CURTIS INTERNATIONAL LTD, 424A, 1998-10-01

CURTIS INTERNATIONAL LTD
424A, 1998-10-01
ELECTRICAL APPLIANCES, TV & RADIO SETS

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<PAGE> 1
As Filed Pursuant to Rule 424(a)
Registration No. 333-56661

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 1, 1998
PROSPECTUS

LOGO

CURTIS INTERNATIONAL LTD.
1,650,000 SHARES

This Prospectus relates to an offering (the "Offering") of 1,650,000 shares
(collectively, the "Shares") of common stock, no par value per share (the
"Common Stock"), of Curtis International Ltd., an Ontario corporation (the
"Company"), through Joseph Stevens & Company, Inc. (the "Representative"), the
representative of the underwriters (the "Underwriters"). Of such Shares,
1,498,000 Shares are being sold by the Company and 152,000 Shares (the "Selling
Stockholder Shares") are being sold by Ranch Limited (the "Selling
Stockholder"). The Company will not receive any of the proceeds from the sale of
the Selling Stockholder Shares.

Prior to the Offering, there has been no market for the Common Stock, and
there can be no assurance that a market will develop for the Company's
securities in the future or that, if developed, it will be sustained. The
Company is applying for quotation of the Common Stock on Nasdaq National Market
under the trading symbol "CURTF."

The public offering price of the Shares was determined by negotiation
between the Company and the Representative and does not necessarily bear any
direct relationship to the Company's assets, earnings, book value per share or
other generally accepted criteria of value. See "Underwriting."
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" COMMENCING ON PAGE 8
AND "DILUTION" ON PAGE 14.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS TO
PRICE DISCOUNTS AND PROCEEDS TO SELLING
TO PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER
- --------------------------------------------------------------------------------------------------------------------------------
Per Share......................... $5.00 $.50 $4.50 $4.50
- --------------------------------------------------------------------------------------------------------------------------------
Total(3).......................... $8,250,000 $825,000 $6,741,000 $684,000
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Excludes the value of warrants to be issued to the Underwriters (the
"Underwriters' Warrants") to purchase up to 165,000 shares of the Company's
Common Stock. In addition, the Company also agreed to indemnify the
Underwriters against certain liabilities under the Securities Act of 1933,
as amended (the "Securities Act"). See "Underwriting."

(2) Before deducting the Underwriters' non-accountable expense allowance,
financial consulting fee and other expenses of the Offering, estimated at
$607,200 and payable by the Company. See "Underwriting."

(3) The Company has granted the Underwriters an option, exercisable for 45 days
after the date the Securities and Exchange Commission declares the Company's
registration statement effective (the "Effective Date"), to purchase up to
an additional 247,500 shares of Common Stock solely for the purpose of
covering over-allotments, if any (the "Over-Allotment Option"). If the
Over-Allotment Option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions, Proceeds to Company and Proceeds to
Selling Stockholder will be $9,487,500, $948,750, $7,854,750 and $684,000,
respectively. See "Underwriting."

The Shares are being offered by the Underwriters on a "firm commitment"
basis, when, as and if delivered to and accepted by the Underwriters, subject to
prior sale, and other conditions and legal matters. The Underwriters reserve the
right to withdraw, cancel or modify the Offering and to reject orders, in whole
or in part, for the purchase of any of the securities offered notwithstanding
tender by check or otherwise. It is expected that delivery of the certificates
representing the Shares will be made against payment therefor at the offices of
Joseph Stevens & Company, Inc., 33 Maiden Lane, New York, New York 10038 on or
about October , 1998.

<TABLE>
<S> <C>
JOSEPH STEVENS & COMPANY, INC. ROYCE INVESTMENT GROUP, INC.
</TABLE>

, 1998
<PAGE> 2

[PICTURES OF THE COMPANY'S PRODUCTS]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
OFFERED HEREBY, INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET
PRICE, PURCHASES OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN
THE COMMON STOCK MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR
SALE UNDER THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA.
THE SECURITIES ARE NOT BEING OFFERED FOR SALE AND MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN CANADA, OR TO ANY RESIDENT THEREOF, IN VIOLATION OF
THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA.

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<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
(including the notes thereto) appearing elsewhere in this Prospectus. Unless the
context otherwise requires, the term "Curtis" or "Company" refers to Curtis
International Ltd. as well as any predecessors. All information in this
Prospectus, unless otherwise noted, assumes no exercise of the Over-Allotment
Option or the Underwriters' Warrants. All references to dollar amounts in this
Prospectus, unless otherwise indicated, are in United States dollars.

THE COMPANY

Curtis International Ltd. designs, distributes and markets quality,
value-priced consumer electronics products. The Company offers a broad line of
telecommunication, audio, video and computer products including, telephones,
answering machines, caller ID systems, CD and cassette systems, portable
televisions and computer accessories. The Company's products are primarily sold
under the brand names "Curtis" and "CTP Worx," as well as private labels. The
Company's strategy has been to build a portfolio of diverse consumer electronics
products which offers retailers flexible merchandising programs. The Company's
products are available in approximately 2,300 stores throughout Canada and
10,000 stores in the United States through approximately 30 retail chains in
Canada and the United States. All of the Company's products are manufactured by
independent manufacturers.

The Company's customers include mass merchandisers such as Wal-Mart
(Canada), Ames, Bradlees, Dollar General and Bi-Way Stores; drug store chains
such as Rite-Aid, London Drugs, Thrifty Payless, Jean Coutu and Ker Drugs;
specialty marketers such as QVC, the Home Shopping Network and Amway; consumer
electronic retailers such as Future Shop, Fry's and ABC Warehouse; and appliance
and department stores such as Boscov and Fedco. The Company has operated
profitably and has recently undergone a period of rapid sales growth. For the
year ended May 31, 1998, the Company's sales increased by $12,557,471, or 84.2%,
to $27,471,613 from $14,914,142 for the year ended May 31, 1997. The Company
only entered the United States market in 1996 and has since opened accounts with
approximately 20 retail chains in the United States. The Company's sales in the
United States were $11,716,935 for the year ended May 31, 1998 as compared to
$2,217,058 for the year ended May 31, 1997, an increase of 428%. The Company
believes there is an opportunity to significantly increase its business in the
United States through both its current customers and potential new customers.

THE CONSUMER ELECTRONICS INDUSTRY

The consumer electronics industry is large and diverse, encompassing a wide
variety of technologies and products, including televisions, VCRs, audio
systems, CD players, cassette players and telephones. The Consumer Electronics
Manufacturers Association ("CEMA") estimates that total factory sales of
consumer electronics products in 1997 were approximately $72 billion, an
increase of 4.0% from 1996. CEMA estimates that factory sales will grow to
approximately $92 billion by the year 2001, an increase of 115% in ten years,
and believes that the consumer electronics industry is one of the fastest
growing sectors of the United States economy. It is estimated that in 1998 the
average United States household will spend $825 on consumer electronics
products.

GROWTH STRATEGY

Distributors have traditionally offered consumer electronics to retailers
using three principal branding strategies and corresponding price points: (i)
premium brands, such as Sony and Panasonic; (ii) mass-market brands, such as
General Electric and Magnavox; and (iii) value-priced brands, such as those of
the Company. The Company plans to continue to establish itself as a leading
supplier of quality, value-priced consumer electronics products. The Company
believes that its broad portfolio of products, superior design capabilities,
flexible and low-cost sourcing and superior service offered both prior to and
after-sale provide it with distinct competitive advantages. The Company plans to
grow its business using a strategy comprised of the following principal
elements:

- CONTINUE TO OFFER VALUE-PRICED, QUALITY PRODUCTS. The Company designs
and markets products which are value-priced, yet fill a market void
through their design and up-to-date style. The Company's

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<PAGE> 4

packaging further distinguishes its products in the marketplace from those
of its competitors. The Company plans to continue to offer its customers
quality products at competitive prices.

- EXPAND CUSTOMER BASE. The Company believes that it has significant
opportunities to expand its customer base both in Canada and the United
States. The Company intends to use its existing relationships in Canada
with retailers such as Wal-Mart, Staples and Toys "R" Us, to penetrate
the United States market in such retailers' stores. In addition, the
Company continually seeks to expand its distribution channels through
various means. For example, the Company recently sold to the Home
Shopping Network its personal televisions as part of a special promotion.
The Home Shopping Network is planning additional promotions of certain of
the Company's products in the Fall of 1998.

- INCREASE PENETRATION AND SALES TO EXISTING UNITED STATES CUSTOMERS. In
the short period in which the Company has focused significant marketing
efforts in the United States, it has established relationships with
several major retailers. The Company plans to focus its efforts on
broadening its product selection being sold by these retailers and
substantially increasing the dollar volume of sales to these existing
customers.

- DEVELOP STRATEGIC ALLIANCES. The Company intends to develop strategic
alliances with large discount chain stores and mass merchants. Management
believes that many retailers whose primary business is not consumer
electronics look for a strategic alliance with a vendor who has the
experience, customer service and product selection to create a successful
consumer electronics program in their stores. Development of strategic
alliances whereby the Company provides these services in exchange for
commitments to stock and sell the Company's products will assist the
Company in the establishment of long-term relationships with such
discount chain stores and mass merchants.

Curtis International Ltd. was incorporated in the Province of Ontario on
December 12, 1990. The Company subsequently amalgamated (or merged) with Unique
Investments Limited and AEG Trading Limited on January 26, 1998 and Worldwide
Holdings Limited on May 31, 1998. The amalgamations were effectuated for the
purpose of transferring the Company's ownership from corporate entities to
individuals and to reduce the Company's outstanding shares to 4,000,000. In both
cases, the Company was the surviving entity. In August 1998, the two principal
stockholders returned an aggregate of 300,000 shares to the Company for
cancellation bringing the Company's outstanding shares to 3,700,000. The
Company's principal executive offices are located at 7 Kodiak Crescent,
Downsview, Ontario M3J 3E5 Canada and its telephone number is (416) 636-5553.

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<PAGE> 5

EXCHANGE RATE DATA

The Company maintains its books of account in Canadian dollars, but has
provided the financial data in this Prospectus in United States dollars with its
audit conducted in accordance with generally accepted auditing standards in the
United States of America. All references to dollar amounts in this Prospectus,
unless otherwise indicated, are in United States dollars.

The following table sets forth, for the periods indicated, certain exchange
rates based on the noon buying rate in New York City for cable transfers in
Canadian dollars. Such rates are the number of United States dollars per one
Canadian dollar and are the inverse of rates quoted by the Federal Reserve Bank
of New York for Canadian dollars per US$1.00. The average exchange rate is based
on the average of the exchange rates on the last day of each month during such
periods. On May 31, 1998, the exchange rate was Cdn$1.00 per US $0.6863.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1994 1995 1996 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
RATE AT END OF PERIOD............................. $0.7143 $0.7353 $0.7299 $0.6991
AVERAGE RATE DURING PERIOD........................ 0.7299 0.7299 0.7353 0.7223
HIGH.............................................. 0.7092 0.7009 0.7212 0.6945
LOW............................................... 0.7642 0.7533 0.7526 0.7493
</TABLE>

The following discussion should be read in conjunction with the Summary
Combined Financial Information and the Company's Financial Statements and the
Notes thereto and the other financial data included elsewhere in this
Prospectus. This Prospectus contains forward-looking statements regarding the
plans and objectives of management for future operations. The forward-looking
statements included herein are based on current expectations and assumptions
that involve numerous risks and uncertainties. Although management believes that
the assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no assurance
that the forward-looking statements included herein will prove to be accurate.
In light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.

5
<PAGE> 6

THE OFFERING

Securities Offered:........ 1,498,000 Shares of Common Stock by the Company and
152,000 Shares of Common Stock by the Selling
Stockholder. See "Description of Securities" and
"Underwriting."

Common Stock Outstanding
Prior to the
Offering(1):............. 3,700,000

Common Stock Outstanding
After the
Offering(1)(2):.......... 5,198,000

Use of Proceeds:........... The Company intends to use the net proceeds of this
Offering to purchase inventory, repay indebtedness,
increase sales and marketing efforts, improve its
management information system, relocate its
existing facilities and for working capital and
general corporate purposes. See "Use of Proceeds."

Proposed Nasdaq National
Market Symbol(3):........ CURTF
- ------------------------------

(1) Does not include an aggregate of 400,000 shares of Common Stock reserved for
issuance upon the exercise of options available for future grant under the
Company's 1998 Stock Option Plan (the "Plan"), 100,000 of which were
granted. See "Management-Stock Option Plan."

(2) Assumes no exercise of the Over-Allotment Option or Underwriters' Warrants.

(3) The proposed symbol does not imply that a liquid and active market will
develop or be sustained for the Shares upon completion of the Offering.

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<PAGE> 7

SUMMARY COMBINED FINANCIAL INFORMATION

The following summary financial information has been derived from the
financial statements of the Company. The summary financial information set forth
below is qualified by and should be read in conjunction with the financial
statements, including the notes thereto and other financial information included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Sales................................................ $14,627,378 $14,914,142 $27,471,613
Gross profit......................................... 2,714,451 2,740,394 5,121,646
Income before income taxes........................... 133,677 123,379 1,467,347
Net income........................................... 100,347 93,001 864,905
Earnings per share(1)................................ .03 .03 .23
</TABLE>

<TABLE>
<CAPTION>
AS OF MAY 31, 1998
----------------------------
ACTUAL AS ADJUSTED(2)
----------- --------------
<S> <C> <C>
BALANCE SHEET DATA
Working capital............................................. $ 1,416,422 $ 6,650,222
Total assets................................................ 13,685,372 18,919,172
Long-term debt.............................................. 241,768 241,768
Total liabilities........................................... 12,248,664 11,348,664
Shareholders' equity........................................ 1,436,708 7,570,508
</TABLE>

- ------------------------------

(1) Based on a weighted average number of shares outstanding of 3,700,000 shares
in each of the applicable periods.

(2) As adjusted to reflect the sale by the Company of the 1,498,000 Shares
offered hereby and the application of the net proceeds therefrom. See "Use
of Proceeds."

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<PAGE> 8

RISK FACTORS

Prospective investors should carefully consider the following factors, in
addition to the other information contained in this Prospectus, in connection
with investments in the Shares offered hereby. This Prospectus contains certain
forward-looking statements which involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated in the
forward-looking statements as a result of certain factors, including those set
forth below and elsewhere in this Prospectus. An investment in the Shares
offered hereby involves a high degree of risk.

DEPENDENCE ON NEW PRODUCT INTRODUCTIONS AND MARKET ACCEPTANCE. The
Company's continued success is dependent upon its ability to continue to
identify, obtain and develop products that can be successfully sold to retail
chains and other mass merchants at acceptable profit margins. There can be no
assurance that the Company will be able to successfully develop and introduce
new products under its own brand names, that any such products will meet with
consumer acceptance in the marketplace or that any such products will be sold at
acceptable profit margins.

DEPENDENCE ON KEY CUSTOMERS. During the year ended May 31, 1996 ("Fiscal
1996") and the year ended May 31, 1997 ("Fiscal 1997") approximately 57% of
revenues were derived from sales to the Company's three largest customers.
During the year ended May 31, 1998 ("Fiscal 1998") approximately 63% of revenues
were derived from sales to the Company's five largest customers. The Company
believes that it has good relationships with its customers. However, the Company
has no long-term contracts with any of its customers, all of which purchase
products from the Company pursuant to individually placed purchase orders. There
can be no assurance that the Company's customers, including any of its largest
customers, will continue to purchase merchandise from the Company. A loss of one
or more of these customers could have a material adverse effect on the Company's
business and results of operations. See "Business--Sales and Distribution" and
"Business--Marketing."

DEPENDENCE ON THIRD PARTY MANUFACTURERS AND SUPPLIERS. To date, most of
the merchandise sold by the Company has been purchased by the Company from
third-party manufacturers and distributors, primarily located in Asia. The
Company does not enter into long-term contracts with such third parties but
instead purchases merchandise pursuant to individually placed purchase orders.
There can be no assurance that the Company's manufacturers will dedicate
sufficient production capacity to meet the Company's scheduled delivery
requirements or that the Company's manufacturers will have sufficient production
capacity to satisfy the Company's requirements. Typically, the Company helps
develop the design of a particular product and the manufacturer meets such
specifications. Accordingly, the Company is dependent on the ability of its
manufacturers to, among other things, meet the Company's design, performance and
quality specifications, as well as the quality and delivery requirements of its
customers. Recently, the economies of many Asian countries have experienced
financial pressures, including the devaluation of their currencies and a
shortage of capital. In the event that the crisis were to cause one or more of
the Company's manufacturers to cease operations it could result in delays in
obtaining merchandise.

Although the Company believes that its relationships with its suppliers are
good and that it would be able to locate other sources of merchandise in the
event of the loss of one or more of such suppliers, there can be no assurance
that the Company will not experience delays or other difficulties in obtaining
merchandise. Such delays or difficulties would have a material adverse effect on
the Company's business and results of operations. See "Business--Manufacturing."

INVENTORY MANAGEMENT RISKS. The Company is subject to significant risks in
connection with its inventory management. In order to assure an adequate supply
of products to meet the relatively high demand during the third and fourth
quarters of each calendar year, the Company must commit to acquire products
three months in advance of delivery. If the Company underestimates its need for
inventory or experiences delays in production, the Company may have to pay a
significant premium to obtain the necessary contract-manufacturing capacity or
ship products by air rather than less expensive ground or sea transportation in
order to meet customer orders. In such event, profit margins, sales and/or
customer relationships could be materially adversely affected. Similarly, if the
Company overestimates its inventory needs, the Company will be required to
reduce prices in order to dispose of such inventory or increase borrowings to
finance the carrying costs of such inventory, thereby adversely affecting its
profitability and cash flows. There can be no assurance

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<PAGE> 9

that the Company will be able to borrow such amounts on reasonable terms, if at
all. To the extent that the Company is unable to adequately plan, time and
budget its sourcing and manufacturing operations, incurs delays in delivery,
fails to adequately forecast prices and demand or reduce costs when necessary, a
material adverse effect on the Company's business, financial condition and
results of operations could result.

The Company incurs expenses as a result of product returns and warranty
claims. Such returns and warranty claims may result from defective goods,
inadequate performance relative to customer expectations, improper packaging,
liberal retailer return policies and other causes which may be outside the
Company's control. During Fiscal 1998, approximately 15% of the Company's gross
sales were made under net sale arrangements, whereby the Company's customers are
responsible for product returns, which cannot be returned to the Company. The
remainder of the sales are returnable only for defects. While the Company plans
to maintain or increase the percentage of sales that are on a net basis, there
can be no assurance that the Company will be successful in maintaining or
increasing such percentage. Any significant increase in product returns and
warranty claims could have a material adverse effect on the Company's business,
financial condition and results of operations.

COMPETITION. The Company's market segment is highly competitive. The mass
merchandise and discount retail market is divided among a large number of
foreign-based manufacturers and distributors. Many of the Company's competitors
have or may obtain significantly greater financial and marketing strength and
resources than the Company, enabling them to compete more effectively than the
Company. In addition, the Company's products compete at the retail store level
for shelf space, which has an impact on the Company's established and proposed
distribution channels. Competition, or failure of consumers to accept existing
or new products, may result in reduced sales, reduced profit margins, or both,
for the Company. There can be no assurance that the Company will not encounter
increased competition in the future, which could have a material adverse effect
on the ability of the Company to successfully market existing products, develop
new products or expand its business. See "Business--Competition."

DEPENDENCE ON KEY PERSONNEL. The Company's future success will depend to a
significant extent on the efforts of key management personnel, particularly
Aaron Herzog, the Company's President and Chief Executive Officer, and Jacob
Herzog, the Company's Chairman, Treasurer and Secretary. The loss of either of
these key employees could have a material adverse effect on the Company's
business. In addition, the Company believes that its future success will depend
in large part upon its continued ability to attract and retain highly qualified
management (including a Chief Financial Officer), as well as technical and sales
personnel. The Company maintains key-man life insurance policies in an amount of
Cdn $1 million on each of the lives of Aaron Herzog and Jacob Herzog, under
which the Company's bank, Canadian Imperial Bank of Commerce, is the
beneficiary. The Company intends to increase such insurance to Cdn $2 million on
each of Messrs. Aaron and Jacob Herzog prior to the Effective Date. Upon the
Effective Date the Company will enter into two-year employment agreements with
each of Aaron Herzog and Jacob Herzog. There can be no assurance that the
Company will be able to attract and retain the qualified personnel necessary for
its business. See "Management."

CONTROL BY EXISTING STOCKHOLDERS. Upon the completion of this Offering,
the Company's management will beneficially own 68.2% (65.1% if the
Over-Allotment Option is exercised in full) of the Company's outstanding Common
Stock. In addition, Aaron and Jacob Herzog are parties to a voting trust
agreement which provides that they will vote their shares together. As a result,
management will continue to elect a majority of the members of the Board of
Directors and decide matters requiring stockholder approval. See "Principal and
Selling Stockholders."

RETAIL INDUSTRY. The retail industry is significantly affected by many
factors, including changes in the national economy and in regional and local
economies, confidence in the overall economy, changes in consumer preferences
and increases in the number of retail operations. Factors such as inflation may
have a greater effect on the retail industry than on other industries. As a
result of these and other pressures, several retail firms have filed for
bankruptcy protection. Although, during the past three years, the Company has
written off only insignificant amounts as a result of such bankruptcies, the
loss of a significant number of the Company's customers could have a material
adverse effect on the business and results of operations of the

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<PAGE> 10

Company. The Company maintains a credit insurance policy whereby it is insured
against certain customers failure to pay their accounts receivable. Not all of
the Company's customers are covered by such policy.

PRODUCT LIABILITY. Any defects in the Company's products that result in
personal injury might result in consequences that could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company maintains insurance to cover such risks; however, the coverage in
certain events may not be adequate to insure against all product liability
claims.

RISK OF DOING BUSINESS IN FOREIGN COUNTRIES; RISK OF IMPORT
LIMITATIONS. The Company's products are principally manufactured by independent
manufacturers in China, Hong Kong, Indonesia, Malaysia, Thailand, the
Philippines and other Asian countries. The Company does not have long-term
contracts with any of its independent manufacturers. Manufacturing in Asian and
other foreign countries is subject to a number of risks including, but not
limited to, transportation delays and interruptions, political and economic
disruptions, the imposition of tariffs and import and export controls and
quotas, loss of property or revenue from expropriation or political demands, and
changes in governmental policies. While the Company to date has not experienced
any material adverse effects due to such risks, there can be no assurance that
such events will not occur in the future and possibly result in increases in
costs and delays of, or interference with, product deliveries resulting in
losses of sales and damage to customer relationships.

Generally, Asian and other countries in which the Company does business may
not offer legal mechanisms to redress an unfair trade practice, contract breach
or other problem requiring the enforcement of contractual provisions or other
redress. In particular, Asian countries generally do not have a well-developed,
consolidated body of law governing foreign investment enterprises, and the
administration of laws and regulations by government agencies may be subject to
considerable discretion and variation and administrative review and approval by
various national and local agencies of Asian governments. As a result, in the
event of any damage to the Company resulting from the breach of a contract, the
failure to fulfill manufacturing commitments, the taking of Company property, or
other similar event creating a loss for the Company or interruption of its
business, there may not be an adequate avenue of recourse against the parties
responsible for such damages.

MOST FAVORED NATION RISK. Presently, products imported into the United
States from Asian countries are subject to favorable duty rates based on the
"Most Favored Nation" status of such countries ("MFN Status"). MFN Status is
reviewed on an annual basis by the United States President and Congress and was
recently renewed for such countries.

If MFN Status for goods produced in Asian countries was removed, there
would be a substantial increase in tariffs imposed on goods of Asian origin
entering the United States, including those sold by the Company, which could
have a material adverse effect on the supply and cost of products manufactured
in such countries, and consequently on the Company's business, financial
condition and results of operations. Although the Company produces products in
other locations, at the present time, the Company plans to continue its
production primarily in Asia.

CURRENCY RISKS. Although the Company currently effects substantially all
of its transactions in United States dollars and approximately 50% of its sales
are made in the United States, in those situations in which transactions are in
foreign currencies, the Company is exposed to risks such as currency
instability, currency exchange losses and the ability to repatriate earnings
under existing exchange control laws. The Company does not currently engage in
hedging, and no assurance can be given that an effective currency hedging policy
could offset these currency risks.

GOVERNMENT REGULATION. Most of the Company's customers (as well as several
state and local authorities) require that the Company's products meet the
electrical safety standards of the Underwriters' Laboratories, Inc. Certain of
the Company's products sold for use in the United States must be registered with
and approved by the United States Federal Communications Commission (the "FCC").
Products sold in Canada must comply with the standards of the Canadian Standards
Association. In addition, the Company's products must meet the applicable safety
standards imposed by any other countries in which it intends to sell its
products. The Company is subject to numerous tariffs, duties, charges and
assessments on the import of its products. The Company retains import agencies
and expediters to facilitate the import of its products and the

10
<PAGE> 11

payment of these charges and duties. Although these duties and charges have not
substantially affected the Company's ability to market its products for delivery
in the United States and elsewhere, regulations affecting these charges and
duties are subject to change, which could have the effect of increasing the cost
of goods imported and sold by the Company. See "Business--Regulation."

SEASONALITY. The Company generally experiences stronger demand for its
products in the quarter ending November 30. Accordingly, to accommodate such
increased demand, the Company is generally required to place higher orders with
its vendors during the quarter ending August 31, thereby affecting the Company's
need for working capital during such period. On a corresponding basis, the
Company also is subject to increased returns during the quarters ending February
28 and May 31, which adversely affects the Company's collection activities
during such periods, also affecting its liquidity. Operating results may
fluctuate due to other factors such as the timing of the introduction of new
products, price reductions by the Company and its competitors, demand for the
Company's products, product mix, delay, available inventory levels, fluctuation
in foreign currency exchange rates relative to the United States dollar,
seasonal cost increases and general economic conditions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

RISKS INVOLVED WITH PRODUCT EXPANSION AND EXPANSION INTO UNITED STATES AND
OTHER MARKETS. As part of its business strategy, the Company intends to acquire
related and complementary businesses and product lines. There can be no
assurance that the Company will be able to acquire such businesses and/or
product lines or, if acquired, be able to manage the expanded operations
effectively. Moreover, failure to implement financial and other systems and to
add resources in connection with such acquisitions could have a material adverse
impact on the Company's results of operations and financial condition. The
Company's acquisitions, if any, could involve a number of risks including the
diversion of management's attention to the assimilation of the product lines to
be acquired, unforeseen difficulties in the acquired intangible assets and
dilution in the ownership interest of stockholders as a result of the issuance
of additional Common Stock or shares of preferred stock (the "Preferred Stock")
in connection with an acquisition. The Company has no present commitments,
understandings or agreements for any acquisitions, and there can be no assurance
that any such acquisitions will occur. See "Business--Growth Strategy."

FREIGHT AND TRANSPORTATION. The Company is dependent on independent
freight haulers to ship the Company's products to distribution facilities. The
ability of the Company to control its transportation and freight expenses is a
significant factor in the Company's gross profit margin. There is no assurance
that the Company will be able to maintain acceptable freight and transportation
pricing and arrangements. Furthermore, a labor slowdown, strike or other matters
beyond management's control may adversely affect the Company's ability to ship
its products on a timely basis or at all.

NO PRIOR PUBLIC MARKET. Prior to this Offering, there has been no public
market for the Common Stock. Accordingly, there can be no assurance that an
active trading market will develop and be sustained upon the completion of this
Offering. The initial public offering price of the Common Stock has been
determined by negotiations between the Company and the Representative and does
not necessarily bear any relation to the Company's asset value, earnings or
other objective criteria. See "Underwriting." The stock market has, from time to
time, experienced extreme price and volume fluctuations which often have been
unrelated to the operating performance of particular companies. Although it has
no obligation to do so, the Representative intends to engage in market-making
activities or solicited brokerage activities with respect to the purchase or
sale of the Common Stock on the Nasdaq National Market. However, no assurance
can be given that the Representative will continue to participate as a
market-maker in the securities of the Company or that other broker/dealers will
make a market in such securities which may adversely impact the liquidity of the
Common Stock. Regulatory developments and economic and other external factors,
as well as period-to-period fluctuations in financial results, may also have a
significant impact on the market price of the Common Stock.

IMMEDIATE AND SUBSTANTIAL DILUTION. This Offering involves an immediate
and substantial dilution to investors. Purchasers of Shares in the Offering will
incur an immediate dilution of $3.54 per Share in the net tangible book value of
their investment from the initial public offering price, which dilution amounts
to approximately 71% of the initial public offering price per Share. Investors
in the Offering will pay $5.00 per Share, as compared to an average cash price
of $0.39 per share paid by existing stockholders. See "Dilution."

11
<PAGE> 12

BROAD DISCRETION IN APPLICATION OF PROCEEDS; UNSPECIFIED
ACQUISITIONS. Approximately 44% of the net proceeds of this Offering will be
applied to working capital and general corporate purposes. Accordingly,
management of the Company will have broad discretion over the use of the
proceeds. Although the Company may utilize a portion of the net proceeds for
potential acquisitions of complementary businesses and of product lines through
licensing or other arrangements, as of the date hereof, the Company has not
identified any particular acquisition targets. Stockholders of the Company may
have no opportunity to approve specified acquisitions or to review the financial
condition of any potential target. In addition, although as of the date hereof
the Company has no agreements, understandings or commitments and is not engaged
in any negotiations relating thereto, the Company may seek to acquire rights to
additional proprietary product lines through licensing or other arrangements,
and intends to use a portion of the proceeds of this Offering for one or more of
such acquisitions in the event opportunities become available on terms
acceptable to the Company. Moreover, there can be no assurance that any such
acquisition opportunities will become available, that the Company would be
successful in acquiring any such rights on favorable terms, or that the Company
would be successful in marketing and selling any product lines so acquired by
it. See "Use of Proceeds" and "Business--Growth Strategy."

NEED FOR ADDITIONAL FINANCING. The Company believes that the proceeds of
the Offering will, together with revenues from operations, be sufficient to
finance the Company's working capital requirements for a period of at least 12
months following the completion of this Offering. However, a part of the
Company's strategy is to acquire related and complementary businesses and/or
individual product lines, although the Company has not presently identified any
specific acquisitions. The Company's ability to make acquisitions may be
dependent upon its ability to obtain additional financing. There can be no
assurance that additional financing will be available on terms acceptable to the
Company, or at all. In the event that the Company is unable to obtain such
additional financing as it becomes necessary, the Company may not be able to
achieve all of its business plans. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

SHARES ELIGIBLE FOR FUTURE SALE. Of the 5,198,000 shares of Common Stock
of the Company to be outstanding upon completion of this Offering, 3,548,000
shares shall be "restricted securities," which are owned by "affiliates" of the
Company, as those terms are defined in Rule 144 promulgated under the Securities
Act. Absent registration under the Securities Act, the sale of such shares is
subject to Rule 144, as promulgated under the Securities Act. All of the
"restricted securities" will be eligible for resale under Rule 144. In general,
under Rule 144, subject to the satisfaction of certain other conditions, a
person, including an affiliate of the Company, who has beneficially owned
restricted shares of Common Stock for at least one year is permitted to sell in
a brokerage transaction, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares of
the same class, or, if the Common Stock is quoted on The Nasdaq Stock Market or
a stock exchange, the average weekly trading volume during the four calendar
weeks preceding the sale. Rule 144 also permits a person who presently is not
and who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned the shares of
Common Stock for at least two years to sell such shares without regard to any of
the volume limitations described above. Holders of all of such shares of Common
Stock are affiliates of the Company. All of the Company's post-offering
stockholders who are affiliates have agreed not to sell or otherwise dispose of
any of their shares of Common Stock now owned or issuable upon the exercise of
any option for a period of 18 months from the Effective Date, without the prior
written consent of the Representative. For a period of 24 months from the
Effective Date such post-offering stockholders who are affiliates agree that all
sales of the Company's Common Stock owned by such affiliates shall be made
through the Representative in accordance with its customary brokerage policies.
No prediction can be made as to the effect, if any, that sales of shares of
Common Stock or the availability of such shares for sale will have on the market
prices of the Company's Common Stock prevailing from time to time. The
possibility that substantial amounts of Common Stock may be sold under Rule 144
into the public market may adversely affect prevailing market prices for the
Common Stock and could impair the Company's ability to raise capital in the
future through the sale of equity securities. See "Shares Eligible for Future
Sale."

NO DIVIDENDS AND NONE ANTICIPATED. To date, no dividends have been
declared or paid on the Common Stock, and the Company does not anticipate
declaring or paying any dividends in the foreseeable future, but

12
<PAGE> 13

rather intends to reinvest profits, if any, in its business. Investors should,
therefore, be aware that it is unlikely that any dividends will be paid on the
Common Stock in the foreseeable future. See "Dividend Policy."

NASDAQ ELIGIBILITY AND MAINTENANCE REQUIREMENTS; POSSIBLE DELISTING OF
COMMON STOCK FROM NASDAQ NATIONAL MARKET SYSTEM. Prior to this Offering, there
has been no established public trading market for the Company's Common Stock and
there is no assurance that a public trading market for the Company's Common
Stock will develop after the completion of this Offering. If a trading market
does in fact develop for the Common Stock offered hereby, there can be no
assurance that it will be sustained.

The Company has applied for listing of the Common Stock on the Nasdaq
National Market upon the Effective Date. The Commission has recently approved
new rules imposing criteria for listing of securities on the Nasdaq National
Market, including standards for maintenance of such listing. In order to qualify
for initial quotation of securities on the Nasdaq National Market, an issuer,
among other things, must have at least $6,000,000 in net tangible assets,
$8,000,000 in market value of the public float and a minimum bid price of $5.00
per share. For continued listing, an issuer, among other things, must have
$4,000,000 in net tangible assets, $5,000,000 in market value of securities in
the public float and a minimum bid price of $1.00 per share. If the Company is
unable to satisfy the Nasdaq National Market's maintenance criteria in the
future, its Common Stock may be delisted from the Nasdaq National Market. In
such event, the Company would seek to list its securities on The Nasdaq SmallCap
Market, however, if it was unsuccessful, trading, if any, in the Company's
Common Stock, would thereafter be conducted in the over-the-counter market in
the so-called "pink sheets" or the OTC Bulletin Board. As a consequence of such
delisting, an investor would likely find it more difficult to dispose of, or to
obtain quotations as to, the price of the Company's Common Stock.

PENNY STOCK REGULATION. In the event that the Company is unable to satisfy
the maintenance requirements for the Nasdaq National Market and its Common Stock
falls below the minimum bid price of $5.00 per share for the initial quotation,
the Company would seek to list its securities on The Nasdaq SmallCap Market. If
it was unsuccessful, trading would be conducted on the "pink sheets" or the OTC
Bulletin Board. In the absence of the Common Stock being quoted on Nasdaq, or
listed on an exchange, trading in the Common Stock would be covered by Rule
15g-9 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), if the Common Stock is a "penny stock." Under such rule,
broker-dealers who recommend such securities to persons other than established
customers and accredited investors must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement to
a transaction prior to sale. Securities are exempt from this rule if the market
price is at least $5.00 per share.

The Commission adopted regulations that generally define a penny stock to
be any equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Such exceptions include an equity security listed
on Nasdaq, and an equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operation
for three years, (ii) net tangible assets of at least $5,000,000, if such issuer
has been in continuous operation for less than three years, or (iii) average
revenue of at least $6,000,000 for the preceding three years. Unless an
exception is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated therewith.

If the Company's Common Stock were to become subject to the regulations
applicable to penny stocks, the ability of broker-dealers to sell the Common
Stock and the ability of purchasers in this Offering to sell their Common Stock
in the secondary market would be limited thereby severely affecting the market
liquidity of the Common Stock. There is no assurance that trading in the Common
Stock will not be subject to these or other regulations that would adversely
affect the market for such securities.

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<PAGE> 14

DILUTION

Dilution represents the difference between the initial public offering
price paid by the purchasers in the Offering and the net tangible book value per
share immediately after completion of the Offering. Net tangible book value per
share represents the amount of the Company's total assets minus the amount of
its liabilities and intangible assets divided by the number of shares
outstanding. As of May 31, 1998, the net tangible book value of the Company's
Common Stock was $1,436,708 or $0.39 per share. Immediately after the Offering,
the pro forma net tangible book value as of May 31, 1998 will increase to
$7,570,508 or $1.46 per share. Consequently, there will be an immediate increase
in net tangible book value of $1.07 per share to the existing stockholders and
an immediate substantial dilution (i.e., the difference between the offering
price of $5.00 and the pro forma net tangible book value per share after the
Offering) of $3.54 or 71% to new investors purchasing the Shares offered hereby.

The following table illustrates, as of May 31, 1998, this per share
dilution:

<TABLE>
<S> <C> <C>
Public offering price per Share............................ $5.00
Net tangible book value per share before Offering(1)....... 0.39
Increase per share attributable to new investors........... 1.07
-----
Pro forma net tangible book value per share after
Offering(1).............................................. 1.46
-----
Dilution per Share to new investors(1)..................... 3.54
=====
</TABLE>

The following table summarizes, as of May 31, 1998, the total number of
shares of Common Stock purchased from the Company, the total consideration paid,
and the average price per share paid by the existing stockholders and by new
investors who purchase shares of Common Stock pursuant to this Offering.

<TABLE>
<CAPTION>
SHARES PERCENTAGE AVERAGE
PURCHASED OF TOTAL AGGREGATE % OF TOTAL PRICE
(1) SHARES CONSIDERATION CONSIDERATION PER SHARE
------------ ---------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Existing
Stockholders........... 3,700,000 71.2% $1,436,708 16.1% $0.39
New Investors.......... 1,498,000 28.8% $7,490,000 83.9% $5.00
--------- ------ ---------- ------
Total.................. 5,198,000 100.0% $8,926,708 100.0%
</TABLE>

- ------------------------------

(1) This information does not include (i) 165,000 shares issuable upon the
exercise of the Underwriters' Warrants; (ii) 400,000 shares that may be
issued under the Plan; or (iii) 247,500 shares available pursuant to the
Over-Allotment Option.

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<PAGE> 15

CAPITALIZATION

The following table sets forth the capitalization of the Company as of May
31, 1998 and as adjusted to reflect the sale of 1,498,000 Shares offered hereby.
The information provided below should be read in conjunction with the other
financial information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MAY 31, 1998
------------------------
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
Long-term debt, less current maturities............. $ 241,768 $ 241,768
---------- ----------
Stockholders' equity:
Common Stock, no par value, 15,000,000 shares
authorized: 3,700,000 issued and outstanding; and
5,198,000 issued and outstanding as adjusted(1)... 80 6,133,880
Foreign currency transaction adjustment............. (94,664) (94,664)
Retained earnings................................... 1,531,292 1,531,292
---------- ----------
Total stockholders' equity.......................... 1,436,708 7,570,508
---------- ----------
Total capitalization................................ 1,678,476 7,812,276
========== ==========
</TABLE>

- ------------------------------

(1) Reflects the issuance of 1,498,000 Shares offered hereby. Assumes no
exercise of the Underwriters' Warrants or the Over-Allotment Option.

15
<PAGE> 16

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the Shares
offered by the Company at a public offering price of $5.00 per Share, after
deducting underwriting commissions, the financial advisory fee payable to the
Representative and other offering expenses to be paid by the Company, is
estimated to be $6,133,800. The Company expects to apply the net proceeds of the
Offering as follows:

<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE OF
APPLICATION OF PROCEEDS AMOUNT NET PROCEEDS
----------------------- ----------- -------------
<S> <C> <C>
Acquisition of Inventory.................................... $1,800,000 29.4%
Repayment of Indebtedness(1)................................ 900,000 14.7%
Sales and Marketing(2)...................................... 400,000 6.5%
Management Information System(3)............................ 250,000 4.1%
Relocation of Warehouse and Principal Executive
Offices(4)................................................ 100,000 1.6%
Working Capital and General Corporate Purposes(5)........... 2,683,800 43.7%
---------- ------
Total....................................................... $6,133,800 100.0%
</TABLE>

- ------------------------------

(1) The Company intends to repay a $900,000 loan which it secured from Jacob
Herzog's father-in-law, in July 1998 for interim financing. Such loan bears
interest at 7.5% and is payable on the earlier of demand or November 30,
1998.

(2) Includes costs associated with hiring a national sales manager, a regional
sales manager and opening a sales office in the United States.

(3) Represents the cost to upgrade the Company's current computer system.

(4) Includes moving costs and certain one time capital expenditures to be
incurred in preparing its new warehouse space. The Company believes that the
rental costs associated with the new warehouse will be commensurate with its
current rental costs.

(5) The net proceeds allocated to working capital include funds for general
corporate purposes including the financing of the Company's accounts
receivable and possible strategic acquisitions. The Company has not
currently identified any acquisition candidates.

The foregoing represents the Company's estimate of the allocation of the
net proceeds of the Offering based upon the current status of its operations and
anticipated business needs. It is possible, however, that the application of
funds will differ considerably from the estimates set forth herein due to
changes in the economic climate and/or the Company's planned business operations
or unanticipated complications, delays and expenses, as well as any potential
acquisitions that the Company may consummate, although no specific acquisition
has been identified. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Any reallocation of the net proceeds will
be at the discretion of the Board of Directors of the Company.

Any additional net proceeds realized from the exercise of the
Over-Allotment Option (up to approximately $1,076,625) will be added to the
Company's working capital.

Pending application, the net proceeds will be invested principally in
short-term certificates of deposit, money market funds or short-term treasury
bonds.

The Company estimates that the net proceeds from this Offering will be
sufficient to meet the Company's liquidity and working capital requirements for
a period of at least 12 months from the completion of this Offering. In the
event that the Company acquires any additional product lines, although no
specific acquisition has been identified, such funds will be derived from the
funds currently allocated to working capital or from revenues generated from the
Company's operations.

DIVIDEND POLICY

The Company has never paid or declared dividends on its Common Stock. The
payment of cash dividends, if any, in the future is within the discretion of the
Board of Directors and will depend upon the Company's earnings, its capital
requirements, financial condition and other relevant factors. The Company
intends, for the foreseeable future, to retain future earnings for use in the
Company's business.

16
<PAGE> 17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the preceding
Summary Combined Financial Data and the Company's Financial Statements and the
Notes thereto and the other financial data included elsewhere in this
Prospectus. This Prospectus contains forward-looking statements regarding the
plans and objectives of management for future operations. The forward-looking
statements included herein are based on current expectations and assumptions
that involve numerous risks and uncertainties. Although management believes that
the assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no assurance
that the forward-looking statements included herein will prove to be accurate.
In light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.

GENERAL

The Company designs, distributes and markets quality, value-priced consumer
electronics products. The Company offers a broad line of telecommunication,
audio, video and computer products, including telephones, answering machines,
caller ID systems, CD and cassette systems, portable televisions and computer
accessories. The Company's products are primarily sold under the brand names
"Curtis" and "CTP Worx," as well as private labels. The Company's strategy has
been to build a portfolio of diverse consumer electronics products which offers
retailers flexible merchandising programs. The Company's products are available
in approximately 2,300 stores throughout Canada and 10,000 stores in the United
States through approximately 30 retail chains in Canada and the United States.

RESULTS OF OPERATIONS

Fiscal Year Ended May 31, 1998 ("Fiscal 1998") Compared to Fiscal Year
Ended May 31, 1997 ("Fiscal 1997").

Sales for Fiscal 1998 were $27,471,613, an 84.2% increase over sales of
$14,914,142 for Fiscal 1997. This increase was primarily due to an increase of
428% in sales in the United States and to a lesser degree, a 24.1% increase in
sales in Canada. The Company's strategy is to continue to increase sales in the
United States, while maintaining and maximizing sales in Canada.

As a result of the 84.2% increase in sales, cost of sales for Fiscal 1998
were $22,349,967, an 83.6% increase over cost of sales of $12,173,748 for Fiscal
1997.

Gross profit margin for Fiscal 1998 was 18.6% of net revenues as compared
to 18.4% in Fiscal 1997. The Company's increased purchasing power which resulted
in slightly lower per item costs was largely offset by lower prices charged to
customers who purchased items in large quantities. The Company expects that its
increased buying power and broadened customer base will lead to a slight
increase in gross profit in the coming periods.

As a result of the Company's increased marketing efforts and certain
one-time charges, expenses increased from $2,617,015 in Fiscal 1997 to
$3,654,299 in Fiscal 1998. Selling expenses increased by $610,928 (93.3%) in
Fiscal 1998 over Fiscal 1997 as a result of increased sales efforts particularly
in the United States. These expenses include salaries and commissions, delivery
charges and advertising costs. The Company expects to further increase its
marketing efforts in the United States, but expects increased sales to offset
such costs. As a percentage of sales, selling expenses remained relatively
stable at approximately 4% of sales. Administrative expenses of $1,758,313 were
$27,721 higher than in Fiscal 1997. However, as a percentage of sales,
administrative expenses were significantly reduced (from 11.6% to 6.4%), as a
result of relatively stable expenses coupled with the Company's

17
<PAGE> 18

sales growth. The Company believes that it can continue to increase sales with
only a minor increase in administrative expenses. Financial expenses rose from
$231,445 to $474,154, a 105% increase which was the result of higher interest
expense, from $161,041 to $329,922 as a result of increased borrowing to sustain
the Company's growth and an increase of $73,828 in the Company's reserve for bad
debts. Management believes that the proceeds of the Offering will allow the
Company to increase sales without increasing borrowing expenses like the Company
has historically incurred in order to fund its growth. In Fiscal 1998, the
Company also incurred a one-time lease cancellation fee of $155,926.

Earnings before income taxes ("EBIT") increased $1,343,968 to $1,467,347
(1,089%) for Fiscal 1998 versus Fiscal 1997. As a percentage of sales, EBIT for
Fiscal 1998 was 5.3% compared to .9% in Fiscal 1997. As a result of the
Company's increased income, the provision for income taxes increased from
$30,378 to $602,442. Net income increased from $93,001 for Fiscal 1997 to
$864,905 for Fiscal 1998. This increase in net income is directly a result of
continued sales growth with stable administrative costs, which more than offset
the increase in selling expenses. Management believes, although there can be no
assurance, that the Company can continue this trend in the future.

Fiscal 1997 Compared to Fiscal Year Ended May 31, 1996 ("Fiscal 1996").

Sales for Fiscal 1997 were $14,914,142, a 2.0% increase over the prior year
sales of $14,627,378. Sales in the United States increased by $960,952 (76.5%)
as a result of increased sales efforts during the later part of Fiscal 1997.
This increase offset slightly lower sales in Canada.

Gross profit for Fiscal 1997 was 18.5% of sales, compared to 18.6% in the
prior year.

Expenses increased from $2,580,774 in Fiscal 1996 to $2,617,015 in Fiscal
1997. The primary difference in expenses was an increase of $416,615 (31.7%) in
administrative expenses which resulted from an increase in management fees and
bonus of $321,485 and an increase in insurance expenses of $52,478. These
increases in administrative expenses were partially offset by a decrease in
selling expenses of $246,242 which was a result of a decrease of $283,305 in
advertising, rebate and promotional expenses. Financial expense decreased by
$134,132 in Fiscal 1997, from $365,577 to $231,445. This change was a result of
the reduction in reserves for bad debts from $257,427 to $70,404 which were only
partially offset by a $52,891 increase in interest and bank charges.

Net income decreased $7,346 in Fiscal 1997, from $100,347 to $93,001. In
addition, income was fairly constant as a percentage of net sales.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has funded its operations from cash flow, its
credit line with Canadian Imperial Bank of Commerce ("CIBC") and advances from
affiliates. The line of credit bears interest at .50% plus prime, has a limit of
$8,250,000 and is personally guaranteed by the Company's President and Chairman
and affiliated companies. The line of credit is secured by a first lien on
substantially all of the Company's assets. In addition, an affiliated company
has agreed to a postponement of the Company's indebtedness to it until the
amount due under the line of credit is paid. Moreover, CIBC is the beneficiary
of the key man life insurance policies maintained by the Company on the lives of
Aaron Herzog and Jacob Herzog. As of May 31, 1998, the line of credit had an
outstanding balance of $5,063,819. The $5,063,819 represents the actual bank
indebtedness ($8,465,000) less the cash balance maintained in the bank
($3,401,181). The Company's executive officers, either directly or through their
affiliated corporations, loaned the Company an aggregate of $725,303 in order to
finance the Company's expansion. These loans were memorialized into notes which
bear interest at 8% and are repayable quarterly over the 18 months following the
Offering, provided the Company is profitable on a post tax basis during each
quarter and CIBC gives its consent to such repayment. In July 1998, the Company
received a $900,000 loan from Jacob Herzog's father-in-law, which loan bears
interest at 7.5% and is due on the earlier of demand or November 30, 1998. The
Company used the proceeds of the loan for working capital. The Company intends
to repay the loan out of the net proceeds of the Offering. See "Use of Proceeds"
and "Certain Transactions."

The Company's cash flow is affected by a number of factors. During Fiscal
1998, the Company experienced a significant increase in its business which has
resulted in a strain on its cash flow. While net

18
<PAGE> 19

income increased from $93,001 for Fiscal 1997 to $864,905 for Fiscal 1998, the
Company's accounts receivable rose from $1,813,898 to $4,084,729 and inventory
increased by $4,512,244. The Company used $4,986,191 in its operating activities
as compared to generating $1,051,798 for Fiscal 1997. As a result of the
Company's increased business, the Company's bank indebtedness increased by
$7,183,701 for Fiscal 1998. The Company had cash on hand of $3,401,181 at May
31, 1998, as compared to $1,251,542 at May 31, 1997. The Company had current
assets of $13,423,318 at May 31, 1998, compared to $4,427,555 at May 31, 1997.
The Company had current liabilities of $12,006,896 at May 31, 1998, as compared
to current liabilities of $3,167,002 at May 31, 1997.

The Company will receive net proceeds from this Offering of approximately
$6,133,800. The Company believes that the net proceeds of the Offering, coupled
with income from operations, will fulfill the Company's working capital needs
for at least the next 12 months. There can be no assurance that the Company will
realize cash flow from operations or that such cash flow will be sufficient, in
which case the Company may require additional financing. In addition, the
Company may seek to acquire rights to additional proprietary product lines
through licensing or other arrangements or make acquisitions of other companies.
Thus, the Company may seek to raise funds through subsequent equity or debt
financings, or through other sources. No assurances can be given that additional
funds will be available to the Company to finance its development. Moreover, the
line of credit places restrictions on the Company's ability to obtain financing
through the issuance of additional debt. Additional financings may result in
dilution to existing stockholders. If funds are needed but are not available in
adequate amounts from additional financing sources or from operations, the
Company's business may be adversely affected. See "Use of Proceeds."

YEAR 2000 PREPARATION

Many computer systems and software products worldwide and throughout all
industries will not function properly as the year 2000 approaches unless
changed, due to a once-common programming standard that represents years using
two-digits. This is the "Year 2000 problem" that has received considerable media
coverage. The Company is in the process of upgrading its management information
systems. As part of this program, the Company will identify those systems and
applications that require modification, redevelopment or replacement. The
Company expects to be Year 2000 compliant by December 31, 1998 with respect to
its internal systems. Management of the Company does not believe that failure of
the Company's vendors or other third-party providers' systems to be Year 2000
compliant will have a material adverse effect upon the Company.

19
<PAGE> 20

BUSINESS

SUMMARY

The Company's customers include mass merchandisers such as Wal-Mart
(Canada), Ames, Bradlees, Dollar General and Bi-Way Stores; drug store chains
such as Rite-Aid, London Drugs, Thrifty Payless, Jean Coutu and Ker Drugs;
specialty marketers such as QVC, the Home Shopping Network and Amway; consumer
electronic retailers such as Future Shop, Fry's and ABC Warehouse; and appliance
and department stores such as Boscov and Fedco. The Company has operated
profitably and has recently undergone a period of rapid sales growth. In Fiscal
1998, the Company's sales increased by $12,557,471, or 84.2%, to $27,471,613
from $14,914,142 in Fiscal 1997. The Company only entered the United States
market in 1996 and has since opened accounts with approximately 20 retail chains
in the United States. The Company's sales in the United States were $11,716,935
in Fiscal 1998 as compared to $2,217,058 in Fiscal 1997, an increase of 428%.
The Company believes there is an opportunity to significantly increase its
business in the United States through both its current customers and potential
new customers.

THE CONSUMER ELECTRONICS INDUSTRY

GROWTH STRATEGY

The Company plans to establish itself as a leading supplier of quality,
value-priced consumer electronics products. The Company believes that its broad
portfolio of products, superior design capabilities, flexible and low-cost
sourcing and superior service offered both prior to and after-sale provide it
with distinct competitive advantages. The Company plans to continue to grow its
business using a strategy comprised of the following principal elements:

- CONTINUE TO OFFER VALUE-PRICED, QUALITY PRODUCTS. The Company designs
and markets products which are value-priced, yet fill a market void
through their design and up-to-date style. The Company's packaging
further distinguishes its products in the marketplace from those of its
competitors. In addition to increasing its product offering (as described
below), the Company plans to continue to offer its customers quality
products at competitive prices.

- EXPAND CUSTOMER BASE. The Company believes that it has significant
opportunities to expand its customer base both in Canada and the United
States. The Company intends to use its existing relationships in Canada
with retailers such as Wal-Mart, Staples and Toys "R" Us, to penetrate
the United States market in such retailers' stores. The Company recently
shipped its first order to Wal-Mart (Canada) and intends to use the
relationship to move into Wal-Mart stores in the United States. In
addition, the Company continually seeks to expand its distribution
channels through various means. For example, the Company recently sold to
the Home Shopping Network its personal

20
<PAGE> 21

televisions as part of a special promotion. The Home Shopping Network is
planning additional promotions of certain of the Company's products in the
Fall of 1998. In addition, the Company will attempt to enter selected
international markets in Mexico, South America and Central America in the
year 2000. Management believes there are significant opportunities in such
markets. To date, the Company has not entered such markets due to limited
financial and human resources. With the increased growth of the middle
class in such countries, the Company believes that there are significant
opportunities in such markets. To gain entrance in such markets, the
Company intends to hire additional sales representatives to focus on such
markets and to utilize its contacts with existing customers who already
have a presence in such areas.

- ACQUIRE AND LICENSE ADDITIONAL PRODUCTS. Discount retail chains and mass
merchants limit the number of vendors with which they deal, preferring to
deal with a limited number of vendors with a wide range of products.
However, the Company has an extensive line of products and strives to
fill substantially all of its customers' electronic requirements. The
Company believes that there are a number of companies which have a
superior niche type product, but have a limited line of customer
electronics products, which makes it difficult to sell their product to
mass merchants and discount chain stores because of their reluctance to
deal with a supplier with a limited number of products. By entering into
arrangements with or acquiring these small companies, the Company can add
to its already wide selection of consumer electronic products.

21
<PAGE> 22

PRODUCTS

The Company designs, distributes and markets quality value-priced consumer
electronics products, including telephones, audio equipment, personal
televisions, radios and computer accessories, to a wide variety of customers.
The Company currently offers over 150 models of consumer electronic products.
The Company's core business currently consists of the following consumer
electronic products:

TVS HOME AND PORTABLE AUDIO PRODUCTS
- - Portable black and white TVs - Home audio systems with single CD player
- - Portable combination TV/Audio products - Home audio systems with CD changer systems
- Portable AM/FM cassette systems
TELEPHONE PRODUCTS - Portable CD systems with detachable
- - Corded and cordless telephones speakers
- - "Feature" telephones - Portable CD stereo systems
- - Answering machines - Portable CD changer stereo systems
- - Combination telephone/answering machines - Personal CD players
- - Telephone clock radios - Personal cassette players
- - Caller ID systems
- Personal sports electronics products
COMPUTER ACCESSORIES designed for use when exercising or
- - Ergonomically designed keyboards traveling
- - Mouse attachments - Portable radios
- Electronic clock radios
- Electronic clock radios with CD players
- Electronic clock radios with cassette
players
- Hand-held micro cassette recorders
</TABLE>

PRODUCT DESIGN AND DEVELOPMENT

Value-priced consumer electronic products typically do not have unique or
innovative technical features. Competition in this segment is therefore more
dependent on product design, visual appeal and price. As such, the Company
recognizes that superior product design provides an important competitive
advantage. The Company believes that the superior design and style of its
products distinguish them from those of its competitors in the value-priced
category and help drive consumer purchasing decisions.

Management believes that the enhancement and extension of the Company's
existing products and the development of new product categories have contributed
significantly to the Company's growth to date and are necessary for the
Company's continued success and growth. The Company's product design and
engineering team, along with its outside graphic and design artists, evaluate
new ideas and seek to develop new products and improvements to existing products
to satisfy industry requirements and changing consumer preferences. The Company
selects design and manufacturing specifications that adapt and implement
available technology features to satisfy its customers' requirements for
quality, product mix and pricing. Company employees work closely with both
retailers and suppliers to identify trends in consumer preferences and to
generate new product ideas.

In addition, the Company highlights the design and style features of its
products with detailed descriptions and illustrations on packaging, which the
Company believes further distinguishes its products from those of its
competitors. The Company believes that this packaging strategy makes its
products more attractive to consumers and facilitates an understanding of the
product features in retail locations where salespersons may not be available to
provide detailed explanations and demonstrations.

22
<PAGE> 23

SALES AND DISTRIBUTION

The Company sells its products in Canada and the United States to mass
merchandisers such as Wal-Mart (Canada), Ames and Bradlees; drug store chains
such as Rite-Aid and London Drugs; and specialty marketers such as QVC and the
Home Shopping Network. The Company does not have long-term contracts with any of
its customers, but rather receives orders on an ongoing basis. Products imported
by the Company are shipped by ocean freight and stored in the Company's
warehouse or contracted public warehouse facilities, for shipment to customers.
All merchandise received by the Company is automatically updated into the
Company's inventory system.

The Company has implemented an integrated system to coordinate purchasing,
sales and distribution segments of its operations. The Company is equipped to
receive orders from its major accounts electronically or by the conventional
modes of facsimile, telephone or mail. The Company is in the process of
upgrading its management information system ("MIS"), which management believes
will increase the efficiency of the Company's distribution efforts. The
Company's new MIS will allow the Company to track its customers inventory levels
and help its customers identify their more popular and profitable items. This
added service will allow the Company to take a more active role in its
customers' electronics business and will help them maintain sufficient inventory
levels. See "Use of Proceeds."

The Company also makes available to its customers a direct import program,
pursuant to which products are imported directly by the Company's customers. To
date, sales in such manner have been limited. Sales under such plan are made at
a reduced cost but also result in savings to the Company. These savings result
from the customer opening its line of credit directly to the manufacturer,
allowing the manufacturer to ship the goods directly to the customer. Under such
arrangement the Company does not incur any interest cost under its line of
credit or for any shipping costs.

MARKETING

The Company's strategy is to initially gain entrance to new accounts with
one or two of its products, and thereafter develop such account. The Company's
goal is to ultimately become its customers' primary consumer electronics
supplier.

The Company does not undertake any direct advertising. However, the
Company's retail customers place advertisements that generally promote the
Company's brand names in newspapers and other publications, catalogs, flyers and
by displaying point-of-purchase advertising. Under such co-op advertising
arrangements, the Company generally pays the customer a small percentage of
sales by the retailer of the Company's products featured in such advertising.
The Company markets its products to retailers at trade shows, including the
Consumer Electronics Show held in Las Vegas, Nevada in January of each year.

Aaron Herzog, the Company's President, has established significant contacts
and is directly responsible for handling the accounts of the Company's primary
customers. The Company intends to utilize a portion of the Offering proceeds to
retain additional in-house sales personnel who can expand upon Mr. Herzog's
existing relationships.

A portion of the Company's sales are made through independent sales
representatives, which receive sales commissions and work closely with Company
sales personnel. The Company has 11 independent sales representatives based in
Canada and the United States. The outside sales representatives also sell, in
addition to the Company's products, allied, but generally non-competitive
products. In most instances, either party may terminate a sales representative
relationship on 30 days prior notice in accordance with customary industry
practice.

MANUFACTURING

The Company is responsible for the final design and specifications of all
of its products. Actual assembly is performed by one of its independent
manufacturers in accordance with specifications mandated by the Company.

During Fiscal 1998 and Fiscal 1997, the Company's three largest independent
manufacturers, which are located in China, supplied approximately 17.0% of the
Company's total products. The Company changes

23
<PAGE> 24

suppliers from time to time as market conditions require. Substantially all of
these suppliers assemble products with components that they purchase from third
parties who manufacture these types of components. The Company has no agreement
with the component suppliers. The Company believes that this is the standard
method of operating and contracting for the manufacture of products in the
consumer electronics industry. During production, the Company's employees
coordinate with the independent manufacturers' facilities to monitor and
facilitate timely manufacture and delivery of products produced to the Company's
specifications.

The Company considers its relationships with its independent manufacturers
and component suppliers to be good and believes that, absent extreme
circumstances affecting the supply of materials or the demand on manufacturing
time, the supply of products will be available when needed. The Company does not
maintain long-term purchase contracts with manufacturers and operates
principally on a purchase order basis. The Company believes that it is not
currently dependent on any single manufacturer for any of its products, and that
the loss of any one manufacturer would not have a long-term material adverse
effect on the Company because other independent manufacturers with which the
Company does business would be able to increase production to fulfill the
Company's requirements. However, the loss of a significant supplier could, in
the short-term, materially and adversely affect the Company's business until
alternative supply arrangements could be secured. See "Risk Factors--Dependence
on Third Party Manufacturers and Suppliers."

QUALITY CONTROL

The Company employs a quality control inspector who inspects the Company's
products before each shipment is sent from its manufacturers to ensure that such
products meet both the Company's quality standards and industry standards.
Additionally, the Company's quality control team does a second quality control
inspection when its products arrive in either the United States or Canada. If
the Company's quality control team feels that the tested products do not meet
both the Company's standards and industry standards, such products are not
accepted by the Company for shipment to its customers and are returned to the
manufacturer, without any expense to the Company.

PRODUCT RETURNS AND WARRANTY CLAIMS

The Company offers its customers limited warranties comparable to those
offered to retailers by its competitors and accepts returns from its customers
in accordance with customary industry practices, on most of its products. If a
low priced item is returned, the Company generally does not repair the item, but
will generally return it to the manufacturer for either credit or exchange.
Higher priced items returned to the Company are generally repaired with parts
supplied by the manufacturer. The Company generally has the ability to return
all defective products to the manufacturer for either credit or exchange.

BACKLOG

From time-to-time, the Company has substantial orders from customers on
hand. Management believes, however, that backlog is not a significant factor in
its operations. As of August 6, 1998, the Company had a backlog of approximately
$6,800,000. Backlog consists of purchase orders and commitments which are to be
filled within the next two months. However, since orders and commitments may be
rescheduled or canceled, management believes that backlog is an inconclusive
indicator of future financial performance. Notwithstanding the foregoing, the
ability of management to correctly anticipate and provide for inventory
requirements is essential to the successful operation of the Company's business.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Transactions."

TRADEMARKS

The Company has trademarked the names "Curtis" and "CTP Worx" in Canada and
has applied for such trademarks in the United States and other countries. The
Company intends to renew all such trademarks before their expiration. The
Company does not consider the "Curtis" and "CTP Worx" trademarks to be of
material importance to its business.

24
<PAGE> 25

REGULATION

Most of the Company's customers (as well as several state and local
authorities) require that the Company's products meet the electrical safety
standards of the Underwriters Laboratories, Inc. The Company ensures that all of
its products sold in Canada and the United States which require electrical
safety approval are registered with either the Underwriters Laboratories, Inc.,
Canadian Standards Association or Warnock Hersey. Certain of the Company's
products sold for use in the United States must be registered with and approved
by the FCC. Products sold in Canada must comply with the standards of the
Canadian Standards Association. The Company has not experienced difficulty in
satisfying such standards.

COMPETITION

The consumer electronics industry is extremely competitive and is dominated
by large well-capitalized companies. The Company competes with the entire
electronics industry for consumer dollars, shelf space and promotional displays
for products and sales support. The Company's competitors may not rely on
external financing or relationships with independent manufacturers to the same
extent as the Company. Furthermore, the Company's competitors may have cost
advantages depending on labor costs, currency exchange rates and other factors
in the countries where their manufacturing operations take place, relative to
the countries where the Company's products are manufactured. The Company has
adopted a marketing strategy that targets the value-priced segment of the
consumer electronics market, which is particularly price sensitive. There is
competition among a number of brands in this market, including Emerson, Newtech
and GPX, as well as foreign-based manufacturers and distributors. In addition,
although General Electric, Sony, Aiwa and Panasonic brand products are not
currently emphasized in the value-priced segment of the market, they do compete
with the Company's products for consumer dollars, shelf space and sales support.
To the extent that these brands compete directly with the Company's brands on
the basis of price, or their product prices were otherwise reduced, the
Company's ability to market and sell competitive products could be severely
affected, which would have a material adverse effect on the Company's business,
financial condition and results of operations.

EMPLOYEES

As of July 31, 1998, the Company employs 37 persons, which include two
senior executives, four administrative personnel, 17 support staff, and 14
full-time non-unionized hourly laborers. One of the Company's employees is
located in Asia. The Company believes that its relationships with its employees
are good. The Company is not party to any collective bargaining agreement, nor
is the Company aware of any effort to organize employees of the Company into any
union or similar organization.

25
<PAGE> 26

PROPERTIES

The Company leases the following premises:

<TABLE>
<CAPTION>
CURRENT
LOCATION ADDRESS EXPIRATION DATE SQUARE FEET ANNUAL RENT
-------- ----------------------------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
Toronto, Ontario 7 Kodiak Crescent (Principal March 31, 1999 38,500 Cdn$148,225
Executive Offices and Warehouse)
Toronto, 300 Steeprock Drive (Warehouse) April 30, 1999 20,000 Cdn$110,000
Ontario.......
Montreal, Quebec 8170 Montview (Sales and Marketing) October 31, 1998 2,500 Cdn$ 20,375
</TABLE>

All of the premises the Company presently occupies are leased. Management
believes its current facilities are adequate and suitable for its present
business, but is seeking larger space to consolidate its warehouses and
principal executive office into one facility in Toronto, Canada, to facilitate
its expected growth. Although no facility has yet been identified, the Company
intends to use a portion of the net proceeds of this Offering to pay the
expenses associated with such relocation. See "Use of Proceeds."

The Company also receives shipment of its products from its manufacturers
at 100 Sonwil Drive, Buffalo, New York, an independently operated distribution
center which ships the Company's products to certain of the Company's customers.
The Company does not lease or own such facility but rather pays a usage charge
for each case of product shipped to such location. The Company owns a
condominium in Florida which it is actively seeking to sell. Management
anticipates selling the condominium within 90 days from the date of this
Prospectus, although there can be no assurance thereof.

LEGAL PROCEEDINGS

The Company is not involved in any material legal proceedings.

26
<PAGE> 27

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning the Directors
and Executive Officers of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Aaron Herzog............................. 37 President, Chief Executive Officer and Director
Jacob Herzog............................. 46 Chairman, Treasurer, Secretary and Director
Louis Drazin............................. 62 Director
David Ben David.......................... 36 Director
</TABLE>

Set forth below is a biographical description of each director and
executive officer of the Company based on information supplied by each of them.

AARON HERZOG is a co-founder of Curtis International Ltd., and has served
as the Company's President, Chief Executive Officer and Director since its
formation in 1990. Mr. Herzog also acts as sales director of the Company. Mr.
Herzog earned a degree in Management from McGill University in 1981.

JACOB HERZOG is a co-founder of Curtis International Ltd., and has served
as the Company's Chairman, Treasurer, Secretary and Director since its formation
in 1990. Mr. Herzog has been in the consumer electronics business since the
early 1970's.

LOUIS DRAZIN has been a Director of the Company since August 1998. From
1961 - present, Mr. Drazin has been a Senior Partner at Drazin, Ouaknine &
Friedman, Notaries. From 1990 - present he has been a senior executive at Shutam
Canada Inc., a real estate acquisition, investment and development company. Mr.
Drazin graduated from McGill University in 1957 with a B.A. with honors in
economics and political science. Mr. Drazin earned a Bachelor of Civil Law from
McGill University in 1960.

DAVID BEN DAVID has been a Director of the Company since August 1998. From
July 1990 - June 1997, Mr. David served as Vice President and Chief Financial
Officer of NSI Communications, Inc. From June 1997 - present, Mr. David has
served as President and Chief Operating Officer of NSI Communications, Inc. NSI
Communications, Inc. is a manufacturer of communications products. Mr. David
earned a B.A. in Economics in 1983 from Bar Ilan University in Israel, an M.B.A.
in 1987 from McGill University and a Public Accountant degree in 1989 from
McGill University.

Aaron Herzog and Jacob Herzog are brothers. There are no other family
relationships among the Company's directors and executive officers.

The term of office of each Director is until the next annual meeting of
stockholders and until a successor is elected and qualified or until the
Director's earlier death, resignation or removal from office. Executive officers
hold office until their successors are chosen and qualified, subject to earlier
removal by the Board of Directors.

For the period of five years after the Effective Date, the Representative
shall have the right to designate a nominee to the Company's Board of Directors.
See "Underwriting."

Following the Offering, the Company intends to retain a Chief Financial
Officer with public company experience and a Vice President of Marketing. The
Company is actively seeking to fill such positions.

COMMITTEES OF THE BOARD

The Company's Board of Directors will have an Audit Committee, comprised of
Jacob Herzog, Louis Drazin and David Ben David, and a Compensation Committee,
comprised of Aaron Herzog, Louis Drazin and David Ben David.

COMPENSATION OF DIRECTORS

The Company has not paid compensation to any director for acting in such
capacity. The Company is currently reviewing its policy on compensation of
outside directors and may pay outside directors in the future.

27
<PAGE> 28

EXECUTIVE COMPENSATION

The following table sets forth certain information regarding compensation
paid by the Company during each of the last three fiscal years to the Company's
Chief Executive Officer and to each of the Company's executive officers who
earned in excess of $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- --------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Aaron Herzog(2), President,.............................. 1998 $28,000 $0 $177,192
Chief Executive Officer................................ 1997 28,000 0 213,962
and Director........................................... 1996 30,000 0 53,220
Jacob Herzog(3), Chairman,............................... 1998 $34,000 $0 $177,192
Treasurer, Secretary and............................... 1997 33,000 0 213,963
Director............................................... 1996 36,000 0 53,220
</TABLE>

- ------------------------------

(1) Represents compensation paid to corporations (AEG Trading Limited and
Worldwide Holdings Limited) controlled by such persons solely for providing
the full time services of Messrs. Aaron and Jacob Herzog. See "Certain
Transactions."

(2) In addition, Aaron Herzog's wife received annual compensation of $35,000 in
each of the years 1996, 1997 and 1998 in her capacity as an administrative
assistant at the Company.

(3) In addition, Jacob Herzog's wife received annual compensation of $35,000 in
each of the years 1996, 1997 and 1998 in her capacity as an administrative
assistant at the Company.

EMPLOYMENT AGREEMENTS

Effective June 1, 1998, the Company entered into two year employment
agreements with each of Aaron Herzog and Jacob Herzog. Such employment
agreements provide for annual salaries of $175,000 with an annual bonus of
$25,000 if the Company achieves gross revenues of $32,430,000 and $1,657,000 in
net income for the year ended May 31, 1999 and gross revenues of $45,120,000 and
$2,354,000 in net income for the year ended May 31, 2000. In addition, each is
entitled to a $1,000 per month car allowance.

STOCK OPTION PLAN

The Plan will be administered by the compensation committee or the Board of
Directors, who determine among other things, those individuals who shall receive
options, the time period during which the options may be partially or fully
exercised, the number of shares of Common Stock issuable upon the exercise of
the options and the option exercise price.

The Plan is effective for a period for ten years, expiring in 2008. Options
may be granted to officers, directors, consultants, key employees, advisors and
similar parties who provide their skills and expertise to the Company. The Plan
is designed to enable management to attract and retain qualified and competent
directors, employees, consultants and independent contractors. Options granted
under the Plan may be exercisable for up to ten years, require a minimum two
year vesting period, and shall be at an exercise price all as determined by the
Board. Options are non-transferable except by the laws of descent and
distribution or a change in control of the Company, as defined in the Plan, and
are exercisable only by the participant during his or her lifetime. Change in
control includes (i) the sale of substantially all of the assets of the Company
and merger or consolidation with another Company, or (ii) a majority of the
Board changes other than by election by the stockholders pursuant to Board
solicitation or by vacancies filled by the Board caused by death or resignation
of such person.

If a participant ceases affiliation with the Company by reason of death,
permanent disability or retirement at or after age 70, the option remains
exercisable for one year from such occurrence but not beyond the

28
<PAGE> 29

option's expiration date. Other types of termination allow the participant three
months to exercise, except for termination for cause which results in immediate
termination of the option.

The exercise price of an option may not be less than the fair market value
per share of Common Stock on the date that the option is granted in order to
receive certain tax benefits under the Income Tax Act of Canada (the "ITA"). The
ITA requires that the exercise price of all future options will be at least 85%
of the fair market value of the Common Stock on the date of grant of the
options. A benefit equal to the amount by which the fair market value of the
shares at the time the employee acquires them exceeds the total of the amount
paid for the shares or the amount paid for the right to acquire the shares shall
be deemed to be received by the employee in the year the shares are acquired
pursuant to paragraph 7(1) of the ITA. Where the exercise price of the option is
equal to the fair market value of the shares at the time the option is granted,
paragraph 110(1)(d) of the ITA allows a deduction from income equal to one
quarter of the benefit as calculated above. If the exercise price of the option
is less than the fair market value at the time it is granted, no deduction under
paragraph 110(1)(d) is permitted. Options granted to any non-employees, whether
directors or consultants or otherwise will confer a tax benefit in contemplation
of the person becoming a stockholder pursuant to subsection 15(1) of the ITA.
The Company, however, has agreed not to grant any options under the Plan at less
than 100% of the fair market value of the Common Stock. Additionally, the
Company has agreed to limit the amount of options granted pursuant to the Plan
to Aaron Herzog and Jacob Herzog to an aggregate of 100,000 options, 50,000 of
which options have been granted and vest over a two-year period but are not
exercisable for at least six months after the Effective Date. The options are
exercisable at $5.00 per share.

Options may not be transferred by an optionee other than by will or the
laws of descent and distribution, and, during the lifetime of an optionee, the
option will be exercisable only the optionee.

Options under the Plan must be issued within ten years from the effective
date of the Plan.

Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by the Company become available again for issuance under
the Plan.

The Plan may be terminated or amended at any time by the Board of
Directors, except that the number of shares of Common Stock reserved for
issuance upon the exercise of options granted under the Plan may not be
increased without the consent of the stockholders of the Company.

29
<PAGE> 30

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information, as of the date hereof,
and as adjusted to give effect to the Offering and the transactions contemplated
thereby, with respect to the beneficial ownership of the Common Stock by (i)
each person known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) each executive officer and director of
the Company and (iii) all executive officers and directors of the Company as a
group:

<TABLE>
<CAPTION>
PERCENTAGE
BENEFICIALLY OWNED
NUMBER OF SHARES OF --------------------
NAME AND ADDRESS OF COMMON STOCK BEFORE AFTER
BENEFICIAL OWNER(1) BENEFICIALLY OWNED OFFERING OFFERING
------------------- ------------------- -------- --------
<S> <C> <C> <C>
Aaron Herzog(2)(5)...................................... 1,774,000 47.9% 34.1%
Jacob Herzog(3)(5)...................................... 1,774,000 47.9% 34.1%
Ranch Limited(4)........................................ 152,000 4.1% 0.0%
Louis Drazin............................................ 0 -- --
David Ben David......................................... 0 -- --
All Executive Officers and Directors as a Group (4
persons).............................................. 3,548,000 95.8% 68.2%
</TABLE>

- ------------------------------

(1) Unless otherwise indicated, the address is c/o Curtis International Ltd, 7
Kodiak Crescent, Downsview, Ontario M3J 3E5.

(2) Consists of 1,689,208 shares of Common Stock owned directly by Aaron Herzog
and 84,792 shares of Common Stock owned by the A&E Herzog Family Trust of
which Aaron Herzog and Evelyn Fisher Herzog are the Trustees.

(3) Consists of 1,663,882 shares of Common Stock owned by Jacob Herzog and
110,118 shares of Common Stock owned by the Herzog Family Trust of which
Jacob Herzog, Beatrice Herzog and Aaron Grubner are the Trustees.

(4) The beneficial owner of Ranch Limited, the Selling Stockholder, is Tzvi
Ralbag, the son-in-law of Jacob Herzog, and is not an employee of the
Company. Ranch Limited will sell 152,000 shares of its Common Stock in this
Offering, which represents all of the shares of Common Stock owned by Ranch
Limited.

(5) Aaron and Jacob Herzog are parties to a voting trust agreement which
provides that they will vote their shares together.

CERTAIN TRANSACTIONS

Aaron Herzog and Jacob Herzog advanced monies to the Company, which
advances are evidenced by promissory notes which are non-interest bearing to May
31, 1998. Had such advances been valued at the current value of cash flows at
the Company's current rate of borrowing, the advances would have been valued at
$725,303 in 1998, $832,295 in 1997 and $761,575 in 1996. As of June 1, 1998 the
advances bear interest at the rate of 8% per annum and are repayable in six
quarterly installments in the 18 month period after the Offering. The repayment
of such loans on a quarterly basis is contingent on the Company reporting
profitability for such quarter on a post-tax basis and the Company obtaining the
consent of CIBC to such repayment. The loans were utilized for working capital
to fund the Company's expansion.

During Fiscal 1998, Fiscal 1997 and Fiscal 1996, the Company paid an
aggregate of $354,384, $427,925 and $106,440, respectively, to companies
controlled by Aaron Herzog and Jacob Herzog. These fees were in consideration
solely for such companies providing the Company with the services of Messrs.
Aaron and Jacob Herzog. See "Management--Executive Compensation."

During 1996 and 1997, the Company occupied office and warehouse space which
was owned by Worldwide Holdings Limited ("Worldwide"), a company owned by Jacob
Herzog. The Company paid rent of $140,000 during 1996, $140,000 during 1997 and
$11,667 for the month of January 1998, to Worldwide. Additionally, the Company
guaranteed the mortgage payments due from Worldwide to a mortgage corporation in
the principal amount of $1,305,000. The guarantee was also secured by the issue
of a collateral

30
<PAGE> 31

debenture containing a fixed charge and a floating charge on the assets of the
Company. On January 30, 1998, Worldwide sold the office and warehouse space to
an independent third party. The Company paid Worldwide a lease cancellation fee
of $155,926. Thus, Worldwide no longer acts as landlord to the Company. In
addition, on May 31, 1998, Worldwide was amalgamated with and into the Company.

The Company has secured a line of credit facility with Canadian Imperial
Bank of Commerce bank, which bears interest at the bank's prime lending rate
plus 0.50% per annum. As security, the Company has provided a general assignment
of accounts receivable, a general security agreement and an assignment of fire
insurance on the business assets, with personal guarantees by Aaron Herzog and
Jacob Herzog and companies they control. The Company's line of credit extends to
$8,250,000.

In July 1998, Jacob Herzog's father-in-law loaned the Company $900,000 at
7.5% per annum. Such loan is payable on the earlier of demand or November 30,
1998.

In August 1998, Aaron and Jacob Herzog and their affiliates returned an
aggregate of 300,000 shares of Common Stock to the Company for cancellation, for
which they received no consideration.

Aaron Grubner, a former director, is a partner with the law firm of
Grubner, Krauss, which serves as counsel to the Company. The Company has paid
legal fees to Grubner, Krauss for services rendered. See "Legal Matters."

All future transactions between the Company and its officers, directors or
5% stockholders, and their affiliates, will be on terms no less favorable than
could be obtained from unaffiliated third parties.

DESCRIPTION OF SECURITIES

The total authorized capital stock of the Company consists of 15,000,000
shares of Common Stock, with no par value, and 1,000,000 shares of Preferred
Stock, with no par value per share. The following descriptions contain all
material terms and features of the Securities of the Company, are qualified in
all respects by reference to the Articles of Incorporation and Bylaws of the
Company, copies of which are filed as Exhibits to the Registration Statement of
which this Prospectus is a part.

COMMON STOCK

The Company is authorized to issue up to 15,000,000 of shares of Common
Stock, no par value per share, of which as of the date of this Prospectus,
3,700,000 shares of Common Stock are outstanding, not including the Shares
offered herein. All outstanding Shares of common stock are, and all shares of
Common Stock to be outstanding upon the closing of this Offering will be validly
authorized and issued, fully paid, and non-assessable.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Holders of Common
Stock are entitled to receive ratably dividends as may be declared by the Board
of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock are entitled to share ratably in all assets remaining, if any, after
payment of liabilities. Holders of Common Stock have no preemptive rights and
have no rights to convert their Common Stock into any other securities.

Pursuant to the Business Corporation Act, Ontario ("BCA"), a stockholder of
an Ontario Corporation has the right to have the corporation pay the stockholder
the fair market value for his shares of the corporation in the event such
stockholder dissents to certain actions taken by the corporation such as
amalgamation or the sale of all or substantially all of the assets of the
corporation and such stockholder follows the procedures set forth in the BCA.

PREFERRED STOCK

The Company's Articles of Incorporation authorize the issuance of up to
1,000,000 shares of Preferred Stock with designations, rights and preferences
determined from time to time by its Board of Directors. Accordingly, the
Company's Board of Directors is empowered, without stockholder approval, to
issue Preferred Stock with dividend, liquidation, conversion, or other rights
that could adversely affect the rights of the holders of the Common Stock.
Although the Company has no present intention to issue any shares of its
Preferred Stock, there can be no assurance that it will not do so in the future.

31
<PAGE> 32

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Continental Stock
Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this Offering, the Company will have 5,198,000
shares of Common Stock outstanding. In addition, the Company has reserved for
issuance 400,000 shares upon the exercise of options eligible for grant under
the Plan, 50,000 of which have been granted. Of the shares to be issued and
outstanding after this Offering, the 1,650,000 Shares offered hereby (plus any
additional Shares sold upon exercise of the Over-Allotment Option) will be
freely tradeable without restriction or further registration under the Act,
except for any shares purchased or held by an "affiliate" of the Company (in
general, a person who has a control relationship with the Company) which will be
subject to the limitations of Rule 144 adopted under the Act ("Rule 144"). The
remaining 3,548,000 shares of Common Stock are "restricted securities" as that
term is defined under Rule 144, and may not be sold unless registered under the
Act or exempted therefrom. All of the 3,548,000 restricted shares are currently
eligible to be sold in accordance with the exemptive provisions and the volume
limitations of Rule 144, however, the owners of such shares have agreed with the
Representative not to offer, sell or otherwise dispose of their shares until 18
months from the Effective Date without the consent of the Representative, except
pursuant to gifts or pledges in which the donee or pledgee agrees to be bound by
such restrictions. For a period of 24 months from the Effective Date such owners
agree that all sales of the Company's Common Stock by such individuals shall be
made through the Representative in accordance with its customary brokerage
policies. These agreements are enforceable only by the parties thereto, and are
subject to rescission or amendment at any time without approval of other
stockholders.

Sales of the Company's Common Stock by certain of the present stockholders
in the future, under Rule 144, may have a depressive effect on the price of the
Company's Common Stock.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following describes the principal United States federal income tax
consequences of the purchase, ownership and disposition of the Common Stock by a
stockholder, that is a citizen or resident of the United States or a United
States domestic corporation or that otherwise will be subject to United States
federal income tax (a "U.S. Holder"). This summary is based on the United States
Internal Revenue Code of 1986, as amended (the "Code"), administrative
pronouncements, judicial decisions and existing and proposed Treasury
Regulations, changes to any of which subsequent to the date of this Prospectus
may affect the tax consequences described herein. This summary discusses only
the principal United States federal income tax consequences to those beneficial
owners holding the securities as capital assets within the meaning of Section
1221 of the Code and does not address the tax treatment of a beneficial owner
that owns 10% or more of the Common Stock. It is for general guidance only and
does not address the consequences applicable to certain specialized classes of
taxpayers such as certain financial institutions, insurance companies, dealers
in securities or foreign currencies, or United States persons whose functional
currency (as defined in Section 985 of the Code) is not the United States
dollar. Persons considering the purchase of these securities should consult
their tax advisors with regard to the application of the United States and other
income tax laws to their particular situations. In particular, a U.S. Holder
should consult his tax advisor with regard to the application of the United
States federal income tax laws to his situation.

COMMON STOCK

A U.S. Holder generally will realize, to the extent of the Company's
current and accumulated earnings and profits, foreign source ordinary income on
the receipt of cash dividends, if any, on the Common Stock equal to the United
States dollar value of such dividends determined by reference to the exchange
rate in effect on the day they are received by the U.S. Holder (with the value
of such dividends computed before any reduction for any Canadian withholding
tax). U.S. Holders should consult their own tax advisors regarding the treatment
of foreign currency gain or loss, if any, on any dividends received which are
converted into United States dollars on a date subsequent to receipt. Subject to
the requirements and limitations imposed by

32
<PAGE> 33

the Code. a U.S. Holder may elect to claim Canadian tax withheld or paid with
respect to dividends on the Common Stock as a foreign credit against the United
States federal income tax liability of such holder. Dividends on the Common
Stock generally will constitute "passive income" or, in the case of certain U.S.
Holders, "financial services income" for United States foreign tax credit
purposes. U.S. Holders who do not elect to claim any foreign tax credits may
claim a deduction for Canadian income tax withheld. Dividends paid on the Common
Stock will not be eligible for the dividends received deduction available in
certain cases to United States corporations.

Upon a sale or exchange of a share of Common Stock, a U.S. Holder will
recognize gain or loss equal to the difference between the amount realized on
such sale or exchange and the tax basis of such Common Stock.

Generally, any gain or loss recognized as a result of the foregoing will be
a capital gain or loss and will either be long-term or short-term depending upon
the period of time the Common Stock sold or exchanged, as the case may be, was
held.

THIS SUMMARY IS OF GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND
SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PROSPECTIVE INVESTOR
AND NO REPRESENTATION WITH RESPECT TO THE TAX CONSEQUENCES TO ANY PARTICULAR
INVESTOR IS MADE.

33
<PAGE> 34

INVESTMENT CANADA ACT

The Investment Canada Act is a Federal Canadian statute which regulates the
acquisition of control of existing Canadian businesses and the establishment of
new Canadian businesses by an entity that is a "non-Canadian" as that term is
defined in the Investment Canada Act.

The Company believes that it is not currently a "non-Canadian" for purposes
of the Investment Canada Act. If the Company were to become a "non-Canadian" in
the future, acquisitions of control of Canadian businesses by the Company would
become subject to the Investment Canadian Act. Generally, the direct acquisition
by a "non-Canadian" of an existing Canadian business with gross assets of
Cdn$5,000,000 or more is reviewable under the Investment Canada Act, with a
threshold of Cdn$168 million for 1996 for "NAFTA investors" as defined under the
Investment Canada Act.

Indirect acquisitions of existing Canadian businesses (with gross assets
over certain threshold levels) as well as acquisitions of businesses related to
Canada's cultural heritage or national identity (regardless of the value of
assets involved) may also be reviewable under the Investment Canada Act. In
addition, acquisitions of control of existing investments to establish new,
unrelated businesses are not generally reviewable but do require that a notice
of the investment be given under the Investment Canada Act. An investment in a
new business that is related to the non-Canadian's existing business in Canada
is not notifiable under the Investment Canada Act unless such investment relates
to Canada's cultural heritage or national identity.

Investments which are reviewable under the Investment Canada Act are
reviewed by the Minister, designated as being responsible for the administration
of the Investment Canada Act. Reviewable investments may not be implemented
prior to the Minister determining that the investment is likely to be of "net
benefit to Canada" based on the criteria set out in the Investment Canada Act.

34
<PAGE> 35

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, each of the Underwriters named below, for whom Joseph Stevens &
Company, Inc. is acting as Representative, has severally agreed to purchase from
the Company and the Selling Stockholder, and the Company and the Selling
Stockholder have agreed to sell to the Underwriters, on a firm commitment basis,
the respective number of shares of Common Stock set forth below opposite each
such Underwriter's name:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Joseph Stevens & Company, Inc...............................
Royce Investment Group, Inc.................................
Total....................................................... 1,650,000
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to certain conditions precedent, including
the absence of any material adverse change in the Company's business and the
receipt of certain certificates, opinions and letters from the Company and
certain certificates from the Selling Stockholder. The nature of the
Underwriters' obligation is such that they are committed to purchase and pay for
all the Shares if any are purchased.

The Underwriters have advised the Company that they propose to offer the
Shares to the public at the public offering price set forth on the cover page of
this Prospectus and that they may allow to selected dealers who are members of
the NASD, concessions of not in excess of $ per Share, of which not more
than $. per Share may be re-allowed to certain other dealers who are
members of the NASD. After the initial public offering, the public offering
prices, concessions and reallowances may be changed.

The Underwriting Agreement further provides that the Underwriters will
receive a non-accountable expense allowance of 3% of the aggregate public
offering price of the Shares sold hereunder (including any Shares sold pursuant
to the Over-Allotment Option), which allowance amounts to $247,500 (or $284,625
if the Over-Allotment Option is exercised in full), of which $25,000 was paid to
the previous underwriter and $15,000 of which has been paid to the
Representative.

The Company has granted to the Underwriters the Over-Allotment Option,
which is exercisable for a period of 45 days after the Closing, to purchase up
to an aggregate 247,500 additional shares of Common Stock (up to 15% of the
shares being offered hereby) at the public offering price, less underwriting
discounts and commissions, on the same terms and conditions of this offering
solely to cover over-allotments, if any.

The Company has agreed to sell to the Underwriters for a nominal
consideration, the Underwriters' Warrants to purchase up to 165,000 Shares,
exclusive of the Over-Allotment Option. The Underwriters' Warrants will be
nonexercisable for one year after the date of this Prospectus. Thereafter, for a
period of four years, the Underwriters' Warrants will be exercisable at $8.25
per Share of Common Stock (165% of the initial public offering price). The
shares of Common Stock issuable upon exercise of the Underwriter's Warrants are
identical to those offered to the public. The Underwriter's Warrants contain
anti-dilution provisions providing for adjustment of the number of warrants and
exercise price under certain circumstances. The Underwriter's Warrants grant to
the holders thereof and to the holders of the underlying securities certain
rights for registration of the securities underlying the Underwriter's Warrants.

For the life of the Underwriters' Warrants, the holders thereof are given,
at nominal costs, the opportunity to profit from a rise in the market price of
the Company's securities with a resulting dilution in the interest of other
stockholders. Further, the holders may be expected to exercise the Underwriters'
Warrants at a time when the Company would in all likelihood be able to obtain
equity capital on terms more favorable than those provided in the Underwriters'
Warrants.

The Company has agreed that upon closing of this Offering, that the
Representative shall have the right to designate a nominee to the Company's
Board of Directors for a period of five years from the Effective Date (the
"Designation Right"). In addition, management of the Company will obtain
agreements from each of the pre-offering stockholders to vote all shares of the
Company's securities owned by him or her, whether directly or indirectly, in
favor of such nominee. The Company has agreed to reimburse the Representative's
designee

35
<PAGE> 36

for all out-of-pocket expenses incurred in connection with the designee's
attendance at meetings of the Board of Directors. In the event the
Representative elects not to exercise its Designation Right, then it may
designate one person to attend all meetings of the Company's Board of Directors
for a period of five years.

The Company has agreed to retain the Representative, as the Company's
financial consultant for a period of two years to commence on the closing of
this Offering, at a monthly fee of $3,437.50, an aggregate of $82,500 (1% of the
gross proceeds of the Offering), all of which shall be payable in advance on the
closing of the Offering. Pursuant to this agreement, the Representative shall
provide advisory services related to merger and acquisition activity, corporate
finance and other matters. The Representative will be paid a fee in the event a
merger, acquisition or similar activity is undertaken by the Company.

Prior to this Offering, there has been no public market for the Common
Stock. Accordingly, the public offering price of the Shares offered hereby has
been determined by negotiation between the Company and the Representative.
Factors considered in determining the offering price of the Shares offered
hereby included the business in which the Company is engaged, the Company's
financial condition, an assessment of the Company's management, the prospects of
the Company, its capital structure, the general condition of the securities
markets and such other factors that were deemed relevant. The offering price
does not necessarily bear any relationship to the assets, results of operations
or net worth of the Company.

In connection with this Offering, the Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing their respective market
prices. The Underwriters also may create a short position for the account of the
Underwriters by selling more shares of Common Stock in connection with the
Offering than they are committed to purchase from the Company, and in such case
may purchase shares of Common Stock in the open market following completion of
the Offering to cover all or a portion of such short position. The Underwriters
may also cover all or a portion of such short position by exercising the
Over-Allotment Option. In addition, the Underwriters may impose "penalty bids"
under contractual arrangements with the Underwriters whereby it may reclaim from
an Underwriter (or dealer participating in the Offering) for the account of
other Underwriters, the selling concession with respect to shares of Common
Stock that are distributed in the Offering but subsequently purchased for the
account of the Underwriters in the open market. Any of the transactions
described in this paragraph may result in the maintenance of the price of the
Common Stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in this paragraph is required, and,
if they are undertaken they may be discontinued at any time.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection with
this Offering, including liabilities under the Securities Act.

The foregoing is a summary of the material terms of the Underwriting
Agreement, the Underwriters' Warrant and the Financial Consulting Agreement.
Reference is made to the copies of the Underwriting Agreement, the Underwriters'
Warrant and the Financial Consulting Agreement, which are filed as exhibits to
the Registration Statement of which this Prospectus forms a part.

36
<PAGE> 37

LEGAL MATTERS

Certain legal matters relating to Canadian law, including the validity of
the issuance of the Common Stock offered herein, will be passed upon for the
Company by Grubner, Krauss, 5140 Yonge Street, Suite 1540, North York, Ontario,
Canada M2N 6L7. Aaron Grubner, a partner of Grubner, Krauss, is a director of
the Company. Certain legal matters in connection with the Offering will be
passed upon for the Company by its United States counsel, Gersten, Savage,
Kaplowitz & Fredericks, LLP, 101 East 52nd Street, New York, New York 10022.
Certain legal matters will be passed upon for the Underwriters by Broad and
Cassel, a general partnership including professional associations, 201 South
Biscayne Boulevard, Suite 3000, Miami, Florida 33131.

EXPERTS

The financial statements of the Company for each of the two fiscal years in
the periods ended May 31, 1997 and 1998, appearing in this Prospectus and
Registration Statement have been audited by Schwartz Levitsky Feldman, Chartered
Accountants, as set forth in their report thereon appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement under
the Act with respect to the Common Stock offered hereby. This Prospectus omits
certain information contained in the Registration Statement and the exhibits
thereto, and references are made to the Registration Statement and the exhibits
thereto for further information with respect to the Company and the Common Stock
offered hereby. Statements contained herein concerning the provisions of any
documents are not necessarily complete, and in each instance reference is made
to the copy of such document filed as an exhibit to the Registration Statement.
Each such statement is qualified in itsentirety by such reference. The
Registration Statement, including exhibits and schedules filed therewith, may be
inspected without charge at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such materials may be obtained from the Public Reference Section of the
Commission, Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and its public reference facilities in New York, New York and Chicago,
Illinois upon payment of the prescribed fees. Electronic registration statements
filed through the Electronic Data Gathering, Analysis, and Retrieval System are
publicly available through the Commission's Website (http://www.sec.gov). At the
date hereof, the Company was not a reporting company under the Exchange Act.

THE COMPANY INTENDS TO FURNISH ITS STOCKHOLDERS WITH ANNUAL REPORTS
CONTAINING AUDITED FINANCIAL STATEMENTS AND TO MAKE AVAILABLE QUARTERLY REPORTS
FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR CONTAINING UNAUDITED INTERIM
FINANCIAL STATEMENTS.

37
<PAGE> 38

INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

The Bylaws of the Company provide that the Company shall indemnify to the
fullest extent permitted by Canadian law directors and officers (and former
officers and directors) of the Company. Such indemnification includes all costs
and expenses and charges reasonably incurred in connection with the defense of
any civil, criminal or administrative action or proceeding to which such person
is made a party by reason of being or having been an officer or director of the
Company if such person was substantially successful on the merits in his or her
defense of the action and he or she acted honestly and in good faith with a view
to the best interests of the Company, and if a criminal or administrative action
that is enforced by a monetary penalty, such person had reasonable grounds to
believe his or her conduct was lawful.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
and the Underwriters pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses,
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person or by the Underwriters in connection
with the securities being registered, the Company will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS

The Company and its officers, directors and auditors are residents of
Canada and consequently all of the assets of the Company are or may be located
outside the United States. As a result, service of process may be effected upon
the Company through the offices of Gersten, Savage, Kaplowitz & Fredericks, LLP
in New York, but it may be difficult for investors to effect service of process
within the United States upon non-resident officers and directors, or to enforce
against them judgments obtained in the United States courts predicated upon the
civil liability provision of the Securities Act or state securities laws. The
Company believes that a judgment of a United States court predicated solely upon
civil liability under the Securities Act would probably be enforceable in Canada
if the United States court in which the judgment was obtained had a basis for
jurisdiction in the matter that was recognized by a Canadian court for such
purposes. However, there is substantial doubt whether an action could be brought
in Canada in the first instance on the basis of liability predicated solely upon
such laws. If investors have questions with regard to these issues, they should
seek the advice of their individual counsel. The Company has also been informed
by its Canadian legal counsel Grubner, Krauss that, pursuant to the Currency Act
(Canada), a judgment by a court in any Province of Canada may only be awarded in
Canadian currency. Pursuant to the provision of the Courts of Justice Act
(Ontario), however, a court in the Province of Ontario shall give effect to the
manner of conversion to Canadian currency of an amount in a foreign currency,
where such manner of conversion is provided for in an obligation enforceable in
Ontario.

38
<PAGE> 39

CURTIS INTERNATIONAL LTD.

FINANCIAL STATEMENTS

AS OF MAY 31, 1998 AND 1997

TOGETHER WITH AUDITORS' REPORT
TABLE OF CONTENTS

<TABLE>
<S> <C>
Report of Independent Auditors.............................. F-2
Balance Sheets.............................................. F-3
Statements of Income........................................ F-4
Statements of Cash Flows.................................... F-5
Statements of Stockholders' Equity.......................... F-6
Notes to Financial Statements............................... F-7 to F-11
</TABLE>

F-1
<PAGE> 40

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
Curtis International Ltd.

We have audited the accompanying balance sheets of Curtis International
Ltd. (incorporated in Canada) as of May 31, 1998, and 1997 and the related
statements of income, cash flows and changes in stockholders' equity for the
years ended May 31, 1998, and 1997. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Curtis International Ltd. as
of May 31, 1998, and 1997 and the results of its operations and its cash flows
for the years ended May 31, 1998, and 1997, in conformity with generally
accepted accounting principles in the United States of America.

Toronto, Ontario /s/ Schwartz Levitsky Feldman
July 24, 1998 Chartered Accountants

F-2
<PAGE> 41

CURTIS INTERNATIONAL LTD.

BALANCE SHEETS
AS AT MAY 31

(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
1998 1997
$ $
---------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash...................................................... 3,401,181 1,251,542
Accounts receivable (note 3).............................. 4,084,729 1,813,898
Inventory (note 4)........................................ 5,853,118 1,340,874
Prepaid expenses and sundry assets........................ 8,737 8,699
Current portion of mortgage receivable (note 5)........... 75,553 852
Income taxes recoverable.................................. -- 11,690
---------- ---------
13,423,318 4,427,555
DEFERRED ISSUE COSTS........................................ 89,845 --
MORTGAGE RECEIVABLE (note 5)................................ -- 75,552
PROPERTY, PLANT AND EQUIPMENT (note 6)...................... 172,209 176,573
---------- ---------
13,685,372 4,679,680
========== =========
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness (note 7)................................ 8,729,357 1,545,656
Accounts payable (note 8)................................. 2,259,681 1,621,346
Income taxes payable...................................... 534,323 --
Current portion of advances from affiliated parties (note
9)..................................................... 483,535 --
---------- ---------
12,006,896 3,167,002
ADVANCES FROM AFFILIATED PARTIES (note 9)................... 241,768 861,425
---------- ---------
12,248,664 4,028,427
---------- ---------
SHAREHOLDERS' EQUITY
CAPITAL STOCK (note 10)..................................... 80 81
CUMULATIVE TRANSLATION ADJUSTMENT........................... (94,664) (15,215)
RETAINED EARNINGS........................................... 1,531,292 666,387
---------- ---------
1,436,708 651,253
---------- ---------
13,685,372 4,679,680
========== =========
</TABLE>

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

F-3
<PAGE> 42

CURTIS INTERNATIONAL LTD.

STATEMENTS OF INCOME
FOR THE YEARS ENDED MAY 31

(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
---------- ---------- ----------
<S> <C> <C> <C>
SALES (note 16)............................................ 27,471,613 14,914,142 14,627,378
Cost of sales............................................ 22,349,967 12,173,748 11,912,927
---------- ---------- ----------
GROSS PROFIT............................................... 5,121,646 2,740,394 2,714,451
---------- ---------- ----------
EXPENSES
Administrative........................................... 1,758,313 1,730,592 1,313,977
Selling.................................................. 1,265,906 654,978 901,220
Financial................................................ 474,154 231,445 365,577
Lease cancellation fee................................... 155,926 -- --
---------- ---------- ----------
3,654,299 2,617,015 2,580,774
---------- ---------- ----------
INCOME BEFORE INCOME TAXES................................. 1,467,347 123,379 133,677
Income taxes (note 11)................................... 602,442 30,378 33,330
---------- ---------- ----------
NET INCOME................................................. 864,905 93,001 100,347
========== ========== ==========
NET INCOME PER WEIGHTED AVERAGE SHARE...................... 0.22 0.02 0.02
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (note
10 and note 17).......................................... 4,000,000 4,000,000 4,000,000
========== ========== ==========
NET INCOME PER FULLY DILUTED SHARE......................... 0.22 0.02 0.02
========== ========== ==========
FULLY DILUTED NUMBER OF COMMON SHARES OUTSTANDING (note 10
and note 17)............................................. 4,000,000 4,000,000 4,000,000
========== ========== ==========
</TABLE>

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

F-4
<PAGE> 43

CURTIS INTERNATIONAL LTD.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MAY 31

(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... 864,905 93,001 100,347
---------- ---------- ----------
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Amortization.......................................... 17,172 17,346 20,225
Decrease (increase) in accounts receivable............ (2,446,164) 113,840 392,022
Decrease (increase) in inventory...................... (4,734,388) 10,675 105,463
Decrease (increase) in income taxes recoverable....... 11,419 (7,113) (4,577)
Decrease (increase) in prepaid expenses and sundry
assets.............................................. (524) (2,182) 1,481
Increase (decrease) in accounts payable and accrued
expenses............................................ 749,617 826,231 (53,397)
Increase (decrease) in income taxes payable........... 551,772 -- 4,843
---------- ---------- ----------
Net cash generated by operating activities............... (4,986,191) 1,051,798 556,721
---------- ---------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment............... (35,730) -- (2,162)
Payment of mortgage receivable........................... (3,389) 872 615
---------- ---------- ----------
Net cash used in investing activities.................... (39,119) 872 (1,547)
---------- ---------- ----------
Cash flows from financing activities:
Increase (decrease) in bank indebtedness................. 7,504,507 (463,749) 7,353
Increase (decrease) in advances from affiliated
parties............................................... (92,517) 16,271 89,113
Deferred issuance costs.................................. (92,779) -- --
Redemption of Class B share.............................. (1) -- --
---------- ---------- ----------
Net cash from financing activities....................... 7,319,210 (447,478) 96,466
---------- ---------- ----------
Effect of foreign currency exchange rate changes........... (144,261) 1,260 (6,550)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents....... 2,149,639 606,452 645,090
Cash and cash equivalents
--Beginning of year...................................... 1,251,542 645,090 --
---------- ---------- ----------
--End of year............................................ 3,401,181 1,251,542 645,090
========== ========== ==========
Interest paid............................................ 408,649 142,792 202,080
========== ========== ==========
Income taxes paid........................................ 50,670 44,221 42,284
========== ========== ==========
</TABLE>

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

F-5
<PAGE> 44

CURTIS INTERNATIONAL LTD.

STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED MAY 31

(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
COMMON CUMULATIVE
STOCK RETAINED TRANSLATION
NUMBER OF AMOUNTS EARNINGS ADJUSTMENTS
SHARES $ $ $
----------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Balance as of May 31, 1995......................... 4,000,000 80 473,039 (9,923)
Foreign currency translation....................... -- -- -- (19,492)
Net income for the year............................ -- -- 99,673 --
----------- --- ----------- -------
Balance as of May 31, 1996......................... 4,000,000 80 572,712 (29,415)
Foreign currency translation....................... -- -- -- 14,874
Net income for the year............................ -- -- 93,001 --
----------- --- ----------- -------
Balance as of May 31, 1997......................... 4,000,000 80 665,713 (14,541)
Foreign currency translation....................... -- -- -- (79,449)
Net income for the year............................ -- -- 864,905 --
----------- --- ----------- -------
Balance as of May 31, 1998......................... 4,000,000 80 1,530,618 (93,990)
=========== === =========== =======
</TABLE>

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

F-6
<PAGE> 45

CURTIS INTERNATIONAL LTD.

NOTES TO FINANCIAL STATEMENTS

MAY 31, 1998, 1997 AND 1996

(AMOUNTS EXPRESSED IN US DOLLARS)

1. BASIS OF PRESENTATION

On January 26, 1998 Curtis International Ltd. amalgamated with Unique
Investments Ltd. and AEG Trading Ltd. to form Curtis International Ltd.

On May 31, 1998, the company amalgamated with Worldwide Holdings Ltd. to
form Curtis International Ltd.

At the time of the amalgamations the only assets of the holding companies
were shares of Curtis International Ltd. These financial statements reflect the
operations of Curtis International Ltd. for the years ended May 31, 1998, 1997
and 1996.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

I) PRINCIPAL ACTIVITIES

The company was incorporated in Canada on December 12, 1990. The company is
principally engaged in the distribution and sales of electronics, audio visual
products and computer accessories in Canada and the United States of America.

II) CASH, CASH EQUIVALENTS AND BANK INDEBTEDNESS

Cash, cash equivalents and bank indebtedness includes cash in bank, amounts
due to banks, and any other highly liquid investments purchased with a maturity
of three months or less. The carrying amount approximates fair value because of
the short maturity of those instruments.

III) OTHER FINANCIAL INSTRUMENTS

The carrying amount of the company's other financial instruments
approximate fair value because of the short maturity of these instruments or the
current nature of interest rates borne by these instruments.

IV) LONG-TERM FINANCIAL INSTRUMENTS

The fair value of each of the company's long-term financial assets and debt
instruments is based on the amount of future cash flows associated with each
instrument discounted using an estimate of what the company's current borrowing
rate for similar instruments of comparable maturity would be.

V) INVENTORY

Inventory is valued at the lower of cost and net realizable value. Cost is
determined on the average cost basis.

VI) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost and are depreciated on
the declining balance basis over their estimated useful lives.

Leasehold improvements are amortized on the straight-line basis over the
term of the lease.

VII) SALES

Sales represent the invoiced value of goods supplied to customers. Sales
are recognized upon delivery of goods and passage of title to customers.

F-7
<PAGE> 46
CURTIS INTERNATIONAL LTD.

NOTES TO FINANCIAL STATEMENTS

MAY 31, 1998, 1997 AND 1996

(AMOUNTS EXPRESSED IN US DOLLARS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
VIII) FOREIGN CURRENCY TRANSLATION

The translation of the financial statements from Canadian dollars ("CDN $")
into United States dollars is performed for the convenience of the reader.
Balance sheet accounts are translated using closing exchange rates in effect at
the balance sheet date and income and expense accounts are translated using an
average exchange rate prevailing during each reporting period. No representation
is made that the Canadian dollar amounts could have been, or could be, converted
into United States dollars at the rates on the respective dates and or at any
other certain rates. Adjustments resulting from the translation are included in
the cumulative translation adjustments in stockholders' equity.

IX) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principals in the United States of America requires
management to make estimates and assumptions that affect certain reported
amounts of assets and liabilities and disclosures 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.

3. ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
1998 1997
$ $
--------- ---------
<S> <C> <C>
Accounts receivable......................................... 4,514,714 2,748,696
Less: Allowance for doubtful accounts....................... 429,985 934,798
--------- ---------
Accounts receivable, net.................................... 4,084,729 1,813,898
========= =========
</TABLE>

4. INVENTORY

Inventory is comprised entirely of finished goods.

5. MORTGAGE RECEIVABLE

The company sold land and a building owned by it on February 10, 1994. The
Company agreed to finance a portion of the purchase price and, as a result, took
back a mortgage. The details of this transaction are described below:

<TABLE>
<CAPTION>
1998 1997
$ $
------ ------
<S> <C> <C>
First mortgage, secured by land and building, due in 9
remaining monthly instalments of $577 including interest
at the rate of 8% per annum plus a final payment of
$74,945 due on February 10, 1999.......................... 75,553 76,404
Current portion............................................. 75,553 852
------ ------
Long-term portion........................................... -- 75,552
====== ======
</TABLE>

F-8
<PAGE> 47

6. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
1998
-------------------------------- 1997
ACCUMULATED -------
COST AMORTIZATION NET NET
$ $ $ $
------- ------------ ------- -------
<S> <C> <C> <C> <C>
Land............................................... 29,920 -- 29,920 34,253
Condominium........................................ 119,682 29,389 90,293 108,808
Furniture and equipment............................ 56,946 41,108 15,838 22,666
Automobile......................................... 34,368 30,931 3,437 5,621
Computer equipment................................. 56,612 24,834 31,778 3,873
Leasehold improvements............................. 8,170 7,227 943 1,352
------- ------- ------- -------
305,698 133,489 172,209 176,573
======= ======= ======= =======
</TABLE>

Amortization for the year amounted to $17,172 ($17,346 in 1997 and $20,225
in 1996).

7. BANK INDEBTEDNESS

The bank indebtedness bears interest at the bank's prime lending rate plus
0.50% per annum. As security, the company has provided a general assignment of
accounts receivable, a general security agreement and an assignment of fire
insurance on the business assets, with guarantees by the directors and
affiliated companies. An affiliated company has provided a postponement of its
loan to the company. The company's line of credit extends to $8,250,000 and is
limited based on a formula which relates to receivables and cashable instalments
held by the company. The company must meet certain covenants imposed by the
bank.

8. ACCOUNTS PAYABLE

<TABLE>
<CAPTION>
1998 1997
$ $
--------- ---------
<S> <C> <C>
Trade payables.............................................. 322,327 700,098
Accrued expenses............................................ 1,937,354 921,248
--------- ---------
2,259,681 1,621,346
========= =========
</TABLE>

9. ADVANCES FROM AFFILIATED PARTIES

The advances from affiliated parties bear interest at 8% per annum
commencing June 1, 1998. The principal sums shall be repaid in six equal quarter
yearly installments on the last day of the month in which each quarter-year
occurs, the first payment commencing 90 days from the effective date of the
registration statement on Form SB-2. Had the advances been valued at the current
value of cash flows at the company's current rate of borrowing the advances
would have been valued at $725,303 in 1998 and $832,295 in 1997. Interest of
$50,603 would have been imputed for 1998 and interest of $54,448 would have been
imputed for 1997.

10. CAPITAL STOCK

AUTHORIZED

15,000,000 Common Shares.

ISSUED

<TABLE>
<CAPTION>
1998 1997
$ $
---- ----
<S> <C> <C>
100 Common shares (old)..................................... -- 80
1 Class B share (old)....................................... -- 1
4,000,000 Common shares..................................... 80 --
-- --
80 81
== ==
</TABLE>

F-9
<PAGE> 48

Curtis International Ltd. amalgamated with Unique Investments Ltd. and AEG
Trading Ltd. on January 26, 1998, and with Worldwide Holdings Limited on May 31,
1998. There was no substantive effect to the amalgamations which reorganized
companies under common control. The outstanding shares of 4,000,000 issued on
the amalgamations are treated as stock splits and therefore the shares have been
retroactively restated as of May 31, 1995.

Subsequent to May 31, 1998, the company redeemed 300,000 common shares at
no consideration. As a result 3,700,000 common shares (new) are outstanding. The
net income per weighted average common share is $0.23 in 1998 and $0.03 in 1997
based on a weighted average number of common shares outstanding of 3,700,000.

The Board of Directors have adopted a stock option plan pursuant to which
400,000 shares of common stock are provided for issuance.

11. INCOMES TAXES

<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
------- ------- -------
<S> <C> <C> <C>
a) Current.............................................. 602,442 30,378 33,330
======= ======= =======
b) Current income taxes consist of:
Amount calculated at basic Federal and Provincial
rates................................................ 611,490 28,179 30,532
Permanent and other differences...................... -- 2,199 2,798
Timing differences................................... (9,048) -- --
------- ------- -------
602,442 30,378 33,330
======= ======= =======
</TABLE>

12. LEASE COMMITMENT

Minimum payments under the company's operating leases for premises,
exclusive of certain operating costs for which the company is responsible for
1999 is $51,958. The lease expires November 30, 1998.

13. TRANSACTION WITH AFFILIATED COMPANIES

<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
------- ------- -------
<S> <C> <C> <C>
Management fees......................................... 354,384 427,925 106,440
Rent expense............................................ 66,154 102,587 102,767
Occupancy costs......................................... 51,114 71,132 78,203
</TABLE>

14. CONTINGENT LIABILITIES

The company's products are purchased overseas. The payment arrangement is
done through letters of credit. Once the product leaves the country of origin,
the liability is recognized by the company and results in an accepted letter of
credit. The company was contingently liable to the bank for unaccepted letters
of credit of approximately $2,997,000 as at May 31, 1998.

15. COMPARATIVE FIGURES

Certain figures in the 1997 financial statements have been reclassified to
conform with the basis of presentation used in 1998.

F-10
<PAGE> 49

16. SEGMENTED INFORMATION

A) SALES TO MAJOR CUSTOMERS

<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
---------- ---------- ----------
<S> <C> <C> <C>
Company A........................................ 8,769,276 4,216,435 3,698,720
Company B........................................ 3,421,958 2,848,573 2,610,476
Company C*....................................... -- 1,467,330 1,973,312
---------- ---------- ----------
12,191,234 8,532,338 8,282,508
========== ========== ==========
Percentage of total sales........................ 44% 57% 57%
Accounts receivable due from major customers..... $2,814,165 $1,448,283 $1,354,947
Percentage of total accounts receivable.......... 69% 80% 70%
</TABLE>

Ongoing credit evaluations of each customer's financial condition are
performed and, generally, no collateral is required. The company maintains
reserves for potential credit losses and such losses, in the aggregate, have not
exceeded management's expectations.

* In 1998, sales to such customer were less than 10% of the Company's
revenues.

B) SALES BY GEOGRAPHIC AREA

<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
---------- ---------- ----------
<S> <C> <C> <C>
Canada........................................... 15,754,678 12,697,084 13,371,272
United States of America......................... 11,716,935 2,217,058 1,256,106
---------- ---------- ----------
27,471,613 14,914,142 14,627,378
========== ========== ==========
</TABLE>

C) NET INCOME BY GEOGRAPHIC AREA

The company's accounting records do not readily provide information on net
income by geographic area. Management is of the opinion that the proportion of
net income based principally on sales, presented below, would fairly present the
results of operations by geographic area.

<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
------- ------ -------
<S> <C> <C> <C>
Canada................................................... 495,782 80,860 91,730
United States of America................................. 369,123 12,141 8,617
------- ------ -------
864,905 93,001 100,347
======= ====== =======
</TABLE>

D) IDENTIFIABLE ASSETS BY GEOGRAPHIC AREA

All identifiable assets were located in Canada for 1998, 1997 and 1996.

E) PURCHASES FROM MAJOR SUPPLIERS

<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
---------- ---------- ----------
<S> <C> <C> <C>
Purchases from major suppliers................... 3,754,794 2,093,884 2,275,563
Percentage of total purchases.................... 17% 17% 19%
Accounts payable due to major suppliers.......... 368,141 288,629 128,809
Percentage of total accounts payable............. 16% 18% 16%
</TABLE>

17. SUBSEQUENT EVENTS

Subsequent to year end, the Company redeemed 300,000 common shares at no
consideration. See note 10 for details.

F-11
<PAGE> 50

[PICTURE OF COMPANY'S PRODUCTS]
<PAGE> 51

No underwriter, dealer,
salesman or other person has been
authorized to give any information
or to make any representations other
than those contained in this
Prospectus, and, if given or made,
such information or representation
must not be relied upon as having
been authorized by the Company. This
Prospectus does not constitute an
offer or solicitation to any person
in any jurisdiction where such offer
or solicitation would be unlawful.
Neither delivery of this Prospectus
nor any Common Stock sale hereunder
shall, under any circumstances,
create any implication that there
has been no change in the affairs of
the Company since the date hereof.
- --------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
The Offering........................... 6
Summary Combined Financial
Information.......................... 7
Risk Factors........................... 8
Dilution............................... 14
Capitalization......................... 15
Use of Proceeds........................ 16
Dividend Policy........................ 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 17
Business............................... 20
Management............................. 27
Principal and Selling Stockholder...... 30
Certain Transactions................... 30
Description of Securities.............. 31
Shares Eligible for Future Sale........ 32
Certain United States Federal Income
Tax Considerations................... 32
Investment Canada Act.................. 34
Underwriting........................... 35
Legal Matters.......................... 37
Experts................................ 37
Additional Information................. 37
Indemnification for Securities Act Liabilities... 38
Enforceability of Civil Liabilities
Against Foreign Persons.............. 38
Financial Statements................... F-1
- -----------------------------------------------
</TABLE>

UNTIL , 1998 (25 DAYS AFTER THE
DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN
THE COMPANY'S SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.

LOGO
CURTIS INTERNATIONAL LTD.
1,650,000 SHARES OF COMMON STOCK

----------------------------------------------------------------
PROSPECTUS

----------------------------------------------------------------

JOSEPH STEVENS & COMPANY, INC.
ROYCE INVESTMENT GROUP, INC.
, 1998