UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 20-F

(Mark One)

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                                       OR

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                    For the fiscal year ended March 31, 2004

                              `         OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ___________________ to ____________________


Commission file number:  0-30366

               ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                                 Alberta, Canada
--------------------------------------------------------------------------------
                 (Jurisdiction of incorporation or organization)

     Suite 355, 10333 Southport Road S.W., Calgary, Alberta, Canada T2W 3X6
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

    Title of each Class               Name of each exchange on which registered
          None

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

                        Common Shares, Without Par Value
--------------------------------------------------------------------------------
                                (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:

                                 Not Applicable
--------------------------------------------------------------------------------
                                (Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital of Common stock as of the close of the period covered by this report.

       March 31, 2004                          7,955,153 Common Shares


                        THE EXHIBIT INDEX IS ON PAGE 88.


<PAGE>

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   [ ]

Indicate by check mark which financial statement item the registrant has elected
to follow.

             Item 17   [X]                 Item 18  [ ]




<PAGE>



                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                                  <C>
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS.....................................................1

DEFINITIONS...........................................................................................1

PART I................................................................................................3
   Item 1.     Identity of Directors, Senior Management and Advisors..................................3
   Item 2.     Offer Statistics and Expected Timetable................................................3
   Item 3.     Key Information........................................................................3
   Item 4.     Information on the Company............................................................11
   Item 5.     Operating And Financial Review And Prospects..........................................15
   Item 6.     Directors, Senior Management and Employees............................................25
   Item 7.     Major Shareholders and Related Party Transactions.....................................34
   Item 8.     Financial Information.................................................................36
   Item 9.     The Offer and Listing.................................................................37
   Item 10.    Additional Information................................................................38
   Item 11.    Quantitative and Qualitative Disclosures About Market Risk............................52
   Item 12.    Description of Securities Other than Equity Securities................................53

PART II..............................................................................................53
   Item 13.    Defaults, Dividend Arrearages And Delinquencies.......................................53
   Item 14.    Material Modifications to the Rights of Securities Holders and Use of Proceeds........53
   Item 15.    Controls and Procedures...............................................................53
   Item 16A.   Audit Committee Financial Expert......................................................54
   Item 16B.   Code of Ethics........................................................................54
   Item 16C.   Principal Accountant Fees and Services................................................54

PART III.............................................................................................54
   Item 17.    Financial Statements..................................................................55
   Item 18.    Financial Statements..................................................................55
   Item 19.    Financial Statements and Exhibits.....................................................55
</TABLE>




<PAGE>

                SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain statements in this document constitute "forward-looking statements" that
involve known and unknown risks, uncertainties and other factors which may cause
the actual  results,  performance or  achievements  of the Company,  or industry
results,  to be materially  different from any future results,  performance,  or
achievements  expressed  or implied  by such  forward-looking  statements.  Such
factors  include,  among  others,  the  following:   the  Corporation's  limited
operating  history;   under-capitalization;   risks  involving   integration  of
acquisitions;  unpredictability  of future  revenues;  management  of growth and
integration;  potential  technological changes; the Corporation's  dependence on
key  personnel;  marketing  relationships;  reliance  on  third-party  insurance
companies;  potential  new  businesses,  competition  and low barriers to entry;
government  regulations;  security risks; and the other risks and  uncertainties
described under Risk Factors in this Annual Report.  Should one or more of these
risks and  uncertainties  materialize,  or should  underlying  assumptions prove
incorrect,  actual  results  may vary  materially  from those  described  in the
forward-looking  statements.  See "Risk Factors." Forward-looking statements are
made  based on  management's  belief,  estimates  and  opinions  on the date the
statements   are  made  and   management   assumes  no   obligation   to  update
forward-looking  statements  if these  beliefs,  estimates and opinions or other
circumstances  should  change.  You are cautioned  against  placing  reliance on
forward-looking statements.

                                   DEFINITIONS

Certain terms used in this Annual Report are defined below:

"Addison York"                       a wholly owned U.S. subsidiary of the
                                     Corporation.

"Corporation", "Company" or          means Anthony Clark International Insurance
"Registrant"                         Brokers Ltd. and its subsidiaries.


"Common Shares"                      means common shares without par value in
                                     the capital stock of the Corporation.

"General Insurance"                  means insurance coverage comprising
                                     property and casualty insurance.

"General Insurance Brokerage"        means an entity which employes Insurance
                                     Brokers to act on behalf of its
                                     customers in seeking to place General
                                     Insurance with any number of
                                     Insurance Companies.

"Insurance Agent"                    means a person who is an employee of
                                     a particular Insurance Company and
                                     represents only that Insurance Company in
                                     the sale of insurance policies.

"Insurance Broker"                   means an individual who works for a
                                     General Insurance Brokerage and who is
                                     responsible for assessing the needs of his
                                     clients, suggesting levels of General
                                     Insurance coverage, if appropriate,
                                     canvassing a number of Insurance Companies
                                     which the General Insurance Brokerage
                                     represents for the coverage requested,
                                     obtaining price quotes or policy premium
                                     and placing General Insurance coverage.

"Insurance Companies" or             means those entities which provide
"Insurance Company"                  insurance coverage, assess and provide the
                                     payment of any insurance claims and pay
                                     commissions to Insurance Brokers and
                                     Insurance Agents for providing customer
                                     services and placing insurance coverage
                                     with the Insurance Company.

"OTCBB"                              means the Nasdaq OTC Bulletin Board.

"TSX"                                means The Toronto Stock Exchange.



                                      -1-
<PAGE>


                                     PART I

Item 1.  Identity of Directors, Senior Management and Advisors

Not Applicable.

Item 2.  Offer Statistics and Expected Timetable

Not Applicable.

Item 3.  Key Information

A.   Selected Financial Data

The following  table sets forth selected  financial data regarding the Company's
consolidated  operating results and financial position in Canadian dollars.  See
"Currency   Translations".   The  data  has  been  derived  from  the  Company's
consolidated  financial statements,  which have been prepared in accordance with
accounting  principles  generally  accepted in Canada ("Canadian  GAAP").  For a
reconciliation to accounting  principles generally accepted in the United States
("U.S.  GAAP") for the years ended March 31, 2004, 2003 and 2002, see note 19 to
the  consolidated  financial  statements  included  in this Annual  Report.  The
following selected financial data is qualified in its entirety by, and should be
read in  conjunction  with,  the  consolidated  financial  statements  and notes
thereto  included  elsewhere in this Annual  Report.  The  comparability  of the
financial   data   presented  is  affected  by  factors   such  as   significant
acquisitions,  financings,  changes of business and property  dispositions.  See
"Item 5 - Operating and Financial Review and Prospects".

<TABLE>
(Canadian Dollars)
-------------------------------------------------------------------------------------------------------------------
                                            March 31,        March 31,       March 31,     March 31,     March 31,
                                              2004             2003            2002          2001          2000
-------------------------------------------------------------------------------------------------------------------
                                                                             (restated)   (restated)    (restated)
<S>                                        <C>             <C>            <C>            <C>           <C>
Working Capital Canadian and US GAAP       $  2,052,673    $ 3,910,863    $  4,263,466   $ 4,391,594   $ 2,660,834

Total Assets Canadian GAAP                 $ 16,864,359    $ 8,662,278    $  8,959,873   $ 8,890,747   $ 7,342,045

Total Assets U.S. GAAP                     $ 16,864,359    $ 8,662,278    $  8,959,873   $ 8,896,993   $ 7,178,594

Total Liabilities Canadian GAAP            $ 10,366,262    $ 1,425,844    $  1,367,732   $   921,074   $ 1,575,804
Total Liabilities U.S. GAAP                $ 10,366,262    $ 1,425,844    $  1,367,732   $   921,074   $ 1,306,901

Long Term Obligations Canadian GAAP        $  8,210,974    $   363,786    $    571,658   $   169,350   $   570,285
Long Term Obligations U.S. GAAP            $  8,210,974    $   363,786    $    571,658   $   169,350   $   301,382

Shareholders' Equity Canadian GAAP         $  6,498,097    $ 7,236,434    $  7,592,141   $ 7,969,673   $ 5,766,241
Shareholders' Equity U.S. GAAP             $  6,458,097    $ 7,196,434    $  7,592,141   $ 7,975,919   $ 5,871,693

Number of Shares Outstanding                  7,955,153      7,692,055       7,692,055     7,725,455     6,969,055
-------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
(Canadian Dollars)
                                                                            Years ended
                                            -----------------------------------------------------------------------------
                                                  March 31,       March 31,      March 31,      March 31,     March 31,
                                                     2004           2003            2002          2001           2000
                                                                                 (restated)   (restated)      (restated)
<S>                                            <C>              <C>             <C>           <C>             <C>
Revenue - U.S. and Canadian GAAP               $  7,469,559     $ 5,175,072     $ 4,449,628   $ 3,894,115     $ 3,509,671

</TABLE>





                                      -2-
<PAGE>

<TABLE>
(Canadian Dollars)
                                                                            Years ended
                                            -----------------------------------------------------------------------------
                                                  March 31,       March 31,      March 31,      March 31,     March 31,
                                                     2004           2003            2002          2001           2000
                                                                                 (restated)   (restated)      (restated)
<S>                                            <C>              <C>             <C>           <C>             <C>
Earnings (loss) before interest, taxes,
depreciation and amortization Canadian
GAAP (1)                                       $    258,502     $   552,778     $  445,029    $  251,034     $    684,658

Earnings (loss) before interest, taxes,
depreciation and amortization US GAAP (1)      $    250,789     $   545,065     $  360,618    $  (30,772)     $(4,796,354)

Dividends per Share (2)                        $          0     $         0     $        0    $        0      $         0

Net earnings (loss) - Canadian GAAP            $ (1,051,498)    $  (355,801)    $ (131,742)   $    9,944      $   (71,388)
Net earnings (loss) - U.S. GAAP                $ (1,059,211)    $  (363,514)    $ (222,399)   $ (294,919)     $(5,552,400)
Earnings (loss) per Common Share, basic and
diluted:
    Canadian GAAP                              $      (0.14)    $     (0.05)    $    (0.02)   $     0.00      $     (0.01)
    U.S. GAAP                                  $      (0.14)    $     (0.05)    $    (0.03)   $    (0.05)     $     (0.79)

(1)  Earnings  (loss) before  interest,  taxes,  depreciation  and  amortization
     (EBITDA)  is  discussed  and  presented  here as a  non-Generally  Accepted
     Accounting  Principles measure because it is management's major performance
     indicator.  EBITDA is reconciled to Net Earnings  (loss) in Item  5.A.under
     the heading  "Earnings  (loss) before  interest,  taxes,  depreciation  and
     amortization (EBITDA)".

(2)  The Company has paid no  dividends on its shares  since  incorporation  and
     does not anticipate doing so for the foreseeable future. The declaration of
     dividends on the Common  Shares of the Company is within the  discretion of
     the Company's board of directors and will depend upon, among other factors,
     earnings,  capital requirements,  and the operating and financial condition
     of the Company.
</TABLE>

Currency Translations

The following table sets forth the average  exchange rates for Canadian  dollars
("Cdn$") expressed in terms of one United States dollar ("US$") in effect at the
end of the following  periods (based on the average of the exchange rates on the
last day of each month in such periods).


<TABLE>
                                Canadian Dollars Per U.S. Dollar
                                   Fiscal Year Ended March 31,
                            ------------------------------------------------------------
                               2004         2003         2002         2001          2000
                            ------------------------------------------------------------
<S>                           <C>          <C>          <C>          <C>           <C>
Average for the period        1.3353       1.5447       1.5671       1.5041        1.4716
</TABLE>


The following table sets forth the high and low exchange rates for Canadian
dollars expressed in terms of one United States dollar for each of the last 6
months.

<TABLE>
                        --------------------------------------------------------------------------------------
                           August          July          June            May            April           March
                            2004           2004          2004           2004            2004            2004
                        --------------------------------------------------------------------------------------
<S>                        <C>            <C>           <C>            <C>             <C>             <C>
High for the month         1.3323         1.3353        1.3772         1.3970          1.3711          1.3480

Low for the month          1.2964         1.3082        1.3407         1.3580          1.3095          1.3080
</TABLE>



                                      -3-
<PAGE>

Exchange rates are based upon the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York. The noon rate of exchange on August 31, 2004 as
reported by the United States Federal Reserve Bank of New York for the
conversion of one Canadian dollar into United States dollars was US$0.7595
(US$1.00 = Cdn$1.3166). In this Annual Report on Form 20-F (the "Annual Report"
or "20-F"), unless otherwise specified, all monetary amounts are expressed in
Canadian dollars.

     B.   Capitalization and Indebtedness

Not Applicable.

     C.   Reasons for the Offer and Use of Proceeds

Not Applicable.

     D.   Risk Factors

The securities of the Corporation are highly speculative. A prospective investor
or other person  reviewing  the  Corporation  should not consider an  investment
unless the  investor is capable of  sustaining  an  economic  loss of the entire
investment.  Certain  risks  are  associated  with  the  Corporation's  business
including the following:

Future  growth and  expansion is dependent  on ongoing  acquisitions  of General
Insurance Brokerages

To a large extent, the Corporation's  growth and expansion plans depend upon the
ongoing  acquisition of independent  General Insurance  Brokerages at reasonable
prices.  There  can be no  assurance  that an  adequate  number  of  acquisition
candidates will be available to the Corporation to meet its expansion  plans, or
in the event that such independent  General  Insurance  Brokerages are available
for  acquisition  that they will be  available  at a price which would allow the
Corporation  to  operate  on  a  profitable  basis.  The  Company  competes  for
acquisition and expansion  opportunities  with entities that have  substantially
greater  resources than the Company and these entities may be able to outbid the
Company for acquisition targets. If the Company fails to execute its acquisition
strategy,  the Company's  revenue growth is likely to suffer and the Company may
be unable to remain competitive.


The  Company  may be  unable  to  successfully  integrate  its  recent or future
acquisitions

There can be no assurance that the Company's recently acquired brokerages or any
brokerages  acquired by the Company in the future will achieve acceptable levels
of revenue and profitability or otherwise  perform as expected.  Until recently,
the Company has operated its business  only in the Province of Alberta,  Canada.
The Company has limited  experience in acquiring and  integrating  brokerages in
other  markets.  The  Company  may  be  unable  to  successfully  integrate  its
recently-acquired  brokerages in the United States, or other brokerages that the
Company may acquire in the future,  due to  diversion of  management  attention,
strains on the Company's infrastructure,  difficulties in integrating operations
and personnel, entry into unfamiliar markets, or unanticipated legal liabilities
or tax,  accounting or other issues. A failure to integrate acquired  brokerages
may  be  disruptive  to the  Company's  operations  and  negatively  impact  the
Company's revenue or increase the Company's expenses.


The  Corporation  has acquired and may continue to acquire  brokerages  prior to
receipt  of all  regulatory  licenses  and  carrier  appointments,  and in  such
circumstances  the  Corporation is dependent upon the vendor to continue to hold
and to comply with the requirements of such licenses and appointments

The  Corporation  has only recently begun to establish and expand its operations
in the  United  States  with  the  purchases  of  assets  of  Vista,  Johns  and
Vinciguerra. At the time of these acquisitions Addison York had not yet obtained
the necessary license to operate as a General Insurance  Brokerage in California
or Virginia  (as the case may be) and without  possessing  that license it could
not obtain carrier  appointments from Insurance  Companies which would enable it
to market and sell General Insurance  products in those states. As such, Addison
York  entered  into  Agency  Agreements  with the  vendors  of  these  Insurance
Brokerages  whereby  the  vendors  of those  agencies  agreed,  for the sole and
exclusive benefit of Addison York, to market, sell, distribute,  place and write
General



                                      -4-
<PAGE>

Insurance  products  to the  clients  of  Addison  York and to any and all other
potential  customers who may wish to purchase  General  Insurance  products from
Addison  York.  (see Item 4.B under the  heading  "Growth  Strategy"  for a more
complete description of the terms of the Agency Agreements).  Since Addison York
was not licensed as an Insurance Broker at the time of these acquisitions it ran
the risk that it would  not  receive  the  required  license  to  operate  as an
Insurance Brokerage in those states and without the appropriate license it would
be unable to obtain carrier  appointments from the Insurance  Companies.  If the
Corporation is unable to secure the required  licenses in the various  different
states  in which it  operates  or if the  Corporation  cannot  obtain  Insurance
Company  representation  then this will have a negative impact on its ability to
service its customers and provide alternative competitive insurance products. In
addition,  these Agency Agreements create a reliance by the Corporation on third
parties in that the Corporation must rely upon the respective  vendors to comply
with  applicable  laws, to perform on the Agency  Agreements  and to process the
Corporation's  General  Insurance  business in the United States. If the vendors
fail to properly perform on the Agency Agreements then this will have a negative
impact on the Corporations ability to service its customers. The Corporation may
enter into similar Agency Agreements in connection with future acquisitions.


The Corporation anticipates the need for additional financing,  which it may not
be successful in arranging

The  Corporation  has relied  principally  on debt  financing to fund its recent
acquisitions in the United States.  The Corporation will also require additional
funds to make  future  acquisitions  of  General  Insurance  Brokerages  and may
require  additional  funds to market and sell its products into the marketplace.
The Corporation has a history of losses and does not, therefore, anticipate that
it will generate  sufficient cash from operations in order to meet its financing
needs.  The ability of the  Corporation to arrange such financing in the future,
and to repay its existing debt, will depend in part upon the prevailing  capital
market  conditions as well as the business  performance of the  Corporation.  In
addition,  the  Corporation is subject to certain  financial and other covenants
under its financing  arrangements.  If the  Corporation is unable to or does not
comply  with  these  covenants,   the  Corporation's   financing  needs  may  be
accelerated.  There can be no assurance that the Corporation  will be successful
in  its  efforts  to  arrange  additional  financing,   when  needed,  on  terms
satisfactory  to the  Corporation.  If  additional  financing  is  raised by the
issuance  of  shares  from  the  treasury  of the  Corporation,  control  of the
Corporation  may change and  shareholders  may suffer  additional  dilution.  If
additional  financing is not available on terms  favourable to the  Corporation,
the  Corporation  may be unable to grow or may be  required to limit or halt its
expansion plans. In addition, the Corporation's existing creditors, some of whom
have security  interests in the Corporation's  assets, may exercise their rights
to acquire or dispose of the Corporation's assets.


Ability to continue as a going concern

At September  30,  2004,  the  Corporation  was in  non-compliance  with certain
covenants in its long-term  borrowing  agreements.  The Corporation expects that
these covenants will be in continuous  non-compliance  pending their replacement
or revision.  In the independent  auditor's  report included with this Form 20-F
annual report, KPMG LLP, the Corporation's  independent  auditor, has noted that
the uncertainty  relating to the  Corporation's  ability to reach a satisfactory
resolution  with the  lenders  raises  substantial  doubt  of the  Corporation's
ability to continue as a going  concern.  The financial  statements  included in
this report do not include any adjustments that might result from the outcome of
this uncertainty.


Planned   future  growth  is  likely  to  place   significant   strains  on  the
Corporation's management, administrative, operational and financial resources

Since its inception,  the Corporation has experienced  steady growth in revenue,
number and  complexity  of products,  personnel,  and customer  base.  The total
number of  employees of the  Corporation  has grown to 60 people as of March 31,
2004.  In  addition,  as  of  March  31,  2004,  the  Corporation  operated  two
California,  U.S.A.  brokerages  through  the vendors of those  brokerages,  who
employed an additional 29 people. The Corporation also serviced more than 26,000
insurance  policies and placed General  Insurance with 150 Insurance  Companies.
The Corporation's planned future growth is likely to place,  significant strains
on the  Corporation's  management,  administrative,  operational  and  financial
resources.  Increased  growth will  require the  Corporation  to continue to add
additional management personnel,  improve its financial and management controls,
reporting  systems and procedures on a timely basis, to implement new systems as
necessary,  to expand,  train, motivate and manage its sales and other personnel
and  to  service  the  Corporation's  customers  effectively.  There  can  be no
assurance that the Corporation  will be able to attract  qualified  personnel or
improve  its  financial  and  management  controls or  implement  new systems as
necessary and the failure to do so may result in increased costs or a decline in
revenue or both.

The  Corporation's  performance  and future  operating  results  and success are
dependent on the  effectiveness  of the  Corporation's  management  team and key
personnel

The  Corporation's  performance  and future  operating  results  and success are
substantially  dependent on how effective the management  team and key personnel
are at  organizing  and  implementing  the  Corporation's  growth  strategy  and
integrating acquired General Insurance Brokerages into the Corporation's overall
organization.  The  investors  hereunder  will be  relying on the  judgment  and
expertise of the management of the Corporation.

The senior  management  and some key  personnel  are employed  under  employment
contracts,  while other key personnel of the Corporation are employed on a month
to month basis and are not under an employment  contract  with the  Corporation.
None of the Corporation's senior management or other key personnel has expressed
any



                                      -5-
<PAGE>

current  intention to leave their employment with the Corporation.  Although the
Corporation is in an industry in which there is not high employee turnover,  the
unexpected  loss or  departure of any of the  Corporation's  key  officers,  Mr.
Podorieszach,  the Chief Executive  Officer,  Mr. Consalvo,  the Chief Operating
Officer,  and Ms. Samec, the Chief Financial Officer could be detrimental to the
future operations of the Corporation.

There can be no assurance that the  Corporation can retain its key personnel and
managerial  employees  or that it will be  able  to  attract  or  retain  highly
qualified   personnel  in  the  future.   The  Corporation   believes  that  the
compensation  it pays to its key management  personnel is competitive  with what
other  companies pay its key  management  personnel in the  insurance  brokerage
industry. Although the Corporation plans to compensate its senior management and
other key  personnel  at  compensation  levels that are  competitive  within the
industry, there is no assurance that it will continue to be able to do so in the
future and this may result in a departure  of some if its senior  management  or
other personnel.

The Corporation maintains keyman life insurance policies on Mr. Podorieszach and
Mr.  Consalvo of $100,000  each and on Ms.  Shelley Samec of $175,000 and has no
other keyman life insurance on any other senior  management or other  personnel.
The loss of the services of any of the Corporation's  senior management or other
key personnel or the  inability to attract and retain the  necessary  technical,
sales and  managerial  personnel  could have a material  adverse effect upon the
Corporation's business, operating results and financial condition.


The Corporation faces intense competition in the insurance industry

The  Corporation  is in an industry in which  intense  competition  exists.  The
Corporation  competes  with  other  General  Insurance  Brokerages,  as  well as
Insurance  Companies  that sell  insurance  directly to consumers and do not pay
commissions to agents and brokers.  Some  competitors  have  substantially  more
financial resources and other assets available than the Corporation does and are
larger  and better  established  than the  Corporation.  Such  competitors  have
existing distribution  facilities and channels,  customer recognition,  customer
lists,  and greater  research and development  capabilities  and sales marketing
staff than does the Corporation.  There can be no assurance that the Corporation
will be able to compete successfully against current and future competitors,  or
that  competitive  pressure  faced by the  Corporation  will not have a material
adverse effect on its business, financial condition and results of operation.


Incursion of government, banks or other financial institutions

The Corporation is susceptible to an incursion in the general insurance industry
by government or banks or other financial institutions. A government takeover of
the general insurance business (or parts thereof) could affect the profitability
of the Corporation.  In addition,  banks with greater financial  resources and a
larger customer base than the Corporation may enter (or are currently  entering)
the general insurance business. While management believes that the Corporation's
representation  of a large and diverse number of Insurance  Companies will allow
it to remain  competitive  against any such  incursion by the banks,  there is a
possibility that their entrance into this market could affect the  profitability
of the Corporation.


We cannot  accurately  forecast our commission  revenue  because our commissions
depend on premium rates charged by insurance companies,  which historically have
varied and are  difficult to predict.  Any  declines in premiums  may  adversely
impact our profitability

In 2004, we derived  approximately 89.9% of our revenue from commissions paid by
insurance companies on the sale of their insurance products to our clients.  Our
revenue from  commissions  fluctuates  with  premiums  charged by  insurers,  as
commissions typically are determined as a percentage of premiums.  When premiums
decline,   we  experience   downward  pressure  on  our  revenue  and  earnings.
Historically,  property and casualty  premiums  have been cyclical in nature and
have varied widely based on market conditions. Significant reductions in premium
rates  occurred  during  the years  1988  through  2000 as a result of  expanded
underwriting capacity of property and casualty insurance companies and increased
competition.  In some cases,  property and casualty insurance  companies lowered
commission  rates.  The years 2001  through  2003 saw  premium  rates  increase.
Although we cannot predict changes in premium pricing,  we did begin to see some
reductions in pricing in the latter part of 2003 in the United States.  Canadian
rate trends have trailed  those of the Unites  States,  leading to  expectations
that Canadian premium rates will continue to be firm for much of 2004, with some
softening as the year  progresses.  Because we cannot  determine  the timing and
extent of premium pricing changes, we cannot accurately forecast our commission



                                      -6-
<PAGE>

revenue, including whether it will significantly decline. If premiums decline or
commission rates are reduced, our revenue, earnings and cash flow could decline.
In addition, our budgets for future acquisitions, capital expenditures, dividend
payments,  loan  repayments  and other  expenditures  may have to be adjusted to
account for unexpected changes in revenue.


Insurance company contingent commissions and volume overrides are less
predictable than normal commissions, which impairs our ability to forecast the
amount of such revenue that we will receive and may negatively impact our
operating results

We derive a portion  of our  revenue  from  contingent  commissions  and  volume
overrides. The aggregate of these sources of revenue generally has accounted for
approximately 6% of our total revenue.  Contingent commissions may be paid by an
insurance company based on the profit it makes on the overall volume of business
that we place with it. Volume overrides and contingent commissions are typically
calculated in the first or second quarter of the following  calendar year by the
insurance  companies  and are  paid  once  calculated.  As a  result  of  recent
developments in the property and casualty insurance industry,  including changes
in the  underwriting  criteria  due in part to the numbers  and dollar  value of
claims as compared to the premiums collected by insurance  companies,  we cannot
predict the payment of this  performance-based  revenue as accurately as we have
been able to in the past.  Further, we have no control over the process by which
insurance companies estimate their own loss reserves,  which affects our ability
to forecast contingent commissions.  Because these contingent commissions affect
our revenue,  any  decrease in their  payment to us could  adversely  affect our
results   of   operations.   Recently,   legal   proceedings   challenging   the
appropriateness of revenue sharing  arrangements between insurance companies and
brokerages,  including contingent profit and volume override arrangements,  have
been commenced against certain insurance  brokerages.  These proceedings  allege
that such revenue  sharing  arrangements  conflict  with a broker's  duty to its
clients. While we have not been named as a defendant in any such proceeding, and
disagree with the  underlying  premise that these revenue  sharing  arrangements
create a conflict of  interest,  we could be the subject of a similar  action in
the future.  A finding that such  arrangements  conflict with a broker's duty to
its  clients  could  have  a  material   adverse   affect  on  our  revenue  and
profitability.


Proposed  tort  reform  legislation  on the United  States,  if  enacted,  could
decrease demand for liability insurance, thereby reducing our commission revenue

Legislation  concerning tort reform is currently being  considered in the United
States Congress and in several states. Among the provisions being considered for
inclusion  on such  legislation  are  limitations  on damage  awards,  including
punitive damages, and various restrictions  applicable to class action lawsuits,
including  lawsuits  asserting  professional  liability  of the  kind  of  which
insurance  is offered  under  certain  policies we sell.  Enactment  of these or
similar  provision  by  Congress,  or by  states or  countries  in which we sell
insurance,  could  result in  reduction  in the demand for  liability  insurance
policies or a decrease in policy limits of such policies sold,  thereby reducing
our commission revenue.


Privacy legislation may impede our ability to utilize our customer database as a
means to generate new sales.

We intended to utilize our extensive  customer databases for marketing and sales
purposes,  which we believe will enhance our ability to meet our organic  growth
targets.  However, new privacy legislation,  such as the  Gramm-Leach-Bailey Act
and the  Health  Insurance  Portability  and  Accountability  Act of 1996 in the
United States and the Personal  Information  Protection and Electronic Documents
Act  (PIPEDA) in Canada,  as well other  regulatory  changes,  may  restrict our
ability to utilize  personal  information  that we have  collected in our normal
course  of  operations  to  generate  new  sales.  If we become  subject  to new
restrictions,  or other regulatory restrictions,  which we are not aware of, our
ability to grow our business may be adversely affected.


If we fail to comply with regulatory  requirements for insurance  brokerage,  we
may not be able to conduct our business.

Our  business  is  subject to legal  requirements  and  governmental  regulatory
supervision in the  jurisdiction  in which we operate.  These  requirements  are
designed to protect our clients by  establishing  minimum  standards  of conduct
practice, particularly regarding the provision of advice and product information
as well as financial criteria.



                                      -7-
<PAGE>

Our  activities in the United  States and Canada are subject to  regulation  and
supervision  by  state  and  provincial  authorities.  Although,  the  scope  of
regulation and form of supervision by state and provincial  authorities may vary
from  jurisdiction  to  jurisdiction,  insurance  laws in the United  States and
Canada are often complex and  generally  grant broad  discretion to  supervisory
authorities in adopting regulations and supervising regulated  activities.  This
supervision generally includes the licensing of insurance brokers and agents and
the  regulation of the handling and investment of client funds held in fiduciary
capacity.  Our ability to conduct our business in the  jurisdictions in which we
currently  operate  depends  on our  compliance  with the rules and  regulations
promulgated  from time to time by the  regulatory  authorities  in each of these
jurisdictions.

Our clients  have the right to file  complaints  with the  regulators  about our
services,  and the  regulators may  investigate  and require us to address these
complaints.  Our failure to satisfy the  regulators  that we are in  compliances
with their requirements or the legal  requirements  governing our activities can
result in a disciplinary action, fines, reputation damage and financial harm.

In addition,  changes in  legislation  or regulation  and actions by regulators,
including changes in administration and enforcement policies, could from time to
time require  operational  improvements or  modifications  at various  locations
which  could  result in higher  costs or  hinder  our  ability  to  operate  our
business.


The  Corporation's  success is  dependent  on its ability to  represent  quality
insurance companies

The  Corporation's  success is dependent  upon its continued  representation  of
quality  Insurance  Companies in order to sell insurance  policies to customers.
The Corporation's  existing brokerage contracts with certain Insurance Companies
do not have a set  term or  expiry  date but may be  terminated  by  either  the
Corporation  or the Insurance  Company on between 90-120 days' written notice of
termination  depending  on the terms of the specific  contract.  In the event of
termination  on any of its  contracts  with  Insurance  Companies,  there are no
penalties to the  Corporation but following  termination,  the Corporation is no
longer able to represent the applicable Insurance Company as agent on the future
placement or renewal of insurance  policies.  If the Corporation loses Insurance
Company  representation  then this will have a negative impact on its ability to
service its customers and provide alternative competitive insurance products.


Dilution and sales of additional Common Shares and the exercise of options

The  number  of  outstanding  Common  Shares  held by  shareholders  who are not
affiliates  of the  Corporation  and the  number  of  Common  Shares  underlying
outstanding  stock  options  is large  relative  to the  trading  volume  of the
Corporation's  Common  Shares.  Any  substantial  sale  of  the  Common  Shares,
including  Common Shares  underlying  stock options,  or even the possibility of
such  sales  occurring  may have an adverse  effect on the  market  price of the
Common Shares.


Broker-Dealers  may be  discouraged  from effecting  transactions  in the Common
Shares because they are considered penny stocks and subject to penny stock rules

Rules 15g-1 through 15g-9 promulgated under the Securities  Exchange Act of 1934
(the "Exchange  Act") impose sales practice and disclosure  requirements on NASD
brokers-dealers  who make a market in "a penny  stock." A penny stock  generally
includes any  non-Nasdaq  equity  security  that has a market price of less than
US$5.00 per share.  The shares of the  Corporation are posted for trading on the
TSX and the  closing  price of its shares on July 31,  2004 was $1.16 per share.
The shares of the  Corporation are also quoted on the OTCBB and the quoted price
of its shares on July 31, 2004 was U.S.$0.93 per share.  As such,  the shares of
the Corporation will be deemed penny stock for the purposes of the Exchange Act.
The  additional  sales  practices  and  disclosure   requirements  imposed  upon
broker-dealers may discourage  broker-dealers from effecting transactions in the
shares of the  Corporation,  which could severely limit the market  liquidity of
the shares and impede the sale of the shares in the secondary market.

Under the penny stock regulations, a broker-dealer selling penny stock to anyone
other than an established customer or "accredited investor",  which is generally
an  individual  with a net worth in excess of  US$1,000,000  or an annual income
exceeding US$200,000, or US$300,000 together with his or her spouse, must make a
special  suitability  determination  for the  purchaser  and  must  receive  the
purchaser's  written  consent  to the  transaction  prior  to sale,  unless  the
broker-dealer  or the transaction is otherwise  exempt.  In addition,  the penny
stock regulations require the broker-dealer to deliver, prior to any transaction
involving a penny stock, a disclosure schedule prepared by the



                                      -8-
<PAGE>

Commission  relating to the penny stock market,  unless the broker-dealer or the
transaction is otherwise  exempt.  A broker-dealer  is also required to disclose
commissions  payable to the broker-dealer and the registered  representative and
current  quotations for the securities.  Finally, a broker-dealer is required to
send monthly statements  disclosing recent price information with respect to the
penny stock held in a  customer's  account and  information  with respect to the
limited market in penny stocks.


The  Corporation has significant  costs and lower  productivity  could result in
operating losses

Fixed costs  including  costs  associated  with salaries and employee  benefits,
depreciation and amortization,  rent, and interest and financing costs, and loan
principal  repayments  account for a  significant  portion of the  Corporation's
costs and expenses.  As a result,  downtime or low  productivity  from its sales
representatives,  lower demand for insurance products, loss of the Corporation's
customers,  any significant decrease in the premium rates, volume and commission
paid in the  different  segments of the  general  insurance  industry,  or other
factors  could  result  in  operating   losses  and  adversely   impact  on  the
Corporation.


No intention to declare dividends

The  Corporation  has a limited history of earnings and has not declared or paid
any cash dividends on its Common Shares.  The Corporation  currently  intends to
retain any future  earnings to fund growth and  operations and it is unlikely to
pay any dividends in the immediate or  foreseeable  future.  Any decision to pay
dividends  on its  Common  Shares  in the  future  will be made by the  board of
directors on the basis of the Corporation's earnings, financial requirements and
other conditions at such time.


Conflicts  of  directors  and officers who serve as directors or officers or are
significant shareholders of other companies

Directors and officers of the Corporation may serve as directors or officers of,
or have significant shareholdings in other companies, or be or become engaged in
business and  activities in other fields,  on their own behalf and on the behalf
of other  companies  and  entities.  To the extent that such other  companies or
entities may  participate in industries or ventures in which the Corporation may
participate,  the directors and officers of the  Corporation may have a conflict
of interest.  Conflicts,  if any, will be subject to the procedures and remedies
under  the  Business  Corporations  Act  (Alberta).  At the date of this  Annual
Report,  none of the  Corporation's  directors serve as directors or officers of
any competitors of the Corporation.


Investors may not be able to secure  foreign  enforcement  of civil  liabilities
against our management

The enforcement by investors of civil liabilities  under the federal  securities
laws of the  United  States  may be  adversely  affected  by the  fact  that the
Corporation  is amalgamated  under the laws of Canada,  that all of its officers
and directors  are residents of a foreign  country and that all or a substantial
portion of its assets and such person's assets are located outside of the United
States.  As a result,  it may be difficult  for holders of the Common  Shares to
effect service of process on such persons within the United States or to realize
in the United States upon judgments  rendered  against them.

Item 4. Information on the Company

     A.   History and Development of the Company

Anthony Clark  International  Insurance  Brokers Ltd. (the  "Corporation")  is a
corporation   amalgamated   pursuant  to  the  laws  of  Alberta,   Canada.  The
Corporation's head office and principal business office is located at Suite 355,
10333 Southport Road, S.W., Calgary,  Alberta,  Canada T2W 3X6 and its telephone
number is (403)  278-8811.  The  Corporation's  registered  office in Alberta is
located at 1200, 1015 - 4th Street S.W., Calgary,  Alberta,  Canada T2R 1J4. The
Company's agent for the service in Alberta,  Canada, is Thomas Milley at the law
firm of  Demiantschuk,  Milley & Hoffinger  at 1200,  1015 - 4th  Street,  S.W.,
Calgary, Alberta, Canada, T2R 1J4.

On April 1, 1996, the Corporation was amalgamated with six other companies under
the  Business  Corporations  Act  (Alberta).   The  companies  involved  in  the
amalgamation were 393675 Alberta Inc., 487220 Alberta Inc., 537169



                                      -9-
<PAGE>

Alberta Inc.,  582939 Alberta Inc.,  537168  Alberta Inc.,  Global FGI Inc. (all
Alberta companies) and Anthony Clark International Insurance Brokers Ltd. (which
was  a  federal  company  incorporated  on  June  23,  1993,  extra-provincially
registered in the Province of Alberta on October 6, 1993, and continued into the
jurisdiction  of the Province of Alberta on March 18, 1996,  for the purposes of
the amalgamation).

During the year ending March 31,  2004,  the  Corporation,  by way of its wholly
owned United States  subsidiary,  Addison York Insurance Brokers Ltd.,  acquired
the net assets of two California  insurance  brokerages doing business as "Vista
International   Insurance  Brokers"  and  "Johns  Insurance  Agency,  Inc."  for
aggregate consideration of $8,600,642 (US$6,516,545),  subject to final purchase
price  adjustments  with a further 20% of the purchase price of one agency being
determined based on a price calculation  relating to the commission revenue in 5
years,  which cannot be quantified at this time.  The final price  adjustment is
based on the twenty-four  months (Vista) and twelve months (Johns) of commission
revenue  retention  from the effective  date of the  acquisitions,  and can only
affect the  purchase  price to reduce it. The  results of  operations  for these
client files have been included in the operating results of the Corporation from
the closing date of the acquisitions.

In February 2004, the Company  successfully  completed the private placement and
issuance of 263,098 Units (4,000 of these Units were issued as  commission) at a
price of $1.28 per Unit.  The  proceeds  of the  private  placement  amounted to
$336,765,  which was added to the Company's working capital.  Each Unit consists
of one common share and one common share purchase warrant (the "Warrant").  Each
Warrant is exercisable to purchase an additional  common share of the Company at
a price of $1.60 per share for a period of 24 months  from the  closing  date of
the private placement, which may result in an additional $420,957 of proceeds to
the Company.

On March  22,  2004,  the  Corporation  closed  a  US$5,000,000  debt  financing
arrangement  with Oak Street Funding LLC ("Oak Street")  whereby Oak Street will
provide a US$5,000,000  reducing revolving line of credit subject to a borrowing
base formula to Addison.

In addition to the California  acquisitions  described  above,  during the years
ended March 31, 2004, 2003 and 2002, the Company acquired the outstanding shares
or customer files of 1 General Insurance  Brokerage for aggregate  consideration
of  $250,000,  subject to final  purchase  price  adjustments.  The  Corporation
determined  purchase price  adjustments  relating to customer lists and agencies
previously acquired which resulted in a net increase in cost of $184,758. All of
such  acquisitions have been financed through a combination of vendor financing,
third party financing and available cash resources of the Company  obtained from
its initial public offering, private placements and existing operations.

The Corporation has also entered into certain material transaction subsequent to
March 31, 2004. See item 5.B. Liquidity and Capital Resources, under the heading
"Subsequent Events".

     B.   Business Overview

The  Corporation  is engaged in the  insurance  business as a General  Insurance
Brokerage which employs  Insurance  Brokers to act on behalf of its customers in
seeking to place general  insurance  coverage  comprising  property and casualty
insurance  with  any  number  of  Insurance  Companies.   Since  inception,  the
Corporation  has focused its  efforts in Canada and all of its  acquisitions  to
acquire other General Insurance Brokerages have been in the Province of Alberta,
Canada. The Corporation is currently expanding its acquisition strategy to other
jurisdictions  in Canada and the United  States and has acquired two  California
based insurance brokerages.  The General Insurance industry insures against many
different  types of risk including  automobile,  personal  property,  commercial
property and  liability.  Compared with other sectors of the financial  services
industry, the General Insurance industry is highly fragmented.  The large number
of competitors  results in no single Insurance  Company having a dominant market
share in any line of business.  Industry-wide  financial  conditions are putting
pressure  upon  General  Insurance   Companies  to  become  more  efficient  and
profitable.  One way in which Insurance Companies are becoming more efficient is
by  reducing  the  number of  General  Insurance  Brokerages  with which they do
business.  Larger General Insurance Brokerages are expected to benefit from this
trend.



                                      -10-
<PAGE>

General Insurance Industry

Insurance  Brokers  are  required  to be  licensed  in each  state,  province or
territory that they conduct business.  In addition,  most jurisdictions  require
individuals  who  engage in  Insurance  Brokerage  activities  to be  personally
licensed.  Licensing  laws for  Insurance  Brokers  vary  from  jurisdiction  to
jurisdiction and are subject to amendment by applicable regulatory  authorities.
Regulatory  authorities have the right to grant,  review and revoke licences and
approvals to sell insurance.

There are two types of  distribution  systems  which account for the majority of
sales of General Insurance to the general public:  firstly,  direct placement by
the Insurance  Company through an in-house  employee sales force and,  secondly,
placement through  independent  General Insurance  Brokerages that place General
Insurance for its  customers  with one of a number of Insurance  Companies.  New
sources of competition  continue to emerge as banks and other financial services
companies  expand the  products  and  services  they offer to include  insurance
products and brokerage services. In addition,  independent Insurance Brokers are
faced with  competition  from Insurance  Companies who utilize  aggressive media
campaigns and  telemarketing  distribution  methods to place  General  Insurance
directly with its customers.

The Insurance  Companies  have put pressure on General  Insurance  Brokerages to
consolidate  the  distribution  component of the insurance  industry,  requiring
ever-increasing  premium volume to justify the  continuance  of their  brokerage
contracts  (i.e.,  contracts  pursuant  to which a General  Insurance  Brokerage
receives  product  access and  support  from the  Insurance  Company).  A larger
General Insurance  Brokerage  generally seeks to have brokerage contracts with a
number of Insurance  Companies  so that the  cancellation  of any one  brokerage
contract would not reduce its ability to offer alternative  competitive products
to its  customers.  Smaller  General  Insurance  Brokerages  that generally have
contracts  with  only a few  Insurance  Companies  are  more  vulnerable  to the
cancellation of any one brokerage  account and the potential  inability to offer
alternative competitive General Insurance products to their customers.

Profile

As of March 31, 2004, the  Corporation  employed 60 people  including  Insurance
Brokers and  operated out of eight  offices  located in the Province of Alberta,
and  operated two  California,  U.S.A.  brokerages  through the vendors of those
brokerages,  who  employed  an  additional  29 people.  The  Corporation  has an
experienced  management  team,  services  more than 23,000  customers and places
insurance  with 150  Insurance  Companies  to place  General  Insurance  for the
Corporation's  customers. The Corporation generated revenue of $7,469,559 in the
fiscal year ended March 31, 2004,  $5,175,072 in the fiscal year ended March 31,
2003 and $4,449,628 in the fiscal year ended March 31, 2002.  The  Corporation's
business is generally  not affected by  seasonality  and  experiences  recurring
revenues  that are  principally  derived  from  commissions  earned from placing
General  Insurance  with  Insurance  Companies  on behalf  of the  Corporation's
customers.  See note 18 to the Company's  consolidated  financial statements for
the geographic distribution of the Corporation's revenues.

The Corporation's  operations are highly automated and it strives to maintain an
excellent reputation with its customers and the Insurance  Companies.  Since its
inception,  the  Corporation  has  pursued  an  aggressive  growth  strategy  of
acquiring  other General  Insurance  Brokerages  and  integrating  them into the
Corporation's overall business structure.  As of March 31, 2004, the Corporation
had  purchased  19 General  Insurance  Brokerages  in the  Province  of Alberta,
Canada, and two insurance brokerages in the State of California.

Growth Strategy

The Corporation has a growth strategy of acquiring strategically located General
Insurance  Brokerages  ("Flagship   Brokerages").   Upon  acquiring  a  Flagship
Brokerage, the Corporation plans to take advantage of the consolidation pressure
in the General  Insurance  industry by further  acquiring and integrating  other
General Insurance Brokerages located close to the Flagship Brokerage in order to
take advantage of the economies of scale of a larger operation.  Moreover, it is
the Corporation's  goal to generate more revenue by providing  increased General
Insurance  coverage to existing  and newly  acquired  customers by virtue of the
Corporation's  representation of various Insurance Companies and their products.
The revenue growth during the past three years has been primarily  attributed to
business  acquisitions  and  internally  generated  business.  There  can  be no
assurance that the Corporation  will continue or improve its earnings growth and
benefit from economies of scale being achieved from increased revenue volume and
commission from its operations and growth strategy.



                                      -11-
<PAGE>

The  Corporation  plans to implement a growth  strategy to other parts of Canada
and the U.S.  During the third  quarter of fiscal  year  2004,  the  Corporation
through its wholly owned United  States  subsidiary,  Addison,  acquired the net
assets of two  California  insurance  brokerages  ("Vista"  and  "John's"),  for
aggregate consideration of $8,600,642 (US$6,516,545).

Subsequent to the fiscal year end, the Company acquired the Vinciguerra  agency,
a  Virginia-based  insurance  brokerage.  See Item 5.B.  Liquidity  and  Capital
Resources, under the heading "Subsequent Events."

At the time of the  acquisition  of the  Vista,  Johns and  Vinciguerra  assets,
Addison  York had not yet obtained  all the  necessary  licenses to operate as a
General  Insurance  Brokerage in California and Virginia and without  possessing
those  licenses  it could not obtain  carrier  appointments  from the  Insurance
Companies which would enable it to market and sell General  Insurance  products.
As such,  Addison York entered into separate Agency  Agreements with the vendors
of Vista,  Johns and Vinciguerra  whereby the vendors of those agencies  agreed,
for the sole and exclusive benefit of Addison York, to market, sell, distribute,
place and write General Insurance products to the clients of Addison York and to
any and all other potential customers who may wish to purchase General Insurance
products from Addison York.

All of the Agency Agreements  entered into with the vendors of the Vista,  Johns
and  Vinciguerra  assets are similar in respect to the duties and obligations of
the parties  thereto and can be summarized as follows.  Pursuant to the terms of
the Agency  Agreements the vendors agreed,  for the exclusive benefit of Addison
York, to staff,  manage and operate the Insurance  Brokerages  and the purchased
assets within an established  budget and in a professional  and prudent  manner.
The agreements  further specify that all clients and revenues  stemming from the
operation of the  Insurance  Brokerage  shall belong  solely to Addison York and
that Addison York is  responsible  for the payment of all of the  reasonable and
provable  expenses of the vendors with respect to the staffing,  management  and
operation of the Insurance Brokerages in accordance with the established budget.

By their  respective  terms,  the  Agency  Agreements  will  terminate  upon the
occurrence  of the  earliest  of the  following  events:  a) the date upon which
Addison York obtains: i) all of the necessary regulatory approvals to operate as
an  Insurance  Brokerage  or agent in the State where the  purchased  assets are
located;  and ii) all of the carrier  appointments from the Insurance  Companies
(or such number of carrier appointments as Addison York deems satisfactory);  or
b) December 31st,  2018 in respect of Johns,  September 30th, 2018 in respect of
Vista and December  31st,  2024 in respect of  Vinciguerra;  or c) the date that
Addison York delivers  written notice to the vendor (as the case may be) that it
is terminating the Agency Agreement. Upon the termination of an Agency Agreement
all of the  vendors  right title and  interest in and to any and all  employment
agreements,  non-competition  agreements and confidentiality agreements which it
may have with its  employees  shall be assigned to Addison  York and any and all
amounts  which are or will become due and owing to Addison York  pursuant to the
terms of the Agency Agreement will immediately become due and payable

As  security  for the  performance  of the terms and  conditions  of the  Agency
Agreement the shareholders of the different  vendors pledged all of their issued
and  outstanding  capital  stock in the  vendors  to  Addison  York and  further
provided  Addison York with a directors  resolution  of the  respective  vendors
authorizing  the officers of Addison York to become the proper signing  officers
of the vendors with respect to the control of the bank  accounts of the vendors.
The respective  pledge of shares  agreements and the directors  resolutions  are
currently  being  held in  escrow  by the firm of  Demiantschuk  Milley  Burke &
Hoffinger  and are to be released  to Addison  York in the event of a default of
the  respective  Agency  Agreements  or  to  the  respective  vendors  upon  the
termination of an Agency Agreement in accordance with its terms.

Since the date of the  acquisition of the Vista,  Johns and  Vinciguerra  assets
Addison York has  acquired  its license to operate as an Insurance  Brokerage in
both California and Virginia.  However,  Addison York is still in the process of
obtaining carrier  appointments from the various different Insurance  Companies,
and given the large  number of  Insurance  Companies  this process may take some
time to fully complete.

The Corporation plans to acquire  additional  General Insurance  Brokerages over
the next 12-month  period  depending  upon its cash resources and its ability to
raise additional capital to acquire Insurance Brokerages.  Depending upon market
conditions, the availability of other General Insurance Brokerages and the price
that they are available,  the Corporation's  acquisition  plans may change.  Any
further growth may require the Corporation to obtain additional



                                      -12-
<PAGE>

equity or debt financing,  which may not be available on attractive terms, or at
all, or may be dilutive to current or future shareholders.

     C.   Organizational Structure

The  Corporation is a General  Insurance  Brokerage which conducts its insurance
business in  Alberta,  Canada,  California,  U.S.A and,  as of  September  2004,
Virginia  U.S.A.  In Canada it  conducts  its  business  through  Anthony  Clark
International  Insurance Brokers Ltd. and Heritage Hill Insurance Ltd., a wholly
owned  operating  subsidiary  of the  Corporation.  In the U.S. it conducts  its
business  through Addison York Insurance  Brokers Ltd., a wholly-owned  Delaware
subsidiary of the Corporation.

              -----------------------------------------------------
               Anthony Clark International Insurance Brokers Ltd.
                              (Alberta corporation)
              -----------------------------------------------------
                        |                              |
-----------------------------------         -----------------------------------
  Addison York Insurance Brokers                Heritage Hill Insurance Ltd.
           Ltd.(Delaware                             (Alberta corporation)
         corporation) 100%                                  100%
-----------------------------------         -----------------------------------

     D.   Property, Plants and Equipment

The  Corporation  does not own any real  property  but  leases  office  space to
conduct  its  business  operations  as  a  General  Insurance   Brokerage.   The
Corporation has a conditional  operating sublease commitment for office premises
in Calgary,  Alberta for a term expiring July 30, 2005 at a base rent of $11,096
per month plus  operating  costs  estimated at $9,668 per month.  Heritage  Hill
Insurance  Ltd.,  a  wholly-owned  subsidiary,   also  has  an  operating  lease
commitment  for office  premises in Calgary,  Alberta,  currently  on a month to
month basis at a base rent of $1,618 per month plus operating costs estimated at
$1,602 per month. The remaining six offices operate on a  month-to-month  office
sharing  arrangement basis without formal leases. The total amount of additional
month-to-month lease costs is approximately $2,500 per month in the aggregate.

In California,  the  Corporation's  subsidiary  (Addison York) has two operating
leases,  one in San  Francisco  area for a term expiring on August 31, 2005 at a
rent of US$20,320 and one in the Los Angeles area for a term expiring  September
30,  2004 at a rent of  $2,042.

Item 5. Operating And Financial Review And Prospects

The  following  discussion  and analysis  explains  trends in the  Corporation's
financial  condition and results of operations  for the three fiscal years ended
March 31, 2004,  2003 and 2002.  This  discussion and analysis of the results of
operations  and  financial  condition  of the  Corporation  should  be  read  in
conjunction with the audited financial statements and the related notes, as well
as statements  made  elsewhere in this Form 20-F.  See "Special  Note  Regarding
Forward  Looking  Statements".  The financial  statements  have been prepared in
accordance with accounting principles generally accepted in Canada which conform
to accounting  principles in the United States, except as described in the notes
to the  Consolidated  Financial  Statements dated March 31, 2004, 2003 and 2002.
Unless  expressly  stated  otherwise,  all  references to dollar amounts in this
section are in Canadian  dollars  (in  accordance  with  Canadian  GAAP).  For a
reconciliation to accounting  principles generally accepted in the United States
("U.S.  GAAP"),  see  note  19 to  the  consolidated  financial  statements  and
supplemental information entitled Reconciliation to United States GAAP for years
ended March 31, 2004, 2003 and 2002.

Overview

The  Corporation's  operations  are  primarily  directed  to acting as a General
Insurance  Brokerage and acquiring  Flagship  Brokerages  which the  Corporation
integrates into its existing operations in order to take advantage of the


                                      -13-
<PAGE>

economies  of  scale  of a  larger  Insurance  Brokerage  operation.  It is  the
Corporation's  goal to generate  more  revenue by  providing  increased  General
Insurance  coverage to existing  and newly  acquired  customers by virtue of the
Corporation's representation of various Insurance Companies and their products.

Subsequent  to  March  31,  2004,  the  Corporation  acquired  a  Virginia-based
insurance brokerage. The results of operations included in this Item 5.A. do not
incorporate  the  operating  results  of  this  newly-acquired   brokerage  and,
accordingly,  may not be representative  of the Corporation's  current or future
results.  See Item 5.B.  Liquidity  and  Capital  Resources,  under the  heading
"Subsequent Events."

Critical Accounting Policies

On December 12, 2001 the  Securities  and  Exchange  Commission  ("SEC")  issued
Financial  Reporting  Release  ("FRR")  No.  60,  "Cautionary  Advice  Regarding
Disclosure  About  Critical  Accounting  Policies"  which,  among other  things,
encourages  discussion  concerning the most critical accounting policies used in
the  preparation  of the Company's  financial  statements.  Critical  accounting
policies are defined as those that are both very  important to the  portrayal of
the Company's  financial  condition and results,  and require  management's most
difficult,  subjective  or complex  judgments.  We are  required to make certain
estimates,  judgments and assumptions  that we believe are reasonable based upon
available information, historical information and/or forecasts. These estimates,
judgments and assumptions  affect the reported amounts of assets and liabilities
at the date of the financial  statements and the reported  revenues and expenses
during the reporting periods.  Actual results could differ from these estimates.
The accounting  policies which management  believes are the most critical to aid
in fully  understanding  and evaluating our reported  financial  results include
those  relating to  business  acquisitions,  and  accounting  for the  resulting
customer account and goodwill balances, and stock-based compensation.

Business Combination, Goodwill and other Intangible Assets

On April 1, 2002, the Corporation  implemented the new accounting  standards for
business  combinations  and goodwill and other  intangible  assets as set out in
CICA Handbook sections 1581 and 3062.

Under  Section  1581,  the  purchase  method  should be used to account  for all
business  combinations  initiated on or after July 1, 2001.  Under Section 1581,
intangible  assets acquired in a business  combination  should be identified and
recognized apart from goodwill when they arise from either  contractual or other
legal rights or they can be separated  from the  acquired  enterprise  and sold,
transferred,  licensed, rented or exchanged, either individually or with a group
of related assets or liabilities.  Any intangible  assets acquired in a business
combination  completed  before July 1, 2001,  that do not meet the  criteria for
separate recognition in Section 1581, must be subsumed into goodwill.

Under  Section  3062,  goodwill is not  amortized  and is tested for  impairment
annually, or more frequently if events or changes in circumstances indicate that
the asset might be impaired.

The  Corporation  adopted  Sections 1581 and 3062 effective April 1, 2002. As of
the date of adoption,  the  Corporation  had  previously  reported an intangible
asset called customer accounts in the amount of $3,085,009,  and no goodwill. In
accordance  with the  requirements  of Sections  1581 and 3062,  the adoption of
these two Sections is not applied  retroactively  and the amounts  presented for
prior  periods are not to be restated for this change.  However,  in  accordance
with the  requirements of those Sections,  the Corporation  reviewed each of the
business  combinations  completed  prior  to July 1,  2001 to  determine  if the
carrying amount of acquired  customer accounts met the criteria in CICA Handbook
Section 1581 for recognition  apart from goodwill,  and whether the amortization
period for acquired customer accounts continued to be appropriate. In connection
with this review, the Corporation  determined that it had incorrectly  allocated
amounts to customer  accounts under  superseded  CICA Handbook  Section 1580 for
business combinations consummated prior to July 1, 2001, and that it had used an
inappropriate amortization period for customer accounts.

Accordingly,  in  connection  with the adoption of Sections  1581 and 3062,  the
Corporation has restated the carrying amounts of goodwill and customer  accounts
at April 1, 2001 in order to correct the allocation of the excess purchase price
over the  fair  value of  tangible  assets  acquired  in  business  combinations
completed prior to July 1, 2001, and to adjust the  amortization  period used in
prior periods.  As a result, it was determined that, in aggregate,  net carrying
value of  $1,593,468  of  customer  accounts  at April 1, 2001  should have been
classified as goodwill under Section



                                      -14-
<PAGE>

1580. In conjunction with this correction,  the amortization  period of customer
accounts was reduced to 12 years retroactively, with a net reduction of customer
accounts of  $1,008,515.  The future  income tax  liability  related to customer
accounts was reduced by $203,160  and the deficit was reduced by  $788,113.  The
statement of  operations  and deficit for the year ended March 31, 2002 has been
restated to reflect the  resulting  changes in  depreciation,  amortization  and
future  income tax  expense for that year.  Depreciation  and  amortization  has
increased from $343,172 to $634,792 and future income tax recovery has increased
by $78,391,  resulting in an increase of $213,229 in net loss for the year ended
March 31, 2002.  This  correction  conformed the  Corporation's  accounting  for
business  combinations  completed prior to July 1, 2001, and the amortization of
goodwill and customer accounts,  under Canadian  generally  accepted  accounting
principles  ("Canadian  GAAP") with the accounting the  Corporation had followed
under United States generally  accepted  accounting  principles  ("United States
GAAP").  Accordingly,  there  have been no  changes  in the  reported  operating
results  for  financial  position  of the  Corporation  for United  States  GAAP
purposes (see note 19).

The Corporation conducted a transitional goodwill impairment test as at April 1,
2002, the date of adoption of the new standards.  Under the goodwill  impairment
test,  if the fair value of a reporting  unit  exceeds its carrying  value,  the
excess of fair value of net assets  over the fair value of a  reporting  unit is
considered  to be the  implied  value  of  goodwill.  If the  carrying  value of
goodwill  exceeds  its  implied  value,  the  difference  is  recognized  as  an
impairment loss. Based on this test, the Corporation  determined that it has one
reporting  unit and that the  implied  value of goodwill  exceeds  the  carrying
amount,  resulting in no impairment loss pursuant to the transitional provisions
of the new goodwill accounting standards.

Acquired customer accounts are stated at cost less accumulated  amortization and
are  amortized  on a  straight-line  basis  over  periods  ranging  from  ten to
seventeen  years.  The  carrying  value of  customer  accounts  is  periodically
reviewed by management to determine if the facts and circumstances  suggest that
it may be impaired. If there are indications that the carrying value is impaired
the  Corporation  compares  the carrying  value of its customer  accounts to the
estimated undiscounted cash flow generated from those assets. If this assessment
indicates  that the  carrying  value of the  asset may not be  recoverable,  the
carrying  value is then  compared to the  estimated  fair value of the  customer
accounts.  Any impairment  identified  through this assessment will require that
the  carrying  value of  related  customer  accounts  be  written  down to their
estimated fair value

As a result of the adoption of the new standard for  accounting for goodwill and
other  intangible  assets and the correction of allocation of purchase price and
amortization  periods discussed above, the previous differences between Canadian
and United  States GAAP that existed for the Company's  accounting  for goodwill
and customer accounts has been eliminated.

Stock-based Compensation

On April  1,  2002 the  Corporation  adopted  the new  accounting  standard  for
stock-based   compensation  as  set  out  in  Canadian  Institute  of  Chartered
Accountants  ("CICA") Handbook Section 3870. This section establishes  standards
for the recognition,  measurement and disclosure of stock-based compensation and
other stock-based  payments made in exchange for goods and services.  It applies
to  transactions  in which an enterprise  grants  shares of common stock,  stock
options, or other equity  instruments,  or incurs liabilities based on the price
of the common stock or other equity instrument.

In accordance with the new standard,  options or similar  instruments granted to
non-employees  by the Corporation are recorded at their fair value. As permitted
under the new standard,  the  Corporation  uses  settlement  date  accounting to
account for employee stock options  whereby no expense is recorded in connection
with the option and the  proceeds  from  exercise of the option are  recorded to
share  capital.  The new standards  require the  Corporation to disclose the pro
forma  impact on net income and  earnings per share if the fair value method was
used to account for employee stock options. During the twelve months ended March
31, 2004, 334,411 stock options were issued. Had we determined compensation cost
in the year ended  March 31,  2004 based on the fair value at the grant date for
its stock options,  $152,288 (2003 - $24,954) would have been recorded using the
Black Scholes  option pricing model with the  weighted-average  assumptions of a
risk free interest rate of 2.6%,  volatility of 64%,  expected  option life of 5
years, and zero dividend yield.

Effective  April 1, 2004, the  Corporation has adopted the revised CICA Handbook
Section 3870,  which requires that a fair-value  method of accounting be applied
to  stock-based  compensation  payments  to both  employees  and  non-employees.
520,000 stock  options were issued  during the six months  ending  September 30,
2004 and an amount of $411,275 was booked as a non-cash stock based compensation
expense. These options were granted with an exercise price ranging $1.10 - $1.25
per share and vested immediately. The options expire in five years.


                                      -15-
<PAGE>

For United States GAAP  purposes,  the Company  follows the intrinsic  method of
accounting for  stock-based  compensation,  in accordance  with APB 25. In 2004,
$7,713 (2003 - $7,713; 2002 - $84,411) was recorded as compensation  expense for
stock options issued to directors, officers and employees.

Income Taxes

The Corporation uses the liability method of accounting for income taxes.  Under
the liability  method,  future tax assets and liabilities are recognized for the
future consequences  attributable to differences between the financial statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Future  tax  assets  and  liabilities  are  measured  using  enacted  or
substantively enacted tax rates expected to apply to taxable income in the years
in which those  temporary  differences  are expected to be recovered or settled.
The  effect on future tax  assets  and  liabilities  of a change in tax rates is
recognized  in income in the  period  that  includes  the date of  enactment  or
substantive  enactment.  A valuation  allowance  is recorded  against any future
income  tax  asset if it is more  likely  than not  that the  asset  will not be
realized.

At March 31, 2004, the  Corporation  had future tax assets of $583,400,  against
which  a  valuation   allowance   of  $352,100  has  been   provided   for.  The
recoverability  of the remaining  future tax asset carrying value of $231,300 is
dependent upon the Corporation's  ability to generate  sufficient taxable income
to absorb the related deductible amounts.

     A.   Operating Results

US Acquisitions

During the year ending March 31,  2004,  the  Corporation,  by way of its wholly
owned  United  States  subsidiary,  Addison,  acquired  the  net  assets  of two
California insurance brokerages doing business as "Vista International Insurance
Brokers" and "Johns Insurance Agency, Inc." for initial aggregate  consideration
of $8,600,642 (US$6,516,545), subject to final purchase price adjustments with a
further 20% of the  purchase  price of one agency  being  determined  based on a
price calculation relating to the commission revenue in 5 years, which cannot be
quantified at this time.

The initial purchase price for the Vista brokerage of $6,117,633  (US$4,626,707)
was satisfied by Addison  paying  $2,189,129  (US$1,656,173)  to the vendors and
$168,489  (US$125,917)  for legal and other fees and  issuing  to the  vendors a
$3,760,015  (US$2,844,617)  promissory  note (the "Vista Note").  The Vista Note
bears  interest at 7% per annum and is repayable  over 10 years in equal monthly
installments  of  US$40,812,  including  interest  and is  secured  by a general
security  agreement  of  Addison.  The note  payable to the vendors of the Vista
assets had a principal amount of $4,646,127  (US$3,515,000)  bearing interest at
7%. That note has been  discounted to $3,760,015  (US$2,844,617)  to reflect the
fair value of the note based  upon the market  value rate for a similar  note of
12%.

The initial purchase price for the Johns brokerage of $2,483,009  (US$1,891,672)
was satisfied by Addison  paying  $2,064,023_  (US$1,572,469)  to the vendor and
$189,651  (US$144,484)  for legal and other  fees and  issuing  to the  vendor a
$229,335  (US$174,719)  promissory  note (the "Johns  Note").  The Johns Note is
non-interest bearing and unsecured. It is repayable on December 31, 2004.

The initial  purchase  price is subject to adjustment  based on the  twenty-four
months  (Vista) and twelve months (Johns) of commission  revenue  retention from
the effective date of the  acquisitions,  and can only affect the purchase price
to reduce it.

In aggregate,  as a result of the above  transactions,  the net assets  acquired
were as follows:



                                      -16-
<PAGE>

Net assets acquired:

<TABLE>
     ----------------------------------------------------------------------------------------------------
                                                         Vista             Johns               Total
     ----------------------------------------------------------------------------------------------------
     <S>                                              <C>               <C>                <C>
     Customer accounts                                 $ 2,481,432       $ 1,372,120        $ 3,853,552
     Computer systems and office equipment                 136,706            45,941            182,647
     Non-competition agreements                            523,992           179,826            703,818
     Goodwill                                            3,038,638           885,122          3,923,760
     Long-term debt (capital lease)                        (63,135)               --            (63,135)
     ----------------------------------------------------------------------------------------------------
                                                       $ 6,117,633       $ 2,483,009        $ 8,600,642
     ----------------------------------------------------------------------------------------------------
     Consideration paid:
     ----------------------------------------------------------------------------------------------------
     Cash                                              $ 2,357,618       $ 2,253,674        $ 4,611,292
     Long-term debt                                      3,760,015           229,335          3,989,350
     ----------------------------------------------------------------------------------------------------
                                                       $ 6,117,633       $ 2,483,009        $ 8,600,642
     ----------------------------------------------------------------------------------------------------
</TABLE>

The acquired customer  accounts will be amortized on a straight-line  basis over
ten years and seventeen  years,  respectively for the Vista and John's agencies,
their estimated useful lives.

Revenues and expenses for California,  U.S.A. acquisitions have been included in
the  current  fiscal  year from the closing  date of the  acquisitions  (Vista -
October 17, 2003 and Johns - November 6, 2003) and thus reflect results for only
part of the year.  The  Corporation's  revenues  and expenses are expected to be
significantly  different  in the next fiscal year as results of the full year of
operations will be included in the financial statements.

Revenues

The  Corporation's  revenue increased to $7,469,559 for the year ended March 31,
2004 from  $5,175,072 for the year ended March 31, 2003 primarily due to revenue
generated  from  US  acquisitions  (approximately   $1,980,000),   new  business
commissions generated and premium increases (approximately  $231,000), and a net
increase in combined  other  revenue  (approximately  $83,000,  primarily due to
increase in contingent  commissions of $261,000,  a decrease in interest revenue
of  approximately  $10,000 and  non-recurrence  of one-time  revenue of $151,000
booked in the prior year).  The total insurance  policy  premiums  (including US
operations)  processed  during the year  ended  March 31,  2004 was  $52,500,000
against $37,000,000 (Canadian operations only) during year ended March 31, 2003.
Revenue  from the US  acquisitions  has been  recorded  from the closing date of
acquisition.

The  Corporation's  revenue increased to $5,175,072 for the year ended March 31,
2003 from  $4,449,628  for the year  ended  March 31,  2002  primarily  due to a
combination of an increase in revenues due to new business commissions generated
and premium increases  (approximately  $656,000), a decrease in interest revenue
(approximately  $48,000),  a  net  increase  in  other  revenues  (approximately
$117,000,  primarily  due to an increase in one-time  revenue of $151,000  and a
decrease in contingent  commissions of approximately  $34,000).  This translates
into an increase in insurance policy premiums being processed from approximately
$32,000,000  for the year ended March 31, 2002 to  approximately  $37,000,000 in
insurance premiums for the year ended March 31, 2003.

Contingent  commissions  are  commissions  paid to the  Corporation by Insurance
Companies based upon volume, growth and/or profitability of business placed with
such Insurance Companies by the Corporation.

Expenses

Salaries  and wages  increased to  $4,818,880  for the twelve month period ended
March 31, 2004 from  $3,165,924 for the twelve month period ended March 31, 2003
mainly due to salaries and wages of US acquisitions  (approximately $1,500,000),
salaries  and  wages  related  to  the  new  business  generated  (approximately
$111,000)  and  administrative  salary  adjustments   (approximately   $42,000).
Salaries and wages have increased to $3,165,924 for the year ended



                                      -17-
<PAGE>

March 31, 2003 from  $2,560,844  for the year ended March 31, 2002 primarily due
to the salaries and wages of the new business generated (approximately $429,000)
and  due  to   adjustments   to   administrative   wages  and  positions   added
(approximately $176,000).

Rent  increased to $422,672 for the year ended March 31, 2004 from  $283,242 for
the  year  ended  March  31,  2003  primarily  due  to  rent  related  to the US
acquisitions.  Rent increased to $283,242 for the year ended March 31, 2003 from
$263,380 for the year ended March 31, 2002  primarily due to base rent increases
(approximately   $30,000)   and   decreases  in   operating   cost   adjustments
(approximately $10,000).

General and  administrative  expenses increased to $1,446,886 for the year ended
March 31, 2004 from  $1,135,956  for the year ended March 31, 2003 mainly due to
the  inclusion  of  general  and  administrative  expenses  of  US  acquisitions
(approximately  $350,000),  increase  in  legal  fees  (approximately  $33,000),
increase in insurance costs (approximately $42,000), increase in accounting fees
(approximately $24,000), decrease in operating costs of the website and computer
maintenance  costs  (approximately  $36,000),  and  decrease  in other  expenses
primarily  related  to  acquisition  identification   (approximately  $102,000).
General and  administrative  expenses decreased to $1,135,956 for the year ended
March 31, 2003 from  $1,180,375  for the year ended March 31, 2002 primarily due
to a reduction in website operating costs (approximately $118,000), net increase
in  operating  costs  (approximately  $43,000),  increase  in costs  related  to
financing and acquisition  research  (approximately  $63,000),  and reduction in
investor relations costs ($32,000).

Legal  judgement  expense of $522,619  was  recorded in the year ended March 31,
2004.  This  judgement  was made  against  the  Corporation  with  respect  to a
previously   outstanding  legal   proceeding.   The  judgement  related  to  the
Corporation's alleged failure to honor a stock option agreement dated October 1,
1998. Subsequent to year-end, the Corporation reached a settlement for an amount
of $450,000 (including legal costs). The difference between the judgement amount
and  settlement  of $76,180  was  received  and will be  reflected  in the first
quarter of the new fiscal year.

Foreign currency loss

Foreign exchange gain for the year ended March 31, 2004 was $0 against a loss of
$37,172 in the year ended March 31, 2003.  The gain resulted due to the strength
of Canadian  Dollar  against the US Dollar.  Foreign  currency loss increased to
$37,172  for the year ended  March 31, 2003 from $0 for the year ended March 31,
2002.  The foreign  currency  loss  resulted  from the  consolidation  of the US
subsidiary in the fiscal year ending March 31, 2003.  The accounts of integrated
foreign  operations  are  translated  into  Canadian  dollars using the temporal
method  whereby   monetary  assets  and  liabilities  are  translated  at  rates
prevailing at the balance sheet date, and  non-monetary  assets and  liabilities
are translated at historic rates.  Revenues and expenses are translated at rates
of exchange  prevailing on the transaction  dates.  Translation gains and losses
are recognized in earnings.  Effective October 17, 2003, the Corporation adopted
the  current  rate  method of  translation  whereby  assets and  liabilities  of
self-sustaining  operations  conducted in foreign  currency are translated  into
Canadian  dollars at the  exchange  rate in effect at the  balance  sheet  date.
Revenues and expenses are  translated  at average  exchange  rates for the year.
Translation  gains or losses are shown as a separate  component of shareholder's
equity.  The change in the method of translation was necessitated due to Addison
acquiring the net assets of two California insurance brokerages (note 3).

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

EBITDA is a non-Generally  Accepted Accounting Principles measure and represents
earnings before interest,  depreciation and amortization (non-cash expenses) and
income taxes.  The  Corporation's  EBITDA  decreased  from $552,778 for the year
ended March 31, 2003 to $258,502 for the year ended March 31, 2004 primarily due
to the  legal  judgement  ($522,619).  EBITDA as a  percentage  of  revenue  has
decreased  from  10.7% for the year  ended  March 31,  2003 to 3.5% for the year
ended March 31, 2004. The  Corporation's  EBITDA increased from $445,029 for the
year  ended  March 31,  2002 to  $552,778  for the year  ended  March  31,  2003
primarily due to increased new business  commission and the related increases in
salaries and wages, and the reduction to website  operating  costs.  EBITDA as a
percentage  of revenue  increased  from 10% for the year ended March 31, 2002 to
10.7% for the year ended March 31, 2003.

EBITDA is discussed and presented here as a  non-Generally  Accepted  Accounting
Principles  measure  because it is  management's  major  performance  indicator.
EBITDA is reconciled to Net Earnings (loss) below.



                                      -18-
<PAGE>


<TABLE>
Years ended March 31,                                 2004           2003          2002         2001(1)      2000(1)
                                                                                (restated)    (restated)    (restated)
<S>                                               <C>            <C>           <C>           <C>           <C>
OPERATIONS
Revenue                                           $ 7,469,559    $ 5,175,072   $ 4,449,628   $ 3,894,115   $ 3,509,671
Earnings before the following (EBITDA)                258,502        552,778       445,029       251,034       684,658
Interest and Financing Costs                         (941,153)      (285,720)       (9,540)       (9,614)       (5,191)
Depreciation and amortization                        (481,025)      (609,546)     (634,886)     (438,133)     (376,740)
Income Taxes (expense) recovery                       112,178        (13,313)       67,561       206,657      (374,115)
Net (Loss) Earnings                               $(1,051,498)   $  (355,801)  $  (131,836)  $     9,944   $   (71,388)
</TABLE>


<TABLE>
Interest and Financing Costs
                                                                                    2004           2003          2002
      <S>                                                                     <C>            <C>             <C>
      Canadian operations:
      Interest and financing costs on Paragon term loan repaid (note
      10(b))                                                                   $ 274,866      $      --       $    --
      Interest and financing costs on long-term debt                                  --         10,961         6,435
      Interest on obligations under capital lease                                  1,701          1,870         3,105
      ----------------------------------------------------------------------------------------------------------------
                                                                                 276,567         12,831         9,540
      US operations:
      Interest and financing costs on Textron terminated debt financing
      (note 10(a))                                                               424,401        272,889            --
      Interest and financing costs on long-term debt                             237,631             --            --
      Interest on obligations under capital lease                                  2,554             --            --
      ----------------------------------------------------------------------------------------------------------------
                                                                                 664,586        272,889            --
      Total interest and financing costs                                       $ 941,153      $ 285,720       $ 9,540
</TABLE>


Depreciation and Amortization

Depreciation and amortization decreased to $481,025 for the year ended March 31,
2004 from  $609,546  for the year ended  March 31,  2003.  The  Deprecation  and
Amortization  expense was higher during the year ended March 31, 2003  primarily
due to the final  amortization of the website  development  costs, the change in
accounting  policy  related  to  business   combinations,   goodwill  and  other
intangible  assets and  purchase  price  adjustments  part way through the year.
During the year ended March 31, 2004, the Deprecation and  Amortization  expense
included an amount of $196,814(2003 - $0) relating to US acquisitions.

Depreciation and amortization increased to $609,546 for the year ended March 31,
2003 from $634,792 for the year ended March 31, 2002  primarily due to the write
down of website  development costs  ($210,200),  the change in accounting policy
related to business combinations,  goodwill and other intangible assets, and the
purchase adjustments part way through the prior year.



                                      -19-
<PAGE>

Net loss and loss per Common share

<TABLE>
                                                                2004             2003           2002
                                                                                             (restated)
    <S>                                                      <C>              <C>             <C>
    Net loss                                                $(1,051,498)      $(355,801)      $(131,742)

    Loss per Common Share, basic and diluted:               $     (0.14)      $   (0.05)      $   (0.02)
</TABLE>

Net loss for the year ended March 31, 2004 increased by $695,697 mainly due to a
legal  judgment of $522,619 and an increase in interest and  financing  costs of
$655,433,  offset by a decrease in depreciation and amortization of $128,521 and
a decrease in future  income tax expenses of $125,491.  Net loss as a percentage
of revenue has  increased  from 6.89% for the year ended March 31, 2003 to 14.1%
for the year ended March 31, 2004.

Net loss for the year ended March 31, 2003 was $355,801  compared to net loss of
$131,742  for the year ended March 31,  2002 due to an increase in interest  and
financing  costs of $276,180.  Net loss as a percentage of revenue was 6.89% for
the year ended March 31, 2003  compared to net loss of 2. 96% for the year ended
March 31, 2002.

     B.   Liquidity and Capital Resources

At March 31,  2004,  the  Corporation  had  working  capital of  $2,052,673  and
long-term debt outstanding of $8,014,044.  At March 31, 2003 the Corporation had
working  capital of $3,910,863  and long-term debt  outstanding of $17,624.  The
Corporation's  balance  sheet as at March 31, 2004 as compared to March 31, 2003
reflects a net decrease in working  capital of  $1,858,190  due to cash used for
the US  acquisitions.  Other major  changes  include an increase in net customer
accounts   ($3,465,334),goodwill   ($3,884,353),  and  other  intangible  assets
($663,551),  long-term debt  ($7,996,420)  related to financing  acquisitions of
customer  accounts  and  goodwill  and a  decrease  in  shareholder's  equity of
$738,337,  primarily due to an operating  loss of  $1,051,498  less net proceeds
from a share issue of $314,006 and a cumulative  translation adjustment of $845.
The  Corporation's  balance  sheet as at March 31, 2003 as compared to March 31,
2002 primarily  reflects a reduction in working capital,  represented by current
assets less current  liabilities.  Major items  accounting  for the reduction in
working capital  (approximately  $353,000) relate to reduction of long-term debt
and costs incurred for the new financing arranged.

The working capital ratios (current  assets/current  liabilities) were 1.95:1 as
at March 31,  2004 and 4.68:1 as at March 31,  2003.  The  long-term  portion of
long-term  debt was  $8,014,044 as at March 31, 2004 and $17,624 as at March 31,
2003.  Accordingly,  the debt to  equity  ratios  (long-term  debt/shareholders'
equity)  were  1.23 as at March  31,  2004  and  0.002  as at  March  31,  2003.
Shareholders'  equity has  decreased  from  $7,236,434  as at March 31,  2003 to
$6,498,097  as at March 31,  2004 due to the loss for the  twelve  month  period
ended March 31, 2004  primarily  related to the legal  judgement  ($522,619) and
expensing  of the  financing  costs  related  to new  and  terminated  financing
($495,763)  and  depreciation  and  amortization  ($481,025).  The  decrease was
partially  offset by the net  proceeds of $314,006  from the private  placement.
Shareholders'  equity  decreased  from  $7,592,235  as  at  March  31,  2002  to
$7,236,434 as at March 31, 2003  primarily  due to the  correction in accounting
policy for goodwill and other intangible assets and the current year loss.

Cash and cash equivalents decreased $2,043,751 in the year ending March 31, 2004
due to negative cash flow from  operating and  investing  activities,  partially
offset by positive cash flow from  financing  activities.  Operating  activities
generated  negative  cash flow due to legal  judgement  of  $522,619  and higher
interest and financing costs. Cash flow from investing  activities was negative,
as cash was used primarily to acquire new brokerages ($4.6 million) and computer
systems and office  equipment  ($66,230).  Cash flow from  financing  activities
provided positive cash flow of $3.5 million mainly due to a private placement of
$314,006  and Oak Street debt  financing  ($4.4  million),  partially  offset by
$655,274, deposited as collateral to the Oak Street debt financing, and $557,324
paid for deferred financing costs.

As at March 31, 2004, the Corporation had contractual and long-term  obligations
as set forth in Item 5.F.



                                      -20-
<PAGE>

The  Corporation  does not currently  enter into any financial  instruments  for
hedging purposes.

Financing Arrangements and Acquisitions

On October 20, 2003,  a  termination  and release  agreement  was executed  with
Textron  Financial  Corporation,  which  terminated the loan  agreement  between
Addison and Textron and released all security  documents.  During the year ended
March 31, 2004, the total interest and financing  costs expensed for the Textron
loan was $424,401 (2003 - $272,899).

On March  22,  2004,  the  Corporation  closed  a  US$5,000,000  debt  financing
arrangement  with Oak Street Funding LLC ("Oak Street")  whereby Oak Street will
provide a  US$5,000,000  reducing  revolving  line of credit  ("the "Oak  Street
Facility") to Addison.  The Corporation can borrow,  an aggregate  amount not to
exceed at any time outstanding the lesser of (a) the maximum principal amount of
the  Line of  Credit  or (b) the  Borrowing  Base.  As of  August  31,  2004 the
Corporation has drawn $4,586,749 (US$3,500,000) of the US$3,985,000 available as
determined  by the  Borrowing  Base.  The  Borrowing  Base  is  determined  as a
percentage of recurring annual revenue of eligible insurance  commissions earned
with regard to policies of acceptable  insurance  pursuant to agency  agreements
between Addison or the Corporation  and insurance  companies  having a rating by
A.M. Best Company (a rating agency) of B and above.  The Oak Street Facility has
an interest rate of prime rate plus 8.0% per annum,  with interest only payments
for two years following the date of closing  ("Pre-Amortization  Period"). After
the   Pre-Amortization   Period,   the  Corporation   shall  pay  equal  monthly
installments  of principal  and interest in the amount  calculated  based on the
amortization  schedule  with the total amount being repaid over 60 month period.
The Pre-Amortization  Period may be extended for up to three additional one year
periods  with the consent of Oak Street.  The Facility is secured by the general
security  agreement of Addison and, has been guaranteed by the Corporation.  Oak
Street,  will have a first priority  security  interest in the assets of Addison
and the  Corporation,  other than any  collateral  subject to certain liens from
approved future financings.  The Oak Street Facility requires the Corporation to
deposit a minimum  balance of $655,274  (US$500,000)  as  collateral in the bank
designated  by Oak Street and maintain a minimum  balance of  US$500,000  in the
collateral account at all times. On the closing date, the Corporation  deposited
US$500,000  with Bank One,  N.A. The Oak Street  Facility is required to be used
for (i) to refinance an existing senior credit facility,  (ii) to make permitted
acquisitions,  (iii) to acquire  equipment in the ordinary  course to expand its
business,  (iv)  to  fund  reasonable  working  capital  needs  associated  with
permitted  acquisitions,  and (v) for such other  purposes as may be approved in
writing by the  lender.  In  connection  with this  financing,  the  Corporation
incurred  US$401,000  (CDN  $525,310)  of  costs,  of which  US$55,200  was paid
subsequent to the year-end. These amounts are being amortized on a straight-line
basis over five years,  amortization  for the period  ending  March 31, 2004 was
$2,301 (US$1,732).

In addition, Addison issued the Vista Note and the Johns Note in connection with
the  acquisition of the Vista and Johns  brokerages in  California,  and will be
required  to make an  additional  payment to the  vendor of the Vista  brokerage
based on earned commissions. See Item 5.A. under "US Acquisitions".

Subsequent Events

Subsequent to March 31, 2004, the Corporation  received regulatory approval from
the Toronto Stock  Exchange to make a normal course issuer bid.  Pursuant to the
bid,  the  Corporation  may  purchase a maximum of 397,758 of its common  shares
representing  approximately  5% of the 7,955,153  issued and outstanding  common
shares.  The bid will  commence on May 20, 2004 and end on May 19, 2005. To July
31, 2004, the Corporation has not repurchased any of its shares.

On June 14, 2004, the Corporation  closed a US$7,500,000  ($10,090,725 CDN) debt
financing  arrangement with First Capital  Corporation,  LLC ("FCC") whereby FCC
will provide up to a US$7,500,000  ($10,090,725 CDN) reducing  revolving line of
credit (the "FCC Facility") subject to a borrowing base formula to Addison.  The
Corporation  can  borrow,  an  aggregate  amount  not  to  exceed  at  any  time
outstanding the lesser of (a) the maximum principal amount of the Line of Credit
or (b) the Borrowing  Base. As of September 25, 2004 the  Corporation  has drawn
US$2,780,000 of the US$7,500,000  available as determined by the Borrowing Base.
The Borrowing Base is determined as a percentage of recurring  annual revenue of
eligible  insurance  commissions  earned with  regard to policies of  acceptable
insurance pursuant to agency agreements between Addison and insurance  companies
having a rating by A.M. Best Company of B and above.  The FCC Facility will have
a Wall Street  Journal  interest rate of prime plus 2% per annum,  with interest
only payments for two years following the date of closing. After the initial


                                      -21-
<PAGE>

two-year  period,  the  Corporation  shall pay the principal and interest in the
amount calculated based on the amortization schedule with the total amount being
repaid  over a 36 month  period.  The FCC  Facility  is secured  by the  general
security agreement of Addison and has been guaranteed by the Corporation,  which
guarantee  has been secured by a general  security  agreement  and pledge of its
shares in Addison.  Pursuant to the FCC Facility,  FCC,  will have:  (i) a first
priority  security  interest in the assets of Addison  which are acquired  after
June 14, 2004, in connection with any purchase or other  acquisition by Borrower
from an unaffiliated party and financed by FCC, of: (a) an insurance agency; (b)
any group of  insurance  policies;  (c) any "book of  business"  with respect to
insurance  policies;  and  (d)  any  "expirations"  with  respect  to  insurance
policies:  in each case together with all future insurance  policies  (including
all commissions paid or payable thereunder) and other assets directly related to
such  acquired  assets,  and all  products  and  proceeds  thereof;  and  (ii) a
subsequent security interest, subject to certain permitted encumbrances,  in the
assets of Addison and the  Corporation.  The FCC Facility is required to be used
to fund  permitted  acquisitions  within the United  States and provide  working
capital for the related acquisitions.  As at August 31, 2004 the Corporation had
incurred US$371,095 of costs related to this financing,  of which US$354,703 had
been paid after  year-end.  These  amounts will be amortized on a  straight-line
basis over five years. No amortization  has been booked for the year ended March
31, 2004.

The Corporation is in non-compliance of certain financial  covenants  prescribed
in the loan agreements with its senior lenders.  The financial  covenants relate
to maintenance of a certain level of tangible net worth (TNW),  minimum interest
coverage  ratio  (MICR) and a minimum  ratio of total  liabilities  to TNW.  The
lenders have agreed to waive the Corporation's non-compliance of these covenants
to September 30, 2004 and the Corporation is in discussions  with the lenders to
alter or replace these covenants by amendment to loan agreements with those that
can be reasonably maintained by the Corporation.  At this time, no agreement has
been  reached  with the lenders to amend the loan  agreements.  The  Corporation
expects  to  continue  to  be in  non-compliance  of  these  covenants  for  the
foreseeable future until an agreement has been reached with the lenders to amend
the loan agreements.  The Corporation anticipates that it will be able to obtain
further waivers or amendments of the Corporation's  financial covenants from its
lenders but this cannot be  guaranteed.  If the  Corporation is unable to comply
with the financial covenants and they are not waived by the lenders, the lenders
could  exercise  their rights to accelerate the  Corporation's  obligations  and
(unless paid with replacement financing) acquire or dispose of the Corporation's
assets.  Due to this  uncertainty,  the  Corporation  has at September  30, 2004
reclassified  the full amount of its  long-term  debt as current,  in compliance
with  Canadian   accounting   standards   for   long-term   debt  with  covenant
non-compliance.  This  reclassification  appears  on the  Corporation's  interim
balance sheet at September 30, 2004,  which has been filed in Canada and will be
submitted  on a Form 6-K pursuant to Rule  13a-16.  At November  15,  2004,  the
lenders had taken no action to exercise  their  remedies and future  action,  if
any, by the lenders is not determinable at this time.

Legal  judgement  expense of $522,619  was  recorded in the year ended March 31,
2004.  This  judgement  was made  against  the  Corporation  with  respect  to a
previously   outstanding  legal   proceeding.   The  judgement  related  to  the
Corporation's alleged failure to honor a stock option agreement dated October 1,
1998. Subsequent to year-end, the Corporation reached a settlement for an amount
of $450,000 (including legal costs). The difference between the judgement amount
and  settlement  of $76,180  was  received  and will be  reflected  in the first
quarter of the new fiscal year.

On  September  9, 2004,  the  Corporation,  by way of Addison,  acquired the net
assets  of  Al  Vinciguerra  Ltd.,  a  Virginia-based  insurance  brokerage  for
$9,030,000 (US$7,000,000). The initial purchase price for the Virginia brokerage
of  $9,030,000   (US$7,000,000)  was  satisfied  by  Addison  paying  $7,740,000
(US$6,000,000) to the vendors at closing and issuing to the vendors a $1,290,000
(US$1,000,000)  promissory note (the "Vinciguerra  Note").  The Vinciguerra Note
bears  interest at 7% per annum and is repayable  over 5 years in equal  monthly
instalments  of  US$19,801,  including  interest  and is  secured  by a  general
security  agreement  of Addison.  The  purchase  was  financed  using the credit
facility provided by FCC,  financing  obtained from Emmett Lescroart (see below)
and seller financing.  The initial purchase price is subject to adjustment based
on the  twenty-four  months of commission  revenue  retention from the effective
date of the  acquisitions,  and can only affect the purchase price to reduce it.
Except as  specifically  noted,  the  information in this Annual Report does not
reflect the purchase of Al Vinciguerra

On August 31, 2004, the Corporation  obtained  US$3,250,000  ($4,192,500 CDN) in
debt  financing  from Emmett  Lescroart  ("Emmett"),  pursuant to an arrangement
whereby Emmett agreed to provide a loan of up to US$3,250,000  ($4,192,500  CDN)
(the  "Emmett  Facility")  to  purchase  substantially  all of the  assets of Al
Vinciguerra  Ltd.  The Emmett  Facility was fully drawn down on August 31, 2004,
bears interest at a rate of 14% per



                                      -22-
<PAGE>

annum, and requires the Corporation to make monthly interest only payments until
2008.  The  principal  amount is due September 1, 2008.  The Emmett  Facility is
secured by the general security  agreement of Addison and has been guaranteed by
the  Corporation,  which  guarantee  has  been  secured  by a  general  security
agreement.

On August 31st, 2004, the Corporation  entered into an  Intercreditor  Agreement
with certain of its creditors,  being Emmett Lescroart, Al Vinciguerra Ltd., the
Kabaker  Family Trust of July 1998, Oak Street Funding LLC and FCC LLC (together
referred to herein as the "Creditors").  The Intercreditor Agreement defines the
rights  and  priorities  of each of the  Creditors  as amongst  themselves  with
respect to the collateral secured by their respective  security interests in the
assets of the  Corporation  and also sets forth the rights and  restrictions  on
execution  against the collateral  placed upon them in the event of a default in
the obligations of the Corporation to any of them. The  Intercreditor  Agreement
imposes no additional  material  obligations on the  Corporation  over and above
those  obligations  already set forth in the security  interests  granted by the
Corporation to the individual Creditors.

Effective  October 1,  2004,  the  Government  of  Alberta  passed  Bill 53, the
Automobile  Reform Act relating to private  passenger  vehicles only. There is a
maximum  premium  set for  Liability  and  Accident  Benefits  depending  on the
territory the automobile is driven called the "Grid". Should the previous method
of developing premium exceed the "Grid" premium set by the Government,  then the
only  criteria  that  can  be  considered  when  establishing  the  premium  for
Automobile  Liability  and  Accidents  benefits  are  driving  experience,  loss
history,  conviction  history and territory  driven. If the premium is below the
"Grid" then the previous method of establishing  premiums will be used, which in
addition to the above will include use of vehicle,  age, sex and marital  status
of the driver.  The physical damage also takes into  consideration  the type and
value of vehicle. It is estimated that 80% of actual Province of Alberta drivers
will continue to be rated based on the pre-grid methodology. It is expected that
young drivers,  facility association type risks and non-standard  exposures will
benefit  most from the new system  created by the  Government  of  Alberta.  The
impact of this legislation cannot be estimated at this time.

Additional Financing

Provided  that  the   Corporation's   lenders  do  not  accelerate  any  of  the
Corporation's  outstanding  debt  and the  Corporation  does  not  complete  any
additional  acquisitions,  the  Corporation  believes that its existing  working
capital  and  cash  flows  from  operations  will  be  sufficient  to  meet  the
Corporation's working capital needs for at least the next 12 months, after which
the Corporation  will require  additional debt or equity  financing.  Additional
financing  may be  required  prior to such  time if the  Corporation  identifies
additional  acquisition targets, or if the Corporation's revenues are less than,
or its expenses are greater than,  expected.  The Corporation's  working capital
and  cash  flows  from  operations  are  not  currently  sufficient  to pay  its
obligations  under its  existing  long-term  debt when  such debt  becomes  due.
Accordingly,  the Corporation  anticipates it will in the future need additional
financing in order to refinance  or repay such debt.  In addition,  at September
30, 2004, the Corporation was in  non-compliance  with certain  covenants in its
long-term  borrowing  agreements.  The Corporation  expects that these covenants
will be in continuous  non-compliance pending their replacement or revision.. If
the  Corporation is unable to or does not regain  compliance with or amend these
covenants, the Corporation's financing needs may be accelerated. The Corporation
may seek additional  financing by issuing debt, Common Shares, or other types of
securities in private placements or public offerings.  There can be no assurance
that additional  financing will be available to the Corporation when required on
favorable terms, if at all.

     C.   Research and Development, Patents and Licenses, etc.

The Company does not generally engage in research and development activities but
has a growth  strategy of  acquiring  strategically  located  General  Insurance
Brokerages  and  integrating  them  into  its  operation  to take  advantage  of
economies of scale of a larger  operation.  The Company evaluates the market for
potential  acquisitions in various  jurisdictions but has focused its efforts in
Alberta, Canada and California, USA.

     D.   Trend Information

There  are  not  any  unusual  or  infrequent  events  or  transactions  or  any
significant economic changes which are expected to materially affect income from
continuing operations. Management does not expect that inflation will materially
adversely affect income from continuing operations as proportional increases can
be expected from commission revenue generated from insurance policies.


                                      -23-
<PAGE>

     E.   Off-Balance Sheet Arrangements

None.

     F.   Tabular Disclosure of Contractual Obligations

The  following  table  sets  forth  the  Corporation's  future  contractual  and
long-term obligations as at March 31, 2004:

<TABLE>
                                                      Less than          1 - 3           3 - 5        More than
Contractual Obligations                    Total         1 Year          Years           Years          5 years
----------------------------------------------------------------------------------------------------------------
<S>                                       <C>            <C>            <C>          <C>             <C>
Capital Lease Obligations                 62,878         38,308         24,570               -                -
Operating Lease Obligations              845,551        627,869        217,682               -                -

Long-term obligations
Kabaker Family Trust                   3,620,895        218,170        522,855         663,887        2,215,983
Johns Insurance Agency, Inc.             228,969        228,969              -               -                -
Oak Street                             4,586,749              -        712,278       1,707,015        2,167,456
----------------------------------------------------------------------------------------------------------------
</TABLE>

Item 6.  Directors, Senior Management and Employees

     A.   Directors and Senior Management

The names, municipality of residence, position(s) with the Company and principal
occupation(s)  of each  director  and  executive  officer of the  Company are as
follows:

<TABLE>
----------------------------------------------------------------------------------------------------------------------
                                                                                                     Date First
Name, Municipality of                                                                                Elected or
Residence and Office or                                                                              Appointed as a
Position Currently Held         Age   Principal Occupation For The Past Five Years                   Director
----------------------------------------------------------------------------------------------------------------------
<S>                             <C>                                                                 <C>
Primo Podorieszach              47    April 1996 to Present: President of the Corporation            April 1, 1996
Kamloops, British Columbia            (post-amalgamation); President of Anthony Clark
President, Chief Executive            International Insurance Brokers Ltd. (Pre-amalgamation)
Officer and Director
----------------------------------------------------------------------------------------------------------------------
Tony Consalvo                   43    April 1996 to Present: General Manager and Chief Operating     April 1, 1996
Calgary, Alberta                      Officer of the Corporation (post amalgamation)
Chief Operating Officer and
Director
----------------------------------------------------------------------------------------------------------------------
Douglas Farmer(1)(2)            45    Since February 1, 2000, Branch Manager, First National         September 24,
Calgary, Alberta                      Financial Corp.; From 1992 to January 31, 2000, Branch         1998
Director                              Manager, Prairie Region for Sun Life Trust
----------------------------------------------------------------------------------------------------------------------
Thomas Milley (2)               43    Barrister & Solicitor; Partner, Demiantschuk, Milley, Burke    June 30, 1999
Calgary, Alberta                      & Hoffinger since 1993; Formerly Chairman of the Board of
Director                              International Datashare Corporation (1996-2000)
----------------------------------------------------------------------------------------------------------------------
Joseph P. Giuffre               46    Barrister & Solicitor, Partner - Axium Law Group LLP since     February 9, 2000
Vancouver, British Columbia           January 1, 2004; Barrister & Solicitor; Partner, Gowling
Director and Secretary                Lafleur Henderson LLP April 1, 2000 - December 2003;
                                      formerly Partner, Montpellier McKeen Varabioff, Talbot &
                                      Giuffre from July 1, 1996 to April 1, 2000
----------------------------------------------------------------------------------------------------------------------
Shelley Samec(3)                40    1998 to Present: Chief Financial Officer of the Corporation    N/A
Calgary, Alberta                      (post amalgamation); April 1996 to 1998: Controller of the
Chief Financial Officer               Corporation (post amalgamation)
----------------------------------------------------------------------------------------------------------------------
Patti Runnalls(1)               40    1995 - Present: Controller for Onyx Energy Inc.                July 7, 2004
Calgary, Alberta
Director
----------------------------------------------------------------------------------------------------------------------
Normand Cournoyer(1)            54    Independent Insurance Consultant from July 2003 to July        August 16, 2004
Calgary, Alberta                      2004; Assistant Vice-President, Business Development Western
Director                              Canada of Allianz Canada, from 1998 to April 2003.
----------------------------------------------------------------------------------------------------------------------
Mahesh Bhatia(4)                45    Interim Chief Financial Officer - August 2004 to present.      N/A
Calgary, Alberta                      Independent consultant from February 2003 - Present; Nov
Interim Chief Financial               2000 - January 2004, Corporate Controller, Proprietary
Officer                               Industries Inc., public company listed on Toronto Stock
                                      Exchange; Oct 1998 - Oct 2000, Sr. Coordinator, Financial
                                      Reporting, ICG Propane Inc.
----------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      -24-
<PAGE>


(1)  Ms  Runnalls,  and  Messrs.  Farmer and  Cournoyer  are the  members of the
     Corporation's Audit Committee.

(2)  Messrs. Farmer and Milley are members of the Compensation Committee.

(3)  Ms. Samec has been on maternity leave since March 1, 2004.

(4)  Mahesh  Bhatia joined the  Corporation  as a consultant on January 15, 2004
     and was subsequently appointed as interim Chief Financial Officer on August
     16, 2004.

Primo  Podorieszach  - President,  Chief  Executive  Officer and  Director;  Mr.
Podorieszach is a Chartered Accountant and has been President of the Corporation
since  its  inception,  and has  extensive  accounting  and  insurance  industry
experience. He obtained a Chartered Accountant designation in 1982.

Tony Consalvo - Chief  Operating  Officer,  General  Manager and  Director;  Mr.
Consalvo has been involved as Vice-President  and Chief Operating Officer of the
Corporation  since  its  inception,   and  has  extensive   insurance   industry
experience.

Douglas Owen Farmer - Director;  Mr.  Farmer is employed as a manager with First
National Financial  Corporation and has over 20 years' experience in the banking
and trust industry.

Joseph P.  Giuffre - Director  and  Secretary;  Mr.  Giuffre is a Partner of the
British Columbia law firm Axium Law Group,  carries on a diverse  commercial and
business law practice with emphasis in the area of securities law,  acquisitions
and  mergers,  corporate  reorganizations  and  public  and  private  securities
offerings.

Thomas Milley - Director;  Mr. Milley is a Partner of the law firm Demiantschuk,
Milley,  Burke &  Hoffinger.  He has  served on a number of boards of public and
private companies focussed  principally in the high tech sector. He was formerly
chairman  of the board of  International  Datashare  Corporation,  a TSX  listed
company. He is also a director of ILI Technologies Corp.

Patti Runnalls - Director; Ms. Runnalls is a Chartered Accountant and Controller
of Onyx Energy Inc. Ms.  Runnalls has extensive  knowledge and experience in the
areas of finance, corporate strategy, and general business operations.

Normand  Cournoyer  -  Director;  Mr.  Cournoyer  is  an  independent  insurance
consultant and has over 20 years of experience in the insurance industry.

Shelley Samec - Chief Financial Officer; Ms. Samec is a Chartered Accountant and
has been the Controller of the Corporation since 1993 and in 1998 she became the
Corporation's  Chief Financial Officer.  Ms. Samec has extensive  accounting and
insurance industry experience. Ms. Samec has been on maternity leave since March
1, 2004.

Mahesh  Bhatia  -  Interim  Chief  Financial  Officer;  Mr.  Bhatia  joined  the
Corporation  as a consultant  in January 2004 and was  appointed  interim  Chief
Financial  Officer on August 16,  2004.  Mr.  Bhatia is a  Chartered  Accountant
(India) and has extensive accounting and public company experience.  He has been
working  as an  independent  consultant  since  February  2003 and prior to that
worked as a  Corporate  Controller  of  Proprietary  Industries  Inc.,  a public
company involved in real estate,  hospitality,  golf and mining. From Oct 1998 -
Oct 2000,  he worked as a Sr.  Coordinator,  Financial  Reporting in ICG Propane
Inc., a propane gas distribution company.

     B.   Compensation

The aggregate  amount of compensation  paid by the Company and its  subsidiaries
during the fiscal  year ended March 31, 2004 to  officers  and  directors,  as a
group,  for services in all  capacities  was $183,772 as compared to $197,500 at
March 31,  2003.  The  Company  does not set aside or  accrue  funds to  provide
pension,  retirement  or similar  benefits  for  officers  and  directors of the
Company.



                                      -25-
<PAGE>



"Named  Executive  Officer" means the Chief  Executive  Officer  ("CEO") and the
Chief  Financial  Officer  ("CFO"),  regardless of the amount of compensation of
that  individual,  and the  Company's  three most highly  compensated  executive
officers, other than the CEO and CFO, who were serving as such at the end of the
most recently  completed fiscal period,  whose total salary and bonus during the
most  recent  fiscal  year end was  $150,000  or more,  whether or not they were
executive officers at the end of the fiscal year.

The Corporation  currently has two Named Executive Officers,  Primo Podorieszach
and Shelley Samec. The following table sets forth the compensation awarded, paid
to or earned by the Corporation's  Named Executive Officers during the financial
years ended March 31, 2002, 2003 and 2004.

<TABLE>
         Summary Compensation Table
-------------------------------------------------------------------------------------------------------------------

                            Annual Compensation                         Long Term Compensation
-------------------------------------------------------------------------------------------------------------------

                                                                           Awards            Pay-outs
-------------------------------------------------------------------------------------------------------------------

Name and           Year(1)  Salary       Bonus       Other       Securities    Restricted      LTIP         All
Principal                    ($)          ($)        Annual        Under       Shares or     Pay-outs      Other
Position                                             Compen-      Options/     Restricted      ($)         Compen-
                                                     sation($)      SARs         Share                     sation
                                                                  granted        Units                       ($)
                                                                    (#)           ($)
-------------------------------------------------------------------------------------------------------------------
<S>                <C>      <C>           <C>        <C>         <C>            <C>           <C>          <C>
Primo              2004     $100,000      Nil         Nil         143,837/0       N/A           N/A         Nil
Podorieszach       2003     $100,000      Nil         Nil         Nil             N/A           N/A         Nil
President          2002     $ 70,000      Nil         Nil         25,000/0        N/A           N/A         Nil
& Chief
Executive Officer
-------------------------------------------------------------------------------------------------------------------

Shelley Samec      2004     $ 77,917      Nil      $5,855(3)      13,017/0        N/A           N/A         Nil
Chief Financial    2003     $ 85,000    $12,500        --         Nil             N/A           N/A         Nil
Officer(2)         2002     $ 78,750         --    $5,385(3)      55,000/0        N/A           N/A         Nil
-------------------------------------------------------------------------------------------------------------------
(1)  Fiscal years ended March 31, 2004, 2003 and 2002.
(2)  Ms. Samec is on temporary leave.
(3)  Paid in lieu of vacation time
</TABLE>

Long Term Incentive Plan Awards

Long term incentive plan awards ("LTIP") means "any plan providing  compensation
intended to serve as an incentive for  performance to occur over a period longer
than one  financial  year  whether  performance  is  measured  by  reference  to
financial  performance of the  Corporation or an affiliate,  or the price of the
Corporation's  shares but does not include option or stock  appreciation  rights
plans or plans  for  compensation  through  restricted  shares  or  units".  The
Corporation  has not granted  any LTIP's  during the fiscal year ended March 31,
2004.

Stock Appreciation Rights

Stock appreciation  rights ("SAR's") means a right,  granted by an issuer or any
of its subsidiaries as compensation for services  rendered or in connection with
office or  employment,  to receive a payment of cash or an issue or  transfer of
securities  based  wholly  or in part on  changes  in the  trading  price of the
Corporation's  shares.  No SAR's  were  granted  to or  exercised  by the  Named
Executive Officers or directors during the fiscal year ended March 31, 2004.



                                      -26-
<PAGE>

Option Grants in Last Fiscal Year

The following tables sets forth  information  concerning grants of stock options
during the financial year ended March 31, 2004 to the Named  Executive  Officers
of the Company:

<TABLE>
--------------------------------------------------------------------------------------------------------------------
                                                                               Market Value of
                                                                                 Securities
                             Securities        % of Total                        Underlying
                                Under       Options Granted   Exercise or     Options/SAR's on
                            Options/SAR's   to Employees in    Base Price       Date of Grant          Expiration
Name                         Granted (#)    Fiscal Year (1)   ($/Security)       ($/Security              Date
--------------------------------------------------------------------------------------------------------------------
<S>                           <C>                <C>             <C>                 <C>                    <C> <C>
Primo Podoreiszach            143,837            45%             $0.81               $0.80           August 29, 2008
--------------------------------------------------------------------------------------------------------------------
Shelley Samec                  13,017             4.1%           $0.81               $0.80           August 29, 2008
--------------------------------------------------------------------------------------------------------------------
(1)  Percentage of all of the  Corporation's  options  granted during the fiscal
     year ended March 31, 2004.
</TABLE>


Aggregated  Option  Exercises  in Last  Fiscal Year and Fiscal  Year-End  Option
Values

As no stock options were exercised by the Named Executive Officers during the
fiscal year ended March 31, 2004, the following table sets forth details of the
fiscal year-end value of unexercised options on an aggregated basis:

<TABLE>
-------------------------------------------------------------------------------------------------------------------
                                                                                               Value of Unexercised
                                                                       Unexercised Options     In-the-Money Options
                                                                        at Fiscal Year-End     at Fiscal Year-End
                                Securities            Aggregate               (#)(1)                 ($)(1)
                                Acquired on             Value
                                 Exercise             Realized             Exercisable/           Exercisable/
Name                                (#)                  ($)              Unexercisable           Unexercisable
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>                    <C>                  <C>                   <C>
Primo Podorieszach                 Nil                   Nil                 483,837/-           $86,421.98(2)/Nil
-------------------------------------------------------------------------------------------------------------------
Shelley Samec                      Nil                   Nil                  88,017/-           $26,279.18(4)/Nil
------------------------------------------------------------------------------------------------------------------
(1)  As  freestanding  SARs have not been  granted,  the number of shares relate
     solely to stock options.

(2)  Based  on  the  closing  price  of  $1.35  for  the  common  shares  of the
     Corporation  on The  Toronto  Stock  Exchange  on March 31,  2004,  168,837
     options were  in-the-money and the net aggregate value of those options was
     $86,421.98.

(3)  Based  on  the  closing  price  of  $1.35  for  the  common  shares  of the
     Corporation on The Toronto Stock Exchange on March 31, 2004, 68,017 options
     were  in-the-money  and  the net  aggregate  value  of  those  options  was
     $26,279.18.

(4)  On April 12, 2004, an aggregate of 335,000 of the options held by the Named
     Executive Officers expired.
</TABLE>


Pension Plans

The Corporation does not provide retirement  benefits for directors or executive
officers.



                                      -27-
<PAGE>

Termination of Employment,  Change in Responsibilities  and Employment Contracts

Other than as described below, the Corporation has not entered into any plans or
arrangements in respect of remuneration  received or that may be received by the
Named Executive Officers in the Corporation's most recently completed  financial
year or current  financial  year in respect of  compensating  such  officers  or
directors in the event of termination of employment (as a result of resignation,
retirement, change of control, etc.) or a change in responsibilities following a
change of control,  where the value of such  compensation  exceeds  $100,000 per
executive officer or director.

The  Corporation  entered  into  employment  agreement  dated April 1, 2003 (the
"Agreements") with Primo  Podorieszach (the "CEO") whereby,  among other things,
should the  Corporation  terminate  the CEO  without  just  cause,  the CEO will
receive payment equal to 300% of his then current annual base salary.

In addition, should any of the following events occur:

     (a)  an  adverse  change  in any of the  current  duties,  powers,  rights,
          discretion, salary or benefits of the CEO;

     (b)  a diminution of the current title of the CEO;

     (c)  a change  in the  person  or body to whom the CEO  currently  reports,
          except if such person or body is of equivalent rank or stature or such
          change is a result of the  resignation  or removal  of such  person or
          persons  comprising  such body, as the case may be, provided that this
          does not include a change  resulting  from a  promotion  in the normal
          course of business;

     (d)  a change in the  municipality  at which the CEO currently  carries out
          his  terms of  employment  with the  Corporation,  without  the  CEO's
          consent,  unless the CEO's terms of employment  include the obligation
          to receive geographic transfers from time to time in the normal course
          of business; or

     (e)  the CEO is not  nominated  as a  management  nominee  of the  Board of
          Directors of the Corporation at a general meeting of the  shareholders
          of the Corporation,

     (f)  the CEO  will  be  entitled  to  terminate  his  employment  with  the
          Corporation  and receive a payment  equal to 300% of his then  current
          annual base salary.

The Corporation  entered into an employment  agreement dated September 1st, 2002
with  Shelley  Samec  (the  "CFO")  whereby,  among  other  things,  should  the
Corporation  terminate the CFO without just cause,  the CFO will receive payment
of 100% of her then current annual salary.

Composition of Compensation Committee

The  Corporation's   executive   compensation   program  is  administered  by  a
compensation  committee  made up of two  directors  from the board of directors,
Thomas Milley and Douglas Farmer. The Compensation Committee has, as part of its
mandate,   primary  responsibility  for  the  appointment  and  remuneration  of
executive officers of the Corporation. The Board of Directors also evaluates the
performance  of the  Corporation's  senior  executive  officers  and reviews the
design and competitiveness of the Corporation's compensation plans.



                                      -28-
<PAGE>

Report on Executive Compensation

Executive Compensation Program
------------------------------

The  Corporation's  executive  compensation  program  is  based  on  a  pay  for
performance  philosophy.  It is designed  to  encourage,  compensate  and reward
employees on the basis of  individual  and  corporate  performance,  both in the
short and the long term. The  Compensation  Committee  reviews and recommends to
the Board of Directors base salaries  based on a number of factors  enabling the
Corporation to compete for and retain  executives  critical to the Corporation's
long term  success.  Incentive  compensation  is directly  tied to corporate and
individual performance.  Share ownership opportunities are provided to align the
interests of executive  officers with the longer term interests of shareholders.
Independent consultants may be retained on an as needed basis by the Corporation
to assess the executive compensation program.

Compensation for the Named Executive Officers, as well as for executive officers
as a whole, consists of a base salary, along with annual incentive  compensation
in the form of a discretionary  annual bonus, and a longer term incentive in the
form of stock options granted. As an executive officer's level of responsibility
increases,  a greater  percentage of total  compensation is based on performance
(as opposed to base salary and standard employee  benefits) and the mix of total
compensation  shifts towards stock options,  thereby increasing the mutuality of
interest between executive officers and shareholders.

Base Salary
-----------

The Chief Executive  Officer and Chief  Operating  Officer approve base salaries
for employees at all levels of the  Corporation  based on performance  and other
reviews of market data  available.  The level of base  salary for each  employee
within a specified range is determined by the level of past performance, as well
as by the level of  responsibility  and the  importance  of the  position to the
Corporation.

Annual Bonus
------------

The Board of Directors determines on a discretionary basis,  incentive awards or
bonuses to be paid by the Corporation to all eligible  employees in respect of a
fiscal year. Corporate performance is measured by reviewing personal performance
and other significant factors, such as level of responsibility and importance of
the position to the Corporation.  The individual  performance  factor allows the
Corporation  to  recognize  and reward  those  individuals  whose  efforts  have
assisted the Corporation to attain its corporate performance objective.

Stock Options
-------------

The Board has sole discretion to determine the key employees to whom grants will
be made and to determine the terms and conditions of the options forming part of
such grants.  The Board approves stock option grants for each level of executive
officer or employee.  Individual  grants are  determined  by an assessment of an
individual's current and expected future performance,  level of responsibilities
and the importance of the position to the Corporation.

The number of stock  options  which may be issued under the Stock Option Plan in
the  aggregate  and in respect of any fiscal year is limited  under the terms of
the Stock  Option Plan and cannot be  increased  without  shareholder  approval.
Stock  options may be granted  with or without  SARs  attached.  Existing  stock
options/SARs have up to a five year term and are exercisable at the market price
(as defined in the Stock Option Plan) of the Corporation's  common shares on the
date of grant.  Generally, a holder of stock options/SARs must be a director, an
employee or consultant of the Corporation, a subsidiary or an affiliate in order
to exercise stock options/SARs.



                                      -29-
<PAGE>

2004 Compensation of Senior Executive Officers
----------------------------------------------

The  Compensation  Committee  has not yet  presented  its report to the Board of
Directors  concerning an incentive  award or bonus to be paid to senior officers
of the  Company  in respect  of 2004  fiscal  year.  In  considering  whether an
incentive  award or bonus  should be paid,  the Board of  Directors  takes  into
account  revenues of the  Corporation and other relevant  factors  including the
senior officers  personal  commitment and ongoing  contributions  in the ongoing
success and development of the Corporation.

Shareholder Return Performance Graph

The chart below compares the yearly  percentage  change in the cumulative  total
shareholder  return on the  Corporation's  common shares  against the cumulative
total  shareholder  return  of The TSX  Composite  Index for the  fiscal  period
commencing April 12, 1999, and ending March 31, 2004.


                  [graphical display of below-listed numbers]


<TABLE>
---------------------------------------------------------------------------------------------------------------------
March 31                         1999           2000           2001           2002           2003           2004
---------------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>             <C>            <C>            <C>            <C>
Company                        $100.00        $781.25         $368.75        $75.63         $59.38         $84.32
---------------------------------------------------------------------------------------------------------------------
TSX Composite Index            $100.00        $138.30         $112.56        $118.05        $97.27         $133.97
---------------------------------------------------------------------------------------------------------------------
</TABLE>

Compensation of Directors

Remuneration  is not  presently  paid to the  directors of the  Corporation  for
acting  in  their  capacity  as  such;   however,   directors  are  entitled  to
reimbursement for reasonable travel and other out-of-pocket expenses incurred in
connection with  attendance at meetings of the Board of Directors.  In the past,
the Corporation had granted options to acquire Common Shares to directors.



                                      -30-
<PAGE>

The following stock options were granted to the Corporation's  directors who are
not Named Executive Officers during the fiscal year ended March 31, 2004:


<TABLE>
---------------------------------------------------------------------------------------------------------------------
                                                                                 Market Value of
                                            % of Total                             Securities
                                            Options/SARs                           Underlying
                      Securities Under       Granted to      Exercise or Base    Options/SARs on
                        Options/SARs        Employees in           Price        the Date of Grant
Name                     Granted (1)      Fiscal Year (2)      ($/Security)       ($/Security)(3)   Expiration Date
---------------------------------------------------------------------------------------------------------------------
<S>                       <C>                  <C>                 <C>                <C>          <C>
Directors who are         162,557              50.9%               $0.81              $0.80         August 29, 2008
not Named Executive
Officers
---------------------------------------------------------------------------------------------------------------------
1)   As  freestanding  SARs have not been  granted,  the number of shares relate
     solely to stock options.

2)   Percentage of all of the  Corporation's  options  granted during the fiscal
     year ended March 31, 2004.

3)   Market value of the Corporation's shares on August 29, 2003, being the date
     of grant.

</TABLE>


     C.   Board Practices

The  current  Board of  Directors  was elected at an annual  general  meeting of
shareholders of the Corporation  held on August 16, 2004. They shall serve until
the next annual general meeting or until their successors are appointed.

The Company has no director's  service contracts with any director providing for
benefits upon termination of employment.

The standing  committees  of the Board of Directors of the  Corporation  are the
Audit  Committee  and the  Compensation  Committee.  The Audit  Committee of the
Corporation's  Board of Directors  currently consists of Ms.Runnalls and Messrs.
Cournoyer and Farmer.  This committee is directed to review the scope,  cost and
results of the independent  audit of the  Corporation's  books and records,  the
results  of  the  annual  audit  with   management   and  the  adequacy  of  the
Corporation's  accounting,   financial  and  operating  controls;  to  recommend
annually to the Board of Directors the selection of the independent auditors; to
consider proposals made by the Corporation's independent auditors for consulting
work;  and to  report  to the  Board of  Directors,  when so  requested,  on any
accounting  or  financial  matters.  Directors  have  historically  received  no
remuneration  for  acting  as  members  of the  Audit  Committee,  nor are their
appointments  for any fixed term or subject to any specific  terms of reference.
However,  as at August 16, 2004,  audit committee  members are to be paid $1,500
per audit committee meeting.

The  Corporation's   executive   compensation   program  is  administered  by  a
Compensation  Committee  made up of two  directors  from the Board of Directors,
Messrs.  Farmer and  Milley.  The  Compensation  Committee  has,  as part of its
mandate,   primary  responsibility  for  the  appointment  and  remuneration  of
executive officers of the Corporation. The Board of Directors also evaluates the
performance of the Corporation's senior executive officers and review the design
and competitiveness of the Corporation's  compensation plans.  Directors receive
no remuneration  for acting as members of the  Compensation  Committee,  nor are
their  appointments  for any fixed  term or  subject  to any  specific  terms of
reference.

The Compensation Committee reviews and recommends to the Board of Directors base
salaries  based on a number of factors  enabling the  Corporation to compete for
and retain executives critical to the Corporation's long term success. Incentive
compensation  is directly tied to corporate and  individual  performance.  Share
ownership  opportunities  are  provided  to align  the  interests  of  executive
officers with the longer term interests of shareholders. Independent consultants
may be retained on an as needed basis by the Corporation to assess the executive
compensation program.

No director or executive officer of the Corporation has any family  relationship
with any other officer or director of the Corporation.



                                      -31-
<PAGE>

     D.   Employees


As of March 31,  2004,  the  Corporation  had 60  employees,  all of which  were
located in Alberta,  Canada. There is no relationship between management and any
labour unions and the management structure is typical of other General Insurance
Brokerages.

In addition,  as of March 31, 2004,  the  Corporation  operated two  California,
U.S.A.  brokerages  through the  vendors of those  brokerages,  who  employed an
additional 29 persons. Such persons were not employees of the Corporation.

     E.   Share Ownership

The  following  table  sets  forth,  as of July  31,  2004,  the  number  of the
Corporation's  Common  Shares  beneficially  owned by (a)  directors  and  Named
Executive Officers of the Corporation, individually, and as a group, and (b) the
percentage  ownership  of the  outstanding  Common  Shares  represented  by such
shares. The security holders listed below are deemed to be the beneficial owners
of Common Shares  underlying  options which are exercisable  within 60 days from
the above date.

Unless  otherwise  indicated,  the  shareholders  listed possess sole voting and
investment  power  with  respect to the shares  shown.  All of our  shareholders
possess the same voting rights.


<TABLE>
--------------------------------------------------------------------------------------------------------------------
Title of Class        Name and Municipality                      Position               Amount       Percentage of
                                                                                                       Class(1)
--------------------------------------------------------------------------------------------------------------------
<S>                   <C>                                <C>                         <C>                <C>
Common                Primo Podorieszach,                Chief Executive Officer       637,467(2)         7.4%
                      Kamloops, British Columbia               &  Director
--------------------------------------------------------------------------------------------------------------------
Common                Tony Consalvo,                     Chief Operating Officer       508,016(3)         5.9%
                      Calgary, Alberta                         &  Director
--------------------------------------------------------------------------------------------------------------------
Common                Shelley Samec,                      Chief Financial Officer       69,017(4)         0.8%
                      Calgary, Alberta
--------------------------------------------------------------------------------------------------------------------
Common                Thomas Milley,                             Director               86,940(5)         1.01%
                      Calgary, Alberta
--------------------------------------------------------------------------------------------------------------------
Common                Douglas Farmer,                            Director              133,740(6)         1.6%
                      Calgary, Alberta
--------------------------------------------------------------------------------------------------------------------
Common                Joseph P. Giuffre,                   Secretary & Director        135,640(7)         1.6%
                      Vancouver, British Columbia
--------------------------------------------------------------------------------------------------------------------
Common                Patti Runnalls,                            Director                 Nil               -
                      Calgary, Alberta
--------------------------------------------------------------------------------------------------------------------
Common                Directors and Officers as a                                    1,570,820(8)        18.2%
                      group (7 persons)
--------------------------------------------------------------------------------------------------------------------
(1)  As of July 31, 2004 there were 7,955,153  common shares of the  Corporation
     issued  and  outstanding.  Percentage  of class is based on the  number  of
     shares  beneficially  owned by the  individual (or group,  if  applicable),
     divided by the sum of 7,955,153  plus any shares  subject to stock  options
     exercisable by such individual (or group) within 60 days of July 31, 2004.

(2)  Includes 168,837 shares subject to stock options exercisable within 60 days
     of July 31, 2004.

(3)  Includes 168,837 shares subject to stock options exercisable within 60 days
     of July 31, 2004.

(4)  Includes 68,017 shares subject to stock options  exercisable within 60 days
     of July 31, 2004.

(5)  Includes 81,240 shares subject to stock options  exercisable within 60 days
     of July 31, 2004.

(6)  Includes 81,240 shares subject to stock options  exercisable within 60 days
     of July 31, 2004.

(7)  Includes 110,640 shares subject to stock options exercisable within 60 days
     of July 31, 2004.

(8)  Includes 658,811 shares subject to stock options exercisable within 60 days
     of July 31, 2004.
</TABLE>



                                      -32-
<PAGE>

Director and Employee Stock Option Grants

Stock  options to purchase  Common  Shares from the  Corporation  are granted to
directors,  officers,  employees and consultants of the Corporation on the terms
and conditions acceptable to the applicable securities regulatory authorities in
Canada.  The  Corporation  has adopted a formal  written  stock option plan (the
"Plan")  which  authorizes  1,309,811  shares  available  for the grant of stock
options under the Plan.  Under the plan,  options  expired or cancelled  will be
available for future issuances.

Under the Plan, the Board of Directors of the  Corporation may from time to time
grant to the directors,  officers,  employees or consultants of the  Corporation
(the  "Eligible  Persons")  and  its  associated,   affiliated,  controlled  and
subsidiary companies,  as the Board of Directors shall designate,  the option to
purchase from the  Corporation  such number of its Common Shares as the Board of
Directors  may  designate.  Options may be granted on  authorized  but  unissued
Common Shares up to but not exceeding the number reserved for issuance under the
Plan. The total number of Common Shares to be optioned to the insiders under the
Plan may exceed 10% of the  outstanding  issue  (determined  on the basis of the
number of Common  Shares  that are  outstanding  immediately  prior to the share
issuance  in  question,   excluding  Common  Shares  issued  pursuant  to  share
compensation  arrangements  over the preceding  one year  period).  In addition,
within a one year  period,  directors  and senior  officers  may receive  Common
Shares issued pursuant to share compensation arrangements that exceed 10% of the
outstanding  issue  and the  issuance  to any  one  insider  or  such  insider's
associates may exceed 5% of the outstanding issue. The purchase price per Common
Share for any option  granted  under the Plan shall not be less than the closing
price of the  Corporation's  shares on the TSX on the  trading  day  immediately
preceding the date of grant. Options shall be granted under the Plan pursuant to
an option  agreement in a form that  complies with the rules and policies of the
TSX, which provide as follows:

all options granted shall be non-assignable;

an option must be exercisable during a period not extending beyond 10 years from
the time of grant; and

no financial  assistance  will be provided with respect to the exercise of stock
options.

As of July 31, 2004, 788,811 options were outstanding under the Plan.

Director and Employee Stock Option Grants

The names and  titles of the  directors  and  Named  Executive  Officers  of the
Corporation to whom  outstanding  stock options have been granted and the number
of Common  Shares  subject to such stock  options are set forth below as at July
31, 2004. The exercise price of the stock options is stated in Canadian dollars.

<TABLE>
-------------------------------------------------------------------------------------------------------------------
                                                                                              Total Outstanding
                                                                                                  Options at
                                          Total                                                31-July-2004 to
                                         Options         Exercise          Expiration        Directors and Officers
Name and titles of Optionees             Granted           Price              Date             of the Corporation
-------------------------------------------------------------------------------------------------------------------
<S>                                       <C>              <C>           <C>                      <C>
Primo Podorieszach, President,            25,000           $1.00          Oct. 26, 2006              25,000
Chief Executive Officer & Director       143,837           $0.81         August 29, 2008            143,837
-------------------------------------------------------------------------------------------------------------------
Tony Consalvo, Chief Operating           100,000           $1.00          Oct. 26, 2006             100,000
Officer & Director                        68,837           $0.81         August 29, 2008             68,837
-------------------------------------------------------------------------------------------------------------------
Shelley Samec, Chief Financial            55,000           $1.00          Oct. 26, 2006              55,000
Officer                                   13,017           $0.81         August 29, 2008             13,017
-------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      -33-
<PAGE>

<TABLE>
-------------------------------------------------------------------------------------------------------------------
                                                                                              Total Outstanding
                                                                                                  Options at
                                          Total                                                31-July-2004 to
                                         Options         Exercise          Expiration        Directors and Officers
Name and titles of Optionees             Granted           Price              Date             of the Corporation
-------------------------------------------------------------------------------------------------------------------
<S>                                       <C>              <C>           <C>                      <C>
Thomas Milley, Director                   25,000           $1.00          Oct. 26, 2006              25,000
                                          31,240           $0.81         August 29, 2008             31,240
-------------------------------------------------------------------------------------------------------------------
Douglas Farmer, Director                  55,000           $1.00          Oct. 26, 2006              55,000
                                          31,240           $0.81         August 29, 2004             31,240
-------------------------------------------------------------------------------------------------------------------
Joseph P. Giuffre, Secretary &            14,400           $4.80          Feb. 28, 2005              14,400
Director                                  65,000           $1.00          Oct. 26, 2006              65,000
                                          31,240           $0.81         August 29, 2008             31,240
-------------------------------------------------------------------------------------------------------------------
Total                                    658,811                                                    658,811
-------------------------------------------------------------------------------------------------------------------
</TABLE>


Item 7.  Major Shareholders and Related Party Transactions

A.   Major Shareholders

The Corporation is a publicly owned  corporation,  the majority of the shares of
which are owned by persons resident outside of the United States. To the best of
the Corporation's knowledge, the Corporation is not directly owned or controlled
by another corporation or by any foreign government.

To the best of the Company's knowledge, there are no beneficial owners of record
of  over  5% of the  Corporation's  outstanding  Common  Shares  other  than  as
described below. To the best of the Corporation's knowledge, there are no voting
arrangements in existence between the shareholders of the Corporation.

As at July 31, 2004,  to the best of the  Company's  knowledge,  the  registered
shareholders of more than 5% of the issued shares of the Company were:

<TABLE>
-------------------------------------------------------------------------------------------------------------------
                              Number of Shares as of        Number of Shares as at       Percentage of Issued(5)
     Shareholder Name              July 31, 2004                July 31, 2003           Shares as of July 31, 2004
-------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                            <C>                             <C>
Primo Podorieszach                  637,467(1)                     808,630                         7.4%
-------------------------------------------------------------------------------------------------------------------
Shelley Podorieszach                501,710(2)                      68,280                         5.8%
-------------------------------------------------------------------------------------------------------------------
Susan Podorieszach                  453,641(3)                      75,260                         5.3%
-------------------------------------------------------------------------------------------------------------------
Tony Consalvo                       508,016(4)                     544,179                         5.9%
-------------------------------------------------------------------------------------------------------------------

--------------------------- ---------------------------- ----------------------------- -----------------------------
(1)  Includes 168,837 shares subject to stock options exercisable within 60 days
     of July 31, 2004.

(2)  Such shares were  transferred to Ms.  Podorieszach  from her spouse,  Peter
     Podorieszach, during 2004.

(3)  Such shares were  transferred  to Ms.  Podorieszach  from her spouse,  John
     Podorieszach, during 2004.

(4)  Includes 168,837 shares subject to stock options exercisable within 60 days
     of July 31, 2004.

(5)  As of July 31, 2004 there were 7,955,153  common shares of the  Corporation
     issued  and  outstanding.  Percentage  of class is based on the  number  of
     shares  beneficially  owned by the  individual (or group,  if  applicable),
     divided by the sum of 7,955,153  plus any shares  subject to stock  options
     exercisable by such individual (or group) within 60 days of July 31, 2004.
</TABLE>


To the best of the Company's  knowledge,  there have been no significant changes
in the percentage  ownership held by the Company's major shareholders during the
past three years other than as set out above. All of the Company's



                                      -34-
<PAGE>



common shares have the same voting rights.  The Company's major  shareholders do
not have different  voting rights.  There are no known  arrangements  that would
result in a change in control of the Company.

     B.   Related Party Transactions

Other than as  disclosed in Item 6, the  following is a list which  includes all
transactions  and  loans  since  April  1,  2003  and  all  presently   proposed
transactions and loans to which the Company or any subsidiary was, is or will be
a party and that are required to be disclosed under this Item 7.C.

1.   On June 27, 2001, the Corporation  approved and advanced a loan of $200,000
     to Mr. Tony  Consalvo,  a director of the  Corporation  to satisfy  certain
     personal  financial  obligations at an interest rate equal to the variable,
     nominal rate per annum for  Canadian  dollar loans in Canada as declared by
     the Royal Bank of Canada, under the terms of a demand promissory note dated
     June 28, 2001 which  provides that repayment is required upon demand by the
     Corporation.  The loan was  secured by a general  security  agreement  that
     provides  the  Company  with  a  security   interest  in  all  present  and
     after-acquired  property  of Mr.  Consalvo to secure the  repayment  of the
     $200,000 loan. As of July 31, 2004, the outstanding  indebtedness  has been
     reduced to $40,000 (As of March 31,  2003 - $40,000).

2.   During the fiscal year ended March 31,  2004,  the  Corporation  was billed
     $187,530  for legal  fees,  disbursements  and taxes by a law firm in which
     Thomas  Milley,  a director  of the  Corporation,  is a partner,  for legal
     services rendered.  The Corporation expects that it will continue to engage
     the law firm from time to time.

3.   During the fiscal year ended March 31,  2004,  the  Corporation  was billed
     $110,766  for  legal  fees,  disbursements  and taxes by law firms in which
     Joseph Giuffre, a director of the Corporation,  is/was a partner, for legal
     services rendered.  The Corporation expects that it will continue to engage
     the law firms from time to time.

4.   Subsequent to the  Corporation's  acquisition  of the Vista  brokerage from
     DKWS  Enterprises,  Inc.  and Kabaker  Family  Trust of July 1998,  Addison
     appointed  an  owner  and  trustee  of  DKWS  and  Kabaker   Family  Trust,
     respectively,  as an  officer of  Addison.  Although  such  person is not a
     member of key management of the  Corporation and is not otherwise a related
     party  within  the scope of Item 7.B,  the  Corporation  is  providing  the
     following disclosure relating to certain  transactions among Addison,  DKWS
     and Kabaker are described below:

     a)   During the year ended March 31, 2004,  the  Corporation  paid $322,146
          (US$244,872),  to Kabaker Family Trust, being the monthly  instalments
          due on the note  payable,  of  which  $222,450  (US$168,797)  has been
          recorded as an  interest  expense  and  $99,696  (US$76,075)  has been
          recorded against note payable.

     b)   The Company holds a $196,575  promissory note issued by Kabaker Family
          Trust  on  October  10,  2003.  This  note  is  due on  demand  and is
          non-interest bearing. It is secured by a general security agreement.

     c)   The Company has issued a $4,444,479  promissory note to Kabaker Family
          Trust.  The note bears  interest at 7% per annum and is repayable over
          10 years in equal monthly instalments of US$40,812 including interest,
          secured by a general security agreement. That note has been discounted
          to  $3,760,015  (US$2,844,617)  to reflect  the fair value of the note
          based  upon the  market  value  rate for a  similar  note of 12%.  The
          difference has been deducted from goodwill. The outstanding balance as
          at March 31, 2004 is $3,620,895.

     d)   As at  March  31,  2004,  The  Corporation  owes  $60,831  to DKWS for
          expenses incurred on behalf of Addison.



                                      -35-
<PAGE>

     e)   Pursuant to an asset management agreement with DKWS, Addison processes
          its clients  insurance  policies  through DKWS,  whereby Addison shall
          receive  all the  revenues  therefrom  and  shall  pay all  associated
          operating costs.


Item 8.  Financial Information

     A.   Consolidated Statements and Other Financial Information

Financial Statements

Included in this Annual Report are consolidated  financial statements audited by
independent  auditors  and  accompanied  by an audit  report  consisting  of the
following:

     o    Balance Sheet as of March 31, 2004 and 2003

     o    Statement of  Operations  and Deficit for the fiscal years ended March
          31, 2004, 2003 and 2002;

     o    Statement  of Cash Flows for the fiscal  years ended  March 31,  2004,
          2003 and 2002; and

     o    Notes to Consolidated Financial Statements.

Legal Proceedings

The  Company  is  aware  of  no  pending  or  threatened  legal  or  arbitration
proceedings which may have or have had in the recent past significant effects on
the Company's  financial position or profitability  (except as discussed below).
The Company is aware of no material proceeding in which any director,  member of
senior management or affiliate of the Company is an adverse party to the Company
or its  subsidiaries  or has a material  interest  adverse to the Company or its
subsidiaries.

Legal  judgement  expense of $522,619  was  recorded in the year ended March 31,
2004.  This  judgement  was made  against  the  Corporation  with  respect  to a
previously   outstanding  legal   proceeding.   The  judgement  related  to  the
Corporation's alleged failure to honor a stock option agreement dated October 1,
1998. Subsequent to year-end, the Corporation reached a settlement for an amount
of $450,000 (including legal costs). The difference between the judgement amount
and  settlement  of $76,180  was  received  and will be  reflected  in the first
quarter of the new fiscal year.

Dividend Policy

No dividends have been declared or paid on the Common Shares since incorporation
and it is not  anticipated  that any  dividends  will be declared or paid on the
Common  Shares in the  immediate  or  foreseeable  future.  Any  decision to pay
dividends  on the Common  Shares will be made by the board of  directors  on the
basis of the Company's  earnings,  financial  requirements  and other conditions
existing at such future time.

     B.   Significant Changes

None, except as disclosed elsewhere in this Annual Report.

Item 9.  The Offer and Listing

     A.   Offer and Listing Details

The Corporation's Common Shares without par value are issued in registered form.
The transfer  agent for the Common  Shares is CIBC Mellon  Trust  Company at its
principal office at Suite 600, 333, 7th Avenue S.W, Calgary, Alberta T2P 2Z1. No
significant  trading  suspensions have occurred in the Common Shares in the last
three years.




                                      -36-
<PAGE>


Below is a table  of the  high  and low  prices  and the  dates  of  trading  or
quotations  on various  stock  exchanges  or markets in which the  Corporation's
Common Shares are or have been traded or quoted.


<TABLE>
------------------------------------------------------------------------------------------------------
                                Exchange High Low
------------------------------------------------------------------------------------------------------
(a)      Year Ended
------------------------------------------------------------------------------------------------------
<S>                                     <C>                   <C>                         <C>
March 31, 2000                           Vancouver Stock        $12.50                        $3.50
                                         Exchange/TSX

March 31, 2001                           TSX                    $15.00                        $5.60

March 31, 2002                           TSX                    $6.45                         $0.58
                                         OTCBB                US$4.50                       US$0.38

March 31, 2003                           TSX                    $1.69                         $0.75
                                         OTCBB                US$1.20                       US$0.25

March 31, 2004                           TSX                    $1.60                         $0.80
                                         OTCBB                US$1.30                       US$0.51

------------------------------------------------------------------------------------------------------
(b)      Quarter Ended
------------------------------------------------------------------------------------------------------
June 30, 2002                            TSX                    $1.69                         $1.21
                                         OTCBB                US$1.20                       US$0.85

September 30, 2002                       TSX                    $1.36                         $1.00
                                         OTCBB                US$0.85                       US$0.64

December 31, 2002                        TSX                    $1.05                         $0.85
                                         OTCBB                US$0.70                       US$0.25

March 31, 2003                           TSX                    $1.03                         $0.75
                                         OTCBB                US$0.685                      US$0.65

June 30, 2003                            TSX                    $1.02                         $0.80
                                         OTCBB                US$0.70                       US$0.65

September 30, 2003                       TSX                    $0.98                         $0.80
                                         OTCBB                US$0.78                       US$0.51

December 31, 2003                        TSX                    $1.60                         $1.35
                                         OTCBB                US$1.30                       US$1.01

March 31, 2004                           TSX                    $1.45                         $1.34
                                         OTCBB                US$1.10                       US$1.03

June 30, 2004                            TSX                    $1.20                         $0.93
                                         OTCBB                US$0.81                       US$0.65

------------------------------------------------------------------------------------------------------
(c)      Month Ended
------------------------------------------------------------------------------------------------------
March 31, 2004                           TSX                    $1.45                         $1.34
                                         OTCBB                US$1.10                       US$1.03

April 30, 2004                           TSX                    $1.35                         $0.95
                                         OTCBB                US$1.10                       US$0.70

May 30, 2004                             TSX                    $1.10                         $0.80
                                         OTCBB                US$0.82                       US$0.63

June 30, 2004                            TSX                    $1.20                         $0.93
                                         OTCBB                US$0.81                       US$0.65

July 31, 2004                            TSX                    $1.20                         $0.92
                                         OTCBB                US$1.00                       US$0.65

August 31, 2004                          TSX                    $1.31                         $1.31
                                         OTCBB                US$1.00                       US$1.00
------------------------------------------------------------------------------------------------------
</TABLE>



                                      -37-
<PAGE>

     B.   Plan of Distribution

Not applicable.

     C.   Markets

The  Corporation's  Common Shares are listed on the TSX under the trading symbol
"ACL" and on the OTCBB under the trading symbol "ACKBF".

     D.   Selling Shareholders

Not applicable.

     E.   Dilution

Not applicable.

     F.   Expenses of the Issuer

Not applicable.

Item 10. Additional Information

     A.   Share Capital

Not applicable.

     B.   Memorandum and Articles of Association

Objects and Purposes of the Company

The Articles and Bylaws of the Company places no restrictions upon the Company's
objects and purposes  and the  Corporate  Access  Number of the  Corporation  is
208204016 with the Registrar of Corporations (Alberta).

Directors' Powers

There are no provisions  in the Company's  Articles with respect to a director's
power to vote on a proposal,  arrangement  or contract in which the  director is
materially interested.

Section  5.06  of  the  Bylaws  provides  that  the  quorum  necessary  for  the
transaction  of the  business  of the  directors  at any meeting of the board of
directors  shall consist of a majority of the directors  holding  office or such
greater  number of  directors  as the board of  directors  may from time to time
determine.

Section 4.08 of the Bylaws  provides that the  remuneration of the directors may
be determined  from time to time by the directors.  There are no restrictions in
the Bylaws upon the directors'  power, in the absence of an independent  quorum,
to vote compensation to themselves or any members of their body.

Section 2.01 of the Bylaws gives  directors a broad  discretion  to borrow money
upon  the  credit  of the  Company,  issue,  re-issue,  sell  or  pledge  bonds,
debentures,  notes  or other  evidences  of  indebtedness  or  guarantee  of the
Company,   whether  secured  or  unsecured;  to  the  extent  permitted  by  the
Corporations Act (Alberta),  give a guarantee on behalf of the Company to secure
performance  of any present or future  indebtedness,  liability or obligation of
any person;  and mortgage,  hypothecate,  pledge or otherwise  create a security
interest  in all  or any  currently  owned  or  subsequently  acquired  real  or
personal, moveable or immoveable,  property of the Company including book debts,
rights, powers,  franchises and undertakings,  to secure any bonds,  debentures,
notes or other  evidences of  indebtedness  or guarantee or any other present or
future indebtedness, liability or obligation of the Company.



                                      -38-
<PAGE>


Qualifications of Directors

There is no  provision  in the  Articles or Bylaws  imposing a  requirement  for
retirement or non-retirement of directors under an age limit requirement.

Section  4.04 of the Bylaws  provides  that a director  shall not be required to
hold a share in the capital of the Company as  qualification  for his office but
no person  shall be  qualified  for election as a director if he is less than 18
years  of age,  if he is of  unsound  mind  and has  been so found by a court in
Canada or elsewhere;  if he is not an  individual;  or if he has the status of a
bankrupt.

Share Rights

All of the  authorized  Common  Shares of the Company are of the same class and,
once issued,  rank equally as to dividends,  voting powers, and participation in
assets and in all other respects,  on liquidation,  dissolution or winding up of
the Company, whether voluntary or involuntary,  or any other distribution of the
assets of the Company among its  shareholders  for the purpose of winding up its
affairs.  The issued Common Shares are not subject to call or assessment  rights
or any  pre-emptive  or  conversion  rights.  The  holders of Common  Shares are
entitled to one vote for each Common  Share on all matters to be voted on by the
shareholders. There are no provisions for redemption, purchase for cancellation,
surrender or purchase funds.

To change the rights of shareholders of stock, where such rights are attached to
an issued class or series of shares, section 173(1) of the Business Corporations
Act requires the consent by a separate  resolution  of the  shareholders  of the
class or series of shares,  as the case may be,  requiring  a majority of 2/3 of
the votes cast by all the shareholders entitled to vote on that resolution.

Meetings

The Business  Corporations  Act provides  that the directors of the Company must
call an annual general  meeting of  shareholders  not later than 15 months after
the last preceding  annual meeting.  The Company must give to its  shareholders,
directors and auditor  entitled to receive notice of a general  meeting not less
than 21 days'  and not more  than 50 days'  notice  before  the  meeting  of the
Company,  but  shareholders and any other person entitled to attend a meeting of
shareholders   may  waive  notice  for  a  particular   meeting.   The  Business
Corporations Act requires management of a corporation,  concurrently with giving
notice of a meeting  of  shareholders,  to send a form of proxy in a  prescribed
form to each  shareholder  who is  entitled  to receive  notice of the  meeting.
However a proxy is not  required to be sent where the  corporation  has not more
than 15  shareholders  entitled to vote at a meeting of  shareholders  with 2 or
more  joint  shareholders  being  counted  as 1  shareholder,  or if  all of the
shareholders entitled to vote at a meeting waive this requirement.

The directors are required to place before the shareholders at every annual
meeting comparative financial statements, the report of the auditor and any
further information respecting the financial position of the corporation and the
results of its operations required by the articles, the bylaws or any unanimous
shareholder agreement. This provision of the Business Corporations Act does not
apply to a corporation that is subject to and complies with the provisions of
the Securities Act (Alberta) relating to the financial statements to be placed
before the shareholders at every annual meeting.

The Business Corporations Act provides that holders of not less than 5% of the
issued voting shares of the Company may requisition the directors to call a
meeting of shareholders for the stated purpose in the requisition.

Limitations on Ownership of Securities

There are no limitations on the right to own securities, imposed by foreign law
or by the charter or other constituent document of the Company.



                                      -39-
<PAGE>

Change in Control of Company

No provision of the Company's  articles of association,  charter or bylaws would
have the effect of delaying, deferring, or preventing a change in control of the
Company,  and operate  only with respect to a merger,  acquisition  or corporate
restructuring of the Company or any of its subsidiaries.

Ownership Threshold

There are no bylaw  provisions  governing  the ownership  threshold  above which
shareholder ownership must be disclosed.

     C.   Material Contracts

The  following  are the  material  contracts  of the  Company,  other than those
mentioned elsewhere in this Annual Report, to which the Company or any member of
the group is a party, for the two years  immediately  preceding the date of this
Annual Report.

On July 3, 2001,  the Board of Directors of the Company  declared a distribution
of one common  share  purchase  right (a "Right")  for each  outstanding  Common
Share.  Each Right has an exercise price of $60.00,  subject to adjustment  (the
"Exercise  Price").  The  description and terms of the Rights are set forth in a
Shareholder Rights Plan Agreement (the "Rights  Agreement")  between the Company
and CIBC Mellon Trust Company,  as Rights Agent.  Initially,  the Rights will be
attached to all share  certificates  representing  Common Shares and no separate
Rights  certificates will be distributed.  Subject to certain  limitations,  the
Rights will detach from the Common Shares and will become  exercisable after the
close of business on the eighth trading day following the date of the earlier to
occur of the  following,  which date is  referred  to herein as the  "Separation
Time":

     (a)  the  first  date of a  public  announcement  by the  Company  or by an
          Acquiring  Person  (as  defined  in the  Rights  Agreement)  that such
          Acquiring  Person has  acquired,  or  obtained  the right to  acquire,
          beneficial  ownership of 20% or more of the outstanding  voting shares
          of any class  (other  than as a result of  certain  reductions  in the
          number of shares outstanding, a Permitted Bid or a Competing Permitted
          Bid (each as defined below),  certain pro rata  acquisitions,  certain
          inadvertent  acquisitions or certain Take Over Bids (as defined below)
          pursuant to take over bid circulars  that are approved by the Board of
          Directors); or

     (b)  the date on which any person does or first publicly  announces that it
          intends to do any of the following:  (i) commence an offer to purchase
          or a  solicitation  of an offer to sell,  or (ii)  accept  an offer to
          sell,  voting  shares or  securities  convertible  into voting  shares
          (other  than as a result of a Permitted  Bid or a Competing  Permitted
          Bid (each as defined below)) that would in the aggregate, if accepted,
          cause such person to  beneficially  own,  together with any securities
          previously  beneficially  owned  by  such  person,  20% or more of the
          voting shares of any class (a "Take Over Bid").

Until the Separation  Time, (i) the Rights shall not be exercisable and no Right
may be  exercised,  (ii)  the  Rights  will be  evidenced  by the  Common  Share
certificates in the name of the holder and will only be  transferable  with such
certificates,  (ii) Common  Share  certificates  issued  after July 3, 2001 have
contained  and will  contain a notation  incorporating  the Rights  Agreement by
reference and (iii) the surrender  for transfer of any  certificates  for Common
Shares  outstanding  will also constitute the transfer of the Rights  associated
with the Common Shares represented by such certificate.

After the Separation Time and prior to the expiry of the Rights,  the Rights are
exercisable  and the  registration  and transfer of Rights will be separate from
and independent of the Common Shares.

The  Rights  Agreement  was  confirmed  by  the  Company's  shareholders  at the
Company's  2001  annual  meeting of  shareholders,  which was held on August 20,
2001.  The Rights  Agreement  must be  reconfirmed at each of the fourth and the
seventh  annual  meetings  following  the 2001  annual  meeting in order for the
Rights to remain  outstanding.  The required vote for the Rights Agreement to be
so  reconfirmed  is a majority  of the votes  cast by holders of voting  shares,
excluding  those voting  shares  beneficially  owned by an Acquiring  Person,  a
person making a Take Over Bid (other than a person who has completed a Permitted
Bid or a Competing Permitted Bid (each as defined below) or



                                      -40-
<PAGE>

certain exempt acquisitions),  any affiliates or associates of or persons acting
jointly with such persons, and any employee benefit or similar plan or trust for
the benefit of the Company's employees,  unless the beneficiaries of the plan or
trust direct the manner in which the voting  shares are to be voted or tendered.
If  the  Rights   Agreement  is  not   reconfirmed   or  is  not  presented  for
reconfirmation at either of such annual meetings,  then the Rights Agreement and
all  outstanding  Rights shall  terminate on the date of the termination of such
annual  meeting;  provided,  however,  that the Rights shall not  terminate if a
Flip-In  Event (as  defined  below)  has  occurred  prior to such  date.  Unless
terminated  earlier in accordance with the foregoing,  the Rights  Agreement and
all outstanding Rights shall terminate at the close of business on July 3, 2011.

Promptly following the Separation Time, Rights certificates and a description of
the  rights  will be mailed  to  holders  of  record of Common  Shares as of the
Separation Time (other than an Acquiring  Person,  any affiliate or associate of
an Acquiring Person, any person acting in concert with any of the foregoing, any
transferee of Rights, directly or indirectly, from any of the foregoing, and any
person  holding  Rights   beneficially   owned  by  an  Acquiring  Person)  and,
thereafter, the separate Rights certificates alone will represent the Rights.

In the event  that a person  acquires  20% or more of the  voting  shares of any
class  of the  Company,  other  than  through  certain  permitted  acquisitions,
including a Permitted  Bid (as defined  below),  certain pro rata  acquisitions,
certain  reductions in the number of  outstanding  shares,  certain  inadvertent
transactions or in certain Take Over Bids involving take over bid circulars that
are  approved by the Board of Directors  (a "Flip-In  Event"),  each holder of a
Right will  thereafter  have the right to receive,  upon payment of the Exercise
Price,  that  number of Common  Shares  (or,  in  certain  circumstances,  cash,
property or other  securities of the Company)  having an aggregate  market price
equal to two (2) times  the  Exercise  Price for an amount in cash  equal to the
Exercise Price.  Notwithstanding any of the foregoing,  following the occurrence
of any of the events set forth in this paragraph, all Rights that are, or (under
certain  circumstances  specified in the Rights  Agreement)  were,  beneficially
owned by any Acquiring Person, any affiliate of associate of an Acquiring Person
or any person acting jointly with any of the foregoing will be null and void.

For example,  at an Exercise Price of $60.00 per Common Share issuable  pursuant
to the exercise of the Rights,  each Right not owned by an Acquiring  Person (or
by certain related  parties)  following a Flip-In Event would entitle its holder
to purchase $120.00 worth of Common Shares for $60.00.  Assuming that the Common
Shares  had a per share  value of $4.00 at such  time,  the holder of each valid
Right would be entitled to purchase thirty (30) Common Shares for $60.00.

A person  will not trigger  the  exercisability  of the Rights if he becomes the
beneficial owner of 20% or more of the voting shares of any class as a result of
a Permitted Bid (as defined below),  certain  reductions in outstanding  shares,
certain pro-rata acquisitions, certain inadvertent transactions and certain Take
Over Bids  involving  take over bid circulars  that are approved by the Board of
Directors  (collectively  the "Permitted  Acquisitions"),  provided that if such
person or group becomes the beneficial owner of 20% or more of the voting shares
of any class by such means and subsequently  acquires  additional  voting shares
constituting more than 1% of the outstanding shares of such class, other than by
a Permitted Acquisition, then, as of the date of such additional acquisition, he
shall become an Acquiring Person.

Any person who was the beneficial owner of 20% or more of the outstanding Common
Shares on July 3, 2001 will be  "grandfathered," so that the dilutive effects of
the Rights will not be triggered unless such person  subsequently  increases his
shareholdings by more than 1%, other than through a Permitted  Acquisition.  The
Company  is not aware of any person or  related  group  that was the  beneficial
owner of 20% or more of the outstanding Common Shares on July 3, 2001.

The Exercise Price payable,  and the number of Common Shares or other securities
or property issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution, including (i) in the event of a stock dividend
on (other than pursuant to any dividend  reinvestment  plan),  or a subdivision,
combination or  reclassification  of, the Common Shares,  (ii) if holders of the
Common Shares are granted certain  rights,  options or warrants to subscribe for
Common  Shares or  convertible  securities  at less than the market price of the
Common  Shares  on the  record  date  set for  such  grant,  or  (iii)  upon the
distribution  to holders of the Common  Shares of evidences of  indebtedness  or
assets (excluding  annual cash dividends and those dividends  referred to above)
or of  subscription  rights,  options or warrants  (other than those referred to
above).



                                      -41-
<PAGE>

With certain  exceptions,  no adjustment in the Exercise  Price will be required
until  cumulative  adjustments  amount to at least 1% of the Exercise  Price. No
fractional Common Shares or fractional Rights will be issued and no amounts will
be paid in respect of such fractional amounts.

The Exercise Price is payable by certified check,  banker's draft of money order
payable to the order of the Company.

The Board of  Directors  may,  acting in good  faith,  at any time  prior to the
occurrence of a Flip-In Event,  elect to redeem all but not less than all of the
outstanding  Rights at the  redemption  price of $0.0001  per Right,  subject to
adjustment  under  certain  circumstances  (the  "Redemption  Price").  Any such
redemption  prior to the Separation Time shall require the prior approval of the
Company's  shareholders by an affirmative vote of the majority of the votes cast
by holders of voting  shares  (excluding  voting  shares  beneficially  owned by
persons that are not independent shareholders) at a meeting duly called and held
for such purpose (the "Required  Vote of Voting  Shares").  Any such  redemption
after the Separation Time shall require the prior approval of the Rights holders
by an  affirmative  vote of the  majority of the votes cast by holders of Rights
(excluding  those Rights that have been become null and void in accordance  with
the Rights  Agreement)  at a meeting of Rights  holders duly called and held for
such purpose (the "Required Vote of Rights").

The Rights  Agreement  requires  the  Company  to redeem all of the  outstanding
Rights  at  the  Redemption  Price  upon  the  completion  of a  Take  Over  Bid
transaction  if the Board of Directors  has waived the  occurrence  of a Flip-In
Event with respect to such  transaction.  Such waiver and  redemption  shall not
require the approval of the Company's shareholders or Rights holders.

As discussed  above,  a take over bid which fits the criteria of a Permitted Bid
or a  Competing  Permitted  Bid will not  trigger  the  dilutive  effects of the
Rights.  A  Permitted  Bid is a take  over  bid  made by way of a take  over bid
circular and which also complies with the following conditions:

     (i)  the  bid  is  made  for  all  voting  shares  of  the  Company  to all
          shareholders  of  record of such  voting  shares  (wherever  resident)
          registered on the books of the Company other than the offeror;

     (ii) the bid  contains,  and  the  take up and  payment  of the  securities
          tendered or deposited  thereunder shall be subject to, irrevocable and
          unqualified provisions that:

          (a)  voting shares will be taken up and paid for pursuant to the bid:

               (i)  prior to the close of  business  on a date which is not less
                    than 75 days following the date of the bid; and

               (ii) only if at such date more than  fifty  percent  (50%) of the
                    voting  shares held by  independent  shareholders  have been
                    deposited pursuant to the bid and not withdrawn;

          (b)  all voting  shares may be  deposited  pursuant  to the bid at any
               time prior to the close of  business  on the date  referred to in
               (a)(i) above and that all voting shares deposited pursuant to the
               bid may be withdrawn until taken up and paid for; and

          (c)  should the  condition  referred to in (a)(ii)  above be met,  the
               offeror must make a public  announcement of that fact and the bid
               must remain open for  deposits  and tenders of voting  shares for
               not less than ten (10) business days from the date of such public
               announcement.

A  Competing  Permitted  Bid is a take  over  bid  which is made  while  another
Permitted  Bid is in  existence,  and which  satisfies  all the  provisions of a
Permitted Bid except that the time limit set out in (ii)(a)(i) above is the date
which is no earlier  than the later of: (i) 35 days after date of the  Competing
Permitted  Bid, and (ii) the 75th day after the earliest date on which any other
Permitted Bid then in existence was made.

Until a Right is exercised,  the holder thereof, as such, will have no rights as
a shareholder of the Company,  including,  without limitation, the right to vote
or to receive dividends.



                                      -42-
<PAGE>

The  Company  may from  time to time  amend the  Rights  Agreement  without  the
approval  of the holders of voting  shares or Rights to correct any  clerical or
typographical  errors and to address changes in law. Any amendment adopted prior
to the  Separation  Time to  address  changes  in law must be  submitted  to the
Company's  shareholders  for  approval  at  the  next  annual  meeting.  If  the
shareholders fail to approve the amendment by the Required Vote of Voting Shares
at such meeting, the Rights Agreement shall thereafter terminate.  Any amendment
adopted after the Separation Time to address changes in law must be submitted to
the Rights  holders for approval at a meeting to be held not later than the next
annual  meeting of the  Company's  shareholders.  If the Rights  holders fail to
approve the amendment by the Required Vote of Rights at the meeting,  the Rights
Agreement shall thereafter terminate.  Other changes to the Rights Agreement may
be made  only (i)  prior  to the  Separation  Time,  with  the  approval  of the
Company's  shareholders by the Required Vote of Voting Shares, or (ii) after the
Separation  Time,  with the  approval  of the  Company's  Rights  holders by the
Required Vote of Voting Shares.  Notwithstanding the foregoing,  the approval of
the Rights  Agent  shall  always be  required  to amend  Article 4 of the Rights
Agreement, which sets forth the terms of engagement of the Rights Agent.

The Rights have certain anti-takeover  effects. The Rights may cause substantial
dilution to a person or group that attempts to acquire the Company other than by
way of a Permitted  Bid or a Take Over Bid  involving  a take over bid  circular
that is approved by the Board of  Directors.  The Rights  Agreement  permits the
Board of  Directors  to waive the  dilutive  effects  of the  Rights in  certain
limited circumstances.  The Rights may interfere with an offeror that is willing
to negotiate with the Company,  since the approval of the Company's shareholders
or Rights  holders at a meeting called for such purpose is required in order for
the Company to redeem the Rights or to amend or terminate the Rights  Agreement.
The Rights may also interfere with other  transactions  approved by the Board of
Directors,  including  issuances  of  additional  voting  shares  or  securities
convertible into voting shares,  transfers of such  securities,  and mergers and
other business combinations that would not otherwise require the approval of the
Company's  shareholders,  if such transactions would result in a person or group
beneficially  owning  20% or more  of the  voting  shares  of any  class  of the
Company.

The Rights  Agreement  between the Company and the Rights Agent  specifying  the
terms of the  Rights,  and which  includes  as  Attachment  1 the form of Rights
certificate,  is  attached  hereto as  Exhibit 4 and is  incorporated  herein by
reference.  The  foregoing  description  of the  Rights  does not  purport to be
complete and is qualified in its entirety by reference to such Exhibit.

     D.   Exchange Controls

Canada has no system of exchange controls. There are no exchange restrictions on
borrowing from foreign  countries nor on the remittance of dividends,  interest,
royalties and similar payments, management fees, loan repayments,  settlement of
trade debts, or the repatriation of capital.  However, any dividends remitted to
U.S.  Holders,  as defined below,  will be subject to withholding tax. See "Item
10E - Taxation".

Except as provided in the Investment  Canada Act (the "Act"),  as amended by the
Canada-United   States  Free  Trade   Implementation   Act   (Canada)   and  the
Canada-United States Free Trade Agreement,  there are no limitations specific to
the rights of non-Canadians to hold or vote the common shares of the Corporation
under the laws of Canada or the Province of Alberta or in the charter  documents
of the Corporation.

Management  of the  Corporation  considers  that the following  general  summary
fairly  describes those  provisions of the Act pertinent to an investment in the
Corporation  by a person  who is not a  Canadian  resident  (a  "non-Canadian").
However, provisions of the Act are complex and any non-Canadian contemplating an
investment to acquire  control of the  Corporation  should consult  professional
advisors as to whether and how the Act might apply.

The Act requires a non-Canadian  making an investment  which would result in the
acquisition of control of a Canadian business,  the gross value of the assets of
which  exceed  certain  threshold  levels or the  business  activity of which is
related to Canada's cultural heritage or national identity, to either notify, or
file an  application  for review with,  Investment  Canada,  the federal  agency
created by the Act.

The notification  procedure  involves a brief statement of information about the
investment  on a prescribed  form which is required to be filed with  Investment
Canada by the investor at any time up to 30 days following implementation of the
investment.  It is intended that investments  requiring only  notification  will
proceed without


                                      -43-
<PAGE>

government  intervention unless the investment is in a specific type of business
activity related to Canada's cultural heritage and national identity.

If an investment is reviewable  under the Act, an application  for review in the
form prescribed is normally required to be filed with Investment Canada prior to
the investment  taking place and the investment may not be implemented until the
review has been completed and the Minister  responsible for Investment Canada is
satisfied that the investment is likely to be of net benefit to Canada.

Factors to be considered include:  (i) the effect of the investment on the level
and nature of economic  activity in Canada,  including  employment,  on resource
processing,  on utilization of parts, components and services produced in Canada
and on exports from Canada; (ii) the degree and significance of participation by
Canadians in the Canadian  business or new Canadian business and in any industry
or industries in Canada of which the Canadian  business or new Canadian business
forms or would form a part;  (iii) the effect of the investment on productivity,
industrial efficiency, technological development, product innovation and product
variety in Canada;  (iv) the effect of the investment on competition  within any
industry or industries in Canada;  (v) the  compatibility of the investment with
national industrial,  economic and cultural policies,  taking into consideration
industrial,  economic and cultural  objectives  enunciated by the  government or
legislature  of  any  province  likely  to  be  significantly  affected  by  the
investment;  and (vi) the  contribution of the investment to Canada's ability to
compete in world markets.

If the  Minister is not  satisfied  that the  investment  is likely to be of net
benefit to Canada, the non-Canadian must not implement the investment or, if the
investment has been implemented, may be required to divest himself of control of
the business that is the subject of the investment.

The following investments by non-Canadians are subject to notification under the
Act:

     (a)  an investment to establish a new Canadian business; and

     (b)  an  investment to acquire  control of a Canadian  business that is not
          reviewable pursuant to the Act.

The following investments by a non-Canadian are subject to review under the Act:

(a)  direct  acquisitions  of  control of  Canadian  businesses  with  assets of
     $5,000,000 or more,  unless the  acquisition is being made by a World Trade
     Organization  ("WTO")  member  country  investor (the United States being a
     member of the WTO);

(b)  direct  acquisitions  of  control of  Canadian  businesses  with  assets of
     $223,000,000 or more by a WTO investor;

(c)  indirect  acquisitions  of control of  Canadian  businesses  with assets of
     $5,000,000  or more if such  assets  represent  more  than 50% of the total
     value  of the  assets  of the  entities,  the  control  of  which  is being
     acquired,  unless the acquisition is being made by a WTO investor, in which
     case there is no review;

(d)  indirect  acquisitions  of control of  Canadian  businesses  with assets of
     $50,000,000  or more  even if such  assets  represent  less than 50% of the
     total  value of the assets of the  entities,  the control of which is being
     acquired,  unless the acquisition is being made by a WTO investor, in which
     case there is no review;

(e)  indirect  acquisitions  of control of  Canadian  businesses  with assets of
     $223,000,000  or more by a WTO investor if such assets  represent more than
     50% of the total value of the assets of the entities,  the control of which
     is being acquired; and

(f)  an  investment   subject  to  notification  that  would  not  otherwise  be
     reviewable if the Canadian business engages in the activity of publication,
     distribution or sale of books, magazines, periodicals,  newspapers, film or
     video  recordings,  audio or video music  recordings,  or music in print or
     machine-readable form.

Generally  speaking,  an acquisition is direct if it involves the acquisition of
control of the Canadian business or of its Canadian parent or grandparent and an
acquisition  is  indirect  if  it  involves  the  acquisition  of  control  of a
non-Canadian  parent  or  grandparent  of an  entity  carrying  on the  Canadian
business. Control may be acquired through



                                      -44-
<PAGE>

the acquisition of actual or lawful voting control of a Canadian  corporation or
through  the  acquisition  of  substantially  all of the assets of the  Canadian
business.  No change of voting  control will be deemed to have  occurred if less
than one-third of the voting control of a Canadian corporation is acquired by an
investor.

A WTO investor,  as defined in the Act, includes an individual who is a national
of a member  country  of the World  Trade  Organization  or who has the right of
permanent  residence in relation to that WTO member,  a government or government
agency of a WTO investor-controlled  corporation,  limited partnership, trust or
joint venture and a  corporation,  limited  partnership,  trust or joint venture
that  is  neither  WTO-investor  controlled  or  Canadian  controlled  of  which
two-thirds of its board of directors,  general partners or trustees, as the case
may be, are any  combination  of  Canadians  and WTO  investors.  The WTO review
threshold ($223,000,000) is adjusted annually by a formula relating to increases
in the nominal gross domestic product of Canada.

The higher  thresholds  for WTO investors do not apply if the Canadian  business
engages in activities  in certain  sectors such as uranium,  financial  services
(except insurance), transportation services or media activities.

The Act specifically  exempts certain  transactions from either  notification or
review.  Included  among this category of  transactions  is the  acquisition  of
voting shares or other voting  interests by any person in the ordinary course of
that person's business as a trader or dealer in securities.

     E.   Taxation

Certain Canadian Federal Income Tax Consequences

The  following  is a general  summary of  certain  Canadian  federal  income tax
considerations  generally  applicable to a holder of the Company's Shares who is
not a resident of Canada for the  purposes of the Income Tax Act  (Canada)  (the
"Act"). The discussion does not address all potentially  relevant federal income
tax matters and it does not address consequences  peculiar to persons subject to
special provisions of federal income tax law.

The summary is based on the current  provisions  of the Act and the  regulations
thereunder  and  the  Company's  understanding  of  the  current  administrative
practices published by, and Press  announcements  released by the Canada Revenue
Agency and the Department of Finance.  This summary takes into account proposals
to amend the Act announced prior to the date hereof  (although no assurances can
be given that such changes will be enacted in the form presented or at all), but
does not  otherwise  take into account or  anticipate  any other changes in law,
whether by judicial,  governmental or legislative action or decision nor does it
take  into   account  any   provincial,   territorial,   local  or  foreign  tax
considerations.   Accordingly,   holders   and   prospective   holders   of  the
Corporation's  Shares should  consult their own tax advisors  about the federal,
provincial,  territorial,  local and foreign  tax  consequences  of  purchasing,
owning and disposing of such shares.

The Act provides in subsection  212(2) that  dividends  and other  distributions
which are deemed to be dividends and which are paid or credited or are deemed to
be paid or credited by a Canadian  resident  Corporation  to a  non-resident  of
Canada shall be subject to  non-resident  withholding tax equal to 25 percent of
the gross amount of the dividend or deemed dividend.  In subsection  215(1), the
Act imposes an obligation on a corporation  to withhold the  applicable tax from
the  dividends  paid to a  non-resident  and remit that amount  forthwith to the
Receiver General.

Subsections  2(3),  115(1) and  248(1) of the Act  provide  that a  non-resident
person  is  subject  to tax in  Canada  at the  rates  generally  applicable  to
residents of Canada on any "taxable  capital gain" arising on the disposition of
the shares of a company which are listed on a prescribed  stock  exchange  (i.e.
certain listed  Canadian,  U.S.A.  and other  international  stock  exchanges as
defined in  Regulations  3200 and 3201 but does not  include  "over-the-counter"
trading ) only if such non-resident, together with persons with whom he does not
deal at arm's length, owned 25 percent or more of the issued shares of any class
of the  capital  stock  of  the  Corporation  at any  time  in  the  five  years
immediately  preceding the date of disposition of the shares. This also includes
the  disposition of any interest in or option on such shares.  The shares of the
Corporation are traded on the Exchange, which is a prescribed stock exchange for
the purpose of these  rules.  Subsections  2(3),  115(1) and 248(1) also provide
that a non-resident  person is subject to tax in Canada on taxable capital gains
arising on the  disposition of shares that constitute  capital  property used in
carrying on a business in Canada  which also  includes  the  disposition  of any
interest in or option in such property. Taxable Canadian Property



                                      -45-
<PAGE>

that is "treaty  protected"  property  is  exempted  from  taxation in Canada by
subsection  115(1).  However,  it is necessary for a non-resident  to report the
disposition  of such  property  on a  Canadian  income  tax  return and claim an
exemption  under a tax treaty.  A capital  gain is the excess of the proceeds of
disposition of a property over its adjusted cost base (cost amount plus or minus
adjustments under s.53 for certain distribution, contributions of capital, etc.)
to the holder,  with the taxable  portion  being  one-half  thereof.  Subsection
116(5)  and  paragraph  116(6)(b)  exempt a  purchaser  from being  required  to
withhold tax from proceeds of disposition  paid to a non-resident  of Canada for
purchases of shares traded on a prescribed stock exchange.

Provisions  in the Act  relating to dividend  and deemed  dividend  payments and
gains realized by non-residents of Canada who are residents of the United States
are subject to the Canada-United States Income Tax Convention (1980), as amended
(the "1980 Convention").

Article X of the 1980 Convention  provides that for 1997 and subsequent taxation
years pursuant to the Third Protocol to the 1980 Convention the rate of Canadian
non-resident   withholding  tax  on  dividends  paid  to  a  U.S.  company  that
beneficially  owns at least 10% of the voting stock of the Corporation shall not
exceed 5% of the  dividends.  Otherwise,  and  except  in the case of  dividends
received  by a resident  of the United  States who carries on business in Canada
through a Canadian  permanent  establishment  and the shares in respect of which
the  dividends  are  paid  are   effectively   connected   with  that  permanent
establishment,  the rate of non-resident withholding shall not exceed 15 percent
of the dividend.  Where the dividends are received by a  non-resident  of Canada
who is a United States person  carrying on business in Canada through a Canadian
permanent  establishment  and the shares in respect of which the  dividends  are
paid are effectively  connected with that permanent  establishment the dividends
are generally  subject to Canadian tax as business  profits,  generally  without
limitation  under  the 1980  Convention.  Article  XIII of the  1980  Convention
provides that gains realized by a United States  resident on the  disposition of
shares of a Canadian  company may not  generally  be taxed in Canada  unless the
value of those  shares is derived  principally  from real  property  situated in
Canada  or  the  shares  form  part  of the  business  property  of a  permanent
establishment   which  the  non-resident  of  Canada  who  is  a  United  States
shareholder has or had in Canada with the 12 month period  preceding the date of
disposition.  Based on Canadian domestic law and provisions of the Convention as
set out above, a  non-resident  of Canada who is a US person would be subject to
income  tax on a  capital  gain in  Canada  on a  disposition  of  shares of the
Corporation  only  where the 25%  ownership  threshold  is met  (under  domestic
Canadian  law as  described  above)  and  the  value  of  those  shares  derives
principally  from real  property  situated  in Canada (as  stipulated  under the
Convention  as described  above).  Canada also retains the right to tax gains on
property  owned at the time of  departure  from Canada if it is sold by a person
who was resident in Canada for 120 months in any 20 consecutive  years preceding
the sale and who was a resident in Canada at any time in the 10 years  preceding
sale.  This  rule  also  applies  to  property  substituted  in  a  tax-deferred
transaction for the property owned on departure.

U.S. Federal Income Tax Consequences

The following is a summary of the anticipated  material U.S.  federal income tax
consequences  to a U.S.  Holder (as defined  below) arising from and relating to
the acquisition, ownership, and disposition of Common Shares of the Company.

This summary is for general information purposes only and does not purport to be
a  complete  analysis  or  listing  of all  potential  U.S.  federal  income tax
consequences  that may apply to a U.S.  Holder  as a result of the  acquisition,
ownership,  and disposition of Common Shares. In addition, this summary does not
take into account the individual facts and  circumstances of any particular U.S.
Holder  that  may  affect  the  U.S.  federal  income  tax  consequences  of the
acquisition,  ownership,  and  disposition of Common Shares.  Accordingly,  this
summary is not  intended to be, and should not be  construed  as,  legal or U.S.
federal  income tax advice with  respect to any U.S.  Holder.  Each U.S.  Holder
should consult its own financial advisor, legal counsel, or accountant regarding
the U.S.  federal,  U.S. state and local,  and foreign tax  consequences  of the
acquisition, ownership, and disposition of Common Shares.

     Scope of this Disclosure

     Authorities
     -----------

This  summary is based on the  Internal  Revenue  Code of 1986,  as amended (the
"Code"),  Treasury  Regulations,  published  Internal  Revenue  Service  ("IRS")
rulings, published administrative positions of the IRS, the Convention



                                      -46-
<PAGE>

Between  Canada and the United States of America with Respect to Taxes on Income
and on Capital,  signed  September  26, 1980, as amended (the  "Canada-U.S.  Tax
Convention"),  and U.S.  court  decisions  that are applicable as of the date of
this Annual Report.  Any of the authorities on which this summary is based could
be changed in a material  and  adverse  manner at any time,  and any such change
could be applied on a  retroactive  basis.  This  summary  does not  discuss the
potential effects,  whether adverse or beneficial,  of any proposed  legislation
that, if enacted, could be applied on a retroactive basis.

     U.S. Holders
     ------------

For purposes of this summary,  a "U.S.  Holder" is a beneficial  owner of Common
Shares that, for U.S. federal income tax purposes, is (a) an individual who is a
citizen or resident of the U.S., (b) a corporation,  or other entity  classified
as a  corporation  for U.S.  federal  income  tax  purposes,  that is created or
organized  in or under the laws of the U.S. or any state in the U.S.,  including
the District of Columbia,  (c) an estate if the income of such estate is subject
to U.S.  federal  income tax  regardless of the source of such income,  or (d) a
trust if (i) such trust has validly  elected to be treated as a U.S.  person for
U.S.  federal  income  tax  purposes  or (ii) a U.S.  court is able to  exercise
primary  supervision over the  administration of such trust and one or more U.S.
persons have the authority to control all substantial decisions of such trust.

         Non-U.S. Holders
         ----------------

A "non-U.S.  Holder" is a  beneficial  owner of Common  Shares other than a U.S.
Holder.  This summary does not address the U.S.  federal income tax consequences
of the  acquisition,  ownership,  and  disposition  of Common Shares to non-U.S.
Holders.  Accordingly,  a  non-U.S.  Holder  should  consult  its own  financial
advisor, legal counsel, or accountant regarding the U.S. federal, U.S. state and
local, and foreign tax consequences  (including the potential application of and
operation of any tax treaties) of the acquisition, ownership, and disposition of
Common Shares.

     U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
     ---------------------------------------------------------------------------

This summary does not address the U.S.  federal income tax  consequences  of the
acquisition,  ownership,  and disposition of Common Shares to U.S.  Holders that
are subject to special  provisions under the Code,  including the following U.S.
Holders:  (a)  U.S.  Holders  that  are  tax-exempt   organizations,   qualified
retirement  plans,   individual   retirement  accounts,  or  other  tax-deferred
accounts; (b) U.S. Holders that are financial institutions, insurance companies,
real estate  investment  trusts, or regulated  investment  companies or that are
broker-dealers  or  dealers  in  securities;   (c)  U.S.  Holders  that  have  a
"functional  currency"  other than the U.S.  dollar;  (d) U.S.  Holders that are
subject to the alternative  minimum tax provisions of the Code; (e) U.S. Holders
that own Common Shares as part of a straddle,  hedging  transaction,  conversion
transaction,  constructive  sale, or other  arrangement  involving more than one
position;  (f) U.S.  Holders that acquired  Common Shares in connection with the
exercise of employee  stock options or otherwise as  compensation  for services;
(g) partners of partnerships that hold Common Shares or owners of other entities
classified as partnerships or  "pass-through"  entities for U.S.  federal income
tax purposes that hold Common Shares,  (h) U.S.  Holders that hold Common Shares
other than as a capital  asset  within the meaning of Section  1221 of the Code.
U.S. Holders that are subject to special  provisions  under the Code,  including
U.S. Holders  described  immediately  above,  should consult their own financial
advisor,  legal counsel or accountant regarding the U.S. federal, U.S. state and
local,  and  foreign  tax  consequences  of  the  acquisition,   ownership,  and
disposition of Common Shares.

     Tax  Consequences  Other  than U.S.  Federal  Income Tax  Consequences  Not
     Addressed
     ---------------------------------------------------------------------------

This  summary  does not  address  the  U.S.  state  and  local  or  foreign  tax
consequences to U.S. Holders of the acquisition,  ownership,  and disposition of
Common Shares. Each U.S. Holder should consult its own financial advisor,  legal
counsel,  or  accountant  regarding  the U.S.  state and local and  foreign  tax
consequences of the  acquisition,  ownership,  and disposition of Common Shares.
(See "Taxation--Certain Canadian Federal Income Tax Consequences" above).

     Treaty Application to Certain Individual U.S. Holders
     -----------------------------------------------------

An  individual  U.S.  Holders  who does not  maintain  a  substantial  presence,
permanent  home, or habitual  abode in the U.S., or whose  personal and economic
relations  are not  closer to the U.S.  than to any other  country  (other  than
Canada),  may be unable to benefit from the  provisions of the  Canada-U.S.  Tax
Convention. An individual U.S.



                                      -47-
<PAGE>

Holder  described  immediately  above should consult its own financial  advisor,
legal counsel,  or accountant  regarding the  availability of benefits under the
Canada-U.S. Tax Convention.

     U.S.  Federal Income Tax Consequences of the  Acquisition,  Ownership,  and
     Disposition of Common Shares

     Distributions on Common Shares
     ------------------------------

     General Taxation of Distributions

A  U.S.   Holder  that  receives  a   distribution,   including  a  constructive
distribution,  with respect to the Common Shares will be required to include the
amount of such distribution in gross income as a dividend (without reduction for
any Canadian  income tax withheld from such  distribution)  to the extent of the
current or accumulated "earnings and profits" of the Company. To the extent that
a distribution exceeds the current and accumulated "earnings and profits" of the
Company,  such  distribution  will be treated (a) first, as a tax-free return of
capital to the extent of a U.S. Holder's tax basis in the Common Shares and, (b)
thereafter,  as gain from the sale or exchange of such Common Shares.  (See more
detailed discussion at "Disposition of Common Shares" below).

     Reduced Tax Rates for Certain Dividends

For taxable years  beginning after December 31, 2002 and before January 1, 2009,
a dividend paid by the Company  generally will be taxed at the  preferential tax
rates  applicable to long-term  capital gains if (a) the Company is a "qualified
foreign  corporation"  (as defined below),  (b) the U.S.  Holder  receiving such
dividend is an individual,  estate,  or trust,  and (c) such dividend is paid on
Common  Shares  that have been  held by such  U.S.  Holder  for at least 61 days
during the 121-day period beginning 60 days before the "ex-dividend date" (i.e.,
the first date that a purchaser  of such  Common  Shares will not be entitled to
receive such dividend).

The Company generally will be a "qualified  foreign  corporation"  under Section
1(h)(11)  of the  Code  (a  "QFC")  if (a)  the  Company  is  incorporated  in a
possession  of the U.S.,  (b) the  Company is eligible  for the  benefits of the
Canada-U.S.  Tax Convention, or (c) the Common Shares are readily tradable on an
established securities market in the U.S. However, even if the Company satisfies
one or more of such  requirements,  the Company  will not be treated as a QFC if
the  Company is a "foreign  personal  holding  company,"  a "foreign  investment
company," or a "passive foreign investment  company" (each as defined below) for
the taxable year during  which the Company pays a dividend or for the  preceding
taxable year.

As discussed  below,  the Company  believes  that it is not a "foreign  personal
holding  company,"  a  "foreign  investment  company,"  or  a  "passive  foreign
investment  company" (See more detailed discussion at "Additional Rules that May
Apply to U.S. Holders" below). Accordingly,  the Company believes that it should
be a QFC.  There can be no assurance,  however,  that the IRS will not challenge
the  determination  made by the  Company  concerning  its QFC status or that the
Company will be a QFC for the current or any future taxable year. If the Company
is not a QFC, a dividend paid by the Company to a U.S. Holder,  including a U.S.
Holder  that is an  individual,  estate,  or trust,  generally  will be taxed at
ordinary income tax rates (and not at the  preferential  tax rates applicable to
long-term  capital  gains).  The dividend rules are complex and each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding
the dividend rules.

     Distributions Paid in Foreign Currency

The amount of a distribution paid to a U.S. Holder in foreign currency generally
will be  equal  to the  U.S.  dollar  value  of such  distribution  based on the
exchange  rate  applicable on the date of receipt.  A U.S.  Holder that does not
convert foreign  currency  received as a distribution  into U.S.  dollars on the
date of receipt  generally will have a tax basis in such foreign  currency equal
to the U.S. dollar value of such foreign currency on the date of receipt. Such a
U.S. Holder  generally will recognize  ordinary income or loss on the subsequent
sale or  other  taxable  disposition  of such  foreign  currency  (including  an
exchange for U.S. dollars).

     Dividends Received Deduction

Dividends  paid on the Common  Shares  generally  will not be  eligible  for the
"dividends  received  deduction."  The  availability  of the dividends  received
deduction  is subject to complex  limitations  that are beyond the scope of this



                                      -48-
<PAGE>

discussion,  and a U.S.  Holder  that is a  corporation  should  consult its own
financial advisor, legal counsel, or accountant regarding the dividends received
deduction.

     Disposition of Common Shares
     ----------------------------

A U.S.  Holder  will  recognize  gain  or  loss on the  sale  or  other  taxable
disposition  of  Common  Shares in an amount  equal to the  difference,  if any,
between  (a) the  amount  of cash  plus the fair  market  value of any  property
received  and (b) such U.S.  Holder's  tax basis in the  Common  Shares  sold or
otherwise  disposed of. Any such gain or loss  generally will be capital gain or
loss, which will be long-term capital gain or loss if the Common Shares are held
for more than one year. ).

Preferential tax rates apply to long-term capital gains of a U.S. Holder that is
an individual,  estate, or trust.  There are currently no preferential tax rates
for long-term  capital gains of a U.S. Holder that is a corporation.  Deductions
for capital  losses and net capital  losses are subject to complex  limitations.
For a U.S. Holder that is an individual, estate, or trust, capital losses may be
used to offset capital gains and up to U.S.$3,000 of ordinary income.  An unused
capital loss of a U.S. Holder that is an individual,  estate, or trust generally
may be carried forward to subsequent  taxable years, until such net capital loss
is exhausted.  For a U.S.  Holder that is a  corporation,  capital losses may be
used to offset  capital  gains,  and an unused  capital  loss  generally  may be
carried  back three years and carried  forward five years from the year in which
such net capital loss is recognized.

     Foreign Tax Credit
     ------------------

A U.S. Holder who pays (whether directly or through withholding) Canadian income
tax with  respect to  dividends  paid on the  Common  Shares  generally  will be
entitled,  at the election of such U.S. Holder, to receive either a deduction or
a credit for such Canadian  income tax paid.  Generally,  a credit will reduce a
U.S.  Holder's U.S. federal income tax liability on a  dollar-for-dollar  basis,
whereas a deduction will reduce a U.S.  Holder's income subject to U.S.  federal
income tax.  This  election is made on a  year-by-year  basis and applies to all
foreign taxes paid (whether  directly or through  withholding)  by a U.S. Holder
during a year.

Complex  limitations  apply to the  foreign tax  credit,  including  the general
limitation  that the  credit  cannot  exceed the  proportionate  share of a U.S.
Holder's U.S.  federal  income tax liability  that such U.S.  Holder's  "foreign
source" taxable income bears to such U.S. Holder's  worldwide taxable income. In
applying this limitation,  a U.S. Holder's various items of income and deduction
must be classified,  under complex rules,  as either  "foreign  source" or "U.S.
source." In addition,  this limitation is calculated  separately with respect to
specific categories of income (including "passive income," "high withholding tax
interest,"  "financial  services income,"  "shipping  income," and certain other
categories of income).  Dividends paid by the Company  generally will constitute
"foreign source" income and generally will be classified as "passive income" or,
in the case of certain U.S. Holders, "financial services income." In addition, a
U.S.  Holder that is a corporation and that owns 10% or more of the voting stock
of the Company may, subject to complex limitations, be entitled to an "indirect"
foreign tax credit under Section 902 of the Code with respect to dividends  paid
by the Company.  The foreign tax credit rules are complex,  and each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding
the foreign tax credit rules.

     Information Reporting; Backup Withholding Tax
     ---------------------------------------------

Payments made within the U.S. of dividends on, and proceeds arising from certain
sales or other taxable  dispositions of, Common Shares generally will be subject
to information  reporting and backup  withholding  tax, at the rate of 28%, if a
U.S.  Holder (a) fails to  furnish  such U.S.  Holder's  correct  U.S.  taxpayer
identification  number  (generally on Form W-9), (b) furnishes an incorrect U.S.
taxpayer identification number, (c) is notified by the IRS that such U.S. Holder
has  previously  failed to properly  report items subject to backup  withholding
tax, or (d) fails to certify,  under penalty of perjury,  that such U.S.  Holder
has furnished its correct U.S. taxpayer  identification  number and that the IRS
has not notified such U.S. Holder that it is subject to backup  withholding tax.
However,  U.S. Holders that are  corporations  generally are excluded from these
information  reporting and backup  withholding tax rules.  Any amounts  withheld
under the U.S. backup  withholding tax rules will be allowed as a credit against
a U.S. Holder's U.S. federal income tax liability,  if any, or will be refunded,
if such U.S. Holder furnishes required  information to the IRS. Each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding
the information reporting and backup withholding tax rules.



                                      -49-
<PAGE>

     Additional Rules that May Apply to U.S. Holders

If the Company is a "foreign  personal holding  company," a "foreign  investment
company," a "controlled  foreign  corporation," or a "passive foreign investment
company" (each as defined below), the preceding sections of this summary may not
describe  the U.S.  federal  income  tax  consequences  to U.S.  Holders  of the
acquisition, ownership, and disposition of Common Shares.

     Foreign Personal Holding Company
     --------------------------------

The Company generally will be a "foreign personal holding company" under Section
552 of the Code (a "FPHC") if (a) at any time during a taxable  year,  more than
50% of the total  voting power or the total value of the  outstanding  shares of
the Company is owned,  directly or indirectly,  by five or fewer individuals who
are citizens or  residents of the U.S. and (b) 60% (or 50% in certain  cases) or
more of the  gross  income  of the  Company  for such  taxable  year is  foreign
personal  holding  company  income.  "Foreign  personal  holding company income"
includes, for example, dividends, interest, certain rents and royalties, certain
gains from the sale of stock and securities,  and certain gains from commodities
transactions.

If the Company is a FPHC, a U.S. Holder generally will be required to include in
gross income such U.S. Holder's allocable portion of the "undistributed  foreign
personal  holding company income" (as defined in Section 556 of the Code) of the
Company.  The Company does not believe that it has previously been, or currently
is, a FPHC.  However,  there can be no assurance  that the Company will not be a
FPHC for the current or any future taxable year.

     Foreign Investment Company
     --------------------------

The Company generally will be a "foreign  investment company" under Section 1246
of the Code (a "FIC") if (a) 50% or more of the total  voting power or the total
value of the outstanding shares of the Company is owned, directly or indirectly,
by  citizens  or  residents  of  the  U.S.,  domestic   partnerships,   domestic
corporations,  domestic estates,  or domestic trusts (each as defined in Section
7701(a)(30)  of the Code) and (b) the Company is (i)  registered  under the U.S.
Investment Company Act of 1940, as amended, as a "management company" or a "unit
investment  trust" or (ii)  engaged  primarily  in the  business  of  investing,
reinvesting,  or  trading  in  securities,   commodities,  or  any  interest  in
securities or commodities.

If the Company is a FIC, all or part of any gain  recognized by a U.S. Holder on
the sale or other  taxable  disposition  of Common  Shares  will be  treated  as
ordinary income (rather than as capital gain). The Company does not believe that
it has  previously  been,  or  currently  is, a FIC.  However,  there  can be no
assurance  that the  Company  will not be a FIC for the  current  or any  future
taxable year.

     Controlled Foreign Corporation
     ------------------------------

The Company generally will be a "controlled  foreign  corporation" under Section
957 of the Code (a  "CFC") if more  than 50% of the  total  voting  power or the
total  value of the  outstanding  shares of the  Company is owned,  directly  or
indirectly,  by  citizens  or  residents  of the  U.S.,  domestic  partnerships,
domestic corporations,  domestic estates, or domestic trusts (each as defined in
Section 7701(a)(30) of the Code), each of which own, directly or indirectly, 10%
or more of the total  voting power of the  outstanding  shares of the Company (a
"10% Shareholder").

If the Company is a CFC, a 10% Shareholder  generally will be subject to current
U.S.  federal  income tax with  respect to (a) such 10%  Shareholder's  pro rata
share of the  "subpart F income"  (as defined in Section 952 of the Code) of the
Company  and (b) such 10%  Shareholder's  pro rata share of the  earnings of the
Company  invested in "United States  property" (as defined in Section 956 of the
Code).  In addition,  under Section 1248 of the Code, any gain recognized on the
sale or other taxable  disposition of Common Shares by a U.S.  Holder that was a
10% Shareholder at any time during the five-year period ending with such sale or
other taxable disposition  generally will be treated as a dividend to the extent
of the  "earnings  and  profits" of the Company  that are  attributable  to such
Common Shares.  If the Company is both a CFC and a "passive  foreign  investment
company" (as defined below),



                                      -50-
<PAGE>

the Company  generally  will be treated as a CFC (and not as a "passive  foreign
investment company") with respect to any 10% Shareholder.

The Company does not believe that it has  previously  been,  or currently  is, a
CFC.  However,  there can be no assurance that the Company will not be a CFC for
the current or any future taxable year.

     Passive Foreign Investment Company
     ----------------------------------

The Company  generally  will be a "passive  foreign  investment  company"  under
Section 1297 of the Code (a "PFIC") if, for a taxable  year,  (a) 75% or more of
the gross income of the Company for such  taxable year is passive  income or (b)
50% or more of the assets held by the Company either  produce  passive income or
are held for the production of passive income, based on the fair market value of
such assets (or on the adjusted tax basis of such assets,  if the Company is not
publicly  traded and either is a "controlled  foreign  corporation"  or makes an
election). "Passive income" includes, for example, dividends,  interest, certain
rents and royalties,  certain gains from the sale of stock and  securities,  and
certain gains from  commodities  transactions.  However,  gains arising from the
sale of commodities  generally are excluded from passive income if (a) a foreign
corporation  holds  the  commodities  directly  (and  not  through  an  agent or
independent  contractor) as inventory or similar property or as dealer property,
(b)  such  foreign  corporation  incurs  substantial  expenses  related  to  the
production, processing, transportation, handling, or storage of the commodities,
and (c) gross receipts from sales of commodities  that satisfy the  requirements
of clauses (a) and (b)  constitute  at least 85% of the total gross  receipts of
such foreign corporation.

For  purposes of the PFIC income test and assets test  described  above,  if the
Company  owns,  directly  or  indirectly,  25% or more of the total value of the
outstanding shares of another foreign  corporation,  the Company will be treated
as if it (a) held a  proportionate  share of the  assets of such  other  foreign
corporation  and (b) received  directly a  proportionate  share of the income of
such other  foreign  corporation.  In addition,  for purposes of the PFIC income
test and asset test  described  above,  "passive  income"  does not  include any
interest,  dividends,  rents,  or royalties  that are received or accrued by the
Company from a "related  person" (as defined in Section  954(d)(3) of the Code),
to the extent such items are  properly  allocable  to the income of such related
person that is not passive income.

If the Company is a PFIC,  the U.S.  federal income tax  consequences  to a U.S.
Holder of the  acquisition,  ownership,  and  disposition  of Common Shares will
depend on whether  such U.S.  Holder makes an election to treat the Company as a
"qualified  electing  fund"  or  "QEF"  under  Section  1295 of the Code (a "QEF
Election")  or a  mark-to-market  election  under  Section  1296 of the  Code (a
"Mark-to-Market  Election").  A U.S.  Holder  that  does not  make  either a QEF
Election or a  Mark-to-Market  Election will be referred to in this summary as a
"Non-Electing U.S. Holder."

Under Section 1291 of the Code, any gain recognized on the sale or other taxable
disposition  of Common  Shares,  and any  "excess  distribution"  (as defined in
Section  1291(b)  of the  Code)  paid on the  Common  Shares,  must  be  ratably
allocated to each day in a  Non-Electing  U.S.  Holder's  holding period for the
Common Shares. The amount of any such gain or excess  distribution  allocated to
prior years of such  Non-Electing  U.S.  Holder's  holding period for the Common
Shares  generally will be subject to U.S.  federal income tax at the highest tax
applicable  to ordinary  income in each such prior  year.  A  Non-Electing  U.S.
Holder will be required to pay interest on the  resulting tax liability for each
such prior year,  calculated  as if such tax liability had been due in each such
prior year.

A U.S.  Holder that makes a QEF  Election  generally  will not be subject to the
rules of Section 1291 of the Code discussed above.  However,  a U.S. Holder that
makes a QEF Election  generally  will be subject to U.S.  federal  income tax on
such U.S.  Holder's pro rata share of (a) the "net capital gain" of the Company,
which will be taxed as long-term  capital gain to such U.S. Holder,  and (b) and
the "ordinary  earnings" of the Company,  which will be taxed as ordinary income
to such U.S.  Holder. A U.S. Holder that makes a QEF Election will be subject to
U.S.  federal  income tax on such  amounts  for each  taxable  year in which the
Company is a PFIC,  regardless of whether such amounts are actually  distributed
to such U.S. Holder by the Company.

A U.S. Holder that makes a Mark-to-Market Election generally will not be subject
to the rules of Section 1291 of the Code discussed above. A U.S. Holder may make
a Mark-to-Market  Election only if the Common Shares are "marketable  stock" (as
defined  in  Section   1296(e)  of  the  Code).  A  U.S.  Holder  that  makes  a
Mark-to-Market  Election will include in gross income,  for each taxable year in
which the Company is a PFIC,  an amount equal to the excess,  if any, of (a) the
fair market value of the Common Shares as of the close of such taxable year over
(b) such U.S. Holder's tax basis in such Common Shares. A U.S. Holder that makes
a Mark-to-Market Election will, subject



                                      -51-
<PAGE>

to certain limitations, be allowed a deduction in an amount equal to the excess,
if any, of (a) such U.S.  Holder's  adjusted tax basis in the Common Shares over
(b) the fair market value of such Common  Shares as of the close of such taxable
year.

The Company does not believe that it was a PFIC for the taxable year ended March
31, 2004 and does not expect that it will be a PFIC for the taxable  year ending
March  31,  2005.  There  can be no  assurance,  however,  that the IRS will not
challenge the  determination  made by the Company  concerning its PFIC status or
that the Company will not be a PFIC for the current or any future taxable year.

The PFIC  rules  are  complex,  and each  U.S.  Holder  should  consult  its own
financial advisor, legal counsel, or accountant regarding the PFIC rules and how
the PFIC rules may  affect  the U.S.  federal  income  tax  consequences  of the
acquisition, ownership, and disposition of Common Shares.

     F.   Dividends and paying agents.

Not Applicable.

     G.   Statement by experts.

Not Applicable

     H.   Documents on Display.

The  documents  described  herein may be  inspected at the  principal  executive
offices of the Company,  Suite 355, 10333 Southport Road, Calgary,  Alberta, T2W
3X6, during normal business hours.

     I.   Subsidiary Information.

Not Applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

The Corporation  generally  invests surplus funds in renewable 30-day government
guaranteed  investment  certificates  from  the  Corporation's  bank  which is a
Canadian  chartered bank. The  investments  entered into generally yield a fixed
interest rate of return at maturity  based upon the prevailing  market  interest
rates  offered  on  government   guaranteed   investment   certificates  at  the
Corporation's  bank from time to time.  The  Corporation  does not invest in any
instruments  for trading  purposes.  Since April 2003, the Company has deposited
surplus funds with a Canadian chartered bank earning daily interest.

Exchange rate sensitivity

We report our revenue in Canadian dollars.  Our U.S. operations earn revenue and
incur expenses in U.S.  dollars.  Given our  increasingly  significant US dollar
revenue,  we are sensitive to the fluctuations in the value of the US dollar and
are  therefore  exposed to foreign  currency  exchange  risk.  Foreign  currency
exchange risk is the potential for loss in revenue and net income as a result of
a decline in the Canadian  dollar value of U.S.  dollar revenue due to a decline
in the value of US dollar compared to Canadian dollar.

The table  below  summarizes  the  effect  that a  hypothetical  10%  decline or
increase in the value of US dollar would have had on our  revenue,  net loss and
cumulative  translation adjustment account for the twelve months ended March 31,
2004.

(in thousands of Canadian dollars)

                                                     2004
                                                     ----
Revenue                                            +/- $196
Net loss                                           +/- $75
Cumulative translation adjustment                  +/- $288



                                      -52-
<PAGE>

We expect that the proportion of revenue earned in U.S. dollars will continue to
increase, further increasing our foreign currency exchange sensitivity.

Interest rate sensitivity

The Corporation has two variable  interest  bearing debt  instruments,  (the Oak
Street Facility, and the FCC Facility),  one fixed interest rate debt instrument
(the  Vista  Note) and one  non-interest  bearing  debt (the  Johns  Note).  The
Corporation  is therefore  subject to interest rate risk in relation to variable
interest bearing debt instruments.  Based on the total principal amount of these
variable  interest  bearing debt  financing  instruments  at July 31, 2004,  the
maximum   potential   future   reduction  in  cash  flows  from  a  hypothetical
instantaneous 10% increase in the prevailing  interest rates as at July 31, 2004
is  approximately  $50,000 per annum.  The future  reduction in cash flows could
vary based on the amount actually drawn and any principal  repayments.

Item 12. Description of Securities Other than Equity Securities

Not applicable.

                                     PART II

Item 13. Defaults, Dividend Arrearages And Delinquencies

None.

Item 14. Material Modifications to the Rights of Securities Holders and
         Use of Proceeds

None.

Item 15. Controls and Procedures

In  connection  with  this  filing,  the  Company,  with the  assistance  of its
independent auditor, identified certain accounting errors described elsewhere in
this Form 20-F annual report with respect to the Company's financial  statements
for the years  ended  March 31,  2002,  2001 and 2000.  Due to these  accounting
errors,  and due to uncertainty  regarding the appropriate  method of accounting
for certain items with respect to the  Company's  financial  statements  for the
year ended  March 31,  2004 (all of which have been  resolved),  this report was
delayed and certain  financial  information  for the years ended March 31, 2002,
2001 and 2000 has been restated in this report.

In connection with this filing, the Company's management, with the participation
of the Company's  Chief Executive  Officer and interim Chief Financial  Officer,
evaluated the effectiveness of the Company's  disclosure controls and procedures
(as  defined  in Rule  13a-15(e)  under the  Exchange  Act) as of the end of the
period covered by this report (the "Evaluation Date").

Based upon the  evaluation  described  above,  the Chief  Executive  Officer and
interim  Chief  Financial  Officer  concluded  that as of the  Evaluation  Date,
subject to the matters  described above, the Company's  disclosure  controls and
procedures  were effective in timely  alerting them to the material  information
relating  to the  Company  (or its  consolidated  subsidiaries)  required  to be
included in reports that the Company files or submits under the Exchange Act.

No changes were made in the Company's internal control over financial  reporting
during the period covered by this report that have materially  affected,  or are
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.

Item 16A. Audit Committee Financial Expert

The Company's Board of Directors has determined that Patti Runnalls, a member of
the Company's Audit  Committee,  is an audit  committee  financial  expert.  Ms.
Runnalls  is  independent,  as that term is  defined  in the  listing  standards
applicable to companies listed on the American Stock Exchange.

Item 16B. Code of Ethics.

The  Corporation  currently does not have a code of ethics.  It is reviewing the
form and content of the code of ethics with its legal counsel and will post such
code on its website as soon it is finalized.



                                      -53-
<PAGE>

Item 16C. Principal Accountant Fees and Services


The following table discloses the aggregate fees billed for each of the last two
fiscal  years  for  professional  services  rendered  by the  Company's  outside
auditor, KPMG LLP:

Fiscal Year ended March 31, 2004 and 2003         Fiscal Year     Fiscal Year
Principal Accountant Fees and Services                2004           2003
--------------------------------------------------------------------------------

                                                -------------------------------
Audit Fees                                      $    55,000       $  75,596
                                                -------------------------------
Audit Related Fees (1)                          $    14,975       $   9,576
                                                -------------------------------
Tax Fees (2)                                    $    35,079       $  15,943
                                                -------------------------------
Total                                           $   105,054       $ 101,115
                                                ===============================

(1)  Audit related fees during  fiscal 2004 related to the  following  services:
     Due  diligence  of new  acquisition,  and  review and  limited  reviews of
     interim financial statements. Audit related fees during fiscal 2003 related
     to the following services: limited reviews of interim financial statements.

(2)  Tax fees during  fiscal 2004 related to the following  services:  Advise on
     Canadian  and U.S.  tax  matters.  Filing of Canadian and U.S. tax returns;
     Advise on  financing,  business  acquisitions.  Tax fees during fiscal 2003
     related to the following services: Advise on Canadian and U.S. tax matters,
     Filing of Canadian and U.S. tax returns.

All  services  to be  undertaken  by  the  Company's  outside  auditor  must  be
pre-approved by the Audit Committee.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Neither the Company nor any affiliated  purchaser purchased any of the Company's
Common  Shares  during the year ended March 31,  2004.  Subsequent  to March 31,
2004, the Company received  regulatory  approval from the Toronto Stock Exchange
to make a normal course  issuer bid.  Pursuant to the bid, the  Corporation  may
purchase a maximum of 397,758 of its common shares representing approximately 5%
of the 7,955,153 issued and outstanding  Common Shares. The bid will commence on
May 20,  2004 and end on May 19,  2005.  To July 31,  2004,  the Company has not
repurchased any of its shares.


                                    PART III
Item 17. Financial Statements

The Consolidated  Financial  Statements for the years ended March 31, 2004, 2003
and 2002 were reported on by KPMG LLP. The Financial Statements were prepared in
accordance with Canadian GAAP and are presented in Canadian  dollars.  There are
differences  between United States and Canadian GAAP which are set forth in note
19 to the Consolidated Financial Statements.



                                      -54-
<PAGE>


Item 18. Financial Statements

Not applicable.


Item 19. Financial Statements and Exhibits

(A)  Financial Statements

     Auditors'  Report to the Directors  dated June 17, 2004 (except for note 17
     and 19 which are as at November 15, 2004)

     Consolidated  Balance  Sheet as at March 31, 2004  (audited)  and March 31,
     2003 (audited)

     Consolidated  Statement of Operations and Deficit for the years ended March
     31, 2004, 2003 and 2002 (audited)

     Consolidated  Statements  of Cash Flows for the years ended March 31, 2004,
     2003 and 2002 (audited)

     Notes to  Consolidated  Financial  Statements for the years ended March 31,
     2004, 2003 and 2002




                                      -55-
<PAGE>

kpmg





                    Consolidated Financial Statements of



                    ANTHONY CLARK INTERNATIONAL
                    INSURANCE BROKERS LTD.



                    Years ended March 31, 2004, 2003 and 2002





                                      -56-

<PAGE>

Report of Independent Registered public accounting firm


To the Directors of Anthony Clark International Insurance Brokers Ltd.

We have audited the  accompanying  consolidated  balance sheets of Anthony Clark
International  Insurance  Brokers Ltd. and subsidiaries as of March 31, 2004 and
2003 and the  consolidated  statements of operations  and deficit and cash flows
for each of the years in the three  year  period  ended  March 31,  2004.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  an audit to obtain  reasonable  assurance  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 audit opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of Anthony  Clark
International  Insurance  Brokers Ltd. and subsidiaries as of March 31, 2004 and
2003 and the  results of their  operations  and their cash flows for each of the
years in the three-year  period ended March 31, 2004 in accordance with Canadian
generally accepted accounting principles.

As discussed in note 2(a), the Company has corrected the application of Canadian
generally accepted  accounting  principles for the amounts allocated to customer
accounts and goodwill,  and the  amortization  periods used in  connection  with
business combinations completed prior to July 1, 2001.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue as a going  concern.  As  discussed in note 17(f) to the
financial  statements,  the Company was in non-compliance with certain covenants
in  its  long-term  borrowing  agreements  which  covenants  were  waived  as at
September  30,  2004.  The  Company  expects  that  these  covenants  will be in
continuous non-compliance pending their replacement or revision. The uncertainty
relating to the Company's  ability to reach a satisfactory  resolution  with the
lenders raises substantial doubt of the Company's ability to continue as a going
concern.  The  financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.


(Signed) KPMG LLP
Chartered Accountants

Calgary, Canada
June 17, 2004 (except for notes 17 and 19 which are as at November 15, 2004)




                                      -57-
<PAGE>



ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Consolidated Balance Sheets
(in Canadian dollars)

March 31, 2004 and 2003

<TABLE>
--------------------------------------------------------------------------------------------
                                                                     2004             2003
--------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>
Assets
Current assets:
     Cash and cash equivalents                              $   1,989,663    $   3,719,408
     Accounts receivable                                        1,335,785        1,038,721
     Prepaid expenses                                             123,329          170,415
     Note receivable from related party (note 5)                  196,575                -
     Future tax asset (note 14)                                         -            4,377
     Restricted cash (note 4)                                     522,619                -
     Loan to Director (note 5)                                     40,000           40,000
--------------------------------------------------------------------------------------------
                                                                4,207,961        4,972,921

Restricted cash (note 4)                                          655,274                -
Computer systems and office equipment (note 6)                    376,540          212,265
Customer accounts (note 7)                                      5,027,401        1,562,067
Goodwill (note 2 and 3)                                         5,459,185        1,574,832
Deferred financing costs (note 8 and 10)                          474,447          340,193
Other intangible assets (note 9)                                  663,551                -

--------------------------------------------------------------------------------------------
                                                            $  16,864,359    $   8,662,278
--------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
     Accounts payable                                       $     915,066    $     936,658
     Accrued liabilities                                          199,479          120,675
     Long-term debt - current (note 10)                           300,660            4,725
     Due to related party - current (note 5)                      184,787                -
     Future tax liability (note 14)                                32,677                -
     Litigation liability (note 4)                                522,619                -
--------------------------------------------------------------------------------------------
                                                                2,155,288        1,062,058

Long-term debt (note 10)                                        4,577,936           17,624
Due to related party (note 5)                                   3,436,108                -
Future tax liability (note 14)                                    196,930          346,162

Shareholders' equity (note 11):
     Share capital                                              9,897,116        9,687,132
     Contributed surplus                                          104,022                -
     Deficit                                                   (3,502,196)      (2,450,698)
     Cumulative translation adjustment                               (845)               -
--------------------------------------------------------------------------------------------
                                                                6,498,097        7,236,434
Commitments and contingencies (notes 15 and 17(f))
Subsequent events (notes 11(b) and 17)
--------------------------------------------------------------------------------------------
                                                            $  16,864,359    $   8,662,278
--------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.




                                      -58-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Consolidated Statements of Operations and Deficit
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002

<TABLE>
-----------------------------------------------------------------------------------------------------------------
                                                                       2004              2003             2002
-----------------------------------------------------------------------------------------------------------------
                                                                                                   (restated -
                                                                                                    note 2(a))
<S>                                                           <C>               <C>              <C>
Revenue                                                       $   7,469,559     $   5,175,072    $   4,449,628

Expenses:
     Salaries and wages                                           4,818,880         3,165,924        2,560,844
     Rent                                                           422,672           283,242          263,380
     General and administrative                                   1,446,886         1,135,956        1,180,375
     Legal judgment (note 17)                                       522,619                 -                -
     Foreign currency loss                                                -            37,172                -
-----------------------------------------------------------------------------------------------------------------
                                                                  7,211,057         4,622,294        4,004,599
-----------------------------------------------------------------------------------------------------------------
Earnings before interest, taxes,
   depreciation and amortization                                    258,502           552,778          445,029

Interest and financing costs (note16)                              (941,153)         (285,720)          (9,540)
-----------------------------------------------------------------------------------------------------------------
Earnings before depreciation and amortization                      (682,651)          267,058          435,489

Depreciation and amortization                                      (481,025)         (609,546)        (634,792)
-----------------------------------------------------------------------------------------------------------------
(Loss) earnings before income taxes                              (1,163,676)         (342,488)        (199,303)

Income taxes (note 14):
     Current recovery (expense)                                           -                 -           (1,834)
     Future recovery (expense)                                      112,178           (13,313)          69,395
-----------------------------------------------------------------------------------------------------------------
                                                                    112,178           (13,313)          67,561
-----------------------------------------------------------------------------------------------------------------
Net loss                                                         (1,051,498)         (355,801)        (131,742)

Deficit, beginning of year
   As previously reported                                        (2,450,698)       (2,669,781)      (2,543,576)
Correction of accounting error (note 2(a))                                -           574,884          788,113
-----------------------------------------------------------------------------------------------------------------
As restated                                                      (2,450,698)       (2,094,897)      (1,755,463)

Excess of share redemption amount over share
   stated amount (note 11(b))                                             -                 -         (207,692)
-----------------------------------------------------------------------------------------------------------------
Deficit, end of year                                          $  (3,502,196)    $  (2,450,698)   $  (2,094,897)
-----------------------------------------------------------------------------------------------------------------
Earnings per common share - basic and
   diluted (note 12)                                          $       (0.14)    $       (0.05)   $       (0.02)
-----------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.



                                      -59-
<PAGE>


ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Consolidated Statements of Cash Flows
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002

<TABLE>
---------------------------------------------------------------------------------------------------------------
                                                                       2004              2003             2002
---------------------------------------------------------------------------------------------------------------
                                                                                                   (restated -
                                                                                                    note 2(a))
<S>                                                           <C>               <C>              <C>
Cash flows from (used in) operating activities:
     Net earnings (loss)                                      $  (1,051,498)    $    (355,801)   $     131,742
     Items not involving cash:
         Depreciation and amortization                              446,392           609,546          634,792
         Amortization of intangible asset                            34,633                 -                -
         Future income tax                                         (112,178)           13,313           69,395
         Amortization of discount on Kabaker note                    62,625                 -                -
         Deferred financing costs                                   423,070           102,385                -
---------------------------------------------------------------------------------------------------------------
                                                                   (196,957)          369,443          433,655
Net change in non-cash working capital relating to operations:
     Accounts receivable                                           (297,054)         (114,185)        (252,420)
     Note receivable from related party                            (196,575)                -                -
     Income taxes receivable/payable                                      -                 -          198,567
     Prepaid expenses                                                47,086           (37,463)          11,774
     Accounts payable                                               (21,592)          240,887           33,631
     Accrued liabilities                                             78,804            78,410            3,265
---------------------------------------------------------------------------------------------------------------
                                                                   (586,288)          537,092          428,472
Cash flows from (used in) financing activities:
     Repurchase of shares under issuer bid                                -                 -         (264,896)
     Net proceeds on issuance of Common Shares                      314,006                 -           19,200
     Proceeds of long-term debt                                   6,632,353                 -                -
     Repayment of long-term debt                                 (2,199,696)         (180,754)         (58,861)
     Restricted cash                                               (655,274)                -                -
     Repayment from (loan to) director                                    -            60,327         (104,228)
     Deferred financing costs                                      (557,324)         (442,578)               -
---------------------------------------------------------------------------------------------------------------
                                                                  3,534,065          (563,005)        (408,785)
Cash flows from (used in) investing activities:
     Computer systems and office equipment additions                (66,230)          (31,766)        (102,284)
     Business acquisitions (note 3)                              (4,611,292)                -         (265,880)
---------------------------------------------------------------------------------------------------------------
                                                                 (4,677,522)          (31,766)        (368,164)
---------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents                 (1,729,745)          (57,679)        (348,477)

Cash and cash equivalents, beginning of year                      3,719,408         3,777,087        4,125,564
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                        $   1,989,663     $   3,719,408    $   3,777,087
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents is comprised of:
     Cash                                                     $     679,006     $   1,719,408    $   1,277,087
     Term deposits maturing within ninety days                $   1,310,657     $   2,000,000    $   2,500,000
---------------------------------------------------------------------------------------------------------------
Supplementary disclosure of cash flow information:
     Income taxes received (paid) in the year                 $           -     $           -    $     196,773
     Interest paid in the year                                $     382,766     $      80,156    $       8,087
---------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.



                                      -60-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

     Anthony Clark  International  Insurance Brokers Ltd.'s (the  "Corporation")
     primary  business  activity  involves the  acquisition,  consolidation  and
     operation of general  insurance  brokerages.  The Corporation  conducts its
     business in the United States through its wholly-owned  subsidiary  Addison
     York  Insurance  Brokers  Ltd.  ("Addison").  Revenues  are  attributed  to
     geographic areas based on the location of resources producing the revenues.

1.   Significant accounting policies:

     (a)  Basis of presentation:

          The consolidated financial statements have been prepared in accordance
          with Canadian  generally  accepted  accounting  principles  ("Canadian
          GAAP")  and  include  the   accounts  of  the   Corporation   and  its
          wholly-owned  subsidiaries.  Differences  between  Canadian  GAAP  and
          United States generally accepted accounting  principles ("US GAAP") as
          applied to these financial statements are described in note 19.

     (b)  Cash and cash equivalents:

          Cash and cash  equivalents  consist of bank  deposits  and  short-term
          investments with initial term to maturity of three months or less.

     (c)  Computer systems and office equipment:

          Computer systems and office equipment are stated at cost. Depreciation
          is provided for using the following methods and annual rates:

<TABLE>
          -----------------------------------------------------------------------------------
          Asset                                                      Basis             Rate
          -----------------------------------------------------------------------------------
          <S>                                           <C>                        <C>
          Computer equipment and software                declining balance              30%
          Corporate website                                  straight-line          3 years
          Furniture and equipment                        declining balance              20%
          Leasehold improvements                             straight-line          3 years
          -----------------------------------------------------------------------------------
</TABLE>

          Corporate website costs include hardware, software and graphics. Costs
          incurred in the planning stage and to enhance the website are expensed
          along with operating costs.



                                      -61-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 2
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


1.   Significant accounting policies (continued):

     (d)  Customer accounts:

          Acquired  customer  accounts  are  stated  at  cost  less  accumulated
          amortization  and are amortized on a straight-line  basis over periods
          ranging from ten to seventeen  years.  The carrying  value of customer
          accounts is  periodically  reviewed by  management to determine if the
          facts and circumstances  suggest that it may be impaired. If there are
          indications  that the  carrying  value  is  impaired  the  Corporation
          compares the carrying value of its customer  accounts to the estimated
          undiscounted cash flow generated from those assets. If this assessment
          indicates that the carrying value of the asset may not be recoverable,
          the carrying value is then compared to the estimated fair value of the
          customer accounts.  Any impairment  identified through this assessment
          will require that the carrying value of related  customer  accounts be
          written down to their estimated fair value.

     (e)  Goodwill:

          Goodwill  represents  the excess of the  purchase  price over the fair
          value of the  identifiable  net tangible and intangible  assets of the
          Corporation's  acquisitions.  It is not  amortized  but is tested  for
          impairment annually.

     (f)  Deferred financing costs:

          Deferred  financing  costs and debt  discount are  amortized  over the
          stated term of the debt using the effective  interest rate method.  If
          the  related  debt is retired  earlier,  the  balance of the  deferred
          financing  costs are charged to  earnings.  Deferred  financing  costs
          generally include expenses (primarily legal expenses,  commitment fees
          and consulting fees) associated with obtaining the debt financing.

     (g)  Other intangible assets:

          Other  intangible  assets are costs  associated  with  non-competition
          agreements  and are  recorded  at the  allocated  cost on the  date of
          acquisition.  Amortization is provided on a  straight-line  basis over
          periods ranging from six to ten years.

     (h)  Revenue recognition:

          Commission revenue, which results from the placement of insurance with
          underwriters,  is recognized as earned upon the effective date of each
          policy.  Contingent  commission  revenue,  which is dependent upon the
          underwriter's  profitability on business placed by the Corporation, is
          not  ascertainable  until  claims  against  underwriters  are settled.
          Accordingly,  the  Corporation  recognizes such revenue as earned when
          received.  Revenue from the  Corporation's  website is  recognized  as
          earned when received.



                                      -62-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 3
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


1.   Significant accounting policies (continued):

     (i)  Foreign currency:

          The accounts of integrated  foreign  operations  are  translated  into
          Canadian dollars using the temporal method whereby monetary assets and
          liabilities  are  translated at rates  prevailing at the balance sheet
          date,  and  non-monetary  assets and  liabilities  are  translated  at
          historic  rates.  Revenues  and expenses  are  translated  at rates of
          exchange  prevailing on the transaction  dates.  Translation gains and
          losses are recognized in earnings.

          The  Corporation  uses the current rate method of translation  whereby
          assets and  liabilities  of  self-sustaining  operations  conducted in
          foreign  currency are translated into Canadian dollars at the exchange
          rate in effect at the balance  sheet date.  Revenues  and expenses are
          translated at average exchange rates for the period. Translation gains
          or losses are shown as a separate  component of shareholder's  equity.

     (j)  Per share amounts:

          Basic per share  amounts are  calculated  using the  weighted  average
          number of common shares outstanding during the year. Diluted per share
          amounts are calculated  following the treasury  stock method  assuming
          that  proceeds  obtained upon the exercise of options would be used to
          purchase common shares at the average market price during the period.

     (k)  Stock-based compensation plans:

          The  Corporation  has a stock  based  compensation  plan.  Stock-based
          compensation is calculated in accordance with the  recommendations  of
          CICA Handbook Section 3870 Stock-Based  Compensation,  as described in
          note 2(b).

     (l)  Income taxes:

          The  Corporation  uses the liability  method of accounting  for income
          taxes.  Under the liability method,  future tax assets and liabilities
          are recognized for the future consequences attributable to differences
          between the financial  statement  carrying  amounts of existing assets
          and liabilities and their respective tax bases.  Future tax assets and
          liabilities  are measured using enacted or  substantively  enacted tax
          rates  expected to apply to taxable income in the years in which those
          temporary  differences  are expected to be  recovered or settled.  The
          effect on future tax assets and  liabilities  of a change in tax rates
          is  recognized  in  income in the  period  that  includes  the date of
          enactment or substantive  enactment. A valuation allowance is recorded
          against any future income tax asset if it is more likely than not that
          the asset will not be realized.




                                      -63-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 4
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


1.   Significant accounting policies (continued):

     (m)  Use of estimates:

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          that  affect  the  reported  amounts  of assets  and  liabilities  and
          disclosure of contingent  assets and  liabilities,  at the date of the
          financial  statements,  and  the  reported  amounts  of  revenues  and
          expenses during the reporting period.  The significant  estimates made
          in the preparation of these financial  statements include the expected
          life of  acquired  customer  accounts,  the  estimated  fair  value of
          customer accounts used in assessing  potential  impairment of customer
          accounts and  goodwill,  the estimated  fair value of  non-competition
          agreements entered into with vendors of businesses  acquired,  and the
          recoverability  of the  company's  future tax assets.  Actual  results
          could differ from those estimates.


2.   Changes in accounting policies:

     (a)  Business combinations, goodwill and other intangible assets:

          On April 1,  2002,  the  Corporation  implemented  the new  accounting
          standards for business  combinations and goodwill and other intangible
          assets as set out in CICA Handbook sections 1581 and 3062.

          Under Section 1581, the purchase  method should be used to account for
          all business  combinations  initiated on or after July 1, 2001.  Under
          Section 1581,  intangible  assets  acquired in a business  combination
          should be  identified  and  recognized  apart from  goodwill when they
          arise from either  contractual  or other  legal  rights or they can be
          separated  from  the  acquired   enterprise  and  sold,   transferred,
          licensed, rented or exchanged,  either individually or with a group of
          related assets or  liabilities.  Any intangible  assets  acquired in a
          business  combination  completed before July 1, 2001, that do not meet
          the  criteria  for  separate  recognition  in  Section  1581,  must be
          subsumed into goodwill.

          Under  Section  3062,  goodwill  is not  amortized  and is tested  for
          impairment  annually,  or more  frequently  if  events or  changes  in
          circumstances indicate that the asset might be impaired.




                                      -64-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 5
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


2.   Changes in accounting policies:

     (a)  Business   combinations,   goodwill   and  other   intangible   assets
          (continued):

          The  Corporation  adopted  Sections 1581 and 3062  effective  April 1,
          2002.  As of the date of  adoption,  the  Corporation  had  previously
          reported an intangible asset called customer accounts in the amount of
          $3,085,009,  and no goodwill.  In accordance with the  requirements of
          Sections  1581 and 3062,  the  adoption  of these two  Sections is not
          applied  retroactively and the amounts presented for prior periods are
          not to be restated for this change.  However,  in accordance  with the
          requirements of those Sections,  the Corporation  reviewed each of the
          business combinations  completed prior to July 1, 2001 to determine if
          the carrying amount of acquired  customer accounts met the criteria in
          CICA Handbook  Section 1581 for recognition  apart from goodwill,  and
          whether the  amortization  period of for  acquired  customer  accounts
          continued to be  appropriate.  In  connection  with this  review,  the
          Corporation  determined that it has incorrectly  allocated  amounts to
          customer  accounts  under  superseded  CICA Handbook  Section 1580 for
          business  combinations  consummated prior to July 1, 2001, and that it
          had used an inappropriate amortization period for customer accounts.

          Accordingly,  in  connection  with the  adoption of Sections  1581 and
          3062, the  Corporation  has restated the carrying  amounts of goodwill
          and  customer  accounts  at April 1,  2001 in  order  to  correct  the
          allocation  of the  excess  purchase  price  over  the  fair  value of
          tangible assets acquired in business  combinations  completed prior to
          July 1, 2001,  and to adjust  the  amortization  period  used in prior
          periods.  As a result,  it was  determined  that,  in  aggregate,  net
          carrying  value of  $1,593,468  of customer  accounts at April 1, 2001
          should be have been  classified  as goodwill  under  Section  1580. In
          conjunction with this correction,  the amortization period of customer
          accounts was reduced to 12 years  retroactively,  with a net reduction
          of customer  accounts of  $1,008,515.  The future income tax liability
          related to customer  accounts  was reduced by $203,160 and the deficit
          was reduced by $788,113.  The statement of operations  and deficit for
          the year  ended  March  31,  2002 has been  restated  to  reflect  the
          resulting changes in depreciation,  amortization and future income tax
          expense for that year.  Depreciation  and  amortization  has increased
          from $343,172 to $634,792 and future income tax recovery has increased
          by $78,391,  resulting  in an increase of $213,229 in net loss for the
          year ended March 31, 2002. This correction conformed the Corporation's
          accounting for business combinations  completed prior to July 1, 2001,
          and the amortization of goodwill and customer accounts, under Canadian
          generally accepted  accounting  principles  ("Canadian GAAP") with the
          accounting the Corporation had followed under United States  generally
          accepted accounting  principles  ("United States GAAP").  Accordingly,
          there  have been no  changes  in the  reported  operating  results  or
          financial  position of the Corporation for United States GAAP purposes
          (see note 19).



                                      -65-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 6
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


2.   Changes in accounting policies (continued):

          The Corporation  conducted a transitional  goodwill impairment test as
          at the date of  adoption  of the new  standards.  Under  the  goodwill
          impairment  test,  if the fair value of a reporting  unit  exceeds its
          carrying  value,  the excess of fair value of net assets over the fair
          value of a reporting  unit is  considered  to be the implied  value of
          goodwill. If the carrying value of goodwill exceeds its implied value,
          the  difference is recognized  as an  impairment  loss.  Based on this
          test, the  Corporation  determined  that it had one reporting unit and
          that the  implied  value of  goodwill  exceeds  the  carrying  amount,
          resulting  in  no  impairment   loss  pursuant  to  the   transitional
          provisions of the new goodwill accounting standards.

     (b)  Stock-based compensation:

          Effective  April 1, 2002 the  Corporation  adopted the new  accounting
          standard for stock-based compensation as set out in Canadian Institute
          of Chartered  Accountants ("CICA") Handbook Section 3870. This section
          establishes standards for the recognition,  measurement and disclosure
          of stock-based  compensation  and other  stock-based  payments made in
          exchange for goods and services.  It applies to  transactions in which
          an enterprise grants shares of common stock,  stock options,  or other
          equity  instruments,  or incurs  liabilities based on the price of the
          common stock or other equity instrument.

          In accordance  with the new standard,  options or similar  instruments
          granted to non-employees by the Corporation are recorded at their fair
          value.  As permitted  under the new  standard,  the  Corporation  uses
          settlement  date  accounting  to account for  employee  stock  options
          whereby no expense is recorded in  connection  with the option and the
          proceeds  from  exercise of the option are recorded to share  capital.
          The new standards  require the  Corporation  to disclose the pro forma
          impact on net income and  earnings  per share if the fair value method
          was used to account for employee stock options.  There were no options
          or other stock-based  instruments  granted during the year ended March
          31, 2003.

          Effective April 1, 2004, the Corporation will be adopting revised CICA
          Handbook  Section 3870,  which  requires  that a fair-value  method of
          accounting  be applied to  stock-based  compensation  payments to both
          employees and non-employees.



                                      -66-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 7
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


3.   Business acquisitions:

     During the year ending March 31, 2004, the Corporation,  through its wholly
     owned United  States  subsidiary,  Addison,  acquired the net assets of two
     California  insurance  brokerages  ("Vista"  and  John's"),  for  aggregate
     consideration of $8,600,642 (US$6,515,638), subject to final purchase price
     adjustments  with a further 20% of the  purchase  price of one agency being
     determined based on a price calculation  relating to the commission revenue
     in 5 years,  which cannot be quantified  at this time. An additional  price
     adjustment is based on twenty-four months (Vista) and twelve months (Johns)
     of  commission   revenue   retention   from  the  effective   date  of  the
     acquisitions,  and can only  affect  the  purchase  price to reduce it. The
     results of operations  for these  businesses  are included in the operating
     results of the Corporation from the closing date of the acquisitions (Vista
     - October 17, 2003 and Johns - November 6,  2003).  The  acquired  customer
     accounts  will be  amortized  on a  straight-line  basis over ten years and
     seventeen  years,  respectively  for the Vista and John's  agencies,  their
     estimated useful lives.  Non-competition  agreements will be amortized on a
     straight-line basis over ten years, their estimated useful lives.

     In  aggregate,  as a  result  of the  above  transactions,  the net  assets
     acquired were as follows:

     Net assets acquired:

<TABLE>
     ----------------------------------------------------------------------------------------------------------
                                                                      Vista             Johns            Total
     ----------------------------------------------------------------------------------------------------------
     <S>                                                      <C>                  <C>           <C>
     Customer accounts                                        $   2,481,432        $1,372,120    $   3,853,552
     Computer systems and office equipment                          136,706            45,941          182,647
     Non-competition agreements                                     523,992           179,826          703,818
     Goodwill                                                     3,038,638           885,122        3,923,760
     Long-term debt (capital lease)                                 (63,135)                -          (63,135)
     ----------------------------------------------------------------------------------------------------------
                                                              $   6,117,633     $   2,483,009    $   8,600,642
     ----------------------------------------------------------------------------------------------------------

     Consideration paid:
     ----------------------------------------------------------------------------------------------------------
     Cash                                                     $   2,357,618     $   2,253,674    $   4,611,292
     Note payable                                                 3,760,015           229,335        3,989,350
     ----------------------------------------------------------------------------------------------------------
                                                              $   6,117,633     $   2,483,009    $   8,600,642
     ----------------------------------------------------------------------------------------------------------
</TABLE>


     The note payable to the vendors of the Vista assets had a principal  amount
     of $4,646,127 (US  $3,515,000)  bearing  interest at 7%. That note has been
     discounted to $3,760,015  (US  $2,844,617) to reflect the fair value of the
     note based upon a market value  interest  rate for similar debt of 12% (see
     note 10).



                                      -67-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 8
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


4.   Restricted cash:

     During the year, a judgment was made against the  Corporation  with respect
     to a previously  outstanding legal proceeding.  The judgment resulted in an
     amount of $522,619 in damages,  which related to the Corporation's  alleged
     failure to honor a stock  option  agreement  dated  October  1,  1998.  The
     damages have been paid into a lawyer's trust account (note 18(a)).

     As required by the Debt Financing  agreement with Oak Street,  an amount of
     $655,274  (US$500,000)  has been deposited into a collateral  account.  The
     Company is required to maintain  this  balance at all times during the term
     of the Debt Financing (note 10(c)).


5.   Related party transactions:

     Due from related parties:

<TABLE>
     ------------------------------------------------------------------------------------------------------------
                                                                                         2004             2003
     ------------------------------------------------------------------------------------------------------------
     <S>                                                                         <C>              <C>
     Demand loan to an individual who is an officer and director of the
       Corporation, bearing interest at the Royal Bank of Canada prime rate,
       with interest payable annually and compounded semi-annually, secured by
       capital stock of the Corporation and a general
       security agreement.                                                      $      40,000    $      40,000

     Note receivable, issued on October 10, 2003,
       from a company, in which an officer of
       Addison is an owner.  This note is due on
       demand and is non-interest bearing.  It is
       secured by a general security agreement.                                       196,575                -
     ------------------------------------------------------------------------------------------------------------
                                                                                $     236,575    $      40,000
     ------------------------------------------------------------------------------------------------------------
</TABLE>



                                      -68-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 9
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


5.   Related party transactions (continued):

     Due to related parties:

<TABLE>
     --------------------------------------------------------------------------------------------------------------
                                                                                          2004               2003
     --------------------------------------------------------------------------------------------------------------
     <S>                                                                            <C>                <C>
     Note payable to Kabaker Family Trust, in which, an officer of Addison is
       one of the trustees. The note bears interest at 7% per annum and is
       repayable over 10 years in equal monthly instalments of US$40,812
       including interest, secured by a general security agreement. The note has
       been discounted to reflect the fair value of the note based upon a market
       value interest rate for similar debt of 12%. The amount of interest
       calculated on the difference between the stated interest rate (7%) and
       the market interest rate (12%) is amortized as incremental interest
       expense and is accreted to the carrying value of the note.                   $   4,444,379      $        -

       Less unamortized discount                                                         (823,484)              -
     --------------------------------------------------------------------------------------------------------------
                                                                                        3,620,895               -
     Amount payable to DKWS Enterprises Inc.
       ("DKWS") for  expenses incurred on
       behalf of Addison.  DKWS is owned by
       an officer of Addison                                                               60,832               -
     --------------------------------------------------------------------------------------------------------------
                                                                                    $   3,681,727      $        -
     --------------------------------------------------------------------------------------------------------------
</TABLE>

     Transactions with related parties:

     During the year ended March 31, 2004 the Corporation  paid $298,296 (2003 -
     $162,384;  2002 -  $168,174)  in  legal  fees to three  law  firms in which
     directors of the  Corporation  are or were partners during the fiscal year.
     The  Corporation  by way of its  wholly  owned  United  States  subsidiary,
     Addison,  acquired the fixed  assets and customer  accounts of a California
     insurance brokerage (Vista) from Kabaker Family Trust and DKWS.  Subsequent
     to the acquisition, the owner and trustee of DKWS and Kabaker Family Trust,
     respectively,  was appointed as an officer of Addison. Pursuant to an asset
     management  agreement with DKWS,  Addison  processes its clients  insurance
     policies through DKWS, whereby Addison shall receive all the revenues there
     from and shall pay all associated  operating  costs.  During the year ended
     March  31,  2004 the  Corporation  received  $1,307,446  (US  $992,972)  in
     revenues, paid expenses of $1,462,369 (US $1,110,632) for payroll, rent and
     administrative  charges,  and paid for capital assets additions and capital
     leases in the amount of $46,103 (US $35,014) to DKWS in accordance with the
     asset  management  agreement.  Accounts  payable at March 31, 2004 included
     $60,832 due to DKWS for expenses incurred on behalf of the Corporation.



                                      -69-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 10
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


5.   Related party transactions (continued):

     During  the year  ended  March 31,  2004,  the  Corporation  paid  $322,146
     (US$244,872),  to Kabaker Family Trust being the monthly instalments due on
     the note payable,  of which $222,255  (US$168,797)  has been recorded as an
     interest  expense and $99,997  (US$76,075)  has been recorded  against note
     payable.


6.   Computer systems and office equipment:

<TABLE>
     -----------------------------------------------------------------------------------------------------------
                                                                                  Accumulated         Net book
     2004                                                              Cost      depreciation            value
     -----------------------------------------------------------------------------------------------------------
     <S>                                                      <C>               <C>              <C>
     Computer equipment and software                          $     805,876     $     569,390    $     236,486
     Furniture and equipment                                        334,434           195,920          138,514
     Corporate website                                                9,245             7,705            1,540
     -----------------------------------------------------------------------------------------------------------
                                                              $   1,149,555     $     773,015    $     376,540
     -----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
     2003
     -----------------------------------------------------------------------------------------------------------
     <S>                                                      <C>               <C>              <C>
     Computer equipment and software                          $     661,439     $     505,331    $     156,108
     Furniture and equipment                                        230,000           178,465           51,535
     Leasehold improvements                                           3,895             3,895                -
     Corporate website                                                9,245             4,623            4,622
     -----------------------------------------------------------------------------------------------------------
                                                              $     904,579     $     692,314    $     212,265
     -----------------------------------------------------------------------------------------------------------
</TABLE>

     Included in capital assets at March 31, 2004 are assets under capital lease
     in the  amount  of  $26,518  (2003  -  $26,518)  with  related  accumulated
     depreciation of $7,425 (2003 - $2,652).


7.   Customer accounts:

     --------------------------------------------------------------------------
                                                        2004             2003
     --------------------------------------------------------------------------
     Cost                                      $   7,069,520    $   3,215,968
     Accumulated amortization                     (2,042,119)      (1,653,901)
     --------------------------------------------------------------------------
                                               $   5,027,401    $   1,562,067
     --------------------------------------------------------------------------

     During  the year  ended  March  31,  2004,  the cost of  customer  accounts
     increased  by  $3,853,552  due to the  acquisitions  of the two  California
     brokerages.



                                      -70-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 11
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


8.   Deferred financing costs:

     --------------------------------------------------------------------------
                                                        2004             2003
     --------------------------------------------------------------------------
     Cost                                      $     476,727    $     442,578
     Accumulated amortization                         (2,280)        (102,385)
     --------------------------------------------------------------------------
                                               $     474,447    $     340,193
     --------------------------------------------------------------------------

     Prior year  balance of  $340,193  related to the  Textron  debt  financing.
     Textron debt financing was terminated  during the year and the total amount
     related to the Textron  debt  financing  costs were  expensed in the fiscal
     year 2004.

     During the year ended  March 31,  2004,  the  Corporation  was  involved in
     arranging  additional  debt  financing  with Oak Street  Funding  and First
     Capital Corporation  ("FCC"). Oak Street debt financing closed on March 22,
     2004,  while the FCC debt financing closed  subsequent to year-end.  During
     the year-ended March 31, 2004, the Corporation  incurred financing costs of
     $455,144  (US$345,670)  and  $21,583  (US$16,392)  for Oak  Street and FCC,
     respectively.  The amount will be amortized on a  straight-line  basis over
     seven years,  from the date of closing.  An amount of $2,301 (US$1,732) was
     amortized  during the year with  respect to Oak Street and no amounts  have
     been amortized for FCC.


9.   Other intangible assets:

     -------------------------------------------------------------------------
                                                        2004             2003
     -------------------------------------------------------------------------
     Cost                                      $     703,818    $           -
     Accumulated amortization                        (40,267)               -
     -------------------------------------------------------------------------
                                               $     663,551    $           -
     -------------------------------------------------------------------------

     During the year ended March 31, 2004, the other  intangible  assets,  which
     are comprised of non-competition  agreements,  increased by $703,818 due to
     the acquisitions of the two California brokerages (note 3).



                                      -71-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 12
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


10.  Long-term debt:

<TABLE>
     ------------------------------------------------------------------------------------------------------------
                                                                                         2004             2003
     ------------------------------------------------------------------------------------------------------------
     <S>                                                                        <C>              <C>
     Anthony Clark International Insurance Brokers Ltd. Capital lease,
       bearing interest at 9.78% and secured by the individual assets
       being leased by the Corporation                                          $      17,624    $      22,349

     Addison York Insurance Brokers Ltd. Capital lease, bearing
       interest at 15.00% and secured by the individual assets
       being leased by the Corporation                                                 45,254                -

     Note payable, bearing no interest and payable on
       December 31, 2004 and unsecured                                                228,969                -

     Note payable US $3,500,000, bearing interest at prime plus 8%, with
       interest only payments for the first 2 years followed by monthly
       instalments of $102,030 (US$77,856) including interest over 60 months.
       The note is secured by a general security agreement and guaranteed by
       Anthony Clark International Insurance
       Brokers Ltd.                                                                 4,586,749                -

     Note payable US $3,515,000, bearing interest at 7% per annum and repayable
       over 10 years in equal monthly instalments of US$40,812 including interest
       secured by a general security agreement. The note has been discounted to
       reflect the fair value of the note based upon a market value interest rate
       for similar debt of 12%. The amount of interest calculated on the difference
       between the stated interest rate (7%) and the market interest rate (12%)
       is amortized as incremental interest expense and is accreted to
       the carrying value of the note                                               4,444,479                -
       Less unamortized discount                                                     (823,484)               -
     ------------------------------------------------------------------------------------------------------------
                                                                                    3,620,895                -
     ------------------------------------------------------------------------------------------------------------
                                                                                    8,499,491           22,349

     Less current portion                                                             485,447            4,725
     ------------------------------------------------------------------------------------------------------------
                                                                                $   8,014,044    $      17,624
     ------------------------------------------------------------------------------------------------------------
</TABLE>


     The aggregate  scheduled  maturities  of long-term  debt for the five years
     subsequent to March 31, 2004 are as follows:

     -------------------------------------------------------------
     2005                                          $     485,447
     2006                                                263,641
     2007                                                996,062
     2008                                              1,114,761
     2009 and beyond                                   5,639,580
     -------------------------------------------------------------
                                                   $   8,499,491
     -------------------------------------------------------------



                                      -72-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 13
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


10.  Long-term debt (continued):

     (a)  On October 20, 2003, a termination and release  agreement was executed
          with  Textron  Financial   Corporation,   which  terminated  the  loan
          agreement and released all security  documents.  During the year ended
          March 31, 2004,  the total  interest and financing  costs expensed for
          the Textron loan was $424,401 (2003 - $272,899).

     (b)  On November 6, 2003,  the  Corporation  executed a loan agreement with
          Paragon Capital  Corporation  Ltd. with loan proceeds of $2.1 million.
          The loan had a  one-year  term,  with  interest  only  payments,  with
          interest  at 2% per  month.  The  assets  of the  Corporation  and its
          subsidiaries  along with a share pledge agreement  secured the loan. A
          commitment fee of 3% of the loan proceeds ($63,000) was charged by the
          lender.  Other costs  incurred for the  financing  were legal costs of
          $19,877.  The loan was  repaid  on March 22,  2004  with the  proceeds
          received  from the Oak Street  debt  financing.  During the year ended
          March 31, 2004,  the total  interest and financing  costs expensed for
          the Paragon loan was $274,866 (2003- $nil).

     (c)  On  March  22,  2004,  the  Corporation  closed  a  US$5,000,000  debt
          financing  arrangement  with Oak Street Funding ("Oak Street") whereby
          Oak Street will  provide a  US$5,000,000  reducing  revolving  line of
          credit ("the Facility") to Addison (the "Borrower").

          The Corporation can borrow,  an aggregate  amount not to exceed at any
          time outstanding the lesser of (a) the maximum principal amount of the
          Line of Credit or (b) the Borrowing  Base. The  Corporation  has drawn
          $4,586,749  (US$3,500,000) of the US$3,985,000 available as determined
          by  the  Borrowing  Base.  The  Borrowing  Base  is  determined  as  a
          percentage  of  recurring   annual   revenue  of  eligible   insurance
          commissions  earned with regard to  policies of  acceptable  insurance
          pursuant to agency agreements with the borrower and the Corporation by
          the insurance companies having a rating by AM best of B and above.

          The Facility  has an interest  rate of prime rate plus 8.0% per annum,
          with  interest  only  payments  for two  years  following  the date of
          closing   ("Pre-Amortization   Period").  After  the  Pre-Amortization
          Period,  the  Corporation  shall pay  equal  monthly  installments  of
          principal  and  interest  in  the  amount   calculated  based  on  the
          amortization schedule with the total amount being repaid over 60 month
          period.  The  Pre-Amortization  Period may be extended for up to three
          additional one year periods with the consent of Oak Street.

          The  Facility  is secured by the  general  security  agreement  of the
          Borrower and, has been guaranteed by the Corporation. Oak Street, will
          have a first priority  security interest in the assets of the Borrower
          and the  Corporation,  other  than the  Collateral  subject  to future
          financing.  The Facility requires the Corporation to deposit a minimum
          balance of $655,274  (US$500,000) as collateral in the bank designated
          by Oak Street  and  maintain a minimum  balance of  US$500,000  in the
          collateral  account at all times. On the closing date, the Corporation
          deposited US$500,000 with Bank One, N.A.



                                      -73-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD
Notes to Consolidated Financial Statements, p. 14
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


10.  Long-term debt (continued):

          The  Facility is required to be used for (i) to  refinance an existing
          senior credit facility, (ii) to make permitted acquisitions,  (iii) to
          acquire equipment in the ordinary course to expand its business,  (iv)
          to fund  reasonable  working  capital needs  associated with permitted
          acquisitions,  and (v) for such other  purposes  as may be approved in
          writing by the lender.

          In connection with this financing, the Corporation incurred US$401,000
          (CDN $525,310) of costs, of which US$55,200 was paid subsequent to the
          year-end.  These  amounts  are being  amortized  using  the  effective
          interest  rate  method,   amortization   for  the  period  was  $2,301
          (US$1,732).

          The facility  includes a subjective  acceleration  clause  whereby Oak
          Street,  can terminate the loan facilities and declare the obligations
          immediately due and payable,  without presentment,  demand, protest or
          notice of any kind, all of which the Corporation has expressly waived.
          The defaults that may cause the acceleration clause to occur include a
          "material adverse change" in the  Corporation's  business or financial
          condition,  as  determined  by Oak  Street in its good  faith.  If the
          acceleration  clause were to occur, the full amount of the loan, which
          at March 31, 2004 is $4,586,749,  would be immediately due and payable
          (see note  17(f)).  While  the loan is  outstanding,  the  Corporation
          cannot pay dividends.


11.  Shareholders' equity:

     (a)  Share capital authorized:

          Unlimited number of Voting Participating Common Shares without nominal
          or par value

     (b)  Share capital, deficit and cumulative translation adjustment:

<TABLE>
          --------------------------------------------------------------------------------------------------------
                                                                                Number of
          Share capital:                                                            shares              Amount
          --------------------------------------------------------------------------------------------------------
          <S>                                                                    <C>               <C>
          Balance, March 31, 2002 and 2003                                       7,692,055         $  9,687,132

          Issuance of common shares on completion of private
            placement of units                                                     263,098              336,765
          Estimated value of warrants included in proceeds of
            Units, recorded as contributed surplus                                       -             (104,022)
          Share issue costs                                                                             (22,759)
          --------------------------------------------------------------------------------------------------------
          Balance, March 31, 2004                                                7,955,153         $  9,897,116
          --------------------------------------------------------------------------------------------------------
</TABLE>

          In February  2004,  the  Company  successfully  completed  the private
          placement  and  issuance of 263,098  Units  (4,000 of these Units were
          issued as  commission)  at a price of $1.28 per Unit.  The proceeds of
          the private  placement  amounted to $336,765,  less issuance  costs of
          $22,759 which was added to the Company's  working  capital.  Each Unit
          consists of one common  share and one common  share  purchase  warrant




                                      -74-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 15
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


11.  Shareholders' equity (continued):

     (b)  Share capital, deficit and cumulative translation adjustment
          (continued):

          (the "Warrant"). Each Warrant is exercisable to purchase an additional
          common share of the Company at a price of $1.60 per share for a period
          of 24 months from the closing date of the private placement, which may
          result in an  additional  $420,957  of proceeds  to the  Company.  The
          estimated  fair value of the warrants of $104,022 has been  determined
          using a Black Scholes  option  pricing  model,  using the  assumptions
          stated in note  11(d).  That amount has been  recorded to  contributed
          surplus.

          In 2001, the Corporation received regulatory approval to make a normal
          course issuer bid. Pursuant to the bid, the Corporation could purchase
          up to 386,273 of its Common Shares which represented  approximately 5%
          of the Common Shares issued and  outstanding.  The bid commenced April
          18, 2001 and expired April 17, 2002. To March 31, 2002 the Corporation
          repurchased  45,400 of its  shares  for  $264,896.  The  $264,896  was
          allocated  to share  capital  for an amount of  $57,204,  equal to the
          assigned value of the shares, and the excess of $207,692 was allocated
          to the deficit.

          In 2002, the Corporation  received regulatory approval to make another
          normal course issuer bid.  Pursuant to the bid, the Corporation  could
          purchase  up  to  384,602  of  its  Common  Shares  which  represented
          approximately 5% of the Common Shares issued and outstanding.  The bid
          commenced  April 18, 2002 and expired April 17, 2003. The  Corporation
          did not repurchase any of its shares under the bid.

          In 2004, the Corporation  received regulatory approval to make another
          normal course issuer bid.  Pursuant to the bid, the Corporation  could
          purchase  up  to  384,602  of  its  Common  Shares  which  represented
          approximately 5% of the Common Shares issued and outstanding.  The bid
          commenced  April 22, 2003 and expired April 21, 2004. The  Corporation
          did not repurchase any of its shares under the bid.



                                      -75-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 16
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


11.  Shareholders' equity (continued):

     (b)  Share capital, deficit and cumulative translation adjustment
          (continued):

          Subsequent  to March  31,  2004,  the  Corporation  has  received  the
          regulatory  approval to make a normal course  issuer bid.  Pursuant to
          the bid,  the  Corporation  may  purchase  a maximum of 397,758 of its
          common shares  representing  approximately  5% of the 7,955,153 issued
          and outstanding  common shares.  The bid will commence on May 20, 2004
          and end on May 19, 2005.  To June 17, 2004,  the  Corporation  has not
          repurchased any of its shares.

     (c)  Stock options:

          (i)  Stock option plan:

               The  Corporation  has  an  incentive  share  option  plan,  which
               provides  for  the  granting  of  stock   options  to  directors,
               officers,  employees  and  consultants  to a maximum of 1,309,811
               Common  Shares.  At March 31,  2004,  stock  options to  purchase
               1,308,811 Common Shares were  outstanding.  The stock options are
               exercisable  at prices  ranging from $0.81 to $4.80 per share and
               expire on various  dates  between  April 12,  2004 and August 08,
               2008.  All  options  granted  prior  to  March  31,  2001  vested
               immediately at the date of grant. Options granted during the year
               ended March 31, 2002 vest over  periods of up to five years.  All
               the options granted during the current year vested immediately at
               the date of grant.

               Changes in options during the years ended March 31, 2004 and 2003
               are as follows:

<TABLE>
              -------------------------------------------------------------------------------------------------
                                                              2004                             2003
                                                  ---------------------------       --------------------------
                                                                    Weighted-                        Weighted-
                                                                      average                          average
                                                     Number of       exercise       Number of         exercise
                                                       options          price         options            price
              -------------------------------------------------------------------------------------------------
             <S>                                    <C>          <C>                <C>          <C>
              Outstanding, beginning of year           984,400    $      1.37           991,400    $      1.37

              Granted                                  334,411           0.82                 -              -
              Cancelled                                (10,000)         (1.00)           (7,000)         (1.00)
              -------------------------------------------------------------------------------------------------
              Outstanding, end of year               1,308,811    $      1.23           984,400    $      1.37
              -------------------------------------------------------------------------------------------------
              Exercisable, end of year               1,244,611    $      1.25           859,400    $      1.43
              -------------------------------------------------------------------------------------------------
</TABLE>


                                      -76-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 17
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


11.  Shareholders' equity (continued):

     (c)  Stock options (continued):

          (i)  Stock option plan (continued):

               The  following  table sets forth  information  relating  to stock
               options outstanding as at March 31, 2004:

<TABLE>
              --------------------------------------------------------------------------------------------------
                                                            Weighted-
                                                 Number       average    Weighted-          Number   Weighted-
                               Range of  outstanding at     remaining      average  exercisable at     average
                               exercise       March 31,   contractual     exercise       March 31,    exercise
              Expiry             prices            2004          life        price            2004       price
              --------------------------------------------------------------------------------------------------
              <S>            <C>                <C>        <C>              <C>    <C>                      <C>
              10/26/06       $     1.00         435,000          1.58      $  1.00         374,550     $  1.00
              03/18/07             1.15           5,000          2.96         1.15           1,250        1.15
              04/12/04             1.60         520,000          0.04         1.60         520,000        1.60
              02/28/05             4.80          14,400          0.92         4.80          14,400        4.80
              08/28/08             0.81         319,411          4.42         0.81         319,411        0.81
              08/28/08             1.00          15,000          4.42         1.00          15,000        1.00
              --------------------------------------------------------------------------------------------------
                        $ 0.81 to $4.80       1,308,811          1.69      $  1.23       1,244,611     $  1.25
              --------------------------------------------------------------------------------------------------
</TABLE>

               Subsequent to the year-end, 520,000 options expiring on April 12,
               2004 were cancelled.

     (d)  Stock-based compensation:

          During the twelve  months ended March 31, 2004,  334,411 stock options
          were  issued  and  10,000  stock  options  were  cancelled.   Had  the
          Corporation   adopted  the  fair  value  method  for   accounting  for
          stock-based  compensation,  the  Corporation's  net  loss and loss per
          share would have been the following pro forma amounts.

<TABLE>
         ---------------------------------------------------------------------------------
                                                              Twelve months ended
                                                                March 31, 2004
                                                            As reported        Pro forma
         ---------------------------------------------------------------------------------
        <S>                                           <C>                  <C>
         Net loss                                     $  (1,051,498)       $  (1,203,786)
         Loss per common share:
              Basic                                           (0.14)               (0.16)
         ---------------------------------------------------------------------------------
</TABLE>

          The fair value of these  options is  $152,288  and has been  estimated
          using a  Black  Scholes  option  pricing  model  and is  based  on the
          following assumptions.

         ------------------------------------------------------------------
         Expected Stock Price Volatility                              64%
         Risk Free Interest Rate                                     2.6%
         Expected Life of the Options (years)                           5
         ------------------------------------------------------------------



                                      -77-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 18
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


12.  Per share amounts:

     The loss per share for 2004 has been  calculated  on the  weighted  average
     number of common shares  outstanding of the  Corporation for the year ended
     March 31, 2004 of 7,713,980 (2003 - 7,692,055;  2002 - 7,699,139).  Diluted
     earnings  per share  reflects  the  dilutive  effect  of the stock  options
     outstanding. Options are not dilutive for 2004 and 2003. The diluted shares
     outstanding for the year ended March 31, 2002 were 8,008,397.


13.  Financial instruments:

     (a)  Fair values:

          The carrying  values of accounts  receivable and accounts  payable and
          accrued   liabilities   approximate  their  fair  values  due  to  the
          relatively  short  periods to  maturity of the  instruments.  The fair
          value of long-term debt is based on market rates for debt with similar
          rating and risk.

     (b)  Credit risk:

          The   Corporation's   financial   instruments   that  are  exposed  to
          concentrations  of  credit  risk  consist  primarily  of cash and cash
          equivalents and accounts receivable.  Cash and cash equivalents are in
          place with major financial institutions. Concentrations of credit risk
          with  respect to  receivables  are limited due to the large  number of
          customers.  The Corporation has evaluation and monitoring processes in
          place  and  writes  off  accounts  when  they  are  determined  to  be
          uncollectible.

     (c)  Foreign exchange risk:

          The  Corporation  is exposed to risks  arising  from  fluctuations  in
          foreign  exchange  rates  and  the  volatility  of  those  rates.  The
          Corporation does not use financial  instruments to reduce its exposure
          to foreign exchange.

     (d)  Interest rate risk:

          Interest rate risk arises from the  possibility  that the value of, or
          cash flows  related to a  financial  instrument  will  fluctuate  as a
          result of changes in the interest  rates.  The Corporation is aware of
          the risks of changes in the interest rate and has a monitoring process
          in place.

     (e)  Summary of significant financial instruments:

<TABLE>
          ------------------------------------------------------------------------------------------------------
                                                             Carrying                    Fair              US$
                                                                value                   Value      Denominated
          ------------------------------------------------------------------------------------------------------
         <S>                                           <C>                  <C>                  <C>
          Cash and short-term deposits                  $    1,989,663           $   1,989,663    $   1,048,615
          Accounts receivable                                1,335,785               1,335,785          127,694
          Note receivable                                      196,575                 196,575          150,000
          Accounts and accrued liabilities                   1,114,545               1,114,545           76,754
          Long-term debt                                     8,499,491               8,499,491        6,472,002
          ------------------------------------------------------------------------------------------------------
</TABLE>



                                      -78-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 19
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


14.  Income taxes:

     Income tax expense or benefit is the sum of the Corporation's provision for
     current income taxes and difference  between opening and ending balances of
     the future income tax assets and liabilities.

     The provision for income tax differs from the result, which would have been
     obtained by applying the combined  Federal and Provincial  income tax rates
     of 36.62% (2003 - 38.62%;  2002 - 41.12%) to the Corporation's net earnings
     before income taxes. The difference results from the following items:

<TABLE>
     -----------------------------------------------------------------------------------------------------------
                                                                       2004              2003             2002
     -----------------------------------------------------------------------------------------------------------
     <S>                                                      <C>               <C>                  <C>
     Expected tax expense (recovery)                          $    (385,059)    $    (132,269)       $  (81,953)
     Effect of rate changes on future income taxes                   (5,924)             (549)            7,814
     Other                                                           (8,644)           15,540             6,578
     Unrecorded benefit of loss of subsidiary                       287,449           130,591                 -
     -----------------------------------------------------------------------------------------------------------
     Provision for income taxes (recovery)                    $   (112,178)     $      13,313        $  (67,561)
     -----------------------------------------------------------------------------------------------------------
</TABLE>


     The tax  effects of  temporary  differences  that give rise to  significant
     portions  of the future tax assets and  liabilities  at March 31,  2004 and
     2003 are as follows:

<TABLE>
     --------------------------------------------------------------------------------------------
                                                                          2004             2003
     --------------------------------------------------------------------------------------------
     <S>                                                         <C>              <C>
     Future tax assets:
         Customer accounts, with tax basis                       $      38,990    $      46,347
         Share issue costs                                              40,690          102,005
         Other assets                                                       53                -
         Non capital losses                                            502,038            3,435
         Computer systems and office equipment                           1,633            2,173

     Less: Valuation allowance                                        (352,141)               -
     --------------------------------------------------------------------------------------------
                                                                       231,265          153,960
     Future tax liabilities:
         Goodwill                                                      (42,519)               -
         Computer systems and office equipment                               -                -
         Customer accounts, without tax basis                         (418,353)        (495,745)
     --------------------------------------------------------------------------------------------

                                                                      (460,872)        (495,745)
     --------------------------------------------------------------------------------------------
     Net future tax liability                                    $    (229,607)   $    (341,785)
     --------------------------------------------------------------------------------------------
     Comprising:
         Current tax liability                                   $     (32,677)   $       4,377
         Long-term tax liability                                      (196,930)        (346,162)
     --------------------------------------------------------------------------------------------
                                                                 $    (229,607)   $    (341,785)
     --------------------------------------------------------------------------------------------
</TABLE>



                                      -79-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 20
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


14.  Income taxes (continued):

     As at March 31, 2004, the  Corporation  has  accumulated  non-capital  loss
     carry forwards for income tax purposes of approximately  $377,700 in Canada
     and  $1,144,425  in the U.S.,  which can be  carried  forward  and  charged
     against future income. A valuation  allowance has been recorded against the
     future tax assets of Addison, as the Corporation cannot demonstrate that it
     is  more  likely  than  not  that  these  assets  will be  realized  by the
     application of these losses to reduce or eliminate  taxes on taxable income
     during the carry forward periods.  The losses in Canada expire in year 2011
     and the losses in the U.S. expire in year 2024.


15.  Commitments:

     The Corporation has operating lease commitments for office premises. Annual
     future payments pursuant to these commitments are as follows:

     ----------------------------------------------------------------------
     2005                                                   $     627,869
     2006                                                         217,682
     ----------------------------------------------------------------------
                                                            $     845,551
     ----------------------------------------------------------------------


16.  Interest and financing costs:

<TABLE>
     -----------------------------------------------------------------------------------------------------------
                                                                       2004              2003             2002
     -----------------------------------------------------------------------------------------------------------
     <S>                                                     <C>               <C>              <C>
     Interest and financing costs on Paragon term loan
       repaid (note 10(b))                                    $     274,866     $           -    $           -
     Interest and financing costs on long-term debt                       -            10,961            6,435
     Interest on obligations under capital lease                      1,701             1,870            3,105
     -----------------------------------------------------------------------------------------------------------
                                                                    276,567            12,831            9,540
     US operations:
         Interest and financing costs on Textron terminated
           debt financing (note 10(a))                              424,401           272,889                -
         Interest and financing costs on long-term debt             237,631                 -                -
         Interest on obligations under capital lease                  2,554                 -                -
     -----------------------------------------------------------------------------------------------------------
                                                                    664,586           272,889                -
     -----------------------------------------------------------------------------------------------------------
     Total interest and financing costs                       $     941,153     $     285,720    $       9,540
     -----------------------------------------------------------------------------------------------------------

     (a)  Interest on long-term  debt  includes  note payable to Kabaker  Family
          Trust (note 5) and Oak Street (note 10 c).

     (b)  Total  financing  costs  included above are $495,763 (2003 - $205,564;
          2002 - $6,435).
</TABLE>



                                      -80-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 21
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


17.  Subsequent events:

     (a)  On October 10, 2003, a legal judgment was made against the Corporation
          with  respect  to  a  previously  outstanding  legal  proceeding.  The
          judgment related to the Corporation's alleged failure to honor a stock
          option agreement dated October 1, 1998. The judgment amount, including
          legal costs  ($522,619)  has been  deposited in trust with the lawyers
          and has been expensed in the year ending March 31, 2004.

          Subsequent  to year-end,  the  Corporation  settled this action for an
          amount of $450,000 (including legal costs). The difference between the
          judgment  amount and  settlement  of $76,180 was  received and will be
          reflected in the first quarter of the new fiscal year.

     (b)  On June 14, 2004, the Corporation  closed a US$7,500,000  ($10,090,725
          CDN) debt financing  arrangement  with a United States  lender,  First
          Capital  Corporation,  LLC ("FCC")  whereby  FCC will  provide up to a
          US$7,500,000  ($10,090,725 CDN) reducing revolving line of credit (the
          "Facility")  subject to a  borrowing  base  formula  to  Addison  (the
          "Borrower").

          The Corporation can borrow,  an aggregate  amount not to exceed at any
          time outstanding the lesser of (a) the maximum principal amount of the
          Line of  Credit  or (b) the  Borrowing  Base.  The  Borrowing  Base is
          determined  as a percentage  of recurring  annual  revenue of eligible
          insurance  commissions  earned with  regard to policies of  acceptable
          insurance  pursuant  to agency  agreements  with the  borrower  by the
          insurance companies having a rating by AM Best of B and above.

          The Facility  will have a Wall Street  Journal  interest rate of prime
          plus 2% per annum, with interest only payments for two years following
          the  date  of  closing.   After  the  initial  two-year  period,   the
          Corporation  shall  pay  the  principal  and  interest  in the  amount
          calculated  based on the  amortization  schedule with the total amount
          being repaid over a 36 month period.

          The  Facility  is secured by the  general  security  agreement  of the
          Borrower and has been guaranteed by the  Corporation,  which guarantee
          has been  secured by a general  security  agreement  and pledge of its
          shares in the Borrower.  Pursuant to the Facility, FCC, will have: (i)
          a first priority security interest in the assets of the Borrower which
          are acquired  after June 14, 2004, in connection  with any purchase or
          other acquisition by Borrower from an unaffiliated  party and financed
          by FCC,  of:  (a) an  insurance  agency;  (b) any  group of  insurance
          policies;  (c) any  "book  of  business"  with  respect  to  insurance
          policies;   and  (d)  any  "expirations"  with  respect  to  insurance
          policies:  in each case  together with all future  insurance  policies
          (including  all  commissions  paid or  payable  thereunder)  and other
          assets directly related to such acquired assets,  and all products and
          proceeds thereof; and (ii) a subsequent security interest,  subject to
          certain permitted encumbrances,  in the assets of the Borrower and the
          Corporation.



                                      -81-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 22
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


17.  Subsequent events (continued):

          The  Facility is required  to be used to fund  permitted  acquisitions
          within the United States and provide  working  capital for the related
          acquisitions.

          To-date the  Corporation  has incurred  US$336,392 of costs,  of which
          US$320,000 was paid subsequent to the year-end.  These amounts will be
          amortized on a  straight-line  basis over five years.  No amortization
          has been booked for the year ended March 31, 2004.

     (c)  On September 9, 2004, the Corporation, by way of Addison, acquired the
          net  assets  of  Al  Vinciguerra  Ltd.,  a  Virginia-based   insurance
          brokerage for $9,030,000  (US$7,000,000).  The initial  purchase price
          for the Virginia brokerage of $9,030,000  (US$7,000,000) was satisfied
          by Addison paying $7,740,000  (US$6,000,000) to the vendors at closing
          and issuing to the vendors a $1,290,000 (US$1,000,000) promissory note
          (the  "Vinciguerra  Note").  The Vinciguerra Note bears interest at 7%
          per annum and is repayable  over 5 years in equal monthly  instalments
          of US$19,801,  including interest and is secured by a general security
          agreement.  The  purchase  was  financed  using  the  credit  facility
          provided by FCC,  financing  obtained from Emmett  Lescroart (see (d))
          and  seller  financing.  The  initial  purchase  price is  subject  to
          adjustment  based on the  twenty-four  months  of  commission  revenue
          retention  from the effective date of the  acquisitions,  and can only
          affect the purchase price to reduce it.

     (d)  On August 31, 2004, the Corporation closed a US$3,250,000  ($4,192,500
          CDN) debt financing  arrangement with a third party whereby the lender
          will provide up to a  US$3,250,000  ($4,192,500  CDN) loan to purchase
          substantially  all of the assets of Al Vinciguerra  Ltd. The loan will
          have a interest rate of 14% per annum,  with  interest only  payments.
          The principal  amount shall be repaid by August 31, 2009.  The loan is
          secured by the  general  security  agreement  of Addison  and has been
          guaranteed by the  Corporation,  which guarantee has been secured by a
          general  security  agreement.  The loan is required to be used to fund
          the Al Vinciguerra Ltd. acquisition.

     (e)  On August 31, 2004,  the  Corporation  entered  into an  Intercreditor
          Agreement with certain of its creditors,  being Emmett  Lescroart,  Al
          Vinciguerra  Ltd.,  the Kabaker  Family Trust of July 1998, Oak Street
          and  FCC  (together  referred  to  herein  as  the  "Creditors").  The
          Intercreditor  Agreement  defines the rights and priorities of each of
          the  Creditors as amongst  themselves  with respect to the  collateral
          secured by their  respective  security  interests in the assets of the
          Corporation  and also  sets  forth  the  rights  and  restrictions  on
          execution  against the  collateral  placed upon them in the event of a
          default in the  obligations  of the  Corporation  to any of them.  The
          Intercreditor  Agreement imposes no additional material obligations on
          the Corporation over and above those obligations  already set forth in
          the security  interests  granted by the  Corporation to the individual
          Creditors.



                                      -82-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 23
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


17.  Subsequent events (continued):

     (f)  Compliance with debt covenants:

          The  Corporation  was  in  compliance  with  the  financial   covenant
          requirements   of  the  prime  plus  8%  note  payable  of  $4,586,739
          (US$3,500,000),  (the  "Oakstreet  Debt") as  described in note 10, at
          March 31, 2004 and therefore, the note was classified as long-term.

          Subsequent  to March  31,  2004,  the  Corporation  raised  additional
          financing (the "FCC debt") as described in note 17(b).

          The FCC Debt and the Oak  Street  Debt loan  agreements  each  contain
          subjective  acceleration  clauses  whereby the  lenders may  terminate
          their loan facilities and declare the obligations  immediately due and
          payable,  without presentment,  demand, protest or notice of any kind,
          all of which the Corporation has expressly  waived.  The defaults that
          may cause the acceleration clause to occur include a "material adverse
          change" in the  Corporation's  business  or  financial  conditions  as
          determined  by  the  lenders  in  good  faith.   The  Corporation  has
          determined  that it is  reasonably  possible  that  one or both of the
          lenders  may  declare  these  loans in default as a result of covenant
          non-compliance, described below, being considered by the lenders to be
          a materially adverse change to the Corporation business.

          As at September 30, 2004, the Corporation was in  non-compliance  with
          the Oakstreet  Debt and the FCC Debt as a result of the  Corporation's
          non-compliance   certain   financial   covenants   prescribed  in  the
          respective  loan  agreements.  Tangible  Net Worth  ("TNW")  covenants
          contained in each agreement, which require the Corporation to maintain
          a  minimum   TNW,  as  defined  in  the  loan   agreements,   were  in
          non-compliance.  Also, Minimum Interest Coverage Ratios (MICR) and the
          Total  Liabilities to TNW, as defined in the loan agreements,  were in
          non-compliance.  The lenders waived  non-compliance with each of these
          covenants as at September 30, 2004. The Corporation expects that these
          covenants,   as   presently   prescribed,   will   be  in   continuous
          non-compliance for the foreseeable future and have been in discussions
          with the  lenders  to revise  or  replace  the  subject  covenants  by
          amendment of the loan agreements.  At this time, no agreement has been
          reached  with  the  lenders  with  respect  to  amendment  of the loan
          agreements. The Corporation anticipates that it will be able to obtain
          further  waivers  and/or  amendments  of the  Corporation's  financial
          covenants from the lenders, however this outcome is not guaranteed. If
          the  Corporation is unable to comply with the financial  covenants and
          they are not waived by the lenders,  the lenders could  exercise their
          rights to accelerate  repayment of the  Corporation's  obligations and
          (unless  paid with  replacement  financing)  acquire or dispose of the
          Corporation's  assets.  At November 15, 2004, the lenders had taken no
          action to exercise their  remedies and future  action,  if any, by the
          lenders, is not determinable at this time.



                                      -83-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 24
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


17.  Subsequent events (continued):

     (f)  Compliance with debt covenants (continued):

          The Corporation will continue to take steps to re-negotiate acceptable
          debt  covenants  with its lenders  and expects to generate  additional
          working capital from operations.  Other alternatives  available to the
          Corporation   include  the  issuance  of  additional  equity  and  the
          renegotiation  of  principal  payments  required  by the  subordinated
          lenders. The Corporation will be dependent on the continued support of
          its  lenders,  failing  which the  Corporation's  ability to  maintain
          continued operations may be adversely affected.


18.  Segmented information:

     The Corporation  operates in two economic  environments  and is involved in
     the  acquisition,  consolidation  and  operation  of general and  insurance
     brokerages.  Revenues are  attributable  to  geographic  areas based on the
     location of resources  producing the revenues.  There were no inter-segment
     transactions during the reported periods.


<TABLE>
--------------------------------------------------------------------------------------------------------------------
                       Twelve months ended March 31, 2004                   Twelve months ended March 31, 2003
                     -----------------------------------------------------------------------------------------------
Operating Segments    Canada           US        Consolidated              Canada         US      Consolidated
--------------------------------------------------------------------------------------------------------------------
<S>                  <C>           <C>           <C>                    <C>            <C>        <C>
Revenue              $5,489,636    $1,979,923    $ 7,469,559            $ 5,175,072    $       -  $5,175,072
Net earnings (loss)    (189,146)    (862,352)     (1,051,498)               (17,657)    (338,144)   (355,801)
Identifiable assets   5,490,449    12,251,856     17,742,305              8,263,053      399,225   8,662,278
Additions to:
  Computer systems
    and office
    equipment            21,797        44,433         66,230                 31,766            -      31,766
  Goodwill (note 3)           -     3,487,272      3,487,272                      -            -           -
Depreciation and
  amortization          284,211       207,284        491,495                609,546            -     609,546
Interest and
  financing costs       276,567       664,586(*)     941,153                 12,831      272,889     285,720
--------------------------------------------------------------------------------------------------------------------
(*)  Interest and  financing  costs  related to the U.S.  subsidiary of $664,586
     above  includes  $410,586  of  financing  costs  related to the  terminated
     Textron debt financing.
</TABLE>


<TABLE>
----------------------------------------------------------------------------------------------------------------------
                       Twelve months ended March 31, 2004                    Twelve months ended March 31, 2003
                     -------------------------------------------------------------------------------------------------
Operating Segments    Canada           US       Consolidated                Canada         US      Consolidated
----------------------------------------------------------------------------------------------------------------------
<S>                  <C>           <C>          <C>                     <C>            <C>          <C>
Revenue              $5,489,635    $1,979,923   $7,469,559              $ 5,175,072    $       -    $5,175,072
Computer systems
 and office
 equipment and
 goodwill             1,745,839     4,089,886    5,438,644                5,835,725            -     1,787,097
-----------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      -84-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 25
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


19.  Reconciliation to United States generally accepted accounting principles:

     The financial  statements  have been  prepared in accordance  with Canadian
     generally accepted accounting principles ("Canadian GAAP"). Any differences
     in United States generally  accepted  accounting  principles ("US GAAP") as
     they pertain to the  Corporation's  financial  statements  are not material
     except as follows:

     The effect on the earnings of the  Corporation for each of the years in the
     three year period ended March 31, 2004 of the differences  between Canadian
     and United States accounting principles is summarized as follows:

<TABLE>
     -----------------------------------------------------------------------------------------------------------
                                                                       2004              2003             2002
     -----------------------------------------------------------------------------------------------------------
     <S>                                                      <C>               <C>              <C>
     (Loss) earnings - Canadian GAAP                          $  (1,051,498)    $    (355,801)   $    (131,742)
     Future/deferred income tax recovery                                  -                 -           (6,246)
     Compensation expense on granting of
       stock options to employees                                    (7,713)           (7,713)         (84,411)
     -----------------------------------------------------------------------------------------------------------
     Loss - US GAAP                                           $  (1,059,211)    $    (363,514)   $    (222,399)
     -----------------------------------------------------------------------------------------------------------
     Loss per share - US GAAP                                 $      (0.14)     $      (0.05)    $      (0.03)
     -----------------------------------------------------------------------------------------------------------
</TABLE>

     The effect on the  consolidated  balance sheets of the differences  between
     Canadian and US GAAP are as follows:

<TABLE>
     -----------------------------------------------------------------------------------------------
                                                                              2004             2003
     -----------------------------------------------------------------------------------------------
     <S>                                                             <C>              <C>
     Shareholders' equity:

     Share capital:
         Balance - Canadian GAAP                                      $  9,897,116      $ 9,687,132
         Compensation expense - stock options                            1,420,337        1,412,624
         Compensation expense - escrowed shares                          4,442,318        4,442,318
     -----------------------------------------------------------------------------------------------
     Balance - US GAAP                                                  15,759,771       15,542,074
     Contributed surplus, Canadian and US GAAP                             104,022                -
     Deficit:
         Balance - Canadian GAAP                                        (3,502,196)      (2,450,698)
         Compensation expense - stock options                           (1,420,337)      (1,412,624)
         Compensation expense - escrowed shares                         (4,442,318)      (4,442,318)
     -----------------------------------------------------------------------------------------------
     Balance - US GAAP                                                  (9,364,851)      (8,305,640)

     Loan from director                                                    (40,000)         (40,000)

     Cumulative translation adjustment:
         Balance per Canadian GAAP                                            (845)               -
     -----------------------------------------------------------------------------------------------
     Balance - US GAAP                                                        (845)               -
     -----------------------------------------------------------------------------------------------
     Total shareholders' equity - US GAAP                             $  6,458,097      $ 7,196,434
     -----------------------------------------------------------------------------------------------
</TABLE>



                                      -85-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 26
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


19.  Reconciliation to United States generally  accepted  accounting  principles
     (continued):

     For US GAAP  presentation,  the loan to director (note 5) is presented as a
     contra amount in shareholder's equity.

     Cash flows from operating activities under US GAAP are the same as Canadian
     GAAP,  however,  sub-totals within cash flow from operating  activities are
     not permitted under U.S. GAAP.

     (a)  Goodwill and customer accounts:

          During the year ended March 31, 2003, the Corporation  implemented the
          new accounting  standards for business  combinations  and goodwill and
          other  intangible  assets for Canadian GAAP purposes  (note 2(a)).  In
          connection with this review,  the  Corporation  determined that it has
          incorrectly  allocated  amounts to customer  accounts under superceded
          CICA Handbook Section 1580 for business combinations consummated prior
          to July 1, 2001,  and that it has used an  inappropriate  amortization
          period for customer  accounts.  As a result the net carrying  value of
          $1,593,468  of customer  accounts was  reclassified  as  goodwill.  In
          conjunction with this correction, the amortization period for customer
          accounts was reduced to twelve years from twenty years  retroactively,
          which is consistent  with the  company's  policy for  amortization  of
          customer's  accounts for U.S.  GAAP  purposes.  The carrying  value of
          goodwill for Canadian and U.S. GAAP purposes is now the same.

     (b)  Stock based compensation:

          During the year ended  March 31,  2004,  334,111  stock  options  were
          issued (2003: -; 2002: 457,000).  For the purpose of reconciling to US
          GAAP,  compensation  expense  has been  recorded  relating  to options
          issued in accordance  with APB 25 for the difference  between the fair
          value  of the  underlying  shares  and  the  exercise  price.  Had the
          Corporation  adopted the fair value  method  outlined in SFAS 123, the
          Corporation's  net income and  earnings  per share would have been the
          following pro forma amounts.

<TABLE>
         ---------------------------------------------------------------------------------------------------------------
                                             2004                        2003                         2002
                                    -------------------------  ---------------------------     -----------------------
                                   As reported    Pro forma    As reported       Pro forma    As reported    Pro forma
         ---------------------------------------------------------------------------------------------------------------
         <S>                      <C>           <C>             <C>            <C>             <C>          <C>
         Net loss                  $(1,051,498)  $(1,221,027)    $(363,514)     $ (380,755)     $  222,399   $  307,368
         ---------------------------------------------------------------------------------------------------------------
         Loss per common share:
         Basic                     $     (0.14)  $     (0.16)    $   (0.05)     $    (0.05)     $    (0.03)  $    (0.04)
         ---------------------------------------------------------------------------------------------------------------
</TABLE>

          The fair  value  of these  options  has been  estimated  using a Black
          Scholes   option   pricing   model  and  is  based  on  the  following
          assumptions:

<TABLE>
         --------------------------------------------------------------------------------
                                                            2004        2003        2002
         --------------------------------------------------------------------------------
         <S>                                              <C>          <C>         <C>
         Expected stock price volatility                     64%         73%         73%
         Risk free interest rate                            2.6%        5.5%        5.5%
         Expected life of the options (years)                  5           5           5
         --------------------------------------------------------------------------------
</TABLE>



                                      -86-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 27
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


19.  Reconciliation to United States generally  accepted  accounting  principles
     (continued):

     (c)  Escrowed shares:

          In accordance with securities regulations 1,767,960 Common Shares with
          respect to the initial  public  offering  were placed in escrow with a
          Trustee  under an Escrow  Agreement.  Under the terms of the agreement
          the  shares  were to be  released  from  escrow  on the  basis  of one
          escrowed share for every $0.61 of cumulative  cash flow if the minimum
          offering is achieved and on the basis of one escrowed  share for every
          $0.41 of cumulative cash flow if the maximum offering is achieved.

          On July 6, 1999 1,665,581  Common Shares were released from escrow and
          compensation  expense of $3,997,061 was recorded for the fair value of
          the shares which related to directors and officers (832,721 x $4.80).

          On July 24, 2000 102,379 Common Shares were released from escrow based
          on the cumulative cash flows at March 31, 2000 on a $0.41 basis as the
          maximum  offering was achieved.  For the purposes of reconciling to US
          GAAP,  compensation  expense was  recorded as at July 24, 2000 for the
          fair  value of the  shares  released  from  escrow  which  related  to
          directors and officers (51,179 x $8.70 = $445,257).

     (d)  Recently issued accounting standards:

          In  December  2002,  the FASB  issued  SFAS No.  148,  Accounting  for
          Stock-Based Compensation - Transition and Disclosure.  SFAS No. 148 is
          an  amendment  to  SFAS  No  123  providing   alternative  methods  of
          transition  for a voluntary  change to the fair value based  method of
          accounting for  stock-based  employee  compensation  and also provides
          additional  disclosures about the method of accounting fro stock-based
          employee  compensation.  In  accordance  with the adoption of the fair
          value-based  method  for  Canadian  GAAP  purposes,   the  Company  is
          reviewing  adopting  the fair  value-based  method  under US GAAP,  as
          provided  for under  SFAS No.  123 and SFAS No.  148.  The  Company is
          currently reviewing the transition provisions.

          In 2003, the FASB issued FIN 46 (Revised)  "Consolidation  of Variable
          Interest Entities" that requires the consolidation of certain entities
          that are controlled through financial  interests that indicate control
          (referred  to as "variable  interests").  Variable  interests  are the
          rights or  obligations  that  convey  economic  gains or  losses  from
          changes in the values of an entity's assets or liabilities. The holder
          of the majority of an entity's variable  interests will be required to
          consolidate  the variable  interest  entity  ("VIE").  As of March 31,
          2004,  the Company  has not  identified  any VIE's that would  require
          consolidation or any significant  exposure to VIE's that would require
          disclosure.



                                      -84-
<PAGE>

ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.
Notes to Consolidated Financial Statements, p. 26
(in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------


19.  Reconciliation to United States generally  accepted  accounting  principles
     (continued):

     (d)  Recently issued accounting standards (continued):

          In May 2003,  the FASB  issued  SFAS No 150  "Accounting  for  Certain
          Financial  Instruments  with  Characteristics  of both Liabilities and
          Equity".  This  Statement  establishes  standards  for  how an  issuer
          classifies and measures in its statement of financial position 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)   because  that   financial   instrument   embodies  an
          obligation of the issuer.  Many of those  instruments  were previously
          classified as equity.  Adopting the provisions of SFAS No. 150 has had
          no impact on the financial statements of the Company.



                                      -87-
<PAGE>

(B)  Index to Exhibits


Exhibit
Number              Description
------              -----------
 1.1(1)             Notarially  certified copies of the Certificate and Articles
                    of Amalgamation dated February 28, 1999

 1.2(4)             Notarially certified copies of General By-Law No. 1

 1.3(4)             Copy of Shareholder  Rights Plan Agreement  dated as of July
                    3,  2001  between  the  Corporation  and CIBC  Mellon  Trust
                    Company as Rights Agent

 4.1(1)             Copy of Sublease  Agreement  regarding  property  located at
                    Southport  Atrium,   10333  Southport  Road,  S.W.  Calgary,
                    Alberta  between  Valmet  Automation  (Canada)  Ltd. and the
                    Corporation

 4.2(2)             Copy of Employee Stock Option Plan dated February, 2000

 4.3(3)             Copy of  Proposal  to  Provide  Financial  Public  Relations
                    Services to the Corporation by Barry Kaplan Associates dated
                    March 17, 2000

 4.4(3)             Copy of Content  License  Agreement  between the Corporation
                    and Screaming Media dated June 20, 2000

 4.5(3)             Copy of Service  Agreement and Fee Proposal for  Co-Transfer
                    Agent   Services   dated   September  1,  2000  between  the
                    Corporation and Chase Mellon Shareholder Services

 4.6(3)             Copy of  Letter  of  Agreement  dated  October  12,  2000 re
                    Maintenance & Support  Services  between the Corporation and
                    Axiom Internet Services

 4.7(3)             Copy of Employment  Agreement  dated January 1, 2001 between
                    the Corporation and Kevin Hamilton

 4.8(3)             Copy of Employment  Agreement  dated January 1, 2001 between
                    the Corporation and Tim Ogryzlo

 4.9(3)             Extension  of Sublease  dated July 20, 2001  between  Valmet
                    Automation (Canada) Ltd. and the Corporation

 4.10(3)            Promissory  Note  dated  June 28,  2001 from  Tony  Consalvo
                    issued to the Corporation

 4.11(3)            Share  Pledge  Agreement  dated June 28, 2001  between  Tony
                    Consalvo and the Corporation

 4.12(3)            Gneral Security  Agreement dated June 28, 2001 between Tony
                    Consalvo and the Corporation

 4.13(4)            Form of Director Stock Option Agreements

 4.14(4)            Form of Employee Stock Option Agreement

 4.15(4)            Purchase   Agreement   dated   August  21,  2001  among  the
                    Corporation, Robert Ryan and 779451 Alberta Ltd.

 4.16(4)            Trust  Agreement  dated  July 29,  2002  among  Demiantschuk
                    Milley Burke & Hoffinger, the Corporation and Robert Ryan

 4.17(5)            Employment  Agreement  between  the  Corporation  and  Primo
                    Podorieszach dated April 1, 2003

 4.18(5)            Employment   Agreement  between  the  Corporation  and  Tony
                    Consalvo dated April 1, 2003



                                      -88-
<PAGE>
Exhibit
Number              Description
------              -----------

 4.19(5)            Employment  Agreement  between  the  Corporation  and Shelly
                    Samec dated September 1, 2002

 4.20               Credit Agreement between Addison York Insurance Brokers Ltd.
                    and Oak Street Funding LLC dated March 19, 2004

 4.21               $5,000,000  Credit  Note  dated  March 19,  2004  issued by
                    Addison York  Insurance  Brokers Ltd. to Oak Street  Funding
                    LLC (included in Exhibit 4.20)

 4.22               General  Security  Agreement  between Addison York Insurance
                    Brokers Ltd. and Oak Street Funding LLC dated March 19, 2004
                    (included in Exhibit 4.20)

 4.23               Guaranty of the  Corporation to Oak Street Funding LLC dated
                    March 19, 2004 (included in Exhibit 4.20)

 4.24               General Security  Agreement  between the Corporation and Oak
                    Street Funding LLC dated March 19, 2004 (included in Exhibit
                    4.20)

 4.25               Securities  Pledge Agreement between the Corporation and Oak
                    Street Funding LLC dated March 19, 2004 (included in Exhibit
                    4.20)

 4.26               Waiver and First  Amendment to Loan and  Security  Agreement
                    dated  August  31,  2004  between   Addison  York  Insurance
                    Brokers, Ltd. and Oak Street Funding LLC.

 4.27               Purchase  Agreement dated October 1, 2003 among Addison York
                    Insurance Brokers, Ltd., and DKWS Enterprises, Inc., Kabaker
                    Family  Trust of July  1998,  John W.  Kabaker  and  Theolyn
                    Kabaker

 4.28               Amendment to Purchase  Agreement  dated March 15, 2004 among
                    Addison York Insurance Brokers,  Ltd., and DKWS Enterprises,
                    Inc., Kabaker Family Trust of July 1998, John W. Kabaker and
                    Theolyn Kabaker

 4.29               $3,515,000  Promissory  Note dated October 1, 2003 issued by
                    Addison York Insurance Brokers, Ltd. to Kabaker Family Trust
                    of July 1998 (included in Exhibit 4.27)

 4.30               General  Security  Agreement  dated  October 1, 2003 between
                    Addison York Insurance Brokers Ltd. and Kabaker Family Trust
                    of July 1998 (included in Exhibit 4.27)

 4.31               Amendment to General Security Agreement dated March 15, 2004
                    between  Addison  York  Insurance  Brokers  Ltd. and Kabaker
                    Family Trust of July 1998

 4.32               Agency  Agreement  dated  October 1, 2003 among Addison York
                    Insurance Brokers Ltd., DKWS  Enterprises,  Inc. and Kabaker
                    Family Trust of July 1998 (included in Exhibit 4.27)

 4.33               Purchase  Agreement dated October 1, 2003 among Addison York
                    Insurance Brokers Ltd., Johns Insurance Agency,  Inc., Johns
                    Revocable Trust and Frederick G. Johns Jr.

 4.34               Agency  Agreement  dated  October 1, 2003 among Addison York
                    Insurance  Brokers Ltd.,  Johns Insurance  Agency,  Inc. and
                    Johns Revocable Trust (included in Exhibit 4.33)

 4.35               Extension  of  Sublease  dated  February  21,  2004  between
                    Telvent Canada Limited and the Corporation

 4.36               Loan and  Security  Agreement  dated  June 3,  2004  between
                    Addison York  Insurance  Brokers,  Ltd. and FCC, LLC,  d/b/a
                    First Capital



                                      -89-
<PAGE>

Exhibit
Number              Description
------              -----------
 4.37               Waiver and First  Amendment to Loan and  Security  Agreement
                    dated  August  31,  2004  between   Addison  York  Insurance
                    Brokers, Ltd. and FCC, LLC, d/b/a/ First Capital

 4.38               Guarantee  of the  Corporation  to  FCC,  LLC,  d/b/a  First
                    Capital dated June 3, 2004

 4.39               General  Security  Agreement  dated June 3, 2004 between the
                    Corporation and FCC, LLC d/b/a First Capital

 4.40               Securities Pledge Agreement between the Corporation and FCC,
                    LLC dated June 3, 2004

 4.41               Loan and  Security  Agreement  dated August 31, 2004 between
                    Addison York Insurance Brokers Ltd. and Emmett Lescroart

 4.42               $3,250,000  Credit  Note  dated  August 31,  2004  issued by
                    Addison York Insurance Brokers, Ltd. to Emmett Lescroart

 4.43               Guarantee  of the  Corporation  to  Emmett  Lescroart  dated
                    August 31, 2004

 4.44               General Security Agreement dated August 31, 2004 between the
                    Corporation and Emmett Lescroart

 4.45               Purchase  Agreement dated August 31, 2004 among Addison York
                    Insurance   Brokers,   Ltd.,  Al  Vinciguerra   Ltd.,   Dena
                    Vinciguerra and Renee Woodard

 4.46               $1,000,000  Promissory  Note dated August 31, 2004 issued by
                    Addison York Insurance Brokers,  Ltd. to Al Vinciguerra Ltd.
                    (included in Exhibit 4.45)

 4.47               Security  Agreement  dated August 31, 2004  between  Addison
                    York  Insurance  Brokers,   Ltd.  and  Al  Vinciguerra  Ltd.
                    (included in Exhibit 4.45)

 4.48               Debt Subordination and Intercreditor  Agreement dated August
                    31, 2004 among Addison York Insurance Brokers, Ltd., Anthony
                    Clark   International   Insurance   Brokers   Ltd.,   Emmett
                    Lescroart, Al Vinciguerra Ltd., Kabaker Family Trust of July
                    1998,  FCC,  LLC,  and Oak Street  Funding LLC  (included in
                    Exhibit 4.45)

 4.49               Agency  Agreement  dated August 31, 2004 among  Addison York
                    Insurance   Brokers,   Ltd.,  Al  Vinciguerra   Ltd.,   Dena
                    Vinciguerra and Renee Woodard (included in Exhibit 4.45)

 8.1                List of Subsidiaries (included in Item 4.C.)

12.1                Certifications   Required   by   Rule   13a-14(a)   or  Rule
                    15(d)-14(a)

13.1                Certifications Required by Rule 13a-14(b) or Rule 14d-14(b)


                                      -90-
<PAGE>


(1)  Previously  filed as  Exhibits  to the  Corporation's  Form  20-F  filed on
     November 2, 1999.

(2)  Previously filed as Exhibits to the  Corporation's  Form 20-F filed on July
     27, 2000.

(3)  Previously  filed as  Exhibits  to the  Corporation's  Form  20-F  filed on
     September 27, 2001.

(4)  Previously filed as Exhibits to the Corporation's Form 20-F filed on August
     27, 2002.

(5)  Previously  filed as  Exhibits  to the  Corporation's  Form  20-F  filed on
     September 15, 2003.




                                      -91-
<PAGE>

                                   SIGNATURES

The Registrant certifies that it meets all of the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.


Date:    November 17, 2004


                                    ANTHONY CLARK INTERNATIONAL
                                    INSURANCE BROKERS LTD.



                                    Per:  /s/ Primo Podorieszach
                                          ------------------------------------
                                          Primo Podorieszach
                                          President and Chief Executive Officer





                                      -92-
<PAGE>