eToys is Founded

We are the leading Web-based retailer focused exclusively on children's products, including toys, video games, software, videos and music.

We currently offer an extensive selection of competitively priced children's products consisting of over 8,500 stock keeping units ("SKUs") representing more than 700 brands. Since launching our Web site in October 1997, we have sold children's products to over 320,000 customers.

We were incorporated in November 1996 and began offering products for sale on our Web site and entered into a marketing agreement with AOL on October 1, 1997. For the period from inception through October 1, 1997, we had no sales and our operating activities related primarily to the development of the necessary computer infrastructure and initial planning and development of our Web site and operations. Since launching our online store, we have continued these operating activities and have also focused on building sales momentum, expanding our product offerings, establishing vendor relationships, promoting our brand name and establishing fulfillment and customer service operations. Our cost of sales and operating expenses have increased significantly since inception. This trend reflects the costs associated with our formation as well as increased efforts to promote our brand, build market awareness, attract new customers, recruit personnel, build operating infrastructure and develop our Web site and associated transaction-processing systems.