U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2000     Commission File Number: 0-27337
                           -----------------                             -------

[ ] TRANSITION  REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES  EXCHANGE ACT
    OF 1934

                              MAX DEVELOPMENT, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


         COLORADO                                      84-1474940
--------------------------------           ----------------------------------
 (State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
  Incorporation or Organization)


6025 S. Quebec Street, Suite 150, Englewood, Colorado                 80111
-----------------------------------------------------               ---------
     (Address of Principal Executive Office)                        (Zip Code)


Issuer's telephone number:  (720) 489-8873
                            ---------------

Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:

                          Common Stock, $.001 Par Value
                         -------------------------------
                                 Title of Class

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act  during the past 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.
  X  Yes          No
----          ----


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

State issuer's revenues for its most recent fiscal year: $ -0-

As of December 31, 2000: (a) 1,161,000  common shares,  $.001 par value,  of the
registrant were outstanding following a 1:2 reverse stock split on September 26,
2000; (b) approximately  161,000 common shares were held by non-affiliates;  and
(c) the aggregate market value of the common shares held by  non-affiliates  was
$80,500 based on the last sale of $.25 per share in a private offering conducted
by the Company during the first half of 1999.

Documents incorporated by reference: None.



<PAGE>



MAX DEVELOPMENT, INC.

INDEX TO ANNUAL REPORT
ON FORM 10-KSB

                                                                           Page
                                                                           ----
PART I

   Item 1.   DESCRIPTION OF BUSINESS...................................      3

   Item 2.   DESCRIPTION OF PROPERTY...................................      9

   Item 3.   LEGAL PROCEEDINGS.........................................      9

   Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......      9

PART II

   Item 5.   MARKET FOR COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS.......................................      9

   Item 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR
             PLAN OF OPERATION ........................................     10

   Item 7.   FINANCIAL STATEMENTS......................................     11

   Item 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE.......................     11

PART III

   Item 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
             PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
             ACT.......................................................     11

   Item 10.  EXECUTIVE COMPENSATION....................................     12

   Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT................................................     13

   Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............     14

   Item 13.  EXHIBITS AND REPORTS ON FORM 8-K..........................     15

                                        2
<PAGE>



Additional information

     Descriptions  in this Report are  qualified by reference to the contents of
any  contract;  agreement  or  other  documents  are not  necessarily  complete.
Reference  is made to each such  contract,  agreement  or  document  filed as an
exhibit  to  this  Report,  or  previously  filed  by the  Company  pursuant  to
regulations of the Securities and Exchange Commission (the  "Commission").  (See
"Item 13. Exhibits and Reports of Form 8-K.")

     Reference  in this  document  to "us"  or  "we"  or "the  Company"  or "the
Registrant" refer to Max Development, Inc.

                Special Note Regarding Forward Looking Statements

     Certain statements contained herein constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward looking statements include, without limitation, statements regarding the
Company's  plan of  business  operations  and  related  expenditures,  potential
contractual   arrangements,   anticipated  revenues  and  related  expenditures.
Investors are cautioned not to put undue reliance on forward-looking statements.
Except as otherwise required by applicable  securities  statutes or regulations,
the Company  disclaims any intent or obligation to update publicly these forward
looking  statements,  whether as a result of new  information,  future events or
otherwise.

PART I

Item 1.  DESCRIPTION OF BUSINESS

     (a) General Development of Business
         -------------------------------

     We were  organized  under  the laws of the State of  Colorado  on April 23,
1998. Our executive  offices are presently  located at 6025 South Quebec Street,
Suite 150,  Englewood,  Colorado 80111, and our telephone and facsimile  numbers
are (720) 489-8873 and (720) 489-8874, respectively.

     We  received  gross  proceeds  in the amount of $80,500  from the sale of a
total of 322,000 shares of common stock,  $.001 par value per share (the "common
stock"),  in an offering  conducted  during the period from January  through May
1999  pursuant to Section 3(b) of the  Securities  Act of 1933,  as amended (the
"Act"), and Rule 504 of Regulation D promulgated thereunder.

On April 21, 1999, we acquired  approximately  eight percent of the total number
of outstanding common shares of Northern Ventures Ltd. ("NVL"), a British Virgin
Islands corporation, in consideration for the sum of $15,000 in cash. NVL holds,
through a wholly owned Republic of South Africa ("RSA") corporation,  a contract
right to mine the admiralty strip on a marine diamond  concession,  known as the
Brazil Farms concession, in the Atlantic Ocean off the west coast of the RSA. As
of December 31, 1999, after due consideration, our board of directors determined
that there was clear  evidence of an impairment  in the carrying  value of NVL's
common  stock.  Accordingly,  a  permanent  decline  for the full  amount of the
investment  ($15,000) was charged to operations in our financial  statements for
the year ended December 31, 1999. There were no changes to the investment or its
valuation during the year ended December 31, 2000.

     We have  not  been  subject  to any  bankruptcy,  receivership  or  similar
proceeding.

                                        3
<PAGE>


     (b) Narrative Description of the Business
         -------------------------------------

         General
         -------

     As of the date hereof, our activities in the mining industry are limited to
our  participation in marine diamond mining operations off the west coast of the
RSA through the  minority  ownership  interest in NVL.  NVL is  conducting  such
operations through a wholly owned Republic of South Africa  corporation.  We own
of record and beneficially 182 shares,  representing approximately eight percent
of the 2,370  outstanding  shares,  of common stock of NVL. Northern Ventures SA
(Pty) Ltd. ("NVSA"),  the RSA corporation  wholly-owned by NVL, holds a contract
right to mine the admiralty strip on the NR 5A marine diamond  concession,  also
known as the "Brazil Farms" concession, in the Atlantic Ocean off the west coast
of RSA where NVSA's diamond mining operations, partially funded by the Company's
investment  in  NVL,  are  conducted.   NVL,  since  1997,  raised  a  total  of
approximately  $119,750 from the sale of its common stock,  including the sum of
$15,000  received  from  us,  which  was used to  complete  the  acquisition  of
equipment,  hire qualified labor (including  divers),  rent a beach facility and
pay the operating costs of the trial-run beach operation  involving  exploration
and limited production activities on the Brazil Farms concession.  The trial-run
beach operation,  conducted  during a period of approximately  seven months from
October 7, 1998,  through  the end of April  1999,  spanned  approximately  four
months more than the three-month period initially anticipated. The operations of
the crew during this period, on five separate  locations along the tidal zone of
the Brazil Farms concession,  were required to be halted periodically because of
adverse weather conditions.  Nevertheless, such operations yielded 2,115 bags of
gravel  weighing 42.3 tons,  which were  processed on site into 142.81 carats of
diamonds.  NVL has realized  net revenue  from diamond  sales to date of $9,854,
after  operating  expenses (not  including  NVSA's  administrative  expenses and
equipment costs) aggregating approximately $18,047.

     The  minimal  revenue  realized by NVL to date has been  attributed  by its
management to three factors:  (i) the lower than expected quantities of diamonds
per ton of gravel  processed;  (ii) the smaller size of diamonds  (less than one
carat) than anticipated;  and (iii) NVSA's  responsibility  for payment of a 40%
royalty and 3% marketing fee before payment of all operating  expenses.  Despite
these factors, the diamonds located to date have been high-grade in quality. NVL
initially  undertook  the Brazil  project based upon,  among other  things,  the
likelihood,  in the assessment of its Board of Directors,  that the Brazil Farms
admiralty strip concession contains  significant amounts of gem quality diamonds
and upon the  independent  geological  report of Mr. Stuart D. Lyle,  Cape Town,
RSA, on the viability of the project.

     As of December  31, 2000,  NVL had limited  capital and  management  has no
intention  of resuming  mining  operations  or pursuing  the Brazil  lease.  NVL
continues  to evaluate  other mining  projects;  however,  NVL is not  currently
negotiating on any projects.

     Mr. David C. Olson,  our sole  executive  officer and director and owner of
77.9 percent of our issued and  outstanding  shares,  has no  experience  in the
mining  industry in general or  specifically,  with  respect to diamond  mining.
Because of this,  among other reasons,  we purchased,  as our initial venture in
the mining industry,  a minority interest in NVL based upon management's  belief
and the  recommendations  of Mr.  Robert  A.  Hildebrand,  a  consultant  to the
Company,  that NVL is  managed by  experienced  individuals  and has  reasonable
potential  for success in the marine  diamond  mining  venture  being  conducted
utilizing the our invested funds as well as other invested  funds. We propose to
participate in one or more mining  ventures in addition to its investment in NVL
if we succeed in raising  additional debt and/or equity financing,  which is not
assured.  For the foreseeable future and until experienced mining personnel join
our management, if ever, virtually all decisions concerning our participation in
mining opportunities will be made or significantly influenced by Mr. Hildebrand.

     NVL has five officers and directors, including (i) Mr. Stephen E. Rounds, a
minority shareholder of the Company; (ii) Mr. Richard D. Robinson; (iii) Mr. Ian
L. Forrest; (iv) Mr. Ian J. ffrench; and (v) Mr. Frank Karefa-Smart.  All of the
foregoing  serve in the positions of Director of NVL except for Mr. Rounds,  who

                                        4
<PAGE>

serves as the  Managing  Director.  Mr.  Robinson  serves  as the  Chief  Safety
Officer,  Engineer and as a director of NVSA, the RSA corporation  100%-owned by
NVL.  Set  forth  below is a brief  description  of each of  these  individuals:

Stephen E. Rounds, age 54, a United States citizen resident in Denver, Colorado,
is a corporate and Federal securities attorney licensed in the United States and
Colorado.

     Richard D. Robinson, age 51, a United Kingdom citizen experienced in mining
and working with financial  institutions,  presently serves as a consultant to a
diamond  production  company in the Ivory Coast.

     W. Ian L. Forrest,  age 58,  a  resident  of  Switzerland  and  a  Scottish
Chartered Accountant,  holds management,  non-executive and consulting positions
in  several  European,  Canadian  and  South  African  corporations,   including
Caledonia Mining, Reunion Mining PLC, Gaelic Rescues and Menora Resources, which
are  listed on various  exchanges  (Dublin,  London,  Montreal,  Toronto  and/or
Johannesburg).

     Ian J. ffrench,  age 56, is a British citizen;  resides in Jersey,  Channel
Islands,  United Kingdom; and holds a Jersey passport.  Mr. ffrench, a Fellow of
the Institute of Chartered  Accountants in England and Wales and an Associate of
the Society of Trust and Estate  Practitioners,  is Managing Director of a Swiss
management company located in Geneva, Switzerland.

     Frank  Karefa-Smart,  age 66, a citizen of Sierra Leone,  is the government
liaison for Langer  International  Ltd., a Tel Aviv and Brussels  diamond dealer
licensed to deal diamonds in Sierra Leone with offices in Freetown, Sierra Leone
and other African countries.

     Ownership
     ---------

     The following table sets forth certain information  regarding the ownership
of NVL's common stock as of December 31, 2000:

<TABLE>
<CAPTION>

                                                                           Consideration
                                  Shares         Percentage       ---------------------------------
Name of Shareholder               Owned          of Class             Cash               Services
--------------------------      ----------       ----------       -------------       -------------
<S>                             <C>              <C>              <C>                 <C>
Steven E. Rounds                658 shares       27.8%            $ 15,750.00         $          -
Richard D. Robinson             400 shares       16.9%            $  7,000.00         $   19,667.00
Ian Forrest                     300 shares       12.7%            $ 20,000.00         $          -
Ian Ffrench                     300 shares       12.7%            $ 20,000.00         $          -
Paddington Investments          200 shares        8.4%            $ 20,000.00         $          -
Max Development, Inc.           182 shares        7.7%            $ 15,000.00         $          -
Frank Karefa-Smart              100 shares        4.2%            $         -         $   10,000.00
Shalimar Business Services      100 shares        4.2%            $ 10,000.00         $          -
David C. Olson                   60 shares        2.5%            $ 5,000.00          $          -
Jerry W. Keel                    50 shares        2.1%            $ 5,000.00          $          -
D. Michael Rounds                20 shares        0.8%            $ 2,000.00          $          -

</TABLE>

     *  Represents  the  number of shares of Common  Stock  owned of record  and
beneficially  by each named person or group,  expressed as a percentage of 2,370
shares of NVL's common stock issued and outstanding as of the date hereof.

     Description of Common Stock of NVL
     ----------------------------------

     All shares of common  stock of NVL are entitled to vote equally at meetings
of  shareholders.  Approval  by holders of a majority  of the shares  issued and
outstanding  are  required  to  elect  and  remove   directors  and  to  approve
substantive  transactions involving NVL (such as a sale or merger of the company
or its assets, a recapitalization, joint venture agreements or amendments to the
Articles of  Incorporation).  Each share of common stock of NVL will be entitled
to share equally in the assets of NVL in the event of liquidation, after payment

                                        5
<PAGE>

of creditors.  No sale,  encumbrance  or other  disposition  of shares of common
stock of NVL may be made unless the following  conditions  have been  satisfied:
(i) the other (non-transferring)  shareholders of NVL must have been offered the
opportunity  to purchase the shares from the seller at the same terms offered by
a third party,  but have declined such offer;  and (ii) the proposed third party
purchaser  must  be  reasonably   acceptable  to  the  holders  of  51%  of  the
non-transferring  shareholders.  Excepted  from such  conditions  are  transfers
within a family or by an entity to its beneficial owners (e.g., a corporation to
its shareholders).

     Dividend Policy, Tax Matters
     ----------------------------

     NVL has not paid any  dividends and does not expect to pay out dividends in
the near future.  The Board of Directors of NVL is evaluating the RSA tax regime
with respect to the adoption of measures that would minimize  corporate taxes on
NVL as a holding company.

     The Brazil Farms Project
     ------------------------

     The contract right owned by NVSA to mine the admiralty  strip on the Brazil
Farms,  or NR 5A marine  diamond,  concession in the Atlantic Ocean off the west
coast of RSA was received by grant from Trans-Hex Mining Limited  ("Trans-Hex"),
the owner of the Brazil Farms concession and the producer of  approximately  10%
of the annual diamond  production of the RSA. The admiralty strip runs along the
entire coast of RSA and is owned by the state government. Typically, it is used,
if at all, for lighthouses, marine conservation and recreational parks. However,
in certain areas,  especially the west coast area, the admiralty strip is leased
to private  companies as part of the "A" concession;  which A, or shallow water,
concession extends into the Atlantic Ocean to a depth of 132 meters.  Within the
A concession,  the admiralty strip extends from 100 feet out to sea from the low
tide mark, then toward land (due east) of the high tide mark up to 60 feet above
the high tide mark.  The width of the  admiralty  strip  running north and south
depends on local terrain, which may include cliffs or gradual beach. On average,
the Brazil admiralty strip is 180 meters (540 feet) wide.

     Gravel recovered by NVSA is processed for diamonds on site and deposited in
a lock box accessible by NVSA and Trans-Hex.  Trans-Hex posts a security officer
on site and is responsible  for diamond sales  throughout the production  phase.
Production is divided  between NVSA and Trans-Hex on a 60%/40% basis. At the end
of each month,  for NVSA's  60%-share of production,  Trans-Hex pays NVSA 80% of
the value  estimated  for each batch of diamonds.  The balance of funds owed for
NVSA's share,  if any, is paid when Trans-Hex  sells the diamonds to the general
diamond  market in RSA.  The amount of the final  payment is adjusted up or down
depending on the actual variance from the initial  estimated value. All payments
are made in U.S. dollars.

     The initial area mined during NVSA's  trial-run beach  operation  halted in
April  1999,  consisted  of three  gullies at the south end of the Brazil  Farms
admiralty  strip which have been  identified  by Trans-Hex  as possibly  diamond
bearing.  Gullies  such as these are  bedrock  features  that run along the West
Coast from the shore into the ocean. Mining is accomplished by removing the sand
overburden  to expose the  gravel,  which is removed in turn and  processed  for
diamonds.  The initial operations of NVSA yielded only 142.81 carats of diamonds
smaller in size than  expected and, as of December 31, 2000,  management  had no
intentions of resuming mining operations.

Trans-Hex  extended NVSA's lease past the expiration date of March 31, 2000. Our
management  believes the lease expired on March 31, 2000. We may obtain  another
lease, but at December 31, 2000 NVSA had no intention of pursuing the leases

     Proposed Participation in Other Mining Opportunities
     ----------------------------------------------------

     Depending  upon our  success in raising  equity  and/or debt  financing  in
addition to the amount of $80,500  received  from our  offering of Common  Stock
pursuant to Rule 504 of Regulation D under Section 3(b) of the Act, we intend to

                                        6
<PAGE>

participate  in one or more mining  ventures in addition to the Brazil  Project.
However,  unless substantial additional funding is received,  management expects
any such  opportunities,  which may  become  available  to us to be  limited  to
partnering,  joint  venture or similar  such  arrangements  whereby we join with
others having the mineral  reserves and resources in addition to the  financing,
equipment,   personnel  and  other   resources   necessary  to  conduct  mineral
exploration,  development  and  production  activities.  Management  intends  to
evaluate  each of these  prospective  projects  or  proposals  that  may  become
available for  participation  by us on a case-by-case  basis. The success of any
such venture  participated in by us could not be assured.  We are dependent upon
the  efforts of our  management,  Mr.  Olson,  to obtain the  sizable  amount of
capital  necessary in order to acquire  mineral  reserves and  resources  and/or
mining  properties,  leases,  interests  or contract or other rights and conduct
operations  in the mining  industry  on a  commercial  scale.  Mr.  Olson has no
previous  experience in the mining business.  It is likely that  properties,  if
any,  acquired by us in the future on which funds are spent for  exploration may
prove  worthless  and/or  extended  periods  of  time  may  elapse  between  the
expenditure of funds and the recognition of income from a property. Furthermore,
even  assuming  our  success in  fund-raising  such that it obtains  the sizable
amount of  capital  required  to  successfully  develop a mine to the  producing
stage, such mine may not produce minerals in sufficient quantity to enable us to
realize a profit.  Accordingly,  no assurance can be given that proven  reserves
will ever be obtained or that we will ever commence that commercial production.

     While management  intends to take all action necessary to ensure that we do
not inadvertently become an "investment  company," as that term is defined under
the Investment Company Act of 1940, as amended (the "1940 Act"), there can be no
assurance  that  we  can  avoid  such  classification.  In  general,  investment
companies  are  companies  in which the bulk of whose  assets  are  invested  in
securities.  Our initial venture was the purchase of eight percent of the common
stock of a British Virgin Islands  corporation that conducts diamond exploration
and mining activities. The 1940 Act was adopted to regulate investment companies
because,  among other reasons,  of the liquidity,  and,  therefore,  the ease of
transfer and liquidation of the securities holdings of these companies making it
possible for  unscrupulous  managers to easily defraud  investors.  The 1940 Act
adopts various techniques of regulation, including disclosure, advisory opinions
from the Securities and Exchange Commission (the "SEC") to the security holders,
requirements  for  approval  by a  majority  of  the  voting  securities  of the
investment  company,  absolute  prohibitions  on  insiders'  dealings  with  the
investment  company  without an SEC exemption and the  imposition of substantive
structure,  minimum capital, composition of the board of directors, terms of the
securities issued,  consideration to be received by investment companies for the
securities  that they issue and various  other  provisions,  all of which can be
waived with or without conditions by an SEC exemption.  Our management  believes
that we will not be  classified as an  investment  company  because we will come
within the  purview of one or more of a number of  exemptions  from the 1940 Act
for the reasons,  among others,  that we are actively and  primarily  engaged in
non-investment business and that we are small in size. Nevertheless,  there is a
risk that we will inadvertently  become an investment  company,  particularly if
management is  unsuccessful  in raising the capital  required to  participate in
mining  operations  other than through minority  securities  ownership in one or
more mining companies.

     Competition
     -----------

     The mining industry is intensely competitive. We anticipate that we will be
in  competition  with  mining  companies  of all sizes  located  both inside and
outside the United  States.  We expect that our  financial  resources  and other
assets may limit our  opportunities.  In this regard,  many of the companies and
other  organizations  with which we will be in competition  are  established and
virtually all such entities have far greater financial resources,  substantially
greater  experience  and larger  staffs than we do.  Additionally,  many of such
organizations  have substantial  exploration,  mining and milling  capabilities,
proven operating  histories and long earnings records,  which we lack. We expect
to face strong competition from both such  well-established  companies and small
independent  companies like ourselves.  The principal  methods of competition in
the industry for the acquisition of mineral  properties are the payment of bonus
payments at the time of acquisition of leases, delay rentals, advance royalties,

                                        7
<PAGE>

the use of differential  royalty rates, the amount of annual rental payments and
stipulations  requiring  exploration  and production  commitments by the lessee.
Companies  with greater  financial  resources,  existing staff and labor forces,
equipment for exploration,  access to technical data and vast experience will be
in a better position than us to compete for such mineral  properties.  There can
be no assurance that any mineral  properties can be acquired by us in the future
or upon terms acceptable to management, or that exploratory work conducted by us
or others would result in commercially  producible  minerals.  In addition,  our
operations may be subject to decline because of generally  increasing  costs and
expenses of doing business,  thus further  increasing  anticipated  competition.
Additionally,  it is  expected  that  there  may  be  significant  technological
advances  in the future and we may not have  adequate  creative  management  and
resources to enable it to take  advantage of such  advances.  The effects of any
such technological advances on us, therefore, cannot be presently determined.

     Employees and Consultants
     -------------------------

     We have had no employees since our organization.  Except for 900,000 shares
of our Common Stock issued and sold to Mr.  David C. Olson,  our sole  executive
officer  and  director,   and  our  former   executive   officer  and  director,
respectively,  in consideration for the payment by each individual of the sum of
$1,250 for legal  services  performed  by Cudd & Associates  on our behalf.  Our
executive  officers  and  directors  have  served  in  those  positions  without
compensation  through the date  hereof.  Mr.  Olson  subsequently  acquired  the
900,000 shares of Common Stock owned by our former executive  officer,  director
and controlling shareholder of the Company.

     It is  anticipated  that at such time, if ever,  as our financial  position
permits,  assuming that we are  successful in raising  additional  funds through
equity and/or debt  financing  and/or  generating a sufficient  level of revenue
from  operations,  Mr. Olson and any other executive  officers and/or  directors
will receive  reasonable  salaries and other appropriate  compensation,  such as
bonuses,  coverage  under  medical  and/or  life  insurance  benefits  plans and
participation  in stock option and/or other profit sharing or pension plans, for
services as our executive  officers and may receive fees for their attendance at
meetings of our Board of Directors.  (See Item 12,  "Certain  Relationships  and
Related Transactions.")

     (c) Organization
         ------------

     We  are  comprised  of one  corporation  with  no  subsidiaries  or  parent
entities.

     (d) Operations
         ----------

     We have been in the  development  stage  since our  inception  on April 23,
1998.

     (e) Employees
         ---------

     We do not have any employees.

     (f) Proprietary Information
         -----------------------

     We have no proprietary information.

     (g) Government Regulation
         ---------------------

     We are not subject to any material governmental regulation or approvals.

     (h) Research and Development
         ------------------------

     We have not spent any amount in research and development activities.

                                        8
<PAGE>

     (i) Environmental Compliance
         ------------------------

     At the  present  time,  we  are  not  subject  to any  material  costs  for
     compliance with any environmental laws.


Item 2. DESCRIPTION OF PROPERTY

     Our  business  office is located at 6025 South  Quebec  Street,  Suite 150,
Englewood,  Colorado 80111. We leased office space and purchased  administrative
services  from an  affiliate  on a  month-to-month  basis during the period from
April 1999  through  May 2000.  We paid the  affiliate  $1,000 per month for the
office  space and  services  during that  period.  Effective  June 1, 2000,  the
affiliate began  providing the office space and services at no charge.  The rent
and  services  were  valued at $1,000 per month for the period from June 1, 2000
through December 31, 2000, based on the charges in prior periods.


Item 3. LEGAL PROCEEDINGS

     No legal  proceedings  of a  material  nature to which we are a party  were
pending during the reporting  period,  and we know of no legal  proceedings of a
material nature, pending or threatened,  or judgments entered against any of our
director or officer in their capacity as such.


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

We did not submit any matter to a vote of security holders through  solicitation
of proxies or  otherwise  during the fourth  quarter of the year covered by this
report.


PART II


Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     (a) Principal Market or Markets
         ---------------------------

     Our common  stock  trades on the OTC  Bulletin  Board.  We have four market
makers;  (1)  Knight  Securities;  (2) Sharp  Capital  Securities;  (3)  Paragon
Securities;  and (4) Hill Thompson Securities.  Trading activity in our stock is
very limited and is designated to trade "by appointment only."

     (b) Approximate Number of Holders of Common Stock
         ---------------------------------------------

     The number of holders of record of our Common  Stock at December  31, 2000,
was approximately 27.

     (c) Dividends
         ---------

     Holders of our common stock are  entitled to receive such  dividends as may
be declared by our Board of  Directors.  No  dividends  on the common stock were
paid during the periods reported herein nor do we anticipate paying dividends in
the foreseeable future.

     (d) Reverse stock split
         -------------------

     On  September  15,  2000,  our  directors  and   shareholders   approved  a
one-for-two  reverse stock split of our outstanding  common shares.  The reverse
split was effective on September 26, 2000. As a result of the reverse split, the
number of outstanding common shares was reduced from 2,322,000 to 1,161,000.

                                        9
<PAGE>

     (e) The Securities Enforcement and Penny Stock Reform Act of 1990
         -------------------------------------------------------------

     The  Securities  Enforcement  and Penny Stock  Reform Act of 1990  requires
additional  disclosure and  documentation  related to the market for penny stock
and for trades in any stock  defined  as a penny  stock.  Unless we can  acquire
substantial  assets  and trade at over  $5.00  per share on the bid,  it is more
likely than not that our securities,  for some period of time,  would be defined
under the Act as a "penny stock." As a result, those who trade in our securities
may be required to provide  additional  information about their fitness to trade
our  shares.  Also,  there is the  requirement  of a  broker-dealer,  prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
that  provides  information  about penny stocks and the risks in the penny stock
market.  Further, a broker-dealer must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the  broker-dealer and
its salesperson in the transaction,  and monthly account  statements showing the
market  value  of  each  penny  stock  held  in the  customer's  account.  These
requirements  present a substantial  burden on any person or brokerage  firm who
plans to trade out securities and would thereby make it unlikely that any liquid
trading market would ever result in our securities  while provisions of this Act
might be applicable to those securities.

     (f) Blue Sky Compliance
         -------------------

     The trading of penny stock  companies may be  restricted by the  securities
laws ("Blue Sky" laws) of the several states.  Management is aware that a number
of states currently  prohibit the unrestricted  trading of penny stock companies
absent  the  availability  of  exemptions,  which are in the  discretion  of the
states' securities administrators.  The effect of these states' laws would be to
limit the trading  market,  if any,  for our shares and to make resale of shares
acquired by investors more difficult.


Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     Forward-Looking statements

     The following discussion contains forward-looking  statements regarding our
Company,  its business,  prospects and results of operations that are subject to
certain  risks and  uncertainties  posed by many  factors  and events that could
cause our  actual  business,  prospects  and  results  of  operations  to differ
materially   from  those  that  may  be  anticipated  by  such   forward-looking
statements.  Factors that may affect such  forward-looking  statements  include,
without  limitation;  our ability to  successfully  develop new products for new
markets; the impact of competition on our revenues; changes in law or regulatory
requirements  that adversely  affect or preclude clients from using our products
for certain  applications;  delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.

     When used in this  discussion,  words  such as  "believes",  "anticipates",
"expects",   "intends"  and  similar   expressions   are  intended  to  identify
forward-looking  statements,  but are not the  exclusive  means  of  identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these  forward-looking  statements,  which  speak  only  as of the  date of this
report.  Our Company  undertakes  no  obligation  to revise any  forward-looking
statements in order to reflect  events or  circumstances  that may  subsequently
arise.   Readers  are  urged  to  carefully  review  and  consider  the  various
disclosures  made  by us in  this  report  and  other  reports  filed  with  the
Securities and Exchange Commission that attempts to advise interested parties of
the risks and factors that may affect our business.

     The following  summarizes the Company's results of operations and financial
conditions, and should be read in conjunction with the financial statements:

     (a) Liquidity and Capital Resources
         -------------------------------

     At December 31, 2000,  we had current  assets  totaling  $9,298 in cash and
$1,800 in current liabilities.  Since our inception, we have received $80,500 in
cash proceeds as consideration for the sale of 322,000 shares of common stock.

                                       10
<PAGE>

     (b) Results of Operations
         ---------------------

     No  operations  were  conducted  during  the  period  from  April 23,  1998
(inception)  through December 31, 2000 as we have been in the development stage.
Expenses  incurred since  inception  have been related to legal,  accounting and
stock transfer agent fees, as well as rent and other general and  administrative
costs in order to provide stock transfer services to current shareholders and to
comply with  reporting as required by the  Securities  Exchange Act of 1934.  We
have also recognized a charge to earnings totaling $15,000 for the write down of
our NVL investment during the year ended December 31, 1999.

     (c) Plan of Operation
         -----------------

     Since inception,  we have has conducted no business  operations  except for
the  purchase of an eight per cent equity  ownership  interest in NVL, a British
Virgin Islands corporation which has conducted, through NVSA, a wholly-owned RSA
subsidiary,  marine diamond mining  operations off the west coast of the RSA. We
propose to raise equity and/or debt  financing in addition to the funding in the
amount of $80,500  received from our offering and sale of Common Stock  pursuant
to Rule 504 of Regulation D under Section 3(b) of the Act.  Although  management
intends to explore all available  alternatives for debt and/or equity financing,
including but not limited to private and public securities offerings,  there can
be no assurance that additional capital can be obtained.  In the event that only
limited  additional  financing is received,  we expect our  opportunities in the
mining  industry  to be limited to  partnering,  joint  venture or similar  such
arrangements  whereby  we join with  others  having  the  mineral  reserves  and
resources in addition to the financing, equipment, personnel and other resources
necessary to conduct mineral exploration, development and production activities.
Even if we succeed in  obtaining  the level of  funding  necessary  to acquire a
mining  property or properties,  funds spent for exploration may prove worthless
and/or extended  periods of time may elapse between the expenditure of funds and
the  recognition  of income from a property and,  further,  a mine  successfully
developed to the producing stage may, nevertheless,  fail to produce minerals in
sufficient quantity to enable us to realize a profit.

     During the year ended December 31, 2000, we began seeking opportunities for
possible  investments  and/or business  combinations  with companies that may be
operating  outside of our original  business plan. No agreements were reached as
of December 31, 2000.


Item 7. FINANCIAL STATEMENTS

     The report of the independent  auditors on the financial statements appears
at Page F-2 and the financial  statements and  accompanying  footnotes appear at
Pages F-3 through F-11 hereof.  These financial statements and related financial
information  required to be filed hereunder  commence on Page F-1 hereof and are
incorporated herein by this reference.

<PAGE>

Item 7. Financial Statements

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                          Index to Financial Statements

                                                                           Page
                                                                          ------
Independent auditors' report ............................................   F-2

Balance sheet, December 31, 2000 ........................................   F-3

Statements of operations, for the years ended December
     31, 2000 and 1999, and for the period from
     April 23, 1998 (inception) through December 31, 2000 ...............   F-4

Statement of shareholders' equity (deficit), for the period
     from April 23, 1998 (inception) through December 31, 2000 ..........   F-5

Statements of cash flows, for the years ended December 31,
     2000 and 1999, and for the period from April 23, 1998
     (inception) through December 31, 2000 ..............................   F-6

Notes to the financial statements .......................................   F-7


                                       F-1
<PAGE>


To the Board of Directors and Shareholders
Max Development, Inc.

                          INDEPENDENT AUDITORS' REPORT

We have audited the balance sheet of Max Development,  Inc. (a development stage
company) as of December  31, 2000,  and the related  statements  of  operations,
shareholders'  equity  (deficit) and cash flows for the years ended December 31,
2000 and 1999, and from April 23, 1998  (inception)  through  December 31, 2000.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Max Development,  Inc. as of
December  31,  2000,  and the results of its  operations  and cash flows for the
years  ended  December  31, 2000 and 1999,  and from April 23, 1998  (inception)
through  December 31, 2000, in conformity with accounting  principles  generally
accepted in the United States of America.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note A to the  financial
statements,  the  Company is in the  development  stage,  has no  revenues as of
December 31, 2000,  and has  experienced  significant  operating  losses for the
periods from April 23, 1998 (inception)  through December 31, 2000, which raises
a  substantial  doubt  about  its  ability  to  continue  as  a  going  concern.
Management's  plans in regard to these matters are also described in Note A. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.




Cordovano and Harvey, P.C.
Denver, Colorado
March 3, 2001

                                          F-2

<PAGE>

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                                  BALANCE SHEET

                                December 31, 2000


ASSETS

Current assets:

     Cash ............................................................ $  9,298
                                                                       --------
                                              Total current assets        9,298

Equipment, less accumulated depreciation of $333 .....................      525

Investment (Note A) ..................................................        -
                                                                       --------

                                                                       $  9,823
                                                                       ========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
     Accounts payable and accrued liabilities ........................ $  2,888
     Due to affiliate (Note B) .......................................       99
                                                                       --------
                                         Total current liabilities        2,987
                                                                       --------

Shareholders' equity (deficit) (Note C):
     Preferred stock, $.01 par value; 1,000,000 shares
        authorized; -0- shares issued and outstanding ................        -
     Common stock, $.001 par value; 10,000,000 shares authorized;
        1,161,000 shares issued and outstanding ......................    1,161
     Additional paid-in capital ......................................   81,904
     Deficit accumulated during development stage ....................  (76,229)
                                                                       --------
                              Total shareholders' equity (deficit)        6,836
                                                                       --------

                                                                       $  9,823
                                                                       ========
               See accompanying notes to the financial statements

                                       F-3
<PAGE>

<TABLE>

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF OPERATIONS
<CAPTION>



                                                                                                          April 28, 1998
                                                                              For the Years Ended          (Inception)
                                                                                  December 31,               Through
                                                                       ------------------------------      December 31,
                                                                         2000                1999              2000
                                                                      -----------         -----------     --------------
Costs and expenses:
<S>                                                                   <C>                 <C>             <C>
    Rent (Note B) ................................................    $    12,000         $     9,000     $    21,000
    Legal and accounting .........................................          9,048              17,735          29,283
    Stock transfer fees ..........................................          1,976               1,538           3,514
    Stock-based compensation, consulting (Note C) ................              -                   -             278
    Travel .......................................................          2,767                   -           2,767
    Printing .....................................................          1,515               1,099           2,614
    Depreciation .................................................            286                  47             333
    Other general and administrative .............................            841                 502           1,440
                                                                      -----------         -----------     -----------
                                                    Operating loss        (28,433)            (29,921)        (61,229)

Non-operating expense:
    Realized loss on write-down of investment (Note A) ...........              -             (15,000)        (15,000)
                                                                      -----------         -----------     -----------
                                          Loss before income taxes        (28,433)            (44,921)        (76,229)

Income taxes (Note D) ............................................              -                   -               -
                                                                      -----------         -----------     -----------

                                                          Net loss    $   (28,433)        $   (44,921)    $   (76,229)
                                                                      ===========         ===========     ===========

Basic loss per common share ......................................    $     (0.02)        $     (0.04)
                                                                      ===========         ===========
Basic weighted average common shares outstanding .................      1,161,000           1,114,042
                                                                      ===========         ===========
</TABLE>


               See accompanying notes to the financial statements.

                                       F-4
<PAGE>

<TABLE>

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

              April 23, 1998 (inception) through December 31, 2000
<CAPTION>

                                                                                                                Deficit
                                                                                                                Accumulated
                                              Preferred Stock      Common Stock          Additional   Deferred  During
                                             -----------------  -----------------------  Paid-in      Offering  Development
                                             Shares  Par Value    Shares     Par Value   Capital      Costs     Stage         Total
                                             ------  ---------  -----------  ---------   -----------  --------  ----------- --------

<S>                                          <C>     <C>        <C>          <C>         <C>          <C>       <C>          <C>
Balance, April 23, 1998 (inception) .........     -  $      -            -   $       -   $         -  $    -    $      -    $     -
November 18, 1998, common stock sold
   to officers ($.00139/share) (Note C) .....     -         -    1,800,000       1,800           700       -           -      2,500
November 18, 1998, common stock issued to
   consultant in exchange for services
   ($.00139/share) (Note C) .................     -         -      200,000         200            78       -           -        278
Deferred offering costs .....................     -         -            -           -             -    (213)          -       (213)
Net loss, April 23, 1998 (inception)
   through December 31, 1998 ................     -         -            -           -             -       -      (2,875)    (2,875)
                                             ------  --------   ----------   ---------   -----------  ------    --------     -------
                   Balance, December 31, 1998     -         -    2,000,000       2,000           778    (213)     (2,875)      (310)

April 15, 1999, sale of common stock less
   offering costs of $5,000 and offering
   costs paid to related party of $2,000
   ($.25/share) (Note C) ....................     -         -     322,000          322        72,965     213           -     73,500
Net loss for the year ended December 31, 1999     -         -            -           -             -       -     (44,921)   (44,921)
                                                  -  --------   ----------   ---------   -----------  ------    --------     -------
                   Balance, December 31, 1999     -         -    2,322,000       2,322        73,743       -     (47,796)    28,269

September 15, 2000, 1 for 2 reverse common
   stock split (Note C) .....................     -         -   (1,161,000)     (1,161)        1,161       -           -          -
Office space contributed by an affiliate
   (Note B)                                       -         -            -           -         7,000       -           -      7,000
Net loss for the year ended December 31, 2000     -         -            -           -             -       -     (28,433)   (28,433)
                                                  -  --------   ----------   ---------   -----------  ------    --------     -------
                   Balance, December 31, 2000     -  $      -    1,161,000   $   1,161   $    81,904  $    -    $(76,229)    $6,836
                                             ======  ========   ==========   =========   ===========  ======    ========     =======
</TABLE>

               See accompanying notes to the financial statements.

                                       F-5
<PAGE>

<TABLE>

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS
<CAPTION>


                                                                                                         April 28,
                                                                                                           1998
                                                                              For the Years Ended        (Inception)
                                                                                 December 31,            Through
                                                                           ------------------------      December 31,
                                                                             2000           1999           2000
                                                                           --------       ---------      ------------
Cash flows from operating activities:
<S>                                                                        <C>            <C>            <C>
    Net loss ........................................................      $(28,433)      $(44,921)      $  (76,229)
    Transactions not requiring cash:
       Depreciation .................................................           286             47              333
       Contributed rent .............................................         7,000              -            7,000
       Common stock issued for services (Note C) ....................             -              -              278
       Realized loss on write-down of investment (Note A) ...........             -         15,000           15,000
       Changes in current liabilities:
          Accounts payable and accrued expenses .....................         1,187          1,490            2,987
                                                                           --------       --------       ------------
                          Net cash (used in) operating activities ...       (19,960)       (28,384)         (50,631)
                                                                           --------       --------       ------------

Cash flows from investing activities:
    Purchase of equipment ...........................................             -           (858)            (858)
    Purchase of investment (Note A) .................................             -        (15,000)         (15,000)
                                                                           --------       --------       ------------
                           Net cash (used in) investing activities ..             -        (15,858)         (15,858)
                                                                           --------       --------       ------------

Cash flows from financing activities:
    Proceeds from sale of common stock ..............................             -         80,500           83,000
    Payments for offering costs .....................................             -         (7,000)          (7,213)
                                                                           --------       --------       ------------
                            Net cash provided by financing activities             -         73,500           75,787
                                                                           --------       --------       ------------

Change in cash ......................................................       (19,960)        29,258            9,298
Cash, beginning of period ...........................................        29,258              -                -
                                                                           --------       --------       ------------

                                                  Cash, end of period      $  9,298       $ 29,258       $    9,298
                                                                           ========       ========       ============

Supplemental disclosure of cash flow information: Cash paid for:
       Interest .....................................................      $      -       $      -       $        -
                                                                           ========       ========       ============
       Income taxes .................................................      $      -       $      -       $        -
                                                                           ========       ========       ============
</TABLE>

               See accompanying notes to the financial statements.

                                       F-6
<PAGE>

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO THE FINANCIAL STATEMENTS

NOTE A: SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF ORGANIZATION

Development stage company

Max Development,  Inc. (the "Company") is in the development stage in accordance
with Financial  Accounting  Standards Board  Statements of Financial  Accounting
Standards   (SFAS)  No.  7  "Accounting  and  Reporting  by  Development   Stage
Enterprises".

Use of estimates

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

Cash

Cash consists of federally insured amounts maintained in a checking account at a
bank. For the purposes of the statement of cash flows, the Company considers all
highly  liquid debt  instruments  purchased  with an original  maturity of three
months  or less to be  cash  equivalents.  There  were  no cash  equivalents  at
December 31, 2000.

Investments

Investments are recorded at cost. The Company's investment consists of less than
a twenty-percent  ownership in a company whose stock is not publicly traded. The
investment was written down to net realizable value.

Equipment and depreciation

Equipment is stated at cost.  Equipment is depreciated over its estimated useful
life using the straight-line method.

Upon  retirement  or  disposition  of the  equipment,  the cost and  accumulated
depreciation  are removed from the accounts  and any  resulting  gain or loss is
reflected  in  operations.  Repairs  and  maintenance  are charged to expense as
incurred and expenditures for additions and improvements are capitalized.

Fair value of financial instruments

SFAS 107,  "Disclosure  About Fair  Value of  Financial  Instruments,"  requires
certain  disclosures  regarding  the fair value of  financial  instruments.  The
Company has determined,  based on available  market  information and appropriate
valuation   methodologies,   the  fair  value  of  its   financial   instruments
approximates carrying value due to the short-term maturity of the instruments.

                                       F-7

<PAGE>

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO THE FINANCIAL STATEMENTS

Income taxes

Income taxes are provided  for the tax effects of  transactions  reported in the
financial  statements  and consist of taxes  currently due plus  deferred  taxes
related  primarily to differences  between the recorded book basis and tax basis
of assets and liabilities  for financial and income tax reporting.  The deferred
tax assets and liabilities represent the future tax return consequences of those
differences,  which will  either be taxable  or  deductible  when the assets and
liabilities  are recovered or settled.  Deferred  taxes are also  recognized for
operating  losses that are  available to offset  future  taxable  income and tax
credits that are available to offset future federal income taxes.

Loss per common share

Effective  December  31, 1997,  SFAS 128  "Earnings  per Share"  requires a dual
presentation  of earnings per  share-basic  and  diluted.  Basic loss per common
share has been computed  based on the weighted  average  number of common shares
outstanding.  Diluted loss per share  reflects the increase in weighted  average
common  shares  outstanding  that would  result  from the  assumed  exercise  of
outstanding stock options.  Basic and diluted losses per share were the same for
all prior periods presented due to the Company's simple capital  structure.  The
losses per share calculations in the accompanying financial statements have been
restated to reflect the reverse split (see Note C).

Stock-based compensation

SFAS No. 123,  "Accounting for Stock-Based  Compensation"  was issued in October
1995.  This  accounting  standard  permits the use of either a "fair value based
method" or the "intrinsic  value method" defined in Accounting  Principles Board
Opinion 25,  "Accounting  for Stock Issued to Employees" (APB 25) to account for
stock-based compensation arrangements.

Companies  that  elect to use the  method  provided  in APB 25 are  required  to
disclose pro forma net income and pro forma earnings per share  information that
would have  resulted  from the use of the fair value based  method.  The Company
adopted SFAS No. 123 during the period ended  December  31, 1998;  however,  the
Company  has  elected  to  continue  to  determine  the  value  of   stock-based
compensation  arrangements  under  the  provisions  of  APB  25.  No  pro  forma
disclosures  have been included with the  accompanying  financial  statements as
there was no pro forma effect to the Company's net loss or loss per share.

Nature of organization and basis of presentation

The  Company was  organized  under the laws of the State of Colorado on April 23
1998.

During 1999 the Company invested  $15,000,  which  approximated an eight-percent
equity ownership  interest in Northern Ventures Ltd.  ("NVL"),  a British Virgin
Islands  corporation.  NVL owns 100 percent of  Northern  Ventures SA (Pty) Ltd.
("NVSA"), a Republic of South Africa ("RSA") corporation, which holds a contract
right to mine the admiralty strip on a marine diamond mine concession,  known as
the Brazil Farms  concession,  in the  Atlantic  Ocean off the west coast of the
RSA.  In May of  1999,  due to the  speculative  nature  of the  investment  and
recurring losses of NVSA, the investment was written down to a new cost basis of
$-0- and the realized loss of $15,000 was included in earnings.


                                       F-8
<PAGE>


                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO THE FINANCIAL STATEMENTS

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplates  the  realization of assets and the  satisfaction of
liabilities  in the  normal  course of  business.  As shown in the  accompanying
financial statements, the Company is in the development stage, has no revenue as
of December 31, 2000, and has incurred operating losses totaling $76,229 for the
period from April 23, 1998 (inception) through December 31, 2000. These factors,
among  others,  may  indicate  that the Company  will be unable to continue as a
going concern for reasonable period of time.

The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. The Company's continuation
as a going  concern is dependent  upon its ability to generate  sufficient  cash
flow to meet  its  obligations  on a  timely  basis  and  ultimately  to  attain
profitability.  The Company's management  anticipates conducting debt financings
or additional  equity offerings during 2001 to help fund the Company's  proposed
operations.  There is no assurance  that the Company will be  successful  in its
efforts to raise  additional  proceeds or attain  profitability.  The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

NOTE B: RELATED PARTY TRANSACTIONS

The Company  leased office space and purchased  administrative  services from an
affiliate  on a month to month basis  during the period from April 1999  through
May 2000.  The Company paid the affiliate  $1,000 per month for the office space
and services  during that period.  Effective June 1, 2000,  the affiliate  began
providing the office space and services at no charge. The rent and services were
valued at $1,000 per month for the period from June 1, 2000 through December 31,
2000,  based on the  charges  in  prior  periods.  The  rent and  administrative
services  contributed  during 2000 are  included in the  accompanying  financial
statements  as  rent  and  administrative   services,   related  party,  with  a
corresponding  credit  to  additional  paid-in  capital.  Rent  expense  totaled
$12,000,  $9,000 and $21,000 for the years ended December 31, 2000 and 1999, and
for the period  from April 23,  1998  (inception)  through  December  31,  2000,
respectively.

During the year ended December 31, 2000, an affiliate paid expenses on behalf of
the Company  totaling  $3,370.  The Company  repaid $3,271 prior to December 31,
2000.  The balance owed the affiliate at December 31, 2000 of $99 is included in
the accompanying financial statements as due to affiliate.

During the year ended December 31, 1999, an affiliate paid expenses on behalf of
the Company  totaling  $475.  The Company  repaid the $475 prior to December 31,
1999.

During the year ended  December 31, 1999,  the Company paid an affiliate  $2,000
for services related to its common stock offering. The $2,000 is included in the
offering  costs,  which were deducted from the gross proceeds of the offering in
the accompanying financial statements.

During the period ended  December 31, 1998, an affiliate paid expenses on behalf
of the Company  totaling $270. The Company repaid the $270 during the year ended
December 31, 1999.

During the period ended December 31, 1998, an officer paid expenses on behalf of
the  Company  totaling  $40.  The  Company  repaid the $40 during the year ended
December 31, 1999.



                                       F-9
<PAGE>


                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO THE FINANCIAL STATEMENTS

NOTE C: SHAREHOLDERS' EQUITY

Preferred Stock

The  Company  is  authorized  to issue  one  million  shares  of $.01 par  value
preferred  stock,  which  may  be  issued  in  series  with  such  designations,
preferences,  stated values, rights, qualifications or limitations as determined
by the Board of Directors.

Common stock sales

During the year ended  December  31,  1999,  the Company  offered for sale 1,250
units. Each unit consisted of 400 shares of the Company's $.001 par value common
stock,  for a total of 500,000  shares.  The units were  offered  pursuant to an
exemption from registration under Rule 504 of Regulation D of the Securities Act
of 1933,  as amended  (the  "Act").  Units were sold for $100 each,  or $.25 per
common  share.  The  Company  sold 805 units  (322,000  common  shares)  for net
proceeds of $73,287, after deducting offering costs totaling $7,213.

During the period from April 23, 1998  (inception)  through  December  31, 1998,
1,800,000 shares of common stock were sold to officers of the Company for $2,500
($.00139 per share).  These shares are  "restricted  securities" and may be sold
only in compliance with Rule 144 of the Act.

Stock option plan

The  Company  has  adopted  a stock  compensation  plan for the  benefit  of key
personnel and others providing significant services to the Company. An aggregate
of 1,000,000 shares of common stock has been reserved under the plan. There were
no options granted under this plan as of December 31, 2000.

Stock-based compensation

On November 18, 1998,  the Company  issued  200,000  shares of common stock to a
consultant  of  the  Company  in  exchange  for  services  related  to  the  NVL
investment.  The Board of Directors valued these shares at the fair value of the
common  stock.  The  Board  of  Directors  considered   contemporaneous   equity
transactions and other analysis to determine the fair value of the common stock.
Stock-based  compensation  expense of $278 was  recognized  in the  accompanying
financial statements for the period ended December 31, 1998.

Reverse stock split

On September 15, 2000,  the  Company's  directors  and  shareholders  approved a
one-for-two reverse stock split of the Company's  outstanding common shares. The
reverse  split was  effective on September  26, 2000. As a result of the reverse
split,  the number of  outstanding  common shares was reduced from  2,322,000 to
1,161,000.


                                      F-10
<PAGE>

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO THE FINANCIAL STATEMENTS

NOTE D: INCOME TAXES

A reconciliation of the U.S.  statutory federal income tax rate to the effective
tax rate is as follows:

                                                    For the Years Ended
                                                       December 31,
                                                  ------------------------
                                                    2000           1999
                                                  -------        ---------
U.S. federal statutory graduated rate.........     15.00%         15.00%
State income tax rate,
  net of federal benefit......................      4.04%          4.04%
Net operating loss for which no tax
  benefit is currently available..............    -19.04%        -19.04%
                                                  -------        ---------
                                                    0.00%          0.00%
                                                  =======         ========

At  December  31,  2000,  deferred  tax assets  consisted  of a net tax asset of
$14,512, due to operating loss carryforwards of $76,229, which was fully allowed
for, in the valuation allowance of $14,512.  The valuation allowance offsets the
net deferred  tax asset for which there is no assurance of recovery.  The change
in the valuation  allowance for the years ended  December 31, 2000 and 1999, and
from April 23, 1998 (inception) through December 31, 1998 totaled $5,413, $8,552
and $547, respectively.  The current tax benefit also totaled $5,413, $8,552 and
$547 for the years ended  December  31,  2000 and 1999,  and from April 23, 1998
(inception)  through  December 31, 1998,  respectively.  The net operating  loss
carryforward expires through the year 2020.

The valuation  allowance will be evaluated at the end of each year,  considering
positive  and  negative  evidence  about  whether the deferred tax asset will be
realized.  At that time,  the  allowance  will either be  increased  or reduced;
reduction could result in the complete  elimination of the allowance if positive
evidence  indicates  that the  value of the  deferred  tax  assets  is no longer
impaired and the allowance is no longer required.

Should the Company undergo an ownership  change as defined in Section 382 of the
Internal  Revenue  Code,  the Company's  tax net  operating  loss  carryforwards
generated prior to the ownership change will be subject to an annual limitation,
which could reduce or defer the utilization of these losses.


                                      F-11
<PAGE>


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

     We did not have any  disagreements on accounting and financial  disclosures
with our accounting firm during the reporting period.


PART III


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

                                       11
<PAGE>


     (a) Directors and Executive Officers
         --------------------------------

     The names  and ages of the our  Directors  and  executive  officers  are as
follows:

       Name              Age                      Position
------------------       ---      ----------------------------------------------
David C. Olson (1)        40      President, Chief Executive Officer, Secretary
                                  Chief Financial Officer and Director


     (1) Mr.  Olson may be deemed a "promoter"  and "parent" of the Company,  as
those terms are  defined  under the General  Rules and  Regulations  promulgated
under the Securities Act of 1933, as amended.

     Directors hold office until our next annual  shareholder  meeting and until
their respective successors have been elected and qualify. Officers serve at the
pleasure of the Board of  Directors.  Mr.  Olson is expected to devote such time
and  effort  to our  business  affairs  as  may  be  necessary  to  perform  his
responsibilities as our sole executive officer and director.

     We have no audit or compensation committee.

     (b) Business Experience
         -------------------

     David C. Olson,  since August 1997, has served as the President,  the Chief
Executive Officer,  the Treasurer,  a director and a controlling  shareholder of
Summit Financial Relations, Inc. ("Summit"), a business finance,  consulting and
investor  relations  firm  with  offices  in the  Denver  Technological  Center,
Englewood,  Colorado,  founded by him. Also, since August 1997, he has served as
the President,  the Chief  Executive  Officer,  the Treasurer,  a director and a
controlling  shareholder of Associate  Capital  Consulting,  Inc., an Englewood,
Colorado, company also founded by Mr. Olson, which is engaged in the business of
investing in private and  publicly-held  companies and,  additionally,  performs
financial  consulting  services.  Mr. Olson has, since September 1998, served as
the  President,  the  Treasurer  and a director  of Easy Web,  Inc.,  Englewood,
Colorado,  a privately-held  company co-founded by him in September 1998 that is
engaged in the business of selling customized and turnkey Internet web sites and
hosting  services  to  businesses  in the  United  States.  He has  served  as a
director,  since May 1999, of Mile High Foliage,  Inc.,  Englewood,  Colorado, a
privately held wholesale tree farm business,  which he founded in May 1999. From
January 1993 to May 1997, he held various  positions,  including Vice President,
Branch Office Manager of Cohig's top producing  branch office and National Sales
Manager,  for Cohig  and  Associates,  Inc.  ("Cohig,"  now part of  EastBrokers
International,  Inc.),  Englewood,  Colorado, a securities  broker-dealer having
approximately  265  registered   representatives  in  twenty-three  states  that
specializes  in NASDAQ  SmallCap  and growth  stocks and initial  and  secondary
public securities offerings. During his tenure at Cohig, Mr. Olson served on the
firm's  Corporate  Finance  Commitment  Committee and was involved in public and
private  financing  involving  hundreds  of  millions  of dollars  and  numerous
companies.  From  April  1987 to  January  1993,  he was  associated  with Kober
Financial  Corp.   ("Kober"),   Denver,   Colorado,  a  regional   broker-dealer
specializing in NASDAQ SmallCap and growth securities that was acquired by Cohig
in January 1993. Mr. Olson held a number of positions,  including Executive Vice
President,  National  Sales  and  Syndication,  registered  broker  and  account
executive  during the period of his  association  with Kober.  During the period
from 1982 to 1987, he was a registered  representative  associated with a number
of NASD-member broker-dealers.


Item 10. EXECUTIVE COMPENSATION

     No cash  compensation  has been awarded to, earned by or paid to any of our
executive  officers or directors for services rendered to us since our inception
on April 23, 1998. It is not anticipated that, for the foreseeable  future,  Mr.
Olson or any other executive  officer or director will receive any  compensation

                                       12
<PAGE>

in any form for services to us in the  capacities  of executive  officer  and/or
director.  On April 28, 1998, we issued an aggregate of 900,000 shares of common
stock to each of Mr.  Olson and to a former  executive  officer and director for
services  rendered in  organizing  the Company.  Mr. Olson  acquired the 900,000
shares owned by our former officer/director for cash on April 15, 1999. He holds
no option to purchase any of our securities. Mr. Olson plans to devote only such
time to our business affairs,  which he deems necessary.  (See Item 12, "Certain
Relationships and Related Transactions.")

     Effective  November  18,  1998,  our Board of  Directors  and  shareholders
approved the adoption of the 1998-9  Services and Consulting  Compensation  Plan
(the "Plan"),  reserving  certain  shares of Common Stock for issuance under the
Plan or in connection  with the exercise of stock options  received by optionees
under  the Plan.  Except  for this  Plan,  we do not  provide  our  officers  or
employees with pension, stock appreciation rights,  long-term incentive or other
plans  and we  have  no  intention  of  implementing  any  such  plans  for  the
foreseeable  future.  In the future,  we may offer stock options to  prospective
employees and/or  consultants;  however, no such options have been granted as of
the date hereof.  It is possible that in the future,  we may  establish  various
executive  incentive  programs and other benefits,  including  reimbursement for
expenses  incurred in connection  with our operations,  Company  automobiles and
life and health insurance,  for its executive  officers and directors,  but none
has yet been granted.  The  provisions of such plans and benefits will be at the
discretion of our Board of Directors.

     Incentive Stock Option Plan
     ---------------------------

     The Board of Directors  approved  the  adoption of the 1998-9  Services and
Consulting  Compensation  Plan (the  "Plan")  effective as of November 18, 1998,
reserving an  aggregate of 1,000,000  shares of Common Stock for issuance to, or
the  exercise  of  stock  options  granted  to,  employees,   consultants,   and
non-employee  members of our Board of Directors  under the Plan.  The purpose of
the Plan is to promote our growth and general  prosperity  by  permitting  us to
issue shares of Common Stock,  and grant options  exercisable to purchase shares
of Common Stock, to our employees,  consultants and non-employee  members of the
Board of Directors.

     Pursuant  to the Plan,  we may grant  incentive  stock  options  within the
meaning of Section 422A of the Internal  Revenue  Code of 1986,  as amended,  to
employees  as  well as  non-qualified  stock  options  to  employees,  officers,
directors and consultants.  The Plan provides for administration by our Board of
Directors  or by a  committee  of the  Board  of  Directors.  The  Board or such
committee selects the optionees,  authorizes the grant of options and determines
the exercise price of the options.  The Board of Directors expects to administer
the plan initially.

     The  exercise  price of each stock  option  under the Plan must be at least
100% of the fair market value of the shares of Common Stock on the date of grant
as  determined  by the Board of Directors.  Each  incentive  stock option may be
exercisable  for a period,  as determined by the Board of Directors,  but not in
excess of ten years from the date of grant.  The exercise price of all incentive
stock options granted under the Plan to shareholders possessing more than 10% of
the total combined  voting power of all classes of stock of the Company must not
be less than 110% of the fair market  value of the shares of Common Stock on the
date of grant and such options may be exercisable  for a period not in excess of
five  years  from the date of  grant.  All  options  granted  under the Plan are
non-transferable  and may be exercised  only by the  optionee or the  optionee's
estate.

     There is no limit on the number of shares with respect to which options may
be granted under the Plan to any participating employee.  However, the aggregate
fair market value of shares of Common Stock  (determined  on the date the option
is granted) with respect to which incentive stock options become exercisable for
the first time by an  individual  option  holder during any calendar year (under
all such plans maintained by us) may not exceed $100,000.

     Options granted under the Plan may be exercised  within twelve months after
the date of an  optionee's  termination  of employment by reason of his death or
disability,  or within three months after the date of  termination  by reason of

                                       13
<PAGE>

retirement or voluntary termination approved by our Board of Directors, but only
to the extent the option was otherwise  exercisable on the date of  termination.
In the event an optionee's  employment  is terminated  for any reason other than
death, disability,  retirement or voluntary termination approved by our Board of
Directors,  such optionee's option terminates thirty days after the date of such
termination.

     The Plan will  terminate on November  18, 2008.  The Plan may be amended by
our Board of Directors without shareholder  approval,  except that no amendment,
which increases the maximum  aggregate number of shares that may be issued under
the Plan or changes,  the class of employees who are eligible to  participate in
the Plan, can be made without the approval of the  shareholders  of the Company.
No options have been granted under the Plan as of December 31, 2000.

     Compensation of Directors
     -------------------------

     Our Directors receive no compensation  pursuant to any standard arrangement
for their services as directors.


Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information  regarding  beneficial ownership
as of the December 31, 2000 of our common stock by any person who is known by us
to be the  beneficial  owner  of more  than  five  (5%)  percent  of our  voting
securities, by each Director of the Registrant, and by officers and Directors of
the Registrant as a group.  Although  authorized for Preferred  Shares,  we have
issued only Common Stock. As of December 31, 2000,  there were 1,161,000  common
shares issued and outstanding.

     All ownership is beneficial and on record and all beneficial  owners listed
below have sole voting and  investment  power with respect to the shares  shown,
unless otherwise indicated.

                                          Shares
                                       Beneficially        Percentage
           Beneficial Owner              Owned (1)        of Class (1)
           ----------------            ------------       ------------

David C. Olson (2)                        904,000            77.9%
6025 South Quebec Street, Suite 150
Englewood, Colorado 80111

James F. Paulos                           100,000             8.6%
4025 Easley Road
Golden, Colorado 80403

All executive officers and directors      904,000            77.9%
as a group (one person)

     (1)  Represents  the number of shares of common  stock  owned of record and
beneficially  by each  named  person  or group,  expressed  as a  percentage  of
1,161000  shares of our common stock issued and  outstanding  as of December 31,
2000.

     (2) Sole executive officer and director of the Company.


Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On April 28, 1998, we issued and sold 900,000 shares of Common Stock to Mr.
David C.  Olson,  our sole  executive  officer and  director  and the record and
beneficial  owner of a total of  1,808,000  shares,  representing  approximately

                                       14
<PAGE>

77.9%  of  the  issued  and  outstanding   shares,   of  our  Common  Stock,  in
consideration  for his  payment  in the  amount  of $1,250  for  legal  services
performed by Cudd & Associates,  Denver,  Colorado, on our behalf (approximately
$.0014 per share).  Cudd & Associates is the law firm, which has passed upon the
legality of the Common Stock and certain other  matters in connection  with this
Form  10-SB  Registration  Statement.  Excepting  8,000  shares of Common  Stock
purchased  by him in our  offering  of  Common  Stock  pursuant  to Rule  504 of
Regulation D under  Section  3(b) of the Act, Mr. Olson  acquired the balance of
900,000 shares of Common Stock presently owned of record and beneficially by him
from our former executive officer, director and controlling shareholder on April
15, 1999.

     We lease  office  space from Summit  Financial  Relations,  Inc., a company
affiliated  through common ownership,  located at the business offices of Summit
in Englewood,  Colorado.  We leased  office space and  purchased  administrative
services  from the  affiliate on a  month-to-month  basis during the period from
April 1999  through  May 2000.  We paid the  affiliate  $1,000 per month for the
office  space and  services  during that  period.  Effective  June 1, 2000,  the
affiliate began  providing the office space and services at no charge.  The rent
and  services  were  valued at $1,000 per month for the period from June 1, 2000
through December 31, 2000,  based on the charges in prior periods.  The rent and
administrative services contributed during 2000 are included in the accompanying
financial statements as rent and administrative services,  related party, with a
corresponding  credit  to  additional  paid-in  capital.  Rent  expense  totaled
$12,000,  $9,000 and $21,000 for the years ended December 31, 2000 and 1999, and
for the period  from April 23,  1998  (inception)  through  December  31,  2000,
respectively.

     We believe  that the terms of this rental  arrangement  are as favorable as
those  that  could  have been  obtained  from an  unaffiliated  third  party for
comparable arrangements in the Denver, Colorado, suburban area.

     On June 17,  1999,  we paid a  one-time  fee in the  amount  of  $2,000  to
Associate Capital Consulting,  Inc., an affiliated company, in consideration for
the  performance by Associate  Capital  Consulting,  Inc., of certain  financial
consulting services for us.

     From  time-to-time  since  our  inception,  Mr.  David C.  Olson,  our sole
executive officer and director,  and Summit have incurred expenses on our behalf
for which they have  subsequently  been reimbursed by us. Such expenditures have
totaled  approximately  $4,155  through the date hereof and, as of December  31,
2000,  the  Company  owed Summit $99 for  expenses  paid on our behalf that were
reimbursed in January of 2001.


Item 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

     3.01 Articles of Incorporation (1)

     3.02 Articles  of  Amendment  to  the  Articles  of  Incorporation  of  Max
          Development, Inc., filed November 15, 1998 (2)

     3.03 Bylaws (3)

     (1)  Incorporated  by  reference  to  Exhibit  3.01  to  the   registration
          statement on Form 10-SB of the  Registrant  filed with the  Securities
          and Exchange Commission on September 15, 1999 (File No. 0-27337).

     (2)  Incorporated  by  reference  to  Exhibit  3.02  to  the   registration
          statement on Form 10-SB of the  Registrant  filed with the  Securities
          and Exchange Commission on September 15, 1999 (File No. 0-27337).

                                       15
<PAGE>


     (3)  Incorporated  by  reference  to  Exhibit  3.03  to  the   registration
          statement on Form 10-SB of the  Registrant  filed with the  Securities
          and Exchange Commission on September 15, 1999 (File No. 0-27337).

     (b)  No reports on Form 8-K were filed  during the year ended  December 31,
          2000.

                                       16
<PAGE>



SIGNATURES


     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


(Registrant):  MAX DEVELOPMENT, INC.



By:   /s/ David C. Olson               Date: March 16, 2001
      ------------------                     --------------
      David C. Olson
      President


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
date indicated.


By:   /s/ David C. Olson               Date: March 16, 2001
      ------------------                     --------------
      David C. Olson
      President

                                       17