The Internet’s development into a significant global medium for communication, content and commerce has led to substantial growth in online shopping and has provided companies with new opportunities to remove intermediaries from the traditional retail supply chain. According to the United States Department of Commerce, U.S. online retail sales in 2004 were $69.2 billion, an increase of 23.5% from 2003. By comparison, total retail sales increased 7.8% in 2004. Online retail has been steadily increasing its share of the total retail market for each of the past several years, representing 0.9% of total retail sales in 2000 and 1.9% in 2004. This growth is partly a result of the increased awareness of the price advantage, convenience, selection and product information available through online shopping, continued improvement in network infrastructure and payment security, and growing access to high speed Internet connections that make online shopping increasingly efficient and attractive to consumers.

As Internet usage and online commerce grows, it is believed women are becoming a more powerful online demographic. According to eMarketer, women accounted for approximately 52% of all Internet users in 2004, a significant increase from approximately 35% in 1997. It is believed that this trend is favorable to the overall business, as traditionally, women have made the majority of household purchases, including baby, toddler, and maternity products.

The market for baby, toddler and maternity products includes accessories, apparel, bedding, furniture, toys, gifts and food products. It is believed that the domestic baby, toddler and maternity products industry is highly fragmented, both in the manufacture of associated products and the retail distribution of these products. However, the market is large and stable, and is supported by approximately four million new babies born each year. Management believes that the industry generates annual revenues in excess of $25 billion.

The Company offers over 33,500 products from over 450 manufacturers in an easy-to-use online shopping environment that includes baby, toddler and maternity accessories, apparel, bedding, furniture, toys and gifts. These products are available in a variety of styles, colors and sizes which account for over 100,000 stock keeping units (“SKUs”). The Company provides consumers with a selection of both traditional, well-known brands and select specialty brands.

The Company continually monitors its customer buying habits to determine the best-selling products in each category. The most popular products are then featured on the homepage and in various locations throughout the website. The Company also suggests complementary or other related purchases.

The Company’s gift registry permits expectant parents to select the items that they wish to have their relatives and friends purchase and then permits the products to be purchased online from anywhere in the world for shipment to the registrant. The Company assists the registrants in notifying their relatives and friends of the registry by either sending an email announcement or by mailing to the registrants pre-printed invitation card inserts for distribution by the registrants themselves.

The Company’s website offers visitors a variety of highlighted subject areas and special features arranged in a simple, easy-to-use format intended to enhance product search, selection and discovery. By clicking on the permanently displayed department names, the consumer moves directly to the home page of the desired department and can quickly view promotions, bestsellers and featured products.

On the Company’s website, customers can find detailed product information, including product descriptions, a list of accessories and related products that are available. The Company also offers buying guides, product comparisons, product specifications and instruction manuals so a customer can make an informed purchase decision.

Discount and returns decreased to $521,000, or 3.6% of net sales, for the year ednded December 31, 2004 from $565,000, or 6.4% of net sales, for the year ended December 31, 2003.

Gross profit increased 54.7% to $3.9 million for the year ended December 31, 2004 from $2.5 million for the year ended December 31, 2003.

Operating expenses increased 35.0% to $3.4 million for the year ended December 31, 2004 from $2.5 million for the year ended December 31, 2003.