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<SEC-DOCUMENT>0001295345-08-000093.txt : 20080912
<SEC-HEADER>0001295345-08-000093.hdr.sgml : 20080912
<ACCEPTANCE-DATETIME>20080912154253
ACCESSION NUMBER:		0001295345-08-000093
CONFORMED SUBMISSION TYPE:	10KSB/A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20071231
FILED AS OF DATE:		20080912
DATE AS OF CHANGE:		20080912

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ZAXIS INTERNATIONAL INC
		CENTRAL INDEX KEY:			0000797542
		STANDARD INDUSTRIAL CLASSIFICATION:	BLANK CHECKS [6770]
		IRS NUMBER:				680080601
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10KSB/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-15746
		FILM NUMBER:		081069416

	BUSINESS ADDRESS:	
		STREET 1:		6399 WILSHIRE BOULEVARD
		STREET 2:		SUITE 1019
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90048
		BUSINESS PHONE:		(323) 951-0575

	MAIL ADDRESS:	
		STREET 1:		6399 WILSHIRE BOULEVARD
		STREET 2:		SUITE 1019
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90048

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INFERGENE CO
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB/A
<SEQUENCE>1
<FILENAME>zxsi_10ksb.htm
<DESCRIPTION>AMENDED ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2007
<TEXT>
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<title>zxsi</title>
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<p ALIGN="CENTER"><b><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="4">UNITED STATES<br>
SECURITIES AND EXCHANGE COMMISSION<br>
</font></b><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="3">Washington, D.C. 20549<br>
</font><font SIZE="4" FACE="Times New Roman, Times, Serif">___________________<br>
<font face="Times New Roman, Times, Serif" size="1"><br>
</font><strong>FORM 10-KSB/A<br>
</strong></font><font face="Times New Roman, Times, Serif" size="1">________________________________</font></p>

<p style="MARGIN: 0in 0in 0pt 0.5in; COLOR: windowtext; TEXT-INDENT: -0.5in"
align="center"><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt" face="Wingdings" size="3">&#253</font><font
style="FONT-WEIGHT: bold; FONT-SIZE: 3pt" size="1"> <b>&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" align="center"><font size="1">&nbsp; </font></p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center" align="center"><font
style="FONT-SIZE: 10pt" face="Times New Roman" size="2">For the fiscal year ended December
31, 2007</font></p>

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext" align="center"><font size="1">&nbsp; </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">&#168</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"><font
size="1">&nbsp; </font></p>

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

<p style="MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center" align="center"><font
size="1">&nbsp; </font></p>

<p style="FONT-SIZE: 10pt; MARGIN: 0in 0in 0pt; COLOR: windowtext; TEXT-ALIGN: center"
align="center"><font style="FONT-SIZE: 10pt" face="Times New Roman" size="2">Commission
file number 0-15476<br>
</font><font size="1">&nbsp; </font></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="1">(Exact Name Of Registrant
As Specified In Its Charter)</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%">
  <tr>
    <td width="50%" align="center"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u>Delaware</u></font></td>
    <td width="50%" align="center"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u>68-0080601</u></font></td>
  </tr>
  <tr>
    <td width="50%" align="center"><font size="1">(State of Incorporation)</font></td>
    <td width="50%" align="center"><font size="1">(I.R.S. Employer Identification No.)</font></td>
  </tr>
  <tr>
    <td width="50%" align="center"><font size="1">&nbsp; </font></td>
    <td width="50%" align="center"><font size="1">&nbsp; </font></td>
  </tr>
  <tr>
    <td width="50%" align="center"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u>6399
    Wilshire Boulevard, Suite 1019, Los Angeles, CA</u></font></td>
    <td width="50%" align="center"><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><u>90048</u></font></td>
  </tr>
  <tr>
    <td width="50%" align="center"><font size="1">(Address of Principal Executive Offices)</font></td>
    <td width="50%" align="center"><font size="1">(ZIP Code)</font></td>
  </tr>
</table>

<p align="center">&nbsp;<font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">Registrant's
Telephone Number, Including Area Code: (323) 951-0575</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;</font><font
size="2" FACE="WINGDINGS">&#120</font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;No&nbsp;</font><font
size="2" FACE="WINGDINGS">&#168</font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><br>
</font><br>
<font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">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;</font><font size="2" FACE="WINGDINGS">&#168</font><font
FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><br>
<br>
At September 4, 2008, the aggregate market value of the 211,331 common stock held by
non-affiliates of the Registrant was approximately $211,331. <br>
At September 4, 2008, the Registrant had 1,051,340 shares of common stock outstanding. </font><br>
<font size="2">Issuer's revenues for its most recent fiscal year: $0.</font></p>

<p ALIGN="JUSTIFY"><font style="FONT-SIZE: 10pt" face="Times New Roman" size="2">Indicate
whether the registrant is an accelerated filer (as defined in Rule&nbsp;12b-2 of the
Exchange Act). Yes&nbsp;</font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;</font><font
size="2" FACE="WINGDINGS">&#168</font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;No&nbsp;</font><font
size="2" FACE="WINGDINGS">&#120</font><font style="FONT-SIZE: 10pt" face="Times New Roman"
size="2">&nbsp;<br>
</font><font size="2">Indicate whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). </font><font FACE="TIMES NEW ROMAN, TIMES, SERIF"
SIZE="2">Yes&nbsp;</font><font size="2" FACE="WINGDINGS">&#120</font><font
FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;No&nbsp;</font><font size="2"
FACE="WINGDINGS">&#168</font></p>

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</div>

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

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<b><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="3">

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

<p ALIGN="CENTER"><a name="TABLE OF CONTENTS"><font size="2"><b>TABLE OF CONTENTS</b></font></a></p>

<table ALIGN="CENTER" CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%" height="0%">
  <tr VALIGN="BOTTOM">
    <th nowrap ALIGN="LEFT" height="59"><font face="Times New Roman" size="2">Item</font><hr
    SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
    </th>
    <th height="59"></th>
    <th nowrap ALIGN="LEFT" height="59"><font face="Times New Roman" size="2">Description</font><hr
    SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
    </th>
    <th ALIGN="LEFT" height="59"></th>
    <th COLSPAN="3" nowrap height="59"><p align="right"><font face="Times New Roman" size="2">Page</font></p>
    <hr SIZE="1" NOSHADE COLOR="#000000" align="right" width="60%">
    </th>
  </tr>
  <tr>
    <td ALIGN="left" WIDTH="109%" bgcolor="#FFFFFF" height="0" colspan="7"><font
    face="Times New Roman" size="2"><p align="center"><strong>PART I</strong></font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#ccffcc" height="0"><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%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font face="Times New Roman" size="2">&nbsp;
    <a href="zxsi_10ksb.htm#ITEM 1. DESCRIPTION OF BUSINESS">DESCRIPTION
    OF BUSINESS</a></font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#ccffcc" height="0"><font size="2">3</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#ccffcc">
    <td ALIGN="LEFT" WIDTH="12%" height="0"><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%" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" height="0"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a
    href="zxsi_10ksb.htm#ITEM 2. DESCRIPTION OF PROPERTIES">DESCRIPTION
    OF PROPERTY</a></font></p>
    </div></td>
    <td WIDTH="3%" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">11</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#ccffcc" height="0"><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%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font face="Times New Roman" size="2">&nbsp;
    <a href="zxsi_10ksb.htm#ITEM 3. LEGAL PROCEEDING">LEGAL
    PROCEEDINGS</a></font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#ccffcc" height="0"><font size="2">11</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#ccffcc">
    <td ALIGN="LEFT" WIDTH="12%" height="0"><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%" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" height="0"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a
    href="zxsi_10ksb.htm#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%" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">11</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="CENTER" WIDTH="12%" COLSPAN="7" height="60"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font face="Times New Roman" size="2">&nbsp;
    <strong>PART II</strong></font></p>
    </div></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#ccffcc">
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#ccffcc" height="0"><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%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font face="Times New Roman" size="2">&nbsp;
    <a
    href="zxsi_10ksb.htm#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%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#ccffcc" height="0"><font size="2">12</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%" height="0"><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%" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" height="0"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a
    href="zxsi_10ksb.htm#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%" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">12</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#ccffcc">
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#ccffcc" height="0"><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%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font face="Times New Roman" size="2">&nbsp;
    <a href="zxsi_10ksb.htm#ITEM 7.&nbsp;FINANCIAL STATEMENTS">FINANCIAL
    STATEMENTS</a></font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" VALIGN="TOP" bgcolor="#ccffcc" height="0"><font size="2">13</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%" height="0"><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%" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" height="0"><div STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font
    face="Times New Roman" size="2">&nbsp; <a
    href="zxsi_10ksb.htm#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%" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0"><font size="2">13</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#ccffcc">
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#ccffcc" height="0"><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%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font face="Times New Roman" size="2">&nbsp;
    <a href="zxsi_10ksb.htm#ITEM 8A.&nbsp;CONTROLS AND PROCEDURES">CONTROLS
    AND PROCEDURES</a></font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#ccffcc" height="0"><font size="2">13</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#ccffcc" height="0"><font
    face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#FFFFFF" height="0"><font size="2">ITEM 8.B</font></td>
    <td WIDTH="3%" bgcolor="#FFFFFF" height="0"></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#FFFFFF" height="0"><font size="2">&nbsp; <a
    href="zxsi_10ksb.htm#ITEM 8B. OTHER INFORMATION">OTHER INFORMATION</a></font></td>
    <td WIDTH="3%" bgcolor="#FFFFFF" height="0"></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#FFFFFF" height="0"></td>
    <td ALIGN="RIGHT" bgcolor="#FFFFFF" height="0"><font size="2">14</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#FFFFFF" height="0"></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="CENTER" WIDTH="12%" COLSPAN="7" height="60"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font face="Times New Roman" size="2">&nbsp;
    <strong>PART III</strong></font></p>
    </div></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#ccffcc">
    <td ALIGN="LEFT" WIDTH="12%" height="0" bgcolor="#FFFFFF"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font size="2">ITEM 9.</font></p>
    </div></td>
    <td WIDTH="3%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" height="0" bgcolor="#FFFFFF"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font size="2">&nbsp; <a
    href="zxsi_10ksb.htm#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%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0" bgcolor="#FFFFFF"><font size="2">15</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font size="2">ITEM 10.</font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font size="2">&nbsp; <a
    href="zxsi_10ksb.htm#ITEM 10. EXECUTIVE COMPENSATION">EXECUTIVE
    COMPENSATION</a></font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#ccffcc" height="0"><font size="2">15</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#ccffcc">
    <td ALIGN="LEFT" WIDTH="12%" height="0" bgcolor="#FFFFFF"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font size="2">ITEM 11.</font></p>
    </div></td>
    <td WIDTH="3%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" height="0" bgcolor="#FFFFFF"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font size="2">&nbsp; <a
    href="zxsi_10ksb.htm#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%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0" bgcolor="#FFFFFF"><font size="2">15</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font size="2">ITEM 12.</font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font size="2">&nbsp; <a
    href="zxsi_10ksb.htm#ITEM 12.&nbsp;CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS">CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS</a></font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#ccffcc" height="0"><font size="2">16</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP" BGCOLOR="#ccffcc">
    <td ALIGN="LEFT" WIDTH="12%" height="0" bgcolor="#FFFFFF"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font size="2">ITEM 13.</font></p>
    </div></td>
    <td WIDTH="3%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" height="0" bgcolor="#FFFFFF"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font size="2">&nbsp; <a
    href="zxsi_10ksb.htm#ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K">EXHIBITS
    AND REPORTS ON FORM 8-K</a></font></p>
    </div></td>
    <td WIDTH="3%" height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" height="0" bgcolor="#FFFFFF"><font size="2">16</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap height="0" bgcolor="#FFFFFF"><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr VALIGN="TOP">
    <td ALIGN="LEFT" WIDTH="12%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><p><font size="2">ITEM 14.</font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="LEFT" WIDTH="75%" bgcolor="#ccffcc" height="0"><div
    STYLE="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><p><font size="2">&nbsp; <a
    href="zxsi_10ksb.htm#ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES">PRINCIPAL
    ACCOUNTING FEES AND SERVICES</a></font></p>
    </div></td>
    <td WIDTH="3%" bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td WIDTH="5%" ALIGN="RIGHT" nowrap bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td ALIGN="RIGHT" bgcolor="#ccffcc" height="0"><font size="2">16</font></td>
    <td WIDTH="5%" ALIGN="LEFT" nowrap bgcolor="#ccffcc" height="0"><font size="2">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
</table>

<p>&nbsp;</p>
<b><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="3">

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

<hr NOSHADE SIZE="5">
</div>

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

<hr NOSHADE SIZE="5">

<p ALIGN="center"><strong><font size="2">Cautionary Statement regarding Forward-Looking
Statements </font></strong></p>

<p ALIGN="left" style="text-align: justify"><font size="2">This Annual Report on Form
10-KSB includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. The Registrant has based these forward-looking statements on its current
expectations and projections about future events. These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about the Registrant
that may cause its actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some cases, you
can identify forward-looking statements by terminology such as &quot;may,&quot;
&quot;will,&quot; &quot;should,&quot; &quot;could,&quot; &quot;would,&quot;
&quot;expect,&quot; &quot;plan,&quot; &quot;anticipate,&quot; &quot;believe,&quot;
&quot;estimate,&quot; &quot;continue,&quot; or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy include, but are
not limited to, those described in this Annual Report on Form 10-KSB and in the
Registrant's other Securities and Exchange Commission filings. </font></p>

<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="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p align="left"><strong><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Organizational
History and General Background of the Registrant</font></strong></p>

<p align="justify" style="text-align: justify"><font size="2">Zaxis International Inc. was
incorporated in Ohio in 1989</font><font size="2" color="#000000"> and is sometimes
referred to herein as &quot;we&quot;, &quot;us&quot;, &quot;our&quot;, &quot;Zaxis&quot;,
&quot;Company&quot; and the &quot;Registrant&quot;.</font><font size="2"> 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.</font></p>

<p align="justify"><font size="2">The Company was a biotechnology holding company that
operated its business through a wholly owned subsidiary. The Company 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 the Company's former research and development efforts as well as its
former sales and marketing efforts were targeted toward the consumables segment of this
market. The Company's core products were the pre-cast gels and reagents used in these
electrophoresis procedures.</font></p>

<p align="justify"><font size="2">The Company believed that its products were well
positioned to take advantage of rapidly growing markets. The Company was not able to
generate sufficient revenues to support its operating expenses during fiscal year 2002. In
addition, the Company 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. </font></p>

<p align="justify"><font size="2">On November 6, 2002, the Registrant filed a voluntary
petition under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court Northern District of
Ohio. On October 13, 2004, the Company emerged from bankruptcy free and clear of liens,
claims and other obligations.</font><font face="Times New Roman" size="2"></p>

<p style="text-align: justify"><font face="Times New Roman" size="2" color="#000000">The
court order authorized (i) that the existing officers and directors were deemed removed
from office; (ii) the appointment of new members to the Registrant's board of directors;
(iii) the amendment of Registrant's Certificate of Incorporation to increase the number of
authorized shares to 100,000,000 shares; (iv) the issuance 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; (v) the authority of the board
of directors to implement a reverse split of the issued and outstanding shares in a ratio
to be determined by the board of directors; (vi) the cancellation and extinguishment of
all common share conversion rights of any kind, including without limitation, warrants,
options, convertible bonds, other convertible debt instruments and convertible preferred
stock; and (vii) the cancellation and extinguishment of all preferred shares of every
series and accompanying conversion rights of any kind.</font></p>

<p style="text-align: justify"><font face="Times New Roman" size="2" color="#000000">As a
result of the Bankruptcy Court order, Ivo Heiden </font><font color="#000000">was
appointed </font><font face="Times New Roman" size="2" color="#000000">to the board of
director of the Registrant. Mr. Heiden was subsequently appointed as sole officer of the
Registrant (&quot;Management&quot;).</font></p>

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

<p align="justify"></font><font color="#000000" face="TIMES NEW ROMAN, TIMES, SERIF"
size="2">The Registrant has no present operations. Management determined to direct its
efforts and limited resources to pursue and effect a business combination.</font><font
face="Times New Roman" size="2"></p>

<p align="justify" style="text-align: justify"><font size="2">&nbsp;&nbsp;&nbsp; <em>Current
trends</em></font></p>

<p align="justify" style="text-align: justify"><font size="2">Management believes that as
a result of the relative uncertainty in the United States equity markets over the past few
years, many privately-held companies have been closed off from the public market and
traditional IPO's. During the past few years, many privately-held or public companies
attempted to divest non-core assets and divisions and valuations of these assets and
divisions have decreased significantly. Therefore, Management believes that there are
substantial business opportunities to effect attractive acquisitions. As a public entity
with its shares of common stock registered under the Exchange Act and publicly trading,
Management believes to be well positioned to identify target acquisitions and to effect a
business combination in order to take advantage of these current trends.</font></p>

<p align="justify"><font size="2">&nbsp;&nbsp;&nbsp; <em>Effecting a business combination</em></font></p>

<p align="justify" style="text-align: justify"><font size="2">Prospective buyers of the
Company's common stock will invest in the Company without an opportunity to evaluate the
specific merits or risks of any one or more business combinations. A business combination
may involve the acquisition of, or merger with, a company which needs to raise substantial
additional capital by means of being a publicly trading company, while avoiding what it
may deem to be adverse consequences of undertaking a public offering itself. These include
time delays, significant expense, loss of voting control and compliance with various
Federal and state securities laws. A business combination may involve a company which may
be financially unstable or in its early stages of development or growth.</font></p>

<p align="justify" style="text-align: justify"><em>&nbsp;&nbsp;&nbsp; <font size="2">The
Registrant has not identified a target business or target industry</font></em></p>

<p align="justify" style="text-align: justify"><font size="2">The Company's effort in
identifying a prospective target business will not be limited to a particular industry and
the Company may ultimately acquire a business in any industry Management deems
appropriate. To date, the Company has not selected any target business on which to
concentrate our search for a business combination. While the Company intends to focus on
target businesses in the United States, it is not limited to those entities and may
consummate a business combination with a target business outside of the United States.
Accordingly, there is no basis for investors in the Company's common stock to evaluate the
possible merits or risks of the target business or the particular industry in which we may
ultimately operate. To the extent we effect a business combination with a financially
unstable company or an entity in its early stage of development or growth, including
entities without established records of sales or earnings, we may be affected by numerous
risks inherent in the business and operations of financially unstable and early stage or
potential emerging growth companies. In addition, to the extent that we effect a business
combination with an entity in an industry characterized by a high level of risk, we may be
affected by the currently unascertainable risks of that industry. An extremely high level
of risk frequently characterizes many industries which experience rapid growth. In
addition, although the Company's Management will endeavor to evaluate the risks inherent
in a particular industry or target business, we cannot assure you that we will properly
ascertain or assess all significant risk factors.</font></p>

<p align="justify" style="text-align: justify">&nbsp;&nbsp;&nbsp; <em><font size="2">Sources
of target businesses</font></em></p>

<p align="justify" style="text-align: justify"><font size="2">The Registrant anticipates
that target business candidates will be brought to our attention from various unaffiliated
sources, including securities broker-dealers, investment bankers, venture capitalists,
bankers and other members of the financial community, who may present solicited or
unsolicited proposals. Our Management may also bring to our attention target business
candidates. While we do not presently anticipate engaging the services of professional
firms that specialize in business acquisitions on any formal basis, we may engage these
firms in the future, in which event we may pay a finder's fee or other compensation. In no
event, however, will we pay Management any finder's fee or other compensation for services
rendered to us prior to or in connection with the consummation of a business combination.</font></p>

<p align="justify" style="text-align: justify">&nbsp;&nbsp;&nbsp; <em><font size="2">Selection
of a target business and structuring of a business combination</font></em></p>

<p align="justify" style="text-align: justify">Management owns 72.86% of the issued and
outstanding shares and will have broad flexibility in identifying and selecting a
prospective target business. In evaluating a prospective target business, our Management
will consider, among other factors, the following:</p>
<font size="2">

<p><font FACE="wingdings">&#159;</font> financial condition and results of operation of
the target company;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> growth potential;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> experience and skill
of management and availability of additional personnel;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> capital requirements;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> competitive position;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> stage of development
of the products, processes or services;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> degree of current or
potential market acceptance of the products, processes or services;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> proprietary features
and degree of intellectual property or other protection of the products, processes or
services;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> regulatory environment
of the industry; and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> costs associated with
effecting the business combination.</font></p>

<p align="justify" style="text-align: justify"><font size="2">These criteria are not
intended to be exhaustive. Any evaluation relating to the merits of a particular business
combination will be based, to the extent relevant, on the above factors as well as other
considerations deemed relevant by our Management in effecting a business combination
consistent with our business objective. In evaluating a prospective target business, we
will conduct a due diligence review which will encompass, among other things, meetings
with incumbent management and inspection of facilities, as well as review of financial and
other information which will be made available to us.</font></p>

<p align="justify" style="text-align: justify"><font size="2">We will endeavor to
structure a business combination so as to achieve the most favorable tax treatment to us,
the target business and both companies' stockholders. We cannot assure you, however, that
the Internal Revenue Service or appropriate state tax authority will agree with our tax
treatment of the business combination. </font></p>

<p align="justify" style="text-align: justify"><font size="2">The time and costs required
to select and evaluate a target business and to structure and complete the business
combination cannot presently be ascertained with any degree of certainty. Any costs
incurred with respect to the identification and evaluation of a prospective target
business with which a business combination is not ultimately completed will result in a
loss to us.</font></p>

<p align="justify" style="text-align: justify">&nbsp;&nbsp;&nbsp; <em><font size="2">Probable
lack of business diversification</font></em></p>

<p align="justify" style="text-align: justify"><font size="2">We may seek to effect
business combinations with more than one target business, it is probable that we will have
the ability to effect only a single business combination. Accordingly, the prospects for
our success may be entirely dependent upon the future performance of a single business.
Unlike other entities which may have the resources to complete several business
combinations of entities operating in multiple industries or multiple areas of a single
industry, it is probable that we will not have the resources to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses. By consummating a
business combination with only a single entity, our lack of diversification may:</font></p>

<p align="justify" style="text-align: justify"><font size="2" FACE="wingdings">&#159;</font><font
size="2"> subject us to numerous economic, competitive and regulatory developments, any or
all of which may have a substantial adverse impact upon the particular industry in which
we may operate subsequent to a business combination, and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> result in our
dependency upon the development or market acceptance of a single or limited number of
products, processes or services.</font></p>

<p align="justify" style="text-align: justify">&nbsp;&nbsp; <em><font size="2">Limited
ability to evaluate the target business' management</font></em></p>

<p align="justify" style="text-align: justify"><font size="2">Although we intend to
closely scrutinize the management of a prospective target business when evaluating the
desirability of effecting a business combination, we cannot assure you that our assessment
of the target business' management will prove to be correct. In addition, we cannot assure
you that the future management will have the necessary skills, qualifications or abilities
to manage a public company intending to embark on a program of business development.
Furthermore, the future role of our director, if any, in the target business cannot
presently be stated with any certainty. While it is possible that our director will remain
associated in some capacity with us following a business combination, it is unlikely that
he will devote his full efforts to our affairs subsequent to a business combination.
Moreover, we cannot assure you that our director will have significant experience or
knowledge relating to the operations of the particular target business. </font></p>

<p align="justify" style="text-align: justify"><font size="2">Following a business
combination, we may seek to recruit additional managers to supplement the incumbent
management of the target business. We cannot assure you that we will have the ability to
recruit additional managers, or that additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent management. </font></p>

<p align="justify" style="text-align: justify"><strong><font size="2">Competition</font></strong></p>

<p align="justify" style="text-align: justify"><font size="2">In identifying, evaluating
and selecting a target business, we expect to encounter intense competition from other
entities having a business objective similar to ours. Many of these entities are well
established and have extensive experience identifying and effecting business combinations
directly or through affiliates. Many of these competitors possess greater technical, human
and other resources than us and our financial resources will be relatively limited when
contrasted with those of many of these competitors. While we believe there are numerous
potential target businesses, our ability to compete in acquiring certain sizable target
businesses will be limited by our limited financial resources. This inherent competitive
limitation gives others an advantage in pursuing the acquisition of a target business.
Further, any of these obligations may place us at a competitive disadvantage in
successfully negotiating a business combination. Our Management believes, however, that
our status as a public entity and potential access to the United States public equity
markets may give us a competitive advantage over privately-held entities having a similar
business objective in acquiring a target business with significant growth potential on
favorable terms. </font></p>

<p align="justify" style="text-align: justify"><font size="2">If we succeed in effecting a
business combination, there will be, in all likelihood, intense competition from
competitors of the target business. In particular, certain industries which experience
rapid growth frequently attract an increasingly larger number of competitors, including
competitors with increasingly greater financial, marketing, technical and other resources
than the initial competitors in the industry. The degree of competition characterizing the
industry of any prospective target business cannot presently be ascertained. We cannot
assure you that, subsequent to a business combination, we will have the resources to
compete effectively, especially to the extent that the target business is in a high-growth
industry.</font></p>

<p align="justify" style="text-align: justify"><strong><font size="2">Employees</font></strong></p>

<p align="justify" style="text-align: justify"><font size="2">Mr. Heiden, our CEO and CFO,
is our sole executive officer. </font><font face="Times New Roman" size="2"
color="#000000">Mr. Heiden </font><font size="2">is not obligated to contribute any
specific number of hours per week and intend to devote only as much time as he deem
necessary to the Company's affairs. The amount of time he will devote in any time period
will vary based on the availability of suitable target businesses to investigate. We do
not intend to have any full time employees prior to the consummation of a business
combination.</font></p>

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

<p align="justify"><font size="2" color="#000000">The Company's Management is not required
to commit its full time to the Company's affairs. As a result, pursuing new business
opportunities may require a greater period of time than if Management would devote his
full time to the Company's 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 the Company's
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="left"><strong><font size="2">Periodic Reporting and Audited Financial Statements</font></strong></p>

<p align="left" style="text-align: justify"><font size="2">We have registered our
securities under the Securities Exchange Act of 1934, as amended, and have reporting
obligations, including the requirement that we file annual and quarterly reports with the
SEC. In accordance with the requirements of the Securities Exchange Act of 1934, our
annual reports will contain financial statements audited and reported on by our
independent public accountants.</font></p>

<p align="left" style="text-align: justify"><font size="2">We will not acquire a target
business if audited financial statements cannot be obtained for the target business. Our
Management believes that the requirement of having available audited financial statements
for the target business will limit the pool of potential target businesses available for
acquisition.</font></p>

<p align="center"><strong><font size="2">RISK FACTOR</font></strong></p>

<p align="left" style="text-align: justify"><font style="Times New Roman" size="2">Any
investment in our shares of common stock involves a high degree of risk. You should
carefully consider the following information about these risks, together with the other
information contained in this annual report before you decide to invest in our common
stock. Each of the following risks may materially and adversely affect our business
objective, plan of operation and financial condition. These risks may cause the market
price of our common stock to decline, which may cause you to lose all or a part of the
money you invested in our common stock. We provide the following cautionary discussion of
risks, uncertainties and possible inaccurate assumptions relevant to our business plan. </font><font
size="2">In addition to other information included in this annual report, the following
factors should be considered in evaluating the Company's business and future prospects.</font></p>

<p align="center"><strong><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISKS RELATED TO
OUR BUSINESS</font></strong></p>

<p align="justify"><strong><font size="2"><em>The Company has a limited operating history
and very limited resources.</em></font></strong></p>

<p align="justify"><font size="2">Since emerging from bankruptcy, the Company's operations
have been limited to seeking a potential business combination and has had no revenues from
operations. Investors will have no basis upon which to evaluate the Company's ability to
achieve the Company's business objective, which is to effect a merger, capital stock
exchange, acquire an operating business. The Company will not generate any revenues until,
at the earliest, after the consummation of a business combination or seeking new business
opportunities.</font></p>

<p align="justify"><strong><font size="2"><em>Since the Company has not currently selected
a particular target industry or target business with which to complete a business
combination, the Company is unable to currently ascertain the merits or risks of the
business' operations.</em></font></strong></p>

<p align="justify"><font size="2">Since the Company has not yet identified a particular
industry or prospective target business, there is no basis for investors to evaluate the
possible merits or risks of the particular industry in which the Company may ultimately
operate or the target business which the Company may ultimately acquire. To the extent the
Company completes a business combination with a financially unstable company or an entity
in its development stage, the Company may be affected by numerous risks inherent in the
business operations of those entities. Although the Company's Management will endeavor to
evaluate the risks inherent in a particular industry or target business, the Company
cannot assure you that it will properly ascertain or assess all of the significant risk
factors. <font color="#000000">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></font></p>

<p align="justify"><font size="2" color="#000000"><strong><em>Unspecified and
unascertainable risks</em></strong></font></p>

<p align="justify"><font size="2" color="#000000">There is no basis for shareholders to
evaluate the possible merits or risks of potential business combination or the particular
industry in which the Company may ultimately operate. To the extent that the Company
effects a business combination with a financially unstable operating company or an entity
that is in its early stage of development or growth, including entities without
established records of revenues or income, the Company will become subject to numerous
risks inherent in the business and operations of that financially unstable company. In
addition, to the extent that the Company effects a business combination with an entity in
an industry characterized by a high degree of risk, the Company 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 business or
industry, there can be no assurance that Management will properly ascertain or assess all
such risks or that subsequent events may not alter the risks that the Company perceived at
the time of the consummation of a business combination.</font></p>

<p align="justify"><strong><font size="2"><em>It is likely that the Company's current
officer and director will resign upon consummation of a business combination and the
Company will have only limited ability to evaluate the management of the target business.</em></font></strong></p>

<p align="justify"><font size="2">The Company's ability to successfully effect a business
combination will be dependent upon the efforts of the Company's Management. The future
role of the Company's key personnel in the target business, however, cannot presently be
ascertained. Although it is possible that Management will remain associated in various
capacities with the target business following a business combination, it is likely that
the management of the target business at the time of the business combination will remain
in place. Although the Company intends to closely scrutinize the management of a
prospective target business in connection with evaluating the desirability of effecting a
business combination, the Company cannot assure you that the Company's assessment of
management will prove to be correct.</font></p>

<p align="justify"><font size="2" color="#000000"><strong><em>Dependence on key personnel</em></strong></font></p>

<p align="justify"><font size="2" color="#000000">The Company is dependent upon the
continued services of its officer and director. To the extent that his services become
unavailable, the Company 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 align="justify"><strong><font size="2"><em>The Company's officer and director may
allocate his time to other businesses thereby causing conflicts of interest in his
determination as to how much time to devote to the Company's affairs. This could have a
negative impact on the Company's ability to consummate a business combination.</em></font></strong></p>

<p align="justify"><font size="2">The Company's officer and director is not required to
commit his full time to the Company's affairs, which may result in a conflict of interest
in allocating his time between the Company's business and other businesses. The Company
does not intend to have any full time employees prior to the consummation of a business
combination. Management of the Company is engaged in several other business endeavors and
is not obligated to contribute any specific number of his hours per week to the Company's
affairs. If Management's other business affairs require him to devote more substantial
amounts of time to such affairs, it could limit his ability to devote time to the
Company's affairs and could have a negative impact on the Company's ability to consummate
a business combination.</font></p>

<p align="justify"><strong><font size="2"><em>The Company's officer and director is now,
and may in the future become, affiliated with entities engaged in business activities
similar to those intended to be conducted by this Company and, accordingly, may have
conflicts of interest in determining which entity a particular business opportunity should
be presented to.</em></font></strong></p>

<p align="justify"><font size="2">The Company's officer and director is now, and may in
the future become, affiliated with entities, including other companies, engaged in
business activities similar to those intended to be conducted by this Company.
Additionally, the Company's office and director may become aware of business opportunities
which may be appropriate for presentation to this Company as well as the other entities
with which he is or may be affiliated. Additionally, due to the Company's officer and
director existing affiliations with other entities, he may have a fiduciary obligation to
present potential business opportunities to those entities in addition to presenting them
to us which could cause additional conflicts of interest. Accordingly, Management may have
conflicts of interest in determining to which entity a particular business opportunity
should be presented.</font></p>

<p align="justify"><strong><font size="2"><em>It is probable that the Company will only be
able to enter into one business combination, which will cause us to be solely dependent on
such single business and a limited number of products or services.</em></font></strong></p>

<p align="justify"><font size="2">It is probable that the Company will enter into a
business combination with a single operating business. Accordingly, the prospects for the
Company's success may be:</font></p>

<p align="justify"><font size="2" FACE="wingdings">&#159;</font><font size="2"> solely
dependent upon the performance of a single operating business, or<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> dependent upon the
development or market acceptance of a single or limited number of products or services.</font></p>

<p align="justify"><font size="2">In this case, the Company will not be able to diversify
the Company's operations or benefit from the possible spreading of risks or offsetting of
losses, unlike other entities which may have the resources to complete several business
combinations in different industries or different areas of a single industry.</font></p>

<p align="justify"><strong><font size="2"><em>The Company has limited resources and there
is significant competition for business combination opportunities. Therefore, the Company
may not be able to enter into or consummate an attractive business combination.</em></font></strong></p>

<p align="justify"><font size="2">The Company expects to encounter intense competition
from other entities having a business objective similar to the Company's, including
venture capital funds, leveraged buyout funds and operating businesses competing for
acquisitions. Many of these entities are well established and have extensive experience in
identifying and effecting business combinations directly or through affiliates. Many of
these competitors possess greater technical, human and other resources than the Company
does and the Company's financial resources are limited when contrasted with those of many
of these competitors. While the Company believes that there are numerous potential target
businesses that it could acquire, the Company's ability to compete in acquiring certain
sizable target businesses will be limited by the Company's limited financial resources and
the fact that the Company will use its common stock to acquire an operating business. This
inherent competitive limitation gives others an advantage in pursuing the acquisition of
certain target businesses.</font></p>

<p align="justify"><strong><font size="2"><em>The Company may be unable to obtain
additional financing, if required, to complete a business combination or to fund the
operations and growth of the target business, which could compel the Company to
restructure a potential business transaction or abandon a particular business combination.</em></font></strong></p>

<p align="justify"><font size="2">The Company has not yet identified any prospective
target business. If we require funds, because of the size of the business combination, we
will be required to seek additional financing. We cannot assure you that such financing
would be available on acceptable terms, if at all. To the extent that additional financing
proves to be unavailable when needed to consummate a particular business combination, we
would be compelled to restructure the transaction or abandon that particular business
combination and seek an alternative target business candidate. In addition, if we
consummate a business combination, we may require additional financing to fund the
operations or growth of the target business. The failure to secure additional financing
could have a material adverse effect on the continued development or growth of the target
business. The Company's officer, director or stockholders are not required to provide any
financing to us in connection with or after a business combination.</font></p>

<p align="justify"><font size="2" color="#000000"><em><strong>Additional financing
requirements associated with reporting obligations under the Exchange Act</strong></em></font></p>

<p align="justify"><font size="2" color="#000000">The Company has no revenues and is
dependent upon the willingness of the Company's Management to fund the costs associated
with the reporting obligations under the Exchange Act, other&nbsp;administrative costs
associated with the Company's corporate existence and expenses related to the Company's
business objective. The Company is not likely to generate any revenues until the
consummation of a business combination. The Company anticipates that it will have
available sufficient financial resources to continue to pay accounting and other
professional fees and other miscellaneous expenses that may be required until the Company
commence business operations in connection with a business combination. In the event that
the Company's available financial resources from its Management prove to be insufficient
for the purpose of achieving its business objective through a business combination, the
Company will be required to seek additional financing. The Company's failure to secure
additional financing could have a material adverse affect on the Company's ability to
pursue a business combination. The Company does 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 the Company's best
interests. The Company does not have any written agreement with Management to provide
funds for the Company's operating expenses.</font></p>

<p align="justify"><strong><em>The Company's officer and director has a 72.86% equity
interest in the Company and thus may influence certain actions requiring stockholder vote.</em></strong></p>

<p align="justify"><font size="2">It is unlikely that there will be an annual meeting of
stockholders to elect new directors prior to the consummation of a business combination,
in which case the current director will continue in office at least until the consummation
of the business combination. If there is an annual meeting, as a consequence of
Management's significant equity interest, the Company's Management has broad discretion
regarding proposals submitted to a vote by shareholders. Accordingly, the Company's
existing board of director will continue to exert substantial control at least until the
consummation of a business combination.</font></p>

<p align="justify"><strong><font size="2"><em>Broad discretion of Management</em></font></strong></p>

<p align="justify"><font size="2">Any person who invests in the Company's common stock
will do so without an opportunity to evaluate the specific merits or risks of any
prospective business combination. 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 combination. There can be no assurance that determinations made by
the Company's Management will permit us to achieve the Company's business objectives.</font></p>

<p align="justify" style="text-align: justify"><strong><em><font size="2" color="#000000">Reporting
requirements may delay or preclude a business combination</font></em></strong></p>

<p align="justify" style="text-align: justify"><font size="2" color="#000000">Pursuant to
the requirements of Section 13 of the Exchange Act, the Company is required to provide
certain information about significant acquisitions and other material events. The Company
will continue to be required to file quarterly reports on Form 10-Q and annual reports on
Form 10-K, which annual report must contain the Company's 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, which report contains audited financial statements
of the acquired entity. These audited financial statements must be filed with the SEC
within 5 days following the closing of a business combination. While obtaining audited
financial statements is typically the responsibility of the acquired company, it is
possible that a potential target company may be a non-reporting company with unaudited
financial statements. The 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 business combination. 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 align="justify"><strong><font size="2"><em>If the Company is deemed to be an investment
company, the Company may be required to institute burdensome compliance requirements and
the Company's activities may be restricted, which may make it difficult for the Company to
enter into a business combination.</em></font></strong></p>

<p align="justify"><font size="2" FACE="wingdings">&#159;</font><font size="2">
restrictions on the nature of the Company's investments; and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> restrictions on the
issuance of securities, which may make it difficult for us to complete a business
combination.</font></p>

<p align="justify"><font size="2">In addition, we may have imposed upon us burdensome
requirements, including:<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> registration as an
investment company;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> adoption of a specific
form of corporate structure; and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> reporting, record
keeping, voting, proxy and disclosure requirements and other rules and regulations.</font></p>

<p align="justify"><font size="2">The Company does not believe that its anticipated
principal activities will subject it to the Investment Company Act of 1940.</font></p>

<p align="justify"><strong><font size="2"><em>The Company may be deemed to have no
&quot;Independent Director&quot;, actions taken and expenses incurred by our officer and
director on behalf of the Company will generally not be subject to &quot;Independent
Review&quot;.</em></font></strong></p>

<p align="justify"><font size="2">Our director owns shares of our common stock and,
although no compensation will be paid to him for services rendered prior to or in
connection with a business combination, he may receive reimbursement for out-of-pocket
expenses incurred by him in connection with activities on the Company's behalf such as
identifying potential target businesses and performing due diligence on suitable business
combinations. There is no limit on the amount of these out-of-pocket expenses and there
will be no review of the reasonableness of the expenses by anyone other than our board of
director, which consist of one directors who may seek reimbursement. If our director will
not be deemed &quot;independent,&quot; he will generally not have the benefit of
independent director examining the propriety of expenses incurred on our behalf and
subject to reimbursement. Although the Company believes that all actions taken by our
director on the Company's behalf will be in the Company's best interests, the Company
cannot assure the investor that this will actually be the case. If actions are taken, or
expenses are incurred that are actually not in the Company's best interests, it could have
a material adverse effect on our business and plan of operation and the price of our stock
held by the public stockholders.</font></p>

<p style="text-align: justify"><font size="2" color="#000000"><strong><em>General Economic
Risks.</em></strong></font></p>

<p style="text-align: justify"><font size="2" color="#000000">The Company's current and
future business objectives and plan of operation are likely dependent, in large part, on
the state of the general economy. Adverse changes in economic conditions may adversely
affect the Company's business objective and plan of operation. These conditions and other
factors beyond the Company's control include also, but are not limited to regulatory
changes.</font></p>

<p align="center"><strong><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISKS RELATED TO
OUR COMMON STOCK</font></strong></p>

<p align="left"><strong><em><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our historic stock
price has been volatile and the future market price for our common stock is likely to
continue to be volatile. Further, the limited market for our shares will make our price
more volatile. This may make it difficult for you to sell our common stock.</font></em></strong></p>

<p align="left" style="text-align: justify"></font><font face="Times New Roman" size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The public market
for our common stock has been very volatile. Over the past two fiscal years and subsequent
quarterly periods, the market price for our common stock has ranged from $0.04 to $0.006
(See &quot;Market for Common Equity and Related Stockholder Matters&#148; on page 12 of
this annual report). Any future market price for our shares is likely to continue to be
very volatile. This price volatility may make it more difficult for you to sell shares
when you want at prices you find attractive. Further, the market for our common stock is
limited and we cannot assure you that a larger market will ever be developed or
maintained. The last reported sales price for our common stock on March 14, 2008 was
$0.009 per share. Market fluctuations and volatility, as well as general economic, market
and political conditions, could reduce our market price. As a result, this may make it
difficult or impossible for you to sell our common stock.</font><font size="2"
face="Times New Roman"></p>

<p align="justify"><strong><font size="2"><em>The Company's shares of common stock are
quoted on the NASD Bulletin Board, which limits the liquidity and price of the Company's
common stock.</em></font></strong></p>

<p align="justify"><font size="2">The Company's shares of common stock are traded on the
NASD Bulletin Board, an NASD-sponsored and operated inter-dealer automated quotation
system for equity securities not included on The Nasdaq Stock Market. Quotation of the
Company's securities on the NASD Bulletin Board limits the liquidity and price of the
Company's common stock more than if the Company's shares of common stock were listed on
The Nasdaq Stock Market or a national exchange. <font color="#000000">There is currently
no active trading market in the Company's common stock. There can be no assurance that
there will be an active trading market for the Company's common stock following a business
combination. In the event that an active trading market commences, there can be no
assurance as to the market price of the Company's shares of common stock, whether any
trading market will provide liquidity to investors, or whether any trading market will be
sustained.</font></font></p>

<p align="left"><em><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our common
stock is subject to the Penny Stock Rules of the SEC and the trading market in our common
stock is limited, which makes transactions in our stock cumbersome and may reduce the
value of an investment in our common stock.</strong></font></em></p>

<p align="left" style="text-align: justify"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Securities and
Exchange Commission has adopted Rule 3a51-1 which establishes the definition of a
&quot;penny stock,&quot; for the purposes relevant to us, as any equity security that has
a market price of less than $5.00 per share or with an exercise price of less than $5.00
per share, subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, Rule 15g-9 require: </font></p>

<p align="left"><font size="2" FACE="wingdings">&#159;</font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif"> </font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that a broker or
dealer approve a person's account for transactions in penny stocks; and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif"> </font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the broker or
dealer receive from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased.</font></p>

<p align="left"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In order to approve
a person&#146;s account for transactions in penny stocks, the broker or dealer must:</font></p>

<p align="left"><font size="2" FACE="wingdings">&#159;</font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif"> </font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtain financial
information and investment experience objectives of the person; and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif"> </font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">make a reasonable
determination that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. </font></p>

<p align="left" style="text-align: justify"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The broker or
dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule
prescribed by the SEC relating to the penny stock market, which, in highlight form:</font></p>

<p align="left"><font size="2" FACE="wingdings">&#159;</font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif"> </font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">sets forth the
basis on which the broker or dealer made the suitability determination; and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif"> </font><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the broker or
dealer received a signed, written agreement from the investor prior to the transaction.</font></p>

<p align="left" style="text-align: justify"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Generally, brokers
may be less willing to execute transactions in securities subject to the &quot;penny
stock&quot; rules. This may make it more difficult for investors to dispose of our common
stock and cause a decline in the market value of our stock. </font></p>

<p align="left" style="text-align: justify"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Disclosure also has
to be made about the risks of investing in penny stocks in both public offerings and in
secondary trading and about the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock transactions. Finally,
monthly statements have to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks. </font></p>

<p style="text-align: justify"><strong><font size="2" color="#000000"><em>State blue sky
registration; potential limitations on resale of the Company's common stock</em></font></strong></p>

<p style="text-align: justify"><font size="2" color="#000000">The holders of the Company's
shares of common stock registered under the Exchange Act and those persons who desire to
purchase them in any trading market that may develop in the future, should be aware that
there may be state blue-sky law restrictions upon the ability of investors to resell the
Company's 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 size="2" color="#000000">It is the
intention of the Registrant's Management following the consummation of a 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 by 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"><strong><font size="2" color="#000000"><em>Dividends
unlikely</em></font></strong></p>

<p style="text-align: justify"><font size="2" color="#000000">The Company does not expect
to pay dividends for the foreseeable future because it has no revenues or cash resources.
The payment of dividends will be contingent upon the Company's future revenues and
earnings, if any, capital requirements and overall financial conditions. The payment of
any future dividends will be within the discretion of the Company's board of directors as
then constituted. It is the Company's expectation that future management following a
business combination will determine to retain any earnings for use in its business
operations and accordingly, the Company does not anticipate declaring any dividends in the
foreseeable future.</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="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY">The Registrant's</font><font face="Times New Roman" size="2"
color="#000000"> corporate office is located at 6399 Wilshire Boulevard, Suite 1019, Los
Angeles, CA 90048. </font><font face="Times New Roman" size="2"><font size="2"
color="#000000">These facilities consist of approximately 300 square feet of executive
office space. The Registrant believes that the office facilities are sufficient for the
foreseeable future and this arrangement will remain in effect until we will 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="zxsi_10ksb.htm#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">None.</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="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY">During the year ended December 31, 2007, no matters were submitted to a
vote of the Company's security holders.</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="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p align="left"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Market
Information</strong></font></p>

<p align="left" style="text-align: justify"></font><font face="Times New Roman" size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our common stock is
currently quoted on the NASD Bulletin Board under the symbol ZXSI, an NASD-sponsored and
operated inter-dealer automated quotation system for equity securities not included on The
Nasdaq Stock Market. Quotation of the Company's securities on the NASD Bulletin Board
limits the liquidity and price of the Company's common stock more than if the Company's
shares of common stock were listed on The Nasdaq Stock Market or a national exchange. For
the periods indicated, the following table sets forth the high and low bid prices per
share of common stock. The below prices represent inter-dealer quotations without retail
markup, markdown, or commission and may not necessarily represent actual transactions.</font><font
face="Times New Roman" size="2"></p>

<table cellpadding="0" cellspacing="0" width="100%" height="1">
  <tr>
    <td align="left" valign="middle" width="32%" style="BORDER-BOTTOM: #ffffff solid"
    height="1"></td>
    <td width="2%" style="BORDER-BOTTOM: #ffffff solid" valign="middle" height="1"></td>
    <td colspan="5" valign="middle" width="21%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">Fiscal
    2007</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"></td>
    <td colspan="5" valign="middle" width="21%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">Fiscal
    2006</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"></td>
    <td colspan="5" valign="middle" width="21%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">Fiscal
    2005</font></font></p>
    </div></td>
  </tr>
  <tr>
    <td align="left" valign="middle" width="32%" style="BORDER-BOTTOM: #ffffff solid"
    height="1"></td>
    <td width="2%" style="BORDER-BOTTOM: #ffffff solid" valign="middle" height="1"></td>
    <td align="left" colspan="2" valign="middle" width="10%"
    style="BORDER-BOTTOM: #000000 thin solid" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">High</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"></td>
    <td align="left" colspan="2" valign="middle" width="10%"
    style="BORDER-BOTTOM: #000000 thin solid" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">Low</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"></td>
    <td align="left" colspan="2" valign="middle" width="10%"
    style="BORDER-BOTTOM: #000000 thin solid" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">High</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"></td>
    <td align="left" colspan="2" valign="middle" width="10%"
    style="BORDER-BOTTOM: #000000 thin solid" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">Low</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"></td>
    <td align="left" colspan="2" valign="middle" width="10%"
    style="BORDER-BOTTOM: #000000 thin solid" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">High</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #000000 thin solid"
    height="1"></td>
    <td align="left" colspan="2" valign="middle" width="10%"
    style="BORDER-BOTTOM: #000000 thin solid" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="1">Low</font></font></p>
    </div></td>
  </tr>
  <tr bgcolor="#ccffcc">
    <td align="left" valign="middle" width="32%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">First
    Quarter ended March 31</font></font></p>
    </div></td>
    <td width="2%" style="BORDER-BOTTOM: #ccffcc" valign="middle" height="1"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.014</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.008</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.040</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.020</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.001</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p></font>&nbsp;</p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="1"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.001</font></font></p>
    </div></td>
  </tr>
  <tr bgcolor="#ffffff">
    <td align="left" valign="middle" width="32%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font
    size="2">Second Quarter ended June 30</font></font></p>
    </div></td>
    <td width="2%" style="BORDER-BOTTOM: #ffffff" valign="middle" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"></font><font
    size="2" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"
    face="Times New Roman"><p>0.011</font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    size="2" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"
    face="Times New Roman"><p>0.007</font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.025</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.011</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.001</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p></font>&nbsp;</p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.001</font></font></p>
    </div></td>
  </tr>
  <tr bgcolor="#ccffcc">
    <td align="left" valign="middle" width="32%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font
    size="2">Third Quarter ended September 30</font></font></p>
    </div></td>
    <td width="2%" style="BORDER-BOTTOM: #ccffcc" valign="middle" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    size="2" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"
    face="Times New Roman"><p>0.035</font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    size="2" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"
    face="Times New Roman"><p>0.008</font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.011</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.007</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.001</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ccffcc" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.001</font></font></p>
    </div></td>
  </tr>
  <tr bgcolor="#ffffff">
    <td align="left" valign="middle" width="32%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font
    size="2">Fourth Quarter ended December 31</font></font></p>
    </div></td>
    <td width="2%" style="BORDER-BOTTOM: #ffffff" valign="middle" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><font
    size="2">$</font></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    size="2" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"
    face="Times New Roman"><p>0.031</font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><font
    size="2">$</font></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    size="2" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"
    face="Times New Roman"><p>0.007</font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.015</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.006</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.300</font></font></p>
    </div></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"></td>
    <td align="left" valign="middle" width="1%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">$</font></font></p>
    </div></td>
    <td align="right" valign="middle" width="9%" style="BORDER-BOTTOM: #ffffff" height="0"><div
    style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><font size="2">0.020</font></font></p>
    </div></td>
  </tr>
</table>

<p align="left"><font size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"
face="Times New Roman">As of December 31, 2007, our shares of common stock were held by
approximately 2,517 stockholders of record. The transfer agent of our common stock is
Standard Registrar and Transfer Company, Inc. </font><font face="Times New Roman" size="2"></p>

<p align="left"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Dividends</strong></font></p>

<p align="left" style="text-align: justify"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Holders of common
stock are entitled to dividends when, as, and if declared by the Board of Directors, out
of funds legally available therefore. We have never declared cash dividends on its common
stock and our Board of Directors does not anticipate paying cash dividends in the
foreseeable future as it intends to retain future earnings to finance the growth of our
businesses. There are no restrictions in our articles of incorporation or bylaws that
restrict us from declaring dividends.</font></p>

<p align="left"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Securities
Authorized for Issuance Under Equity Compensation Plans </strong></font></p>

<p align="left" style="text-align: justify"></font><font size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"
face="Times New Roman">No equity compensation plan or agreements under which our common
stock is authorized for issuance has been adopted during the fiscal year ended December
31, 2007.</font><font face="Times New Roman" size="2"></p>

<p ALIGN="JUSTIFY" style="text-align: justify"><strong><font size="2">Sale of Unregistered
Securities</font></strong></p>

<p ALIGN="JUSTIFY" style="text-align: justify">On December 10, 2007, the Registrant issued
7,000,000 restricted shares to the Registrant's CEO in </font><font size="2">consideration
for the conversion of $35,000 in debt.</font><font face="Times New Roman" size="2"></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="zxsi_10ksb.htm#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"><em><font color="#000000" size="2">Overview</font></em></p>

<p style="text-align: justify"><font size="2"><font color="#000000">The Company emerged
from bankruptcy in October 2004 and discontinued its former business operations as a
result of the bankruptcy proceedings. The Company's current business objective is to seek
a business combination with an operating company. We intend to use the Company's limited
personnel and financial resources in connection with such activities. </font>The Company
will utilize its capital stock, debt or a combination of capital stock and debt, in
effecting a business combination. <font color="#000000">It may be expected that entering
into a business combination will involve the issuance of restricted shares of capital
stock. </font>The issuance of additional shares of our capital stock:</font></p>

<p style="text-align: justify"><font size="2" FACE="wingdings">&#159;</font><font size="2">
may significantly reduce the equity interest of our stockholders;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> will likely cause a
change in control if a substantial number of our shares of capital stock are issued, and
most likely will also result in the resignation or removal of our present officer and
director; and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> may adversely affect
the prevailing market price for our common stock.</font></p>

<p style="text-align: justify"><font size="2">Similarly, if we issued debt securities, it
could result in:<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> default and
foreclosure on our assets if our operating revenues after a business combination were
insufficient to pay our debt obligations;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> acceleration of our
obligations to repay the indebtedness even if we have made all principal and interest
payments when due if the debt security contained covenants that required the maintenance
of certain financial ratios or reserves and any such covenants were breached without a
waiver or renegotiations of such covenants;<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> our immediate payment
of all principal and accrued interest, if any, if the debt security was payable on demand;
and<br>
</font><font size="2" FACE="wingdings">&#159;</font><font size="2"> our inability to
obtain additional financing, if necessary, if the debt security contained covenants
restricting our ability to obtain additional financing while such security was
outstanding.</font></p>

<p style="text-align: justify"><font color="#000000" size="2"><em>Liquidity and Capital
Resources</em></font></p>

<p align="justify"><font size="2"><font color="#000000">At present, the Company has </font>no
business operations. <font color="#000000">We are dependent upon interim funding provided
by Management or affiliated parties to pay professional fees and expenses. Our Management
and affiliated parties have agreed to provide funding as may be required to pay for
accounting fees and other administrative expenses of the Company. If we require additional
financing, we cannot predict whether equity or debt financing will become available at
terms acceptable to us, if at all. The Company depends upon services provided by
Management and affiliated consultants to fulfill its filing obligations under the Exchange
Act. At present, the Company has limited financial resources to pay for such services and
may be required to issue restricted shares in lieu of cash.</font></font></p>

<p align="justify"></font><font face="Times New Roman" size="2" color="#000000">At
December 31, 2007, we have had $170 current assets and had $51,400 in current liabilities.</font><font
face="Times New Roman" size="2"></p>

<p align="justify"><font color="#000000" size="2">There are no limitations in the
Company's certificate of incorporation on the Company's ability to borrow funds or raise
funds through the issuance of restricted common stock to effect a business combination.
The Company's limited resources and lack of having cash-generating business operations may
make it difficult to borrow funds or raise capital. The Company's limitations to borrow
funds or raise funds through the issuance of restricted capital stock required to effect
or facilitate a business combination may have a material adverse effect on the Company's
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"><em><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Off-Balance Sheet
Arrangements</font></em></p>

<p align="justify"></font><font face="Times New Roman" size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of December 31,
2007 we did not have any off-balance sheet arrangements as defined in
Item&nbsp;303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.</font><font
face="Times New Roman" size="2"></p>

<p align="justify"><em><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contractual
Obligations and Commitments</font></em></p>

<p align="justify"></font><font face="Times New Roman" size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of December 31,
2007 we did not have any contractual obligations.</font><font face="Times New Roman"
size="2"></p>

<p align="justify"><em><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Critical Accounting
Policies</font></em></p>

<p align="justify"></font><font face="Times New Roman" size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our significant
accounting policies are described in the notes to our financial statements for the year
ended December 31, 2007 and 2006, and are included elsewhere in this registration
statement.</font><font face="Times New Roman" size="2"></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="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p ALIGN="JUSTIFY">The Registrant's audited financial statements for the fiscal years
ended December 31, 2007 and 2006 are attached to this annual report.</p>

<p ALIGN="JUSTIFY"><a
href="zxsi_10ksb.htm#ZAXIS INTERNATIONAL INC.">Financial
Statements for the Fiscal Year ended December 31, 2007 and 2006</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="zxsi_10ksb.htm#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">None.</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="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>
<font size="2"><b>

<p>Evaluation of Disclosure Controls and Procedures</b> </p>
<i>

<p>Evaluation of disclosure controls and procedures.</i> As of December 31, 2007, the
Company's chief executive officer/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 chief executive officer/chief financial
officer concluded that our disclosure controls and procedures were not effective as of the
end of the fiscal year 2007. </p>
<b>

<p>Management&#146;s Annual Report on Internal Control Over Financial Reporting</p>
</b>

<p>Management is responsible for establishing and maintaining adequate internal control
over financial reporting and for the assessment of the effectiveness of those internal
controls. As defined by the SEC, internal control over financial reporting is a process
designed by our&nbsp;principal executive officer/principal financial officer, who is also
the sole member of our Board of Directors, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of the financial statements in
accordance with U.S. generally accepted accounting principles.</p>

<p>Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.</p>

<p>Management has assessed the effectiveness of our internal control over financial
reporting as of December 31, 2007. In making this assessment, management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control-Integrated Framework. Based on our assessment and those criteria, we
have concluded that our internal control over financial reporting was effective as of
December 31, 2007.</p>

<p>This annual report does not include an attestation report of the company&#146;s
registered public accounting firm regarding internal control over financial reporting.
Management&#146;s report was not subject to attestation by the Company&#146;s registered
public accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only Management&#146;s report in this annual
report.</p>
<b>

<p>Changes in Internal Control Over Financial Reporting</p>
</b>

<p>There were no changes in our internal control over financial reporting or in other
factors identified in connection with the evaluation required by paragraph (d) of Exchange
Act Rules 13a-15 or 15d-15 that occurred during the fourth quarter ended December 31, 2007
that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.</p>
<b>

<p>Remediation Plan for Certain Weaknesses in the Company&#146;s Disclosure Controls and
Procedures</p>
</b>

<p>During September&nbsp;2008, the Company completed the implementation of certain control
activities that we believe will prevent or detect certain weaknesses in our disclosure
controls and procedures, specifically the preparation and submission to the SEC of the
Company&#146;s reports under the Exchange Acts. The Company implemented an additional
review process of its reports under the Exchange Act prior to final submission to the SEC
of its reports. Management believes that these steps are sufficient to remediate the
certain weakness in our disclosure controls and procedures.</p>
</font>

<p style="text-align: justify"><font color="#000000" size="2"><strong><a
name="ITEM 8B. OTHER INFORMATION">ITEM 8B. OTHER INFORMATION</a> </strong></font><a
href="zxsi_10ksb.htm#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">None.</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="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p align="left"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following table
sets forth the names and ages of the members of our Board of Directors and our executive
officers and the positions held by each.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%" height="0%">
  <tr>
    <td width="20%" bgcolor="#FFFFFF" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1"><strong>Name</strong></font></td>
    <td width="5%" bgcolor="#FFFFFF" height="0">&nbsp; </td>
    <td width="5%" bgcolor="#FFFFFF" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="center"><font size="1"><strong>Age</strong></font></td>
    <td width="5%" bgcolor="#FFFFFF" height="0"></td>
    <td width="40%" bgcolor="#FFFFFF" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1"><strong>Title</strong></font></td>
    <td width="5%" bgcolor="#FFFFFF" height="0"><font size="1">&nbsp; </font></td>
    <td width="20%" bgcolor="#FFFFFF" align="center" height="0"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="1"><strong>Date Became Executive
    Officer</strong></font></td>
  </tr>
  <tr>
    <td width="20%" bgcolor="#FFFFFF" height="0%"><font size="2">Ivo Heiden</font></td>
    <td width="5%" bgcolor="#FFFFFF" height="0%"><font size="2">&nbsp; </font></td>
    <td width="5%" bgcolor="#FFFFFF" height="0%"><font size="2"><p align="center">41</font></td>
    <td width="5%" bgcolor="#FFFFFF" height="0%"><font size="2">&nbsp; </font></td>
    <td width="40%" bgcolor="#FFFFFF" height="0%"><font size="2">CEO, CFO and Chairman</font></td>
    <td width="5%" bgcolor="#FFFFFF" height="0%"></td>
    <td width="20%" bgcolor="#FFFFFF" align="center" height="0%"><font size="2">10/2004</font></td>
  </tr>
</table>

<p align="left" style="text-align: justify">Ivo Heiden, 41, has been CEO, CFO and Chairman
of the Registrant since October 2004. During the last five years, Mr. Heiden has been
engaged in the business of providing corporate securities compliance service and
reorganizing distressed public companies. Mr. Heiden was CEO and Chairman of St. Lawrence
Energy Corp., a public reporting company, from January 2005 until December 2007. Mr.
Heiden served as a director of Jeantex Group, a public reporting company from August 2002
to September 2003. Mr. Heiden served as CFO and director of Peregrine Industries, Inc., a
public reporting company from March 2004 until February 2006.</p>

<p align="left" style="text-align: justify"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our director holds
office until the next annual meeting of stockholders and until his successors have been
duly elected and qualified. There are no agreements with respect to the election of
directors. We do not compensate our directors. Officers are appointed annually by the
Board of Directors and each executive officer serves at the discretion of the Board of
Directors. We do not have any standing committees at this time.</font></p>

<p align="left" style="text-align: justify"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our director,
officer or affiliates have not, within the past five years, filed any bankruptcy petition,
been convicted in or been the subject of any pending criminal proceedings, or is any such
person the subject or any order, judgment or decree involving the violation of any state
or federal securities laws.</font></p>

<p ALIGN="JUSTIFY"><b><font size="2"><a name="ITEM 10. EXECUTIVE COMPENSATION">ITEM 10.
EXECUTIVE COMPENSATION</a></font> </b><a
href="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p align="left"></font><font face="Times New Roman" size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following table
sets forth information concerning the total compensation that we have paid or that has
accrued on behalf of our chief executive officer and other executive officers with annual
compensation exceeding $100,000 during the fiscal years ending December 31, 2007, 2006 and
2005.</font><font face="Times New Roman" size="2"></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="#CCFFCC"><p align="center"><font
    size="1"><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="#CCFFCC"><font size="1">&nbsp; <strong>Name and
    Principal Position </strong></font></td>
    <td width="1%" height="0%" bgcolor="#CCFFCC"><font size="1">&nbsp; </font></td>
    <td align="center" width="9%" height="0%" bgcolor="#CCFFCC"><p align="right"><font
    size="1"><strong>Year </strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#CCFFCC"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#CCFFCC"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#CCFFCC"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#CCFFCC"><p align="center"><font
    size="1"><strong>($) </strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#CCFFCC"><p align="center"><font
    size="1"><strong>($)</strong></font></td>
    <td align="center" width="9%" height="0%" bgcolor="#CCFFCC"><p align="center"><font
    size="1"><strong>($)</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>
    </font><td width="35%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">Ivo Heiden, CEO, CFO and Chairman
    (1)</font></td>
    <td width="1%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#CCFFCC"></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">2007 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">24,000</font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"></td>
    <font face="Times New Roman" size="2">
  </tr>
  <tr vAlign="bottom" bgColor="#cbdbd1">
    </font><td width="35%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"></td>
    <td width="1%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#CCFFCC"><font
    face="Times New Roman" size="2">&nbsp; </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">2006 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">24,000</font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <font face="Times New Roman" size="2">
  </tr>
  <tr>
    </font><td width="35%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"></td>
    <td width="1%" height="0%" style="background-color: rgb(255,255,255)" bgcolor="#CCFFCC"></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">2005 </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <td align="right" width="9%" height="0%" style="background-color: rgb(255,255,255)"
    bgcolor="#CCFFCC"><font face="Times New Roman" size="2">--- </font></td>
    <font face="Times New Roman" size="2">
  </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 the Company's officer and
    director in October 2004. Mr. Heiden's compensation for serving as the Company's officer
    accrues at a rate of $2,000 a month.</font></td>
  </tr>
</table>

<p align="left"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Executive
Employment Agreements</strong></font></p>

<p align="left"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To date, we have
not entered into any employment agreements with our executive officer.</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="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>

<p align="left" style="text-align: justify"></font><font face="Times New Roman" size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following table
sets forth information regarding the beneficial ownership of our common stock as of
September 4, 2008. The information in this table provides the ownership information for:
each person known by us to be the beneficial owner of more than 5% of our common stock;
each of our directors; each of our executive officers; and our executive officers and
directors as a group.</font><font face="Times New Roman" size="2"></p>

<p align="left" style="text-align: justify"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beneficial
ownership has been determined in accordance with the rules and regulations of the SEC and
includes voting or investment power with respect to the shares. Unless otherwise
indicated, the persons named in the table below have sole voting and investment power with
respect to the number of shares indicated as beneficially owned by them.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%">
  <tr>
    <td width="33%" style="border-bottom: 1px solid rgb(0,0,0)"><strong><font
    style="Times New Roman" size="1">Name of Beneficial Owner</font></strong></td>
    <td width="2%" align="right"><font style="Times New Roman" size="1"><strong>&nbsp; </strong></font></td>
    <td width="31%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><strong><font
    style="Times New Roman" size="1">Common Stock Beneficially Owned (1)</font></strong></td>
    <td width="2%" align="right"><font style="Times New Roman" size="1"><strong>&nbsp; </strong></font></td>
    <td width="32%" align="right" style="border-bottom: 1px solid rgb(0,0,0)"><strong><font
    style="Times New Roman" size="1">Percentage of Common Stock&nbsp; Owned (1)</font></strong></td>
  </tr>
  <tr bgcolor="#ccffcc">
    <td width="33%"><font size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ivo Heiden</font></td>
    <td width="2%" align="right"></td>
    <td width="31%" align="right"></font><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">766,000</font></td>
    <td width="2%" align="right"></td>
    <td width="32%" align="right"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">72.86%</font></td>
  </tr>
  <tr>
    <td width="33%"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6399 Wilshire
    Boulevard, Suite 1019</font></td>
    <td width="2%" align="right"></td>
    <td width="31%" align="right"></td>
    <td width="2%" align="right"></td>
    <td width="32%" align="right"></td>
  </tr>
  <tr bgcolor="#ccffcc">
    <td width="33%"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Los Angeles, CA
    90048</font></td>
    <td width="2%" align="right"></td>
    <td width="31%" align="right"></td>
    <td width="2%" align="right"></td>
    <td width="32%" align="right"></td>
  </tr>
  <tr>
    <td width="33%"><font size="1">&nbsp; </font></td>
    <td width="2%" align="right"></td>
    <td width="31%" align="right"></td>
    <td width="2%" align="right"></td>
    <td width="32%" align="right"></td>
  </tr>
  <tr bgcolor="#ccffcc">
    <td width="33%"><font size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Juergen Heiden</font></td>
    <td width="2%" align="right"></td>
    <td width="31%" align="right"><font size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">72,000</font></td>
    <td width="2%" align="right"></td>
    <td width="32%" align="right"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.85%</font></td>
  </tr>
  <tr>
    <td width="33%"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Radenkaempen 19A</font></td>
    <td width="2%" align="right"></td>
    <td width="31%" align="right"></td>
    <td width="2%" align="right"></td>
    <td width="32%" align="right"></td>
  </tr>
  <tr bgcolor="#ccffcc">
    <td width="33%"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17192 Waren
    (Mueritz), Germany</font></td>
    <td width="2%" align="right"></td>
    <td width="31%" align="right"></td>
    <td width="2%" align="right"></td>
    <td width="32%" align="right"></td>
  </tr>
  <tr>
    <td width="33%"><font size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director and
    Officer (1 person)</font></td>
    <td width="2%" align="right"></td>
    <td width="31%" align="right"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">766,000</font></td>
    <td width="2%" align="right"></td>
    <td width="32%" align="right"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">72.86%</font></td>
  </tr>
</table>

<p align="left" style="text-align: justify"><font face="Times New Roman" size="2"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1) Applicable
percentage ownership is based on 1,051,340 shares of common stock outstanding as of
September 12, 2008. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of common stock that are currently exercisable or
exercisable within 60 days of December 31, 2007 are deemed to be beneficially owned by the
person holding such securities for the purpose of computing the percentage of ownership of
such person, but are not treated as outstanding&nbsp;for the purpose of computing the
percentage ownership of any other person.</font><font face="Times New Roman" size="2"></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="zxsi_10ksb.htm#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" face="Times New Roman" size="2">During the last
two years, to the knowledge of the Company, there was no person who had or has a direct or
indirect material interest in any transaction or proposed transaction to which the Company
was or is a party.&nbsp;Transactions in this context relate to any transaction
which&nbsp;exceeds $60,000.</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="zxsi_10ksb.htm#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="#ccffcc" height="0%"><font size="1"><strong>Exhibit No.</strong></font></td>
    <td width="92%" bgcolor="#ccffcc" height="0%"><font size="1"><strong>Description</strong></font></td>
  </tr>
  <tr>
    <td width="8%" bgcolor="#FFFFFF" height="0%"><font size="1">31.1</font></td>
    <td width="92%" bgcolor="#FFFFFF" height="0%"><font size="1">Certification of President
    and CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section
    302 of the Sarbanes-Oxley Act of 2002.</font></td>
  </tr>
  <tr>
    <td width="8%" bgcolor="#FFFFFF" height="0%"><font size="1">32.1</font></td>
    <td width="92%" bgcolor="#FFFFFF" height="0%"><font size="1">Certification of President
    and CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.</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 did not file a current report on Form 8-K during the last
quarter of the fiscal year covered by this annual report.</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="zxsi_10ksb.htm#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">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, 2007.</p>

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

<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px">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 year
ended December 31, 200</font><font FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">7 and
2006, and fees billed for other services rendered by Michael F. Cronin, CPA during those
periods. </font><font face="Times New Roman" size="2"></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="middle" width="55%" height="0" align="right"></td>
    <td vAlign="middle" width="2%" height="0" align="right"></td>
    <td vAlign="middle" align="right" width="13%" height="0"
    style="border-bottom: 1px none rgb(0,0,0)"><font size="1"><b>Year&nbsp;Ended&nbsp;</b></font></td>
    <td vAlign="middle" width="2%" height="0" align="right"></td>
    <td vAlign="middle" align="right" width="13%" height="0"
    style="border-bottom: 1px none rgb(0,0,0)"><b><font size="1">Year&nbsp;Ended&nbsp;</font></b></td>
  </tr>
  <tr>
    <td vAlign="middle" width="55%" height="0" bgcolor="#CCFFCC" align="right"></td>
    <td vAlign="middle" width="2%" height="0" align="right" bgcolor="#CCFFCC"></td>
    <td vAlign="middle" align="right" width="13%" height="0"
    style="border-bottom: 1px solid rgb(0,0,0)" bgcolor="#CCFFCC"><font size="1"><b>December
    31, 2006 </b></font></td>
    <td vAlign="middle" width="2%" height="0" align="right" bgcolor="#CCFFCC"></td>
    <td vAlign="middle" align="right" width="13%" height="0"
    style="border-bottom: 1px solid rgb(0,0,0)" bgcolor="#CCFFCC"><font size="1"><b>December
    31, 2005 </b></font></td>
  </tr>
  <tr bgColor="#cceeff">
    <td vAlign="top" width="55%" height="0" style="background-color: rgb(255,255,255)"
    bgcolor="#ccffcc"><p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font size="2">Audit fees
    </font><font size="1">(1)</font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"
    style="background-color: rgb(255,255,255)" bgcolor="#ccffcc"><font size="2">$</font></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="background-color: rgb(255,255,255)" bgcolor="#ccffcc"><font size="2">4,000</font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"
    style="background-color: rgb(255,255,255)" bgcolor="#ccffcc"><font size="2">$ </font></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="background-color: rgb(255,255,255)" bgcolor="#ccffcc"><font size="2">4,000</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 </font><font size="1">(2)</font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"><font size="2">--- </font></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="#ccffcc"><p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font size="2">Tax fees </font><font
    size="1">(3)</font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"
    style="background-color: rgb(255,255,255)" bgcolor="#ccffcc"></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="background-color: rgb(255,255,255)" bgcolor="#ccffcc"><font size="2">--- </font></td>
    <td vAlign="bottom" width="2%" height="0" align="right"
    style="background-color: rgb(255,255,255)" bgcolor="#ccffcc"><font size="2">&nbsp; </font></td>
    <td vAlign="bottom" align="right" width="13%" height="0"
    style="background-color: rgb(255,255,255)" bgcolor="#ccffcc"><font size="2">--- </font></td>
  </tr>
  <tr>
    <td vAlign="top" width="55%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><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"><font size="2">--- </font></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="100%" height="0" colspan="5"><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="5"><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="5"><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>
<b>

<p style="text-align: justify"></b>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 ha</font><font
FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">ve filed all reports required under Section
16(a).</font><font face="Times New Roman" size="2"></p>

<p style="text-align: justify">&nbsp;</p>

<hr NOSHADE SIZE="5">

<p ALIGN="CENTER"><font size="2"><b>SIGNATURES</b></font></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="#ccffcc">
    </font><td ALIGN="left" WIDTH="15%" bgcolor="#FFFFFF"><font size="2"><u>/s/ Ivo Heiden</u><br>
    Ivo Heiden<br>
    <i>&nbsp;&nbsp;CEO, CFO&nbsp; and Chairman<br>
    &nbsp; Dated: September 12, 2008</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"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><a
name="ZAXIS INTERNATIONAL INC.">ZAXIS INTERNATIONAL INC.</a><br>
INDEX TO FINANCIAL STATEMENTS </strong></font><a
href="zxsi_10ksb.htm#TABLE OF CONTENTS"><font
face="TIMES NEW ROMAN, TIMES, SERIF" size="1">Back to Table of Contents</font></a></p>
<div align="left">

<table cellSpacing="0" cellPadding="0" width="100%">
  <tr bgColor="#ccffcc">
    <td style="BORDER-BOTTOM: #ccffcc" vAlign="top" align="left" width="95%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font face="Times New Roman" size="2"
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u><p>Years ended
    December 31, 2007 and 2006 (Audited)</u></font></p>
    </div></td>
    <td style="BORDER-BOTTOM: #ccffcc" vAlign="top" width="5%"></td>
  </tr>
  <tr bgColor="white">
    <td vAlign="top" align="left" width="95%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><a
    href="zxsi_10ksb.htm#REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM">Report
    of Independent Registered Public Accounting Firm </a></font></p>
    </div></td>
    <td vAlign="top" width="5%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>F-19 </font></p>
    </div></td>
  </tr>
  <tr bgColor="#ccffcc">
    <td vAlign="top" align="left" width="95%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>&nbsp;&nbsp;
    <a
    href="zxsi_10ksb.htm#Balance Sheets as of December 31, 2005 (Unaudited) and June 30, 2005">Balance
    Sheet</a> </font></p>
    </div></td>
    <td vAlign="top" width="5%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>F-20 </font></p>
    </div></td>
  </tr>
  <tr bgColor="white">
    <td vAlign="top" align="left" width="95%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>&nbsp;&nbsp;
    <a href="zxsi_10ksb.htm#Statement of Operations">Statements of
    Operations</a> </font></p>
    </div></td>
    <td vAlign="top" width="5%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>F-21 </font></p>
    </div></td>
  </tr>
  <tr bgColor="#ccffcc">
    <td vAlign="top" align="left" width="95%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>&nbsp;&nbsp;
    <a
    href="zxsi_10ksb.htm#Consolidated Statements of Stockholders' Deficiency">Statements
    of Stockholders' Equity (Deficit) </a></font></p>
    </div></td>
    <td vAlign="top" width="5%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>F-22 </font></p>
    </div></td>
  </tr>
  <tr bgColor="white">
    <td vAlign="top" align="left" width="95%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>&nbsp;&nbsp;
    <a href="zxsi_10ksb.htm#Statement of Cash Flows">Statements of
    Cash Flows </a></font></p>
    </div></td>
    <td vAlign="top" width="5%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>F-23 </font></p>
    </div></td>
  </tr>
  <tr bgColor="#ccffcc">
    <td vAlign="top" align="left" width="95%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p><a
    href="zxsi_10ksb.htm#Background and Significant Accounting Policies">Notes
    to Financial Statements</a> </font></p>
    </div></td>
    <td vAlign="top" width="5%"><div
    style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"
    align="center"><font
    style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><p>F-24 </font></p>
    </div></td>
  </tr>
</table>
</div>

<p align="center">&nbsp;</p>
<a
href="zxsi_10ksb.htm#BACKGROUND ANDSIGNIFICANT ACCOUNTING POLICIESJune 30, 2005"></div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
</a><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="zxsi_10ksb.htm#ZAXIS INTERNATIONAL INC."><font size="1">Back
to Table of Contents</font></a></p>

<p ALIGN="center">Michael F. Cronin<br>
Certified Public Accountant<br>
Rochester, New York</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, 2007 and 2006 and the related statements of operations,
stockholders&#146; deficiency and cash flows for the years 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. </p>

<p ALIGN="JUSTIFY">I conducted my audits in accordance with the standards of the Public
Company Accounting Oversight Board <i>(United States)</i>. Those standards require that I
plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to have, nor was
I engaged to perform, an audit of its internal control over financial reporting. My audit
included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, I express no such opinion. 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 audits provide 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, 2007 and 2006 and the results of its operations, its changes in
stockholder&#146;s deficiency and its cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.</p>

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

<p ALIGN="JUSTIFY">March 25, 2008</p>
</font></div>

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

<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="#ccffcc"><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="Balance Sheets as of December 31, 2005 (Unaudited) and June 30, 2005">Balance Sheets</a>
    </font><font size="1"><a
    href="zxsi_10ksb.htm#ZAXIS INTERNATIONAL INC.">Back to Table of
    Contents</a></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"></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"></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"><strong>December 31, 2007</strong></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"><strong>December 31, 2006</strong></font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><p align="center"><font size="2"
    face="Times New Roman">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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0" bgcolor="#FFFFFF"><font size="2"
    face="Times New Roman">&nbsp;&nbsp; Cash</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 1px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">$</font></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">170</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 1px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">$</font></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">19</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">&nbsp;&nbsp; &nbsp;&nbsp; Total current assets</font></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">170</font></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">19</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&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="2" face="Times New Roman">&nbsp; </font></td>
    <td vAlign="middle" align="right" width="2%" height="0"
    style="border-bottom: 1px solid 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" face="Times New Roman">&nbsp; </font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Total Assets</strong></font></td>
    <td vAlign="middle" align="right" width="2%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0" bgcolor="#ccffcc"
    style="border-bottom: 2px double rgb(0,0,0)"><font size="2" face="Times New Roman">170</font></td>
    <td vAlign="middle" align="right" width="2%" height="0" bgcolor="#ccffcc"
    style="border-bottom: 2px none rgb(0,0,0)"><font size="2" face="Times New Roman">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0" bgcolor="#ccffcc"
    style="border-bottom: 2px double rgb(0,0,0)"><font size="2" face="Times New Roman">19</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><p align="center"><font size="2"
    face="Times New Roman">LIABILITIES AND STOCKHOLDERS' DEFICIENCY</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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Accounts payable</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"><font size="2"
    face="Times New Roman">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">500</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"><font size="2"
    face="Times New Roman">$</font></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">2,500</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Advances from and accruals due to related party</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" face="Times New Roman">50,900</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" face="Times New Roman">43,395</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">&nbsp;&nbsp; &nbsp;&nbsp; Total current liabilities</font></td>
    <td vAlign="middle" align="right" width="2%" height="0" bgcolor="#ccffcc"></td>
    <td vAlign="middle" align="right" width="13%" height="0" bgcolor="#ccffcc"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2" face="Times New Roman">51,400</font></td>
    <td vAlign="middle" align="right" width="2%" height="0" bgcolor="#ccffcc"
    style="border-bottom: 1px none rgb(0,0,0)"></td>
    <td vAlign="middle" align="right" width="13%" height="0" bgcolor="#ccffcc"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2" face="Times New Roman">45,895</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">Stockholders'
    deficiency:</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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Preferred stock, $0.0001 par value; 10,000,000 shares authorized;</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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
    Series A preferred stock, 1,000,000 authorized, none issued;</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">-</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
    Series B convertible preferred stock, 2,000,000 authorized, none issued;</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">-</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">-</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Common stock, $0.0001 par value; 100,000,000 shares authorized; </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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
    99,933,155 issued and outstanding at December 31, 2007 and</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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
    92,933,155 issued and outstanding at December 31, 2006</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">9,993</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">9,293</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&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"
    face="Times New Roman">48,991</font></td>
    <td vAlign="middle" align="right" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="13%" height="0"><font size="2"
    face="Times New Roman">14,691</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&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" face="Times New Roman">(110,214)</font></td>
    <td style="border-bottom: 1px solid 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" face="Times New Roman">(69,860)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0"><font size="2" face="Times New Roman">&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 solid rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0"><font size="2" face="Times New Roman">(51,230)</font></td>
    <td style="border-bottom: 1px solid 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" face="Times New Roman">(45,876)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="70%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Total Liabilities and
    Stockholders' Deficiency</strong></font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">170</font></td>
    <td style="border-bottom: 2px none rgb(0,0,0)" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="13%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">19</font></td>
    <font size="2" face="Times New Roman">
  </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>

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

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

<table height="1" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="104%" height="21" bgcolor="#ccffcc" colspan="5" align="center"><font size="2"><b>Zaxis
    International Inc.</b></font></td>
  </tr>
  <tr>
    <td width="104%" height="21" colspan="5" align="center"><font size="2"><a
    name="Statement of Operations">Statement of Operations</a> </font><font size="1"><a
    href="zxsi_10ksb.htm#ZAXIS INTERNATIONAL INC.">Back to Table of
    Contents</a></font></td>
  </tr>
  <tr>
    <td width="104%" height="21" colspan="5" align="center"><font size="2">&nbsp; </font></td>
  </tr>
  <tr>
    </font><td width="70%" height="16"></td>
    <td width="2%" height="16" align="right"></td>
    <td width="13%" align="right" height="16"><font size="1"><strong>Year Ended</strong></font></td>
    <td width="2%" height="16" align="right"></td>
    <td width="13%" align="right" height="16"><font size="1"><strong>Year Ended</strong></font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="16"></td>
    <td width="2%" height="16" align="right"></td>
    <td width="13%" align="right" height="16" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1"><strong>December 31, 2007</strong></font></td>
    <td width="2%" height="16" align="right"></td>
    <td width="13%" align="right" height="16" style="border-bottom: 1px solid rgb(0,0,0)"><font
    size="1"><strong>December 31, 2006</strong></font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="24" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">&nbsp;
    </font></td>
    <td width="2%" height="24" bgcolor="#FFFFFF" align="right"></td>
    <td width="13%" bgcolor="#FFFFFF" align="right" height="24"></td>
    <td width="2%" height="24" bgcolor="#FFFFFF" align="right"></td>
    <td width="13%" height="24" bgcolor="#FFFFFF" align="right"></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="21" bgcolor="#ccffcc"><font size="2" face="Times New Roman">Revenue</font></td>
    <td width="2%" height="21" bgcolor="#ccffcc" align="right"><font size="2"
    face="Times New Roman">$</font></td>
    <td width="13%" bgcolor="#ccffcc" align="right" height="21"><font size="2"
    face="Times New Roman">0</font></td>
    <td width="2%" height="21" bgcolor="#ccffcc" align="right"><font size="2"
    face="Times New Roman">$</font></td>
    <td width="13%" height="21" bgcolor="#ccffcc" align="right"><font size="2"
    face="Times New Roman">0</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="17"><font size="2" face="Times New Roman">Costs and
    Expenses:</font></td>
    <td width="2%" height="17" align="right"></td>
    <td width="13%" align="right" height="17"></td>
    <td width="2%" height="17" align="right"></td>
    <td width="13%" height="17" align="right"></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="17" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    General and administrative</font></td>
    <td width="2%" height="17" bgcolor="#FFFFFF" align="right"></td>
    <td width="13%" bgcolor="#FFFFFF" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)" height="17"><font size="2"
    face="Times New Roman">40,354</font></td>
    <td width="2%" height="17" bgcolor="#FFFFFF" align="right"></td>
    <td width="13%" bgcolor="#FFFFFF" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)" height="17"><font size="2"
    face="Times New Roman">60,719</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="17" bgcolor="#ccffcc"><font size="2" face="Times New Roman">Total
    costs and expenses</font></td>
    <td width="2%" height="17" align="right" bgcolor="#ccffcc"></td>
    <td width="13%" align="right" bgcolor="#ccffcc" height="17"><font size="2"
    face="Times New Roman">40,354</font></td>
    <td width="2%" height="17" align="right" bgcolor="#ccffcc"></td>
    <td width="13%" align="right" bgcolor="#ccffcc" height="17"><font size="2"
    face="Times New Roman">60,719</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="17"><font size="2" face="Times New Roman">&nbsp; </font></td>
    <td width="2%" height="17" align="right"></td>
    <td width="13%" align="right" height="17"></td>
    <td width="2%" height="17" align="right"></td>
    <td width="13%" align="right" height="17"></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="18" bgcolor="#ccffcc"><font size="2" face="Times New Roman">Net
    income (loss)</font></td>
    <td width="2%" height="18" align="right" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">$</font></td>
    <td width="13%" align="right" bgcolor="#ccffcc"
    style="border-bottom: 2px double rgb(0,0,0)" height="18"><font size="2"
    face="Times New Roman">(40,354)</font></td>
    <td width="2%" height="18" align="right" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">$</font></td>
    <td width="13%" align="right" bgcolor="#ccffcc"
    style="border-bottom: 2px double rgb(0,0,0)" height="18"><font size="2"
    face="Times New Roman">(60,719)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="17"><font size="2" face="Times New Roman">&nbsp; </font></td>
    <td width="2%" height="17" align="right"></td>
    <td width="13%" align="right" height="17"></td>
    <td width="2%" height="17" align="right"></td>
    <td width="13%" align="right" height="17"></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="1"><font size="2" face="Times New Roman">Basic and diluted
    net loss</font></td>
    <td width="2%" height="1" align="right"><font size="2" face="Times New Roman">$</font></td>
    <td width="13%" height="1" align="right" style="border-bottom: 2px double rgb(0,0,0)"><font
    size="2" face="Times New Roman">(0.00)</font></td>
    <td width="2%" height="1" align="right"><font size="2" face="Times New Roman">$</font></td>
    <td width="13%" height="1" align="right" style="border-bottom: 2px double rgb(0,0,0)"><font
    size="2" face="Times New Roman">(0.00)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="1"><font size="2" face="Times New Roman">&nbsp; </font></td>
    <td width="2%" height="1" align="right"></td>
    <td width="13%" align="right" height="1"></td>
    <td width="2%" height="1" align="right"></td>
    <td width="13%" align="right" height="1"></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="1" bgcolor="#ccffcc"><font size="2" face="Times New Roman">Weighted
    average shares outstanding (basic and diluted)</font></td>
    <td width="2%" 1. Basis of Presentation Peregrine Industries, Inc. (the "Company") was
    formed on October 1, 1995 for the purpose of manufacturing residential pool heaters. On
    March 29, 2004, the U.S. Bankruptcy Court confirmed the sale of the Peregrine corporate
    shell entity. The accounts of the former subsidiaries were not included in the sale and
    have not been carried forward. The Financial Statements presented herein have been
    prepared by us in accordance with the accounting policies described in our June 30, 2005
    Annual Report on Form 10-KSB and should be read in conjunction with the Notes to
    Consolidated Financial Statements which appear in that report. The preparation of these
    financial statements in conformity with accounting principles generally accepted in the
    United States requires us to make estimates and judgments that affect the reported amounts
    of assets, liabilities, revenues and expenses, and related disclosure of contingent assets
    and liabilities. On an on going basis, we evaluate our estimates, including those related
    intangible assets, income taxes, insurance obligations and contingencies and litigation.
    We base our estimates on historical experience and on various other assumptions that are
    believed to be reasonable under the circumstances, the results of which form the basis for
    making judgments about the carrying values of assets and liabilities that are not readily
    apparent from other resources. Actual results may differ from these estimates under
    different assumptions or conditions. In the opinion of management, the information
    furnished in this Form 10-QSB reflects all adjustments necessary for a fair statement of
    the financial position and results of operations and cash flows as of and for the three
    and six-month periods ended December 31, 2005 and 2004. All such adjustments are of a
    normal recurring nature. The Consolidated Financial Statements have been prepared in
    accordance with the instructions to Form 10-QSB and therefore do not include some
    information and notes necessary to conform with annual reporting requirements. "Fresh
    Start" Accounting: On September 4, 2002 all assets were transferred to the chapter 7
    trustee in settlement of all outstanding corporate obligations. We adopted "fresh-start"
    accounting as of September 5, 2002 in accordance with procedures specified by AICPA
    Statement of Position ("SOP") No. 90-7, "Financial Reporting by Entities in Reorganization
    under the Bankruptcy Code." On March 29, 2004, the U.S. Bankruptcy Court for the Southern
    District of Florida confirmed the order previously granted on March 15, 2004 for the sale
    of Peregrine as a shell entity. All results for periods including and subsequent to
    September 5, 2002 are referred to as those of the "Successor Company". 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, "Business Combinations". 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 September 5, 2002 was $0. We
    adopted "fresh-start" 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. The accounts of the former subsidiaries were not included
    in the bankruptcy sale and have not been carried forward. Change of Control: On February
    12, 2004, the Trustee for Peregrine and Park Avenue Group, Inc. entered into a contract
    resulting in a change in control of Peregrine. On March 15, 2004, the Bankruptcy Court
    granted an order approving the contract and finding that Park Avenue Group is a good faith
    purchaser within the meaning of 11 USC Section 363(m). On March 29, 2004, the U.S.
    Bankruptcy Court for the Southern District of Florida confirmed the order previously
    granted on March 15, 2004. The confirmed Court order provided that the existing officers
    and directors were deemed removed from office and also authorized the following: (i) the
    appointment of new members to the board of directors; (ii) the amendment of the Article of
    Incorporation to increase the number of authorized shares to 100,000,000 shares; (iii) the
    issuance of up to 30,000,000 shares of common stock, par value $0.0001 to the new
    management;(iv) the authority to implement a reverse split of the issued and outstanding
    shares in a ratio to be determined by the board of directors; (v) the cancellation and
    extinguishment of all common share conversion rights of any kind, including without
    limitation, warrants, options, convertible bonds, other convertible debt instruments and
    convertible preferred stock; and (vi) the cancellation and extinguishment of all preferred
    shares of every series and accompanying conversion rights of any kind. 2. Earnings/Loss
    Per Share Basic earnings per share is computed by dividing income available to common
    shareholders (the numerator) by the weighted-average number of common shares outstanding
    (the denominator) for the period. Diluted earnings per share assume that any dilutive
    convertible securities outstanding were converted, with related preferred stock dividend
    requirements and outstanding common shares adjusted accordingly. It also assumes that
    outstanding common shares were increased by shares issuable upon exercise of those stock
    options for which market price exceeds the exercise price, less shares which could have
    been purchased by us with the related proceeds. In periods of losses, diluted loss per
    share is computed on the same basis as basic loss per share as the inclusion of any other
    potential shares outstanding would be anti-dilutive. 3. Stockholders' Equity Common Stock
    In July 2005, we issued 15,050,000 shares of common stock to related parties. 9,000,000
    shares were issued to pay outstanding advances of $ 7,999 and 6,050,000 shares, valued at
    $5,385, were issued to reflect the cost of services provided to our company to meet
    ongoing reporting and compliance obligations. 4. New Accounting Standards In December
    2004, the FASB issued SFAS No. 123 (revised 2004) "Share-Based Payment," or SFAS No.
    123(R). SFAS No. 123(R) revises FASB Statement No. 123 "Accounting for Stock-Based
    Compensation," and supersedes APB Opinion No. 25, and its related implementation guidance.
    This Statement eliminates the ability to account for share-based compensation using the
    intrinsic value method under APB Opinion No. 25. SFAS No. 123(R) focuses primarily on
    accounting for transactions in which an entity obtains employee services in share-based
    payment transactions. SFAS No. 123(R) requires a public entity to measure the cost of
    employee services received in exchange for an award of equity instruments based on the
    grant-date fair value of the award (with limited exceptions). That cost will be recognized
    over the period during which an employee is required to provide service in exchange for
    the award, known as the requisite service period, which is usually the vesting period.
    SFAS No. 123(R) is effective for companies filing under Regulation SB as of the beginning
    of the first interim or annual reporting period that begins after December 15, 2005, which
    for us will be our first quarter of the year ending December 31, 2006. We anticipate
    adopting SFAS No. 123(R) beginning in the quarter ending March 31, 2006. Accordingly, the
    provisions of SFAS No. 123(R) will apply to new awards and to awards modified,
    repurchased, or cancelled after the required effective date. Additionally, compensation
    cost for the portion of awards for which the requisite service has not been rendered that
    are outstanding as of the required effective date must be recognized as the requisite
    service is rendered on or after the required effective date. These new accounting rules
    will lead to a decrease in reported earnings. Although our adoption of SFAS No. 123(R)
    could have a material impact on our financial position and results of operations, we are
    still evaluating the potential impact from adopting this statement. In December 2004, the
    FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets-an amendment of APB Opinion No.
    29," which is effective for us starting July 1, 2005. In the past, we were frequently
    required to measure the value of assets exchanged in non-monetary transactions by using
    the net book value of the asset relinquished. Under SFAS No. 153, we will measure assets
    exchanged at fair value, as long as the transaction has commercial substance and the fair
    value of the assets exchanged is determinable within reasonable limits. A non-monetary
    exchange has commercial substance if the future cash flows of the entity are expected to
    change significantly as a result of the exchange. The adoption of SFAS No. 153 is not
    anticipated to have a material effect on our consolidated financial position, results of
    operations or cash flows. In September 2004, the EITF reached a consensus regarding Issue
    No. 04-1, "Accounting for Preexisting Relationships Between the Parties to a Business
    Combination" ("EITF 04-1"). EITF 04-1 requires an acquirer in a business combination to
    evaluate any preexisting relationship with the acquiree to determine if the business
    combination in effect contains a settlement of the preexisting relationship. A business
    combination between parties with a preexisting relationship should be viewed as a multiple
    element transaction. EITF 04-1 is effective for business combinations after October 13,
    2004, but requires goodwill resulting from prior business combinations involving parties
    with a preexisting relationship to be tested for impairment by applying the guidance in
    the consensus. We will apply EITF 04-1 to acquisitions subsequent to the effective date
    and in our future goodwill impairment testing. In December 2004, the FASB issued FASB
    Staff Position No. FAS 109-2, or FAS 109-2, "Accounting and Disclosure Guidance for the
    Foreign Earnings Repatriation Provision within the American Jobs Creations Act of 2004."
    The AJCA introduces a limited time 85% dividends received deduction on the repatriation of
    certain foreign earnings to a U.S. taxpayer (repatriation provision), provided certain
    criteria are met. FAS No. 109-2 provides accounting and disclosure guidance for the
    repatriation provision. Although FAS 109-2 is effective immediately, we have not begun our
    analysis and do not expect to be able to complete our evaluation of the repatriation
    provision until after Congress or the Treasury Department provides additional clarifying
    language on key elements of the provision In May 2005, the FASB issued SFAS No. 154,
    "Accounting Changes and Error Corrections," which replaces APB Opinion No. 20 "Accounting
    Changes," and FASB Statement No. 3 "Reporting Accounting Changes in Interim Financial
    Statements," and changes the requirements for the accounting for and reporting of a change
    in accounting principle. This Statement requires retrospective application to prior
    periods financial statements of changes in accounting principle, unless it is
    impracticable to determine either the period-specific effects or the cumulative effect of
    the change. This Statement shall be effective for accounting changes and corrections of
    errors made in fiscal years beginning after December 15, 2005. Early adoption is permitted
    for accounting changes and corrections of errors made in fiscal years beginning after the
    date this Statement is issued. We do not believe that adoption of SFAS 154 will have a
    material impact on our financial statements. align="right" bgcolor="#ccffcc" height="1"></td>
    <td width="13%" align="right" bgcolor="#ccffcc"
    style="border-bottom: 2px double rgb(0,0,0)" height="1"><font size="2"
    face="Times New Roman">93,340,357</font></td>
    <td width="2%" height="1" align="right" bgcolor="#ccffcc"></td>
    <td width="13%" align="right" bgcolor="#ccffcc"
    style="border-bottom: 2px double rgb(0,0,0)" height="1"><font size="2"
    face="Times New Roman">92,786,895</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="104%" height="17" bgcolor="#FFFFFF" colspan="5"><font size="2"
    face="Times New Roman">&nbsp; </font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="104%" height="21" bgcolor="#FFFFFF" colspan="5"><font size="2"
    face="Times New Roman">See Summary of Significant Accounting Policies and Notes to
    Financial Statements.</font></td>
    <font size="2" face="Times New Roman">
  </tr>
</table>
</div>

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

<p>&nbsp;</p>

<table cellSpacing="0" cellPadding="0" width="100%" border="0" height="0">
  <tr>
    <td width="101%" height="0" colspan="5" align="center" bgcolor="#ccffcc"><font size="2"><b>Zaxis
    International Inc.</b></font></td>
  </tr>
  <tr>
    <td width="101%" height="0" colspan="5" align="center"><font size="2"
    face="Times New Roman"><a name="Statement of Cash Flows">Statement of Cash Flows</a> </font><font
    size="1"><a href="zxsi_10ksb.htm#ZAXIS INTERNATIONAL INC.">Back to
    Table of Contents</a></font></td>
  </tr>
  <tr>
    </font><td width="101%" height="0" colspan="5" align="center"><p align="left"><font
    face="Times New Roman" size="1">&nbsp;&nbsp; &nbsp; </font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="1"><strong>Year ended</strong></font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="1"><strong>Year ended</strong></font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="1">&nbsp; </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"><strong>December 31, 2007</strong></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="1"><strong>December 31, 2006</strong></font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">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 width="13%" height="0" align="right"></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">Net
    loss</font></td>
    <td width="2%" height="0" align="right" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">$</font></td>
    <td width="13%" height="0" align="right" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">(40,354)</font></td>
    <td align="right" width="2%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">$</font></td>
    <td width="13%" height="0" align="right" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">(60,719)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Expenses paid by issuance of common stock</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">35,000</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">18,000</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp; Fair
    value of services provided by related parties</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">34,000</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Expenses paid by related party</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">2,500</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">2,577</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">Adjustments
    required to reconcile net loss to 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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&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" face="Times New Roman">0</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">0</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&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" face="Times New Roman">(2,000)</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" face="Times New Roman">500</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
    <strong>Cash flows used by operating activities</strong></font></td>
    <td width="2%" height="0" bgcolor="#ccffcc" align="right"></td>
    <td width="13%" height="0" bgcolor="#ccffcc" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2" face="Times New Roman">(4,854)</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 1px" align="right" width="2%" height="0"
    bgcolor="#ccffcc"></td>
    <td width="13%" height="0" bgcolor="#ccffcc" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2" face="Times New Roman">(5,642)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">Cash flows from
    investing activities:</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" face="Times New Roman">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" face="Times New Roman">0</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
    <strong>Cash used in investing activities</strong></font></td>
    <td width="2%" height="0" bgcolor="#ccffcc" align="right"></td>
    <td width="13%" height="0" bgcolor="#ccffcc" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2" face="Times New Roman">0</font></td>
    <td align="right" width="2%" height="0" bgcolor="#ccffcc"></td>
    <td width="13%" height="0" bgcolor="#ccffcc" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2" face="Times New Roman">0</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Proceeds from issuance of common 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"
    face="Times New Roman">-</font></td>
    <td align="right" width="2%" height="0" bgcolor="#FFFFFF"></td>
    <td width="13%" height="0" bgcolor="#FFFFFF" align="right"><font size="2"
    face="Times New Roman">-</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Advances from related parties</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" face="Times New Roman">5,005</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" face="Times New Roman">5,200</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
    <strong>Cash generated by financing activities</strong></font></td>
    <td width="2%" height="0" bgcolor="#ccffcc" align="right"></td>
    <td width="13%" height="0" bgcolor="#ccffcc" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2" face="Times New Roman">5,005</font></td>
    <td align="right" width="2%" height="0" bgcolor="#ccffcc"></td>
    <td width="13%" height="0" bgcolor="#ccffcc" align="right"
    style="border-bottom: 1px solid rgb(0,0,0)"><font size="2" face="Times New Roman">5,200</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">&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>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">Change in cash</font></td>
    <td width="2%" height="0" align="right"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">151</font></td>
    <td align="right" width="2%" height="0"></td>
    <td width="13%" height="0" align="right"><font size="2" face="Times New Roman">(442)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0"><font size="2" face="Times New Roman">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" face="Times New Roman">19</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" face="Times New Roman">461</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="70%" height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">Cash
    - End of period</font></td>
    <td width="2%" height="0" bgcolor="#ccffcc" align="right"><font size="2"
    face="Times New Roman">$</font></td>
    <td width="13%" height="0" bgcolor="#ccffcc" align="right"
    style="border-bottom: 2px double rgb(0,0,0)"><font size="2" face="Times New Roman">170</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" align="right" width="2%" height="0"
    bgcolor="#ccffcc"><font size="2" face="Times New Roman">$</font></td>
    <td width="13%" height="0" bgcolor="#ccffcc" align="right"
    style="border-bottom: 2px double rgb(0,0,0)"><font size="2" face="Times New Roman">19</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="100%" height="0" bgcolor="#FFFFFF" colspan="5"><font size="2"
    face="Times New Roman">&nbsp; </font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td width="100%" height="0" bgcolor="#FFFFFF" colspan="5"><font size="2"
    face="Times New Roman">See Summary of Significant Accounting Policies and Notes to
    Financial Statements.</font></td>
    <font size="2" face="Times New Roman">
  </tr>
</table>

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

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

<table height="1" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td vAlign="middle" width="100%" height="0" colspan="9" align="center" bgcolor="#ccffcc"><font
    size="1"><b>Zaxis International Inc.</b></font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0" colspan="9" align="center"><font size="1"><a
    name="Consolidated Statements of Stockholders' Deficiency">Statements of Stockholders'
    Deficiency</a> <a href="zxsi_10ksb.htm#ZAXIS INTERNATIONAL INC.">Back
    to Table of Contents</a></font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="100%" height="0" colspan="9" align="center"><font size="1">&nbsp;
    </font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="52%" height="0"></td>
    <td vAlign="middle" width="2%" height="0" align="right"></td>
    <td vAlign="middle" width="22%" height="0" colspan="3"><p align="center"><font size="1"><strong>Common
    Stock</strong></font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="10%" height="0"><font size="1"><strong>Additional</strong></font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="10%" height="0" align="right"></td>
  </tr>
  <tr>
    <td vAlign="middle" width="52%" height="0"></td>
    <td vAlign="middle" width="2%" height="0" align="right"></td>
    <td vAlign="middle" width="10%" height="0"><p align="right"><font size="1"><strong>Number
    of</strong></font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="10%" height="0"><p align="right"><font size="1"><strong>Stated
    Or</strong></font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="10%" height="0"><font size="1"><strong>Paid-In</strong></font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="10%" height="0"><p align="right"><font size="1"><strong>Accumulated</strong></font></td>
  </tr>
  <tr>
    <td vAlign="middle" width="52%" height="0"></td>
    <td vAlign="middle" width="2%" height="0" align="right"></td>
    <td vAlign="middle" width="10%" height="0" style="border-bottom: 1px solid rgb(0,0,0)"><p
    align="right"><font size="1"><strong>Shares</strong></font></td>
    <td vAlign="middle" width="2%" 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"><strong>Par Value</strong></font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" align="right" width="10%" height="0"
    style="border-bottom: 1px solid rgb(0,0,0)"><p align="right"><font size="1"><strong>Capital</strong></font></td>
    <td vAlign="middle" width="2%" height="0"></td>
    <td vAlign="middle" width="10%" height="0" style="border-bottom: 1px none rgb(0,0,0)"><p
    align="right"><font size="1"><strong>Deficit</strong></font></td>
  </tr>
  <tr>
    </font><td vAlign="middle" width="52%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">Balance at December 31, 2005</font></td>
    <td vAlign="middle" width="2%" height="0" bgcolor="#ccffcc" align="right"></td>
    <td style="border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    vAlign="middle" align="right" width="10%" height="0" bgcolor="#CCFFCC"><font size="2"
    face="Times New Roman">92,333,155</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"></td>
    <td style="border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    vAlign="middle" align="right" width="10%" height="0" bgcolor="#CCFFCC"><font size="2"
    face="Times New Roman">9,233</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"></td>
    <td style="border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    vAlign="middle" align="right" width="10%" height="0" bgcolor="#CCFFCC"><font size="2"
    face="Times New Roman">(3,249)</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"></td>
    <td style="border-top: 1px solid rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    vAlign="middle" align="right" width="10%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">(9,141)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="52%" height="0" bgcolor="#FFFFFF"><font size="2"
    face="Times New Roman">Issuance of shares for services</font></td>
    <td vAlign="middle" width="2%" height="0" bgcolor="#FFFFFF" align="right"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">600,000</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#FFFFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">60</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#FFFFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">17,940</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#FFFFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">0</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="52%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Net loss</font></td>
    <td vAlign="middle" width="2%" height="0" align="right"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0"><font size="2" face="Times New Roman">-</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="10%"
    height="0"><font size="2" face="Times New Roman">-</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="10%"
    height="0"><font size="2" face="Times New Roman">-</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="10%"
    height="0"><font size="2" face="Times New Roman">(60,719)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="52%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">Balance at December 31, 2006</font></td>
    <td vAlign="middle" width="2%" height="0" bgcolor="#ccffcc" align="right"></td>
    <td style="border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    vAlign="middle" align="right" width="10%" height="0" bgcolor="#CCFFCC"><font size="2"
    face="Times New Roman">92,933,155</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"></td>
    <td style="border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    vAlign="middle" align="right" width="10%" height="0" bgcolor="#CCFFCC"><font size="2"
    face="Times New Roman">9,233</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"></td>
    <td style="border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    vAlign="middle" align="right" width="10%" height="0" bgcolor="#CCFFCC"><font size="2"
    face="Times New Roman">14,691</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"></td>
    <td style="border-top: 1px none rgb(0,0,0); border-bottom: 1px none rgb(0,0,0)"
    vAlign="middle" align="right" width="10%" height="0" bgcolor="#CCFFCC"><font size="2"
    face="Times New Roman">(69,860)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="52%" height="0" bgcolor="#FFFFFF"><font size="2"
    face="Times New Roman">Issuance of shares for services</font></td>
    <td vAlign="middle" width="2%" height="0" bgcolor="#FFFFFF" align="right"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">7,000,000</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#FFFFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">700</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#FFFFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">34,300</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#FFFFFF"></td>
    <td style="border-bottom: 1px none rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#FFFFFF"><font size="2" face="Times New Roman">0</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="52%" height="0"><font size="2" face="Times New Roman">&nbsp;&nbsp;
    Net loss</font></td>
    <td vAlign="middle" width="2%" height="0" align="right"></td>
    <td style="border-bottom: 1px solid rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0"><font size="2" face="Times New Roman">-</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="10%"
    height="0"><font size="2" face="Times New Roman">-</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="10%"
    height="0"><font size="2" face="Times New Roman">-</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="10%"
    height="0"><font size="2" face="Times New Roman">(40,354)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="52%" height="0" bgcolor="#ccffcc"><font size="2"
    face="Times New Roman">Balance at December 31, 2007</font></td>
    <td vAlign="middle" width="2%" height="0" bgcolor="#ccffcc" align="right"></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">99,933,155</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">9,993</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">48,991</font></td>
    <td style="BORDER-BOTTOM: rgb(0,0,0) 2px" vAlign="middle" align="right" width="2%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">$</font></td>
    <td style="border-bottom: 2px double rgb(0,0,0)" vAlign="middle" align="right" width="10%"
    height="0" bgcolor="#ccffcc"><font size="2" face="Times New Roman">(110,214)</font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="100%" height="1" colspan="9"><font size="2"
    face="Times New Roman"><strong>&nbsp; </strong></font></td>
    <font size="2" face="Times New Roman">
  </tr>
  <tr>
    </font><td vAlign="middle" width="100%" height="1" colspan="9"><font
    face="Times New Roman" size="1">See Summary of Significant Accounting Policies and Notes
    to Financial Statements.</font></td>
    <font size="2" face="Times New Roman">
  </tr>
</table>
</div>

<p><br style="PAGE-BREAK-BEFORE: always; mso-break-type: section-break" clear="all">
</p>
<div><b><font SIZE="3">

<p ALIGN="center"></font><font size="2">ZAXIS INTERNATIONAL, Inc.<br>
</b><a name="Background and Significant Accounting Policies">Background and Significant
Accounting Policies</a> </font><font size="1"><a
href="zxsi_10ksb.htm#ZAXIS INTERNATIONAL INC.">Back to Table of
Contents</a></font><br>
December 31, 2007</p>
<b>

<p ALIGN="JUSTIFY">The Company</p>
</b>

<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>
<u><i>

<p ALIGN="JUSTIFY">Bankruptcy Proceedings:</i></u><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.</p>
<b>

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

<p ALIGN="JUSTIFY">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(R), <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">On January 1, 2006, we adopted the provisions of Statement of Financial
Accounting Standards (&#147;SFAS&#148;) 123R, &#147;Share-Based Payment&#148; (&#147;SFAS
123(R)&#148;), which requires that companies measure and recognize compensation expense at
an amount equal to the fair value of share-based payments granted under compensation
arrangements. Prior to January 1, 2006, we accounted for our stock-based compensation
plans under the recognition and measurement principles of Accounting Principles Board
(&#147;APB&#148;) Opinion 25, &#147;Accounting for Stock Issued to Employees,&#148; and
related interpretations, and would typically recognize no compensation expense for stock
option grants if options granted had an exercise price equal to the market value of the
underlying common stock on the date of grant. </p>

<p ALIGN="JUSTIFY">We adopted SFAS 123(R) using the &#147;modified prospective&#148;
method, which results in no restatement of prior period amounts. Under this method, the
provisions of SFAS 123(R) apply to all awards granted or modified after the date of
adoption. In addition, compensation expense must be recognized for any unvested stock
option awards outstanding as of the date of adoption on a straight-line basis over the
remaining vesting period. We calculate the fair value of options using a Black-Scholes
option pricing model. We do not currently have any outstanding options subject to future
vesting. SFAS 123(R) also requires the benefits of tax deductions in excess of recognized
compensation expense to be reported in the Statement of Cash Flows as a financing cash
inflow rather than an operating cash inflow. In addition, SFAS 123(R) required a
modification to the Company&#146;s calculation of the dilutive effect of stock option
awards on earnings per share. For companies that adopt SFAS 123(R) using the
&#147;modified prospective&#148; method, disclosure of pro forma information for periods
prior to adoption must continue to be made. </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 March 27, 2008. 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 issueable 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 2007. </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</p>
</b>

<p ALIGN="JUSTIFY">In September 2006, the FASB issued SFAS No.&nbsp;157, <i>Fair Value
Measurements</i> (SFAS 157). SFAS 157 provides guidance for using fair value to measure
assets and liabilities. It also responds to investors&#146; requests for expanded
information about the extent to which companies measure assets and liabilities at fair
value, the information used to measure fair value, and the effect of fair value
measurements on earnings. SFAS 157 applies whenever other standards required (or permit)
assets or liabilities to be measured at fair value, and does not expand the use of fair
value in any new circumstances. SFAS 157 is effective for financial statements issued for
fiscal years beginning after November&nbsp;15, 2007. We are currently evaluating the
effect that the adoption of SFAS 157 will have on our results of operations and financial
condition and are not yet in a position to determine such effects.</p>

<p ALIGN="JUSTIFY">&nbsp;In September 2006, the SEC staff issued Staff Accounting
Bulletin&nbsp;No.&nbsp;108, <i>Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements </i>(&#147;SAB&nbsp;108&#148;).
SAB&nbsp;108 establishes an approach that requires quantification of financial statement
misstatements based on the effects of the misstatements on each of the Company&#146;s
consolidated financial statements and the related financial statement disclosures.
SAB&nbsp;108 is effective for the year ending December&nbsp;31, 2006. We are currently
evaluating the effect that the adoption of SFAS 157 will have on our results of operations
and financial</p>

<p ALIGN="JUSTIFY">&nbsp;In June&nbsp;2006, the FASB issued FASB Interpretation
No.&nbsp;48, <i>Accounting for Uncertainty in Income Taxes&#151;an Interpretation of FASB
Statement 109</i> (&quot;FIN 48&quot;), which clarifies the accounting for uncertain tax
positions. This Interpretation allows the tax effects from an uncertain tax position to be
recognized in the Company's financial statements if the position is more likely than not
to be sustained upon audit, based on the technical merits of the position. FIN 48 also
provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning
after December&nbsp;15, 2006. We do not expect the adoption of FIN 48 to have a material
impact on our financial statements.</p>

<p ALIGN="JUSTIFY">In February 2007, FASB issued FASB Statement No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to specific
requirements outlined in the new Statement. The new Statement allows entities to choose,
at specified election dates, to measure eligible financial assets and liabilities at fair
value that are not otherwise required to be measured at fair value. If a company elects
the fair value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. FAS 159 also
establishes presentation and disclosure&nbsp;requirements designed to draw comparison
between entities that elect different measurement attributes for similar assets and
liabilities.</p>

<p ALIGN="JUSTIFY">In December 2007, the FASB issued SFAS No. 141(R), &#147;Business
Combinations&#148;. This Statement replaces SFAS No. 141, Business Combinations. This
Statement retains the fundamental requirements in Statement 141 that the acquisition
method of accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business combination.
This Statement also establishes principles and requirements for how the acquirer: a)
recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree; b) recognizes and
measures the goodwill acquired in the business combination or a gain from a bargain
purchase and c) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business combination. SFAS
No. 141(R) will apply prospectively to business combinations for which the acquisition
date is on or after Company&#146;s fiscal year beginning October 1, 2009. While the
Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R)
will have on its consolidated financial statements, the Company will be required to
expense costs related to any acquisitions after September 30, 2009.</p>

<p ALIGN="center"><b>Zaxis International Inc.<br>
</b>Notes to Financial Statements<br>
December 31, 2007</p>
<b>

<p ALIGN="JUSTIFY">1. &#147;Fresh Start&#148; Accounting</p>
</b>

<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;. </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</p>
</b>

<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>

<p ALIGN="JUSTIFY"><font FACE="Wingdings" SIZE="2">&#159 </font><font size="2">amend the
Article of Incorporation to increase the number of authorized shares to 100,000,000
shares;<br>
</font><font FACE="Wingdings" SIZE="2">&#159 </font><font size="2">amend the Article of
Incorporation to change the par value of our common and preferred stock to $0.0001;<br>
</font><font FACE="Wingdings" SIZE="2">&#159 </font><font size="2">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;<br>
</font><font FACE="Wingdings" SIZE="2">&#159 </font><font size="2">implement a reverse split
of the issued and outstanding shares in a ratio to be determined by the board of
directors;<br>
</font><font FACE="Wingdings" SIZE="2">&#159 </font><font size="2">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>
</font><font FACE="Wingdings" SIZE="2">&#159 </font><font size="2">cancel and extinguish all
preferred shares of every series and accompanying conversion rights of any kind.</font></p>
<font size="2">

<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> Resultant Change in Control: 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</p>
</b>

<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">We have a current operating loss carry-forward of $13,000 resulting in
deferred tax assets of $4,000. We have determined it more likely than not that these
timing differences will not materialize and have provided a valuation allowance against
substantially all our net deferred tax asset.</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</p>
</b>

<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>
<b>

<p ALIGN="JUSTIFY">5. Stockholders' Equity</b><i></p>

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

<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">On December10, 2007 we issued 7,000,000 shares in satisfaction of
$35,000 due for services rendered. The shares were valued at $0.05 per share which was
management&#146;s estimate of fair value at the time of issuance. </p>

<p ALIGN="JUSTIFY">On March 28, 2006 we issued 600,000 shares in satisfaction of $18,000
due for services rendered. The shares were valued at $0.30 per share which was
management&#146;s estimate of fair value at the time of issuance. </p>

<p ALIGN="JUSTIFY">On October 4, 2005 we issued 16,800,000 shares upon the conversion of
our Preferred stock. On October 5, 2005 we issued 55,000,000 shares to one of our officers
in satisfaction of $5,500 due on cash advances. </p>
<i>

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

<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>
</font><font FACE="Wingdings" SIZE="2">

<p ALIGN="JUSTIFY">&#159 </font><font size="2">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. <br>
<font FACE="Wingdings" SIZE="2">&#159 </font>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. </p>

<p ALIGN="JUSTIFY">In the event the Corporation shall at any time</p>
</font><font FACE="Wingdings" SIZE="2">

<p ALIGN="JUSTIFY">&#159 </font><font size="2">declare a dividend on the Common Stock payable
in shares of Common Stock, <br>
<font FACE="Wingdings" SIZE="2">&#159 </font>subdivide the outstanding shares of Common
Stock,<br>
<font FACE="Wingdings" SIZE="2">&#159 </font>combine the outstanding shares of Common Stock
into a smaller number of shares or<br>
<font FACE="Wingdings" SIZE="2">&#159 </font>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), </p>

<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>
</font><i><font SIZE="3">

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

<p ALIGN="JUSTIFY">There are no employee or non-employee options granted. </p>
<b>

<p ALIGN="JUSTIFY">6. Related Party Transactions not Disclosed Elsewhere</p>
</b><i>

<p ALIGN="JUSTIFY">Due Related Parties: </i>Amounts due related parties consist of
corporate reinstatement expenses paid by the principal shareholder and cash advances made
to the company. Such items totaled $7,505 and $7,777 at December 31, 2007 and 2006
respectively. </p>
</div></font>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>exh_31.htm
<DESCRIPTION>EXHIBIT 31
<TEXT>
<html>

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

<body>
<b><u><font SIZE="1">

<p align="center"></font><font size="2">CERTIFICATION</font></p>
</u>

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

<p><font size="2">1. I have reviewed this amended 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. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures (as
4efined 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>

<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 annual 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>

<p><font size="2">5. The small business issuer's other certifying officer(s) and 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>

<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 r 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>

<p><font size="2">Date: September 12, 2008</font></p>

<p><font size="2">/s/ Ivo Heiden<br>
CEO, CFO and Chairman</font></p>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>3
<FILENAME>exh_32.htm
<DESCRIPTION>EXHIBIT 32
<TEXT>
<html>

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

<body>

<p align="left"><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">Exhibit 32</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 amended annual report of Zaxis International Inc. (the
&#147;Company&#148;) on Form 10-KSB for the year ended December 31, 2007 (the
&#147;Report&#148;), as filed with the Securities and Exchange Commission on the date
hereof, I, Ivo Heiden, CEO and CFO 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<br>
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><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">/s/ Ivo Heiden</font></p>

<p><font face="TIMES NEW ROMAN, TIMES, SERIF" size="2">Ivo Heiden<br>
CEO and CFO<br>
Dated: September 12, 2008</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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</DOCUMENT>
</SEC-DOCUMENT>
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