SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                Annual Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934
                      For the year ended: December 31, 2001

                         CORMAX BUSINESS SOLUTIONS INC.
                   -----------------------------------------
             (Exact name of registrant as specified in its charter)

        Utah                                            84-0959153
        ----                                            ----------
(State or Other Jurisdiction                            (I.R.S. Employer
of incorporation or organization)                       Identification Number)

                         Suite 250, 708 11th Avenue S.W.
                        Calgary, Alberta, Canada T2R 0E4
                       ---------------------------------
                    (Address of principal Executive Offices)

       Registrant's telephone number, including area code: (877) 322-8822

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, $.001 Par Value per Share
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 Yes (X) No ( )

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained,  to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.
                                 Yes ( ) No (X)

State issuer's revenues for its most recent fiscal year $
Transitional Small Business Disclosure Format:

                                 ( ) Yes (X) No

As of December 31, 2001, 36,640,160 shares of common stock were outstanding. The
aggregate  market value of the Stock held by  non-affiliates  was $293,121.80 at
December 31, 2001 based on closing price of $.08 per share.

                      Documents incorporated by reference:


<PAGE>

                         CORMAX BUSINESS SOLUTIONS INC.
                          ANNUAL REPORT ON FORM 10-KSB
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                TABLE OF CONTENTS

PART I

                                                                        PAGE NO.
Item 1.  Description of Business

Item 2.  Description of Property

Item 3.  Legal Proceedings

Item 4.  Submission of Matters To a Vote of Security Holders

PART II

Item 5.  Market For Common Equity and Related Stockholder Matters

Item 6.  Management's Discussion and Analysis or Plan Of Operation

Item 7.  Financial Statements

Item 8.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosure

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) Of The Exchange Act

Item 10. Executive Compensation

Item 11. Security Ownership of Certain Beneficial Owners and Management

Item 12. Certain Relationships and Related Transactions

Item 13. Exhibits and Reports on Form 8-K

<PAGE>

                                   FORM 10-KSB
                   For the fiscal year ended December 31, 2001

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Annual Report on Form 10-KSB contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. When used in this Annual
Report, or in our future filings with the SEC, in our press releases and in oral
statements made with the approval of an authorized executive officer, the words
or phrases "anticipates," "estimates," "expects," "will likely result,"
"projects," "believes," "intends," or similar expressions are intended to
identify such forward-looking statements, but are not the exclusive means of
identifying such statements. These forward-looking statements involve risks and
uncertainties that may cause our actual results to differ materially from the
results discussed in the forward-looking statements.

We caution you not to place undue reliance on these forward-looking statements,
which speak only as of the date made. We undertake no obligation to revise any
forward-looking statements in order to reflect events or circumstances after the
date of such statements. Readers are urged to carefully review and consider the
various disclosures made by us in this report and other reports we file with the
SEC that attempt to advise interested parties of the risks and factors that may
affect our business.


<PAGE>

Item 1. Description of Business

Since its inception in July of 1983 as White Cloud Exploration, Inc. ("the
Company"), has been in the developmental stage, while it has attempted to
identify suitable mergers, assets or acquisitions of operations.

The Company had no further  activities  since  1991,  and was  inactive up until
1997. The Company changed its name to Watchout! Inc., in November, 1998.

In April 1997, William C. Meier through his beneficial ownership of WCM
Investments, Inc., a Texas corporation ("WCM Investments"), obtained control of
Registrant by purchasing on April 17, 1997, 5,010,750 (pre-reverse stock split)
shares of Registrant's Common Stock. On May 14, 1997, WCM Investments purchased
from Registrant 7,500,000 (pre-reverse stock split) newly issued shares of
Registrant's Common Stock for $7,500 in cash. The 12,510,750 shares were
automatically converted into 72,213 shares pursuant to a 173.25 to 1 reverse
stock split of Registrant's Common Stock on June 29, 1997, and represented 72.2%
of the shares of Common Stock of Registrant outstanding at such time.

The  Watchout!  Agreement  was entered  into  effective  May 30,  1997,  and the
Watchout!  Acquisition became effective as of December 29, 1997. Pursuant to the
Watchout!  Agreement,  the  shareholders of Watchout!  contributed to Registrant
251,354 shares of Watchout's common stock (100%) for an aggregate  consideration
of  11,296,300  shares of  Registrant's  common  stock.  The number of shares of
Registrant's  common  stock  issued  pursuant  to the  Watchout!  Agreement  was
determined by reference to the proportionate  post-Acquisition  equity ownership
of  Registrant  negotiated  by  the  pre-Acquisition   Watchout!   shareholders,
Goldpoint  members  and  Registrant  shareholders.  Prior to the  closing of the
Watchout!  Acquisition,  Watchout!  was  controlled  by Robert  Galoob and David
Galoob.

As a result of the Watchout!  Acquisition,  Registrant  owned 100% of the issued
and  outstanding  shares of  Watchout!  Watchout!  intended to market  worldwide
watches and other consumer goods  utilizing  proprietary  colored liquid crystal
display technology.

Pursuant to an LLC Interest and Asset Contribution Agreement (the "Goldpoint
Agreement" and together with the Watchout! Agreement, the "Agreements"), the
members (i.e., equity holders) of Goldpoint International, LLC, a Delaware
limited liability company ("Goldpoint"), effective as of December 29, 1997,
contemporaneously with the closing of the Watchout! Acquisition, received from
Registrant 2,140,000 newly issued shares of Registrant's common stock in
exchange for 100% of the membership interests in Goldpoint (the "Goldpoint
Acquisition".) The 2,140,000 shares represent approximately 14% of the
outstanding shares of common stock of Registrant on a fully diluted basis. Prior
to the closing of the Goldpoint Acquisition, Goldpoint was controlled by Mr.
Stephen J. Petre.

Effective as of December 29, 1997, pursuant to the Agreements, and
contemporaneously with the consummation of the Acquisitions, Robert Galoob and
David Galoob accepted appointments as directors of Registrant from the prior
directors of Registrant, each of whom resigned as directors.

As a result of the Goldpoint Acquisition, Registrant owned 100% of the
outstanding membership interests in Goldpoint LLC. Goldpoint intended to market
fine writing instruments.

Neither  WatchOut!  Inc. nor  Goldpoint  was  successful  in raising  capital or
carrying out the business plan  adopted.  As a result all attempts at operations
were suspended in September 1998, and no further business was attempted in 1998.

Pursuant to a Stock Purchase Agreement effective as of October 9, 1999,
Innovative Cybersystems Corp., a Florida corporation, agreed to purchase
6,376,922 issued and outstanding shares of Registrant's common stock from David
Galoob, Robert Galoob, and Archangel Holding Company, LLC. The 6,376,922 shares
represent approximately 42% of the outstanding shares of the common stock of
Registrant on a fully diluted basis. In addition Innovative has options to
purchase an additional 1,750,00 common shares. Innovative Cybersystems was
controlled by Kevin Waltzer. In addition, Innovative Cybersystems had 1,750,000
options to purchase.

<PAGE>

As of the closing, the following persons owned more than 5% of Registrant's
outstanding common stock (on a fully diluted basis):

Innovative Cybersystems Corp. 6,376,922 shares

Innovative Cybersystems also has options for 1,750,000 shares.

The Closing was completed on February 11, 2000.

On August 31, 2000, Watchout! acquired all of the issued and outstanding shares
of common stock of Cormax Business Solutions, Ltd. in exchange for the issuance
of 25,100,000 shares of our common stock. For purposes of the transaction, the
shares were valued at $.30 per share for a total consideration of $7,530,000.
The transaction was subject to receipt of certain documentation, which was
received by the Company on September 9, 2000. Pursuant to the share acquisition
Agreement, Todd Violette was appointed as President and Chairman of the Board of
Directors of the Registrant.

On March  7,  2001  Watchout!  Inc.,  filed  an  amendment  to its  articles  of
incorporation changing the registrant's name to Cormax Business Solutions Inc.

On April 1, 2001 Cormax Business Solutions Inc. purchase 100% interest in
Expanded Systems Solutions Inc. Cormax purchased the company from Novalink for
$200,000 USD. Expanded is a wholly owned subsidiary of Cormax Business Solutions
Inc.


OVERVIEW OF BUSINESS

Cormax Business Solutions is a " Business Facilitator" intends to acquire and
develop technology driven subsidiaries that generate revenue or startup
companies with projections to produce revenue and profit in relatively short
timeframes, in exchange for its securities.

Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing how the transaction is structured, Cormax
Board of Directors expects that it will provide its shareholders with complete
disclosure documentation concerning a potential business opportunity and the
structure of the proposed business combination prior to consummation. Disclosure
is expected to be in the form of a proxy or information statement, in addition
to the post-effective amendment.

Our purpose is to seek, investigate, and acquire an interest in business
opportunities presented to it by persons or firms that desire to seek the
perceived advantages of an Exchange Act registered corporation. We will not
restrict our search to any specific business, industry, or geographical location
and we may participate in a business venture of virtually any kind or nature. We
will however initially focus on Information Technology companies and
opportunities as these are opportunities that our executives are best suited to
understand, verify and evaluate. This discussion of the proposed business is
purposefully general and is not meant to restrict our discretion to search for
and enter into potential business opportunities. Management anticipates that it
may be able to participate in many potential business ventures. This
diversification should be considered a means to reduce risk to our shareholders
because it will permit us to offset potential losses from one venture against
gains from another.

We may seek a business opportunity with entities that have recently commenced
operations, or that wish to utilize the public marketplace in order to raise
additional capital in order to expand into new products or markets, to develop a
new product or service, or for other corporate purposes. We may acquire assets
and establish wholly owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.

We anticipate that the selection of a business opportunity will be complex and
extremely risky. Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available capital,
management believes that there are numerous firms seeking the perceived benefits
of a publicly registered corporation. The perceived benefits may include
facilitating or improving the terms for additional equity financing that may be

<PAGE>

sought, providing liquidity for incentive stock options or similar benefits to
key employees, providing liquidity (subject to restrictions of applicable
statutes) for all shareholders and other factors. Potentially, available
business opportunities may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of these business opportunities extremely difficult
and complex.

The analysis of new business opportunities will be undertaken by our officers
and directors, none of whom are professional business analysts. Management
intends to concentrate on identifying preliminary prospective business
opportunities that may be brought to our attention through present associations
of our officers and directors, or by our shareholders. In analyzing prospective
business opportunities, management will consider:


-  The available technical, financial and managerial resources;

-  Working capital and other financial requirements;

-  History of operations, if any;

-  Prospects for the future;

-  Nature of present and expected competition;

-  The quality and experience of management services that may be available and
   the depth of that management;

-  The potential for further research, development, or exploration;

-  Specific risk factors not now foreseeable but could be anticipated to impact
   our proposed activities;

-  The potential for growth or expansion;

-  The potential for profit;

-  The perceived public recognition of acceptance of products, services, or
   trades;

-  Name identification; and

-  Other relevant factors.

Our management shall rely upon their own efforts and, to a much lesser extent,
the efforts of our shareholders, in accomplishing our business purposes. We do
not anticipate that any outside consultants or advisors, except for our legal
counsel and accountants, will be utilized by us to accomplish our business
purposes. However, if we do retain an outside consultant or advisor, any cash
fee will be paid by the prospective merger/acquisition candidate. We have in the
past had contracts or agreements with outside consultants, we currently have
none but anticipate that such contracts may be utilized in the future.

We will not restrict our search for any specific kind of firms, and may acquire
a venture that is in its preliminary or development stage or is already
operating. We cannot predict at this time the status of any business in which we
may become engaged, because the business may need to seek additional capital,
may desire to have its shares publicly traded, or may seek other perceived
advantages that we may offer. Furthermore, we do not intend to seek capital to
finance the operation of any acquired business opportunity until we have
successfully consummated a merger or acquisition.

We anticipate that we will incur nominal expenses in the implementation of its
business plan. Current subsidiaries will pay these charges from funds derived
through profit from operations. If additional funding is necessary, management
and or shareholders will continue to provide capital or arrange for additional
outside funding.

<PAGE>


Market Opportunities

In implementing a structure for a particular business acquisition, we may become
a party to a merger, consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. We may also acquire stock or
assets of an existing business.

As part of the "due diligence" investigation, our officers and directors will
meet personally with management and key personnel, may visit and inspect
material facilities, obtain independent analysis of verification of certain
information provided, check references of management and key personnel, and take
other reasonable investigative measures to the extent of our limited financial
resources and management expertise. How we will participate in an opportunity
will depend on the nature of the opportunity, the respective needs and desires
of the parties, the management of the target company and our relative
negotiation strength.

We will participate in a business opportunity only after the negotiation and
execution of appropriate written agreements. Although we cannot predict the
terms of the agreements, generally the agreements will require some specific
representations and warranties by all of the parties, will specify certain
events of default, will detail the terms of closing and the conditions that must
be satisfied by each of the parties prior to and after the closing, will outline
the manner of bearing costs, including costs associated with our attorneys and
accountants, will set forth remedies on default and will include miscellaneous
other terms.



 EMPLOYEES

As of December 31, 2001 we had 10 full time employees and 2 consultants.


AVAILABLE INFORMATION AND REPORTS TO SECURITIES HOLDERS

We are subject to the informational requirements of the Securities Exchange Act
of 1934 and pursuant to those requirements we file reports, proxy statements and
other information with the Securities and Exchange Commission relating to our
business, financial statements and other matters. Reports, proxy and information
statements filed under Sections 14(a) and 14(c) of the Securities Exchange Act
of 1934 and other information filed with the SEC, including copies of the
registration statement, can be inspected and copied SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling
1-800-SEC-0330. The SEC also maintains an Internet site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the SEC at http://www.sec.gov.


Item 2.  Description of Property

Cormax Business Solutions Inc. maintains office space of approximately 3,234
square feet in Calgary, Alberta, Canada. The address is #250, 708 11th Avenue
S.W. Postal code T2R 0E4. The lease at these premises expires January 31, 2003.
The monthly lease payments are $5,686.99 Cdn that includes parking, operating
costs and property taxes. Cormax management feels that the premises have been
adequate to date. There are no intentions of renovating our existing premise.
According to the landlord we carry adequate insurance.

Cormax has since subleased its prior premises located at #810, 808 4th Avenue
S.W. Calgary, Alberta. This sublease expires April 30, 2002. As we expand our
staff and services we will require a larger accommodation to house our employees
and equipment in the near future.

Item 3. Legal Proceedings

(1)      We are subject to a lawsuit filed by John Bader, Wayne E. Williams and
         Jagi Capital Group, Inc. against the company and others in the District
         Court of Tarrant County, Texas (Case No. 48-183154-00). The action

<PAGE>

         seeks approximately $263,396.06 plus 10% interest per Annum until paid
         to John Bader, $135,745.61 plus 10% interest per annum from the date of
         judgment until paid to Wayne E. Williams and $1,386,250 plus 10%
         interest per annum until paid to Jagi Capital Group, Inc. The damages
         are in connection with the alleged failure to repay certain loans and
         pay a finder's fee. The allegations relate to events that transpired
         before current management took control of the Company. We have retained
         council in Tarrant County, Texas and had the default judgment vacated.
         On March 1, 2001, the court heard the respective motions for new trial
         filed by Watchout!, David Galoob and Robert Galoob in the above
         entitled and numbered cause. After considering the pleadings, evidence
         and arguments of counsel, the court determined that Plaintiffs should
         recover from Defendants attorneys' fees incurred from the granting of
         the Default Judgment on December 21, 2000, to the present time, and
         further determined that mediation of all matters in dispute among all
         parties is appropriate. It is further ordered that the parties shall
         mediate this cause before Wade McMullen on or before the expiration of
         sixty (60) days from the date of this order.

         The result of mediation was Watchout! and the Plaintiff reached a
         verbal agreement with out the participation of David and Robert Galoob.
         Counsel for the company is finalizing the verbal agreement. The terms
         of the agreement require Cormax to repay John Bader and Wayne Williams
         $450,000 USD from the proceeds of this Registration statement. $450,000
         is the principle amount borrowed plus interest. JAGI Capital is to
         receive 1,750,000 shares of stock and an appointment to the board of
         director. We have signed a tolling agreement which allows for the
         statute of limitations to be extended on the claims but has capped our
         damages to four hundred fifty thousand dollars.

         Cormax has not paid any sums owed to John Bader or Wayne William as of
         December 31, 2001. The Company signed a consents judgment for the
         principle balance plus interest in January.

         Robert and David Galoob have filed a cross-claim, in Texas, against
         Cormax indicating that the company shall be responsible for any damages
         they might incur. Cormax has since filed a response stating we feel
         their cross claim lacks legal merit. Robert and David Galoob have filed
         a similar claim in California and after a meeting between the parties
         it was agreed to dismiss the case in California and explore options for
         settling the case.


         Management will perform to the best of their ability and has every
         intention to fulfill the terms of the verbal agreement to resolve this
         matter. In the event the company is unable to perform on the terms
         outlined above or if the terms are modified, management is uncertain or
         may be unable to predict the impact of such modification or failure to
         perform.


Item 4. Submission of Matters To a Vote of Security Holders

No matters have been submitted to a vote of security holders within the year
covered by this report.


                                    PART II

Item 5.  Market For Common Equity and Related Stockholder Matters

The following table sets forth the range of high and low bid closing quotations
for our common stock for each quarter within the last two year. These quotes
were provided by the Over-The-Counter Bulletin Board, and reflect inter dealer
prices without retail mark-up, mark down or commission and may not represent
actual transactions. The high and low closing sales prices are as follows:


<PAGE>


The outstanding registered securities of the Company were quoted on the OTCBB
during the year 2001.

Period                                        Closing Bid
                                    High                       Low

First Quarter                      $0.37                      $0.063
Second Quarter                     $0.1875                    $0.08
Third Quarter                      $0.13                      $0.05
Fourth Quarter                     $0.12                      $0.04

The outstanding registered securities of the Company were quoted on the OTCBB
during the year 2000.

Period                                        Closing Bid
                                    High                        Low

First Quarter                      $4.875                     $0.531
Second Quarter                     $1.875                     $0.344
Third Quarter                      $0.50                      $0.11
Fourth Quarter                     $0.468                     $0.046


No dividends have been declared or paid by the Company and presently intends to
retain all future earnings, if any, to finance the expansion and development of
its business.


Item 6. Management's Discussion and Analysis or Plan of Operation

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL
CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE
NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. EXCEPT FOR THE HISTORICAL
INFORMATION CONTAINED HEREIN, THE DISCUSSION CONTAINED IN THIS REPORT CONTAINS
"FORWARD-LOOKING STATEMENTS" THAT INVOLVE RISK AND UNCERTAINTIES. THESE
STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS
"BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD" OR "ANTICIPATES" OR THE NEGATIVE
THEREOF OR SIMILAR EXPRESSIONS OR BY DISCUSSIONS OF STRATEGY. THE CAUTIONARY
STATEMENTS MADE IN THIS REPORT SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS REPORT. OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THIS REPORT.

Result of Operations

During the twelve month period ended December 31, 2001, we had revenues of
$596,996 compared to $194,620 in the same period in 2000. We incurred general
and administrative expenses of $1,002,738 for the year ended December 31, 2001
and $1,498,062 for the year ended December 31, 2000. Net Loss in the year ended
December 31, 2001 was ($925,651) or ($.05) per share compared to net loss of
($1,570,017) or ($.13) per share in the same period 2000. We recognize revenues
as they are earned, not necessarily as they are collected. Direct costs such as
hardware and software purchases for resale and subcontracting fees are
classified as cost of goods sold. General and administrative expenses include
salaries, accounting, advertising, contract labor, bank charges, entertainment,
equipment rental, insurance, legal, supplies, pay roll taxes, postage,
professional fees, telephone and travel. The decrease in general and
administrative expenses during the three month period ended December 31, 2001 as
compared to the three month period ended December 31, 2000 is primarily
attributable to tighter cost controls.

Liquidity and Capital Resources.

The auditor's report accompanying our audited financial statements for the year
ended December 31, 2001 indicated that there is substantial doubt respecting our
ability to continue as a going concern. The qualification was due to our need to
generate positive cash flow from operations or obtain additional financing.
During the year ended December 31, 2001, we were able to generate positive cash
flow. No assurance can be given that we will continue to achieve positive cash
flows or obtain additional financing for operations.

<PAGE>

We have incurred losses since the inception of our business. We expect to
continue to incur losses until we increase our revenues while reducing costs of
good sold and general and administrative expenses. We have been dependent on
additional funding from lenders and investors to conduct operations. At December
31, 2001 we had a retained deficit of ($5,454,765) compared to retained deficits
of ($4,529,114) at and December 31, 2000, respectively. As of December 31, 2001,
we had total current assets of $182,170 and total current liabilities of
$788,383 or negative working capital of ($606,213). At December 31, 2000 we had
total current assets of $66,270, and total current liabilities of $1,237,431 or
negative working capital of ($1,171,161). We currently have no material
commitments for capital expenditures. We will continue to evaluate possible
acquisitions or investments in businesses, products and technologies that are
complimentary to ours. These may require the use of cash which would require us
to seek financing. We believe that existing cash, investments and loans
available under our present credit facilities will only be sufficient for the
next 1 to 2 months. However, we may sell additional equity or debt securities or
seek additional credit facilities to fund acquisition-related or other business
costs. Sales of additional equity or convertible debt securities would result in
additional dilution to our stockholders. We may also need to raise additional
funds in order to support more rapid expansion, develop new or enhanced services
or products, respond to competitive pressures, or take advantage of
unanticipated opportunities. Our future liquidity and capital requirements will
depend upon numerous factors, including the success of our service offerings and
competing technological and market developments.

Refer to the Auditors Repot and Notes to financial statements for further
explanation of the results of operations.


Item 7. Financial Statements

The following report and financial statements of the Corporation are contained
on the pages indicated.

         Independent Auditors' Report                         F-1
         Balance Sheet                                        F-2
         Statement of Income and Retained Earnings            F-3
         Statements of Changes in Stockholders' Equity        F-4
         Statement of Cash Flows                              F-5
         Notes to Financial Statements                        F-6 - F-???

Item  8.  Changes  In and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

In connection with audits of two most recent fiscal years and any interim period
preceding resignation, no disagreements exist with any former accountant on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of the former accountant would have caused him to make reference in
connection with his report to the subject matter of the disagreement(s).


<PAGE>

The principal accountant's report on the financial statements for any of the
past two years contained no adverse opinion or a disclaimer of opinion nor was
qualified as to uncertainty, audit scope, or accounting principles except for
the "going concern" qualification.

For Fiscal Year 1992 and thereafter the Company engaged as its Auditor Michael
B. Johnson & Co. There were no disagreements as to any matter of accounting
practice or principles, financial statement disclosure or auditing scope or
procedure, with any prior accountant.


                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.

NAME                 AGE      POSITION                  TERM OF OFFICE
-------------        ---      --------                  --------------
Todd Violette        31       President, Director       September 2000-Present
Grahame Entwistle    44       Director                  April 2001-Present

Mr. Todd Violette, Chairman of the Board, President, Director
-------------------------------------------------------------

Company                                     Position          Date
--------------------------------------------------------------------------------
Cormax Business Solutions Inc.      President                 2000 - Present
Centurion Financial Communication   President                 1997 - 2000
West America Securities Inc.        Stock Broker              1996 - 1997
Chevy Chase Bank                    Loan Officer              1992 - 1996

Mr.  Violette is currently  employed by Cormax  Business  Solutions  Inc. as the
President and has been since 2000.  Mr.  Violette was the President of Centurion
Financial  Communication  from 1997 to 2000.  Centurion  was a consulting  firm,
advising  company  on  methods  for  public  communication.  Prior  to work  for
Centurion Mr. Violette was a Stock Broker with West America  Securities Inc. and
M.A. Gillespie Securities starting 1996.

Mr. Grahame Entwistle, Director
--------------------------------------------------------------------------------
Company                                     Position                   Date
--------------------------------------------------------------------------------
Expanded Systems Solutions Inc.     Executive Vice President, 1995 - Present
                                    Business development
Innerlink Telecommunications Ltd.   Director, Partner         1990 - 1995

Mr. Entwistle is a 23-year veteran of the information technology industry. His
career began in England as a Senior Computer Operator at Welcome Foundation,
world wide pharmaceutical company. Mr. Entwistle has developed strong leadership
and management skills with technical expertise focused on IBM mainframe and
telecommunications. Throughout his career Mr. Entwistle has often rationalized
and implemented new IT systems and methodologies that result in annual savings
of often hundreds of thousands of dollars. Mr. Entwistle has accomplished this
by reviewing telephone expenditure that private companies spend on a monthly
basis for voice and data communications to multiple branch offices in cities in
Canada and around the world. With the intent of combining these costs through
the use of telecommunications hardware to achieve voice and data convergence,
thus passing on monthly savings through economies of scale. His experience with
wide area voice and data integration proves to be an asset now that voice and
data integration has re-emerged for frame relay services.

Directors of the Company hold office until the next annual meeting of the
shareholders and until their successors have been elected and qualified.

<PAGE>

Officers of the Company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company shareholders and hold office
until their death, or until they shall resign or have been removed from office.

Item 10. Executive Compensation

The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal year ended December 31, 2001.

<TABLE>
<CAPTION>

                           Summary Compensation Table
                                                                                                 All
Name                                                 Restricted        Securities                Other
And                                 Other Annual     Stock             Underlying       LTIP     Compens-
Principle         Salary   Bonus    Compensation     Award(s)          Options/SARs     Payouts  ation
Position Year     ($)      ($)      ($)              ($)               (#)              ($)      ($)
------------------------------------------------------------------------------------------------------
<S>      <C>      <C>                                <C>               <C>              <C>      <C>

Todd A   2000
Violette          81,000 USD                                           1,000,000        0        CDN$
Chairman
President
------------------------------------------------------------------------------------------------------
Grahame  2001
Entwistle         54,000 USD                         0                                  0        CDN$
Director

------------------------------------------------------------------------------------------------------
</TABLE>

Aggregated  Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR value
(None)

Long Term Incentive Plans - Awards in Last Fiscal Year (None)

<TABLE>
<CAPTION>

Item 11. Security Ownership of Certain Beneficial Owners and Management.

      Title of Class            Name and Address of       Amount and Nature of         Percent of Class
                                 Beneficial Owner           Beneficial Owner
<S>                     <C>


Class A Common

</TABLE>



Item 12. Certain Relationships and Related Transactions.

On  March  7,  2001  Watchout!  Inc.  filed  an  amendment  to its  articles  of
incorporation changing the Registrant's name to Cormax Business Solutions Inc.

On March 8, 2001, the Registrant entered into an agreement to acquire 100% of
the common shares of Expanded Systems Solution Inc., from Novalink Finance Ltd.
In connection with the asset sale agreement, dated March 8, 2001, the agreement
appoints Kenneth F. McCallion, Esq. a lawyer located in 100 Park Avenue, New
York, NY as the escrow agent. Novalink Finance shall deposit Five Hundred
Thousand Common Shares (500,000) of Expanded Systems Solutions Inc. being all of
the outstanding shares of Expanded Systems into the escrow account of the escrow
agent stated. We then deposited Four Hundred Thousand (400,000) shares of

<PAGE>

Watchout! Inc., common shares into the escrow account. These shares are being
registered as part of this Registration Statement. The escrow account was
established for the payment to Novalink Finance pursuant to the agreement for
the sum of Two Hundred Thousand ($200,000) Dollars. Upon the registration
statement becoming effective the escrow agent is to liquidate the shares in the
Escrow account to pay Novalink the sum of $200,000. The escrow agent is
authorized to sell, no more than 20,000 of the shares per week. The Escrow agent
may not distribute more than $50,000 to Novalink during each of the first two
quarters following the effectiveness of the registration statement and no more
than $100,000 in each quarter thereafter. The proceeds shall be paid to Novalink
Finance Ltd. seven days after the close of each period.

Currently, Cormax Business Solutions holds 100% of the issued and outstanding
shares of Expanded Systems Solutions Inc. Expanded Systems is a network
integration company that specializes in building comprehensive wide area
networks including hardware software installation and ongoing maintenance.
On December 6, 2001, the Board of Director agreed to sell Todd Violette
1,000,000 shares of Class A Preferred shares for $50,000 CDN and completion of
his current employment contract. The Class A Preferred Share is convertible into
two hundred shares of common stock and is entitled to the cumulative votes per
share. The primary reason for this recommendation is to help ensure that the
business, the leadership and vision of Todd Violette, our Chairman of the Board,
Chief Executive Officer, will continue in the future. The above was disclosed in
a Form 8-K dated December 26, 2001.



Item 13. Exhibits and Reports on Form 8-K.

        (a)   The following exhibits and financial statement schedules are filed
              as exhibits to this Report:

                1.  Financial Statements of the Registrant are included under
                    Item 8 hereof.
                2.  Financial Statement Schedules - None.
                3.  Exhibits:

Exhibit #         Description                        Location

3.1               Articles of Incorporation          Exhibit to Annual Report
                                                     on Form 10K  for  Fiscal
                                                     Year ended June 30, 1986

3.2               Bylaws of Registrant               Exhibit to Annual Report
                                                     on Form 10K  for  Fiscal
                                                     Year ended June 30, 1986

3.3               Amendment to Articles of           Exhibit to Form 8-K filed
                  Incorporation                      December 14, 1998

10.1              Share Purchase Agreement           Exhibit to Form 8-K filed
                                                     March 2000

10.2              Letter of Intent Inter-            Exhibit to Form 8-K filed
                  national Mercantile Corp.          March 2000

10.3              Stock Exchange Agreement           Exhibit to Form 8-K filed
                                                     September 2000


(b) Reports on Form 8-K.

Incorporated by reference.

8-K Filed December 26, 2001


<PAGE>


                                   Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant had duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized, in the city of Calgary,
Province of Alberta on this 15 day of April, 2002.


         Cormax Business Solutions Inc.

     By:  /s/ Todd Violette
          ----------------------------
          President, Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed by the following persons in the capacities and on the dates
indicated.

Signature                           Title                     Date


/s/ Todd Violette                                         April 15, 2002
----------------------     President, Chairman         --------------------
Todd Violette


/s/ Grahame Entwistle                                     April 15, 2002

----------------------     Director                    --------------------
Grahame Entwistle


<PAGE>

                         Cormax Business Solutions, Inc.

                        Consolidated Financial Statements
                 For the Years Ended December 31, 2001 and 2000





<PAGE>


                           Michael Johnson & Co., LLC
                          Certified Public Accountants
                        9175 East Kenyon Ave., Suite 100
                             Denver, Colorado 80237

Michael B. Johnson C.P.A.                              Telephone: (303) 796-0099
Member: A.I.C.P.A.                                     Fax: (303) 796-0137
Colorado Society of C.P.A.s







                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Cormax Business Solutions, Inc.
Calgary, AB T2P 3E8

We have audited the accompanying consolidated balance sheets of Cormax Business
Solutions, Inc. as of December 31, 2001 and 2000, and the related consolidated
statements of operations, cash flows, and changes in stockholders' equity for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Cormax
Business Solutions, Inc. at December 31, 2001 and 2000, and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As described in Note 5 to the
financial statements, conditions exists which raise substantial doubt about the
Company's ability to continue as a going concern unless it is able to generate
sufficient cash flows to meet its obligations and sustain its operations.
Management's plans in regard to these matters are also discussed in Note 5. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


/s/ Michael Johnson & Co., LLC.
Denver, Colorado
April 12, 2002






                                      F-1



<PAGE>

<TABLE>
<CAPTION>


                 CORMAX BUSINESS SOLUTIONS, INC. AND SUBSIDIARY
                          Consolidated Balance Sheets
                           December 31, 2001 and 200




ASSETS                                                                             2001                       2000
                                                                              ---------------            ---------------
<S>                                                                              <C>                        <C>
Current Assets
 Cash                                                                               $ 38,551                    $ 3,471
 Accounts receivable - trade                                                         125,550                     62,799
 Prepaids                                                                              7,037                          -
 Inventory                                                                            11,032                          -
                                                                              ---------------            ---------------
  Total Currents Assets                                                              182,170                     66,270
                                                                              ---------------            ---------------

Investments:                                                                           3,456                      8,280
                                                                              ---------------            ---------------

Fixed Assets:
 Computer equipment                                                                  115,515                    111,523
 Computer software                                                                     5,177                      6,921
 Furniture & fixtures                                                                 31,026                     26,151
                                                                              ---------------            ---------------
                                                                                     151,718                    144,595
 Less accumulated depreciation                                                       (46,473)                   (14,921)
                                                                              ---------------            ---------------
  Net Fixed Assets                                                                   105,245                    129,674
                                                                              ---------------            ---------------

TOTAL ASSETS                                                                        $290,871                   $204,224
                                                                              ===============            ===============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Accounts payable - trade                                                           $273,580                   $783,282
 Accrued expenses                                                                     23,438                    105,682
 Accrued interest payable                                                             96,466                     98,467
 Due to stockholders                                                                 119,944                          -
 Notes payable - current portion                                                     274,955                    250,000
                                                                              ---------------            ---------------
  Total Current Liabilities                                                          788,383                  1,237,431
                                                                              ---------------            ---------------


Stockholders' Equity
 Preferred stock, no par value, 10,000,000 shares
  authorized, no shares issued or outstanding                                              -                          -
 Common stock, par value $,001, 50,000,000 shares
  authorized, 36,640,160 and 12,051,921 issued and outstanding
  at December 31, 2001 and 2000, respectively                                         36,640                     12,052
 Additional paid-in capital                                                        4,920,613                  3,483,855
 Retained deficit                                                                 (5,454,765)                (4,529,114)
                                                                              ---------------            ---------------
  Total Stockholders' Equity                                                        (497,512)                (1,033,207)
                                                                              ---------------            ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $290,871                   $204,224
                                                                              ===============            ===============

</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-2

<PAGE>

<TABLE>
<CAPTION>


                 CORMAX BUSINESS SOLUTIONS, INC. AND SUBSIDIARY
                     Consolidated Statemetns of Operations
                     Years Ended December 31, 2001 and 2000

                                                              2001                          2000
                                                        -----------------             -----------------
<S>                                                          <C>                         <C>
REVENUES:                                                      $ 596,996                     $ 194,620

COST OF GOODS SOLD:                                              239,258                             -
                                                        -----------------             -----------------

GROSS PROFIT                                                     357,738                       194,620
                                                        -----------------             -----------------


EXPENSES:
 Selling and marketing                                            74,602                       912,366
 General and administrative                                    1,002,738                     1,498,062
 Acquisition costs                                               255,000                             -
                                                        -----------------             -----------------
  Total Operating Expenses                                     1,332,340                     2,410,428
                                                        -----------------             -----------------

OTHER REVENUES & EXPENSES:
 Interest expense                                                 (3,075)                      (34,067)
 Interest income                                                   2,498                           240
 Other income                                                      5,557                             -
 Loss on sale of equipment                                       (41,205)                            -
 Loss on investments                                              (4,824)                     (291,720)
                                                        -----------------             -----------------
  Total Other Revenues & Expenses                                (41,049)                     (325,547)
                                                        -----------------             -----------------

Extraordinary item - debt forgiveness                             90,000                       971,338
                                                        -----------------             -----------------

NET LOSS                                                      $ (925,651)                 $ (1,570,017)
                                                        =================             =================


Per share information
   Weighted average number
     of common shares outstanding                             19,012,564                    12,051,000
                                                        =================             =================

Net Loss per common share                                        $ (0.05)                      $ (0.13)
                                                        =================             =================

</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-3

<PAGE>

<TABLE>
<CAPTION>

                 CORMAX BUSINESS SOLUTIONS, INC. AND SUBSIDIARY
                Consolidated Statements of Stockholders' Equity


                                                                          Additional                            Total
                                                   Common Stock             Paid-In          Retained       Stockholders'
                                               Shares         Amount        Capital          Deficit            Equity
                                            --------------  -----------  --------------   ---------------   ---------------
<S>                                            <C>            <C>           <C>              <C>               <C>
Balance -December 31, 1997                      1,503,024      $ 1,503      $1,003,029       $(2,056,003)      $(1,051,471)

Net loss                                                -            -               -          (856,896)         (856,896)
                                            --------------  -----------  --------------   ---------------   ---------------
Balance - December 31, 1998                     1,503,024        1,503       1,003,029        (2,912,899)       (1,908,367)
                                            --------------  -----------  --------------   ---------------   ---------------
Nel loss                                                -            -               -           (46,198)          (46,198)
                                            --------------  -----------  --------------   ---------------   ---------------
Balance - December 31, 1999                     1,503,024        1,503       1,003,029        (2,959,097)       (1,954,565)
                                            --------------  -----------  --------------   ---------------   ---------------
Stock issued for cancellation of debt              35,000           35          34,965                 -            35,000
Stock issued for services                       8,003,897        8,004       2,445,861                 -         2,453,865
Stock issued for subsidiary                     2,510,000        2,510               -                 -             2,510
Net loss                                                -            -               -        (1,570,017)       (1,570,017)
                                            --------------  -----------  --------------   ---------------   ---------------
Balance - December 31, 2000                    12,051,921       12,052       3,483,855        (4,529,114)       (1,033,207)
                                            --------------  -----------  --------------   ---------------   ---------------
Stock issued for cash                          14,420,000       14,420         280,488                 -           294,908
Stock issued for cancellation of debt           1,075,000        1,075         336,148                 -           337,223
Stock issued for services                       8,693,239        8,693         587,517                 -           596,210
Stock issued for subsidiary                       400,000          400         232,605                 -           233,005
Net loss                                                -            -               -          (925,651)         (925,651)
                                            --------------  -----------  --------------   ---------------   ---------------
Balance - December 31, 2001                    36,640,160     $ 36,640      $4,920,613       $(5,454,765)       $ (497,512)
                                            ==============  ===========  ==============   ===============   ===============

</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-4

<PAGE>

<TABLE>
<CAPTION>


                 CORMAX BUSINESS SOLUTIONS, INC. AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                     Years Ended December 31, 2001 and 2000


                                                                        2001                        2001
                                                                    --------------             ----------------
<S>                                                                   <C>                         <C>
Cash Flows from Operating Activities:
  Net Loss                                                             $ (925,651)                 $(1,570,017)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
   Depreciation                                                            31,552                       14,921
   Stock issued for services                                              596,210                    2,453,830
   Debt forgiveness                                                       (90,000)                    (971,338)
   Loss of sale of equipment                                               41,205                            -
                                                                          168,990                            -
   Changes in assets and liabilities:
    (Increase) in accounts receivable                                     (62,751)                     (62,799)
    (Increase) in prepaids                                                 (7,037)                           -
    (Increase) in inventory                                               (11,032)                           -
    (Decrease) in accounts payable                                              -                      307,293
    (Decrease) in accrued expenses                                        (84,245)                     (23,824)
                                                                    --------------             ----------------
Net Cash Used in Operating Activities                                    (342,759)                     148,066
                                                                    --------------             ----------------

Cash Flows from Investing Activities
  Capital expenditures                                                     (7,132)                    (144,595)
                                                                    --------------             ----------------
Cash Flows Used in Investing Activities                                    (7,132)                    (144,595)
                                                                    --------------             ----------------

Cash Flows from Financing Activities:
 Proceeds from sale of stock                                              281,770                            -
 Due to officer                                                            78,246                            -
 Proceeds from notes payable                                               24,955                            -
                                                                    --------------             ----------------
Cash Flows Provided by Financing Activities                               384,971                            -
                                                                    --------------             ----------------

Net Increase (Decrease) in cash and cash equivalents                       35,080                        3,471

Cash and cash equivalents - beginning of period                             3,471                            -
                                                                    --------------             ----------------

Cash and cash equivalents - end of period                                $ 38,551                      $ 3,471
                                                                    ==============             ================


Supplemental information:
    Cash paid for interest                                                $ 7,735                      $ 7,101
                                                                    ==============             ================
                                                                    ==============             ================
    Cash paid for income taxes                                                $ -                          $ -
                                                                    ==============             ================


Supplemental schedule of non-cash investing and financing activities:
    Stock issued in exchange for Expanded' assets                        $233,005                          $ -
                                                                    ==============             ================
    Issuance of stock for services                                       $596,210                  $ 2,453,830
                                                                    ==============             ================

</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-5

<PAGE>



                         Cormax Business Solutions, Inc.
                          Notes to Financial Statements
                                December 31, 2001


NOTE 1 -GENERAL
        -------

         The Company

          Cormax Business Solutions,  Inc. (the "Company") was incorporated July
          22, 1983 under the laws of Utah for the purpose of  obtaining  capital
          to  seek  potentially   profitable   business   opportunities.   Since
          inception,   the  Company  has  been  engaged  in  several   different
          organizational activities. In 1997, the Company acquired two entities:
          Watchout, a California  corporation,  and Goldpoint  International,  a
          limited  liability  company.  In  November  of 1998,  the  corporation
          changed  its name to  Watchout!,  Inc.  In  March  2001,  the  Company
          purchased all of the issued and  outstanding  stock of Expanded System
          Solutions,  Inc.  (ESSI).  ESSI  is  engaged  in the  installation  of
          networking  and  communication  facilities  and is also a reseller  of
          networking and communication equipment.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

         Principles of Consolidation

         The consolidated financial statements include the accounts of Cormax
         Business Solutions, Inc and its wholly owned subsidiary. All
         significant inter-company accounts and transactions are eliminated in
         consolidation.

         Basis of Accounting

         These financial statements are presented on the accrual method of
         accounting in accordance with accounting principles generally accepted
         in the United States. Significant principles followed by the Company
         and the methods of applying those principles, which materially affect
         the determination of financial position and cash flows, are summarized
         below:

         Cash and Cash Equivalents

         For the purpose of the statement of cash flows, cash and cash
         equivalents include cash in the bank and money market accounts.

         Use of Estimates:

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States, requires management
         to make estimates and assumptions that affect the reported amounts of
         assets and liabilities and the disclosure of contingent assets and
         liabilities at the date of the financial statements and the reported
         amounts of revenue and expenses during the reporting period. Actual
         results could differ from these estimates.

         Net earning (loss) per share

         Net loss per share is based on the weighted average number of common
         shares and common share equivalents outstanding during the period.

         Inventories

         Inventories are stated at the lower of cost (first-in, first-out) or
         fair market value. Inventories consist of finished goods only.


                                      F-6

<PAGE>


                         Cormax Business Solutions, Inc.
                          Notes to Financial Statements
                                December 31, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -  Continued
         -------------------------------------------------------

         Property and Equipment

         The Company follows the practice of capitalizing property and equipment
         over $250 at cost. The cost of ordinary maintenance and repairs is
         charged to operations while renewals and replacements are capitalized.
         Depreciation is computed on the straight-line method over the following
         estimated useful lives. Depreciation expense for the year was $31,552.

                  Computer Equipment                          5 years
                  Computer Software                           3 years
                  Furniture & Fixtures                        5 years

         Revenue Recognition

         Revenue from product and services are recognized at the time goods are
         shipped or services are provided to the customer, with an appropriate
         provision for returns and allowances. The estimated sales value of
         fixed price contracts in process is recognized under the
         percentage-of-completion method of accounting in which the estimated
         sales value is determined on the basis of physical completion to date.

         Goodwill

         The Company assesses the recoverability of goodwill periodically by
         determining whether the amortization of goodwill balance over its
         remaining life can be recovered through projected undiscounted cash
         flows. The amount of goodwill impairment, if any, is charged to
         operations in the period in which goodwill impairment is determined by
         management. In the current fiscal year ended December 31, 2001,
         goodwill impairment of $239,961 was charged to operations.

         Fair Value of Financial Instruments

         The carrying amount of accounts receivable, accounts payable, notes
         payable, and accrued expenses are considered to be representative of
         their respective fair values because of the short-term nature of these
         financial instruments.

         Other Comprehensive Income

         The Company has no material components of other comprehensive income
         (loss) and accordingly, net loss is equal to comprehensive loss in all
         periods.

         Income Taxes

         The Company accounts for income taxes under SFAS No. 109, which
         required the asset and liability approach for accounting for income
         taxes. Under this method, deferred tax assets and liabilities are
         measured based on differences between financial reporting and tax bases
         of assets and liabilities measured using enacted tax rates and laws
         that are expected to be in effect when the differences are expected to
         reverse.



                                      F-7

<PAGE>



                         Cormax Business Solutions, Inc.
                          Notes to Financial Statements
                                December 31, 2001


NOTE 3 - INCOME TAXES
         ------------

         There has been no provision for U.S. federal, state, or foreign income
         taxes for any period because the Company has incurred losses in all
         periods and for all jurisdictions.

         Deferred income taxes reflect the net tax effects of temporary
         differences between the carrying amounts of assets and liabilities for
         financial reporting purposes and the amounts used for income tax
         purposes. Significant components of deferred tax assets are as follows:

            Deferred tax assets:
              Net operating loss carryforwards                   $5,454,765
              Valuation allowance for deferred tax assets        (5,454,765)
            Net deferred tax assets                              $        -
                                                                 ==========

         Realization of deferred tax assets is dependent upon future earnings,
         if any, the timing and amount of which are uncertain. Accordingly, the
         net deferred tax assets have been fully offset by a valuation
         allowance. As of December 31, 2001, the Company had net operating loss
         carryforwards of approximately $5,454,7651 for federal income tax
         purposes. Utilization of the net operating loss may be subject to
         substantial annual limitations due to the ownership change limitations
         provided by the Internal Revenue Code and similar state provisions. The
         annual limitation could result in the expiration of the net operating
         loss before utilization.

NOTE 4 -DUE TO STOCKHOLDERS
        -------------------

         The president of the Company advanced the Company $89,691 for
         operations. The advances were unsecured, due on demand, bear interest
         at 8%, and are convertible to 2,562,600 shares or a value of $0.035 per
         share.

NOTE 5 - GOING CONCERN
         -------------

         The accompanying financial statements have been prepared in conformity
         with accounting principles generally accepted in the United States,
         which contemplates continuation of the Company as a going concern. As
         of December 31, 2001, the Company's current liabilities exceed its
         current assets by $565,515. As shown in the financial statements, the
         Company incurred a net loss of $925,651 in the current fiscal year.

         The future success of the Company is likely dependent on its ability to
         attain additional capital to develop its proposed products and
         ultimately, upon its ability to attain future profitable operations.
         There can be no assurance that the Company will be successful in
         obtaining such financing, or that it will attain positive cash flows
         from operations.

NOTE 6 - COMMITTMENTS AND CONTINGENCIES
         ------------------------------

         Rental/Capital Leases
         In February 1998, the Company entered into lease agreements for office
         and warehouse space in Calgary, Canada that expires in January 2003.
         Rental expense for the period was $23,545.


                                      F-8

<PAGE>




                         Cormax Business Solutions, Inc.
                          Notes to Financial Statements
                                December 31, 2001



         The following is a schedule of future minimum payments under capital
         and operating leases and obligations under capital leases (present
         value of future minimum rentals) as of December 31, 2001:

                                               Capital               Operating
                          2002                 $ 4,923                 24,531
                          2003                     356                  2,141
                                              ---------              ---------
                                                $5,279                $26,672
                                                                     =========
         Less amount representing interest       1,719
                                                ------
         Tax obligations under capital leases   $6,998
                                                ======






                                      F-9