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, 1999     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, 1999: (a) 2,322,000  common shares,  $.001 par value,  of the
registrant were outstanding;  (b) approximately  322,000 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..............................................  14

     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.")


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

     Max Development,  Inc. (the "Company" or the  "Registrant"),  was organized
under  the laws of the  State of  Colorado  on April  23,  1998.  The  Company's
executive offices are presently located at 6025 South Quebec Street,  Suite 150,
Englewood,  Colorado  80111,  and its telephone and facsimile  numbers are (720)
489-8873 and (720) 489-8874, respectively.

     The Company  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, the Company 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,  the
board of directors of the Company 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 the Company's financial statements for the year ended December 31,
1999.

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

         General
         -------

     As of the date hereof, the Company's  activities in the mining industry are
limited to its  participation  in marine diamond mining  operations off the west
coast of the RSA through the Company's  minority  ownership interest in NVL. NVL
is conducting  such operations  through a wholly-owned  Republic of South Africa
corporation.   The  Company  owns  of  record  and   beneficially   182  shares,
representing  approximately eight percent of 2,370 outstanding shares, of common
stock of NVL.  Northern  Ventures


                                       3

<PAGE>


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 the  Company,  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 and
NVL expects to resume mining operations in late September 1999; which operations
were  halted  after  the  first  season in April  1999  because  of the onset of
unfavorable   weather   conditions   in  the  southern   hemisphere.   Prior  to
re-commencing  mining  activities,  however,  management  intends  to review the
results of an independent contractor's  activities,  including the evaluation of
new types of equipment and  prospecting in areas in the tidal zone unfamiliar to
NVL,  conducted during the autumn season despite the limitations  imposed by the
adverse weather and sea conditions.  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.
Based upon the foregoing and the quality of the small quantity of diamonds mined
by NVSA to date,  Company  management  remains  hopeful  that  NVL will  realize
profits from future operations from which the Company will benefit as a minority
shareholder of NVL via dividends and/or otherwise.

     Mr. David C. Olson, the sole executive  officer and director of the Company
and owner of 77.9 percent of the issued and outstanding  shares of the Company's
Common  Stock,   has  no  experience  in  the  mining  industry  in  general  or
specifically,  with  respect to diamond  mining.  Because of this,  among  other
reasons, the Company purchased, as its 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  Company's  and other
invested  funds.  The  Company  proposes  to  participate  in one or more mining
ventures  in  addition  to  its  investment  in NVL if it  succeeds  in  raising
additional  debt  and/or  equity  financing,  which  is  not  assured.  For  the
foreseeable future and until experienced  mining personnel join the Company,  if
ever, virtually all decisions  concerning the Company's  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
serves as the  Managing  Director.  Mr.  Robinson  serves  as the  Chief  Safety
Officer,  Engineer and as


                                       4

<PAGE>


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 53, 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 50, 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 57,  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 55, 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 65, 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, 1999:

--------------------------------------------------------------------------------
                                                           Consideration
                              Shares    Percentage   ---------------------------
 Name of Shareholder          Owned      of Class        Cash         Services
----------------------      ----------  ----------   -------------   -----------
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     $ -
--------------------------------------------------------------------------------

     *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


                                       5

<PAGE>


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  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 intends to pay  dividends  from  earnings in U.S.  dollars,  subject to
retention  of  earnings  for the  proposed  second  phase of  operations  and to
maintenance of a prudent working capital reserve.  The Board of Directors of NVL
is  presently  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.

     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. With the resumption of operations, NVL intends to focus on other areas
along the strip which management  anticipates to be richer and, after payment of
the 40% royalty fee to Trans Hex and the 3%  marketing  fee will,  nevertheless,
enable NVSA to break even.  NVL intends that NVSA will conduct  exploration  and
production activities contemporaneously, i.e., if an area is productive, it will
be mined on a limited basis and targeted for more  intensive  work in the second
phase,  after completion of the exploration of the Brazil Farms admiralty strip.
Management  of NVL believes  that the  exploration/limited  production  phase of
NVSA's  operations may span a period of three years,  assuming  encouraging  and
profitable results of operations.  The initial operations of NVSA, which yielded
only 142.81 carats of diamonds smaller in size than expected are,  nevertheless,
sufficiently encouraging as to warrant further exploratory operations because of
the high-grade quality of the diamonds, among other factors.

     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



                                       6

<PAGE>


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.

     Expenses for the first phase of the Brazil  Farms  project over the initial
start-up  period  are  estimated  by NVL  management  not to  exceed  the sum of
$80,000,  including equipment costs,  direct operating expenses,  geological and
administrative  expenses  (including travel from the U.S. and the United Kingdom
to the RSA) and working capital. This first phase of operations will include the
three  gullies  initially  explored  and other areas on the Brazil  Farms strip,
which have been identified as potentially more attractive.  If a gully proves to
be promising in the initial  stage,  operations in the second phase are expected
to encompass  excavation  of the gully onto land and further out to sea. In this
event,  Trans-Hex  would  be  required  to give  its  consent  to the  Company's
excavating a discovered gully past the land (east) and/or sea (west) boundaries.
Trans-Hex  has  previously  verbally  agreed to such seaward  (west)  extensions
(expected  to be reduced to writing in the near  future) and similar  agreements
for extensions toward land, or east extensions, are expected to be obtained.

     NVL management had estimated  that, in order for operations to be continued
past the trial-run beach  operation,  average daily recoveries of diamonds would
be required to be from 15 to 20 carats.  At an  estimated  $120 per carat net to
NVL for small  stones  (prices  per carat are higher for  larger  stones),  such
production would generate gross revenues of $39,600 to $52,800,  or net revenues
(after  operating  and  administrative  expenses)  of  $25,000 to  $38,200,  per
twenty-two day working month.  While the aforesaid goal has not been achieved to
date, NVL management  believes that there is potential for significantly  higher
recoveries if attractive diamond-bearing gullies are identified elsewhere on the
Brazil Farms strip prior to the second phase of operations. While cash flow from
operations,  i.e., payments received from Trans-Hex, have not been sufficient to
generate profits for  shareholders or fund continuing  operations in the initial
phase and despite  inconclusive  results of mining and  geological  evaluations,
management  intends to continue first phase  operations.  Undertaking the second
stage of  operations  will depend on the results of the first phase  operations;
the  estimated  diamond  reserves  in the  admiralty  strip;  whether  Trans-Hex
extended  NVSA's  lease  past the  expiration  date of March 31,  2000  (Company
management  believes the lease expired on March 31, 2000, however, it may obtain
another lease); and other factors.  Equipment and operating costs for the second
stage of operations are estimated to aggregate approximately  $900,000.  Funding
for the second  phase of  operations  is expected,  although  not assured,  from
positive cash flow from the first stage of operations,  to a limited degree, and
from additional equity and/or debt financing. The Company's investment in NVL is
not without risks,  including,  among others, the absence of established diamond
reserves and very limited capital for the development-stage operation.

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

     Depending  upon  the  Company's  success  in  raising  equity  and/or  debt
financing  in  addition  to the amount of  $80,500  received  from its  recently
completed  offering of Common Stock  pursuant to Rule 504 of  Regulation D under
Section  3(b) of the Act,  the  Company  intends to  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 the Company to be limited to partnering,  joint venture
or similar such  arrangements  whereby the Company  joins 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 the Company on a case-by-case  basis.  The success of any such
venture  participated  in by the Company  could not be  assured.  The Company is
dependent  upon the  efforts  of its  management  and/or  consultant,  including
Messrs. Olson and Hildebrand,  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 the
Company  in the  future  on which  funds are  spent  for  exploration  may prove
worthless  and/or



                                       7

<PAGE>


extended  periods of time may elapse  between the  expenditure  of funds and the
recognition of income from a property.  Furthermore, even assuming the Company's
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 the Company to realize a
profit. Accordingly, no assurance can be given that proven reserves will ever be
obtained or the Company will ever commence that commercial production.

     While  management  intends to take all action  necessary to ensure that the
Company does 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 the Company can avoid such  classification.  In
general,  investment  companies  are companies in which the bulk of whose assets
are invested in  securities.  The Company's  initial  venture is 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.  Company  management  believes that the
Company will not be  classified as an  investment  company  because it will come
within the  purview of one or more of a number of  exemptions  from the 1940 Act
for the reasons,  among  others,  that it is actively and  primarily  engaged in
non-investment business and that it is small in size.  Nevertheless,  there is a
risk  that  the  Company  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.  The Company anticipates that
it will be in competition with mining companies of all sizes located both inside
and outside the United States. The Company expects that its financial  resources
and other  assets  may  limit its  opportunities.  In this  regard,  many of the
companies and other  organizations with which the Company will be in competition
are  established  and virtually  all such  entities  have far greater  financial
resources,  substantially greater experience and larger staffs than the Company.
Additionally,  many of such organizations have substantial  exploration,  mining
and milling capabilities,  proven operating histories and long earnings records,
which the Company lacks.  The Company  expects to face strong  competition  from
both such  well-established  companies  and  small  independent  companies  like
itself. 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, 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
the Company to compete for such  mineral  properties.  There can be no assurance
that any mineral properties can be acquired by the Company in the future or upon
terms  acceptable  to  management,  or that  exploratory  work  conducted by the
Company or others would result in commercially producible minerals. In addition,
the  Company's  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 the Company 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 the Company,
therefore, cannot be presently determined.



                                       8
<PAGE>



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

     The Company has had no employees since its organization. Except for 900,000
shares of the Company's  Common Stock issued and sold to Mr. David C. Olson, the
sole  executive  officer and  director of the  Company,  and a former  executive
officer and  director of the Company,  respectively,  in  consideration  for the
payment by each individual of the sum of $1,250 for legal services  performed by
Cudd & Associates on behalf of the Company, the Company's 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 the former  executive  officer,  director and controlling  shareholder of the
Company.

     It is  anticipated  that at such time, if ever, as the Company's  financial
position permits,  assuming that the Company is 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 of the Company 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 executive officers of the Company and may receive
fees for their  attendance at meetings of the Board of Directors of the Company.
(See Item 12, "Certain Relationships and Related Transactions.")

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

     The Company  presently  comprises one  corporation  with no subsidiaries or
parent entities.

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

     The Company has been in the development  stage since its inception on April
23, 1998.

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

     The Company does not have any employees.

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

     The Company has no proprietary information.

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

     The  Company is not  subject to any  material  governmental  regulation  or
approvals.

     (k) Research and Development
         ------------------------

     The  Company  has  not  spent  any  amount  in  research  and   development
activities.

     (l) Environmental Compliance
         ------------------------

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


Item 2.  DESCRIPTION OF PROPERTY
================================



                                       9

<PAGE>



     For the year ended  December 31, 1999,  the Company's  business  office was
located at 6025 South Quebec Street,  Suite 150, Englewood,  Colorado 80111. The
Company  leases its office space from an affiliate  on a  month-to-month  basis.
Rent expense for the year ended December 31, 1999 totaled $9,000.


Item 3. LEGAL PROCEEDINGS
==========================

     No legal  proceedings of a material  nature to which the Company is a party
were pending  during the  reporting  period,  and the Company  knows of no legal
proceedings of a material nature,  pending or threatened,  or judgments  entered
against any director or officer of the Company in his capacity as such.


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

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


PART II

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

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

     There is no trading  market for the  Company's  common stock at present and
there has been no trading  market to date.  Management  has not  undertaken  any
discussions,  preliminary  or  otherwise,  with  any  prospective  market  maker
concerning the  participation  of such market maker in the  aftermarket  for the
Company's  securities,  but the Company may  initiate  such  discussions  in the
future.

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

     The number of holders of record of the  Company's  Common Stock at December
31, 1999, was approximately 27.

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

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


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

     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,  1999,  the Company had cash assets  totaling  $29,258 and
$1,800 in current liabilities.  Since the Company's  inception,  it has received
$80,500 in cash  proceeds  as  consideration  for the sale of 322,000  shares of
common stock.

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

     No  operations  were  conducted  during  the  period  from  April 23,  1998
(inception) through December 31, 1999 as the Company has 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


                                       10

<PAGE>


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. The Company also recognized a charge to earnings  totaling
$15,000 for the write-off of its NVL  investment  during the year ended December
31, 1999.

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

     Since its  inception,  the Company  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 conducts,  through NVSA, a wholly-owned
RSA subsidiary,  marine diamond mining operations off the west coast of the RSA.
For the period from April 23, 1998  (inception)  through  December 31, 1999, the
Company had no income from operations,  operating expenses  aggregating  $32,796
and a loss of $15,000 on the  write-down of its investment in NVL because of the
speculative  nature of the investment and NVSA's recurring  losses.  The Company
proposes to raise equity and/or debt financing in addition to the funding in the
amount of $80,500  received  from its recent  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,  the Company  expects its
opportunities in the mining industry to be limited to partnering,  joint venture
or similar such  arrangements  whereby the Company  joins 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 the Company succeeds 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 the
Company to realize a profit.

Item 7.  FINANCIAL STATEMENTS

         The report of the  independent  auditors  on the  financial  statements
appears  at  Page  F-2 and  the  financial  statements  and  their  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.


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

     The Company did not have any  disagreements  on  accounting  and  financial
disclosures with its present 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.
================================================================================

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

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


                                       11

<PAGE>

--------------------------------------------------------------------------------
      Name              Age                   Position
------------------      ---     ---------------------------------------------
David C. Olson (1)      38      President, Chief Executive Officer, Secretary
                                Chief Financial Officer and Director
--------------------------------------------------------------------------------

     (1) Mr. Olson may be deemed to be 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 the next  annual  meeting  of the  Company's
shareholders  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 the  business  and  affairs of the
Company  as may  be  necessary  to  perform  his  responsibilities  as the  sole
executive officer and director of the Company.

     The Company has 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  turnkey  Internet web sites and
hosting  services  to  businesses  in the  United  States.  He has  served  as a
director,  since May 1999, and as the President and the Treasurer,  since August
1999,  of  Mile  High  Foliage,  Inc.,  Englewood,  Colorado,  a  privately-held
wholesale tree farm business which he founded in May 1999. Mr. Olson has served,
since June 1999,  as a  director  of ModeVa  Profiles  Inc.,  a  privately-held,
Denver, Colorado,  manufacturer of building materials. 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 which 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
executive  officer or director of the Company for all  services  rendered in all
capacities to the Company since the Company's inception on April 23, 1998. It is
not  anticipated  that,  for the  foreseeable  future,  Mr.  Olson or any  other
executive  officer or director of the Company will receive any  compensation  in
any form for  services to the


                                       12

<PAGE>


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

     Effective November 18, 1998, the Board of Directors and shareholders of the
Company 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, the Company does not provide its
officers  or  employees  with  pension,  stock  appreciation  rights,  long-term
incentive or other plans and has no intention of implementing any such plans for
the foreseeable  future.  In the future,  the Company 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 the Company may
establish various  executive  incentive  programs and other benefits,  including
reimbursement for expenses incurred in connection with the Company's 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 the Company's 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 the Board of Directors  of the Company  under the Plan.
The purpose of the Plan is to promote the growth and general  prosperity  of the
Company by  permitting  the Company to issue shares of Common  Stock,  and grant
options  exercisable  to  purchase  shares of Common  Stock,  to its  employees,
consultants and non-employee members of the Board of Directors.

     Pursuant to the Plan, the Company 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 the Board of
Directors of the Company 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 the Company) may not exceed $100,000.


                                       13

<PAGE>



     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
retirement or voluntary termination approved by the 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 the 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
the Board of Directors without  shareholder  approval,  except that no amendment
which increases the maximum aggregate number of shares which 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, 1999.

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

     Directors of the Company 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, 1999 of the  Company's  common stock by any person who is
known by the Company to be the  beneficial  owner of more than five (5%) percent
of the Company's voting securities,  by each Director of the Registrant,  and by
officers and Directors of the  Registrant as a group.  Although  authorized  for
Preferred  Shares,  the Company has issued only Common Stock. As of December 31,
1999 there were 2,322,000 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)                             1,808,000           77.9%
6025 South Quebec Street, Suite 150
Englewood, Colorado 80111

Robert A. Hildebrand                             200,000            8.6%
405 Detroit Street
Denver, Colorado 80206

All executive officers and directors           1,808,000           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
2,322,000  shares of the  Company's  common stock issued and  outstanding  as of
December 31, 1999.

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



                                       14

<PAGE>



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

     On April 28, 1998,  the Company  issued and sold  900,000  shares of Common
Stock to Mr.  David C. Olson,  the sole  executive  officer and  director of the
Company  and the record and  beneficial  owner of a total of  1,808,000  shares,
representing  approximately  77.9% of the issued and outstanding  shares, of the
Company's Common Stock, in consideration for his payment in the amount of $1,250
for legal services performed by Cudd & Associates,  Denver,  Colorado, on behalf
of the Company  (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 the  Company's  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 a former executive officer,  director and
controlling shareholder of the Company on April 15, 1999.

     The Company leases office space from Summit Financial  Relations,  Inc., an
affiliated  company,  located at the  business  offices of Summit in  Englewood,
Colorado,  on a month-to-month basis at a rental rate of $1,000 per month. Since
the Company's inception in April 1998 through December 31, 1999, the Company has
paid a total of $9,000 in rent to Summit for the lease of this office space.

     The Company  believes  that the terms of this rental  arrangement  are more
favorable  than those that could have been obtained from an  unaffiliated  third
party for comparable arrangements in the Denver, Colorado, suburban area.

     On June 17,  1999,  the Company 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 the Company.

     From time-to-time  since the Company's  inception,  Mr. David C. Olson, the
Company's sole executive officer and director, and Summit have incurred expenses
on behalf of the Company for which they have subsequently been reimbursed by the
Company.  Such  expenditures have totaled less than $400 through the date hereof
and, as of December 31,  1999,  all such amounts due to Mr. Olson or Summit have
been reimbursed in full.


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)

          27.01  Financial Data Schedule

          (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 quarter  ended  December
          31, 1999.



                                       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: April 11, 2000
         ------------------                                --------------
            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: April 11, 2000
         ------------------                                --------------
            David C. Olson
            President


                                       17

<PAGE>





Item 7.  Financial Statements


                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                          Index to Financial Statements


                                                                        Page
                                                                        ----

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

Balance sheets, December 31, 1999 and 1998..............................F-3

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

Statement of shareholders' equity (deficit), for the period from
April 23, 1998 (inception) through December 31, 1999....................F-5

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

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


                                      F-1

<PAGE>



                          INDEPENDENT AUDITORS' REPORT



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

We have audited the balance sheets of Max Development, Inc. (a development stage
company)  as of  December  31,  1999 and 1998,  and the  related  statements  of
operations,  shareholders'  equity  (deficit)  and cash flows for the year ended
December 31, 1999, from April 23, 1998 (inception) through December 31, 1998 and
1999.  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  generally   accepted  auditing
standards. 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, 1999 and 1998, and the results of its operations and cash flows for
the year ended  December  31,  1999,  from April 23,  1998  (inception)  through
December 31, 1998 and 1999, in conformity  with  generally  accepted  accounting
principles.

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  has no  revenues  and has  experienced  a  significant
operating loss for the periods from April 23, 1998 (inception)  through December
31, 1999,  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.
March 15, 2000


                                      F-2

<PAGE>

<TABLE>
<CAPTION>

                               MAX DEVELOPMENT, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                                  BALANCE SHEETS


                                                                                  December 31,
                                                                         ----------------------------
                                                                           1999               1998
                                                                         ----------        ----------
                                     ASSETS

CURRENT ASSETS
<S>                                                                      <C>               <C>
     Cash............................................................    $   29,258        $    -
                                                                         ----------        ----------
                                                 TOTAL CURRENT ASSETS        29,258             -

EQUIPMENT, less accumulated depreciation of
     $47 and $-0-, respectively (Note C).............................           811             -

INVESTMENT, less allowance of $15,000 and
     $-0-, respectively (Note A).....................................          -                -
                                                                         ----------        ----------

                                                                         $   30,069        $    -
                                                                         ==========        ==========

                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
     Accounts payable and accrued liabilities........................    $    1,800        $    -
     Due to affiliate (Note B).......................................          -                 270
     Due to officer (Note B).........................................          -                  40
                                                                         ----------        ----------
                                            TOTAL CURRENT LIABILITIES         1,800              310
                                                                         ----------        ----------

SHAREHOLDERS' EQUITY (DEFICIT) (Note C)
     Preferred stock, $.01 par value; 1,000,000 shares authorized;
        -0- and -0- shares issued and outstanding, respectively......          -                -
     Common stock, $.001 par value; 10,000,000 shares authorized;
        2,322,000 and 2,000,000 shares issued and outstanding,
        respectively.................................................         2,322            2,000
     Additional paid-in capital......................................        73,743              778
     Deferred offering costs.........................................          -                (213)
     Deficit accumulated during development stage....................       (47,796)          (2,875)
                                                                         ----------        ----------
                                  TOTAL SHAREHOLDERS EQUITY (DEFICIT)        28,269             (310)
                                                                         ----------        ----------

                                                                         $   30,069        $    -
                                                                         ==========        ==========
</TABLE>




               See accompanying notes to the financial statements

                                       F-3


<PAGE>


<TABLE>
<CAPTION>

                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF OPERATIONS


                                                                            Year                  April 23, 1998
                                                                            Ended               (Inception) Through
                                                                         December 31,               December 31,
                                                                            1999           ----------------------------
                                                                                               1998             1999
COSTS AND EXPENSES                                                       -----------       -----------     ------------
<S>                                                                      <C>               <C>             <C>
    Rent (Note B)....................................................    $    9,000        $    -          $    9,000
    Legal and accounting.............................................        17,735            2,500           20,235
    Stock transfer fees..............................................         1,538             -               1,538
    Stock-based compensation, consulting (Note C)....................          -                 278              278
    Other general and administrative.................................         1,648               97            1,745
COSTS AND EXPENSES                                                       -----------       -----------     ------------
                                                       OPERATING LOSS       (29,921)          (2,875)         (32,796)

NON-OPERATING EXPENSE
    Write-down of investment (Note A)................................       (15,000)            -             (15,000)
COSTS AND EXPENSES                                                       -----------       -----------     ------------
                                             LOSS BEFORE INCOME TAXES       (44,921)          (2,875)         (47,796)

INCOME TAXES (Note D)................................................          -                -                -
COSTS AND EXPENSES                                                       -----------       -----------     ------------

                                                             NET LOSS    $  (44,921)       $  (2,875)      $  (47,796)
                                                                         ===========       ===========     ============

Basic loss per common share..........................................    $    (0.02)       $    *
                                                                         ===========       ===========

Basic weighted average common shares outstanding.....................     2,228,083          363,636
                                                                         ===========       ===========
</TABLE>


* Less than $.01 per share


               See accompanying notes to the financial statements

                                       F-4


<PAGE>

<TABLE>
<CAPTION>


                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)


April 23, 1998 (inception) through December 31, 1999                                                           Deficit
                                                                                                               Accumulated
                                                                                       Additional   Deferred   During
                                               Preferred Stock       Common Stock      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, shares sold
   to officers ($.00139/share) (Note C)......   -        -       1,800,000     1,800       700         -           -          2,500

November 18, 1998, shares 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 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
                                             ======   =========  =========  =========  ==========   ========   ===========  ========


</TABLE>

               See accompanying notes to the financial statements

                                       F-5


<PAGE>

<TABLE>
<CAPTION>


                      MAX DEVELOPMENT, INC.
                  (A DEVELOPMENT STAGE COMPANY)

                     STATEMENTS OF CASH FLOWS


                                                                            Year                 April 23, 1998
                                                                            Ended               (Inception) Through
                                                                         December 31,               December 31,
                                                                            1999           ----------------------------
                                                                                               1998             1999
                                                                         -----------       -----------     ------------
OPERATING ACTIVITIES
<S>                                                                      <C>               <C>             <C>
    Net loss.........................................................    $  (44,921)       $  (2,875)      $  (47,796)

    Transactions not requiring cash:
       Depreciation..................................................            47             -                  47
       Common stock issued for services (Note C).....................          -                 278              278
       Write-off of investments......................................        15,000             -              15,000

    Changes in current liabilities:
       Accounts payable and accrued expenses.........................         1,490              310            1,800
                                                   NET CASH (USED IN)    -----------       -----------     ------------
                                                 OPERATING ACTIVITIES       (28,384)          (2,287)         (30,671)
                                                                         -----------       -----------     ------------

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)
                                                                         -----------       -----------     ------------
FINANCING ACTIVITIES
    Proceeds from sale of common stock...............................        80,500            2,500           83,000
    Payments for offering costs......................................        (7,000)            (213)          (7,213)
                                                                         -----------       -----------     ------------
                                                 NET CASH PROVIDED BY
                                                 FINANCING ACTIVITIES        73,500            2,287           75,787
                                                                         -----------       -----------     ------------
CHANGE IN CASH AND CASH EQUIVALENTS..................................        29,258             -              29,258

Cash and cash equivalents, beginning of period.......................          -                -                -
CASH AND CASH EQUIVALENTS
    AT END OF PERIOD.................................................    $   29,258        $    -          $   29,258
                                                                         ===========       ===========     ============

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 and cash equivalents
-------------------------
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.

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.

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. The carrying amounts of cash, accounts payable, and
other accrued liabilities  approximate fair value due to the short-term maturity
of the instruments.

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.

                                       F-7


<PAGE>



                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO THE FINANCIAL STATEMENTS


NOTE A: SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF ORGANIZATION, CONTINUED

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 loss per share were the same for
all prior periods presented due to the Company's simple capital structure.

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.

Recently issued accounting pronouncements
-----------------------------------------
The Company has adopted Statements of Financial  Accounting Standards (SFAS) No.
133 "Accounting for Derivative  Instruments and Hedging Activities" and SFAS 137
"Deferral of the  Effective  Date of FASB  Statement No. 133" for the year ended
December 31, 1999.  There was no effect on the  financial  statements  presented
from the adoption of the new standards.

In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS 133.
SFAS  133  establishes   accounting  and  reporting   standards  for  derivative
instruments,  including derivative instruments embedded in other contracts,  and
for hedging activities. SFAS 133 requires an entity to recognize all derivatives
as either an asset or liability and measure those  instruments at fair value, as
well as identify  the  conditions  for which a  derivative  may be  specifically
designed as a hedge.  SFAS 133 is  effective  for all fiscal  quarters of fiscal
years beginning after June 15, 1999.

In June 1999,  the FASB issued SFAS 137, which amended the  implementation  date
for SFAS  133 to be  effective  for all  fiscal  quarters  of all  fiscal  years
beginning after June 15, 2000.

                                       F-8


<PAGE>



                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO THE FINANCIAL STATEMENTS


NOTE A: SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF ORGANIZATION, CONTINUED

Nature of organization and basis of presentation
------------------------------------------------
The  Company was  organized  under the laws of the State of Colorado on April 23
1998.

As of December 31, 1999, the Company had 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  1999,  due to the  speculative  nature  of the
investment  and recurring  losses of NVSA,  the investment was written down to a
net realizable value of $-0-.

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 a development stage company with no revenue
as of December  31, 1999 and has  incurred a loss of $47,796 for the period from
April 23, 1998 (inception) through December 31, 1999. This factor, 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 2000 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 from an  affiliate  on a month to month basis
during the year ended  December  31, 1999.  Rent expense for the period  totaled
$9,000.

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

                                       F-9


<PAGE>



                              MAX DEVELOPMENT, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO THE FINANCIAL STATEMENTS


NOTE B: RELATED PARTY TRANSACTIONS, CONTINUED

During the period ended  December 31, 1998,  an affiliate  incurred  expenses on
behalf of the Company totaling $270. This amount is included in the accompanying
balance sheet at December 31, 1998 as due to affiliate.  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. This amount is included in the  accompanying  balance
sheets at December 31, 1998 as due to officer. The Company repaid the $40 during
the year ended December 31, 1999.


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,  totaling  500,000 shares of the Company's  $.001 par value common stock,
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 only be
sold 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, 1999.

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.

                                      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:

<TABLE>
<CAPTION>


                                                                April 23, 1998      April 23, 1998
                                                                  (Inception)         (Inception)
                                             Year Ended             Through             Through
                                            December 31,         December 31,        December 31,
                                                1999                 1998                1999

                                          --------------        ----------------    ----------------
<S>                                       <C>                   <C>                 <C>
U.S. federal statutory graduated rate.....    15.00%              15.00%                 15.00%
State income tax rate,
  net of federal benefit..................     4.04%               4.04%                  4.04%
Loss on investment........................    -6.36%               0.00%                 -5.98%
Net operating loss for which no tax
  benefit is currently available..........   -12.68%             -19.04%                -13.06%
                                          --------------        ----------------    ----------------
                                               0.00%               0.00%               0.00%
                                          ==============        ================    ================
</TABLE>


At  December  31,  1999,  deferred  tax assets  consisted  of a net tax asset of
$6,244, due to operating loss carryforwards of $47,796,  which was fully allowed
for, in the valuation  allowance of $6,244. 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 year ended  December 31, 1999 and from April
23,  1998  (inception)  through  December  31,  1998  totaled  $5,696  and $548,
respectively.  The current tax benefit also totaled $5,696 and $548 for the year
ended December 31, 1999 and from April 23, 1998 (inception) through December 31,
1998, respectively. The net operating loss carryforward expires through the year
2019.

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