---

**UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION**
  Washington, D.C. 20549

FORM 10-QSB

x Quarterly Report
  pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2004

 ̈ Transition report
  pursuant section 13 or 15(d) of the Securities Exchange Act of 1934

0-9040
  Commission file number

AUCXIS CORP.
  (Exact name of small business issuer as specified in its charter)

**Nevada**
  (State or other jurisdiction)

**Pending**
  (IRS Employer of incorporation or organization Identification No.)

**Suite 500 - 666 Burrard Street, Vancouver, BC V6C
  3P6 Canada.**
  (Address of principal executive offices)

**604-639-3109**
  (Issuer's telephone number)

`                                                                                                                                        
  .
  (Former Name, Address and Former Fiscal Year, if Changed Since Last Report)

Check whether the issuer:

(1) filed all reports required to be filed by Section 13 or
  15(d) of the Exchange Act during the past 12 months (or for such shorter period
  that the registrant was required to file such reports), and

(2) has been subject to such filing requirements for the past
  90 days. Yes x No  ̈

Check whether the registrant filed all documents and reports
  required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
  distribution of securities under a plan confirmed by court. Yes  ̈
  No x

As of August 13, 2004 there were 66,409,415shares of the Registrant's
  common stock, par value $0.001 per share outstanding. (This includes 3,636,364
  mandatory redeemable shares of common stock).

Transitional Small Business Disclosure Format (check one);
  Yes  ̈ No x

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AUCXISCORP.

FORM 10-QSB

INDEX

|                                                                                                          | Page
|--------------------------------------------------------------------------------------------------------- | ----
|                                                                                                          |     
|PART I. FINANCIAL INFORMATION                                                                             | 3   
|                                                                                                          |     
|Item 1. Financial Statements                                                                              | 3   
|                                                                                                          |     
|Consolidated Balance Sheets at June
      30, 2004 (Unaudited) and December 31, 2003 (Audited)            | 5   
|                                                                                                          |     
|Consolidated Statements of Operations
      (Unaudited) for the three months ended June 30, 2004 and 2003 | 6   
|                                                                                                          |     
|Consolidated Statements of Cash Flows
      (Unaudited) for three months ended June 30, 2004 and 2003     | 7   
|                                                                                                          |     
|Notes to Consolidated Financial Statements                                                                | 8   
|                                                                                                          |     
|Item 2. Managements Discussion and Analysis of
      Financial Condition and Results of Operations       | 15  
|                                                                                                          |     
|Item 3. Controls and Procedures                                                                           | 17  
|                                                                                                          |     
|PART II. OTHER INFORMATION                                                                                | 17  
|                                                                                                          |     
|Item 1. Legal Proceedings                                                                                 | 17  
|                                                                                                          |     
|Item 5: Other Information                                                                                 | 18  
|                                                                                                          |     
|Item 6. Exhibits and Reports on Form 8-K                                                                  | 18  
|                                                                                                          |     
|Signatures                                                                                                | 19  

2

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**PART I. FINANCIAL INFORMATION**

| | ITEM 1. Financial Statements
      Aucxis Corp. 
        (formerly e-Auction Global Trading Inc.)
        (a Nevada Corporation)
      Consolidated Financial Statements
        (Unaudited)
        June 30, 2004 
        (expressed in U.S. dollars)
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

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| | AUCXIS
        CORP.(a Nevada Corporation)                                                        | 
| | ------------------------------------------------------------------------------------------------- | 
| | CONSOLIDATED
      FINANCIAL STATEMENTS 
      (Unaudited) JUNE 30, 2004 
      (in U.S. dollars) | 



4

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|AUCXIS
        CORP.
      CONSOLIDATED BALANCE SHEETS
      (Expressed in U.S. dollars)
|----------------------------------------------------------------------------------------

|                                                                            |   | June 30,    |   |   | December 31, |  
|--------------------------------------------------------------------------- | - | ----------- | - | - | ------------ | -
|                                                                            |   | 2004        |   |   | 2003         |  
|                                                                            |   | (Unaudited) |   |   | (Audited)    |  
|                                                                            |   |             |   |   |              |  
|ASSETS                                                                      |   |             |   |   |              |  
|                                                                            |   |             |   |   |              |  
|CURRENT ASSETS                                                              |   |             |   |   |              |  
|Cash and equivalents                                                        | $ | 3,495       |   | $ | 19,724       |  
|Accounts receivable, net of allowance for doubtful
      account of $12,840 |   | 7,434       |   |   | 16,646       |  
|                                                                            |   |             |   |   |              |  
|Total Current Assets                                                        |   | 10,929      |   |   | 36,370       |  
|                                                                            |   |             |   |   |              |  
|Property and equipment                                                      |   | 14,453      |   |   | 18,900       |  
|Investments (Note 4)                                                        |   | 1,000       |   |   | 1,000        |  
|                                                                            |   |             |   |   |              |  
|Total Assets                                                                | $ | 26,382      |   | $ | 56,270       |  
|                                                                            |   |             |   |   |              |  
|LIABILITIES                                                                 |   |             |   |   |              |  
|                                                                            |   |             |   |   |              |  
|CURRENT LIABILITIES                                                         |   |             |   |   |              |  
|Accounts payable                                                            | $ | 552,683     |   | $ | 525,650      |  
|Accrued liabilities                                                         |   | 50,313      |   |   | 62,235       |  
|Due to former Kwatrobox shareholders                                        |   | 537,331     |   |   | 574,834      |  
|Current portion of long-term debt (Note 7)                                  |   | 471,525     |   |   | 533,180      |  
|                                                                            |   |             |   |   |              |  
|Total Current Liabilities                                                   |   | 1,611,852   |   |   | 1,695,899    |  
|                                                                            |   |             |   |   |              |  
|Mandatory Redeemable Shares of Common Stock (Note 8)                        |   | 4,215,914   |   |   | 4,215,914    |  
|                                                                            |   |             |   |   |              |  
|                                                                            |   | 5,827,766   |   |   | 5,911,813    |  
|                                                                            |   |             |   |   |              |  
|Commitments and Contingencies (Note 10)                                     |   |             |   |   |              |  
|                                                                            |   |             |   |   |              |  
|STOCKHOLDERS EQUITY (DEFICIT)                                              |   |             |   |   |              |  
|                                                                            |   |             |   |   |              |  
|Common stock                                                                |   |             |   |   |              |  
|Authorized:
      250,000,000 shares, $0.001 par value                      |   |             |   |   |              |  
|Issued and outstanding:
      62,773,051 shares                             |   | 62,773      |   |   | 62,773       |  
|Additional paid-in capital                                                  |   | 18,736,200  |   |   | 18,736,200   |  
|Accumulated other comprehensive income                                      |   | 645,427     |   |   | 505,843      |  
|Deficit                                                                     |   | (25,245,784 | ) |   | (25,160,359  | )
|                                                                            |   |             |   |   |              |  
|Total Stockholders Equity (Deficit)                                        |   | (5,801,384  | ) |   | (5,855,543   | )
|                                                                            |   |             |   |   |              |  
|Total Liabilities and Stockholders Equity (Deficit)                        | $ | 26,382      |   | $ | 56,270       |  

(The Accompanying Notes are an Integral Part of These Financial
  Statements)

5

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|AUCXIS
        CORP.
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
      (Expressed in U.S. dollars)
      (unaudited)
|-------------------------------------------------------------------------------------------------------------------------------------------

|                                                    |   | Three months |   |   | Three months |   |   | Six months |   |   | Six months |  
|--------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ---------- | - | - | ---------- | -
|                                                    |   | ended        |   |   | ended        |   |   | ended      |   |   | ended      |  
|                                                    |   | June 30,     |   |   | June 30,     |   |   | June 30,   |   |   | June 30,   |  
|                                                    |   | 2004         |   |   | 2003         |   |   | 2004       |   |   | 2003       |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Revenue                                             | $ | -            |   | $ | -            |   | $ | -          |   | $ | 1,226,880  |  
|Cost of goods sold                                  |   | -            |   |   | -            |   |   |            |   |   | (307,800   | )
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|                                                    |   | -            |   |   | -            |   |   | -          |   |   | 919,080    |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Selling, general and administrative expense         |   | 44,768       |   |   | 69,561       |   |   | 81,834     |   |   | 1,063,116  |  
|Depreciation and amortization expense               |   | 1,191        |   |   | 2,328        |   |   | 3,591      |   |   | 64,696     |  
|Recovery of inventory                               |   | -            |   |   | (14,040      | ) |   | -          |   |   | (14,040    | )
|Gain on disposal of assets                          |   | -            |   |   | (20,746      | ) |   | -          |   |   | (20,746    | )
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Total operating expenses                            |   | 45,959       |   |   | 37,103       |   |   | 85,425     |   |   | 1,093,026  |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Operating income (loss)                             |   | (45,959      | ) |   | (37,103      | ) |   | (85,425    | ) |   | (173,946   | )
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Share of income of equity investment                |   | -            |   |   | -            |   |   | -          |   |   | 32,170     |  
|Miscellaneous revenue                               |   | -            |   |   | 4,055        |   |   | -          |   |   | 4,055      |  
|Gain on cancellation of mandatory redeemable shares |   | -            |   |   | -            |   |   | -          |   |   | 542,295    |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Net income (loss) for the period                    | $ | (45,959      | ) | $ | (33,048      | ) | $ | (85,425    | ) | $ | 404,574    |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Basis and diluted income (loss) per share           | $ | (0.01        | ) | $ | (0.01        | ) | $ | (0.01      | ) | $ | 0.01       |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Net income (loss) for the period                    | $ | (45,959      | ) | $ | (33,048      | ) | $ | (85,425    | ) | $ | 404,574    |  
|Foreign currency translation adjustments            |   | 22,158       |   |   | 184,211      |   |   | 139,584    |   |   | 358,834    |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Comprehensive income (loss)                         | $ | (23,801      | ) | $ | 151,163      |   | $ | 54,159     |   | $ | 763,408    |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Common shares used in computing                     |   |              |   |   |              |   |   |            |   |   |            |  
|basic
      earnings per share                      |   | 62,773,051   |   |   | 62,773,051   |   |   | 62,773,051 |   |   | 62,773,051 |  
|                                                    |   |              |   |   |              |   |   |            |   |   |            |  
|Common shares used in computing                     |   |              |   |   |              |   |   |            |   |   |            |  
|diluted
      earnings per share                    |   | 62,773,051   |   |   | 62,773,051   |   |   | 62,773,051 |   |   | 62,773,051 |  

(The Accompanying Notes are an Integral Part of These Financial
  Statements)

6

---

|AUCXIS
        CORP.
      CONSOLIDATED STATEMENTS OF CASH FLOWS
      (Expressed in U.S. dollars)
      (unaudited)
|--------------------------------------------------------------------------------------------------------------------

|SIX
      MONTHS ENDED JUNE 30                            |   | 2004    |   |   | 2003     |  
|--------------------------------------------------------- | - | ------- | - | - | -------- | -
|                                                          |   |         |   |   |          |  
|OPERATING ACTIVITIES                                      |   |         |   |   |          |  
|Net income (loss) for the period                          | $ | (85,425 | ) | $ | 404,574  |  
|Adjustments to reconcile net income (loss) to cash        |   |         |   |   |          |  
|Depreciation
      and amortization                       |   | 4,447   |   |   | 64,696   |  
|Gain
      on cancellation of mandatory redeemable shares |   | -       |   |   | (542,295 | )
|Share
      of income of equity investment                |   | -       |   |   | (32,170  | )
|Gain
      on disposal of assets                          |   | -       |   |   | (20,746  | )
|Net change in operating assets and liabilities            |   |         |   |   |          |  
|Accounts
      receivable                                 |   | 9,213   |   |   | (3,372   | )
|Prepaid
      expenses                                    |   | -       |   |   | 15,315   |  
|Accounts
      payable and accrued liabilities            |   | 15,110  |   |   | 120,700  |  
|                                                          |   |         |   |   |          |  
|CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES           |   | (56,655 | ) |   | 6,702    |  
|                                                          |   |         |   |   |          |  
|INVESTING ACTIVITIES                                      |   |         |   |   |          |  
|Change in subsidiary net assets                           |   | -       |   |   | (854,491 | )
|                                                          |   |         |   |   |          |  
|CASH USED IN INVESTING ACTIVITIES                         |   | -       |   |   | (854,491 | )
|                                                          |   |         |   |   |          |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                   |   | 40,426  |   |   | 250,591  |  
|                                                          |   |         |   |   |          |  
|DECREASE IN CASH AND CASH EQUIVALENTS                     |   | (16,229 | ) |   | (597,198 | )
|                                                          |   |         |   |   |          |  
|CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD             |   | 19,724  |   |   | 617,811  |  
|                                                          |   |         |   |   |          |  
|CASH AND CASH EQUIVALENTS END OF PERIOD                   | $ | 3,495   |   | $ | 20,613   |  
|                                                          |   |         |   |   |          |  
|Supplemental cash flow information:                       |   |         |   |   |          |  
|                                                          |   |         |   |   |          |  
|Interest paid                                             | $ | 18,274  |   | $ | 15,120   |  
|Income taxes paid                                         | $ | -       |   | $ | -        |  

(The Accompanying Notes are an Integral Part of These Financial
  Statements)

7

---

|AUCXIS
        CORP.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in U.S. dollars)
|---------------------------------------------------------------------------------------------
|SIX
      MONTHS ENDED JUNE 30, 2004                                                         

|1. | NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS
      The Company was incorporated in Nevada, USA on January
        8, 1998 under the name Kazari International, Inc. and changed its name
        to e-Auction Global Trading Inc. on June 10, 1999. The Company changed
        its name to Aucxis Corp. on June 12, 2001. The Companys business
        is the development of e-business services for the perishable commodity
        marketplace primarily in Europe, the installation and maintenance of auction
        clock and cooling systems for traditional auction halls, and the development
        of software for auctions. The Company has suspended development of e-business
        services for the perishable commodity marketplace pending further review
        of the business opportunities in this area. Refer to Note 2.
      These financial statements have been prepared on a going
        concern basis, which implies the Company will continue to realize its
        assets and discharge its liabilities in the normal course of business.
        The Company has not generated significant revenues since inception and
        has never paid any dividends and is unlikely to pay dividends or generate
        earnings in the immediate or foreseeable future. The continuation of the
        Company as a going concern is dependent upon the continued financial support
        from its shareholders, the ability of the Company to obtain necessary
        equity financing to continue operations and the attainment of profitable
        operations. As at June 30, 2004, the Company has a working capital deficiency
        of $1,600,923 (2003 - $1,516,809), and has accumulated losses of $25,245,784
        since inception. These financial statements do not include any adjustments
        to the recoverability and classification of recorded asset amounts and
        classification of liabilities that might be necessary should the Company
        be unable to continue as a going concern. These factors raise substantial
        doubt regarding the Companys ability to continue as a going concern.
        Management is considering various revenue and cost management alternatives
        and is examining a variety of options to re-organize the Company. It is
        not possible at this time to predict with any assurance the success of
        these initiatives.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | BASIS OF PRESENTATION
      The Companys and its wholly-owned subsidiaries
        are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| | 100% | Aucxis Corp. NV (Belgium)                | 100% | I-Three Inc. (Canada)
| | ---- | ---------------------------------------- | ---- | ---------------------
| | 100% | e-Auction Global Trading Inc. (Barbados) | 100% | Aucxis Corp. (Canada)

| | Aucxis Corp. NV (Belgium) has investments in the following companies which
      are accounted for by the equity method:
| | ------------------------------------------------------------------------------------------------------------------------

| | 92.5% | Aucxis Trading Solutions NV             
| | ----- | ----------------------------------------
| | 30.0% | Aucxis Trading Services Netherlands B.V.
| | 40.0% | SDL Invest NV (Belgium)                 

|   | All intercompany transactions
        and balances have been eliminated.
      Aucxis Corp. NV owns a 92.5% interest in Aucxis Trading
        Solutions NV (ATS), a Belgium company. ATS is engaged in the
        installation and maintenance of auction clock and cooling systems for
        traditional auction halls and the development of software for auctions,
        including Internet-based auction systems. On April 11, 2003, Aucxis Corp.
        NV voluntarily filed for bankruptcy. As the Company has relinquished control
        of Aucxis Corp. NV to a trustee in bankruptcy, its operating results have
        not been included in the consolidated results of operations since the
        bankruptcy filing (see Note 4). With the exception of ATS, none of the
        Companys subsidiaries or other investments have significant assets,
        liabilities, cash flows or operations.
      These consolidated financial statements include the
        accounts of the Company and its wholly owned subsidiaries other than Aucxis
        Corp. NV (Belgium) as described above.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

8

---

|AUCXIS
        CORP.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in U.S. dollars)
|---------------------------------------------------------------------------------------------
|SIX
      MONTHS ENDED JUNE 30, 2004                                                         

|3. | SUMMARY OF SIGNIFICANT
        ACCOUNTING POLICIES (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | (b)                                                           
|   |                                                               
|   | (c)                                                           
|   |                                                               
|   | (d)                                                           
|   |                                                               
|   | (e)                                                           
|   |                                                               
|   | (f)                                                           
|   |                                                               
|   | (g)                                                           
|   |                                                               
|   | (h)                                                           

9

---

|AUCXIS
        CORP.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in U.S. dollars)
|---------------------------------------------------------------------------------------------
|SIX
      MONTHS ENDED JUNE 30, 2004                                                         

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)
|-- | ------------------------------------------------------------
|   |                                                             
|   | (i)                                                         
|   |                                                             
|   | (j)                                                         

| |  |                                                      |   | Three Months Ended |   | Six Months Ended |  
| |  | ---------------------------------------------------- | - | ------------------ | - | ---------------- | -
| |  |                                                      |   | June 30            |   | June 30          |  
| |  |                                                      |   | 2004               |   | 2003             |  
| |  | Net income (loss)  as reported                      | $ | (45,959            | ) | (33,048          | )
| |  | Add: Stock-based compensation expense                |   |                    |   |                  |  
| |  | included
      in net loss  as reported             |   | -                  |   | -                |  
| |  | Deduct: Stock-based compensation                     |   |                    |   |                  |  
| |  | expense
      determined under fair value            |   | -                  |   |                  |  
| |  | method                                               |   |                    |   | -                |  
| |  |                                                      |   |                    |   |                  |  
| |  | Net income (loss)  pro forma                        | $ | (45,959            | ) | (33,048          | )
| |  |                                                      |   |                    |   |                  |  
| |  | Net income (loss) per share (basic and diluted)  as |   |                    |   |                  |  
| |  | reported                                             |   | (0.01              | ) | (0.01            | )
| |  | Net income (loss) per share (basic and diluted)     |   |                    |   |                  |  
| |  | pro
      forma                                      |   | (0.01              | ) | (0.01            | )

| |     | The fair value of the stock options granted was estimated
        using the Black-Scholes option pricing model with the following weighted-average
        assumptions: risk free interest rate of 5.77%, expected volatility of
        30%, an expected option life of three years and no expected dividends                                                                                                                                                                                                                                                                          
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (k) | Interim financial statements
      These interim unaudited financial statements have been
        prepared on the same basis as the annual financial statements and in the
        opinion of management, reflect all adjustments, which include only normal
        recurring adjustments, necessary to present fairly the Companys
        financial position, results of operations and cash flows for the period
        shown. The results of operations for such periods are not necessarily
        indicative of the results expected for a full year or for any future period.

10

---

|AUCXIS
        CORP.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in U.S. dollars)
|---------------------------------------------------------------------------------------------
|SIX
      MONTHS ENDED JUNE 30, 2004                                                         

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (l)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4. | SUMMARIZED FINANCIAL INFORMATION
        OF DECONSOLIDATED SUBSIDIARY
      The Company has a 100% interest in Aucxis Corp. NV,
        a Belgium company (wholly-owned subsidiary), which in turn has a
        92.5% interest in Aucxis Trading Solutions NV (ATS). The Company
        also has advances receivable from Aucxis NV of $10,324,000. On April 11,
        2003, Aucxis Corp. NV, voluntarily filed for bankruptcy. A trustee in
        bankruptcy has been entrusted with Aucxis Corp. NVs management and
        the realization of its assets for the benefit of its creditors and its
        shareholders. Court proceedings for the final verification of claims and
        counterclaims took place on June 5, 2003.
      The proceeds from liquidating Aucxis NVs 92.5%
        interest in ATS, are expected to be used to settle the various claims
        once the allocation of damages, if any, has been agreed to by all interested
        parties. Although the Company believes that it will recover a portion
        of its advances, the final allocation of the proceeds may be subject to
        further litigation and/or additional claims. The Companys management
        is unable to estimate, within the constraints of timeliness or cost, the
        amount that the Company will ultimately recover. Accordingly, the Company
        ceased consolidating the operations of Aucxis Corp. NV effective April
        11, 2003 and the Company has provided for the impairment of this investment
        by writing it down to $1,000 and carrying it under the equity method as
        of December 31, 2003. The Company will recognize any recovery of this
        investment when the claims and counter claims are settled by the receiver
        and/or the Belgian courts and in such amounts as are recovered under the
        settlement. (See also Note 11).
      Summarized consolidated financial information of Aucxis
        Corp. NV as at and for the quarter ended March 31, 2003 immediately prior
        to filing for bankruptcy and deconsolidation by the Company was as follows:

| |                                  |   | As at     | 
| | -------------------------------- | - | --------- | 
| |                                  |   | March 31, | 
| |                                  |   | 2003      | 
| |                                  |   |           | 
| | Current assets                   | $ | 3,143,712 | 
| |                                  |   |           | 
| | Noncurrent assets                | $ | 527,714   | 
| |                                  |   |           | 
| | Current liabilities              | $ | 3,055,624 | 
| |                                  |   |           | 
| | Noncurrent liabilities           | $ | 36,608    | 
| |                                  |   |           | 
| | Minority interests               | $ | 59,972    | 
| |                                  |   |           | 
| | Revenue                          | $ | 1,226,880 | 
| |                                  |   |           | 
| | Cost of goods sold               | $ | 307,800   | 
| |                                  |   |           | 
| | Net income (loss) for the period | $ | 10,296    | 

11

---

|AUCXIS
        CORP.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in U.S. dollars)
|---------------------------------------------------------------------------------------------
|SIX
      MONTHS ENDED JUNE 30, 2004                                                         

|5. | RELATED PARTY TRANSACTIONS
|-- | --------------------------
|   |                           
|   | (a)                       

| |  |  |   | June 30, |  |   | June30, | 
| |  |  | - | -------- |  | - | ------- | 
| |  |  |   | 2004     |  |   | 2003    | 
| |  |  | $ | 48,562   |  | $ | 46,043  | 

|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Due to directors and officers:
      Included in accounts payable is $Nil (2003 - $17,467)
        due to a firm in which a director is a partner. 
        Included in accounts payable is $160,678 (2003-$70,473) due to a company
        controlled by an officer.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                       
|6. | DUE TO FORMER KWATROBOX
        SHAREHOLDERS
      The amount due to former Kwatrobox shareholders relates
        to the acquisition of Kwatrobox from its former shareholders (vendors)
        and the balance is non-interest bearing. The company has been in discussions
        with legal counsel of the Kwatrobox shareholders and is reviewing certain
        representations made by the vendors immediately prior to the acquisition
        of Kwatrobox.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|7. | DEBT
      On April 16, 2002, the Company and three lenders, ABN
        Capital (Belgium) NV, Bodin Saphir Pension Scheme, and J.J. Mennillo,
        entered into a Convertible Bridge Loan Agreement for $125,000 each, representing
        an aggregate loan by the lenders to the Company of $375,000. The loan
        bears interest at a rate of 12.5% per annum, which accrues until the loan
        is repaid or converted to shares. Subject to certain terms and conditions
        of this agreement, each of the lenders is entitled to convert only such
        amounts as have been drawn down from its respective part of the principal
        of the loan into shares at $.01 per share. Interest has been capitalized
        to the loan balances.
      The entire loan has been drawn down and was due to be
        repaid or converted on December 31, 2002. Since the repayment date has
        passed, the loan been classified as a current liability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|8. | MANDATORY REDEEMABLE SHARES
        OF COMMON STOCK
      On January 10, 2000, the Company completed and closed
        the purchase of 100% of the issued and outstanding shares of ATS. The
        Company acquired the shares of ATS in exchange for 3,636,364 shares of
        common stock and cash of $4,000,000. The shares of common stock were valued
        at $3,636,364, based on their estimated fair value at January 10, 2000.
        Fair value was determined based on the cash price paid for stock in a
        contemporaneous private placement, the put feature related to the shares
        issued to acquire ATS and the market price of the Companys stock
        around the acquisition date. The Company accreted $938,000 and $243,817
        to the mandatory redeemable shares of common stock during the years ended
        December 31, 2000 and 2001, respectively. The accretions were recorded
        under a straight-line assumption based on a two-year amortization. The
        terms of the purchase agreement also provided the vendors with a put feature,
        which allowed the vendors to sell the shares back to the Company at $1.65
        per share at the time of release if they were not freely tradable. Since
        the 3,636,364 shares issued to the vendors were subject to a put feature,
        which is beyond the Companys direct control, they were classified
        as mandatory redeemable shares of common stock.
      Under the terms of the purchase agreement, the vendors
        agreed not to sell or transfer any of their shares except on the basis
        of a time-release formula which presumes that the shares will be freely
        tradable at the time of release for sale or transfer. Under the time release
        formula, 454,545 shares were to be released on each of the 6, 12, 18 and
        24 month anniversary dates of the closing and 606,061 shares are to be
        released on each of the 36, 48 and 60 month anniversary dates of the closing.
        The first 454,545 shares were not free trading on July 10, 2000, the first
        anniversary date of the acquisition and during 2002 the vendors sought
        to exercise their right to retract 909,090 shares, representing the first
        two tranches under the time release agreement, on the basis that they
        were not free trading on their respective release dates.
      During the year ended December 31, 2003, the Company
        finalized the disposition of a 7.5% interest in ATS pursuant to a court
        order allowing the former owners of ATS to reacquire a 7.5% interest in
        exchange for the transfer for cancellation of the first tranche of 454,545
        shares. Accordingly, the Company reduced the mandatory redeemable shares
        of common stock by $602,267 (454,545 shares), increased its non-controlling
        interest by $59,972, representing the carrying amount of the portion of
        ATS disposed of and recognized a gain on cancellation of mandatory redeemable
        common shares for the balance of $542,295.

12

---

|AUCXIS
        CORP.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in U.S. dollars)
|---------------------------------------------------------------------------------------------
|SIX
      MONTHS ENDED JUNE 30, 2004                                                         

|9. | INCOME AND LOSS PER SHARE
      The following table represents the calculation of basic
        and diluted net income (loss) per common share:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------

| |                                                   |   | For Three Months Ended |   |   | For Six Months Ended |  
| | ------------------------------------------------- | - | ---------------------- | - | - | -------------------- | -
| |                                                   |   | June 30                |   |   | June 30              |  
| |                                                   |   | 2004                   |   |   | 2003                 |  
| |                                                   |   |                        |   |   |                      |  
| | Net Income (loss)                                 | $ | (45,959                | ) | $ | (33,048              | )
| |                                                   |   |                        |   |   |                      |  
| | Weighted -average shares used in computing basic  |   |                        |   |   |                      |  
| | net income (loss) per share                       |   | 62,773,051             |   |   | 62,773,051           |  
| |                                                   |   |                        |   |   |                      |  
| | Dilutive effect of common share equivalents       |   | 0                      |   |   | 0                    |  
| |                                                   |   |                        |   |   |                      |  
| | Weighted-average shares used in computing diluted |   |                        |   |   |                      |  
| | net income (loss) per share                       |   | 62,773,051             |   |   | 62,773,051           |  
| |                                                   |   |                        |   |   |                      |  
| | Basic net income (loss) per share                 |   | (0.01                  | ) |   | (0.01                | )
| |                                                   |   |                        |   |   |                      |  
| | Diluted net income (loss) per share               |   | (0.01                  | ) |   | (0.01                | )

|    | For the six months ended
        June 30, 2004, potential common shares in the form of stock options to
        purchase 618,000 shares of common stock were anti-dilutive and therefore
        not included in the computation of diluted earnings per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10. | COMMITMENTS AND CONTINGENCIES
      The Company wholly owned subsidiary, Aucxis Corp.
        NV, filed for voluntary bankruptcy on April 11, 2003 (see Note 5). A trustee
        in bankruptcy has been entrusted with Aucxis Corp. NVs management
        and the realization of its assets for the benefit of its creditors. Court
        proceedings for the final verification of claims took place on June 5,
        2003. It is at least reasonably possible that a material change in the
        net realizable value of the investment in the wholly owned subsidiary
        will occur in the near term, however the amount of the change cannot be
        reasonably estimated at this time. The amount of this change, may materially
        affect the value of the investment. The effect of any increase or decrease
        in net realizable value and the amount actually realized will be recognized
        when it occurs.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

13

---

|AUCXIS
        CORP.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in U.S. dollars)
|---------------------------------------------------------------------------------------------
|SIX
      MONTHS ENDED JUNE 30, 2004                                                         

|11. | COMMITMENTS AND CONTINGENCIES (continued)
      Litigation(continued)
|--- | ---------------------------------------------------------------------
|    |                                                                      
|    | a)                                                                   
|    |                                                                      
|    | b)                                                                   
|    |                                                                      
|    | c)                                                                   
|    |                                                                      
|    | d)                                                                   
|    |                                                                      
|    | e)                                                                   

14

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Item 2.     Management's Discussion
  and Analysis of Financial Condition and Results of Operations

When used herein, the words may, will,
  expect, anticipate, continue, estimate,
  project, intend, plan and similar expressions
  are intended to identify forward-looking statements within the meaning of Section
  21E of the Securities Exchange Act of 1934, as amended, regarding events, conditions
  and financial trends that may affect the Company's future plans of operations,
  business strategy, operating results and financial position. All statements,
  other than statements of historical facts, included or incorporated by reference
  in this Form 10-QSB which address activities, events or developments which the
  Company expects or anticipates will or may occur in the future, including such
  things as future capital expenditures (including the amount and nature thereof),
  business strategy, expansion and growth of the Companys business and operations,
  and other such matters are forward-looking statements. These statements are
  based on certain assumptions and analyses made by the Company in light of its
  experience and its perception of historical trends, current conditions and expected
  future developments as well as other factors it believes are appropriate in
  the circumstances. Such statements are not guarantees of future performance
  and are subject to risks and significant uncertainties and that actual results
  may differ materially from those included within the forward-looking statements
  as a result of various factors. The occurrence of any unanticipated events may
  cause actual results to differ from those expressed or implied by the forward-looking
  statements contained herein. You are cautioned not to place undue reliance on
  these statements, which speak only as of the date of this report.

Overview

Aucxis Corp. (Aucxis or the Company)
  was originally incorporated in Nevada on January 8, 1998 under the name Kazari
  International, Inc. (Kazari). On February 26, 1999, Kazari and e-Auction Global
  Trading Inc. (Barbados) entered into a share exchange agreement pursuant to
  which agreement Kazari purchased e-Auction (Barbados) shares on a one for one
  basis. Kazari had no viable business activities at the time of the share exchange
  agreement. On June 10, 1999, Kazari amended its name to e-Auction Global Trading
  Inc. During fiscal year 2000, Aucxis acquired Schelfhout Computer Systemen N.V.,
  Kwatrobox B.V., and I-Three, Inc. On June 12, 2001 the Company amended its charter
  to change its name to Aucxis Corp.

Aucxis currently has a wholly owned subsidiary, e-Auction
  (Barbados), which in turn has one wholly owned subsidiary, Aucxis Corp. (Canada).
  The Company also owns Aucxis Corp. (Belgium) (Aucxis NV), directly,
  which in turn has a 92.5% ownership in Aucxis Trading Solutions, N.V. (ATS)
  (formerly Schelfhout Computer Systemen N.V.), a Belgium company. Aucxis Trading
  Solutions N.V. in turn has a 33.3.% interest in Auction Trading Services Nederland
  BV (ATS Holland) formed in partnership with two of the largest flower
  auctions.

On April 11, 2003 Aucxis NV, voluntarily filed for bankruptcy.
  A trustee in bankruptcy has been entrusted with Aucxis NVs management
  and the realization of its assets for the benefit of its creditors. Court proceedings
  for the final verification of claims took place on June 5, 2003. Management
  of the Company is working with the trustee to maximize the proceeds received
  for ATS and to ensure there is little disruption to employees and normal business
  operations. Accordingly, the Company ceased consolidating the operations of
  Aucxis NV effective April 11, 2003.

ATS (formerly Schelfhout) is a solutions provider for perishable
  commodity (fish, flower, fruits and vegetables) auction houses. Over the past
  17 years ATS has developed trading systems for numerous selling organizations
  all over the world. ATS delivers the tools to bring together supply and demand
  under optimum conditions and thus create a better market situation. ATS has
  focused on two market sectors: (i) the computerization of auctions and (ii)
  automation for the preservation of perishable products. As an ancillary to the
  auction system, a modular graphic display panel was developed by ATS in 1992
  and added to the product range. ATS is engaged in the installation and maintenance
  of auction clock and cooling systems for traditional auction halls and the development
  of software for auctions, including Internet-based auction systems.

On May 28, 2004, the company reached a settlement with the
  former owners of the Companys subsidiary, ATS, with regard to all disputes
  and claims alleged against the company by the former owners of ATS. The former
  owners of ATS agreed to withdraw all claims against the Company in exchange
  for a portion of the proceeds to be received by Aucxis upon the eventual sale
  of ATS and a withdrawal by Aucxis of any claims

15

---

against the former owners. The Commercial Court of Dendermonde
  granted its approval of the settlement on June 23, 2004. The amount of net proceeds,
  if any, to be received by Aucxis from the sale of ATS is not determinable at
  this time. The sale of ATS is subject to a bidding process and subsequent court
  approval. It is difficult to determine the timing and closure of this process,
  but it is anticipated that it will occur before the year-end.

Certain claims against the company remain outstanding along
  with significant amounts payable to various vendors. Management will be working
  to resolve those claims in the coming months.

Summary of Quarterly Results

Effective April 11, 2003, the Company had voluntarily relinquished
  control of Aucxis NV to a trustee in bankruptcy and, accordingly, has deconsolidated
  the subsidiary and ceased consolidating the operations of ATS, the 92.5% owned
  subsidiary of Aucxis NV. As a result, revenue and cost of sales for the three
  months ended June 30, 2004 and the same three-month period in 2003 were nil.

Selling, general and administrative expense for the quarter
  ended June 30, 2004 was $44,768 as compared to $69,561 for the corresponding
  three-month period in 2003. The expenses were higher in the prior year due to
  higher accounting and legal fees and higher interest expenses. Depreciation
  and amortization expense for the quarter was $1,191 compared to $2,328 in the
  prior year period. Net total operating expenses for the three months ended June
  30, 2004 were $45,959 compared to $37,103 in the corresponding three-month period
  in the prior year. The operating expenses in the current quarter were actually
  lower than the quarter in the previous year, which totaled $71,889 before being
  offset by a recovery of inventory and a gain on disposal of assets to yield
  a net total of $37,103.

A loss of $45,959 was recorded for the three months ended
  June 30, 2004 compared to a loss of $33,048 for the corresponding prior year
  period. The quarterly results in the prior year included gain on disposal of
  assets and inventory recovery.

Management continues to keep costs at a consistent level as
  it works its way through the process of selling ATS and maintaining the public
  listing. Management has engaged an Ontario technology company to review its
  technology for commercial viability. The review has not commenced as Aucxis
  is awaiting the outcome of the ATS sale. When the results of the sale are known,
  management will begin planning a reorganization of the companys affairs
  including the search for new opportunities and related fundraising.

Liquidity and Capital Resources

As at June 30, 2004, the Company had a cash balance of $3,495
  compared to $19,724 at December 31, 2003. Future cash flows for the Company
  will be derived from recovery of outstanding receivables, the sale of redundant
  assets, the success of future external financing initiatives and proceeds from
  the sale of ATS. Management continues to examine a variety of options to raise
  additional financing. Aucxis continues to keep operating costs to a minimum.
  In an effort to raise funds from existing or new shareholders management intends
  to negotiate settlements with creditors regarding outstanding payables. It is
  not possible at this time to predict with any assurance the success of any of
  these initiatives, however management is working diligently towards the goal
  of self-sustainability.

Critical accounting policies

We have identified the policies below as critical to our business
  operations and the understanding of our results of operations. The impact and
  any associated risks related to these policies on our business operations is
  discussed throughout Managements Discussion and Analysis of Financial
  Condition and Results of Operations where such policies affect our reported
  and expected financial results. For a detailed discussion on the application
  of these and other accounting policies, see Note 3 in the Notes to the Consolidated
  Financial Statements as at June 30, 2004. Note that our preparation of this
  Quarterly Report on Form 10-QSB requires us to make estimates and assumptions
  that affect the reported amount of assets and liabilities, disclosure of contingent
  assets and liabilities at the date of our financial statements, and the reported
  amounts of revenue and expenses during the reporting period. There can be no
  assurance that actual results will not differ from those estimates.

16

---

Recent Accounting Pronouncements

December 2003, the United States Securities and Exchange Commission
  issued Staff Accounting Bulletin No. 104, "Revenue Recognition" (SAB 104), which
  supersedes SAB 101, "Revenue Recognition in Financial Statements." The primary
  purpose of SAB 104 is to rescind accounting guidance contained in SAB 101 related
  to multiple element revenue arrangements, which was superseded as a result of
  the issuance of EITF 00-21, "Accounting for Revenue Arrangements with Multiple
  Deliverables." While the wording of SAB 104 has changed to reflect the issuance
  of EITF 00-21, the revenue recognition principles of SAB 101 remain largely
  unchanged by the issuance of SAB 104. The adoption of SAB 104 did not have a
  material impact on the Company's financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting
  for Certain Financial Instruments with Characteristics of both Liabilities and
  Equity. SFAS No. 150 establishes standards for how an issuer classifies
  and measures certain financial instruments with characteristics of both liabilities
  and equity. It requires that an issuer classify a financial instrument that
  is within its scope as a liability (or an asset in some circumstances).

The requirements of SFAS No. 150 apply to issuers classification
  and measurement of freestanding financial instruments, including those that
  comprise more than one option or forward contract. SFAS No. 150 does not apply
  to features that are embedded in a financial instrument that is not a derivative
  in its entirety. SFAS No. 150 is effective for financial instruments entered
  into or modified after May 31, 2003, and otherwise is effective at the beginning
  of the first interim period beginning after June 15, 2003, except for mandatory
  redeemable financial instruments of nonpublic entities. It is to be implemented
  by reporting the cumulative effect of a change in an accounting principle for
  financial instruments created before the issuance date of SFAS No. 150 and still
  existing at the beginning of the interim period of adoption. Restatement is
  not permitted. The adoption of this standard did not have a material effect
  on the Companys results of operations or financial position.

Item 3.     Controls and Procedures

The Companys principal executive and financial officers
  have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e)
  and 15d-15(e) under the Securities Exchange Act of 1934) as of June 30, 2004.
  They have determined that such disclosure controls and procedures are effective
  to ensure that information required to be disclosed in our filings under the
  Securities Exchange Act of 1934 with respect to the Company is recorded, processed,
  summarized and reported within the time periods specified in the Securities
  and Exchange Commissions rules and forms and is accumulated and communicated
  to our management, including the Companys principal executive officer
  and principal financial officer, as appropriate, to allow timely decisions regarding
  required disclosures.

The Company has made no significant changes in its internal
  controls over financial reporting during the most recent fiscal quarter covered
  by this Report that materially affected or are reasonably likely to materially
  affect our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1.     Legal Proceedings

On April 16, 2002, the former owners (Schelfhout),
  of the Companys subsidiary ATS filed a request for arbitration against
  Aucxis NV (Belgium) and the Company alleging that the Company and Aucxis NV
  (Belgium) deliberately committed a number of misrepresentations both prior to
  and subsequent to the closing of the ATS share purchase agreement. They have
  alleged damages of up to $1,190,309 for which they seek to be compensated by
  Aucxis NV (Belgium) and the Company.

In addition, Schelfhout sought to enforce the mandatory redemption
  feature related to the second and third tranches of shares (the 12 and 18 month
  shares) totalling 909,090 to be released under the terms of the purchase agreement
  on the basis that these shares were not free trading at the time of release
  as contemplated in the agreement. This action to recover $1,500,000 from the
  Company is currently pending, and has now

17

---

been increased to $3,250,000, representing the 12, 18, 24
  and 36 month shares. Failing recovery of the $3,250,000 in cash, the former
  owners claim that they are entitled to a reverse swap of a 32.5% stake in ATS.
  All written pleadings on both matters have been submitted and the Belgium arbitration
  tribunal has heard arguments on November 28, 2003. An arbitral award would normally
  have been expected by April 15, 2004, however, a dispute initiated by Schelfhout,
  with respect to the responsibility for additional arbitration fees due as a
  result of increasing Schelfhouts claim from $1,500,000 to $3,250,000 has
  delayed the award.

On March 17, 2003, Schelfhout obtained a restraining order
  against the Company, effectively securing the remaining 92.5% of the ATS shares
  to satisfy any ultimate judgement which might be awarded to the former owners
  of ATS as a result of their claims in respect of the arbitration. These attachments
  lapsed automatically as a consequence of the Aucxis NV bankruptcy filed on April
  11, 2003.

On May 14, 2002 Aucxis NV (Belgium) brought an action against
  Schelfhout before the Court of Dendermonde (Belgium) relating to certain irregularities
  in the deletion of a non-compete clause from ATS articles of association.
  On February 14, 2003 the claim was dismissed by the courts and an appeal was
  filed on March 25, 2003. As a consequence of the Aucxis NV bankruptcy filed
  on April 11, 2003, these proceedings have been stayed to allow the trustee in
  bankruptcy to make a decision regarding continuation.

On May 28, 2004, the company reached a settlement with Schelfhout
  with regard to all disputes and claims alleged against the company by Schelfhout.
  Schelfhout agreed to withdraw all claims against the Company in exchange for
  a portion of the proceeds to be received by Aucxis upon the eventual sale of
  ATS and a withdrawal by Aucxis of its claims against Schelfhout. The Commercial
  Court of Dendermonde granted its approval of the settlement on June 23, 2004.
  The amount of net proceeds, if any, to be received by Aucxis from the sale of
  ATS is not determinable at this time. The sale of ATS is subject to a bidding
  process and subsequent court approval. It is difficult to determine the timing
  and closure of this process, but it is anticipated that it will occur before
  the year end.

Except as described above, management does not have knowledge
  of any material litigation pending, threatened or contemplated, or unsatisfied
  judgments against the Company or its affiliates, or any proceedings in which
  the Company or its affiliates is a party. Similarly, management is without knowledge
  as to any legal actions pending or threatened or judgments entered against the
  Company's executive officers and directors in their capacity as such, other
  than to the extent such individuals are named in the above actions.

Item 5.     Other Information

The Company has no other information to report.

Item 6.     Exhibits And Reports On Form 8-K

| | (a) | Exhibits.                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                             
| | 31  | Certification pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002                                               
| |     |                                                                                                                             
| | 32  | Certification pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |     |                                                                                                                             
| | (b) | Reports on Form 8-K                                                                                                         

| |                                               
| | ----------------------------------------------
| | The Company has no reports on Form 8K to file.

18

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**SIGNATURES**

In accordance with the requirements of the Securities Exchange
  Act of 1934, as amended, the Company has caused this report to be signed on
  its behalf by the undersigned thereunto duly authorized.

|Date: August 13, 2004 | Aucxis Corp.
|--------------------- | ------------
|                      | (Registrant)
|                      |             
|                      | By:         
|                      |             
|                      |             

19

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