U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A
                                (Amendment No. 2)

(Mark One)
|X|  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934

For the fiscal year ended: November 30, 2001
                           -----------------

|_|  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

For the transition period from ________________ to ______________.

Commission file Number:  0-18686

                        PAK MAIL CENTERS OF AMERICA, INC.
                        ---------------------------------
                 (Name of small business issuer in its charter)

            Colorado                                      84-0934575
            --------                                      ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

7173 South Havana, Suite 600, Englewood, CO                 80112
-------------------------------------------                 -----
(Address of principal executive offices)                  (Zip Code)

Issuer's telephone number: 303-957-1000

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par
value $.001 per share

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
YES  X   NO
    ---     ---

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

The Issuer's revenues for its most recent fiscal year were $4,507,656.

The aggregate market value of the Issuer's voting stock held as of a recent date
by non-affiliates of the Issuer cannot be ascertained due to the absence of
reliable information as to quoted prices with respect to the Issuer's common
stock.

As of February 23rd, 2001, the Issuer had 3,877,737 shares of its $0.001 par
value common stock issued and outstanding.

Transitional small business disclosure format: YES      NO  X
                                                   ---     ---
<PAGE>


                        PAK MAIL CENTERS OF AMERICA, INC.
                        2001 FORM 10-KSB/A ANNUAL REPORT
                                TABLE OF CONTENTS


PART I                                                                  Page No.
------                                                                  --------

Item 1.   Description of Business..............................................1

Item 2.   Description of Property..............................................6

Item 3.   Legal Proceedings....................................................6

Item 4.   Submission of Matters to Vote of Security Holders....................6

PART II
-------

Item 5.   Market for Common Equity and Related Stockholder Matters.............7

Item 6.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations .................................7

Item 7.   Financial Statements................................................11

Item 8.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure.................................11

Part III
--------

Item 9.   Directors, Executive Officers, Promoters and Control
          Persons; Compliance with Section 16(a) of the Exchange Act..........12

Item 10.  Executive Compensation..............................................14

Item 11.  Security Ownership of Certain Beneficial Owners and Management......17

Item 12.  Certain Relationships and Related Transactions......................20

Item 13.  Exhibits and Reports on Form 8-K ...................................21

          Signatures..........................................................22


<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

     (a) Business Development. Pak Mail Centers of America, Inc. (the "Issuer"
or "Company") was incorporated in the State of Colorado on January 27, 1984. The
Company is principally engaged in franchising of retail service centers which
specialize in the packaging and shipping business ("Pak Mail Centers" or
"Centers"). Pak Mail Centers typically provide mailbox service, parcel shipping
and receiving, packaging, freight forwarding and other communications and
information products and services to commercial and residential customers
through a variety of carriers and may offer a variety of related items such as
stamps, greeting cards, stationery supplies, keys and passport photographs.

     (b) Business of Issuer.

          (1)(2) Principal Products or Services; Distribution Methods. The
Company's principal business is the marketing of Pak Mail Center franchises and
its principal source of revenues is derived from royalties and franchise fees as
well as from the sale of certain equipment, supplies, forms and materials to
franchisees. As of November 30, 2001, there were 338 domestic and 45
international individual franchises and 22 domestic and 8 international area
agreements in existence.

Franchise Program
-----------------

     The Company offers individual franchise agreements and area marketing
agreements. Individual franchisees are granted the nonexclusive right, within a
specified area, to use the Pak Mail trademarks as well as Pak Mail's proprietary
operating procedures, techniques, forms, equipment and advertising materials in
the operation of a Pak Mail Center. Area marketers and, under a previously
offered area franchise program, area developers, are granted rights to sell
individual franchises for the Company in designated areas and are required to
provide site selection and start up assistance and continuing support for
individual franchisees within those areas. The Company locates prospective
franchisees through advertising, referrals from existing franchisees and the
marketing efforts of its area marketers and developers.

Franchise Agreements, Fees and Related Matters
----------------------------------------------

     Individual Franchises

     Each individual franchisee enters into a franchise agreement (the
"Franchise Agreement") with the Company. The Franchise Agreement requires
payment of an initial franchise fee of $27,950, although franchisees who acquire
more than one franchise are eligible for certain discounts and may be eligible
for financing of the discounted initial franchise fees for second and subsequent
Centers. Individual franchisees are also charged an initial fee ranging between
$580 and $900 for a grand opening advertising and marketing program which is
provided by the Company at or around the time the individual franchisee
commences operation of a Pak Mail Center. Under the Company's current standard

                                       1
<PAGE>


Franchise Agreement, individual franchisees pay a sliding scale monthly royalty
in each calendar year of five percent of the first $200,000 of the franchisee's
royalty based revenues, plus four and one-half percent for the next $50,000 of
royalty based revenues, plus four percent for the next $50,000 of royalty based
revenues, plus three and one-half percent for the next $50,000 of royalty based
revenues, plus three percent for all subsequent royalty based revenues received
in that calendar year. No royalty fee is paid with respect to revenues from
postage stamps. Individual franchisees are also required to pay an advertising
fee each month in the amount of two percent of royalty based revenues, with the
exception of franchisees operating under agreements entered into prior to March
1990 who are required to pay an advertising fee of one percent of gross
revenues. The advertising fees are held in a separate legal trust controlled by
the Company. These fees are used in connection with the formulation and
execution of national advertising and for other marketing purposes. The
Company's current standard Franchise Agreement has a term of ten years. With the
approval of the Company, the franchisee has the right to transfer and assign
their franchise rights.

     Area Marketing Agreement

     Each area marketer franchisee enters into an area marketing agreement which
requires the payment of an initial fee based upon several factors including
population and other demographic factors in the designated geographic region.
The area marketing agreement grants the right to market franchises within a
specified territory using certain of the Company's trademarks. When an area
marketer successfully markets an individual franchise in its territory, the
Company typically pays the area marketer 40% to 60% of the franchise fee paid by
the individual franchisee. The area marketer receives 50% to 60% of the
royalties paid to the Company by individual franchisees in its territory. If an
individual franchise is sold in an area where there is no area marketer, the
Company retains 100% of all fees and royalties paid by the franchisee. There may
be variations in the terms of specific area marketing agreements based on
special circumstances affecting the geographic area and the area marketer.

     Area Developer Franchises

     The Company no longer offers area developer agreements. Under area
developer agreements previously entered into, initial franchise fees paid to the
Company by individual franchisees within an area are generally divided 60% and
40% between the Company and the area franchisee, respectively. Generally, the
individual franchise royalty fees are divided equally between the Company and
the area franchisee. All franchise fees and royalties are paid directly to the
Company, which then remits the portion of fees owed to the area franchisee. For
individual franchisees in locations which are not encompassed by an area
franchise, the Company retains all fees and royalties.

     International Area Franchises

     The Company's international area franchise agreements require the payment
of an initial franchise fee based upon several factors including population and
other demographic factors in the designated country or geographic region. The
Company often finances a portion of the area franchise fee. The international
area franchisee is responsible for individual franchise marketing, site
selection assistance and lease negotiation, on-site training and continuing
local support of the individual franchisees within their areas.

                                       2
<PAGE>


     Generally, the division of initial franchise fees of individual franchises
within an international area and the individual franchise royalty fees within an
international area is negotiated on a case by case basis. As of November 30,
2001, there were eight international franchise agreements in existence with
respect to geographic areas in the Mexican cities of Mexico City and
Guadalajara, the Mexican states of Baja California and Sonora and the countries
of Chile, Argentina, Venezuela, Honduras, Panama, Nicaragua, El Salvador, Costa
Rica, Belize, Guatemala, Australia, New Zealand and Japan. Because of the large
number of factors that exist with respect to different countries and different
geographic locations within a given country which may affect the terms of an
international area franchise agreement, the specific terms of international area
franchises may vary significantly from one another.

     Related Matters

     The Company provides various training and support to its franchisees. The
Company furnishes to each franchisee an operations manual, which sets forth many
of the Company's standards and specifications and contains certain provisions
designed to ensure uniformity in the quality of the Pak Mail Center, and
provides updates thereto. In addition, each franchisee is required to attend a
nine day training class with regard to packaging, pricing and available shipping
and mailing services; preparation and execution of marketing and placement of
advertising; record keeping and systems operation; the Company's required
software; soliciting and servicing customers; selecting and training personnel;
and store location and operation. There is no charge for the class, but
franchisees pay their own expenses, including travel, lodging and meals. The
Company also provides three days of on-the-job training in an individual
franchisee's Pak Mail Center.

     The Company offers to franchisees various equipment, supplies, forms and
materials necessary or useful in connection with the operation of the Pak Mail
Center. However, the franchisees are not required to purchase such items from
the Company. Prior to and upon the opening of a new franchisee's Pak Mail
Center, the Company or area franchisee provides additional on-site assistance to
the franchisee. The Company maintains ongoing communications with its
franchisees designed to inform the franchisees of new services to be provided by
the Company, marketing techniques and other operational aspects of the Pak Mail
system.

Services
--------

     The typical Pak Mail Center offers a wide range of services and products
for personal and business support, communications services and convenience items
and services. The type and importance of particular services and products vary
from Center to Center. Prices for services and products are set by individual
franchisees and depend on competitive conditions in their respective franchise
locations.

                                       3
<PAGE>


     Major services and products offered at typical retail Pak Mail Centers
include the following:

     Shipping and Receiving. Pak Mail Centers offer shipping services through a
variety of carriers and can assist the customer in selecting the fastest and
most cost effective method of sending goods. Pak Mail Centers also act as
receiving agents for goods shipped to their customers. Pak Mail Centers advise
customers as to the packaging requirements of the various carriers, provide
packaging of items for shipment and sell packaging materials.

     Business Support Products and Services. Small businesses are often major
users of a Pak Mail Center. Pak Mail Centers provide a small business with a
variety of business services and products such as mailbox rental, telecopy
transmission, copying and office supplies.

     Communications Services. Pak Mail Centers may offer customers a wide range
of communications services such as telecopies, wire transfer of funds and
electronic mail and Internet access.

     Convenience Items and Services. Pak Mail Centers generally offer
convenience items such as postage stamps, envelopes, custom rubber stamps,
laminating, passport and identification photos and keys. Most Pak Mail Centers
also offer office supplies, greeting cards, gift wrapping and other gift items.

     Insurance. Also available at the customer's option is loss damage insurance
which can be purchased either through the courier's insurance carrier and/or
separate parcel insurance which is available on an as needed basis from the
Company's carrier. The insurance prices for the Company's insurance vary from
those charged by carriers.

     Private Mailbox Service. Pak Mail Centers usually offer private mailbox
rentals. Mailbox rental fees vary based on the size of the box, the rental terms
and the location of the Pak Mail Center.

          (3) Status of New Product or Service. For the fiscal years 1996
through 2001 the Company developed a point of sale software program ("PSS") for
inclusion in the Pak Mail operating system. The point of sale software contains
all of the shipping rates of various carriers and assists the franchisee in
selecting the most efficient and cost effective way to ship a package. It also
records the transaction for accounting purposes. The franchisees were required
to use PSS in the operation of the store. Management's decision to develop PSS
was based upon two main issues: software purchased from third parties did not
handle specific industry needs and requirements or meet the requirements of the
Company's unique markets. In addition the software previously used was not fully
Year 2000 compliant. In August 1999, the Company was granted a copyright
registration on the Program. Early release of the Program started in December of
1999 and conversion of the entire franchise system was started in February 2000.
After PSS was used by the franchisees for a month it was determined that PSS was
not serviceable as written due to bugs and architecture. Immedient (Raymond
James) was contracted to re-write the program. The franchisees used PSS version

                                       4
<PAGE>


1 from February 2000 until the 3rd and 4th quarters of 2001. Due to the
inability to produce a functioning product, Pak Mail made arrangements with
Resource Software in May of 2001 to purchase licenses for all of the stores for
Resource's off the shelf packing and shipping point of sale software. During the
3rd and 4th quarters of 2001, the franchisees were converted back to Resource
software. The company has contracted with, Resource to peruse the code in PSS
versions 1 and 2 and incorporate modules from PSS into the Resource software.
The finished product will be jointly marketed with Pak Mail receiving a pro-rata
share based upon the amount of code used.

          (4) Competition. The Company and its franchisees face competition
primarily from independent packaging and shipping service centers and other
franchised operations offering similar products and services. Mail Boxes Etc. is
the largest competitor. The Company's franchising approach and the operations of
a Pak Mail Center are not unique or patentable and can be imitated by others.
Although the Company and its franchisees offer services similar to those offered
by the U.S. Postal Service, such as private mail box service and parcel
handling, the U.S. Postal Service does not offer certain of the business
support, communications and personal services offered by most Pak Mail Centers.

          (5) Raw Materials and Supplies. The Company purchases materials for
resale to its franchisees. These materials are available from a variety of
suppliers, and the Company has not experienced any delays in obtaining such
materials.

          (6) Customer Dependence. The Company does not depend upon a single
customer, or a few customers, for its revenues, the loss of any one or more
which would have a material adverse effect on the Company.

          (7) Patents, Trademarks, Licenses, Etc. The Company has registered the
service mark "Pak Mail" and the Pak Mail logo on the Principal Register of the
United States Patent and Trademark Office ("USPTO"). The service mark was
renewed for an additional 10 years in November 2000 and the logo expires in
2005. The Company has registered several other related service marks on the
Principal Register of the USPTO, and has registered the service mark "Pak Mail"
and the Pak Mail logo in several international countries.

          (8)(9) Government Regulations. The Federal Trade Commission has a rule
that requires franchisors to make certain disclosures to prospective franchisees
prior to the offer or sale of franchises. This rule requires the disclosure of
information necessary for a franchisee to make an informed decision as to
whether to enter into a franchise relationship and delineates the circumstances
in which franchisors may make predictions on future sales, income and profits.
Failure to comply with this rule constitutes an unfair or deceptive act or
practice under the Federal Trade Commission Act.

     Numerous states have adopted laws regulating franchise operations and the
franchisor/franchisee relationship. Applicable franchise laws vary from filing
and disclosure requirements in the offer and sale of franchises to the
application of statutory standards regulating the establishment and termination
of franchise relationships. Although the foregoing matters may result in some
modification of the Company's franchising activities and the legal inability to
enforce all of the terms of its franchise agreements in certain states, such
inabilities have not had a material adverse effect on the operations or business
of the Company to date. However, the laws applicable to franchise operations and
relationships are subject to change, and the Company is unable to predict the
effect, if any, on its operations of additional laws, regulations or
restrictions that may be enacted or promulgated or of court decisions that may
be adverse to the franchise industry.

                                       5
<PAGE>


          (10) Research and Development. In developing versions 1 and 2 of PSS,
the Company spent $124,202 in fiscal 1997, $227,005 in fiscal 1998, $499,647 in
fiscal 1999, $211,880 in fiscal 2000 and $197,229 in fiscal 2001. Other than
developing the PSS System, the Company has not engaged in material research and
development activities during its last two fiscal years.

          (11) Environmental Regulation. Compliance with federal, state and
local environmental law provisions does not have any material effect on the
capital expenditures, earnings and competitive position of the Company.

          (12) Employees. As of November 30, 2001, the Company had 14 employees,
1 part-time and 13 full-time.

ITEM 2. DESCRIPTION OF PROPERTY

     The Company's executive offices are located in approximately 12,540 square
feet of office space in Englewood, Colorado under a lease expiring in May 2006
with a base rental currently at approximately $14,724 per month and rising to
approximately $15,840 per month by the end of the term. The Company is the first
tenant in this office space and the offices are in excellent condition.

ITEM 3. LEGAL PROCEEDINGS

     Other than routine litigationthat is incidental to the business the company
was not involved in aly legal proceddings during the fiscal year..

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of the Company's security holders.


                                       6
<PAGE>


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     (a) Market Information.

     The Company's common stock is sporadically traded in the over-the-counter
market. During fiscal 2001, and 2000 there was no established trading market for
the Company's common stock, and the Company has been unable to obtain reliable
information as to quoted prices with respect to the common stock.

     (b) Holders.

     As of November 30, 2001, the Company had 1,153 holders of record of its
$0.001 par value common stock.

     (c) Dividends.

     The Company has not declared cash dividends on its common stock in the last
two fiscal years and in any subsequent period for which financial information is
required. The Company has issued and outstanding 2,216.668 shares of its Series
C Preferred Stock, which have a 6% annual dividend payable on March 31 of each
year. All dividends have been declared and paid. The Company must pay all
dividends in arrears on the Series C Preferred Stock before any dividends may be
paid or declared and set aside for payment and before any other distribution may
be made on the Company's common stock. The Company does not anticipate paying
any cash dividends on its common stock in the foreseeable future.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Changes in Accounting Principle Imposed by the SEC
--------------------------------------------------

     The Company changed its accounting policy to reflect a decision made by the
Securities and Exchange Commission ("SEC") in December 1999 relative to the
recognition of area developer/marketer franchise fee revenue. Revenue from area
developer/marketer agreements which is not tied to unit sales performance is
initially deferred and recognized on a straight line basis over the life of the
agreement. The Company's policy in previous fiscal years was to recognize sales
to area developers/marketers on a cash received basis. As cash was received on a
sales contract, the Company recognized the associated income. The area marketing
agreements were typically executed for a 5 year period. Under the method started
in 1999, all payments received must be capitalized and amortized over the life
of the agreement. The new method was applied retroactively in 1999 on all
contracts in existence. Due to this accounting method change, the Company
recognized $30,406 in area franchise fee revenue amortized into income during
the fiscal year ending November 30, 2000 and $13,400 in fiscal 2001 from sales
made in previous fiscal years.

     This change is strictly an accounting reporting issue and has no affect on
cash flow or the Company's business operations.

                                       7
<PAGE>


Liquidity and Capital Resources
-------------------------------

     The Company produced cash from operating activities of $185,543 during
fiscal 2001 compared to cash used in operating activities of $106,841 during
fiscal 2000. The primary sources of the funds were non-cash charges on the
profit & loss statement, depreciation, bad debt allowance and accrued expense
and deferred rent. The cash was used primarily for PSS software development and
to pay down accounts payable during fiscal 2001.

     As of November 30, 2001, the average age of accounts receivable was
approximately 57 days compared to 68 days in 2000. Accounts receivable relate
primarily to royalties from franchisees and sales of equipment, supplies and
services. Royalties are payable on a monthly basis and invoices for equipment,
supplies and services are payable within 30 days. The Company continues to take
an aggressive approach to managing accounts receivable and reducing the average
age by implementing a proactive collection system and hiring the personnel to
maintain it.

     For fiscal 2002 the company expects to increase cash flow through increases
in unit sales, minimizing capital expenditures, and reviewing and reducing all
operating expenditures. At present the company has signed a letter of intent
with an area developer for a foreign country representing potential significant
cash flow. Several operating expenses have been substantially reduced including
telephone and travel expense.

The Company believes that cash flow from operating activities will be adequate
to cover operating capital needs for the next 12 months.

Results of Operations
---------------------

     Financial statements for the year ended November 30, 1999 are included
strictly for franchising purposes and no comparisons will be included in
management's discussion and analysis.

     Fiscal 2001 Compared to Fiscal 2000
     -----------------------------------

     The Company's recorded net loss from operations for fiscal 2001 was
$368,678 compared to a net loss in 2000 of $919,583. The $550,905 reduction was
attributable to a decrease in sales of Equipment, supplies and services (down
23.02% from $836,082 to $643,639), a decrease in recognition of franchise sales
(down 17.70% from $1,063,315 to $875,099) a decrease in PSS license &
maintenance fees (down 59.77% from $301,175 to $121,170), a decrease in Other
income (down 47.16% from $252,453 to $133,398) a decrease in Selling, general
and administrative costs (down 23.38% from $2,596,832 to $1,989,770), a decrease
in the Cost of sales of equipment, supplies and services (down 14.29% from
$852,732 to $730,848), an increase in royalties paid to area franchisees (up
6.05% from $1,070,974 to $1,135,805), a decrease in commissions on franchise
sales (down 10.92% from $398,884 to $355,343), a decrease in Advertising
expenditures (down 22.51% from $171,844 to $133,164), a decrease in depreciation
and amortization (down 37.92% from $224,839 to $139,573), the reduction in
impairment of capitalized software costs (down 100% from $557,853 to -0-), and
an increase in Income tax expense (up 100% from $0 to $214,766).

                                       8
<PAGE>


     The $192,443 decrease in sales of equipment, supplies and services in
fiscal 2001 is the result of fewer store buildouts, the delayed launch of PSS
version 2 and Pak Mail's decision to exit the computer software and hardware
business on June 30, 2001. New store sales in 2001 mostly occurred in areas
where the area developer handled the buildout. The delayed release of PSS
version 2 halted all computer sales in the first half of 2001. PSS version 2
required a different type of computer than the one in use by the franchisees.
PSS version 1 would not run on the PSS version 2 machine specifications. The two
software systems were totally incompatible. As a result all computer sales were
on hold in anticipation of the release of version 2 which never occurred. The
decision to use an off the shelf software program and associated hardware vendor
moved Pak Mail out of the computer software and hardware business in the second
half of 2001.

     The $188,216 decrease in franchise fees is represented by a decrease in
franchise sales recognized during the fiscal 2001. The Company recognized 48
individual franchises in fiscal 1999, 33 in fiscal 2000 and 24 in fiscal 2001.
21 of the 2001 sales were cash sales and 3 were deposits. 2001 sales were
adversely affected by negative existing franchisee endorsements which were a
result of poorly functioning PSS software.

     The $180,005 decrease in PSS licensing and maintenance fees is a result of
Pak Mail's decision to discontinue development of its proprietary software.
There was no revenue from this activity in the second half of 2001. The company
made arrangements to purchase software licenses from Resource Software Inc., a
software vendor to the packing and shipping industry. Maintenance fees are paid
directly to Resource by the franchisees.

     The $133,398 decrease in other income is due primarily to a lawsuit
settlement in 2000, decreased revenue from store transfers and the timing of
email income reporting.

     The $607,062 decrease in Selling, general and administrative is due to a
decrease in Wage expense (down $58,686) the result of a reduction in personnel;
a reduction in the use of contractors due to the elimination of software service
for PSS (down $22,315); a decrease in the allowance for bad debt (down
$153,381); elimination of duplicate rent paid for office space through May of
2000, the date the prior lease expired (down $64,667); a reduction in phone
expense (down $49,233); a reduction in printing expense, a result of a large
quantity of sales brochures being printed in 2000 (down $42,474); a reduction in
computer consultant fees incurred to keep PSS version 1 running (down $43,154);
and a reduction in travel expenses as all unnecessary travel has been eliminated
(down $42,195).

     The $121,884 decrease in cost of sales of equipment, supplies and services
is the result of fewer store buildouts. Fewer stores were sold in areas not
covered by area developers. In addition, Pak Mail departed from the computer
hardware and software business in June of 2001.

                                       9
<PAGE>


     The $64,831 increase in royalties paid to area franchisees is due to the
sale of a royalty producing area to a developer.

     The $43,541 decrease in commissions on franchise sales is the direct result
of fewer sales being recognized in fiscal 2001.

     The $38,680 decrease in advertising is due to a reduction in advertising
expenditures due to cash flow constraints.

     The $85,266 increase in depreciation and amortization is a result of
placing the PSS software package in service in February of 2000. Amortization of
PSS started on the portion that was not impaired as described in the next
paragraph.

     The $557,853 decrease in impairment of capitalized software costs for
fiscal 2001 is the result of the decision to re-write the PSS point of sale
software program in fiscal 2000 using a different database to increase the
modularity of the program and reduce future maintenance costs. The Impairment
was a one time charge. PSS version 1 was used by the franchisees from February
2000 until May of 2001. Portions of version 1 costing $293,000 were being
integrated into PSS version 2. The initial un-impaired cost of version 1 was to
be amortized over a three-year period. The PSS version 2 development costs
incurred from February 2000 through May 2001 were capitalized. Since the program
was still non-functional in May of 2001 the decision was made to discontinue the
program and purchase software from Resource Software. The Resource program does
not have a marketing or custom packaging module. Those two pieces from PSS will
be incorporated into the Resource Software Point of sale program sometime after
April of 2002. Pak Mail will share in the revenue from the enhanced program.

     The $214,766 increase in Income Tax Expense is a result of reducing the
value of the Deferred Income Tax asset carried on the balance sheet. Due to
continuing losses, Pak Mail's Net Operating Loss carry-forwards are expiring.
The Net Operating Loss carry-forward allows Pak Mail to shelter earnings from
income tax. In anticipation of future profitability, an asset was recognized in
1997, 1998 and 1999.

     The foregoing discussion contains certain forward looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements include the plans and
objectives of management for future operations, including plans and objectives
relating to the development of the Company. The forward-looking statements
included herein are based on current expectations that involve numerous risks
and uncertainties. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that the assumptions underlying the
forward looking statements are reasonable, any of the assumptions could be
inaccurate and, therefore, there can be no assurance that the forward looking
statements included in this Form 10-KSB will prove to be accurate. In light of
the significant uncertainties inherent in the forward looking statements
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.

                                       10
<PAGE>


ITEM 7. FINANCIAL STATEMENTS

     See Financial Statements in this report following the signature page. Three
years of Financial Statements are presented in this filing. The two most recent
years are compared to each other, fiscal 2001 and fiscal 2000. Fiscal 1999 is
presented for informational and franchising purposes only.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     During the Company's two most recent fiscal years, and any interim period,
the principal independent accountant of the Company did not resign (or decline
to stand for re-election) and was not dismissed.







                                       11
<PAGE>


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

     (a) Identification of Directors and Executive Officers.
     -------------------------------------------------------

     The present term of office of each director will expire at the next annual
meeting of shareholders. The executive officers of the Company are elected
annually at the first meeting of the Company's Board of Directors held after
each annual meeting of shareholders. Each executive officer holds office until
his or her successor is duly elected and qualified or until his or her
resignation or until he or she shall be removed in the manner provided by the
Company's Bylaws. The name, position with the Company, the age of each director
and executive officer, and the period during which each has served are as
follows:

<TABLE>
<CAPTION>

Name, Age and                 Director or        Principal Occupation
Position in the Company       Officer Since      During the Last Five Years
-----------------------       -------------      --------------------------
<S>                           <C>                <C>
John E. Kelly, 61             September, 1989    Executive officer of the Company since
(President, Chief Executive                      September, 1989.
Officer and Director)

P. Evan Lasky, 60             March, 1988        Executive officer of the Company since March,
(Executive Vice President,                       1988. And Secretary/Treasurer since November
Treasurer and Chief                              2001.
Operating Officer)

Alex Zai, 42                  May, 1996          Executive officer of the Company since May,
(Vice President of                               1996; director of store operations of the
Store Operations)                                Company since April, 1994.

J. S. Corcoran, 58            September, 1989    Self-employed as a business consultant since
(Director)                                       October, 1996; executive officer of D.P.
                                                 Kelly & Associates L.P., a firm offering
                                                 management services, from November, 1988 to
                                                 January, 1997; executive officer of
                                                 Envirodyne Industries, Inc., a manufacturer
                                                 of food packaging and food service supplies,
                                                 from June, 1989 to March, 1996.

                                       12
<PAGE>


Name, Age and                 Director or        Principal Occupation
Position in the Company       Officer Since      During the Last Five Years
-----------------------       -------------      --------------------------

John W. Grant, 77             September, 1989    Retired since September, 1987.
(Director)

F. Edward Gustafson, 60       September, 1989    Executive officer of D.P. Kelly & Associates
(Director)                                       L.P., a firm offering management services,
                                                 since November, 1988; executive officer of
                                                 Viskase Companies, Inc., a manufacturer of
                                                 food packaging and food service supplies,
                                                 since June, 1989; director of Viskase
                                                 Companies, Inc. since December, 1993;
                                                 executive officer of Viskase Corporation,
                                                 a wholly-owned subsidiary of Viskase
                                                 Companies, Inc., from February, 1990 to
                                                 August, 1993.

Laura K. McGrath 45           September, 1989    General Partner of KMK & Associates, an
(Director)                                       investment partnership since May, 1986;
                                                 President of Emerald Valley Farms, Inc. a
                                                 farm land acquisition and management company
                                                 since March, 1999; Treasurer of the Donald P.
                                                 and Byrd M. Kelly Foundation, a family
                                                 foundation that focuses on educational
                                                 support for non-profit organizations, since
                                                 November, 1988.



                                       13
</TABLE>
<PAGE>


     (b) Identification of Certain Significant Employees.
     ----------------------------------------------------

     Not Applicable.

     (c) Family Relationships.
     -------------------------

     Not Applicable.

     (d) Involvement in Certain Legal Proceedings.
     ---------------------------------------------

     Not Applicable.

     (e) Section 16(a) Beneficial Ownership Reporting Compliance.
     ------------------------------------------------------------

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of the Company's
outstanding common stock to file reports of ownership with the SEC. Officers,
directors and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

     For the Company's fiscal year ended November 30, 2001, there were no Forms
3, 4 or 5 filed by the directors, officers or more than 10% shareholders of the
Company. However, for the fiscal year ending November 30, 2002, all Forms 3, 4,
and 5 have been timely filed for all officers and directors and persons who own
more than 10% of the Company's outstanding common stock

ITEM 10. EXECUTIVE COMPENSATION

     Cash Compensation.
     ------------------

     The following table shows all cash compensation paid by the Company for
services rendered during the fiscal years ended November 30, 2001, November 30,
2000, and November 30, 1999 to John E. Kelly and P. Evan Lasky (there were no
other executive officers of the Company whose annual salary and bonus exceeded
$100,000).



                                       14
<PAGE>


                           SUMMARY COMPENSATION TABLE

Name and                                                          Other Annual
Principal Position     Fiscal Year      Salary        Bonus       Compensation
------------------     -----------      ------        -----       ------------

John E. Kelly             2001         $161,000       $2,300       $8,520(2)
President and Chief       2000         $153,300          -0-(1)    $8,520(2)
Executive Officer         1999         $146,000      $33,016(1)    $8,520(2)
P. Evan Lasky             2001         $125,000       $1,500          -0-
Executive Vice            2000         $112,000          -0-(1)       -0-
President and Chief       1999         $102,000      $19,573(1)       -0-
Operating Officer


(1)  Bonus was earned in the fiscal year indicated, although it may have been
     paid in the following fiscal year.

(2)  The amount for fiscal 2001, 2000 and 1999 consists of a $4,800 car
     allowance and $3,720 of country club dues

     Stock Option Plans.
     -------------------

     Effective January 1, 1999, the Company adopted the 1999 Incentive and
Nonstatutory Stock Option Plan ("1999 Plan"). The 1999 Plan authorizes the
granting of options to employees and non-employee directors of the Company to
purchase an aggregate of 400,000 shares of the Company's common stock. No
options may be granted after December 31, 2008 under the 1999 Plan. There were
no options issued during the year ended November 30, 2000 or November 30, 2001.
For the fiscal year ended November 30, 1999, employees of the Company were
issued options under the 1999 Plan to purchase a total of 172,227 shares of the
Company's common stock at $.75 per share expiring in December 2009.

     Options/SAR Grants.
     -------------------

     The following table sets forth the individual grants of stock options made
during the last two completed fiscal years to each of the named executive
officers:

There were no options granted in fiscal 2000.
There were no options granted in fiscal 2001.


                                       15
<PAGE>


     Fiscal Year End Option Values
     -----------------------------

                        Number of Securities
                             Underlying
                         Unexercised Options
    Name                 at Fiscal Year End
--------------          --------------------

John E. Kelly                  30,000

P. Evan Lasky                  22,000

     Long-Term Incentive Plans.
     --------------------------

     Not Applicable.

     Compensation of Directors--Standard Arrangement.
     ------------------------------------------------

     Members of the Board of Directors, other than members who are also officers
of the Company, are entitled to receive a fee of $2,000 per year and $250 for
each attended meeting of the Board of Directors.

     Compensation of Directors--Other Arrangements.
     ----------------------------------------------

     Not Applicable.

     Employment Contracts and Termination of Employment and Change of Control
Arrangements.
-----------------------------------------------------------------------------

          In fiscal 2001 the Company adopted a Severance Pay Policy for certain
     of its officers and employees. Under this Policy, John E. Kelly and P. Evan
     Lasky are entitled to a pro rata share of any bonus earned under the
     Management Incentive Plan or any comparable plan in effect at the time of
     termination of employment, plus 24 months and 18 months salary,
     respectively, following termination of employment if the termination occurs
     in the 24-month period following a change in control of the Company. Change
     in control under the Policy is defined as the sale of the stock and/or
     substantially all of the assets of the Company as approved by the Board of
     Directors. To be eligible for the severance pay the termination must be a
     result of:

     (a)  any involuntary separation of employment from the Company for any
          reason other than death, disability or willful misconduct on the part
          of the employee;

                                       16
<PAGE>


     (b)  any voluntary separation of employment from the Company following a
          reduction in the employee's base compensation and incentive bonus
          opportunity from that in effect on the day immediately before the
          change in control;

     (c)  any voluntary separation of employment from the Company following a
          reduction in the employee's principal responsibilities from those in
          effect on the day immediately before the change in control; or

     (d)  any change in the employee's work location by more than 50 miles than
          the work location on the day immediately before the change in control,
          except for those employees who, on a project basis, would normally
          change location.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     (a)(b) Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth as of November 30, 2001, the number of
shares of the Company's $0.001 par value common stock, its only class of
outstanding voting securities, beneficially owned by each of the Company's
current directors and executive officers, by all of the Company's current
directors and executive officers as a group, and by each person who owned of
record, or was known to own beneficially, more than 5% of the Company's
outstanding shares of common stock:


                                       17
<PAGE>


Name and Address                        Amount and Nature of
Of Beneficial Holder                   Beneficial Ownership(1)  Percent of Class
--------------------                   --------------------     ----------------

J. S. Corcoran                              2,405,264(2)               62.1%
701 Harger Road, Suite 190
Oak Brook, Illinois 60523

John W. Grant                                     800(3)                (7)
701 Harger Road, Suite 190
Oak Brook, Illinois 60523

F. Edward Gustafson                         2,931,578(2)(4)(8)         75.7%
701 Harger Road, Suite 190
Oak Brook, Illinois 60523

John E. Kelly                                  30,000(5)                (7)
3033 S. Parker Road, Suite 1200
Aurora, Colorado 80014

P. Evan Lasky                                  22,000(6)                (7)
3033 S. Parker Road, Suite 1200
Aurora, Colorado 80014

All directors and executive officers        2,933,378(2)(4)            75.7%
as a group (9 persons)

D.P. Kelly and Associates, L.P.               492,814                  12.7%
701 Harger Road, Suite 190
Oak Brook, Illinois 60523

Donald P. Kelly                             2,966,184(2)(4)            76.6%
701 Harger Road, Suite 190
Oak Brook, Illinois 60523

Pak Mail Investment Partnership L.P.        2,404,264                  62.1%
701 Harger Road, Suite 190
Oak Brook, Illinois 60523


(1)  The beneficial owners listed have sole voting and investment power with
     respect to the shares shown unless otherwise indicated.

                                       18
<PAGE>


(2)  Includes 2,404,264 shares of common stock owned by Pak Mail Investment
     Partners, L.P. ("PMIP"). Messrs. Corcoran, Gustafson and Donald Kelly are
     officers, directors and shareholders of Norcross Corporation, 701 Harger
     Road, Suite 190, Oak Brook, Illinois 60523, which exercises control over
     PMIP, and may be deemed to have the ability to vote or dispose of
     securities owned by PMIP. Therefore, they may be deemed to be the
     beneficial owners of such shares of common stock for the purposes of this
     table. However, for purposes of Rule 16a-1 adopted under the Securities
     Exchange Act of 1934, as amended, Messrs. Corcoran, Gustafson and Donald
     Kelly disclaim beneficial ownership of the shares of common stock owned by
     PMIP, except to the extent of each of their respective pecuniary interests
     in PMIP.

(3)  Shares owned jointly by Mr. Grant and his wife.

(4)  Includes 492,814 shares of common stock owned by D.P. Kelly and Associates,
     L.P. ("D.P. Kelly"). Messrs. Gustafson and Donald Kelly are principals and
     executive officers of D.P. Kelly and may be deemed to have the ability to
     vote or dispose of securities owned by D.P. Kelly. Therefore, they may be
     deemed to be the beneficial owners of such shares of common stock for the
     purposes of this table. However, for purposes of Rule 16a-1 adopted under
     the Securities Exchange Act of 1934, as amended, Messrs. Gustafson and
     Donald Kelly disclaim beneficial ownership of the shares of common stock
     owned by D.P. Kelly, except to the extent of each of their respective
     pecuniary interest in D.P. Kelly.

(5)  Consists of 30,000 shares underlying stock options that are exercisable at
     $0.75 per share, which vest as follows: 10,000 shares on January 1, 2000,
     10,000 shares on January 1, 2001, and 10,000 shares on January 1, 2002.

(6)  Consists of 22,000 shares underlying stock options that are exercisable at
     $0.75 per share, which vest as follows: 7,333 shares on January 1, 2000,
     7,333 shares on January 1, 2001, and 7,333 shares on January 1, 2002.

(7)  Less than 1%.

(8)  Includes 6,000 shares of common stock owned by Mr. Gustafson's children,
     for whom he acts as custodian.


     (c) Changes in Control. Not Applicable.



                                       19
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (a)(b) Transactions With Management and Others and Certain Business
Relationships.

     None

     (c) Parent Companies. PMIP owns a controlling interest in the Company
through its ownership of 2,404,264 shares of common stock, representing
approximately 62.1% of the outstanding common stock.

     (d) Transactions With Promoters. Not Applicable.





                                       20
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits.
     -------------

(3)(a)    Articles of Incorporation incorporated by reference to Exhibit (3)(a)
          of the Company's Annual Report on Form 10-KSB for the fiscal year
          ended November 30, 1995.

(3)(b)    Articles of Amendment to the Articles of Incorporation filed with the
          Colorado Secretary of State on January 26, 1998 incorporated by
          reference to Exhibit (3)(b) of the Company's Annual Report on Form
          10-KSB for the fiscal year ended November 30, 1997.

(3)(c)    Articles of Amendment to the Articles of Incorporation filed with the
          Colorado Secretary of State on July 13, 1998, incorporated by
          reference to Exhibit 3(a) of the Company's Quarterly Report on Form
          10-QSB for the quarter ended May 31, 1998.

(3)(d)    Bylaws incorporated by reference to Exhibit 3(b) of the Company's
          Quarterly Report on Form 10-QSB for the quarter ended May 31, 1998.

(10)(a)*  Individual Franchise Agreement.

(10)(b)*  Area Marketing Agreement.

(10)(c)   Pak Mail Centers of America, Inc. Management Incentive Plan for Fiscal
          Year 1998 incorporated by reference to Exhibit (10)(f) of the
          Company's Annual Report on Form 10-KSB for the fiscal year ended
          November 30, 1998.

(10)(d)   Pak Mail Centers of America, Inc. Management Incentive Plan for Fiscal
          Year 1999 incorporated by reference to Exhibit (10)(g) of the
          Company's Annual Report on Form 10-KSB for the fiscal year ended
          November 30, 1998.

(10)(e)   Pak Mail Centers of America, Inc. 1999 Incentive and Non-statutory
          Employee Stock Option Plan incorporated by reference to Exhibit
          (10)(h) of the Company's Annual Report on Form 10-KSB for the fiscal
          year ended November 30, 1998.

(10)(f)   Contract with Immedient, a software development company to re-write
          the PSS software. (Scope Document) incorporated by reference to
          exhibit 10(f) of the Company's Annual Report on Form 10 KSB for the
          fiscal year ending November 30, 2001.

(10)(g)   Promissory Note, D.P. Kelly & Associates, Inc. incorporated by
          reference to the Company's Annual Report on Form 10 KSB for the fiscal
          year ending November 30, 2001

(10)(h)   Office Lease with Bedford Property Investors for office located at
          7173 South Havana Street, Denver, CO 80112, approximately 12,540
          square feet. (to be filed by amendment) incorporated by reference to
          the Company's Annual Report on Form 10 KSB for the fiscal year ending
          November 30, 2001.

(10)(i)*  Resource, Inc. software licensing contract

(21)*     Subsidiaries of the Registrant.

(99.1)    Certification Pursuant to 18 U.S.C. Section 1350

(99.2)    Certification Pursuant to 18 U.S.C. Section 1350


     *    Previously filed.

     (b) 8-K Reports. None.
     ----------------

                                       21
<PAGE>


                                   SIGNATURES

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

                                        PAK MAIL CENTERS OF AMERICA, INC.,
                                        a Colorado corporation



                                        By: /s/ P. Evan Lasky
                                        ----------------------------------------
                                        P. Evan Lasky, Chief Executive Officer
     Dated: January 8, 2003

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

Name and Title             Signature                           Date
--------------             ---------                           ----

J.S. Corcoran              /s/ J.S. Corcoran                   January 8, 2003
Director                   --------------------------


John W. Grant              /s/ John W. Grant                   January 8, 2003
Director                   --------------------------


F. Edward Gustafson        /s/ F. Edward Gustafson             January 8, 2003
Director                   --------------------------


Laura K. McGrath           /s/ Laura K. McGrath                January 8, 2003
Director                   --------------------------


John E. Kelly              /s/ John E. Kelly                   January 8, 2003
Director                   --------------------------



                                       22
<PAGE>

                                 CERTIFICATIONS

I, P. Evan Lasky, certify that:

1. I have reviewed this annual report of Pak Mail Centers of America, Inc.

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report; and

3. Based upon my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.

Date:    January 8, 2003

                                               By: /s/ P. Evan Lasky
                                               --------------------------------
                                               P. Evan Lasky
                                               Chief Executive Officer


I, P. Evan Lasky, certify that:

1. I have reviewed this annual report of Pak Mail Centers of America, Inc.

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report; and

3. Based upon my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.

Date:    January 8, 2003

                                               By: /s/ P. Evan Lasky
                                               --------------------------------
                                               P. Evan Lasky
                                               Accounting Supervisor

<PAGE>


                                  EXHIBIT INDEX

(3)(a)    Articles of Incorporation incorporated by reference to Exhibit (3)(a)
          of the Company's Annual Report on Form 10-KSB for the fiscal year
          ended November 30, 1995.

(3)(b)    Articles of Amendment to the Articles of Incorporation filed with the
          Colorado Secretary of State on January 26, 1998 incorporated by
          reference to Exhibit (3)(b) of the Company's Annual Report on Form
          10-KSB for the fiscal year ended November 30, 1997.

(3)(c)    Articles of Amendment to the Articles of Incorporation filed with the
          Colorado Secretary of State on July 13, 1998, incorporated by
          reference to Exhibit 3(a) of the Company's Quarterly Report on Form
          10-QSB for the quarter ended May 31, 1998.

(3)(d)    Bylaws incorporated by reference to Exhibit 3(b) of the Company's
          Quarterly Report on Form 10-QSB for the quarter ended May 31, 1998.

(10)(a)*  Individual Franchise Agreement.

(10)(b)*  Area Marketing Agreement.

(10)(c)   Pak Mail Centers of America, Inc. Management Incentive Plan for Fiscal
          Year 1998 incorporated by reference to Exhibit (10)(f) of the
          Company's Annual Report on Form 10-KSB for the fiscal year ended
          November 30, 1998.

(10)(d)   Pak Mail Centers of America, Inc. Management Incentive Plan for Fiscal
          Year 1999 incorporated by reference to Exhibit (10)(g) of the
          Company's Annual Report on Form 10-KSB for the fiscal year ended
          November 30, 1998.

(10)(e)   Pak Mail Centers of America, Inc. 1999 Incentive and Non-statutory
          Employee Stock Option Plan incorporated by reference to Exhibit
          (10)(h) of the Company's Annual Report on Form 10-KSB for the fiscal
          year ended November 30, 1998.

(10)(f)   Contract with Immedient, a software development company to re-write
          the PSS software. (Scope Document) incorporated by reference to
          exhibit 10(f) of the Company's Annual Report on Form 10 KSB for the
          fiscal year ending November 30, 2001.

(10)(g)   Promissory Note, D.P. Kelly & Associates, Inc. incorporated by
          reference to the Company's Annual Report on Form 10 KSB for the fiscal
          year ending November 30, 2001

(10)(h)   Office Lease with Bedford Property Investors for office located at
          7173 South Havana Street, Denver, CO 80112, approximately 12,540
          square feet. (to be filed by amendment) incorporated by reference to
          the Company's Annual Report on Form 10 KSB for the fiscal year ending
          November 30, 2001.

(10)(i)*  Resource, Inc. software licensing contract

(21)*     Subsidiaries of the Registrant.

(99.1)    Certification Pursuant to 18 U.S.C. Section 1350

(99.2)    Certification Pursuant to 18 U.S.C. Section 1350


     *    Previously filed.


<PAGE>

                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                        Consolidated Financial Statements
                                       and
                          Independent Auditors' Report
                           November 30, 2001 and 2000




                                Table of Contents
                                -----------------


                                                                            Page
                                                                            ----

Independent Auditors' Report ..............................................  F-1

Consolidated Financial Statements

         Consolidated Balance Sheets ......................................  F-2

         Consolidated Statements of Operations ............................  F-3

         Consolidated Statement of Changes in Stockholders' Equity ........  F-4

         Consolidated Statements of Cash Flows ............................  F-5

Notes to Consolidated Financial Statements ................................  F-7

Accompanying Information

         Schedule of Selling, General and Administrative Expenses ......... F-22


<PAGE>
                                                           Ehrhardt
                                                           Keefe
                                                    EKS&H  Steiner &
                                                           Hottman PC

                                                    Certified Public Accountants
                                                    and Consultants



                          INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
Pak Mail Centers of America, Inc. and Subsidiary
Aurora, Colorado

We have audited the accompanying consolidated balance sheets of Pak Mail Centers
of America, Inc. and Subsidiary as of November 30, 2001 and 2000, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended November 30, 2001, 2000 and 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pak Mail Centers of
America, Inc. and Subsidiary as of November 30, 2001 and 2000, and the results
of their operations and their cash flows for the years ended November 30, 2001,
2000 and 1999 in conformity with accounting principles generally accepted in the
United States of America.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The information included in the
accompanying schedule is presented only for supplementary analysis purposes and
is not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.


                                         /s/ Ehrhardt Keefe Steiner & Hottman PC
                                         ---------------------------------------
                                         Ehrhardt Keefe Steiner & Hottman PC
January 10, 2002
Denver, Colorado

                                      F-1
<PAGE>
<TABLE>
<CAPTION>


                             PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                                        Consolidated Balance Sheets


                                                                                        November 30,
                                                                                 --------------------------
                                                                                    2001            2000
                                                                                 -----------    -----------
                                                  Assets
<S>                                                                              <C>            <C>
Current assets
     Cash and cash equivalents                                                   $    17,201    $      --
     Restricted cash                                                                 138,406         11,129
     Trade accounts receivable, net                                                  544,192        556,437
     Inventories                                                                      30,225         44,283
     Notes receivable - current, net                                                 115,523        169,982
     Prepaid expenses and other current assets                                        55,588         22,686
     Deferred income taxes                                                           132,734        347,500
                                                                                 -----------    -----------
        Total current assets                                                       1,033,869      1,152,017
                                                                                 -----------    -----------

Non-current assets
     Property and equipment, net                                                      85,413        136,256
     Notes receivable, net of current portion                                        184,447        286,148
     Capitalized software, net                                                       571,956        423,491
     Deferred franchise costs, net                                                    16,770         66,862
     Deposits and other                                                              112,868        157,274
                                                                                 -----------    -----------
        Total non-current assets                                                     971,454      1,070,031
                                                                                 -----------    -----------

Total assets                                                                     $ 2,005,323    $ 2,222,048
                                                                                 ===========    ===========

                                   Liabilities and Stockholders' Equity
Current liabilities
     Trade accounts payable                                                      $   203,042    $   317,231
     Accrued other                                                                   348,617        212,659
     Deferred rent                                                                    64,776         70,434
     Preferred stock dividends payable                                               133,000        133,000
     Current portion of capital lease obligation                                      10,520         10,520
     Due to advertising fund                                                         138,406         11,129
                                                                                 -----------    -----------
        Total current liabilities                                                    898,361        754,973
                                                                                 -----------    -----------

Non-current liabilities
     Deferred franchise revenues                                                     626,205        607,120
     Note payable - shareholder                                                      400,000        400,000
     Capital lease obligations, less current portion                                  11,088         21,608
                                                                                 -----------    -----------
        Total non-current liabilities                                              1,037,293      1,028,728
                                                                                 -----------    -----------
Total liabilities                                                                  1,935,654      1,783,701
                                                                                 -----------    -----------

Commitments

Stockholders' equity
     Common stock, $.001 par value; 200,000,000 shares authorized, 3,877,737
      shares (2001) and 3,873,737 shares (2000) issued and outstanding                 3,877          3,874
     Series C redeemable preferred stock, $1,000 par value; 6% cumulative;
      2,500 shares authorized 2,216 shares issued and outstanding (liquidation
      preference $2,349,668)                                                       2,216,668      2,216,668
     Additional paid-in capital                                                    5,113,992      5,113,995
     Accumulated deficit                                                          (7,264,868)    (6,896,190)
                                                                                 -----------    -----------
        Total stockholders' equity                                                    69,669        438,347
                                                                                 -----------    -----------

Total liabilities and stockholders' equity                                       $ 2,005,323    $ 2,222,048
                                                                                 ===========    ===========


                              See notes to consolidated financial statements.

                                                    F-2
<PAGE>


                           PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                                Consolidated Statements of Operations

                                                                         For the Years Ended
                                                                              November 30,
                                                               -----------------------------------------
                                                                   2001           2000           1999
                                                               -----------    -----------    -----------

Revenues
     Royalties from franchisees                                $ 2,715,152    $ 2,709,764    $ 2,455,552
     Franchise fees                                                875,099      1,063,315      1,368,304
     Sales of products and services                                643,639        836,082      1,106,313
     Software license fees                                         121,170        301,175           --
     Other operating revenue                                       133,398        252,453        155,491
                                                               -----------    -----------    -----------
        Total Revenue                                            4,488,458      5,162,789      5,085,660
                                                               -----------    -----------    -----------

Operating Expenses
     Selling, general and administrative                         1,989,770      2,596,832      2,061,493
     Cost of products and services                                 730,848        852,732        906,693
     Royalties paid to area franchisees                          1,135,805      1,070,974        975,510
     Commissions on franchise sales                                355,343        398,884        539,532
     Advertising                                                   133,164        171,844        143,429
     Depreciation and amortization                                 139,573        224,839         85,446
     Impairment of capitalized software                               --          557,853           --
     Loss on disposal of assets                                       --           12,221
                                                               -----------    -----------    -----------
        Total Operating Expenses                                 4,484,503      5,886,179      4,712,103
                                                               -----------    -----------    -----------

Operating income (loss)                                              3,955       (723,390)       373,557

Other Income & Expense
     Interest income                                                19,198           --             --
     Interest expense                                               44,065         63,193          4,768
                                                               -----------    -----------    -----------
                                                                   (24,867)       (63,193)        (4,768)

(Loss) income before income tax expense and cumulative
 effect of change in accounting method                             (20,912)      (786,583)       368,789

Income tax expense                                                (214,766)          --             --

(Loss) income before cumulative effect of change in
 accounting method                                                (235,678)      (786,583)       368,789

Cumulative effect of change in accounting method                      --             --         (140,728)

Net (loss) income                                                 (235,678)      (786,583)       228,061
                                                               -----------    -----------    -----------

Preferred stock dividend                                           133,000        133,000        133,000

Net (loss) income available to Stockholders                    $  (368,678)   $  (919,583)   $    95,061
                                                               ===========    ===========    ===========

Net (loss) income per share - basic and diluted
   Net (loss) income per share before cumulative
    effect of change in accounting principle                         (0.10)         (0.24)          0.07
   Cumulative effect of changes in accounting principle               --             --            (0.04)

Basic and diluted net (loss) income per share of common
 stock                                                         $     (0.10)   $     (0.24)   $      0.03
                                                               ===========    ===========    ===========

                                                                 3,875,158      3,873,737      3,568,494
                                                               ===========    ===========    ===========


                            See notes to consolidated financial statements.

                                                 F-3
<PAGE>


                                          PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                                     Consolidated Statement of Changes in Stockholders' Equity
                                        For the Years Ended November 30, 2001, 2000 and 1999


                                   Preferred Stock
                                      Series C                   Common Stock          Additional                     Total
                              -------------------------   -------------------------     Paid-in      Accumulated   Stockholders'
                                 Shares       Amount        Shares        Amount        Capital        Deficit        Equity
                              -----------   -----------   -----------   -----------   -----------    -----------    -----------

Balance - November 30, 1998         2,216   $ 2,216,668     2,989,473   $     2,990   $ 5,026,453    $(6,071,668)   $ 1,174,443

Warrants exercised                   --            --         884,264           884        87,542           --           88,426

Net income                           --            --            --            --            --           95,061         95,061
                              -----------   -----------   -----------   -----------   -----------    -----------    -----------

Balance - November 30, 1999         2,216     2,216,668     3,873,737         3,874     5,113,995     (5,976,607)     1,357,930

Net loss                             --            --            --            --            --         (919,583)      (919,583)
                              -----------   -----------   -----------   -----------   -----------    -----------    -----------

Balance - November 30, 2000         2,216     2,216,668     3,873,737         3,874     5,113,995     (6,896,190)       438,347

Stock issuance                       --            --           4,000             3            (3)          --             --

Net loss                             --            --            --            --            --         (368,678)      (368,678)
                              -----------   -----------   -----------   -----------   -----------    -----------    -----------

Balance - November 30, 2001         2,216   $ 2,216,668     3,877,737   $     3,877   $ 5,113,992    $(7,264,868)   $    69,669
                              ===========   ===========   ===========   ===========   ===========    ===========    ===========



                                          See notes to consolidated financial statements.

                                                                F-4
<PAGE>


                        PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                              Consolidated Statements of Cash Flows


                                                                       For the Years Ended
                                                                           November 30,
                                                               -----------------------------------
                                                                 2001          2000         1999
                                                               ---------    ---------    ---------

Cash flows from operating activities
   Net (loss) income                                           $(368,678)   $(919,583)   $  95,061
                                                               ---------    ---------    ---------
   Adjustments to reconcile net (loss) income to net cash
    provided by (used in) operating activities
     Depreciation and amortization                               139,573      224,839       85,446
     Change in provision for loss on accounts receivable         (57,761)       8,278       65,735
     Change in provision for loss on notes receivable             13,107       27,086         --
     Bad debts                                                   102,000      255,381       42,559
     Deferred franchise costs                                     30,901      (15,860)      84,190
     Franchise fee revenue financed through notes receivable        --           --        (48,786)
     Deferred income taxes                                       214,766         --        (72,500)
     Impairment of capitalized software                             --        557,853         --
     Changes in assets and liabilities
        Accounts receivable                                      (31,994)    (235,595)    (310,962)
        Inventories                                               14,058       57,074      (45,120)
        Prepaid expenses and other current assets                (32,902)       6,588        8,226
        Trade accounts payable                                  (114,189)       1,856      125,621
        Accrued expenses and deferred rent                       130,300      (77,108)     175,786
        Deferred Revenue                                          19,085       (6,899)    (140,946)
        Due to advertising fund                                  127,277        9,249       (2,000)
                                                               ---------    ---------    ---------
                                                                 554,221     (812,742)     (32,751)
                                                               ---------    ---------    ---------
        Net cash provided by (used in) operating activities      185,543     (106,841)      62,310
                                                               ---------    ---------    ---------

Cash flows from investing activities
   Capital expenditures                                           (9,102)     (82,799)    (136,694)
   Capitalized software costs                                   (197,299)    (211,880)    (499,647)
   Deposits and other                                             32,803      (11,372)     (50,649)
   Payments on notes receivable                                  143,053      109,154      227,826
                                                               ---------    ---------    ---------
        Net cash used in investing activities                    (30,545)    (196,897)    (459,164)
                                                               ---------    ---------    ---------

Cash flows from financing activities
   Payments on notes payable and capital lease obligations       (10,520)     (31,549)        --
   Advances on notes payable                                        --        300,000      120,000
   Preferred stock dividends payable                             133,000      133,000      133,000
   Preferred stock dividends paid                               (133,000)    (133,000)    (133,000)
   Proceeds from sale of stock                                      --           --         88,426
   Restricted cash                                              (127,277)      (9,249)       2,000
                                                               ---------    ---------    ---------
        Net cash (used in) provided by financing activities     (137,797)     259,202      210,426
                                                               ---------    ---------    ---------

Net increase (decrease) in cash                                   17,201      (44,536)    (186,428)

Cash - beginning of year                                            --         44,536      230,964
                                                               ---------    ---------    ---------

Cash - end of year                                             $  17,201    $    --      $  44,536
                                                               =========    =========    =========

(Continued on next page.)


                         See notes to consolidated financial statements.

                                               F-5
</TABLE>
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows


(Continued from previous page.)


Supplemental disclosure of cash flow information

                  Cash paid for:                 Interest
                  --------------                 --------

                       2001                      $  44,065
                       2000                      $  63,194
                       1999                      $   4,768


Supplemental disclosure of non-cash activity:

     At November 30, 2001, 2000 and 1999 $0, $49,170 and $100,000 of notes
     receivable additions are included in deferred revenue, respectively.

     During 2000, the Company incurred capital lease obligations and recorded
     related equipment of $43,677.








                 See notes to consolidated financial statements.

                                       F-6
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 1 - Description of Business and Summary of Significant Accounting Policies
-------------------------------------------------------------------------------

Pak Mail Centers of America, Inc., (the Company), was incorporated in Colorado
in 1984 and is engaged in the business of marketing and franchising Pak Mail
Retail and Service Centers, which specialize in custom packaging of items to be
mailed or shipped throughout the United States and Mexico.

The following table summarized the number of Pak Mail Retail and Service Centers
in operation during the last three fiscal years:

                                        November 30,  November 30,  November 30,
                                            2001         2000          1999
                                           ------       ------        ------
Franchises:
     Franchise centers in operation:
         Domestic                             338          345           332
         International                         45           44            33
     Rights to franchise centers sold
         and not in operation                  22           29            37
                                           ------       ------        ------
                                              405          418           402
                                           ======       ======        ======

Principles of Consolidation
---------------------------

The accompanying consolidated financial statements include the accounts of Pak
Mail Centers of America, Inc. and its subsidiary, Pak Mail Crating and Freight
Services, Inc. All intercompany accounts and transactions have been eliminated
in consolidation.

Cash and Cash Equivalents
-------------------------

The Company considers all highly liquid instruments purchased with an original
maturity of three months or less to be cash equivalents. The Company continually
monitors its positions with, and the credit quality of, the financial
institutions it invests with.

Concentrations of Credit Risk
-----------------------------

Financial instruments, which potentially subject the Company to concentration of
credit risk consist principally of cash and cash equivalents, and accounts and
notes receivable from franchisees, area developers and marketing directors. The
Company places its temporary cash investments with what management believes are
high-credit, quality financial institutions. To reduce credit risk, the Company
reserves the right to terminate franchise agreements for non-payment of amounts
owed. Additionally, as of November 30, 2001 and 2000, approximately $183,000 and
$347,000 of notes receivable are offset by comparable amounts in deferred
revenue.

During the year ended November 30, 1999, one customer accounted for 16% of total
revenues. At November 30, 1999 the same customer accounted for 12% of total
accounts receivable.

                                      F-7
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 1 - Description of Business and Summary of Significant Accounting Policies
(continued)
-------------------------------------------------------------------------------

Fair Value of Financial Instruments
-----------------------------------

The carrying amounts of financial instruments including accounts receivable,
accounts payable and accrued expenses approximated fair value as of November 30,
2001 because of the relatively short maturity of these instruments.

The carrying amounts of notes receivable, capital lease obligations, and debt
outstanding approximate fair value as of November 30, 2001 because interest
rates and discount rates on these instruments approximate market interest rates.

Inventories
-----------

Inventory consists of equipment and supplies held for resale to franchisees for
use at their store locations or held at corporate owned stores for resale to the
public and is stated at the lower of cost or market, determined using the
first-in, first-out method (FIFO).

Property and Equipment
----------------------

Property and equipment is stated at cost. Depreciation is provided utilizing the
straight-line method over the estimated useful lives for owned assets, ranging
from 3 to 7 years.

Use of Estimates
----------------

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

The Company has recorded an allowance for doubtful collections on accounts
receivable and notes receivable. These are continually reviewed based upon
changes in the nature of the amounts outstanding. Accordingly, the allowances
are subject to change due to circumstances not presently known.

The Company has recorded a valuation allowance for potentially unrealizable
deferred tax assets. This allowance is reviewed based upon historical and
projected financial results of the Company. Accordingly, the allowance is
subject to changes due to circumstances not presently known.

                                      F-8
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 1 - Description of Business and Summary of Significant Accounting Policies
(continued)
-------------------------------------------------------------------------------

Revenue Recognition
-------------------

The Company has awarded franchise rights under the following franchise
agreements:

o    Individual franchise agreement - Right to operate one store at a location
     to be determined. Franchise fees are payable in cash or notes upon
     execution of agreement.

o    Area developer agreement - Right to develop stores within a specified
     geographic area. The area franchise fee (based upon the estimated
     development potential of the area) is payable in cash and notes upon
     execution of the area developer agreement. Upon awarding of individual
     franchises within the franchise area, the Company typically received 60% of
     the individual franchise fee and the area developer receives 40%. The area
     developer receives 50% to 60% of the royalties from individual franchisees
     within the area. Although the Company currently has several franchises
     operating under this agreement, during fiscal year 1994, the Company
     changed the terms of this agreement as specified in the area marketing
     agreement below.

o    Area marketing agreement - Right to market franchises within a specified
     geographic region. The area marketing fee is payable in cash and notes upon
     execution of the area marketing agreement. Upon selling of individual
     franchises within the area, the Company typically receives 60% of the
     individual franchise fee and the area marketer receives 40%. The area
     marketer receives 50% of the royalties from individual franchisees within
     the area.

o    International area franchise agreement - Right to market franchises within
     a designated country or specified geographic region. The international
     franchise fee is payable in cash and notes upon execution of the franchise
     agreement. The Company's participation in franchise fees and royalties for
     individual franchises sold within the international area are negotiated on
     a case-by-case basis. Additionally, the Company agrees to train all new
     individual franchisees for a flat fee.

Individual franchise fees outside a marketing or development area are recognized
as revenue when all material services and conditions relating to the sale have
been substantially performed by the Company and the franchise has commenced
operations.

                                      F-9
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 1 - Description of Business and Summary of Significant Accounting Policies
(continued)
-------------------------------------------------------------------------------

Revenue Recognition
-------------------

Prior to December 1, 1998, area marketing fees were recognized as income upon
completion of the initial training by the area marketer and collection of the
marketing fee. Effective December 1, 1998, the Company changed its accounting
policy based on an SEC directive related to the recognition of area marketing
agreement fees to one that recognizes such fees on a straight-line basis over
the effective term of the agreement, which is five years or as stores within the
area are opened. The effect of the change in fiscal 1999 resulted in the
deferral of $213,228 of net revenue previously recognized in prior years. This
change was reported as a cumulative effect of change in accounting principle of
$140,728 (net of $72,500 in income tax benefits) and is included in the net
income in fiscal year 1999. Fiscal year 2001, 2000 and 1999 income included
$13,400, $30,400 and $114,628, respectively, of amortized deferred net revenue
related to area marketing agreement fees that had been previously recognized in
prior years.

Individual franchise fees within a domestic area are recognized as revenue when
all material services and conditions relating to the sale have been
substantially performed by the Company, principally site selection and training.

International area franchise fees are deferred and recognized as revenue until
training provided to the international area marketer is completed and once
collection of notes receivable is reasonable assured.

Royalties from Franchisees
--------------------------

Royalties from individual franchisees are based upon a percentage of each
franchisee's sales and are recognized when earned based upon reported sales
activity by each franchisee.

Software Revenue Recognition
----------------------------

The Company's software products are generally licensed to franchisees for a
one-time initial fee and subsequent annual license and maintenance fees. The
initial license fee is recognized as revenue upon execution of a signed
contract, delivery of licensed software and when the Company believes that the
collection of the receivable is probable. Revenue on annual license fees will be
recognized over the related 12 month period.

Sales Equipment, Supplies and Services
--------------------------------------

Revenue is recognized as product is shipped or services rendered.

                                      F-10
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 1 - Description of Business and Summary of Significant Accounting Policies
(continued)
-------------------------------------------------------------------------------

Income Taxes
------------

The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Deferred tax liabilities and assets are determined
based on the differences between the financial statement and tax basis of assets
and liabilities using the enacted tax rates in effect for the year in which the
differences are expected to reverse. The measurement of deferred tax assets is
reduced, if necessary, by the amount of any tax benefits that are not expected
to be realized based on available evidence. The Company expects future taxable
income and, therefore, believes it will recognize future benefits related to a
portion of its deferred tax asset.

Deferred Financing Costs
------------------------

Costs related to the development of the franchise operations are capitalized and
amortized over the expected period of benefit of five years. These costs are
primarily comprised of costs incurred to develop the franchise documents.

Incremental direct development costs, such as commissions, are deferred, but not
in excess of the deferred revenue and are expensed when the related franchise
fee revenue is recognized.

Software Development Costs
--------------------------

The Company applies the provisions of Statement of Position 98-1, "Accounting
for Costs of Computer Software Developed for Internal Use". The Company accounts
for costs incurred in the development of computer software as software research
and development costs until the preliminary project stage is completed.
Capitalized software costs consist of costs of internally developed software
developed for sale to franchisees. Capitalization of internally developed
software costs begins upon the establishment of the technological feasibility of
a product. The recoverability of capitalized software costs requires
considerable judgment by management with respect to certain external factors,
including, but not limited to, technological feasibility, anticipated future
gross revenues, estimated economic life and changes in software and hardware
technologies. Amortization of internally developed software costs are provided
on a product-by-product basis using the amount computed by the straight-line
method over the remaining economic life of the product. Generally, an original
estimated economic life of three years is assigned to capitalized costs. The
software was placed in service by a majority of the franchises in February 2000.
As such, no amortization was recorded during the fiscal year 1999, amortization
in 2000 was $81,390. After two months of use, it became apparent that the
software was not working as intended. The Company contracted with a software
development company to rewrite a significant portion of the program for
approximately $230,000. Management's analysis indicated that approximately
$557,853 of the original capitalized asset needed to be written off as an
impaired asset.

                                      F-11
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 1 - Description of Business and Summary of Significant Accounting Policies
(continued)
-------------------------------------------------------------------------------

Software Development Costs (continued)
--------------------------------------

In May of 2001 the Company determined that it had no more funds to commit to
finishing the development of the software. Accordingly, an agreement was reached
with ReSource Software, Inc. to continue development of the software at their
expense and then market the finished product and split the revenue. The Company
also received 350 ReSource point of sale software licenses for use by the
Company's stores for $55,000 to be paid over one year.

Reclassifications
-----------------

Certain amounts in the 2000 consolidated financial statements have been
reclassified to conform to the 2001 presentation.

Advertising Costs
-----------------

The Company expenses advertising costs as incurred.

Recently Issued Accounting Pronouncements
-----------------------------------------

In July 2001, the FASB issued SFAS Nos. 141 and 142 " Business Combinations "
and " Goodwill and other Intangible Assets ". Statement 141 requires all
business combinations initiated after June 30, 2001 to be accounted for using
the purchase method. Under the guidance of Statement 142, goodwill is no longer
subject to amortization over its estimated useful life. Rather, goodwill will be
subject to at least an annual assessment for impairment by applying a fair value
base test. Statement 142 is effective for financial statement dates beginning
after December 15, 2001. Management does not anticipate that this statement will
have an impact on the financial statements of the Company.

Long-Lived Assets
-----------------

The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recovered. The Company looks primarily to the undiscounted future cash flows
in its assessment of whether or not long-lived assets have been impaired.

Deferred Rent
-------------

The Company was granted free rent periods on its office facility. The
accompanying financial statements reflect rent expense on a straight-line basis
over the term of the lease.

                                      F-12
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 2 - Balance Sheet Disclosures
----------------------------------

Accounts receivable are summarized as follows:

                                                              November 30,
                                                         ----------------------
                                                           2001         2000
                                                         ---------    ---------
Trade accounts receivable                                $ 613,869    $ 683,875
Provision for loss on accounts receivable                  (69,677)    (127,438)
                                                         ---------    ---------
                                                         $ 544,192    $ 556,437
                                                         =========    =========

Software development costs consist of the following:

                                                              November 30,
                                                         ----------------------
                                                           2001         2000
                                                         ---------    ---------
PSS version 1                                            $ 293,000    $ 293,000
PSS version 2                                              409,329      211,881
Less accumulated amortization                             (130,373)     (81,390)
                                                         ---------    ---------
                                                         $ 571,956    $ 423,491
                                                         =========    =========

Property and equipment consist of the following:

                                                              November 30,
                                                         ----------------------
                                                           2001         2000
                                                         ---------    ---------
Office equipment                                         $ 205,362    $ 196,260
Furniture and fixtures                                     228,089      228,088
                                                         ---------    ---------
                                                           433,451      424,348
Less accumulated depreciation                             (348,038)    (288,092)
                                                         ---------    ---------
                                                         $  85,413    $ 136,256
                                                         =========    =========

Depreciation expense for the periods ended is:

                             2001                                     $  59,945
                             2000                                     $  87,031
                             1999                                     $  85,446


                                      F-13
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 3 - Notes Receivable
-------------------------

Notes receivable consist of franchise fees and area marketer fees financed by
the Company. The notes are collateralized by the underlying franchise agreements
and by essentially all of the franchisees' assets incidental to the operation of
the franchise centers. Most of the notes are personally guaranteed by the owners
of each franchise.

Notes receivable consist of the following:

                                                              November 30,
                                                         ----------------------
                                                            2001         2000
                                                         ---------    ---------

Non-interest bearing notes; interest imputed at 7%       $ 301,736    $ 444,452

Interest-bearing notes; interest rates from 6% to 8%        29,349       29,686
                                                         ---------    ---------
                                                           331,085      474,138
         Less current portion                             (115,523)    (169,982)
                                                         ---------    ---------
                                                           215,562      304,156
         Less allowance                                    (31,115)     (18,008)
                                                         ---------    ---------
                                                         $ 184,447    $ 286,148
                                                         =========    =========


The Company reserves an allowance for doubtful collections which is continually
reviewed and adjusted to maintain the allowance at a level considered adequate
to cover future losses. The allowance is management's best estimate of
uncollectible amounts and is determined based on historical performance of the
notes, which is tracked by the Company on an ongoing basis. The losses
ultimately incurred could differ materially in the near term from the amounts
estimated in determining the allowance. The Company collateralizes the notes
with the area directorship agreement, assets of the store sold or other related
assets.

It is the Company's policy not to impute interest on the notes which are
included in deferred revenue. Included in these notes are financed area marketer
fees, the maturities of which are based upon the expected opening of franchises
within the area.

The above amounts are scheduled to mature as follows:

          Year Ending November 30,
                    2002                                $ 115,523
                    2003                                   87,856
                    2004                                   71,231
                    2005                                   38,186
                    2006                                   18,289
                                                        ---------
                                                          331,085
                   Less allowance                        (31,115)
                                                        ---------
                                                        $ 299,970
                                                        =========


                                      F-14
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 4 - Income Taxes
---------------------

During 2001, 2000 and 1999 the Company utilized approximately $0, $0 and $80,000
in net operating loss carryforwards to offset current taxable income. This
resulted in tax savings of approximately $0, $0 and $27,000, respectively. The
Company's valuation allowance on its remaining net operating loss carryforward
is an estimate based on the Company's ability to utilize net operating loss
carryforwards to offset taxable income projected in future years.

Temporary differences and carryforwards giving rise to a significant portion of
deferred tax assets and liabilities are as follows:

                                                          November 30,
                                                 ------------------------------
                                                    2001                2000
                                                 -----------        -----------
Net operating loss carryforwards                 $ 2,414,117        $ 2,176,000
Reserves and other deferrals                        (138,000)           162,000
Depreciation and amortization                        (15,000)          (145,000)
Valuation allowance                               (2,128,383)        (1,845,500)
                                                 -----------        -----------
                                                 $   132,734        $   347,500
                                                 ===========        ===========


As of November 30, 2001, the Company has net operating loss carryforwards for
tax purposes of approximately $4,440,000.

If not used, these carryforwards will expire in varying amounts as follows.

          Year Ending November 30,
          ------------------------
                    2003                                 $    63,000
                    2004                                     500,000
                    2005                                   1,030,000
                    2006                                   1,162,000
                    2007                                      73,000
                    2008                                     605,000
                    2009                                     616,000
                    2019                                       3,000
                    2020                                     245,000
                    2021                                     143,000
                                                         -----------
                                                         $ 4,440,000
                                                         ===========


                                      F-15
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 4 - Income Taxes (continued)
---------------------------------

The following is a reconciliation of the statutory federal income tax rate
applied to pre-tax accounting net (loss) income compared to the income taxes in
the consolidated statements of operations as of November 30, 2001:


Income tax (benefit) expense at the statutory rate of 34%             $ (68,117)

Change resulting from:
         Change in valuation allowance                                  282,883
                                                                      ---------

Provision for income tax expense                                      $ 214,766
                                                                      =========


Note 5 - Long-Term Debt
-----------------------

The Company has a long-term, $400,000 note payable to the majority shareholder
requiring the balance plus interest at prime rate (5.10% at November 30, 2001)
to be paid upon demand subsequent to January 2003. The note is unsecured.


Note 6 - Capital Leases
-----------------------

The Company has acquired assets under the provisions of long-term leases. For
financial reporting purposes, minimum lease payments relating to the assets have
been capitalized. The lease expires in August 29, 2003. Amortization of the
leased property is included in depreciation expense.

The assets under capital lease have cost and accumulated amortization as
follows:

                                                            November 30,
                                                     --------------------------
                                                       2001              2000
                                                     --------          --------
Capitalized leases                                   $ 43,677          $ 43,677
Less accumulated amortization                         (24,568)          (13,649)
                                                     --------          --------
                                                     $ 19,109          $ 30,028
                                                     ========          ========


                                      F-16
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 6 - Capital Leases (continued)
-----------------------------------

Maturities of capital lease obligations are as follows:

      Year Ending November 30,
      ------------------------
              2002                                               $   13,705
              2003                                                   10,281
                                                                 ----------
              Total minimum lease payments                           23,986
              Amount representing interest                          (2,378)
                                                                 ----------
              Present value of net minimum lease payments            21,608
              Less current portion                                 (10,520)
                                                                 ----------

              Long-term capital lease obligation                 $   11,088
                                                                 ==========


Note 7 - Commitments
--------------------

Operating Leases
----------------

The Company leases office space and office equipment under noncancelable
operating leases.

Rent expense for these leases was:

      Year Ending November 30,
      ------------------------

               2001                                              $ 264,618
               2000                                              $ 341,851
               1999                                              $ 287,250


Future minimum lease payments under these leases are approximately as follows:

      Year Ending November 30,
      ------------------------

               2002                                              $ 184,000
               2003                                                184,000
               2004                                                186,000
               2005                                                187,000
               2006                                                 79,000
                                                                 ---------
                                                                 $ 820,000
                                                                 =========

                                      F-17
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 8 - Stockholders' Equity
-----------------------------

Preferred Stock
---------------

Dividends on the Series C Preferred Stock will accrue at 6% per year commencing
December 1, 1997. Dividends are payable annually commencing March 31, 1999 and
each March 31 thereafter for the previous year ended. The preferred stock does
not vote although holders of 51% must approve certain items such as any changes
in control, sale of the Company or a sale of the majority of the Company's
assets. The Series C Preferred Stock may be redeemed at the Company's option any
time at $1,000 per share plus accrued dividends.

As an incentive to exchange for the Series C preferred stock, the preferred
shareholders were granted a total of 884,264 common stock warrants at an average
price of $0.10 per share. There was no fair value attributed to the warrants as
no material imputed value was estimated in the Company pricing model. All
warrants were exercised during fiscal year 1999.

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

The 1999 Incentive and Non-statutory Stock Option Plan (the Plan) authorizes the
issuance of up to 400,000 shares of the Company's Common Stock. The Plan will
remain in effect until December 31, 2008 unless terminated earlier by action of
the Board. All employees of the Company are eligible to receive options under
the Plan at the discretion of the Board. Options issued under the Plan vest
one-third per year upon each of the first three anniversaries of the issue date
and have a term of ten years from the date of issue.



                                      F-18
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 8 - Stockholders' Equity (continued)
-----------------------------------------

Stock Options (continued)
-------------------------

The following table presents the activity for options outstanding:

                                                                       Weighted
                                                    Incentive           Average
                                                      Stock            Exercise
                                                     Options             Price
                                                     --------          --------

Outstanding - November 30, 1998                          --            $    --
         Granted                                      172,227              0.75
         Forfeited/canceled                           (10,386)             0.75
         Exercised                                       --                 --
                                                     --------          --------

Outstanding - November 30, 1999                       161,841              0.75
         Granted                                         --                 --
         Forfeited/canceled                           (33,743)             0.75
         Exercised                                       --                 --
                                                     --------          --------

Outstanding - November 30, 2000                       128,098              0.75
         Granted                                         --                 --
         Forfeited/canceled                           (19,938)             0.75
         Exercised                                       --                 --
                                                     --------          --------

Outstanding - November 30, 2001                       108,160          $   0.75
                                                     ========          ========


The following table presents the composition of options outstanding and
exercisable:

                             Options Outstanding             Options Exercisable
                             -------------------             -------------------
Range of Exercise Prices      Number     Price*     Life*     Number     Price*
-------------------------    -------     ------     -----     ------     ------
         .75                 108,160     $ 0.75     8.00      72,108     $ 0.75
                             -------     ------     -----     ------     ------

Total - November 30, 2001    108,160     $ 0.75     8.00      72,108     $ 0.75
                             =======     ======     ====      ======     ======


*Price and Life reflect the weighted average exercise price and weighted average
remaining contractual life, respectively.

                                      F-19
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 8 - Stockholders' Equity (continued)
-----------------------------------------

Stock Options (continued)
-------------------------

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation cost has been recognized for the stock option
plans. Had compensation cost for the Company's option plan been determined based
on the fair value at the grant date for awards consistent with the provisions of
SFAS No. 123, the Corporation's net (loss) income and basic (loss) income per
common share would have been changed to the pro forma amounts indicated below:

                                                   For the Years Ended
                                                       November 30,
                                         ---------------------------------------
                                            2001           2000           1999
                                         ----------     ----------     ---------

Net (loss) income - as reported          $ (368,678)    $ (919,583)    $  95,061
Net income - pro forma                         --             --          19,496
Basic (loss) income per common share
  - as reported                               (0.10)         (0.24)         0.03
Basic (loss) income per common share
  - pro forma                                 (0.10)         (0.24)         0.01


The Company utilizes the Black-Scholes option-pricing model to calculate the
fair value of each individual issuance of options with the following assumptions
used for grants during the year ended November 30, 1999: dividend yield of 0.0%;
expected average annual volatility of 102.5%; average annual risk-free interest
rate of 5.25%; and expected term of 10 year.


Note 9 - Employee Benefit Plan
------------------------------

Effective December 1, 1991, the Company established the Pak Mail 401(k) Profit
Sharing Plan (the Plan). All employees of the Company who are 21 years of age
and have completed one year of eligibility service, as defined, may participate
in the Plan. Participants may make tax deferred contributions in any amount up
to the maximum allowable under current federal tax laws. The Company will
contribute an amount equal to 50% of each participant's contribution, limited to
3% of the participant's compensation as defined in the Plan.


Company contributions to the Plan are as follows:

                                                    For the Years Ended
                                                        November 30,
                                           -------------------------------------
                                             2001           2000           1999
                                           -------        -------        -------
Benefit contributions                      $19,918        $27,887        $42,048
                                           =======        =======        =======


                                      F-20
<PAGE>


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


Note 10 - Advertising Fund
--------------------------

The Company has established an advertising trust to administer funds collected
from franchisees for advertising. The advertising trust is a separate legal
entity and, therefore, the Company is not contingently liable for any trust
liabilities incurred; nor is the trust activity reflected in the accompanying
consolidated financial statements.


Note 11 - Restricted Cash
-------------------------

At November 30, 2001 and 2000, the amounts collected and due to the advertising
trust of $138,406 and $11,129, respectively, are included in restricted cash.
Restricted cash is the portion of cash in Pak Mail Centers of America, Inc.'s
checking account which is payable to the Pak Mail Advertising Trust Fund. These
funds are received by Pak Mail Centers of America, Inc. and are immediately
payable to the Advertising Trust Fund upon receipt and subsequent
identification. A corresponding current liability appears as "Due to advertising
fund".






                                      F-21
<PAGE>


                            ACCOMPANYING INFORMATION


                PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY

            Schedule of Selling, General and Administrative Expenses


                                                   For the Years Ended
                                                        November 30,
                                          --------------------------------------
                                             2001          2000          1999
                                          ----------    ----------    ----------
Salaries and bonuses/commissions          $  946,961    $1,009,266    $  881,021
Rent expense                                 264,618       341,851       287,250
Bad debts                                    102,000       255,381        42,559
Miscellaneous expense and other               63,047       210,510       109,192
Benefit contributions                         19,918        27,887        42,048
Professional services                        158,463       147,610       137,728
Telephone, fax and internet                   71,715       129,943        69,460
Health insurance                              83,507        62,177        73,715
Payroll taxes                                 63,385        75,854        62,831
Printing                                      18,426        60,901        43,362
Travel and entertainment                      18,655        60,850       130,462
Contract labor - temporary help               23,804        46,619        11,878
Dues and fees                                  3,962        37,458        47,879
Freight                                       25,262        32,465         9,108
Training                                      59,867        27,312        30,845
Postage                                        6,085        16,422         9,108
Supplies                                      11,904        15,988        20,200
Other taxes                                   21,910        13,045        11,152
Operating insurance                           12,489        11,319        11,223
Trade shows                                    7,769         6,311         6,706
Repairs and maintenance                        2,216         4,123        11,862
Subscriptions                                  3,462         2,629         4,446
Donations                                        345           911         7,458
                                          ----------    ----------    ----------
                                          $1,989,770    $2,596,832    $2,061,493
                                          ==========    ==========    ==========


                                      F-22