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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549___________________**FORM 10-K**________________________________

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

For the fiscal year ended December31, 2010

  

** ̈                             TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

  

For the transition period from         to

  

Commissionfile number 0-15476  

**ZAXISINTERNATIONAL INC.**(Exact Name Of RegistrantAs Specified In Its Charter)
Delaware68-0080601(State of Incorporation)(I.R.S. Employer Identification No.)    6399    Wilshire Boulevard, Suite 1019, Los Angeles, CA90048(Address of Principal Executive Offices)(ZIP Code)
 Registrant'sTelephone Number, Including Area Code: (323) 951-0575

**SecuritiesRegistered Pursuant to Section 12(g) of The Act: Common Stock, $0.0001**

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes x No  ̈Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the best of theregistrant's knowledge, in the definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.  ̈

On December 31,2010, the aggregate market value of the 307,126 common stock held by non-affiliates of theregistrant was approximately $21,499 based on the asked price of the Registrants commonstock on December 31, 2010. On December 31, 2010, the Registrant had 1,495,126 shares ofcommon stock outstanding.

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer (asdefined in Rule 12b-2 of the Exchange Act) or a smallerreporting company.
Large accelerated    filer  ̈Accelerated filer  ̈ Non-Accelerated    filer  ̈ Smaller reporting    company x
Indicate by check mark whether the registrant is a shellcompany (as defined in Rule 12b-2 of the Exchange Act). Yes x No  ̈
****
**TABLE OF CONTENTS**
ItemDescription
Page

**PART I**
ITEM    1.
    
       DESCRIPTION OF    BUSINESS
        3  ITEM 1A.    RISK FACTORSA    RELATED TO OUR BUSINESS6ITEM 1B.    UNRESOLVED STAFF COMMENTS11
ITEM    2.
    
       DESCRIPTION OF    PROPERTY
        11   
ITEM    3.
    
       LEGAL PROCEEDINGS
        11   
ITEM    4.
    
       SUBMISSION    OF MATTERS TO A VOTE OF SECURITY HOLDERS
        11   
     **PART II**

ITEM    5.
    
     MARKET    FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
        12  ITEM 6.  SELECTED    FINANCIAL DATA12
ITEM    7.
    
     MANAGEMENT'S    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND PLAN OF OPERATION
        13   ITEM 7A.  QUANTITATIVE AND    QUALITATIVE DISCLOSURE ABOUT MARKET RISK13
ITEM    8.
    
     FINANCIAL STATEMENTS AND    SUPPLEMENTARY DATA
        14   
ITEM    9.
    
     CHANGES    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
        14   
ITEM    9A.
    
     CONTROLS AND    PROCEDURES
        14   ITEM 9 B.  OTHER INFORMATION14
     **PART III**

ITEM 10.
    
  DIRECTORS    AND EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE
        15  
ITEM 11.
    
  EXECUTIVE COMPENSATION
        15   
ITEM 12.
    
  SECURITY    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
        15   
ITEM 13.
    
  CERTAIN    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
        16   
ITEM 14.
    
  PRINCIPAL    ACCOUNTING FEES AND SERVICES
        16   
ITEM 15.
    
  EXHIBITS AND    FINANCIAL STATEMENT SCHEDULES
        16   
 
****
**Cautionary Statement regarding Forward-LookingStatements**

This Annual Report on Form 10-Kincludes forward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, asamended. The Registrant has based these forward-looking statements on its currentexpectations and projections about future events. These forward-looking statements aresubject to known and unknown risks, uncertainties and assumptions about the Registrantthat may cause its actual results, levels of activity, performance or achievements to bematerially different from any future results, levels of activity, performance orachievements expressed or implied by such forward-looking statements. In some cases, youcan identify forward-looking statements by terminology such as "may,""will," "should," "could," "would,""expect," "plan," "anticipate," "believe,""estimate," "continue," or the negative of such terms or other similarexpressions. Factors that might cause or contribute to such a discrepancy include, but arenot limited to, those described in this Annual Report on Form 10-K and in the Registrant'sother Securities and Exchange Commission filings. 

**PART I**

**ITEM 1. DESCRIPTION OF BUSINESS**Back to Table of Contents

**OrganizationalHistory and General Background of the Registrant**

Zaxis International Inc. wasincorporated in Ohio in 1989 and is sometimesreferred to herein as "we", "us", "our", "Zaxis","Company" and the "Registrant". On August 25,1995, Zaxis merged with a subsidiary of The InFerGene Company ("InFerGene") andInFerGene changed its name to Zaxis International Inc. For accounting and tax purposes,the merger was treated as a reverse acquisition.

The Company was a biotechnology holding company thatoperated its business through a wholly owned subsidiary. The Company was a manufacturerand distributor of products that were used in a molecular separation process known aselectrophoresis, a procedure used in more than 55,000 research, industrial and clinicallaboratories worldwide. The more common applications of this procedure includeprotein-based separations such as the HDL and LDL components and sub-components ofcholesterol, the identification of various genes and gene products (e.g. DNA, RNA, etc.)and the separation and identification of proteins in drug discovery applications(Proteomics). A variety of techniques, formats, materials, compounds, equipment anddevices are employed in electrophoresis and Zaxis provided products to meet these needs.The primary focus of the Company's former research and development efforts as well as itsformer sales and marketing efforts were targeted toward the consumables segment of thismarket. The Company's core products were the pre-cast gels and reagents used in theseelectrophoresis procedures.

The Company believed that its products were wellpositioned to take advantage of rapidly growing markets. The Company was not able togenerate sufficient revenues to support its operating expenses during fiscal year 2002. Inaddition, the Company was not able to raise additional capital to fund its negative cashflow from operations through borrowings or equity financing to support and expand itsbusiness plan. 

On November 6, 2002, the Registrant filed a voluntarypetition under the U.S. Bankruptcy Code. On October 13, 2004, the Company emerged frombankruptcy free and clear of liens, claims and other obligations.
On October 13, 2004, Ivo Heiden wasappointed to the board ofdirector of the Registrant. Mr. Heiden was subsequently appointed as sole officer of theRegistrant ("Management").

**Business Objectives of the Registrant**

The Registrant has no present operations. Management determined to direct itsefforts and limited resources to pursue and effect a business combination.
    *Currenttrends*

Management believes that asa result of the relative uncertainty in the United States equity markets over the past fewyears, many privately-held companies have been closed off from the public market andtraditional IPO's. During the past few years, many privately-held or public companiesattempted to divest non-core assets and divisions and valuations of these assets anddivisions have decreased significantly. Therefore, Management believes that there aresubstantial business opportunities to effect attractive acquisitions. As a public entitywith its shares of common stock registered under the Exchange Act and publicly trading,Management believes to be well positioned to identify target acquisitions and to effect abusiness combination in order to take advantage of these current trends.

    *Effecting a business combination*

Prospective buyers of theCompany's common stock will invest in the Company without an opportunity to evaluate thespecific merits or risks of any one or more business combinations. A business combinationmay involve the acquisition of, or merger with, a company which needs to raise substantialadditional capital by means of being a publicly trading company, while avoiding what itmay deem to be adverse consequences of undertaking a public offering itself. These includetime delays, significant expense, loss of voting control and compliance with variousFederal and state securities laws. A business combination may involve a company which maybe financially unstable or in its early stages of development or growth.

*    TheRegistrant has not identified a target business or target industry*

The Company's effort inidentifying a prospective target business will not be limited to a particular industry andthe Company may ultimately acquire a business in any industry Management deemsappropriate. To date, the Company has not selected any target business on which toconcentrate our search for a business combination. While the Company intends to focus ontarget businesses in the United States, it is not limited to those entities and mayconsummate a business combination with a target business outside of the United States.Accordingly, there is no basis for investors in the Company's common stock to evaluate thepossible merits or risks of the target business or the particular industry in which we mayultimately operate. To the extent we effect a business combination with a financiallyunstable company or an entity in its early stage of development or growth, includingentities without established records of sales or earnings, we may be affected by numerousrisks inherent in the business and operations of financially unstable and early stage orpotential emerging growth companies. In addition, to the extent that we effect a businesscombination with an entity in an industry characterized by a high level of risk, we may beaffected by the currently unascertainable risks of that industry. An extremely high levelof risk frequently characterizes many industries which experience rapid growth. Inaddition, although the Company's Management will endeavor to evaluate the risks inherentin a particular industry or target business, we cannot assure you that we will properlyascertain or assess all significant risk factors.

    *Sourcesof target businesses*

The Registrant anticipatesthat target business candidates will be brought to our attention from various unaffiliatedsources, including securities broker-dealers, investment bankers, venture capitalists,bankers and other members of the financial community, who may present solicited orunsolicited proposals. Our Management may also bring to our attention target businesscandidates. While we do not presently anticipate engaging the services of professionalfirms that specialize in business acquisitions on any formal basis, we may engage thesefirms in the future, in which event we may pay a finder's fee or other compensation. In noevent, however, will we pay Management any finder's fee or other compensation for servicesrendered to us prior to or in connection with the consummation of a business combination.

    *Selectionof a target business and structuring of a business combination*

Management owns 80% of the issued andoutstanding shares and will have broad flexibility in identifying and selecting aprospective target business. In evaluating a prospective target business, our Managementwill consider, among other factors, the following:

Ÿ financial condition and results of operation ofthe target company;Ÿ growth potential;Ÿ experience and skillof management and availability of additional personnel;Ÿ capital requirements;Ÿ competitive position;Ÿ stage of developmentof the products, processes or services;Ÿ degree of current orpotential market acceptance of the products, processes or services;Ÿ proprietary featuresand degree of intellectual property or other protection of the products, processes orservices;Ÿ regulatory environmentof the industry; andŸ costs associated witheffecting the business combination.

These criteria are notintended to be exhaustive. Any evaluation relating to the merits of a particular businesscombination will be based, to the extent relevant, on the above factors as well as otherconsiderations deemed relevant by our Management in effecting a business combinationconsistent with our business objective. In evaluating a prospective target business, wewill conduct a due diligence review which will encompass, among other things, meetingswith incumbent management and inspection of facilities, as well as review of financial andother information which will be made available to us.

We will endeavor tostructure a business combination so as to achieve the most favorable tax treatment to us,the target business and both companies' stockholders. We cannot assure you, however, thatthe Internal Revenue Service or appropriate state tax authority will agree with our taxtreatment of the business combination. 

The time and costs requiredto select and evaluate a target business and to structure and complete the businesscombination cannot presently be ascertained with any degree of certainty. Any costsincurred with respect to the identification and evaluation of a prospective targetbusiness with which a business combination is not ultimately completed will result in aloss to us.

    *Probablelack of business diversification*

We may seek to effectbusiness combinations with more than one target business, it is probable that we will havethe ability to effect only a single business combination. Accordingly, the prospects forour success may be entirely dependent upon the future performance of a single business.Unlike other entities which may have the resources to complete several businesscombinations of entities operating in multiple industries or multiple areas of a singleindustry, it is probable that we will not have the resources to diversify our operationsor benefit from the possible spreading of risks or offsetting of losses. By consummating abusiness combination with only a single entity, our lack of diversification may:

Ÿ subject us to numerous economic, competitive and regulatory developments, any orall of which may have a substantial adverse impact upon the particular industry in whichwe may operate subsequent to a business combination, andŸ result in ourdependency upon the development or market acceptance of a single or limited number ofproducts, processes or services.

   *Limitedability to evaluate the target business' management*

Although we intend toclosely scrutinize the management of a prospective target business when evaluating thedesirability of effecting a business combination, we cannot assure you that our assessmentof the target business' management will prove to be correct. In addition, we cannot assureyou that the future management will have the necessary skills, qualifications or abilitiesto manage a public company intending to embark on a program of business development.Furthermore, the future role of our director, if any, in the target business cannotpresently be stated with any certainty. While it is possible that our director will remainassociated in some capacity with us following a business combination, it is unlikely thathe will devote his full efforts to our affairs subsequent to a business combination.Moreover, we cannot assure you that our director will have significant experience orknowledge relating to the operations of the particular target business. 

Following a businesscombination, we may seek to recruit additional managers to supplement the incumbentmanagement of the target business. We cannot assure you that we will have the ability torecruit additional managers, or that additional managers will have the requisite skills,knowledge or experience necessary to enhance the incumbent management. 

**Competition**

In identifying, evaluatingand selecting a target business, we expect to encounter intense competition from otherentities having a business objective similar to ours. Many of these entities are wellestablished and have extensive experience identifying and effecting business combinationsdirectly or through affiliates. Many of these competitors possess greater technical, humanand other resources than us and our financial resources will be relatively limited whencontrasted with those of many of these competitors. While we believe there are numerouspotential target businesses, our ability to compete in acquiring certain sizable targetbusinesses will be limited by our limited financial resources. This inherent competitivelimitation gives others an advantage in pursuing the acquisition of a target business.Further, any of these obligations may place us at a competitive disadvantage insuccessfully negotiating a business combination. Our Management believes, however, thatour status as a public entity and potential access to the United States public equitymarkets may give us a competitive advantage over privately-held entities having a similarbusiness objective in acquiring a target business with significant growth potential onfavorable terms. 

If we succeed in effecting abusiness combination, there will be, in all likelihood, intense competition fromcompetitors of the target business. In particular, certain industries which experiencerapid growth frequently attract an increasingly larger number of competitors, includingcompetitors with increasingly greater financial, marketing, technical and other resourcesthan the initial competitors in the industry. The degree of competition characterizing theindustry of any prospective target business cannot presently be ascertained. We cannotassure you that, subsequent to a business combination, we will have the resources tocompete effectively, especially to the extent that the target business is in a high-growthindustry.

**Employees**

Mr. Heiden, our CEO and CFO,is our sole executive officer. Mr. Heiden is not obligated to contribute anyspecific number of hours per week and intend to devote only as much time as he deemnecessary to the Company's affairs. The amount of time he will devote in any time periodwill vary based on the availability of suitable target businesses to investigate. We donot intend to have any full time employees prior to the consummation of a businesscombination.

**Conflicts of Interest**

The Company's Management is not requiredto commit its full time to the Company's affairs. As a result, pursuing new businessopportunities may require a greater period of time than if Management would devote hisfull time to the Company's affairs. Management is not precluded from serving as officer ordirector of any other entity that is engaged in business activities similar to those ofthe Registrant. Management has not identified and is not currently negotiating a newbusiness opportunity for us. In the future, Management may become associated or affiliatedwith entities engaged in business activities similar to those we intend to conduct. Insuch event, Management may have conflicts of interest in determining to which entity aparticular business opportunity should be presented. In the event that the Company'sManagement has multiple business affiliations, it may have legal obligations to presentcertain business opportunities to multiple entities. In the event that a conflict ofinterest shall arise, Management will consider factors such as reporting status,availability of audited financial statements, current capitalization and the laws ofjurisdictions. If several business opportunities or operating entities approach Managementwith respect to a business combination, Management will consider the foregoing factors aswell as the preferences of the Management of the operating company. However, Managementwill act in what it believes will be in the best interests of the shareholders of theRegistrant. The Registrant shall not enter into a transaction with a target business thatis affiliated with Management.

**Periodic Reporting and Audited Financial Statements**

We have registered oursecurities under the Securities Exchange Act of 1934, as amended, and have reportingobligations, including the requirement that we file annual and quarterly reports with theSEC. In accordance with the requirements of the Securities Exchange Act of 1934, ourannual reports will contain financial statements audited and reported on by ourindependent public accountants.

We will not acquire a targetbusiness if audited financial statements cannot be obtained for the target business. OurManagement believes that the requirement of having available audited financial statementsfor the target business will limit the pool of potential target businesses available foracquisition.

**ITEM 1A. RISK FACTORS RELATED TO OURBUSINESS**Back to Table of Contents
Anyinvestment in our shares of common stock involves a high degree of risk. You shouldcarefully consider the following information about these risks, together with the otherinformation contained in this annual report before you decide to invest in our commonstock. Each of the following risks may materially and adversely affect our businessobjective, plan of operation and financial condition. These risks may cause the marketprice of our common stock to decline, which may cause you to lose all or a part of themoney you invested in our common stock. We provide the following cautionary discussion ofrisks, uncertainties and possible inaccurate assumptions relevant to our business plan. In addition to other information included in this annual report, the followingfactors should be considered in evaluating the Company's business and future prospects.

***The Company has a limited operating historyand very limited resources.***

Since emerging from bankruptcy, the Company's operationshave been limited to seeking a potential business combination and has had no revenues fromoperations. Investors will have no basis upon which to evaluate the Company's ability toachieve the Company's business objective, which is to effect a merger, capital stockexchange, acquire an operating business. The Company will not generate any revenues until,at the earliest, after the consummation of a business combination or seeking new businessopportunities.

***Since the Company has not currently selecteda particular target industry or target business with which to complete a businesscombination, the Company is unable to currently ascertain the merits or risks of thebusiness' operations.***

Since the Company has not yet identified a particularindustry or prospective target business, there is no basis for investors to evaluate thepossible merits or risks of the particular industry in which the Company may ultimatelyoperate or the target business which the Company may ultimately acquire. To the extent theCompany completes a business combination with a financially unstable company or an entityin its development stage, the Company may be affected by numerous risks inherent in thebusiness operations of those entities. Although the Company's Management will endeavor toevaluate the risks inherent in a particular industry or target business, the Companycannot assure you that it will properly ascertain or assess all of the significant riskfactors. There can be no assurance that any prospective businesscombination will benefit shareholders or prove to be more favorable to shareholders thanany other investment that may be made by shareholders and investors.

***Unspecified andunascertainable risks***

There is no basis for shareholders toevaluate the possible merits or risks of potential business combination or the particularindustry in which the Company may ultimately operate. To the extent that the Companyeffects a business combination with a financially unstable operating company or an entitythat is in its early stage of development or growth, including entities withoutestablished records of revenues or income, the Company will become subject to numerousrisks inherent in the business and operations of that financially unstable company. Inaddition, to the extent that the Company effects a business combination with an entity inan industry characterized by a high degree of risk, the Company will become subject to thecurrently unascertainable risks of that industry. An extremely high level of riskfrequently characterizes certain industries that experience rapid growth. AlthoughManagement will endeavor to evaluate the risks inherent in a particular business orindustry, there can be no assurance that Management will properly ascertain or assess allsuch risks or that subsequent events may not alter the risks that the Company perceived atthe time of the consummation of a business combination.

***It is likely that the Company's currentofficer and director will resign upon consummation of a business combination and theCompany will have only limited ability to evaluate the management of the target business.***

The Company's ability to successfully effect a businesscombination will be dependent upon the efforts of the Company's Management. The futurerole of the Company's key personnel in the target business, however, cannot presently beascertained. Although it is possible that Management will remain associated in variouscapacities with the target business following a business combination, it is likely thatthe management of the target business at the time of the business combination will remainin place. Although the Company intends to closely scrutinize the management of aprospective target business in connection with evaluating the desirability of effecting abusiness combination, the Company cannot assure you that the Company's assessment ofmanagement will prove to be correct.

***Dependence on key personnel***

The Company is dependent upon thecontinued services of its officer and director. To the extent that his services becomeunavailable, the Company will be required to obtain other qualified personnel and therecan be no assurance that it will be able to recruit and hire qualified persons uponacceptable terms.

***The Company's officer and director mayallocate his time to other businesses thereby causing conflicts of interest in hisdetermination as to how much time to devote to the Company's affairs. This could have anegative impact on the Company's ability to consummate a business combination.***

The Company's officer and director is not required tocommit his full time to the Company's affairs, which may result in a conflict of interestin allocating his time between the Company's business and other businesses. The Companydoes not intend to have any full time employees prior to the consummation of a businesscombination. Management of the Company is engaged in several other business endeavors andis not obligated to contribute any specific number of his hours per week to the Company'saffairs. If Management's other business affairs require him to devote more substantialamounts of time to such affairs, it could limit his ability to devote time to theCompany's affairs and could have a negative impact on the Company's ability to consummatea business combination.

***The Company's officer and director is now,and may in the future become, affiliated with entities engaged in business activitiessimilar to those intended to be conducted by this Company and, accordingly, may haveconflicts of interest in determining which entity a particular business opportunity shouldbe presented to.***

The Company's officer and director is now, and may inthe future become, affiliated with entities, including other companies, engaged inbusiness activities similar to those intended to be conducted by this Company.Additionally, the Company's office and director may become aware of business opportunitieswhich may be appropriate for presentation to this Company as well as the other entitieswith which he is or may be affiliated. Additionally, due to the Company's officer anddirector existing affiliations with other entities, he may have a fiduciary obligation topresent potential business opportunities to those entities in addition to presenting themto us which could cause additional conflicts of interest. Accordingly, Management may haveconflicts of interest in determining to which entity a particular business opportunityshould be presented.

***It is probable that the Company will only beable to enter into one business combination, which will cause us to be solely dependent onsuch single business and a limited number of products or services.***

It is probable that the Company will enter into abusiness combination with a single operating business. Accordingly, the prospects for theCompany's success may be:

Ÿ solelydependent upon the performance of a single operating business, orŸ dependent upon thedevelopment or market acceptance of a single or limited number of products or services.

In this case, the Company will not be able to diversifythe Company's operations or benefit from the possible spreading of risks or offsetting oflosses, unlike other entities which may have the resources to complete several businesscombinations in different industries or different areas of a single industry.

***The Company has limited resources and thereis significant competition for business combination opportunities. Therefore, the Companymay not be able to enter into or consummate an attractive business combination.***

The Company expects to encounter intense competitionfrom other entities having a business objective similar to the Company's, includingventure capital funds, leveraged buyout funds and operating businesses competing foracquisitions. Many of these entities are well established and have extensive experience inidentifying and effecting business combinations directly or through affiliates. Many ofthese competitors possess greater technical, human and other resources than the Companydoes and the Company's financial resources are limited when contrasted with those of manyof these competitors. While the Company believes that there are numerous potential targetbusinesses that it could acquire, the Company's ability to compete in acquiring certainsizable target businesses will be limited by the Company's limited financial resources andthe fact that the Company will use its common stock to acquire an operating business. Thisinherent competitive limitation gives others an advantage in pursuing the acquisition ofcertain target businesses.

***The Company may be unable to obtainadditional financing, if required, to complete a business combination or to fund theoperations and growth of the target business, which could compel the Company torestructure a potential business transaction or abandon a particular business combination.***

The Company has not yet identified any prospectivetarget business. If we require funds, because of the size of the business combination, wewill be required to seek additional financing. We cannot assure you that such financingwould be available on acceptable terms, if at all. To the extent that additional financingproves to be unavailable when needed to consummate a particular business combination, wewould be compelled to restructure the transaction or abandon that particular businesscombination and seek an alternative target business candidate. In addition, if weconsummate a business combination, we may require additional financing to fund theoperations or growth of the target business. The failure to secure additional financingcould have a material adverse effect on the continued development or growth of the targetbusiness. The Company's officer, director or stockholders are not required to provide anyfinancing to us in connection with or after a business combination.

***Additional financingrequirements associated with reporting obligations under the Exchange Act***

The Company has no revenues and isdependent upon the willingness of the Company's Management to fund the costs associatedwith the reporting obligations under the Exchange Act, other administrative costsassociated with the Company's corporate existence and expenses related to the Company'sbusiness objective. The Company is not likely to generate any revenues until theconsummation of a business combination. The Company anticipates that it will haveavailable sufficient financial resources to continue to pay accounting and otherprofessional fees and other miscellaneous expenses that may be required until the Companycommence business operations in connection with a business combination. In the event thatthe Company's available financial resources from its Management prove to be insufficientfor the purpose of achieving its business objective through a business combination, theCompany will be required to seek additional financing. The Company's failure to secureadditional financing could have a material adverse affect on the Company's ability topursue a business combination. The Company does not have any arrangements with any bank orfinancial institution to secure additional financing and there can be no assurance thatany such arrangement would be available on terms acceptable and in the Company's bestinterests. The Company does not have any written agreement with Management to providefunds for the Company's operating expenses.

***The Company's officer and director has a 80% equityinterest in the Company and thus may influence certain actions requiring stockholder vote.***

It is unlikely that there will be an annual meeting ofstockholders to elect new directors prior to the consummation of a business combination,in which case the current director will continue in office at least until the consummationof the business combination. If there is an annual meeting, as a consequence ofManagement's significant equity interest, the Company's Management has broad discretionregarding proposals submitted to a vote by shareholders. Accordingly, the Company'sexisting board of director will continue to exert substantial control at least until theconsummation of a business combination.

***Broad discretion of Management***

Any person who invests in the Company's common stockwill do so without an opportunity to evaluate the specific merits or risks of anyprospective business combination. As a result, investors will be entirely dependent on thebroad discretion and judgment of Management in connection with the selection of aprospective business combination. There can be no assurance that determinations made bythe Company's Management will permit us to achieve the Company's business objectives.

***Reportingrequirements may delay or preclude a business combination***

Pursuant tothe requirements of Section 13 of the Exchange Act, the Company is required to providecertain information about significant acquisitions and other material events. The Companywill continue to be required to file quarterly reports on Form 10-Q and annual reports onForm 10-K, which annual report must contain the Company's audited financial statements. Asa reporting company under the Exchange Act, following any business combination, we will berequired to file a report on Form 8-K, which report contains audited financial statementsof the acquired entity. These audited financial statements must be filed with the SECwithin 5 days following the closing of a business combination. While obtaining auditedfinancial statements is typically the responsibility of the acquired company, it ispossible that a potential target company may be a non-reporting company with unauditedfinancial statements. The time and costs that may be incurred by some potential targetcompanies to prepare such audited financial statements may significantly delay or may evenpreclude consummation of an otherwise desirable business combination. Acquisitionprospects that do not have or are unable to obtain the required audited statements may notbe appropriate for acquisition because we are subject to the reporting requirements of theExchange Act.

***If the Company is deemed to be an investmentcompany, the Company may be required to institute burdensome compliance requirements andthe Company's activities may be restricted, which may make it difficult for the Company toenter into a business combination.***

Ÿrestrictions on the nature of the Company's investments; andŸ restrictions on theissuance of securities, which may make it difficult for us to complete a businesscombination.

In addition, we may have imposed upon us burdensomerequirements, including:Ÿ registration as aninvestment company;Ÿ adoption of a specificform of corporate structure; andŸ reporting, recordkeeping, voting, proxy and disclosure requirements and other rules and regulations.

The Company does not believe that its anticipatedprincipal activities will subject it to the Investment Company Act of 1940.

***The Company may be deemed to have no"Independent Director", actions taken and expenses incurred by our officer anddirector on behalf of the Company will generally not be subject to "IndependentReview".***

Our director owns shares of our common stock and,although no compensation will be paid to him for services rendered prior to or inconnection with a business combination, he may receive reimbursement for out-of-pocketexpenses incurred by him in connection with activities on the Company's behalf such asidentifying potential target businesses and performing due diligence on suitable businesscombinations. There is no limit on the amount of these out-of-pocket expenses and therewill be no review of the reasonableness of the expenses by anyone other than our board ofdirector, which consist of one directors who may seek reimbursement. If our director willnot be deemed "independent," he will generally not have the benefit ofindependent director examining the propriety of expenses incurred on our behalf andsubject to reimbursement. Although the Company believes that all actions taken by ourdirector on the Company's behalf will be in the Company's best interests, the Companycannot assure the investor that this will actually be the case. If actions are taken, orexpenses are incurred that are actually not in the Company's best interests, it could havea material adverse effect on our business and plan of operation and the price of our stockheld by the public stockholders.

***General EconomicRisks.***

The Company's current andfuture business objectives and plan of operation are likely dependent, in large part, onthe state of the general economy. Adverse changes in economic conditions may adverselyaffect the Company's business objective and plan of operation. These conditions and otherfactors beyond the Company's control include also, but are not limited to regulatorychanges.

**RisksRelated to Our Common Stock**
***Our historic stockprice has been volatile and the future market price for our common stock is likely tocontinue to be volatile. Further, the limited market for our shares will make our pricemore volatile. This may make it difficult for you to sell our common stock.***

The public marketfor our common stock has been very volatile. Over the past three fiscal years andsubsequent quarterly periods, the market price for our common stock has ranged from $0.10to $3.50 (See "Market for Common Equity and Related Stockholder Matters” on page12 of this annual report). Any future market price for our shares is likely to continue tobe very volatile. This price volatility may make it more difficult for you to sell shareswhen you want at prices you find attractive. Further, the market for our common stock islimited and we cannot assure you that a larger market will ever be developed ormaintained. The last reported sales price for our common stock on march 7, 2010 was $0.30per share. Market fluctuations and volatility, as well as general economic, market andpolitical conditions, could reduce our market price. As a result, this may make itdifficult or impossible for you to sell our common stock.
***The Company's shares of common stock are quoted on theFINRA Bulletin Board, which limits the liquidity and price of the Company's common stock.***

The Company's shares of common stock are traded on the FINRA BulletinBoard, an FINRA-sponsored and operated inter-dealer automated quotation system for equitysecurities not included on The Nasdaq Stock Market. Quotation of the Company's securitieson the FINRA Bulletin Board limits the liquidity and price of the Company's common stockmore than if the Company's shares of common stock were listed on The Nasdaq Stock Marketor a national exchange. Thereis currently no active trading market in the Company's common stock. There can be noassurance that there will be an active trading market for the Company's common stockfollowing a business combination. In the event that an active trading market commences,there can be no assurance as to the market price of the Company's shares of common stock,whether any trading market will provide liquidity to investors, or whether any tradingmarket will be sustained.
***Our commonstock is subject to the Penny Stock Rules of the SEC and the trading market in our commonstock is limited, which makes transactions in our stock cumbersome and may reduce thevalue of an investment in our common stock.***

The Securities andExchange Commission has adopted Rule 3a51-1 which establishes the definition of a"penny stock," for the purposes relevant to us, as any equity security that hasa market price of less than $5.00 per share or with an exercise price of less than $5.00per share, subject to certain exceptions. For any transaction involving a penny stock,unless exempt, Rule 15g-9 require: 

Ÿthat a broker ordealer approve a person's account for transactions in penny stocks; andŸthe broker ordealer receive from the investor a written agreement to the transaction, setting forth theidentity and quantity of the penny stock to be purchased.

In order to approvea person’s account for transactions in penny stocks, the broker or dealer must:

Ÿobtain financialinformation and investment experience objectives of the person; andŸmake a reasonabledetermination that the transactions in penny stocks are suitable for that person and theperson has sufficient knowledge and experience in financial matters to be capable ofevaluating the risks of transactions in penny stocks. 

The broker ordealer must also deliver, prior to any transaction in a penny stock, a disclosure scheduleprescribed by the SEC relating to the penny stock market, which, in highlight form:

Ÿsets forth thebasis on which the broker or dealer made the suitability determination; andŸthat the broker ordealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokersmay be less willing to execute transactions in securities subject to the "pennystock" rules. This may make it more difficult for investors to dispose of our commonstock and cause a decline in the market value of our stock. 

Disclosure also hasto be made about the risks of investing in penny stocks in both public offerings and insecondary trading and about the commissions payable to both the broker-dealer and theregistered representative, current quotations for the securities and the rights andremedies available to an investor in cases of fraud in penny stock transactions. Finally,monthly statements have to be sent disclosing recent price information for the penny stockheld in the account and information on the limited market in penny stocks. 

***State blue skyregistration; potential limitations on resale of the Company's common stock***

The holders of the Company'sshares of common stock registered under the Exchange Act and those persons who desire topurchase them in any trading market that may develop in the future, should be aware thatthere may be state blue-sky law restrictions upon the ability of investors to resell theCompany's securities. Accordingly, investors should consider the secondary market for theRegistrant's securities to be a limited one.

It is theintention of the Registrant's Management following the consummation of a businesscombination to seek coverage and publication of information regarding the Registrant in anaccepted publication manual which permits a manual exemption. The manual exemption permitsa security to be distributed in a particular state without being registered if theRegistrant issuing the security has a listing for that security in a securities manualrecognized by the state. However, it is not enough for the security to be listed in arecognized manual. The listing entry must contain (1) the names of issuers, officers, anddirectors, (2) an issuer's balance sheet, and (3) a profit and loss statement for eitherthe fiscal year preceding the balance sheet or for the most recent fiscal year ofoperations. Furthermore, the manual exemption is a nonissuer exemption restricted tosecondary trading transactions, making it unavailable for issuers selling newly issuedsecurities.

Most of the accepted manualsare those published by Standard and Poor's, Moody's Investor Service, Fitch's InvestmentService, and Best's Insurance Reports, and many states expressly recognize these manuals.A smaller number of states declare that they "recognize securities manuals" butdo not specify the recognized manuals. The following states do not have any provisions andtherefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois,Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin. 

***Dividendsunlikely***

The Company does not expectto pay dividends for the foreseeable future because it has no revenues or cash resources.The payment of dividends will be contingent upon the Company's future revenues andearnings, if any, capital requirements and overall financial conditions. The payment ofany future dividends will be within the discretion of the Company's board of directors asthen constituted. It is the Company's expectation that future management following abusiness combination will determine to retain any earnings for use in its businessoperations and accordingly, the Company does not anticipate declaring any dividends in theforeseeable future.

**ITEM 1B.UNRESOLVED STAFF COMMENTS**Back to Table of Contents
None.
**ITEM 2.DESCRIPTION OF PROPERTIES**Back to Table of Contents

The Registrant's corporate office is located at 6399 Wilshire Boulevard, Suite1019, Los Angeles, CA 90048. These facilities consist of approximately 300 square feet of executiveoffice space. The Registrant believes that the office facilities are sufficient for theforeseeable future and this arrangement will remain in effect until we will consummate abusiness combination. 
**ITEM 3. LEGAL PROCEEDING**Back to Table of Contents

None.

**ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**Back to Table of Contents

None.
**PART II**

**ITEM 5.MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTER**Back to Table of Contents

**MarketInformation**

Our common stock iscurrently quoted on the FINRA Bulletin Board under the symbol ZXSI, an FINRA-sponsored andoperated inter-dealer automated quotation system for equity securities not included on TheNasdaq Stock Market. Quotation of the Company's securities on the FINRA Bulletin Boardlimits the liquidity and price of the Company's common stock more than if the Company'sshares of common stock were listed on The Nasdaq Stock Market or a national exchange. Forthe periods indicated, the following table sets forth the high and low bid prices pershare of common stock. The below prices represent inter-dealer quotations without retailmarkup, markdown, or commission and may not necessarily represent actual transactions.
Fiscal 2010

Fiscal 2009

Fiscal 2008

High

Low

High

Low

High

Low

First    Quarter ended March 31

$

0.11

$

0.03

$

1.10

$

0.10

$

1.00

 

$

0.77

Second Quarter ended June 30

$

0.11

$

0.03

$

0.11

$

0.10

$

1.10

 

$

0.67

Third Quarter ended September 30

$

0.07

$

0.03

$

0.11

$

0.10

$

3.50

$

0.65

Fourth Quarter ended December 31
$
0.08
$
0.07

$

0.11

$

0.10

$

0.31

$

0.10

As of December 31, 2010, our shares of common stock were held byapproximately 2,517 stockholders of record. The transfer agent of our common stock isStandard Registrar and Transfer Company, Inc. Phone (801) 571-8844.
**Dividends**

Holders of commonstock are entitled to dividends when, as, and if declared by the Board of Directors, outof funds legally available therefore. We have never declared cash dividends on its commonstock and our Board of Directors does not anticipate paying cash dividends in theforeseeable future as it intends to retain future earnings to finance the growth of ourbusinesses. There are no restrictions in our articles of incorporation or bylaws thatrestrict us from declaring dividends.

**SecuritiesAuthorized for Issuance Under Equity Compensation Plans**

No equity compensation plan or agreements under which our commonstock is authorized for issuance has been adopted during the fiscal year ended December31, 2010.
**Sale of UnregisteredSecurities**

On July 1, 2010, the Registrant issued122,000 restricted shares to the Registrant's CEO in considerationfor the conversion of $9,760 in debt.
**ITEM 6. SELECTED FINANCIAL DATA**Back toTable of Contents
None.

**ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND PLAN OF OPERATION**Back to Table of Contents

*Overview*

The Company's currentbusiness objective is to seek a business combination with an operating company. We intendto use the Company's limited personnel and financial resources in connection with suchactivities. The Company will utilize its capital stock, debt or a combination ofcapital stock and debt, in effecting a business combination. It maybe expected that entering into a business combination will involve the issuance ofrestricted shares of capital stock. The issuance of additional shares of ourcapital stock:

Ÿmay significantly reduce the equity interest of our stockholders;Ÿ will likely cause achange in control if a substantial number of our shares of capital stock are issued, andmost likely will also result in the resignation or removal of our present officer anddirector; andŸ may adversely affectthe prevailing market price for our common stock.

Similarly, if we issued debt securities, itcould result in:Ÿ default andforeclosure on our assets if our operating revenues after a business combination wereinsufficient to pay our debt obligations;Ÿ acceleration of ourobligations to repay the indebtedness even if we have made all principal and interestpayments when due if the debt security contained covenants that required the maintenanceof certain financial ratios or reserves and any such covenants were breached without awaiver or renegotiations of such covenants;Ÿ our immediate paymentof all principal and accrued interest, if any, if the debt security was payable on demand;andŸ our inability toobtain additional financing, if necessary, if the debt security contained covenantsrestricting our ability to obtain additional financing while such security wasoutstanding.

*Liquidity and CapitalResources*

Atpresent, the Company has no businessoperations and no material cash resources. We are dependent upon interim funding provided by Management oraffiliated parties to pay professional fees and expenses. Our Management and affiliatedparties have agreed to provide funding as may be required to pay for accounting fees andother administrative expenses of the Company. If we require additional financing, wecannot predict whether equity or debt financing will become available at terms acceptableto us, if at all. The Company depends upon services provided by Management and affiliatedconsultants to fulfill its filing obligations under the Exchange Act. At present, theCompany has limited financial resources to pay for such services and may be required toissue restricted shares in lieu of cash.
On December 31, 2010, we have had no current assets and had $143,849in liabilities.
There are no limitations in theCompany's certificate of incorporation on the Company's ability to borrow funds or raisefunds through the issuance of restricted common stock to effect a business combination.The Company's limited resources and lack of having cash-generating business operations maymake it difficult to borrow funds or raise capital. The Company's limitations to borrowfunds or raise funds through the issuance of restricted capital stock required to effector facilitate a business combination may have a material adverse effect on the Company'sfinancial condition and future prospects, including the ability to complete a businesscombination. To the extent that debt financing ultimately proves to be available, anyborrowing will subject us to various risks traditionally associated with indebtedness,including the risks of interest rate fluctuations and insufficiency of cash flow to payprincipal and interest, including debt of an acquired business. 

*Off-Balance SheetArrangements*

As of December 31,2010 we did not have any off-balance sheet arrangements as defined inItem 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
*ContractualObligations and Commitments*

As of December 31,2010 we did not have any contractual obligations.
*Critical AccountingPolicies*

Our significantaccounting policies are described in the notes to our financial statements for the yearended December 31, 2010 and 2009, and are included elsewhere in this annual report.
**ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**Back to Table of Contents
We have not enteredinto, and do not expect to enter into, financial instruments for trading or hedgingpurposes.

**ITEM 8. FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA**Back to Table of Contents

The Registrant's audited financial statements for the fiscal yearsended December 31, 2010 and 2009 are attached to this annual report.

FinancialStatements for the Fiscal Year ended December 31, 2010 and 2009

**ITEM9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE**Back to Table of Contents

None.

**ITEM 9A. CONTROLS AND PROCEDURESBack to Table of Contents**Evaluation of Disclosure Controls and Procedures
*Evaluation of disclosure controls and procedures. As of December 31, 2010, theCompany's chief executive officer/chief financial officer conducted an evaluationregarding the effectiveness of the Company's disclosure controls and procedures (asdefined in Rules 13a-15(e) or 15d-15(e) under the  Exchange Act. Based upon theevaluation of these controls and procedures, our chief executive officer/chief financialofficer concluded that our disclosure controls and procedures were effective as of the endof the fiscal year 2010. 
**Management’s Annual Report on Internal Control Over Financial Reporting**
Management is responsible for establishing and maintaining adequate internal controlover financial reporting and for the assessment of the effectiveness of those internalcontrols. As defined by the SEC, internal control over financial reporting is a processdesigned by our principal executive officer/principal financial officer, who is alsothe sole member of our Board of Directors, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of the financial statements inaccordance with U.S. generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may notprevent or detect misstatements. Also, projections of any evaluation of effectiveness tofuture periods are subject to the risk that controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or proceduresmay deteriorate.

Management has assessed the effectiveness of our internal control over financialreporting as of December 31, 2010. In making this assessment, management used the criteriaset forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)in Internal Control-Integrated Framework. Based on our assessment and those criteria, wehave concluded that our internal control over financial reporting was effective as ofDecember 31, 2010.

This annual report does not include an attestation report of the company’sregistered public accounting firm regarding internal control over financial reporting.Management’s report was not subject to attestation by the Company’s registeredpublic accounting firm pursuant to temporary rules of the Securities and ExchangeCommission that permit the Company to provide only Management’s report in this annualreport.
**Changes in Internal Control Over Financial Reporting**
There were no changes in our internal control over financial reporting or in otherfactors identified in connection with the evaluation required by paragraph (d) of ExchangeAct Rules 13a-15 or 15d-15 that occurred during the fourth quarter ended December 31, 2010that have materially affected, or are reasonably likely to materially affect, our internalcontrol over financial reporting.

**ITEM 9B. OTHER INFORMATION**Back to Table of Contents
None.

**PART III**

**ITEM10. DIRECTORS ANDEXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCEBack toTable of Contents
The following tablesets forth the names and ages of the members of our Board of Directors and our executiveofficers and the positions held by each.
**Name**  
**Age****Title**  **Date    Became Executive Officer**Ivo    Heiden
44CEO, CFO and Chairman10/2004
Ivo Heiden, 44, has been CEO, CFO and Chairmanof the Registrant since October 2004. During the last five years, Mr. Heiden has beenengaged in the business of providing corporate securities compliance service andreorganizing distressed public companies. Since December 2009 Mr. Heiden has been servingon the board of directors of Peregrine Industries, Inc., a public reporting company. Mr.Heiden was CEO and Chairman of St. Lawrence Energy Corp., a public reporting company, fromJanuary 2005 until December 2007. 

Our director holdsoffice until the next annual meeting of stockholders and until his successors have beenduly elected and qualified. There are no agreements with respect to the election ofdirectors. We do not compensate our directors. Officers are appointed annually by theBoard of Directors and each executive officer serves at the discretion of the Board ofDirectors. We do not have any standing committees at this time.

Our director,officer or affiliates have not, within the past five years, filed any bankruptcy petition,been convicted in or been the subject of any pending criminal proceedings, or is any suchperson the subject or any order, judgment or decree involving the violation of any stateor federal securities laws.

Section 16(a)Compliance

Section 16(a) ofthe Securities and Exchange Act of 1934 requires the Registrant's directors and executiveofficers, and persons who own beneficially more than ten percent (10%) of the Registrant'sCommon Stock, to file reports of ownership and changes of ownership with the Securitiesand Exchange Commission. Copies of all filed reports are required to be furnished to theRegistrant pursuant to Section 16(a). Based solely on the reports received by theRegistrant and on written representations from reporting persons, the Registrant wasinformed that its officer and director and ten percent (10%) shareholders have filedreports required to be filed under Section 16(a).

**ITEM 11. EXECUTIVECOMPENSATION**Back to Table of Contents

The following tablesets forth information concerning the total compensation that we have paid or that hasaccrued on behalf of our chief executive officer and other executive officers with annualcompensation exceeding $100,000 during the fiscal years ending December 31, 2010, 2009 and2008.
**Summary Compensation Table**            
**Long    Term**        
**Annual    Compensation**
**Compensation    Awards**                    **Other****Restricted****Securities**            **Annual****Stock****Underlying****All Other**      
**Salary**
**Bonus****Compensation****Award(s)****Options****Compensation**  **Name and    Principal Position**  
**Year**
**($)**
**($)**
**($)**
**($)**
**($)**
**($)**  Ivo Heiden, CEO, CFO and Chairman    (1)2010 24,000--- --- --- ---   2009 24,000--- --- --- --- --- 2008 24,000--- --- --- --- ---   
**ExecutiveEmployment Agreements**

To date, we havenot entered into any employment agreements with our executive officer.

**ITEM12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSHAREHOLDER MATTERS**Back to Table of Contents

The following tablesets forth information regarding the beneficial ownership of our common stock as ofDecember 31, 2010. The information in this table provides the ownership information for:each person known by us to be the beneficial owner of more than 5% of our common stock;each of our directors; each of our executive officers; and our executive officers anddirectors as a group.
Beneficialownership has been determined in accordance with the rules and regulations of the SEC andincludes voting or investment power with respect to the shares. Unless otherwiseindicated, the persons named in the table below have sole voting and investment power withrespect to the number of shares indicated as beneficially owned by them.
**Name of Beneficial Owner**** ****Common Stock Beneficially Owned (1)**** ****Percentage of Common Stock  Owned (1)**Ivo Heiden1,188,00080%6399 Wilshire    Boulevard, Suite 1019Los    Angeles, CA 90048Director and    Officer (1 person)1,188,00080%
(1) Applicablepercentage ownership is based on 1,495,126 shares of common stock outstanding as ofDecember 31, 2010. Beneficial ownership is determined in accordance with the rules of theSecurities and Exchange Commission and generally includes voting or investment power withrespect to securities. Shares of common stock that are currently exercisable orexercisable within 60 days of December 31, 2010 are deemed to be beneficially owned by theperson holding such securities for the purpose of computing the percentage of ownership ofsuch person, but are not treated as outstanding for the purpose of computing thepercentage ownership of any other person.
**ITEM 13. CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORS INDEPENDENCEBack to Table of Contents
During thelast two years, to the knowledge of the Company, there was no person who had or has adirect or indirect material interest in any transaction or proposed transaction to whichthe Company was or is a party. Transactions in this context relate to any transactionwhich exceeds $120,000.
**ITEM 14. PRINCIPAL ACCOUNTING FEESAND SERVICES**Back to Table of Contents

Independent PublicAccountantsThe Registrant's Board of Directors has appointed John A. Braden,P.C. as independentpublic accountant for the fiscal year ended December 31, 2010. Our financial statementsfor the year ended December 31, 2009 were audited by Michael F. Cronin, CPA.
 

Principal Accounting FeesThe following table presents the fees for professional audit services rendered by John A. Braden, P.C. and Michael F. Cronin, CPA for the audit ofthe Registrant's annual financial statements for the years ended December 31, 2010 and2009, and fees billed for other services rendered by John A. Braden,P.C. and Michael F. Cronin, CPA during thoseperiods. 
  
**Year Ended ****Year Ended ****December 31, 2010****December 31, 2009**
Audit fees (1)$4,000$ 4,000
Audit-related fees (2)---   --- 
Tax fees (3)---   --- 
All other fees ---   --- (1) Audit fees consist of    audit and review services, consents and review of documents filed with the SEC. (2) Audit-related fees    consist of assistance and discussion concerning financial accounting and reporting    standards and other accounting issues. (3) Tax fees consist of    preparation of federal and state tax returns, review of quarterly estimated tax payments,    and consultation concerning tax compliance issues. 
**ITEM15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**Back to Table of Contents

(a) The following documents are filed as exhibits tothis report on Form 10-K or incorporated by reference herein. Any document incorporated byreference is identified by a parenthetical reference to the SEC filing that included suchdocument.
**Exhibit No.****Description**31.1Certification of President    and CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section    302 of the Sarbanes-Oxley Act of 2002.32.1Certification of President    and CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the    Sarbanes-Oxley Act of 2002.
 

**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant and in the capacities and on the dateindicated.
/s/ Ivo Heiden    Ivo Heiden*  CEO, CFO  and Chairman      Dated: March 31, 2011*
**ZAXIS INTERNATIONAL INC.INDEX TO FINANCIAL STATEMENTS**Back to Table of Contents
Report of Independent Registered Public Accounting FirmReport of Independent    Registered Public Accounting Firm17Financial Statements for the Years Ended December 31, 2010 and 2009   Balance Sheets18   Statement    of Operations19   Statement    of Cash Flows20   Statement of Stockholders' Equity21Notes    to Financial Statements22
 

**JOHN A. BRADEN,P.C.**A Professional Corporation____________________________________________________________________________________________________________Member of the Texas Society of    Member of the American InstituteCertified Public Accountants    Certified Public Accountant of CertifiedPublic Accountants
**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and StockholdersZaxis International Inc.

We have audited the accompanying consolidated balance sheetof Zaxis International Inc. as of December 31, 2010 and the related statement ofoperations, stockholders’ equity (deficiency), and cash flows for the year thenended.  These consolidated financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audit.

We conducted our audit in accordance with the auditingstandards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control overfinancial reporting. Our audit included consideration of internal control over financialreporting as a basis for designing audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe Company’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit also includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.In our opinion, the consolidated financial statements referred to above present fairly, inall material respects, the financial position of Zaxis International Inc. as of December31, 2010 and the results of its operations and cash flows for the years then ended inconformity with accounting principles generally accepted in the United States of America.

March 31, 2011.

John A. Braden, P.C.Houston, Texas
**REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBack to Table ofContents

Michael F. CroninCertified Public AccountantRochester, New York

To the Board of Directors and StockholdersZaxis International Inc. 

I have audited the accompanying balance sheet of Zaxis International, Inc. as ofDecember 31, 2009 and 2008 and the related statements of operations, stockholders’deficiency and cash flows for the years then ended. These financial statements are theresponsibility of the Company’s management. My responsibility is to express anopinion on these financial statements based on my audit. 

I conducted my audits in accordance with the standards of the Public Company AccountingOversight Board *(United States)*. Those standards require that I plan and performthe audits to obtain reasonable assurance about whether the financial statements are freeof material misstatement. The company is not required to have, nor was I engaged toperform, an audit of its internal control over financial reporting. My audit includedconsideration of internal control over financial reporting as a basis for designing auditprocedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Company's internal control overfinancial reporting. Accordingly, I express no such opinion. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financialstatement presentation. I believe that my audits provide a reasonable basis for myopinion.

In my opinion, the financial statements referred to above present fairly, in allmaterial respects, the financial position of Zaxis International, Inc. as of December 31,2009 and 2008 and the results of its operations, its changes in stockholder’sdeficiency and its cash flows for the years then ended in conformity with accountingprinciples generally accepted in the United States of America..

April 13, 2010

/s/ Michael F. CroninMichael F. CroninCertified Public AccountantNY, FL
**Zaxis International Inc.**Balance SheetsBack to Table of Contents  **December 31, 2010****December 31, 2009**
ASSETSCurrent assets:      Cash$0$0         Total current assets00                 **Total Assets**$0$0  
LIABILITIES    AND STOCKHOLDERS' DEFICIENCY  Current liabilities:   Accounts    payable - trade$-$5,500   Accrued    interest5,2501,050   Advances    from and accruals due to related party103,59967,355         Total current liabilities108,84973,905          Convertible note35,00035,000           Total liabilities143,849108,905Stockholders' deficiency:   Preferred    stock, $0.0001 par value; 10,000,000 shares authorized; none issued   Common    stock, $0.0001 par value; 100,000,000 shares authorized;         1,495,126 issued and outstanding at December 31, 2010 and        1,373,126 issued and outstanding at December 31, 2009149137   Additional    paid in capital107,26697,518   Accumulated    deficit(251,264)(206,560)        Total Stockholders' Deficiency(143,849)(108,905)          **Total Liabilities and Stockholders' Deficiency**$0$0  See Summary of Significant Accounting Policies and Notes    to Financial Statements.
 
**Zaxis    International Inc.**Statement of OperationsBack to Table of Contents  **Year Ended****Year Ended**  **December 31, 2010****December 31, 2009**  Revenue$0$0Costs and Expenses:   General and administrative50,50442,488   Interest4,2001,050Total costs and    expenses44,70443,538  Net income (loss)$(44,704)$(43,538)  Basic and diluted net loss$(0.03)$(0.04)  Weighted average shares    outstanding (basic and diluted)Loss    Per Share Basic earnings per share is computed by dividing income available to common    shareholders (the numerator) by the weighted-average number of common shares outstanding    (the denominator) for the period. Diluted earnings per share assume that any dilutive    convertible securities outstanding were converted, with related preferred stock dividend    requirements and outstanding common shares adjusted accordingly. It also assumes that    outstanding common shares were increased by shares issuable upon exercise of those stock    options for which market price exceeds the exercise price, less shares which could have    been purchased by us with the related proceeds. In periods of losses, diluted loss per    share is computed on the same basis as basic loss per share as the inclusion of any other    potential shares outstanding would be anti-dilutive. 3. Stockholders' Equity Common Stock    In July 2005, we issued 15,050,000 shares of common stock to related parties. 9,000,000    shares were issued to pay outstanding advances of $ 7,999 and 6,050,000 shares, valued at    $5,385, were issued to reflect the cost of services provided to our company to meet    ongoing reporting and compliance obligations. 4. New Accounting Standards In December    2004, the FASB issued SFAS No. 123 (revised 2004) "Share-Based Payment," or SFAS No.    123(R). SFAS No. 123(R) revises FASB Statement No. 123 "Accounting for Stock-Based    Compensation," and supersedes APB Opinion No. 25, and its related implementation guidance.    This Statement eliminates the ability to account for share-based compensation using the    intrinsic value method under APB Opinion No. 25. SFAS No. 123(R) focuses primarily on    accounting for transactions in which an entity obtains employee services in share-based    payment transactions. SFAS No. 123(R) requires a public entity to measure the cost of    employee services received in exchange for an award of equity instruments based on the    grant-date fair value of the award (with limited exceptions). That cost will be recognized    over the period during which an employee is required to provide service in exchange for    the award, known as the requisite service period, which is usually the vesting period.    SFAS No. 123(R) is effective for companies filing under Regulation SB as of the beginning    of the first interim or annual reporting period that begins after December 15, 2005, which    for us will be our first quarter of the year ending December 31, 2006. We anticipate    adopting SFAS No. 123(R) beginning in the quarter ending March 31, 2006. Accordingly, the    provisions of SFAS No. 123(R) will apply to new awards and to awards modified,    repurchased, or cancelled after the required effective date. Additionally, compensation    cost for the portion of awards for which the requisite service has not been rendered that    are outstanding as of the required effective date must be recognized as the requisite    service is rendered on or after the required effective date. These new accounting rules    will lead to a decrease in reported earnings. Although our adoption of SFAS No. 123(R)    could have a material impact on our financial position and results of operations, we are    still evaluating the potential impact from adopting this statement. In December 2004, the    FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets-an amendment of APB Opinion No.    29," which is effective for us starting July 1, 2005. In the past, we were frequently    required to measure the value of assets exchanged in non-monetary transactions by using    the net book value of the asset relinquished. Under SFAS No. 153, we will measure assets    exchanged at fair value, as long as the transaction has commercial substance and the fair    value of the assets exchanged is determinable within reasonable limits. A non-monetary    exchange has commercial substance if the future cash flows of the entity are expected to    change significantly as a result of the exchange. The adoption of SFAS No. 153 is not    anticipated to have a material effect on our consolidated financial position, results of    operations or cash flows. In September 2004, the EITF reached a consensus regarding Issue    No. 04-1, "Accounting for Preexisting Relationships Between the Parties to a Business    Combination" ("EITF 04-1"). EITF 04-1 requires an acquirer in a business combination to    evaluate any preexisting relationship with the acquiree to determine if the business    combination in effect contains a settlement of the preexisting relationship. A business    combination between parties with a preexisting relationship should be viewed as a multiple    element transaction. EITF 04-1 is effective for business combinations after October 13,    2004, but requires goodwill resulting from prior business combinations involving parties    with a preexisting relationship to be tested for impairment by applying the guidance in    the consensus. We will apply EITF 04-1 to acquisitions subsequent to the effective date    and in our future goodwill impairment testing. In December 2004, the FASB issued FASB    Staff Position No. FAS 109-2, or FAS 109-2, "Accounting and Disclosure Guidance for the    Foreign Earnings Repatriation Provision within the American Jobs Creations Act of 2004."    The AJCA introduces a limited time 85% dividends received deduction on the repatriation of    certain foreign earnings to a U.S. taxpayer (repatriation provision), provided certain    criteria are met. FAS No. 109-2 provides accounting and disclosure guidance for the    repatriation provision. Although FAS 109-2 is effective immediately, we have not begun our    analysis and do not expect to be able to complete our evaluation of the repatriation    provision until after Congress or the Treasury Department provides additional clarifying    language on key elements of the provision In May 2005, the FASB issued SFAS No. 154,    "Accounting Changes and Error Corrections," which replaces APB Opinion No. 20 "Accounting    Changes," and FASB Statement No. 3 "Reporting Accounting Changes in Interim Financial    Statements," and changes the requirements for the accounting for and reporting of a change    in accounting principle. This Statement requires retrospective application to prior    periods financial statements of changes in accounting principle, unless it is    impracticable to determine either the period-specific effects or the cumulative effect of    the change. This Statement shall be effective for accounting changes and corrections of    errors made in fiscal years beginning after December 15, 2005. Early adoption is permitted    for accounting changes and corrections of errors made in fiscal years beginning after the    date this Statement is issued. We do not believe that adoption of SFAS 154 will have a    material impact on our financial statements. align="right" bgcolor="#ccffcc" height="1">1,435,6301,088,413  See Summary of Significant Accounting Policies and Notes    to Financial Statements.
 
**Zaxis    International Inc.**Statement of Cash FlowsBack to Table of Contents
     **Year ended****Year ended**  **December 31, 2010****December 31, 2009**Cash flows from operating activities:Net loss$(44,704)$(43,538)   Expenses paid by issuance of    common stock02,171   Fair value of services    provided by related parties36,00036,000   Expenses paid by related    party5,275-Adjustments required to reconcile net    loss to cash used in operating activities:   Increase (decrease) in    accounts payable and accrued expenses(3,429)4,548        **Cash flows used by operating activities**0(819)  Cash flows from investing activities:00        **Cash used in investing activities**00   Cash flows from financing activities:   Advances from related    parties0700        **Cash generated by financing activities**0700  Change in cash0(119)Cash - Beginning of period0119Cash - End of period$0$0  See Summary of Significant Accounting Policies and Notes    to Financial Statements.
 
**Zaxis International Inc.**Statements    of Stockholders' DeficiencyBack to Table of Contents     
**Common    Stock****Additional**
**Number    of**
**Stated    Or****Paid-In**
**Accumulated**
**Shares**
**Par Value**
**Capital**
**Deficit**Balance    at December 31, 2007999,332$10058,884(110,214)      Conversion of related party debt50,000512,495-      Shares issued due to rounding2,085---   Net loss---(52,808)Balance    at December 31, 20081,051,41710571,379(163,022)      Shares issued for services21,70922,169-      Conversion of related party debt300,0003023,970-   Net loss---(43,538)Balance    at December 31, 20091,373,12613797,518(206,560)      Conversion of related party debt122,000129,748-   Net loss---(44,704)Balance    at December 31, 20101,495,126$149$107,266$(251,264)** **See Summary of Significant Accounting Policies and Notes    to Financial Statements.**ZAXIS INTERNATIONAL, INC.Background and SignificantAccounting PoliciesBack to Table of ContentsDecember 31, 2010
**The Company**
Zaxis International Inc.("International") was incorporated in California in1984 and subsequently changed its domicile to Delaware in 1985. Prior to ceasing its operations in 2002, Zaxis manufactured anddistributed products used in a molecular separationprocess known as electrophoresis, a procedure used in research,industrial and clinical laboratoriesworldwide. 
*Bankruptcy Proceedings:****On November 6, 2002, the Registrant filed forbankruptcy under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court Northern Districtof Ohio. On October 13, 2004, the Company emerged from bankruptcy Court.
*Basis of Presentation:****We adopted "fresh-start" accounting asof November 7, 2002 in accordance with procedures specified by AICPA Statement of Position("SOP") No. 90-7, "Financial Reporting by Entities in Reorganization underthe Bankruptcy Code.
**Significant Accounting Policies:***Use of Estimates : The preparation of financial statements in conformity withgenerally accepted accounting principles requires management to make estimates andassumptions that affect reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statement and the reportedamounts of revenues and expenses during the reporting period. Actual results could differfrom the estimates.
*Cash and Cash Equivalents : For financial statement presentation purposes, theCompany considers those short-term, highly liquid investments with original maturities ofthree months or less to be cash or cash equivalents.
*Property and Equipment: New property and equipment are recorded at cost.Depreciation is computed using the straight-line method over the estimated useful lives ofthe assets, generally 5 years. Expenditures for renewals and betterments are capitalized.Expenditures for minor items, repairs and maintenance are charged to operations asincurred. Gain or loss upon sale or retirement due to obsolescence is reflected in theoperating results in the period the event takes place.
*Valuation of Long-Lived Assets : We review the recoverability of our long-livedassets including equipment, goodwill and other intangible assets, when events or changesin circumstances occur that indicate that the carrying value of the asset may not berecoverable. The assessment of possible impairment is based on our ability to recover thecarrying value of the asset from the expected future pre-tax cash flows (undiscounted andwithout interest charges) of the related operations. If these cash flows are less than thecarrying value of such asset, an impairment loss is recognized for the difference betweenestimated fair value and carrying value. Our primary measure of fair value is based ondiscounted cash flows. The measurement of impairment requires management to make estimatesof these cash flows related to long-lived assets, as well as other fair valuedeterminations.
*Stock Based Compensation: Stock-based awards to non-employees are accounted forusing the fair value method in accordance with SFAS No. 123, *Accounting forStock-Based Compensation* , and EITF Issue No. 96-18, *Accounting for EquityInstruments that are Issued to Other Than Employees for Acquiring, or in Conjunction withSelling Goods or Services* . All transactions in which goods or services are theconsideration received for the issuance of equity instruments are accounted for based onthe fair value of the consideration received or the fair value of the equity instrumentissued, whichever is more reliably measurable. The measurement date used to determine thefair value of the equity instrument issued is the earlier of the date on which thethird-party performance is complete or the date on which it is probable that performancewill occur.

On January 1, 2006, we adopted the provisions of Statement of Financial AccountingStandards (“SFAS”) 123R, “Share-Based Payment” (“SFAS123(R)”), which requires that companies measure and recognize compensation expense atan amount equal to the fair value of share-based payments granted under compensationarrangements. Prior to January 1, 2006, we accounted for our stock-based compensationplans under the recognition and measurement principles of Accounting Principles Board(“APB”) Opinion 25, “Accounting for Stock Issued to Employees,” andrelated interpretations, and would typically recognize no compensation expense for stockoption grants if options granted had an exercise price equal to the market value of theunderlying common stock on the date of grant.

We adopted SFAS 123(R) using the “modified prospective” method, which resultsin no restatement of prior period amounts. Under this method, the provisions of SFAS123(R) apply to all awards granted or modified after the date of adoption. In addition,compensation expense must be recognized for any unvested stock option awards outstandingas of the date of adoption on a straight-line basis over the remaining vesting period. Wecalculate the fair value of options using a Black-Scholes option pricing model. We do notcurrently have any outstanding options therefore no charge is required for the year endedDecember 31, 2010. SFAS 123(R) also requires the benefits of tax deductions in excess ofrecognized compensation expense to be reported in the Statement of Cash Flows as afinancing cash inflow rather than an operating cash inflow. In addition, SFAS 123(R)required a modification to the Company’s calculation of the dilutive effect of stockoption awards on earnings per share. For companies that adopt SFAS 123(R) using the“modified prospective” method, disclosure of pro forma information for periodsprior to adoption must continue to be made.
*Fair Value Accounting: On January 1, 2009, we adopted Statement of FinancialAccounting Standards No. 157,  *Fair Value Measurements*  (“SFAS157”) (as amended by FSP No. 157-2), which defines fair value, establishes guidelinesfor measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements, and has been partiallydeferred for non-financial assets and non-financial liabilities, except those that arerecognized or disclosed at fair value in the financial statements on a recurring basis (atleast annually). The partial adoption of SFAS 157 for financial assets and liabilities didnot have a material impact on our consolidated financial position, results of operationsor cash flows.

In addition, on January 1, 2009, we adopted Statement of Financial Accounting StandardsNo. 159, * The Fair Value Option for Financial Assets and FinancialLiabilities * (“SFAS 159”).  Under SFAS 159, companies may elect tomeasure certain financial instruments and certain other items at fair value.  Thestandard requires that unrealized gains and losses on items for which the fair valueoption has been elected be reported in earnings.  We did not elect to use the fairvalue option.  Therefore, the adoption of SFAS 159 did not impact our consolidatedfinancial position, results of operations or cash flows.
*Fair Value of Financial Instruments : Statements of Financial AccountingStandards No. 107, "Disclosures about Fair Value of Financial Instruments,"requires disclosure of fair value information about financial instruments. Fair valueestimates discussed herein are based upon certain market assumptions and pertinentinformation available to management as of December 31, 2010. The respective carrying valueof certain on-balance sheet financial instruments approximated their fair values.

These financial instruments include cash and cash equivalents, accounts payable andaccrued expenses. Fair values were assumed to approximate carrying values for thesefinancial instruments since they are short-term in nature and their carrying amountsapproximate fair values or they are receivable or payable on demand.
*Earnings per Common Share : Basic net loss per share is computed using theweighted average number of common shares outstanding during the period. Diluted net lossper common share is computed using the weighted average number of common and dilutiveequivalent shares outstanding during the period. Dilutive common equivalent shares consistof options to purchase common stock (only if those options are exercisable and at pricesbelow the average share price for the period) and shares issueable upon the conversion ofour Preferred Stock. Due to the net losses reported, dilutive common equivalent shareswere excluded from the computation of diluted loss per share, as inclusion would beanti-dilutive for the periods presented. We consummated a 1 for 100 reverse split on July11, 2008, which became effective on August 4, 2008. All per share disclosuresretroactively reflect shares outstanding or issuable as though the reverse split hadoccurred January 1, 2007.

There were no common equivalent shares required to be added to the basic weightedaverage shares outstanding to arrive at diluted weighted average shares outstanding in2010 or 2009.
*Income Taxes: The Company accounts for income taxes in accordance withStatement of Financial Accounting Standards No. 109, "Accounting for IncomeTaxes," ("SFAS 109") which requires recognition of estimated income taxespayable or refundable on income tax returns for the current year and for the estimatedfuture tax effect attributable to temporary differences and carry-forwards. Measurement ofdeferred income tax is based on enacted tax laws including tax rates, with the measurementof deferred income tax assets being reduced by available tax benefits not expected to berealized.

In 2006, the FASB issued FIN 48, which clarifies the accounting for uncertainty in taxpositions. FIN 48 requires that the Company recognize in its financial statements theimpact of a tax position, if that position is more likely than not of being sustained onaudit, based on the technical merits of the position. The Company adopted the provisionsof FIN 48 on January 1, 2007.

Management of the Company is not aware of any additional needed liability forunrecognized tax benefits at December 31, 2010 and 2009.
*Accounting For Obligations And Instruments Potentially To Be Settled In TheCompany’s Own Stock : We account for obligations and instruments potentiallyto be settled in the Company’s stock in accordance with EITF Issue No. 00-19, *Accountingfor Derivative Financial Instruments Indexed To, and Potentially Settled In aCompany’s Own Stock* . This issue addresses the initial balance sheetclassification and measurement of contracts that are indexed to, and potentially settledin, the Company’s own stock.
**Recent Accounting Pronouncements**
In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.46(R)” (“SFAS 167”). SFAS 167 amends FASB Interpretation No. 46 (revisedDecember 2003), “Consolidation of Variable Interest Entities” to require anenterprise to qualitatively assess the determination of the primary beneficiary of avariable interest entity (VIE) based on whether the entity (1) has the power to direct theactivities of a VIE that most significantly impact the entity’s economic performanceand (2) has the obligation to absorb losses of the entity or the right to receive benefitsfrom the entity that could potentially be significant to the VIE. Also, SFAS 167 requiresan ongoing reconsideration of the primary beneficiary, and amends the events that triggera reassessment of whether an entity is a VIE. Enhanced disclosures are also required toprovide information about an enterprise’s involvement in a VIE. This statement shallbe effective as of the beginning of each reporting entity’s first annual reportingperiod that begins after November 15, 2009, for interim periods within that first annualreporting period, and for interim and annual reporting periods thereafter. Earlierapplication is prohibited. The Company does not expect the adoption of SFAS 167 to have amaterial impact on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification TM and the Hierarchyof Generally Accepted Accounting Principles (“SFAS 168”). SFAS 168 establishesthe FASB Accounting Standards Codification TM (the“Codification”) as the single source of authoritative U.S. GAAP recognized bythe FASB to be applied by nongovernmental entities. Rules and interpretive releases of theSEC under authority of federal securities laws are also sources of authoritative U.S. GAAPfor SEC registrants. When effective, the Codification will supersede all existing non-SECaccounting and reporting standards. All other non-grandfathered non-SEC accountingliterature not included in the Codification will become non-authoritative. Following SFAS168, the FASB will not issue new standards in the form of Statements, FASB StaffPositions, or Emerging Issues Task Force Abstracts. Instead, the FASB will issueAccounting Standards Updates, which will serve only to: (a) update the Codification; (b)provide background information about the guidance; and (c) provide the bases forconclusions on the change(s) in the Codification. SFAS 168 and the Codification areeffective for financial statements issued for interim and annual periods ending afterSeptember 15, 2009. The Company has evaluated this new statement and has determined thatit will not have a significant impact on the determination or reporting of its financialresults.
In May 2009, the FASB issued SFAS No. 165, *Subsequent Events*("SFAS 165"). SFAS 165 establishes guidance related to accounting forand disclosure of events that happen after the date of the balance sheet but before therelease of the financial statements. SFAS 165 is effective for reporting periodsending after June 15, 2009. The Company adopted SFAS 165 on December 31, 2009.SFAS 165 affects disclosures only .
Management does not anticipate that the adoption of these standards will have amaterial impact on the financial statements.
**Zaxis International Inc.Notes to Financial StatementsDecember 31, 2010

**1. “Fresh Start” Accounting:**

On November 7, 2002 in connection with the Company emerging from bankruptcy we adopted"fresh-start" accounting in accordance with procedures specified by AICPAStatement of Position ("SOP") No. 90-7, "Financial Reporting by Entities inReorganization under the Bankruptcy Code." All results for periods subsequent toNovember 7, 2002 are referred to as those of the "Successor Company". 

In accordance with SOP No. 90-7, the reorganized value of the Company was allocated tothe Company's assets based on procedures specified by SFAS No. 141, "BusinessCombinations". Each liability existing at the plan sale date, other than deferredtaxes, was stated at the present value of the amounts to be paid at appropriate marketrates. It was determined that the Company's reorganization value computed immediatelybefore November 6, 2002 was $0. We adopted "fresh-start" accounting becauseholders of existing voting shares immediately before filing and confirmation of the salereceived less than 50% of the voting shares of the emerging entity and its reorganizationvalue is less than its post-petition liabilities and allowed claims. 
**2. Income Taxes:

The Company has anet operating loss carryovers available to reduce future income taxes. We have adoptedSFAS 109 which provides for the recognition of a deferred tax asset based upon the valuethe loss carry-forwards will have to reduce future income taxes and management's estimateof the probability of the realization of these tax benefits. We have determined it morelikely than not that our net operating loss carry-forwards will not be utilized.Utilization of federal and state NOL and tax credit carryforwards may be subject to asubstantial annual limitation due to the ownership change limitations provided by theInternal Revenue Code of 1986, as amended, and similar state provisions. The annuallimitation may result in the expiration of NOL and tax credit carryforwards before fullutilization. The Company is not under examination by any jurisdiction for any tax year. AtDecember31, 2010 and 2009,the Company had no material unrecognized tax benefits and no adjustments to liabilities oroperations were required under FIN 48.**3. Commitments:**
The Company is not a party to any leases and does not have any commitments 
**4. Stockholders' Equity: *Common Stock*
In November 2004, we modified our authorized shares of common stock to 100,000,000, parvalue $0.0001. All issued shares of common stock are entitled to one vote per share ofcommon stock.
*Preferred Stock*
In November 2004, we modified our authorized preferred shares to 10,000,000, par value$0.0001. The preferred shares may be issued in one or more series. The Board of Directorsof the Corporation is authorized to fix the powers, preferences, rights, qualifications,limitations or restrictions of the preferred shares and any series thereof pursuant toSection 151 of the Delaware General Corporation Law. As of December 31, 2010, there are nopreferred shares issued and outstanding.
*Reverse Stock Split*
On July 11, 2008****we declared a reverse split of our common stock.****Theformula provided that every one hundred (100) issued and outstanding shares of commonstock of the Corporation be automatically split into 1 share of common stock. Anyresulting fractional share ownership interest was rounded up to the first whole integer insuch a manner that all rounding was done to the next single share and each and everyshareholder would own at least 1 share. The reverse stock split was effective for holdersof record at July 11, 2008. Except as otherwise noted, all share, option and warrantnumbers have been restated to give retroactive effect to this reverse split. All per sharedisclosures retroactively reflect shares outstanding or issuable as though the reversesplit had occurred January 1, 2008.

On August 15, 2008 we issued 50,000 shares insatisfaction of $12,500 due for services rendered. The shares were valued at $0.25 pershare which was management’s estimate of fair value at the time of issuance. On February 6, 2009 we issued 21,709 shares valued at $2,171 for consulting servicesrendered. The shares were valued at $0.10 per share which was management’s estimateof fair value at the time of issuance. On December 10, 2009 we issued 300,000 shares to our officer in connection with theconversion of $24,000 in debt at $0.08 per share.On July 1, 2010 we issued 122,000 shares to our officer in connection with the conversionof $9,760 in debt at $0.08 per share.*Stock Based Compensation

There are no employee or non-employee options granted. 
**5. Convertible Note to Related party**
In 2009, we issued a convertible promissory note in the amount of $35,000 to ourPresident. The note bears interests at 12% per annum until paid or converted.Interest is payable upon the maturity date (December 31, 2011). The initial conversionrate is $0.10 per share (subject to standard anti-dilution provisions). The noteformalized a like amount due through the accretion of cash advances covering severalyears.

The convertible debt securities were issued with a non-detachable conversion feature.We evaluate and account for such securities in accordance with EITF Issue Nos. 98-5,00-19, 00-27, 05-02, 05-04 and 05-08, and SFAS No. 133,*Accounting for DerivativeInstruments and Hedging Activities* as amended.

In accordance SFAS No. 133, we evaluate that the holder’s conversion rightprovision, interest rate adjustment provision, liquidated damages clause, cash premiumoption (if applicable), and the redemption option (collectively, the debt features)contained in the terms governing the Note to determine whether they are or are not clearlyand closely related to the characteristics of the Note. Accordingly, if the featuresqualify as embedded derivative instruments at issuance and, furthermore if they do or donot qualify for any scope exception within SFAS No. 133 (paragraphs 12-32), then theyare required by SFAS No. 133 to be accounted for separately from the debt instrumentand recorded as derivative financial instruments.

The values ascribed to the note, the conversion feature of the note, other potentialembedded derivative features, and common stock follow the guidance of EITF Issue No.00-19,*Accounting for Derivative Financial Instruments Indexed to, and PotentiallySettled in, a Company’s Own Stock* ; SFAS No. 150,*Accounting for CertainFinancial Instruments with Characteristics of both Liabilities and Equity* ; and EITFIssue No. 00-27,*Application of Issue No. 98-5 to Certain Convertible Instruments*.. The Company evaluated the embedded conversion feature and determined its effect based onEITF Issue No. 00-19. In accordance with EITF Issue No. 00-19, a transaction whichincludes a potential for net-cash settlement, including liquidated damages, requires thatderivative financial instruments, including warrants and the embedded conversion feature,be bifurcated, and initially recorded at fair value as an asset or liability andsubsequent changes in fair value be reflected in the statement of operations. 

In accordance with the FASB Emerging Issues Task Force (“EITF”) IssueNo. 98-5 “Accounting for Convertible Securities with Beneficial ConversionFeatures or Contingently Adjustable Conversion Ratios” and EITF Issue No. 00-27“Application of Issue No. 98-5 to Certain Convertible Instruments,” wedetermined that the convertible notes did not contains an embedded beneficial conversionfeature. The effective conversion price exceeded the stock price on the valuation date
**6. Related Party Transactions not Disclosed Elsewhere:***Fair value of services: The principal stockholder provided, without cost to theCompany, his services and office space. The total of these expenses was $36,000 for 2010and 2009, respectively, and was reflected in the statement of operations as general andadministrative expenses.
*Due Related Parties: Amounts due related parties consist of corporate regulatorycompliance expenses paid directly by and cash advances received from affiliates as well asaccruals for the fair value of services described above.************************************