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                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, DC. 20549
                                          
                  ----------------------------------------------- 
                                 Amendment No. 2 to
                             Annual Report on Form 10-K
                                   on Form 10-K/A
                  ----------------------------------------------- 
                                          
                                          


  MARK ONE              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
   [X]                              SECURITIES EXCHANGE ACT OF 1934 
                               FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997
                                                   OR
   [ ]                    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                                    THE SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from _____ to _____. 
                                          
                           Commission file number 0-22636
                                          
                                    CANMAX INC.
              (Exact name of registrant as specified in its charter) 
                                          

                 Wyoming                               75-2461665
 --------------------------------------  --------------------------------------
     State or other jurisdiction of       (I.R.S. Employer Identification No.)
      incorporation or organization

                               150 W. CARPENTER FRWY.
                                IRVING, TEXAS 75039
                     (Address of principal executive offices) 
                                     (Zip Code)
                                          
                                    972-541-1600
               (Registrant's telephone number, including area code) 
                               ----------------------
                                          
            SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 
                                        NONE
                                          
            SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 
                                Title of each class
                                -------------------
                          Common Stock, without par value
                               ----------------------

     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 the past 90 days.   Yes       No   X    
                                                 -----    -----
 
     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 registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-K or any amount to this Form 10-K or any amount to this Form 10-K. [    ]

     As of October 22, 1998, 6,611,005 shares of Common Stock were 
outstanding. The aggregate market value of the 4,546,543 shares of Common 
Stock held by nonaffiliates of Canmax Inc. as of such date, approximated 
$1,454,893.

     The Company has amended this Form 10-K/A to include disclosures 
regarding recent sales of unregistered securities in Item 5.

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                                     PART I
 
ITEM 1. BUSINESS
 
THE COMPANY
 
    Canmax Inc. ("Canmax") was incorporated on July 10, 1986 under the Company
Act of the Province of British Columbia, Canada, and subsequently changed its
name to "International Retail Systems Inc." On August 7, 1992, Canmax renounced
its original province of incorporation and elected to continue its domicile
under the laws of the State of Wyoming, and on November 30, 1994 its name was
changed to "Canmax Inc." Canmax was listed on the Nasdaq SmallCap Market tier of
The Nasdaq Stock Market on February 10, 1994, and trades under the symbol
"CNMX."
 
    Canmax's principal executive offices are located at 150 West Carpenter
Freeway, Irving, Texas 75039, and its telephone number is (972) 541-1600.
 
    SOFTWARE BUSINESS
 
    Canmax, through its wholly owned subsidiary Canmax Retail Systems, Inc.,
develops and provides enterprise wide technology solutions to the convenience
store and retail petroleum industries. Canmax offers fully integrated retail
automation solutions, including its principle product "C-Serve," which includes
point of sale ("POS") systems, credit/debit network authorization systems, pump
control systems, and other back office management systems, and "Vista," its
headquarters-based management system. Canmax's products and services enable
retailers and operators to interact electronically with customers, capture data
at the point of sale, manage site operations and logistics and communicate
electronically with their sites, vendors and credit/debit networks. Canmax also
provides (a) software development, customization and enhancements, (b) systems
integration, installation and training services, and (c) 24 hour a day, 365 day
per year help desk services. These additional services enable Canmax to tailor
the solutions to each customer's specifications and provide successful system
implementation, installation, training and after sales support.
 
    Canmax's objective is to be a leading provider of enterprise wide technology
solutions to the convenience store and retail petroleum market. In October, 1997
Canmax completed an enhanced version of its C-Serve product to run on the
Windows NT operating system in conjunction with a development project with NCR
Corporation ("NCR") and The Southland Corporation ("Southland"). Canmax
continues to develop a generic version of its C-Serve software that runs under
the Microsoft Windows family of operating systems. This product is expected to
be completed during the first calendar quarter of 1998. As of October 31, 1997,
Canmax's products have been installed in over 5,900 locations. Canmax's
customers include Southland, ARCO and the Army and Air Force Exchange.
 
    TELECOMMUNICATIONS BUSINESS
 
    GENERAL.  On January 30, 1998, Canmax acquired USCommunication Services,
Inc. ("USC") through a private stock transaction which will be accounted for
under the purchase method. USC's shareholders received an aggregate of 1.5
million shares of Canmax common stock and warrants to acquire 2.5 million shares
of Canmax common stock with exercise prices of $1.25 and $2.00 per share. See
Notes to the Consolidated Financial Statements regarding subsequent events.
 
    USC provides a number of telecommunication and internet products and
services to its customers, most of which are in the transportation industry.
USC's products and services include prepaid calling cards, one plus long
distance services, public internet access kiosks, pay telephones, and pallet
exchange services.
 
    USC primarily markets its products and services to individuals and
businesses in the transportation industry through national and regional
truckstops and trucking fleets. Currently, USC's products are sold
 
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or are contracted to sell at selected locations throughout the U.S., such as
locations operated by Pilot Travel Centers, Petro Stopping Centers, and All
American Travel Centers. USC also markets its services directly through prepaid
calling card recharge sales and, in the future, anticipates marketing its
products and services through internet advertising.
 
    INTEGRATION RISKS.  The consummation of the USC acquisition is expected to
result in a significant growth of Canmax's operations. To manage this growth
effectively, Canmax will be required to improve its operating and financial
systems. There can be no assurances that the management and systems currently in
place or any steps taken to improve such management and systems will be adequate
in the future.
 
    Achieving the benefits that Canmax believes will result from the USC
acquisition will depend in part upon the integration of the businesses of Canmax
and USC in an efficient and effective manner, and there can be no assurance that
this will occur. The transition to a combined company will require substantial
attention from management, particularly with regard to the allocation of capital
resources. The process of combining the two organizations may cause the
interruption of, or the disruption in, the activities of either or both the
companies' businesses, which could have an adverse effect on their combined
operations.
 
    REGULATORY ENVIRONMENT.  Businesses offering prepaid calling cards and "one
plus" long distance services are subject to federal and state governmental
regulations applicable to providers of long distance telephone services. At the
federal level, the industry is regulated by the Federal Communications
Commission (the "FCC"), while at the state level, telecommunication service
providers are subject to regulation by various state agencies. Federal
regulations require that long distance telephone service providers maintain both
domestic interstate and international tariffs that contain the then effective
rates, terms and conditions of service. Intrastate long distance
telecommunication service providers and pay telephone operators are also subject
to various state regulations, which typically require prior state certification,
notification and/or registration and tariff approval. Generally, companies
offering such services must obtain and maintain certificates of public
convenience and necessity from state regulatory authorities in each state which
they offer service and file tariffs and obtain tariff approval prior to
providing intrastate telecommunication and pay phone services. USC is in the
process of applying for its state and federal regulatory approvals, but has not
obtained any such approvals to date. USC is unable to predict whether it will
receive all necessary federal and state approvals, although USC anticipates
expending at least $75,000 in fees and expenses in seeking such approvals in the
21 states in which it currently operates. USC may be subject to fines or other
penalties for failing to obtain state approvals prior to commencing operations
in a state, which penalties may require the refund of all amounts received by
USC from intrastate traffic in states where prior state approvals were not
obtained. The imposition of any such fines or the inability of USC to obtain
such federal and state approvals would have a material adverse impact on the
business operations of USC.
 
    On February 8, 1996, President Clinton signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act"), which granted the
FCC the authority to deregulate certain aspects of the telecommunications
industry. This legislation is anticipated to result in increased competition in
the telecommunications industry from substantially larger regulated entities
(such as Regional Bell Operating Companies) that may compete with USC. Section
276 of the Telecommunications Act required the FCC to promulgate rules to
establish a per call compensation plan to ensure that all pay telephone
providers are fairly compensated for each completed intrastate and interstate
pay telephone initiated call, including calls for which pay telephone providers
had not previously received compensation (such as operator assisted and prepaid
calling card calls placed to toll free numbers or calls placed through network
access codes). In September 1996, the FCC promulgated rules to implement Section
276 of the Telecommunications Act which established a three-phase compensation
plan for pay telephone providers. Under the first phase, interexchange carriers
with annual toll revenues of more than $100 million were required to pay a total
of $45.85 per pay telephone per month for all toll free and access code calls
for the first year, commensurate with their portion of total interexchange
revenues. All switch-based and facilities-based interexchange carriers were
required to pay $0.35 per call to each pay telephone provider during the second
year
 
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(although payments could subsequently be recovered from resellers by the
carriers), after which per call compensation rates were to be left based upon
market-driven rates to be negotiated between pay telephone providers and
interexchange carriers. On July 1, 1997, the D.C. Circuit Court of Appeals
vacated a significant portion of the FCC's rules, including the $0.35 per call
rate which was found to be arbitrary and capricious, and remanded the matter to
the FCC for reconsideration. In September 1997, the FCC established a two (2)
year "default" compensation rate of $0.284 per pay telephone originated toll
free or access code call. At the end of the two (2) year interim period, the per
call pay telephone compensation rate will be the deregulated market-based local
coin rate less $0.066. This amount is payable by all "switch-based"
interexchange carriers (but again, may be passed through to the non-facilities
based resellers). The revised FCC rules became effective on October 7, 1997, but
continue to be subject to regulatory and legal challenges. USC is unable to
predict whether this regulation or other potential changes in the regulatory
environment will have a material adverse effect on USC.
 
BUSINESS STRATEGY
 
    SOFTWARE BUSINESS
 
    In the United States, there are approximately 200,000 locations which derive
revenues from the operations of convenience stores and/or retail gasoline sites.
Canmax believes that the industry is under automated and under invested in
automation and technology solutions. The National Association of Convenience
Stores (NACS) 1997 State of the Industry Report confirms that the convenience
store environment requires information derived from automation solutions to
compete efficiently and effectively. That study indicates that convenience
stores lag the rest of the retail industry in store automation, citing, for
example, that approximately 24% of all convenience stores utilize scanning
technology, while grocery stores have implemented scanning technology in
approximately 90% of their locations. Canmax believes that the industry is
prepared to increase its investment in automation and technology solutions and
consequently that there will be demand in the marketplace for the Canmax's
products, solutions and services. Canmax considers that international markets
also represent substantial marketing opportunities for its solutions.
 
    Canmax's marketing strategy includes (i) providing solutions based products
and services for the automation and management of convenience stores and
gasoline stations, (ii) maintaining a high level of customer service through its
help desk services and account managers, (iii) seeking strategic partnerships to
provide Canmax visibility to buying audiences worldwide, and (iv) continuing to
invest in product development initiatives.
 
    Canmax identifies potential customers by size and geographic location and
directs its marketing efforts along these segments. In general, Canmax allocates
its sales and marketing efforts to "corporate accounts" with global operations,
"national accounts" with operations primarily in the U.S. and "regional
accounts" with operations on a local or regional basis. Canmax utilizes
concurrent efforts by both sales representatives and account managers in
analyzing, selecting and implementing an automation system.
 
    TELECOMMUNICATIONS BUSINESS
 
    USC intends to be the dominant provider of telecommunications services to
the transportation industry. To implement this strategy, USC has initially
offered prepaid phone cards, one plus long distance services, and internet
access kiosks to its customers within the industry. USC intends to expand its
business by offering additional products and services to the transportation
industry and by targeting other retail markets.
 
    ACQUISITIONS
 
    Canmax continues to review an acquisition strategy within its current
industries and other related markets. Any material acquisitions may result in
significant changes in Canmax's business.
 
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PRODUCTS AND SERVICES
 
    SOFTWARE BUSINESS
 
    GENERAL.  Canmax utilizes a process called "Pathmation" to analyze a
customer's needs, assess a customer's options, and implement the best resources
available to build a path leading a customer to its ultimate goal. The
Pathmation process includes (i) defining business goals, (ii) defining business
processes to support the business goals; (iii) determining technology
requirements to support defined business processes; (iv) developing an
implementation plan that encompasses business processes, technology training and
continuing support; (v) deploying modified business processes, technology and
support infrastructure; and (vi) continuously validating results with business
goals and changes in business practices.
 
    C-SERVE.  The Canmax C-Serve software is a comprehensive site-based store
automation software solution that provides, as its key features, debit/credit
card processing, pump control, POS and scanning capabilities, and significant
back office functions. Canmax's solutions are designed to allow retailers to
process transactions, manage pumps and credit/debit card processing and capture
data at the point of sale, as well as manage other front office and back office
operations. The key purpose of the system is to provide the store operator with
information and tools to enable improved store operations and profitability.
C-Serve includes features such as touch screen, PC keyboard or integrated third
party POS terminals which provide user friendly applications and flexible
configurations to accommodate the operational needs and differences of each
site. Further, C-Serve has the capability of supporting communications and data
transfers to and from remote corporate headquarters.
 
    C-Serve was designed exclusively for the retail petroleum and convenience
store marketplace. C-Serve's features include:
 
    - point-of-sale transaction processing, incorporating touch screens, PC POS
      keyboards, or integrated POS terminals
 
    - fueling transactions,
 
    - dispenser controls,
 
    - settlement transactions for credit/debit cards,
 
    - shift and day reporting,
 
    - store maintenance,
 
    - file maintenance,
 
    - inventory controls,
 
    - fuel inventory management,
 
    - reporting capabilities,
 
    - accounts receivable controls,
 
    - island payment terminals,
 
    - credit/debit card authorizations,
 
    - communications to or from head office,
 
    - security controls,
 
    - shelf label generation,
 
    - interface to handheld terminals and scanners,
 
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    - time and attendance records, and
 
    - car wash interface.
 
    Presently, C-Serve operates in a DOS/UNIX environment. In October, 1997
Canmax completed an enhanced version of its C-Serve product to run on the
Windows NT operating system in conjunction with a development project with NCR
and Southland. Canmax continues to develop a generic version of its
C-Serve software that runs under the Microsoft Windows family of operating
systems. This product is expected to be completed during the first calendar
quarter of 1998. See "Product Development."
 
    VISTA.  The Canmax "Vista" software provides a flexible automation system
that is able to conform to changing business needs. Vista is a decision support,
communications and remote store management system that operates from corporate
headquarters. Through a communications network, Vista provides for the
transmission of data messages from headquarters to the remote store and from the
store to headquarters. Vista's features include fuel and retail pricebook
maintenance, tax book maintenance, vendor pricebook maintenance, and exception
reporting for stores. Other features of Vista include:
 
    - batch or on-line communications
 
    - remote on-line support
 
    - sales analysis from store to store, zone to zone and region to region
 
    - addition of new parameters at any time
 
    - decision support, and
 
    - report writer
 
    OTHER SERVICES AND PRODUCTS.  In addition to revenues generated from the
licensing of C-Serve and Vista software and sale of proprietary communication
boards, revenues are generated from the following other services:
 
    - modification and custom development contracts,
 
    - installation and training services,
 
    - annual maintenance and support services contracts, and
 
    - the provision of third-party software and hardware.
 
    Canmax's products are designed to provide a flexible generic system that can
be easily modified to meet most customer's individual needs and preferences.
Most customers, such as major oil companies, typically require a certain degree
of product customization and the development of unique interfaces to communicate
with their existing proprietary networks and host systems. Canmax typically
charges for customization and development costs. Because Canmax retains
ownership of the source code for such products (which is essential to effect
program changes), Canmax typically realizes service revenues from such products
throughout the duration of a relationship with the customer. However, Canmax
recently licensed the source code for its C-Serve software to Southland, which
may result in decreased revenue from that customer in the future. See "Major
Contracts--Southland Agreements."
 
    To assist retailers and store operators in optimizing their use of Canmax's
software, Canmax also offers consulting, installation, training and help desk
support services. Canmax provides installation and training services at each
installed site, and back-up and technical support services from a central
location. Canmax has developed a proprietary help desk support system known as
"Sites." Sites provides efficient call handling, automatic problem escalation,
and customer reporting 24 hours a day, 7 days a week. Trained support
technicians handle everything from "how do I . . . " questions to dispatching
field service for hardware problems. Support services also include free software
and user guide updates as well as ensuring that technicians respond to all
problems in a timely manner. Sites management reports help identify and
 
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resolve recurring issues, such as the need for additional training at the store
or potential hardware failures. Sites also supports remote dial in capability to
the Canmax help desk Sites database, which provides customers managing a number
of locations access to data and reporting functions to better manage their
operations.
 
    Canmax does not usually directly sell hardware, such as personal computers
and POS terminals, although it does provide a small amount of related equipment
which may not be readily available from the principal hardware vendor. The
majority of hardware products supplied to customers is provided by hardware
vendors such as NCR, Ultimate Technologies and Compaq Computers. Third party
software and hardware products such as operating systems, local and wide area
network software and modems are also packaged with Canmax's software and
firmware products and sold in accordance with distribution agreements entered
into with such suppliers.
 
    MAJOR CONTRACTS.
 
    Southland Agreements. In December, 1993, Canmax signed a five year agreement
with Southland to provide software licenses, development services, and provide
hardware and help desk services (the "Master Agreement"). Southland chose
Canmax's proprietary convenience store automation software, C-Serve, as the
basis for its automation of store functions and operations at its corporate and
franchise operated 7-Eleven convenience stores in the United States. Software
licensing, product and service revenue under this agreement during the fiscal
years ended October 31, 1997, 1996, and 1995 totaled approximately $2,051,000,
$2,581,000 and $3,733,000, respectively, while development revenues recorded
under the Master Agreement during these same periods totaled approximately
$799,000, $1,564,000 and $1,792,000, respectively.
 
    On October 31, 1997, Canmax and Southland entered into Amendment No. 3 to
the Master Agreement (the "Southland Amendment"). Pursuant to the terms of the
Southland Amendment, Canmax allowed Southland to exercise its right as specified
in the Master Agreement to use, possess and modify the source code for the
software developed by Canmax for Southland for a one-time license fee of $1.0
million. Payment of the license fee was due in two installments of $500,000. The
first installment was received in November, 1997 and the second installment was
received in January, 1998. The Southland Amendment also contains Southland's
agreement to purchase from Canmax on or before December 7, 1998, no less than
$4.0 million of hardware, software maintenance, help desk, development and other
services. Although Southland has committed to purchase certain products and
services totaling a minimum of $4.0 million through December 7, 1998 in
accordance with the terms of the Southland Amendment, Southland's use and
possession of the source code could result in a material reduction in
Southland's reliance upon, and payment of fees for development services to,
Canmax. The use by Southland of its own staff or a third-party other than Canmax
to perform such services could have a material adverse effect on Canmax.
 
    From time to time, Canmax may also provide development and other resources
to Southland on an as-needed basis under various agreements at terms specified
in the Master Agreement. Approximately $254,000 of development revenue under
such agreements was recognized by Canmax in fiscal 1997. Such agreements extend
through December, 1998.
 
    In 1995, Canmax contracted with NCR to successfully bid for two additional
contracts with Southland relating to business requirements definition and the
development of a preliminary non scanning point of sale system. These projects
resulted in revenues to Canmax of approximately $2,165,000 and $1,005,000 in the
fiscal years ended October 31, 1996 and 1995, respectively.
 
    During fiscal 1996, Canmax reached an agreement with NCR to develop for
Southland a next generation Windows NT based version of the Canmax C-Serve
convenience store software for $9.5 million. NCR was chosen by Southland to
provide project management and other professional services for the project.
Modifications to project requirements increased total project revenues from $9.5
million to
 
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$11.5 million. Approximately $7,560,000 and $3,920,000 of development revenues
under such agreement was recognized by Canmax in fiscal 1997 and 1996,
respectively.
 
    Canmax is in discussions with Southland regarding the renegotiation of its
contract with Southland, but no definitive agreement has been reached to date.
While Canmax anticipates that it will successfully negotiate future agreements
with Southland, there can be no assurances either that Canmax will continue to
provide services to or receive revenue from Southland after the expiration of
the existing contracts in December, 1998 or, if Canmax enters into new
agreements with Southland extending beyond December, 1998, the amount of
revenues Canmax will receive thereunder. Any termination or significant
disruption of Canmax's relationships with Southland could have a material
adverse effect on Canmax's business, financial condition and results of
operations.
 
    EDS Agreements. On April 29, 1997, Electronic Data Systems ("EDS") exercised
its option to acquire up to 25% of Canmax's Common Stock, resulting in Canmax
issuing an additional 1,598,136 shares. Canmax accounted for this transaction by
reclassifying the amount associated with the option to common stock. EDS then
immediately sold its total interest in Canmax, representing 1,863,364 shares, in
a private transaction to two Texas-based institutional investors. In conjunction
with this transaction, Canmax agreed to extend certain registration rights
similar to those held by EDS with regard to such shares to such investors.
 
    Concurrent with EDS's exercise of its option, EDS and Canmax also agreed to
amend a license and grant of rights agreement which specifies rights and
obligations of both parties as to 788 of Canmax's site licenses sold to EDS in
fiscal 1994, and to terminate all other formal agreements between them including
their joint marketing and other supporting business agreements.
 
    Canmax believes that the termination of its relationship with EDS is
beneficial because Canmax will be able to market its products directly (rather
than through EDS) to a much larger customer base within selected target markets.
Additionally, Canmax believes that the termination of the EDS option will
facilitate Canmax's future growth strategies as the dilutive effect of the EDS
option has been eliminated.
 
    CONCENTRATION OF REVENUES; CUSTOMER CONCENTRATION.  Canmax's revenues are
currently concentrated in Southland which accounted for approximately 92%, 83%
and 73% of Canmax's total revenue for fiscal years 1997, 1996 and 1995,
respectively. Canmax's revenues derived from its relationship with Southland
include products and services provided directly by Canmax to Southland and
indirectly through NCR to Southland pursuant to NCR's contract with Southland.
During those same periods, EDS accounted for 2%, 7% and 10%, respectively, of
Canmax's revenues for such fiscal years. No other customer accounted for over
10% of Canmax's total revenues. On April 29, 1997, Canmax and EDS agreed to
terminate substantially all of their business arrangements. Canmax does not
anticipate any significant future revenues from EDS.
 
    At October 31, 1997 and 1996, Southland accounted for 95% and 83%,
respectively, of total accounts receivable. Because a significant portion of
Canmax's revenues are derived from its relationship with Southland, the timing
of payments received from Southland will affect the percentage of the current
assets of Canmax classified as either cash (or cash equivalents) or accounts
receivable; however, Canmax does not currently anticipate any significant
problems in collecting the accounts receivable arising from the Southland
relationship beyond any reserves established therefor. If the financial
condition of Southland adversely changes at a time when the receivable owing
from Southland is substantial and Southland becomes unable to pay its debts as
they become due, then the financial condition, working capital resources, and
results of operations of Canmax would be adversely affected.
 
    In October, 1997, Canmax completed its previously announced $9.5 million
development project contract with NCR/Southland, and Canmax's Master Agreement
with Southland expires on December 7, 1998. See "Southland Agreements."
 
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    PRODUCT DEVELOPMENT.  Due to the rapid pace of technological change in its
industry, Canmax believes that its future success will depend, in large part, on
its ability to enhance and develop its software products to meet customer needs.
 
    C-Serve is being enhanced to be operating system independent through the use
of sophisticated software tools. Canmax believes that this independence will be
a competitive advantage. Canmax currently provides C-Serve in a UNIX environment
and released a customized Windows NT based version of
C-Serve for Southland in October, 1997. A generic Windows NT based version of
C-Serve is scheduled for release in the first calendar quarter of 1998. Canmax
has also developed Vista (commonly referred to as a "host system") which enables
operators of chains of gas stations/convenience stores to monitor and control
activities at stores. Operators are able to obtain "real time" store level
information (from all stores or any number of selected stores) at headquarters
over communications lines to provide timely information for decision making.
 
    During the fiscal years ended October 31, 1997, 1996 and 1995, Canmax
expensed approximately $615,000, $1,287,000 and $2,401,000, respectively, on
product development activities. Canmax incurred approximately $209,000, $129,000
and $0 during the fiscal years ended October 31, 1997, 1996 and 1995,
respectively, in software development costs, which were capitalized.
 
    TELECOMMUNICATIONS AND OTHER BUSINESSES
 
    PREPAID PHONE CARDS.  USC provides convenient, cost-effective
telecommunications products and services to individuals and businesses through
its prepaid phone card (the "USC Card"). The USC Card provides customers with a
single point of access to prepaid telecommunications services at a fixed rate
charge per minute regardless of the time of day or, in the case of domestic
calls, the distance of the call. USC's services currently include domestic
calling, outbound international long distance calling, as well as enhanced
features such as customized greetings, sequential calling, and voice mail. The
USC Card may also be recharged on-line with a major credit card, allowing the
user to add minutes as needed.
 
    USC's revenues originate from (i) USC Card and co-branded phone card sales
primarily through travel centers and truck stops, (ii) payroll deduction
programs for trucking company drivers, (iii) cards sold for promotional
marketing campaigns, (iv) corporate sales to businesses, and (v) recharges of
existing phone cards.
 
    ONE PLUS LONG DISTANCE SERVICE.  USC provides one plus long distance
services to individuals and businesses that have been "presubscribed" by USC. As
a result of deregulation in the industry, consumers have the right to select a
long distance company of their choice to provide them with long distance
services. To presubscribe these consumers, USC enters into agency agreements
with these customers that designate USC as their long distance service provider.
 
    INTERNET ACCESS KIOSKS.  Through USC's kiosks, called TravelNet,
professional drivers and business and vacationing motorists are able to "surf
the net" and send and receive e-mail, without subscription. In addition,
subscribers can access America Online at the TravelNet kiosks. USC currently has
internet access kiosks installed at 41 locations. TravelNet distinguishes itself
in the marketplace by accepting cash as well as major credit cards. Many truck
drivers do not carry credit cards and prefer using TravelNet on demand with cash
and without subscription. See "Major Suppliers--PayNet Communications, Inc." In
the future, USC anticipates selling the right for businesses to market their
products and services through TravelNet.
 
    PAY TELEPHONES.  USC intends to provide pay telephone services to its
customers to complement its other telecommunications products. The truck stop
and travel center industry has historically been a high volume user of pay
telephones; however, until recently, pay telephone providers were not
compensated for "1-800" calls. Recently enacted FCC rules related to "dial
around compensation" are expected to increase revenues of independent pay
telephone providers. See "Business--Telecommunications Business--Regulatory
Environment."
 
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    PALLET EXCHANGE SERVICES.  Through USC's wholly-owned subsidiary, Convenient
Pallets, Inc. ("CPI"), USC operates a pallet exchange business. By enabling
carriers to obtain and discard pallets along their routes, CPI improves the
efficiency of carriers and increases traffic at locations where it provides
pallet exchange services. CPI sends its own management to each location in order
to set up the pallet operation and administer training on all procedures. CPI
pays all start up costs such as signs, pallet inventory, printing, pallet jacks
and fencing. As of January 30, 1998 CPI was operating in 17 locations. CPI has
earned the endorsement of AMBEST, an association of travel center owners,
exposing the business to AMBEST's network of 130 franchised truck stops
nationwide.
 
    MAJOR SUPPLIERS.  USC believes that multiple suppliers are available to meet
all of its product and service needs at competitive prices and rates and expects
the availability of such products and services to continue in the future,
however, the continuing availability of alternative sources cannot be assured.
Transition from USC's existing suppliers, if necessary, could have a disruptive
effect on USC's operations and could give rise to unforeseen delays and/or
expenses. USC is not aware of any current circumstances that would require USC
to seek alternative suppliers for any of the products or services used in the
operation of its business. The following discusses USC's major suppliers.
 
    WorldCom Network Services, Inc. Both inbound calls to and outbound calls
from USC's platform placed by consumers through USC's prepaid phone cards and
long distance calls placed by customers subscribing to USC's one plus long
distance services are carried by WorldCom Network Services, Inc. ("WorldCom").
USC obtains telecommunication services pursuant to supply agreements with
WorldCom.
 
    CallSource, Inc. USC's prepaid phone card services are delivered through
proprietary switching, application, and database access software running on the
USC platform. The USC platform is located in Reseda, California, is owned by USC
and is operated for USC by CallSource, Inc. ("CallSource"). The USC platform
allows users to access USC's prepaid phone card services, and provides USC,
through CallSource, with the flexibility to customize and add features to USC's
services on a platform-wide basis. CallSource has also developed for USC a data
reporting system which tracks inventory, controls fraud, monitors usage by card
and retailer and allows USC to provide certain marketing information to its
retailers and business customers.
 
    PayNet Communications, Inc. USC's TravelNet kiosks are operated under a
technology license agreement with PayNet Communications, Inc. ("PayNet"). The
licensed technology consists of a proprietary internet access software package
located at each terminal which (i) tracks and reports revenues, use, and billing
information by kiosk, (ii) allows periodic updating of the kiosk services by
downloading new programs and (iii) provides troubleshooting reports. As USC's
internet access service provider ("ISP"), PayNet provides validation, billing
and collection of all credit card sales, software administrative systems,
software updates to the licensed technology and telephonic technical support for
repairs of the licensed technology.
 
COMPETITION
 
    SOFTWARE BUSINESS
 
    Canmax believes its competition can be categorized as follows:
 
    - pump manufacturers,
 
    - point-of-sale equipment manufacturers, and
 
    - specialized application software companies.
 
    Pump manufacturers supply the majority of point-of-sale devices used by gas
stations and convenience stores. They supply specialized equipment with
proprietary interfaces specific to their pump control consoles. The proprietary
nature of their products limits the technology used and the ability to interface
to other devices. Their primary intent, however, is to provide a complementary
service to the sale of their
 
                                       10
<PAGE>

"core" product - pumps. Canmax faces competition from manufacturers such as
Dresser Industries Inc., Gilbarco Inc. and Tokheim Corporation.
 
    Software firms, such as Canmax, specializing in gas and convenience store
applications enjoy the advantage of bringing specialized knowledge and
applications to customers. The industry, however, does not enjoy a strong
reputation as service consultants who deliver solutions that meet/exceed
customer expectations. Canmax faces competition from software firms such as
Radiant Systems, Inc., MSI, Pinnacle, Inc., and Stores Automated Software, Inc.
Canmax's service strategy is designed to employ "Pathmation," a consulting
service process, to understand customer needs, while guiding and delivering
appropriate products better than other marketplace alternatives.
 
    Specialized POS manufacturers traditionally have developed solutions based
on their proprietary hardware. POS manufacturers, such as Verifone, Ltd. and
IBM, also compete with Canmax.
 
    Many of Canmax's current and prospective competitors have substantially
greater financial, technical and marketing resources than Canmax. Canmax could
face significant competition upon any consolidation or alliance of major
suppliers or competitors creating a larger, stronger presence in the
marketplace. Canmax also anticipates that additional competitors may enter
certain of Canmax's markets, resulting in even greater competition. There can be
no assurance that Canmax will be able to compete with existing or new
competitors. Increased competition could result in significant price reductions
with negative effects upon Canmax's gross margins and a loss of market share,
which could materially and adversely affect Canmax's business, financial
condition and operating results.
 
    TELECOMMUNICATIONS BUSINESS
 
    PREPAID PHONE CARDS AND ONE PLUS LONG DISTANCE SERVICES.  The
telecommunications services industry is highly competitive, rapidly evolving and
subject to constant technological change. Currently, numerous companies sell
prepaid calling cards and USC expects competition to increase in the future.
Other providers currently offer one or more of each of the services offered by
USC. Telecommunication service companies compete for consumers based on price,
with the dominant providers conducting extensive advertising campaigns to
capture market share. As a service provider in the long distance
telecommunications industry, USC competes with three dominant providers, AT&T
Corp. ("AT&T"), MCI Communications Corporation ("MCI"), and Sprint Corporation
("Sprint"), all of which are substantially larger and have (i) greater
financial, technical, engineering, personnel and marketing resources; (ii)
longer operating histories; (iii) greater name recognition; and (iv) larger
consumer bases than USC. These advantages afford USC's competitors the ability
to (a) offer greater pricing flexibility, (b) more attractive incentive packages
to encourage retailers to carry competitive products, (c) negotiate more
favorable distribution contracts with retailers, and (d) negotiate more
favorable contracts with suppliers of telecommunication services. USC believes
that existing competitors are likely to continue to expand their service
offerings to appeal to retailers and consumers. In addition, the relatively low
barriers to entry to the markets in which USC competes may encourage new
competitors to enter the telecommunications market.
 
    The ability of USC to compete effectively in the telecommunications services
industry will depend upon USC's ability to (i) continue to provide high quality
services at prices generally competitive with, or lower than, those charged by
its competitors and (ii) develop new innovative products and services. There can
be no assurance that USC will be able to compete successfully in the future.
 
    INTERNET ACCESS KIOSKS.  The recent popularity of the internet has resulted
in increased modem access points at various high traffic and convenient
locations, such as hotels and airports. Some of these access points are used by
business and other travelers that carry laptop or other portable computers and
have existing access through ISPs. Additionally, an increasing number of these
locations are providing computer equipment and internet access to their users.
USC's TravelNet kiosks provide both computer equipment and internet access
through PayNet, USC's designated ISP. See "Products and
Services--Telecommunications and Other Businesses--Major Suppliers--PayNet
Communications, Inc". USC expects to encounter
 
                                       11
<PAGE>
increased competition in the future from convenience store chains, trucking
companies and travel centers implementing similar programs.
 
    PAY TELEPHONES.  USC will compete for pay telephone locations with local
exchange carriers ("LECs") and other independent pay telephone operators. USC
will also compete, indirectly, with long distance companies that can offer
location owners commissions on long distance calls made from LEC-owned pay
telephones. Most LECs and long distance companies against which USC competes and
some independent operators have greater financial, marketing, and other
resources than USC. In addition, many LECs, faced with competition from
independent pay telephone companies, have increased their compensation
arrangements with owners of pay telephone locations to offer more favorable
commission schedules.
 
    USC believes that pay telephone providers primarily compete on the following
factors: (i) the commission payments to a location owner on both local and long
distance calls (ii) the ability to serve accounts with locations in several
local access transport areas or "LATAs", (iii) the quality of service, (iv) the
ability to provide specialized services to a location owner and its telephone
users, and (v) the ability to quickly respond to customer needs.
 
    USC competes with long distance carriers who provide dial-around services
which can be accessed through USC's pay telephones. Certain national long
distance operator service providers have launched advertising promotions which
have increased dial-around activity on pay telephones owned by LECs and
independent telephone companies. Recent regulatory initiatives resulting from
implementation of the Telecommunications Act of 1996 are expected to increase
the amount of dial around compensation received by independent pay telephone
operators on their pay telephones. See "Business--Telecommunications
Business--Regulatory Environment."
 
    PALLET EXCHANGE SERVICES  USC operates its pallet exchange program both
through buying and selling used pallets to and from carriers and buying new
pallets from manufacturers as necessary to maintain inventories at its pallet
exchange locations. Many pallet manufacturers are large companies with
significantly greater financial resources than USC. These companies will be able
to offer new pallets to carriers at lower prices than USC. In addition, trucking
companies may compete with USC's pallet exchange program by offering similar
services at various distribution facilities. USC believes that its ability to
offer convenient access to and drop off points for pallets at travel plazas
across the country differentiates its products and services from those of its
actual or potential competitors. USC believes that the primary barrier to entry
to this market is the ability to secure convenient locations for operating a
pallet exchange program. Therefore, additional potential competitors include
national gasoline stations and travel centers with locations along major
transportation corridors.
 
SALES AND MARKETING
 
    Canmax markets C-Serve and ancillary products and services from its offices
in Irving, Texas. Virtually all sales efforts are focused on the U.S., Canada
and Mexico at this time. However, Canmax plans to expand its international
marketing efforts in the future. More than 99% of 1997 revenue was derived from
U.S. based customers. USC markets its products and services to truck stops,
travel centers, and the transportation industry throughout the U.S.
 
BACKLOG
 
    Software and telecommunication products are generally delivered to customers
when ordered and therefore there is no backlog of orders.
 
IMPACT OF YEAR 2000
 
    Canmax has completed an assessment of the impact of Year 2000 issues on its
internal systems and developed software products and determined that it will be
required to modify or replace portions of its
 
                                       12
<PAGE>
internal systems and developed software products so that they will function
properly with respect to dates in the year 2000 and thereafter. Canmax has
initiated communications with all of its significant suppliers and customers to
determine the extent to which Canmax's internal systems and developed software
products are vunerable to those third parties failure to remediate their own
Year 2000 issues. Canmax has commenced its Year 2000 compliance project. The
project is estimated to be completed not later than December 31, 1998. Canmax
believes that with modifications to existing internal systems and developed
software products and conversions to new internal systems and developed software
products, the Year 2000 issue will not pose significant problems for its
internal systems and developed software products. However, if such modifications
and conversions are not made, or are not completed timely, the Year 2000 issue
could have a material impact on the operations of Canmax. Canmax has concluded
that the cost of its Year 2000 project will not materially impact future
financial results. Canmax is in the process of evaluating Year 2000 issues
related to the recently acquired business operations of USC.
 
EMPLOYEES
 
    As of October 31, 1997, Canmax had 100 full time employees. The functional
distribution of the employees was 9 in sales and marketing and professional
services, 44 in product development and advanced research, 12 in general and
administration, and 35 in service, support and education. All are located in
Irving, Texas with the exception of two sales employees located outside Texas.
As of January 30, 1998, USC had 11 full time employees. All employees are
located in San Diego, California with the exception of 5 employees located in
Arkansas, Connecticut, Utah and Florida. No employees are represented by a labor
union, and Canmax and USC consider their employee relations to be excellent.
 
NEW ACCOUNTING STANDARD
 
    In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share," which is required to be adopted for periods
ending after December 15, 1997. See Note 12 to the Consolidated Financial
Statements.
 
ITEM 2.  PROPERTIES
 
    Canmax occupies 47,178 square feet of office space at 150 West Carpenter
Freeway, Irving, Texas, pursuant to a lease which expires August 31, 1998. The
space is used for executive, administrative, sales, engineering personnel, help
desk and related services, as well as for inventory storage and demonstration
purposes. Currently, Canmax does not have an option to renew the lease, however,
Canmax is reviewing proposals for suitable available space at several
alternative locations. Canmax does not believe it has been or will be materially
affected by environmental laws.
 
    USC occupies 4,094 square feet of office space at 12245 World Trade Drive,
San Diego, California, pursuant to a lease which expires December 31, 2000. The
space will be used for sales and marketing purposes.
 
ITEM 3.  LEGAL PROCEEDINGS
 
    Neither Canmax, USC, nor any of their subsidiaries are party to any material
legal proceedings.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
 
                                       13
<PAGE>
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
MARKET FOR COMMON STOCK
 
    Canmax has only one class of shares, common stock without par value, which
is traded on the Nasdaq SmallCap Market tier of The Nasdaq Stock Market. Each
share ranks equally as to dividends, voting rights, participation in assets on
winding-up and in all other respects. No shares have been or will be issued
subject to call or assessment. There are no preemptive rights, provisions for
redemption or purpose for either cancellation or surrender or provisions for
sinking or purchase funds.
 
    Canmax was listed on the Nasdaq SmallCap Market tier of The Nasdaq Stock
Market on February 10, 1994, and trades under the symbol "CNMX."
 
    Canmax's principal executive offices are located at 150 West Carpenter
Freeway, Irving, Texas 75039, and its telephone number is (972) 541-1600.
 
CHANGE IN NASDAQ LISTING REQUIREMENTS
 
    On August 25, 1997, the U.S. Securities and Exchange Commission, the
National Association of Securities Dealers, Inc. and The Nasdaq Stock Market
approved increases in the listing and maintenance standards governing the Nasdaq
SmallCap Market. These new standards require, as a condition to continued
listing on the Nasdaq SmallCap Market, an issuer to maintain either "net
tangible assets" (defined as total assets, excluding goodwill, minus total
liabilities) of $2.0 million, market capitalization of $35.0 million or net
income in two of the last three fiscal years of at least $0.5 million. Companies
failing to satisfy the new listing requirements are allowed a six month
"compliance" period during which they may take appropriate steps to comply with
the new listing requirements. As of October 31, 1997, Canmax had net tangible
assets of approximately $2.2 million and a market capitalization of
approximately $11.2 million. In addition, Canmax has not had net income of $0.5
million in any of its last three fiscal years. If in the future Canmax fails to
satisfy the requirements for continued listing on the Nasdaq SmallCap Market,
Canmax will be subject to being delisted from the Nasdaq SmallCap Market. The
delisting of Canmax would materially adversely affect the liquidity of the
Canmax Common Stock and the operations of Canmax.
 
MARKET PRICES OF CANMAX COMMON STOCK
 
    The following table sets forth for the fiscal periods indicated the high and
low closing sales price per share of Canmax Common Stock as reported on the
Nasdaq SmallCap Market. All per share amounts have been retroactively adjusted
to reflect a one-for-five reverse stock split of Canmax's Common Stock
 
                                       14
<PAGE>
effective December 21, 1995. The market quotations presented reflect
inter-dealer prices, without retail mark-up, mark-down or commissions and may
not necessarily reflect actual transactions.
 
<TABLE>
<CAPTION>
                                                                                                CANMAX
                                                                                             COMMON STOCK
                                                                                            CLOSING PRICES
                                                                                         --------------------
                                                                                           HIGH        LOW
                                                                                         ---------  ---------
<S>                                                                                      <C>        <C>
FISCAL 1996
  First Quarter........................................................................  $    4.31  $    2.19
  Second Quarter.......................................................................  $    4.63  $    2.50
  Third Quarter........................................................................  $    4.50  $    1.63
  Fourth Quarter.......................................................................  $    3.25  $    1.50
 
FISCAL 1997
  First Quarter........................................................................  $    2.50  $    1.50
  Second Quarter.......................................................................  $    2.88  $    1.50
  Third Quarter........................................................................  $    2.75  $    1.88
  Fourth Quarter.......................................................................  $    2.50  $    1.38
 
FISCAL 1998
  First Quarter........................................................................  $    1.50  $    0.88
  Second Quarter (through February 10, 1998)...........................................  $    1.13  $    1.03
</TABLE>
 
    The closing price for the Canmax Common Stock on February 10, 1998 as
reported by Nasdaq was $1.13.
 
DIVIDENDS
 
    Canmax has never declared or paid any cash dividends on the Canmax Common
Stock and does not presently intend to pay cash dividends on the Canmax Common
Stock in the foreseeable future. Canmax intends to retain future earnings for
reinvestment in its business.
 
    Additionally, dividends are restricted to less than 5% of net operating
income in accordance with the terms of the convertible loan agreement effective
December 15, 1997. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Sources of Capital" and Notes
to the Consolidated Financial Statements regarding subsequent events.
 
HOLDERS OF RECORDS
 
    There were 454 stockholders of record as at February 10, 1998, and
approximately 4,000 beneficial stockholders.

RECENT SALE OF UNREGISTERED SECURITIES

On April 29, 1997, Electronic Data Systems Corporation ("EDS") exercised its 
option to acquire up to 25% of Canmax's Common Stock, resulting in Canmax 
issuing 1,598,136 shares to EDS.  Pursuant to the terms of the EDS option, 
the exercise price for the option was to be not less than 75% of market at 
the time of exercise, minus $4,861,659 (which amount represented the 
investment by EDS in the option).  Upon the exercise of the EDS option, the 
Company did not receive any cash but reclassified the amount associated with 
the EDS option ($4,861,659) to Common Stock at a transaction value of $3.04 
per share.  On July 23, 1997, the Company agreed to grant to Founders a 
warrant to acquire 50,000 shares of Canmax Common Stock at an exercise price 
of $2.00 per share in exchange for Founders' agreement to extend the date by 
which Canmax was to have filed a registration statement for the resale of 
certain securities held by Founders.  Both the issuance of the shares upon 
the exercise of the EDS option and the issuance of the Founders warrant were 
consummated in a private transaction in reliance upon the exemption set forth 
in Section 4(2) of the Securities Act.

                                       15
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                                         FISCAL YEARS ENDED OCTOBER 31,
                                                              -----------------------------------------------------
                                                                1997       1996       1995       1994       1993
                                                              ---------  ---------  ---------  ---------  ---------
<S>                                                           <C>        <C>        <C>        <C>        <C>
                                                                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues....................................................  $  12,736  $  12,264  $   8,996  $   9,675  $   4,659
Cost of software licenses, product revenue and development
  revenue...................................................      5,337      4,489      4,352      3,219      1,411
Operating expenses..........................................      7,291      7,604      8,328      8,305      4,361
Interest expense, net.......................................         21         28         50         66         29
Writedown of capitalized software...........................         --         --         --      4,127         --
Net income (loss)...........................................         87        143     (3,734)    (6,042)    (1,142)
Net income (loss) per share(1)..............................  $    0.01  $    0.02  $   (0.79) $   (1.54) $   (0.31)
 
CONSOLIDATED BALANCE SHEET DATA:
Total assets................................................  $   4,707  $   5,650  $   4,702  $   5,328  $   6,883
Working capital (deficiency)................................        793        208       (469)       146        526
Non-current obligations.....................................        178        256        265      1,375        146
Shareholders' equity........................................      2,220      2,075      1,719      1,910      4,045
</TABLE>
 
------------------------
 
(1) All per share amounts have been retroactively adjusted to reflect a
    one-for-five reverse stock split of Canmax Common Stock effective December
    21, 1995.
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS FOR THE FISCAL YEARS ENDED OCTOBER 31, 1997, 1996 AND
         1995
 
GENERAL
 
    Canmax generates its revenues primarily through three sources:
 
    1.  licensing its sophisticated software systems and selling or licensing
ancillary hardware and third party software to operators of retail petroleum and
convenience stores;
 
    2.  providing related development, customization, and enhancement to its
customers, and
 
    3.  providing maintenance by way of 24 hour per day, 365 day per year help
desk, and other services.
 
                                       16
<PAGE>
    The following table sets forth certain financial data as a percentage of
total net revenues and the percentage change for the periods indicated.
 
<TABLE>
<CAPTION>
                                                                   PERCENTAGE OF TOTAL REVENUE
                                                              -------------------------------------         PERCENTAGE
                                                                                                       INCREASE (DECREASE)
                                                                  FISCAL YEAR ENDED OCTOBER 31,      ------------------------
                                                                 1997         1996         1995         1997         1996
                                                              -----------  -----------  -----------  -----------  -----------
<S>                                                           <C>          <C>          <C>          <C>          <C>
Revenues:
  Software licenses and product revenue.....................       15.1%        15.5%        34.8%         1.2%       (39.2)%
  Development...............................................       68.3%        64.7%        42.2%         9.6%       108.9%
  Service agreements........................................       16.6%        19.8%        23.0%       (13.0)%       17.2%
                                                                  -----        -----        -----
                                                                  100.0%       100.0%       100.0%         3.9%        36.3%
                                                                  -----        -----        -----
Costs and expenses:
  Costs of software licenses, product revenue and
    development revenues....................................       41.9%        36.6%        48.3%        18.9%         3.1%
  Customer service..........................................       17.7%        18.9%        26.2%        (2.9)%       (1.6)%
  Product development.......................................        4.8%        10.5%        26.7%       (52.3)%      (46.4)%
  Sales and marketing.......................................        4.8%         3.6%         7.4%        38.1%       (33.6)%
  General and administrative................................       29.9%        29.0%        32.3%         7.3%        22.4%
  Interest and financing....................................        0.2%         0.2%         0.6%       (26.0)%      (44.4)%
                                                                  -----        -----        -----
                                                                   99.3%        98.8%       141.5%         4.4%        (4.8)%
                                                                  -----        -----        -----
  Net income (loss).........................................        0.7%         1.2%       (41.5)%      (38.8)%      103.8%
                                                                  -----        -----        -----
                                                                  -----        -----        -----
</TABLE>
 
RESULTS OF OPERATIONS--1997 VERSUS 1996
  REVENUE
 
    For the year ended October 31, 1997, Canmax had revenues of $12,736,223, an
increase of $472,363 or 3.9% over 1996. During 1997, The Southland Corporation
(Southland) and NCR Corporation (NCR) accounted for approximately 92% of
Canmax's total revenue as compared with approximately 83% for the comparable
period of 1996.
 
    Software licenses and product revenue for the year ended October 31, 1997
increased by 1.2% from $1,901,302 in 1996 to $1,924,897 in 1997. This increase
is primarily due to increased software and hardware sales to Southland during
the first nine months of 1997 for the planned implementation by Southland of a
Windows NT solution that commenced in December, 1997 and the sale to Southland
in October, 1997 of the right to use, possess and modify the source code of the
software developed by Canmax for Southland, for a one-time license fee of $1.0
million. These increases were partially offset by a decline in sales of software
and hardware components to other customers and a decrease in software and
hardware sales to Southland resulting from the completion of one phase of a UNIX
store upgrade which commenced during 1995 and concluded during the first quarter
of 1996.
 
    Development revenue for the year ended October 31, 1997 increased $763,823
or 9.6% from $7,940,515 in 1996 to $8,704,338 in 1997. Development revenue from
the base contract with Southland continued to decline from approximately
$1,564,000 in 1996 to approximately $799,000 during the same period in 1997, in
accordance with the terms of the contract. Additionally, during 1996, Canmax
recognized development revenues of approximately $2,165,000 for work associated
with a contract between Canmax and NCR to develop a preliminary (non scanning)
point of sale software application in UNIX for Southland. This project was
completed in July, 1996. Also during 1996, Canmax recognized approximately
$3,920,000 of development revenue for work performed under an agreement which
commenced in May, 1996 with NCR and Southland to develop a scanning point of
sale application for Southland and other associated inventory, merchandising,
and back office functions, running in a Windows NT environment
 
                                       17
<PAGE>
(the "Southland Windows NT development project"). Canmax recognized revenues of
approximately $7,560,000 during 1997 related to the Southland Windows NT
development project. Modifications to original project requirements increased
total project revenues from $9.5 million to $11.5 million. The Southland Windows
NT development project was completed in October, 1997. Additionally, during the
fourth quarter of 1997, Canmax provided development and other resources to
Southland on an as-needed basis. Canmax recognized approximately $254,000 of
development revenue related to this effort.
 
    Development revenue increased $1,415,028 or 50.0% from $603,731 in the third
quarter of 1997 to $2,018,759 in the fourth quarter of 1997. During the third
quarter of 1997, Canmax undertook a significant work effort to support the
expanded testing of the Southland Windows NT development project for an interim
period up to pilot implementation. This expanded work effort was out of scope of
the original contract. Accordingly, at the end of the third quarter, Canmax
increased its cost estimates used to compute development project revenue under
the percentage-of-completion method and expensed all costs incurred related to
the additional work effort, including approximately $854,000 for work performed
during the third quarter of 1997. Canmax subsequently negotiated approximately
$981,000 of additional revenue related to this work effort. Therefore, as the
project was completed in October, 1997, Canmax recognized approximately $543,000
of remaining revenue under the percentage-of-completion method and approximately
$981,000 of the approved change control during the fourth quarter of 1997.
 
    Canmax has negotiated with Southland to provide development and other
resources to Southland on an as-needed basis through December, 1998. Canmax is
in discussions with Southland regarding the renegotiation of its contract, but
no definitive agreement has been reached to date. See "Products and
Services--Software Business--Major Contracts--Southland Agreements."
 
    Service agreements revenue for the year ended October 31, 1997 decreased
$315,055 or 13.0% from $2,422,043 in 1996 to $2,106,988 in 1997. This decrease
resulted from a decline in the installation, training and site survey revenues
reflecting a lower number of new installations of Canmax's proprietary software
accompanied by a decrease in calls received from Southland locations by the 24
hour/7 day a week help desk, which caused a decline in revenue due to the
structure of the support contract with Southland.
 
    See discussion in "Liquidity and Sources of Capital" for future trends and
status of contracts.
 
GROSS MARGIN
 
    Gross margin, as a percentage of software licenses and product revenue, was
59.9% for the year ended October 31, 1997 as compared with 30.5% for the same
period in 1996, prior to 1996 inventory writedowns of $217,623. Gross margin on
software sales for 1997 was 66.4% compared with 23.9% for the same period in
1996, excluding 1996 inventory writedowns. The increase is due to the effects of
the higher margin source code sale to Southland in October, 1997. This increase
in margin was partially offset by a decrease in margin resulting from increased
sales of lower margin purchased software during the reporting period coupled
with a decline in sales of Canmax's higher margin proprietary software. Gross
margin on hardware sales for 1997 was 37.6% compared with 32.8% for the same
period in 1996, excluding 1996 inventory writedowns. The increase in margin
resulted from a change in the mix of hardware components sold. Included in the
cost of revenues of software licenses and product revenue for 1996 is a one time
writedown of $105,763 for software inventory that Canmax determined was
necessary due to the limited likelihood of future sales of that item. Further,
also included in cost of revenues of software licenses and product revenue for
1996 is a one time writedown of inventory of $111,860 that Canmax determined was
required to reflect the inventory at net realizable value.
 
                                       18
<PAGE>
    Gross margin on development revenues for 1997 was 47.6% for the year ended
October 31, 1997 as compared with 62.9% for the same period in 1996. This
decrease is partially due to lower anticipated profit margins on the Southland
Windows NT development project as compared to the NCR/Southland development
project in progress in 1996, the preliminary (non scanning) point of sale
software application in UNIX as well as changes in cost estimates of the
Southland Windows NT development project. The lower planned profit margin is a
result of the need to employ a significant number of highly skilled contractors
to complete certain phases of the Southland Windows NT development project
throughout the life of the project which was completed in October, 1997. No such
requirements were necessary or incurred for the NCR/Southland UNIX based project
which was completed in July, 1996.
 
    Gross margin on development revenue for the fourth quarter of 1997 was 67.5%
as compared to (51.9)% for the third quarter of 1997. This increase is primarily
related to changes in project cost estimates and accounting for the additional
work effort undertaken in the third quarter of 1997. As previously discussed,
during the third quarter of 1997, Canmax undertook a significant work effort to
support the extended testing of the Southland Windows NT development project for
an interim period up to pilot implementation. This expanded work effort was out
of the scope of the original contract. Accordingly, at the end of the third
quarter, Canmax increased its cost estimates used to compute development project
revenue under the percentage-of-completion method and expensed all costs
incurred related to the additional work effort, including approximately $854,000
for the work effort performed during the third quarter of 1997. Canmax
subsequently negotiated approximately $981,000 of additional revenue related to
this work effort. Therefore, as the Southland Windows NT development project was
completed in October, 1997, Canmax recognized approximately $543,000 of
remaining revenue under the percentage-of-completion method and approximately
$981,000 of the approved change control during the fourth quarter of 1997.
 
EXPENSES
 
    Customer service costs for the year ended October 31, 1997 decreased by 2.9%
compared with the same period in 1996. The decline in costs is due to lower
operating costs for the service arising from increased efficiencies and lower
overall expenditure levels.
 
    Product development costs declined $672,463 or 52.3% from $1,286,966 in 1996
to $614,503 in 1997. The reduction is due to a significant increase in funded
development projects which resulted in development expenditures being included
in cost of revenues. Additionally, there was an increase in software development
costs capitalized. During the first quarter of 1996, Canmax capitalized $128,874
of software development costs relating to a new credit card processing network
interface as compared with $209,202 of such costs capitalized in the fourth
quarter of 1997 relating to Canmax's next generation Windows based project which
is scheduled for release in the first calendar quarter of 1998.
 
    General and administrative expenses increased $258,225 or 7.3% from
$3,555,042 in 1996 to $3,813,267 in 1997. This net increase is primarily due to
Canmax expensing approximately $360,000 of merger related costs during October,
1997 upon termination of the proposed merger with Auto Gas Systems, Inc. These
costs, comprised primarily of legal and other professional fees incurred during
the second and third quarter of 1997, were originally deferred and would have
been accounted for as additional purchase price or as a reduction in the fair
value of the securities issued upon consummation of the proposed merger
transaction. Additionally, Canmax experienced increases in expenditures related
to the establishment of a business development unit, responsible for identifying
new business opportunities and project management and increased expenditures for
investor relations. These increases were partially offset by a reduction in
development project premiums to ensure timely completion of projects and
performance bonuses.
 
    Sales and marketing expenses increased by $167,864 or 38.1% from $440,581 in
1996 to $608,445 in 1997. These increases are due to increased headcount and
advertising and marketing expenditures aimed
 
                                       19
<PAGE>

at generating interest in existing products as well as Canmax's new Windows
based product scheduled for release in the first calendar quarter of 1998.
 
    For the year ended October 31, 1997 Canmax recorded no tax provision as net
operating loss carryforwards of approximately $20.3 million would offset any tax
liability related to fiscal year 1997.
 
    As a result of the foregoing, Canmax generated net income of $87,331, or
$0.01 per share, for the year ended October 31, 1997 as compared with net income
of $142,614, or $0.02 per share, for the year ended October 31, 1996.
 
RESULTS OF OPERATIONS--1996 VERSUS 1995
  REVENUE
 
    For the year ended October 31, 1996, Canmax had revenues of $12,263,860, an
increase of $3,267,773, or 36.3%, over 1995. The improvement in revenue is a
result of growth in service agreement revenues and significant growth in
development revenue as Canmax completed a project to develop a preliminary (non
scanning) point of sale software application in UNIX for Southland and commenced
a project to produce a scanning point of sale application and other associated
inventory, merchandising, and back office functions for Southland in a Windows
NT environment.
 
    Software licenses and product revenue for the year ended October 31, 1996
was $1,901,302, a decrease of $1,226,133, or 39.2% over 1995. The decrease is
primarily due to the sale during 1995 of software and hardware components to
Southland in accordance with their contract which did not occur during 1996. The
provision of these items to Southland under their contract commenced during 1995
and concluded during the first quarter of 1996.
 
    Development revenue for the year ended October 31, 1996 was $7,940,515, an
increase of $4,139,307, or 108.9% over 1995. While development revenue from the
base contract with Southland declined in accordance with the terms of the
contract compared with the same period in 1995, Canmax recognized additional
development revenue of approximately $2,165,000 for work associated with a
contract between Canmax and NCR to develop a preliminary (non scanning) point of
sale software application in UNIX for Southland. This project was completed in
July 1996. In fiscal 1996, Canmax reached agreement with NCR to develop for
Southland a next generation Windows NT based version of the Canmax "C-Serve"
convenience store software for $9.5 million. The resulting product will be used
in Southland's approximately 5,000 7-Eleven stores in the United States. NCR was
chosen by Southland to provide project management and other professional
services for this project. The $9.5 million in revenues is in addition to
previous contracts awarded to Canmax from Southland. During 1996, Canmax
recognized revenue of $3,920,098 under this agreement. No such revenue was
recorded in 1995.
 
    Service agreements revenue for the year ended October 31, 1996 was
$2,422,043, an increase of $354,599, or 17.2%, over 1995. This improvement
results from an increase in revenue from the 24 hour/7 day a week help desk
services of 49.4%, reflecting an increase in the number of sites supported from
3,654 as of October 31, 1995 to 5,912 as of October 31, 1996. While the number
of sites increased by 61.8%, revenue increased at a lower rate due to the
structure of the support contract with Southland which provided for a minimum
payment until a certain volume of support calls was reached. These increases
were offset by a reduction in installation and training revenue resulting from a
decrease in the number of sites installed and trained in 1996 compared with
1995.
 
GROSS MARGIN
 
    Gross margin as a percentage of software license, product and development
revenue was 56.6% for the year ended October 31, 1996 compared with 37.2% for
the same period in 1995, prior to 1996 inventory writedowns of $217,623.
 
                                       20
<PAGE>
    Gross margin on software sales increased from 17.6% for the year ended
October 31, 1995 to 23.9% for the same period in 1996, excluding the $105,763
software inventory writedown recorded in 1996. This improvement was due to a
change in mix of products sold away from low margin products sold to Southland
during 1995 to a mix that is more representative of higher margin products sold
during 1996. Gross margin on hardware sales increased slightly from 31.6% for
the year ended October 31, 1995 to 32.8% for the same period in 1996, excluding
the $111,860 hardware inventory writedown recorded in 1996. The improvement in
1996 was due to the sale of hardware with higher than normal margins compared
with 1995.
 
    For the year ended October 31, 1996, the gross margin on development revenue
was 62.9% compared with 47.1% for the same period in 1995. The improvement is a
result of improved profit margins negotiated on Canmax's development projects.
 
EXPENSES
 
    For the year ended October 31, 1996, customer service costs decreased 1.6%
compared with the same period in 1995. The decline in cost despite the increase
in the number of sites supported from 3,654 to 5,912 is due to lower operating
costs for the service arising from increased efficiencies and lower overall
expenditure levels.
 
    For the year ended October 31, 1996, product development costs declined from
$2,401,306 for the same period in 1995 to $1,286,966, a reduction of 46.4%. The
reduction was due to an overall reduction in product development funded by
Canmax and due to the capitalization of software development costs amounting to
$128,874 relating to a new credit card processing network interface Canmax
developed during the first quarter of 1996.
 
    General and administrative expenses increased 22.4% for the year ended
October 31, 1996 compared with 1995, predominately as a result of the
establishment of a business development unit responsible for identifying new
business opportunities and project management. Sales and marketing expenses
declined 33.5% for the year ended October 31, 1996 compared with the same period
in 1995. These cost reductions are a result of lower expenditure levels.
 
    During the year ended October 31, 1996, Canmax announced it would close its
wholly owned subsidiary, Dataplane Technologies Inc., on August 31, 1996.
Dataplane had designed and developed certain communication processor boards
which allow C-Serve to handle some of the communication protocols and device
interfaces used in the industry. Canmax determined that the technology had a
limited life and it would no longer continue to develop and manufacture the
technology. Canmax has licensed the manufacturing rights of the technology to
Bass Inc. for the next three years and anticipates providing for future
requirements through Bass. In addition, Canmax closed its non operating
subsidiary, The Point of Sale Corporation.
 
    The cost of closing these subsidiaries has been included in part in the
writedown of $217,623 of inventory previously discussed and $25,000 included in
general and administrative expense representing the write off of intellectual
property.
 
    At October 31, 1996, Canmax ceased operations of its wholly owned
subsidiary, Canmax Retail Systems (British Columbia), which had been providing
software development services on a software development project which was
completed on October 31, 1996. Canmax does not anticipate to incur any
additional material costs to close this subsidiary.
 
    For the year ended October 31, 1996, Canmax recorded no tax provision as net
operating loss carryforwards of approximately $19.1 million would offset any tax
liability related to fiscal year 1996.
 
                                       21
<PAGE>
    As a result of the foregoing, Canmax generated net income of $142,614, or
$0.02 per share, for the year ended October 31, 1996 as compared with incurring
a net loss of $3,734,450, or $0.79 per share, for the year ended October 31,
1995.
 
LIQUIDITY AND SOURCES OF CAPITAL
 
    At October 31, 1997, Canmax had working capital of $792,807. For the fiscal
year ended October 31, 1997, Canmax used cash from operating activities of
$306,463. Canmax maintained liquidity during fiscal 1997 primarily by utilizing
cash generated from operating activities. To maintain liquidity during fiscal
1998, Canmax must (i) increase revenue through the successful completion of
on-going development contracts with customers, the introduction of new products
to the marketplace, increasing the market share for existing products and
services, and negotiating new development contracts with customers and/or (ii)
obtain additional lines of credit. Additionally, in December, 1997, Canmax
entered into a convertible loan agreement and on February 11, 1998, Canmax
entered into a loan commitment letter to help provide for its liquidity needs.
See "Convertible Loan Agreements." Canmax believes that it will meet its
liquidity needs in 1998 through cash generated from the operations of its
existing software business, newly acquired telecommunications business, and, if
necessary, through utilization of its existing loan and loan commitment
agreements.
 
    At October 31, 1996 and 1995 Canmax had a net working capital surplus
(deficiency) of $208,466 and ($468,653), respectively. During the years ended
October 31, 1996 and 1995 Canmax provided (used) cash from operating activities
of $888,220 and ($1,529,593), respectively.
 
    Canmax maintained liquidity during fiscal 1996 primarily from net proceeds
arising from the sale of common stock from the exercise of stock options which
provided cash of $208,940 during the second quarter of 1996 and from cash
provided by operating activities during the third and fourth quarter of 1996.
Canmax maintained liquidity during fiscal 1995 primarily from the receipt of
proceeds from the sale of common shares and exercise of stock options, the
conversion of certain EDS development obligations into shares of common stock
and the proceeds received from shareholder advances.
 
    CONVERTIBLE LOAN AGREEMENTS
 
    On December 15, 1997, Canmax executed a convertible loan agreement with a
shareholder, Founders Equity Group, Inc., ("Founders") which provides financing
of up to $500,000. Funds obtained under the loan agreement are collateralized by
all assets of Canmax and bear interest at 10%. Required payments are for
interest only and are due monthly beginning February 1, 1998. Borrowings under
the loan agreement mature January 1, 1999, unless otherwise redeemed or
converted.
 
    Under the terms of the loan agreement, Founders may exercise its right at
any time to convert all, or in multiples of $25,000, any part of the borrowed
funds into Canmax Common Stock at a conversion price of $1.25 per share. The
conversion price is subject to adjustment for certain events and transactions as
specified in the loan agreement. Additionally, the outstanding principal amount
is redeemable at the option of Canmax at 110% of par.
 
    As of February 11, 1998, Founders had advanced to Canmax $350,000 under the
loan agreement. Canmax used these funds to pay fees and expenses related to the
USC acquisition, to advance to USC $250,000, and for general working capital
requirements, all of which are permitted uses of proceeds under the loan
agreement.
 
    On February 11, 1998, Canmax and Founders executed a loan commitment letter
which provides for multiple advance loans of up to $2 million over the ensuing
12 month period. Funds obtained under the loan commitment agreement are
collateralized by all assets of Canmax and bear interest at 10%. Interest is
payable monthly and borrowings under the agreement mature one year from the date
of the advance. Amounts borrowed under the agreement are convertible into Canamx
Common Stock at a conversion
 
                                       22
<PAGE>
price equal to the five (5) day trading average of the Canmax Common Stock
immediately preceding the date of the advance. The maximum amount of Canmax
Common Stock issuable under the loan commitment is 1.6 million shares. As
consideration for the loan commitment, Canmax paid a commitment fee of $10,000.
As of February 11, 1998, no amounts had been advanced to Canmax under the loan
commitment agreement.
 
    PRODUCT DEVELOPMENT
 
    To complete development of the next generation Windows based product, Canmax
will need to perform additional development effort that is not funded by work
currently being performed for Southland. Costs necessary to perform the
additional development and to bring the new product to market are estimated to
range from $250,000 to $500,000. Canmax increased its sales and marketing
efforts in 1997 in order to generate market interest in existing systems as well
as new products under development.
 
    Canmax believes that it may be necessary to raise additional capital to
complete development of its next generation product within the critical window
of opportunity and to provide vital marketing and other support services. If
cash generated by operations is insufficient to satisfy Canmax's liquidity
requirements, Canmax may be required to sell additional debt or equity
securities or utilize existing lines of credit, delay new product development or
restructure operations to reduce costs. Such financing could have a dilutive
effect on the stockholders of Canmax.
 
    USC LIQUIDITY NEEDS
 
    Canmax anticipates that approximately $3.5 to $5.0 million will be required
to realize anticipated revenue growth in its telecommunications businesses.
These funds will be used to purchase and install additional prepaid phone card
vending machines and internet access kiosks. Canmax is seeking to secure
equipment financing for these purchases.
 
    In addition, Canmax anticipates incurring at least $75,000 in fees and
expenses to obtain federal and state authorizations and approvals related to
USC's telecommunications business.
 
    ACQUISITIONS
 
    Canmax continues to review an acquisition strategy within its current
industry and other related markets. From time to time Canmax will review
acquisition candidates with products, technologies or other services that could
enhance Canmax's product offerings or services. Any material acquisitions could
result in Canmax issuing or selling additional debt or equity securities,
obtaining additional debt or other lines of credit and may result in a decrease
to Canmax's working capital depending on the amount, timing and nature of the
consideration to be paid.
 
    SOUTHLAND AGREEMENTS
 
    In December, 1993, Canmax signed a five year agreement with Southland to
provide software licenses, development services, and provide hardware and help
desk services (the "Master Agreement"). Southland chose Canmax's proprietary
convenience store automation software, C-Serve, as the basis for its automation
of store functions and operations at its corporate and franchise operated
7-Eleven convenience stores in the United States. Software licensing, product
and service revenue under this agreement during the fiscal years ended October
31, 1997, 1996, and 1995 totaled approximately $2,051,000, $2,581,000 and
$3,733,000, respectively, while development revenues recorded under the Master
Agreement during these same periods totaled approximately $799,000, $1,564,000
and $1,792,000, respectively.
 
    On October 31, 1997, Canmax and Southland entered into Amendment No. 3 to
the Master Agreement (the "Southland Amendment"). Pursuant to the terms of the
Southland Amendment, Canmax allowed Southland to exercise its right as specified
in the Master Agreement to use, possess and modify the
 
                                       23
<PAGE>
source code for the software developed by Canmax for Southland for a one-time
license fee of $1.0 million. Payment of the license fee was due in two
installments of $500,000. The first installment was received in November, 1997
and the second installment was received in January, 1998. The Southland
Amendment also contains Southland's agreement to purchase from Canmax on or
before December 7, 1998, no less than $4.0 million of hardware, software
maintenance, help desk, development and other services. Although Southland has
committed to purchase certain products and services totaling a minimum of $4.0
million through December 7, 1998 in accordance with the terms of the Southland
Amendment, Southland's use and possession of the source code could result in a
material reduction in Southland's reliance upon, and payment of fees for
development services to, Canmax. The use by Southland of its own staff or a
third-party other than Canmax to perform such services could have a material
adverse effect on Canmax.
 
    From time to time, Canmax may also provide development and other resources
to Southland on an as-needed basis under various agreements at terms specified
in the Master Agreement. Approximately $254,000 of development revenue under
such agreements was recognized by Canmax in fiscal 1997. Such agreements extend
through December, 1998.
 
    In 1995, Canmax contracted with NCR to successfully bid for two additional
contracts with Southland relating to business requirements definition and the
development of a preliminary point of sale system. These projects resulted in
revenues to Canmax of approximately $2,165,000 and $1,005,000 in the fiscal
years ended October 31, 1996 and 1995, respectively.
 
    During fiscal 1996, Canmax reached an agreement with NCR to develop for
Southland a next generation Windows NT based version of the Canmax C-Serve
convenience store software for $9.5 million. NCR was chosen by Southland to
provide project management and other professional services for the project.
Modifications to project requirements increased total project revenues from $9.5
million to $11.5 million. Approximately $7,560,000 and $3,920,000 of development
revenues under such agreement was recognized by Canmax in fiscal 1997 and 1996,
respectively.
 
    Canmax is in discussions with Southland regarding the renegotiation of its
contract, but no definitive agreement has been reached to date. While Canmax
anticipates that it will successfully negotiate future agreements with
Southland, there can be no assurances either that Canmax will continue to
provide services to or receive revenue from Southland after the expiration of
the existing contracts in December, 1998 or, if Canmax enters into new
agreements with Southland extending beyond December, 1998, the amount of
revenues Canmax will receive thereunder. Any termination or significant
disruption of Canmax's relationships with Southland could have a material
adverse effect on Canmax's business, financial condition and results of
operations.
 
    Due to periodic fluctuations in billing and collection cycles in the
Southland relationship, Canmax's accounts receivable as a percentage of its
total assets will fluctuate; however, Canmax does not anticipate any material
problems in collecting its accounts receivable with Southland. Any material
adverse change in the ability of Southland to pay the amounts owed to Canmax
would result in a write down in such receivables (beyond any reasons currently
established therefor) and, if significant, could have a material adverse effect
on Canmax.
 
    In October, 1997 Canmax completed an enhanced version of its C-Serve product
to run on the Windows NT operating system in conjunction with a development
project with NCR and Southland. Canmax continues to develop a generic version of
its C-Serve software that runs under the Microsoft Windows family of operating
systems. This product is expected to be completed in the first calendar quarter
of 1998. The new product is being developed in conjunction with the
NCR/Southland project noted above and is expected to include state of the art
technology and best industry practices for the management of retail gas stations
and convenience stores.
 
                                       24
<PAGE>
CHANGE IN NASDAQ LISTING REQUIREMENTS
 
    On August 25, 1997, the listing and maintenance standards applicable to the
Nasdaq SmallCap Market were increased. See "Market for Registrant's Common
Equity and Related Stockholder Matters-- Nasdaq Increased Listing Standards."
Although Canmax met the new requirements at October 31, 1997, there can be no
assurances that Canmax will continue to do so in the future. If in the future
Canmax fails to satisfy the requirements for continued listing on the Nasdaq
SmallCap Market, Canmax will be subject to being delisted from the Nasdaq
SmallCap Market. The delisting of Canmax would materially adversely affect the
liquidity of the Canmax Common Stock and the operations of Canmax.
 
    The foregoing "Management's Discussion and Analysis of Financial Condition
and Results of Operations of Canmax" section contains various "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act which represent Canmax's expectations or beliefs
concerning, among other things, future operating results and various components
thereof and the adequacy of future operations to provide sufficient liquidity.
Canmax cautions that such matters necessarily involve significant risks and
uncertainties that could cause actual operating results and liquidity needs to
differ materially from such statements, including, without limitation: user
acceptance of Windows NT as an operating system, continued acceptance of UNIX
based software and Canmax's products and services, timing of completion of
development projects and new products, competitive factors such as pricing and
the release of new products and services by competitors, potential need for
additional financing to fund product development, capital expenditure financing,
general economic conditions, product demand, manufacturing efficiencies and
merger and acquisition integration.
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
    Not applicable.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The information required by Item 8 of Form 10-K is presented at pages F-1 to
F-25.
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
 
    None.

<PAGE>
                                       
                                   PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth certain information regarding the current
directors, nominees for director and executive officers of the Company.

<TABLE>
<CAPTION>

         NAME              AGE  POSITION WITH THE COMPANY
------------------------   ---  ----------------------------------------
<S>                        <C>  <C>
 Roger D. Bryant            55  President, Chief Executive Officer, and
                                Director

 Debra L. Burgess           40  Executive Vice President, Chief Operating
                                Officer, Secretary and Director

 W. Thomas Rinehart         57  Director

 Robert M. Fidler           59  Director

 Nick DeMare                43  Director
</TABLE>

     ROGER D. BRYANT has served as President, Chief Executive Officer and a 
director of Canmax since November 15, 1994. Prior to joining Canmax, Mr. 
Bryant was President of Network Data Corporation (1993-1994), a private 
corporation which specialized in developing software for the convenience 
store and retail petroleum industries. Mr. Bryant has also served as 
President of Wayne Division, USA (1991-1993), a division of Dresser 
Industries Inc., a manufacturer of fuel dispensing equipment. Mr. Bryant 
currently serves as a director of Field Point Petroleum Corporation. Mr. 
Bryant has extensive knowledge and experience in the software development, 
retail petroleum and convenience store industries. Mr. Bryant holds a degree 
in electrical engineering.

     DEBRA L. BURGESS has served with the Company since 1989 in increasingly 
responsible positions. Since November 1994, she has been the Company's Chief 
Operating Officer and a director.  Ms. Burgess also serves as the Company's 
Chief Financial Officer.  Ms. Burgess has been the Secretary of the Company 
since 1996. Prior to joining Canmax, Ms. Burgess was the Manager of Retail 
Automation responsible for the selection and implementation of a retail 
automation solution (1981-1989) at Fina Oil and Chemical Company, a retail 
petroleum, petrochemical refining and exploration company. Ms. Burgess is a 
Certified Public Accountant.

     W. THOMAS RINEHART has served as a director of Canmax since May, 1991. 
He was co-founder and Executive Vice President of BASS Inc., from June 1981 
until his retirement in September 1992. BASS Inc., a private corporation, is 
a supplier of retail automation hardware and software to the grocery store 
industry. Prior to BASS Inc., Mr. Rinehart was with NCR from 1964 to 1981, 
where he held various staff and management positions within its retail 
software development divisions. Mr. Rinehart has extensive experience in 
software development and retail automation.

     ROBERT M. FIDLER has served as a director of Canmax since November 1994. 
Mr. Fidler joined Atlantic Richfield Company ("ARCO") in 1960, was a member 
of ARCO's executive management team from 1976 to 1994 and was ARCO's manager 
of New Marketing Programs from 1985 until his retirement in 1994. Mr. Fidler 
has extensive knowledge and experience in managing retail petroleum 
operations. 

     NICK DEMARE, has served as a director of Canmax since January 1991. 
Since May, 1991, Mr. DeMare has been the President and Chief Financial 
Officer of Chase Management Ltd., where his overall responsibility includes 
providing a broad range of administrative, management and financial services 
to private and public companies with varied interests in mineral exploration 
and development, precious and base metals production, oil and gas, venture 
capital and computer software. Mr. DeMare has served and continues to serve 
on the boards of a number of Canadian 

<PAGE>

4

public companies and on the board of directors of North Lily Mining Co., a 
mining company.  Mr. DeMare is a Chartered Accountant (Canada). 

SIGNIFICANT EMPLOYEES

     A brief description of the business experience and position of certain 
significant employees of the Company and its subsidiaries who are not also 
directors is provided below.

     LYNN G. CHIANESE is Vice President of Customer Services of Canmax Retail 
Systems Inc., ("CRSI") and has served in that capacity since April 1993. Ms. 
Chianese joined Canmax in September 1986 and has held positions of increasing 
responsibility. Prior to joining Canmax, she was the Operations Manager for 
Darnell / Darcor, an international manufacturing company.

     IVOR  J. FLANNERY is Vice President of Advanced Research of CRSI and has 
served in that capacity since January 1989. Mr. Flannery joined Canmax in 
September 1983 and has held positions of increasing responsibility. Prior to 
joining Canmax he was an Advanced Systems Engineer for RIM Technology, a 
software development company which developed point of sale systems for the 
retail petroleum industry. 

     RICHARD STEPHENS is Vice President of Development of CRSI and has served 
in that capacity since April 1995. Previously, he spent seven years with the 
Wayne Division of Dresser Industries Inc., a manufacturer of fuel dispensing 
equipment, as Manager--Systems Software, responsible for developing point of 
sale systems and applications.

     SCOTT R. MATTHEWS  is Vice President of Telecommunications 
Development/Sales and Marketing and has served in that capacity since April 
1998.  From February 1996 to March 1998, Mr. Matthews was the Vice President 
of Sales and Marketing at Galaxy Communications, Inc., a telecommunications 
company.  Mr. Matthews previously served as the Director of Sales of ATCALL, 
Inc., a telecommunications company.
 
     MICHAEL C.F. MCQUARRIE  is the Vice President of Professional Services 
and has served in that capacity since March of 1998.  Since 1997, Mr. 
McQuarrie has also been responsible for overseeing the development of CRSI's 
Windows NT based software products.  Mr. McQuarrie joined Canmax in 1982 and 
has held positions of increasing responsibility.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Section 16(a) of the Securities Exchange Act of 1934, as amended, 
requires the Company's directors and executive officers and persons who own 
more than 10% of the Company's common stock to file with the SEC initial 
reports of ownership and reports of changes in ownership of common stock and 
other equity securities of the Company. Officers, directors and greater than 
10% shareholders are required by SEC regulations to furnish the Company with 
copies of all Section 16(a) reports they file. To the Company's knowledge, 
based solely on the review of the copies of such reports filed during the 
fiscal year ended October 31, 1997, all Section 16(a) filing requirements 
applicable to its officers, directors and greater than 10% beneficial owners 
were complied with, except (i) Mr. Roger D. Bryant, Mr. Philip M. Parsons and 
Ms. Debra L. Burgess each filed one late report concerning their receipt of 
the Performance Warrants, (ii) the Dodge Jones Foundation has not filed a 
Form 3 to report their 10% ownership interest in the Company, (iii) neither 
Mr. Bernet, Ms. Delia O'Donnell nor the trustee of the voting trust for the 
former shareholders of USC have filed Form 3's reporting their receipt of 
shares of Company Common Stock on January 30, 1998 as a result of the Merger 
Agreement, and (iv) each of the Company's officers and directors filed late 
their Form 5 Annual Statement of Beneficial Ownership of Securities Report 
that was due on or about December 15, 1997. 

ITEM 11. EXECUTIVE COMPENSATION AND OTHER INFORMATION

EXECUTIVE COMPENSATION

     The following table summarizes the compensation paid by Canmax and its 
subsidiaries during the years ended October 31, 1997, 1996 and 1995 for 
services in all capacities to each of Canmax's chief executive officer and 
the four highest paid executive officers (the "Named Executive Officers") of 
Canmax whose total annual salary and bonus exceeded $100,000.

<PAGE>

5

                            SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                        LONG-TERM
                                                                                       COMPENSATION 
                                                        ANNUAL COMPENSATION               AWARDS
                                             ----------------------------------------  ------------
                                                                                        SECURITIES
     NAME AND PRINCIPAL                                                  OTHER ANNUAL   UNDERLYING       ALL OTHER
         POSITION                    YEAR    SALARY($)      BONUS($)(1)  COMPENSATION   OPTIONS (#)    COMPENSATION (2)
----------------------------------   ----    ---------      ----------  -------------   -----------    ------------
<S>                                  <C>     <C>            <C>         <C>             <C>            <C>         
 Roger D. Bryant.................    1997     185,000              --       --             45,000         538
 President and CEO                   1996     169,750          73,920    18,733(4)        210,000         --
                                     1995                      10,000       --             35,000         --
                                                                                                          
 Debra L. Burgess................    1997     140,000              --       --             35,000         69
 Executive Vice President            1996     118,542          40,320       --             69,000         --
 Chief Operating Officer             1995     104,260           4,000       --             15,800         --
 Secretary
                                                                                                          
 Philip M. Parsons(3)............    1997     125,000              --       --             25,000         65
 Executive Vice President            1996     108,750          36,960       --             55,000         --
 Chief Financial Officer             1995      36,070           4,000       --             10,000         --
 Treasurer
                                                                                                          
 Ivor Flannery...................    1997     110,000              --       --             23,000         --
 Vice President -                    1996      94,050          21,056       --             15,000         --
 Advanced Research (5)               1995      91,055          12,750       --                 --

                                                                                                          
 Richard Stephens................    1997     110,000              --       --             15,000         --
 Vice President-                     1996      94,000          21,056       --             20,000         --
 Development (5)                     1995      52,724           4,500       --              5,000         --
</TABLE>

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

(1)  Reflects bonus earned during the fiscal year but paid during the next year.
     
(2)  Reflects compensation associated with supplemental long-term disability
     insurance.
     
(3)  Mr. Parsons resigned as a director and officer of the Company effective
     April 9, 1998.
     
(4)  Reflects compensation associated with relocation expenses incurred by
     Mr. Bryant.
     
(5)  Reflects positions held with Canmax's subsidiary, CRSI.
     

EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS 

     Mr. Bryant and Ms. Burgess serve as executive officers of CRSI pursuant 
to written employment agreements that commenced July 1, 1997 and were amended 
effective upon their renewal on July 1, 1998. Each employment agreement 
provides for certain benefits and protections upon a "Change of Control," 
which is defined to occur (i) at any time a person becomes a "beneficial 
owner" of in excess of thirty percent of the combined voting power of the 
outstanding securities of CRSI or Canmax, (ii) if, at any time during the 
twenty-four month period following a merger, tender offer, consolidation, 
sale of assets or contested election, or any combination thereof, at least a 
majority of the Canmax Board shall cease to consist of either (a) directors 
who served prior to such transaction or (b) directors whose nomination for 
election by the shareholders of Canmax was approved by at least two-thirds of 
all directors then serving, or (iii) at any time the shareholders of Canmax 
approve an agreement to sell or dispose of all or substantially all of the 
assets of CRSI or Canmax. Each employment agreement also permits CRSI or 
Canmax to terminate the executive for "Cause", meaning a termination as a 
result of (a) acts of dishonesty constituting a felony or intended to result 
in substantial gain for personal enrichment at the expense of CRSI or Canmax, 
or (b) the willful and continued failure to substantially perform such 
person's duties and responsibilities following a demand for substantial 
performance by CRSI or Canmax. Each employment agreement prohibits the 
executive from engaging in any activities in competition with CRSI or Canmax 
during the employment term and prohibits the executive from 

<PAGE>

6

soliciting any employees, customers or clients of Canmax or CRSI during the 
2-year period following any voluntary termination by the executive or 
termination for Cause.

     The July 1, 1997 employment agreements with Mr. Bryant and Ms. Burgess 
provided for the issuance of warrants ("1997 Performance Warrants") to each 
executive as additional employment compensation. Each 1997 Performance 
Warrant expires 10 years from the date of issuance and, prior to the 
amendments to the employment agreements and 1997 Performance Warrants 
effective July 1, 1998, was exercisable at a price of $2.25 per share, the 
closing price of the Canmax Common Stock on July 17, 1997, the date that the 
compensation committee approved the issuance of such warrants. The vesting of 
the 1997 Performance Warrants was conditioned on the Company's achievement of 
certain financial targets or upon the occurrence of a Change of Control.  The 
1997 Performance Warrants vested on January 30, 1998 as a result of the 
Company's issuance of shares of common stock and warrants as consideration 
for its acquisition of USCommunication Services, Inc. ("USC").  Effective 
July 20, 1998, the Compensation Committee reduced the exercise price of the 
1997 Performance Warrants from $2.25 per share to $0.53 per share, the 
closing price of the Canmax Common Stock on July 17, 1998, the trading date 
preceding the date that the Compensation Committee repriced the 1997 
Performance Warrants.  In addition, on such date the Compensation Committee 
also issued to Mr. Bryant and Ms. Burgess additional performance warrants 
(the "1998 Performance Warrants") having an exercise price of $0.53 per share 
and a 10 year expiration period, the vesting of which is dependent either 
upon the Company's recording of revenues in excess of $50 million in any 
period of twelve consecutive months with positive earnings during such 
twelve-month period or upon a Change of Control (other than a Change of 
Control arising from the Proposed Sale).

     Mr. Bryant's employment agreement expires June 30, 2000. Mr. Bryant is 
entitled to receive an annual base salary of $200,000 and to participate in 
any bonus programs established by the Canmax Board. Pursuant to his 
employment agreement, Mr. Bryant has also been granted 1997 Performance 
Warrants to acquire 250,000 shares of Canmax Common Stock and 1998 
Performance Warrants to acquire an additional 100,000 shares of Canmax Common 
Stock.  Pursuant to the terms of his agreement, Mr. Bryant may elect to 
voluntarily terminate his employment within 90 days following a Change of 
Control and receive a lump sum payment equal to one year's base salary. If 
Mr. Bryant is terminated during his employment period without Cause, he will 
be entitled to continue to receive his base salary and benefits for a period 
of two years and an amount equal to any bonus paid during the preceding 12 
months (payable in 24 monthly installments) in accordance with CRSI's 
standard payroll cycle; provided, however, that such amounts shall be payable 
in a lump sum following a Change of Control.

     Ms. Burgess' employment agreement expires June 30, 1999. Ms. Burgess is 
entitled to receive an annual base salary of $165,000 and to participate in 
any bonus programs established by the Canmax Board. Pursuant to her 
employment agreement, Ms. Burgess has also been granted 1997 Performance 
Warrants to acquire 125,000 shares of Canmax Common Stock and 1998 
Performance Warrants to acquire 200,000 shares of Canmax Common Stock. 
Pursuant to the terms of her agreement, Ms. Burgess may elect to voluntarily 
terminate her employment within 90 days following a Change of Control and 
receive a lump sum payment equal to one year's base salary. If Ms. Burgess is 
terminated during her employment period without Cause, she will be entitled 
to continue to receive her base salary and benefits for a period of one year 
and an amount equal to 50% of any bonus paid during the preceding 12 months 
(payable in 12 monthly installments) in accordance with CRSI's standard 
payroll cycle; provided, however, that such amounts shall be payable in a 
lump sum following a Change of Control.

     Mr. Parsons was a party to an employment agreement similar to the 
agreements of Mr. Bryant and Ms. Burgess, which provided for an annual base 
salary of $125,000 and the grant of 1997 Performance Warrants to acquire 
100,000 shares of Canmax Common Stock.  Mr. Parsons' employment agreement and 
1997 Performance Warrants terminated upon his resignation on April 9, 1998.

     On June 12, 1998, the Company and CRSI executed employment contracts 
with Lynn G. Chianese, Ivor J. Flannery, Richard Stephens and Michael 
McQuarrie, each a vice president of CRSI, which requires the Company to give 
six months prior written notice of any termination of the employment of each 
person without cause.  Pursuant to these employment contracts, Mr. McQuarrie 
is entitled to receive an annualized base salary of $96,000, Ms. Chianese is 
entitled to receive an annualized base salary of $100,000, and Messers. 
Flannery and Stephens are each entitled to receive an annualized base salary 
of $110,000.  In the event the Company terminates any such employee without 
cause upon less than six months prior written notice, each such employee 
shall be entitled, for a period of six months from the date of delivery of 
notice of termination without cause, (i) to continue to receive the base 
salary in effect at the time of termination in accordance with the Company's 
regular payroll cycle, (ii) to receive monthly payments equal to one-twelfth 
of any bonuses paid during the 12-month period preceding the date of 
termination, and (iii) to continue to participate in all regular employee 
benefit plans of the Company.  Each employment contract provides that if such 
employee is involuntarily terminated (other than for "cause") in 
contemplation of, or within six months following, a Change of 

<PAGE>

7

Control, then the employee shall be entitled to receive a lump sum severance 
payment equal to fifty percent (50%) of the employee's annualized base salary 
in effect at the time of the involuntary termination plus 50% of any bonuses 
paid during the preceding 12 month period.  Each employment contract provides 
that the employee would also be entitled to continue to participate in any 
employee benefit plans for a period of six months following the date of 
termination, and that upon a Change of Control any unvested options held by 
such employee would be immediately vested and exercisable.  In addition, Mr. 
Flannery and Mr. Matthews have each been granted 1998 Performance Warrants to 
acquire 100,000 shares of Canmax Common Stock.  

STOCK OPTIONS

     The Board of Directors introduced a stock option plan (the "Stock Option 
Plan"), pursuant to a resolution dated March 29, 1990, in the form approved 
by Canmax's shareholders at an annual general meeting held March 20, 1990. 

     The Stock Option Plan authorizes the Directors to grant options to 
purchase common shares of Canmax provided that, when exercised, such options 
will not exceed 2.3 million shares of Canmax Common Stock and no options will 
be granted to any individual director or employee which will, when exercised, 
exceed 5% of the issued and outstanding shares of Canmax. The term of any 
option granted under the Stock Option Plan is fixed by the Board of Directors 
at the time the options are granted, provided that the exercise period may 
not be longer than 10 years from the date of granting. The exercise price of 
any options granted under the Stock Option Plan is the fair market value at 
the date of grant. On February 26, 1998, the Board of Directors increased the 
number of shares issuable under the Stock Option Plan from 1.2 million shares 
to 2.3 million shares so that stock options previously granted by the Board 
in excess of those permitted by the Stock Option Plan could be covered by the 
Plan. As of September 14, 1998, 1,121,990 shares of Canmax Common Stock had 
been issued under the Stock Option Plan, 1,094,650 shares remain subject to 
outstanding options under the Stock Option Plan, and 83,360 shares were 
available under the Stock Option Plan. 

OPTION GRANTS IN LAST FISCAL YEAR

     The following table sets forth information with respect to stock options 
pursuant to Canmax's stock option plans granted to the Named Executive 
Officers during fiscal year ended October 31,1997.

<PAGE>

8

<TABLE>
<CAPTION>
                                                                                        POTENTIAL REALIZABLE
                                            INDIVIDUAL GRANTS                 
                          ----------------------------------------------------         VALUE AT ASSUMED ANNUAL  
                           NUMBER OF                                                    RATES OF STOCK PRICE   
                          SECURITIES     % OF TOTAL                                       APPRECIATION FOR    
                          UNDERLYING   OPTIONS GRANTED  EXERCISE                           OPTION TERM (1)    
                           OPTIONS     TO EMPLOYEES IN   PRICE      EXPIRATION      ------------------------
         NAME              GRANTED      FISCAL YEAR    ($/SH)        DATE             5% ($)       10% ($)
-----------------------   ----------  ---------------  --------     ----------       ----------  -----------
<S>                       <C>        <C>               <C>          <C>              <C>         <C>     
 Roger D. Bryant........     5,000                       1.88        4/30/02           2,597        5,739
                            13,333                       1.88        4/30/03           8,525       19,340
                            13,333                       1.88        4/30/04          10,204       23,781
                            13,334                       1.88        4/30/05          11,969       28,667
                          --------                                                   -------      -------
                            45,000        17%                                         33,295       77,527
                                                                                      
 Debra L. Burgess.......     5,000                       2.13        5/11/99           1,092        2,236
                             5,000                       1.88        4/30/02           2,597        5,739
                             8,333                       1.88        4/30/03           5,328       12,087
                             8,333                       1.88        4/30/04           6,378       14,863
                             8,334                       1.88        4/30/05           7,480       17,918
                          --------                                                   -------      -------
                            35,000        13%                                         22,875       52,843
                                                                                      
 Philip M. Parsons......     5,000                       1.88        4/30/02           2,597        5,739
                             6,666                       1.88        4/30/03           4,262        9,669
                             6,667                       1.88        4/30/04           5,103       11,891
                             6,667                       1.88        4/30/05           5,984       14,334
                          --------                                                   -------      -------
                            25,000         9%                                         17,946       41,633
                                                                                      
 Ivor J. Flannery.......     8,000                       2.13        5/11/99           1,746        3,578
                             5,000                       1.88        4/30/03           3,197        7,253
                             5,000                       1.88        4/30/04           3,827        8,918
                             5,000                       1.88        4/30/05           4,488       10,750
                          --------                                                   -------      -------
                            23,000         9%                                         13,258       30,499
                                                                                      
 Richard Stephens.......     5,000                       1.88        4/30/03           3,197        7,253
                             5,000                       1.88        4/30/04           3,827        8,918
                             5,000                       1.88        4/30/05           4,488       10,750
                          --------                                                   -------      -------
                            15,000         6%                                         11,512       26,921
                                                                                      
</TABLE>
-----------

(1)  Based upon the per share market price on the date of grant and on annual
     appreciation of such market price through the expiration date of such
     options at the stated rates. These amounts represent assumed rates of
     appreciation only and may not necessarily be achieved. Actual gains, if
     any, are dependent on the future performance of the Common Stock, as well
     as the continued employment of the Named Executives through the vesting
     period. The potential realizable values indicated have not taken into
     account amounts required to be paid as income tax under the Internal
     Revenue Code of 1986, as amended, and any applicable state laws.

     No other annual or long-term compensation was received or is receivable 
by the executive officers named above in respect of employment in 1997 or 
prior years.

     The following table sets forth information with respect to each exercise 
of stock options during fiscal 1997, by each of the Named Executive Officers 
and the number of options held at fiscal year end and the aggregate value of 
in-the-money options held at fiscal year end. None of the Named Executive 
Officers exercised options in fiscal 1997.

<PAGE>

9


     AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
                                       VALUES

<TABLE>
<CAPTION>
                                                                                                          
                                                                     NUMBER OF SECURITIES                 VALUE OF UNEXERCISED  
                                                                    UNDERLYING UNEXERCISED             "IN-THE-MONEY" OPTIONS AT
                                                                     OPTIONS AT FY-END (#)                      FY-END ($)     
                        SHARES ACQUIRED ON    VALUE REALIZED     -----------------------------      -----------------------------
          NAME             EXERCISE (#)            ($)           EXERCISABLE     UNEXERCISABLE      EXERCISABLE     UNEXERCISABLE
---------------------   ------------------    --------------     -----------     -------------      -----------     -------------
<S>                     <C>                   <C>                <C>             <C>                <C>             <C>          
 Roger D. Bryant......          --                  --              150,000         140,000             --               --
 Debra L. Burgess.....          --                  --               77,800          50,000             --               --
 Philip M. Parsons....          --                  --               45,000          45,000             --               --
 Ivor J. Flannery.....          --                  --               26,500          22,500             --               --
 Richard Stephens.....          --                  --               15,000          25,000             --               --
                                                                                    
                                                                                    
</TABLE>

     On October 31, 1997, there were 1,017,700 outstanding stock options with 
a weighted average exercise price of $2.23 per share.

               LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR

     The following table sets forth information with respect to long term 
incentive plan awards to the Named Executive Officers during fiscal year 
ended October 31, 1997.

<TABLE>
<CAPTION>
                                                                                                        ESTIMATED FUTURE PAYOUTS
                                    NUMBER OF SHARES UNDERLYING      PERFORMANCE OR OTHER PERIOD      UNDER NON-STOCK PRICE-BASED
               NAME                         WARRANTS (#)              UNTIL MATURATION OR PAYOUT                 PLANS (#)
-------------------------------    ----------------------------      ---------------------------      ----------------------------
<S>                                <C>                               <C>                              <C>
 Roger D. Bryant................       250,000                                   (1)                            250,000
 Debra L. Burgess...............       125,000                                   (1)                            125,000
 Philip M. Parsons..............       100,000                                   (1)                            100,000
</TABLE>

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

(1)  The long-term incentive plan awards to Mr. Bryant, Ms. Burgess and
     Mr. Parsons relate to the 1997 Performance Warrants issued under each of
     their employment agreements. See "Employment and Change of Control
     Agreements".  Under the terms of the 1997 Performance Warrants, vesting of
     such warrants is dependent upon the earlier of (i) the earnings per share
     of Canmax (after  tax) equals or exceeds $0.30 per share during any fiscal
     year, (ii) the closing price of the Canmax Common Stock equals or exceeds
     $8.00 per share for sixty-five consecutive trading days, or (iii) a Change
     of Control. 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Canmax has no interlocking relationships involving any of its 
Compensation Committee members which would be required by the Commission to 
be reported herein, and no officer or employee of Canmax serves on its 
Compensation Committee.

COMPENSATION COMMITTEE REPORT
                                          
     In fiscal 1997, Canmax's Compensation Committee consisted of two outside 
directors; Messrs., Fidler, and Rinehart. The Committee was responsible for 
determining the compensation of Canmax's executive officers and other key 
senior employees, including Roger D. Bryant, Canmax's Chief Executive 
Officer, (the "Chief Executive").

<PAGE>

10

DETERMINATION OF CEO AND EXECUTIVE OFFICER COMPENSATION.

     Canmax has strived to structure its executive compensation programs in a 
manner designed to attract and retain a talented and capable management team, 
and to provide appropriate compensation based on that team's achievement of 
financial performance objectives. During fiscal 1997, the Compensation 
Committee held primary responsibility for determining the compensation of the 
Chief Executive, and for approving the determinations of compensation paid to 
other officers and senior executives, as proposed by the Chief Executive.

     Compensation is normally paid to the Chief Executive in the form of base 
compensation, bonus compensation and the granting of options to buy shares of 
Canmax's Common Stock at then prevailing market prices. Each year the Board 
of Directors of Canmax sets forth certain financial performance objectives 
for Canmax. Canmax's ability to meet such targeted financial goals, and the 
Chief Executive's previous base compensation level, are the most important 
criteria utilized by the Compensation Committee in determining the 
compensation of the Chief Executive, although the Compensation Committee 
reviews other factors, including the compensation awarded to chief executive 
officers of similar corporations. Based on a review of such criteria, the 
Compensation Committee will determine the annual base and bonus compensation 
of the Chief Executive. In addition, the Compensation Committee may grant 
stock options in order to align the interests of the Chief Executive with 
those of the shareholders. With respect to the Chief Executive's compensation 
during fiscal 1997, the Compensation Committee primarily considered Canmax's 
financial performance and the previously existing compensation level of the 
Chief Executive. 

     Compensation to other executive officers is also provided in the form of 
base compensation, bonus compensation and the granting of stock options. Base 
compensation is determined based on industry norms associated with the 
position held by the executive and the recommendation of the Chief Executive, 
while bonus compensation is normally linked to specific shorter-term (e.g., 
one to three years) financial performance objectives. Stock options are 
granted to align the interests of the executive officers with those of the 
shareholders. The Chief Executive is principally responsible for the 
performance assessment of individual executive officers and provides his 
recommendations to the Compensation Committee for its review and approval.

     Additionally, on July 17, 1997, the Compensation Committee approved 
employment agreements for certain executives. The employment agreements 
provide for the issuance of warrants to each executive as additional 
compensation. The warrants were intended to align the interests of the 
executive officers with those of the shareholders by providing incentive 
compensation based on the performance of the Company and to retain key 
executive management by providing protection against a change in control.

COMPENSATION COMMITTEE:

Robert M. Fidler (Chairman)
W. Thomas Rinehart

STOCK PERFORMANCE GRAPH

     Securities and Exchange Commission rules require that a line graph 
performance presentation be provided comparing cumulative total shareholder 
return with a performance indicator of a broad market index and a nationally 
recognized industry index. The following performance graph compares the 
cumulative total shareholder return on the Company's stock with the Nasdaq 
Stock Market Total Return Index (Nasdaq Index) and the Nasdaq Computer and 
Data Processing Services Stocks Total Return Index (Industry Index). 

     The Company's stock traded on the Nasdaq SmallCap market tier of The 
Nasdaq Stock Market from February 10, 1994 through June 8, 1998 on which date 
it was delisted from the Nasdaq SmallCap market. The Company's stock 
currently trades on the over-the-counter bulletin board.  The comparison 
assumes that $100 was invested on February 10, 1994 in the Company's shares 
and in each of the indices. Past performance is not necessarily an indicator 
of future performance. 

<PAGE>

11

                 COMPARISON OF THREE YEARS ENDED OCTOBER 31, 1997 
                               CUMULATIVE TOTAL RETURN
  CANMAX INC., NASDAQ STOCK MARKET INDEX AND NASDAQ COMPUTER AND DATA PROCESSING
                                   SERVICES INDEX
 
            EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
                                            CANMAX                        NASDAQ INDEX                    INDUSTRY INDEX
                                     ------------------              ---------------------             -------------------
 <S>                                 <C>                             <C>                               <C>               
 Feb-94                                $    100.00                      $    100.00                      $    100.00
 Oct-95                                $     21.43                      $    132.90                      $    174.99
 Oct-96                                $     11.07                      $    156.96                      $    203.20
 Oct-97                                $      9.64                      $    206.72                      $    273.71
</TABLE>

<TABLE>
<CAPTION>
                                       FEBRUARY 10, 1994       OCTOBER 31, 1995        OCTOBER 31, 1996        OCTOBER 31, 1997
                                       -----------------       ----------------        ----------------        ----------------
<S>                                    <C>                     <C>                     <C>                     <C>          
 Canmax Inc.                                  100                 21.43                   11.07                    9.64
 Nasdaq Index                                 100                132.90                  156.96                  206.72
 Nasdaq Industry Index                        100                174.99                  203.20                  273.71
</TABLE>

     The data set forth in the above graph and related table was obtained 
from the Nasdaq Stock Market. All Canmax share data is based on the last 
closing price of the month. The total return calculation is based upon 
weighting at the beginning of the period.

COMPENSATION OF DIRECTORS

     Each director who is not an officer of the Company receives a fee of 
$1,500 for each Board meeting attended in person. Directors are not 
compensated for attending committee meetings or participating in meetings by 
telephone. Further, all directors participate in the Company's Stock Option 
Plan and are awarded non-qualified stock options for 5,000 shares of Common 
Stock for service on the Board of Directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 

     The following table sets forth certain information as of September 10, 
1998, concerning those persons known to Canmax, based on information obtained 
from such persons, Canmax's records and schedules required to be filed with 
Canmax, with respect to the beneficial ownership of Canmax's Common Stock by 
(i) each shareholder known by Canmax to own beneficially 5% or more of such 
outstanding Common Stock, (ii) each current director of Canmax and each 
nominee for election as a director, (iii) each Named Executive Officer and 
(iv) all executive officers and directors of Canmax as a group. Except as 
otherwise indicated below, each of the entities or persons named in the table 
has sole voting and investment power with respect to all shares of Common 
Stock beneficially owned. Effect has been given to shares reserved for 
issuance under outstanding stock options and warrants where indicated. 

<PAGE>

12

<TABLE>
<CAPTION>
                                             AMOUNT AND NATURE OF    PERCENT OF
    NAME AND ADDRESS OF BENEFICIAL OWNER     BENEFICIAL OWNERSHIP     CLASS(1)
-----------------------------------------   ----------------------   -----------
<S>                                         <C>                      <C>
 Dodge Jones Foundation                           1,000,000             15.1%
 400 Pine Street, Suite 900                                              
 Abilene, Texas 79601                                                    
                                                                         
 Joseph E. Canon                                  1,000,000(2)          15.1%
 Dodge Jones Foundation                                                  
 P.O. Box 176                                                            
 Abilene, Texas 79601                                                    
                                                                         
 Founders Equity Group                            2,788,364(3)          32.7%
 2602 McKinney, Suite 220                                                
 Dallas, Texas 75204                                                     
                                                                         
 Roger D. Bryant (4)                                540,000(5)           7.6%
                                                                         
 Nick DeMare                                         46,880(6)           *
 Chase Management                                                        
 1090 West Georgia Street, Suite 1305                                    
 Vancouver, BC V6E 3V7                                                   
                                                                         
 W. Thomas Rinehart                                 101,600(7)           1.5%
 700 Freeling Drive                                                      
 Sarasota, Florida 34242                                                 
                                                                         
 Debra L. Burgess (4)                               274,800(8)           4.0%
                                                                         
 Ivor J. Flannery (4)                                83,468(9)           1.3%
                                                                         
 Robert M. Fidler                                    25,000(10)          *
 987 Laguna Road                                                         
 Pasadena, California 91105                                              
                                                                         
 Richard Stephens (4)                                25,000(11)          *
                                                                         
 All  Executive Officers and Directors as a       1,096,748(12)         14.5%
 group (10 persons)
                                                                         
 *   Less than 1.0%                                                      
</TABLE>


(1)  Based upon 6,611,005 shares of Canmax Common Stock outstanding as of
     September 10, 1998.

(2)  Includes 1,000,000 shares held by Dodge Jones Foundation, of which Mr.
     Canon serves as the Executive Director. As such, Mr. Canon exercises voting
     power over all such shares.

(3)  Includes 50,000 shares subject to presently exercisable warrants and
     1,875,000 shares subject to presently convertible debentures issued under
     the Loan Agreement.

(4)  The business address for Canmax executives is 150 West Carpenter Freeway,
     Irving, Texas 75039.

(5)  Includes 290,000 shares of Common Stock which may be acquired through the
     exercise of stock options which are exercisable within 60 days of September
     10, 1998 ("Vested Options") and 250,000 shares subject to presently
     exercisable warrants.

(6)  Includes 36,600 Vested Options.
     
(7)  Includes 35,000 Vested Options.
     
(8)  Includes 127,800 Vested Options and 125,000 shares subject to presently
     exercisable warrants.

<PAGE>

13

     
(9)  Includes 35,250 Vested Options.
     
(10) Includes 20,000 Vested Options.
     
(11) Includes 25,000 Vested Options.
     
(12) Includes 569,650 Vested Options and 375,000 shares subject to presently
     exercisable warrants.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the first quarter of 1995, a director, W. Thomas Rinehart 
advanced Canmax $250,000.  This advance was unsecured and bore interest at 
the rate of 10%. The principal balance was due on demand and could be repaid 
by Canmax from time to time.  Principal payments of $95,765 (together with 
accrued interest thereon) were repaid during the six months ended April 30, 
1997, which fully satisfied Canmax's obligation.

     On April 30, 1997, Founders Equity Group, Inc. ("Founders") acquired 
from Electronic Data Systems ("EDS") 863,364 shares of Canmax Common Stock in 
a private transaction, in connection with which Canmax agreed to extend to 
Founders certain registration rights similar to those previously held by EDS. 
On May 9, 1997, Founders exercised its right to demand that Canmax file a 
registration statement with regard to all of its shares of Canmax Common 
Stock. Under applicable securities laws, Canmax was unable to file the 
Founders registration statement until after the filing of a registration 
statement relating to the proposed Merger of Canmax with Auto-Gas Systems, 
Inc., which merger was subsequently abandoned.  Pursuant to the terms of the 
registration rights agreement with Founders, Canmax was to have filed a 
registration statement on or about July 23, 1997 or incur a registration 
penalty of 50,000 shares per month. Founders agreed to extend the 
registration obligation until August 26, 1997 in exchange for its receipt of 
a warrant to acquire 50,000 shares of Canmax Common Stock at an exercise 
price of $2.00 per share. In addition, in May of 1997, Canmax retained 
Founders to provide advisory services regarding the proposed Merger with 
Auto-Gas Systems, Inc., and agreed to pay to Founders a fee of $25,000 for 
such services. 

     On April 30, 1997, the Dodge Jones Foundation acquired from EDS 
1,000,000 shares of Canmax Common Stock in a private transaction, in 
connection with which Canmax agreed to extend to the Dodge Jones Foundation 
certain registration rights similar to those previously held by EDS.

     On October 30, 1997, a shareholder, Founders Equity Group, Inc. 
("Founders"), advanced Canmax $100,000.  The advance was unsecured and had an 
interest rate of 12%.  On November 6, 1997, Canmax repaid principal and 
interest of $100,230, which fully satisfied Canmax's obligation.
     
     On December 15, 1997, Canmax executed a convertible loan agreement (the 
"Original Agreement") with Founders providing for financing of up to $500,000 
at an interest rate of 10% per annum.  Advances under the Original Agreement 
were secured by a lien on all of the Company's assets.  Indebtedness 
outstanding under the Original Agreement was convertible, at the option of 
Founders, into shares of Canmax Common Stock at a conversion price of $1.25 
per share, subject to adjustment for certain events, and was redeemable at 
the option of Canmax at 110% of par.

     On February 11, 1998, Canmax and Founders executed a loan commitment 
letter (the "Loan Commitment") which provided for a multiple advance loan of 
up to $2 million upon terms similar to the Original Agreement; however, 
indebtedness outstanding under the Loan Commitment was convertible into 
shares of Canmax Common Stock at a conversion price equal to the average 
closing prices of the Canmax Common Stock over the five-day trading period 
immediately preceding the date of each advance.  As consideration for the 
Loan Commitment, Canmax paid a commitment fee of $10,000.

     As of March 31, 1998, Founders (and certain of its affiliates) entered 
into the First Restated Loan Agreement (the "Loan Agreement") which 
consolidated all rights and obligations of Canmax to Founders under the 
Original Agreement and the Loan Commitment.  Amounts advanced under the Loan 
Agreement bear interest at the rate of 12% per annum, are secured by a lien 
on all of the Company's assets and are convertible into shares of Canmax 
Common Stock, at the option of Founders, at $.80 per share.  On August 25, 
1998, Founders agreed to release its lien on all of the Company's assets upon 
the consummation of the Proposed Sale. As consideration for the release, the 
Company agreed, upon the consummation of the Proposed Sale, to repay $1.0 
million of the $1.5 million currently outstanding under the Loan Agreement, 
and to allow Founders to convert the remaining $500,000 plus all accrued but 
unpaid interest outstanding under the Loan Agreement into shares of Canmax 
Common Stock at a conversion price of $.50 per share.

<PAGE>

14

     On February 5, 1998, Founders and the Company entered into a financial 
consulting agreement pursuant to which Founders agreed to provide financial 
advisory and consulting services to the Company, and the Company agreed to 
pay to Founders a fee equal to 3% of the value of the consideration received 
in any sale or merger of any division or subsidiary of the Company.  As a 
result of this agreement, Founders will receive $120,000 of the initial 
proceeds of the Proposed Sale.  Founders has agreed to forego any further 
payments that may be attributable to the Company's receipt of deferred 
payments in connection with the Proposed Sale.

<PAGE>
                                       
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
 
(A)  (1) AND (2) LIST OF FINANCIAL STATEMENTS
 
    The response to this item is submitted as a separate section of the Report.
See the index on Page F-1.
 
    (3) EXHIBITS
 
    The following is a list of all exhibits filed with this 10-K/A-2, including
those incorporated by reference.
 
<TABLE>
<CAPTION>
 EXHIBIT
   NO.     DESCRIPTION OF EXHIBIT
---------  --------------------------------------------------------------------------------------------------
<C>        <S>
   2.1     Agreement and Plan of Merger dated as of January 30, 1998, among Canmax Inc., CNMX MergerSub, Inc.
             and USCommunication Services, Inc. (filed as Exhibit 2.1 to Form 8-K filed February 9, 1998 (the
             "USC 8-K"), and incorporated herein by reference)
 
   3.1     Articles of Incorporation (filed as Exhibit 3.01 to Canmax's Registration Statement on Form 10,
             File No. 0-22636 (the "Form 10"), and incorporated herein by reference)
 
   3.2     Bylaws (filed as Exhibit 3.02 to the Form 10 and incorporated herein by reference)
 
   4.1     Registration Rights Agreement between Canmax and the Dodge Jones Foundation (filed as Exhibit 4.02
             to Canmax's Quarterly Report on Form 10-Q for the period ended April 30, 1997 and incorporated
             herein by reference)
 
   4.2     Registration Rights Agreement between Canmax and Founders Equity Group, Inc. (filed as Exhibit
             4.02 to Canmax's Quarterly Report on Form 10-Q for the period ended April 30, 1997 and
             incorporated herein by reference)
 
   4.3     Amended Stock Option Plan (filed as Exhibit 10.08 to Canmax's Quarterly Report on Form 10-Q for
             the period ended July 31, 1996 and incorporated herein by reference)
 
   9.1     Voting Trust Agreement of Nationwide Transportation Products, Inc. (subsequently known as
             USCommunication Services, Inc.) made as of May 1, 1997 (filed as Exhibit 9.1 to the USC 8-K and
             incorporated herein by reference)
 
   9.2     First Amendment to Voting Trust Agreement of USCommunication Services, Inc. dated as of December
             1, 1997 (filed as Exhibit 9.2 to the USC 8-K and incorporated herein by reference)
 
  10.1     Master Agreement for Computer Software Development, License and Maintenance between CRSI and The
             Southland Corporation (filed as Exhibit 10.05 to the Form 10 and incorporated herein by
             reference)
 
  10.2**   Software Development Agreement dated July 1, 1996 between NCR Corporation and CRSI (filed as
             Exhibit 10.09 to Canmax's Annual Report on Form 10-K for the period ended October 31, 1996)
</TABLE>
 
                                       26
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT
   NO.     DESCRIPTION OF EXHIBIT
---------  --------------------------------------------------------------------------------------------------
<C>        <S>
  10.3     Office Building Lease between Canmax and Commercial Properties Inc. (filed as Exhibit 10.3 to
             Canmax's Registration Statement on Form S-3, File No. 333-33523 (the "Form S-3"), and
             incorporated herein by reference)
 
  10.4     Employment Agreement, dated June 30, 1997 between Canmax Retail Systems, Inc. and Roger Bryant
             (filed as Exhibit 10.4 to the Form S-3 and incorporated herein by reference)
 
  10.5     Employment Agreement, dated June 30, 1997 between Canmax Retail Systems, Inc. and Philip Parsons
             (filed as Exhibit 10.5 to the Form S-3 and incorporated herein by reference)
 
  10.6     Employment Agreement, dated June 30, 1997 between Canmax Retail Systems, Inc. and Debra L. Burgess
             (filed as Exhibit 10.6 to the Form S-3 and incorporated herein by reference)
 
  10.7     Amendment No. 3 to Master Agreement for Computer Software Development, License and Maintenance
             dated October 31, 1997 between Canmax Retail Systems, Inc. and The Southland Corporation (filed
             as Exhibit 10.7 to the Form S-3 and incorporated herein by reference)
 
  10.8*    Convertible Loan Agreement by and between Canmax Inc. and Canmax Retail Systems, Inc. as
             Co-Borrowers and Founders Equity Group, Inc. and Founders Mezzanine Investors III, LLC as
             Lenders dated December 15, 1997
 
  10.9*    Security Agreement between Canmax Inc. and Canmax Retail Systems, Inc. as Co-Borrowers and
             Founders Equity Group, Inc. and Founders Mezzanine Investors III, LLC as Lenders dated December
             15, 1997
 
  10.10*   Canmax Inc. and Canmax Retail Systems, Inc. 10.00% Senior Secured Convertible Debenture No. 1
 
  10.11*   Canmax Inc. and Canmax Retail Systems, Inc. 10.00% Senior Secured Convertible Debenture No. 2
 
  10.12*   Standard Industrial/Commercial Multi-Tenant Lease between TMT Carmel Business Center, Inc. and
             USCommunication Services, Inc.
 
  10.13    Common Stock Purchase Warrant dated January 30, 1998, between Canmax Inc. and Delia O'Donnell,
             Trustee (filed as Exhibit 10.1 to the USC 8-K and incorporated herein by reference)
 
  10.14    Common Stock Purchase Warrant dated January 30, 1998, between Canmax Inc. and Delia O'Donnell,
             Trustee (filed as Exhibit 10.2 to the USC 8-K and incorporated herein by reference)
 
  10.15    Employment Contract dated as of January 30, 1998 among Canmax Inc., USCommunication Services,
             Inc., and James C. Bernet (filed as Exhibit 10.3 to the USC 8-K and incorporated herein by
             reference)
 
  10.16    Common Stock Purchase Warrant dated January 30, 1998, between Canmax Inc. and James C. Bernet
             (filed as Exhibit 10.4 to the USC 8-K and incorporated herein by reference)
</TABLE>
 
                                       27
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT
   NO.     DESCRIPTION OF EXHIBIT
---------  --------------------------------------------------------------------------------------------------
<C>        <S>
  10.17    Common Stock Purchase Warrant dated January 30, 1998, between Canmax Inc. and James C. Bernet
             (filed as Exhibit 10.5 to the USC 8-K and incorporated herein by reference)
 
  10.18*   Loan commitment letter dated February 11, 1998, between Canmax Inc. and Canmax Retail Systems,
             Inc. as Borrowers and Founders Equity Group, Inc. and Founders Mezzanine Investors III, LLC as
             Lenders
 
  11.1*    Statement re: Computation of earnings per share
 
  21.1*    Subsidiaries of the Registrant
 
  23.1*    Consent of Independent Auditors
 
  27.1*    Financial Data Schedule
</TABLE>
 
------------------------
 
*   Previously filed 
 
**  Portions of this Exhibit were omitted and have been filed separately with
    the Secretary of the Commission pursuant to Canmax's Application requesting
    confidential treatment under Rule 406 under the Securities Act of 1933, as
    amended.
 
(B)  REPORTS ON FORM 8-K
 
    No reports on Form 8-K were filed by the Registrant during the quarter ended
October 31, 1997. However, on December 23, 1997, the Registrant filed a report
on Form 8-K regarding the signing of a letter of intent to acquire
USCommunication Services, Inc. Additionally, on February 9, 1998, the Registrant
filed a report on Form 8-K regarding the consummation of the USCommunication
Services, Inc. acquisition.
 
                                       28

<PAGE>

15

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this Report to be signed 
in its behalf by the undersigned thereunto duly authorized.

                                              Canmax Inc. 
Date:  October 22, 1998

                                              By: /s/ Debra L. Burgess 
                                                 -------------------------------
                                                 Debra L. Burgess 
                                                 Executive Vice President and 
                                                 Chief Financial Officer 

<PAGE>

                          CANMAX INC. AND SUBSIDIARIES
                         INDEX TO FINANCIAL STATEMENTS
                             ITEM 14(A)(1) AND (2)
 
<TABLE>
<S>        <C>                                                                                <C>
1.         The Consolidated Financial Statements, the Notes to Consolidated Financial
           Statements and Report of Ernst & Young LLP, Independent Auditors, for the fiscal
           year ended October 31, 1997:
 
           Report of Ernst & Young LLP, Independent Auditors................................        F-2
 
           Consolidated Balance Sheets at October 31, 1997 and October 31, 1996.............        F-3
 
           Consolidated Statements of Operations for the fiscal years ended October 31,
           1997, October 31, 1996 and October 31, 1995......................................        F-4
 
           Consolidated Statements of Shareholders' Equity for the fiscal years ended
           October 31, 1997, October 31, 1996 and October 31, 1995..........................        F-5
 
           Consolidated Statements of Cash Flows for the fiscal years ended October 31,
           1997, October 31, 1996 and October 31, 1995......................................        F-6
 
           Notes to Consolidated Financial Statements.......................................        F-7
 
2.         Financial Statement Schedules
 
           Schedules are omitted because they are not applicable or because the required
           information is shown in the consolidated financial statements or notes hereto.
</TABLE>
 
                                      F-1
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Directors and Shareholders
Canmax Inc.
 
    We have audited the accompanying consolidated balance sheets of Canmax Inc.
and subsidiaries as of October 31, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended October 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Canmax Inc. and
subsidiaries at October 31, 1997 and 1996, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
October 31, 1997, in conformity with generally accepted accounting principles.
 
                                          /s/ ERNST & YOUNG LLP
 
Dallas, Texas
December 18, 1997, except for note 16,
as to which the date is February 11, 1998
 
                                      F-2
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                             OCTOBER 31,
                                                                                    ------------------------------
                                                                                         1997            1996
                                                                                    --------------  --------------
<S>                                                                                 <C>             <C>
Current assets:
  Cash............................................................................  $      128,871  $      908,772
  Accounts receivable, less allowance for doubtful accounts of $26,900 in 1997 and
    $95,207 in 1996 (note 5)......................................................       2,751,264       2,027,288
  Inventory.......................................................................          46,615         388,800
  Prepaid expenses and other......................................................         175,494         202,513
                                                                                    --------------  --------------
    Total current assets..........................................................       3,102,244       3,527,373
  Property and equipment, net (note 6)............................................         962,175       1,411,567
  Capitalized software costs, net of accumulated amortization of $839,271 in 1997
    and $607,857 in 1996..........................................................         494,786         516,999
  Intellectual property rights, net of accumulated amortization of $639,617 in
    1997 and $620,173 in 1996.....................................................          30,556          50,000
  Other assets....................................................................         117,717         144,194
                                                                                    --------------  --------------
    Total assets..................................................................  $    4,707,478  $    5,650,133
                                                                                    --------------  --------------
                                                                                    --------------  --------------
 
                                       LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable................................................................  $      878,241  $    1,724,195
  Accrued liabilities (note 7)....................................................         867,233         778,521
  Deferred revenue................................................................         269,404         558,122
  Current portion of lease obligations............................................         159,364         128,282
  Current portion of long-term debt...............................................          35,195          34,022
  Advances from shareholders (note 8).............................................         100,000          95,765
                                                                                    --------------  --------------
    Total current liabilities.....................................................       2,309,437       3,318,907
  Lease obligations (note 9)......................................................         127,051         169,794
  Long-term debt (note 10)........................................................          51,056          86,114
  Commitments (notes 9 and 14)
 
  Shareholders' equity (notes 4, 11 and 16)
    Common stock, no par value, 44,169,100 shares authorized;
    6,611,005 and 5,012,869 shares issued and outstanding in 1997 and 1996,
    respectively..................................................................      23,290,733      18,372,574
    Option to purchase common stock (note 4)......................................              --       4,861,659
    Accumulated deficit...........................................................     (21,065,383)    (21,152,714)
    Foreign currency translation adjustment.......................................          (5,416)         (6,201)
                                                                                    --------------  --------------
    Total shareholders' equity....................................................       2,219,934       2,075,318
                                                                                    --------------  --------------
    Total liabilities and shareholders' equity....................................  $    4,707,478  $    5,650,133
                                                                                    --------------  --------------
                                                                                    --------------  --------------
</TABLE>
 
                            See accompanying notes.
 
                                      F-3
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                                YEAR ENDED OCTOBER 31,
                                                                      -------------------------------------------
                                                                          1997           1996           1995
                                                                      -------------  -------------  -------------
<S>                                                                   <C>            <C>            <C>
Revenues:
  Software licenses and product revenue.............................  $   1,924,897  $   1,901,302  $   3,127,435
  Development.......................................................      8,704,338      7,940,515      3,801,208
  Service agreements................................................      2,106,988      2,422,043      2,067,444
                                                                      -------------  -------------  -------------
                                                                         12,736,223     12,263,860      8,996,087
Costs and expenses:
  Cost of software licenses and product revenue.....................        772,502      1,539,646      2,342,937
  Cost of development revenue.......................................      4,564,441      2,949,166      2,009,060
  Customer service..................................................      2,254,986      2,321,798      2,359,279
  Product development...............................................        614,503      1,286,966      2,401,306
  General and administrative........................................      3,813,267      3,555,042      2,904,548
  Sales and marketing...............................................        608,445        440,581        662,982
  Interest and financing costs, net.................................         20,748         28,047         50,425
                                                                      -------------  -------------  -------------
                                                                         12,648,892     12,121,246     12,730,537
                                                                      -------------  -------------  -------------
Net income (loss)...................................................  $      87,331  $     142,614  $  (3,734,450)
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
Net income (loss) per common and common equivalent share............  $        0.01  $        0.02  $       (0.79)
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
Weighted average common and common equivalent shares outstanding....      6,649,641      6,851,148      4,706,382
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
</TABLE>
 
                            See accompanying notes.
 
                                      F-4
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                        OPTION TO                      FOREIGN
                                                            COMMON       PURCHASE                     CURRENCY
                                                            STOCK         COMMON      ACCUMULATED    TRANSLATION
                                               SHARES       AMOUNT        STOCK         DEFICIT      ADJUSTMENT      TOTAL
                                             ----------  ------------  ------------  --------------  -----------  ------------
<S>                                          <C>         <C>           <C>           <C>             <C>          <C>
BALANCE AT OCTOBER 31, 1994................   4,131,174  $ 14,614,539  $  4,861,659  $  (17,560,878)  $  (5,415)  $  1,909,905
 
Shares issued:
  For cash on exercise of options..........     294,200     1,321,000            --              --          --      1,321,000
  For conversion of advances from
    shareholder............................      30,000       150,000            --              --          --        150,000
  EDS......................................     265,228     1,273,095            --              --          --      1,273,095
  Private Placement........................     214,667       805,000            --              --          --        805,000
Net loss...................................          --            --            --      (3,734,450)         --     (3,734,450)
Translation adjustment.....................          --            --            --              --      (5,878)        (5,878)
                                             ----------  ------------  ------------  --------------  -----------  ------------
BALANCE AT OCTOBER 31, 1995................   4,935,269    18,163,634     4,861,659     (21,295,328)    (11,293)     1,718,672
 
Shares issued for cash on exercise of
  options..................................      77,600       208,940            --              --          --        208,940
Net income.................................          --            --            --         142,614          --        142,614
Translation adjustment.....................          --            --            --              --       5,092          5,092
                                             ----------  ------------  ------------  --------------  -----------  ------------
BALANCE AT OCTOBER 31, 1996................   5,012,869    18,372,574     4,861,659     (21,152,714)     (6,201)     2,075,318
 
Shares issued to EDS.......................   1,598,136     4,861,659    (4,861,659)             --          --             --
Warrants issued in settlement of
  registration obligation..................          --        56,500            --              --          --         56,500
Net income.................................          --            --            --          87,331          --         87,331
Translation adjustment.....................          --            --            --              --         785            785
                                             ----------  ------------  ------------  --------------  -----------  ------------
 
BALANCE AT OCTOBER 31, 1997................   6,611,005  $ 23,290,733  $         --  $  (21,065,383)  $  (5,416)  $  2,219,934
                                             ----------  ------------  ------------  --------------  -----------  ------------
                                             ----------  ------------  ------------  --------------  -----------  ------------
</TABLE>
 
                            See accompanying notes.
 
                                      F-5
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                  YEAR ENDED OCTOBER 31,
                                                                          ---------------------------------------
                                                                             1997         1996          1995
                                                                          -----------  -----------  -------------
<S>                                                                       <C>          <C>          <C>
Operating activities:
  Net income (loss).....................................................  $    87,331  $   142,614  $  (3,734,450)
  Adjustments to reconcile net income (loss) to net cash provided by
    (used in) operating activities:
    Inventory write-down................................................           --      217,623             --
    Warrants issued in settlement of registration obligation............       56,500           --             --
    Loss on disposal of assets..........................................       10,584        3,329             --
    Depreciation and amortization.......................................      939,854      916,582        849,251
  Changes in operating assets and liabilities:
    Accounts receivable.................................................     (723,976)    (805,830)       154,535
    Accounts receivable from EDS........................................           --           --        446,976
    Inventory...........................................................      342,185     (131,942)      (151,566)
    Prepaid expenses and other..........................................       27,019     (126,254)       (43,358)
    Accounts payable....................................................     (845,954)     433,932        533,286
    Accounts payable to EDS.............................................           --           --         67,539
    Accrued liabilities.................................................       88,712      266,880        (84,707)
    Deferred revenue....................................................     (288,718)     (28,714)       432,901
                                                                          -----------  -----------  -------------
    Net cash provided by (used in) operating activities.................     (306,463)     888,220     (1,529,593)
                                                                          -----------  -----------  -------------
Investing activities:
  Purchase of property and equipment....................................     (117,030)    (241,889)      (163,575)
  Capitalized software costs............................................     (209,202)    (128,874)            --
  Decrease (increase) in other assets...................................       26,477     (113,518)            --
                                                                          -----------  -----------  -------------
    Net cash used in investing activities...............................     (299,755)    (484,281)      (163,575)
                                                                          -----------  -----------  -------------
Financing activities:
  Net proceeds from issuance of common stock............................           --      208,940      2,126,000
  Payments made on leasehold obligations................................     (144,818)    (117,464)      (102,971)
  Repayment of shareholder advances.....................................      (95,765)    (124,235)      (107,200)
  Advances from shareholders............................................      100,000           --        250,000
  Decrease in development obligations...................................           --      (65,000)            --
  Proceeds from borrowing...............................................           --      123,602             --
  Repayment on borrowing................................................      (33,885)      (3,466)            --
                                                                          -----------  -----------  -------------
    Net cash (used in) provided by financing activities.................     (174,468)      22,377      2,165,829
                                                                          -----------  -----------  -------------
Effect of exchange rate changes on cash.................................          785        5,092         (5,878)
                                                                          -----------  -----------  -------------
Net (decrease) increase in cash.........................................     (779,901)     431,408        466,783
 
Cash at beginning of year...............................................      908,772      477,364         10,581
                                                                          -----------  -----------  -------------
Cash at end of year.....................................................  $   128,871  $   908,772  $     477,364
                                                                          -----------  -----------  -------------
                                                                          -----------  -----------  -------------
</TABLE>
 
                            See accompanying notes.
 
                                      F-6
<PAGE>

                          CANMAX INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. ORGANIZATION AND NATURE OF BUSINESS
 
    Canmax Inc. ("Canmax") was incorporated on July 10, 1986 under the Company
Act of the Province of British Columbia, Canada, and subsequently changed its
name to "International Retail Systems Inc." On August 7, 1992, Canmax renounced
its original province of incorporation and elected to continue its domicile
under the laws of the State of Wyoming, and on November 30, 1994, its name was
changed to "Canmax Inc."
 
    Canmax through its wholly owned subsidiary Canmax Retail Systems, Inc.,
("CRSI") develops and provides enterprise wide technology solutions to the
convenience store and retail petroleum industries. Canmax offers fully
integrated retail automation solutions, including "C-Serve," which includes
point of sale ("POS") systems, credit/debit network authorization systems, pump
control systems, and other back office management systems, and "Vista," its
headquarters-based management system. Canmax's products and services enable
retailers and operators to interact electronically with customers, capture data
at the point of sale, manage site operations and logistics and communicate
electronically with their sites, vendors and credit/debit networks. Canmax also
provides (a) software development, customization and enhancements, (b) systems
integration, installation and training services, and (c) 24 hour a day, 365 day
per year help desk services. These additional services enable Canmax to tailor
the solutions to each customer's specifications and provide successful system
implementation, installation, training and after sales support.
 
    LIQUIDITY
 
    At October 31, 1997, Canmax had an accumulated deficit of $21,065,383 and a
net working capital surplus of $792,807. To maintain liquidity during fiscal
1998, Canmax must (i) increase revenue through the successful completion of
on-going development contracts with customers, the introduction of new products
to the marketplace, increasing the market share for existing products and
services, and negotiating new development contracts with customers and/or (ii)
obtain additional lines of credit. Additionally, in December, 1997, Canmax
entered into a convertible loan agreement and on February 11, 1998, Canmax
entered into a loan commitment letter to help provide for its liquidity needs.
See Note 16--Subsequent Events--Convertible Loan Agreements. Canmax believes
that it will meet its liquidity needs in 1998 through cash generated from the
operations of its existing software business, newly acquired telecommunications
business, and, if necessary, through utilization of its existing loan and loan
commitment agreements.
 
    Canmax commenced work on a next generation Windows based product in May of
1996 which is expected to be completed during the first calendar quarter of
1998. The majority of Canmax's new product has been developed in conjunction
with a development project for The Southland Corporation. To complete
development of the next generation Windows based product, Canmax will need to
perform additional development effort that is not funded by the work performed
for The Southland Corporation. Costs necessary to perform the additional
development and to bring the new product to market are estimated to be in the
range of $250,000 to $500,000. Canmax believes that it may be necessary to raise
additional capital to complete development of its next generation product within
the critical window of opportunity and to provide vital marketing and other
support services. If cash generated by operations is insufficient to satisfy
Canmax's liquidity requirements, Canmax may be required to sell additional debt
or equity securities or utilize existing lines of credit, delay new product
development or restructure operations to reduce costs.
 
                                      F-7
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2. SUMMARY OF SIGNIFICANT POLICIES
 
    PRINCIPLES OF CONSOLIDATION
 
    These consolidated financial statements include the accounts of Canmax and
its wholly-owned subsidiaries, Canmax Retail Systems Inc. (Texas) and Canmax
Retail Systems Inc. (British Columbia). All significant intercompany
transactions have been eliminated.
 
    REVENUE RECOGNITION
 
    The following describes Canmax's revenue recognition policies by type of
activity:
 
    SOFTWARE LICENSES AND PRODUCTS--Revenue is recognized when the software or
products have been delivered to the customer, collectibility is probable, and no
significant vendor obligations remain after delivery.
 
    SOFTWARE DEVELOPMENT CONTRACTS--Revenue is recognized as Canmax performs the
services in accordance with the contract terms. Revenue from long-term contracts
is recognized using the percentage-of-completion method. Progress to completion
is measured based upon the relationship that total costs incurred to date bears
to the total costs expected to be incurred on a specified project. Losses on
fixed price contracts are recorded when estimable.
 
    SERVICE AGREEMENTS--Revenue from maintenance and support agreements is
generally recognized in one of the following ways:
 
    - Billed annually in advance and recognized ratably over the ensuing year.
 
    - Billed and recognized monthly based on a fixed fee per site.
 
    - Billed and recognized monthly at a minimum base fee plus a variable fee
      which is dependent on call volumes.
 
    INVENTORY
 
    Inventory is stated at the lower of cost (first in-first out) or market and
is primarily comprised of computer hardware and purchased software.
 
    PROPERTY AND EQUIPMENT
 
    Property and equipment are stated at cost. Depreciation of property and
equipment is calculated using the straight-line method over the estimated useful
lives of the assets ranging from three to five years. Equipment held under
capital leases and leasehold improvements are amortized on a straight-line basis
over the shorter of the lease term or the estimated useful life of the related
asset.
 
    CAPITALIZED SOFTWARE COSTS
 
    Under provisions of the Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise
Marketed," software development costs are charged to expense when incurred until
technological feasibility for the product has been established, at which time
the costs are capitalized until the product is available for release. Canmax
begins amortizing capitalized software costs upon general release of the
software products to customers. Canmax evaluates the net realizable value for
each of its capitalized projects by comparing the estimated future gross
 
                                      F-8
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2. SUMMARY OF SIGNIFICANT POLICIES (CONTINUED)
revenues from a project less estimated future disposal costs to the amount of
the unamortized capitalized cost. Costs are being amortized using the greater of
1) the ratio that current gross revenues for a capitalized software project
bears to the total of current and future gross revenue for that project or 2)
the straight-line method over the remaining economic life of the related
projects which is estimated to be a period of between four and five years.
Amortization of capitalized software costs amounted to approximately $231,000,
$226,000, and $119,000, in 1997, 1996, and 1995, respectively.
 
    INTELLECTUAL PROPERTY RIGHTS
 
    Intellectual property rights consist of the rights to computer software used
in Canmax's products. Expenditures are recorded at cost and are being amortized
on a straight-line basis over a projected life of five years. Amortization of
intellectual property rights amounted to approximately $20,000, $123,000, and
$131,000 in 1997, 1996, and 1995, respectively.
 
    NET INCOME (LOSS) PER SHARE
 
    Net income (loss) per common and common equivalent share is computed in
accordance with Accounting Principles Board Opinion No. 15, "Earnings Per
Share". Net income (loss) per share data are based upon the weighted average
number outstanding shares of common stock plus dilutive common stock
equivalents. Common stock equivalent shares consist of stock options and
warrants (using the treasury stock method), and an option to purchase common
stock held by EDS (see Note 4).
 
    In February, 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share", which will
require Canmax to report basic and diluted earnings per share in future periods.
(See Note 12).
 
    INCOME TAXES
 
    The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
 
    STATEMENT OF CASH FLOWS
 
    For purposes of the statements of cash flows, Canmax considers all cash and
highly liquid short-term deposits to be cash equivalents. Total interest paid
during 1997, 1996, and 1995 amounted approximately to $46,000, $50,000, and
$44,000, respectively.
 
    CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
 
    Canmax derives its sales primarily from customers in the retail petroleum
market. Canmax performs periodic credit evaluations of its customers and
generally does not require collateral. Billed receivables are generally due
within 30 days. Credit losses have historically been insignificant.
 
    Canmax's revenues are currently concentrated in The Southland Corporation
("Southland"), which accounted for approximately 92%, 83% and 73% of Canmax's
total revenue for fiscal years 1997, 1996 and 1995, respectively. Canmax's
revenues derived from its relationship with Southland include products and
 
                                      F-9
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2. SUMMARY OF SIGNIFICANT POLICIES (CONTINUED)
services provided directly by Canmax to Southland and indirectly through NCR
Corporation ("NCR") to Southland pursuant to NCR's contract with Southland.
During those same periods, Electronic Data Systems ("EDS") accounted for 2%, 7%
and 10%, respectively, of Canmax's revenues for such fiscal years. No other
customer accounted for over 10% of Canmax's total revenues. On April 29, 1997,
Canmax and EDS agreed to terminate substantially all of their business
arrangements.
 
    At October 31, 1997 and 1996, Southland accounted for 95% and 83%,
respectively of total accounts receivable. Because a significant portion of
Canmax's revenues are derived from its relationship with Southland, the timing
of payments received from Southland will affect the percentage of current assets
of Canmax classified as either cash (or cash equivalents) or accounts
receivable; however, Canmax does not anticipate any significant problems in
collecting the accounts receivable arising from the Southland relationship. If
the financial condition of Southland adversely changes at a time when the
receivable owing from Southland is substantial and Southland becomes unable to
pay its debts as they become due, then the financial condition, working capital
resources, and results of operations of Canmax may be adversely affected.
 
    ESTIMATES
 
    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
    STOCK-BASED COMPENSATION
 
    Canmax accounts for its stock-based compensation in accordance with
provisions of the Accounting Principles Board's Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees."
 
    RECLASSIFICATIONS
 
    Certain amounts previously reported in the consolidated statements of
operations for the fiscal years ended October 31, 1996 and 1995, namely
depreciation and amortization, have been reclassified to various cost and
expense line items to conform to the 1997 presentation.
 
3. SOUTHLAND AGREEMENTS
 
    In December, 1993, Canmax signed a five year agreement with Southland to
provide software licenses, development services, and provide hardware and help
desk services (the "Master Agreement"). Southland chose Canmax's proprietary
convenience store automation software, C-Serve, as the basis for its automation
of store functions and operations at its corporate and franchise operated
7-Eleven convenience stores in the United States. Software licensing, product
and service revenue under this agreement during the fiscal years ended October
31, 1997, 1996 and 1995 totaled approximately $2,051,000, $2,581,000 and
$3,733,000, respectively, while development revenues recorded under the Master
Agreement during these same periods totaled approximately $799,000, $1,564,000,
and $1,792,000, respectively. This agreement expires December 7, 1998.
 
    On October 31, 1997, Canmax and Southland entered into Amendment No.3 to the
Master Agreement (the "Southland Amendment"). Pursuant to the terms of the
Southland Amendment, Canmax allowed Southland to exercise its right as specified
in the Master Agreement to use, possess and modify the
 
                                      F-10
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
3. SOUTHLAND AGREEMENTS (CONTINUED)
source code for the software developed by Canmax for Southland for a one-time
license fee of $1.0 million. Payment of the license fee was due in two
installments of $500,000. The first installment was received in November, 1997
and the second installment was received in January, 1998. The Southland
Amendment also contains Southland's agreement to purchase from Canmax on or
before December 7, 1998, no less than $4.0 million of hardware, software
maintenance, help desk, development and other services. Although Southland has
committed to purchase certain products and services totaling a minimum of $4.0
million through December 7, 1998 in accordance with the terms of the Southland
Amendment, Southland's use and possession of the source code could result in a
material reduction in Southland's reliance upon, and payment of fees for
development services to, Canmax.
 
    From time to time Canmax may also provide development and other resources to
Southland on an as-needed basis under various agreements at terms specified in
the Master Agreement. Approximately $254,000 of development revenue under such
agreements was recognized by Canmax in fiscal 1997. Such agreements extend
through December, 1998.
 
    In 1995, Canmax contracted with NCR to successfully bid for two additional
contracts with Southland relating to business requirements definition and the
development of a preliminary point of sale system. These projects resulted in
revenues to Canmax of approximately $2,165,000 and $1,005,000 in the fiscal
years ended October 31, 1996 and 1995, respectively.
 
    During fiscal 1996, Canmax reached an agreement with NCR to develop for
Southland a next generation Windows NT based version of the Canmax C-Serve
convenience store software for $9.5 million. NCR was chosen by Southland to
provide project management and other professional services for the project.
Modifications to project requirements increased total project revenues from $9.5
million to $11.5 million. Approximately $7,560,000 and $3,920,000 of development
revenues under such agreement was recognized by Canmax in fiscal 1997 and 1996,
respectively.
 
4. EDS AGREEMENTS AND TRANSACTION
 
    Canmax signed agreements with Electronic Data Systems Corporation ("EDS") in
April 1993 which were amended in October 1994. Under the terms of the amended
agreements, EDS marketed Canmax's software, services and hardware technology to
the retail petroleum marketplace exclusively, and Canmax offered EDS the right
to participate with its customers and prospective customers. Additionally,
Canmax granted EDS the right to acquire up to 25% of Canmax's Common Stock
calculated on a fully diluted basis at the time of exercise, at an exercise
price of not less than 75% of the market value of the Common Stock at the time
of exercise, minus $4,861,659, which would be reduced by royalties or similar
payments received by EDS from any licensing of Canmax's product other than
through EDS.
 
    On April 29, 1997, EDS exercised its option to acquire up to 25% of Canmax's
Common Stock, resulting in Canmax issuing an additional 1,598,136 shares. Canmax
accounted for this transaction by reclassifying the amount associated with the
option to Common Stock. EDS then immediately sold its total interest in Canmax,
representing 1,863,364 shares, in a private transaction to Founders Equity
Group, Inc. and the Dodge Jones Foundation, two Texas-based institutional
investors. In conjunction with this transaction, Canmax entered into
registration rights agreements with the two institutional investors.
 
    Additionally, EDS and Canmax agreed to amend a license and grant of rights
agreement which specifies rights and obligations of both parties as to 788 of
Canmax's site licenses sold to EDS in fiscal
 
                                      F-11
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
4. EDS AGREEMENTS AND TRANSACTION (CONTINUED)
1994, and to terminate all formal agreements including the aforementioned stock
option agreement, as well as their joint marketing and other supporting business
agreements.
 
    A summary of transactions with EDS for the last three fiscal years is set
forth below:
 
<TABLE>
<CAPTION>
                                                                                 RECORDED AS
                                                              -------------------------------------------------
                                                                            OPTION TO
                                                                 TOTAL      PURCHASE
                                                               AMOUNT OF     COMMON       COMMON      REVENUE
               YEAR/ TRANSACTION DESCRIPTION                  TRANSACTION     STOCK       STOCK      (EXPENSE)
------------------------------------------------------------  -----------  -----------  ----------  -----------
<S>                                                           <C>          <C>          <C>         <C>
1995
  Other development services purchased from EDS.............   1,188,168            --          --   (1,188,168)
  Conversion of development obligations due to EDS into
    shares of Canmax common stock...........................   1,273,095(1)          --  1,273,095           --
  Development Revenue.......................................     175,513            --          --      175,513
  Product & services revenue................................     751,440            --          --      751,440
1996
  Other services purchased from EDS.........................      84,327            --          --      (84,327)
  Development revenue.......................................     143,415            --          --      143,415
  Product & services revenue................................     690,751            --          --      690,748
1997
  Exercise of EDS options...................................   4,861,659    (4,861,659)  4,861,659           --
</TABLE>
 
------------------------
 
(1) EDS obligations were converted into 265,228 shares of Canmax common stock.
 
5. ACCOUNTS RECEIVABLE
 
    At October 31, 1997, accounts receivable included approximately $1,212,000
of work performed under development contracts for which billings have not been
presented to the customer or for which amounts are not contractually billable.
Approximately $712,000 of this amount was billed and collected in December,
1997. The remaining amounts were billed and collected by January 15, 1998.
 
6. PROPERTY AND EQUIPMENT
 
    Property and equipment consist of the following at October 31:
 
<TABLE>
<CAPTION>
                                                                                1997           1996
                                                                            -------------  -------------
<S>                                                                         <C>            <C>
Furniture and fixtures....................................................  $     929,060  $     925,637
Computer equipment........................................................      1,464,809      1,524,887
Computer software.........................................................        465,321        388,041
Leasehold improvements....................................................         87,635         84,951
Equipment held under capital lease obligations (Note 9)...................        239,207        106,050
Leasehold improvements under leasehold obligations (Note 9)...............        508,892        508,892
                                                                            -------------  -------------
                                                                                3,694,924      3,538,458
Less accumulated depreciation and amortization............................     (2,732,749)    (2,126,891)
                                                                            -------------  -------------
                                                                            $     962,175  $   1,411,567
                                                                            -------------  -------------
                                                                            -------------  -------------
</TABLE>
 
                                      F-12
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6. PROPERTY AND EQUIPMENT (CONTINUED)
    Depreciation and amortization expense amounted to approximately $689,000,
$567,000, and $519,000 in 1997, 1996, and 1995, respectively.
 
7. ACCRUED LIABILITIES
 
    Accrued liabilities consist of the following at October 31:
 
<TABLE>
<CAPTION>
                                                                                     1997        1996
                                                                                  ----------  ----------
<S>                                                                               <C>         <C>
Accrued compensation and benefits...............................................  $  184,860  $  405,924
Accrued rent....................................................................      68,525     150,755
Sales tax payable...............................................................     314,503          --
Other...........................................................................     299,345     221,842
                                                                                  ----------  ----------
                                                                                  $  867,233  $  778,521
                                                                                  ----------  ----------
                                                                                  ----------  ----------
</TABLE>
 
8. ADVANCES FROM SHAREHOLDERS
 
    On October 30, 1997, a shareholder, Founders Equity Group, Inc., advanced
Canmax $100,000. The advance was unsecured and had an interest rate of 12%. On
November 6, 1997, Canmax repaid principal and interest of $100,230, which fully
satisfied Canmax's obligation.
 
    During 1995, a director, W. Thomas Rinehart advanced Canmax $250,000. The
advance was unsecured and had an interest rate of 10%. The principal balance was
due on demand. Canmax repaid principal of $30,000 and paid interest of $13,456
in fiscal 1995 and repaid principal of $124,235 and interest of $37,732 in
fiscal 1996. Principal and interest payments of $95,765 and $2,132 were paid
during the first six months of fiscal 1997, which fully satisfied Canmax's
obligation.
 
9. LEASEHOLD AND CAPITAL LEASE OBLIGATIONS
 
    Through October 31, 1997, a total of $508,892 of leasehold obligations were
incurred on behalf of Canmax. These costs have been capitalized as leasehold
improvements and are to be repaid with interest calculated at 8% to 11% per
annum in monthly installments of $11,104, over the remaining lease term, which
terminates on August 31, 1998.
 
    Canmax leased equipment under capital leases in 1997 totaling $133,157. The
capital lease obligations are to be repaid with interest at 12% to 21% per annum
in monthly installments of $4,731 through June, 2000.
 
    Canmax leased equipment under capital leases in 1996 totaling $106,050. The
capital lease obligations are to be repaid with interest at 15% to 16% per annum
in monthly installments of $2,995 through June, 2000.
 
                                      F-13
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
9. LEASEHOLD AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
    Future minimum payments due under leasehold and capital lease obligations
are as follows:
 
<TABLE>
<S>                                                                         <C>
Years ended October 31:
  1998....................................................................  $ 190,866
  1999....................................................................     92,706
  2000....................................................................     59,717
                                                                            ---------
Total future minimum lease payments.......................................    343,289
Less amount representing interest.........................................     56,874
                                                                            ---------
Present value of minimum lease payments...................................    286,415
Less current portion......................................................    159,364
                                                                            ---------
Leasehold and capital lease obligations...................................  $ 127,051
                                                                            ---------
                                                                            ---------
</TABLE>
 
10. LONG-TERM DEBT
 
    Long-term debt consists of the following at October 31:
 
<TABLE>
<CAPTION>
                                                                                     1997        1996
                                                                                   ---------  ----------
<S>                                                                                <C>        <C>
Bank term note, interest at prime, principal of $1,679 plus interest payable
  monthly through October 29, 1999...............................................  $  40,297  $   60,445
Bank term note, interest at bank's base rate, principal and interest of $1,524
  payable monthly through August 15, 2000........................................     45,954      59,691
                                                                                   ---------  ----------
Total............................................................................     86,251     120,136
Less current portion.............................................................     35,195      34,022
                                                                                   ---------  ----------
                                                                                   $  51,056  $   86,114
                                                                                   ---------  ----------
                                                                                   ---------  ----------
</TABLE>
 
    At October 31, 1997, the prime and base rates were 8.5%. The bank term notes
are collateralized by investments in government securities totaling $106,858 and
$133,335 at October 31, 1997 and 1996, respectively. Such restricted investments
are classified as other non-current assets.
 
    Future maturities of long-term debt are as follows:
 
<TABLE>
<S>                                                                  <C>
1998...............................................................  $  35,195
1999...............................................................     36,485
2000...............................................................     14,571
                                                                     ---------
                                                                     $  86,251
                                                                     ---------
                                                                     ---------
</TABLE>
 
                                      F-14
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
11. SHAREHOLDERS' EQUITY
 
REVERSE STOCK SPLIT
 
    In December 1995, Canmax's Board of Directors authorized a one-for-five
reverse stock split of the Company's Common Stock, effective December 21, 1995.
All applicable share and per share data have been retroactively restated to give
effect to the reverse stock split.
 
WARRANT ISSUANCES
 
    FOUNDERS EQUITY GROUP, INC.
 
    On May 9, 1997, Founders Equity Group, Inc. exercised its right to demand
that Canmax file a registration statement with regard to all its shares
(863,364) of Canmax Common Stock. Such shares were acquired from EDS on April
29, 1997 (see Note 4--EDS Agreements and Transaction). Under applicable
securities laws, Canmax was unable to file such registration statement until
after the filing of the registration statement relating to the resale of shares
of Canmax Common Stock in the proposed Merger of Canmax and Auto-Gas Systems,
Inc. Pursuant to the terms of the registration rights agreement with Founders
Equity Group, Inc., Canmax was to have filed a registration statement on or
about July 23, 1997 or incur a registration penalty of 50,000 shares per month.
Founders Equity Group, Inc. agreed to extend the registration obligation until
August 26, 1997 in exchange for its receipt of a warrant to purchase 50,000
shares of Canmax Common Stock at an exercise price of $2.00 per share. Such
warrants are exerciseable and expire on August 1, 2000. The registration
obligation was satisfied by the filing of a registration statement on Form S-3
on August 13, 1997.
 
    Canmax recorded expense of $56,500 in August, 1997 related to these
Warrants. This amount represents Canmax's estimate of the fair value of these
warrants at the date of grant using a Black-Scholes pricing model with the
following assumptions: applicable risk-free interest rate based on the current
treasury-bill interest rate at the grant date of 5.9%; dividend yields of 0%;
volatility factors of the expected market price of Canmax common stock of .85;
and an expected life of the warrant of 1.5 years.
 
    PERFORMANCE WARRANTS
 
    In September 1997, Canmax executed employment agreements with certain
executives which provided for the issuance of warrants ("Performance Warrants")
to each executive as additional compensation. These agreements were effective
July 1, 1997. The aggregate number of shares to be issued upon exercise of such
Performance Warrants is 475,000. Each Performance Warrant expires 10 years from
the date of issuance, and is exercisable at a price of $2.25 per share, the
closing price of the Canmax Common Stock on July 17, 1997, the date that the
compensation committee approved the issuance of such warrants. The Performance
Warrants vest 50% upon the "Trigger Date" and 50% on the one-year anniversary of
the Trigger Date. As used in each employment agreement, the Trigger Date means
the date of the earlier of the following events: (i) the earnings per share of
Canmax (after tax) equals or exceeds $0.30 per share during any fiscal year,
(ii) the closing price of the Canmax Common Stock equals or exceeds $8.00 per
share for sixty-five consecutive trading days, or (iii) a Change of Control.
 
    The employment agreements define a "Change of Control" as existing upon any
of the following: (i) any person or entity is or becomes the beneficial owner of
more than thirty percent (30%) of the combined voting power of the outstanding
securities of CRSI or Canmax; (ii) at any time during the twenty-four month
period following a merger, tender offer, consolidation, sale of assets or
contested election, or any combination of such transactions, at least a majority
of the Board of Directors of CRSI or
 
                                      F-15
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
11. SHAREHOLDERS' EQUITY (CONTINUED)
Canmax shall cease to be "continuing directors" (meaning a director of CRSI or
Canmax prior to such transaction or who subsequently became directors and whose
election or nomination for election by the stockholders of CRSI or Canmax, was
approved by a vote of at least two-thirds of the directors then still in office
prior to such transaction); or (iii) the stockholders approve an agreement of
sale or disposition by CRSI or Canmax of all or substantially all of the assets
of CRSI or Canmax.
 
    In accordance with APB No. 25, and its related interpretations, Canmax has
recorded no compensation expense to date. Compensation expense will be
recognized when it becomes probable that an event which will trigger vesting
will occur.
 
    Pro forma information regarding net income and earnings per share is
required by SFAS No. 123 "Accounting for Stock-Based Compensation", and has been
determined as if Canmax had accounted for the Performance Warrants under the
fair value method of that statement. The fair value of the Performance Warrants
was estimated to be approximately $822,000 at the date of grant using a
Black-Scholes pricing model with the following assumptions: applicable risk-free
interest rates based on the current treasury-bill interest rate at the grant
date of 6.2%; dividend yields of 0%; volatility factors of the expected market
price of the Canmax common stock of .94; and an expected life of the Performance
Warrants of 5 to 6 years.
 
    The weighted-average fair value of warrants granted during the year is $1.67
and the weighted-average remaining contracted life of warrants outstanding at
October 31, 1997 is 9.1 years.
 
STOCK OPTIONS
 
    In 1990, Canmax adopted a stock option plan (the "Stock Option Plan"). The
Stock Option Plan authorizes the Board of Directors to grant up to 1,200,000
options to purchase common shares of the Company. No options will be granted to
any individual director or employee which will, when exercised, exceed 5% of the
issued and outstanding shares of the Company. The term of any option granted
under the Stock Option Plan is fixed by the Board of Directors at the time the
options are granted, provided that the exercise period may not be longer than 10
years from the date of granting. All options granted under the Stock Option Plan
have up to 10 year terms and have vesting periods which range from 0 to 3 years
from the grant date. The exercise price of any options granted under the Stock
Option Plan is the fair market value at the date of grant. As of October 31,
1997, the Board had granted certain options under the Stock Option Plan in
excess of shares authorized under the plan. The Board is in the process of
amending
 
                                      F-16
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
11. SHAREHOLDERS' EQUITY (CONTINUED)
the Stock Option Plan to cover all outstanding stock options. Activity under the
Stock Option Plan for the three years ended October 31, 1996 was as follows:
 
<TABLE>
<CAPTION>
                                                                                       NUMBER OF    OPTION PRICE
                                                                                         SHARES      PER SHARE
                                                                                       ----------  --------------
<S>                                                                                    <C>         <C>
Options outstanding at October 31, 1994..............................................     411,910   $1.95 - $6.25
  Options granted....................................................................     418,200    2.50 -  5.00
  Options exercised..................................................................    (294,200)   3.75 -  5.00
  Options canceled...................................................................     (45,360)   5.00 -  6.75
                                                                                       ----------  --------------
Options outstanding at October 31, 1995..............................................     490,550    2.50 -  5.00
  Options granted....................................................................     729,600    1.88 -  4.19
  Options exercised..................................................................     (77,600)   1.90 -  2.88
  Options canceled...................................................................     (91,500)   2.25 -  6.25
                                                                                       ----------  --------------
Options outstanding at October 31, 1996..............................................   1,051,050    1.88 -  5.00
  Options granted....................................................................     266,000    1.50 -  2.50
  Options canceled...................................................................    (299,350)   1.88 -  5.00
                                                                                       ----------  --------------
Options outstanding at October 31, 1997..............................................   1,017,700   $1.50 - $5.00
                                                                                       ----------  --------------
                                                                                       ----------  --------------
</TABLE>
 
    Effective December 29, 1995, employee options to purchase 87,100 shares of
Canmax's Common stock were repriced to the then current market price. The
repricing was made because management believed that the higher priced options
were no longer a motivating factor for key employees and officers. The options
repriced are reflected in the cancellation and grant activity for 1996.
 
    A summary of Canmax's stock option activity and related information for the
years ended October 31, 1997 and 1996 is as follows:
 
<TABLE>
<CAPTION>
                                                                  1997                     1996
                                                         -----------------------  -----------------------
                                                                      WEIGHTED-                WEIGHTED-
                                                                       AVERAGE                  AVERAGE
                                                         NUMBER OF    EXERCISE    NUMBER OF    EXERCISE
                                                           SHARES       PRICE       SHARES       PRICE
                                                         ----------  -----------  ----------  -----------
<S>                                                      <C>         <C>          <C>         <C>
Outstanding--Beginning of year.........................   1,051,050   $    3.04      490,550   $    4.10
 
Granted................................................     266,000        1.91      729,600        2.19
Exercised..............................................          --          --      (77,600)       2.69
Canceled...............................................    (299,350)       4.35      (91,500)       4.86
                                                         ----------               ----------
Outstanding--End of year...............................   1,017,700   $    2.23    1,051,050   $    3.04
                                                         ----------               ----------
                                                         ----------               ----------
 
Exerciseable at end of year............................     691,535   $    2.29      623,300   $    3.67
Weighted-average fair value of options granted
 during the year.......................................               $    1.33                $    2.18
</TABLE>
 
    The weighted-average remaining contractual life of options outstanding at
October 31, 1997 and 1996 is 4.37 years and 5.37 years, respectively.
 
                                      F-17
<PAGE>

                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
11. SHAREHOLDERS' EQUITY (CONTINUED)
    At October 31, 1997, there are 1,542,700 shares issuable upon the exercise
or conversion of outstanding warrants or options under the Stock Option Plan.
 
    Under APB 25, because the exercise price of Canmax's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.
 
    Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if Canmax had accounted for
its employee stock options under the fair value method of that statement. The
fair value for options was estimated at the date of grant using a Black-Scholes
option pricing model with the following assumptions: applicable risk-free
interest rates based on the current treasury-bill interest rate at the grant
date, which ranged from 5.8% to 6.2% in 1997 and 5.2% to 5.6% in 1996; dividend
yields of 0% in 1997 and 1996; volatility factors of the expected market price
of Canmax common stock of between .89 and .95 in 1997 and between 0.8 and 0.9 in
1996; and an expected life of the option of between 1.6 and 6 years in 1997 and
between 2 and 7 years in 1996.
 
    The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because Canmax employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
 
    For purposes of pro forma disclosure, the estimated fair value of the
options and warrants is amortized to expense over the vesting period of the
related option or warrant. The effects of applying SFAS No. 123 in computing the
pro forma disclosures presented below are not indicative of future amounts as
only options and warrants granted subsequent to October 31, 1995 have been
included in the pro forma computations. Canmax's pro forma information for the
year ended October 31, 1997 and 1996 is as follows:
 
<TABLE>
<CAPTION>
                                                                                   1997         1996
                                                                                -----------  -----------
<S>                                                                             <C>          <C>
Net income as reported........................................................  $    87,331  $   142,614
SFAS No. 123 Pro forma adjustments:
  Stock options...............................................................     (465,476)    (585,718)
  Founders Equity Group, Inc. warrants........................................           --           --
  Performance warrants........................................................           --           --
                                                                                -----------  -----------
Pro forma net loss............................................................  $  (378,145) $  (443,104)
                                                                                -----------  -----------
                                                                                -----------  -----------
Pro forma loss per share......................................................  $     (0.06) $     (0.09)
                                                                                -----------  -----------
                                                                                -----------  -----------
</TABLE>
 
CHANGES IN NASDAQ LISTING REQUIREMENTS
 
    On August 25, 1997, the U.S. Securities and Exchange Commission, the
National Association of Securities Dealers, Inc. and The Nasdaq Stock Market
approved increases in the listing and maintenance standards governing the Nasdaq
SmallCap Market. These new standards require, as a condition to continued
listing on the Nasdaq SmallCap Market, an issuer to maintain either "net
tangible assets" (defined as total assets, excluding goodwill, minus total
liabilities) of $2.0 million, market capitalization of
 
                                      F-18
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
11. SHAREHOLDERS' EQUITY (CONTINUED)
$35.0 million or net income in two of the last three fiscal years of at least
$0.5 million. Companies failing to satisfy the new listing requirements are
allowed a six month "compliance" period during which they may take appropriate
steps to comply with the new listing requirements. As of October 31, 1997,
Canmax had net tangible assets of approximately $2.2 million and a market
capitalization of approximately $11.2 million. In addition, Canmax has not had
net income of $0.5 million in any of its last three fiscal years. If in the
future Canmax fails to satisfy the requirements for continued listing on the
Nasdaq SmallCap Market, Canmax will be subject to being delisted from the Nasdaq
SmallCap Market. The delisting of Canmax could materially adversely affect the
liquidity of the Canmax Common Stock and the operations of Canmax.
 
12. NEW ACCOUNTING STANDARD
 
    In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share," which is required to be adopted for periods
ending after December 15, 1997. Early adoption is not allowed. When adopted,
Canmax will be required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new requirements, primary
earnings per share will be replaced by a simpler calculation called "basic"
earnings per share. This calculation will exclude all common stock equivalents
and other dilutive securities (i.e. options, warrants and convertible
instruments). Under the new requirements, "diluted" earnings per share will
replace the existing fully diluted earnings per share calculation. The new
diluted earnings per share will include the effect of all dilutive instruments
if they meet certain requirements. Under the new standard, earnings (loss) per
share would have been as follows:
 
<TABLE>
<CAPTION>
                                                                                FOR THE YEARS ENDED OCTOBER 31,
                                                                                -------------------------------
                                                                                  1997       1996       1995
                                                                                ---------  ---------  ---------
<S>                                                                             <C>        <C>        <C>
Basic.........................................................................  $    0.01  $    0.03  $   (0.79)
Diluted.......................................................................  $    0.01  $    0.02  $   (0.79)
</TABLE>
 
13. INCOME TAXES
 
    Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax
 
                                      F-19
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
13. INCOME TAXES (CONTINUED)
purposes. Significant components of Canmax's deferred tax liabilities and assets
as of October 31 are as follows:
 
<TABLE>
<CAPTION>
                                                                               1997           1996
                                                                           -------------  -------------
<S>                                                                        <C>            <C>
Deferred tax assets (liabilities):
Current:
  Allowance for doubtful accounts........................................  $       9,146  $      32,370
  Provisions and accrued expenses........................................          5,100         69,700
  Less: valuation allowance..............................................        (14,246)      (102,070)
                                                                           -------------  -------------
Total current............................................................             --             --
                                                                           -------------  -------------
Noncurrent:
  Capitalized software and intellectual property.........................         (4,906)       417,613
  Property and equipment.................................................         94,289         19,927
  Net operating loss.....................................................      6,892,327      6,503,397
  Less: valuation allowance..............................................     (6,981,710)    (6,940,937)
                                                                           -------------  -------------
Total noncurrent.........................................................             --             --
                                                                           -------------  -------------
Total deferred tax assets................................................  $          --  $          --
                                                                           -------------  -------------
                                                                           -------------  -------------
</TABLE>
 
    The valuation allowance for deferred tax assets decreased by $47,052 and
$40,057 during the years ended October 31, 1997 and 1996, respectively.
 
    The reconciliation of income tax provision at the statutory United States
federal income tax rates to income tax provision is:
 
<TABLE>
<CAPTION>
                                                                               1997        1996         1995
                                                                            ----------  ----------  -------------
<S>                                                                         <C>         <C>         <C>
Income tax provision (benefit) at statutory rate..........................  $   29,693  $   48,489  $  (1,269,713)
Benefit of net operating loss not recognized..............................          --          --      1,331,851
Other.....................................................................     (29,693)    (48,489)       (62,138)
                                                                            ----------  ----------  -------------
                                                                            $       --  $       --  $          --
                                                                            ----------  ----------  -------------
                                                                            ----------  ----------  -------------
</TABLE>
 
    At October 31, 1997, Canmax has net operating loss carryforwards for federal
income tax purposes of approximately $20.3 million which expire in 2006 through
2011. Utilization of net operating losses may be subject to annual limitations
due to the ownership change limitation provided by the Internal Revenue Code of
1986. The annual limitation may result in the expiration of net operating losses
before utilization. At October 31, 1997, the net operating losses carryforwards
of Canmax and its subsidiaries were not subject to any material annual
limitation.
 
    Canmax anticipates that it may undergo a change of ownership as defined in
Internal Revenue Code Section 382 upon issuance of the shares in the merger
transaction with USCommunication Services, Inc. (See Note 16). Any resulting
annual limitation of the combined company's ability to utilize the net operating
loss carryforward is expect to result in the expiration of a significant portion
of the net operating losses before utilization.
 
                                      F-20
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
14. COMMITMENTS
 
    The Company leases office space and computer equipment under noncancellable
operating leases. Approximate future minimum lease payments for the fiscal years
ending October 31 are as follows:
 
<TABLE>
<S>                                                 <C>
1998..............................................  $ 515,000
1999..............................................     34,000
2000..............................................     17,000
2001..............................................     14,000
                                                    ---------
                                                    $ 580,000
                                                    ---------
                                                    ---------
</TABLE>
 
    Total rent expense amounted to approximately $609,000, $499,000, and
$633,000, for 1997, 1996, and 1995, respectively.
 
    The lease on Canmax's office space expires August 31, 1998. The space is
used for executive, administrative, sales, engineering personnel, help desk and
related services, as well as for inventory storage and demonstration purposes.
Currently, Canmax does not have an option to renew the lease, however, Canmax is
reviewing proposals for suitable available space at several alternative
locations.
 
15. BENEFIT PLAN
 
    Effective January 1, 1994, the Company implemented an Internal Revenue Code
Section 401(k) Profit Sharing Plan for all employees of the Company. The Plan
provides for voluntary contributions by employees into the Plan subject to the
limitations imposed by the Internal Revenue Code Section 401(k). The Company may
match employee contributions to a discretionary percentage of the employees
contribution. The Company's matching funds are determined at the discretion of
the Board of Directors and are subject to a seven year vesting schedule from the
date of original employment. The Company made no matching contributions during
the years ended October 31, 1997, 1996 and 1995.
 
16. SUBSEQUENT EVENTS
 
USCOMMUNICATION SERVICES, INC.
 
    On January 30, 1998, Canmax acquired USCommunication Services, Inc. ("USC"),
a San Diego, California based provider of telecommunication products and
internet services to the transportation industry, through a private stock
transaction which will be accounted for under the purchase method. USC's
products and services include prepaid calling cards, one plus long distance
services, public internet access kiosks, pay telephones, and pallet exchange
services.
 
    In accordance with the terms of the merger transaction, USC shareholders
received 1.5 million shares of Canmax Common Stock and warrants to acquire 2.5
million shares of Canmax Common Stock with exercise prices of $1.25 and $2.00
per share. Additionally, upon close, Canmax entered into a three year employment
agreement with the President of USC. As part of the terms of his employment
agreement, the President received 2.0 million warrants which will vest, if at
all, upon achievement of certain earnings per share targets over the initial
term of the employment agreement. The exercise price of these warrants are $2.00
and $3.00 per share and the warrants expire five years from the date of vesting.
 
                                      F-21
<PAGE>
                          CANMAX INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
16. SUBSEQUENT EVENTS (CONTINUED)
CONVERTIBLE LOAN AGREEMENTS
 
    On December 15, 1997, Canmax executed a convertible loan agreement with a
shareholder, Founders Equity Group, Inc., ("Founders") which provides financing
of up to $500,000. Funds obtained under the loan agreement are collateralized by
all assets of Canmax and bear interest at 10%. Required payments are for
interest only and are due monthly beginning February 1, 1998. Borrowings under
the loan agreement mature January 1, 1999, unless otherwise redeemed or
converted.
 
    Under the terms of the loan agreement, Founders may exercise its right at
any time to convert all, or in multiples of $25,000, any part of the borrowed
funds into Canmax Common Stock at a conversion price of $1.25 per share. The
conversion price is subject to adjustment for certain events and transactions as
specified in the loan agreement. Additionally, the outstanding principal amount
is redeemable at the option of Canmax at 110% of par.
 
    As of February 11, 1998, Founders had advanced to Canmax $350,000 under the
loan agreement. Canmax used these funds to pay fees and expenses related to the
USC acquisition, to advance USC $250,000 for equipment purchases and for USC's
general working capital requirements, and for Canmax's general working capital
requirements, all of which are permitted uses of proceeds under the loan
agreement.
 
    On February 11, 1998, Canmax and Founders executed a loan commitment letter
which provides for multiple advance loans of up to $2 million over the ensuing
12 month period. Funds obtained under the loan commitment agreement are
collateralized by all assets of Canmax and bear interest at 10%. Interest is
payable monthly and borrowings under the agreement mature one year from the date
of the advance. Amounts borrowed under the agreement are convertible into Canamx
Common Stock at a conversion price equal to the five (5) day trading average of
the Canmax Common Stock immediately preceding the date of the advance. The
maximum amount of Canmax Common Stock issuable under the loan commitment is 1.6
million shares. As consideration for the loan commitment, Canmax paid a
commitment fee of $10,000. As of February 11, 1998, no amounts had been advanced
to Canmax under the loan commitment agreement.
 
                                      F-22