SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

(Mark One)
|_| REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934

OR

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

For the fiscal year ended December 31, 2004

OR

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

For the transition period from _________________ to ________________

                       Commission file number: 333-104670

                                 STRATABASE INC.
             (Exact name of Registrant as specified in its charter)

                                     Canada
                 (Jurisdiction of incorporation or organization)

                      Suite 101 - 34595 3rd Ave Abbotsford
                        British Columbia, Canada V2S 8B7
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
None

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

                     Common Stock, par value $.001 per share
                                (Title of Class)

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

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report:  The  registrant  has one class of Common Stock with  10,914,972  shares
outstanding as of April 20, 2005.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|

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

Item 17 |_| Item 18 |X|

<PAGE>

BASIS OF PRESENTATION

The  financial  results  of  Stratabase  Inc.  ("Stratabase"  or "the  Company")
contained in this Form 20-F are reported in United States  dollars and have been
prepared in compliance  with  accounting  principles  generally  accepted in the
United States of America for the purposes of this annual report.  In this annual
report,  all dollar  amounts are expressed in United States dollars except where
otherwise indicated.

FORWARD LOOKING INFORMATION

Certain   statements   in  this  annual   report   constitute   "forward-looking
statements."  Stratabase  has  based  these  forward-looking  statements  on its
current   expectations,   which  are  subject  to  known  and   unknown   risks,
uncertainties  and  assumptions.  They  include  statements  relating  to future
revenues, expenses and profitability, the future development and expected growth
of Stratabase's business and the communications  industry,  Stratabase's ability
to  successfully  execute its business  model and business  strategy,  projected
capital expenditures, and trends in government regulation.

Forward-looking  statements  can be  identified  by  terminology  such as "may,"
"will,"  "should,"  "could,"  "expects,"   "intends,"  "plans,"   "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue," or the negative
of these  terms or  other  comparable  terminology.  These  statements  are only
predictions. Actual events or results may differ materially from those suggested
by these forward-looking  statements. In evaluating these statements,  carefully
consider the risks outlined under Item 3.

Key Information -- Risk Factors.

Although   Stratabase   believes   that  the   expectations   reflected  in  the
forward-looking  statements are reasonable,  it cannot guarantee future results,
levels of activity, performance or achievements.  Stratabase does not promise to
update  forward-looking  information  to  reflect  actual  results or changes in
assumptions.




<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S>                                                                                              <C>
PART I                                                                                              1
Item 1. Identity of Directors, Senior Management and Advisors                                       1
Item 2. Offer Statistics and Expected Timetable                                                     1
Item 3. Key Information                                                                             1
    A. Selected Financial Data                                                                      1
    B. Capitalization and Indebtedness                                                              2
    C. Reasons for the offer and use of proceeds                                                    2
    D. Risk Factors                                                                                 2
Item 4. Information on Stratabase                                                                   7
    A. History and Development of Stratabase                                                        7
    B. Business Overview                                                                            8
    C. Organizational Structure                                                                    11
    D. Description of Property                                                                     11
Item 5. Operating and Financial Review and Prospects                                               11
    A. Operating Results                                                                           13
    B. Liquidity and Capital Resources                                                             16
    C. Research and Development, Patents and Licenses, etc                                         17
    D. Trend Information                                                                           17
    E. Off-balance sheet arrangements                                                              17
    F. Tabular disclosure of contractual obligations                                               17
Item 6. Directors, Senior Management and Employees                                                 18
    A. Directors and Senior Management                                                             18
    B. Compensation                                                                                19
    C. Board Practices                                                                             19
    D. Employees                                                                                   19
    E. Share Ownership                                                                             19
Item 7. Major Shareholders and Related Party Transactions                                          21
    A. Major Shareholders                                                                          21
    B. Related Party Transactions                                                                  21
    C. Interests of Experts and Counsel                                                            21
Item 8. Financial Information                                                                      21
    A.  Financial Statements and Other Financial Information                                       21
    B. Significant Changes                                                                         22
Item 9. The Offer and Listing                                                                      22
    A. Offer and Listing Details                                                                   22
    B. Plan of distribution                                                                        23
    C. Markets                                                                                     23
    D. Selling shareholders                                                                        23
    E. Dilution                                                                                    23
    F. Expenses of the issue                                                                       23
Item 10. Additional Information                                                                    23
    A. Share Capital                                                                               23
    B. Memorandum and Articles of Incorporation                                                    23
    C. Material Contracts                                                                          24
    D. Exchange Controls                                                                           24
    E. Taxation                                                                                    24
    F. Dividends and Paying Agents                                                                 27
    G. Statement by Experts                                                                        27
    H. Documents on Display                                                                        27
    I. Subsidiary Information                                                                      28
Item 11. Quantitative and Qualitative Disclosures About Market Risk                                28
Item 12. Description of Securities Other than Equity Securities                                    28
PART II                                                                                            29
Item 13. Defaults, Dividend Arrearages and Delinquencies                                           29
Item 14. Material Modifications to the Rights of Security Holders and  Use of Proceeds             29
Item 15. Controls and Procedures                                                                   29
Item 16. [Reserved]                                                                                29
    Item 16A. Audit Committee Financial Expert                                                     29
    Item 16B. Code of Ethics                                                                       29
    Item 16C. Principal Accountant Fees and Services                                               29
    Item 16D. Exemptions from the Listing Standards for Audit Committees                           30
    Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers               30
PART III                                                                                           30
Item 17. Financial Statements                                                                      30
Item 18. Financial Statements                                                                      30
Item 19. Exhibits                                                                                  31
</TABLE>

<PAGE>

                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

The following  sets forth selected  financial  information of Stratabase for the
fiscal years ended December 31, 2004,  2003,  2002,  2001 and 2000. The selected
financial  information may not be indicative of Stratabase's  future performance
and should be read in conjunction with "Management's  Discussion and Analysis of
Financial Condition and Results of Operations" and the financial  statements and
the notes thereto included elsewhere in this annual report.


STATEMENT OF OPERATIONS DATA
(in U.S. dollars)

<TABLE>
<CAPTION>

                                                                   STRATABASE
                                                            YEARS ENDED DECEMBER 31,

                                           2004         2003         2002         2001          2000
                                       ------------- ------------ ------------ ------------ --------------
<S>                                    <C>           <C>          <C>          <C>          <C>
  Revenues                             $          -  $     5,000  $   430,240  $ 2,360,452  $   1,313,579
  Cost of revenues                            8,415        2,669      324,012    1,607,102      1,060,311
  Gross margin                              (8,415)        2,331      106,228      753,350        253,268
  Research and development                  139,742      154,544      171,500            -              -
  General and administration                549,191      705,888      794,939      441,571        357,483
  Income (loss) from operations            (697,348)    (858,101)    (860,211)     311,779       (104,215)
  Other income (expense), net                 2,489     (169,175)      31,195      158,809          7,159
  Income tax expense                              -            -      (85,629)     (49,342)             -
  Net income (loss)                    $  (694,859)  $(1,027,276)  $ (914,645) $   421,246  $     (97,056)
  Net income (loss) per share:
  Basic income (loss) per share        $     (0.07)  $     (0.13)  $    (0.12) $      0.06  $       (0.02)
  Diluted income (loss) per share      $     (0.07)  $     (0.13)  $    (0.12) $      0.05  $       (0.02)
  Basic weighted average number of
   common shares outstanding
    (in millions)                             9.91          8.04         7.93         7.37           6.39
  Diluted weighted average number of
   common shares outstanding  (in
  millions)
                                               N/A           N/A          N/A         8.11            N/A
</TABLE>




                                       1
<PAGE>

BALANCE SHEET DATA
(in U.S. Dollars)
<TABLE>
<CAPTION>
                                                                   STRATABASE
                                                                  DECEMBER 31,

                                           2004         2003         2002         2001          2000
                                       ------------- ------------ ------------ ------------ --------------
<S>                                    <C>           <C>          <C>          <C>          <C>
  Cash and cash equivalents            $     52,187  $   509,180  $   134,093  $ 1,265,457  $     219,801
  Other current assets                        5,329       14,674      113,836       46,386        144,287
  Property and equipment, net                14,520       37,001       44,989       59,590         66,788
  Other assets, net                               -      243,701      690,120      675,027        146,281
  Total assets                         $     72,036  $   804,556  $   983,038  $ 2,046,460  $     577,157
  Current liabilities                  $     34,729  $    64,933  $    66,455  $   901,125  $     106,044
  Common stock                                9,915        9,915        8,034        7,719          6,654
  Other capital accounts                  2,558,090    2,565,547    1,717,112    1,031,534        779,623
  (Accumulated deficit) retained         (2,530,698)  (1,835,839)    (808,563)     106,082      (315,164)
  earnings
  Total liabilities and
  stockholders' equity                 $     72,036  $   804,556  $   983,038  $ 2,046,460  $     577,157
</TABLE>


B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

An investment in Stratabase  common shares involves certain risks. In evaluating
us and our business,  investors  should  carefully  consider the following  risk
factors  in  addition  to the other  information  included  or  incorporated  by
reference in this 20-F.

We have a going concern  opinion from our auditors,  indicating the  possibility
that we may not able to continue to operate.

For the years ended December 31, 2004,  2003 and 2002, we incurred net losses of
$694,859, $1,027,276 and $914,645,  respectively. The Company has yet to receive
any revenues from sales of its new product line.  These  factors,  among others,
indicate that Stratabase may be unable to continue operations in the future as a
going concern.  These circumstances raise substantial doubt about our ability to
continue as a going concern,  as described in the  explanatory  paragraph to our
independent  auditors'  report on our 2004  financial  statements.  The  Company
expects sales from its new product line to fund long-term operations and will be
actively marketing its products during 2005.  Management  believes marketing and
operating  expenses will be financed during the first six months of 2005 through
gross  proceeds of  $300,000  received  from a private  placement  completed  in
February 2005. The Company expects to need an additional $300,000 to cover costs
through  the  remainder  of 2005.  Such will be financed  by  additional  equity
issuances.  There can be no assurance that management's  plans to market its new
products  will  be  successful  or  that  additional  equity  financing  will be
available on favourable  terms. No adjustment has been made in the  accompanying
financial statements to the amounts and classification of assets and liabilities
which could result should  Stratabase be unable to continue as a going  concern.
If we cannot continue as a viable entity,  our shareholders may lose some or all
of their investment in Stratabase.

In January 2003,  the Company filed a proposal to effect a  continuation  of the
corporate  jurisdiction  from the State of Nevada to Canada on Form S-4 with the
United  States  Securities  and  Exchange  Commission  (SEC).  The  Form S-4 was
declared effective on or about July 7, 2004 and submitted to the stockholders of
the Company.  The special meeting of stockholders to vote on the adoption of the
plan  of  conversion  was  held  on  August  17,  2004  and a  majority  of  the


                                       2
<PAGE>

shareholders approved the plan of conversion.  Accordingly,  the Company changed
its name to  "Stratabase,  Inc.,"  and  continued  to  operate  under the Canada
Business Corporations Act and is no longer a Nevada corporation. The Company has
never had any employees or operations in the U.S., and  management  believes the
continuation  to  Canada  accurately  reflects  the  nature  of its  operations.
Management of the Company  believes that the  continuation to Canada enables the
Company to benefit from scientific  research and development grants that are not
available to non-Canadian corporations.

RISKS RELATING TO THE CONTINUANCE

We  may  owe  additional  U.S.  taxes  as a  result  of  the  conversion  if our
conclusions relating to the value of our assets are incorrect.

For U.S.  tax  purposes,  when we  continued  the company in Canada in the third
quarter  of 2004,  it was  treated  as  though we sold all of our  property  and
received the fair market value for those properties. We were taxed on any income
or gains  realized  on that  "sale."  The fair  market  value of our  assets was
greater  than our tax basis of our assets and as a result we had a taxable  gain
on the deemed "sale".

In connection  with the  continuation,  we reviewed our assets,  liabilities and
paid-up capital and the extent of our losses carried forward and believe that we
do  not   owe   any   U.S.   federal   income   taxes   as  a   result   of  the
conversion/continuance.  Accordingly, we believe that no U.S. taxes are owing as
a result of the proposed  conversion.  It is possible that the facts on which we
based our assumptions and conclusions may be challenged by the Internal  Revenue
Service. In particular,  our determination of fair market value was based upon a
valuation of our assets and  liabilities as of September 30, 2002. The value was
determined based upon the cash flows projected to be generated by our intangible
assets, discounted at a rate representative of an appropriate rate of return for
an alternative  investment of equivalent  risk. This discount rate was estimated
to  be  25%.  Underlying  the  valuation  were  key  estimates  of  management's
projections of revenue and expenses for a six-year  period which were based upon
on further estimates and assumptions surrounding our cost structure, development
of technology  and  continued  market  acceptance  of our database  products and
pricing.

There are other valuation  methodologies which, if employed,  may have yielded a
higher fair market  value for our assets  which would have  resulted in a larger
taxable gain.  One such method is the "market  capitalization  method" where the
implied  value of our net  assets is equal to the  number of our  common  shares
outstanding multiplied by the quoted market price of our common stock on the OTC
Bulletin Board on the  transaction  date. Had the market  capitalization  method
been applied,  the valuation of our assets would have been substantially  higher
(as much as $9.6 million  higher as of the  September 30, 2002  valuation  date)
than the value  determined  using the discounted cash flow method and would have
yielded  significant  taxable  capital  gains and taxes owing as a result of the
continuance.  Management  assessed  the two  methods,  but did not  consider the
"market  capitalization  method" an  appropriate  reflection of the value of our
company as a whole.  Our  Company's  common  stock is quoted on the OTC Bulletin
Board,  has a small public float and is  relatively  thinly  traded.  Because of
these  factors,  we  considered  the quoted  market  price of our stock to be an
unreliable  measure of the fair value of our net assets and accordingly sought a
more appropriate measure of value.

The valuation may be challenged by the Internal Revenue Service ("IRS").  Should
the  IRS  disagree  with  the  valuation  methodology  we  used  or  any  of our
assumptions,  they could  reassess the deemed  proceeds on the  continuance to a
higher  amount.  We may not have tax losses  carried  forward  from prior  years
sufficient to cover any adjustments to the taxable gain required upon assessment
by federal tax authorities. Should our losses be insufficient, the tax liability
to our company could be  significant  and we may not have the available  cash at
that time to settle the liability owing.  Should we be unable to settle any such
liability,  we may have to cease operations in which case our stockholders would
likely loose their investment in our company.

Management  believes the  methodology,  estimates and  assumptions  are not only
reasonable but the most  appropriate in these  circumstances.  Hence, we did not
apply to the federal tax authorities (the Internal Revenue Service in the United
States and the Canada Customs and Revenue Agency in Canada) for a ruling on this
matter and do not intend to do so. We have also made certain  other  assumptions
regarding  the  tax  treatment  of  this  transaction  in  order  to  reach  our
conclusions  and it  may  be  possible  for  some  of  these  assumptions  to be
interpreted  in a  different  manner  which would be less  favorable  to us. You
should  understand that it is possible that the federal tax authorities will not
accept our  valuations  or positions  and claim that we owe taxes as a result of
this transaction.



                                       3
<PAGE>

RISKS RELATING TO STRATABASE

At December 31, 2004 the Company had $22,787 of working capital. On February 14,
2005  the  Company  received  $300,000  from  a  private  placement.   Based  on
management's  estimates,  the  proceeds  from  the  private  placement  will  be
sufficient to fund operations for approximately six months.  Management  expects
to begin marketing Relata during the first half of 2005 and expects Relata sales
to fund the  long-term  needs of the  Company.  However,  in the  event  that we
require  additional  funding we anticipate that such funding will be in the form
of  equity  financing  from the sale of our  common  stock.  However,  we cannot
provide  investors with any assurance  that we will be able to raise  sufficient
funding from the sale of our common  stock to fund the Company.  We believe that
debt financing will not be an alternative for funding.  The risky nature of this
enterprise  and  lack of  tangible  assets  places  debt  financing  beyond  the
credit-worthiness  required by most banks or typical investors of corporate debt
until such time as the economic  viability of Relata can be demonstrated.  We do
not have any arrangements in place for any future equity financing.

The stock price of our common shares may be volatile. In addition, demand in the
United States for our shares may be decreased by the change in domicile.

The market price of our common shares may be subject to significant fluctuations
in  response  to  variations  in  results  of  operations   and  other  factors.
Developments  affecting  the  software  industry  generally,  including  general
economic  conditions  and government  regulation,  could also have a significant
impact on the market  price for our shares.  In  addition,  the stock market has
experienced a high level of price and volume  volatility.  Market prices for the
stock of many similar  companies have experienced wide  fluctuations  which have
not  necessarily  been related to the operating  performance of such  companies.
These broad  market  fluctuations,  which are beyond the control of  Stratabase,
could have a material adverse effect on the market price of our shares.

If we do not grow by  generating  sales of our  products and  services,  we will
never be able to achieve profitability.

For the  year  ended  December  31,  2004  we had a net  loss  of  $694,859.  We
anticipate  losses from operations to continue as we market our new product.  If
revenues and spending levels are not adjusted  accordingly,  we may not generate
sufficient revenues to achieve profitability. Even if profitability is achieved,
we may not  maintain or increase  such  profitability  on a quarterly  or annual
basis in the future.

If we do not grow, we will probably not become profitable.  However, if we grow,
develop and increase the size of our  business,  the demands on our  operational
systems  will  also  increase.  We will  be  required  to  further  develop  our
operational and financial  systems and managerial  controls and  procedures.  We
will also then need to expand,  train and manage a larger  team of staff.  We do
not  currently  have the  resources  for this type of  expansion  and may not be
successful in our expansion efforts.  Accordingly, we may limit or even entirely
negate our chances to be profitable if we do not grow or if we cannot manage our
growth.

Although we initially  experienced  rapid  growth,  now that we have revised our
business model it is possible we will not experience any further growth.

Although we experienced  revenue growth during 2000 and 2001, we came to believe
that the specific  open-source  software  business model we were using would not
result in substantial continued growth past that point. Therefore it was decided
by  management  to change our  business  model to focus  instead on  proprietary
software.  This change will continue to place further demands on our operational
and financial resources.

We may not be able to install and implement  adequate  operational and financial
systems,  procedures  and controls in an efficient  and timely  manner,  and our
current or planned  systems,  procedures  and  controls  may not be  adequate to
support our future operations.  The difficulties  associated with installing and
implementing these new systems,  procedures and controls may place a significant
burden on our  management and our internal  resources.  If we are unable to sell
our proprietary software services and generate profitability, we may not be able
to continue as a viable business entity.

Our  chances  of  success  will be  diminished  if we lose the  services  of our
officers or if  potential  conflicts  of interest  between our  business and our
officers are not resolved in our favor.



                                       4
<PAGE>

We are highly  dependent  on the services  provided by Mr.  Trevor  Newton,  our
Chairman of the Board, President,  Secretary,  Treasurer and Chief Operating and
Executive  Officer,  and Mr.  Fred  Coombes,  our Vice  President  of  Corporate
Development.  Neither of these two individuals has an employment  agreement with
us nor do we have key-man life  insurance on them.  Since both may become active
in other  unrelated  businesses,  they may not  devote  their  full-time  to our
affairs. This may cause conflicts of interest with our business in terms of time
and business  opportunities.  These  conflicts may not be resolved in our favor.
Our business may be hurt if these conflicts are not resolved in our favor.

Since our expenses are paid for in Canadian  dollars,  an  unfavorable  currency
exchange rate would increase our net loss or decrease our net income.

Our operations are located in Canada. Accordingly,  the majority of our expenses
are paid in Canadian  dollars.  We anticipate  that most of our revenues will be
received  in US  dollars.  Accordingly,  if the  value  of the  Canadian  dollar
relative  to the US dollar  increases,  then this could have a negative  adverse
effect on our financial condition by reducing our net income.

Our software  may contain  defects  that may harm our  reputation,  be costly to
correct, delay revenue and expose us to litigation.

Despite  testing by us and our  customers,  errors may be found in our  software
after commencement of distribution. If errors are discovered, we may not be able
to  successfully  correct them in a timely manner or at all. Errors and failures
in our software could result in a loss of, or delay in, market acceptance of our
software and the  associated  services  that we sell to our  customers and could
damage our  reputation  and our ability to convince users of the benefits of our
software. In addition,  we may need to make significant  expenditures of capital
resources in order to eliminate errors and failures.  If our software fails, our
customers'  systems may fail and they may assert claims for substantial  damages
against us. In addition,  our insurance  policies may not  adequately  limit our
exposure with respect to this type of claim. A software liability claim, even if
unsuccessful,  could  be  costly  and  time  consuming.  Claims  related  to the
occurrence  or discovery of these types of errors or failures  could result in a
decrease  in sales  and an  increase  in costs to  remedy  the  failures  in our
software.

We may be sued as a result of  information  retrieved  from our website.  On our
website we publish corporate  information,  sales material,  software downloads,
limited general industry information,  investor relations material and technical
support information.  We may be subjected to claims for defamation,  negligence,
copyright or trademark  infringement or other claims relating to the information
we publish on our website.  These types of claims have been  brought,  sometimes
successfully, against online services in the past. We could also be subjected to
claims based on content that is  accessible  from our website  through  links to
other websites.  Our insurance may not adequately protect us against these types
of claims.  Any lawsuit  against us would result in a diversion of our resources
from focusing on implementing our business plan.

Our  securities  are  referred  to as "penny  stocks"  which  are not  perceived
favorably in the market place.

The SEC has adopted regulations which generally define a "penny stock" to be any
equity security that has a market price of less than $5.00 per share, subject to
certain  exceptions.  Our securities are subject to rules that impose additional
sales  practice  requirements  on  broker-dealers  who sell such  securities  to
persons other than  established  customers and accredited  investors  (generally
those  with a net worth in  excess of  $1,000,000  or  annual  income  exceeding
$200,000,  or $300,000 together with their spouse).  For transactions covered by
these rules, the broker-dealer must:

o        make a  special  suitability  determination  for the  purchase  of such
         securities;

o        have received the purchaser's  written consent to the transaction prior
         to the purchase;

o        deliver  to the  purchaser,  prior  to the  transaction,  a  disclosure
         schedule prepared by the Securities and Exchange Commission relating to
         the penny stock market;

o        disclose to the purchaser the commission  payable to the  broker-dealer
         and the registered representative;

o        provide the purchaser with current quotations for the securities;

o        if he is the sole market maker, disclose that fact to the purchaser and
         his presumed control over the market; and



                                       5
<PAGE>

o        provide the purchaser with monthly  statements  disclosing recent price
         information  for the penny stock held in the account and information on
         the limited market in penny stocks.

Consequently, the "penny stock" rules may restrict the ability of broker-dealers
to sell our securities in the market.

RISKS RELATING TO OUR STRATEGY AND OUR INDUSTRY

Since we face intense competition from other software and service suppliers, and
new competitors may enter our markets easily, we may not be able to overcome the
competition.

The market for Knowledge Worker Automation  software,  which includes Enterprise
and Customer  Relationship  Management  software and services,  is new,  rapidly
evolving  and  intensely  competitive.  We expect  competition  to  persist  and
intensify in the future. We estimate that there are currently over 5,000 private
and public suppliers of Enterprise and Customer Relationship Management software
solutions  worldwide  and expect this number to grow.  In addition,  there are a
number of companies with large customer  bases and greater  financial  resources
and name recognition,  such as Oracle and Microsoft,  which have increased their
presence  in the market for  Enterprise  and  Customer  Relationship  Management
software  systems and services.  These  companies may be able to undertake  more
extensive promotional  activities,  adopt more aggressive pricing policies,  and
offer more attractive terms to their customers than we can.

Furthermore, barriers to entry are minimal. Accordingly, it is possible that new
competitors  or  alliances  among  competitors  may emerge and  rapidly  acquire
significant market share. These companies may be able to leverage their existing
service   organizations   and  provide  higher  levels  of  support  on  a  more
cost-effective  basis than we can.  If we are not able to  compete  successfully
with  current  or  future  competitors,  our  business,  operating  results  and
financial condition will be materially adversely affected.

If we do not succeed in the marketing of our products and  services,  we may not
generate a sufficient amount of sales to ever generate profits.

We cannot be certain that customers will want to purchase our products or engage
our  services.  We also  cannot  be  certain  that we can  attract  or  retain a
sufficient number of the highly qualified  services personnel that the expansion
of our business  will need. In addition,  this change in our business  model has
required,  and will  continue to require,  significant  additional  expenses and
development,  financial and operational  resources.  These additional  resources
will place further  demands on our financial and  operational  resources and may
make it more difficult for us to achieve and maintain profitability.

We may enter into  business  combinations  and  strategic  alliances  which will
present us with additional challenges.

We may expand our  operations  or market  presence  by  entering  into  business
combinations,  investments,  joint  ventures or other  strategic  alliances with
other companies. Any such transactions may create risks such as:

-        difficulty assimilating the operations, technology and personnel of the
         combined companies;
-        disruption of our ongoing business;
-        problems retaining key technical and managerial personnel;
-        one-time  in-process  research  and  development  charges  and  ongoing
         expenses  associated with  amortization of goodwill and other purchased
         intangible assets;
-        potential dilution to our stockholders;
-        additional operating losses and expenses of acquired businesses; and
-        impairment  of  relationships  with existing  employees,  customers and
         business partners.

Our inability to address these risks could result in not  generating  sufficient
revenue to achieve profitability.

Competition for skilled  technical  personnel in our industry is intense and our
business could suffer if we can not retain our employees or attract new ones.

Our future  performance  also  depends  upon our  ability to attract  and retain
highly qualified  programming,  technical,  marketing and managerial  personnel.


                                       6
<PAGE>

There is intense competition for skilled personnel, particularly in the field of
software  engineering.  If we do not succeed in  retaining  our  personnel or in
attracting new employees, our business could suffer significantly.

In order to keep up with technological advances, we may have to incur additional
costs to modify our services or infrastructure.

Our market is characterized by rapidly changing technologies,  evolving industry
standards,  frequent new service introductions and changing customer demands. To
be  successful,  we must  adapt to a  rapidly  evolving  market  by  continually
enhancing our infrastructure,  content,  information and services to fulfill our
users' needs. We could incur additional costs if it becomes  necessary to modify
services or infrastructure in order to adapt to these or other changes affecting
providers of Internet services. If we have to incur such additional costs, or if
we cannot adapt to changes in the  marketplace,  our net income will be directly
adversely affected.

If we do not improve our sales  force,  we may not  generate  revenues or become
profitable.

Since  eliminating  our  second  office  we have  lost the  services  of our two
salespeople. Currently we do not have any dedicated fulltime salespeople and are
looking to find suitable replacements. We do not have current relationships with
outside sales  personnel or  distributors.  In order to grow, we must develop an
effective sales capability.  Our ability to do so successfully involves a number
of  factors.  They  include the  competition  in hiring and  retaining  suitable
personnel,  our ability to integrate  and motivate  personnel  and the length of
time it takes for new personnel to become  effective.  While we intend to market
our products and services via direct mail advertising and the Internet, there is
no assurance that these  marketing  efforts will be  successful.  Our failure to
develop and maintain an  effective  sales  infrastructure  would have a negative
effect  upon  our  business  prospects  as we will  not be able  to  generate  a
sufficient amount of sales.

ITEM 4. INFORMATION ON STRATABASE

A. HISTORY AND DEVELOPMENT OF STRATABASE

Stratabase  was  incorporated  under the laws of the State of Nevada on November
18, 1998 and  commenced  operations  in January  1999.  We completed our initial
public  offering in February  2000.  Our  headquarters  are located at 34595 3rd
Avenue,  Suite 101,  Abbotsford,  BC, V2S.8B7,  Canada.  The telephone number is
(604) 504-5811.

We are presently  incorporated  under the Canada Business  Corporations  Act. In
January  2003,  the  Company  filed a proposal to effect a  continuation  of the
corporate  jurisdiction  from the State of Nevada to Canada on Form S-4 with the
United  States  Securities  and  Exchange  Commission  (SEC).  The  Form S-4 was
declared effective on or about July 7, 2004 and submitted to the shareholders of
the Company.  The special meeting of stockholders to vote on the adoption of the
plan  of  conversion  was  held  on  August  17,  2004  and a  majority  of  the
shareholders approved the plan of conversion.  Accordingly,  the Company changed
its name to  "Stratabase,  Inc.,"  and  continued  to  operate  under the Canada
Business  Corporations  Act.  "Continuance"  is a process by which a corporation
which is not  incorporated  under the laws of Canada may change its jurisdiction
of incorporation to Canada.  Under the Canada Business  Corporations Act, if the
laws of its home  jurisdiction  allow for it and a  resolution  authorizing  the
continuance  is approved by 66 2/3% of the company's  shareholders,  the company
may  be  "continued"  as  a  Canadian  corporation  by  filing  of  Articles  of
Continuance with the Director under the Canada Business  Corporations Act. Under
the  corporate  law of Nevada,  this process is treated as a  conversion  of the
outstanding  shares of a Nevada  company  to shares of a Canadian  company.  The
business and operations of Stratabase following the conversion were identical in
most respects to our current business,  except that we will no longer be subject
to the  corporate  laws of the State of Nevada  but are  subject  to the  Canada
Business  Corporations Act. The Canadian company is liable for all the debts and
obligations of the Nevada company, and the officers and directors of the company
are the officers and  directors of  Stratabase.  On August 17, 2004,  Stratabase
filed a Form 8-A with the SEC registering its securities  under Section 12(g) of
the Securities Act of 1933.

We had developed  software  which was designed to allow users to interface  with
and manage  databases  and customer  relationships.  However,  we did not charge
users for the use of our software.  We expected that by giving the software away
for free and making it open source, the users would want to buy our databases of
sales leads and mailing  lists.  Our model also  expected that these users would
want us to provide  technical  services to customize  and improve the quality of
the databases we sold.



                                       7
<PAGE>

Currently we no longer support open source  software,  but rather have developed
proprietary software.  Our proprietary software is called 'Relata',  and will be
offered  to users on a free  trial  basis for 1 month,  and  thereafter  will be
billed at $50 per user per month. The software was released in a beta-version in
June 2003 and the final  version  will be  marketed  in 2005.  Since the initial
beta-version,  release,  the Company has made significant  changes to Relata. To
date the software has not generated any revenue.  Since  eliminating  our second
office we have lost the services of our two  salespeople who were selling custom
database and technical services.  Currently we do not have dedicated salespeople
to sell custom database and technical services.  We are looking to find suitable
replacements

For the three-year  period ending  December 31, 2004, the Company has expended a
total of $5,463 on office and computer equipment and $155,775 on the acquisition
of  databases  and  domain  names.  The only  other  investing  activity  in the
three-year  period ended December 31, 2004 was $150,000 advanced to an unrelated
party in 2002. The loan was recorded as a note receivable.  Due to concerns over
the  collectibility of the note, the total amount of the note along with accrued
interest  was  written  off at  December  31,  2003.  The Company has filed suit
against the debtor in an attempt to recover the total  amount owing at April 30,
2003 of $171,206  (plus  interest  accruing from the date of the  default).  The
Company  does not have any  capital  expenditures  currently  in  progress.  All
capital activity has previously been undertaken in Canada.

B. BUSINESS OVERVIEW

Stratabase  is a provider of Knowledge  Worker  Automation  software.  Knowledge
Worker  Automation  (KWA)  software,  of which  Enterprise  and CRM software are
components,  is  designed to allow  enterprises  to improve  the  efficiency  of
knowledge  workers.  The KWA  software we have  produced  consists of  web-based
software  tools.  These  tools allow  enterprises  to manage  relationships  and
contacts,  administer and organize time  allocations,  collaborate  with others,
manage data,  automate  communications and productivity  reporting,  and conduct
data synchronization.

We have developed both  proprietary  and open source  software.  Although in the
past we have focused  predominantly on developing open source code software,  we
have altered our direction to focus on proprietary software development.

It was originally thought by management that the demand for open source software
would increase significantly over time, and that open source software developers
would realize significant revenue from associated service contracts.  While this
has indeed happened over the last four years in the software  industry,  we have
seen  much  of  the  anticipated  service  revenues  go to  established  service
contractors  such as the  likes  of IBM,  and not to  small  companies  like us.
Therefore it was  determined by  management  that we can extract more value from
our software by keeping it proprietary,  and offering it on a subscription basis
as a hosted solution.

We previously generated revenues by selling databases of sales leads and mailing
lists,  and  providing  technical  services  aimed to customize  and improve the
quality of the  databases we sold.  Such  technical  services and  customization
substantially occurred prior to sale of databases.  Our open source software was
designed  to allow  users to  interface  with and manage  these  databases,  and
customer relationships.  It was the expectation of management that by giving the
software away for free and making it open source, we would create demand for our
database and technical services.

Specifically,  in 2001 and 2002,  when we  employed  this open  source  business
model,  89% and 91%,  respectively,  of our revenues related to the provision of
databases  to our  customers  and  11%  and  9%,  respectively,  related  to the
provision of technical and hardware  services.  However,  the magnitude of these
revenues  was not  sufficient  to generate the level of  shareholder  value that
management  feels is expected by its  shareholders.  Therefore  the decision was
made by management to alter Stratabase's  business model to focus on proprietary
software and cease selling  databases.  Therefore,  we are no longer  supporting
open  source  code  software.  We have not yet  begun  selling  our  proprietary
software.  However we did release the first  phase of our  proprietary  software
(the  software is called  "Resync")  in the last quarter of 2002 and continue to
offer it for free. Resync is downloaded  approximately 1,000 times per month and
is designed to allow the  migration  of data  between the several of the leading
applications and devices currently on the market. We do not know whether we will
be able to generate any revenue from Resync.

In June 2003 we released a beta-version  of the second phase of our  proprietary
software  (the  software  is called  "Relata").  Approximately  2,500 users have
already  signed  up for a free  trial use of  Relata.  We have not  derived  any
revenue to date from our  proprietary  products.  Although we intend to generate


                                       8
<PAGE>

sales of Relata by using direct mail  advertising and the Internet,  there is no
assurance that we will be  successful.  With the closing of our second office we
lost the  services of our entire  sales  force,  and  therefore  have not had an
active sales staff to sell our database services.  Although we expect to rebuild
our sales staff in this area, we have not yet found suitable personnel for these
positions.

Subsequent to the release of the  beta-version  of Relata,  we changed our focus
for Relata from customer relationship management to knowledge worker automation.
As a result,  Relata  was  redesigned  so that it could be used to  improve  the
productivity  of individuals  and  workgroups.  In particular,  a completely new
front-end  was  developed  and several new modules  were added.  Relata has been
designed for use with Resync.

Stratabase  was  incorporated  under the laws of the State of Nevada on November
18,  1998 and  commenced  operations  in January  1999.  On August 17,  2004 the
company  completed  the process of becoming a Canadian  company.  For the period
from  inception  to December  31, 1999,  we operated in the  development  stage.
Substantially  all activity  during this period  through 1999 was devoted to the
raising of equity capital and  development of our long-term  business  model, up
until the completion of our initial public offering in February 2000.

OUR FOCUS

We engineer Knowledge Worker Automation (KWA) software,  of which Enterprise and
CRM  software are  components.  The KWA  software we have  produced  consists of
web-based software tools. These tools allow enterprises to manage  relationships
and contacts, administer and organize time allocations, collaborate with others,
manage data,  automate  communications and productivity  reporting,  and conduct
data synchronization.

The software we have developed is:

-        mostly  web-based,  meaning that it can be accessed  through a standard
         web browser;
-        designed  to  appeal  to the  needs of  enterprises  with  hundreds  of
         potential  users:
-        adaptable,   meaning  that  users  can  modify  the   functionality  by
         establishing  preferences;
-        functionally  reliable,  as bug reports and performance  statistics are
         regularly monitored by our programming staff.

In addition to developing this KWA software, we have developed extensive written
documentation and user support  materials.  Our programming staff has prepared a
manual and other  documentation  that describes the features of our software and
advises the user on how best to utilize these features.  Our staff monitors on a
daily basis the technical  support  inquiries  and bug reports,  and to a lesser
extent the software performance  statistics,  in order to ensure the software is
functionally reliable.

CORE PRODUCTS AND SERVICES

We have not yet begun selling our proprietary  software.  However we did release
the first phase of our proprietary software (the software is called "Resync") in
Q4 2002,  but we are offering it as a free trial version for now. We do not know
whether we will be able to generate any revenue from  Resync.  We are  currently
preparing to begin marketing the second phase of our  proprietary  software (the
software is called "Relata"). Although we plan to offer it as a hosted solution,
and charge users on a monthly  basis for access to it, we do not know whether we
will be able to  generate  any  revenue  from this  product.  It is the  current
intention of management to begin marketing Relata in 2005.

It is the  intention  of  management  to market  Relata  using  direct  mail and
internet  advertising.  However,  we do not know if these  methods of  marketing
Relata  will  successfully  generate  any sales.  The  Company  did not have any
revenue in 2004.  During 2003, the Company had one sale for $5,000 to a customer
in the United States and in 2002 sales totaled  $430,240 of which  $392,730 were
in the United  States and $37,510  were in Canada.  The  majority of the revenue
from 2003 and 2002  related  to the sale of  customized  databases.  We have not
derived any revenue to date from our Relata proprietary software.

Relata is designed to facilitate  automation of specific knowledge worker tasks,
including, but not limited to, contact management, account management,  outcomes
management,  activities management, logging and document and file management and
basic  group  communication.  All these  activities  are within the context of a
shared   environment  in  a  hosted  setting  which  is  accessible   through  a
web-browser.  The Company's  principal market will be North America and the main
customer target base will be customers who need to track customer contacts.  The
software  industry  does not  require  the use of a  significant  amount  of raw
materials  and the  business  in general  is not  seasonal.  The  Company is not
subject to any significant  governmental  regulation  other than those governing
the general operation of a business.



                                       9
<PAGE>

In the past we have  utilized  a business  model  built  around the open  source
software we have developed.  Historically we have generated  revenues by selling
databases of sales leads and mailing  lists,  and providing  technical  services
aimed to customize  and improve the quality of the  databases we sold;  our open
source  software was designed to allow users to interface  with and manage these
databases, and customer relationships. The model hypothesized that by giving the
software  away for free and making it open  source,  demand would be created for
our database and technical  services.  Customers who purchased databases from us
were not  required  to use our open  source  software.  However it was easier to
manage and  interface  with these  databases by using our open source  software,
particularly when the databases were very large. . However,  with the closing of
our second office we lost the services of two of our salespeople,  and therefore
have not had an active sales staff to sell our database and technical  services.
The Company does not expect to begin selling databases again in the future.

COMPETITION

In the broader market for Knowledge Worker Automation  software,  which includes
Enterprise  and CRM  software,  there  are a large  number  of  well-established
companies  that  have   significantly   greater  financial   resources,   larger
development  staffs and more extensive  marketing and distribution  capabilities
than we do. These competitors include thousands of established software vendors,
some of them very large,  including the likes of Microsoft  and Siebel  Systems,
and some of them much smaller, such as Pivotal,  Hummingbird and Documentum. The
market  for this  software  is broad  and  covers  many  aspects  of  enterprise
computing.  Many of these  competitors  are  well  positioned  vendors  who have
established  and stable  customer  bases and continue to attract new  customers.
Most of these companies are larger and more  experienced  organizations  than we
are. In addition,  we face potential competition from many companies with larger
customer bases,  greater financial  resources and stronger name recognition than
we have.

Software markets are seldom  characterized by traditional barriers to entry that
are found in many traditional markets. Accordingly, new competitors or alliances
among competitors can emerge and rapidly acquire significant market share.

We believe that the major factors  affecting the  competitive  landscape for our
software and related services include:

- name and reputation of software and service  provider;  - product  performance
and  functionality;  - strength of  relationships in the software  community;  -
availability of user  applications;  - ease of use; - networking  capability;  -
breadth of hardware compatibility; - quality of related services; - distribution
strength; and - alliances with industry partners.

Although we believe that we will compete  favorably with many of our competitors
in a number of respects, including product performance and functionality and the
fact that our  product  will be offered as a hosted and  web-based  service,  we
believe  that many of our  competitors  enjoy  greater  name  recognition,  have
software  which  has  more  features  than  our  software  does,  have  superior
distribution  capabilities  and offer more  extensive  support  services than we
currently do. In addition,  there are significantly more applications  available
for competing software  solutions,  than there are for ours. An integral part of
our strategy in the future,  however, is to address these shortcomings by, among
other things, offering our software as a hosted and entirely web-based solution;
providing more services to our clients that have high associated  margins;  and,
enhancing the software's functionality.

INTELLECTUAL PROPERTY

The software we have developed falls into two  categories:  proprietary and open
source.

The  proprietary  software  we  have  developed  is the  exclusive  property  of
Stratabase,  and we retain all  copyright  and  ownership  of this  intellectual
property.



                                       10
<PAGE>

The open source software we have developed has been made available for licensing
under the GNU General Public License (GPL), pursuant to which anyone, generally,
may copy,  modify and distribute the software,  subject only to the  restriction
that any resulting or derivative  work is made available to the public under the
same terms. Therefore, although we retain the copyrights to the code, due to the
GPL and the open  source  nature  of our  software,  the  intellectual  property
contained  within the software does not belong to us, or to anyone else. That is
the nature of open source software.  However,  we do enter into  confidentiality
and nondisclosure agreements with our employees and consultants.

We are pursuing registration of the Stratabase and Relata trademarks in the U.S.
However we may be unable to detect the  unauthorized use of, or take appropriate
steps to enforce, our trademark rights.  Although we have begun the registration
process of our trademarks in the U.S., it is not yet complete.  Additionally, we
do not have any assurances that the trademark  applications  will be successful.
Failure to adequately  protect our  trademark  rights could harm or even destroy
the Stratabase brand and impair our ability to compete effectively. The value to
creating market  awareness of the Stratabase and Relata marks will be diminished
if we cannot protect the name. Furthermore, defending or enforcing our trademark
rights could result in the  expenditure of significant  financial and managerial
resources.

Although we do not believe  that our  business  infringes on the rights of third
parties,  there  can  be  no  assurance  that  third  parties  will  not  assert
infringement claims against us in the future or that any such assertion will not
result in costly  litigation  or require  us to obtain a license to third  party
intellectual  rights. In addition,  there can be no assurance that such licenses
will be available on reasonable terms or at all.

C. ORGANIZATIONAL STRUCTURE

The Company is not part of a group and has no subsidiaries.

D. DESCRIPTION OF PROPERTY

We do not own any real property. Our offices are approximately 2,000 square feet
located at 34595 3rd Avenue, #101, Abbotsford, B.C., V2S.8B7, Canada. The office
is leased for a two-year lease that commenced on February 1, 2001. The lease was
renewed  for an  additional  twelve  month  period  and,  upon  expiry  in 2004,
continues on a month-to-month  basis. The monthly rent is approximately  $1,350.
We believe that the facilities will be adequate for the foreseeable  future. All
costs  described  in this section are stated in U.S.  dollars as converted  from
Canadian  dollars.  Accordingly,  the  costs  may vary to some  degree  with the
currency exchange rate.

We leased a  Bandwidth/Connectivity  (fiber  optic  line)  from Telus  Corp.  in
British Columbia.  It was the subject of a three-year  agreement which commenced
on  February  1, 2001,  and called for a monthly  fee of CDN  $1,000.  The lease
terminated  December  31, 2003 and we  currently  have a monthly  agreement  for
high-speed ADSL internet access.

Additionally,  we pay an annual premium of  approximately  $1,500 for a one year
term  comprehensive  general  liability  insurance  policy  with  the  following
coverage:  (i) general liability - $1,400,000;  (ii) database - $150,000;  (iii)
hardware  -  $125,000;  and  (iv)  Flood/Earthquake  -  $185,000.  (Figures  are
converted from Canadian dollars).

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  should  be  read  in  conjunction  with  the  accompanying   audited
consolidated  financial statements for the fiscal years ended December 31, 2004,
2003,  2002.  These reports are presented in United States dollars and have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States, referred to in this annual report as US GAAP.



                                       11
<PAGE>

CRITICAL ACCOUNTING POLICIES:

The Company's  discussion and analysis of its financial condition and results of
operations are based upon its financial statements,  which have been prepared in
accordance with accounting  principles  generally accepted in the United States.
The  preparation  of these  financial  statements  requires  the Company to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities.  On  an  on-going  basis,  the  Company  evaluates  its  estimates,
including those related to bad debts,  inventories,  long-lived  assets,  income
taxes,  and  contingencies  and  litigation.  The Company bases its estimates on
historical  experience and on various other  assumptions that are believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions.

The Company believes the following critical  accounting policies affect its more
significant  judgments and estimates  used in the  preparation  of its financial
statements:

On April 30,  2003,  our note  receivable  from ACT came due and was not repaid.
Senior management of ACT has advised us that steps are being taken to settle the
outstanding note receivable in full. Management has considered the likelihood of
full  collection of principal and interest in light of the plans laid out by ACT
and has recorded a provision for  impairment in its Statement of Operations  for
the  $150,000  principal  amount and $21,206 of unpaid  interest to December 31,
2002. The Company is pursuing ACT for full collection of the amount outstanding,
but  at  this  time  the  ultimate   amount   recoverable   and  the  timing  is
indeterminable.  Any  subsequent  recovery  will be  recorded  in the  period it
occurs.

We account for  impairment of  long-lived  assets,  which  include  property and
equipment,  databases and domain names,  in  accordance  with the  provisions of
Statement of Financial  Accounting  Standard ("SFAS") No. 144 Accounting for the
Impairment or Disposal of Long-Lived  Assets.  An impairment review is performed
quarterly or whenever a change in  condition  occurs  which  indicates  that the
carrying  amounts of assets may not be  recoverable.  Such  changes  may include
changes in our business strategies and plans, which occurred during 2002 when we
changed our business focus to the  development of proprietary  software.  We are
proceeding  well toward the completion of our development and expected launch of
our new software in 2005.  In conducting  our  impairment  analyses,  we largely
utilized information from independent  valuation obtained in connection with our
plans to move to Canada. The impairment  analysis employed involved  assumptions
concerning  the  remaining  useful lives of our  databases and domain names (the
majority being 1-2 years),  interest and discount rates,  growth projections and
other  assumptions  of future  business  conditions  and  estimated  proceeds on
disposal should we plan to sell the databases and domain names.  The assumptions
employed were based on our judgment using internal and external data.

Based on our review,  no  impairment  adjustment  was  considered  necessary  at
December 31, 2003 or 2002. At December 31, 2004, all of the databases and domain
names had been fully  amortized.  The  estimated  useful life of the  long-lived
assets was assessed by management for each period.  The determination of whether
or not long-lived  assets have become impaired  involves a significant  level of
judgment in the  assumptions  underlying  the  approach  used to  determine  the
estimated  future cash flows  expected  to result from the use of those  assets.
Changes  in  our   strategy,   assumptions   and/or  market   conditions   could
significantly impact these judgments and require adjustments to recorded amounts
of long-lived assets.

Software   development   costs  are  charged  to  expense  until   criteria  for
capitalization  under Statement of Position ("SOP) 98-1 are met.  Capitalization
will commence when it becomes  probable that the project will be completed,  the
software  will be used to perform the function  intended and there is reasonable
assurance  as to future  cash flows  resulting  from the  Company's  proprietary
software.  We have not  previously  generated  revenue from sales of proprietary
software products.  To date, cash flow constraints resulted in the timeframe for
completion  of the project  being  lengthy.  Due to  uncertainty  regarding  the
project completion and cash flow to be generated from the proprietary  software,
all  expenditures  relating  to the  project  have been  charged  to  expense as
incurred. At such point in time that such uncertainty disappears,  costs will be
capitalized  until  such time that the  proprietary  software  is  substantially
complete and ready for its intended use.

These accounting policies are applied consistently for all years presented.  Our
operating results would be affected if other alternatives were used. Information
about the  impact  on our  operating  results  is  included  in the notes to our
financial statements.



                                       12
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS:

On December 16, 2004, the Financial  Accounting  Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 123 (revised  2004),
"Share-Based  Payment." SFAS No. 123(R) would require our company to measure all
employee  stock-based  compensation  awards using a fair value method and record
such expense in its consolidated  financial  statements.  In addition,  SFAS No.
123(R) will require additional  accounting related to the income tax effects and
additional disclosure regarding the cash flow effects resulting from share-based
payment arrangements.  For public entities that file as a small business issuer,
SFAS No. 123(R) is effective for the first  interim or annual  reporting  period
beginning after December 31, 2005.

The  implementation  of this new  standard  is not  expected  to have a material
effect on the Company's financial statements.

In December  2004,  FASB issued SFAS No. 153 to amend Opinion 29 by  eliminating
the  exception  for  non-monetary  exchanges  of similar  productive  assets and
replaces it with general exception for exchanges of non-monetary  assets that do
not have  commercial  substance.  A  non-monetary  exchange  is  defined to have
commercial  substance  if the future  cash flows of the entity are  expected  to
change significantly as a result of the exchange.

The  implementation  of this new  standard  is not  expected  to have a material
effect on the Company's financial statements.

A. OPERATING RESULTS

The following table sets forth the audited consolidated  statement of operations
data for Stratabase for the fiscal years indicated:

                                                   STRATABASE
                                             YEARS ENDED DECEMBER 31

                                     2004             2003             2002
Revenues                              $     -        $  5,000      $   430,240
Cost of revenues                        8,415           2,669          324,012
Gross margin                          (8,415)           2,331          106,228
Research and development              139,742         154,544          171,500
General and administration            549,191         705,888          794,939

Loss from operations                (697,348)       (858,101)        (860,211)
Other income (expense), net             2,489       (169,175)           31,195
Income tax expense                          -               -         (85,629)
Net loss                         $  (694,859)    $(1,027,276)      $ (914,645)
Net loss per share:
 Basic and diluted                $  (0.07 )        $  (0.13)        $  (0.12)
Weighted average number of              9.91             8.04             7.93
  common shares outstanding
  (in millions)


YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003:

RESULTS OF OPERATIONS

During the year ended  December  31,  2004,  we  incurred a net loss of $694,859
compared to a net loss of $1,027,276  for the year ended  December 31, 2003. Our
loss for the  current  year has  decreased  substantially  over  2003 due to the
change in our business such that we have  minimized our work force and shut down
operations located in Vancouver. Also included in the loss for the twelve months
ended December 31, 2003 is a $171,206  provision for impairment  against amounts
lent (and unpaid interest) to Advanced Cell Technology ("ACT").  Our proprietary
software was only issued at the end of June 2003 and we have not derived revenue
from it to date. Although we have reduced our monthly operational  expenses,  we
have  continued  to  realize  net  losses  due to the  lack of  sales  from  our
proprietary software.



                                       13
<PAGE>

REVENUES

We did not have any  revenues for the twelve month  periods  ended  December 31,
2004 while we had  revenue of $5,000 for the prior  twelve  month  period  ended
December  31,  2003.  Our  Relata  proprietary   software  was  only  issued  in
beta-version  at the end of June 2003 and we have not derived revenue from it to
date.  Although  we have  reduced  our  monthly  operational  expenses,  we have
continued  to realize  net losses due to the lack of sales from our  proprietary
software.  Development of our new proprietary software products had taken longer
than expected.  Also, with the closing of our second office we lost the services
of two of our  salespeople,  and therefore have not had an active sales staff to
sell our  database  services.  Although  we expect to rebuild our sales staff in
this area, we have not yet found suitable personnel for these positions. We have
not derived any revenue to date from our proprietary products.

COST OF REVENUE

Cost of revenue for the year ended  December 31, 2004 was $8,415 as we wrote-off
  all of our remaining  inventory.  Cost of revenue for the year ended  December
  31, 2003 was $2,669 (including an inventory write-down of $1,683)
for our only sale in 2003.

RESEARCH AND DEVELOPMENT EXPENSES

During the year period ended December 31, 2004, we incurred $139,742 in research
and  development  costs  pertaining to the  development  of our new  proprietary
software.  For the 2003, we incurred $154,544. The decrease in 2004 is primarily
related to an approximate $11,700 decrease in research and development  salaries
and wages paid in 2004 compared to 2003.  Research and development in both years
related to the  development of our  proprietary  software for future sale.  Such
costs in 2004 and 2003  substantially  consist  of  salaries  and  wages for our
development staff.

GENERAL AND ADMINISTRATIVE EXPENSES

General and Administrative  (G&A) expenses for 2004 were $549,191 as compared to
$705,888 for the prior year. G&A costs for the current period largely consist of
depreciation  and  amortization  of databases and domain names,  accounting  and
professional fees, and salaries and wages. The decline in G&A expenses from 2004
to 2003 is largely  attributable to the change of sales focus that resulted in a
sharp  decline in revenues in 2003 that led to a  reduction  in general  monthly
overhead in order to  preserve  cash.  As well,  we our  professional  fees were
higher  in 2003 due to the  initial  filing  of our  registration  statement  in
connection with our continuation into Canada.

INTEREST AND OTHER INCOME (EXPENSE)

Interest and other income (expense) decreased from a net expense of $169,175 for
the year ended  December  31,  2003 to $2,489 in income for the  current  twelve
months.  Amounts for 2003 largely reflect the provision for a loan impairment of
$171,206 while the current period  relates to interest  earned.  Our loan to ACT
came due on April 30, 2003 without payment or settlement. We have discussed this
matter  with ACT  management  who have  indicated  that steps are being taken to
finance  their  company  and repay  outstanding  loans made by our  company  and
others.  However,  due to uncertainty as to the amount and timing of collection,
we have recognized in 2003 a provision for impairment of this loan in the amount
of $171,206.  We are pursuing ACT for full collection of the amount outstanding.
Any  subsequent  recovery  will be  recorded  in the period it occurs.  The loan
continues  to  accrue  interest  at 20% per  annum.  However,  we are no  longer
recognizing  interest income on the loan in our financial  statements until such
time that recoverability of such interest is deemed likely.

YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002:

RESULTS OF OPERATIONS

During the year ended  December 31, 2003,  we incurred a net loss of  $1,027,276
compared to a net loss of $914,645 for the  comparative  period in 2002. Our net
loss for 2003  increased  over 2002 due to the change in our business  such that
only minimal  revenue has been  recognized to date in 2003 whereas  $430,240 was
recognized in 2002.  Also  included in the loss for the year ended  December 31,
2003 is a $171,206  provision for  impairment  against  amounts lent (and unpaid
interest) to Advanced Cell Technology ("ACT"). Our proprietary software was only
issued at the end of June 2003 and we have not derived  revenue from it to date.
Although we have reduced our monthly operational  expenses, we have continued to
realize net losses due to the lack of sales from our proprietary software.



                                       14
<PAGE>

REVENUES

Revenues for the year ended December 31, 2003 were $ 5,000, compared to revenues
of  $430,240  for the year ended  December  31,  2002.  Our  Relata  proprietary
software was only issued in beta-version at the end of June 2003 and we have not
derived  revenue  from  it  to  date.  Although  we  have  reduced  our  monthly
operational expenses, we have continued to realize net losses due to the lack of
sales from our proprietary software. Development of our new proprietary software
products had taken longer than  expected;  also,  with the closing of our second
office we lost the services of two of our  salespeople,  and therefore  have not
had an active sales staff to sell our database  services.  Although we expect to
rebuild our sales staff in this area, we have not yet found  suitable  personnel
for  these  positions.  We  have  not  derived  any  revenue  to date  from  our
proprietary products.

COST OF REVENUE

Cost of revenue for the year ended  December 31, 2003 was $2,669  (including  an
inventory  write-down  of  $1,683)  for our  only  sale in 2003 as  compared  to
$324,012 for the year ended December 31, 2002 when there was sales activity.  In
the prior year,  significant  costs were incurred for programming  wages,  media
costs and renting  databases.  Over the past year,  we have reduced our non-core
workforce and closed one of our offices in order to reduce expenses.

RESEARCH AND DEVELOPMENT EXPENSES

During the year ended  December 31, 2003,  we incurred  $154,544 in research and
development  ("R&D") costs  pertaining to the development of our new proprietary
software,  as compared to $171,500 for the year ended  December  31, 2002.  Such
costs in 2003 substantially  consisted of salaries and wages for our development
staff.  The decrease over the prior year is due to the reduction of our research
and development staff.

GENERAL AND ADMINISTRATIVE EXPENSES

General and Administrative  (G&A) expenses for the years ended December 31, 2003
and 2002 were $705,888 and $794,939,  respectively.  The decline in G&A expenses
from  2002  to  2003  is  largely  attributable  to  $255,750  of  stock  option
compensation being recorded in 2002 for options granted in 2002 whereas no stock
options  were  granted  and no stock  option  compensation  recognized  in 2003.
Additionally,  due to the change of sales focus that resulted in a sharp decline
in  revenues  in 2003,  we have  reduced  general  monthly  overhead in order to
preserve  cash.  This was  offset by  increases  in  certain  2003 G&A  expenses
including  professional fees associated with compliance with  Sarbanes-Oxley Act
rules  and the  preparation  of our S-4  Registration  Statement  regarding  our
company's continuation into Canada.

INTEREST AND OTHER INCOME (EXPENSE)

Interest  income  expense  changed from $31,195 for the year ended  December 31,
2002 to $2,031 for the year ended  December 31,  2003.  Amounts for 2002 largely
reflect the interest earned on  interest-bearing  investments  consisting of the
20%  annual  interest  rate  attached  to our  $150,000  loan to  Advanced  Cell
Technology  ("ACT") made in the second quarter of 2002. Our loan to ACT came due
on April 30, 2003 without  payment or settlement.  We have discussed this matter
with ACT  management  who have  indicated  that steps are being taken to finance
their  company  and repay  outstanding  loans made by our  company  and  others.
However,  due to uncertainty as to the amount and timing of collection,  we have
recognized  in 2003 a  provision  for  impairment  of this loan in the amount of
$171,206. We are pursuing ACT for full collection of the amount outstanding. Any
subsequent recovery will be recorded in the period it occurs. The loan continues
to accrue interest at 20% per annum; however, subsequent to December 31, 2002 we
are no  longer  recognizing  interest  income  on  the  loan  in  our  financial
statements  until  such  time that  recoverability  of such  interest  is deemed
likely.



                                       15
<PAGE>

INCOME TAXES

The provision for income tax was $nil for the years ended  December 31, 2004 and
2003, as compared to $85,629 for 2002. The 2002 provision  largely  consisted of
$90,321 being recognized as tax expense in respect of stock option compensation,
the deduction  benefit of which was  recognized as additional  paid-in  capital.
Additionally,   a   loss-carryback   was  claimed  in  2002  in  the  amount  of
approximately $50,000. This was claimed to recover taxes previously paid and was
received  during  2003.  This  recovery  was offset by an  additional  valuation
allowance provided against previously recognized deferred tax assets.

During  2003,  all  deferred  tax  assets  were  fully  offset by the  valuation
allowance.

B. LIQUIDITY AND CAPITAL RESOURCES

(IN U.S. DOLLARS)                            AS AT DECEMBER 31,
                                    2004            2003            2002
Cash and cash equivalents         $ 52,187      $ 509,180        $  134,093
Working capital                     22,787        458,921           181,474
Net cash provided by (used in)
     Operating activities        (446,700)      (472,987)       (1,165,026)
     Investing activities          (2,836)        (2,242)         (306,160)
     Financing activities                -        860,016           344,000

As of December  31,  2004,  we had $52,187 in cash,  a decrease of 456,993  from
December  31,  2003.  The  decrease in cash is  substantially  due to  continued
operating losses.  Losses from operations are expected to continue in the future
as we shift our revenue model to marketing our new Relata proprietary  software.
If  revenues  and  spending  levels  are not  adjusted  accordingly,  we may not
generate  sufficient  revenues  to achieve  profitability.  Management  believes
marketing and operating expenses will be financed in during the first six months
of 2005  through  the  proceeds of $300,000  received  from a private  placement
completed  in February  2005.  Even if  profitability  is  achieved,  we may not
maintain or increase  such  profitability  on a quarterly or annual basis in the
future.  Our policy is to pay all operational  expenses when due,  provided that
the vendor,  in the normal  course of  business,  has  satisfied  all  necessary
conditions for payment.

Net cash used in operating  activities  during the twelve months ended  December
31, 2004 was $446,700  compared to $472,987  during the year ended  December 31,
2003.  Although  the net  loss  in 2003  ($1,027,276)  was  higher  than in 2004
($694,859),  we used less cash on  operations in the current year largely due to
two non-cash  items. In 2003, we had a provision for loan impairment of $171,206
related to the loan to ACT. In addition,  amortization  expense  relating to our
investment  in acquired  databases  and domain  names,  and other  property  and
equipment  decreased  from  $303,923  in 2003 to  $269,018  in  2004  The  other
significant  factor was that  unlike  2004,  recoverable  taxes of $62,844  were
recognized in 2003.

In 2004,  we  purchased  $2,836 of  computer  equipment.  During  the year ended
December  31,  2003,  we made  purchases  of domain  names  totaling  $1,014 and
computer equipment of $1,228.  There were no financing  activities in 2004 while
in 2003 we completed a private placement for proceeds of $860,016.

We have no long-term debt. We have reduced our expenses by downsizing  staff and
closing one of our offices in 2003. We believe that our available cash, together
with  future   revenues,   will  be  sufficient  to  fund  our  working  capital
requirements  for the first six months of 2005.  We further  believe that we can
generate  sufficient  liquidity  through  future  sales and our current  working
capital to carry out our operational activities. We have no long-term employment
contracts and can further reduce our work-force,  as necessary,  if revenues are
not sufficient to support our existing  operations or until  additional  funding
can be  obtained.  Since we  currently  only have  three  people  employed,  any
significant  further reductions in our work force may directly negatively affect
our operations.  For example, if we dismiss an engineer, new product development
may be delayed.

The Company expects sales from its new product line to fund long-term operations
and will be actively  marketing its products  during 2005.  Management  believes
marketing and  operating  expenses will be financed over the first six months of
2005 through $300,000 of proceeds from private  placement  completed in February
2005.  Notwithstanding,  we  cannot  be  certain  that any  required  additional
financing  will be available on terms  favorable to us. If additional  funds are
raised by the  issuance of our equity  securities,  such as through the issuance
and exercise of warrants, then existing stockholders will experience dilution of
their  ownership  interest.  We  believe  that  debt  financing  will  not be an
alternative  for  funding.  The  risky  nature  of this  enterprise  and lack of
tangible assets places debt financing beyond the  credit-worthiness  required by
most  banks or  typical  investors  of  corporate  debt  until  such time as the
economic  viability  of Relata can be  demonstrated.  If adequate  funds are not
available  or not  available  on  acceptable  terms,  we may be  unable  to fund
expansion, develop or enhance services or respond to competitive pressures.



                                       16
<PAGE>

GOING CONCERN CONSIDERATION

Our  activities  historically  have been supported by available cash on hand and
revenues generated from the sales of our products and services.  As indicated in
the accompanying  balance sheet, at December 31, 2004 we had $52,187 in cash and
after $29,400 of current  liabilities  (net of certain other current assets) had
$22,787 in working capital. We estimate that our cash expenditures over the next
twelve  months to be  approximately  $40,000  per month.  These  factors,  among
others,  indicate that  Stratabase  may be unable to continue  operations in the
future as a going concern.  The Company  expects sales from its new product line
to fund long-term  operations and will be actively marketing its products during
2005.  Management  believes  marketing and  operating  expenses will be financed
during the first six months of 2005 through proceeds of $300,000 received from a
private  placement  completed in February 2005.  The Company  expects to need an
additional  $300,000 to cover costs through the remainder of 2005.  Such will be
financed  by  additional  equity  issuances.  There  can  be no  assurance  that
management's  plans  to  market  its new  products  will be  successful  or that
additional equity financing will be available on favourable terms. No adjustment
has been  made in the  accompanying  financial  statements  to the  amounts  and
classification of assets and liabilities which could result should Stratabase be
unable to continue as a going concern.

There is  substantial  doubt about our ability to continue as a going concern as
we have refocused our business model on our proprietary software and it has only
recently been released in beta-form and we have  generated no revenue from it to
date. As a result we have incurred recurring operating losses. Accordingly,  our
independent  auditors  included an explanatory  paragraph in their report on the
December 31, 2004 financial statements regarding the substantial doubt about our
ability  to  continue  as a going  concern.  Our  financial  statements  contain
additional  note  disclosures  describing  the  circumstances  that lead to this
disclosure by our independent auditors.

C. RESEARCH AND DEVELOPMENT, PATENTS, AND LICENSES, ETC.

See Item 4.B Business Overview and 5.A Operating Results.

D. TREND INFORMATION

According to Peter Drucker,  knowledge  workers make up approximately 40% of the
American  workforce and 50% of future  workplace  investments  will focus on the
individual  productivity of knowledge workers.  Stratabase has changed its focus
to adjust  to this  trend in the  marketplace.  Subsequent  to the  beta-version
release  of Relata,  the  company  redesigned  Relata  from a focus on  customer
relationship management to knowledge worker automation. Management believes that
the  change in focus will  better  able the  Company to compete in the  software
industry.

E.     OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off balance sheet  arrangements as of December 31, 2004 or of
the date of this report.

F.     CONTRACTUAL OBLIGATIONS
<TABLE>
<CAPTION>
                Contractual Obligations                                 Payments due by period
-------------------------------------------------------- ------------------------------------------------------
                                                         TOTAL      LESS       1-3 YEARS  3-5 YEARS  MORE
                                                                    THAN 1                           THAN
                                                                    YEAR                             FIVE
                                                                                                     YEARS
-------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S>                                                      <C>        <C>        <C>        <C>        <C>
Long Term Debt Obligations                               0          0          0          0          0
Capital (Finance) Lease Obligations                      0          0          0          0          0
Operating Lease Obligations                              0          0          0          0          0
Purchase Obligations                                     0          0          0          0          0
Other Long-Term Liabilities Reflected on the Company's
Balance Sheet Under the GAAP of the primary financial
statements                                               0          0          0          0          0
-------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
</TABLE>

At December 31, 2004,  the Company's  only  obligations  are trade  payables and
accrued  liabilities of $34,729.  All of these  obligations are due in less than
one year.



                                       17
<PAGE>

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

The  directors,  officers and designers upon whose work the Company is dependent
of Stratabase are as follows:

    NAME                             POSITION                      POSITION HELD
                                                                           SINCE

Trevor Newton           President, Secretary, Treasurer, Chief    November, 1998
                        Executive Officer
Fred Coombes            Vice President of Corporate Development   November, 1998
                        and Director
Scott Praill            Director                                  October, 2002
Avinesh Bangar          Chief Technology Manager                  July, 2000

The following  summarizes certain biographical data concerning the directors and
senior management of Stratabase:

TREVOR  NEWTON,  age 36, since our  incorporation  to the present,  has been our
President, Secretary, Treasurer and Chief Executive Officer. Mr. Newton oversees
all aspects of operations and business  development for  Stratabase.  Mr. Newton
graduated  from  Simon  Fraser  University  in 1993  with a  Masters  Degree  in
Economics,  and from the  University  of  Victoria  in 1991 with a  Bachelor  of
Science degree in Economics.  From 1994 to 1995 Mr. Newton taught  Economics and
Statistics at the University  College of Fraser  Valley,  and from February 1996
until  October  1996,  Mr.  Newton  was  a  registered   representative  with  a
broker-dealer.  From  October  1996 until  1999,  Mr.  Newton was  employed at a
company which ran a financial website published financial  information,  such as
stock  quotes  and  news,  to its  users  24 hours a day.  His  responsibilities
included  the  overseeing  of all  aspects of  operations  such as  programming,
technical infrastructure and marketing.

FRED COOMBES,  age 52, since our  inception to the present,  has been one of our
Directors  and since  January 20,  1999,  to the present our  Vice-President  of
Corporate Development.  Since 1987 to the present, Mr. Coombes has also acted as
the President of Co-ab  Marketing,  Ltd.,  an investor and  corporate  relations
firm.

SCOTT PRAILL,  age 39, has served on our Board of Directors of Stratabase  since
October 2002.  Mr. Praill is a financial  professional  who has been employed by
leading  companies  such as Placer Dome and Westcoast  Energy,  and was a Senior
Accountant  for  Price  Waterhouse,  where  his  responsibilities  included  the
planning of  financial  statement  audits and ensuring  Canadian  and U.S.  GAAP
compliance.  His duties have also  included  assessment  of  adequate  financial
statement  disclosure;  preparing and reviewing financial  information including
pro-forma financial statements for prospectuses, information circulars and other
offering documents related to acquisitions, mergers and the issuance of debt and
equity securities; evaluating public company operating results through financial
statement and financial ratio analysis; and reviewing financial internal control
systems and preparing reports for presentation to Audit Committees and Boards of
Directors.  Mr. Praill has  extensive  experience  in public  company  financial
reporting  including  compliance  with  Canadian  and U.S.  securities  exchange
requirements and the preparation and review of financial statements.  Mr. Praill
was the  director  of  finance  for  Inflazyme  Pharmaceuticals.  Mr.  Praill is
currently a self-employed  financial consultant.  Mr. Praill is also currently a
Director of American Goldrush Corporation,  a privately held mining company. Mr.
Praill has earned the following  designations:  Chartered Accountant (BC, 1996),
Certified Public Accountant  (Illinois,  2001), and a Bachelor of Science Degree
(Simon Fraser University, 1989).

AVINESH BANGAR,  age 26, has served as  Stratabase's  Chief  Technology  Manager
since July,  2000. For the four years prior to July, 2000, Mr. Bangar was a full
time student. Mr. Bangar is an information technology professional with specific
expertise in system and network administration, database design, web application
development,  software design and development, and technical documentation.  Mr.
Bangar has worked as an information  technology  professional  since  graduating
from the University  College of the Fraser Valley with his Computer  Information
Systems  degree in 2000.  Mr. Bangar  completed  his A+, Sun  Certified  Systems
Administrator,  and  Citrix  Certified  Administrator  certifications  in  2001,
followed by his Masters in Computer  Science in 2002.  Mr. Bangar was recognized
and  awarded  by the  International  Who's Who of  Information  Technology  as a
leading  information  technology  professional  in 2002.  Mr.  Bangar has been a
member of the IEEE Computer Society and the Association for Computing  Machinery
since 2001.



                                       18
<PAGE>

Our  directors  have been  elected  to serve  until the next  annual  meeting of
stockholders and until their  successor(s)  have been elected and qualified,  or
until death, resignation or removal.

There are no family  relationships  between any directors or executive officers.
There are no  arrangements or  understandings  pursuant to which any director or
member of senior  management  was  selected  as a  director  or member of senior
management,  other than as provided for in the shareholders' agreement described
under Item 10.C of this annual report.

B. COMPENSATION

During the years ended  December 31, 2004 and December 31, 2003,  we paid to our
President and CEO $90,000 each year and we paid to our Vice President, Corporate
Development,  $56,074  each year.,  in salaries  and fees.  The total amount set
aside or accrued for the year ended  December 31, 2004 to provide for severance,
retirement and similar  benefits for such persons was $Nil. There were no option
grants to any of the officers,  directors or senior  management during the ended
December 31, 2004.

C. BOARD PRACTICES

Our  Articles  provide  that we must have a minimum  of one (1)  director  and a
maximum  of ten  (10).  At  least  25% of our  Board  members  must be  Canadian
residents.  The number of directors  to be elected at a meeting of  shareholders
shall be the number of directors  whose term of office has expired or such other
number as the directors determine.  If directors are not elected at a meeting of
shareholders,  the incumbent directors continue in office until their successors
are appointed.

Our directors hold office until the earlier of their resignation, termination or
election  of a  successor.  Each of Trevor  Newton  and Fred  Coombes  have been
members of our Board since  November  1998 and Scott Praill has been a member of
our Board since October 2002.

None of the directors have a service  contract or other agreement  providing for
benefits upon termination of employment.

The Board of Directors has established an Audit Committee.  Mr. Praill, the sole
member of the Audit  Committee,  is the audit committee  financial  expert.  The
Audit Committee recommends  engagement of the company's independent auditors, is
primarily  responsible  for  approving the services  perform by the  independent
auditors and for reviewing and  evaluating  our  accounting  principles  and its
system  of  internal  accounting  controls  and has  general  responsibility  in
connection with related matters.

The Board has established an Option Committee and a Compensation Committee, each
consisting of Messrs.  Newton and Coombes.  The Option Committee  recommends and
grants options to individuals under the option plans adopted by the company. The
Compensation  Committee  recommends and grants  compensation  to individuals who
work for the company.

The Board  does not have a  nominating  committee,  the  functions  of which are
performed by the Board.

D. EMPLOYEES

As of December  31, 2004,  2003 and 2002 we had 3, 3, and 4 full-time  employees
respectively,  including Mr. Trevor  Newton,  Chairman of the Board,  President,
Secretary, Treasurer and CEO. Mr. Newton supervises the company's operations. It
is  anticipated  that we will need to add additional  managerial,  technical and
administrative  staff in the future in order to realize our business objectives.
We currently  utilize 2 software  programmers and outsource to outside  software
contractors on an as-needed basis.

E. SHARE OWNERSHIP

The following  table lists, as of April 20, 2005, the number of shares of common
stock  beneficially  owned by (i) each  person or  entity  known to us to be the
beneficial owner of more than 5% of our outstanding  common stock;  (ii) each of
our officers  and  directors;  and (iii) all of our officers and  directors as a
group.  Information  relating to  beneficial  ownership  of common  stock by our
principal  stockholders  and management is based upon  information  furnished by


                                       19
<PAGE>

each  person  using  "beneficial  ownership"  concepts  under  the  rules of the
Securities and Exchange Commission.  Under these rules, a person is deemed to be
a  beneficial  owner of a security  if that person has or shares  voting  power,
which  includes  the power to vote or direct  the  voting  of the  security,  or
investment  power,  which includes the power to vote or direct the voting of the
security.  The person is also deemed to be a beneficial owner of any security of
which that person has a right to acquire  beneficial  ownership  within 60 days.
Under the Securities and Exchange  Commission rules, more than one person may be
deemed to be a  beneficial  owner of the same  securities,  and a person  may be
deemed to be a beneficial owner of securities as to which he or she may not have
any pecuniary beneficial interest.

The percentages  below are calculated based on 10,914,972 shares of common stock
issued  and  outstanding,  plus in the  case of a  person  who has the  right to
acquire  additional  shares within 60 days, any new shares which would be issued
to effect such acquisition.
<TABLE>
<CAPTION>

            OFFICERS, DIRECTORS,
             AND 5% SHAREHOLDERS                    NUMBER OF SHARES                   BENEFICIAL OWNERSHIP (%)
  ------------------------------------------ ------------------------------- ------ -------------------------------

<S>                                                    <C>                    <C>               <C>
  TREVOR NEWTON                                        2,897,400              (1)               26.00

  FRED COOMBES                                          912,300               (2)                8.36


  SCOTT PRAILL                                           60,000               (3)            LESS THAN 1%


  AVINESH BANGAR                                         35,000               (4)            LESS THAN 1%


  Y. DE JOIE                                            876,177               (5)                8.03


  A. RAMIC                                              876,170               (5)                8.03


  ALL DIRECTORS AND EXECUTIVE OFFICERS AS
  A GROUP (4 PERSONS)*
                                                       3,904,700                                34.74
</TABLE>


(1) Includes  225,000  options to purchase  common stock at a purchase  price of
$0.60 per share, all of which are vested. The options expire on April 9, 2011.

(2)  Includes  30,000  shares of common  stock owned by Mr.  Coombes'  children,
Candice Coombes, Mackenzie Coombes and Carley Coombes.

(3) Scott Praill was granted 100,000  options  pursuant to the 2002 Stock Option
Plan to purchase  common stock at a purchase price of $1.30 per share.  Of these
options,  60,000 are  currently  vested.  The  balance of his  options  vests as
follows:  20,000 on June 23, 2005 and 20,000 on December 31,  2005.  The options
expire on October 22, 2012.

(4) Mr. Bangar was granted 35,000 options to purchase common stock at a purchase
price of $1.45 per share.  All of these options are fully vested at December 31,
2004. These options expire on October 8, 2011.

(5) Does not  include the  warrants  held by each of the above  individuals,  of
which 480,800 are not  exercisable  until  December 23, 2005 and 480,800 are not
exercisable until December 23, 2006.

* These shares are attributed to Trevor Newton, Fred Coombes and Scott Praill.

The persons or entities  named in this table,  based upon the  information  they
have provided to us, have sole voting and  investment  power with respect to all
shares of common stock beneficially owned by them.



                                       20
<PAGE>

STOCK OPTION PLANS:

The Company has two option  plans  pursuant to which  employees,  directors  and
consultants  and other agents of the Company could receive  shares.  The Company
has a 2000 Stock  Option  Plan ("the 2000  Plan") and a 2002 Stock  Option  Plan
("the 2002 Plan").  There are 80,000  options  available to be granted under the
2000 Plan and 1,420,000 available under the 2002 Plan

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

See Item 6.E.

There has been no significant  change in the percentage  ownership by any of the
major shareholders during the past 3 years.

The  Company's  major  shareholders  listed in Item 6.E above do not have voting
rights different than any of the other common shareholders of the Company.

United States Shareholders

On April 20, 2005,  Stratabase had 65 registered  shareholders with addresses in
the United States holding approximately 4,863,472 common shares which represents
approximately  44.6% of the  total  number  of issued  and  outstanding  shares.
Residents of the United States may beneficially own common shares  registered in
the names of non-residents of the United States.

To the  knowledge of the Company,  there are no  arrangements,  the operation of
which may at a subsequent date result in a change in control of the Company.

B. RELATED PARTY TRANSACTIONS

During the 2001 fiscal year, we accepted non-interest bearing notes from Messrs.
Newton  and  Coombes  for  $200,000  and  $175,000,  respectively,  for the 2001
exercise of stock options which were previously  granted.  The notes  receivable
from each of Messrs.  Newton and Coombes were written  non-interest  bearing and
were to be paid from the proceeds  from the sale of the stock  acquired  through
the  exercise of the stock  options.  The notes were due and payable on April 1,
2003. In May 2003, we reached an oral agreement with Messrs.  Newton and Coombes
to settle the  indebtedness by accepting  150,000 common shares of Stratabase as
payment in full for Mr. Newton's  outstanding  note and 130,000 common shares of
the Company as payment for Mr. Coombes'  outstanding note,  representing a total
value of $385,560 as compared to the $375,000 face value of the notes. The total
value was  determined  based on quoted  market prices of our common stock on the
redemption date. The redemption and cancellation of these shares occurred in May
2003. No gain or loss was recognized on the redemption. Notwithstanding that the
indebtedness  owed to us by Messrs.  Newton and  Coombes  was  evidenced  by two
separate  written  promissory  notes,  we did not  memorialize  in a writing our
agreement  to  settle  the   indebtedness   by  issuing   150,000  and  130,000,
respectively, shares to said individuals.

On October 23, 2002,  100,000  options to purchase  common stock were granted to
Scott Praill.  The options are priced at $1.30 per option and expire October 22,
2012. At December 31, 2004,  60,000 of these options have vested. No other stock
options  have been granted to  directors  or officers in the  three-year  period
ended December 31, 2004.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A.     FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION

Stratabase's Financial Statements, which are set forth in the accompanying index
to the Financial  Statements included in this annual report, are filed as a part
of this annual report pursuant to Item 18.



                                       21
<PAGE>

LEGAL PROCEEDINGS

Not applicable.

DIVIDEND POLICY

We have never  declared or paid any cash dividends on our common stock nor do we
anticipate  paying  any in the  foreseeable  future.  Furthermore,  we expect to
retain any future earnings to finance our operations and expansion.  The payment
of cash  dividends  in the  future  will be at the  discretion  of our  Board of
Directors and will depend upon our earnings levels,  capital  requirements,  any
restrictive loan covenants and other factors the Board considers relevant.

B.     SIGNIFICANT CHANGES

No significant  change has occurred  since the date of the audited  consolidated
financial statements included in Item 18.

ITEM 9. THE OFFER AND LISTING

A.     OFFER AND LISTING DETAILS

         The  following  tables  set forth the price  history  of the  Company's
stock:

         1. Annual high and low market  prices for the last five full  financial
years:

   Year                       Market Price
------------ ------------------------------------------------
                   High Price               Low Price
------------ ------------------------ -----------------------
2004         $1.25                    $0.15
2003         $1.65                    $0.23
2002         $3.37                    $0.92
2001         $2.50                    $0.63
2000         $3.00                    $0.75
------------ ------------------------ -----------------------

         2. High and low market prices for each full  financial  quarter  during
the two most recent full financial years:


      Financial Quarter                      Market Price
------------------------------- ---------------------------------------
     Year           Quarter         High Price          Low Price
---------------- -------------- ------------------- -------------------
2004             Fourth
                 Quarter of
                 2004           $0.35               $0.15

                 Third
                 Quarter of
                 2004           $0.42               $0.15

                 Second
                 Quarter of
                 2004           $0.65               $0.40

                 First
                 Quarter of
                 2004           $1.25               $0.51

2003             Fourth
                 Quarter of
                 2003           $0.45               $0.25

                 Third
                 Quarter of
                 2003           $0.70               $0.23

                 Second
                 Quarter of
                 2003           $1.55               $0.61

                 First
                 Quarter of
                 2003           $1.65               $1.20

                                       22
<PAGE>


         3. High and low market prices for each of the six most recent months:

            Month                            Market Price
------------------------------- ---------------------------------------
                                   High Price.          Low Price
------------------------------- ------------------- -------------------
February, 2005                  $0.50               $0.40

January, 2005                   $0.70               $0.35

December, 2004                  $0.35               $0.16

November, 2004                  $0.20               $0.16

October, 2004                   $0.25               $0.15

September, 2004                 $0.24               $0.15
------------------------------- ------------------- -------------------

B.     PLAN OF DISTRIBUTION.

Not applicable.

C.     MARKETS.

In July 2000 our common  stock began  trading on the Over the  Counter  Bulletin
Board sponsored by the National  Association of Securities  Dealers,  Inc. under
the symbol  "SBSF.OB".  Subsequent to our continuance to Canada,  our symbol was
changed to "SBASF.OB".  The Over the Counter Bulletin Board is maintained by the
NASDAQ Stock Market,  but does not have any of the  quantitative  or qualitative
standards  such as those  required for companies  listed on the NASDAQ Small Cap
Market or National Market System.

D.     SELLING SHAREHOLDERS.

Not applicable.

E.     DILUTION.

Not applicable.

F.     EXPENSES OF THE ISSUE.

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A.     SHARE CAPITAL.

Not applicable.

B.     MEMORANDUM AND ARTICLES OF INCORPORATION

This section summarizes certain material provisions of the Company's charter and
bylaws.

The Company is authorized to issue shares of common stock (the "Common  Shares")
as well as shares of preferred stock (the "Preferred Shares").

Subject  to the rights of holders of  Preferred  Shares in the  future,  if any,
holders of the Common  Shares are entitled to share equally on a per share basis
in such  dividends  as may be  declared by the Board of  Directors  out of funds
legally available therefore.  There are presently no plans to pay dividends with
respect to the Common  Shares.  Upon the Company's  liquidation,  dissolution or
winding up, after  payment of creditors  and the holders of any of the Preferred
Shares,  if any,  the  Company's  assets will be divided pro rata on a per share
basis among the holders of the Common Shares.  The Common Shares are not subject
to any liability for further assessments. There are no conversions or redemption
privileges nor any sinking fund provisions with respect to the Common Shares and
the Common  Shares are not subject to call.  The holders of Common Shares do not


                                       23
<PAGE>

have any pre-emptive or other subscription rights.  Holders of the Common Shares
are entitled to cast one vote for each share held at all shareholders'  meetings
for all purposes,  including the election of directors. The Common Shares do not
have cumulative voting rights.

None of the Preferred Shares are currently  outstanding.  The Board of Directors
has the  authority,  without  further  action by the holders of the  outstanding
Common  Shares,  to  issue  preferred  shares  from  time to time in one or more
series,  to fix the number of shares  constituting  any  series,  and to fix the
terms of any such series,  including dividend rights, dividend rates, conversion
or exchange  rights,  voting rights,  rights and terms of redemption  (including
sinking fund provisions), the redemption price and the liquidation preference or
such series.

The  Company's  Bylaws  provide that Board of Directors  may, from time to time,
with or without the authority or the authorization of the shareholders,  in such
amounts  and on such terms as it deems  expedient,  cause the  Company to borrow
money.  The board may from time to time delegate to a committee,  to a director,
or to an officer of the Company all or any of the powers  conferred on the board
by law or the  by-laws to such  extent and in such manner as the board from time
to time determines.

Annual and special  meetings of the  shareholders  may be called by the Board of
Directors.  Notice of a shareholder meeting shall be given not less than 21 days
and not more than 60 days prior to the date of such  meeting  to each  director,
the auditor of the Company,  and each  shareholder of record entitled to vote at
the meeting.  A quorum for any shareholder  meeting shall be persons present not
being less than two in number and holding or representing by proxy not less than
5% of the total number of issued shares entitled to vote at the meeting.

C.     MATERIAL CONTRACTS

We have not entered into any material  contracts,  other than contracts  entered
into in the ordinary course of business, for the two years immediately preceding
publication of this document.

D.     EXCHANGE CONTROLS

There are no government  laws,  decrees or  regulations in Canada which restrict
the export or import of capital or,  subject to the  following  sentence,  which
affect the remittance of dividends or other  payments to nonresident  holders of
Stratabase's  common shares.  However,  any such remittance to a resident of the
United States is generally  subject to non-resident tax pursuant to Article X of
the 1980  Canada-United  States Income Tax Convention.  See "Item 10.E Taxation"
for additional discussion on tax matters.

There are currently no  limitations of general  application  imposed by Canadian
federal or provincial laws on the rights of  non-residents  of Canada to hold or
vote Stratabase's  common shares.  There are also no such limitations imposed by
the articles of incorporation with respect to Stratabase's common shares.  There
are, however, certain requirements on the acquisition of control of Stratabase's
securities  by  non-residents  of Canada.  The  INVESTMENT  CANADA ACT  requires
notification  to and, in certain  cases,  advance  review and  approval  by, the
Government of Canada,  of the acquisition by a "non-Canadian"  of "control" of a
"Canadian  business",  all as defined in the  INVESTMENT  CANADA ACT.  Generally
speaking,  in order for an  acquisition  to be  subject  to  advance  review and
approval,  the asset value of the Canadian  business being acquired must meet or
exceed certain monetary thresholds.

E. TAXATION

The  following  discussion  is not intended to be, nor should it be construed to
be, legal or tax advice to any holder or prospective  holder of common shares of
Stratabase  and no opinion or  representation  with  respect to the  Canadian or
United States federal, state, provincial, local or other income tax consequences
to any such  holder or  prospective  holder is made.  Accordingly,  holders  and
prospective  holders of common shares of Stratabase should consult their own tax
advisors  about  the  federal,   state,   provincial,   local  and  foreign  tax
consequences of purchasing, owning and disposing of common shares of Stratabase.

CANADIAN FEDERAL INCOME TAX CONSEQUENCES

This  summary  is based  upon  the  current  provisions  of the  Income  Tax Act
(Canada),   the  regulations   there  under,  the  current  publicly   announced
administrative  and assessing  policies of the Canada  Revenue  Agency,  and all
specific  proposals  (the  "Tax  Proposals")  to amend  the  Income  Tax Act and
regulations  announced  by the  Minister of Finance  (Canada)  prior to the date


                                       24
<PAGE>

hereof.  This  discussion  is not  exhaustive of all possible  Canadian  federal
income tax  consequences  and, except for the Tax Proposals,  does not take into
account or anticipate any changes in law,  whether by legislative,  governmental
or judicial  action,  nor does it take into  account  provincial  or foreign tax
considerations which may differ significantly from those discussed herein.

The summary applies to beneficial  owners of common shares who, for the purposes
of the Income Tax Act, are  residents of the United  States and are not resident
in Canada, and who hold common shares of Stratabase as capital property.

Dividends

The Income Tax Act provides that dividends and other distributions  deemed to be
dividends paid or deemed to be paid by a Canadian resident  corporation (such as
Stratabase)  to a  non-resident  of Canada  shall be subject  to a  non-resident
withholding  tax equal to 25% of the  gross  amount  of the  dividend  or deemed
dividend.

Provisions  in the Income  Tax Act  relating  to  dividend  and deemed  dividend
payments  to and  capital  gains  realized  by  non-residents  of Canada who are
residents  of the United  States are  subject to the 1980  Canada-United  States
Income Tax Convention.

Article X of the 1980 Canada-United  States Income Tax Convention  provides that
the  rate of  Canadian  non-resident  withholding  tax on  dividends  or  deemed
dividends paid to a United States  corporation that  beneficially  owns at least
10% of the voting shares of the corporation paying the dividend shall not exceed
5% of the  dividend  or  deemed  dividend,  and in any other  case,  the rate of
non-resident  withholding  tax shall not  exceed 15% of the  dividend  or deemed
dividend.

Disposition of Shares

The  Income Tax Act  provides  that a  non-resident  person is subject to tax in
Canada on the  disposition  of "taxable  Canadian  property."  Common  shares of
Stratabase  are considered to be "taxable  Canadian  property" as defined in the
Income Tax Act.  Therefore,  under the Income Tax Act, a  non-resident  would be
subject  to tax in Canada on the  disposition  of common  shares of  Stratabase.
Article XIII of the 1980  Canada-United  States Income Tax  Convention  provides
that gains realized by a United States  resident on the disposition of shares of
a Canadian  corporation may not generally be taxed in Canada unless the value of
the Canadian  corporation is derived  principally from real property situated in
Canada.

Generally,  certain filing and reporting  obligations exist where a non-resident
of Canada disposes of taxable Canadian property. In particular, the non-resident
must  make an  application  to the  Canada  Revenue  Agency  in  advance  of the
disposition  for the  purpose of  obtaining a  certificate  issued by the Canada
Revenue  Agency  pursuant  to  section  116  of  the  Income  Tax  Act.  If  the
non-resident  fails to secure such certificate from the Canada Revenue Agency in
advance of the  disposition,  the purchaser is required to withhold and remit to
the  Canada  Revenue  Agency  25%  of  the  amount  otherwise   payable  to  the
non-resident.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following  discussion is based on the U.S. Internal Revenue Code of 1986, as
amended (the  "Code"),  existing and proposed  Treasury  Regulations,  published
Internal  Revenue Service  rulings,  published  administrative  positions of the
Internal Revenue Service and court decisions that are currently applicable,  any
or all of  which  could be  materially  and  adversely  changed,  possibly  on a
retroactive  basis, at any time. In addition,  this discussion does not consider
the potential  effects,  both adverse and beneficial,  of any recently  proposed
legislation that, if enacted, could be applied, possibly on a retroactive basis,
at any time. In addition,  this  discussion  does not cover any state,  local or
foreign tax consequences. The following is a discussion of United States federal
income tax  consequences,  under  current law,  generally  applicable  to a U.S.
Holder (as defined  below) of common shares of Stratabase  who holds such shares
as capital assets.  This  discussion  does not address all potentially  relevant
federal  income tax  matters and it does not  address  consequences  peculiar to
persons  subject to special  provisions of federal income tax law, such as those
described below that are excluded from the definition of a U.S. Holder.

U.S. Holder

As used herein, a "U.S. Holder" includes a holder of common shares of Stratabase
who is a citizen or  resident of the United  States,  a  corporation  created or


                                       25
<PAGE>

organized  in or  under  the  laws  of the  United  States  or of any  political
subdivision  thereof, any United States entity which is taxable as a corporation
for United States tax purposes and any other person or entity whose ownership of
common shares of Stratabase is effectively connected with the conduct of a trade
or business in the United States. A U.S. Holder does not include persons subject
to  special   provisions   of  federal   income  tax  law,  such  as  tax-exempt
organizations,  qualified retirement plans,  financial  institutions,  insurance
companies,  real  estate  investment  trusts,  regulated  investment  companies,
broker-dealers,  nonresident  alien  individuals or foreign  corporations  whose
ownership of common shares is not  effectively  connected  with the conduct of a
trade or business  in the United  States and  shareholders  who  acquired  their
shares   through  the  exercise  of  employee  stock  options  or  otherwise  as
compensation.

Dividends

Except as otherwise  discussed below under "Passive Foreign  Investment  Company
Considerations,"  U.S.  Holders  receiving  dividend  distributions   (including
constructive dividends) with respect to common shares of Stratabase are required
to include in gross  income for United  States  federal  income tax purposes the
gross amount of such  distributions to the extent that Stratabase has current or
accumulated earnings and profits,  without reduction for any Canadian income tax
withheld  from such  distributions.  Such Canadian tax withheld may be credited,
subject to certain limitations,  against the U.S. Holder's United States federal
tax liability or, alternatively,  may be deducted in computing the U.S. Holder's
federal  taxable  income (but in the case of  individuals,  only if they itemize
deductions).  See "Foreign Tax Credit." To the extent that distributions  exceed
current or accumulated earnings and profits of Stratabase,  they will be treated
first as a return  of  capital  up to the U.S.  Holder's  adjusted  basis in the
common shares (which adjusted basis must therefore be reduced) and thereafter as
a gain from the sale or exchange of the common  shares.  Preferential  tax rates
for  long-term  capital  gains  are  applicable  to a  U.S.  Holder  that  is an
individual,  estate or trust.  Moreover,  "qualified dividends" received by U.S.
Holders who are individuals,  during tax years beginning before January 1, 2009,
from any "qualified foreign corporation" are subject to a preferential tax rate,
provided such individual U.S. Holder meets a certain holding period requirement.
A "qualified  foreign  corporation"  is generally  any  corporation  formed in a
foreign jurisdiction which has a comprehensive income tax treaty with the United
States or, if not,  the  dividend is paid with  respect to stock that is readily
tradable on an established  United States market.  However, a "qualified foreign
corporation"  excludes a foreign  corporation that is a foreign personal holding
company, a foreign investment  company,  or a passive foreign investment company
for the year the dividend is paid or the previous year. Stratabase believes that
it  qualifies  as a  "qualified  foreign  corporation".  There are  currently no
preferential tax rates for a U.S. Holder that is a corporation.

In general,  dividends paid on common shares of Stratabase  will not be eligible
for the same dividends  received  deduction  provided to corporations  receiving
dividends  from certain  United States  corporations.  A U.S.  Holder which is a
corporation may, under certain circumstances,  be entitled to a 70% deduction of
the United States source portion of dividends  received from Stratabase  (unless
Stratabase is a "foreign  personal holding company" as defined in Section 552 of
the Code, or a "passive  foreign  investment  company" as defined below) if such
U.S. Holder owns shares  representing at least 10% of the voting power and value
of Stratabase.  The availability of this deduction is subject to several complex
limitations that are beyond the scope of this discussion.

Foreign Tax Credit

A U.S.  Holder who pays (or has withheld from  distributions)  Canadian or other
foreign  income tax with respect to the ownership of common shares of Stratabase
may be entitled, at the election of the U.S. Holder, to either a tax credit or a
deduction  for such  foreign tax paid or  withheld.  This  election is made on a
year-by-year basis and generally applies to all foreign income taxes paid by (or
withheld  from) the U.S.  Holder  during that year.  There are  significant  and
complex  limitations  that  apply to the  credit,  among  which  is the  general
limitation  that the credit  cannot exceed the  proportionate  share of the U.S.
Holder's  United  States  income tax liability  that the U.S.  Holder's  foreign
source income bears to his or its worldwide taxable income. In the determination
of the application of this limitation, the various items of income and deduction
must be  classified  into foreign and  domestic  sources.  Complex  rules govern
income such as "passive  income",  "high  withholding tax interest",  "financial
services income", "shipping income" and certain other classifications of income.
In addition,  U.S. Holders that are corporations and that own 10% or more of the
voting stock of Stratabase  may be entitled to an "indirect"  foreign tax credit
under  Section  902 of the Code with  respect  to the  payment of  dividends  by
Stratabase  under  certain  circumstances  and  subject  to  complex  rules  and
limitations.  The  availability of the foreign tax credit and the application of
the  limitations  on the  foreign tax credit are fact  specific  and holders and
prospective  holders of common  shares  should  consult  their own tax  advisors
regarding their individual circumstances.



                                       26
<PAGE>

Disposition of Shares

Except as otherwise  discussed below under "Passive Foreign  Investment  Company
Considerations,"  a gain  or  loss  realized  on a sale of  common  shares  will
generally  be a capital gain or loss,  and will be long-term if the  shareholder
has a  holding  period  of  more  than  one  year.  The  amount  of gain or loss
recognized by a selling U.S.  Holder will be measured by the difference  between
(i) the amount  realized on the sale and (ii) his or its tax basis in the common
shares.  Gains and losses are netted and combined  according to special rules in
arriving  at the  overall  capital  gain  or loss  for a  particular  tax  year.
Deductions  for net  capital  losses  are  subject to  significant  limitations.
Individual  U.S.  Holders may carryover  unused capital losses to offset capital
gains  realized in  subsequent  years.  For U.S.  Holders that are  corporations
(other  than  corporations  subject to  Subchapter  S of the  Code),  any unused
capital  losses may only be carried  back three and forward  five years from the
loss year to offset capital gains until such net capital losses are exhausted.

Foreign Personal Holding Company Considerations

Special rules apply to a U.S. Holder of a "foreign  personal holding company" or
"FPHC" as defined in Section 552 of the Code.  Stratabase will not be classified
as a FPHC  for  U.S.  federal  income  tax  purposes  unless  (i)  five or fewer
individuals  who are U.S.  citizens or  residents  own or are deemed to own more
than 50% of the total voting  power of all classes of stock  entitled to vote or
the total value of  Stratabase  stock;  and (ii) at least 60% (or 50% in certain
cases) of  Stratabase's  gross  income  consists  of "foreign  personal  holding
company  income,"  which  generally  includes  passive income such as dividends,
interest, gains from the sale or exchange of stock or securities, certain rents,
and royalties.  Stratabase believes that it is not a FPHC; however, no assurance
can be provided that Stratabase will not be classified as a FPHC in the future.

Passive Foreign Investment Company Considerations

If Stratabase is a "passive foreign investment  company" or "PFIC" as defined in
Section 1297 of the Code,  U.S.  Holders will be subject to U.S.  federal income
taxation under one of two  alternative  tax regimes at the election of each such
U.S.  Holder.  Section 1297 of the Code defines a PFIC as a corporation  that is
not formed in the United  States and either (i) 75% or more of its gross  income
for the taxable year is "passive  income",  which generally  includes  interest,
dividends  and certain rents and  royalties or (ii) the average  percentage,  by
fair market value (or, if Stratabase elects,  adjusted tax basis), of its assets
that produce or are held for the production of "passive  income" is 50% or more.
The rules  applicable  to a FPHC take  priority  over the rules  applicable to a
PFIC,  so that amounts  includable in gross income under the FPHC rules will not
be taxable again under the PFIC rules.  Stratabase does not believe that it will
be a PFIC for the current fiscal year or for future years. Whether Stratabase is
a PFIC in any year and the tax consequences  relating to PFIC status will depend
on the  composition of  Stratabase's  income and assets,  including  cash.  U.S.
Holders should be aware,  however, that if Stratabase becomes a PFIC, it may not
be able or willing to satisfy record-keeping requirements that would enable U.S.
Holders to make an election to treat  Stratabase as a "qualified  electing fund"
for purposes of one of the two  alternative  tax regimes  applicable  to a PFIC.
U.S.  Holders or potential  shareholders  should  consult  their own tax advisor
concerning the impact of these rules on their investment in Stratabase.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

Stratabase  is subject to the  informational  requirements  of the United States
Securities  Exchange Act of 1934, as amended,  such as to file reports and other
information  with the SEC.  Shareholders  may read and copy any of  Stratabase's
reports and other  information  at, and obtain copies upon payment of prescribed
fees from, the Public  Reference Room maintained by the SEC at 450 Fifth Street,
N.W., Room 1024,  Washington,  D.C. 20549. The public may obtain  information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.



                                       27
<PAGE>

Stratabase  is not  required  to file  reports  and other  information  with any
securities commissions in Canada.

As a foreign  private  issuer,  Stratabase  is exempt  from the rules  under the
United  States  Securities  Exchange Act of 1934,  as amended,  prescribing  the
furnishing and content of proxy statements to shareholders.

Stratabase will provide without charge to each person,  including any beneficial
owner,  on the  written  or oral  request of such  person,  a copy of any or all
documents  referred to above which have been or may be incorporated by reference
in this annual report (not including  exhibits to such incorporated  information
that are not  specifically  incorporated  by reference  into such  information).
Requests  for such  copies  should be directed to  Stratabase  at the  following
address: Stratabase, Suite 101 - 34595 3rd Avenue, Abbotsford, British Columbia,
Canada, V2S 8B7 Attention: President, telephone number: 604-504-5811.

I. SUBSIDIARY INFORMATION

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk  represents  the  potential  risk of loss in the future  earnings of
Stratabase due to adverse changes in financial markets. Stratabase is exposed to
market risk from changes in its common share price,  foreign  exchange rates and
interest  rates.  Inflation  has not had a  significant  impact on  Stratabase's
results of operations.

Foreign Currency Risk

While our  financial  statements  are reported in US dollars and are intended to
comply with U.S. GAAP requirements,  a portion of our business operations may be
conducted in Canadian dollars.  Since June 1, 1970, the government of Canada has
permitted a floating exchange rate to determine the value of the Canadian dollar
as compared to the United States dollar. On April 20, 2005, the exchange rate in
effect for Canadian  dollars  exchanged for United States dollars,  expressed in
terms of Canadian  dollars was $1.2393.  This exchange rate is based on the noon
buying  rates in New York City for  cable  transfers  in  Canadian  dollars,  as
certified for customs purposes by the Federal Reserve Bank of New York.

Interest Rate Risk

In accordance  with Company policy,  cash  equivalent and short-term  investment
balances are primarily comprised of high-grade commercial paper and money market
instruments  with  original  maturity  dates of less than one month.  Due to the
short-term maturity of its investments, Stratabase is not subject to significant
interest rate risk.

Any future  financial  impact  would be based on actual  developments  in global
financial  markets.  Management does not foresee any significant  changes in the
strategies used to manage  interest and foreign  exchange rate risks in the near
future.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.



                                       28
<PAGE>

                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable

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

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

As  required  by Rule  13a-15  under the  Securities  Exchange  Act of 1934 (the
"Exchange Act"), we carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures as of December 31, 2004.
This evaluation was carried out under the supervision and with the participation
of our Chief Executive Officer and Chief Financial  Officer,  Mr. Trevor Newton.
Based upon that  evaluation,  our Chief  Executive  Officer and Chief  Financial
Officer  concluded  that our  disclosure  controls and procedures are effective.
There have been no significant  changes in our internal  controls over financial
reporting or in other factors that could significantly  affect internal controls
over financial reporting during the fourth fiscal quarter.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that  information  required  to be  disclosed  on our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required  to be  disclosed  in our  reports  filed  under  the  Exchange  Act is
accumulated  and  communicated  to  management,  including  our Chief  Executive
Officer  and  Chief  Financial  Officer,  to allow  timely  decisions  regarding
required disclosure.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Stratabase's Board of Directors has determined that Scott Praill,  member of the
audit  committee  of the Board of  Directors,  is an audit  committee  financial
expert as  defined by the SEC,  and is  independent  as  defined in the  listing
standards of the New York Stock Exchange.

ITEM 16B. CODE OF ETHICS

The Company has adopted a code of ethics that applies to its principal executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller,  or persons performing similar functions. For purposes of this Item,
the term code of ethics means written standards that are reasonably  designed to
deter wrongdoing and to promote:

- honest and  ethical  conduct,  including  the  ethical  handling  of actual or
apparent conflicts of interest between personal and professional  relationships;
- full, fair,  accurate,  timely, and  understandable  disclosure in reports and
documents that the issuer files with, or submits to, the Commission and in other
public   communications  made  by  the  issuer;  -  compliance  with  applicable
governmental  laws,  rules and regulations;  - the prompt internal  reporting of
violations of the code to the board of directors or another  appropriate  person
or persons; and - accountability for adherence to the code.

The Company  hereby  undertakes to provide to any person  without  charge,  upon
request,  a copy of such code of ethics.  Such request may be made in writing to
the board of directors at the address of the issuer.

ITEM 16C. PRINCIPAL ACCOUNTANT AND FEES

BDO Dunwoody LLP has served as the Company's  Principal  Accountant  since April
30, 2003. Their pre-approved fees billed to the Company are set forth below:



                                       29
<PAGE>

                                  FISCAL YEAR ENDING   FISCAL YEAR ENDING
                                   DECEMBER 31, 2004    DECEMBER 31, 2003
                                  -------------------- --------------------
Audit Fees                        $            48,838  $            55,910
Audit Related Fees                                  0                    0
Tax Fees                          $                 0                    0
All Other Fees                    $                 0  $                 0


As of December 31, 2004,  the  Company's  Audit  Committee did not have a formal
documented  pre-approval policy for the fees of the principal accountant.  It is
in the process of adopting such a policy.

Audit committee pre-approval process:

From time to time, management of the Company recommends to and requests approval
from the audit committee for audit and non-audit  services to be provided by the
Company's  auditors.  The audit committee considers such requests on a quarterly
basis, and if acceptable, pre-approves such audit and non-audit services. During
such deliberations,  the audit committee assesses,  among other factors, whether
the services requested would be considered "prohibited services" as contemplated
by the US Securities and Exchange Commission, and whether the services requested
and the fees  related to such  services  could  impair the  independence  of the
auditors.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Neither  the  Company  nor any  "affiliated  purchasers"  as  defined in Section
240.10b-18(a)(3) of the Exchange Act purchased any shares of the Company.

                                    PART III

ITEM 17. FINANCIAL STATEMENTS

Not  applicable,  as  Stratabase  has  elected to provide  financial  statements
pursuant to "Item 18. Financial Statements."

ITEM 18. FINANCIAL STATEMENTS

Stratabase's  financial  statements  commence on page F-1 of this annual report.
These  financial  statements  are  expressed in United  States  dollars and were
prepared in accordance with U.S. GAAP.



                                       30
<PAGE>

ITEM 19. EXHIBITS

(a) The following documents are filed as part of this report:

(1)      Financial Statements

         Reports of  Independent  Registered  Public  Accounting  Firms  Balance
         Sheets as of December 31, 2004 and 2003  Statements of  Operations  and
         Comprehensive  Loss for the years ended  December 31, 2004,  2003,  and
         2002. Statements of Changes in Stockholders' Equity for the years ended
         December  31,  2004,  2003 and 2002.  Statements  of Cash Flows for the
         years ended December 31, 2004,  2003, and 2002.  Notes to the Financial
         Statements

(2)      Financial Statement Schedules

(3)      Exhibits


         Exhibit No. Description

1.1      Articles of Continuance

1.2      Bylaws

2.1      Specimen Certificate for Shares of the Registrant's Common Stock

2.2      Description of Capital Stock  (contained in the Articles of Continuance
         filed as Exhibit 1.1)

2.3      Form of Class A warrant issued in April 20031

2.4      Form of Class A warrant issued in December 20032

2.5      Form of Class B warrant issued in December 20033

4.1      Lease with SGS Enterprises4

4.2      Internet Business Service Agreement with BCTEL5

4.3      Distributor Agreement with COMTEX6

4.4      Internetworking Services Agreement with Telus Advanced Communications7

4.5      Lease Agreement with George P. and Sandra J. Andreasen8

12.      Rule 13a-14(a)/15d-14(a) Certifications

13.      Section 1350 Certifications

15.3     Stock Option Plan9

15.4     2002 Stock Option Plan10

1        Previously  filed with the  Company's  Annual Report on Form 10-KSB for
         the year ended December 31, 2003
2        Previously  filed with the  Company's  Annual Report on Form 10-KSB for
         the year ended December 31, 2003
3        Previously  filed with the  Company's  Annual Report on Form 10-KSB for
         the year ended December 31, 2003
4        Incorporated herein by reference to the Company's Form SB-2, filed with
         the Securities and Exchange Commission on August 8, 1999
5        Previously  filed  with the  Company's  Form  10-KSB for the year ended
         December 31, 2000
6        Previously  filed  with the  Company's  Form  10-KSB for the year ended
         December 31, 2000
7        Incorporated  herein by reference to the Company's Form SB-2,  filed on
         August 8, 1999
8        Previously  filed  with  Stratabase's  Form  10-KSB  for the year ended
         December 31, 2000
9        Previously filed with the Company's Form S-8 on January 29, 2000
10       Previously filed with the Company's Form S-8 filed on February 12, 2002


                                       31
<PAGE>




                                  STRATABASE INC.
                                  (A DEVELOPMENT STAGE COMPANY)
                                  FINANCIAL STATEMENTS
                                  FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                  (EXPRESSED IN US DOLLARS)






CONTENTS
--------------------------------------------------------------------------------

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - BDO DUNWOODY LLP

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - MOSS ADAMS LLP

FINANCIAL STATEMENTS

    Balance Sheets

    Statements of Operations and Comprehensive Loss

    Statements of Changes in Stockholders' Equity

    Statements of Cash Flows

    Summary of Significant Accounting Policies

    Notes to the Financial Statements



                                       32
<PAGE>



     BDO DUNWOODY LLP                            600 Cathedral Place
     Chartered Accountants                       925 West Georgia Street
                                                 Vancouver, BC, Canada V6C 3L2
                                                 Telephone:  (604) 688-5421
                                                 Telefax:  (604) 688-5132
                                                 E-mail:  vancouver@bdo.ca
                                                 www.bdo.ca




<PAGE>



================================================================================

                         REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)

We  have  audited  the  accompanying   balance  sheets  of  Stratabase  Inc.  (a
development  stage  company)  as of  December  31, 2004 and 2003 and the related
statements  of  operations  and  comprehensive  loss,  changes in  stockholders'
equity, and cash flows for the years then ended. 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 the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  an audit to obtain  reasonable  assurance  whether  the  financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audits included consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining, on a test basis, evidence supporting the amounts and disclosures,  in
the  financial   statements,   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 Stratabase Inc. as of December
31, 2004 and 2003,  and the results of its operations and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 2 to the  financial
statements,  the  Company  incurred  a loss  in  2004  of  $694,859  and  has an
accumulated  deficit of $2,530,698 at December 31, 2004.  These conditions raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans  regarding  these matters are also  described in Note 2. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


/S/ BDO DUNWOODY LLP


Chartered Accountants

Vancouver, Canada
February 1, 2005



                                       33
<PAGE>



MOSS-ADAMS LLP
--------------------------------------------------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholders
Stratabase, Inc.


We have audited  Stratabase,  Inc.'s  statements of operations and comprehensive
loss,  changes  in  stockholders'  equity,  and cash  flows  for the year  ended
December  31,  2002.  These  financial  statements  are  the  responsibility  of
Stratabase  Inc.'s  Management.  Our  responsibility is to express an opinion on
these financial statements based on our audit.

We  conducted  our audit in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit 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  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the results of Stratabase,  Inc.'s operations and their
cash flows for the year ended  December  31,  2002,  in  conformity  with United
States generally accepted accounting principles.



/S/ MOSS ADAMS LLP

PORTLAND, OREGON
FEBRUARY 26, 2003





                                       34
<PAGE>


<TABLE>
<CAPTION>

===================================================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(EXPRESSED IN US DOLLARS)


DECEMBER 31                                                                         2004                  2003
-------------------------------------------------------------------------------------------------------------------

<S>                                                                      <C>                  <C>
ASSETS

CURRENT
        Cash                                                             $          52,187    $          509,180
        Receivables - net of allowance for doubtful accounts
             of $Nil (2003 - $8,599)                                                 3,612                 4,551
        Prepaid expenses                                                             1,717                 1,708
        Inventory                                                                        -                 8,415
                                                                         --- --------------- --- ------------------
               Total current assets                                                 57,516               523,854

OFFICE EQUIPMENT (Note 3)                                                           14,520                37,001
DATABASES AND DOMAIN NAMES, NET                                                          -               243,701
                                                                         --- --------------- --- ------------------
TOTAL ASSETS                                                             $          72,036    $          804,556
===================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

CURRENT
        Accounts payable                                                 $           5,795    $           31,943
        Accrued liabilities                                                         28,934                32,990
                                                                         --- --------------- --- ------------------
                 Total current liabilities                                          34,729                64,933
                                                                         --- --------------- --- ------------------
STOCKHOLDERS'  EQUITY
        Preferred stock, $0.001 par value, 1,000,000 shares,
           authorized and unissued                                                       -                     -
        Common stock, $0.001 par value, 25,000,000 shares
           authorized, 9,914,972 shares issued and
           outstanding at December 31, 2004 and 2003
           respectively                                                              9,915                 9,915
        Additional paid-in capital                                               2,586,506             2,586,506
        Accumulated deficit                                                     (2,530,698)           (1,835,839)
        Accumulated other comprehensive loss                                       (28,416)              (20,959)
                                                                         --- --------------- --- ------------------
                 Total stockholders' equity                                         37,307               739,623
                                                                         --- --------------- --- ------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $          72,036    $          804,556
===================================================================================================================
</TABLE>

The  accompanying  summary of significant  accounting  policies and notes are an
integral part of these financial statements.



                                       35
<PAGE>

<TABLE>
<CAPTION>

===================================================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(EXPRESSED IN US DOLLARS)

FOR THE YEARS ENDED DECEMBER 31                                        2004                2003             2002
-------------------------------------------------------------------------------------------------------------------

<S>                                                           <C>              <C>                 <C>
REVENUE                                                       $            -   $           5,000   $       430,240
                                                              -- ------------- --- --------------- -- --------------
COST OF REVENUE
       Commissions                                                         -                 986           111,641
       Wages and subcontracting costs                                      -                   -            94,345
       Direct marketing costs                                              -                   -            79,238
       Hardware cost of sales                                              -                   -            26,235
       Internet connectivity                                               -                   -            12,553
       Write-down of inventory                                         8,415               1,683                 -
                                                              -- ------------- --- --------------- -- --------------
                                                                       8,415               2,669           324,012
                                                              -- ------------- --- --------------- -- --------------
GROSS PROFIT (LOSS)                                                   (8,415)              2,331           106,228

RESEARCH AND DEVELOPMENT                                            (139,742)             (154,544)       (171,500)
GENERAL AND ADMINISTRATIVE EXPENSES                                                               )
    including stock option compensation of $Nil
    (2003 - $Nil, 2002 - $255,750)                                  (549,191)             (705,888        (794,939)
                                                              -- ------------- --- --------------- -- --------------

LOSS FROM OPERATIONS                                                (697,348)           (858,101)         (860,211)

OTHER INCOME (EXPENSES)
       Interest                                                        2,489               2,031            31,195
       Provision for note receivable impairment (Note 4)                   -            (171,206)                -
                                                              -- ------------- --- --------------- -- --------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES                          (694,859)         (1,027,276)         (829,016)
       Provision for income taxes                                          -                   -           (85,629)
                                                              -- ------------- --- --------------- -- --------------
NET LOSS                                                            (694,859)         (1,027,276)         (914,645)

OTHER COMPREHENSIVE INCOME (LOSS)
       Foreign currency translation adjustments                       (7,457)             (9,700)           (4,178)
                                                              -- ------------- --- --------------- -- --------------

COMPREHENSIVE LOSS                                            $     (702,316)  $      (1,036,976)  $      (918,823)
===================================================================================================================
BASIC AND DILUTED LOSS PER SHARE OF COMMON
   STOCK                                                      $        (0.07)  $           (0.13)  $          (0.12)
===================================================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING -
   BASIC AND DILUTED                                               9,914,972           8,036,037         7,928,372
===================================================================================================================
</TABLE>


The  accompanying  summary of significant  accounting  policies and notes are an
integral part of these financial statements.




                                       36
<PAGE>

<TABLE>
<CAPTION>
====================================================================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(EXPRESSED IN US DOLLARS)


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

                                                                             Retained                    Accumulated
                                                             Additional      Earnings  Related Party           Other          Total
                                          Common Stock          Paid-in  (Accumulated          Notes   Comprehensive  Stockholders'
                                       Shares      Amount       Capital       Deficit)    Receivable            Loss         Equity
----------------------------------- ---------- ----------- ------------- -------------- -------------- -------------- --------------
<S>                                 <C>        <C>         <C>           <C>             <C>           <C>            <C>
Balance, January 1, 2002            7,718,372  $    7,718  $  1,515,616  $     106,082   $  (477,000)  $     (7,081)  $   1,145,335

Exercise of common stock options      315,000         315       241,685              -              -              -        242,000
Related party notes received in
exchange                                    -           -             -              -       (14,500)              -       (14,500)
    For common stock options
exercised
Payments on related party notes
    receivable                              -           -             -              -        116,500              -        116,500
Compensation expense related to
common                                      -           -       255,750              -              -              -        255,750
     stock options granted
US income tax benefits from common
stock                                       -           -        90,321              -              -              -         90,321
     options exercised
Net loss and comprehensive loss             -           -             -      (914,645)              -        (4,178)      (918,823)
                                    ---------- -- -------- -- ---------- -- ----------- --- ---------- -- ----------- -- -----------
Balance, December 31, 2002          8,033,372       8,033     2,103,372      (808,563)      (375,000)       (11,259)        916,583
Repayment of related party notes
      receivable (Note 5)           (280,000)       (280)     (374,720)              -        375,000              -              -
Private placement common stock
issuances                             200,000         200       349,800              -              -              -        350,000
       for cash (Note 6)
Private placement common stock
issuances                           1,961,600       1,962       508,054              -              -              -        510,016
       for cash (Note 6)
Net loss and comprehensive loss             -           -             -     (1,027,276)             -        (9,700)     (1,036,976)
                                    ---------- -- -------- -- ---------- -- ----------- --- ---------- -- ----------- -- -----------
Balance, December 31, 2003          9,914,972       9,915     2,586,506     (1,835,839)             -       (20,959)        739,623
Net loss and comprehensive loss             -           -             -      (694,859)              -        (7,457)      (702,316)
                                    ---------- -- -------- -- ---------- -- ----------- --- ---------- -- ----------- -- -----------
BALANCE, DECEMBER 31, 2004          9,914,972  $    9,915  $  2,586,506  $  (2,530,698)  $          -  $    (28,416)  $      37,307
====================================================================================================================================
</TABLE>


The  accompanying  summary of significant  accounting  policies and notes are an
integral part of these financial statements.




                                       37
<PAGE>

<TABLE>
<CAPTION>
==================================================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(EXPRESSED IN US DOLLARS)

FOR THE YEARS ENDED DECEMBER 31                                       2004              2003               2002
------------------------------------------------------------------------------------------------------------------

<S>                                                          <C>              <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
       Net loss                                              $     (694,859)  $     (1,027,276)  $       (914,645)
       Adjustments to reconcile net loss to net cash used
       in operating activities:
              Depreciation and amortization                          269,018            303,923            281,326
              Deferred income tax expense                                  -                  -             45,548
              Stock option compensation expense                            -                  -            255,750
              US income tax benefit from common
                 stock options exercised                                   -                  -             90,321
              Provision for note receivable
                 impairment                                                -            171,206                  -
              Write-down of inventory                                  8,415              1,683                  -

       Change in assets and liabilities:
              Receivables                                                939             15,388           (16,122)
              Taxes recoverable                                            -             62,844           (62,844)
              Prepaid expenses                                           (9)                895            (2,603)
              Inventory                                                    -              (128)            (7,087)
              Accounts payable                                      (26,148)           (27,578)          (782,423)
              Accrued liabilities                                    (4,056)             26,056            (1,982)
              Income taxes payable                                         -                  -           (50,265)
                                                             --- ------------ --- -------------- -- ---------------
            Net cash used in operating activities                  (446,700)          (472,987)        (1,165,026)
                                                             --- ------------ --- -------------- -- ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
       Acquisition of databases and domain names                           -            (1,014)          (154,761)
       Acquisition of computer and office equipment                  (2,836)            (1,228)            (1,399)
       Advance on note receivable                                          -                  -          (150,000)
                                                             --- ------------ --- -------------- -- ---------------
            Net cash used in investing activities                    (2,836)            (2,242)          (306,160)
                                                             --- ------------ --- -------------- -- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
       Payments received from related parties                              -                  -            102,000
       Proceeds from the issuance of common stock                          -            860,016            242,000
                                                             --- ------------ --- -------------- -- ---------------
            Net cash provided by financing activities                      -            860,016            344,000
                                                             --- ------------ --- -------------- -- ---------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                              (7,457)            (9,700)            (4,178)
                                                             --- ------------ --- -------------- -- ---------------
NET INCREASE (DECREASE) IN CASH                                    (456,993)            375,087        (1,131,364)
CASH, beginning of year                                              509,180            134,093          1,265,457
                                                             --- ------------ --- -------------- -- ---------------
CASH, end of year                                            $        52,187  $         509,180  $         134,093
==================================================================================================================

SUPPLEMENTAL  DISCLOSURE  OF CASH FLOW  INFORMATION  Cash paid during the period
       for:
              Interest                                       $             -  $               -  $               -
              Income taxes                                                 -                  -             63,261

NON-CASH ACTIVITIES
       Inventory transferred to office equipment             $             -  $          18,480  $               -
       Related party notes (settled) received in
          exchange for common stock                          $             -  $       (375,000)  $          14,500
</TABLE>

The  accompanying  summary of significant  accounting  policies and notes are an
integral part of these financial statements.



                                       38
<PAGE>


================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003

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


MANAGEMENT'S ESTIMATES AND ASSUMPTIONS

         The  preparation  of financial  statements  in  conformity  with United
         States generally accepted accounting  principles requires management to
         make  estimates  and  assumptions  that affect the reported  amounts of
         assets and  liabilities  as of the balance sheet date, and revenues and
         expenses  for the  period  then  ended.  Actual  results  could  differ
         significantly from those estimates.

REVENUE RECOGNITION

         Prior to 2003,  the Company  generated  revenues by selling  customized
         Customer  Relationship  Management ("CRM") services which are comprised
         primarily  of the  provision  of  databases  of sales leads and mailing
         lists,  and includes  the  provision  of  technical  services  aimed to
         customize  and improve the quality of the databases  sold.  Included in
         the sale of databases was non-essential  open-source  software to allow
         users to interface with and manage these  databases and  relationships.
         Revenue on the sales of databases and technical services was recognized
         when  persuasive  evidence of an  arrangement  existed and delivery had
         occurred, provided the fee was fixed or determinable and collectibility
         was  probable.  The majority of the databases  sold  required  customer
         payments in advance of delivery. There are no post-delivery performance
         obligations  in respect to past database  sales and no rights of refund
         exist.  No database sales occurred  during 2004 or 2003 and the Company
         no longer sells databases.

         Technical consulting service revenue, invoiced separately from database
         sales, was recognized upon the completion of the services provided.

         Hardware  revenue was  recognized  at the time the goods were  shipped,
         when both title and risk of loss transferred to the customer,  provided
         that no significant  obligations  remained.  The Company's shipping and
         handling costs were included in the cost of revenue.

         During 2002, the Company began  development  of  proprietary  software,
         which it believes will be the primary  source of revenue in the future.
         During 2004,  2003, and 2002 the Company did not recognize any revenues
         from the proprietary software developed.




                                       39
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003

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

CASH AND CASH EQUIVALENTS

         The Company  considers all highly liquid  investments  purchased with a
         maturity of 90 days or less to be cash equivalents.

INVENTORY

         Inventory was comprised  primarily of system hardware components and is
         stated at the lower of cost or  market.  The  Company  determined  cost
         using the first-in,  first-out (FIFO) method.  During 2004, the Company
         wrote off its remaining inventory.

OFFICE EQUIPMENT

         Office  equipment  is  recorded  at cost and is  depreciated  using the
         straight-line  method over its useful  life,  which  ranges from two to
         five years.  Depreciation expense charged to general and administrative
         expenses  was  $25,317,  $27,696 and  $16,000 for 2004,  2003 and 2002,
         respectively.

DATABASES AND DOMAIN NAMES

         Databases  and domain  names were  amortized  over three  years and two
         years, respectively. Cost and accumulated amortization of the databases
         at December 31, 2003 was $851,453 and $610,740,  respectively. Cost and
         accumulated  amortization  of the domain names at December 31, 2003 was
         $15,615 and $12,627, respectively.

         Amortization  expense charged to operations was $243,701,  $276,227 and
         $265,326 for 2004, 2003 and 2002,  respectively.  At December 31, 2004,
         all  databases  and  domain  names have been  fully  amortized.  As the
         Company  does not intend to use the  databases  and domain names in its
         proprietary  software  product,  the cost and accumulated  amortization
         were written down to Nil at December 31, 2004.

LONG-LIVED ASSET IMPAIRMENT

         Long-lived  assets are evaluated for impairment  when events or changes
         in business  circumstances  indicate  that the  carrying  amount of the
         assets  may not be  fully  recoverable.  An  impairment  loss  would be
         recognized  when estimated  undiscounted  future cash flows expected to
         result from the use of these assets and their  eventual  disposition is
         less than their carrying amount.  Impairment, if any, is assessed using
         discounted  cash  flows.  Because  the  Company  has not yet  generated
         revenue from its proprietary products,  the determination of whether or
         not long-lived assets have become impaired involves a significant level
         of  judgment  in  the  assumptions  underlying  the  approach  used  to
         determine the estimated  future cash flows  expected to result from the
         use of those  assets.  Changes in the Company's  strategy,  assumptions
         and/or market conditions could significantly impact these judgments and
         require  adjustments to recorded amounts of long-lived  assets.  During
         the years ended  December 31, 2004,  2003 and 2002, no  write-downs  of
         long-lived assets were recognized.




                                       40
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003

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

SOFTWARE DEVELOPMENT COSTS

         Software   development   costs   associated   with  the  Company's  new
         proprietary  hosted  software  product  are  charged to  expense  until
         criteria for capitalization under Statement of Position ("SOP) 98-1 are
         met.  Capitalization  will commence  when it becomes  probable that the
         project will be  completed,  the  software  will be used to perform the
         function  intended and there is reasonable  assurance as to future cash
         flows resulting from the Company's  proprietary  software. To date, due
         to  uncertainty  regarding the project  completion  and cash flow to be
         generated from the proprietary  software,  all expenditures relating to
         the project have been charged to expense as incurred.

         Software  development costs incurred in 2002 and prior years in respect
         of the  Company's  CRM product  line were  expensed  as incurred  until
         technological  feasibility  in the  form of a  working  model  had been
         established.  No costs had been  previously  capitalized  in connection
         with the CRM product line.

ADVERTISING

         Advertising costs are expensed as incurred.

INCOME TAXES

         The Company  follows the asset and liability  method of accounting  for
         income taxes whereby deferred tax assets and liabilities are recognized
         for the future tax  consequences  of differences  between the financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax bases.

FOREIGN EXCHANGE TRANSLATION

         The Company's functional currency is the Canadian dollar.  Transactions
         that are measured in US dollars are  translated to Canadian  dollars in
         the following  manner:  All balance sheet accounts have been translated
         using the current rate of exchange at the balance  sheet date.  Results
         of operations have been translated  using the average rates  prevailing
         throughout  the year.  Translation  gains or losses  resulting from the
         changes in the exchange rates are  accumulated  as other  comprehensive
         income or loss in a separate  component of  stockholders'  equity.  All
         amounts included in the accompanying financial statements and footnotes
         are denominated in U.S. dollars.

STOCK OPTION PLANS

         The Company applies Accounting Principles Board Opinion No. 25 (APB No.
         25) and related interpretations in accounting for stock options granted
         to employees  and  directors  (for  services  performed as a director).
         Accordingly,  compensation  costs  are  recognized  as  the  difference
         between the  exercise  price of each option and the market price of the
         Company's  stock  at the date of each  grant.  No  stock  options  were
         granted during 2004 or 2003.  Accordingly,  no compensation  costs were
         recognized  for the years ended  December  31, 2004 and 2003.  In 2002,
         $255,750 was  recognized  in  compensation  expense under APB No. 25 in
         respect  of  300,000  stock  options  granted  to an  employee  with an
         exercise  price below the quoted market price of the  Company's  common
         stock on the grant dates. The weighted average discount offered to this
         employee on options granted in 2002 was  approximately  $0.85 per stock
         option.




                                       41
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003

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

STOCK OPTION PLANS - CONTINUED

         The Company  accounts for the grant of options to  non-employees  using
         the fair  value-based  method  prescribed  in  Statement  of  Financial
         Accounting  Standard ("SFAS") No. 123, using the  Black-Scholes  option
         pricing  model.  There were no stock options  granted to  non-employees
         during the years ended December 31, 2004, 2003 and 2002.

         Compensation for unvested options is amortized over the vesting period.

         Had  compensation  expense on options  granted  in prior  periods  been
         determined  based on the fair value at the grant dates, as described in
         the Financial  Accounting Standards Board (FASB) Statement of Financial
         Accounting  Standards  (SFAS) No. 123, the  Company's  net loss and net
         loss per share would have been as follows:

<TABLE>
<CAPTION>

                                                2004             2003           2002
                                      --- ---------- --- ------------ --- ----------
<S>                                     <C>            <C>              <C>
Net loss, as reported                   $  (694,859)   $  (1,027,276)   $  (914,645)

Add: stock-based compensation
   expense included in reported net
   income, net of related taxes                   -                 -        163,680

Deduct total stock-based employee
   compensation expense
   determined under fair based
   methods for all awards                   (18,646)         (32,707)      (219,376)
                                        --------------------------------------------
Pro forma net loss                      $  (713,505)   $  (1,059,983)   $  (970,341)
                                        ============================================

Loss per common share:
   Basic and diluted - as reported      $     (0.07)   $       (0.13)   $     (0.12)
   Basic and diluted - pro forma        $     (0.07)   $       (0.13)   $     (0.12)
</TABLE>

         No stock options were granted in 2004 and 2003.  The fair value of each
         option  granted in 2002 was  estimated  on the date of grant  using the
         Black-Scholes  option-pricing model with the following assumptions: (1)
         dividend  yield of 0%, (2) expected  volatility of 149%,  (3) risk-free
         rate of  3.16%,  and (4)  expected  life of 1.13  years.  The  weighted
         average fair value per share of options granted in 2002 was $1.04.

EARNINGS (LOSS) PER SHARE OF COMMON STOCK

         Basic earnings (loss) per share of common stock is computed by dividing
         net   income   (loss)   available   to  common   shareholders   by  the
         weighted-average  number of common shares  outstanding  for the period.
         Diluted  earnings  per  share of common  stock  reflect  the  potential
         dilution  that could occur if  securities  or other  contracts to issue
         common stock were  exercised or converted into common stock or resulted
         in the issuance of common stock that then shared in the earnings of the
         Company.

         At  December  31,  2004,  2003 and  2002,  potential  common  shares of
         4,758,200, 4,758,200, and 715,000 respectively, related to common stock
         options and warrants  were  excluded  from the  computation  of diluted
         earnings per share since their effect was anti-dilutive.



                                       42
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The  carrying   amounts  reported  in  the  balance  sheets  for  cash,
         receivables,  accounts payable and accrued liabilities approximate fair
         value  because  of  the  immediate  or  short-term  maturity  of  these
         financial instruments.

COMPREHENSIVE INCOME (LOSS)

         Comprehensive income (loss) is defined to include all changes in equity
         except those resulting from investments by owners and  distributions to
         owners.  The Company's items of other  comprehensive  income (loss) are
         foreign currency translation  adjustments,  which relate to investments
         that are permanent in nature.

NEW ACCOUNTING PRONOUNCEMENTS

         On December 16, 2004, the Financial Accounting Standards Board ("FASB")
         issued  Statement of Financial  Accounting  Standards  ("SFAS") No. 123
         (revised  2004),  "Share-Based  Payment." SFAS No. 123(R) would require
         our company to measure all  employee  stock-based  compensation  awards
         using a fair value method and record such  expense in its  consolidated
         financial  statements.  In  addition,  SFAS  No.  123(R)  will  require
         additional  accounting related to the income tax effects and additional
         disclosure  regarding the cash flow effects  resulting from share-based
         payment arrangements. For public entities that file as a small business
         issuer,  SFAS No.  123(R) is effective  for the first interim or annual
         reporting period beginning after December 31, 2005.

         In  December  2004,  FASB  issued  SFAS No. 153 to amend  Opinion 29 by
         eliminating  the  exception  for  non-monetary   exchanges  of  similar
         productive  assets and replaces it with general exception for exchanges
         of  non-monetary  assets  that  do not  have  commercial  substance.  A
         non-monetary  exchange is defined to have  commercial  substance if the
         future cash flows of the entity are expected to change significantly as
         a result of the exchange.

         The  implementation  of these new  standards  is not expected to have a
         material effect on the Company's financial statements.




                                       43
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------

1.      NATURE OF ORGANIZATION AND OPERATIONS

        Stratabase  Inc.  is a provider of  Knowledge  Worker  Automation  (KWA)
        software,  designed  to  enable  corporations  to save time and money by
        improving the efficiency of knowledge  workers.  The Company's  software
        tools allow enterprises to manage relationships and contacts, administer
        and organize time  allocations,  collaborate  with others,  manage data,
        automate  communications  and  productivity  reporting  and conduct data
        synchronization.  The Company has historically  derived its revenue from
        sales of customized  databases to its clients.  During 2002, the Company
        began   redefining  its  product  line  by  developing  its  proprietary
        software. The proprietary software (Relata) was released in beta form in
        June 2003 and the Company expects to begin marketing Relata in the first
        half of 2005.  The  Company  has not yet  generated  revenue  from  this
        proprietary software. This new proprietary software product line will be
        the primary focus of the Company.  The Company operates from Abbotsford,
        British Columbia, Canada.

        The accompanying  financial  statements have been prepared in US dollars
        and in accordance with accounting  principles  generally accepted in the
        United  States  on  a  going  concern  basis,   which  contemplates  the
        realization of assets and the  satisfaction of liabilities in the normal
        course of business.

        In January 2003,  the Company filed a proposal to effect a  continuation
        of the corporate jurisdiction from the State of Nevada to Canada on Form
        S-4 with the United States Securities and Exchange  Commission (SEC). At
        a Special Meeting of the  stockholders of Stratabase Inc. held on August
        17, 2004, a majority of the  Company's  stockholders  voted in favour of
        the plan of conversion.  Accordingly,  the Company filed the Articles of
        Conversion in Nevada and obtained a Certificate of Continuance  from the
        Director of Business Corporations.  As a result, the Company changed its
        name to  "Stratabase  Inc." and  continued  to operate  under the Canada
        Business  Corporations  Act and is no longer a Nevada  corporation.  The
        Company  has never had any  employees  or  operations  in the U.S.,  and
        management  believes the continuation to Canada accurately  reflects the
        nature of its operations. The continuance had no impact on the Company's
        financial  statements.  These  financial  statements  are presented as a
        continuation of the Nevada Company.


2.      ABILITY TO CONTINUE AS A GOING CONCERN

        The accompanying  financial  statements have been prepared in US dollars
        and in accordance with accounting  principles  generally accepted in the
        United  States  on  a  going  concern  basis,   which  contemplates  the
        realization of assets and the  satisfaction of liabilities in the normal
        course  of  business.   The  Company  began   actively   developing  its
        proprietary software product line during the second quarter of 2002, and
        revenues  declined due to the reduced  resources for sales and marketing
        of the Company's  existing product line.  During the year ended December
        31, 2004, the Company incurred a loss of $694,859 and has an accumulated
        deficit of  $2,530,698  at December 31,  2004.  These  conditions  raise
        substantial  doubt  about the  Company's  ability to continue as a going
        concern.

        The  Company  expects  its new  product  line  sales  to fund  long-term
        operations  and will be actively  marketing  its  products  during 2005.
        Management  believes  marketing and operating  expenses will be financed
        during  the  first  six-months  of 2005  through  proceeds  of a private
        placement  completed  in February  2005 in the amount of $300,000  (Note
        12). The Company  expects to need an additional  $300,000 to cover costs
        through the  remainder  of 2005.  Such will be  financed  by  additional
        equity  issuances.  During the year ended December 31, 2003, the Company
        also  reduced  its  labour  force  and  closed  its  Vancouver,  British
        Columbia,  office in an effort  to  further  reduce  its  operating  and
        general and administrative expenses.



                                       44
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------

2.      ABILITY TO CONTINUE AS A GOING CONCERN - CONTINUED

        The Company's ability to continue as a going concern is dependent on its
        ability to sustain profitable operations and to generate sufficient cash
        flow from  financing  and  operations  to meet its  obligations  as they
        become  payable.  The  Company's  plans to deal  with  this  uncertainty
        include further reducing  expenditures and raising additional capital or
        entering into a strategic arrangement with a third party. Although there
        are no assurances that  management's  plans to reduce  expenditures  and
        raise additional capital will be realized,  management believes that the
        Company will be able to continue operations in the future.  Accordingly,
        no  adjustment  relating to the  recoverability  and  classification  of
        recorded asset amounts and the  classification  of liabilities  has been
        made to the  accompanying  financial  statements in  anticipation of the
        Company not being able to continue as a going concern.

3.      OFFICE EQUIPMENT

                                                      2004                  2003
                                       ---- -------------- ------ --------------
Computer hardware                         $         99,043      $         96,207
Computer software                                   12,924                12,924
Office furniture and equipment                      12,137                12,137
                                       -----------------------------------------
                                                   124,104               121,268
Accumulated depreciation                          (109,584)             (84,267)
                                       -----------------------------------------
                                          $         14,520      $         37,001
                                       =========================================

4.       NOTE RECEIVABLE

         In May 2002,  the Company loaned  $150,000 to Advanced Cell  Technology
         ("ACT"), a private biotechnology company, in exchange for a convertible
         promissory note  receivable.  The note is unsecured,  bears interest at
         20% per annum,  matured on April 30, 2003, and was to be converted into
         stock of ACT should ACT have proceeded with a preferred stock financing
         prior to the note's maturity date. The Company accrued a receivable for
         interest  income,  due under the terms of the  promissory  note, in the
         amount of $21,206 at December  31, 2002.  At April 30,  2003,  the note
         receivable  was in  default.  The Company  received  notice from ACT of
         their  intention  to settle the note  receivable  in full out of future
         financing.  With the uncertainty  regarding the  recoverability  of the
         note  receivable,  in 2003 the Company reserved the principal amount of
         the note  receivable and accrued  interest  outstanding at December 31,
         2002 and  fully  reserve  all  additional  accruals  of  interest.  Any
         subsequent  recovery  will be  recorded  in the period it  occurs.  The
         Company has filed suit  against  ACT in pursuit of the  recovery of the
         loan.



                                       45
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------

5.      RELATED PARTY TRANSACTIONS

        At December 31, 2002, the Company had outstanding  notes receivable from
        two  executive  officers  resulting  from  previous  exercises  of stock
        options  aggregating to $375,000.  The notes  receivable were unsecured,
        non-interest-bearing and were to be paid from the proceeds from the sale
        of stock acquired  through the exercise of stock  options,  but no later
        than April 1, 2003. On May 1, 2003, the Company  reached  agreement with
        the  noteholders  to redeem for  cancellation  280,000  shares of common
        stock  owned  by  the  executive  officers  in  full  settlement  of the
        outstanding  balance.  The fair value of the common shares  redeemed was
        $385,560, based on the quoted market price of the Company's common stock
        on  the  agreement   date.  No  gain  or  loss  was  recognized  on  the
        transaction.

6.      STOCKHOLDER TRANSACTIONS

        During April through July of 2002,  pursuant to the  Company's  2002 and
        2000 stock  option  plans,  230,000,  10,000,  and 75,000  common  stock
        options  were  exercised by  employees  at $0.50,  $1.45,  and $1.50 per
        share, respectively,  for total proceeds to the Company of $242,000. The
        exercise of 10,000  shares at $1.45 was initially  accomplished  through
        the exchange of notes  receivable,  which was  subsequently  paid by the
        employee in 2002.

        On April 7, 2003,  the Company  issued  200,000  units for an  aggregate
        purchase  price of $350,000.  Each unit consisted of one share of common
        stock and one warrant.  Until April 7, 2005, each warrant is exercisable
        for one share of common stock at an exercise price of $2.50 per share.

        On May 1, 2003,  related-party notes receivable were settled in exchange
        for the redemption of 280,000 shares of common stock (Note 5).

        On December 23, 2003, the Company  issued a total of 1,961,600  units at
        $0.26 per unit, or aggregate  proceeds of $510,016.  Each unit consisted
        of one  share of  common  stock,  one  Class A  warrant  and one Class B
        warrant.  The Class A warrants are  exercisable on or after December 23,
        2005 for a period of two years at an  exercise  price of $0.45 per share
        of common  stock and the Class B warrants  are  exercisable  on or after
        December  23,  2006 for a period of four years at an  exercise  price of
        $0.75 per share of common stock.  The Company has the right, in its sole
        discretion, to accelerate the exercise date of the warrants, to decrease
        the exercise price of the warrants  and/or extend the expiration date of
        the warrants.



                                       46
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------

7.       STOCK OPTION PLANS

         In February 2000, the Company  adopted its 2000 Stock Option Plan ("the
         2000 Plan"). The 2000 Plan provides for the granting of up to 1,750,000
         stock options to key employees,  directors and  consultants,  of common
         shares of the Company.  Under the 2000 Plan,  the granting of incentive
         and  non-qualified  stock  options,   exercise  prices  and  terms  are
         determined by the Company's Option Committee, a committee designated to
         administer  the 2000  Plan by the  Board of  Directors.  For  incentive
         options,  the  exercise  price  shall not be less than the fair  market
         value of the Company's  common stock on the grant date. (In the case of
         options granted to an employee who owns stock  possessing more than 10%
         of the voting power of all classes of the  Company's  stock on the date
         of  grant,  the  option  price  must not be less  than 110% of the fair
         market value of common stock on the grant date.).  Options  granted are
         not to exceed  terms  beyond  ten years  (five  years in the case of an
         incentive  stock  option  granted  to a  holder  of 10  percent  of the
         Company's common stock).

         Activity under the 2000 Plan is summarized as follows:
<TABLE>
<CAPTION>
                                                                            Weighted
                                       Available for          Options  Average Price
                                               Grant      Outstanding      Per Share
                                    ---------------- ---------------- --------------
<S>                                 <c>              <C>              <C>
BALANCE OUTSTANDING,
   January 1, 2002                                 -          700,000   $       0.78
   Options cancelled                         100,000         (100,000)          1.45
   Options granted                          (100,000)         100,000           1.30
   Options exercised                               -         (230,000)          0.50
                                    ---------------- ---------------- --------------
   December 31, 2002                               -          470,000           0.88
   Options cancelled                          80,000          (80,000)          1.03
                                    ---------------- ---------------- --------------
BALANCE OUTSTANDING,
   December 31, 2003 and 2004                 80,000          390,000   $       0.85
                                    ================================================
BALANCE EXERCISABLE,
   December 31, 2004                                          350,000   $       0.80
   December 31, 2003                                          315,000   $       0.74
   December 31, 2002                                          325,000   $       0.70
</TABLE>

         During 2001, the Company  adopted its 2002 Stock Option Plan ("the 2002
         Plan").  The 2002 Plan provides for the granting of up to an additional
         1,750,000 stock options to key employees, directors and consultants, of
         common  shares of the  Company.  Under the 2002 Plan,  the  granting of
         incentive and  non-qualified  stock options,  exercise prices and terms
         are  determined  by  the  Company's  Option   Committee,   a  committee
         designated to administer  the 2002 Plan by the Board of Directors.  For
         incentive  options,  the exercise price shall not be less than the fair
         market value of the Company's  common stock on the grant date.  (In the
         case of options  granted to an employee who owns stock  possessing more
         than 10% of the voting power of all classes of the  Company's  stock on
         the date of grant,  the option  price must not be less than 110% of the
         fair market value of common stock on the grant date.).  Options granted
         are not to exceed  terms beyond ten years (five years in the case of an
         incentive  stock  option  granted  to a  holder  of 10  percent  of the
         Company's common stock).


                                       47
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------

7.       STOCK OPTION PLANS - CONTINUED

         Activity under the 2002 Plan is summarized as follows:
<TABLE>
<CAPTION>
                                                                            Weighted
                                       Available for          Options  Average Price
                                               Grant      Outstanding      Per Share
                                    ---------------- ---------------- --------------
<S>                                 <c>              <C>              <C>
Initial shares reserved, January 2002      1,750,000                -   $          -
   Options granted                          (330,000)         330,000           0.80
   Options exercised                               -          (85,000)          1.49
                                    ---------------- ---------------- --------------
BALANCE OUTSTANDING,
   December 31, 2002, 2003 and 2004        1,420,000          245,000   $       0.57
                                    ================================================
BALANCE EXERCISABLE,
   December 31, 2004                                          245,000   $       0.57
   December 31, 2002 and 2003                                 235,000   $       0.53
</TABLE>

          The following table summarizes  information concerning outstanding and
          exercisable  common  stock  options  under the 2000 and 2002  Plans at
          December 31, 2004:

<TABLE>
<CAPTION>
                                                        Weighted    Number of  Weighted
            Remaining    Number of                       Average      Options   Average
             Range of      Options     Contractual      Exercise    Currently  Exercise
      Exercise Prices  Outstanding  Life (in Years)        Price  Exercisable     Price
   ------------------ ------------ --------------- -------------- ----------- ---------
<S>                   <C>          <C>             <C>            <C>         <C>
       $0.50 - $0.60       480,000            6.74   $       0.55     480,000  $   0.55
       $1.30 - $1.45       155,000            7.59   $       1.33     115,000  $   1.35
                      ------------                                 ----------
                           635,000                                    595,000
                      ============                                 ==========
</TABLE>





                                       48
<PAGE>

================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------

8.       WARRANTS

                                                Warrants        Weighted Average
                                                                  Exercise Price
                                          -------------------- -----------------

BALANCE, December 31, 2001 and 2002                          -   $             -
Warrants granted                                     4,123,200              0.69
                                          -------------------- -----------------
BALANCE, December 31, 2003 and 2004                  4,123,200   $          0.69
                                          ==================== =================

         The  following  table lists the common share  warrants  outstanding  at
         December 31, 2004. Each warrant is exchangeable for one common share.

                          Quantity    Exercise Price              Expiry
                     ------------- ----------------- -------------------
                           200,000             $2.50       April 7, 2005
                         1,961,600             $0.45   December 23, 2007
                         1,961,600             $0.75   December 23, 2010
                     -------------
                         4,123,200
                     =============

         At December  31, 2004,  only the  warrants  expiring in April 2005 were
         exercisable.


9.       PROVISION FOR INCOME TAXES

         The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                                2004             2003               2002
                                  ----- ------------ ---- ------------- --- ------------
<S>                               <C>                <C>
CURRENT
US net operating loss carryback       $            -    $             -   $      (50,240)
                                  ------------------------------------------------------
                                                   -                  -          (50,240)
                                  ------------------------------------------------------

DEFERRED
Tax recovery based on statutory rates       (247,509)          (380,895)        (216,236)
Increase in valuation allowance              247,509            380,895          352,105
                                  ------------------------------------------------------
                                                   -                  -          135,869
                                  ------------------------------------------------------
Provision for income taxes            $            -    $             -   $       85,629
                                  ======================================================
</TABLE>


                                       49
<PAGE>


================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------

9.       PROVISION FOR INCOME TAXES - CONTINUED

         The  tax  effects  of  temporary  differences  that  give  rise  to the
         Company's deferred tax assets are as follows:

                                                2004               2003
                                    ----------------    ---------------
DEFERRED TAX ASSETS (LIABILITIES)
   Net operating loss carryforwards  $       137,000     $      467,000
   Office equipment                            5,000             22,000
   Databases and domain names                278,000            211,000
   Capital loss carryforwards                      -             33,000
                                    -----------------------------------
                                             420,000            733,000
Valuation allowance                        (420,000)           (733,000)

      Net deferred tax asset         $             -     $            -
                                    ===================================

             No options were  exercised in 2004 or 2003  requiring an income tax
             effect to be assessed.  The exercise of nonqualified  stock options
             in 2002 resulted in the recording of additional  paid-in capital of
             $90,321 and  recognition  of an additional  $90,321 of deferred tax
             assets related to a net operating loss carryforward.

             Upon continuation to Canada, all losses carried forward expired. As
             of December 31, 2004,  the Company had  available to offset  future
             taxable  income,  net  Canadian  operating  loss  carryforwards  of
             approximately  $384,000.  The carryforwards  will begin expiring in
             2014 unless utilized in earlier years.

             The Company evaluates its valuation allowance requirements based on
             projected future  operations.  When  circumstances  change and this
             causes a change in management's  judgement about the recoverability
             of deferred tax assets,  the impact of the change on the  valuation
             allowance is reflected in current income.

             The  provision  for income taxes  differs from the amount of income
             tax determined by applying the applicable Canadian (2003 and 2002 -
             U.S.)  statutory  federal  income  tax rate to  pretax  income as a
             result of the following differences:

<TABLE>
<CAPTION>
                                                2004               2003             2002
                                  ------------------ ------------------ ----------------
<S>                               <C>                <C>                <C>
Statutory federal income tax rate               (36%)              (34%)            (34%)
Change in valuation allowance                    36%                37%              43%
Other                                            (-)                (3)               1
                                  ------------------------------------------------------
                                                  -%                 -%              10%
                                  ======================================================
</TABLE>



                                       50
<PAGE>


================================================================================

STRATABASE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)

DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------


10.      COMMITMENTS AND CONTINGENCIES

         Lease  commitments  - The Company  leased  office space in  Abbotsford,
         British Columbia,  with monthly payments of approximately  $1,350.  The
         Abbotsford  lease expired in February 2004. The Company  currently pays
         the rent for its office on a month-to-month  basis.  Total rent expense
         under this lease was $20,669,  $ 21,623 and $30,429 for the years ended
         December 31, 2004, 2003 and 2002, respectively.

         Management  fees - The Company pays management fees for the services of
         its vice president at the rate of $5,000 (including  Canadian Goods and
         Services  Tax of 7%) a month.  Compensation  of  $56,074  for the years
         ended  December  31,  2004 and 2003,  and  $47,710  for the year  ended
         December  31,  2002  has  been  recorded  as  management  fees  in  the
         accompanying financial statements.


11.      SALES ACTIVITY

         The Company's sales were distributed geographically as follows:

<TABLE>
<CAPTION>
                                                2004               2003             2002
                                  ----- ------------ ---- ------------- --- ------------
<S>                                <C>               <C>               <C>
United States                         $            -    $         5,000   $      392,730
Canada                                             -                  -           37,510
                                  ------------------------------------------------------
                                      $            -    $         5,000   $      430,240
                                  ======================================================
</TABLE>

              During 2003, the Company had one sale for $5,000 (2002 - $225,000)
              representing 100% (2002 - 52%) of total revenues.

12.      SUBSEQUENT EVENT

         On February 14, 2005, the Company issued a total of 1,000,000  units at
         $0.30 per unit, for aggregate proceeds of $300,000. Each unit consisted
         of one share of  common  stock,  one  Class A  warrant  and one Class B
         warrant.  The Class A warrants are exercisable on February 14, 2007 for
         a period  of five  years at an  exercise  price of $0.50  per  share of
         common stock and the Class B warrants are  exercisable  on February 14,
         2008 for a period of four  years at an  exercise  price of  $0.80.  The
         Company  has the  right,  in its sole  discretion,  to  accelerate  the
         exercise  date of the warrants,  to decrease the exercise  price of the
         warrants and/or extend the expiration date of the warrants.


                                       51
<PAGE>


                                   SIGNATURES

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

                                   STRATABASE

By /s/ Trevor Newton                                       Dated: April 21, 2005
----------------------------------------------------
Trevor Newton
Chairman, President, Chief Executive and
Operating Officer, Secretary and Treasurer




By /s/ Fred Coombes                                        Dated: April 21, 2005
----------------------------------------------------
Fred Coombes
Vice President of Corporate Development




         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 dates indicated.


                        Chairman, President, Chief         Dated: April 21, 2005
/s/ Trevor Newton       Executive And Operating Officer, Secretary and Treasurer
-----------------
Trevor Newton
                        (Principal  Executive Officer and
                        Principal Financial Officer)


                        Vice President of Corporate Development
 /s/ Fred Coombes                                         Dated:  April 21, 2005
-----------------
Fred Coombes



                        Director
 /s/ Scott Praill                                         Dated:  April 21, 2005
-----------------
Scott Praill





                                       52