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

                                    FORM 20-F
                                    ---------

         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001
                        Commission File Number 000-23785

                         Telum International Corporation
                         -------------------------------
                           (formerly ActFit.com Inc.)

               (Exact Name of Company as Specified in Its Charter)

                                 ONTARIO, CANADA
                 (Jurisdiction of Incorporation or Organization)

                   241 Hanlan Rd. Woodbridge, Ontario L4L 3R7
                     (Address of Principal Executive Office)

Securities  registered or to be registered  pursuant to Section12(b) of the Act:
None

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

                                  COMMON STOCK
                                (Title of Class)

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act: None

Number of  outstanding  shares of the  issuer's  common stock as of December 31,
2001: 36,541,597

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 [ ] NO [X]

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

                             Item 17 [X] Item 18 [ ]


<PAGE>

                                TABLE OF CONTENTS
                                -----------------

SECTION                                                                   PAGE
-------                                                                   ----

                                     PART I
                                     ------

Item 1.  IDENTITY OF DIRECTORS, SENIOR MAMAGEMENT AND ADVISOR................3
Item 2.  OFFER STATISTICE AND EXPECTED TIMETABLE.............................3
Item 3.  KEY INFORMATION.....................................................3
A.       Selected Financial Data.............................................3
B.       Capitalization and Indebtedness.....................................5
C.       Reasons for the Offer and Use of Proceeds...........................5
D.       Risk Factors........................................................6
Item 4.  INFORMATION ON THE COMPANY.........................................19
A.       History and Development of the Company.............................19
B.       Business Overview..................................................22
C.       Organizational Structure...........................................28
D.       Property Plants and Equipment......................................29
Item 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS.......................29
Item 6.  DIRECTORS, SENIOR MANAGEMENT & EMPLOYEES...........................31
A.       Directors and Senior Management....................................31
B.       Compensation.......................................................32
C.       Board Practices....................................................32
D.       Employees..........................................................34
E.       Share Ownership....................................................34
Item 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS..................34
Item 8.  FINANCIAL INFORMATION..............................................35
Item 9.  THE OFFER AND LISTING..............................................35
Item 10.ADDITIONAL INFORMATION..............................................38
A.       Share Capital......................................................38
B.       Memorandum and Articles of Association.............................38
C.       Material Contracts.................................................42
D.       Exchange Controls..................................................43
E.       Taxation...........................................................43
F.       Dividends and Paying Agents........................................51
G.       Statement by Experts...............................................51
H.       Documents on Display...............................................51
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES - MARKET RISK.............51
Item 12. DESCRIPTION OF SECURITITES OTHER THANDEBTSECURITIES................52
                                       1
<PAGE>


                                     PART II
                                     -------

Item 13. DEFAULT, DIVIDEND ARREARAGES ANDDILINQUENCIES......................55
Item 14  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
         HOLDERS AND THE USE OF PROCEEDS....................................55


                                    PART III
                                    --------

Item 17. FINANCIAL STATEMENTS...............................................56
Item 18. FINANCIAL STATEMENTS...............................................56
                                       2

<PAGE>


                        Telum International Corporation.
                 Annual Report on Form 20-F for the Fiscal Year
                             Ended December 31, 2001

         This report on Form 20-F,  including  Item 1  ("Business")  and Item 17
("Financial  Statements"),  contains forward looking statements regarding future
events or the future  financial  condition  of Telum  International  Corporation
(formerly  ActFit.com  Inc.) and its  subsidiaries  (the "Company") that involve
certain risks and  uncertainties  discussed under "Risk Factors"  below.  Actual
events or the actual future  results of the Company may differ  materially  from
any forward looking statement due to such risks and uncertainties.

                                     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 selected  financial data set forth below should be read in conjunction with,
and are qualified by reference to, our  consolidated  financial  statements  and
notes thereto,  and our "Operating and Financial Review and Prospects"  included
elsewhere in this annual report.  The consolidated  statement of operations data
for the years ended 2001,  2000 and 1999,  as set forth below,  are derived from
our  consolidated  audited  financial  statements  and the  notes  thereto,  and
included elsewhere in this annual report. We have prepared our audited financial
statements  in  accordance  with  accounting  principles  generally  accepted in
Canada,  which differ in certain  respects from  generally  accepted  accounting
principles in the United States.  The differences  between  Canadian GAAP and US
GAAP,  as set out in Note 16 to the notes to the audited  financial  statements,
have a material impact on the operating  results of the Company.  Under US GAAP,
the operating  loss  increased by $88,798,  $925,668 and $1,627,154 in the years
ended  December 31,  2001,  2000 and 1999,  respectively  resulting in operating
losses of $2,019,574, $6,276,538 and $5,547,956 for the years ended December 31,
2001, 2000 and 1999, respectively under US GAAP.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                                              2001            2000             1999
                                          ------------    ------------    ------------
<S>                                       <C>             <C>             <C>
REVENUE                                   $     66,743    $    149,378    $    290,730
                                          ------------    ------------    ------------
EXPENSES

         General and administrative            692,579       1,525,606       2,199,907

         Corporate Development                  99,766       1,711,094         138,760

         Research and Development              282,114    $    262,135            --

         Sales and Marketing                   494,058         458,738       1,099,595

         Amortization                          194,616         164,540         177,634

         Interest                               41,478          28,220          70,602

         Product Cost                           60,148          14,785          12,694
                                          ------------    ------------    ------------

                                          $  1,864,759    $  4,165,118    $  3,699,192
                                          ------------    ------------    ------------


INCOME (LOSS) BEFORE UNDERNOTED ITEMS       (1,798,016)     (4,015,740)     (3,408,462)

Write-off of Deferred Development Costs           --              --           418,879

Write-off of Goodwill                     $    132,760            --            93,461

Write-off of Active Trainer                       --           999,990            --

Write-down of Fixed Assets                        --           335,140            --
                                          ------------    ------------    ------------
                                          $    132,760       1,335,130         512,340
                                          ------------    ------------    ------------

INCOME (LOSS) FOR THE YEAR                $ (1,930,776)   $ (5,350,870)   $ (3,920,802)


BASIC EARNINGS (LOSS) PER SHARE           $      (0.05)   $      (0.19)   $      (0.20)


AVERAGE SHARES OUTSTANDING                  36,504,986      28,606,483      19,668,993
</TABLE>

EXCHANGE RATES OF THE CANADIAN DOLLAR

Financial  information  in this annual report is expressed in Canadian  dollars,
unless otherwise noted. References to "CDN$" or "$" are to Canadian dollars. The
following table sets forth, for the periods indicated, the high and low exchange
rates, the average of the month-end  exchange rates and the period-end  exchange
rate of the Canadian  dollar in exchange for the United  States  dollars,  based
upon the inverse of exchange rates  reported by the Bank of Canada.  On June 30,
2002 the noon buying rate was CDN$1.00 = U.S. $0.6754

                                       4
<PAGE>

FISCAL YEAR ENDED      AVERAGE           HIGH            LOW            CLOSE
-----------------      -------           ----            ---            -----
     12/31/01          0.6458          $0.6710         $0.6229          $0.6278

     12/31/00          0.6733          $0.6984         $0.6397          $0.6668



     12/31/99           0.6730          $0.6935         $0.6462         $0.6928

     12/31/98           0.6741           0.7060          0.6484         0.6522

     12/31/97           0.7223           0.7424          0.6991         0.6991

     12/31/96           0.7334           0.7557          0.7209         0.7297

     12/31/95           0.7285           0.7533          0.7009         0.7331

     12/31/94           0.7321           0.7591          0.7198         0.7198

     12/31/93           0.7751           0.8046          0.7439         0.7544

B.       Capitalization and Indebtedness

Not applicable.

C.       Reasons for the Offer and Use of Proceeds

Not applicable.

                                       5
<PAGE>

D.       Risk Factors

         IF WE ARE  UNSUCCESSFUL  IN OUR ATTEMPTED  PURCHASE OF  MEDIAPAGE,  OUR
PRIMARY BUSINESS WILL BE NEGATIVELY IMPACTED.

The Company's primary business is the sale and distribution of an Internet based
interactive broadcast technology that is marketed under the name Mediapage.  The
Company  has  licensed  for  resale,  on a royalty  free  basis,  the  Mediapage
technology  from Mark  Vange,  who is a director  of the  Company.  The  current
license  term  expires  on  October  25,  2002.  Under the terms of the  license
agreement  the  Company  has  assumed  the costs to continue to fund the ongoing
development  and  operations  of the Mediapage  product and services.  Under the
terms of the license agreement,  the Company and Mr. Mark Vange have agreed that
they will  negotiate  an  agreement  in good  faith,  to sell the  rights to the
Mediapage  technology to the Company for a combination of cash and shares of the
Company.  There is no  assurance  that the Company  will be able to complete the
purchase of the rights to Mediapage  technology  nor is there any assurance that
the Company will be able to extend the current license  agreement beyond October
25, 2002 if the technology  purchase is not completed prior to October 25, 2002.
If the purchase  agreement is not completed the Company would not have a product
to market and sustain its existence as a viable entity.

OUR SUCCESS DEPENDS ON OUR ONGOING RELATIONSHIP WITH EXTERNAL CONTRACTORS

Because the company relies on external  contractors to perform  critical work we
are dependent on these  continuing  relationships.  Given the  company's  fiscal
position,  some contractors have not been fully  remunerated or remunerated on a
timely basis in the past. There can be no assurance that these  contractors will
continue  to be  available  to the  company  in the  future or be  available  on
acceptable terms.

COMPETITION

The Company will be facing  competition,  and in some cases this competition may
come from companies who are better financed,  better equipped, better staffed or
already have  relationships  with customers.  There can be no certainty that the
Company can overcome such competition.

CHANGES IN TECHNOLOGY AND CUSTOMER PREFERENCES

Technologies  change  rapidly and there can be no assurance that the Company can
keep up with such changes. In addition,  as customer preferences or requirements
change,  there can be no  assurance  that we can  continue  to provide a product
deemed desirable by potential customers.

RELIANCE ON THIRD PARTY TECHNOLOGY

Mediapage  technology  works in concert  with,  and in some cases  relies on the
existence of other technologies and products (e.g. Microsoft Windows). There can
be no  assurances  that some  current  or future  version  of such  third  party
software is either  incompatible  with, or undermines the proper  functioning of
Mediapage.

                                       6
<PAGE>

OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT.

During June 2001 the Company  began to shift its focus from the  development  of
Marketing   and  Customer   Relationship   Management   (CRM)  online   software
applications  for the health  club  industry  towards the  commercialization  of
Mediapage technology and service for a wider market. Accordingly,  there is only
a  limited  operating  history  to base an  evaluation  of the  Company  and its
business  prospects.  Our business and prospects  must be considered in light of
the risks,  uncertainties  and expenses  frequently  encountered by companies in
their early  stages of  development,  particularly  companies in new and rapidly
evolving  markets such as Internet  based  software  applications.  Our business
strategy may not be successful and we may not successfully address those risks.

WE NEED ADDITIONAL CAPITAL CURRENTLY,  AND IF WE ARE UNABLE TO SECURE ADDITIONAL
FINANCING,  WE WILL BE REQUIRED TO CURTAIL OUR OPERATIONS  SIGNIFICANTLY,  WHICH
WOULD HAVE A MATERIAL  ADVERSE EFFECT ON OUR BUSINESS,  FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS.

The Company is in need of additional  capital currently in order to meet a large
working capital deficiency and to fund future  operations.  If the funds are not
received, the Company will not be able to continue as a public Company. Since we
began  our  operations,  we have  been  funded  primarily  through  the  sale of
securities  to investors in a series of private  placements,  sales of equity to
and  investments  from  strategic  partners,  gains  from  investments,   option
exercises and, to a limited extent, through cash flow from operations.

At this time,  funds from  operations are not sufficient to meet our anticipated
financial  requirements beyond 2002. As of June 30, 2002, we had no cash on hand
and marketable  securities.  Based on current plans we believe that current cash
balances and anticipated funds from operations will support  operations into the
third  quarter 2002.  However,  the actual amount of funds that will be required
until that time will be determined by many factors, some of which are beyond our
control.  As a result,  we may need  funds  sooner or in  greater  amounts  than
currently anticipated.

We do not have any committed sources of additional financing at this time and we
are uncertain  whether  additional  funding will be available when we need it on
terms  that  will be  acceptable  to us or at all.  If we are not able to obtain
financing when we need it, we would be unable to carry out our business plan and
would have to significantly curtail our operations,  which would have a material
adverse effect on our business,  financial  condition and results of operations.
Potential  sources  of  financing  include  strategic  relationships,  public or
private sales of our shares or debt or other arrangements.  If we raise funds by
selling  additional   shares,   including  common  shares  or  other  securities
convertible  into  common  shares,  the  ownership  interests  of  our  existing
shareholders will be diluted.  If we raise funds by selling  preference  shares,
such  shares may carry more  voting  rights,  higher  dividend  payments or more
favorable rights upon distribution than those for the common shares.

                                       7
<PAGE>

WE ARE NOT PROFITABLE AND WE MAY NEVER BECOME PROFITABLE.

We have  accumulated  net losses of  approximately  $ 14.9  million for the year
ended  December 31, 2001.  We have never  achieved  profitability  and expect to
continue to incur losses for the foreseeable  future.  We cannot assure you that
we will earn  profits or generate  positive  cash flows from  operations  in the
future (see note 1 to our consolidated financial statements contained in section
17 of this Form 20-F).

OUR QUARTERLY RESULTS COULD FLUCTUATE, AND IF WE DO NOT MEET QUARTERLY FINANCIAL
EXPECTATIONS OF SECURITIES ANALYSTS OR INVESTORS OUR STOCK PRICE COULD DECLINE.

Because of our  limited  operating  history  of  providing  services,  and other
factors,  our quarterly  revenue and operating results are difficult to predict.
In  addition,  due  to  the  emerging  nature  of  the  market  for  interactive
communications  services  for  websites,  our  quarterly  revenue and  operating
results may fluctuate  from quarter to quarter.  In addition,  a number of other
factors could cause  fluctuations in our operating results,  including,  but not
limited to, the following:

- the growth  rate of the market for  interactive  communications  services  for
websites;
- technical  difficulties or system outages;
- the mix of services we offer;
-  our  ability  to  attract  and  retain   customers   and  maintain   customer
satisfaction;
- our partners' degree of success in distributing our services to end-users;
- the amount and timing of operating costs and capital expenditures  relating to
expansion of our business and network infrastructure;
- the  announcement,  introduction  and  market  acceptance  of new or  enhanced
services or products by us or our existing or potential competitors; and
-  changes  in our  pricing  policies  or those  of our  existing  or  potential
competitors.

If any of  these  factors  impact  our  business  in a  particular  period,  our
operating  results  may be below the  expectations  of  securities  analysts  or
investors,  in which case the  market  price of our common  stock  would  likely
decline.

OUR CUSTOMERS DO NOT HAVE LONG-TERM OBLIGATIONS TO PURCHASE OUR SERVICES AND OUR
REVENUE AND OPERATING  RESULTS COULD DECLINE IF OUR CUSTOMERS DO NOT CONTINUE TO
USE OUR SERVICES.

Our customers do not have long-term  obligations  to purchase  services from us.
Our  customers  may choose not to continue to use our  services,  and we may not
obtain a  sufficient  number  of  additional  customers  to  compensate  for any
customers we may lose. The failure of existing  customers to continue to use our
services or our failure to obtain  additional  customers would harm our business
and operating results.

                                       8
<PAGE>

OUR  BUSINESS  AND  OPERATING  RESULTS  MAY  SUFFER  IF  WE  FAIL  TO  ESTABLISH
PARTNERSHIPS.

We must continue to establish and extend our  partnerships.  Establishing  these
partner  relationships  can take as long as several months or more. Our partners
may choose to devote  insufficient  resources to marketing  and  supporting  our
services  or they may  choose to  devote  greater  resources  to  marketing  and
supporting the products and services of other companies. If we fail to establish
new  partner  relationships  in a  timely  manner  or if  our  partners  do  not
successfully  distribute our services,  our ability to achieve market acceptance
of our  interactive  communications  services for  websites  will suffer and our
business and operating results will be harmed.

OUR FUTURE  SUCCESS  DEPENDS ON THE BROAD  MARKET  ADOPTION  AND  ACCEPTANCE  OF
INTERACTIVE COMMUNICATIONS SERVICES FOR WEBSITES.

The market for  interactive  communications  services for websites is relatively
new and rapidly evolving. Market demand for communications services over the Web
is unproven. If the market for interactive communications services does not grow
at the rate we  expect,  our  business  and  operating  results  will be harmed.
Factors that might  influence  market  acceptance  of our  services  include the
following, many of which are beyond our control:

- willingness  of businesses  and  end-users to use  interactive  communications
services for websites;
- the growth of the Web and commercial on-line services;
- the  willingness  of our  partners  to  integrate  interactive  communications
services for websites in their service offerings; and
-the ongoing level of security and reliability for conducting  business over the
Web.

FAILURE TO SUCCESSFULLY  DEVELOP AND INTRODUCE  ENHANCED VERSIONS OF INTERACTIVE
COMMUNICATIONS  SERVICES FOR WEBSITES  THAT MEET  CHANGING  CUSTOMER  DEMANDS OR
EVOLVING TECHNOLOGICAL STANDARDS WOULD HARM OUR BUSINESS.

We must successfully offer our customers a comprehensive, integrated solution in
order for us to  expand  market  acceptance  of our  interactive  communications
services for  websites.  Our industry is  characterized  by rapid  technological
change, frequent new product introductions and enhancements, changes in customer
demands and evolving industry standards.  Our existing services will be rendered
obsolete if we fail to introduce new services or service  enhancements that meet
new customer  demands,  support new  standards or are  compatible  with upgraded
versions of software. In addition,  the technological life cycle of our services
is difficult to estimate.

                                       9
<PAGE>

As a result, our future success depends in large part on our ability to develop,
in a timely  manner,  new or enhanced  interactive  communications  services for
websites  and to  provide  new  services  that  achieve  rapid and broad  market
acceptance.  We  may  fail,  however,  to  identify  new  service  opportunities
successfully  or to develop and bring new services to market in a timely manner.
In  addition,  we may incur  substantial  costs in  developing  new or  enhanced
versions of our services. If we experience delays in completing  development of,
enhancements to, new or localized  versions of, or  cross-platform  capabilities
for, our  services,  our operating  results  would  suffer.  We also may need to
develop and  acquire new  technologies  or service  applications  to broaden our
service offerings. We may be unable to develop or acquire marketable services on
a timely basis, if at all. In addition,  our service innovations may not achieve
the market penetration or price stability necessary for profitability.

IF OUR SERVICES FAIL TO FUNCTION WHEN USED BY LARGE NUMBERS OF PARTICIPANTS,  WE
MAY LOSE CUSTOMERS AND OUR BUSINESS AND REPUTATION MAY BE HARMED.

Our strategy  requires that our services be able to accommodate large numbers of
users at any one time. We have limited experience in conducting large numbers of
concurrent  broadcasts.  If our services do not perform  adequately when used by
large numbers of participants,  we may lose customers,  be unable to attract new
customers and our operating results could suffer.

IF WE FAIL TO EXPAND OUR MARKETING ACTIVITIES,  OR IF OUR BRANDING AND MARKETING
EFFORTS ARE NOT SUCCESSFUL, OUR BUSINESS MAY BE HARMED.

We believe that  continued  expansion  of our  marketing  and brand  recognition
efforts will be critical to achieve  widespread  acceptance  of our  interactive
communications  services for websites.  If sufficient financing is obtained,  we
plan to  increase  our  marketing  expenditures  to create  and  maintain  brand
recognition.  Our marketing  campaigns or branding efforts may not be successful
or consumers may not find our marketing  efforts  compelling..  If our marketing
efforts are not successful, our business and operating results will be harmed.

WE COULD INCUR  SUBSTANTIAL  COSTS  RESULTING FROM CLAIMS RELATING TO USE OF OUR
SERVICES.

Many of the business interactions  supported by our services are critical to our
customers' businesses. Any failure in a customer's business interaction or other
communications  activity caused or allegedly caused by our services could result
in a claim for substantial  damages against us, regardless of our responsibility
for the failure.

IF OUR SYSTEM SECURITY IS BREACHED, OUR BUSINESS AND REPUTATION COULD BE HARMED.

A fundamental requirement for on-line  communications,  transactions and support
is the secure  transmission of confidential  information  over public  networks.
Third parties may attempt to breach our security or that of our  customers.  Our
customers and end-users may use our services to share  proprietary  information,
the  security of which is critical  to their  business.  We may be liable to our
customers for any breach in such security and any breach could harm our business
and our reputation.  In addition,  computers are vulnerable to computer viruses,
physical or electronic  break-ins and similar  disruptions,  which could lead to
interruptions,  delays or loss of data. We may be required to expend significant
capital and other resources to further protect against  security  breaches or to
rectify problems caused by any breach.

                                       10
<PAGE>

OUR  BUSINESS  COULD BE HARMED IF OUR SERVICES  FAIL TO PERFORM  PROPERLY DUE TO
UNDETECTED ERRORS OR SIMILAR PROBLEMS WITH OUR UNDERLYING SOFTWARE.


Complex software,  such as the software underlying our services,  often contains
undetected  errors.  Although we conduct testing during  development,  we may be
forced to delay commercial  release of our services until problems are corrected
and, in some cases,  may need to provide  enhancements to correct errors that we
do not detect until after  deployment of our services.  If we do detect an error
in our software before we introduce new versions of our services,  we might have
to limit our  services  for an  extended  period of time  while we  address  the
problem.  In addition,  problems with the software underlying our services could
result in:

- damage to our reputation;
- damage to our efforts to build brand awareness;
- loss of or delay in revenue;
- delays in or loss of market acceptance of our services; and
- unexpected expenses and diversion of resources to remedy errors.

IF OUR SERVICES DO NOT WORK WITH THE MANY HARDWARE AND SOFTWARE  PLATFORMS  USED
BY OUR CUSTOMERS AND END-USERS, OUR BUSINESS MAY BE HARMED.

We serve  customers  and  end-users  who that use a wide  variety of  constantly
changing  hardware and software  applications and networking  platforms.  If our
services  are unable to  support  these  platforms,  they may fail to gain broad
market  acceptance,  which  would  cause our  operating  results to suffer.  Our
success depends on our ability to deliver our services to multiple platforms and
existing,  or  legacy,  systems  and  to  modify  our  services  and  underlying
technology as new versions of  applications  are  introduced.  In addition,  the
success of our  services  depends on our ability to  anticipate  and support new
standards, especially web standards.

WE MAY NEED TO LICENSE THIRD-PARTY TECHNOLOGIES,  TOOLS AND APPLICATIONS AND MAY
BE UNABLE TO DO SO.

Third-party  technologies  that we may utilize in the future may not continue to
be available to us on commercially  reasonable terms or at all. In addition,  we
may fail to  successfully  integrate any licensed  technology into our services.
Third-party  licenses  and  our  use  of  third-party   application  programming
interfaces, known as APIs, expose us to increased risks, including the potential
diversion  of  our  resources  from  the  development  of  our  own  proprietary
technology and our potential  inability to generate  sufficient revenue from new
technology to offset associated acquisition and maintenance costs. Our inability
to obtain any of these licenses could delay service development until equivalent
technology can be identified,  licensed and integrated.  This in turn could harm
our business and operating results.

                                       11
<PAGE>

IF WE DO NOT  SUCCESSFULLY  ADDRESS THE RISKS  INHERENT IN THE  EXPANSION OF OUR
INTERNATIONAL OPERATIONS, OUR BUSINESS COULD SUFFER.

We intend to expand  further  into  international  markets.  If our revenue from
international  operations  does not  exceed  the  expense  of  establishing  and
maintaining  these  operations,  our  business  could  suffer.  We have  limited
experience  in  international   operations  and  may  not  be  able  to  compete
effectively in international  markets. Some risks we face in conducting business
internationally include:

- difficulties and costs of staffing and managing  international  operations;  -
difficulties  in  expanding  our  network  overseas;  - political  and  economic
instability;  - changes in currency  exchange  rates or  controls;  and - longer
sales cycles.

IF WE LOSE THE SERVICES OF ANY OF OUR SENIOR  MANAGEMENT OR OTHER KEY PERSONNEL,
OUR BUSINESS WOUL IRREPAIRABLY HARM OF BUSINESS.


Our success will depend on the skills,  experience and performance of our senior
management,  engineering, sales, marketing and other key personnel, many of whom
have worked  together for only a short period of time. We do not have  long-term
employment  agreements  with  or  life  insurance  policies  on any  of our  key
employees. The loss of the services of any of our senior management or other key
personnel would harm our business.

WE MUST ATTRACT, INTEGRATE AND RETAIN QUALIFIED PERSONNEL

Our future  success  will depend on our ability to  attract,  train,  retain and
motivate highly skilled engineering,  technical, managerial, sales and marketing
and customer support personnel.  Competition for these personnel is intense. Our
inability  to hire,  integrate  and retain  qualified  personnel  in  sufficient
numbers  could  reduce  the  quality of our  services.  If we fail to retain and
recruit  necessary sales,  marketing or other personnel,  our ability to develop
new services and to provide a high level of customer  service,  and consequently
our  business,  could  suffer.  In  addition,  if we  hire  employees  from  our
competitors,  these  competitors may claim that we have engaged in unfair hiring
practices.  We could incur substantial costs in defending  ourselves against any
of these claims, regardless of their merits.

INTERRUPTIONS IN EITHER OUR INTERNAL OR OUTSOURCED  COMPUTER AND  COMMUNICATIONS
SYSTEMS  COULD  REDUCE OUR  ABILITY TO PROVIDE OUR  SERVICES  AND COULD HARM OUR
BUSINESS AND REPUTATION.

The success of our interactive  communications  services for websites depends on
the  efficient  and  uninterrupted  operation  of our  internal  and  outsourced
computer and communications  hardware and software systems.  In this regard, our
communications  hardware  and  software  are hosted at  third-party  co-location
facilities.   These  systems  and   operations   are  vulnerable  to  damage  or
interruption from human error, telecommunications failures, break-ins, sabotage,
computer  viruses,  intentional acts of vandalism and similar events. We have no
formal  disaster  recovery plan in the event of damage to or interruption of our
internal or outsourced systems,.  Any system failure that causes an interruption
in our interactive  communications  services for websites or a decrease in their
performance could harm our relationships with our customers and partners.

                                       12
<PAGE>

DUE TO THE  WEB-BASED  NATURE OF OUR SERVICES,  WE MIGHT HAVE  LIABILITY FOR WEB
CONTENT.


Due to the web-based  nature of our services,  we face  potential  liability for
defamation,  negligence,  copyright,  patent or trademark infringement and other
claims  based on the nature and  content of the  materials  transmitted  via the
Internet. Any imposition of liability could harm our reputation and our business
and operating results, or could result in the imposition of criminal penalties.

THE SUCCESS OF MEDIAPAGE DEPENDS UPON THE PROTECTION OF ITS PATENT RIGHTS.
                                                                         --

Mediapage's  success and ability to compete depend to a significant  degree upon
the protection of its underlying software and our proprietary technology rights.
We regard the  protection of patent able  inventions as important to Mediapage's
future  opportunities.  Mediapage currently has four patent applications pending
in the United States and we may seek additional patents in the future.  However,
it is possible that:

o        any  patents  acquired  by or issued  to us may not be broad  enough to
         protect us;
o        any issued patent could be successfully challenged by one or more third
         parties,  which could result in our loss of the right to prevent others
         from exploiting the inventions claimed in those patents;
o        current  and  future  competitors  may  independently  develop  similar
         technology, duplicate our services or design around any of our patents;
o        Mediapage's  pending patent applications may not result in the issuance
         of patents;  and o effective patent  protection may not be available in
         every country in which we do business.

WE ALSO RELY UPON  TRADEMARKS,  COPYRIGHTS  AND TRADE  SECRETS  TO  PROTECT  OUR
PROPRIETARY  RIGHTS,  WHICH MAY NOT BE  SUFFICIENT  TO PROTECT OUR  INTELLECTUAL
PROPERTY.

We also rely on a combination  of laws,  such as copyright,  trademark and trade
secret laws, and contractual  restrictions,  such as confidentiality  agreements
and licenses,  to establish  and protect our  technology.  However,  despite any
precautions  that we have taken:

o        third parties may infringe or misappropriate our copyrights, trademarks
         and similar proprietary rights;
o        laws and  contractual  restrictions  may not be  sufficient  to prevent
         misappropriation  of our technology or to deter others from  developing
         similar technologies;
o        effective  trademark,  copyright  and trade  secret  protection  may be
         unavailable or limited in foreign countries;
o        other companies may claim common law trademark  rights based upon state
         or foreign laws that precede the federal registration
         of our marks; and
o        policing  unauthorized use of our services and trademarks is difficult,
         expensive  and  time-consuming,  and we may be unable to determine  the
         extent of any unauthorized use.
o        reverse engineering,  unauthorized copying or other misappropriation of
         our proprietary  technology  could enable third parties to benefit from
         our technology without paying us for it, which would significantly harm
         our business.

                                       13
<PAGE>

WE MAY FACE INTELLECTUAL  PROPERTY  INFRINGEMENT  CLAIMS THAT COULD BE COSTLY TO
DEFEND AND RESULT IN OUR LOSS OF SIGNIFICANT RIGHTS.

We may be subject to legal  proceedings and claims,  including claims of alleged
infringement of the trademarks and other  intellectual  property rights of third
parties.  Although we have not received notice of any alleged infringement,  our
services  may  infringe  issued  patents  that may  relate to our  services.  In
addition,  because the contents of patent  applications in the United States are
not publicly  disclosed  until the patent is issued,  we may be unaware of filed
patent applications  relating to our services.  Intellectual property litigation
is expensive and  time-consuming  and could divert  management's  attention away
from  running our  business.  This  litigation  could also require us to develop
non-infringing  technology  or enter into royalty or license  agreements.  These
royalty or license agreements,  if required,  may not be available on acceptable
terms,  if at all,  in the  event of a  successful  claim of  infringement.  Our
failure or inability to develop non-infringing technology or license proprietary
rights on a timely basis would harm our business.

WE MAY  ENGAGE IN FUTURE  ACQUISITIONS  OR  INVESTMENTS  THAT  COULD  DILUTE THE
OWNERSHIP OF OUR EXISTING  STOCKHOLDERS,  CAUSE US TO INCUR SIGNIFICANT EXPENSES
OR HARM OUR OPERATING RESULTS.

To finance any  acquisitions,  it may be  necessary  for us to raise  additional
funds  through  public  or  private  financings.  Additional  funds  may  not be
available  on  terms  that  are  favorable  to us and,  in the  case  of  equity
financings,  may result in  dilution  to our  stockholders.  We may be unable to
complete any acquisitions or investments on commercially reasonable terms, if at
all.  Even if  completed,  we may be unable to operate any  acquired  businesses
profitably or otherwise  implement our growth strategy  successfully.  If we are
unable to integrate any newly acquired entities or technologies effectively, our
operating results could suffer.  Future  acquisitions by us could also result in
large and immediate write-offs,  incurrence of debt and contingent  liabilities,
or amortization of expenses  related to goodwill and other  intangibles,  any of
which could harm our operating results.

INDUSTRY RISKS

WE MUST COMPETE SUCCESSFULLY IN THE INTERACTIVE COMMUNICATIONS SERVICES MARKET.

The market for  interactive  communications  services is intensely  competitive,
subject to rapid change and is significantly affected by new product and service
introductions and other market activities of industry participants.  Although we
do not currently  compete  against any one entity with respect to all aspects of
our  services,  we do compete  with  various  companies  in regards to  specific
elements of our interactive  communications  solution.  For example,  we compete
with   providers   of   traditional   communications    technologies   such   as
teleconferencing  and  videoconferencing  as well as  applications  software and
tools companies,  such as Centra Software,  Contigo Software,  Lotus (SameTime),
Microsoft (NetMeeting) and Placeware.  We also face potential competition from a
variety of enterprise software vendors, such as Microsoft, and from a variety of
providers of  infrastructure  services for  websites,  such as Akamai,  Inktomi,
Infospace and Critical  Path, any of which could choose to extend their products
and services to include interactive communications.

                                       14
<PAGE>

Many of our current and potential  competitors have longer operating  histories,
significantly greater financial,  technical and other resources and greater name
recognition  than we do.  Our  current  and  future  competitors  may be able to
respond  more  quickly to new or emerging  technologies  and changes in customer
requirements.  In addition,  current and potential competitors have established,
and may in the future establish,  cooperative  relationships  with third parties
and with each other to increase the  availability of their products and services
to the  marketplace.  Competitive  pressures  could  reduce our market  share or
require us to reduce the price of our  services,  either of which could harm our
business and operating results.

OUR  SUCCESS  DEPENDS  ON THE  CONTINUED  GROWTH OF WEB USAGE AND THE  CONTINUED
RELIABILITY OF THE INTERNET.

Because  our  services  are  designed to work over the Web,  our revenue  growth
depends  on  the  continued   development   and   maintenance  of  the  Internet
infrastructure.  This continued development of the Web would include maintenance
of a reliable network with the necessary speed,  data capacity and security,  as
well as timely  development of  complementary  products and services,  including
high-speed modems, for providing reliable Internet access and services.  Because
global  commerce on the Web and the on-line  exchange of  information is new and
evolving,  we  cannot  predict  whether  the Web  will  continue  to be a viable
commercial marketplace over the long term. The success of our business will rely
on the  continued  improvement  of the Web as a  convenient  means  of  customer
interaction  and commerce,  as well as an efficient  medium for the delivery and
distribution of information by businesses to their employees.

GOVERNMENTAL  REGULATION AND LEGAL  UNCERTAINTIES COULD IMPAIR THE EASE OUR COST
OF DOING BUSINESS.

The laws and regulations  that govern our business  change  rapidly.  The United
States government and the governments of other states and foreign countries have
attempted  to regulate  activities  involving  the Web and the  distribution  of
computer  software over the Internet.  Although there are currently few laws and
regulations  directly  applicable  to the  Web  and  the  use  of  the  Web as a
commercial  medium, a number of laws have been proposed involving the Web. These
proposed  laws  include  laws   addressing  user  privacy,   pricing,   content,
copyrights,  distribution, antitrust and characteristics and quality of products
and services. Moreover, the applicability to the Web of existing laws in various
jurisdictions  governing  issues  such as  property  ownership,  sales and other
taxes,  libel and personal  privacy is uncertain  and may take years to resolve.
Evolving  areas of law that are  relevant to our business  include  privacy law,
proposed  encryption  laws,  telecommunications  law  and  regulations,  content
regulations and sales and use tax laws and regulations.  Because of this rapidly
evolving and uncertain regulatory environment,  we cannot predict how these laws
and regulations  might affect our business.  Any new laws and regulations  could

                                       15
<PAGE>

harm  us by  subjecting  us to  liability  or  forcing  us to  change  how we do
business.  For example,  in 1996,  Congress passed the  Telecommunications  Act,
which prohibits  certain types of information and content from being transmitted
over the Web. The  prohibition's  scope and the  liability  associated  with its
violation  are  currently  unsettled  and  might be  interpreted  to  cover  our
activities. In addition,  regulatory treatment of web-based voice communications
outside the United States varies from country to country. For example, access to
voice-over  IP  services,  which we  currently  offer as part of our  integrated
service  offering,  may be blocked in some countries in Asia and the Middle East
by  government-controlled  telecommunication  companies.  This  action and other
similar actions may adversely  affect our ability to offer services in these and
other countries.

POTENTIAL  FLUCTUATIONS  IN OUR FINANCIAL  RESULTS MAKES  FINANCIAL  FORECASTING
DIFFICULT

Our  operating  results  have  varied on a  quarterly  basis in the past and may
fluctuate  significantly as a result of a variety of factors,  many of which are
outside our control.  Factors that may affect our  quarterly  operating  results
include:

o        general economic  conditions as well as economic conditions specific to
         the Internet and online commerce industries;

o        any  decision by us to reduce  prices for our  solutions in response to
         price reductions by competitors;

o        the amount  and  timing of  operating  costs and  capital  expenditures
         relating to expansion of our business, operations and infrastructure;

o        the announcement or introduction of new sites, services and products by
         us or our competitors; and

o        the timing of, and our ability to integrate,  any future acquisition of
         businesses,  technologies  or products or any strategic  investments or
         relationships into which we may enter.

As a result of our limited operating history, the emerging nature of the markets
in which we compete and the inherent  degree of variability  in dynamic  pricing
transactions,  it is  difficult  for us to  accurately  forecast  our  revenues,
earnings,  cash flow and other  financial  information.  Our  current and future
expense levels are based largely on our investment plans and estimates of future
revenues and are, to a large extent,  fixed. We may be unable to adjust spending
in a timely manner to compensate for any unexpected revenue shortfall.

Any significant shortfall in revenues relative to our planned expenditures would
have an immediate  adverse effect on our business,  results of operations,  cash
flow and financial condition. Further, as a strategic response to changes in the
competitive environment,  we may from time to time make certain pricing, service
or  marketing  decisions  that  could  have a  material  adverse  effect  on our
business, results of operations, financial condition and prospects. In addition,
payment and  recognition of revenues may be affected by  implementation  delays,
which are not always in our control.

                                       16
<PAGE>

Due to these factors, our quarterly revenues and operating results are difficult
to  forecast.  We believe that  period-to-period  comparisons  of our  operating
results may not be meaningful  and should not be relied upon as an indication of
future  performance.  In  addition,  it is  likely  that in one or  more  future
quarters,  our operating  results will fall below the expectations of securities
analysts and  investors.  In such event,  the trading price of our common shares
would almost certainly be materially adversely affected.

THE VOLATILITY OF THE STOCK MARKETS AND OUR SHARE PRICE COULD  ADVERSELY  AFFECT
OUR SHAREHOLDERS.

The market prices for securities of  Internet-related  and technology  companies
have been highly volatile, especially recently. These companies have experienced
extreme  price  and  volume  fluctuations  that have  often  been  unrelated  or
disproportionate  to their  operating  performance.  Broad  market and  industry
factors  may  materially  and  adversely  affect the market  price of our common
shares, regardless of our operating performance. The trading price of our common
shares on the NASD OTC Bulletin  Board and  previously  on the Canadian  Venture
Exchange (CDNX) has fluctuated significantly in the past and could be subject to
wide fluctuations in the future.

In the past,  following periods of volatility in the market price of a Company's
securities, securities class-action litigation has often been instituted against
that  Company.  Such  litigation,  if  instituted  against us,  could  result in
substantial costs and a diversion of management's attention and resources, which
could have a material  adverse  effect on our business,  results of  operations,
cash flow, financial condition and prospects.

WE  MAY  HAVE  TO  EXPEND   SIGNIFICANT   RESOURCES  TO  KEEP  PACE  WITH  RAPID
TECHNOLOGICAL CHANGE.

The Internet and e-commerce  industries are characterized by rapid technological
change,  changes in user and  customer  requirements,  frequent  new  service or
product  introductions  embodying  new  technologies  and the  emergence  of new
industry  standards  and  practices.  Any of these could render our  proprietary
technology obsolete. Our performance will depend, in part, on our ability to:

o        develop new  proprietary  technology  that  addresses the  increasingly
         sophisticated   and  varied  needs  of  our  existing  and  prospective
         customers;

o        respond to technological  advances and emerging industry  standards and
         practices on a timely and cost-effective basis;

o        continually  improve the  performance,  features and reliability of our
         services in response to evolving market demands; and

o        license leading technologies.

                                       17
<PAGE>

We may be required to make substantial  expenditures to accomplish the foregoing
and to modify or adapt our services or  infrastructure.  INFORMATION  TECHNOLOGY
SPENDING BUDGETS COULD HARM OUR OPERATING RESULTS

The primary  customers  for our  products are  enterprises  seeking to launch or
expand  e-business  initiatives.  Any  significant  downturn  in our  customers'
markets or in general  economic  conditions that results in reduced  information
technology  spending  budgets would likely result in a decreased  demand for our
products and services and will harm our business.  Industry downturns like these
have been,  and may  continue  to be,  characterized  by  diminished  demand for
products and services and subsequent erosion of average selling prices.

OUR BUSINESS MAY BE AFFECTED BY EVOLVING TAX REGULATIONS.

A number of  proposals  have been made at the U.S.  state and local  level  that
would  impose  additional  taxes on the sale of goods and  services  through the
Internet.  Such proposals,  if adopted, could substantially impair the growth of
electronic  commerce,  and could  adversely  affect  our  opportunity  to derive
financial benefit, through our customers, from such activities.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH EXCHANGE RATE FLUCTUATIONS.

Substantially  all of our revenues are in U.S. dollars while the majority of our
operating expenses are in Canadian dollars.  We do not have any hedging programs
in place to manage the potential exposure to fluctuations in the Canadian dollar
exchange rate. Fluctuations in the Canadian dollar exchange rate or the exchange
rate of other  currencies  against  the U.S. or  Canadian  dollars  could have a
material adverse effect on our earnings and cash flows.

OUR PREFERENCE  SHARES COULD PREVENT OR DELAY A TAKEOVER THAT SOME OR A MAJORITY
OF SHAREHOLDERS CONSIDER FAVORABLE.

Our Board of Directors, without any further vote of our shareholders,  may issue
up to 2 million preference shares and determine the price,  preferences,  rights
and  restrictions  of those  shares.  The rights of the holders of common shares
will be subject to, and may be adversely  affected by, the rights of the holders
of any series of preference shares that may be issued in the future. That means,
for example, that we can issue preference shares with more voting rights, higher
dividend  payments or more favorable rights upon distribution than those for the
common shares.  If we issue certain types of preference shares in the future, it
may also be more  difficult  for a third  party to  acquire  a  majority  of our
outstanding  voting  shares and may,  in certain  circumstances,  deter or delay
mergers,  tender offers or other  possible  transactions  that may be favored by
some or a majority of our shareholders.

IT MAY BE DIFFICULT FOR YOU TO ENFORCE CIVIL  LIABILITIES  ON US OR OUR OFFICERS
OR DIRECTORS.

We are incorporated under the laws of the Province of Ontario,  Canada.  Certain
of our directors and officers are residents of Canada and a substantial  part of
our assets and all or a  substantial  portion of the assets of such  persons are

                                       18
<PAGE>


located outside the United States.  As a result, it may be difficult for holders
of common  shares to effect  service of legal  process  within the United States
upon those  directors and officers who are not residents of the United States or
to realize in the United  States upon  judgments of courts of the United  States
predicated upon civil liability under the Securities Act of 1933, as amended, or
the Exchange Act or the rules and regulations  promulgated  under such statutes.
We believe that a judgment of a United States court predicated solely upon civil
liability under such U.S. federal  securities laws would probably be enforceable
in Canada if the United  States  court in which the  judgment was obtained had a
basis for jurisdiction in the matter that was recognized by a Canadian court for
such purposes.  However,  we believe that there is substantial  doubt whether an
action  could be brought  successfully  in Canada in the first  instance  on the
basis of liability predicated solely upon such U.S. federal securities laws.

OUR COMPANY  HAS BEEN  ISSUED A  TEMPORARY  CEASE TRADE ORDER FOR NOT FILING OUR
ANNUAL FINANCIAL REPORT BY MAY 21, 2002

A  temporary  cease  trade  order  has been  issued  by the  Ontario  Securities
Commission as a result of the late filing of our annual financial  report.  As a
result of the cease  trade  order,  trading was halted on the  Canadian  Venture
Exchange.  The financial  report is anticipated to be filed by July 15, 2002 and
it is expected the cease trade order will be lifted.

ITEM 4.  INFORMATION ON THE COMPANY

A.       History and Development of the Company

The Company was  incorporated  under the Business  Corporations Act (Ontario) on
April 20,  1964 under the name Benvan  Mines  Limited.  The Company  underwent a
number of name changes  between 1964 and 1987. The principal  business office is
located at 241 Hanlon Rd.  Woodbridge,  Ontario  L4L 3R7 and it phone  number is
905-265-7794.

On  June  27,  1997,   the  name  of  the  Company  was  changed  to  LaserMedia
Communications  Corp.  ("LaserMedia")  as part of a  transaction  in  which  the
Company  acquired all the issued and  outstanding  securities of LaserMedia Inc.
LaserMedia  Inc.'s  principal  business was the production and  distribution  of
multimedia  interactive  consumer software products in the  entertainment,  home
education and personal fitness categories.  The securities issued by the Company
in exchange for the issued and  outstanding  securities of LaserMedia  Inc. were
valued  at  CDN$8,300,000.  The  value  of  the  Company  was  determined  by an
unaffiliated  business valuation and litigation support Company. The Company, at
that time had one other wholly owned subsidiary,  Verisim, Inc., which developed
Internet software.

In 1997 the Company  determined  the need to move its business  activities  away
from diffuse and divergent  multimedia  activities  toward the more focused core
business  of the  delivery of health and fitness  information  via the  Internet
through the creation of a sport and fitness portal.

ActFit acquired 100% of the outstanding shares in ClubSite Internet Network Inc.
in December of 2000.  ClubSite  had  produced  website  and  e-commerce  service
solution for over 1800 health and fitness  clubs in the United States and Canada
and was in the early development  stages of a suite of online software solutions
to help clubs better manage their customer  relationship  building  initiatives.


                                       19
<PAGE>

Prior to the December  acquisition  of ClubSite  management  worked closely with
ActFit on a number of strategic  initiatives  including a purchasing network for
health  clubs,  a sport  specific  training  CD and online  application  and the
promotion  of the Active  Trainer/Body  of  Knowledge  CD-ROM to the health club
market.  Given  the  state of the  equity  markets  in  relation  to  technology
companies  during the month of December 2000,  management  decided not to pursue
the raising of sufficient capital to launch and develop the three initiatives

By the last quarter of fiscal year 2000,  management determined long term growth
and  profitability  would not be possible under the sport portal  business model
and through the acquisition of ClubSite  Internet Network Inc. shifted the focus
of the business to the  development  and  distribution of Internet based CRM and
marketing software for the health and fitness club industry. In December of 2000
the ActFit sport and fitness portal was shut down.

MAJOR DEVELOPMENTS

In May 2001,  Richard Hue resigned as CEO, Chairman and director of the Company.
In May 2001,  Mark Vange was  appointed  director of the  Company.  In May 2001,
Robert  Clapperton was appointed CEO of the Company.  In July 2001 Peter Melhado
joined the Board of Directors. In November 2001 Howard Weingrow joined the Board
of Directors. Both Mr. Melhado and Mr. Weingrow resigned from the Board in March
and April 2002 respectively due to a lack of Directors liability insurance.

On December 28, 2000,  the Company  acquired  all of the  outstanding  shares of
Clubsite   Internet  Network  Inc.   ("Clubsite"),   a  privately  held  company
incorporated in Ontario in the business of providing  template-based websites to
the  fitness  club  industry.  The  transaction  has been  accounted  for by the
purchase  method,  with the results of  operations  included in these  financial
statements  from the date of  acquisition.  The purchase price of  approximately
$244,000  was  satisfied  by the  issuance  of  2,000,000  common  shares of the
Company.  In  addition,  the Company has  committed to the issuance of a further
2,000,000  common shares in increments  of 500,000  contingent  upon the Company
meeting  cumulative  consolidated  revenue  targets of  $2,000,000,  $5,000,000,
$10,000,000   and  $20,000,000   over  the  next  five  years.   The  contingent
considerations   will  be  recorded  as  additional   purchase  price  upon  the
achievement of the contingent  events.  Shares issued in the connection with the
contingent  consideration  will be valued at the market rate when  issuable.  In
addition,  the Company incurred $17,000 in costs related to the acquisition.  As
the Company assumed no identifiable  assets or liabilities,  the entire purchase
price has been  allocated  to goodwill  and is being  amortized  over two years.
Goodwill is comprised of workforce and non-contractual  customer  relationships.
Amortization  expense of $130,282  and nil has been  recorded in the years ended
December 31, 2001 and 2000, respectively.

During  the  fourth  quarter  of 2001,  the  Company  performed  a review of the
carrying value of its goodwill  related to the  acquisition of Clubsite.  During
the  course of the  review,  the  Company  considered  the  future  value of the
goodwill and non-contractual relationships in light of the shift in the focus of
the  Company's   business  and  the   potential   future  cash  flows  from  the
non-contractual customer relationships. As a result of the Company's review, the
Company  determined  that the carrying value of the goodwill was not recoverable
and,  accordingly,  the  Company  recorded,  in the fourth  quarter  of 2001,  a
$130,302  write-down of goodwill.  As the Clubsite business has been wound down,
the Company does not expect to make any  additional  payments under the terms of
the contingent consideration described above.

                                       20
<PAGE>

On June 26,  2001,  the Company  executed a letter of intent with Telum Inc. for
the acquisition of the worldwide rights to Mediapage,  a technology developed by
Telum Inc. Telum Inc. is a Barbados based research and development  company that
develops  software for the  communications  and broadband  industries and is not
related to the  Company.  Due to a lack of cash on the part of the  Company  the
acquisition  has been  delayed.  In the interim the  Company  has  licensed  for
resale,  on a royalty free basis,  the Mediapage  technology from Mark Vange (to
whom  ownership of the technology was  transfrerred  in October 2001),  who is a
director of the Company.  The current  license term expires on October 25, 2002.
Under the terms of the  license  agreement  the Company has assumed the costs to
continue to fund the ongoing development and operations of the Mediapage product
and services. Under the terms of the license agreement, the Company and Mr. Mark
Vange have agreed that they will  negotiate an agreement in good faith,  to sell
the rights to the Mediapage  technology to the Company for a combination of cash
and shares of the Company

In March 2001, the Company  voluntarily  de-listed from the CDNX exchange due to
an inability to meet the cash requirements for active trading.

The Company has a working  capital  deficiency of  $2,404,260,  a  shareholders'
deficiency of $2,378,023  and has incurred  significant  losses in recent years.
The Company has instituted cost  preservation  measures until further  financing
can be arranged.  These cost preservation measures include,  among other things,
non-remittance  of payroll  withholding  taxes,  suspension of employee benefits
from March 2001,  cessation of business and directors'  liability  insurance and
the  non-payment  of  creditors.  The  Company  failed to file its 2001  audited
financial statements with the regulatory authorities on a timely basis which, on
May 22,  2002,  resulted  in a cease  trade  order  being  issued by the Ontario
Securities Commission.

During 2001,  the Company has raised  additional  funds  through the issuance of
shares and debt from various  individuals in the aggregate amount of $903,903 in
order to continue operations.

Continued  operations depend upon the Company's ability to generate revenues and
attain profitable  operations and obtain sufficient cash from external financing
to meet the Company's past due liabilities and future liabilities as they become
due.  The  Company is  presently  seeking  additional  financing  to fund future
operations and to reduce it existing working capital deficiency. There can be no
assurance that the Company will be successful in obtaining  additional financing
and that these and other  strategies will be sufficient to permit the Company to
continue as a going concern.

Should  the  Company  be unable  to  become  profitable  and  secure  additional
financing,  the  application  of  the  going  concern  principle  for  financial
statement  reporting  purposes  may no longer be  appropriate.  These  financial
statements  do not include any  adjustments  related to the  recoverability  and
classification  of recorded asset amounts or the amounts and  classification  of
liabilities  that may be necessary should the Company be unable to continue as a
going concern.

                                       21
<PAGE>

PRINCIPAL CAPITAL EXPENDITURES AND DIVESTITURES

The Company made no investments during the period.

B.        BUSINESS OVERVIEW

Upon the completion of the Mediapage acquisition the Company anticipates further
developing and  exploiting the  proprietary  desktop  broadcasting  application.
Mediapage  Technology combines proprietary voice technology with a unique patent
pending   interface  to  create  a  multi-user   interactive  Web   broadcasting
("Webcast")   platform  that  enables  group   communication   with  live  audio
interaction  over the  Internet.  Users can generate Web pages that stream audio
and/or video along with synchronized  images and sounds,  animation and Web page
links  to  their   audience.   Users  can  also   control   real-time   audience
participation.

Mediapage Technology  integrates  interactive Web broadcasting into any Website.
It provides  online  businesses  the  opportunity to increase their revenues and
broaden  their  reach  to the  Internet  community  by  supplying  an end to end
solution to easily create  presentations or programming  content and communicate
with audiences.  If the Mediapage  acquisition  does not close the Company would
suffer a major  setback and would have to restate its  revenue  projections  and
operating budget.

The Product: Mediapage Software

Mediapage  software is an Internet based interactive  broadcasting  application.
Mediapage allows the user to create live online  broadcasts for audiences of all
sizes complete with streaming video, audio interaction with audience members and
a wide range of multimedia content.

Technology Differentiators

The following are the key differentiating aspects of Mediapage software:

1.       The  Mediapage  patent  pending audio mixing  technology  reduces voice
         quality degradation due to bandwidth  limitations allowing high quality
         voice interactions  between host and viewer that can be broadcast to an
         unlimited audience.

2.       Mediapage software contains an imbedded  technology that allows for the
         limitations of each audience member's local  connection.  This allows a
         viewer with a connection as limited as 28.8 Kbps.

3.       Mediapage  software  is  infinitely  scalable  due to the fact  that it
         leverages commercially available infrastructure.

4.       The Mediapage content management  technology allows for the creation of
         contextual  content during a live broadcast.  Mediapage allows the host
         to display content related to topics or questions raised by an audience
         member or interviewee.

Mediapage  Technology  is an  interactive  communication  tool that  allows  the
host/user  to speak  directly  with the  audience  and have the  audience  speak
directly with the host/user.  Mediapage can be used to create training seminars,
institutional education programs and live marketing events.

                                       22
<PAGE>

Mediapage  eliminates the need for telephone  conferencing or video conferencing
systems and replaces them with a managed  system that can  incorporate  question
filtering and caller moderation,  making possible interactive presentations with
large  audiences.  Mediapage  includes a full range of voice and text chat tools
for both caller management and in-show chat.

Mediapage uses servers hosted at a secure data center, to manage,  broadcast and
control all of the presentations  using the system.  Each customer has access to
secure  account  management,  customization  and  billing  information,  and has
complete  control  over all of their own saved  programming.  Content  security,
including  128-bit keys securing each customer's  content  completes the service
offering.

Economic Model

The  Internet  is  primarily  a huge  network  of  computers  that  provides  an
infrastructure for communications and information  delivery.  Mediapage provides
the technology to use that infrastructure in an effective way. The Company bills
as traditional  telecommunication  companies do. Mediapage Technology tracks and
records each  customer's  usage of the system,  and bills based on the number of
viewing minutes  generated.  Revenue is generated based on billing for bandwidth
costs  plus a premium  for the  service,  training,  content  creation  help and
licensing billed on usage or by subscription.

As part of the Mediapage  Technology system a proprietary  billing engine tracks
the usage of the system by monitoring  the number of viewers,  and how long each
viewer watches.  For example,  if one hundred people watch a presentation for 10
minutes 15 seconds  each,  the presenter  will be billed for 1025  minutes.  The
Company  charges  the  presenter  a  variable  cents per  minute  per viewer fee
depending  on their total  volume of usage,  audience  size and service plan (if
any),  or uses a pre-paid  flat usage fee.  Casual users  broadcasting  to small
audiences are billed higher per minute charges than frequent users  broadcasting
to large audiences.

Sales and Communication Strategy

Positioning Strategy

The  Company  will  attempt  to  position  Mediapage  as  the  first  generation
interactive  broadcasting solution with the objective of establishing  Mediapage
as the  technology/service  standard.  Mediapage  will be  branded  as the  next
evolutionary step of webcasting and tele-conferencing.

Sales Strategy

Mediapage is sold through three channels:

1.       Direct sales through internal staff and selected sales agents.

2.       Direct online sales.  The Mediapage  website is being designed to allow
         prospective  subscription  customers of all sizes to enroll as a client
         without any direct contact with Telum sales staff.  The Company's sales
         staff  will  contact  the  appropriate  clients  to offer  value  added
         services  such as  production  and  design  work as well as  consulting
         services.

                                       23
<PAGE>

3.       The Company is in the process of partnering with selected  resellers in
         order to broaden its market reach. These resellers are categorized into
         horizontal resellers covering a range of markets and vertical resellers
         specializing in one market. The Company has signed a reseller agreement
         with Hewlett Packard as its first vertical reseller.

Customer Analysis

Enterprise Customers:

A Mediapage Enterpriser customer can be defined as an individual or organization
with the need to reduce the overall expense of communication both internally and
with customers.  Competitive  telephony  (conference  call) based offerings have
made tremendous inroads into organizations as a method of reducing travel costs.
By combining a conference call with an Internet  presentation  organizations are
able to reduce the direct and indirect  expense of travel.  Mediapage offers the
same ability to reduce travel expense while reducing the expense of the Internet
meeting by removing the need for conference call architecture.

Next to the cost  reduction  aspect of  Mediapage  through  its ability to allow
voice communication  between host and audience without the need for a conference
call, the most important differentiator of Mediapage is scalability.  Enterprise
customers are able to communicate directly with customers. While conference call
based  systems  are  limited  in scale  and are  thus  only  used  for  internal
communication, Mediapage presentations are unlimited in scale and can be used in
marketing and customer support applications.

A third important  differentiator  of Mediapage for Enterprise  customers is its
ability to archive meetings and presentations in real time. With conference call
based  applications  archiving  is an  expensive  and  time-consuming  endeavor.
Mediapage allows  organizations to develop a library of past training  sessions;
customers service seminars etc. with no extra production costs.

Competitive Analysis

During the design process of Mediapage a concerted effort was made to define key
elements  that were  missing  or could be  improved  in current  webcasting  and
conferencing  solutions.  Six key areas were  identified by carefully  examining
deployed  solutions.  These  areas were  particularly  targeted  in the  design,
implementation and deployment of Mediapage.

Availability and ease of access

Many of the current solutions use proprietary players or require custom hardware
to watch or  participate  in  presentations.  Given the  reluctance  of users to
install software,  and the cost of custom hardware, a decision was made to use a
player already in wide circulation and to avoid any reliance on special hardware
or connectivity.  Mediapage does not use a custom plug-in,  or special hardware,
but instead uses Microsoft's  Windows Media Player to decode audio and video and
content will display on most PCs or Macintosh  computers available today without
additional downloads.  This further allows customer's current on-line content to
be seamlessly and inexpensively integrated into Mediapage.

                                       24
<PAGE>

Attention  was also  paid to the  creation  of  content,  which  does  require a
software  download  but  does  not  require  any  specific  hardware,   Internet
connection or special  expertise.  The service  itself is a fully  automated ASP
offering  (whether  provided by the Company or by a third party  licensee)  that
allows presenters to configure, schedule and broadcast their programming without
any  intervention  by  the  service  provider  or  customer   installed  special
equipment, and is available 24X7 for broadcasting or viewing.

Broadcasts  are  viewed  by  clicking  on a web link  that can be  placed on any
website. This link automatically connects the audience to the correct show at an
appropriate bandwidth.

Manageability of the service

Because Mediapage is offered as a hosted,  web-based  solution,  the service has
been designed to minimize  intervention by the Company's staff. All services are
automated and accessible using a web-browser. The server architecture,  designed
with redundancy and automation in mind, rarely requires  intervention,  with all
bandwidth  provisioning,  scheduling  and  broadcasting  services  automated and
controlled  by the  customer.  Mediapage  offers  a full  set of  administrative
solutions for controlling content access, customer accounts,  usage tracking and
billing, and security.  The entire administrative  package is web accessible and
incorporates several levels of security that are dependent on the sensitivity of
the content.

Service providers can control allowable  content,  size of audiences,  allowable
bandwidth used in a broadcast and customer access. Each customer has the ability
to administer their own individual  account,  fine tuning the platform to fit it
within their own requirements,  and managing their own usage and costs.  Because
Mediapage  provides access by `zones' companies can have a single  administrator
oversee all zones'  presenters and content,  thus providing a clearinghouse  for
all broadcasts.

Billing and usage  tracking is  available  to the  customer  in  real-time,  and
Mediapage  can provide  detailed  usage  reports on any  broadcast  or on-demand
content.  Broadcasters can see the exact response each broadcast  receives in an
easy to read  graphical  form,  and have access to detailed  numerical  data and
statistical analysis.

Secure web access allows customers to manage all of their content on the system.
All broadcasts are archived,  and  immediately  available for on-demand  viewing
once the live broadcast is complete.

Scalability

Mediapage Technology is designed to support audiences ranging from two people to
tens of  thousands  of people and  incorporates  a range of audience  management
tools to make the audience  experience  engaging and  interactive,  while at the
same time  providing  the  broadcast  presenter  with  controllable,  manageable
audience  participation.  The server  architecture is designed to  automatically
balance  audience  load across  multiple  servers,  and allows rapid  scaling to
support larger audiences using automated server tools transparent to the user.

                                       25
<PAGE>

Mediapage  provides multiple methods for managing  audience  member's  questions
including  moderator software that allows  pre-interviewing  and prioritization,
presenter  controlled  question  lists and  question  auditing / sorting  tools.
Multiple participant feedback options include text messaging, text chat, polling
and  presenter  initiated  voice  chat  make  Mediapage  the  most  flexible  IP
communication platform available.

The presenter's task is further  simplified by the ability to distribute various
tasks across multiple computers in multiple  locations.  All of the software can
be run on a  single  computer,  or tasks  can be  distributed  depending  on the
complexity  of the  presentation,  size  of the  audience  and  the  presenter's
preferences.  For example content can be loaded, sorted and used either from the
presenter's computer, or from a PC running the a remote Library client.

The servers themselves support between three and five thousand  concurrent users
per machine and  automatically  distribute  the load of any single  presentation
across   multiple   machines  to  provide  a  high  level  of  redundancy,   and
mass-broadcasting   capacity.   Scores  of   presentations   can  be   broadcast
simultaneously  from each  server,  with  thousands  of  concurrent  users.  The
Mediapage  platform can easily support many concurrent  shows, each broadcasting
to large audiences,  with no degradation of quality. For peak traffic periods or
special  events,   servers  can  be  added  without  interrupting  the  service,
immediately increasing available capacity.

The Company's decision to base the platform on Microsoft's Media Server offering
makes it possible to leverage commercial streaming infrastructure for very large
shows.  Various  suppliers such as AT&T have Streaming servers available for use
and directly leverage able from the Mediapage platform.

Customization and Integration

With  Internet  based  communication  playing an  increasingly  integral role in
corporate communication  strategies,  ease of integration and branding becomes a
critical  factor in the deployment of any solution.  Mediapage is designed to be
easy to customize.  Web  designers  can  customize  the  Mediapage  presentation
screen.  Show-launching  links can be  embedded  in any  website.  The  software
incorporates  industry standard,  firewall friendly,  components to minimize the
need to involve the  customer's IT resources to broadcast or  participate  in an
event.

Bandwidth Management

As an ASP service  designed to deliver  content  across the Internet,  Mediapage
must be able to deliver content to a variety of Internet  connection  speeds. By
using multiple bit rate video,  pre-caching content,  and constantly  monitoring
the presenter's  and audience  connections to the broadcast  servers,  Mediapage
strives to provide a consistently good connection and quality presentation.

A  Mediapage  presentation  can be  broadcast  at multiple  bandwidths  with the
appropriate bandwidth transparently determined to best match the connectivity of
each audience member.  During live voice connection with an audience member, the
show bandwidth is throttled down to preserve the quality of the live connection,
and content delivery is accelerated.  This secures available bandwidth to reduce
lag and latency in the live channel.  Smooth broadcast  reception is strived for
during regular viewing, when, prior to displaying, content is preloaded into the
audience member's cache, according to their available bandwidth

                                       26
<PAGE>

Mediapage Costs of Service

Mediapage  is  offered as an ASP  service  with  Telum  International  providing
infrastructure and bandwidth. Costs of delivery are directly related to capacity
and scale linearly.

The peak  number of  concurrent  viewers  of a  broadcast,  which  sets the peak
bandwidth  consumption  level and  determines  our  bandwidth  cost,  determines
Mediapage  variable costs. This costs increases linearly at less than one to one
with industry standard discounting for bandwidth for heavy users (i.e. the first
megabit costs approximately $1100.00 USD, the hundredth $800.00 USD).

Bandwidth  Models:  ISP / Data centers charge for bandwidth either by monitoring
the exact amount of data transferred, or by monitoring the peak throughput used.

The `Data transferred'  billing model charges $5.00-$7.00 per GB transferred for
all traffic.  A GB of data transferred  equals  approximately  2700 user minutes
served, or a cost of between $0.11-0.15 per user per hour for bandwidth.

The `Peak  throughput'  model depends on peak  bandwidth  usage as determined by
eliminating  the  peak 5% of  usage,  while  revenue  depends  on  user  minutes
generated overall. For example, in the attached charts we have a peak load of 60
megabits and a billed bandwidth level of 7.5 megabits.  Traffic that falls under
the billed level does not increase our  bandwidth  cost,  but does  increase our
revenue.  The exact level of usage is impossible to predict,  but can be modeled
as in the attached charts.

Both ISP billing  models  yield very  similar per user  minute  costs  around US
$0.002 per user per minute variable cost.

Mediapage Bandwidth Usage

Mediapage  bandwidth  usage patterns for a 24-hour  period,  reported using five
minute  sampling,  with 288 samples  per day.  Peak usage is 60  megabits,  95th
percentile is 7.5 megabits. Traffic assumes one large broadcast, several smaller
conferences and a low level of on-demand traffic.

RESEARCH AND DEVELOPMENT

We believe that Mediapage  software provides a competitive  advantage,  and that
our future success depends,  in part, on our ability to continue  developing and
enhancing that software.  Our research and  development  efforts have focused on
the Mediapage Platform and our other proprietary software.  Ongoing Research and
Development  efforts are aimed at;  enhancing the features and  functionality of

                                       27
<PAGE>


existing software;  enhancing  usability by improving user interfaces and access
points;  updating our software and any third party technology  incorporated into
the software to work with new browsers and operating systems,  such as Microsoft
XP; rebuilding  networking components to simplify integration with firewalls and
networks;  and the  integration  of the Mediapage  Platform with elements of the
SmartClub  Solution.   Productization  involves  the  development  of  'generic'
applications   and   interfaces   to  reduce  the  time  and  costs  for  client
implementations and deployment of our solutions.


Research and development  expenditures were $282,114 for the year ended December
31, 2001,  including the salaries and related expenses of our personnel  engaged
in  research  and  development.  Research  and  development  activities  in 2001
included;  enhancements to version 3.5 of the Mediapage Platform,  completion of
Version 4.0 of the Mediapage  Platform,  construction  of the  Mediapage  portal
website, and an e-commerce engine.

TRADEMARKS, LOGOS AND TRADENAMES

The Company relies upon copyright,  trade secret and contract law to protect its
proprietary  technology  in  Canada,  the  United  States  and in  international
markets.  Such copyright protection prohibits the reproduction of exact language
and  code  of  the  Company's  products  and  software  programs  but  does  not
effectively  protect  the  Company  against  selective  reproduction  of certain
aspects of any product or  program.  The Company  utilizes  confidentiality  and
non-competition  provisions in its employee and consultant agreements as well as
with  various  third  parties with whom it deals in order to restrict the use of
its  proprietary  technology.  There are no assurances as to the extent to which
such  agreements  will be enforceable or be able to protect the interests of the
Company

GOVERNMENT REGULATION OF ENVIRONMENT

There are no significant  rules or regulations in connection  with  governmental
regulation  of the  environment  applicable  to the  Company  that  would have a
material effect on capital expenditures, earnings or its competitive position.

C.       ORGANIZATIONAL STRUCTURE

The table below lists our subsidiaries.  Unless otherwise indicated,  we, or one
of our subsidiaries,  own 100% of the outstanding common shares of the companies
listed.

         Name of Subsidiary                     Country of Incorporation
         ------------------                     ------------------------

         ActiveFitness Communications Inc               Canada

         ClubSite Internet Network Inc                  Canada
         Telum International Inc                        Canada
         Verism Inc.                                    Canada

                                       28
<PAGE>

D.       PROPERTY, PLANTS AND EQUIPMENT

In March 2001 the Company  relocated to 124 Merton  Street,  Suite 503,  Toronto
Ontario, M4S 2Z2. The new office is approximately 1600 square feet and is leased
until  September  2001 for  approximately  $36,000 per year with an option for a
twelve month  extension.  In December 2001 the Company  moved  operations to 241
Hanlon Road,  Woodbridge  Ontario L4L 3R7. The new space is approximately  6,000
square  feet and is  sub-leased  until June 2004 with an annual  rental  rate of
approximately  $60,000.  Management believes this space will be adequate for the
projected growth of the Company during this period.

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

RESULTS OF OPERATIONS
Comparison of Years Ended December 31, 2001 and December 31, 2000

Revenue: Revenue is comprised of Mediapage service sales revenue, graphic design
and website  services.  Revenue for the period was $66,743,  a 55% decrease from
2000 revenue of $149,378.  2001 revenue was derived from Mediapage service sales
and graphic design while 2000 revenue was derived from CD-ROM and graphic design
sales.  This  decrease is  attributable  to a shift in the focus of the business
towards the commercialization of Mediapage services. Mediapage services were not
brought to market until September 2001.

General and Administrative  Expense:  General and administrative expense for the
period was $692,579 a reduction of 55% of the 2000 expense of  $1,525,606.  This
reduction is  attributable  to a reduction in the company's  workforce and other
cost  cutting  measures  taken by  management  including  a move to a lower cost
facility.

Corporate Development Expense:  Corporate development expense for the period was
$99,766 a decrease of $1,611,328  over 2000  corporate  development  expenses of
$1,711,094.  This  decrease  is  attributable  to the  elimination  of  investor
relations consultants primarily CUNE Management and RT Management. The reduction
is also due to a  reduction  of stock  based  compensation  recorded  on options
issued to consultants from $912,083 in 2000 to $39,250 on 2001.

Research and Development Expense:  Research and development expense was $282,114
for 2001 compared to $262,135 for 2000. The expense in 2001 primarily relates to
the amount spent on the advancement of the Mediapage  technology  while the 2000
expense relates to the  development of the SmartClub  software which the Company
is no longer pursuing.

Sales and Marketing:  Sales and marketing  expenses for the period were $494,058
an increase of 8% over 2000 sales and marketing  expense of $458,738.  Sales and
marketing  expense  for  2001  primarily  represents  the  amount  spent  on the
commercialization  of Mediapage  services while 2000 sales and marketing expense
represents  the amount  spent on  marketing  the CD-ROM  products the Company no
longer markets.

Amortization:  Amortization  expense  for the period was  $194,616  compared  to
$164,540  for  2000.  Amortization  expense  in 2001  primarily  relates  to the
amortization of goodwill resulting from the 2000 acquisition of Clubsite.

                                       29
<PAGE>

Write-off  of  Distribution  Rights:  In May  2000,  the  Company  acquired  the
distribution  rights to  Active  Trainer  software  from a  company  engaged  in
providing  consulting  services to them.  The purchase  cost of  $1,000,000  was
settled by the issuance of 3,663,333  common shares of the Company at an average
price  of $.27  per  share.  The  valuation  of these  distribution  rights  was
subsequently  written down to $10 when the Company  completed the acquisition of
ClubSite  Internet  Network Inc. and  discontinued  the  production  and sale of
Active Trainer software.

Write-down of Fixed Assets: The Company regularly reviews the carrying values of
its fixed assets by comparing  the carrying  amount of the asset to the expected
undiscounted  future cash flows to be  generated  by the asset.  If the carrying
value exceeds the undiscounted future cash flows, a write-down is charged to the
consolidated statement of operations and deficit for the excess. In May 2000 the
Company moved primary office locations in order to reduce costs. As there was an
excess of  office  furniture  and  fixtures  given  the size of the new  office,
certain fixed assets were put into storage or discarded. Obsolete computers were
also written off during this period.

LIQUIDITY AND CAPITAL RESOURCES

Funding  to Date.  We have  been  funded to date  primarily  through a series of
private  placements  of  equity.  Please  see Note 7 of the  attached  Financial
Statements.

Present Status.  We have not earned profits to date and, at December 31, 2001 we
had an accumulated deficit of $14,856,742.  We have generated negative cash flow
from  operations  since inception and we have expended and expect to continue to
expend  substantial  funds to continue to develop  technology,  and expand other
areas of our business including the acquisition of, or strategic investments in,
complementary  products,  businesses or technologies.  As a result, we expect to
incur losses for the  foreseeable  future and there can be no assurance  that we
will ever achieve  profitability.  Operating  results have varied on a quarterly
basis in the past and may fluctuate significantly in the future as a result of a
variety of factors, many of which are outside of our control.

As of June 30, 2002, we had no cash on hand. At this time, funds from operations
will not be sufficient to meet our anticipated financial requirements beyond the
third quarter of 2002. Before the issuance of the Cease Trade Order, the Company
was in the process of securing a private  placement from investors in the amount
of $458,333 USD to meet immediate cash needs. Once the order is lifted following
the  filing  of  our  year-end  financial  statements  the  Company  anticipates
completing this private  placement.  Our management has developed a business and
financial  plan to reduce  operating  costs,  and  refocus  our  efforts on more
profitable  elements of our business  model.  As a short term measure to improve
operating  performance,  management  has  implemented  a revised  financial  and
business  plan  requiring  internal  restructuring  and cost  cutting  measures.
However,  we believe that current cash balances are  insufficient to support the
activities  of the  Company  long term and  further  capital  infusions  will be
necessary.  The actual amount of funds that will be required  during the interim
period will be determined by many factors, some of which are beyond our control.
As a result,  we may require funds sooner or in greater  amounts than  currently
anticipated.

                                       30
<PAGE>

We do not have  committed  sources of financing at this time and there can be no
assurance that we will be able to obtain  financing when needed on  commercially
reasonable terms or at all. If adequate funds are not available or not available
on acceptable terms when needed, our business,  operations,  financial condition
and future  prospects will be materially  adversely  affected (see note 1 to our
consolidated financial statements contained in section 17 of this 20-F Form).

Foreign  Currency  Rate  Fluctuations.  While our  financial  statements  are in
Canadian dollars,  revenue is generated in US dollars and other  currencies.  We
incur the  majority of our  expenses in Canadian  dollars.  As a result,  we may
suffer losses due to  fluctuations in exchange rates between the Canadian dollar
and US dollar, and the Canadian dollar and currencies of other countries.  We do
not  currently  engage  in  foreign  exchange  hedging  activities  or use other
financial instruments in this regard.

ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.     DIRECTORS AND SENIOR MANAGEMENT

The following  table sets forth the name,  position and year of election of each
of our directors and executive officers.

                                                                    YEAR BECAME
        NAME                           POSITION                     A DIRECTOR
        ----                           --------                     ----------

  Robert Clapperton     Chief Executive Officer, President and         2000
                                       Director

     Mark Vange                        Director                        2001




The  principal  occupations,  business  or  employment  of each of the  proposed
directors and their respective biographies are as follows:

Robert Clapperton

Robert Clapperton  recently served as President of ClubSite Internet Network, an
e-commerce and website  provider to the health club industry.  Prior to that Mr.
Clapperton served as Vice-President of Operations for XRNet Corporation where he
led the  development of a number of Internet  business  communities  including a
network of 150 online art galleries.  Mr. Clapperton has also served as Director
of  Marketing  for 701.COM the leading  provider of small  business  websites in
Canada.  Mr.  Clapperton  brings  over 16 years  of  operational  experience  in
technology development and marketing to the Company

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<PAGE>

Mark Vange

Mark Vange has  established  his reputation as a trailblazer  for  strategically
fostering  emerging  innovations  through  his  direction  of a number of highly
successful  technology  companies.  In 1994, he founded Gemsoft Corporation,  an
electronic  game  development  Company.  VR-1  acquired  Gemsoft  and Mr.  Vange
stayed-on as chief technology  officer to pioneer the development and publishing
of massive  multi-user online  entertainment  technologies VR-1 has been renamed
Circadence   Corporation,   broadening  its  scope  to  provide   solutions  for
bandwidth-constrained services over the Internet.

EXECUTIVE OFFICERS (Other than Mr. Clapperton)

Perry Tucciarone Vice-President Mediapage Sales

Perry  Tucciarone  has 14 years  experience in sales and marketing  with some of
North America's  largest fitness club chains including 24 Hour Fitness (formerly
Family Fitness) and Gold's Gym. Mr.  Tucciarone was also VP of Sales for 701.com
Inc.,  Canada's  largest  developer of community  websites.  Mr.  Tucciarone  is
responsible for coordinating all Mediapage sales activities..


Marc Lutz, CTO

As head of  technology,  Marc Lutz  draws on his broad  academic  and  corporate
experience in managing  Telum's product  development  and technology  personnel.
Following his studies in Computer  Science at the  University of New  Brunswick,
Canada,  Mr. Lutz worked as an  information  specialist  and  consultant  in the
corporate sector  designing  workflow and job management  solutions,  as well as
extensive  solutions for Y2K issues in global  companies  such as Glaxo Wellcome
Inc.  Mr.  Lutz went on to graduate  studies in  Economics  and  Politics at the
University of New Brunswick,  where he lectured,  before  returning again to the
corporate sector. His insights into technology and business have also earned him
the designation of inventor on Mediapage's pending patents.

EXECUTIVE COMPENSATION

During the fiscal year ended December 31, 2001 the aggregate  remuneration  paid
to all officers of the Company as a group was approximately $142,991.

The table below sets forth all annual and long term compensation for services in
all  capacities to the Company and its  subsidiary  for the Company's  financial
years ending  December 31, 1999,  and December 31, 2000,  for the president (the
"Named Executives") being the only executive officers of the Company with income
over $100,000 annually.

                                       32
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------

                                                    Annual Compensation                      Long Term Compensation

                                      -------------------------------------------------
         Name and                                                      Other Annual             Securities under
    Principal Position        Year       Salary          Bonus       Compensation (1)         Options Granted (2)
    ------------------        ----       ------          -----       ----------------         -------------------


<S>                          <C>       <C>           <C>                    <C>                    <C>
Richard Hue                  1999          NIL           NIL                $3,160                 1,200,000
Chief Executive Officer      2000      $66,667(3)    $50,000(3)            $21,408(1)              1,025,000
and President

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

(1) Represents Automobile expense.
(2) For the fiscal year ended December 31, 1999,  1,200,000 options were granted
to the Company's named executive  officers.
(3) Paid by way of common shares of the Company.

B.  COMPENSATION OF DIRECTORS

During the financial  year ended  December 31, 2001,  the directors  received no
fees for meetings of the Board or a committee  of the Board which they  attended
and no fee for the signing of any resolution of directors or documents on behalf
of the Company.

C.  BOARD PRACTICES

Our Articles  currently provide for a Board of Directors  consisting of not less
than 3 and not more than 10  directors,  to be  elected  annually.  The  Ontario
Business  Corporations  Act provides that, where a minimum and maximum number of
directors  are provided for in the articles of a Company,  the directors of that
Company  may, if  empowered  by special  resolution  of the  shareholders,  by a
resolution  determine  the number of  directors  to be  elected  at each  annual
meeting of the  shareholders.  Two new directors will be elected at the upcoming
annual shareholders meeting.

The Board of Directors presently consists of 2 directors.  Under Canadian law, a
majority of our board of directors and of each of our Board  Committees  must be
residents of Canada, subject to certain exceptions.  Each of our directors holds
office until the next annual meeting of  shareholders or until his successor has
been elected and qualified. Our executive officers are appointed by our board of
directors and serve at the discretion of our Board of Directors.

No director has any contract or  arrangement  with us entitling them to benefits
upon termination of their directorship.

The Audit Committee activities are handled by the board as a whole.

                                       33
<PAGE>

D.  EMPLOYEES AND CONTRACTORS

As of June 30, 2002, we employed and contracted as follows:

          2 in sales and marketing;

          6 in technical support and operations;

          3 in finance, administrative and senior management functions.


E.  SHARE OWNERSHIP

The  following  table  sets  forth  certain  information  concerning  the  share
ownership of our directors and executive officers as of April 20, 2001:
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
                       Number of        Number of Common       Exercise     Expiration   Percentage of
                       Common           Shares that may be     Price        Date of      Common Shares
                       Shares Owned     acquired under         of Options   Options      Beneficially Owned
                       (1)              option plan (2)                                  (3)
---------------------- ---------------- ---------------------- ------------ ------------ ---------------------
<S>                    <C>              <C>                    <C>          <C>                  <C>
Robert Clapperton      500,000          100,000                0.22         07/31/02              *
---------------------- ---------------- ---------------------- ------------ ------------ ---------------------
Mark Vange             0                0                      0                                  *
---------------------- ---------------- ---------------------- ------------ ------------ ---------------------
Perry Tucciarone       500,000          100,000                0.22         07/31/02              *
---------------------- ---------------- ---------------------- ------------ ------------ ---------------------
Marc Lutz              0                0                      0                                  *
---------------------- ---------------- ---------------------- ------------ ------------ ---------------------
Ian Sinclair           0                0                      0                                  *
---------------------- ---------------- ---------------------- ------------ ------------ ---------------------
</TABLE>

* Represents less than 1%

(1) Represents  shares owned  beneficially  by the named  individual  other than
those shares which may be acquired  under our  Company's  option  plans.  Unless
otherwise  noted,  all  persons  referred  to above  have sole  voting  and sole
investment  power.  (2) Includes all shares which the named  individual  has the
right  to  acquire  under  all  vested  and  unvested  options  granted  to such
individual under our Company's option plan.

(3) This information is based on 43,977,181 common shares outstanding as of June
30, 2002. Common shares subject to options exercisable within 60 days are deemed
outstanding  for computing the  percentage  ownership of the person  holding the
options but are not deemed outstanding for computing the percentage ownership of
any other person.

ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

To our  knowledge,  no person  beneficially  owns,  directly or  indirectly,  or
exercises  control or direction over more than 5% of our issued and  outstanding
common shares. This information is based on our records, information provided to
us by directors and executive officers.

                                       34
<PAGE>

RELATED PARTY TRANSACTIONS

Please see note 14 of the Financial Statements

ITEM 8 - FINANCIAL INFORMATION

See Item 17 for our audited consolidated financial statements.

LEGAL PROCEEDINGS

Neither we, nor any of our subsidiaries,  are a party to, or the subject of, any
material  legal  proceedings.  Due to a lack of cash  flow  some  suppliers  are
threatening  litigation.  Management has negotiated  extensions and  settlements
with the majority of these suppliers.  It is possible legal proceedings  against
theCompany may be initiated by these suppliers. All amounts have been accrued in
the financial statements.

DIVIDEND POLICY

We have not  declared  or paid any  cash  dividends  on our  common  shares.  We
currently  intend to retain any future  earnings  for use in the  operation  and
expansion of our business. We do not anticipate paying any cash dividends on our
common shares in the foreseeable future.

We have not  issued any  preference  shares.  The  dividend  entitlement  of any
preference shares issued will be determined by our Board of Directors.

SIGNIFICANT CHANGES
None.


ITEM 9 - THE OFFER AND LISTING

Our common shares are quoted on the NASD/OTC  Bulletin Board.  Our common shares
have been quoted on the NASD/OTC  Bulletin  Board since October 19, 1998,  under
the symbol "LZMCF" at which time the Company name was LaserMedia  Communications
Corp. On August 19, 1999 the Company name was changed to ActFit.com Inc. and the
new symbol on the NASD/OTC  Bulletin board became ACTFF.  The Company  currently
trades under the symbol  TLMIF.  Our common shares began trading on the Canadian
Dealing  Network on August 14, 1997 under the symbol  "LMCD",  and, since August
19, 1999 our common  shares traded under the symbol  "ACTF.U.  Since October 20,
2000 our shares began trading on the Canadian  Venture Exchange under the symbol
YAC.U. until our voluntary delisting in March 2002

                                       35
<PAGE>

Due to the late filing of its annual financial report,  the Company is currently
under a cease trade order form the Ontario  Securities  Commission.  The company
will apply to have the cease trade order  released  following  the filing of the
annual financial report for fiscal year 2001.

The following tables set forth the range of high and low sales prices(rounded to
the nearest  hundredth) as reported by Canadian Dealing Network (through October
19,  2000),  the  Canadian  Venture  Exchange  (beginning  October 20, 2000) and
NASD/OTC  Bulletin  Board  (beginning   October  19,   1998)during  the  periods
indicated:

The Canadian Dealing Network

                                                 High             Low
                                               ---------       ----------
               Annual Market Prices
               --------------------
                       1998                    2.05[CAN$]      0.10[CAN$]
                       1999                    3.10[CAN$]      0.10[CAN$]
                       2000                    0.88 [US$]       0.04[US$]

              Quarterly Market Prices
              -----------------------

                      1998
                      ----

                 1/st/ Quarter   [N/A]
                 2/nd/ Quarter                 2.05[CAN$]      0.45[CAN$]
                 3/rd/ Quarter                 0.55[CAN$]      0.25[CAN$]
                 4/th/ Quarter                 0.40[CAN$]      0.10[CAN$]

                       1999
                       ----

                 1/st/ Quarter                 0.85[CAN$]      0.10[CAN$]
                 2/nd/ Quarter                 2.22[CAN$]      0.47[CAN$]
                 3/rd/ Quarter                 2.12 [US$]       0.95[US$]
                 4/th/ Quarter                 1.15 [US$]       0.43[US$]

                       2000
                       ----

                 1/st/ Quarter                  0.88[US$]       0.45[US$]
                 2/nd/ Quarter                  0.70[US$]       0.27[US$]
                 3/rd/ Quarter                  0.37[US$]       0.16[US$]
                 4/th/ Quarter                  0.34[US$]       0.04[US$]

                                       36
<PAGE>

                       2001
                       ----

                 1/st/ Quarter                  0.23[US$]       0.03[US$]

                 April 1 - May 18               0.14[US$]       0.04[US$]

              Monthly Market Prices

                  November 2000                 0.18[US$]       0.09[US$]
                  December 2000                 0.09[US$]       0.04[US$]
                  January 2001                  0.23[US$]       0.06[US$]
                  February 2001                 0.12[US$]       0.07[US$]
                  March 2001                    0.09[US$]       0.03[US$]
                  April 2001                    0.08[US$]       0.04[US$]

NASD/OTC Bulletin Board
-----------------------

                       1999                         High                 Low
                       ----                         ----                 ---
                                                    (US$)               (US$)

Annual Market Prices

                       1999                          2.12                0.10

                       2000                          0.88                0.04
              Quarterly Market Prices

                       1999
                       ----

               1/st/ Quarter                         0.58                0.10
               2/nd/ Quarter                         1.47                0.31
               3/rd/ Quarter                         2.12                0.95
               4/th/ Quarter                         1.15                0.43


                       2000
                       ----

               1/st/ Quarter                         0.88                0.45
               2/nd/ Quarter                         0.70                0.27
               3/rd/ Quarter                         0.37                0.16
               4/th/ Quarter                         0.34                0.04

                                       37
<PAGE>

 Monthly Market Prices

 Stock prices TLMIF

Monthly High/Low Prices

May 2001-.14  .07
June     .14  .08
July     .11  .06
Aug      .09  .08
Sept     .10  .04
Oct      .11  .07
Nov      .09  .07
Dec      .09  .065

Jan 2002 .11  .09
Feb      .09  .065
Mar      .075 .045
Apr      .055 .045
May      .06  .03
June     .07  .045


ITEM 10 - ADDITIONAL INFORMATION

A.       Share Capital

            Not applicable.

B.       Memorandum and Articles of Association

Our  Articles  of  Amalgamation,  as amended,  are on file with the  Ministry of
Consumer and  Commercial  Relations  for the Province of Ontario  under  Ontario
Corporation Number 132323. Our articles do not include a stated purpose.

Directors

Directors  of our  Company  need not be  shareholders.  In  accordance  with our
by-laws and the Ontario Business  Corporations  Act, a majority of our directors
must be  residents  of  Canada,  subject  to certain  exceptions.  In  addition,
directors  must be at least 18 years of age,  of sound mind,  and not  bankrupt.
Neither our  articles or by-laws,  nor the Ontario  Business  Corporations  Act,
impose any mandatory retirement age for directors.

A  director  who is a party  to, or who is a  director  or  officer  of or has a
material  interest  in any  person  who is a party to, a  material  contract  or
transaction or proposed  material contract or transaction with our Company shall
disclose to the Company the nature and extent of his interest at the time and in
the manner  provided  by the  Ontario  Business  Corporations  Act.  The Ontario
Business  Corporations  Act  prohibits  such  a  director  from  voting  on  any
resolution  to approve  the  contract  or  transaction  unless the  contract  or
transaction:

                                       38
<PAGE>

o        is an  arrangement  by way of security for money lent to or obligations
         undertaken  by the  director  for  the  benefit  of the  Company  or an
         affiliate;

o        relates  primarily to his or her  remuneration as a director,  officer,
         employee or agent of the Company or an affiliate;

o        is for indemnity or insurance; or

o        is with an affiliate.

Our board of directors  may, on behalf of the Company and without  authorization
of our shareholders:

o        borrow money upon the credit of the Company;

o        issue,  reissue,  sell or  pledge  bonds,  debentures,  notes  or other
         evidences or indebtedness or guarantees of our Company,  either secured
         or unsecured;

o        subject to certain  disclosure  requirements  of the  Ontario  Business
         Corporations Act, give, directly or indirectly, financial assistance to
         any person by means of a loan,  a guarantee  or  otherwise on behalf of
         our   Company  to  secure   performance   or  any   present  or  future
         indebtedness, liability or obligation of any person; and

o        mortgage,  hypothecate,  pledge or otherwise create a security interest
         in all or any currently owned or subsequently acquired real or personal
         property  of our  Company,  movable  or  immovable,  including  without
         limitation book debts, rights, powers, franchises and undertakings,  to
         secure any bonds, debentures,  notes or other evidences of indebtedness
         or guarantee or any other obligation of the Company.

Common Shares

Our articles authorize the issuance of an unlimited number of common shares. The
holders of the common  shares of our Company are  entitled to receive  notice of
and to attend all meetings of the  shareholders of our Company and have one vote
for each common share held at all meetings of the  shareholders  of our Company,
except for meetings at which only holders of another  specified  class or series
of shares of the Company are entitled to vote  separately  as a class or series.
Subject to the prior rights of the holders of  preference  shares of our Company
and to any other  shares  ranking  senior to the common  shares with  respect to
priority in the payment of dividends,  the holders of common shares are entitled
to receive dividends and our Company will pay dividends, as and when declared by
our Board of  Directors,  out of moneys  properly  applicable  to the payment of
dividends,  in such amount and in such form as our Board of  Directors  may from
time to time  determine,  and all  dividends  which our Board of  Directors  may
declare on the common  shares  shall be declared  and paid in equal  amounts per
share  on all  common  shares  at the  time  outstanding.  In the  event  of the
dissolution,  liquidation  or  winding-up of the Company,  whether  voluntary or
involuntary,  or any  other  distribution  of assets  of the  Company  among its
shareholders  for the  purpose of winding up its  affairs,  subject to the prior
rights of the  holders  of  preference  shares and to any other  shares  ranking
senior to the common  shares with  respect to priority  in the  distribution  of
assets upon  dissolution,  liquidation or winding-up,  the holders of the common
shares  will be entitled to receive  the  remaining  property  and assets of the
Company.

                                       39
<PAGE>

Preference Shares

Our articles of  incorporation  authorize  the issuance of 2 million  preference
shares,  in one or more series.  The Ontario Business  Corporations Act does not
impose restrictions upon our Board of Directors issuing preference shares of the
type  authorized  by our articles of  incorporation.  Our Board of Directors may
fix,  before  issuing,  the  number of  preference  shares of each  series,  the
designation,  rights,  privileges,  restrictions and conditions attaching to the
preference  shares of each series,  including  any voting  rights,  any right to
receive  dividends  (which may be cumulative or  non-cumulative  and variable or
fixed) or the means of  determining  the  dividends,  the dates of payment,  any
terms and conditions of redemption or purchase,  any conversion  rights, and any
rights on the liquidation, dissolution or winding-up of the Company, any sinking
fund or other provisions,  the whole to be subject to the issue of a Certificate
of Amendment setting forth the designation, rights, privileges, restrictions and
conditions  attaching to the  preference  shares of the series.  Our articles of
incorporation  require that preference  shares of each series must, with respect
to the  payment of  dividends  and the  distribution  of assets or the return of
capital  in the  event of the  liquidation,  dissolution  or  winding-up  of the
Company, whether voluntary or involuntary,  rank on a parity with the preference
shares of every  other  series and be  entitled  to  preference  over the common
shares and over any other shares ranking junior to the  preference  shares.  The
preference  shares of one series shall  participate  ratably with the preference
shares of every other series in respect of all dividends and similar amounts.

Action Necessary to Change the Rights of Shareholders

In order to change  the rights of our  shareholders,  we would need to amend our
articles of incorporation to effect the change.  Such an amendment would require
the  approval  of holders of  two-thirds  of the  shares  cast at a duly  called
special  meeting.  If we wish to amend the rights of holders of a specific class
of shares,  such approval would also be required from the holders of that class.
A shareholder is entitled to dissent in respect of such a resolution and, if the
resolution is adopted and the Company implements such changes, demand payment of
the fair value of its shares.

Meetings of Shareholders

An  annual  meeting  of  shareholders  is held  each  year  for the  purpose  of
considering the financial statements and reports, electing directors, appointing
auditors and for the  transaction of other business as may be brought before the
meeting. The President or the Board of Directors has the power to call a special
meeting  of  shareholders  at any  time.  Notice  of the time and  place of each
meeting of  shareholders  must be given not less than 21 days,  nor more than 50
days,  before the date of each meeting to each  director,  to the auditor and to
each  shareholder  who at the close of business on the record date for notice is
entered in the securities  register as the holder of one or more shares carrying
the right to vote at the meeting. Notice of a meeting of shareholders called for


                                       40
<PAGE>


any other purpose other than consideration of financial statements and auditor's
report,  election of directors and reappointment of the incumbent auditor,  must
state the nature of the business in sufficient  detail to permit the shareholder
to form a reasoned judgment on and must state the text of any special resolution
or by-law to be  submitted  to the  meeting.  The only  persons  entitled  to be
present at a meeting of  shareholders  are those  entitled to vote thereat,  the
directors of the Company, the auditor of the Company and others who although not
entitled to vote are  entitled or  required  to be present at the  meeting.  Any
other  person may be  admitted  only on the  invitation  of the  chairman of the
meeting or with the consent of the meeting. If a corporation is winding-up,  the
Ontario  Business  Corporations  Act  permits  a  liquidator  appointed  by  the
shareholders,  during the  continuance  of a voluntary  winding-up,  to call and
attend meetings of the  shareholders.  In  circumstances  where a court orders a
meeting  of  shareholders,  the court may direct  how the  meeting  may be held,
including the parties entitled, or required, to attend the meeting.

Limitations on Rights to Own Securities

There is no  limitation  imposed by  Canadian  law or by the  articles  or other
charter  documents on the right of a non-resident  to hold or vote common shares
or  preference  shares  with  voting  rights,  other  than  as  provided  in the
Investment  Canada  Act, as amended by the World  Trade  Organization  Agreement
Implementation Act. The Investment Canada Act generally prohibits implementation
of a reviewable  investment  by an  individual,  government  or agency  thereof,
corporation,  partnership,  trust or joint venture that is not a "Canadian,"  as
defined in the Investment Canada Act (a "non-Canadian"),  unless,  after review,
the minister responsible for the Investment Act is satisfied that the investment
is likely to be a net benefit to Canada.

An investment in our voting shares by a non-Canadian  (other than a "World Trade
Organization  Investor,"  as  defined  below)  would  be  reviewable  under  the
Investment  Canada Act if it were an investment to acquire direct control of our
Company, and the value of our assets were $5.0 million or more. An investment in
our voting  shares by a World Trade  Organization  Investor  would be reviewable
under the  Investment  Canada Act if it were an  investment  to  acquire  direct
control of our  Company,  and the value of our assets  equaled or exceeded  $209
million.  A  non-Canadian,  whether  a  World  Trade  Organization  Investor  or
otherwise, would acquire control of us for purposes of the Investment Canada Act
if he or she acquired a majority of our voting shares.  The  acquisition of less
than a majority,  but at least one-third of our voting shares, would be presumed
to be an acquisition  of control of our Company,  unless it could be established
that we were not  controlled  in fact by the acquirer  through the  ownership of
voting shares. In general, an individual is a World Trade Organization  Investor
if he or she is a "national"  of a country  (other than Canada) that is a member
of the World Trade  Organization  ("World Trade  Organization  Member") or has a
right of permanent residence in a World Trade Organization Member. A corporation
or other  entity will be a World Trade  Organization  investor if it is a "World
Trade  Organization  investor-controlled  entity" pursuant to detailed rules set
out  in  the  Investment  Canada  Act.  The  United  States  is  a  World  Trade
Organization Member.

Certain  transactions  involving  our  voting  shares  would be exempt  from the
Investment Canada Act, including: (a) an acquisition of our voting shares if the
acquisition  were made in connection  with the person's  business as a trader or
dealer in securities; (b) an acquisition of control of our Company in connection

                                       41
<PAGE>


with  the  realization  of a  security  interest  granted  for a loan  or  other
financial  assistance  and not for any purpose  related to the provisions of the
Investment  Canada  Act;  and (c) an  acquisition  of control of our  Company by
reason of an amalgamation,  merger,  consolidation or corporate  reorganization,
following which the ultimate direct or indirect  control in fact of our Company,
through the ownership of voting interests, remains unchanged.

Change of Control

Our authorized  capital  consists of  2,000,000preference  shares.  The Board of
Directors,  without  any  further  vote  by the  common  shareholders,  has  the
authority to issue  preference  shares and to determine the price,  preferences,
rights and restrictions,  including voting and dividend rights, of these shares.
The rights of the holders of common  shares are subject to the rights of holders
of any  preference  shares that the Board of Directors  may issue in the future.
That means, for example,  that we can issue  preference  shares with more voting
rights, higher dividend payments or more favorable rights upon dissolution, than
the  common  shares.  If we issued  certain  types of  preference  shares in the
future, it may also be more difficult for a third-party to acquire a majority of
our outstanding voting shares.

C.       Material Contracts

The  following is a summary of our  Company's  material  contracts  entered into
since January 1, 1999.

On December 28, 2000,  the Company  acquired  all of the  outstanding  shares of
ClubSite   Internet  Network  Inc.   ("ClubSite"),   a  privately  held  company
incorporated in Ontario in the business of providing  template-based websites to
the  fitness  club  industry.  The  transaction  has been  accounted  for by the
purchase  method,  with the  results of  operations  included  in the  financial
statements  from the date of  acquisition.  The purchase price of  approximately
$244,000  was  satisfied  by the  issuance  of  2,000,000  common  shares of the
Company.  In  addition,  the Company has  committed to the issuance of a further
2,000,000  common shares in increments  of 500,000  contingent  upon the Company
meeting   cumulative   pretax   consolidated   revenue  targets  of  $2,000,000,
$5,000,000,  $10,000,000 and $20,000,000 over the next five years. Shares issued
in connection  with the  contingent  consideration  will be valued at the market
rate when  issuable.  The purchase  price has been  allocated to goodwill and is
being amortized over two years.

On June 26,  2001,  the Company  executed a letter of intent with Telum Inc. for
the acquisition of the worldwide rights to Mediapage,  a technology developed by
Telum Inc. Telum Inc. is a Barbados based research and development  company that
develops software for the communications and broadband industries. Due to a lack
of cash on the part of the  Company the  acquisition  has been  delayed.  In the
interim the Company  has  licensed  for  resale,  on a royalty  free basis,  the
Mediapage  technology  from  Mark  Vange  (who had the  ownership  of  Mediapage
technology  transferred  to himself in October  2001),  who is a director of the
Company.  The current license term expires on October 25, 2002.  Under the terms
of the license  agreement  the Company has assumed the costs to continue to fund
the ongoing  development  and operations of the Mediapage  product and services.
Under the terms of the  license  agreement,  The Company and Mr. Mark Vange have
agreed that they will  negotiate an agreement in good faith,  to sell the rights
to the Mediapage  technology to the Company for a combination of cash and shares
of the Company

                                       42
<PAGE>

D.       Exchange Controls

There is no law,  government  decree or  regulation  in Canada  restricting  the
export or import of capital or affecting the  remittance of dividends,  interest
or other  payments  to a  non-resident  holder  of  common  shares,  other  than
withholding tax requirements.

E.       Taxation

Canadian Federal Income Tax Considerations

The  following   summary   describes   material   Canadian  federal  income  tax
consequences  generally applicable to a holder of our common shares who is not a
resident of Canada,  and who, for purposes of the Income Tax Act  (Canada),  (i)
holds such shares as capital  property  and (ii) deals at arm's  length with us.
Generally,  common  shares  will be  considered  capital  property  to a  holder
provided  that  such  holder  does not hold  such  securities  in the  course of
carrying on a business and has not acquired such  securities in a transaction or
transactions  considered  to be an  adventure  or concern in the nature of trade
which includes a transaction or  transactions of the same kind and carried on in
the same manner as a transaction or transactions of an ordinary trader or dealer
in property of the same kind.

This summary is based upon the current  provisions of the Income Tax Act and the
regulations there under and on an understanding of the published  administrative
practices of the Canadian Customs and Revenue Agency. This summary does not take
into account or anticipate  any possible  changes in law, or the  administration
thereof,  whether  by  legislative,  governmental  or  judicial  action,  except
proposals for specific  amendment thereto which have been publicly  announced by
the Canadian Minister of Finance prior to the date hereof.

This  summary  does not address all aspects of Canadian  federal  income tax law
that may be relevant to shareholders based upon their particular  circumstances,
and  does  not  deal  with   provincial,   territorial  or  foreign  income  tax
consequences,  which might  differ  significantly  from the  consequences  under
Canadian federal income tax law.

Shareholders are advised to consult their tax advisors regarding the application
of the Canadian  federal income tax law to their  particular  circumstances,  as
well as any Canadian  provincial,  territorial or other tax  consequences or any
U.S.  federal,  state or local tax  consequences  or other  foreign  income  tax
consequences of the acquisition, ownership and disposition of our common shares.

                                       43
<PAGE>

Taxation of Dividends.

A holder of a common  share who is not  resident  in Canada for  purposes of the
Income Tax Act will be subject to Canadian  withholding tax on dividends paid or
credited,  or deemed  under the  Income Tax Act to be paid or  credited,  to the
holder of the common share. The rate of withholding tax under the Income Tax Act
on  dividends  is 25% of the  amount of the  dividend.  Such rate may be reduced
under the provisions of an applicable  international  tax treaty to which Canada
is a party.  Under the tax treaty that  Canada has entered  into with the United
States, the rate of Canadian  withholding tax applicable in respect of dividends
paid or  credited by a Canadian  corporation  to a  shareholder  resident in the
United  States,  is  generally  reduced to 15%, or 5% in the case of a corporate
holder which owns 10% or more of the voting shares. A foreign tax credit for the
tax withheld may be available under applicable US tax law to a US holder against
U.S.  federal  income tax  liability.  Moreover,  pursuant to Article XXI of the
Canada-U.S.  Treaty,  an exemption  from Canadian  withholding  tax generally is
available  in respect of dividends  received by certain  trusts,  companies  and
other organizations whose income is exempt from tax under the laws of the United
States.

Disposition of common shares.

A  non-resident  holder of a common  share  will not be subject to tax under the
Income Tax Act in respect of a capital  gain  realized on the  disposition  of a
common  share  unless the common share  constitutes  or is deemed to  constitute
"taxable  Canadian  property"  as defined  in the  Income  Tax Act.  Shares of a
corporation  that are listed on a  prescribed  stock  exchange  (which  includes
shares  traded on certain  U.S.  stock  exchanges,  including  the  Nasdaq)  are
generally not considered to be taxable Canadian property.  However,  such shares
are considered  taxable Canadian property in the hands of a non-resident  holder
if, at any time during the 60-month period immediately  preceding disposition by
the  holder,  25% or more of our  issued  shares of any class  were owned by the
non-resident  holder  together with persons with whom the  non-resident  did not
deal at arm's length.

An  interest  in or  option in  respect  of  common  shares or other  securities
convertible  into or  exchangeable  for common shares could  constitute  taxable
Canadian  property if the common shares that could be acquired upon the exercise
of the  option,  the  conversion  or  exchange  rights or in which there is such
interest are themselves  taxable Canadian  property.  Taxable Canadian  property
also includes any common share held by a non-resident if the  non-resident  used
the common share in carrying on a business (other than an insurance business) in
Canada, or, if the non-resident is a non-resident insurer, any common share that
is its "designated insurance property" for the year. A non-resident whose common
shares  constitute or are deemed to constitute  taxable  Canadian  property will
realize upon the disposition or deemed  disposition of a common share, a capital
gain (or a capital  loss) to the extent  that the  proceeds of  disposition  are
greater  than (or less  than) the  aggregate  of the  adjusted  cost base to the
holder of a common share and any reasonable costs of disposition.

One-half of any capital gain realized by a holder (a taxable  capital gain) will
be included in  computing  the  holder's  income.  One-half of any capital  loss
realized by a holder may, subject to certain restrictions  applicable to holders
that are  corporations,  normally be deducted from the holder's  taxable capital
gains realized in the year of disposition, the three preceding taxation years or
any subsequent taxation years, subject to detailed rules contained in the Income
Tax Act.

                                       44
<PAGE>

A  purchase  by us of our common  shares  (other  than a purchase  of our common
shares  on the  open  market  in a manner  in which  shares  would  normally  be
purchased  by any member of the public in the open  market)  will give rise to a
deemed  dividend  under the Income Tax Act equal to the  difference  between the
amount we paid on the purchase and the paid-up capital of such shares determined
in accordance with the Income Tax Act. The paid-up capital of such shares may be
less than the cost of such shares to the  holder.  Any such  dividend  deemed to
have been  received by a  non-resident  holder  will be subject to  non-resident
withholding tax as described  above. The amount of any such deemed dividend will
reduce the  proceeds  of  disposition  of the common  share to the  non-resident
holder for the  purpose of  computing  the amount of the  non-resident  holder's
capital gain or loss under the Income Tax Act.

Even if the common shares constitute taxable Canadian property to a non-resident
holder and their  disposition  would give rise to a capital  gain,  an exemption
from tax  under  the  Income  Tax Act may be  available  under  the  terms of an
applicable  international  tax  treaty  to which  Canada  is a  party.  A holder
resident  in the United  States for  purposes  of the  Canada-U.S.  Treaty  will
generally be exempt from Canadian tax in respect of a gain on the disposition of
common  shares  provided  that the value of the  common  shares  is not  derived
principally  from real  property  situated in Canada.  Our common  shares  would
qualify for this exception,  however Article XIII paragraph 5 of the Canada-U.S.
Treaty provides that the treaty exemption does not apply where the U.S. resident
holder was an individual  who was a Canadian  resident for 120 months during any
period of 20 consecutive  years  preceding the time of the sale and was resident
in Canada at any time during the ten years  immediately  preceding  the sale. If
the  exemption  from such  Canadian tax in respect of such gain is not available
under the  Canada-U.S.  Treaty,  a foreign  tax  credit may be  available  under
applicable US tax law for U.S.  federal income tax purposes.  Non-residents  are
advised to consult  their tax  advisers  with  regard to the  availability  of a
treaty exemption.

U.S. Federal Income Tax Considerations

The  following  summary  describes  material  United States  federal  income tax
consequences  arising from the purchase,  ownership  and sale of common  shares.
This summary is based on the provisions of the Internal Revenue Code of 1986, as
amended,  final,  temporary  and proposed  United  States  Treasury  Regulations
promulgated  there under, and the  administrative  and judicial  interpretations
thereof,  all as in effect as of the date of this annual report and all of which
are subject to change,  possibly on a retroactive basis. The consequences to any
particular  investor  may differ  from those  described  below by reason of that
investor's  particular   circumstances.   This  summary  does  not  address  the
considerations  that may be applicable to any particular  taxpayer based on such
taxpayer's  particular  circumstances  (including  potential  application of the
alternative  minimum  tax),  to  particular  classes  of  taxpayers   (including
financial institutions,  broker-dealers, insurance companies, taxpayers who have
elected mark-to-market accounting, tax-exempt organizations,  taxpayers who hold
ordinary shares as part of a straddle,  "hedge" or "conversion transaction" with
other   investments,   investors  who  own  (directly,   indirectly  or  through
attribution) 10% or more of our Company's  outstanding  voting stock,  taxpayers
whose functional  currency is not the U.S. dollar,  persons who are not citizens
or residents of the United  States,  or persons which are foreign  corporations,
foreign  partnerships  or foreign  estates or trusts as to the United States) or
any aspect of state,  local or  non-United  States tax laws.  Additionally,  the
discussion does not consider the tax treatment of persons who hold common shares
through a partnership or other pass-through  entity or the possible  application
of United States federal gift or estate tax. This summary is addressed only to a
holder of common  shares who is (i) a citizen or resident  of the United  States
who owns  less  than  10% of our  Company's  outstanding  voting  stock,  (ii) a

                                       45
<PAGE>


corporation  organized  in the  United  States or under  the laws of the  United
States or any state thereof,  (iii) an estate, the income of which is includable
in gross income for United  States  federal  income tax purposes  regardless  of
source, or (iv) a trust, if a court within the United States is able to exercise
primary  supervision over the  administration  of the trust and one or more U.S.
persons have the authority to control all substantial  decisions of the trust (a
"U.S.  Holder").  This summary is for general information purposes only and does
not purport to be a comprehensive  description of all of the tax  considerations
that may be  relevant  to a decision to purchase  common  shares.  This  summary
generally  considers  only U.S.  Holders  that will own their  common  shares as
capital assets.

Each shareholder  should consult with such  shareholder's  own tax advisor as to
the particular tax consequences to such  shareholder of the purchase,  ownership
and sale of their  common  shares  including  the effects of  applicable  state,
local, foreign or other tax laws and possible changes in the tax laws.

Treatment of Dividend Distributions

Subject  to the  discussion  below  under "Tax  Status Of The  Company - Passive
Foreign Investment Companies," a distribution by our Company to a U.S. Holder in
respect  of the  common  shares  (including  the  amount of any  Canadian  taxes
withheld thereon) will generally be treated for United States federal income tax
purposes as a dividend to the extent of our  Company's  current and  accumulated
earnings and profits,  as  determined  under United  States  federal  income tax
principles.  To the  extent,  if any,  that the amount of any such  distribution
exceeds our  Company's  current and  accumulated  earnings  and  profits,  as so
computed,  it will first reduce the U.S. Holder's tax basis in the common shares
owned by him, and to the extent it exceeds such tax basis, it will be treated as
capital gain from the sale of common shares.

While  it is  not  anticipated  that  our  Company  will  pay  dividends  in the
foreseeable  future,  the gross  amount  of any  distribution  from our  Company
received  by a U.S.  Holder  which is treated as a  dividend  for United  States
federal income tax purposes  (before  reduction for any Canadian tax withheld at
source) will be included in such U.S. Holder's gross income,  will be subject to
tax at the rates  applicable to ordinary  income and generally  will not qualify
for the  dividends  received  deduction  applicable  in certain  cases to United
States corporations.  For United States federal income tax purposes,  the amount
of any dividend  paid in Canadian  dollars by our Company to a U.S.  Holder will
equal the U.S.  dollar  value of the  amount of the  dividend  paid in  Canadian
dollars,  at the  exchange  rate in  effect  on the  date  of the  distribution,
regardless of whether the Canadian  dollars are actually  converted  into United
States dollars at that time.  Canadian  dollars  received by a U.S.  Holder will
have a tax  basis  equal to the U.S.  dollar  value  thereof  determined  at the
exchange rate on the date of the  distribution.  Currency exchange gain or loss,
if any,  recognized by a U.S. Holder on the conversion of Canadian  dollars into
U.S. dollars will generally be treated as U.S. source ordinary income or loss to
such holder.  U.S. Holders should consult their own tax advisors  concerning the
treatment of foreign  currency  gain or loss,  if any, on any  Canadian  dollars
received which are converted into dollars subsequent to distribution.

                                       46
<PAGE>

A U.S.  Holder  generally will be entitled to deduct any Canadian taxes withheld
from  dividends in computing  United States  taxable  income,  or to credit such
withheld taxes against the United States federal income tax imposed on such U.S.
Holder's  dividend  income.  No  deduction  for  Canadian  taxes may be claimed,
however,  by a noncorporate  U.S. Holder that does not itemize  deductions.  The
amount of foreign  taxes for which a U.S.  Holder may claim a credit in any year
is subject to complex limitations and restrictions,  which must be determined on
an individual basis by each  shareholder.  Distributions  with respect to common
shares that are taxable as dividends  will generally  constitute  foreign source
income for  purposes of the foreign tax credit  limitation.  The  limitation  on
foreign  taxes  eligible  for credit is  calculated  separately  with respect to
specific  classes of income.  For this  purpose,  dividends  distributed  by our
Company with respect to the common  shares will  generally  constitute  "passive
income."  Foreign income taxes exceeding a shareholder's  credit  limitation for
the year of payment or accrual of such tax can be carried  back for two  taxable
years and  forward  for five  taxable  years,  subject to the credit  limitation
applicable  in each of such years.  Additionally,  the foreign tax credit in any
taxable  year may not  offset  more than 90% of a  shareholder's  liability  for
United States individual or corporate  alternative minimum tax. The total amount
of allowable  foreign tax credits in any year  generally  cannot exceed  regular
U.S. tax liability for the year attributable to foreign source taxable income. A
U.S.  Holder will be denied a foreign tax credit with respect to Canadian income
tax withheld  from  dividends  received on the common  shares to the extent such
U.S.  Holder has not held the ordinary shares for at least 16 days of the 30-day
period  beginning on the date which is 15 days before the ex-dividend date or to
the extent  such U.S.  Holder is under an  obligation  to make  certain  related
payments with respect to  substantially  similar or related  property.  Any days
during which a U.S. Holder has substantially  diminished its risk of loss on the
common shares are not counted toward meeting the 16 day holding period  required
by the statute.

Sale or Exchange of a Common Share

Subject  to the  discussion  below  under "Tax  Status Of The  Company - Passive
Foreign Investment Companies," the sale or exchange by a U.S. Holder of a common
share  generally  will  result  in the  recognition  of gain or loss by the U.S.
Holder in an amount equal to the difference  between the amount realized and the
U.S.  Holder's basis in the common share sold. Such gain or loss will be capital
gain or loss  provided  that the common share is a capital asset in the hands of
the holder.  The gain or loss realized by a noncorporate U.S. Holder on the sale
or exchange of a common share will be long-term  capital gain or loss subject to
tax at a maximum tax rate of 20% if the common share had been held for more than
one year. If the common share had been held by such noncorporate U.S. Holder for
not more than one year, such gain will be short-term capital gain subject to tax
at a maximum rate of 39.6%. Finally, gain realized by a noncorporate U.S. Holder
with respect to common shares acquired after December 31, 2000 and held for more
than five years,  shall be taxed at a maximum  rate of 18%.  Gain  realized by a
corporate  U.S.  Holder will be subject to tax at a maximum  rate of 35%.  Gains
recognized by a U.S. Holder on a sale,  exchange or other  disposition of common
shares  generally  will be treated  as United  States  source  income for United
States foreign tax credit  purposes.  A loss  recognized by a U.S. Holder on the
sale,  exchange or other  disposition of common shares generally is allocated to
U.S.  source  income  under  recently  finalized  regulations.   However,  those
regulations  require such loss to be allocated to foreign  source  income to the
extent  certain  dividends  were  received by the  taxpayer  within the 24-month
period  preceding  the date on which  the  taxpayer  recognized  the  loss.  The
deductibility  of a  capital  loss  recognized  on the sale,  exchange  or other
disposition  of common  shares is subject to  limitations.  A U.S.  Holder  that
receives  foreign  currency upon  disposition of common shares and  subsequently
converts the foreign  currency  into U.S.  dollars  generally  will have foreign
exchange gain or loss based on any  appreciation or depreciation in the value of
the foreign currency against the U.S. dollar.  U.S. Holders should consult their
own tax advisors regarding treatment of any foreign currency gain or loss on any
Canadian dollars received in respect of the sale,  exchange or other disposition
of common shares.

                                       47
<PAGE>

Tax Status of the Company

Personal  Holding  Companies.  A non-U.S.  corporation  may be  classified  as a
personal  holding  Company for United States federal income tax purposes if both
of the  following  two tests are  satisfied:  (i) if at any time during the last
half of the Company's taxable year, five or fewer individuals (without regard to
their  citizenship  or  residency)  own or are  deemed  to  own  (under  certain
attribution  rules) more than 50% of the stock of the  corporation  by value and
(ii) 60% or more of such non-U.S.  corporation's  gross income derived from U.S.
sources or effectively  connected with a U.S. trade or business, as specifically
adjusted,  is from  certain  passive  sources  such  as  dividends  and  royalty
payments. Such a corporation generally is taxed (currently at a rate of 39.6% of
"undistributed  personal holding Company income") on the amounts of such passive
source income,  after making  adjustments  such as deducting  dividends paid and
income taxes,  that are not  distributed  to  shareholders.  We believe that our
Company  was not a  personal  holding  Company  in 1999 and is not  currently  a
personal  holding Company.  However,  no assurance can be given that either test
will not be satisfied in the future.

Foreign Personal Holding Companies. A non-U.S. corporation will be classified as
a foreign personal holding Company for United States federal income tax purposes
if both of the two following tests are satisfied:  (i) five or fewer individuals
who are United  States  citizens  or  residents  own or are deemed to own (under
certain  attribution  rules) more than 50% of all  classes of the  corporation's
stock  measured by voting  power or value and (ii) the  corporation  receives at
least 60% (50% if previously an foreign  personal  holding Company) of its gross
income (regardless of source),  as specifically  adjusted,  from certain passive
sources.  If such a  corporation  is classified  as a foreign  personal  holding
Company,  a portion  of its  "undistributed  foreign  personal  holding  Company
income" (as defined for United  States  federal  income tax  purposes)  would be
imputed to all of its  shareholders who are U.S. Holders on the last taxable day
of the corporation's  taxable year, or, if earlier,  the last day on which it is
classifiable as a foreign personal holding Company. Such income would be taxable
as a  dividend,  even if no cash  dividend is actually  paid.  U.S.  Holders who
dispose  of their  shares  prior to such date  would not be subject to tax under
these rules.  We believe that our Company was not a personal  holding Company in
1999 and is not currently a personal holding Company.  However, no assurance can
be given that our Company will not qualify as a foreign personal holding Company
in the future.

Passive  Foreign  Investment  Companies.  A Company  will be a  passive  foreign
investment  Company if 75% or more of its gross income  (including  the pro rata
share of the gross income of any Company (United States or foreign) in which the
Company is  considered  to own 25% or more of the shares  (determined  by market
value)) in a taxable year is passive income. Alternatively,  the Company will be

                                       48
<PAGE>


considered  to be a passive  foreign  investment  Company if at least 50% of the
value of the Company's  assets  (averaged over the year) (including the pro rata
share  of the  value of the  assets  of any  Company  in which  the  Company  is
considered to own 25% or more of the shares  (determined  by market value)) in a
taxable year are held for the production  of, or produce,  passive  income.  For
these  purposes,  the value of our  assets  is  calculated  based on our  market
capitalization.  Passive  income  generally  includes,  among others,  interest,
dividends, royalties, rents and annuities.

If our Company is a passive foreign  investment  Company for any taxable year, a
U.S.  Holders,  in the absence of an  election by such U.S.  Holder to treat our
Company as a "qualified  electing fund" (a "QEF election"),  as discussed below,
would,  upon certain  distributions  by our Company and upon  disposition of the
common  shares  at a gain,  be  liable  to pay tax at the  highest  tax  rate on
ordinary income in effect for each period to which the income is allocated, plus
interest on the tax, as if the distribution or gain had been recognized  ratably
over the days in the U.S.  Holder's  holding period for the common shares during
which our Company was a passive foreign investment Company. Additionally, if our
Company is a passive  foreign  investment  Company,  U.S.  Holders  who  acquire
ordinary shares from decedents would be denied the normally available step-up of
the income tax basis for such common  shares to fair market value at the date of
death and  instead  would have a tax basis  equal to the  decedent's  basis,  if
lower.

If our  Company is  treated  as a passive  foreign  investment  Company  for any
taxable year, U.S.  Holders should  consider  whether to make a QEF election for
United States federal income tax purposes.  If a U.S.  Holder has a QEF election
in effect for all taxable years that such U.S. Holder has held the common shares
and our Company was a passive foreign investment Company, distributions and gain
will not be recognized  ratably over the U.S. Holder's holding period or subject
to an interest  charge,  gain on the sale of common shares will be characterized
as capital gain and the denial of basis step-up at death  described  above would
not apply. Instead, each such U.S. Holder is required for each taxable year that
our Company is a qualified  electing  fund to include in income a pro rata share
of the ordinary  earnings of our Company as ordinary income and a pro rata share
of the net capital gain of our Company as long-term  capital gain,  subject to a
separate  election to defer  payment of taxes,  which  deferral is subject to an
interest charge. Consequently, in order to comply with the requirements of a QEF
election,  a U.S. Holder must receive from our Company certain  information.  We
intend to supply U.S.  Holders with the information  needed to report income and
gain  pursuant to a QEF  election in the event our  Company is  classified  as a
passive   foreign   investment   Company.   The  QEF   election  is  made  on  a
shareholder-by-shareholder basis and can be revoked only with the consent of the
Internal  Revenue  Service.  A  shareholder  makes a QEF election by attaching a
completed IRS Form 8621 (including the passive foreign investment Company annual
information statement) to a timely filed United States federal income tax return
and  by  filing  such  form  with  the  IRS  Service  Center  in   Philadelphia,
Pennsylvania.  Even if a QEF  election is not made, a  shareholder  in a passive
foreign  investment  Company who is a U.S. Holder must file a completed IRS Form
8621 every year.

As an  alternative to making a QEF election,  a U.S.  Holder may elect to make a
mark-to-market  election  with respect to the common shares owned by him. If the
mark-to-market  election  were made,  then the rules set forth  above  would not
apply for periods  covered by the election.  Under such election,  a U.S. Holder
includes in income each year an amount  equal to fair market value of the common
shares  owned by such U.S.  Holder as of the close of the taxable  year over the
U.S. Holder's  adjusted basis in such shares.  The U.S. Holder would be entitled
to a deduction for the excess,  if any, of such U.S.  Holder's adjusted basis in


                                       49
<PAGE>


his common  shares over the fair market  value of such shares as of the close of
the taxable year; provided however,  that such deduction would be limited to the
extent  of any net  mark-to-market  gains  with  respect  to the  common  shares
included by the U.S. Holder under the election for prior taxable years. The U.S.
Holder's basis in his common shares is adjusted to reflect the amounts  included
or deducted  pursuant to this election.  Amounts  included in income pursuant to
the  mark-to-market  election,  as well as gain on the sale or  exchange  of the
common  shares,  will be treated as ordinary  income.  Ordinary  loss  treatment
applies to the deductible portion of any mark-to-market  loss, as well as to any
loss  realized on the actual sale or exchange of the common shares to the extent
that the  amount of such  loss  does not  exceed  the net  mark-to-market  gains
previously included with respect to such common shares.

The  mark-to-market  election  applies to the tax year for which the election is
made and all later tax years, unless the common shares cease to be marketable or
the IRS consents to the revocation of the election.

We do not believe our Company was a passive  foreign  investment  Company during
2000. However, there can be no assurance that our Company will not be classified
as a passive foreign  investment Company in 2001 or thereafter because the tests
for determining  passive foreign  investment Company status are applied annually
and it is difficult to make  accurate  predictions  of future income and assets,
which are relevant to this  determination.  U.S.  Holders who hold common shares
during a period when our Company is a passive foreign investment Company will be
subject  to the  foregoing  rules,  even if our  Company  ceases to be a passive
foreign investment  Company,  subject to certain exceptions for U.S. Holders who
made a QEF  election.  U.S.  Holders  are urged to  consult  with  their own tax
advisors  about  making a QEF  election  or  mark-to-market  election  and other
aspects of the passive foreign investment Company rules.

Back-Up Withholding and Information Reporting

U.S.  Holders  generally are subject to information  reporting  requirements and
back-up  withholding  with  respect to  dividends  paid in the United  States on
common shares.  Back-up  withholding will not apply if a U.S. holder provides an
IRS Form W-9 or otherwise establishes an exemption.  U.S. holders are subject to
information  reporting and back-up withholding at a rate of 31% on proceeds paid
from the  disposition of common shares unless the U.S.  holder provides IRS Form
W-9 or otherwise establishes an exemption.

Non-U.S.  holders generally are not subject to information  reporting or back-up
withholding  with  respect  to  dividends  paid  on,  or the  proceeds  from the
disposition  of, common shares,  provided that such non-U.S.  holder  provides a
taxpayer  identification  number,  certify to its foreign  status,  or otherwise
establish an exemption.

The amount of any back-up withholding will be allowed as a credit against a U.S.
or non-U.S.  holder's  U.S.  federal  income tax  liability and may entitle such
holder to a refund,  provided that certain required  information is furnished to
the IRS.

                                       50
<PAGE>

F.       Dividends and Paying Agents

Not applicable.

G.       Statements by Experts

Not applicable.

H.       Documents on display.

We have filed this Annual Report on Form 20-F with the  Securities  and Exchange
Commission  under the Securities  Exchange Act of 1934.  Statements made in this
annual  report as to the contents of any contract,  agreement or other  document
referred to are not  necessarily  complete.  With respect to each such contract,
agreement or other document filed as an exhibit to this annual report, reference
is made to the exhibit for a more complete  description of the matter  involved,
and each  such  statement  shall be deemed  qualified  in its  entirety  by such
reference.

We are subject to the  informational  requirements  of the Exchange Act and file
reports and other  information  with the  Securities  and  Exchange  Commission.
Reports and other  information  which we file with the  Securities  and Exchange
Commission,  including  this Annual  Report on Form 20-F,  may be inspected  and
copied  at the  public  reference  facilities  of the  Securities  and  Exchange
Commission at:

450 Fifth Street N.W.                        500 West Madison Street
Room 1024                                    Suite 1400
Washington D.C. 20549                        Chicago, Illinois 60661

You can also obtain  copies of this  material by mail from the Public  Reference
Section of the  Securities  and Exchange  Commission,  450 Fifth  Street,  N.W.,
Washington,  D.C.  20549,  at  prescribed  rates.  Additionally,  copies of this
material may also be obtained  from the  Securities  and  Exchange  Commission's
Internet  site at  http://www.sec.gov.  The  Commission's  telephone  number  is
1-800-SEC-0330.

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

(a)  Quantitative Information about Market Risk

See Item 5 - Operating  and  Financial  Review and  Prospects  -  Liquidity  and
Capital  Resources  - Foreign  Currency  Rate  Fluctuations;  Interest  Rate and
Investment Risk.

(b)  Qualitative Information about Market Risk

                                       51
<PAGE>

See Item 5 - Operating and Financial Review and Prospects -Liquidity and Capital
Resources - Foreign  Currency Rate  Fluctuations;  Interest Rate and  Investment
Risk.

ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN DEBT SECURITIES

Not applicable.

PART II

ITEM 13 - DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14 - MATERIAL  MODIFICATIONS  TO THE RIGHTS OF SECURITY  HOLDERS AND USE OF
PROCEEDS

There were no material modifications  affecting the rights of securities holders
made during the fiscal year ended December 31, 2000.

ITEM 17- FINANCIAL STATEMENTS

See the Index to Consolidated  Financial Statements  accompanying this report on
page F-1.

                                       52
<PAGE>

ITEM 18 - FINANCIAL STATEMENTS

Not applicable.

SIGNATURES

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

                        Telum International Coproration.




         By:   /s/ Robert Clapperton
               ------------------------------------------------
                   Name:  Robert Clapperton
                   Title: President and Chief Executive Officer

Dated: July 15 , 2002

                                       53
<PAGE>



                        Consolidated Financial Statements
                         (Expressed in Canadian dollars)

                         telum INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)

                  Years ended December 31, 2001, 2000 and 1999

                                       54
<PAGE>


kpmg

    kpmg LLP
    Chartered Accountants                         Telephone     (416) 228-7000
    Yonge Corporate Centre                        Telefax       (416) 228-7123
    4100 Yonge Street Suite 200                   www.kpmg.ca
    Toronto ON M2P 2H3
    Canada

Auditors' Report to The SHAREHOLDERS

We  have  audited  the  consolidated   balance  sheets  of  Telum  International
Corporation  (formerly ActFit.Com Inc.) as at December 31, 2001 and 2000 and the
consolidated statements of operations and deficit and cash flows for each of the
years  in the  three-year  period  ended  December  31,  2001.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

With  respect  to the  consolidated  financial  statements  for the years  ended
December 31, 2001 and 2000, we conducted our audits in accordance  with Canadian
generally  accepted  auditing  standards  and United States  generally  accepted
auditing standards.  With respect to the consolidated  financial  statements for
the year ended  December 31, 1999,  we conducted  our audit in  accordance  with
Canadian generally accepted auditing standards.  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.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2001
and 2000 and the  results of its  operations  and its cash flows for each of the
years in the  three-year  period  ended  December  31, 2001 in  accordance  with
Canadian generally accepted accounting principles.

[GRAPHIC OMITTED]
/s/ KPMG LLP
------------
    KPMG LLP
    Chartered Accountants

Toronto, Canada
July 12, 2002

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA - U.S. REPORTING DIFFERENCE
In the United States,  reporting  standards for auditors require the addition of
an  explanatory   paragraph  when  the  financial  statements  are  affected  by
conditions and events that cast  substantial  doubt on the Company's  ability to
continue as a going concern,  such as those described in note 1 to the financial
statements.  Our report to the shareholders dated July 12, 2002, is expressed in
accordance with Canadian reporting  standards which do not permit a reference to
such events and  conditions  in the auditors'  report when these are  adequately
disclosed in the financial statements.

[GRAPHIC OMITTED]
/s/ KPMG LLP
------------
    KPMG LLP
    Chartered Accountants

Toronto, Canada
July 12, 2002


                                       F-1
<PAGE>



telum international corporation
(FORMERLY ACTFIT.COM INC.)

Consolidated Balance Sheets
(Expressed in Canadian dollars)

December 31, 2001 and 2000

                                                    2000           2001
                                                ------------    ------------

Assets

Current assets:
     Cash                                       $     48,955    $       --
     Accounts receivable                              19,540          28,454
     Advance receivable                                 --            41,639
     Prepaid expenses and sundry assets                5,473             651
                                                ------------    ------------
                                                      70,744          73,968

Fixed assets (note 3)                                 26,237          76,201

Goodwill (note 4)                                       --           260,584
                                                ------------    ------------

                                                $    407,529    $    100,205
                                                ============    ============

Liabilities and Shareholders' Deficiency

Current liabilities:
     Bank indebtedness                          $       --      $      8,542
     Accounts payable and accrued liabilities      1,539,719         831,933
     Unpaid taxes (note 13)                          335,390         348,151
     Loans payable (note 6)                          603,119         233,001
                                                ------------    ------------
                                                   1,421,627       2,478,228

Shareholders' deficiency:
     Capital stock (note 7)                       11,981,146      11,911,868
     Conversion options (note 6)                      41,350            --
     Shares to be issued (note 8)                    456,223            --
     Deficit                                     (14,856,742)    (12,925,966)
                                                ------------    ------------
                                                  (1,014,098)     (2,378,023)

Going concern (note 1)
Commitments and contingencies (note 13)

                                                $    407,529    $    100,205
                                                ============    ============

          See accompanying notes to consolidated financial statements.

On behalf of the Board:

                                           Director
-----------------------------------------

                                           Director
-----------------------------------------

                                      F-2
<PAGE>

<TABLE>
<CAPTION>

TELUM INTERNATIONAL CORPORATION
(FORMERLY ACTFIT.COM INC.)

Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)

Years ended December 31, 2001, 2000 and 1999

                                              1999           2001             2000
                                          ------------    ------------    ------------

<S>                                       <C>             <C>             <C>
Revenue                                   $     66,743    $    149,378    $    290,730

Expenses:
     General and administrative                692,579       1,525,606       2,199,907
     Corporate development (note 14)            99,766       1,711,094         138,760
     Research and development                  282,114         262,135            --
     Sales and marketing                       494,058         458,738       1,099,595
     Amortization                              194,616         164,540         177,634
     Interest                                   41,478          28,220          70,602
     Product costs                              60,148          14,785          12,694
                                          ------------    ------------    ------------
                                             3,699,192       1,864,759       4,165,118
                                          ------------    ------------    ------------

Loss before the undernoted items            (1,798,016)     (4,015,740)     (3,408,462)

Write-off of deferred development costs           --              --           418,879
Write-off of goodwill                          132,760            --            93,461
Write-off of Active Trainer (note 9)              --           999,990            --
Write-down of fixed assets                        --           335,140            --
                                          ------------    ------------    ------------
                                               512,340         132,760       1,335,130
                                          ------------    ------------    ------------

Loss for the year                           (1,930,776)     (5,350,870)     (3,920,802)

Deficit, beginning of year                 (12,925,966)     (7,575,096)     (3,654,294)
                                          ------------    ------------    ------------
Deficit, end of year                      $(14,856,742)   $(12,925,966)   $ (7,575,096)
                                          ============    ============    ============


Basic and diluted loss per
   common share (note 15)                 $      (0.05)   $      (0.19)   $      (0.20)
                                          ============    ============    ============

Weighted average number
   of common shares outstanding
   used in the calculation of basic
   and diluted loss per common share        36,504,986      28,606,483      19,668,993
                                          ============    ============    ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

TELUM INTERNATIONAL CORPORATION
(FORMERLY ACTFIT.COM INC.)

Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)

Years ended December 31, 2001, 2000 and 1999

                                                         1999          2001           2000
                                                     -----------    -----------    -----------
Cash flows from (used in) operating activities:

<S>                                                  <C>            <C>            <C>
     Loss for the year                               $(1,930,776)   $(5,350,870)   $(3,920,802)
     Items not involving cash:
         Amortization of fixed assets                     64,324        164,540        177,634
         Write-down of fixed assets                         --          335,140           --
         Amortization of goodwill                        130,292           --             --
         Write-off of deferred development costs            --             --          418,879
         Write-off of goodwill                           132,760           --           93,461
         Write-off of Active Trainer                        --          999,990           --
         Stock options issued for consulting
           services                                       39,250        912,083           --
         Capital stock issued for services                  --          645,229        389,695
         Other                                            (1,663)          --             --
     Change in non-cash operating
       working capital (note 11)                         778,284        264,014        708,109
                                                     -----------    -----------    -----------
                                                      (2,133,024)      (787,529)    (2,029,874)

Cash flows from (used in) financing activities:

     Decrease in long-term debt                          (27,049)       (71,105)      (237,612)
     Issuance of notes payable                           234,480         55,000        311,935
     Decrease in loans payable                           (15,000)       (35,486)      (546,796)
     Issuance of capital stock, net of issue costs          --        2,113,729      2,863,969
     Shares to be issued                                 456,223           --             --
     Issuance of convertible promissory notes            213,200           --             --
                                                     -----------    -----------    -----------
                                                       2,391,496        861,854      2,062,138

Cash flows used in investing activities:

     Acquisition of Clubsite                                --          (17,000)          --
     Purchase of fixed assets                            (16,828)       (66,405)      (136,142)
                                                     -----------    -----------    -----------
                                                         (16,828)       (83,405)      (136,142)
                                                     -----------    -----------    -----------

Increase (decrease) in cash                               57,497        (51,141)       122,330

Cash (bank indebtedness), beginning of year               (8,542)        42,599        (79,731)
                                                     -----------    -----------    -----------
Cash (bank indebtedness), end of year                $    48,955    $    (8,542)   $    42,599
                                                     ===========    ===========    ===========
</TABLE>


Supplemental cash flow information (note 11)


          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

Telum International  Corporation  (formerly  ActFit.Com Inc.) (the "Company") is
incorporated under the provisions of the Ontario Business  Corporations Act. The
Company is a developer and distributor of Internet based  interactive  broadcast
and communications technologies that allow a wide range of industries to realize
the potential of the internet as a marketing and educational medium.

These  financial  statements are stated in Canadian  dollars except as otherwise
noted.  They have been prepared in accordance with Canadian  generally  accepted
accounting principles.

1.       Going concern:

       These  consolidated  financial  statements  have been prepared on a going
       concern  basis,  which  assumes the Company will continue in operation in
       the  foreseeable  future  and be  able  to  realize  assets  and  satisfy
       liabilities  in its normal  course of business.  Certain  conditions  and
       events,  as disclosed  below,  exist that cast  substantial  doubt on the
       Company's ability to continue as a going concern.

       The  Company's  primary  business  is the  sale  and  distribution  of an
       Internet based  interactive  broadcast  technology that is marketed under
       the name  Mediapage.  The Company has licensed  for resale,  on a royalty
       free basis,  the  Mediapage  technology  from Mr.  Mark  Vange,  who is a
       director of the Company.  The current license term expires on October 25,
       2002. Under the terms of the license  agreement,  the Company has assumed
       the costs to continue to fund the ongoing  development  and operations of
       the  Mediapage  product  and  services.  Under the  terms of the  license
       agreement,  the  Company  and Mr.  Mark Vange have  agreed that they will
       negotiate an agreement in good faith, to sell the rights to the Mediapage
       technology  to the  Company for a  combination  of cash and shares of the
       Company.  There is no assurance that the Company will be able to complete
       the purchase of the rights to the Mediapage  technology  nor is there any
       assurance  that the Company  will be able to extend the  current  license
       agreement  beyond  October  25,  2002 if the  technology  purchase is not
       completed prior to October 25, 2002.

                                      F-5
<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

1.       Going concern (continued):

       The  Company  has  a  working   capital   deficiency  of  $2,404,260,   a
       shareholders'  deficiency  of  $2,378,023  and has  incurred  significant
       losses in recent  years.  The Company has  instituted  cost  preservation
       measures until further financing can be arranged. These cost preservation
       measures   include,   among  other  things,   non-remittance  of  payroll
       withholding  taxes,  suspension  of  employee  benefits  from March 2001,
       cessation  of  business  and  directors'   liability  insurance  and  the
       non-payment  of creditors  (note 13(c)).  The Company  failed to file its
       2001 audited  financial  statements with the regulatory  authorities on a
       timely  basis  which,  on May 22,  2002,  resulted in a cease trade order
       being issued by the Ontario Securities Commission.

       During 2001, the Company has raised additional funds through the issuance
       of shares and debt (note 6) from  various  individuals  in the  aggregate
       amount of $903,903 in order to continue operations.

       Continued  operations  depend  upon the  Company's  ability  to  generate
       revenues and attain profitable operations and obtain sufficient cash from
       external  financing to meet the Company's past due liabilities and future
       liabilities  as  they  become  due.  The  Company  is  presently  seeking
       additional financing to fund future operations and to reduce its existing
       working  capital  deficiency.  There can be no assurance that the Company
       will be successful in obtaining  additional  financing and that these and
       other  strategies will be sufficient to permit the Company to continue as
       a going concern.

       Should the Company be unable to become  profitable and secure  additional
       financing,  the application of the going concern  principle for financial
       statement  reporting  purposes  may  no  longer  be  appropriate.   These
       financial  statements  do not  include  any  adjustments  related  to the
       recoverability  and  classification  of  recorded  asset  amounts  or the
       amounts and  classification  of liabilities  that may be necessary should
       the Company be unable to continue as a going concern.

2.       Significant accounting policies:

       (a)        Principles of consolidation:


           The results of  operations  for  acquisitions  are  included in these
           consolidated  financial  statements  from  the  date of  acquisition.
           Intercompany    transactions   and   balances   are   eliminated   on
           consolidation.

                                      F-6
<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

2.       Significant accounting policies (continued):

       (b)        Fixed assets:


           Fixed  assets  are  stated  at cost  less  accumulated  amortization.
           Amortization  is provided for over the estimated  useful lives of the
           assets using the following bases and annual rates:

-------------------------------------------------------------------------------
           Asset                            Basis                    Rate
-------------------------------------------------------------------------------

           Furniture and equipment          Declining balance         20%
           Computer hardware                Declining balance         30%
           Computer software                Straight line            100%

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


           The Company regularly reviews the carrying values of its fixed assets
           by  comparing  the  carrying  amount  of the  asset  to the  expected
           undiscounted  future cash flows to be generated by the asset.  If the
           carrying  value  exceeds  the  undiscounted   future  cash  flows,  a
           write-down  is charged to the  consolidated  statements of operations
           and deficit for the excess.

       (c)        Research and development costs:


           Costs  related to research,  design and  development  of products are
           charged to research and development expenses as incurred. Development
           costs  are  capitalized  beginning  when  a  product's  technological
           feasibility  has  been  established,   which  generally  occurs  upon
           completion of a working model, and ending when a product is available
           for general release to customers.  Development costs are written down
           to their fair value when declines in value are considered to be other
           than temporary in nature based upon expected future cash flows.

       (d)        Goodwill:


           Goodwill  represents  the excess of the purchase  price over the fair
           market  value  of  net  assets  acquired,   and  is  amortized  on  a
           straight-line  basis  over its  expected  useful  life which has been
           assessed as two years.  On an ongoing basis,  management  reviews the
           valuation and amortization of goodwill, taking into consideration any
           events and  circumstances  which might have  impaired the fair value.
           Goodwill  is written  down to fair value when  declines  in value are
           considered  to be other than  temporary in nature based upon expected
           future benefits.

                                      F-7
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials


2.       Significant accounting policies (continued):

       (e)        Income taxes:


           The Company  provides for income taxes under the asset and  liability
           method.  Under the asset and liability method,  future tax assets and
           liabilities   are   recognized   for  the  future  tax   consequences
           attributable to differences  between the financial statement carrying
           value of existing  assets and  liabilities  and their  respective tax
           basis and  operating  loss and tax credit  carryforwards.  Future tax
           assets and  liabilities are measured using 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 year that includes the enactment date. To
           the  extent  that the  recoverability  of  future  tax  assets is not
           considered  to be more  likely  than not, a  valuation  allowance  is
           provided.

       (f)        Revenue recognition:


           The Company  typically enters into agreements with customers  whereby
           they license  their  technology to the customer and agree to host the
           Mediapage  service.  The  Company  may or may not  obtain an  upfront
           payment for the  licensing  of the  Mediapage  software.  The Company
           typically  charges a monthly  minimum fee for a preset number of user
           minutes for hosting the  Mediapage  service.  Any usage of minutes in
           excess of the  preset  number  are  charged  at a preset  amount  per
           minute.  The Company also provides  professional  services  including
           installation, training and design work, which are typically billed on
           an hourly basis.

           The Company earns revenue from upfront software license fees; minimum
           services fees on a monthly basis (hereafter  referred to as Recurring
           Fees); fees charged for the use of the Mediapage service in excess of
           the preset number of minutes  included in the Recurring  Fees charge;
           and  consulting   service.   Consulting   service   includes  design,
           installation, training and other services.

           Upfront   software   licence  fees  are   recognized   monthly  on  a
           straight-line  basis over the initial  term of the related  Mediapage
           service  contract.  If there is no service contract term, the Company
           recognizes the software license fee monthly on a straight-line  basis
           over the estimated period of future service not to exceed two years.
                                      F-8

<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

2.       Significant accounting policies (continued):

           Recurring  Fees are  recorded as revenue on a pro rata basis over the
           applicable period for which the fee relates. Fees charged for the use
           of the  Mediapage  service in excess of the preset  number of minutes
           included  in the  Recurring  Fees  are  recorded  as  revenue  as the
           services are provided.  Consulting  services are not essential to the
           functionality  of the  software  and are  recorded  as revenue as the
           services are performed on a percentage of completion basis.

           The Company defers the  recognition of any revenue until such time as
           the  product has been  shipped  and the  customer  has  accepted  the
           product.   Product   acceptance   is  typically   upon  delivery  and
           installation,   in   instances   where  the  Company   performs   the
           installation or upon the lapse of the specified  acceptance period in
           the contract, which is typically 30 days.

       (g)        Foreign currency translation:


           Monetary assets and liabilities denominated in foreign currencies are
           translated into Canadian  dollars at the prevailing rates of exchange
           at the balance sheet date. Revenue and expenses are translated at the
           exchange  rates  prevailing  on the  transaction  date.  Realized and
           unrealized exchange gains and losses are included in earnings.

       (h)        Use of estimates:


           The  preparation of financial  statements in conformity with Canadian
           generally accepted accounting  principles requires management to make
           estimates and assumptions  that affect the reported amounts of assets
           and  liabilities   and  the  disclosure  of  contingent   assets  and
           liabilities at the date of the financial  statements and the reported
           amounts  of  revenue  and  expenses  during  the year.  Specifically,
           management  makes estimates of the  recoverability  of its intangible
           assets based on the  underlying  value of the technology and economic
           prospect of the tangible  product.  Actual  results could differ from
           those estimates.
                                      F-9

<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

2.       Significant accounting policies (continued):

       (i)        Stock-based compensation plan:


           The Company has a stock-based  compensation  plan, which is described
           in note 7. No  compensation  expense is recognized for this plan when
           stock  options are issued to  employees.  Any  consideration  paid by
           employees  on  exercise  of stock  options  or  purchase  of stock is
           credited to share capital.  If stock or stock options are repurchased
           from  employees,  the  excess  of the  consideration  paid  over  the
           carrying amount of the stock or stock option  cancelled is charged to
           retained earnings.

           The Company  issues  stock  options to  consultants  and  advisors in
           return for services received. The Company records the intrinsic value
           of the  stock  options  on the  date of grant  as the  value  for the
           options issued and services received.  The intrinsic value represents
           the excess between the market value of the Company's  stock as at the
           grant date and exercise  price of the stock option  multiplied by the
           number of options granted.  As all options granted to consultants and
           advisors are immediately  vested,  any intrinsic value  determined is
           expensed as at the grant date.

       (j)        Comparative figures:


           Certain  comparative  figures have been  reclassified to conform with
           the financial statement presentation adopted in the current year.

       (k)        Recent accounting pronouncements:


           (i)  In August 2001, the Accounting  Standards  Board of The Canadian
                Institute  of Chartered  Accountants  ("CICA")  issued  Handbook
                Section 1581, Business Combinations,  and Section 3062, Goodwill
                and Other  Intangible  Assets.  Section 1581  requires  that the
                purchase   method  of   accounting  be  used  for  all  business
                combinations  initiated  on or after July 1, 2001.  Section 1581
                also specifies criteria intangible assets acquired in a purchase
                method  business  combination  must  meet to be  recognized  and
                reported  apart from  goodwill.  Section  3062 will require that
                goodwill and intangible  assets with indefinite  useful lives no
                longer be  amortized,  but instead be tested for  impairment  at
                least  annually in  accordance  with the  provisions  of Section
                3062. Section 3062 will also require that intangible assets with
                estimable  useful  lives  be  amortized  over  their  respective
                estimated useful lives to their estimated  residual values,  and
                be reviewed for impairment.

                                      F-10
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

2.       Significant accounting policies (continued):

                The  Company has adopted  the  provisions  of Section  1581 with
                regard to business  combinations  initiated  on or after July 1,
                2001,  and will adopt  Section 3062  effective  January 1, 2002.
                Effective January 1, 2002, Section 1581 will require the Company
                to evaluate its  existing  intangible  assets and goodwill  that
                were acquired in a prior purchase business  combination,  and to
                make any  necessary  reclassifications  in order to conform with
                the new  criteria  in Section  1581 for  recognition  apart from
                goodwill.  Under Section  3062,  the Company will be required to
                reassess the useful lives and residual  values of all intangible
                assets  acquired,  and make any  necessary  amortization  period
                adjustments  by the  end  of  the  first  interim  period  after
                adoption.  In  addition,  to the extent an  intangible  asset is
                identified as having an indefinite useful life, the Company will
                be  required  to test the  intangible  asset for  impairment  in
                accordance  with the provisions of Section 3062 within the first
                interim  period.  Any impairment loss will be measured as of the
                date of adoption and  recognized as the  cumulative  effect of a
                change in accounting  principle in the first interim period.  As
                the  Company  has fully  written  down all  previously  acquired
                intangible assets and goodwill,  there will be no impact related
                to the adoption of these requirements.

                As a result of the adoption of these Sections,  the Company will
                cease to amortize future  acquired  goodwill and will instead be
                required to test any future acquired  goodwill for impairment in
                accordance  with the provisions of Section 3062 within the first
                interim  period.  The Company does not believe that the adoption
                of these  standards will have a material impact on the Company's
                financial  condition  or  results of  operations  other than the
                impact of not amortizing future acquired goodwill.

           (ii) In December  2001, the  Accounting  Standards  Board of the CICA
                issued Handbook Section 3870. Section 3870 establishes standards
                for the recognition,  measurement, and disclosure of stock-based
                compensation and other stock-based payments made in exchange for
                goods and services provided by employees and  non-employees.  It
                applies to transactions  in which shares of common stock,  stock
                options or other equity  instruments  are granted or liabilities
                incurred  based on the  price of  common  stock or other  equity
                instruments.

                                      F-11
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

2.       Significant accounting policies (continued):

                Section  3870 sets out a fair value based  method of  accounting
                that  is  required  for  certain,   but  not  all,   stock-based
                transactions.  Section 3870 must be applied to: all  stock-based
                payments  to  non-employees,  and to  employee  awards  that are
                direct  awards of stock,  that  call for  settlement  in cash or
                other  assets,  or are stock  appreciation  rights that call for
                settlement by the issuance of equity instruments.  However,  the
                new standard permits the Company to continue its existing policy
                that no  compensation  cost is  recorded  on the  grant of stock
                options to  employees.  Consideration  paid by  employees on the
                exercise of stock options is recorded as share capital.

                Section 3870, however,  does require additional  disclosures for
                options granted to employees, including disclosures of pro forma
                earnings  and pro forma  earnings per share as if the fair value
                based  accounting  method had been used to account for  employee
                stock options.

                The  Company  will  adopt  Section  3870  for  its  fiscal  year
                beginning  January  1,  2002.  As a  majority  of the  Company's
                employees  became  consultants in 2001, the Company  anticipates
                that the expense  related to stock options  issued in the future
                will increase.  The Company has not yet assessed the impact that
                the  adoption  of  this  standard  will  have  on the  Company's
                financial condition or future results of operations.

3.       Fixed assets:

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

                             Net book                             Accumulated
 2001                          Cost          amortization            value
------------------------------------------------------------------------------

 Furniture and equipment  $    158,323          $    145,241      $    13,082
 Computer hardware             494,020               480,865           13,155
 Computer software              72,004                72,004             --

------------------------------------------------------------------------------
                          $    724,347          $    698,110      $     26,237
------------------------------------------------------------------------------


                                      F-12

<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

3.       Fixed assets (continued):

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

                               Net book                           Accumulated
 2000                             Cost          amortization          value
------------------------------------------------------------------------------

 Furniture and equipment  $    158,323          $    108,122    $    50,201
 Computer hardware             479,661               453,661         26,000
 Computer software              72,004                72,004           --

------------------------------------------------------------------------------
                          $    709,988          $    633,787    $    76,201
------------------------------------------------------------------------------


       During the year ended December 31, 2000,  the Company  vacated its leased
       premise on Charlotte Street,  Toronto,  Canada. As a result,  the Company
       has  written  off the net book value of the  leasehold  improvements.  In
       addition,  during  the move in fiscal  2000,  the  Company  assessed  the
       carrying value of the remaining  assets and recorded a write-down.  Total
       write-down  of fixed assets in the year ended  December 31, 2000 amounted
       to $335,140. The leasehold improvements,  which have been abandoned,  and
       other fixed assets have been specifically pledged as security for certain
       loans payable (note 6).

4.       Acquisition:

       Clubsite Internet Network Inc.:


       On December 28, 2000, the Company acquired all of the outstanding  shares
       of Clubsite Internet Network Inc. ("Clubsite"),  a privately held company
       incorporated  in  Ontario in the  business  of  providing  template-based
       websites to the fitness club industry. The transaction has been accounted
       for by the purchase  method,  with the results of operations  included in
       these financial  statements  from the date of  acquisition.  The purchase
       price  of  approximately  $244,000  was  satisfied  by  the  issuance  of
       2,000,000  common  shares of the Company.  In  addition,  the Company has
       committed  to the  issuance  of a  further  2,000,000  common  shares  in
       increments  of 500,000  contingent  upon the Company  meeting  cumulative
       consolidated revenue targets of $2,000,000,  $5,000,000,  $10,000,000 and
       $20,000,000 over the next five years. The contingent  considerations will
       be recorded as  additional  purchase  price upon the  achievement  of the
       contingent  events.  Shares  issued  in  connection  with the  contingent
       consideration  will be  valued  at the  market  rate  when  issuable.  In
       addition,   the  Company   incurred  $17,000  in  costs  related  to  the
       acquisition.   As  the  Company   assumed  no   identifiable   assets  or
       liabilities, the entire purchase price has been allocated to goodwill and
       is being amortized over two years. Goodwill is comprised of workforce and
       non-contractual customer relationships.  Amortization expense of $130,282
       and nil has been recorded in the years ended  December 31, 2001 and 2000,
       respectively.

                                      F-13
<PAGE>


                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

4.       Acquisition (continued):

       During the fourth quarter of 2001, the Company  performed a review of the
       carrying  value of its goodwill  related to the  acquisition of Clubsite.
       During the course of the review,  the Company considered the future value
       of the goodwill and  non-contractual  relationships in light of the shift
       in the focus of the  Company's  business  and the  potential  future cash
       flows from the non-contractual customer relationships. As a result of the
       Company's review,  the Company  determined that the carrying value of the
       goodwill was not recoverable and,  accordingly,  the Company recorded, in
       the fourth  quarter of 2001, a $130,302  write-down  of goodwill.  As the
       Clubsite  business  has been wound down,  the Company  does not expect to
       make  any   additional   payments  under  the  terms  of  the  contingent
       consideration described above.

5.       Deferred development costs:

       During  1999,  management  discontinued  the  development  of its various
       interactive  CD-Rom products and,  accordingly,  wrote off the balance of
       the deferred development costs.
                                      F-14

<PAGE>


<TABLE>
<CAPTION>

6.       Loans payable:

-----------------------------------------------------------------------------------------------------------------------------
                                                                                   Reference      2001                 2000
-----------------------------------------------------------------------------------------------------------------------------

<S>                                                                                  <C>                         <C>
       Bank loan:
           Demand loan,  bearing  interest  at prime  plus  2.5%,  secured  by a
              general security agreement, repayable in blended interest
              and principal payments of $4,080                                       (a)    $     88,583         $     98,491
       Equipment loans:
           Equipment loan,  bearing interest at 13.6% per annum,  secured by the
              equipment,  repayable in blended  monthly  principal  and interest
              payments of $2,089, due on
              demand                                                                 (b)          14,567               14,567
           Equipment loan, bearing interest at 8.625%
              per annum, secured by the equipment,
              repayable in blended monthly principal
              and interest payments of $4,239, due on
              demand                                                                 (b)          17,802               26,474
           Equipment loan, bearing interest at 14.8%
              per annum, secured by the equipment,
              repayable in blended monthly principal
              and interest payments of $1,639, due on
              demand                                                                                --                  8,469
       Shareholder notes payable:
           Note payable, non-interest bearing and unsecured, $15,000 due May 24,
              2001  with  the   remainder   being  paid  in  six  equal  monthly
              instalments commencing
              November 24, 2001                                                      (c)          40,000               55,000
           Note payable, bearing interest at 4.6%
              per annum, due January 15, 2002 and
              secured by a general security agreement                                (d)          77,480                 --
           Loan payable                                                              (e)         157,000                 --
       Notes payable:
           Note payable, non-interest bearing, due
              on demand and unsecured                                                             30,000               30,000
       Convertible promissory notes                                                  (f)         177,687                 --

-----------------------------------------------------------------------------------------------------------------------------
                                                                                            $    603,119         $    233,001
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                      F-15
<PAGE>


                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

6.       Loans payable (continued):

       (a) The  Company  is in default on the bank loan in the amount of $88,583
           and, on May 4, 2001,  the bank  notified the Company of its intention
           to  enforce  security.  The assets  securing  the bank loan have been
           abandoned  (note 3). The Company has not made the  required  payments
           during the year.

       (b) The Company is in default of all of its equipment loans and, on April
           16,  2001,  the lender of the secured  equipment  loan with a balance
           payable of $14,567  notified the Company of its intention to commence
           litigation proceedings against the Company.

       (c) The Company has not made the  required  payments to the holder of the
           shareholder note payable due to the current lack of funds.


       (d) The  Company  was  unable to repay the  secured  note  payable in the
           principal amount of $77,480 on the January 15, 2002 due date.

       (e) On November 15, 2001,  the Company agreed to issue  2,000,000  common
           shares  for gross  proceeds  of U.S.  $100,000  (Cdn  $157,000)  to a
           shareholder. The Company received the U.S. $100,000 prior to December
           31, 2001,  however  they had not formally  issued the shares prior to
           year end. In connection  with this issuance,  the Company granted the
           shareholder a put option that would require the Company to repurchase
           up to 1,600,000  common shares for U.S.  $100,000 if exercised by the
           shareholder at its sole  discretion  prior to January 15, 2002. As at
           December 31, 2001,  the Canadian  dollar  equivalent  of the proceeds
           received  amounting to $157,000 has been included as loans payable on
           the balance sheet since the shareholder has the right to receive cash
           for the instrument issued.

                                      F-16
<PAGE>


                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

6.       Loans payable (continued):

           On  January  4,  2002,  the  shareholder  exercised  the  put  option
           requiring the Company to repurchase  1,520,000 common shares for U.S.
           $95,000.  The  Company  settled  the  transaction  by  issuing a U.S.
           $95,000  promissory  note due on August 15, 2002. The promissory note
           is unsecured, bears interest at 10% per annum payable on the 15th day
           of each month. The promissory note carries a conversion  privilege at
           the option of the holder to convert all or a specified portion of the
           principal  amount and/or the accrued  interest on the promissory note
           on or before  the due date at a  conversion  price of U.S.  $0.05 per
           common  share.  Subsequent  to year end, the Company  issued  480,000
           common shares as required under the share subscription  agreement and
           issued an additional  20,000 common shares as a premium.  As a result
           of this transaction,  the Company  effectively  issued 500,000 common
           shares valued at U.S. $37,500 in return for U.S.  $5,000.  During the
           first quarter of 2002,  the Company has recorded this  transaction as
           an issuance of 500,000 common shares in the amount of U.S. $37,500, a
           reduction in loan payable of U.S.  $5,000 and a financing fee of U.S.
           $32,500.

           The Company has not been able to pay the monthly interest payments on
           the U.S.  $95,000 loan payable.  The shareholder has agreed to extend
           the due date for the U.S. $95,000 promissory note to October 15, 2002
           if interest  payments on this note are kept current.  The Company has
           agreed  to  issue  200,000  common  shares  to  the   shareholder  in
           consideration  of the shareholder  agreeing to amend the terms of the
           promissory note. The fair value of the common shares,  at the date of
           grant, will be expensed as a financing charge in fiscal 2002.

       (f)

During 2001, the Company issued four unsecured convertible  promissory notes, of
which three were  denominated  in U.S.  dollars for gross proceeds of US $80,000
(Cdn.  $123,200) and one denominated in Canadian  dollars for $90,000 having the
following terms:


                                                     Canadian    Interest
                                Amount in             dollar     rate per
  Due date                    U.S. dollars          equivalent     annum
--------------------------------------------------------------------------

  May 31, 2002 (i)             $    50,000        $     76,500      6.0%
  June 15, 2002 (i)                 10,000              15,300      4.6%
  December 20, 2002 (i)             20,000              31,400      4.6%
  December 31, 2002 (ii)                 -              90,000      8.0%

--------------------------------------------------------------------------
                               $     80,000       $    213,200
--------------------------------------------------------------------------

                                      F-17

<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

6.       Loans payable (continued):

           (i)  These notes and any unpaid interest are convertible, in whole or
                in part,  at the option of the  holders  into Units on or before
                the due dates at a conversion price of U.S. $0.05 per Unit, with
                a Unit  consisting  of one  common  share and one  common  share
                purchase  warrant.  Each common share purchase  warrant entitles
                the holder to purchase one common share at an exercise  price of
                U.S. $0.05 per common share and expires within 2 years from date
                of issue.

           (ii) This note and any unpaid interest is convertible, in whole or in
                part,  at the option of the  holder  into Units on or before the
                due date at a  conversion  price of $0.10 per Unit,  with a Unit
                consisting  of one  common  share  and  one  half  common  share
                purchase  warrant.  Each whole  common  share  purchase  warrant
                entitles  the holder to purchase one common share at an exercise
                price of $0.10 per common share and expires  within 2 years from
                date of issue.

                The Company has valued the  conversion  options as the intrinsic
                value of the  conversion  feature  at the dates  the  promissory
                notes were entered into.  The  intrinsic  value  represents  the
                difference  between  the fair value of the shares  traded on the
                NASDAQ OTC on the date the  promissory  notes were  entered into
                and the  conversion  price  multiplied by the maximum  potential
                number  of shares  that may be issued if the debt is  converted.
                The fair value of the conversion option in the amount of $41,350
                represents the value ascribed to the holders'  option to convert
                the financial  instrument to common shares and has been included
                in   shareholders'   equity  as  the  equity  component  of  the
                convertible  instrument.   The  balance  of  $171,850  has  been
                recorded  as a  liability  and has been  included in the balance
                sheet as loans payable.  This liability is being accreted to the
                face value of the convertible  debt over the period to maturity,
                and up to  December  31,  2001,  an amount  of  $5,837  has been
                accrued, bringing the liability to $177,687.

                                      F-18
<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

7.       Capital stock:

       Authorized:
           2,000,000 preference shares
           Unlimited common shares
<TABLE>
<CAPTION>
       Issued common shares:

------------------------------------------------------------------------------------------------------------------
                                                                                 Number
                                                                                of shares               Amount
------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>             <C>
       Balance, December 31, 1999                                              22,769,821      $     6,817,633
       Issued for exercise of Series E share purchase warrants                    560,000              420,000
       Issued for exercise of Series C share purchase warrants                    200,000              100,000
       Issued for exercise of stock options                                     1,527,763              480,103
       Issued to consultants for services rendered                              1,482,220              645,229
       Issued for conversion of debt                                            7,651,518            2,293,236
       Issued as consideration for acquisition of Clubsite (note 4)             2,000,000              243,584
       Stock options issued to consultants                                           --                912,083
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
       Balance, December 31, 2000                                              36,191,322           11,911,868
       Issued to consultants for services rendered                                375,275               37,528
       Shares cancelled                                                           (25,000)              (7,500)
       Stock options issued to consultant                                            --                 39,250

------------------------------------------------------------------------------------------------------------------
       Balance, December 31, 2001                                              36,541,597      $    11,981,146
------------------------------------------------------------------------------------------------------------------
</TABLE>


       There are no issued preference shares.

       During the years, the following occurred:

       2001

       (a) During  the  year,  the  Company  issued  375,275  common  shares  as
           settlement of $37,528 for legal services.


       (b) During the year,  the  Company  cancelled  and the  holder  agreed to
           return 25,000 common shares originally issued to a consultant in 2000
           having a value of $7,500.

                                      F-19
<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

7.       Capital stock (continued):

       2000

       (c) The Company issued 45,846 common shares for legal  services  rendered
           in the amount of $18,707.


       (d) The Company issued 267,533 common shares in the settlement of $82,260
           for corporate development and public relations consulting services.

       (e) The Company issued  1,168,841 common shares as settlement of $544,262
           for consulting services.


       (f) The Company  issued  3,663,333  common  shares at an average price of
           $0.274  per share in  settlement  for a  liability  that arose on the
           acquisition of Active Trainer (note 9).

       (g) The Company issued  3,988,185  common shares on conversion of debt of
           $1,293,236.


       Stock option plan:


       The Company has a stock option plan (the "Plan") for directors, officers,
       employees,  consultants and advisors of the Company, its subsidiaries and
       affiliates.  The purpose of the Plan is to attract,  retain and  motivate
       management  and staff by  providing  them with the  opportunity,  through
       share  options,  to acquire a proprietary  interest in the Company and to
       benefit  from its  growth.  The Company has  reserved  18,000,000  common
       shares for issuance under the Plan.

       No single  individual  may hold options in respect of more than 5% of the
       outstanding  common shares unless approved by the shareholders.  In 1999,
       the shareholders granted approval to an officer of the Company to receive
       the grant of options in excess of the 5% of the shares outstanding. Stock
       options  for  employees  are  exercisable  on  the  basis  of  continuing
       employment. Options given in a year are generally exercisable immediately
       or 25% for every three months of employment from the date granted.

       During  2001,  the Company  issued  1,303,900  (2000 -  7,258,666)  stock
       options to  consultants  and  contractors.  The Company  has  recorded an
       expense equal to the  intrinsic  value of the stock option on the date of
       grant.  The total  expense of $39,250 (2000 - $912,083) has been recorded
       in the statement of operations as a corporate  development  expense (note
       14).

                                      F-20
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

7.       Capital stock (continued):

       A summary of the stock option  transactions  for the years ended December
31, 2001 and 2000 is presented below:

-------------------------------------------------------------------------------
                                                                Weighted
                                                Share            average
                                               options       exercise price
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
       Balance, December 31, 1999             4,866,225      $    0.45
       Granted                                8,672,516           0.31
       Exercised                             (1,973,446)          0.38
       Expired or cancelled                  (1,457,262)          0.42
-------------------------------------------------------------------------------

       Balance, December 31, 2000            10,108,033           0.35
       Granted                                1,303,900           0.12
       Expired or cancelled                  (6,352,700)          0.33

-------------------------------------------------------------------------------
       Balance, December 31, 2001             5,059,233           0.36
-------------------------------------------------------------------------------


       Of the share options  outstanding,  5,059,233  (2000 -  10,108,033)  were
fully vested and exercisable.

-------------------------------------------------------------------------------
                        Weighted                                   Weighted
                         average               Options              average
 Range                 outstanding           life (years)            price
-------------------------------------------------------------------------------

 $0.10 - $0.25           2,813,900              1.53            $    0.19
 $0.26 - $0.65           1,630,000              0.42                 0.37
 $0.66 - $1.65             615,333              0.45                 1.12

-------------------------------------------------------------------------------
                                        5,059,233

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

                                      F-21
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

7.       Capital stock (continued):

       Share purchase warrants:


       The holders of the share purchase warrants entitle the holder to purchase
       one common share for each warrant held. The outstanding purchase warrants
       are as follows:
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                       Exercise
       Expiry date                                       price              2001           2000           1999
-----------------------------------------------------------------------------------------------------------------

<S>                                                     <C>              <C>            <C>            <C>
       March 31, 2002, Series A                         $ 1.00           500,000        500,000        500,000
       March 31, 2002, Series B                           1.50           200,000        200,000        200,000
       March 31, 2002, Series C                           0.50                 -              -        200,000
       June 30, 2000, Series E                            0.75                 -              -        977,500
       June 16, 2004, Series G                            0.80           572,000        572,000        572,000
       June 17, 2001, Series H                            1.10                 -        498,265        498,265
       March 13, 2003, Series J (note 8(a))               0.08           750,000              -              -
       March 13, 2003, Series K (note 8(a))               0.08           300,000              -              -
       August 29, 2002, Series L (note 8(a))              0.19            75,000              -              -

-----------------------------------------------------------------------------------------------------------------
                                                                       2,397,000      1,770,265      2,947,765
-----------------------------------------------------------------------------------------------------------------
</TABLE>


       In  addition  to the above  share  purchase  warrants,  the  Company  has
       committed to issue up to 2,050,000  additional share purchase warrants to
       the extent that the convertible  promissory  notes described in note 6(f)
       are converted to Units.

       During 1997, as part of the reverse  takeover  transaction  involving the
       Company,  the Company issued 11,033,532  common shares,  600,000 Series A
       purchase warrants,  200,000 Series B purchase warrants,  200,000 Series C
       purchase  warrants,  100,000  Series D purchase  warrants,  and 2,866,666
       Series E purchase warrants.

       The  Series  G and  Series  H share  purchase  warrants  were  issued  in
       conjunction with the private placements completed in June and July 1999.

                                      F-22
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials
<TABLE>
<CAPTION>

8.       Shares to be issued:
------------------------------------------------------------------------------------------------------------------
                                                                                Number of
                                                                                shares to
                                                                                be issued               Amount
------------------------------------------------------------------------------------------------------------------

<S>                                                                               <C>             <C>
       Cash received from private placements (a)                                  850,000         $    101,473
       For conversion of debt (b)                                                 150,000               23,250
       For conversion of debt (c)                                               2,200,000              331,500

------------------------------------------------------------------------------------------------------------------
                                                                                3,200,000         $     456,223
------------------------------------------------------------------------------------------------------------------
</TABLE>


       During the year, the Company made the following transactions:

       (a) The Company  issued  850,000 units for gross  proceeds of $101,473 by
           way of  private  placements.  The  850,000  units  consist of 850,000
           common  shares and  1,125,000  share  purchase  warrants.  Each share
           purchase  warrant can be  exercised  to acquire  one common  share at
           exercise  prices  ranging  from  U.S.  $0.05 to U.S.  $0.12 The share
           purchase  warrants  expire within 12 to 24 months of their  issuance.
           The common  shares and the share  purchase  warrants  were  issued on
           March 13, 2002.

       (b) The Company issued U.S. $15,000 in non-interest  bearing  convertible
           debt to a  director  of the  Company.  The debt is  convertible  into
           common shares at a rate of U.S.  $0.10 per share.  At the date of the
           debt issuance,  the Company's  common shares closed at U.S. $0.13 per
           share.  On November 20,  2001,  the debt was  converted  into 150,000
           common shares.  The common shares were legally  issued  subsequent to
           December 31, 2001.

       (c) The Company  issued an  aggregate  of U.S.  $220,000 in  non-interest
           bearing convertible debt to an entity related to certain shareholders
           of the Company.  The debt is convertible into common shares at a rate
           of U.S.  $0.10  per  share.  At the dates of the debt  issuance,  the
           Company's common shares closed at an average price of U.S. $0.074 per
           share.  On November 20, 2001,  the debt was converted  into 2,200,000
           common shares.  The common shares were legally  issued  subsequent to
           December 31, 2001.


       (d) In addition  to the above,  the  Company  has a  commitment  to issue
           1,200,000  common shares for $131,880 to employees and consultants in
           lieu of  salaries  payable.  At  December  31,  2001,  the  amount of
           $131,880   has  been   included  in  accounts   payable  and  accrued
           liabilities.
                                      F-23

<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

9.       Write-off of Active Trainer:

       In 1997,  the Company  sold the  ownership  rights to the Active  Trainer
       software for cash proceeds of $1,950,000 to a non-controlling shareholder
       of the Company  (the  "NCS").  The Company also entered into an exclusive
       worldwide  distributions  rights agreement with NCS to distribute  Active
       Trainer and any other derivative  products produced on the Active Trainer
       software technology.  The distribution  agreement required the Company to
       make minimum cash royalty  payments  amounting to $500,000 for the period
       from June 1997 to December 1998 and to make future royalty payments based
       on the number of CDs sold in subsequent periods.

       In 1998, the Company  defaulted on the minimum  royalty  payments and the
       unpaid  royalties  were  converted  into a loan.  The loan was secured by
       third  parties  through  the pledge of Company  shares  held by the third
       parties.  The third  parties  were  shareholders  of the Company and also
       provided  corporate  development and investor  relations  services to the
       Company (note 14).

       In 1999,  the Company  defaulted  on the loan.  NCS claimed the  security
       under the loan agreement and the loan and ownership of the Active Trainer
       software  was assumed by Cune  Management  Inc.  ("Cune").  In 1999,  the
       Company  settled  the loan  payable of $290,782  through the  issuance of
       468,124 shares.  In June 2000, the Company  reacquired the Active Trainer
       software  from Cune for  proceeds of  $1,000,000  that was settled by the
       issuance of 3,663,333 common shares of the Company at an average price of
       $0.274 per share.

       In  December  2000,  the  Company  altered its  strategic  direction  and
       discontinued  the  production  and sale of Active  Trainer  products  and
       software. As a result of this change in strategic direction,  the Company
       has written off the value of the acquired technology.

                                      F-24
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

10.      Income taxes:

       Income tax  expense  attributable  to income from  continuing  operations
       differs from the amounts  computed by applying  the combined  federal and
       provincial  income  tax rate of 41.75  percent  to  pre-tax  income  from
       continuing operations as a result of the following:
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------
                                                            2001                 2000                   1999
-------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                 <C>                  <C>
       Loss from continuing operations                $    (1,930,776)    $    (5,350,870)     $    (3,920,802)

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

       Computed expected tax                          $      (806,099)    $    (2,354,383)     $    (1,725,153)
       Increase (decrease) in income taxes
         resulting from:
           Change in the beginning of year
              balance of the valuation allowance
              for future tax assets allocated to
              income tax expense                           (1,017,254)          1,909,238            1,321,600
           Permanent differences                              179,514             445,145              403,553
           Impact of decreasing future tax
              rates on future tax assets                    1,643,839                   -                    -

-------------------------------------------------------------------------------------------------------------------------
       Income taxes                                   $             -     $             -      $             -
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


       The tax effects of temporary  differences  that give rise to  significant
       portions of the future tax assets and future tax  liabilities at December
       31, 2001, 2000 and 1999 are presented below:
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                              2001                 2000                 1999
-----------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                 <C>                  <C>
       Future tax assets:
           Non-capital loss carryforwards             $     3,738,338     $     4,686,842      $     2,968,240
           Fixed assets - differences in
              deprecation and undepreciated
              capital cost                                    210,606             279,355               88,719
-----------------------------------------------------------------------------------------------------------------
           Total gross future tax assets                    3,948,944           4,966,197            3,056,959

           Less valuation allowance                         3,948,944           4,966,197            3,056,959

-----------------------------------------------------------------------------------------------------------------
       Net future tax assets                          $             -     $             -      $             -
-----------------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-25

<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

10.      Income taxes (continued):

       At December 31, 2001, the Company and its  subsidiaries  have non-capital
       loss  carryforwards  for federal  income tax  purposes  of  approximately
       $12,411,000  which are available to offset future federal taxable income,
       if any, through 2008. The losses expire as follows:

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

       2002                                $       55,000
       2003                                       250,000
       2004                                       257,000
       2005                                     3,323,000
       2006                                     2,826,000
       2007                                     4,250,000
       2008                                     1,450,000

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


       In  assessing  the  realizability  of  deferred  tax  assets,  management
       considers whether it is more likely than not that some portion of, or all
       of,  the  deferred  tax  assets  will  not  be  realized.   The  ultimate
       realization  of deferred tax assets is dependent  upon the  generation of
       future  taxable  income  during  the  years  in  which  those   temporary
       differences  become  deductible.  Management  considers  projected future
       taxable  income,  uncertainties  related  to the  industry  in which  the
       Company operates,  and tax planning  strategies in making the assessment.
       In order to fully  utilize  the  future  tax  assets of  $4,000,000,  the
       Company  will need to generate  future  taxable  income of  approximately
       $13,000,000,   prior  to  the   expiration  of  the  net  operating  loss
       carryforwards in the years 2002 to 2008. Due to uncertainties  related to
       the industry in which the Company operates,  the tax benefit of the above
       carryforward   amounts  have  been  completely   offset  by  a  valuation
       allowance.
                                      F-26

<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

11.      Consolidated statement of cash flows:
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
                                                               2001                 2000                  1999
------------------------------------------------------------------------------------------------------------------

<S>                                                     <C>                 <C>                   <C>
       Change in non-cash operating working capital:

           Decrease in accounts receivable              $       8,914       $       45,048        $     43,395
           Decrease (increase) in advances
              receivable                                       41,639              (41,639)                  -
           Decrease in investment tax credits
              recoverable                                           -                    -             429,873
           Decrease (increase) in prepaid
              expenses and sundry assets                       (4,822)              61,862              (9,465)
           Increase in accounts payable and
              accrued liabilities                             745,314              159,524             244,306
           Increase (decrease) in unpaid taxes                (12,761)              39,219                   -

------------------------------------------------------------------------------------------------------------------
                                                        $     778,284       $      264,014        $     708,109
------------------------------------------------------------------------------------------------------------------

       Supplemental cash flow information:

           Interest paid                                $       7,187       $       24,538        $     70,602

       Supplemental disclosure of non-cash transactions:

           Issuance of stock for Clubsite

              acquisition                                           -              243,584                   -
           Shares to be issued for repayment
              of loans                                        354,750              179,610                   -
           Issuance of stock for purchase
              of Active Trainer                                     -            1,000,000                   -

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

                                     F-27
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

12.      Fair value disclosure of financial assets and financial liabilities:


       (a)        Fair values:

            The  carrying   values  of  cash,   accounts   receivable,   advance
            receivable,   bank   indebtedness,   accounts  payable  and  accrued
            liabilities and loans payable  approximate  their fair values due to
            the  relatively  short periods to maturity of these items or because
            they are receivable or payable on demand.

            The carrying value of long-term debt  approximates the fair value as
            the amounts are all due on demand due to default of payments.

       (b)        Credit risk:

            The Company does not have a significant  exposure to any  individual
customer or counterparty.

13.      Commitments and contingencies:

       (a)        Unpaid taxes:


           The Company is in arrears on its  payments  for  payroll  withholding
           taxes in the amount of  approximately  $335,390.  The Company has met
           with  Canada  Customs  and  Revenue  Agency and is in the  process of
           agreeing a payment schedule to pay the outstanding balances.

       (b)        Commitments:


           Future minimum lease payments under non-cancellable  operating leases
           for premises and equipment at December 31, 2001 are as follows:

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

           2002                          $     65,670
           2003                                65,670
           2004                                42,196

------------------------------------------------------------------------------
                                        $     173,536
------------------------------------------------------------------------------
                                      F-28

<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

13.      Commitments and contingencies (continued):

           Rent expense for the year ended December 31, 2001 was $34,570 (2000 -
           $100,312;  1999 -  $89,388).  The  Company  is also  responsible  for
           certain common area costs at its various leased premises.

       (c)        Contingencies:


           The  Company  is party to several  pending  litigations  from  unpaid
           suppliers.  The  Company  is in arrears  on its  payments  due to its
           current working capital  deficiency.  The Company is working with its
           creditors  and lenders to extend the payment terms until such time as
           the  Company  is able to  obtain  additional  financing  or  generate
           positive cash flows from operations.

           The Company has received  notice from the Labor  Commissioner  of the
           State of California of a claim by a former  employee for unpaid wages
           and  expenses in the amount of U.S.  $125,300.  The Company  believes
           that the claim is without  merit and  therefore  has not accrued this
           amount in accrued liabilities.

14.      Related party transactions:

       2001
       ----

       During the year ended December 31, 2001, the Company  received loans from
       a director and a shareholder in the aggregate amount of $310,980 (note 6)
       and has agreed to issue  150,000  common  shares to a  director  upon the
       conversion of U.S. $15,000  non-interest  bearing  convertible debt (note
       8(b)).

       During the year ended  December  31,  2001,  the Company  terminated  its
       consulting  agreements  with Cune,  RT, 655947 and HMVD and cancelled all
       stock options held by these parties.  Prior to terminating its consulting
       agreement  with  655947,   the  Company  incurred  $60,516  in  corporate
       development costs. At December 31, 2001, amounts owed to 655947, Cune and
       RT are $161,880, $56,097 and $30,000, respectively.

                                      F-29
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

14.      Related party transactions (continued):

       2000
       ----

       During the year ended December 31, 2000, the Company incurred  $1,711,094
       in  corporate  development  costs.  This  amount  includes  $912,083  for
       stock-based  compensation  costs  recorded on the  issuance of options to
       companies engaged by the Company as consultants.

       Several  of  the  companies  engaged  to  perform  corporate  development
       activities were also shareholders of the Company. None of these companies
       beneficially  control more than 5% of the  Company's  outstanding  common
       shares. The following sets out the transactions with these shareholders.

       On June 15, 2000, the Company entered into two-year consulting agreements
       with  Cune,  RT  Management   Inc.  ("RT")  and  655947  Ontario  Limited
       ("655947").  Under the terms of the agreements, Cune and RT each received
       options to acquire  1,250,000  common  shares in the  Company  and 655947
       received options to acquire 500,000 common shares.  The exercise price of
       the  options  of $0.30 per share was  issued at a  discount  of $0.14 per
       share to the  market  price on the date the  options  were  granted.  The
       Company recorded a corporate  development  expense of $420,300 related to
       the intrinsic value of the option.

       On  August  1,  2000,  the  Company  entered  into  additional   one-year
       consulting agreements with Cune, RT, Hue, Martini and Vaughan Design Inc.
       ("HMVD")  and  655947  for  the  provision  of  consulting   services  in
       connection  with the website  development  and internet  marketing of the
       Company.  Under the terms of the  agreements,  each  consultant  received
       500,000  options to acquire  common  shares in the Company.  The exercise
       price of the  options of $0.22 was  issued at a discount  of $0.15 to the
       market price on the date the options were granted. The Company recorded a
       corporate  development expense of $290,150 related to the intrinsic value
       of the option.

       During the year ended  December 31, 2000,  the Company also incurred fees
       of approximately $416,000, $193,000 and $91,000 with Cune, RT and 655947,
       respectively,  which were settled by the  issuance of common  shares at a
       25% discount to the market price and the cashless exercise of options and
       warrants.

       During  the year  ended  December  31,  2000,  the  Company  also  issued
       3,663,333  common  shares  to Cune  for the  settlement  of a  $1,000,000
       liability that arose on the acquisition of Active Trainer (note 9).

                                      F-29
<PAGE>
                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials
15.      Loss per share:

       Due to the net loss for all years presented,  all potential common shares
       outstanding  are  considered  anti-dilutive  and are  excluded  from  the
       calculation  of diluted  loss per share.  Common  shares  issuable on the
       exercise of options and warrants that could potentially dilute basic loss
       per share in the future  that were not  included  in the  computation  of
       diluted  loss per share,  because to do so would have been  anti-dilutive
       amounted to 15,206,233,  11,878,298  and  7,813,990,  for the years ended
       December 31, 2001, 2000 and 1999, respectively.

16.    Differences   between  Canadian  and  United  States  generally  accepted
       accounting principles ("GAAP"):


       These  financial   statements  have  been  prepared  in  accordance  with
       generally  accepted  accounting  principles in Canada  ("Canadian  GAAP")
       which,  in  the  case  of  these  financial  statements,  conform  in all
       significant  respects  with those in the  United  States  ("U.S.  GAAP"),
       except as follows:

       Adjustment to earnings:
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                            2001                 2000                   1999
-----------------------------------------------------------------------------------------------------------------

<S>                                                  <C>                  <C>                  <C>
       Loss for the year in accordance
         with Canadian GAAP                          $     (1,930,776)    $    (5,350,870)     $    (3,920,802)
       Compensation expense(a)                                (88,798)           (925,668)          (2,046,033)
       Deferred development
         costs(b)                                                   -                   -              418,879

-----------------------------------------------------------------------------------------------------------------
       Loss in accordance with
         U.S. GAAP                                   $     (2,019,574)    $    (6,276,538)     $    (5,547,956)
-----------------------------------------------------------------------------------------------------------------

       Basic loss per share in accordance
         with U.S. GAAP                              $         (0.06)     $         (0.22)     $         (0.28)

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

                                      F-30

<PAGE>


                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

16.    Differences   between  Canadian  and  United  States  generally  accepted
       accounting principles ("GAAP") (continued):


       There are no significant  differences  between Canadian and United States
       GAAP for assets and total  shareholders'  deficiency in each of the three
       years ended December 31, 2001.

       (a) The  Company's  Canadian  accounting  policy  is to  not  record  any
           compensation  expense for options  issued to  employees.  For options
           issued to non-employees,  the Company has chosen to measure the value
           as the intrinsic value of the options on the date of the grant.

           Under US GAAP, in accordance  with Statement of Financial  Accounting
           Standards  No. 123  ("SFAS  No.  123"),  Accounting  for  Stock-based
           Compensation,  the  Company  is  required  to  recognize  stock-based
           compensation  costs for consultants and advisors using the fair value
           market method and for employees using the intrinsic method.

           As all options issued have  immediate  vesting and are not subject to
           performance, all expenses related to employee and non-employee awards
           are expensed in the period of grant. The adjusted amounts reflect the
           intrinsic value of employee options and the incremental value between
           the   intrinsic   value  and  fair   value  of   options   issued  to
           non-employees.

       (b) Canadian GAAP permits the capitalization of product development costs
           if certain  criteria are met.  Under U.S. GAAP,  product  development
           costs are  expensed  as incurred  unless the Company has  established
           technological feasibility.

       (c)        Accounting for employee stock options:


           U.S.  GAAP  encourages  but  does not  require  companies  to  record
           compensation  cost for stock option plans at fair value.  The Company
           has  chosen  to  continue  to  account  for stock  options  using the
           intrinsic value method as permitted under SFAS No. 123. For companies
           electing  not to adopt the fair  value  measurement  for  stock-based
           compensation,  the pronouncement requires the disclosure of pro forma
           net income (loss) and net income (loss) per share  information  as if
           the Company had  accounted for its employee  stock options  issued in
           1995 and subsequent years under the fair value method.

                                      F-31
<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

16.    Differences   between  Canadian  and  United  States  generally  accepted
       accounting principles ("GAAP") (continued):


       The fair value of each  option  grant is  estimated  on the date of grant
       using the Black-Scholes  option-pricing model with the following weighted
       average assumptions by year:
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
       Assumptions                                               2001                2000                 1999
-----------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                 <C>                  <C>
       Risk-free interest rate                                     6%                  6%                   6%
       Expected life (in years)                           1 - 2 years         1 - 2 years          1 - 2 years
       Expected volatility                                       100%                100%                 100%
-----------------------------------------------------------------------------------------------------------------
</TABLE>


       Had  compensation  cost for the Plan  been  determined  based on the fair
       value at the grant dates for awards  under the Plan  consistent  with the
       method  described  in SFAS No. 123,  the  Company's  net earnings and net
       earnings  per share  would  have been  reduced  to the pro forma  amounts
       indicated below:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                             2001                 2000                   1999
-----------------------------------------------------------------------------------------------------------------

<S>                                                  <C>                  <C>                  <C>
       Net loss:
           As reported                               $     (2,019,574)    $    (6,276,538)     $    (5,547,956)
           Pro forma                                       (1,954,495)         (6,427,288)          (5,780,956)

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

       Basic loss per share:
           As reported                               $         (0.06)     $         (0.22)     $         (0.28)
           Pro forma                                           (0.06)               (0.22)               (0.29)

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


                                      F-32

<PAGE>

                        TELUM INTERNATIONAL CORPORATION
                           (FORMERLY ACTFIT.COM INC.)
                              Notes to Financials

16.    Differences   between  Canadian  and  United  States  generally  accepted
       accounting principles ("GAAP") (continued):


       (d)        Recent accounting pronouncements:


           In July 2001,  the  Financial  Accounting  Standards  Board  ("FASB")
           issued Statement of Financial  Accounting  Standard ("SFAG") No. 141,
           "Business  Combinations"  and  SFAS  No.  142,  "Goodwill  and  Other
           Intangible  Assets" which are consistent with Handbook  Section 1581,
           "Business  Combinations",  and Handbook  Section 3062,  "Goodwill and
           Other  Intangible   Assets"  (note  2(k)(ii)),   except  for  certain
           remaining  generally  accepted  accounting  principles   differences,
           including  the  accounting  for  purchased  in-process  research  and
           development.  As the Company has no goodwill or intangible  assets as
           at  December  31,  2001,  the impact of the  remaining  provision  of
           adopting  SFAS No. 141 and No. 142 has been  determined  as not to be
           significant to the Company.

           In October 2001,  the FASB issued SFAS No. 144,  "Accounting  for the
           Impairment  or Disposal of Long-Lived  Assets".  SFAS No. 144 address
           significant  issues relating to the  implementation  of SFAS No. 121,
           "Accounting   for  the  impairment  of  Long-Lived   Assets  and  for
           Long-Lived   Assets  to  be  Disposed  of",  and  develops  a  single
           accounting  method  under  which  long-lived  assets  that  are to be
           disposed  of by sale are  measured at the lower of book value or fair
           value less cost to sell. Additionally, SFAS No. 144 expands the scope
           of  discontinued  operations  to include all  components of an entity
           with operations that: (i) can be  distinguished  from the rest of the
           entity and (ii) will be eliminated from the ongoing operations of the
           entity in a  disposal  transactions.  SFAS No. 144 is  effective  for
           financial statements issued for fiscal years beginning after December
           15, 2001,  and its provisions  are to be applied  prospectively.  The
           Company  does not believe that the adoption of SFAS No. 144 will have
           a  significant  effect  on its  financial  position  and  results  of
           operations for U.S. GAAP purposes.

                                      F-33