue from the sale of banner ads will be minimal.
Inventoy's licensing efforts begin with twenty-seven toy designs which were
acquired from Kaplan Design Group, a New Jersey general partnership. Inventoy
expects to market those toy designs by both direct meetings with toy
manufacturers' representatives as well as through a website that will give the
manufacturers an opportunity to review pictures and descriptions of new
inventions at a single source to decide whether a fact-to-face meeting would be
useful.

Inventoy's plan of operations for the next twelve months includes hiring a
web designer to build Inventoy's web page, and soliciting new toy designs. The
web page will take approximately four months build and cost approximately
$25,000. We plan to hire a web designer later this year. We will rely on Ed
Kaplan and Doug Kaplan's contacts in the toy industry to solicit new toy
designs. We plan for the web page to also solicit new toy designs. Also, during
the next twelve months Ed Kaplan will market Inventoy's current toy designs
directly to toy manufactures' representatives.

From its inception to the time of filing this registration statement,
Inventoy has been developing its business and had no operations. Inventory
believes that it will not need to raise additional funds in the next twelve
months.

Intellectual Property

We have no trademark, copyright or patent protection at this time. None of
the designs we own are protected by patent protection. Generally, while some toy
designs may be entitled to patent protection, the majority of toy designs will
not meet the criteria for a utility patent protection. Some designs may be
eligible for a limited degree of protection provided by design patents. However,
in general most designs are protected only under the law of trade secrets. Under
the law of trade

secrets, the secret is legally protected only for so long as it is not disclosed
to others other than by someone under an obligation to maintain its secrecy.

Competition

We expect to face intense competition both in our efforts to market new
toy inventions to toy manufacturers and in our efforts to get new inventor
customers for whom we can act as agent. There are several other companies
seeking to assist toy inventors, one of the more successful companies is
Haystack Toy Company. Insofar as marketing toy designs to the manufacturers is
concerned, the major competition will be from the manufacturers' own in-house
design departments. There are also approximately 150 independent toy design
companies, many of which are sole proprietorships. The principal bases on which
industry participants compete is on the perceived value of the toy design
concept and the likelihood of it being manufactured and marketed.

ITEM 7. FINANCIAL STATEMENTS

The financial statements and supplementary data are included beginning
immediately following the signature page to this report. See Item 13 for a list
of the financial statements and financial statement schedules included.

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

None.

PART III

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

Executive Officers, Directors and Key Employees

The following table sets forth certain information regarding our executive
officers, directors and key employees.

Name Age Position
---- --- --------

Ed Kaplan 68 Chairman of the Board, President, CEO, Treasurer

Douglas Kaplan 30 Secretary, Vice President of Marketing and
Director

Ron Beit-Halachmy 28 Director

Management

The directors have been elected by the present shareholders and will serve
for a term of one year or until their successors are elected. Officers are
appointed by, and serve at the pleasure of, the board of directors.

Our directors and executive officers are:

Ed Kaplan, president, treasurer and director, age 67, has been the
president, treasurer and director since our formation. Ed Kaplan serves at the
pleasure of the board of directors. Ed Kaplan has been in the toy industry since
1957. From 1957 to 1978 he was COO of Knickerbocker Toy, from 1978 to 1984 he
was president and CEO of Amtoy, a division of American Greeting. Ed Kaplan has
been a partner of Ed Kaplan Associates, a toy design and licensing general
partnership since 1985, and a partner of Kaplan Design Group, a general
partnership with no operations and no assets (other than stock in Inventoy). He
will be working for Inventoy part-time approximately 20 hour per week. Ed Kaplan
received his B.S. in Science from Brooklyn College, City University in 1955.

Douglas Kaplan, secretary and director, age 30, has been secretary and
director since our formation. Douglas Kaplan serves at the pleasure of the board
of directors. He has been in the toy industry since 1993. From 1993 to 1998 he
was director of marketing for Ed Kaplan Associates. At Ed Kaplan Associates he
presented and sold toy concepts to most of the major and minor toy companies.
His responsibilities at Inventoy will include presentation of new toy concepts
and billing toy companies for royalties owed. He is also a partner of Ed Kaplan
Associates and Kaplan Design Group. From 1998 to 2001 he was a commercial real
estate salesman with Winick Realty Group in New York City. Since September of
2000 Douglas Kaplan has been employed full time as an equity trader at Schonfeld
Securities in New York City. He will be working at Inventoy part-time,
approximately 40 hours per month. He received his B.A. from the University of
Wisconsin-Madison in 1993.

Ron Beit-Halachmy, director, age 28, has been a director since July, 2001.
Since 1994, he has served as Vice President of Latham Properties, a real estate
development firm that has assets in New York, New Jersey, and Florida. Also
since 1994 he has served as President of Latham Management Company, a real
estate management company with operations in the New York metropolitan area. He
received his J.D. at New York School in 1997 and B.A. at the University of
Wisconsin-Madison in 1994.

The board of directors currently does not have a procedure in place to
deal with possible conflicts of interests.

Board Meetings and Committees

Meetings of our Board of Directors may be held from time to time to
consider matters for which its approval is desirable or is required by law. Our
Board of Directors did not meet during its fiscal year ended July 31, 2001 and
acted by written consent on several matters. The Board of Directors may
designate from among its members an executive committee and one or more other
committees. No such committees have been appointed.

16(a) Beneficial Ownership Reporting Compliance

To our knowledge, no officers, directors, beneficial owners of more than
ten percent of any class of our equity securities registered pursuant to Section
12 of the Exchange Act or any other person subject to Section 16 of the Exchange
Act with respect to us, failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year, which
ended July 31, 2001.

ITEM 10. EXECUTIVE COMPENSATION

Executive Officers' Compensation

We have not commenced paying any of our officers any salaries or fees. We
have not adopted any plan providing for stock appreciation rights, restricted
stock, stock options, phantom stock or similar type of stock benefits and have
no other long-term incentive plan in effect.

Compensation to Directors

No compensation has been paid to our directors. Compensation is not paid
to a director, as such, for his services, but, by resolution of the Board of
Directors, a fixed sum and expenses for actual attendance at each regular or
special meeting of the Board may be authorized.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial
ownership of our common stock as of October 22, 2001. The information in this
table provides the ownership information for:

a. each person known by us to be the beneficial owner of more than 5%
of our common stock;
b. each of our directors;
c. each of our executive officers; and
d. our executive officers, directors and director nominees as a group.

Beneficial ownership has been determined in accordance with the rules and
regulations of the SEC and includes voting or investment power with respect to
the shares. Unless otherwise indicated, the persons named in the table below
have sole voting and investment power with respect to the number of shares
indicated as beneficially owned by them. Common stock beneficially owned and
percentage ownership are based on 5,221,000 shares outstanding. There are
currently no outstanding options or warrants to purchase any common stock.

Number of Shares Percentage
Name and Address of Beneficial Owner Beneficially Owned Outstanding
------------------------------------ ------------------ -----------

Ed Kaplan 300,000 6%
c/o Inventoy .com, Inc.
6786 Willowood Drive, Suite G1006
Boca Raton, Florida 33434

Douglas Kaplan 300,000 6%
62 West 62nd Street, #6F
NY, New York 10023

Kaplan Design Group* 3,000,000 57%

Ron Beit-Halachmy 10,000 less than 1%

All Executive Officers and Directors 3,610,000 69%
as a Group (2 persons)

KGL Investments, Ltd.** 250,000 4.5%
630 Third Avenue, 5th Floor
New York, New York 10017

* Kaplan Design Group is a New Jersey Partnership of which Ed Kaplan
holds 10%, Douglas Kaplan holds 45% and Michael Kaplan holds 45%. It
has no operations and no assets, other than stock in Inventoy.

** KGL Investment, Ltd. is owned and controlled by Kaplan Gottbetter &
Levenson, LLP.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our president and chairman of the board, Ed Kaplan, and our secretary and
director, Doug Kaplan, are father and son. Ed Kaplan is also the father of
Steven Kaplan, who is a partner in Kaplan Gottbetter & Levenson, LLP, our
counsel.

In July, 2000 Inventoy issued 300,000 shares of its common stock to its
founder and president Ed Kaplan in exchange for a $300 subscription receivable,
and issued 300,000 shares of its common stock to its secretary Douglas Kaplan in
exchange for a $300 subscription receivable. These shares were valued at par
value, $.01 per share.

In July, 2000 Inventoy issued 3,000,000 shares of its common stock to
Kaplan Design Group in exchange for twenty-seven toy designs from Kaplan Design
Group. These shares were valued at par value, $.01 per share for a total of
$3,000. Ed Kaplan Associates paid $3,000 for the toy designs and then
transferred them to Kaplan Design Group for no additional consideration.

In October, 2000 Inventoy issued 250,000 shares of its common stock to KGL
Investments, Ltd, the beneficial owner of which is Kaplan Gottbetter & Levenson,
LLP, counsel to the Registrant in exchange for legal services rendered, valued
at $25,000. These shares were valued at $.10 per share.

In December, 2000 Inventoy issued 250,000 shares of its common stock to
Dunlap Industries, Ltd, in exchange for financial consulting services rendered
and to be rendered, valued at $25,000. These shares were valued at $.10 per
share.

In July, 2001 Inventoy issued 10,000 shares of common stock, at par value
$.001, to newly appointed director Ron Beit-Halachmy.

Shareholder Paul Levenson is a partner in Kaplan Gottbetter & Levenson,
and his wife's uncle is Ed Kaplan.

We believe that the terms of the above transactions are commercially
reasonable and no less favorable to us than we could have obtained from an
unaffiliated third party on an arm's length basis. To the extent we may enter
into any agreements with related parties in the future, the board of directors
has determined that such agreements must be on similar terms.

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

Exhibits

(a) The following exhibits are included as part of this report:

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

3.1 Certificate of Incorporation of Registrant

3.2 By-Laws

4.1 Specimen Certificate of Common Stock

(b) Reports on Form 8-K: None.

INDEX TO FINANCIAL STATEMENTS

Inventoy.com, Inc.
(A Development Stage Company)

Auditors' Report ............................................................F-1

Balance Sheets of July 31, 2001 (Audited); July 31, 2000 (Audited) ..........F-2

Statements of Operations for the Year Ended July 31, 2001 (Audited);
period from August 11, 1999 (inception) to July 31, 2000 (Audited);
period from August 11, 1999 to July 31, 2001 (Audited) ................F-3

Statements of Cash Flows for the Year Ended July 31, 2001 (Audited);
period from August 11, 1999 (inception) to July 31, 2000 (Audited);
period from August 11, 1999 to July 31, 2001 (Audited) ................F-4

Statement of Changes in Shareholder's Equity from August 11, 1999
(inception) to July 31, 2001 (Audited).................................F-5

Notes to Financial Statements ...............................................F-6

[Letterhead of Rogoff & Company, P.C.]

Independent Auditors' Report

The Shareholders and Board of Directors
Inventoy.Com, Inc.:

We have audited the accompanying balance sheets of Inventoy.Com, Inc., (a
development stage enterprise) as of July 31, 2001 and 2000 and the related
statements of operations, of cash flows and of changes in shareholders' equity
for the year ended July 31, 2001 and for the periods from August 11, 1999
(inception) through July 31, 2000 and 2001. 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 Inventoy.Com, Inc. at July 31,
2001 and 2000, and the results of its operations, its cash flows and the changes
in its shareholders' equity for the year ended July 31, 2001 and for the periods
from August 11, 1999 (inception) through July 31, 2000 and 2001, in conformity
with accounting principles generally accepted in the United States.

/s/ Rogoff & Company, P.C.

New York, New York
October 1, 2001

F-1

Inventoy.Com, Inc.

(A Development Stage Enterprise)

Balance Sheets

Assets

July 31, July 31,
2001 2000
-------- --------

Current assets:

Cash $ 62,991 $ --

Deferred offering expenses -- 50,000
-------- --------
Total current assets 62,991 50,000

Purchased toy designs 3,000 3,000
-------- --------
Total assets $ 65,991 $ 53,000
======== ========

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable $ 6,864 $ 2,000
-------- --------
Total liabilities 6,864 2,000
-------- --------
Shareholder's equity:

Preferred stock - 5,000,000 shares
authorized; -0- shares issued
and outstanding; par value $.001 -- --
Common stock - 20,000,000 shares
authorized; 5,211,000 and 4,100,000
shares issued and outstanding;
par value $.001 5,211 4,100
Paid in capital 81,849 49,500
Deficit accumulated during the
development stage (27,333) (2,000)
Subscriptions receivable (600) (600)
-------- --------
Total shareholders' equity 59,127 51,000
-------- --------
Total liabilities and shareholders' equity $ 65,991 $ 53,000
======== ========

See accompanying Notes to Financial Statements.

F-2

Inventoy.Com, Inc.

(A Development Stage Enterprise)

Statements of Operations

Period from Period from
August 11, August 11,
Year 1999 1999
Ended (inception) (inception)
July 31, to July 31, to July 31,
2001 2000 2001
---- ---- ----

REVENUES: $ -- $ -- $ --
----------- ----------- --------
EXPENSES:

General and administrative 26,307 2,000 28,307
----------- ----------- --------
TOTAL EXPENSES 26,307 2,000 28,307
----------- ----------- --------
OTHER INCOME:
Interest 974 -- 974
----------- ----------- --------
NET LOSS $ (25,333) $ (2,000) $(27,333)
=========== =========== ========

Net Loss Per Share:
Basic (0.01) (--)
Diluted $ (0.01) $ (--)
=========== ===========

Weighted average shares of
common stock used in
calculation of net loss
per share 4,965,802 3,600,000
=========== -----------

See accompanying Notes to Financial Statements.

F-3

Inventoy.Com, Inc.

(A Development Stage Enterprise)

Statements of Cash Flows

Period from Period from
August 11, August 11,
Year 1999 1999
Ended (inception) (inception)
July 31, July 31, July 31,
2001 2000 2001
---- ---- ----

Cash Flows From Operating
Activities:
Net loss $(25,333) $ (2,000) $(27,333)

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

Increase in operating accounts
payable 4,864 2,000 6,864
-------- -------- --------
Cash used by operating
activities (20,469) -- (20,469)
-------- -------- --------
Cash Flows From Financing
Activities:
Proceeds of private placement
Offering net of $27,640 direct costs 83,460 -- 83,460
-------- -------- --------
Cash provided by financing
activities 83,460 -- 83,460
-------- -------- --------
Increase in cash 62,991 -- 62,991
-------- -------- --------
Cash, beginning of period -- -- --
-------- -------- --------
Cash, end of period $ 62,991 $ -- $ 62,991
======== ======== ========
Supplemental Disclosure of
non-cash investing and
financing activities:

Receivable from shareholders in
connection with subscription
from common stock $ -- $ 600 $ 600

Issuance of common stock for
deferred design costs $ -- $ 3,000 $ 3,000

Issuance of common stock for
deferred offering costs $ -- $ 50,000 $ 50,000

See accompanying Notes to Financial Statements.

F-4

Inventoy.Com, Inc.

(A Development Stage Enterprise)

Statement of Changes in Shareholders' Equity

For the periods from August 11, 1999 (inception) through July 31, 2001

Numbered Common Paid-In Earnings Subscription
Shares Stock Capital (Deficit) Receivable Total
-------- ------ ------- --------- ------------ -----

Issuance of common stock
for subscription receivable 600,000 $ 600 $ -- $ -- $ (600) $ --

Inkind contributions:
Toy designs 3,000,000 3,000 -- -- -- 3,000
Deferred offering expenses 500,000 500 49,500 -- -- 50,000

Net income (loss) -- -- (2,000) -- (2,000)
--------- ------ -------- -------- ------- --------
Balances, July 31, 2000 4,100,000 4,100 49,500 (2,000) (600) 51,000

Issuance of common stock
at $0.10 per share,
net of $77,640 direct
costs 1,111,000 1,111 32,349 -- -- 33,460

Net loss -- -- -- (25,333) -- (25,333)
--------- ------ -------- -------- ------- --------
Balances, July 31, 2001 5,211,000 $5,211 $ 81,849 $(27,333) $ (600) $ 59,127
========= ====== ======== ======== ======= ========

See accompanying Notes to Financial Statements.

F-5

Inventoy.Com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

1. Nature of Business

Inventoy.Com, Inc. (the "Company"), ("Inventoy") was incorporated on August 11,
1999, seeks to license toy designs to toy manufacturers and to act as a toy
inventor's agent in licensing toy designs developed by others. Additionally the
company will seek revenue from the sale of banner ads on the web page it plans
to create. However, the expectation is that any revenue from the sale of banner
ads will be minimal. Inventoy's licensing efforts began with twenty-seven toy
designs, which were acquired from Kaplan Design Group ("KDG"), a New Jersey
general partnership. The Company expects to market those toy designs by both
direct meetings with toy manufacturers' representatives as well as through a
website that will give the manufacturers an opportunity to review pictures and
descriptions of new inventions at a single source to decide whether a
face-to-face meeting would be useful.

From inception through July 31, 2001, the Company has been in the developmental
stage, developing its business plans, acquiring toy designs and raising capital.
There have been no operations or revenues since inception.

2. Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles required management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and matters for disclosure 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.

Purchased Toy Designs

During the fiscal year ended July 31, 2000 the Company acquired twenty-seven toy
designs from Kaplan Design Group (KDG). The Company issued 3,000,000 shares of
common stock at par value ($3,000) in consideration. The value of the toy
designs represents KDG's out-of-pocket cost of acquiring them. Upon commencement
of selling activity, these toy design costs will be amortized over the useful
life of the designs, not to exceed three years, unless management determines
sooner that the value of a design is impaired, in which case it is charged off
to operations.

Accrual Basis

The financial statements have been prepared on the accrual basis of accounting.
Revenues are reflected when earned and expenses are recognized when incurred.

The Company has reviewed Securities and Exchange Commission Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial

F-6

Inventoy.Com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

2. Significant Accounting Policies - Continued

Accrual Basis - continued

Statements," and its effect on the recognition licensing fee revenue. At July
31, 2001 The Company has not entered into any written or oral licensing
agreements with third parties. The Company only expects to make written
licensing agreements in the future. Revenue from these third parties will be
recognized only when the terms of the written contracts are satisfied.

Financial Instruments

Current assets and liabilities are reported at their face amount, which because
of their short-term nature, approximates fair value.

Income Taxes

The Company uses the liability method for income taxes as required by SFAS No.
109 "Accounting for Income Taxes." Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting and
tax basis of assets and liabilities. Deferred tax assets and liabilities are
measured using enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

Other

Startup expenses including organization costs and certain website development
costs are charged to operations as incurred.

Dividends

The Company does not expect to pay cash dividends on its common stock in the
foreseeable future. The intent is to retain any earnings to develop and extend
its business.

Comprehensive Loss

There is no difference in the Company's historical net losses as reported and
the comprehensive net losses for all periods presented.

Net Income Per Share

Basic net income per share is computed by dividing net income (after deducting
dividends, if any, declared on preferred stock) by the weighted average number
of common shares outstanding for the period.

Year Ended July 31
------------------
2001 2000
---- ----
Net income per share:
Net income $ (25,333) $ (2,000)
=========== ===========
Weighted average shares 4,965,802 3,600,000
=========== ===========
Net loss per share $ (0.01) $ (0.00)
=========== ===========

F-7

Inventoy.Com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

3. Shareholders' Equity

As of July 31, 2000 all of Inventoy's contributed capital was provided by three
shareholders who held one hundred percent of Inventoy's shares. Kaplan Design
Group, a New Jersey general partnership, owned eighty-three (83) percent of
Inventoy's outstanding common stock and Ed Kaplan and his son, Douglas Kaplan
were each eight and one-half (8 1/2) percent owners. Both Ed and Douglas Kaplan
are also principal owners in Kaplan Design Group. The capital contributed by
Kaplan Design Group was in exchange for twenty-seven toy designs that Inventoy
is now trying to license. See related party transactions.

In addition, 250,000 shares were each issued in October 2000 to Kaplan,
Gottbetter & Levenson LLP in exchange for legal services and in December 2000 to
Dunlap Industries, Ltd. for advisory services in connection with planned private
and public placements of stock. These shares are shown as if they were already
issued, so as to reflect the transaction as though it were completed prior to
July 31, 2000. These shares were issued at the value, of the legal services and
advisory services that were performed. Dunlap will also advise the Company on
proposed business combination matters through December of 2001.

In August 2000, Inventoy's Board of Directors authorized a private placement
offering of Inventory's common stock to a limited number of sophisticated
investors at a price of $.10 per share. By July 31 2001, Inventoy completed the
private placement of 1,111,000 shares of common stock, resulting in cash
proceeds of $111,100. Holders of common stock are entitled to one vote for each
share held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. The deferred offering expenses were charged against
the proceeds of this offering.

4. Related Party Transactions

In July of 2000, an agreement was made by which The Company acquired
twenty-seven toy designs from KDG in exchange for 3,000,000 shares of its common
stock. KDG (the principal shareholder of Inventoy) is a New Jersey general
partnership of which Ed Kaplan (Inventoy's president and shareholder) owns ten
(10) percent and his sons Douglas Kaplan (Inventory's secretary and shareholder)
and Michael Kaplan each own forty-five (45) percent. KDG acquired these toy
designs from Ed Kaplan Associates ("EKA"). KDG does not have any operations. EKA
is a New Jersey general partnership of which Inventoy's president, Ed Kaplan
owns ten (10) percent and his son's Douglas Kaplan, Michael Kaplan and Steven
Kaplan each own thirty (30) percent. EKA designs toys and markets toy designs to
toy manufacturers. Ed Kaplan will continue to work at EKA part time for
approximately twenty hours per month. EKA does not represent the toy designs of
others, unlike Inventoy's business plan.

F-8

Inventoy.Com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

5. Income Taxes

No provision for federal or state income taxes has been recorded as Inventoy did
not have any active operations for the period August 11, 1999 (inception) to
July 31, 2001.

6. Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement No. 141
Business Combinations and Statement No. 142 Goodwill and Other Intangible
Assets. These statements become effective to the Company on July 1, 2001 for
Statement No. 141 and August 1, 2002 for Statement No. 142. The Company has not
completed any business combinations as of July 31, 2001 and, management cannot
currently assess what effect the future adoption of these pronouncements will
have on the Company's financial statements.

F-9

SIGNATURES

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

Inventoy.com, Inc.

By: /s/ Ed Kaplan
----------------------------------------
Ed Kaplan
President, CEO and Chairman of the Board
(principal financial officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 28th day of October,
2001.

By: /s/ Douglas Kaplan
----------------------------------------
Douglas Kaplan
Secretary, Director
(principal accounting officer)

By: /s/Ron Beit-Halachmy
----------------------------------------
Ron Beit-Halachmy
Director

EXHIBIT INDEX

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

3.1 Certificate of Incorporation of Registrant

3.2 By-Laws

4.1 Specimen Certificate of Common Stock