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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000797542-05-000002.txt : 20050516
<SEC-HEADER>0000797542-05-000002.hdr.sgml : 20050516
<ACCEPTANCE-DATETIME>20050516152118
ACCESSION NUMBER:		0000797542-05-000002
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20021231
FILED AS OF DATE:		20050516
DATE AS OF CHANGE:		20050516

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ZAXIS INTERNATIONAL INC
		CENTRAL INDEX KEY:			0000797542
		STANDARD INDUSTRIAL CLASSIFICATION:	IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835]
		IRS NUMBER:				680080601
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-15746
		FILM NUMBER:		05833866

	BUSINESS ADDRESS:	
		STREET 1:		115 EAST 57TH STREET, 11TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10022
		BUSINESS PHONE:		646-202-9679

	MAIL ADDRESS:	
		STREET 1:		115 EAST 57TH STREET, 11TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10022

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INFERGENE CO
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>zaxs.htm
<TEXT>
<html>

<head>
<title>zaxs</title>
</head>

<body>

<hr SIZE="4" NOSHADE COLOR="#000000">

<hr SIZE="2" NOSHADE COLOR="#000000">

<p ALIGN="CENTER"><b><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="4">UNITED STATES<br>
SECURITIES AND EXCHANGE COMMISSION<br>
</font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="3">Washington, D.C. 20549<br>
</font></b><font SIZE="4" FACE="Times New Roman, Times, Serif">___________________<br>
<br>
<b>FORM 10-KSB</b><br>
___________________</font></p>

<p style="MARGIN: 0in 0in 0pt 0.5in; COLOR: windowtext; TEXT-INDENT: -0.5in"
align="center"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt" face="Wingdings"
size="3">&#253</font><font style="FONT-WEIGHT: bold; FONT-SIZE: 3pt" size="1">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font
style="FONT-WEIGHT: bold; FONT-SIZE: 12pt" size="3">ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext">&nbsp;</p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center" align="center"><font
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt" face="Times New Roman" size="2"><b>For the
fiscal year ended December 31, 2002</b></font></p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext">&nbsp;</p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center" align="center"><font
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt" face="Times New Roman" size="2"><b>or</b></font></p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center" align="center">&nbsp;</p>

<p style="MARGIN: 0in 0in 0pt 0.5in; COLOR: windowtext; TEXT-INDENT: -0.5in"
align="center"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt" face="Wingdings"
size="3">o</font><font style="FONT-WEIGHT: bold; FONT-SIZE: 3pt" size="1">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt" size="3">TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center" align="center">&nbsp;</p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center" align="center"><b><font
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt" face="Times New Roman" size="2">For the
transition period from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to</font></b></p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center" align="center">&nbsp;</p>

<p style="FONT-SIZE: 10pt; MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center"
align="center"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt" face="Times New Roman"
size="2">Commission file</font><font style="FONT-WEIGHT: bold"> number 0-15476<br>
</font></b></p>

<p ALIGN="center"><b><font face="TIMES NEW ROMAN, TIMES, SERIF" size="5">ZAXIS
INTERNATIONAL INC.<br>
</font></b><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">(Exact Name Of Registrant
As Specified In Its Charter)</font></p>

<table ALIGN="CENTER" CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="CENTER" WIDTH="55%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u><p><strong>Delaware</strong></u></font></p>
    </div></td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td ALIGN="CENTER" WIDTH="40%" COLSPAN="3"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u><p><strong>68-0080601</strong></u></font></p>
    </div></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="CENTER" WIDTH="55%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><p>(State of Incorporation)</font></p>
    </div></td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td ALIGN="CENTER" WIDTH="40%" COLSPAN="3"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><p>(I.R.S. Employer Identification No.)</font></p>
    </div></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="CENTER" WIDTH="55%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><p></font>&nbsp;</p>
    </div></td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td>&nbsp;&nbsp;&nbsp;&nbsp; </td>
    <td>&nbsp;&nbsp;&nbsp;&nbsp; </td>
    <td>&nbsp;&nbsp;&nbsp;&nbsp; </td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="CENTER" WIDTH="55%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u><p><strong>115 East 57th Street, Suite
    1118, New York, NY</strong></u></font></p>
    </div></td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td ALIGN="CENTER" WIDTH="40%" COLSPAN="3"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u><p><strong>10022</strong></u></font></p>
    </div></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="CENTER" WIDTH="55%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><p>(Address of Principal Executive Offices)</font></p>
    </div></td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td WIDTH="3%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td ALIGN="CENTER" WIDTH="40%" COLSPAN="3"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><font
    FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><p>(ZIP Code)</font></p>
    </div></td>
  </tr>
</table>

<p align="center">&nbsp;<font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">Registrant's
Telephone Number, Including Area Code: (646) 202-9679</font></p>

<p ALIGN="CENTER"><strong><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">Securities
Registered Pursuant to Section 12(g) of The Act: Common Stock, $0.0001</font></strong></p>

<p ALIGN="JUSTIFY"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.&nbsp;Yes&nbsp;&nbsp;[
&nbsp; ]&nbsp;&nbsp;No&nbsp;[X]<br>
<br>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best of the
registrant's knowledge, in the definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form
10-KSB.&nbsp;&nbsp;[&nbsp; ]</font></p>

<p ALIGN="JUSTIFY"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">At December 31,
2002, the aggregate market value of the 13,154,187 voting common stock held by
non-affiliates of the registrant was approximately $13,154. At December 31, 2002, the
registrant had 16,245,623 shares of common stock outstanding.</font></p>

<p ALIGN="left"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">Issuers Involved in
Bankruptcy Proceeding During The Past Five Years<br>
Indicate by check mark whether the registrant has filed all documents and reports required
to be filed by Section 12, 13 or 15(b) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [&nbsp; ]&nbsp; No [&nbsp; ]</font></p>

<hr NOSHADE SIZE="5" color="#000000">
<b>

<hr SIZE="1" NOSHADE COLOR="#000000">
</b>

<p ALIGN="CENTER"><a name="TABLE OF CONTENTS"><b>TABLE OF CONTENTS</b></a></p>

<table ALIGN="CENTER" CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
  <tr VALIGN="BOTTOM">
    <th nowrap ALIGN="LEFT"><font face="Times New Roman" size="2">Item</font><hr SIZE="1"
    NOSHADE COLOR="#000000" ALIGN="LEFT" WIDTH="22%">
    </th>
    <th></th>
    <th></th>
    <th><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></th>
    <th nowrap ALIGN="LEFT"><font face="Times New Roman" size="2">Description</font><hr
    SIZE="1" NOSHADE COLOR="#000000" ALIGN="LEFT" WIDTH="60%">
    </th>
    <th ALIGN="LEFT"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></th>
    <th COLSPAN="3" nowrap><font face="Times New Roman" size="2">Page</font><hr SIZE="1"
    NOSHADE COLOR="#000000" WIDTH="22%">
    </th>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="center" WIDTH="12%" COLSPAN="9" bgcolor="#FFFFFF"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"></div><p><font face="Times New Roman" size="2">&nbsp;
    <br>
    <strong>PART I<br>
    </strong></font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp; </font></td>
  </tr>
  <tr>
    <td></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 1.</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a href="#ITEM 1. DESCRIPTION OF BUSINESS">DESCRIPTION
    OF BUSINESS</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">3</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 2.</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a href="#ITEM 2. DESCRIPTION OF PROPERTIES">DESCRIPTION
    OF PROPERTY</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">8</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 3.</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a href="#ITEM 3. LEGAL PROCEEDING">LEGAL
    PROCEEDINGS</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">9</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 4.</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a
    href="#ITEM 4.&nbsp;SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS">SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">9</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="CENTER" WIDTH="12%" COLSPAN="9"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">&nbsp; <br>
    <strong>PART II<br>
    </strong></font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp; </font></p>
    </div></td>
  </tr>
  <tr>
    <td></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 5.</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a
    href="#ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTER">MARKET
    FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">10</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 6.</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a
    href="#ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION">MANAGEMENT'S
    DISCUSSION AND ANALYSIS AND PLAN OF OPERATION</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">10</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 7.</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a href="#ITEM 7.&nbsp;FINANCIAL STATEMENTS">FINANCIAL
    STATEMENTS</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" VALIGN="TOP"><font size="2">11</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 8.</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a
    href="#ITEM 8.&nbsp;CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE">CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">11</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">ITEM 8.A</font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a href="#ITEM 8A.&nbsp;CONTROLS AND PROCEDURES">CONTROLS
    AND PROCEDURES</a></font></p>
    </div></td>
    <td WIDTH="3%"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">12</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="CENTER" WIDTH="12%" COLSPAN="9"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    face="Times New Roman" size="2">&nbsp; <br>
    <strong>PART III<br>
    </strong></font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp; </font></p>
    </div></td>
  </tr>
  <tr>
    <td></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    size="2">ITEM 9.</font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    size="2">&nbsp; <a
    href="#ITEM 9.&nbsp;DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT">DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT, COMPLIANCE WITH SECTION 16(A)</a></font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">13</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    size="2">ITEM 10.</font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    size="2">&nbsp; <a href="#ITEM 10. EXECUTIVE COMPENSATION">EXECUTIVE COMPENSATION</a></font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">13</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    size="2">ITEM 11.</font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    size="2">&nbsp; <a
    href="#ITEM 11.&nbsp;SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT">SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</a></font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">13</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    size="2">ITEM 12.</font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    size="2">&nbsp; <a href="#ITEM 12.&nbsp;CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS">CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS</a></font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">14</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    size="2">ITEM 13.</font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    size="2">&nbsp; <a href="#ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K">EXHIBITS AND REPORTS
    ON FORM 8-K</a></font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">14</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%"><div STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font
    size="2">ITEM 14.</font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    size="2">&nbsp; <a href="#ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES">PRINCIPAL
    ACCOUNTING FEES AND SERVICES</a></font></p>
    </div></td>
    <td WIDTH="3%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT"><font size="2">14</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
</table>
<b><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="3">

<hr SIZE="1" NOSHADE COLOR="#000000">
</font></b>

<hr NOSHADE SIZE="5">

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<p ALIGN="CENTER"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><b>PART I</b></font></p>

<p ALIGN="JUSTIFY"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><b><a
name="ITEM 1. DESCRIPTION OF BUSINESS">ITEM 1. DESCRIPTION OF BUSINESS</a> </b></font><a
href="#TABLE OF CONTENTS"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to
Table of Contents</font></a></p>

<p align="justify"><font size="2" color="#000000"><u>General Background and Reports under
the Exchange Act</u></font></p>

<p align="justify" style="text-align: justify"><font size="2"><font color="#000000">Zaxis
International Inc., a Delaware corporation, is sometimes referred to herein as
&quot;we&quot;, &quot;us&quot;, &quot;our&quot;, &quot;Company&quot; and the
&quot;Registrant&quot;. </font>The Registrant was a biotechnology holding company that
operated its business through a wholly owned subsidiary. Zaxis was incorporated in Ohio in
1989. On August 25, 1995, Zaxis merged with a subsidiary of The InFerGene Company
(&quot;InFerGene&quot;) and InFerGene changed its name to Zaxis International Inc. For
accounting and tax purposes, the merger was treated as a reverse acquisition. InFerGene
and its subsidiary were inactive and had no assets or liabilities at the time of the
merger. InFerGene was incorporated in California in 1984 and subsequently changed its
domicile to Delaware in 1985. </font></p>

<p align="justify"><font size="2">On November 6, 2002, the Registrant filed a voluntary
Chapter 7 petition under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court Northern
District of Ohio (case no. 02-55160). </font><font face="Times New Roman" size="2">As a
result of the Chapter 7 petition, the Registrant's assets were transferred to a United
States Trustee and the Registrant terminated its business operations.</font><font size="2">
</font><font face="Times New Roman" size="2">During 2003 and 2004, the Bankruptcy Trustee
had disposed of substantially all of the assets of the Registrant and its subsidiaries. </font><font
size="2">On October 13, 2004, the Bankruptcy Court approved an Order confirming the sale
of debtor's interest in personal property to Park Avenue Group Inc. and confirming that
Park Avenue Group, Inc. is a good faith purchaser pursuant to 11 USC Section363(m).</font></p>

<p align="justify"><font size="2"><u>Change in Control following Bankruptcy</u></font></p>

<p style="text-align: justify"><font size="2">The material terms of the transaction
confirmed by the Bankruptcy Court authorized Park Avenue Group to appoint new members to
the Registrant's board of directors and the newly-appointed board of directors be
authorized to:</font></p>

<p><font size="2">(i) amend the Article of Incorporation to increase the number of
authorized shares to 100,000,000 shares; <br>
(ii) amend the Article of Incorporation to change the par value of the Registrant's common
and preferred stock to $0.0001;<br>
(iii) issue up to 30,000,000 shares of common stock, par value $0.0001 to the new
management of the Registrant, which management was appointed by the newly-constituted
board of directors; <br>
(iv) implement a reverse split of the issued and outstanding shares in a ratio to be
determined by the board of directors; <br>
(v) cancel and extinguish all common share conversion rights of any kind, including
without limitation, warrants, options, convertible bonds, other convertible debt
instruments and convertible preferred stock; and <br>
(vi) cancel and extinguish all preferred shares of every series and accompanying
conversion rights of any kind.</font></p>

<p style="text-align: justify"><font size="2">In connection with the Order confirming the
sale of debtor's interest in certain intangible personal property to Park Avenue Group
Inc. approved by the U.S. Bankruptcy Court Northern District of Ohio on October 13, 2004,
the Court authorized Park Avenue Group to appoint a new board of directors. On October 13,
2004, Park Avenue Group appointed </font><font size="2" color="#000000">Ivo Heiden to the
board of directors of the Registrant, which board subsequently appointed Mr. Heiden
(&quot;Management&quot;) to be president of the Registrant.</font><font size="2"> The
Court order further provided that the sale was free and clear of all liens, claims and
interests of others and that the sale was free and clear of any and all other real or
personal property interests, including any interests in Zaxis's subsidiaries. On November
30, 2004, the Registrant's board of directors approved and authorized an amendment the the
Registrant's Article of Incorporation to establish a series B convertible preferred stock,
par value $0.0001 (&quot;Series B Convertible Preferred Stock&quot;). The holders of the
Series B Convertible Preferred Stock shall be entitled to twenty votes on all matters
submitted to a vote of the stockholders of the Registrant. The holders of Series B
Convertible Preferred Stock shall have the right to convert each share into twenty shares
of common stock upon their written request at any time.</font></p>

<p align="justify"><font color="#000000" face="Times New Roman" size="2"><u>Former
Business Operations of the Registrant</u></font></p>

<p align="justify"><font size="2">Zaxis was a manufacturer and distributor of products
that were used in a molecular separation process known as electrophoresis, a procedure
used in more than 55,000 research, industrial and clinical laboratories worldwide. The
more common applications of this procedure include protein-based separations such as the
HDL and LDL components and sub-components of cholesterol, the identification of various
genes and gene products (e.g. DNA, RNA, etc.) and the separation and identification of
proteins in drug discovery applications (Proteomics). A variety of techniques, formats,
materials, compounds, equipment and devices are employed in electrophoresis and Zaxis
provided products to meet these needs. The primary focus of Zaxis' former research and
development efforts as well as its former sales and marketing efforts were targeted toward
the consumables segment of this market. Zaxis' core products were the pre-cast gels and
reagents used in these electrophoresis procedures.</font></p>

<p align="justify"><font size="2"><em>Former Products of the Registrant</em>: Zaxis' core
product was a pre-cast polyacrylamide gel cassette that utilized Zaxis's proprietary
polymer chain length control (&quot;PCL&quot;) technology. The gel cassettes was used with
Zaxis' proprietary electrophoresis devices or with devices of other manufacturers. Zaxis'
product line included electrophoresis systems and components, chemicals, compounds,
stains, reagents, chambers, power supplies, computers, scanners, and accessories, in
addition to gel cassettes. The gel cassettes, chemical compounds and many of the acrylic
components were manufactured or assembled by Zaxis in its facility, while the
microprocessor components, scanners, power supplies and other system components were
manufactured to Zaxis' specifications by outside vendors.</font></p>

<p align="justify"><font size="2">In its initial pre-cast gel product line introduced in
1995, Zaxis was not able to gain any significant market share due to production quality
variances. In December 1997, after additional development work, the polyacrylamide product
line was re-introduced to Beta-site testing. Test-user responses in 1998 were positive and
the advanced product line of protein gels were re-introduced into the market place in the
latter half of 1998.</font></p>

<p align="justify"><font size="2">During 2001, Zaxis continued to collaborate with
manufacturers of Proteomics and DNA sequencing instruments and with life science
distributors to provide new OEM (original equipment manufacturer) and private label
products. </font></p>

<p align="justify"><font size="2">Zaxis had developed and was selling a lipoprotein assay
system, consisting of a poly-gradient electrophoresis gel, electrophoresis processing
equipment, reagents, gel scanner, and computer software. The system measured the relative
percentages of High Density and Low Density Lipoproteins (HDL and LDL) in human blood
serum in a single test from single samples. The system was granted FDA marketing approval
in September 1996 on the basis that it provided measurements in terms of total LDL and HDL
equivalent to other systems already approved. </font></p>

<p align="justify"><font size="2">During 2001, Zaxis developed a new line of custom
designed pre-cast gels that adapt to the Ettan DALT II Proteomics Electorphoresis system
sold by Amersham Biosciences, Inc.(&quot;Amersham&quot;). Amersham was the leading
Proteomics system supplier to pharmaceutical, biotechnology and proteomics organizations.
Zaxis obtained a $281,855 supply agreement with Geneva Proteomics, Inc. (GeneProt) based
on this new gel development and Zaxis had begun to expand its sales efforts to focus on
this rapidly expanding custom market. Zaxis generated limited sales from a second
customer, a major pharmaceutical company, and expected this line of its business to be a
major growth area in 2002 provided that it was able to raise the necessary capital to
develop the market. However, Zaxis was not able to raise the capital.</font></p>

<p align="justify"><font size="2">During 2002, Zaxis believed that its gel products were
well positioned to take advantage of a rapidly growing market. Zaxis was not able to
generate sufficient revenues to support its operating expenses during fiscal year 2002. In
addition, Zaxis was not able to raise additional capital to fund its negative cash flow
from operations through borrowings or equity financing to support and expand its business
plan. As a result, Zaxis ceased operations during the fourth quarter in 2002 and filed a
voluntary Chapter 7 bankruptcy petition .</font></p>

<p align="justify"><font size="2"><em>Competition: </em>Zaxis faced competition in the
pre-cast gel market from suppliers who were far larger, could offer more effective service
and control substantial portions of the market, had established sales and distribution
organizations and were more profitable and better financed. The two largest pre-cast gel
suppliers were Novex (owned by Invitrogen, Inc.), which had approximately a 55% share of
the market at that time, and Bio-Rad, Inc., which had approximately 25% of the market at
that time. Zaxis represented less than 1% of the market for pre-cast protein separation
gels at that time.</font></p>

<p align="justify"><font size="2"><em>Suppliers:</em> The raw materials and system
components that Zaxis was using in its products were readily available from multiple
reliable sources.</font></p>

<p align="justify"><font size="2"><em>Main Customers and Distribution Methods:</em>
Zaxis's five largest customers accounted for approximately 60% of its sales in 2001. This
compared to three customers representing 65% of sales in 2000. Three of those customers
each represented 10% or more of total sales for the year 2001. Of Zaxis' top five
customers in 2001, three acquired Zaxis products for their own use while the other two
customers purchased under a private label arrangement. Zaxis also shipped its branded
products directly to end users such as pharmaceutical, biotechnology, proteomic and other
life science, research, educational and medical institutions. Zaxis distributed its
branded products through various regional distributors.</font></p>

<p align="justify"><font size="2"><em>Patents, Trademarks and Agreements: </em>In addition
to the poly-gradient gel patent granted in September 1996, Zaxis had patents on its
electrophoresis device, a cassette and a cassette component. Zaxis had various U.S.
patents relating to its gel products and various U.S. trademarks. In addition, Zaxis
possessed intellectual property consisting of trade secrets and proprietary knowledge
related to manufacturing techniques and product formulations. Zaxis had also several
trademark applications pending. In connection with Zaxis filing a Chapter 7 bankruptcy
petition, all patents and trademarks were transferred to the estate.</font></p>

<p align="justify"><font size="2"><em>Governmental Regulations:</em> Zaxis' manufacturing
plant was a registered FDA facility and was subject to FDA regulation, including audit and
review for compliance with agency rules.</font></p>

<p><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF" size="2"><u>New Business
Objectives of the Registrant</u></font></p>

<p align="justify"><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF" size="2">As
a result of the Chapter 7 bankruptcy proceeding, the Registrant has no present operations.
Management determined to direct its efforts and limited resources to pursue potential new
business opportunities. The Registrant does not intend to limit itself to a particular
industry and has not established any particular criteria upon which it shall consider and
proceed with a business opportunity.</font></p>

<p align="justify"><font size="2">Our common stock previously traded on the NASDAQ OTCBB
under the symbol ZAXS. In May 2003, due to the Registrant's failure to file its annual
report on Form 10-KSB for the year ended December 31, 2002, the Registrant's shares were
deleted from the NASDAQ OTCBB market, following which the Registrant's common stock has
been subject to quotation on the pink sheets. There is currently no active trading market
in the Registrant's shares. There can be no assurance that there will be an active trading
market for our common stock. In the event that an active trading market commences, there
can be no assurance as to the market price of our shares of common stock, whether any
trading market will provide liquidity to investors, or whether any trading market will be
sustained.</font></p>

<p align="justify"><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF" size="2">Management
has voting control and would therefore have substantial flexibility in identifying and
selecting a prospective new business opportunity. Registrant would not be obligated nor
does Management intend to seek pre-approval by our shareholders.</font></p>

<p align="justify"><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF" size="2">Management
intends to devote such time as it deems necessary to carry out the Registrant's affairs.
The exact length of time required for the pursuit of any new potential business
opportunities is uncertain. No assurance can be made that we will be successful in our
efforts. We cannot project the amount of time that our Management will actually devote to
the Registrant's plan of operation.</font></p>

<p align="justify"><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF" size="2">The
Registrant intends to conduct its activities so as to avoid being classified as an
&quot;Investment Company&quot; under the Investment Company Act of 1940, and therefore
avoid application of the costly and restrictive registration and other provisions of the
Investment Company Act of 1940 and the regulations promulgated thereunder.</font></p>

<p><font size="2" color="#000000"><u>Selection and Structuring of a New Business
Opportunity</u></font></p>

<p align="justify"><font size="2">New management has voting control of 50.84%. As a
result, Management will have substantial flexibility in identifying and selecting a
prospective new business opportunity. The Registrant will be dependent on the judgment of
its Management in connection with the selection of a new business opportunity. <font
color="#000000">I</font></font><font size="2" color="#000000">n evaluating a prospective
business opportunity, we would consider, among other factors, the following: (i) costs
associated with pursuing a new business opportunity; (ii) growth potential of the
potential new business opportunity; (iii) experiences, skills and availability of
additional personnel necessary to pursue a potential new business opportunity; (iv)
necessary capital requirements; (v) the competitive position of the new business
opportunity; (vi) stage of business development; (vii) the market acceptance of the
potential products and services; (viii) proprietary features and degree of intellectual
property; and (ix) the regulatory environment that may be applicable to any prospective
business opportunity.</font></p>

<p align="justify"><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF" size="2">The
foregoing criteria are not intended to be exhaustive and there may be other criteria that
management may deemed relevant. In connection with an evaluation of a potential business
opportunity, management may be expected to conduct a due diligence review and may seek
assistance of independent third parties.</font></p>

<p align="justify"><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF" size="2">The
time and costs required to select and evaluate a potential new business opportunity,
including conducting a due diligence review, and to structure a plan to pursue a potential
new business opportunity cannot presently be ascertained. Management will devote such time
as it deems reasonably necessary to carry out plans for potential new business
opportunities. As a result, the time devoted to the Registrant's business may vary
depending upon whether we have identified a business opportunity.</font></p>

<p align="justify"><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF" size="2">We
anticipate that various prospective new business opportunities will be brought to our
attention from various sources in the finance and investment community.</font></p>

<p align="justify"><font size="2" color="#000000"><u>Conflicts of Interest</u></font></p>

<p align="justify"><font size="2" color="#000000">Our Management is not required to commit
its full time to our affairs. As a result, pursuing new business opportunities may require
a greater period of time than if he would devote their full time to our affairs.
Management is not precluded from serving as officer or director of any other entity that
is engaged in business activities similar to those of the Registrant. Management has not
identified and is not currently negotiating a new business opportunity for us. In the
future, Management may become associated or affiliated with entities engaged in business
activities similar to those we intend to conduct. In such event, management may have
conflicts of interest in determining to which entity a particular business opportunity
should be presented. In the event that our Management has multiple business affiliations,
it may have legal obligations to present certain business opportunities to multiple
entities. In the event that a conflict of interest shall arise, Management will consider
factors such as reporting status, availability of audited financial statements, current
capitalization and the laws of jurisdictions. If several business opportunities or
operating entities approach Management with respect to a business combination, Management
will consider the foregoing factors as well as the preferences of the Management of the
operating company. However, Management will act in what it believes will be in the best
interests of the shareholders of the Registrant. The Registrant shall not enter into a
transaction with a target business that is affiliated with management.</font></p>

<p ALIGN="JUSTIFY"><font size="2" color="#000000"><u>Business Experience of Management</u></font></p>

<p ALIGN="JUSTIFY"><font size="2" color="#000000">Mr. Ivo Heiden, our sole officer and
director had experiences in negotiating transactions involving several different private
operating companies. In connection with or upon completion of such transactions, Mr.
Heiden resigned its management position. The following table sets forth business
transactions management was involved during the last five years.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%" height="1%">
  <tr>
    <td width="25%" height="0%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)"><font
    face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Company</font></td>
    <td width="45%" height="0%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)"><font
    face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Type and Date of Transaction</font></td>
    <td width="30%" height="0%"
    style="border-left: 1px solid rgb(0,0,0); border-right: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)"><font
    face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Subsequent Involvement</font></td>
  </tr>
  <tr>
    <td width="25%" height="1%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: medium none"><font
    size="2" color="#000000">PlanetLink Communications, Inc.</font></td>
    <td width="45%" height="1%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)" rowspan="4"><font
    size="2" color="#000000">Merger in August 2001 between Fifth Avenue Acquisition I Corp.,
    which was a reporting non-operating&nbsp;and PlanetLink Communications, Inc., an operating
    company. PlanetLink Communications, Inc. became the successor reporting company
    and&nbsp;is subject to quotation on the OTCBB. </font></td>
    <td width="30%" height="1%"
    style="border-left: 1px solid rgb(0,0,0); border-right: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)"
    rowspan="4"><font size="2" color="#000000">Mr. Heiden, Vice President and a director of
    Fifth Avenue, resigned as officer and director following the merger with PlanetLink.<br>
    </font></td>
  </tr>
  <tr>
    <td width="25%" height="0%"
    style="border-left: 1px solid rgb(0,0,0); border-right: medium none; border-top: 1px none rgb(0,0,0); border-bottom: medium none"><font
    size="2" color="#000000">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="25%" height="0%"
    style="border-left: 1px solid rgb(0,0,0); border-right: medium none; border-top: 1px none rgb(0,0,0); border-bottom: medium none"><font
    size="2" color="#000000">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="25%" height="1%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px none rgb(0,0,0)"><font size="2"
    color="#000000">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="25%" height="1%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"><font
    size="2" color="#000000">Lexor Holdings Inc.</font></td>
    <td width="45%" height="1%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px solid rgb(0,0,0)"
    rowspan="3"><font size="2" color="#000000">Merger in September 2003 between Western-Silver
    Lead Corp., a reporting non-operating public company and Lexor Holdings Inc., an operating
    company. Lexor became the successor reporting company and is subject to quotation on the
    OTCBB. </font></td>
    <td width="30%" height="1%" style="border: 1px solid rgb(0,0,0)" rowspan="3"><font
    size="2" color="#000000">Mr. Heiden resigned as director following the merger with Lexor.</font><p>&nbsp;</td>
  </tr>
  <tr>
    <td width="25%" height="0%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"><font
    face="Times New Roman" size="2">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="25%" height="1%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px none rgb(0,0,0); border-bottom: 1px solid rgb(0,0,0)">&nbsp;
    </td>
  </tr>
</table>

<table border="0" cellpadding="0" cellspacing="0" width="100%" height="1%">
  <tr>
    <td width="25%" height="0%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"></td>
  </tr>
</table>

<p align="center"><font size="2" color="#000000"><strong><u>RISK FACTORS</u></strong></font></p>

<p ALIGN="JUSTIFY"><font size="2">FORWARD-LOOKING STATEMENTS<br>
This annual report on Form 10-KSB contains forward-looking statements that are based on
current expectations, estimates, forecasts and projections about us, our future
performance, our beliefs and our Management's assumptions. In addition, other written or
oral statements that constitute forward-looking statements may be made by us or on our
behalf. Words such as &quot;expects,&quot; &quot;anticipates,&quot; &quot;targets,&quot;
&quot;goals,&quot; &quot;projects,&quot; &quot;intends,&quot; &quot;plans,&quot;
&quot;believes,&quot; &quot;seeks,&quot; &quot;estimates,&quot; variations of such words
and similar expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict or assess. Therefore, actual
outcomes and results may differ materially from what is expressed or forecast in such
forward-looking statements. Except as required under the federal securities laws and the
rules and regulations of the SEC, we do not have any intention or obligation to update
publicly any forward-looking statements after the filing of this Form 10-KSB, whether as a
result of new information, future events, changes in assumptions or otherwise.</font></p>

<p align="justify"><font size="2" color="#000000">DEPENDENCE ON KEY PERSONNEL<u><br>
</u>The Registrant is dependent upon the continued services of its officer and director.
To the extent that his services become unavailable, the Registrant will be required to
obtain other qualified personnel and there can be no assurance that it will be able to
recruit and hire qualified persons upon acceptable terms.</font></p>

<p style="text-align: justify"><font size="2">LIMITED RESOURCES; NO PRESENT SOURCE OF
REVENUES.<br>
At present, we have no business operations and our business activities are limited to
seeking potential business opportunities. Due to our limited financial and personnel
resources, there is only a limited basis upon which to evaluate our prospects for
achieving our intended business objectives. We have only limited resources and have no
operating income, revenues or cash flow from operations. Our Management is providing us
with limited&nbsp;funding, on an as needed basis, necessary for us to continue our
corporate existence and our business objective to seek new business opportunities, as well
as funding the costs of remaining a reporting company under the Exchange Act. We have no
written agreement with our Management to provide any interim financing for any period. In
addition, we will not generate any revenues unless and until we enter into&nbsp;a new
business or acquire an entity that generates revenues, of which there can be no assurance.
There can be no assurance that any business that we may acquire will generate any material
revenues or operate on a profitable basis.</font></p>

<p style="text-align: justify"><font size="2">BROAD DISCRETION OF MANAGEMENT<br>
Any person who invests in our securities will do so without an opportunity to evaluate the
specific merits or risks of any potential new prospective business in which we may engage.
As a result, investors will be entirely dependent on the broad discretion and judgment of
Management in connection with the selection of a prospective business. There can be no
assurance that determinations made by our Management will permit us to achieve our
business objectives.</font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">ABSENCE OF SUBSTANTIVE DISCLOSURE RELATING TO PROSPECTIVE BUSINESS <br>
As of the date of filing of this annual report, we have not yet identified any prospective
business or industry in which we may seek to become involved and at present we have no
substantive information concerning any prospective business. There can be no assurance
that any prospective business combination will benefit shareholders or prove to be more
favorable to shareholders than any other investment that may be made by shareholders and
investors.</font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">THERE IS NO ACTIVE MARKET FOR OUR COMMON STOCK AND NONE MAY DEVELOP OR BE
SUSTAINED<br>
Our common stock previously traded on the NASDAQ OTCBB under the symbol ZAXS. In 2003, the
Registrant did not remain current in its reporting obligations under the Exchange Act and
its shares were subsequently deleted from the NASDAQ OTCBB market. Following deletion from
the OTCBB, the Registrant's common stock has been subject to quotation on the pink sheets.
There is currently no active trading market in our common stock. There can be no assurance
that there will be an active trading market for our common stock following a business
combination or commencement of a new business. In the event that an active trading market
commences, there can be no assurance as to the market price of our shares of common stock,
whether any trading market will provide liquidity to investors, or whether any trading
market will be sustained.</font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">UNSPECIFIED INDUSTRY FOR NEW PROSPECTIVE BUSINESS OPPORTUNITIES;
UNASCERTAINABLE RISKS<br>
There is no basis for shareholders to evaluate the possible merits or risks of potential
new business opportunities or the particular industry in which we may ultimately operate.
To the extent that we effect a business combination with a financially unstable Registrant
or an entity that is in its early stage of development or growth, including entities
without established records of revenues or income, we will become subject to numerous
risks inherent in the business and operations of that financially unstable company. In
addition, to the extent that we effect a business combination with an entity in an
industry characterized by a high degree of risk, we will become subject to the currently
unascertainable risks of that industry. An extremely high level of risk frequently
characterizes certain industries that experience rapid growth. Although Management will
endeavor to evaluate the risks inherent in a particular new prospective business or
industry, there can be no assurance that we will properly ascertain or assess all such
risks or that subsequent events may not alter the risks that we perceive at the time of
the consummation of any new business opportunity.</font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">CONFLICTS OF INTEREST<br>
Our Management is not required to commit its full time to our affairs. There may be a
conflict of interest in allocating their time in the event that Management engages in
similar business efforts for other entities. Our Management will devote such time, in its
sole discretion, to conduct our business, including the evaluation of potential new
business opportunities and the negotiation and consummation of a business combination. As
a result, the amount of time devoted to our business and affairs may vary significantly
depending upon whether we have identified a new prospective business opportunity or are
engaged in active negotiations related to the consummation of a business combination.</font></p>

<p style="text-align: justify"><font size="2" color="#000000">COMPETITION<br>
We expect to encounter intense competition from other entities seeking to pursue new
business opportunities or business combinations.&nbsp;Many of these entities&nbsp;are
well-established and have extensive experience in connection with identifying new
prospective business opportunities or in effecting business combinations. Many of these
competitors possess greater financial, technical, human and other resources than we do and
there can be no assurance that we will have the ability to compete successfully. Based
upon our limited financial and personnel resources, we may lack the resources as compared
to those of many of our potential competitors.</font></p>

<p align="justify" style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF"
SIZE="2" color="#000000">REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. <br>
Pursuant to the requirements of Section 13 of the Exchange Act, we are required to provide
certain information about significant acquisitions and other material events. We will
continue to be required to file quarterly reports on Form 10-QSB and annual reports on
Form 10-KSB, which annual report must contain our audited financial statements. As a
reporting company under the Exchange Act, following any business combination, we will be
required to file a report on Form 8-K or other form appropriate under the Exchange Act,
which contains audited financial statements of the acquired entity. These audited
financial statements must be filed with the SEC within 71 days following the filing of
Form 8-K disclosing the transaction. While obtaining audited financial statements is
typically the economic responsibility of the acquired company, it is possible that a
potential target company may be a non-reporting company with unaudited financial
statements. The additional time and costs that may be incurred by some potential target
companies to prepare such audited financial statements may significantly delay or may even
preclude consummation of an otherwise desirable transaction. Acquisition prospects that do
not have or are unable to obtain the required audited statements may not be appropriate
for acquisition because we are subject to the reporting requirements of the Exchange Act.</font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">ADDITIONAL FINANCING REQUIREMENTS<br>
We have no revenues and are dependent upon the willingness of our management to fund the
costs associated with the reporting obligations under the Exchange Act, and
other&nbsp;administrative costs associated with our corporate existence. As of the date of
this filing, the Registrant has paid a total of $2,939 for general and administrative
expenses, including accounting fees and reinstatement fees. We may not generate any
revenues until the consummation of a business combination or our commencement of new
business operations. We anticipate that we will have available to us sufficient resources
to continue to pay accounting and other professional fees and other miscellaneous expenses
that may be required until we commence business operations or enter into a business
combination. In the event that our available resources from our Management prove to be
insufficient for the purpose of commencing operations through a business combination or
otherwise, we will be required to seek additional financing. Our failure to secure
additional financing could have a material adverse affect on our ability to commence new
business opportunities or pursue a business combination. We do not have any arrangements
with any bank or financial institution to secure additional financing and there can be no
assurance that any such arrangement would be available on terms acceptable and in our best
interests. We do not have any written agreement with Management to provide funds for our
operating expenses.</font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">STATE BLUE SKY REGISTRATION; POTENTIAL LIMITATIONS ON RESALE OF THE
SECURITIES<br>
The holders of our shares of common stock registered under the Exchange Act and those
persons who desire to purchase them in any trading market that might develop in the
future, should be aware that there may be state blue-sky law restrictions upon the ability
of investors to resell our securities. Accordingly, investors should consider the
secondary market for the Registrant's securities to be a limited one.</font></p>

<p align="justify" style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF"
SIZE="2" color="#000000">It is the intention of the Registrant's management following the
consummation of a business or business combination to seek coverage and publication of
information regarding the Registrant in an accepted publication manual which permits a
manual exemption. The manual exemption permits a security to be distributed in a
particular state without being registered if the Registrant issuing the security has a
listing for that security in a securities manual recognized by the state. However, it is
not enough for the security to be listed in a recognized manual. The listing entry must
contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet,
and (3) a profit and loss statement for either the fiscal year preceding the balance sheet
or for the most recent fiscal year of operations. Furthermore, the manual exemption is a
nonissuer exemption restricted to secondary trading transactions, making it unavailable
for issuers selling newly issued securities.</font></p>

<p style="text-align: justify"><font size="2" color="#000000">Most of the accepted manuals
are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment
Service, and Best's Insurance Reports, and many states expressly recognize these manuals.
A smaller number of states declare that they &quot;recognize securities manuals&quot; but
do not specify the recognized manuals. The following states do not have any provisions and
therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois,
Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin. </font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">DIVIDENDS UNLIKELY<br>
We do not expect to pay dividends for the foreseeable future because we have no revenues
or any potential business operations. The payment of dividends will be contingent upon our
future revenues and earnings, if any, capital requirements and overall financial
conditions. The payment of any future dividends will be within the discretion of our board
of directors as then constituted. It is our expectation that future management following a
business combination will determine to retain any earnings for use in business operations
and accordingly, we do not anticipate declaring any dividends in the foreseeable future.</font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">POSSIBLE ISSUANCE OF ADDITIONAL SECURITIES<br>
Our Articles of Incorporation, as amended, authorize the issuance of 100,000,000 shares of
common stock, par value $0.0001. As of March 31, 2005, we have 16,245,623 shares of common
stock issued and outstanding and 840,000 shares of Series B convertible preferred shares.
We may issue additional shares of common stock in connection with our intention to pursue
new business opportunities or enter into a business combination. To the extent that
additional shares of common stock are issued or our issued and outstanding Series B
convertible preferred shares are converted into common stock, our shareholders would
experience dilution of their respective ownership interests in the Registrant. If we issue
shares of common stock in connection with our intent to pursue new business opportunities,
a change in control of the Registrant may occur. The issuance of additional shares of
common stock and convertible preferred stock may adversely affect the&nbsp;market price of
our common stock, in the event that an active trading market commences, of which there can
be no assurance. </font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">COMPLIANCE WITH PENNY STOCK RULES<br>
Our common stock will&nbsp; be considered a &quot;penny stock&quot; as defined in the
Exchange Act and the rules thereunder, unless the price of our shares of common stock is
at least $5.00. We expect that our share price will be less than $5.00. Unless our common
stock is otherwise excluded from the definition of &quot;penny stock,&quot; the penny
stock rules apply. The penny stock rules require a broker-dealer prior to a transaction in
penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its sales person in the transaction, and monthly account statements
showing the market value of each penny stock held in the customer's account. In addition,
the penny stock rules require that the broker-dealer, not otherwise exempt from such
rules, must make a special written determination that the penny stock is suitable for the
purchaser and receive the purchaser's written agreement to the transaction. These
disclosure rules have the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny stock rules. So long as the
common stock is subject to the penny stock rules, it may become more difficult to sell
such securities. Such requirements could result in reduction in the level of trading
activity for our common stock and could make it more difficult for investors to sell our
common stock. </font></p>

<p style="text-align: justify"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"
color="#000000">GENERAL ECONOMIC RISKS<br>
The Registrant's current and future business plans are dependent, in large part, on the
state of the general economy. Adverse changes in economic conditions may may adversely
affect our plan of operation. These conditions and other factors beyond the Registrant's
control include, but are not limited to regulatory changes.</font></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a name="ITEM 2. DESCRIPTION OF PROPERTIES">ITEM 2.
DESCRIPTION OF PROPERTIES</a></font> </b><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font size="2">The Registrant's<font color="#000000"> corporate office
is located at 115 East 57th Street, 11th Floor, New York, NY 10022, which space is&nbsp;
provided to us on a rent-free basis by </font></font><font size="2" color="#000000">Park
Avenue Group, Inc., a company of which our president is an officer and director. These
facilities consist of approximately 300 square feet of executive office space and are
leased by Park Avenue Group, Inc. from an unaffiliated third party. The Registrant
believes that the office facilities are sufficient for the foreseeable future and this
arrangement will remain in effect until we find a new business opportunity or consummate a
business combination. </font></p>

<p ALIGN="JUSTIFY"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><b><a
name="ITEM 3. LEGAL PROCEEDING">ITEM 3. LEGAL PROCEEDING</a> </b></font><a
href="#TABLE OF CONTENTS"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to
Table of Contents</font></a></p>
<font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">

<p ALIGN="JUSTIFY" style="text-align: justify"></font><font face="Times New Roman"
size="2" color="#000000">The Registrant's officer and director is not aware of any
threatened or pending litigation to which the Registrant is a party or which any of its
property is the subject and which would have any material, adverse effect on the
Registrant. The Registrant, prior to its bankruptcy proceeding, was subject to several
claims. As a result of the confirmed order of the U.S. Bankruptcy Court dated October 13,
2004 pursuant to Section 363(f) of the Bankruptcy Code, the Registrant is free of all
liens, claims and interests of others.</font></p>
<font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">

<p ALIGN="JUSTIFY"><b><a
name="ITEM 4.&nbsp;SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS">ITEM
4.&nbsp;SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS</a> </b></font><a
href="#TABLE OF CONTENTS"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to
Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font size="2">During the year ended December 31, 2002, no matters were
submitted to a vote of our security holders.</font></p>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div>

<hr NOSHADE SIZE="5">

<p ALIGN="center"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><b>PART II</b></font></p>

<p ALIGN="JUSTIFY"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><b><a
name="ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTER">ITEM 5.
MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTER</a> </b></font><a
href="#TABLE OF CONTENTS"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to
Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font size="2">(a) Market Price Information<br>
</font><font face="Times New Roman" size="2" color="#000000">During 2002 and 2001, the
Registrant's common stock was subject to quotation on the OTCBB under the symbol ZAXS. In
connection with the Registrant filing a Chapter 7 bankruptcy petition on November 6, 2002
and subsequent delinquency in its reporting requirements, its common stock became subject
to quotation on the pink sheets. To the best knowledge of the Registrant, there has been
no active trading activity for approximately the past two years. The following table shows
the high and low bid prices for the Registrant's common stock during the fiscal years 2002
and 2001 as reported by the National Quotation Bureau Incorporated. These prices reflect
inter-dealer quotations without adjustments for retail markup, markdown or commission, and
do not necessarily represent actual transactions.</font></p>

<table ALIGN="CENTER" CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%" height="1">
  <tr VALIGN="BOTTOM">
    <th nowrap height="0"></th>
    <th height="0"><font size="1">&nbsp; </font></th>
    <th height="0"><font size="1">&nbsp; </font></th>
    <th height="0"><font size="1">&nbsp;&nbsp;&nbsp; </font></th>
    <th COLSPAN="3" nowrap height="0"><font size="1">High</font></th>
    <th height="0"><font size="1">&nbsp;&nbsp;&nbsp;&nbsp;</font></th>
    <th COLSPAN="3" nowrap height="0"><font size="1">Low</font></th>
  </tr>
  <tr>
    <td height="0"><font size="1">&nbsp; </font></td>
  </tr>
  <tr>
    <td ALIGN="LEFT" WIDTH="100%" bgcolor="#00FFFF" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font size="2">Year Ended December 31,
    2002</font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td ALIGN="LEFT" WIDTH="100%" height="0"><div
    STYLE="MARGIN-LEFT: 20px; TEXT-INDENT: -10px"><p><font size="2">Quarter ended December 31,
    2002</font></p>
    </div></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;$</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.02</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;$</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.001</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td ALIGN="LEFT" WIDTH="100%" bgcolor="#00FFFF" height="0"><div
    STYLE="MARGIN-LEFT: 20px; TEXT-INDENT: -10px"><p><font size="2">Quarter ended September
    30, 2002</font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#00FFFF" height="0"><font size="2">0.10</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#00FFFF" height="0"><font size="2">0.02</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td ALIGN="LEFT" WIDTH="100%" height="0"><div
    STYLE="MARGIN-LEFT: 20px; TEXT-INDENT: -10px"><p><font size="2">Quarter ended June 30,
    2002</font></p>
    </div></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.15</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.09</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td ALIGN="LEFT" WIDTH="100%" bgcolor="#00FFFF" height="0"><div
    STYLE="MARGIN-LEFT: 20px; TEXT-INDENT: -10px"><p><font size="2">Quarter ended March 31,
    2002</font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#00FFFF" height="0"><font size="2">0.15</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#00FFFF" height="0"><font size="2">0.10</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#00FFFF" height="0"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td ALIGN="LEFT" WIDTH="100%" height="1"><font size="1">&nbsp; </font></td>
    <td WIDTH="3%" height="1"></td>
    <td WIDTH="3%" height="1"></td>
    <td WIDTH="3%" height="1"></td>
    <td height="1"></td>
    <td height="1"></td>
    <td height="1"></td>
    <td height="1"></td>
    <td height="1"></td>
    <td height="1"></td>
    <td height="1"></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="100%" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font size="2">Year Ended December 31,
    2001</font></p>
    </div></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="100%" height="0"><div
    STYLE="MARGIN-LEFT: 20px; TEXT-INDENT: -10px"><p><font size="2">Quarter ended December 31,
    2001</font></p>
    </div></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;$</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.44</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;$</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.19</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="100%" height="0"><div
    STYLE="MARGIN-LEFT: 20px; TEXT-INDENT: -10px"><p><font size="2">Quarter ended June 30,
    2001</font></p>
    </div></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.43</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.11</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="100%" height="0"><div
    STYLE="MARGIN-LEFT: 20px; TEXT-INDENT: -10px"><p><font size="2">Quarter ended March 31,
    2001</font></p>
    </div></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.50</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.19</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="100%" height="0"><div
    STYLE="MARGIN-LEFT: 20px; TEXT-INDENT: -10px"><p><font size="2">Quarter ended December 31,
    2001</font></p>
    </div></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.41</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
    <td WIDTH="3%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">0.12</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
</table>

<p><font size="2">(b) Approximate Number of Holders of Common Stock<br>
On December 31, 2002, there were 2,514 shareholders of record of our common stock.</font></p>

<p ALIGN="JUSTIFY"><font size="2">(c) Dividends<br>
We currently do not pay cash dividends on our common stock and have no plans to reinstate
a dividend on our common stock.</font></p>

<p ALIGN="JUSTIFY" style="text-align: justify"><font size="2">(d) Sale of Unregistered
Securities<br>
During the three-month period ended December 31, 2002, the Registrant issued no restricted
shares. For issuance of restricted shares during prior periods reference is made to
Registrant's quarterly and annual reports. </font></p>

<p ALIGN="JUSTIFY"><font size="2">(e) Equity Compensation Plans<br>
We have no equity compensation plans.</font></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a
name="ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION">ITEM 6.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION</a></font> </b><a
href="#TABLE OF CONTENTS"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to
Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font color="#000000" size="2">The following discussion contains
forward-looking statements. Forward-looking statements give our current expectations or
forecasts of future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. They use of words such as
&quot;anticipate,&quot; &quot;estimate,&quot; &quot;expect,&quot; &quot;project,&quot;
&quot;intend,&quot; &quot;plan,&quot; &quot;believe,&quot; and other words and terms of
similar meaning in connection with any discussion of future operating or financial
performance. From time to time, we also may provide forward-looking statements in other
materials we release to the public.</font></p>

<p style="text-align: justify"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2"
color="#000000"><u>Overview<br>
</u>Our current activities are related to seeking a new business opportunity or business
combination. We will use our limited personnel and financial resources in connection with
such activities. It may be expected that entering into a new business opportunity or
business combination will involve the issuance of restricted shares of common stock. </font></p>

<p align="justify"><font color="#000000" face="Times New Roman" size="2">During the fourth
quarter of 2002, we discontinued our operations in connection with our filing a Chapter 7
bankruptcy petition. As of the date of this filing and subsequently to emerging from
bankruptcy, the Registrant has paid a total of $2,939 for general and administrative
expenses, including accounting fees and reinstatement fees. While we are dependent upon
interim funding provided by Management to pay professional fees and expenses. We have no
written finance agreement with Management to provide any continued funding.</font></p>

<p align="justify"><font color="#000000" size="2"><u>Liquidity and Capital Resources</u></font></p>

<p align="justify"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2" color="#000000">At
December 31, 2002, we have no assets and had no liabilities. As part of our intent to seek
new business opportunities and/or in effecting a business combination, we may determine to
seek to raise funds from the sale of equity or debt securities.We have no agreements to
issue any debt or equity securities and cannot predict whether equity or debt financing
will become available at terms acceptable to us, if at all. </font></p>

<p align="justify"><font color="#000000" size="2">We anticipate that in connection with
the commencement of a new business opportunity or consummation of a business combination,
we will issue a substantial number of additional restricted shares or other securities. If
such additional securities are issued, our shareholders will experience a dilution in
their ownership interest in the Company. If a substantial number of shares are issued in
connection with a business combination, a change in control may be expected to occur.</font></p>

<p align="justify"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2" color="#000000">There
are no limitations in our articles of incorporation on our ability to borrow funds or
raise funds through the issuance of restricted common stock to effect a business
combination. Our limited resources and lack of operating history may make it difficult to
do borrow funds or raise capital. Our inability to borrow funds or raise funds through the
issuance of restricted common stock required to effect or facilitate a business
combination may have a material adverse effect on our financial condition and future
prospects, including the ability to complete a business combination. To the extent that
debt financing ultimately proves to be available, any borrowing will subject us to various
risks traditionally associated with indebtedness, including the risks of interest rate
fluctuations and insufficiency of cash flow to pay principal and interest, including debt
of an acquired business. </font></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a name="ITEM 7.&nbsp;FINANCIAL STATEMENTS">ITEM
7.&nbsp;FINANCIAL STATEMENTS</a></font> </b><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font size="2">The Registrant's audited financial statements for the
fiscal years ended December 31, 2002 and 2001 are attached to this annual report.</font></p>

<p ALIGN="JUSTIFY"><a href="#Financial Statements"><font size="2">Financial Statements for
the Fiscal Year ended December 31, 2002&nbsp;</font></a></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a
name="ITEM 8.&nbsp;CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE">ITEM
8.&nbsp;CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE</a></font> </b><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font size="2">The Registrant reported in its current report on Form
8-K filed with the SEC on December 8, 2004 a change in certifying accountants. In
connection with the Registrant's filing on November 6, 2002 under Chapter 7 of the
Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern
Division, the Registrant's certifying accountant, Grant Thornton LLP resigned as the
Registrant's independent accountant effective November 27, 2002.</font></p>

<p ALIGN="JUSTIFY"><font size="2">(a)(1) Previous Independent Accountant</font></p>

<table CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%" height="0%">
  <tr>
    <td VALIGN="TOP"><p ALIGN="JUSTIFY"><font size="2">(i) The Registrant reports a change in
    certifying accountants, which involved the resignation of Grant Thornton LLP effective
    November 27, 2002. </font></td>
  </tr>
  <tr>
    <td VALIGN="TOP"><p ALIGN="JUSTIFY"><font size="2">(ii) Grant Thornton LLP's reports on
    the Company's consolidated financial statements for the fiscal years ended December 31,
    2000 and December 31, 2001 did not contain an adverse opinion or disclaimer of opinion,
    and were not modified as to uncertainty, audit scope, or accounting principles, except as
    described below.</font></p>
    <p ALIGN="JUSTIFY"><font size="2">For the years ended December 31, 2000 and 2001, Grant
    Thornton LLP rendered reports dated March 30, 2001 (except for the third sentence of note
    13, as to which the date is April 6, 2001) and February 15, 2002, respectively, which
    contained a paragraph raising substantial doubt about the Company's ability to continue as
    a going concern.</font></p>
    <p ALIGN="JUSTIFY"><font size="2">In connection with the audits of the Company's financial
    statements for the years ended December 31, 2001 and 2000, there were no disagreements
    with Grant Thornton LLP on any matter of accounting principles or practices, financial
    statement disclosure, or auditing scope or procedure which, if not resolved to Grant
    Thornton LLP's satisfaction, would have caused them to make reference to the subject
    matter in connection with their report on the Company's consolidated financial statements
    for such years; and there were no reportable events as defined in Item 304(a)(1)(v) of
    Regulation S-K.</font></td>
  </tr>
  <tr>
    <td VALIGN="TOP"><p ALIGN="JUSTIFY"><font size="2">(iii) The decision to change
    accountants was recommended and approved by the new board of directors of the Registrant
    on October 20, 2004. </font></td>
  </tr>
</table>

<p ALIGN="JUSTIFY"><font size="2">(a)(2) Engagement of New Independent Accountant.<br>
On October 20, 2004, the Registrant's board of directors recommended and approved the
engagement of Michael F. Cronin, CPA, Rochester, New York, as its independent accountant
to audit the Registrant's financial statements for its fiscal years ended December 31,
2002 and 2003.</font></p>

<p ALIGN="JUSTIFY"><font size="2">(a)(3) The Registrant has provided Grant Thornton LLP
with a copy of the disclosures it is making in response to Item 4.01 of its Form 8-K filed
on December 8, 2004. The Registrant has requested Grant Thornton LLP to furnish a letter
addressed to the Commission stating whether it agrees with the statements made by the
Registrant in (a)(1)(i) and (ii) above and, if not, stating the respects in which Grant
Thornton LLP does not agree. The Registrant has filed the letter as exhibit 16.2 to its
current report filed on December 8, 2004 containing this disclosure.</font></p>

<p ALIGN="JUSTIFY"><font face="Times New Roman" size="2"><b><a
name="ITEM 8A.&nbsp;CONTROLS AND PROCEDURES">ITEM 8A.&nbsp;CONTROLS AND PROCEDURES</a> </b></font><a
href="#TABLE OF CONTENTS"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to
Table of Contents</font></a></p>
<i><font style="FONT-SIZE: 10pt; FONT-STYLE: italic" face="Times New Roman" size="2">

<p style="text-align: justify">Evaluation of disclosure controls and procedures</font></i>.
<font color="#000000" size="2">As of March 31, 2005, the Company's president and chief
financial officer conducted an evaluation regarding the effectiveness of the Company's
disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under
the&nbsp; Exchange Act. Based upon the evaluation of these controls and procedures, our
president and chief financial officer concluded that our disclosure controls and
procedures were effective as of the date of filing this annual report applicable for the
period covered by this report.</font></p>

<p style="text-align: justify"><i><font style="FONT-SIZE: 10pt; FONT-STYLE: italic"
face="Times New Roman" size="2">Changes in internal controls</font></i>. <font
color="#000000" size="2">Management was appointed during the last quarter of fiscal 2004.
Since than no changes occurred in our internal control over financial reporting that
materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.</font></p>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">

<hr NOSHADE SIZE="5">

<p ALIGN="CENTER"><b>PART III</b></font></p>

<p ALIGN="JUSTIFY"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2"><b><a
name="ITEM 9.&nbsp;DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT">ITEM
9.&nbsp;DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, COMPLIANCE WITH SECTION 16(A)</a>
</b></font><a href="#TABLE OF CONTENTS"><font face="TIMES NEW ROMAN, TIMES, SERIF"
size="1">Back to Table of Contents</font></a></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%">
  <tr>
    <td width="20%" bgcolor="#00FFFF"><font size="1"><strong>Name</strong></font></td>
    <td width="5%" bgcolor="#00FFFF"></td>
    <td width="5%" bgcolor="#00FFFF"><font size="1"><strong>Age</strong></font></td>
    <td width="5%" bgcolor="#00FFFF"></td>
    <td width="40%" bgcolor="#00FFFF"><font size="1"><strong>Title</strong></font></td>
    <td width="5%" bgcolor="#00FFFF"></td>
    <td width="20%" bgcolor="#00FFFF" align="center"><font size="1"><strong>Date Became
    Executive Officer</strong></font></td>
  </tr>
  <tr>
    <td width="20%" bgcolor="#00FFFF"><font face="Times New Roman" size="2">Ivo Heiden</font></td>
    <td width="5%" bgcolor="#00FFFF">&nbsp; </td>
    <td width="5%" bgcolor="#00FFFF"><font face="Times New Roman" size="2">38</font></td>
    <td width="5%" bgcolor="#00FFFF">&nbsp; </td>
    <td width="40%" bgcolor="#00FFFF"><font face="Times New Roman" size="2">President, CFO and
    Chairman</font></td>
    <td width="5%" bgcolor="#00FFFF"></td>
    <td width="20%" bgcolor="#00FFFF" align="center"><font face="Times New Roman" size="2">10/2004</font></td>
  </tr>
</table>

<p><font size="2">Our president has held this position and directorship with us since
October 2004. Officers are not elected for a fixed term of office but hold office until
their successors have been elected.</font></p>

<p align="justify"><font size="2">Ivo Heiden, 37, has been vice president and a director
of the Registrant since October 2004. During the past five years, Mr. Heiden has been
engaged in the business of providing corporate securities consulting services to public
and private companies. From October 2000 until August 2001, Mr. Heiden served as an
officer and director of Fifth Avenue Acquisition I Corp., and resigned in connection with
a business combination with PlanetLink Communications, Inc. Mr. Heiden served also as a
director of Western-Silver-Lead Corporation, a public reporting company from August 2002
to September 2003, resigning in connection with a business combination with Lexor
Holdings. Since March 2004, Mr. Heiden is CFO and a director of Peregrine Industries,
Inc., a company reporting under the Exchange Act.</font></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a name="ITEM 10. EXECUTIVE COMPENSATION">ITEM 10.
EXECUTIVE COMPENSATION</a></font> </b><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<table cellSpacing="0" cellPadding="0" width="100%" align="center" border="0" HEIGHT="0%">
  <tr bgColor="white">
    <td align="center" colSpan="9" height="0%" bgcolor="#00FFFF"><p align="center"><font
    size="2"><strong>Summary Compensation Table </strong></font></td>
  </tr>
  <tr vAlign="bottom" bgColor="white">
    <td width="35%" height="0%"><font size="1">&nbsp; </font></td>
    <td width="1%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="center" width="18%" colSpan="2" height="0%"><p align="center"><font size="1"><strong>Long
    Term </strong></font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
  </tr>
  <tr vAlign="bottom" bgColor="white">
    <td width="35%" height="0%"><font size="1">&nbsp; </font></td>
    <td width="1%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="center" width="27%" colSpan="3" height="0%"><p align="center"><font size="1"><strong>Annual
    Compensation </strong></font></td>
    <td align="center" width="18%" colSpan="2" height="0%"><p align="center"><font size="1"><strong>Compensation
    Awards </strong></font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
  </tr>
  <tr vAlign="bottom" bgColor="white">
    <td width="35%" height="0%"><font size="1">&nbsp; </font></td>
    <td width="2%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="27%" colSpan="3" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="18%" colSpan="2" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
  </tr>
  <tr vAlign="bottom" bgColor="white">
    <td width="35%" height="0%"><font size="1">&nbsp; </font></td>
    <td width="1%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Other </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Restricted </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Securities </strong></font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
  </tr>
  <tr vAlign="bottom" bgColor="white">
    <td width="35%" height="0%"><font size="1">&nbsp; </font></td>
    <td width="1%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Annual </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Stock </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Underlying </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>All Other </strong></font></td>
  </tr>
  <tr vAlign="bottom" bgColor="white">
    <td width="35%" height="0%"><font size="1">&nbsp; </font></td>
    <td width="1%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><font size="1">&nbsp; </font></td>
    <td align="center" width="9%" height="0%"><p align="center"><font size="1"><strong>Salary </strong></font></td>
    <td align="center" width="9%" height="0%"><p align="center"><font size="1"><strong>Bonus </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Compensation </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Award(s) </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Options </strong></font></td>
    <td align="center" width="9%" height="0%"><font size="1"><strong>Compensation </strong></font></td>
  </tr>
  <tr vAlign="bottom" bgColor="white">
    <td width="35%" height="0%" bgcolor="#00FFFF"><font size="1">&nbsp; <strong>Name and
    Principal Position </strong></font></td>
    <td width="1%" height="0%" bgcolor="#00FFFF"><font size="1">&nbsp; </font></td>
    <td align="center" width="9%" height="0%" bgcolor="#00FFFF"><p align="right"><font
    size="1"><strong>Year </strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#00FFFF"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#00FFFF"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#00FFFF"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#00FFFF"><p align="center"><font
    size="1"><strong>($) </strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#00FFFF"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#00FFFF"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
  </tr>
  <tr vAlign="bottom" bgColor="white">
    <td width="35%" height="0%"><hr noShade SIZE="2">
    </td>
    <td width="2%" height="0%"><font size="2">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
  </tr>
  <tr vAlign="bottom" bgColor="#cbdbd1">
    <td width="35%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"><font
    size="2">Ivo Heiden, President and Chairman (1)</font></td>
    <td width="1%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"><font
    size="2">&nbsp; </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">2004 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
  </tr>
  <tr>
    <td width="35%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"><font
    size="2">John Hrobsky (2)</font></td>
    <td width="1%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">2002 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
  </tr>
  <tr>
    <td width="35%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"></td>
    <td width="1%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">2001 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">147,118 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">24,252 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
  </tr>
  <tr>
    <td width="35%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"><font
    size="2">Leonard Tannen (2)</font></td>
    <td width="1%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">2002 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><font size="2">--- </font></td>
  </tr>
  <tr>
    <td width="35%" height="0%" style="background-color: rgb(255,255,255)"></td>
    <td width="1%" height="0%" style="background-color: rgb(255,255,255)"></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"><font
    size="2">2001 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"><font
    size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"><font
    size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"><font
    size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"><font
    size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"><font
    size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"><font
    size="2">--- </font></td>
  </tr>
  <tr>
    <td width="35%" height="0%"><hr noShade SIZE="2">
    </td>
    <td width="2%" height="0%"><font size="2">&nbsp; </font></td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
    <td align="right" width="9%" height="0%"><hr noShade SIZE="2">
    </td>
  </tr>
  <tr bgColor="white">
    <td colSpan="9" height="0%"><font size="1">(1) Mr. Heiden became president and chairman of
    the Registrant in October 2004 and has not received compensation for serving as president
    and chairman during 2004.</font></td>
  </tr>
  <tr>
    <td colSpan="9" height="0%"><font size="1">(2) Mr. Hrobsky and Tannen are former officers
    of the Registrant.</font></td>
  </tr>
</table>

<p ALIGN="JUSTIFY"><font size="2">The Company has no employment agreement with its
president. No executive compensation was paid during the fiscal year ended December 31,
2003 and 2004.</font></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a
name="ITEM 11.&nbsp;SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT">ITEM
11.&nbsp;SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</a></font> </b><a
href="#TABLE OF CONTENTS"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to
Table of Contents</font></a></p>

<p style="text-align: justify"><font size="2" color="#000000">The table below discloses
any person (including any &quot;group&quot;) who is known to the Registrant to be the
beneficial owner of more than five (5%) percent of the Registrant's voting securities. As
of March 31, 2005, the Registrant had 33,045,623 voting shares issued and outstanding
including 840,000 shares of Series B Preferred Convertible Stock, which represent
16,800,000 votes.</font></p>

<table border="0" cellspacing="0" width="100%" height="0%">
  <tr>
    <td width="13%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)" height="0"
    bgcolor="#00FFFF"><p align="center"><strong><font face="Times New Roman" size="1">Title of
    Class</font></strong></td>
    <td width="40%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)" height="0"
    bgcolor="#00FFFF"><p align="left"><strong><font face="Times New Roman" size="1">Name and
    Address of Beneficial Owner</font></strong></td>
    <td width="25%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)" height="0"
    bgcolor="#00FFFF"><p align="center"><strong><font face="Times New Roman" size="1">Amount
    and Nature of Beneficial Owner</font></strong></td>
    <td width="23%"
    style="border-left: 1px solid rgb(0,0,0); border-right: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0)"
    height="0" bgcolor="#00FFFF"><p align="center"><font face="Times New Roman" size="1"><strong>Percent
    of Class(1)</strong></font></td>
  </tr>
  <tr>
    <td width="13%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    align="center" height="0"><font face="Times New Roman" size="2">Common Stock</font></td>
    <td width="40%" align="left"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0"><font face="Times New Roman" size="2">Ivo Heiden<br>
    115 East 57th Street, Suite 1118, New York, NY 10022</font></td>
    <td width="25%" align="center"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0"><font face="Times New Roman" size="2">9,600,000 shares</font></td>
    <td width="23%" align="center"
    style="border-left: 1px solid rgb(0,0,0); border-right: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0"><font face="Times New Roman" size="2">29.05%</font></td>
  </tr>
  <tr>
    <td width="13%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0" bgcolor="#00FFFF"><p align="center"><font face="Times New Roman" size="2">Common
    Stock</font></td>
    <td width="40%" align="left"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0" bgcolor="#00FFFF"><font face="Times New Roman" size="2">Juergen Heiden<br>
    Dorfstrasse 21, Luedershagen 18314, Germany</font></td>
    <td width="25%" align="center"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0" bgcolor="#00FFFF"><font face="Times New Roman" size="2">7,200,000 shares</font></td>
    <td width="23%" align="center"
    style="border-left: 1px solid rgb(0,0,0); border-right: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0" bgcolor="#00FFFF"><font face="Times New Roman" size="2">21.79%</font><font
    face="Times New Roman" size="1">(2)</font></td>
  </tr>
  <tr>
    <td width="13%"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px solid rgb(0,0,0)"
    height="0" bgcolor="#FFFFFF"><p align="center"><font face="Times New Roman" size="2">Common
    Stock</font></td>
    <td width="40%" align="left"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px solid rgb(0,0,0)"
    height="0" bgcolor="#FFFFFF"><font face="Times New Roman" size="2">All officers and
    directors as a group (1 person)</font></td>
    <td width="25%" align="center"
    style="border-left: 1px solid rgb(0,0,0); border-top: 1px solid rgb(0,0,0); border-bottom: 1px solid rgb(0,0,0)"
    height="0" bgcolor="#FFFFFF"><font face="Times New Roman" size="2">16,800,000 shares</font></td>
    <td width="23%" align="center" style="border: 1px solid rgb(0,0,0)" height="0"
    bgcolor="#FFFFFF"><font face="Times New Roman" size="2">50.84%</font><font
    face="Times New Roman" size="1">(2)</font></td>
  </tr>
  <tr>
    <td width="100%"
    style="border-left: 1px none rgb(0,0,0); border-right: medium none; border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0%" colspan="4"><font size="1">(1) The percentage and ownership is based on
    33,045,623 voting securities issued and outstanding as of December 31, 2004, including
    votes and shares issuable upon conversion of Series B Convertible Preferred Stock.</font></td>
  </tr>
  <tr>
    <td width="100%"
    style="border-left: 1px none rgb(0,0,0); border-right: medium none; border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    height="0%" colspan="4"><font size="1">(2) Mr. Heiden has sole irrevocable voting power
    with respect to the 360,000 Series B Convertible Preferred Shares representing 7,200,000
    votes owned beneficially by Juergen Heiden who is the father of Ivo Heiden, the
    Registrant's president and director.</font></td>
  </tr>
</table>

<p style="text-align: justify"><font size="2">To the knowledge of the Registrant, there
are no arrangements which may result in a change in control of the Registrant. However, in
the event that the Registrant enters into a business combination with an operating entity,
it may be expected that it will experience a change in control.</font></p>

<p ALIGN="JUSTIFY"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><b><a
name="ITEM 12.&nbsp;CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS">ITEM 12.&nbsp;CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS</a> </b></font><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" size="2" color="#000000">During
the last two fiscal years, to the knowledge of the Registrant, there was no person who had
or has a direct or indirect material interest in any transaction or proposed transaction
to which the Registrant was or is a party.</font></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a name="ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K">ITEM
13. EXHIBITS AND REPORTS ON FORM 8-K</a></font> </b><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font size="2">(a) The following documents are filed as exhibits to
this report on Form 10-KSB or incorporated by reference herein. Any document incorporated
by reference is identified by a parenthetical reference to the SEC filing that included
such document.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%" height="0%">
  <tr>
    <td width="8%" bgcolor="#00FFFF" height="0%"><font size="1"><strong>Exhibit No.</strong></font></td>
    <td width="92%" bgcolor="#00FFFF" height="0%"><font size="1"><strong>Description</strong></font></td>
  </tr>
  <tr>
    <td width="8%" height="0%"><font size="1">2</font></td>
    <td width="92%" height="0%"><font size="1">Order Confirming Sale of Public Shell Entity to
    Park Avenue Group, Inc., filed with the Registrant's Form 8-K on December 8, 2004.</font></td>
  </tr>
  <tr>
    <td width="8%" bgcolor="#00FFFF" height="0%"><font size="1">3(i)1</font></td>
    <td width="92%" bgcolor="#00FFFF" height="0%"><font size="1">Articles of Incorporation of
    the Registrant, as amended, filed with the Registrant's Form 8-K on December 8, 2004.</font></td>
  </tr>
  <tr>
    <td width="8%" height="0%"><font size="1">3(ii)1</font></td>
    <td width="92%" height="0%"><font size="1">By-Laws of the Registrant, filed with the
    Registrant's Form 8-K on December 8, 2004.</font></td>
  </tr>
</table>

<p><font size="2">(b)&nbsp;Reports on Form 8-K During the Last Quarter of the Fiscal Year
Covered by this Report:</font></p>

<p><font size="2">The Registrant file a Form 8-K during the last quarter of the fiscal
year covered by this annual report. The Registrant disclosed under Item 3. Bankruptcy and
Liquidation that it filed a Chapter 7 bankruptcy petition on November 6, 2002. </font></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a
name="ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES">ITEM 14. PRINCIPAL ACCOUNTING FEES
AND SERVICES</a></font> </b><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2">Independent Public
Accountants<br>
The Registrant's Board of Directors has appointed Michael F. Cronin, CPA as independent
public accountant for the fiscal year ending December 31, 2002.</font></p>

<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px">&nbsp;</p>

<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font FACE="TIMES NEW ROMAN, TIMES, SERIF"
SIZE="2">Principal Accounting Fees<br>
The following table presents the fees for professional audit services rendered by Michael
F. Cronin, CPA for the audit of the Registrant's annual financial statements for the years
ended December 31, 2002, and fees billed for other services rendered by Michael F. Cronin,
CPA during those periods. </font></p>

<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font FACE="TIMES NEW ROMAN, TIMES, SERIF"
SIZE="2">&nbsp; </font></p>

<table style="BORDER-COLLAPSE: collapse" cellSpacing="0" cellPadding="0" width="100%"
align="center" border="0" height="0%">
  <tr>
    <td vAlign="bottom" width="100%" height="0" bgcolor="#00FFFF" colspan="6"><p align="right"><font
    face="Times New Roman" size="1"><b>Year&nbsp;Ended&nbsp;</b></font></td>
  </tr>
  <tr>
    <td vAlign="top" width="55%" height="0"></td>
    <td vAlign="bottom" width="2%" height="0" align="right"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td vAlign="bottom" width="15%" height="0"></td>
    <td vAlign="bottom" width="2%" height="0" align="right"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="border-bottom: 1px solid rgb(0,0,0)"><font face="Times New Roman" size="1"><b>December
    31, 2002 </b></font></td>
  </tr>
  <tr bgColor="#cceeff">
    <td vAlign="top" width="55%" height="0" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font size="2">Audit fees
    (1)</font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"
    style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"></td>
    <td vAlign="bottom" width="15%" height="0" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"></td>
    <td vAlign="bottom" width="2%" height="0" align="right"
    style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"><font size="2">$ </font></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"><font size="2">--- </font></td>
  </tr>
  <tr>
    <td vAlign="top" width="55%" height="0"><p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font
    size="2">Audit-related fees (2)</font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"></td>
    <td vAlign="bottom" width="15%" height="0"></td>
    <td vAlign="bottom" width="2%" height="0" align="right"><font size="2">&nbsp; </font></td>
    <td vAlign="bottom" align="right" width="13%" height="0"><font size="2">--- </font></td>
  </tr>
  <tr bgColor="#cceeff">
    <td vAlign="top" width="55%" height="0" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"><p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font size="2">Tax fees
    (3)</font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"
    style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"></td>
    <td vAlign="bottom" width="15%" height="0" style="background-color: rgb(255,255,255)"
    bgcolor="#00FFFF"></td>
    <td vAlign="bottom" width="2%" height="0" align="right"
    style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"><font size="2">&nbsp; </font></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="background-color: rgb(255,255,255)" bgcolor="#00FFFF"><font size="2">--- </font></td>
  </tr>
  <tr>
    <td vAlign="top" width="55%" height="0"><p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font
    size="2">All other fees </font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"></td>
    <td vAlign="bottom" width="15%" height="0"></td>
    <td vAlign="bottom" width="2%" height="0" align="right"><font size="2">&nbsp; </font></td>
    <td vAlign="bottom" align="right" width="13%" height="0"><font size="2">--- </font></td>
  </tr>
  <tr>
    <td vAlign="top" width="55%" height="0"><font size="2">________________</font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"></td>
    <td vAlign="bottom" width="15%" height="0"></td>
    <td vAlign="bottom" width="2%" height="0" align="right"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td vAlign="top" width="100%" height="0%" colspan="6"><font
    face="TIMES NEW ROMAN, TIMES, SERIF" size="1" color="#000000">(1) Audit fees consist of
    audit and review services, consents and review of documents filed with the SEC. </font></td>
  </tr>
  <tr>
    <td vAlign="top" width="100%" height="0" colspan="6"><font
    face="TIMES NEW ROMAN, TIMES, SERIF" size="1" color="#000000">(2) Audit-related fees
    consist of assistance and discussion concerning financial accounting and reporting
    standards and other accounting issues. </font></td>
  </tr>
  <tr>
    <td vAlign="top" width="100%" height="0" colspan="6"><font
    face="TIMES NEW ROMAN, TIMES, SERIF" size="1" color="#000000">(3) Tax fees consist of
    preparation of federal and state tax returns, review of quarterly estimated tax payments,
    and consultation concerning tax compliance issues. </font></td>
  </tr>
</table>

<p style="text-align: justify; margin-top: 0px; margin-bottom: 0px">&nbsp;</p>

<p style="text-align: justify; margin-top: 0px; margin-bottom: 0px"><font
FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">Code of Ethics <br>
In October 2004, the Registrant adopted a Code of Ethics that is designed to deter
wrongdoing and to promote honest and ethical conduct, full, fair, accurate, timely and
understandable disclosure in the Registrant's SEC reports and other public communications.
The Code of Ethics promotes compliance with applicable governmental laws, rules and
regulations. </font></p>

<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">&nbsp;</p>
<b>

<p style="text-align: justify"></b><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">Section
16(a) Compliance<br>
Section 16(a) of the Securities and Exchange Act of 1934 requires the Registrant's
directors and executive officers, and persons who own beneficially more than ten percent
(10%) of the Registrant's Common Stock, to file reports of ownership and changes of
ownership with the Securities and Exchange Commission. Copies of all filed reports are
required to be furnished to the Registrant pursuant to Section 16(a). Based solely on the
reports received by the Registrant and on written representations from reporting persons,
the Registrant was informed that its officer and director has not filed reports required
under Section 16(a).</font></p>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div>

<hr NOSHADE SIZE="5">

<p ALIGN="CENTER"><b>SIGNATURES </b><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the date
indicated.</font></p>

<table ALIGN="CENTER" CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
  <tr VALIGN="TOP" BGCOLOR="#66FFFF">
    <td ALIGN="LEFT" WIDTH="15%"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u>/s/
    IVO HEIDEN</u><br>
    Ivo Heiden<br>
    <i>&nbsp;&nbsp;President, CFO&nbsp; and Chairman<br>
    &nbsp; Dated: May 16, 2005</i></font></td>
  </tr>
</table>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div>

<p align="center"><a name="Financial Statements"><strong><font size="2">Financial
Statements</font></strong></a><font size="3"> </font><a href="#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%">
  <tr>
    <td width="90%"><a href="#REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM"><font
    face="Times New Roman" size="2">Report of Independent Registered Public Accounting Firm</font></a></td>
    <td width="10%" align="right"><font size="2">17</font></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="2">Consolidated Financial Statements</font></td>
    <td width="10%" align="right"></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="2">&nbsp;&nbsp; <a
    href="#Consolidated Balance Sheets">Balance Sheets</a></font></td>
    <td width="10%" align="right"><font size="2">18</font></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="2">&nbsp;&nbsp; <a
    href="#Consolidated Statement of Operations">Statement of Operations</a></font></td>
    <td width="10%" align="right"><font size="2">19</font></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="2">&nbsp;&nbsp; <a
    href="#Consolidated Statements of Cash Flows">Statement of Cash Flows</a></font></td>
    <td width="10%" align="right"></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="2">&nbsp;&nbsp; <a
    href="#Consolidated Statements of Stockholders' Deficiency">Statement of Stockholders'
    Equity</a></font></td>
    <td width="10%" align="right"><font size="2">20</font></td>
  </tr>
  <tr>
    <td width="90%"><font face="Times New Roman" size="2">&nbsp;&nbsp; </font></td>
    <td width="10%" align="right"><font size="2">21</font></td>
  </tr>
  <tr>
    <td width="90%"><a href="#BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES"><font
    face="Times New Roman" size="2">Notes to Financial Statements</font></a></td>
    <td width="10%" align="right"><font size="2">22</font></td>
  </tr>
  <tr>
    <td width="90%">&nbsp; </td>
    <td width="10%" align="right"></td>
  </tr>
</table>

<p>&nbsp;</p>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div><font size="2"><b>

<p ALIGN="center"><a name="REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM">REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</a> </b><a href="#Financial Statements"><font
size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY">To the Board of Directors and Stockholders<br>
Zaxis International Inc. </p>

<p ALIGN="JUSTIFY">I have audited the accompanying balance sheet of Zaxis International
Inc. as of December 31, 2002 and the related statements of operations, changes in
stockholders&#146; equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company&#146;s management. My responsibility is
to express an opinion on these financial statements based on my audit. The financial
statements of Zaxis International, Inc. as of December 31, 2001 were audited by other
auditors whose report dated February 15, 2002 expressed an unqualified opinion on those
financial statements.</p>

<p ALIGN="JUSTIFY">I conducted my audit in accordance with auditing standards established
by the Public Company Accounting Oversight Board. Those standards require that I 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. I believe that my audit
provides a reasonable basis for my opinion.</p>

<p ALIGN="JUSTIFY">In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Zaxis International Inc. as of
December 31, 2002 and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United States of
America..</p>

<p ALIGN="JUSTIFY">The Company adopted &quot;fresh-start&quot; accounting as of November
7, 2002. The impact of this is more fully described in note 1 of the financial statements.
</p>

<p ALIGN="JUSTIFY">&nbsp;</p>

<p ALIGN="JUSTIFY">Michael F. Cronin, CPA<br>
Rochester. New York </p>

<p ALIGN="JUSTIFY">May 13, 2005</p>
</font></div>

<p><br clear="all" style="page-break-before:always; mso-break-type:section-break">
</p>
<div>

<p align="center"><strong><font size="2">Financial Statements for the fiscal years 2002
and 2001</font></strong></p>

<table style="BORDER-BOTTOM: rgb(0,0,0) 1px" height="0%" cellSpacing="0" cellPadding="0"
width="100%" border="0">
  <tr>
    <td vAlign="middle" width="100%" height="0%" colspan="5" align="center" bgcolor="#00FFFF"><font
    size="2"><b>Zaxis International Inc.</b></font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0%" colspan="5" align="center"><font size="2"><a
    name="Consolidated Balance Sheets">Consolidated Balance Sheets</a> </font><font size="1"><a
    href="#Financial Statements">Back to Table of Contents</a></font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0%" colspan="5" align="center"><font size="2">&nbsp;
    </font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="1">&nbsp;&nbsp; </font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="1">Successor Company</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="1">Predecessor
    Company</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="1">&nbsp; </font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="1">December 31, 2002</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="1">December 31, 2001</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><p align="center"><font size="2">ASSETS</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">Current Assets:</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Cash</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"><font size="2">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"><font size="2">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">24,726</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Accounts
    receivable</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">41,056</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Inventory</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">52,575</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp;&nbsp; Prepaid
    expenses</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"
    style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">5,572</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%" bgcolor="#00FFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total current assets</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0%" bgcolor="#00FFFF"
    style="border-bottom: 2px double rgb(0,0,0)"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%" bgcolor="#00FFFF"
    style="border-bottom: 2px none rgb(0,0,0)"><font size="2">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0%" bgcolor="#00FFFF"
    style="border-bottom: 2px double rgb(0,0,0)"><font size="2">123,929</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp; </font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">Assets from discontinued
    operations held for sale:</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Equipment, net</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">33,620</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Other assets</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">32,130</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%" bgcolor="#00FFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total Assets</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 2px double rgb(0,0,0)" bgcolor="#00FFFF"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 2px double rgb(0,0,0)" bgcolor="#00FFFF"><font size="2">189,679</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp; </font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><p align="center"><font size="2">LIABILITIES
    AND STOCKHOLDERS' EQUITY</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">Current Liabilities:</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Accounts
    payable-trade</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"><font size="2">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"><font size="2">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">240,848</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Accrued expenses</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">107,851</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Notes payable</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">15,000</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Notes payable -
    related parties</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">299,252</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Deferred income</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">174,116</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Current portion of
    capitalized lease obligation</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">1,328</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%" bgcolor="#00FFFF"><font size="2">&nbsp;&nbsp;
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%" bgcolor="#00FFFF"></td>
    <td vAlign="middle" align="right" width="13%" height="0%" bgcolor="#00FFFF"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">0</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%" bgcolor="#00FFFF"
    style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td vAlign="middle" align="right" width="13%" height="0%" bgcolor="#00FFFF"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">838,395</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp; </font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">Redeemable Preferred Stock:</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; 10,000,000 shares
    authorized, $0.01 par value,</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; 170
    designated series 01-A cumulative, convertible</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    canceled November 2002 (170 outstanding in 2001)</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">131,803</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp; </font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">Stockholders' Equity:</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Common stock,
    20,000,000 shares authorized, $.01 par value; </font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
    16,245,623 shares issued and outstanding 2002 and 2001, respectively</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">162,245</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">162,156</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Additional paid in
    capital</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">(162,245)</font></td>
    <td vAlign="middle" align="right" width="2%" height="0%"></td>
    <td vAlign="middle" align="right" width="13%" height="0%"><font size="2">11,055,415</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp; Accumulated
    deficit</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 1px" vAlign="middle" align="right" width="2%"
    height="0%"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0%"><font size="2">0</font></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="2%"
    height="0%"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0%"><font size="2">(11,998,090)</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Total
    Stockholders' Deficiency</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 1px" vAlign="middle" align="right" width="2%"
    height="0%"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0%"><font size="2">0</font></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="2%"
    height="0%"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0%"><font size="2">(780,519)</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%"><font size="2">&nbsp; </font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 1px" vAlign="middle" align="right" width="2%"
    height="0%"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0%"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="2%"
    height="0%"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0%"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="70%" height="0%" bgcolor="#00FFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Total Liabilities and Stockholders' Equity</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0%" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0%" bgcolor="#00FFFF"><font size="2">0</font></td>
    <td style="border-bottom: 2px none rgb(0,0,0)" vAlign="middle" align="right" width="2%"
    height="0%" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0%" bgcolor="#00FFFF"><font size="2">189,679</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0%" bgcolor="#FFFFFF" colspan="5"><font size="2">&nbsp;
    </font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0%" bgcolor="#FFFFFF" colspan="5"><font size="2">See
    Summary of Significant Accounting Policies and Notes to Financial Statements.</font></td>
  </tr>
</table>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div>

<table height="1" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="100%" height="0" colspan="5" align="center"><font size="2"><b>Zaxis
    International Inc.</b></font></td>
  </tr>
  <tr>
    <td width="100%" height="0" colspan="5" align="center"><font size="2"><a
    name="Consolidated Statement of Operations">Consolidated Statement of Operations</a> </font><a
    href="#Financial Statements"><font size="1">Back to Table of Contents</font></a></td>
  </tr>
  <tr>
    <td width="100%" height="0" colspan="5" align="center"><font size="2">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="1">&nbsp; </font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="1">Fiscal Year</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="1">Fiscal Year</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1">ended</font></td>
    <td align="right" width="2%" height="0" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1">ended</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1">December 31, 2002</font></td>
    <td align="right" width="2%" height="0" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1">December 31, 2001</font></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#00FFFF"><font size="2">Revenue</font></td>
    <td align="right" width="2%" height="0" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td align="right" width="13%" height="0" bgcolor="#00FFFF"><font size="2">0</font></td>
    <td align="right" width="2%" height="0" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td align="right" width="13%" height="0" bgcolor="#00FFFF"><font size="2">707,419</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp; </font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Costs and Expenses:</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Cost of goods sold</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; General and administrative</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">565,001</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Depreciation and amortization</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">997,180</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Other</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">(2,751)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp; Interest</font></td>
    <td align="right" width="2%" height="0" bgcolor="#FFFFFF"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"
    bgcolor="#FFFFFF"><font size="2">0</font></td>
    <td align="right" width="2%" height="0" style="border-bottom: 1px none rgb(0,0,0)"
    bgcolor="#FFFFFF"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"
    bgcolor="#FFFFFF"><font size="2">133,714</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Total costs and expenses</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">1,693,144</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp; </font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Loss from continuing operations before income
    taxes, extraordinary gain</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;and discontinued operations</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">(988,725)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Extraordinary gain from extinguishment of debt</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">789,020</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Loss from continuing operations before
    discontinued operations</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">(199,705)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp; </font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Discontinued operations:</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp; Loss from
    discontinued operations (net of taxes)</font></td>
    <td align="right" width="2%" height="0" bgcolor="#FFFFFF"></td>
    <td align="right" width="13%" height="0" bgcolor="#FFFFFF"><font size="2">(395,571)</font></td>
    <td align="right" width="2%" height="0" bgcolor="#FFFFFF"></td>
    <td align="right" width="13%" height="0" bgcolor="#FFFFFF"><font size="2">0</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Gain on disposal of assets used in
    discontinued operations</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">1,042,338</font></td>
    <td align="right" width="2%" height="0" style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td align="right" width="13%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">0</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Income from discontinued operations</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">646,767</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"><font size="2">0</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp; </font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#00FFFF"><font size="2">Net Income (loss)</font></td>
    <td align="right" width="2%" height="0" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td align="right" width="13%" height="0" style="border-bottom: 2px double rgb(0,0,0)"
    bgcolor="#00FFFF"><font size="2">646,767</font></td>
    <td align="right" width="2%" height="0" style="border-bottom: 2px none rgb(0,0,0)"
    bgcolor="#00FFFF"><font size="2">$</font></td>
    <td align="right" width="13%" height="0" style="border-bottom: 2px double rgb(0,0,0)"
    bgcolor="#00FFFF"><font size="2">(199,705)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp; </font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Basic and diluted per shares amounts:</font></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Continued operations</font></td>
    <td align="right" width="2%" height="0"><font size="2">$</font></td>
    <td align="right" width="13%" height="0"><font size="2">0.00</font></td>
    <td align="right" width="2%" height="0"><font size="2">$</font></td>
    <td align="right" width="13%" height="0"><font size="2">(0.09)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Extraordinary gain</font></td>
    <td align="right" width="2%" height="0"><font size="2">$</font></td>
    <td align="right" width="13%" height="0"><font size="2">0.00</font></td>
    <td align="right" width="2%" height="0"><font size="2">$</font></td>
    <td align="right" width="13%" height="0"><font size="2">0.07</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Discontinued operations</font></td>
    <td align="right" width="2%" height="0"><font size="2">$</font></td>
    <td align="right" width="13%" height="0" style="border-bottom: 2px double rgb(0,0,0)"><font
    size="2">0.04</font></td>
    <td align="right" width="2%" height="0" style="border-bottom: 2px none rgb(0,0,0)"><font
    size="2">$</font></td>
    <td align="right" width="13%" height="0" style="border-bottom: 2px double rgb(0,0,0)"><font
    size="2">0.00</font></td>
  </tr>
  <tr>
    <td width="70%" height="1"><font size="2">Basic and diluted net loss</font></td>
    <td align="right" width="2%" height="1"><font size="2">$</font></td>
    <td align="right" width="13%" height="1" style="border-bottom: 2px double rgb(0,0,0)"><font
    size="2">0.04</font></td>
    <td align="right" width="2%" height="1" style="border-bottom: 2px none rgb(0,0,0)"><font
    size="2">$</font></td>
    <td align="right" width="13%" height="1" style="border-bottom: 2px double rgb(0,0,0)"><font
    size="2">(0.02)</font></td>
  </tr>
  <tr>
    <td width="70%" height="1"><font size="2">&nbsp; </font></td>
    <td align="right" width="2%" height="1"></td>
    <td align="right" width="13%" height="1"></td>
    <td align="right" width="2%" height="1"></td>
    <td align="right" width="13%" height="1"></td>
  </tr>
  <tr>
    <td width="70%" height="1"><font size="2">Weighted average shares outstanding (basic and
    diluted)</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" align="right" width="2%" height="1"></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" align="right" width="13%" height="1"><font
    size="2">16,245,623</font></td>
    <td style="border-bottom: 2px none rgb(0,0,0)" align="right" width="2%" height="1"></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" align="right" width="13%" height="1"><font
    size="2">16,245,623</font></td>
  </tr>
  <tr>
    <td width="100%" height="1" colspan="5"><font size="2">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="100%" height="1" colspan="5"><font size="2">See Summary of Significant
    Accounting Policies and Notes to Financial Statements.</font></td>
  </tr>
</table>

<p>&nbsp;</p>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div>

<table cellSpacing="0" cellPadding="0" width="100%" border="0" height="0%">
  <tr>
    <td width="101%" height="0" colspan="5" align="center" bgcolor="#00FFFF"><font size="2"><b>Zaxis
    International Inc.</b></font></td>
  </tr>
  <tr>
    <td width="101%" height="0" colspan="5" align="center"><font size="2"><a
    name="Consolidated Statements of Cash Flows">Consolidated Statements of Cash Flows</a> </font><a
    href="#Financial Statements"><font size="1">Back to Table of Contents</font></a></td>
  </tr>
  <tr>
    <td width="101%" height="0" colspan="5" align="center"><p align="left"><font size="2">&nbsp;&nbsp;
    &nbsp; </font></td>
  </tr>
  <tr>
    <td width="70%" height="0%"></td>
    <td width="2%" height="0%" align="right"></td>
    <td width="13%" align="right" height="0%"><font size="1">Fiscal Year</font></td>
    <td width="2%" height="0%" align="right"></td>
    <td width="13%" align="right" height="0%"><font size="1">Fiscal Year</font></td>
  </tr>
  <tr>
    <td width="70%" height="0%"></td>
    <td width="2%" height="0%" align="right"></td>
    <td width="13%" align="right" height="0%"><font size="1">Ended</font></td>
    <td width="2%" height="0%" align="right"></td>
    <td width="13%" align="right" height="0%"><font size="1">Ended</font></td>
  </tr>
  <tr>
    <td width="70%" height="0%"><font size="1">&nbsp; </font></td>
    <td width="2%" height="0%" align="right"></td>
    <td width="13%" align="right" style="border-bottom: 1px solid rgb(0,0,0)" height="0%"><font
    size="1">December 31, 2002</font></td>
    <td width="2%" height="0%" align="right"></td>
    <td width="13%" height="0%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1">December 31, 2001</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Cash flows from operating activities:</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"></td>
    <td align="right" width="2%" height="0"></td>
    <td align="right" width="13%" height="0%"></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#00FFFF"><font size="2">Net income (loss)</font></td>
    <td width="2%" height="0" align="right" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td width="13%" height="0" align="right" bgcolor="#00FFFF"><font size="2">646,767</font></td>
    <td align="right" width="2%" height="0" bgcolor="#00FFFF"><font size="2">$</font></td>
    <td width="13%" height="0" align="right" bgcolor="#00FFFF"><font size="2">(199,705)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Adjustments required to reconcile net loss to
    net cash used in operating activities:</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Depreciation</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2">19,073</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2">50,431</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Expenses paid by issuance of stock</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2">168,798</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Extraordinary (gain) from
    extinguishment of debt</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2">(789,020)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Gain from discontinued operations</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2">(1,042,338)</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2">0</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; (Increase) decrease in current
    assets</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2">9,682</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2">(34,084)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Increase (decrease) in accounts
    payable and accrued expenses</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">174,116</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">289,261</font></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#00FFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Cash
    flows used by operating activities</font></td>
    <td width="2%" height="0" bgcolor="#00FFFF" align="right"></td>
    <td width="13%" height="0" bgcolor="#00FFFF" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">(188,321)</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 1px" align="right" width="2%" height="0"
    bgcolor="#00FFFF"></td>
    <td width="13%" height="0" bgcolor="#00FFFF" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">(514,319)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp; </font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#FFFFFF"><font size="2">Cash flow from investing
    activities:</font></td>
    <td width="2%" height="0" bgcolor="#FFFFFF" align="right"></td>
    <td width="13%" height="0" bgcolor="#FFFFFF" align="right"></td>
    <td align="right" width="2%" height="0" bgcolor="#FFFFFF"></td>
    <td width="13%" height="0" bgcolor="#FFFFFF" align="right"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Purchase of equipment</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">0</font></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#00FFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Cash
    used in investing activities</font></td>
    <td width="2%" height="0" bgcolor="#00FFFF" align="right"></td>
    <td width="13%" height="0" bgcolor="#00FFFF" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">0</font></td>
    <td align="right" width="2%" height="0" bgcolor="#00FFFF"></td>
    <td width="13%" height="0" bgcolor="#00FFFF" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">0</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; </font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Cash flows from financing activities:</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp; Proceeds from the
    issuance of common and preferred stock</font></td>
    <td width="2%" height="0" bgcolor="#FFFFFF" align="right"></td>
    <td width="13%" height="0" bgcolor="#FFFFFF" align="right"><font size="2">0</font></td>
    <td align="right" width="2%" height="0" bgcolor="#FFFFFF"></td>
    <td width="13%" height="0" bgcolor="#FFFFFF" align="right"><font size="2">489,000</font></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp; Proceeds from
    notes payable</font></td>
    <td width="2%" height="0" bgcolor="#FFFFFF" align="right"></td>
    <td width="13%" height="0" bgcolor="#FFFFFF" align="right"><font size="2">165,000</font></td>
    <td align="right" width="2%" height="0" bgcolor="#FFFFFF"></td>
    <td width="13%" height="0" bgcolor="#FFFFFF" align="right"><font size="2">314,500</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp; Repayment of notes payable</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">(1,405)</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">(266,282)</font></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#00FFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Net
    cash provided by financing activities</font></td>
    <td width="2%" height="0" bgcolor="#00FFFF" align="right"></td>
    <td width="13%" height="0" bgcolor="#00FFFF" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">163,595</font></td>
    <td align="right" width="2%" height="0" bgcolor="#00FFFF"></td>
    <td width="13%" height="0" bgcolor="#00FFFF" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2">537,218</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp; </font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Change in cash</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2">(24,726)</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2">22,899</font></td>
  </tr>
  <tr>
    <td width="70%" height="0"><font size="2">Cash - beginning of period</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">24,726</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="2">1,827</font></td>
  </tr>
  <tr>
    <td width="70%" height="0" bgcolor="#00FFFF"><font size="2">Cash - end of period</font></td>
    <td width="2%" height="0" bgcolor="#00FFFF" align="right"><font size="2">$</font></td>
    <td width="13%" height="0" bgcolor="#00FFFF" align="right"
    style="border-bottom: 2px double rgb(0,0,0)"><font size="2">0</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" align="right" width="2%" height="0"
    bgcolor="#00FFFF"><font size="2">$</font></td>
    <td width="13%" height="0" bgcolor="#00FFFF" align="right"
    style="border-bottom: 2px double rgb(0,0,0)"><font size="2">24,726</font></td>
  </tr>
  <tr>
    <td width="100%" height="0" bgcolor="#FFFFFF" colspan="5"><font size="2">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="100%" height="0" bgcolor="#FFFFFF" colspan="5"><font size="2">See Summary of
    Significant Accounting Policies and Notes to Financial Statements.</font></td>
  </tr>
</table>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div>

<table height="276" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td vAlign="middle" width="100%" height="0" colspan="8" align="center" bgcolor="#00FFFF"><font
    size="1"><b>Zaxis International Inc.</b></font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0" colspan="8" align="center"><font size="1"><a
    name="Consolidated Statements of Stockholders' Deficiency">Consolidated Statements of
    Stockholders' Deficiency</a>&nbsp; <a href="#Financial Statements">Back to Table of
    Contents</a></font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0" colspan="8" align="center"><font size="1">&nbsp;
    </font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"></td>
    <td vAlign="middle" width="20%" height="0" colspan="3"><p align="center"><font size="1">Common
    Stock</font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">Additional</font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="8%" height="0" align="right"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"></td>
    <td vAlign="middle" width="10%" height="0"><p align="right"><font size="1">Number of</font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="8%" height="0"><p align="right"><font size="1">Stated Or</font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">Paid-In</font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="8%" height="0"><p align="right"><font size="1">Accumulated</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"></td>
    <td vAlign="middle" width="10%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="right"><font size="1">Shares</font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="8%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="right"><font size="1">Par Value</font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"
    style="border-bottom: 1px solid rgb(0,0,0)"><p align="right"><font size="1">Capital</font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="8%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="right"><font size="1">Deficit</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0" bgcolor="#00FFFF"><font size="1">Balance at
    December 31, 2000</font></td>
    <td vAlign="middle" align="right" width="10%" height="0" bgcolor="#00FFFF"><p
    align="right"><font size="1">9,866,773</font></td>
    <td vAlign="middle" align="right" width="2%" height="0" bgcolor="#00FFFF"><font size="1">$</font></td>
    <td vAlign="middle" align="right" width="8%" height="0" bgcolor="#00FFFF"><font size="1">98,668</font></td>
    <td vAlign="middle" align="right" width="2%" height="0" bgcolor="#00FFFF"><font size="1">$</font></td>
    <td vAlign="middle" align="right" width="8%" height="0" bgcolor="#00FFFF"><p align="right"><font
    size="1">9,816,530</font></td>
    <td vAlign="middle" align="right" width="2%" height="0" bgcolor="#00FFFF"><font size="1">$</font></td>
    <td vAlign="middle" align="right" width="8%" height="0" bgcolor="#00FFFF"><font size="1">(11,798,385)</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp; </font></td>
    <td vAlign="middle" align="right" width="10%" height="0"></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Shares issued for
    cash </font></td>
    <td vAlign="middle" align="right" width="10%" height="0"><font size="1">3,100,000</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">31,000</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">288,000</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">-</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Shares issued for
    services</font></td>
    <td vAlign="middle" align="right" width="10%" height="0"><font size="1">283,558</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">2,836</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">76,105</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Shares issued on
    conversion of notes</font></td>
    <td vAlign="middle" align="right" width="10%" height="0"><font size="1">2,965,292</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">29,653</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">770,976</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">-</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Value of preferred
    share beneficial conversion future</font></td>
    <td vAlign="middle" align="right" width="10%" height="0"><font size="1">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">56,666</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">-</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Preferred share
    accretion</font></td>
    <td vAlign="middle" align="right" width="10%" height="0"><font size="1">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">(18,467)</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">-</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Fair value of
    warrants issued for services</font></td>
    <td vAlign="middle" align="right" width="10%" height="0"><font size="1">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">65,605</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="8%" height="0"><font size="1">-</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Net loss</font></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0"><font size="1">-</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">-</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">-</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">(199,705)</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0" bgcolor="#00FFFF"><font size="1">Balance at
    December 31, 2001</font></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#00FFFF"><font size="1">16,215,623</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#00FFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0" bgcolor="#00FFFF"><font size="1">162,156</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#00FFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0" bgcolor="#00FFFF"><font size="1">11,055,415</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#00FFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0" bgcolor="#00FFFF"><font size="1">(11,998,090)</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; </font></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0"></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Shares issued for
    services</font></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0"><font size="1">30,000</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">300</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">1,930</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">-</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Effect of
    &quot;Fresh Start&quot; accounting</font></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0"><font size="1">-</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">-</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">(11,219,801)</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">11,351,323</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0"><font size="1">&nbsp;&nbsp; Net income </font></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0"><font size="1">-</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">-</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">-</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0"><font size="1">646,767</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="60%" height="0" bgcolor="#00FFFF"><font size="1">Balance at
    December 31, 2002</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#00FFFF"><font size="1">16,245,623</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#00FFFF"><font size="1">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0" bgcolor="#00FFFF"><font size="1">162,456</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#00FFFF"><font size="1">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0" bgcolor="#00FFFF"><font size="1">(162,456)</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#00FFFF"><font size="1">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="8%"
    height="0" bgcolor="#00FFFF"><font size="1">0</font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0" colspan="8"><font size="1"><strong>&nbsp; </strong></font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0" colspan="8"><font size="1">See notes to the
    consolidated financial statements.</font></td>
  </tr>
</table>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div>

<p ALIGN="center"><font size="2"><b>Zaxis International Inc.</b><br>
<a name="BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES">BACKGROUND AND SIGNIFICANT
ACCOUNTING POLICIES</a><a name="BACKGROUND ANDSIGNIFICANT ACCOUNTING POLICIES"> </a></font><a
href="#Financial Statements"><font size="1">Back to Table of Contents</font></a><font
size="2"><br>
December 31, 2002</font></p>

<p ALIGN="left"><b><font size="2">The Company</font></b></p>
<font size="2">

<p ALIGN="JUSTIFY">Zaxis International Inc.(&quot;International&quot;) was incorporated in
California in 1984 and subsequently</p>

<p ALIGN="JUSTIFY">chartered in Delaware in 1985.Prior to filing for bankruptcy under
chapter 7, Zaxis manufactured and distributed products used in a molecular separation
process known as electrophoresis, a procedure used in research, industrial and clinical
laboratories worldwide. </p>
<i><u>

<p ALIGN="JUSTIFY">Bankruptcy Proceedings:</u></i><b> </b>On November 6, 2002, the
Registrant filed a voluntary Chapter 7 petition under the U.S. Bankruptcy Code in the U.S.
Bankruptcy Court Northern District of Ohio (case no. 02-55160. As a result of the filing,
all of our properties were transferred to a United States Trustee and we terminated all of
our business operations. The Bankruptcy Trustee has disposed of all of the assets. On
October 13, 2004, the Bankruptcy Court approved an Order confirming the sale of debtor's
interest in personal property to Park Avenue Group, Inc.</p>
<u><i>

<p ALIGN="JUSTIFY">Basis of Presentation:</i></u><b> </b>We adopted
&quot;fresh-start&quot; accounting as of November 7, 2002 in accordance with procedures
specified by AICPA Statement of Position (&quot;SOP&quot;) No. 90-7, &quot;Financial
Reporting by Entities in Reorganization under the Bankruptcy Code. The results of the
discontinued component have been reclassified from continuing operations. The
reclassification reduces sales for December 31, 2002 by $718,444 and related expenses by
$1,114,015.</p>

<p ALIGN="JUSTIFY"><b>Significant Accounting Policies</b></p>

<p ALIGN="JUSTIFY"><i><u>Use of Estimates</u></i>The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statement and
the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from the estimates.</p>
<i><u>

<p ALIGN="JUSTIFY">Cash and Cash Equivalents</u>: </i>For financial statement presentation
purposes, the Company considers those short-term, highly liquid investments with original
maturities of three months or less to be cash or cash equivalents.</p>
<u><i>

<p ALIGN="JUSTIFY">Property and Equipment</i></u> New property and equipment are recorded
at cost. Property and equipment included in the bankruptcy proceedings and transferred to
the Trustee had been valued at liquidation value. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally 5 years.
Expenditures for renewals and betterments are capitalized. Expenditures for minor items,
repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or
retirement due to obsolescence is reflected in the operating results in the period the
event takes place.</p>
<i><u>

<p ALIGN="JUSTIFY">Valuation of Long-Lived Assets</u>:</i> We review the recoverability of
our long-lived assets including equipment, goodwill and other intangible assets, when
events or changes in circumstances occur that indicate that the carrying value of the
asset may not be recoverable. The assessment of possible impairment is based on our
ability to recover the carrying value of the asset from the expected future pre-tax cash
flows (undiscounted and without interest charges) of the related operations. If these cash
flows are less than the carrying value of such asset, an impairment loss is recognized for
the difference between estimated fair value and carrying value. Our primary measure of
fair value is based on discounted cash flows. The measurement of impairment requires
management to make estimates of these cash flows related to long-lived assets, as well as
other fair value determinations.</p>
<i><u>

<p ALIGN="JUSTIFY">Stock Based Compensation:</u> </i>Stock-based awards to non-employees
are accounted for using the fair value method in accordance with SFAS No.&nbsp;123, <i>Accounting
for Stock-Based Compensation</i>, and EITF Issue No.&nbsp;96-18, <i>Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling Goods or Services</i>. </p>

<p ALIGN="JUSTIFY">We account for stock-based awards to employees using the intrinsic
value method in accordance with APB Opinion No.&nbsp;25 and FIN No. 44. As permitted by
SFAS No.&nbsp;123, as amended by SFAS No.&nbsp;148, we have chosen to continue to account
for our employee stock-based compensation plans under APB Opinion No.&nbsp;25 and provide
the expanded disclosures specified in SFAS No.&nbsp;123.</p>
<i><u>

<p ALIGN="JUSTIFY">Fair Value of Financial Instruments</u>:</i> Statements of Financial
Accounting Standards No. 107, &quot;Disclosures about Fair Value of Financial
Instruments,&quot; requires disclosure of fair value information about financial
instruments. Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of April 30, 2005. The
respective carrying value of certain on-balance sheet financial instruments approximated
their fair values. </p>

<p ALIGN="JUSTIFY">These financial instruments include cash and cash equivalents, accounts
payable and accrued expenses. Fair values were assumed to approximate carrying values for
these financial instruments since they are short-term in nature and their carrying amounts
approximate fair values or they are receivable or payable on demand.</p>
<i><u>

<p ALIGN="JUSTIFY">Earnings per Common Share</u>:</i> Basic net loss per share is computed
using the weighted average number of common shares outstanding during the period. Diluted
net loss per common share is computed using the weighted average number of common and
dilutive equivalent shares outstanding during the period. Dilutive common equivalent
shares consist of options to purchase common stock (only if those options are exercisable
and at prices below the average share price for the period) and shares issuable upon the
conversion of our Preferred Stock. Due to the net losses reported, dilutive common
equivalent shares were excluded from the computation of diluted loss per share, as
inclusion would be anti-dilutive for the periods presented.</p>

<p ALIGN="JUSTIFY">There were no common equivalent shares required to be added to the
basic weighted average shares outstanding to arrive at diluted weighted average shares
outstanding in 2002 or 2001. </p>
<i><u>

<p ALIGN="JUSTIFY">Income Taxes:</u> </i>The Company accounts for income taxes in
accordance with Statement of Financial Accounting Standards No. 109, &quot;Accounting for
Income Taxes,&quot; (&quot;SFAS 109&quot;) which requires recognition of estimated income
taxes payable or refundable on income tax returns for the current year and for the
estimated future tax effect attributable to temporary differences and carry-forwards.
Measurement of deferred income tax is based on enacted tax laws including tax rates, with
the measurement of deferred income tax assets being reduced by available tax benefits not
expected to be realized.</p>
<b>

<p ALIGN="JUSTIFY">Recent Accounting Pronouncements</b></p>

<p ALIGN="JUSTIFY">.In June 2002, the FASB issued SFAS No. 146, &quot;Accounting for Exit
or Disposal Activities.&quot; This statement addresses the recognition, measurement, and
reporting of costs associated with exit and disposal activities. SFAS No. 146 is
applicable to restructuring activities and costs related to terminating a contract that is
not a capital lease and one time benefit arrangements received by employees who are
involuntarily terminated. SFAS No. 146 supersedes EITF Issue No. 94-3, &quot;Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring).&quot; Under SFAS No. 146 the cost
associated with an exit or disposal activity is recognized in the periods in which it is
incurred rather than at the date the Company committed to the exit plan. This statement is
effective for exit or disposal activities initiated after December 31, 2002, with earlier
adoption encouraged. Previously issued financial statements will not be restated. The
provisions of EITF Issue No. 94-3 will continue to apply for exit plans initiated prior to
the adoption of SFAS No. 146. As of January 1, 2003, management has determined that there
will be no current impact of SFAS No. 146 on the Company's financial statements.</p>

<p ALIGN="JUSTIFY">In January 2003, FASB issued Interpretation No. 46, <i>Consolidation of
Variable Interest Entities </i>(&quot;FIN 46&quot;). In general, a variable interest
entity is a corporation, partnership, trust or any other legal structure used for business
purposes that either (a) does not have equity investors with voting rights or (b) has
equity investors that do not provide sufficient financial resources for the entity to
support its activities. FIN 46 requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the investors do not have the
characteristics of a controlling financial interest or do not have sufficient equity at
risk for the entity to finance its activities without additional subordinated financial
support from other parties. The consolidation requirements of FIN 46 apply immediately to
variable interest entities created after January 31, 2003. The Company adopted the
provisions of FIN 46 effective February 1, 2003 and such adoption did not have a material
impact on its consolidated financial statements since it currently has no variable
interest entities. </p>
<b>

<p ALIGN="center">ZAXIS INTERNATIONAL Inc.<br>
</b>NOTES TO FINANCIAL STATEMENTS<br>
December 31, 2002</p>
<b>

<p ALIGN="JUSTIFY">1. &quot;Fresh Start&quot; Accounting: </b></p>

<p ALIGN="JUSTIFY">On November 6, 2002 all assets were transferred to the chapter 7
trustee in settlement of all outstanding corporate obligations. We adopted
&quot;fresh-start&quot; accounting as of November 7, 2002 in accordance with procedures
specified by AICPA Statement of Position (&quot;SOP&quot;) No. 90-7, &quot;Financial
Reporting by Entities in Reorganization under the Bankruptcy Code.&quot;</p>

<p ALIGN="JUSTIFY">All results for periods subsequent to November 7, 2002 are referred to
as those of the &quot;Successor Company&quot;. The results of operations and cash flows as
presented on the 2002 financial statements reflect the predecessor company. The successor
company had no transactions between November 7 and the end of the reporting period,
December 31, 2002. </p>

<p ALIGN="JUSTIFY">In accordance with SOP No. 90-7, the reorganized value of the Company
was allocated to the Company's assets based on procedures specified by SFAS No. 141,
&quot;Business Combinations&quot;. Each liability existing at the plan sale date, other
than deferred taxes, was stated at the present value of the amounts to be paid at
appropriate market rates. It was determined that the Company's reorganization value
computed immediately before November 6, 2002 was $0. We adopted &quot;fresh-start&quot;
accounting because holders of existing voting shares immediately before filing and
confirmation of the sale received less than 50% of the voting shares of the emerging
entity and its reorganization value is less than its post-petition liabilities and allowed
claims. </p>
<b>

<p ALIGN="JUSTIFY">2. Bankruptcy Proceedings</b></p>

<p ALIGN="JUSTIFY">On November 6, 2002, the Registrant filed a voluntary Chapter 7
petition under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court Northern District of
Ohio (case no. 02-55160). On October 13, 2004, the Bankruptcy Court approved an Order
confirming the sale of debtor's interest in personal property to Park Avenue Group Inc.
The material terms of the transaction confirmed by Bankruptcy Court authorized Park Avenue
Group to appoint new members to the Registrant's board of directors and authorized those
newly-appointed board of directors be to:</p>

<ul>
  <li>amend the Article of Incorporation to increase the number of authorized shares to
    100,000,000 shares;</li>
  <li>amend the Article of Incorporation to change the par value of our common and preferred
    stock to $0.0001;</li>
  <li>issue up to 30,000,000 shares of common stock, par value $0.0001 to the new management
    which management was appointed by the newly-constituted board of directors;</li>
  <li>implement a reverse split of the issued and outstanding shares in a ratio to be
    determined by the board of directors;</li>
  <li>cancel and extinguish all common share conversion rights of any kind, including without
    limitation, warrants, options, convertible bonds, other convertible debt instruments and
    convertible preferred stock; and</li>
  <li>cancel and extinguish all preferred shares of every series and accompanying conversion
    rights of any kind.</li>
</ul>

<p ALIGN="JUSTIFY">The accounts of the former subsidiaries were not included in the sale
and have not been carried forward. </p>
<b>

<p ALIGN="JUSTIFY">Resultant Change in Control: </b>In connection with the Order
confirming the sale of debtor's interest in certain intangible personal property to Park
Avenue Group Inc. approved by the U.S. Bankruptcy Court Northern District of Ohio on
October 13, 2004, the Court authorized a change in control pursuant to which Ivo Heiden
became our sole director on October 13, 2004, and was appointed president by the new board
of directors on October 19, 2004. The Court order further provided that the sale was free
and clear of liens, claims and interests of others and that the sale was free and clear of
any and all other real or personal property interests, including any interests in Zaxis's
subsidiaries. The Bankruptcy Court Order provided that the existing officers and directors
were deemed removed from office and also authorized the appointment of new members to the
board of directors. </p>

<p ALIGN="JUSTIFY">On November 30, 2004 the board of directors approved and authorized an
amendment of our Article of Incorporation to establish a series B convertible preferred
stock, par value $0.0001 (&quot;Series B Convertible Preferred Stock&quot;). The holders
of the Series B Convertible Preferred Stock shall be entitled to 20 (twenty) votes on all
matters submitted to a vote of the stockholders of the Registrant. The holders of Series B
Convertible Preferred Stock shall have the right to convert each share into 20 (twenty)
shares of common stock upon their written request at any time. On December 7, 2004, the
board of directors authorized 2,000,000 shares of Series B Convertible Preferred Stock and
issued 840,000 Series B Convertible Preferred Stock that resulted in a change in control.</p>
<b>

<p ALIGN="JUSTIFY">3. Income Taxes:</b></p>

<p ALIGN="JUSTIFY">Our net operating loss carryovers available to reduce future income
taxes were reduced or eliminated through our bankruptcy proceedings. We have adopted SFAS
109 which provides for the recognition of a deferred tax asset based upon the value the
loss carry-forwards will have to reduce future income taxes and management's estimate of
the probability of the realization of these tax benefits. </p>

<p ALIGN="JUSTIFY">Utilization of federal and state NOL and tax credit carry forwards may
be subject to a substantial annual limitation due to the ownership change limitations
provided by the Internal Revenue Code of 1986, as amended and similar state provisions.
The annual limitation may result in the expiration of NOL and tax credit carry forwards
before full utilization.</p>
<b>

<p ALIGN="JUSTIFY">4. Commitments: </b></p>

<p ALIGN="JUSTIFY">The Company, prior to its bankruptcy, was a party to numerous claims
and threatened litigation. As a result of the bankruptcy and the subsequent transfer by
the Bankruptcy Trustee of the Company&#146;s corporate shell entity free of all liens,
claims and encumbrances pursuant to Section 363(f) of the US Bankruptcy Code, the Company
is no longer party to any litigation.</p>

<p ALIGN="JUSTIFY">The Company is not a party to any leases and does not have any
commitments </p>

<p ALIGN="JUSTIFY"><b>4. Stockholders' Equity: </b></p>

<p ALIGN="JUSTIFY"><i>Common Stock</i></p>

<p ALIGN="JUSTIFY">In November, 2004, we modified our authorized shares of common stock to
100,000,000 par value $0.0001. All issued shares of common stock are entitled to vote on a
1 share/1 vote basis. </p>

<p ALIGN="JUSTIFY"><i>Preferred Stock</i></p>

<p ALIGN="JUSTIFY">On November, 2004 and pursuant to authority granted to it by the
bankruptcy court, the Board cancelled and extinguished all issued and outstanding
preferred stock. All related dividends obligations were also extinguished (the elimination
of this preferred stock has been reflected in the 2002 financial statements) and
authorized 10,000,000 new shares of preferred stock, $0.0001 par value that may be issued
in one or more series. The Board of Directors of the Corporation is authorized to fix the
powers, preferences, rights, qualifications, limitations or restrictions of the Preferred
Stock and any series thereof pursuant to Section 151 of the Delaware General Corporation
Law. On December 7, 2004, we issued of 840,000 shares of Series B Convertible Preferred
Stock, which resulted in a change in control. </p>

<p ALIGN="JUSTIFY">The Board of Directors of the Corporation is authorized to issue:</p>

<ul>
  <li>Up to one million shares of series A preferred stock, $0.0001 par value (&quot;Series A
    Preferred Stock&quot;), the holders of which shall have the right to appoint one (1)
    member to the Board of Directors of the Corporation. </li>
</ul>

<ul>
  <li>Up to two million shares of series B convertible preferred stock, $0.0001 par value
    (&quot;Series B Convertible Preferred Stock&quot;). The holders of the Series B
    Convertible Preferred Stock shall have the following voting rights: Each share of Series B
    Convertible Preferred Stock shall be entitled to 20 (twenty) votes on all matters
    submitted to a vote of the stockholders of the Corporation. </li>
</ul>

<p ALIGN="JUSTIFY">In the event the Corporation shall at any time</p>

<ul>
  <li>declare a dividend on the Common Stock payable in shares of Common Stock, </li>
  <li>subdivide the outstanding shares of Common Stock,</li>
  <li>combine the outstanding shares of Common Stock into a smaller number of shares or</li>
  <li>issue any of its shares of capital stock in a reclassification of the outstanding shares
    of Common Stock (including any such reclassification in connection with a consolidation or
    merger in which the Corporation is the continuing or surviving entity), </li>
</ul>

<p ALIGN="JUSTIFY">then in each such case the number of votes per share to which holders
of shares of Series B Convertible Preferred Stock would have been entitled to immediately
prior to such event must be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. The holders of Series B Convertible Preferred
Stock have the right to convert each share into 20 (twenty) shares of Common Stock upon
their written request at any time. </p>
<i>

<p ALIGN="JUSTIFY">Stock Based Compensation</i></p>

<p ALIGN="JUSTIFY">Stock based compensation is accounted for by using the intrinsic value
based method in accordance with Accounting Principles Board Opinion No. 25,
&quot;Accounting for Stock Issued to Employees&quot; (&quot;APB 25&quot;). The Company has
adopted Statements of Financial Accounting Standards No. 123, &quot;Accounting for Stock
Based Compensation, (&quot;SFAS 123&quot;) which allows companies to either continue to
account for stock based compensation to employees under APB 25, or adopt a fair value
based method of accounting. The Company has elected to continue to account for stock based
compensation to employees under APB 25. APB 25 recognizes compensation expense for options
granted to employees only when the market price of the stock exceeds the grant exercise
price at the date of the grant. The amount reflected as compensation expense is measured
as the difference between the exercise price and the market value at the date of the
grant. </p>

<p ALIGN="JUSTIFY">There are no employee or non-employee options granted. </font></p>
</div>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>exh31_1.htm
<TEXT>
<html>

<head>
<title>Exhibit 31.1</title>
</head>

<body>

<h3 align="center"><font size="2">CERTIFICATIONS</font></h3>

<p><font size="2">I, Ivo Heiden, certify that:<br>
</font></p>

<blockquote>
  <p><font size="2">(1) I have reviewed this Annual Report of Zaxis International Inc.; </font></p>
  <p><font size="2">(2) Based on my knowledge, this report does not contain any untrue
  statement of a material fact or omit to state a material fact necessary to make the
  statements made, in light of the circumstances under which such statements were made, not
  misleading with respect to the period covered by this report; </font></p>
  <p><font size="2">(3) Based on my knowledge, the financial statements, and other financial
  information included in this report, fairly present in all material respects the financial
  condition, results of operations and cash flows of the small business issuer as of, and
  for, the periods presented in this report; </font></p>
  <p><font size="2">(4) I am responsible for establishing and maintaining disclosure
  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
  internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
  15d-15(f)) for the small business issuer and have: </font></p>
  <blockquote>
    <p><font size="2">(a) Designed such disclosure controls and procedures, or caused such
    disclosure controls and procedures to be designed under our supervision, to ensure that
    material information relating to the small business issuer, including its consolidated
    subsidiaries, is made known to us by others within those entities, particularly during the
    period in which this report is being prepared; </font></p>
    <p><font size="2">(b) Designed such internal control over financial reporting, or caused
    such internal control over financial reporting to be designed under our supervision, to
    provide reasonable assurance regarding the reliability of financial reporting and the
    preparation of financial statements for external purposes in accordance with generally
    accepted accounting principles; </font></p>
    <p><font size="2">(c) Evaluated the effectiveness of the small business issuer's
    disclosure controls and procedures and presented in this report our conclusions about the
    effectiveness of the disclosure controls and procedures, as of the end of the period
    covered by this report based on such evaluation; and </font></p>
    <p><font size="2">(d) Disclosed in this report any change in the small business issuer's
    internal control over financial reporting that occurred during the small business issuer's
    most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case
    of an Quarterly report) that has materially affected, or is reasonably likely to
    materially affect, the small business issuer's internal control over financial reporting;
    and </font></p>
  </blockquote>
  <p><font size="2">(5) I have disclosed, based on our most recent evaluation of internal
  control over financial reporting, to the small business issuer's auditors and the audit
  committee of the small business issuer's board of directors (or persons performing the
  equivalent functions): </font></p>
  <blockquote>
    <p><font size="2">(a) All significant deficiencies and material weaknesses in the design
    or operation of internal control over financial reporting which are reasonably likely to
    adversely affect the small business issuer's ability to record, process, summarize and
    report financial information; and </font></p>
    <p><font size="2">(b) Any fraud, whether or not material, that involves management or
    other employees who have a significant role in the small business issuer's internal
    control over financial reporting. </font></p>
  </blockquote>
</blockquote>

<p><font size="2">Date: May 16, 2005 <br>
</font></p>

<p><font size="2"><u>/s/ Ivo Heiden<br>
</u>[Signature] <br>
President, CFO and Chairman<br>
[Title] </font></p>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>3
<FILENAME>exh32_1.htm
<TEXT>
<html>

<head>
<title>Exhibit 32.1</title>
</head>

<body>

<p align="left"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">Exhibit 32.1</font></p>

<p align="center"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">CERTIFICATION
PURSUANT TO<br>
18 U.S.C. SECTION 1350,<br>
AS ADOPTED PURSUANT TO SECTION 906<br>
OF THE SARBANES-OXLEY ACT OF 2002</font></p>

<p style="text-align: justify"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">In
connection with the Annual Report of Zaxis International Inc. (the &#147;Company&#148;) on
Form 10-KSB for the year ended December 31, 2002 (the &#147;Report&#148;), as filed with
the Securities and Exchange Commission on the date hereof, I, Ivo Heiden, President, CFO
and Chairman of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:</font></p>

<p style="text-align: justify"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">1. The
Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and</font></p>

<p style="text-align: justify"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">2. The
information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.</font></p>

<p>&nbsp;</p>

<p><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">/s/ Ivo Heiden</font></p>

<p align="left"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">Ivo Heiden <br>
President, CFO and Chairman<br>
Dated: May 16, 2005</font></p>

<p><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">A signed original of this written
statement required by Section 906 has been provided to Zaxis International Inc. and will
be retained by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.</font></p>
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