SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-KSB

|[X]   | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934    
|----- | ----------------------------------------------------------------------------------------------
|      |                                                                                               
|      | For the fiscal year ended December 31, 2002                                                   
|      |                                                                                               
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR
      15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number __________

Aucxis Corp.


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|Nevada                          |  | n/a                
|------------------------------- |  | -------------------
|                                |  |                    
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

|Suite 500-666 Burrard Street                   |  | V6C 3P6   
|---------------------------------------------- |  | ----------
|Vancouver, British Columbia CANADA             |  |           
|                                               |  |           
|(Address of principal executive
      offices) |  | (Zip Code)

220 King Street West, Suite 200 
  Toronto, Ontario CANADA


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Issuer's telephone number, including area code: 604-639-3109

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

Check whether the issuer (1) filed all reports required to
  be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
  (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 [ ]

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

Issuers revenues for the fiscal year ended December
  31, 2002 were $4,717,887. The aggregate market value as at March 28, 2003 of
  the common stock of the issuer, its only class of voting stock, held by non-affiliates
  was approximately U.S. $200,000 calculated on the basis of the price of the
  last trade of the issuer's common stock, as reported by the OTC Bulletin Board
  on March 28, 2003.Such market value excludes shares owned by
  all executive officers and directors (but includes shares owned by their spouses);
  this should not be construed as indicating that all such persons are affiliates.

The number of shares outstanding of the issuer's common stock as at March 28, 2002 was 66,409,415.

DOCUMENTS INCORPORATED BY REFERENCE

Transitional Small Business Disclosure Format Yes [ ] No [X]

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CAUTIONARY STATEMENT

Cautionary Statement for purposes of the "Safe Harbor''
  Provisions of the Private securities Litigation Reform Act of 1995:Certain
  statements in this report, including, without limitation, statements contained
  under the captions "Item 1. Description of Business" and "Item 6. Plan of Operation,"
  and such other statements, except historical facts, regarding the Companys
  financial position, business strategy and plans of management for future operations
  are "forward looking statements" within the meaning within the meaning of Section
  27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
  Exchange Act of 1934, as amended. These statements, which include, but are not
  limited to, words such as ``expect,'' believe, anticipate,'' estimate,
  plan, project, strategy and ``intend'' are
  based on management's beliefs and assumptions, and on information currently
  available to management and involve certain known and unknown risks, uncertainties
  and other factors which may cause these statements to be materially different
  from any future results, performance or achievements expressed or implied by
  these forward-looking statements. Such factors include, among others, the Company's
  ability to finance its operations and the ability to obtain such financing,
  uncertainties relating to the integration of acquired businesses and operations,
  the Company's ability to successfully implement its business plan; potential
  fluctuations in financial results, dependence on product development, rapid
  technological and market change, failure to complete the manufacture of products
  on schedule and on budget, uncertainties relating to business and economic conditions
  in markets in which the Company operates or which relate to customer plans and
  commitments; dependence on intellectual property rights; the competitive environment
  in which the Company operates and such other risks as detailed from time to
  time in the Company's periodic reports filed with the United States Securities
  and Exchange Commission and other regulatory authorities.

PART I

Item 1.Description of Business

General

The Company was originally incorporated in the State of Nevada
  on January 8, 1998 under the name Kazari International, Inc." On February
  26, 1999, we purchased all of the outstanding shares of common stock of e-Auction
  Global Trading Inc. (Barbados). Pursuant to the terms of the stock exchange
  agreement, we issued to the 11 shareholders of e-Auction (Barbados), on a one
  for one exchange basis, thirty-four million five hundred thousand (34,500,000)
  shares of our common stock. We had no viable business activities at the time
  of the exchange agreement.

On June 10, 1999, Kazari amended its articles of incorporation
  to change its name from "Kazari International, Inc." to "e-Auction Global Trading
  Inc." and increased the number of authorized shares of our common stock from
  forty million (40,000,000) shares to two hundred and fifty million (250,000,000)
  shares of common stock, par value $.001 per share. During fiscal year 2000,
  Aucxis acquired Schelfhout Computer Systemen N.V., Kwatrobox B.V., and I-Three,
  Inc. On June 12, 2001 the Company amended its charter to change its name to
  Aucxis Corp. (Aucxis or the Company).

We currently own the following subsidiaries:

- a 100% ownership interest in e-Auction Global Trading
      Inc. (Barbados), which in turn has a wholly owned subsidiary, Aucxis Corp.
      (Canada). Prior to May 11, 2000, this subsidiary was known as e-Auction
      Global Trading Inc. (Canada).
- a 100% ownership interest in Aucxis Corp. (Belgium) N.V.,
      which in turn has a 92.5% ownership in Aucxis Trading Solutions, N.V. Aucxis
      Trading Solutions N.V. in turn has a 33.3.% interest in Auction Trading
      Services Nederland BV (ATS Holland) formed in

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> partnership with two of the largest flower auctions. Prior
>     to May 12, 2000, this subsidiary was known as e-Auction Belgium N.V. a 40%
>     ownership interest in SDL Invest N.V.

- a new legal entity formed March 22, 2000, in which we
      made a contribution in kind of certain real property and liabilities. In
      connection with the formation of SDL Invest N.V., we granted an option to
      Luc Schelfhout and Hilde De Laet to purchase the shares of SDL Invest N.V.
      for a nominal price equal to the book value.

Business strategy of ATS Belgium and ATS Holland

|1 | Aucxis Corp., through its subsidiary
        Aucxis Trading Solutions (ATS), is committed to expand geographically
        from its market leading provision of electronic systems to European auctions.
        To this end, ATS to date has entered new geographic regions with auction
        solutions being supplied in China, Australia, Tanzania, South Africa,
        Kenya, Brazil, and USA. These new markets are growing from more traditional
        open outcry methods to incorporate modern solutions of electronic actions.
        It is the intention of the business to replicate its leading market position
        in Europe in these fast expanding new markets.                                                                       
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2 | Aucxis Corp., through its subsidiary
        ATS, continues to create innovative solutions in response to customer
        needs within the perishable auction sector. Technologically, ATS created
        a new generation of the Moby Clock with highly standardized
        RF buying equipment, a new universal Internet Based Communication Engine
        rolled out successfully in several auction clusters in Holland (fish),
        Belgium (fruit and vegetables) and France (fish), and a deployed automation
        and tracing of the fish chain in Europe's biggest fish auction, Boulogne.
        Further opportunities exist for combining auctions together in clusters
        and further refining remote, on-line buying capabilities.

At ATS, our trading platform is fully operational and used
  by over 150 customers worldwide. Through our acquisitions of Schelfhout and
  the retention of key assets and contracts post-Nieaf, we now have a complete
  trading platform for perishable commodity auctions. This allows the Company
  to offer auction houses the ability to conduct remote and simultaneous auctions.
  Our trading platform consists of the following components (all of which are
  currently operational):

Electronic Auction Clocks

Since 1985, Schelfhout has been a constant innovator in auctions
  based on the Dutch clock. The "Dutch Clock" is the electronic timepiece
  utilized in the Dutch auction system. Starting with (now primitive) projection
  systems, and evolving into digital and LED based clocks, the goal has always
  been to provide clock systems that maximize usability and auction throughput.
  Auction throughput refers to the number of transactions that occur over a stated
  period of time in an individual auction environment. Many auctions now employ
  several clocks simultaneously, substantially increasing the number
  of lots that can be sold on any given auction day.

In some auctions, the clock is mobile: the so-called Moby
  Clock. This clock was developed to meet the specific needs of the fishing
  industry, where buyers and the clock can move through a fish market and conduct
  sales over the actual product.

Auction Controller

The auction master console runs the electronic clock and the
  digital displays of the auction. It also registers the winning bid made by either
  a local buyer or a buyer using a remote workstation. The console is a PC running
  Microsoft Windows (3.1, 9x, NT), and bids are logged into a local SQL database.
  In some high volume auctions, a multi-transaction controller is used all owing
  several transactions to be processed every time the auction clock is stopped.

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Remote Bidding Systems

A number of auctions support buying through remote workstations,
  so that the buyers do not have to be physically present at the auction. In some
  cases, these remote terminals are actually in the auctions themselves, replacing
  the main electronic clock. In either case, the remote terminals connect to the
  main auction using dial up or ISDN, and make socket connections to the syncrator,
  a dedicated server whose sole task is to determine which bid is the highest.
  Through logic that takes into account transmission delays, the syncrator ensures
  that, regardless of whether or not the bidder is physically present, the auction
  is always fair. As with the auction controller, the remote bidding clients are
  currently using PC based applications.

Mediation Systems

While most of ATSs auction customers operate on a Dutch
  clock, there are some circumstances under which a different type of bidding
  is required. In these cases, a mediation system is used, where a server collects
  bids, relates them to asking prices by producers and their agents, and assigns
  lots to the relevant buyers. ATS has been working on the development of a new,
  integrated trading system that builds on the vast experience gained over the
  last 15 years. The basic principal is that, to obtain the optimum price for
  a particular product, a variety of tools must be available to the selling organization,
  as well as detailed information services. The Multi-Trade product is designed
  to provide some or all of these tools at the sellers discretion.

Other Controllers

ATS has also developed a range of other controllers with microprocessors,
  customized for the following market segments:

- (ultra low oxygen) preservation of hard fruit;
- Short term preservation of soft fruit, exotic fruit, vegetables, plants
    and flowers; and
- General temperature control for preservation of deep frozen and cooled products.

ATS controllers are also used to control condensers, gas analysis,
  energy. Management. ATS has developed a graphic modular display panel on which
  text, logos and drawings can be displayed. This innovative concept offers numerous
  advantages over standard systems:

- unlimited dimensions;
- storage capacity of more than 100 graphic images; and
- various special effects are included as standard: scrolling, blinking and
    animation via fast displays of successive images

Competition

The electronic auction market is highly competitive, is changing
  rapidly, and is significantly affected by new product and service introductions.
  Companies are increasing the demand for industry specific solutions to meet
  their needs in providing products and services to customers and trading partners.
  Barriers to entry into this market are relatively low, and we expect that competition
  will intensify in the future. The market environment in which we operate is
  extremely dynamic and is characterized by constantly evolving standards and
  new market entrants.

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Our primary competition currently comes from traditional auction
  suppliers of hardware and software services Agro Marche Internationaux. Agro
  Marche focuses on the food production industry and other utilities such as traceability
  systems.

Government Regulation; Government Approval

The Company is not currently subject to direct regulation
  by any government agency, other than regulations applicable to businesses generally.
  There are currently few laws or regulations directly applicable to access to,
  or commerce on, the Internet. However, due to the increasing popularity of and
  use of the Internet, it is possible that a number of laws and regulations may
  be adopted with respect to issues such as the protection of databases, user
  privacy, pricing and characteristics and quality of products and services. The
  adoption of laws or regulations in the future may decrease the growth of the
  Internet, which in turn could decrease the demand for the Company's services
  and products and increase the Company's costs of doing business or otherwise
  have an adverse effect on the Company's business, operating results and financial
  condition. Moreover, the applicability to the Internet of existing laws governing
  issues such as property ownership, libel and personal privacy is uncertain and
  could expose us to substantial liability, for which the Company might not be
  indemnified.

Research and Development Costs

There were no significant expenditures relating to research
  and development in the current year. In prior years, the Company has incurred
  significant research and development costs in the former subsidiary of Kwatrobox
  relating primarily to the development of PBS Verdeel Pro, a proprietary software
  application. All research and development costs have been expensed by the Company
  as incurred.

Costs and Effects of Compliance With Environmental Laws

The Company is not involved in a business that involves the
  use of materials in a manufacturing stage where such materials are likely to
  result in the violation of any existing environmental rules and/or regulations.
  Further, while the Company does own real property it is unlikely that its own
  ownership would lead to liability as a landowner. Therefore, the Company does
  not anticipate that there will be any costs associated with the compliance of
  environmental laws and regulations.

Intellectual Property

Other than the patent regarding "method and system for real
  time credit reservation and distribution" currently under review by the United
  States Patent and Trademark Office, we have neither any registered patents nor
  trademarks. Aucxis has entered into a licensing and royalty agreement with Boomboat
  whereby Aucxis is entitled to receive a fee of one percent (1%) of all revenues
  actually received by BoomBoat from the sale of the BoomBoat Toolbox Product
  (developed with the I-Three technologies) up to and including August 29, 2006.

Employees and contractors

As of March 25, 2003, we had forty (40) full time employees
  at ATS and one (1) contractor at the parent company. None of our employees is
  represented by a labor union or are covered by a collective bargaining agreement.
  We consider our labor and employee relations to be good. Access to qualified
  labour in Europe is much better in light of the decline in demand post 2000.
  Furthermore, we continue to have access to the BoomBoat staff under a Service
  Level Agreement at very favourable rates.

Item 2.Description of Properties.

The Company has offices located at Suite 500, 666 Burrard
  Street, Vancouver, BC, Canada V6C 3P6 and at Bormte 204/A, Stekene, Belgium
  9190. Our office lease obligation in Vancouver are renewed on an annual basis
  at the end of May.

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ATS real property was divested prior to our acquisition.
  As part of the acquisition, however, ATS shall be entitled to remain on the
  premises where it currently conducts its business operations for a twelve (12)
  month period ending January 7, 2001 rent free and thereafter, for an additional
  term of 10 years, at a rate of 2,400 BEF per square meter for office space,
  1,800 BEF per square meter for the work room and 1,200 per square meter for
  the warehouse.

Our Company does not own any real property other than the
  building contributed by us to our subsidiary, SDL Invest N.V., which ownership
  interest is subject to an option to purchase granted to such subsidiarys
  minority shareholders. The three story office and small warehouse building located
  at the 2 Molenvlietweg; Aalsmeer that was owned by our subsidiary, Kwatrobox
  is now in the control of the trustee in bankruptcy and will be turned over to
  the bank as it was provided as security for loans. We have not entered into
  any agreements to acquire any properties.

Item 3.Legal Proceedings.

The former owners of the Companys subsidiary, ATS (formerly
  Schelfhout Computer Systemen N.V.), sought to enforce the mandatory redemption
  feature related to the first two tranches of shares totaling 909,090 be released
  under the terms of the purchase agreement on the basis that these shares were
  not free trading at the time of release as contemplated in the agreement. The
  former owners of the Companys subsidiary, brought an action against the
  Company to enforce a pledge on the shares of ATS, which was provided to secure
  the obligations of the Company under the agreement. This action was heard by
  a Belgian court which granted remedy to the former owners of the subsidiary
  which allowed them to reacquire a 71⁄2% interest in the subsidiary from
  the Company in exchange for the transfer for cancellation of the first tranche
  of 454,545 shares of the Company in full satisfaction of the Companys
  obligations in relation to such shares under the agreement. No further action
  has been taken to date with respect to the second tranche of 454,545 shares
  released on January 10, 2001.

On April 16, 2002, Mr. Schelfhout and Mrs. De Laet filed a
  request for arbitration against Aucxis NV (Belgium) and the Company. The plaintiffs
  allege that the Company and Aucxis NV (Belgium) deliberately committed a number
  of misrepresentations both prior to and subsequent to the closing of the ATS
  share purchase agreement. They have alleged damages of up to $1,190,309 for
  which they seek to be compensated by Aucxis NV (Belgium) and the Company. These
  proceedings are presently in their initial stages and are not expected to be
  resolved before some time. Management believes that the claim brought against
  Aucxis NV (Belgium) and itself, is without merit and intends to vigorously defend
  both itself and Aucxis NV (Belgium).

On March 29, 2002 Mr. Schelfhout and Mrs. De Laet brought
  an ex parte application before Court of Dendermonde (Belgium), which granted
  them authorization to apply a restraint order to a portion of the ATS shares
  held by Aucxis NV (Belgium). The restraint order was effectively applied on
  that same date with a view to securing the alleged damages that may be due in
  respect of the arbitration proceedings. On April 29, 2002 Aucxis NV (Belgium)
  appealed the said authorization and restraint order, which it also believes
  to be without merit, before the Court of Dendermonde (Belgium). The judge for
  Attachments of Dendermonde heard the case on June 25, 2002 and on October 22,
  2002 the appeal was denied.

On March 26, 2002, Mr. Schelfhout resigned as the managing
  director of ATS, as a consequence of which ATS brought a civil law action before
  the Commercial Court of Dendermonde (Belgium) on May 17, 2002, aiming at establishing
  that such resignation has caused the management contract under which Mr Schelfhout
  performed his management duties to be terminated, entitling ATS to cease all
  payments of management fees and to demand damages. Subsequent to the year end
  the Belgium Courts have awarded damages to INFOMAR of $ 247,181 ATS has made
  provision for $176,136 in fiscal 2002. The case is being appealed.

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Except as described above, management does not have knowledge
  of any material litigation pending, threatened or contemplated, or unsatisfied
  judgments against the Company or its affiliates, or any proceedings in which
  the Company or its affiliates is a party. Similarly, management is without knowledge
  as to any legal actions pending or threatened or judgments entered against the
  Company's executive officers and directors in their capacity as such, other
  than to the extent such individuals are named in the above actions.

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

No matters were submitted to the vote of the holders of the
  Company's securities during the fourth (4th) quarter ended December 31, 2002.

Part II

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

Market Price of the Company's Common Stock

Our common stock is currently quoted on the OTC Bulletin Board under the symbol
  "AUCX.".

For the year ended December 31, 2001

| | Year Ending December 31, 2001 |            |          
| | ----------------------------- | ---------- | ---------
| |                               | Price High | Price Low
| | First Quarter                 | 0.84       | 0.30     
| | Second Quarter                | 0.39       | 0.15     
| | Third Quarter                 | 0.08       | 0.01     
| | Fourth Quarter                | 0.14       | 0.01     

For the year ended December 31, 2002

The following table sets forth the closing prices for the
  common stock during the periods indicated, as reported by the OTC Bulletin Board

| | Year Ending December 31, 2002             |            |          
| | ----------------------------------------- | ---------- | ---------
| |                                           | Price High | Price Low
| | First Quarter                             | 0.09       | 0.03     
| | Second Quarter                            | 0.03       | 0.03     
| | Third Quarter                             | 0.01       | 0.01     
| | Fourth Quarter                            | 0.003      | 0.003    
| |                                           |            |          
| | Year Ending December 31, 2003             |            |          
| |                                           | Price High | Price Low
| | First Quarter                             | 0.003      | 0.003    
| | Second Quarter, through to March 28, 2003 | 0.003      | 0.003    

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As of March 28, 2003 we had 66,406,415 shares of common stock
  outstanding held by approximately 258 record holders. The Company estimates
  that approximately 750 beneficial holders hold its common stock.

Dividend Policy

We have never declared or paid a cash dividend on our common
  stock. It is our present policy to retain earnings, if any, to finance the development
  and growth of our business. Accordingly, we do not anticipate that cash dividends
  will be paid until our earnings and financial condition justify such dividends,
  and there can be no assurance that we can achieve such earnings.

Recent Sales of Unregistered Securities.

There were no sales of unregistered securities in the past 12 months.

Item 6.Managements Discussion
  and Analysis of Financial Condition and Results ofOperations

The year ended December 31, 2002

The year under review has proved to be another difficult year
  at the parent level thanks to increasing legal pressure applied by Luc Schelfhout
  in what management believes is an attempt to regain control of the company that
  he sold to Aucxis in December 2000. At the subsidiary level, however, the operation
  continues to grow and is profitable.

The new Board of Aucxis established in May 2001 continues
  to seek out ways to maximize shareholder value with the remaining business units
  of Company. This has proven to be a difficult task, as we have had to address
  many difficult issues that remained in the Company after the previous management
  resigned in August 2001.

On a positive note, Aucxis Trading Solutions (ATS)
  continued to make profit on increased revenue. ATS maintained its position as
  the major provider of electronic auction systems for the perishable agricultural
  industry. Early in 2002, ATS delivered 12 Moby Clocks (mobile auction systems)
  to 7 fish auctions in southern Brittany. The electronic clocks, which are mounted
  on small battery powered vehicles, are driven through the markets amongst the
  boxes of fish. Their introduction was warmly welcomed by all market users. The
  markets are Audierne, Concarneau, Douarnenez, Loctudy, Le Guilvinec, Saint-Guénolé
  and Lesconil, all of which are controlled by the Quimper Chamber of Commerce.
  In 2002, their combined sales, comprising 63,150 tons of fish, had a total value
  of 188,200,000 EUR.

At the end of 2001, ATS established Auction Trading Services
  Nederland BV (ATS Holland) in cooperation with Flora Holland and
  Verenigde Bloemenveilingen Aalsmeer. We succeeded in our goal to continue the
  services of the former Nieaf Systems. The first fiscal year of ATS Holland was
  closed with positive results.

In the previous year, as a result of a review, seeking opportunities
  for consolidation,. it was decided to enter merger negotiations with Agro Marches
  Internationaux (AMI), which is a competitor in the electronic auction market
  and has also developed several complimentary and non-competitive products. Discussions
  with Agro Marches Internationaux have ceased as it was felt that it would not
  to be in the best interest of the shareholders to merge the two organizations
  at this time.

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The Company will continue to focus on the development of ATS
  as this business unit continues to capture new business and strives to be the
  premier supplier of electronic trading systems to perishable agriculture and
  fish trading world-wide. The management team at ATS is committed to the long
  term supply of quality trading systems its customers have come to expect.

ATS Highlights from 2002:

Following are a selection of key implementations in 2002.

Belgium - Fruits and Vegetables -The overall modernisation
  of the auction room at Vennootschap Mechelse Veilingen in Sint-Katelijne-Waver
  (6 clocks, 374 buyers) and of the central linking infrastructure of the network
  of Belgian fruit and vegetable auctions.

China - Flowers -The entire selling equipment of the
  high-tech auction room in Kunming International Flora Trading Centers
  new auction building (2 clocks, 300 buyers).

France - Fish -The supply of 12 Moby-Clocks and 335
  radiographic buying transmitters for the auction of the Chamber of Commerce
  in Quimper. The implementation of the information and auction network " W-Fish".
  France fish New selling system for the Granville fish market with remote bidding
  system. Continued omputerization of the fish market in Boulogne-sur-Mer by
  implementing mobile stations for the input and processing of supply and sales
  information.

Germany  Flowers -The entire selling equipment
  of the ultramodern auction room in NBV+UGA Herongens new auction building
  (5 clocks, 448 buyers) with remote bidding possibility

Holland - Fish -The further development of the EFICE
  network, which links 8 auction markets. The national roll-out of the information
  server and the backoffice system.

South Africa - Flowers -The modernisation of the selling system of Multiflora in Johannesburg.

Tanzania - Coffee -The implementation of an electronic selling system for the Coffee Board of Tanzania.

United Kingdom - Fish -The implementation of an electronic
  auction room for Shetland Seafood Auction, including remote bidding.

United States - Fish -The implementation of a back-office system for Portland Fish Market.

Results Of Operations

Comparison of Year ended December 31, 2002 to Year ended December 31, 2001

Revenues.

Revenue for the year ended December 31, 2002 was $4.7 million,
  as compared to $7.4 million in the year ended December 31, 2001. Revenue was
  lower as there was no contribution from the bankrupt Kwatrobox subsidiary. The
  revenue for 2001 included nine months of revenue from Kwatrobox, which was acquired
  on November 1, 2000. There has been an increase in revenue from ATS of approximately
  $1.1 million from the previous year contributing an additional $576,000 in gross
  profit. ATS derives its revenues from the development and installation of clock
  systems, cooling installations and maintenance for auction halls. Kwatrobox,
  which declared bankruptcy at the end of September 2001, specialized in the manufacturing
  and servicing of auction clock systems used in the auction of perishable commodities
  as well as the development of software specific to auctions and industries associated
  with auctions, including importers and exporters, the wholesale trade, line
  drivers and growers.

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Net Loss/Earnings.

Net loss for the year ended December 31, 2002 was $1,225,962
  a $13.5 million improvement from the previous year which had a loss of $14,727,621.
  The loss in the prior year was attributable to the $7.6 million in write-offs
  of goodwill, acquired workforce and acquired core technology and operational
  losses of $6.5 million. The goodwill, acquired workforce and acquired core technologies
  of Kwatrobox and I-Three Inc. were written off in their entirety due to the
  bankruptcy of Kwatrobox and the discontinued operations of I-Three. The $ 3.9
  million of goodwill relating to the purchase of ATS was written off even though
  ATS as a separate business unit continues to grow and increase in performance.
  Management felt it was important to remove the goodwill from the balance sheet
  to properly reflect the assets of the Company.

Loss from operations for the year ended December 31, 2002
  was $982,947 compared to $6,578,227 for the year ended December 31, 2001, an
  improvement of $5.6 million. This improvement is mainly attributable to the
  reduction in staff at the parent level, strong operating results of ATS and
  the absence of expenses of the bankrupt Kwatrobox subsidiary.

Operating Expenses.

Operating expenses, net of interest income, for the year ended
  December 31, 2002 were $3,596,907 as compared to $7,934,783 for the year ended
  December 31, 2001. This decrease in operating expenses was chiefly attributable
  the absence of expenses of the bankrupt Kwatrobox subsidiary and a reduction
  of $3 million in expenses at the parent company level. This reduction was due
  primarily to a significant reduction in employees and contractors as well as
  continued cost management measures implemented by current management. Operating
  expenses at ATS are higher by approximately $721,000, due primarily to a provision
  for the INFOMAR contract dispute ,increased legal and write-down.

A significant portion of the prior year expenditures of the
  Kwatrobox subsidiary relate to a software development project, PBS Verdeel Pro
  a proprietary software application, which failed when the delivery of the second
  phase of the project was found to be unsatisfactory to the intended customer.
  Accounting, audit and legal expenses relating to listing requirements, the patent
  application process, employee severances and other legal issues were also part
  of the expenses in the prior year.

There were no Research and development costs incurred in the
  current year compared to $506,000 for the year ended December 31, 2001 all of
  which were incurred by Kwatrobox. There were no further R&D expenses incurred
  related to the various non-core Tibco based software due to a suspension in
  development of this non-core technology.

Plan of Operation.

Our plan of operation for the coming year at the parent level involves the following

|1 | Planned divestitures of business units and or business
      Consideration is being given to full or partial dispositions
        of our 92.5% interest in ATS, the 33% interest in Holland BV and other
        company assets. We expect to undertake formal valuations for the various
        business units and will be accepting offers from competitors and other
        interested buyers.                                                                                                                                                                          
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2 | Settlements of outstanding liabilities
      Liabilities at the parent level consist of three main
        groups. Trade payables, the bulk of which were accrued before the current
        board took control of the Company,at approximately $390,000, an amount
        due to the former shareholders of Kwatrobox for approximately $356,000
        and bridge loans payable totaling $396,000 with accrued interest. Negotiations
        for settlements with regard to trade payables and the amount owed to the
        former Kwatrobox shareholders are ongoing.

10

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|3 | CMU evaluation
      Management will be reviewing the Collateral Management
        Utility (CMU) and related hardware to determine if the CMU justifies additional
        research and development. It is expected that this review will lead to
        discussions with interested parties for the development or sale of the
        CMU, depending on the outcome of any financings or business unit sale
        initiatives.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4 | Other strategic options and opportunities
      Management will continue its revenue enhancing and cost
        management initiatives while simultaneously considering other strategic
        options and opportunities for the Company.                                                                                                                                                                                          

At the subsidiary level, ATS continues to grow organically
  within its well-defined auction niche, gaining market share with competitive
  pricing enabled by efficient technology management and standardization. Management
  of Aucxis is now taking a more hands on approach with ATS with the desire of
  increasing margins and profitability at this subsidiary.

With respect to further vertical penetration within the perishable
  supply chain, we continue to consider acquisition/merger opportunities to achieve
  a broader product offering with sufficient potential to meet shareholder expectations.

Liquidity and Capital Resources

Cash has increased by approximately $300,000 from December 31, 2001tot $618,000.

On April 16, 2002, the Company and three lenders, ABN Capital
  (Belgium) NV, Bodin Saphir Pension Scheme, and J.J. Mennillo, entered into a
  Convertible Bridge Loan Agreement for $125,000 each, representing an aggregate
  loan by the lenders to the Company of $375,000. The Company and lenders placed
  the loan in escrow. The loan bears interest at a rate of 12.5% per annum, which
  accrues until the loan is repaid or converted to shares. Subject to certain
  terms and conditions of this agreement, each of the lenders is entitled to convert
  only such amounts as have been drawn down from its respective part of the principal
  of the loan into shares at $.01 per share. Interest has been capitalized to
  the loan balances. This was the only financing for the year ended December 31,
  2002 at the parent level.

The Companys subsidiary, ATS, has available a bank credit
  facility of approximately $220,000 (247,000 EUR) which can be used for operating
  purposes. This credit facility bears interest at the banks base rate plus
  1.25% and is secured by certain assets of ATS. ATS is seeking a bank guarantee
  facility from the Nationale Borg but this has not been finalized.

Working capital for the year ended December 31, 2002 resulted
  in a deficit of $1,243,921 compared to a deficit of $569,074 for the year ended
  December 31, 2001. The main reason being the inclusion of the bridge loan as
  a current payable and a $300,000 increase in deferred revenue. Current assets
  are up $1,140,000 mainly due to an increase in inventory and cash. . During
  2002, the Company disposed of its equity investment in Aucxis Limited (Australia)
  for proceeds of $84,000 and recognized a gain of $84,000.which has been used
  to fund current operations at the parent level.

Risks and Uncertainties

Our business plan is largely dependent upon the perishable
  commodity auction marketplace. While this marketplace has been experiencing
  a dramatic increase in size over the past few years, it has also seen many initiatives
  fail to achieve market acceptance. We believe in the strengths of the Company's
  capabilities, and in its ability to adapt to changes in the marketplace. However,
  there can be no assurance that the perishable commodity auction marketplace
  will continue to exist or that the skills of the Company will not become obsolete,
  or be circumvented. Due to the significant and rapid technological changes in
  the perishable commodity auction marketplace there can be no assurance that
  the introduction of new products or the development of technologies by other
  entities will not render the

11

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Companies products and services obsolete or unmarketable.
  Management is committed to grow by providing products and services that meet
  the needs of its customer base.

The Company has only a limited operating history upon which
  an evaluation of the Company and its prospects can be based. The Companys
  prospects must be considered in light of the risks, expenses and difficulties
  frequently encountered by companies seeking to introduce new products into new
  and rapidly evolving markets characterized by intense competition, as well as
  new paradigms being pursued such as traceability. To address these risks and
  uncertainties, the Company must, among other things, successfully market its
  existing products and technologies and complete and introduce products and product
  enhancements under development in a timely manner, continue to upgrade and commercialize
  its technologies, compete effectively with a large number of technologically
  sophisticated and well financed companies, time the introduction of new products
  and services in a manner synchronous with market demand, and attract, retain
  and motivate highly qualified personnel, manage rapid growth and integrate the
  personnel, technologies and operations of acquired businesses. There can be
  no assurance that the Company will successfully address these challenges.

The Company has incurred losses from operations in its last
  five fiscal years and as at December 31, 2002, had an accumulated deficit in
  shareholders' equity of $24.455million..

At the ATS level, the Company continues to seek out opportunities
  to acquire or invest in businesses, products and technologies that expand, compliment
  or are otherwise related to the Companys current business or products.
  The Company also considers from time to time opportunities to engage in joint
  ventures or other business collaborations with third parties to address particular
  market segments. Such acquisitions, investments, joint ventures or other business
  initiatives may involve significant commitments of financial and other resources
  of the Company. There can be no assurance that any such activity will be successful
  in generating revenue, income or other returns to the Company, or that financial
  or other resource committed to such activities will not be lost.

Item 7.Financial Statements.

| | (i)   | Report of Independent Accountants                                                                                                                         
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                           
| | (ii)  | Consolidated Balance Sheet as of December 31, 2002.                                                                                                       
| |       |                                                                                                                                                           
| | (iii) | Consolidated Statement of Operations Deficit and Accumulated
      Comprehensive Income for the years ended December 31, 2002 and December
      31, 2001.
| |       |                                                                                                                                                           
| | (iv)  | Consolidated Statement of Cash Flows for the years ended
      December 31, 2002 and December 31, 2001.                                                   
| |       |                                                                                                                                                           
| | (v)   | Consolidated Statement of Stockholders' Equity for the years
      ended December 31, 2002 and December 31, 2001.                                         
| |       |                                                                                                                                                           
| | (vi)  | Notes to Consolidated Financial Statements.                                                                                                               

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

On February 21, 2002, Aucxis engaged Manning Elliott as its
  new independent accountants. The engagement of Manning Elliott was recommended
  by the Audit Committee and approved by the Board of Directors of the Company.
  There were no changes or disagreements with accountants in the current year.

12

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PART III

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

Executive Officers and Directors

The following table sets forth the executive officers and
  directors of the Company, which officers are elected annually by the Board of
  Directors and hold office at the discretion of the Board.

|NAME | AGE            | POSITION
|---- | -------------- | --------
|     |                |         
|     | Gary Jessop    | 40      
|     |                |         
|     | Dennis Petke   | 39      
|     |                |         
|     | Lewis Reinders | 65      

Summary Background of Executive Officers and Directors

Gary Jessop, Chairman.

Gary Jessop has been the Chairman of the board of directors
  since May 31, 2001. Gary Jessop is a partner with the Ottawa office of Blake,
  Cassels & Graydon LLP. He works primarily in the corporate/securities law
  group with his practice concentration involving general corporate/securities
  transactions, including acquisitions, private placements and prospectus offerings,
  both domestic and cross-border. Mr. Jessop provides ongoing general corporate
  advice to a number of high-technology companies. Mr. Jessop also regularly advises
  corporate boards and is corporate secretary to a number of companies. Mr. Jessop
  is a member of the Canadian Bar Association - Business Law and Media and Communications
  Law sections, the County of Carleton Law Association, and the Ottawa Association
  of Communications Lawyers. He was admitted to the Ontario bar in 1992 and has
  been a partner at Blake, Cassels & Graydon LLP since 1997. Mr. Jessop has
  a B.Comm from Carleton University (1985) and an LL.B. from the University of
  Ottawa (1990).

Dennis Petke, Chief Financial Officer and Corporate Secretary.

Dennis Petke has served as Chief Financial Officer
  of the Company since August 21, 2001.Dennis Petke is currently a director
  of Crux Industries. Mr. Petke is qualified as a Chartered Accountant in Canada
  and is a member of the Institute of Chartered Accountants of B.C (1995). Mr.
  Petke provides contract and consulting services to public and private companies
  including quarterly reporting and corporate secretary services. His expertise
  is in the areas of operations analysis, systems design and implementation, corporate
  finance and corporate administration. Throughout his professional career, Mr.
  Petke has been involved with various financings including private placements,
  preferred shares issues and debt financings. Mr. Petke specialized in the audit
  of public companies while completing his articles.

Lewis Reinders, Director.

Mr. Reinders has been a director of the Company since May
  31, 2001. Mr. Reinders is a registered professional engineer in the Province
  of British Columbia. At present, Mr. Reinders is the chairman of the official
  committee representing the equity holders of Sanga International Inc. He is
  the president of Lewis and Associates Engineering Ltd. providing national and
  international consulting services. He is also a board member of several private
  companies in the care-home and real estate industry. Between 1980 and 1997,
  Mr. Reinders was a partner and member of the board of directors of associated
  engineering, an engineering company with offices throughout Canada and overseas.
  Between 1990 and 1997, Mr. Reinders was the vice president-international of
  Associated Engineering International Ltd., responsible for raising capital for
  and managing international projects. Mr. Reinders is currently a director of
  Crux Industries Inc.

13

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The Company has no other employees. There are no family relationships
  between the directors and the executive officers of the Company. No director
  or executive officer of the Company has been involved in any legal proceedings
  during the past five years. Currently, upon being appointed to the Board of
  Directors, a director of the Company receives options to purchase up to 50,000
  shares of the Company's common stock under the Company's 1999 Stock Option Plan.
  In addition, the Company compensates each of its directors Cdn $5,000 per annum
  and Cdn $500 for each meeting held for which such director attends.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires
  the Company's executive officers and directors, and persons who beneficially
  own more than 10% of the Company's common stock (Reporting Person),
  to file with the Securities and Exchange Commission, on a timely basis, the
  initiation of their status as a Reporting Person and any changes with respect
  to their beneficial ownership of the Company's common stock. Such persons are
  required to furnish the Company with copies of all Section 16(a) forms they
  file. Based solely on its review of such forms received by it, the Company believes
  all filing requirements applicable to its directors, executive officers and
  beneficial owners of 10% or more of the common stock were complied with during
  fiscal 2001.

Item 10.     Executive Compensation.

Summary of Cash and Certain Other Compensation

The following table sets forth certain information for the
  two (2) years ended December 31, 2002 and December 31, 2001 regarding the compensation
  of the Company's Named Executive Officers:

|SUMMARY COMPENSATION TABLE                                
|----------------------------------------------------------
|Name and Principal
      Position                         
|Awards                                                    
|Salary
      (US$)                                        
|Dan McKenzie,
      President, CEO and 
      Chairman (1)
|David Hackett,
      Chief Financial 
      Officer(2)    
|Dennis Petke,
      Chief Financial 
      Officer (3)    
|Neil Murphy,
      Chief Operating 
      Officer(4)      

14

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|(1) | Dan McKenzie resigned as President,
        Chief Executive Officer and Chairman August 13, 2001. The salary above
        is based on the prorated portion for the year.. In addition, advances
        of $9,600 were forgiven and $8,800 was paid as part of a severance settlement. 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                         
|(2) | David Hackett resigned as Chief Financial
        Officer and Corporate Secretary August 13, 2001. The salary above is based
        on the prorated portion for the year.. In addition, advances of $9,800
        were forgiven and $8,400 was paid as part of a severance settlement.
|    |                                                                                                                                                                                                                                                                                         
|(3) | Dennis Petke was named Chief Financial
        Officer and Corporate Secretary August 21, 2001. Mr. Petke is compensated
        under contract through Q4 Financial Group Inc., a company controlled by
        Mr. Petke, at a rate of $6,875 per month.                              
|    |                                                                                                                                                                                                                                                                                         
|(5) | Neil Murphy was named Chief Operating
        Officer August 21, 2001. Mr. Murphy is compensated under contract at $9,375
        per month. Mr. Murphy resigned effective July 1, 2002.                                                                                                

STOCK OPTION GRANTS IN LAST FISCAL YEAR

No stock options were granted in the year ended December 31, 2002.

Stock Option Plans

The Company maintains a stock option plan designated as the
  1999 Stock Option Plan (the "1999 Plan"). The 1999 Plan reserves 9,000,000 shares
  of the Companys Common Stock for issuance, upon the exercise of options
  designated as either (i) incentive stock options ("ISOs") under the Internal
  Revenue Code of 1986, as amended (the "Code") or (ii) non-qualified options.
  Nonqualified options may be granted to consultants, directors (whether or not
  they are employees), employees or officers of the Company. In certain circumstances,
  the exercise of stock options may have an adverse effect on the market price
  of the Company's Common Stock.

The purpose of the 1999 Plan is to encourage stock ownership
  by certain directors, officers and employees of the Company and certain other
  people instrumental to the success of the Company and give them a greater personal
  interest in the success of the Company. The 1999 Plan is administered by the
  Board of Directors and/or the Compensation Committee. The Board or the Compensation
  Committee, as applicable, within the limitations of the 1999 Plan, determines
  the persons to whom options will be granted, the number of shares to be covered
  by each option, whether the options granted are intended to be ISOs, the duration
  and rate of exercise of each option, the option purchase price per share and
  the manner of exercise, the time, manner and form of payment upon exercise of
  an option, and whether restrictions such as repurchase rights by the Company
  are to be imposed on shares subject to options. ISOs granted under the 1999
  Plan may not be granted at a price less than the fair market value (110% of
  fair market value in the case of ISOs granted to persons holding 10% or more
  of the voting stock of the Company) of the Common Stock on the date of grant.
  Options granted under the 1999 Plan will expire not more than ten years from
  the date of grant (five years in the case of ISOs granted to persons holding
  10% or more of the voting stock of the Company). Except as otherwise provided
  in the individual option agreement granting such options, any options granted
  under the 1999 Plan are not transferable during the optionee's lifetime but
  are transferable at death by will or by the laws of descent and distribution.

Employment Agreements

There are currently no employment agreements in effect with the Companys executive officers.

15

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

The following table sets forth certain information regarding
  beneficial ownership of the shares of our common stock as of the date of March
  28, 2003 by (i) each person who is known by management to own beneficially more
  than five percent (5%) of our Company's issued and outstanding shares of common
  stock, (ii) our Chief Operating Officer and each of our Company's other most
  highly compensated executive officers whose compensation on an annualized basis
  (salary and bonus) for services rendered in all capacities to the Company during
  the year ended December 31, 2001 exceeded US $100,000 (collectively, the Named
  Executive Officers), and (iii) each of our Company's directors.

|                                                                               |  |                      |  | Percentage of
|------------------------------------------------------------------------------ |  | -------------------- |  | -------------
|Name and Address of Beneficial Owner                                           |  | Number of Shares (1) |  | Class        
|                                                                               |  |                      |  |              
|J. Andrews, in Trust for the Shareholders of Sanga International
      Inc.(2) |  | 16,500,000           |  | 24.9%        
|c/o Pachulski, Stong, Ziehl, Yang & Jones P.C.                                 |  |                      |  |              
|10100 Santa Monica Blvd., Suite 1100, Los Angeles, CA 90067                    |  |                      |  |              
|                                                                               |  |                      |  |              
|ABN AMRO Capital Investments (Belgie) N.V.                                     |  | 4,072,639            |  | 6.1%         
|Regentlaan 53, 1000 Brussels, Belgium                                          |  |                      |  |              
|                                                                               |  |                      |  |              
|Luc Schelfhout                                                                 |  | 3,636,364 (3)        |  | 5.5%         
|Bornte 204/A, Stekene, Belgium 9190                                            |  |                      |  |              
|                                                                               |  |                      |  |              
|Neil Murphy, COO                                                               |  | Nil                  |  | *            
|c/o 220 King Street West, Suite 200, Toronto, Ontario M5H
      1K4            |  |                      |  |              
|                                                                               |  |                      |  |              
|Bart Sonck                                                                     |  | 150,000 (4) (5)      |  | *            
|c/o 220 King Street West, Suite 200, Toronto, Ontario M5H
      1K4            |  |                      |  |              
|                                                                               |  |                      |  |              
|Gary Jessop, Chairman                                                          |  | 100,000 (5)          |  | *            
|c/o 220 King Street West, Suite 200, Toronto, Ontario M5H
      1K4            |  |                      |  |              
|                                                                               |  |                      |  |              
|Lewis Reinders                                                                 |  | 100,000 (5)          |  | *            
|c/o 220 King Street West, Suite 200, Toronto, Ontario M5H
      1K4            |  |                      |  |              
|                                                                               |  |                      |  |              
|Dennis Petke                                                                   |  | 112,000 (5) (6)      |  | *            
|c/o 220 King Street West, Suite 200, Toronto, Ontario M5H
      1K4            |  |                      |  |              
|                                                                               |  |                      |  |              
|All executive officers and directors as a group (3 persons)                    |  | 312,000 (4) (5) (6)  |  | *            

* represents less than 5%

|1) | The number and percentage of shares beneficially
        owned is determined in accordance with Rule 13d-3 under the Securities
        Exchange Act of 1934, as amended (the Exchange Act), and the
        information is not necessarily indicative of beneficial ownership for
        any other purpose. Under such rule, beneficial ownership includes any
        share as to which 33 the individual or entity has voting power or investment
        power. Unless otherwise indicated, each person or entity has sole voting
        and investment power with respect to shares shown as beneficially owned.
        A person is deemed to be the beneficial owner of securities that can be
        acquired by such person within 60 days, whether pursuant to the exercise
        of options, conversion of securities or otherwise.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2) | The shares are beneficially owned by Sanga
        International Inc., which is currently undergoing a restructuring pursuant
        to Chapter 11 of United States Bankruptcy laws. Sanga does not have any
        controlling shareholder. The sole officer of Sanga is John Andrews and
        its directors are John Andrews, Mitch Stein and Masood Jabor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3) | Includes 1,818,182 shares held by Mr. Schelfhouts spouse, Hilde
      de Laet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

16

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|4) | Includes options enabling the holder to purchase up to 50,000 shares,
      re-pricedat an exercise price of $0.35 per share on December 30,
      2000.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                         
|5) | Includes options enabling the holder to purchase up to 100,000 shares,
      pricedat an exercise price of $0.35 per share.                             
|   |                                                                                                                                                         
|6) | Includes 12,000 shares held directly.                                                                                                                   

Item 12.     Certain Relationships and Related Transactions.

On December 30, 2000, Dan McKenzie, the former President,
  Chief Executive Officer and a former director of the Company entered into an
  agreement (the McKenzie Employment Agreement) to serve as President
  and Chief Executive Officer of the Company, effective January 2000, in addition
  to serving on the board of directors of the Company. The McKenzie Employment
  Agreement provided for a base fee of CDN$200,000 per year, payable in equal
  semi-monthly payments, plus a bonus of CDN$50,000 subject to meeting certain
  benchmarks outlined in the agreement. Mr. McKenzie was provided with insurance
  benefits and other perquisites, including car allowance and professional fees,
  along with four weeks vacation per annum, and the reimbursement of normal
  and reasonable business expenses. Under the McKenzie Employment Agreement, Mr.
  McKenzie was also granted options to purchase up to an aggregate of 1,500,000
  shares of the Companys common stock. These options vested on the date
  of grant and were exercisable at approximately US$0.35 per share. The McKenzie
  Employment Agreement also provided for a one (1) year non-competition clause
  and a one (1) year non-solicitation clause.

On December 30, 2000, David Hackett, the former Chief Financial
  Officer of the Company, entered into a an agreement (the Hackett Employment
  Agreement) with respect to his capacity as Chief Financial Officer of
  the Company, effective May 1, 1999. The Hackett Employment Agreement provided
  for a base fee of CDN$165,000 per year, payable in equal semi-monthly payments,
  plus a bonus of CDN$35,000 subject to meeting certain benchmarks outlined in
  the agreement. Mr. Hackett was also provided with insurance benefits and other
  perquisites, including car allowance and professional fees, along with four
  weeks vacation per annum, and the reimbursement of normal and reasonable business
  expenses. Under the Hackett Employment Agreement, Mr. Hackett was granted options
  to purchase up to an aggregate of 1,000,000 shares of the Company's common stock.
  These options vested on the date of grant and were exercisable at approximately
  US $0.35 per share. The Hackett Employment agreement also provided for a one
  (1) year non-competition clause and a one (1) year non-solicitation clause.

On August 2, 2001, the Company entered into an amending agreement
  with Dan McKenzie (the McKenzie Amending Agreement) amending the
  terms of the McKenzie Employment Agreement. Among other things, the McKenzie
  Amending Agreement provided that the term of Dan McKenzies employment
  with the Company would expire on December 31, 2001 unless extended or earlier
  terminated. The McKenzie Amending Agreement also provided that if Dan McKenzie
  resigned from his position with the Company he would continue to perform his
  duties up to a maximum of six months as a transition period. In addition, pursuant
  to the McKenzie Amending Agreement, if Dan McKenzie resigned, the Company would
  pay to Mr. McKenzie the severance amount prescribed in the McKenzie Employment
  Agreement.

On August 2, 2001 the Company entered into an amending agreement
  with David Hackett (the Hackett Amending Agreement) amending the
  terms of the Hackett Employment Agreement. Among other things, the Hackett Amending
  Agreement provided that the term of David Hacketts employment with the
  Company would expire on December 31, 2001 unless extended or earlier terminated.
  The Hackett Amending Agreement also provided that if David Hackett resigned
  from his position with the Company he would continue to perform his duties up
  to a maximum of six months as a transition period. In addition, pursuant to
  the Hackett Amending Agreement, if David Hackett resigned, the Company would
  pay to Mr. Hackett the severance amount prescribed in the Hackett Employment
  Agreement.

17

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On October 9, 2001, the Company entered into minutes of settlement
  and a full and final mutual release and indemnification with Dan McKenzie, the
  former President, Chief Executive Officer and a former director of the Company
  and David Hackett, the former Chief Financial Officer of the Company, relating
  to an action commenced by Dan McKenzie and David Hackett in the Ontario Superior
  Court of Justice claiming damages for beach of contract. The Company paid the
  aggregate amount of CDN$63,000 to Dan McKenzie and David Hackett in full and
  final satisfaction of all claims by Dan McKenzie and David Hackett against the
  Company. On October 17, 2001, the Ontario Superior Court of Justice dismissed
  the action by Dan McKenzie and David Hackett against the Company.

The Company has an ongoing agreement with Blake, Cassels &
  Graydon LLP for the provision of legal services to the Company. Mr. Gary Jessop,
  Chairman of the Company, is a partner with Blake, Cassels & Graydon LLP.

The Company has an ongoing agreement with Q4 Financial Group
  Inc.(Q4 Financial) for the provision of accounting services including
  the provision of an accounting and administration office in Vancouver, BC, Canada.
  Dennis Petke, Chief Financial Officer, controls Q4 Financial and receives his
  compensation as Chief Financial Officer through this company.

Management believes that the terms and conditions of the foregoing
  transactions were no less favorable to the Company than terms attainable from
  unaffiliated third parties.

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

| |        | (a) | Exhibits                                                                       |               
| | ------ | --- | ------------------------------------------------------------------------------ | --------------
| |        |     |                                                                                |               
| | Number |     |                                                                                | (a)Description
| |        |     |                                                                                |               
| | 21.1   |     | List of subsidiaries                                                           |               
| |        |     |                                                                                |               
| | 99.1   |     | Certification pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to
| |        |     | Section 906 of the Sarbanes-Oxley Act of 2002                                 
| |        |     |                                                                                |               
| |        |     |                                                                                |               
| |        |     |                                                                                |               
| |        | (b) | Reports on Form 8-K                                                            |               
| |        |     |                                                                                |               
| |        |     | None                                                                           |               

18

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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.

|                      | Aucxis Corp. (formerly e-Auction Global
|--------------------- | ---------------------------------------
|                      | Trading Inc.)                          
|                      |                                        
|Dated: March 28, 2003 |                                        
|                      | By: /s/ Dennis Petke                   
|                      |                                        
|                      | Dennis Petke, Chief Financial Officer  

In accordance with the Exchange
  Act, this report has been signed by the following persons in the capacities
  and on the dates indicated:

|Signature          | Title                   | Date          
|------------------ | ----------------------- | --------------
|                   |                         |               
|                   |                         |               
|/s/ Dennis Petke   | Chief Financial Officer | March 28, 2003
|                   |                         |               
|Dennis Petke       |                         |               
|                   |                         |               
|/s/ Gary Jessop    | Director                | March 28, 2003
|                   |                         |               
|Gary Jessop        |                         |               
|                   |                         |               
|/s/ Lewis Reinders | Director                | March 28, 2003
|                   |                         |               
|Lewis Reinders     |                         |               

31

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AUCXIS CORP.   (a Nevada Corporation)  CONSOLIDATED FINANCIAL STATEMENTS  DECEMBER 31, 2002


---









---





| | Independent Auditors' Report
      To the Board of Directors
        and Stockholders of
        Aucxis Corp. (formerly e-Auction Global Trading Inc.)
        (a Nevada Corporation)
      We have audited the accompanying consolidated balance
        sheets of Aucxis Corp. (formerly e-Auction Global Trading Inc.) as of
        December 31, 2002 and December 31, 2001 and the related consolidated statements
        of operations, deficit and comprehensive loss and cash flows for each
        of the two 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 generally
        accepted auditing standards in the 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 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 consolidated financial statements
        referred to above present fairly, in all material respects, the consolidated
        financial position of Aucxis Corp. (formerly e-Auction Global Trading
        Inc.) as of December 31, 2002 and December 31, 2001, and the consolidated
        results of its operations and its cash flows for each of the two years
        then ended in conformity with generally accepted accounting principles
        in the United States.
      The accompanying consolidated financial statements have
        been prepared assuming the Company will continue as a going concern. As
        discussed in Note 1 to the financial statements, the Company has a working
        capital deficiency of $1,225,962 and has recurring operating losses which
        accumulated to December 31, 2002 of $24,455,766. These factors raise substantial
        doubt about the Companys ability to continue as a going concern.
        Managements plans in regard to these matters are also discussed
        in Note 1. These financial statements do not include any adjustments which
        might result from the outcome of this uncertainty.
      
      Chartered Accountants
      Vancouver, Canada
      March 22, 2003 | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 



---



---

CONSOLIDATED BALANCE SHEET

---

|DECEMBER 31                                                   |   | 2002        |   |   | 2001        |  
|------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                              |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|ASSETS                                                        |   |             |   |   |             |  
|CURRENT ASSETS                                                |   |             |   |   |             |  
|Cash and equivalents                                          | $ | 617,811     |   | $ | 310,050     |  
|Accounts receivable (Note 5)                                  |   | 1,135,903   |   |   | 1,230,348   |  
|Inventory (Note 6)                                            |   | 1,394,028   |   |   | 404,310     |  
|Prepaid expenses                                              |   | 51,218      |   |   | 113,528     |  
|                                                              |   |             |   |   |             |  
|Total Current Assets                                          |   | 3,198,960   |   |   | 2,058,236   |  
|                                                              |   |             |   |   |             |  
|Investments (Note 7)                                          |   | 160,070     |   |   | 115,772     |  
|Property, plant and equipment (Note 8)                        |   | 297,624     |   |   | 549,272     |  
|Software (Note 8)                                             |   | -           |   |   | 157,582     |  
|Acquired core technology (Notes 4 and 10)                     |   | 299,584     |   |   | 449,381     |  
|                                                              |   |             |   |   |             |  
|Total Assets                                                  | $ | 3,956,238   |   | $ | 3,330,243   |  
|                                                              |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|LIABILITIES                                                   |   |             |   |   |             |  
|CURRENT LIABILITIES                                           |   |             |   |   |             |  
|Accounts payable and accrued liabilities (Note
      13)      | $ | 1,592,618   |   | $ | 1,462,832   |  
|Due to related parties (Note 14)                              |   | 356,274     |   |   | 352,335     |  
|Deferred revenue                                              |   | 2,000,082   |   |   | 711,551     |  
|Current portion of long-term debt (Note 16)                   |   | 488,666     |   |   | 89,055      |  
|Deferred taxes                                                |   | 5,241       |   |   | 11,577      |  
|                                                              |   |             |   |   |             |  
|Total Current Liabilities                                     |   | 4,442,881   |   |   | 2,627,350   |  
|                                                              |   |             |   |   |             |  
|Long-term debt (Note 16)                                      |   | 105,859     |   |   | 165,643     |  
|Non-controlling interest                                      |   | 2,400       |   |   |            |  
|                                                              |   |             |   |   |             |  
|Total                                                         |   | 4,551,140   |   |   | 2,792,993   |  
|                                                              |   |             |   |   |             |  
|Mandatory Redeemable Shares of Common Stock
      (Note 4(a)) |   | 4,818,181   |   |   | 4,818,181   |  
|                                                              |   |             |   |   |             |  
|Total Liabilities                                             |   | 9,369,321   |   |   | 7,611,174   |  
|                                                              |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|STOCKHOLDERS EQUITY (DEFICIT)                                |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|COMMON STOCK, $0.001 par value; 250,000,000
      shares      |   |             |   |   |             |  
|authorized, 62,773,051 and
      62,714,551 issued and        |   |             |   |   |             |  
|outstanding respectively
      (Note 18)                      |   | 62,773      |   |   | 62,773      |  
|Additional paid-in capital                                    |   | 18,736,200  |   |   | 18,736,200  |  
|Accumulated other comprehensive income                        |   | 243,710     |   |   | 149,900     |  
|Deficit                                                       |   | (24,455,766 | ) |   | (23,229,804 | )
|                                                              |   |             |   |   |             |  
|Total Stockholders Equity (Deficit)                          |   | (5,413,083  | ) |   | (4,280,931  | )
|                                                              |   |             |   |   |             |  
|Total Liabilities and Stockholders Equity
      (Deficit)    | $ | 3,956,238   |   | $ | 3,330,243   |  
|                                                              |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|Contingencies (Notes 1 and 23)                                |   |             |   |   |             |  

Approved on behalf of the Board of Directors:



|/s/ Gary Jessop |  | /s/ Lewis Reinders
|--------------- |  | ------------------
|                |  |                   



(The accompanying notes are an integral part of these consolidated
  financial statements)

---



---

CONSOLIDATED STATEMENTS OF OPERATIONS, DEFICIT AND COMPREHENSIVE LOSS

---

|DECEMBER 31                                                                          |   | 2002        |   |   | 2001        |  
|------------------------------------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Revenue                                                                              | $ | 4,717,887   |   | $ | 7,442,479   |  
|Cost of goods sold                                                                   |   | (1,764,616  | ) |   | (3,429,377  | )
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   | 2,963,271   |   |   | 4,013,102   |  
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Selling, general and administrative expense                                          |   | 3,596,907   |   |   | 7,934,783   |  
|Depreciation and amortization expense                                                |   | 349,311     |   |   | 2,656,546   |  
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   | 3,946,218   |   |   | 10,591,329  |  
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Loss from operations before the under-noted                                          |   | (982,947    | ) |   | (6,578,227  | )
|                                                                                     |   |             |   |   |             |  
|Impairment of goodwill, acquired workforce,
      software and                       |   |             |   |   |             |  
|acquired core technology (Note 4(d))                                                 |   | (104,796    | ) |   | (7,572,735  | )
|                                                                                     |   |             |   |   |             |  
|Losses on sales and write down of assets                                             |   | (221,704    | ) |   | -           |  
|                                                                                     |   |             |   |   |             |  
|Gain on disposal of investment (Note 7)                                              |   | 84,000      |   |   | -           |  
|                                                                                     |   |             |   |   |             |  
|Share of income (loss) of equity investment
      (Note 7)                           |   | 38,641      |   |   | (488,028    | )
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Loss before income taxes and non-controlling
      interest                          |   | (1,186,806  | ) |   | (14,638,990 | )
|                                                                                     |   |             |   |   |             |  
|Income tax expense                                                                   |   | (36,756     | ) |   | (86,840     | )
|                                                                                     |   |             |   |   |             |  
|Non-controlling interest                                                             |   | (2,400      | ) |   | (1,791      | )
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Loss for the year                                                                    |   | (1,225,962  | ) |   | (14,727,621 | )
|                                                                                     |   |             |   |   |             |  
|Accretion of mandatory redeemable common stock                                       |   |             |   |   |             |  
|to redemption value (Note
      4(a))                                                |   | -           |   |   | (243,817    | )
|                                                                                     |   |             |   |   |             |  
|Deficit beginning of year                                                            |   | (23,229,804 | ) |   | (8,258,366  | )
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Deficit end of year                                                                  | $ | (24,455,766 | ) | $ | (23,229,804 | )
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Basic loss per share                                                                 |   | (.02        | ) |   | (0.23       | )
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Net loss for the year                                                                | $ | (1,225,962  | ) | $ | (14,727,621 | )
|                                                                                     |   |             |   |   |             |  
|Foreign currency translation adjustments and                                         |   |             |   |   |             |  
|other comprehensive income                                                           |   | 93,810      |   |   | 274,721     |  
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Comprehensive loss                                                                   | $ | (1,332,152  | ) | $ | (14,452,900 | )
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|Shares used in computing basic earnings per
      share                              |   | 62,738,926  |   |   | 62,738,926  |  
|                                                                                     |   |             |   |   |             |  
|                                                                                     |   |             |   |   |             |  
|(Diluted loss per share has not been presented
      as the result is anti-dilutive) |   |             |   |   |             |  

(The accompanying notes are an integral part of these consolidated financial
  statements)

---



---

CONSOLIDATED STATEMENTS OF CASH FLOWS

---

|DECEMBER 31                                                              |   | 2002       |   |   | 2001        |  
|------------------------------------------------------------------------ | - | ---------- | - | - | ----------- | -
|                                                                         |   |            |   |   |             |  
|                                                                         |   |            |   |   |             |  
|                                                                         |   |            |   |   |             |  
|OPERATING ACTIVITIES                                                     |   |            |   |   |             |  
|Net loss for the year                                                    | $ | (1,225,962 | ) | $ | (14,727,621 | )
|Adjustments to reconcile net loss to cash                                |   |            |   |   |             |  
|Interest                                                                 |   | 30,864     |   |   |            |  
|Depreciation and amortization                                            |   | 349,311    |   |   | 2,656,546   |  
|Foreign exchange                                                         |   | 22,223     |   |   | 2,930       |  
|Non-controlling interest                                                 |   | 2,400      |   |   | 1,791       |  
|Share of (income) loss of
      equity investment                        |   | (38,641    | ) |   | 488,028     |  
|Impairment of goodwill and
      intangibles                             |   | 104,796    |   |   | 7,572,735   |  
|Loss (gain) on sale of assets                                            |   | 221,704    |   |   | (8,940      | )
|Gain on disposal of investment                                           |   | (84,000    | ) |   | -           |  
|Net change in non-cash working
      capital items (Note 19)             |   | 582,957    |   |   | (867,180    | )
|                                                                         |   |            |   |   |             |  
|CASH USED IN OPERATING ACTIVITIES                                        |   | (34,348    | ) |   | (4,881,711  | )
|                                                                         |   |            |   |   |             |  
|                                                                         |   |            |   |   |             |  
|FINANCING ACTIVITIES                                                     |   |            |   |   |             |  
|Related party repayments                                                 |   | -          |   |   | (967,456    | )
|Issuance of capital stock                                                |   | -          |   |   | 585         |  
|Long-term debt net of repayment                                          |   | 308,963    |   |   | (45,680     | )
|                                                                         |   |            |   |   |             |  
|CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                          |   | 308,963    |   |   | (1,012,551  | )
|                                                                         |   |            |   |   |             |  
|                                                                         |   |            |   |   |             |  
|INVESTING ACTIVITIES                                                     |   |            |   |   |             |  
|Purchase of property, plant and equipment net
      of disposal proceeds |   | (68,997    | ) |   | (4,357      | )
|Purchase of Auction Trading Services Netherlands
      B.V.              |   | (5,657     | ) |   | -           |  
|Proceeds of disposal of Aucxis Limited (Australia)                       |   | 84,000     |   |   | -           |  
|                                                                         |   |            |   |   |             |  
|CASH USED IN INVESTING ACTIVITIES                                        |   | 9,346      |   |   | (4,357      | )
|                                                                         |   |            |   |   |             |  
|                                                                         |   |            |   |   |             |  
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         |   |            |   |   |             |  
|DURING THE YEAR                                                          |   | 283,961    |   |   | (5,898,619  | )
|                                                                         |   |            |   |   |             |  
|EFFECT OF FOREIGN EXCHANGE ON CASH                                       |   | 23,800     |   |   | 3,500       |  
|                                                                         |   |            |   |   |             |  
|CASH AND CASH EQUIVALENTS BEGINNING OF YEAR                              |   | 310,050    |   |   | 6,205,169   |  
|                                                                         |   |            |   |   |             |  
|                                                                         |   |            |   |   |             |  
|CASH AND CASH EQUIVALENTS END OF YEAR                                    | $ | 617,811    |   | $ | 310,050     |  
|                                                                         |   |            |   |   |             |  
|                                                                         |   |            |   |   |             |  
|Supplemental cash flow information:                                      |   |            |   |   |             |  
|                                                                         |   |            |   |   |             |  
|Interest paid                                                            | $ | 86,495     |   | $ | 71,362      |  
|Taxes paid                                                               |   | 36,756     |   |   | 86,840      |  



(The accompanying notes are an integral part of these consolidated
  financial statements)



---



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

---

---

|1. | NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS
        Aucxis Corp. (the Company) changed its name from e-Auction
          Global Trading Inc. in June 2001.
        The Company is currently developing e-business services for the perishable
          commodity marketplace primarily in Europe. In addition, through its
          subsidiary, Aucxis Trading Solutions N.V. (ATS) (formerly Schelfhout
          Computer Systemen N.V.), the Company is engaged in the installation
          and maintenance of auction clock and cooling systems for traditional
          auction halls and the development of software for auctions.
        In September 2001, the Company decided to discontinue its financial
          support for its subsidiaries in the Netherlands, including V-Wholesale
          N.V., Kwatrobox B.V., Palm Verlingsystemen B.V., Scoop Software B.V.,
          Automatiseringsbureau Palm N.V., and Nieaf Systems B.V. (together Kwatrobox)
          as the businesses operated by these companies no longer form part of
          the companys refocused business strategy. As a result, Kwatrobox
          and its operating subsidiaries, Automatiseringsbureau Palm N.V. and
          Nieaf Systems B.V., filed for bankruptcy and under the bankruptcy laws
          of the Netherlands, a trustee took control of Kwatrobox and its subsidiaries
          in October 2001.
        The Company has a serious working capital deficiency as at December
          31, 2002 and has suffered recurring operating losses and has an accumulated
          deficit as at December 31, 2002. These factors raise substantial doubt
          about the ability of the Company to continue as a going concern.
        The ability of the Company to continue as a going concern is dependent
          upon effective implementation of revenue and cost management alternatives
          and the success of potential future external financing initiatives.
        Management is considering various revenue and cost management alternatives
          and is examining a variety of options to re-organize the Company. It
          is not possible at this time to predict with any assurance the success
          of these initiatives.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | BASIS OF PRESENTATION
      These financial statements consolidate the accounts of
        the Company, Aucxis Corp. (Nevada) and its subsidiaries as follows:
      100%      Aucxis
        Corp. N.V. (Belgium) 
             92.5%     Aucxis Trading
        Solutions N.V. (formerly Schelfhout Computer Systemen N.V. (Belgium) 
             100%       I-Three
        Inc. (Canada) 
             100%      e-Auction
        Global Trading Inc. (Barbados) 
             100%      Aucxis
        Corp. (Canada)
      The December 31, 2001 comparative figures also include
        the operations and cash flows of the Netherlands subsidiaries described
        in Note 1 as these entities were controlled and operated by the Company
        during 2001 prior to these entities filing for bankruptcy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|2. | BASIS OF PRESENTATION (continued)
        The financial statements also include the Companys share of
          the net assets and earnings or loss of the Companys 48.2% investment
          in Aucxis Limited (Australia) and 40% investment in SDL Invest N.V.
          (Belgium) which are accounted for by the equity method. During 2002,
          the Company disposed of its investment in Aucxis Limited (Australia).
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                         

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Foreign exchange translation
        The Companys functional currency is U.S. dollars, except that
          its main operating subsidiaries function in euros. Foreign denominated
          assets and liabilities are measured in U.S. dollars using the exchange
          rate prevailing at year end. Resulting remeasurement adjustments are
          included in income. The Company applies the average exchange rate for
          the year to translate revenues, expenses and gains and losses, into
          U.S. dollars. The resulting translation adjustments are included as
          a separate component of comprehensive loss within shareholders
          equity.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (b) | Financial instruments
      The Companys financial instruments consist of cash and cash equivalents
        and bank indebtedness, accounts receivable, accounts payable and accrued
        liabilities amounts, due to related parties, deferred revenue, long-term
        debt and contingencies. The fair values of these financial instruments
        approximate their carrying values due to their short-term nature and normal
        trade terms.                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (c) | Property, plant and equipment
      Property, plant and equipment are recorded at cost less accumulated
        depreciation. Property, plant and equipment are depreciated from the date
        of acquisition using the following rates and methods:                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |  |                        |                       
| |  | ---------------------- | ----------------------
| |  | Furniture and fixtures | 10 years straight-line
| |  | Leaseholds             | 4 years straight-line 
| |  | Tools and equipment    | 5 years straight-line 
| |  | Vehicles               | 5 years straight-line 
| |  | Software               | 5 years straight-line 

| |     |                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (d) | Acquired workforce
      Acquired workforce was recorded at cost and amortized
        on a straight-line basis over its expected life of approximately five
        years. Acquired workforce related to I-Three Inc. was written off during
        2001.                 
| |     |                                                                                                                                                                                                                                                                             
| | (e) | Acquired core technology
      Acquired core technology is recorded at cost and amortized
        on a straight-line basis over its expected life of approximately five
        years. Acquired core technology related to I-Three Inc. was written off
        during 2001.



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------
|   |                                                       
|   | (f)                                                   
|   |                                                       
|   | (g)                                                   
|   |                                                       
|   | (h)                                                   
|   |                                                       
|   | (i)                                                   
|   |                                                       
|   | (j)                                                   



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------
|   |                                                       
|   | (j)                                                   
|   |                                                       
|   | (k)                                                   
|   |                                                       
|   | (l)                                                   
|   |                                                       
|   | (m)                                                   
|   |                                                       
|   | (n)                                                   
|   |                                                       
|   | (o)                                                   



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------
|   |                                                       
|   | (p)                                                   
|   |                                                       
|   | (q)                                                   
|   |                                                       
|4. | ACQUISITIONS AND IMPAIRMENT OF ACQUIRED ASSETS        
|   |                                                       
|   | (a)                                                   



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|4. | ACQUISITIONS AND IMPAIRMENT OF ACQUIRED ASSETS (continued)
|-- | ----------------------------------------------------------
|   |                                                           
|   | (a)                                                       
|   |                                                           
|   | (b)                                                       



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|4. | ACQUISITIONS AND IMPAIRMENT OF ACQUIRED ASSETS
      (continued)
|-- | ----------------------------------------------------------------
|   |                                                                 
|   | (c)                                                             
|   |                                                                 
|   | (d)                                                             

|   |                                                        |  |                                                           |   | 2002    |  |   | 2001      |  
|-- | ------------------------------------------------------ |  | --------------------------------------------------------- | - | ------- |  | - | --------- | -
|   |                                                        |  |                                                           |   |         |  |   |           |  
|   |                                                        |  | Goodwill for ATS                                          | $ | -       |  | $ | 3,924,267 |  
|   |                                                        |  | Goodwill for Kwatrobox                                    |   | -       |  |   | 3,386,785 |  
|   |                                                        |  | Acquired workforce for I-Three Inc.                       |   | -       |  |   | 144,461   |  
|   |                                                        |  | Acquired core technology for I-Three Inc.                 |   | -       |  |   | 563,211   |  
|   |                                                        |  | Less gain on disposal of net identifiable assets
      of |   |         |  |   |           |  
|   |                                                        |  | Kwatrobox.                                                |   | -       |  |   | (445,989  | )
|   |                                                        |  | Software of I-Three Inc.                                  |   | 104,796 |  |   | -         |  
|   |                                                        |  |                                                           |   |         |  |   |           |  
|   |                                                        |  |                                                           | $ | 104,796 |  | $ | 7,572,735 |  
|   |                                                        |  |                                                           |   |         |  |   |           |  
|   |                                                        |  |                                                           |   |         |  |   |           |  
|5. | ACCOUNTS RECEIVABLE                                   
|   |                                                       
|   | Accounts receivable consists of the following amounts:

|   |                                      |   | 2002      |   |   | 2001      |  
|-- | ------------------------------------ | - | --------- | - | - | --------- | -
|   |                                      |   |           |   |   |           |  
|   | Accounts receivable                  | $ | 1,148,743 |   | $ | 1,243,188 |  
|   | Allowance for doubtful accounts      |   | (12,840   | ) |   | (12,840   | )
|   |                                      |   |           |   |   |           |  
|   |                                      |   |           |   |   |           |  
|   |                                      | $ | 1,135,903 |   | $ | 1,230,348 |  
|   |                                      |   |           |   |   |           |  
|   |                                      |   |           |   |   |           |  
|6. | INVENTORY                            |   |           |   |   |           |  
|   |                                     
|   | Inventory consists of the following:

| |                  |   | 2002      |  |   | 2001    | 
| | ---------------- | - | --------- |  | - | ------- | 
| |                  |   |           |  |   |         | 
| | Raw materials    | $ | 272,550   |  | $ | 235,990 | 
| | Work-in-progress |   | 981,072   |  |   | 45,418  | 
| | Finished goods   |   | 140,406   |  |   | 122,902 | 
| |                  |   |           |  |   |         | 
| |                  |   |           |  |   |         | 
| |                  | $ | 1,394,028 |  | $ | 404,310 | 
| |                  |   |           |  |   |         | 



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|7. | INVESTMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | During 2002, the Company recognized an
        impairment in the entire carrying amount of its equity investment in Aucxis
        Limited (Australia) in the amount of $484,448 because management believed
        the Company would not be able to recover its investment in Aucxis Limited
        (Australia). During 2002, the Company disposed of its equity investment
        in Aucxis Limited (Australia) for proceeds of $84,000 and recognized a
        gain of $84,000.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The remaining investments balance consists
        of the Companys interest in SDL Invest N.V. (Belgium) and the Companys
        interest in Auction Trading Services Netherland B.V. as follows:                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Auction Trading Services Netherlands B.V.,
      at cost                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | SDL Invest N.V. (Belgium), at cost                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Equity income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|8. | PROPERTY, PLANT, EQUIPMENT AND SOFTWARE                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Property, plant, equipment comprises:                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |                        |   |         |  |   |              |  |   | 2002         |  |   | 2001         | 
| | ---------------------- | - | ------- |  | - | ------------ |  | - | ------------ |  | - | ------------ | 
| |                        |   |         |  |   |              |  |   |              |  |   |              | 
| |                        |   |         |  |   | Accumulated  |  |   | Net Carrying |  |   | Net Carrying | 
| |                        |   | Cost    |  |   | Depreciation |  |   | Value        |  |   | Value        | 
| | Furniture and fixtures | $ | 96,520  |  | $ | 19,100       |  | $ | 77,420       |  | $ | 124,919      | 
| | Leaseholds             |   | -       |  |   | -            |  |   | -            |  |   | 27,619       | 
| | Tools and equipment    |   | 60,808  |  |   | 37,106       |  |   | 23,702       |  |   | 122,761      | 
| | Vehicles               |   | 482,909 |  |   | 286,407      |  |   | 196,502      |  |   | 273,973      | 
| |                        |   |         |  |   |              |  |   |              |  |   |              | 
| |                        | $ | 640,237 |  | $ | 342,613      |  | $ | 297,624      |  | $ | 549,272      | 
| |                        |   |         |  |   |              |  |   |              |  |   |              | 
| |                        |   |         |  |   |              |  |   |              |  |   |              | 
| | Software comprises:    |   |         |  |   |              |  |   |              |  |   |              | 

|   |                          |   | 2002     |   |   | 2001     |  
|-- | ------------------------ | - | -------- | - | - | -------- | -
|   |                          |   |          |   |   |          |  
|   | Cost                     | $ | 288,880  |   | $ | 288,880  |  
|   | Accumulated amortization |   | (184,084 | ) |   | (131,298 | )
|   | Written off (Note 4(d))  |   | (104,796 | ) |   | -        |  
|   |                          |   |          |   |   |          |  
|   |                          |   |          |   |   |          |  
|   |                          | $ | -        |   | $ | 157,582  |  
|   |                          |   |          |   |   |          |  
|   |                          |   |          |   |   |          |  
|9. | ACQUIRED WORKFORCE      

|    |                                      |   | 2002 |  |   | 2001     |  
|--- | ------------------------------------ | - | ---- |  | - | -------- | -
|    | Cost                                 | $ | -    |  | $ | 166,898  |  
|    | Accumulated amortization             |   | -    |  |   | (22,437  | )
|    | Written off I-Three Inc. (Note 4(c)) |   | -    |  |   | (144,461 | )
|    |                                      |   |      |  |   |          |  
|    |                                      | $ | -    |  | $ | -        |  
|    |                                      |   |      |  |   |          |  
|    |                                      |   |      |  |   |          |  
|10. | ACQUIRED CORE TECHNOLOGY            

| |                                      |   | 2002     |   |   | 2001      |  
| | ------------------------------------ | - | -------- | - | - | --------- | -
| |                                      |   |          |   |   |           |  
| | Cost                                 | $ | 748,969  |   | $ | 1,394,310 |  
| | Accumulated amortization             |   | (449,385 | ) |   | (381,718  | )
| | Written off I-Three Inc. (Note 4(c)) |   | -        |   |   | (563,211  | )
| |                                      |   |          |   |   |           |  
| |                                      | $ | 299,584  |   | $ | 449,381   |  
| |                                      |   |          |   |   |           |  



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|11. | GOODWILL                         
|--- | ---------------------------------
|    |                                  
|    |                                  
|    |                                  
|    | Cost                             
|    | Accumulated amortization         
|    | Written off ATS (Note 4(a))      
|    | Written off Kwatrobox (Note 4(b))
|    |                                  
|    |                                  
|    |                                  

|12. | BANK INDEBTEDNESS
        The Companys subsidiary, ATS, has available a bank credit facility
          of approximately $220,000 (247,000 EUR) which can be used for operating
          purposes. This credit facility bears interest at the banks base
          rate plus 1.25% and is secured by certain assets of ATS.
        The Company has executed a postponement agreement in favour of the
          bank. Under the agreement, the Company may not cause the ATS subsidiary
          to pay dividends to the Company or otherwise make payments to other
          companies in the group without the consent of the bank.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|13. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
      Accounts payable and accrued liabilities consist of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|    |                        |   | 2002      |  |   | 2001      | 
|--- | ---------------------- | - | --------- |  | - | --------- | 
|    |                        |   |           |  |   |           | 
|    | Trade payables         | $ | 896,398   |  | $ | 853,412   | 
|    | Accrued liabilities    |   | 566,255   |  |   | 263,000   | 
|    | Payroll                |   | 129,965   |  |   | 346,420   | 
|    |                        |   |           |  |   |           | 
|    |                        |   |           |  |   |           | 
|    |                        | $ | 1,592,618 |  | $ | 1,462,832 | 
|    |                        |   |           |  |   |           | 
|    |                        |   |           |  |   |           | 
|14. | DUE TO RELATED PARTIES

| |                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 2002     |   |   | 2001     |  
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | - | - | -------- | -
| |                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          |   |   |          |  
| | Due to former Kwatrobox shareholders                                                                                                                                                                                                                                                                                                                                                                                                        | $ | 356,274  |   | $ | 352,335  |  
| | Less: Current portion                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (356,274 | ) |   | (352,335 | )
| |                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          |   |   |          |  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                             | $ | -        |   | $ |         |  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          |   |   |          |  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          |   |   |          |  
| | The amount due to former Kwatrobox
        shareholders relates to the acquisition of Kwatrobox from these former
        shareholders and the balance is non-interest bearing.
      Included in the accounts payable is $24,874 (2001 - $59,000)
        due to a firm in which a director is a partner.
      Included in accounts payable is $44,825 (2001 - $33,494)
        due to a company controlled by directors of a subsidiary.



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|15. | RELATED PARTY TRANSACTIONS                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                           
|    | The Company incurred the following amounts
        to related parties during the year ended December 31, 2002 and December
        31, 2001, respectively:
|    |                                                                                                                                                           
|    |                                                                                                                                                           
|    |                                                                                                                                                           
|    | Management fees to directors and former directors                                                                                                         
|    |                                                                                                                                                           
|    | Professional fees paid to a firm in which a
      director is a partner                                                                                   
|    |                                                                                                                                                           
|    | Administration fees to a company with common
      directors                                                                                              
|    |                                                                                                                                                           
|    | Consulting fees to a company controlled by
      a director                                                                                               
|    |                                                                                                                                                           
|    | Consulting fees paid to a company controlled
      by the directors                                                                                       
|    | of a subsidiary (see also Note 23)                                                                                                                        
|    |                                                                                                                                                           
|    | Rent paid to SDL Invest N.V. (Belgium)                                                                                                                    
|    |                                                                                                                                                           
|16. | LONG-TERM DEBT                                                                                                                                            

| |                                                                                                                                                                                                                                                               |   | 2002     |   |   | 2001    |  
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | - | - | ------- | -
| |                                                                                                                                                                                                                                                               |   |          |   |   |         |  
| | Convertible bridge loan                                                                                                                                                                                                                                       | $ | 405,865  |   | $ | -       |  
| | Vehicle and other loans                                                                                                                                                                                                                                       |   | 188,660  |   |   | 254,698 |  
| | Less: Current portion                                                                                                                                                                                                                                         |   | (488,666 | ) |   | (89,055 | )
| |                                                                                                                                                                                                                                                               |   |          |   |   |         |  
| |                                                                                                                                                                                                                                                               |   |          |   |   |         |  
| | Long-term debt                                                                                                                                                                                                                                                | $ | 105,859  |   | $ | 165,643 |  
| |                                                                                                                                                                                                                                                               |   |          |   |   |         |  
| |                                                                                                                                                                                                                                                               |   |          |   |   |         |  
| | The vehicle loans have interest rates ranging
        from 3.67% to 8.82% and maturity dates ranging from December 2002 through
        May 2006, and are secured by the related vehicles.
      The debt repayments over the next four years are as follows:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 2003                                                                          |  | $ | 92,102  | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- |  | - | ------- | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 2004                                                                          |  |   | 59,454  | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 2005                                                                          |  |   | 35,159  | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 2006                                                                          |  |   | 1,945   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                               |  |   |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                               |  | $ | 188,660 | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                               |  |   |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                               |  |   |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | The weighted average interest rate on borrowings
      is approximately 6.5%.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                              
| | On April 16, 2002, the Company and three
        lenders, ABN Capital (Belgium) NV, Bodin Saphir Pension Scheme, and J.J.
        Mennillo, entered into a Convertible Bridge Loan Agreement for $125,000
        each, representing an aggregate loan by the lenders to the Company of
        $375,000. The Company and lenders placed the loan in escrow. The loan
        bears interest at a rate of 12.5% per annum, which accrues until the loan
        is repaid or converted to shares. Subject to certain terms and conditions
        of this agreement, each of the lenders is entitled to convert only such
        amounts as have been drawn down from its respective part of the principal
        of the loan into shares at $.01 per share. Interest has been capitalized
        to the loan balances.



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|17. | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company has adopted the provisions of Financial Accounting Standards
          Board Statement No. 109 (SFAS 109), Accounting for Income Taxes.
        Pursuant to SFAS 109, the Company is required to compute tax asset
          benefits for net operating losses carried forward. The potential tax
          benefit of net operating losses has not been recognized in the financial
          statements because the Company cannot be assured that it is more likely
          than not that it will utilize the net operating losses carried forward
          in future years.
        The Company has U.S. and European tax losses of approximately $19,000,000
          to offset future years taxable income. These losses expire between fiscal
          2014 and fiscal 2016.
        The components of the net deferred tax asset, the statutory tax rate,
          the effective tax rate and the elected amount of the valuation allowance
          are outlined below:

| |                                                 |   | 2002       |   |   | 2001       |  
| | ----------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                 |   |            |   |   |            |  
| | Net combined U.S. and European operating losses | $ | 19,000,000 |   | $ | 18,000,000 |  
| | Statutory combined U.S. and European tax rate   |   | 35%        |   |   | 35%        |  
| | Effective tax rate                              |   | -          |   |   | -          |  
| | Deferred tax asset                              |   | 6,650,000  |   |   | 6,300,000  |  
| | Valuation allowance                             |   | (6,650,000 | ) |   | (6,300,000 | )
| |                                                 |   |            |   |   |            |  
| | Net deferred tax asset                          | $ | -          |   | $ |           |  
| |                                                 |   |            |   |   |            |  



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|18. | COMMON STOCK                    
|--- | --------------------------------
|    |                                 
|    |                                 
|    |                                 
|    |                                 
|    |                                 
|    | Balance, December 31, 2000      
|    | Issued on exercise of options   
|    |                                 
|    |                                 
|    | Balance on December 31, 2001 and
|    | December 31, 2002               
|    |                                 

| |  |                                                                                                                                   | Options for |   | Weighted       | 
| |  | --------------------------------------------------------------------------------------------------------------------------------- | ----------- | - | -------------- | 
| |  |                                                                                                                                   | shares of   |   | average        | 
| |  |                                                                                                                                   | common      |   | exercise price | 
| |  |                                                                                                                                   | stock       |   | per share      | 
| |  |                                                                                                                                   |             |   |                | 
| |  | Balance December 31, 2000                                                                                                         | 8,213,000   |   | 0.34           | 
| |  |                                                                                                                                   |             |   |                | 
| |  |                                                                                                                                   |             |   |                | 
| |  | Exercised                                                                                                                         | (58,500     | ) | .01            | 
| |  | Cancelled                                                                                                                         | (5,100,000  | ) | .35            | 
| |  |                                                                                                                                   |             |   |                | 
| |  | Balance December 31, 2001 and December 31,
      2002                                                                             | 3,054,500   |   | .34            | 
| |  |                                                                                                                                   |             |   |                | 
| |  |                                                                                                                                   |             |   |                | 
| |  | The following table summarizes information
        about the Companys share options outstanding as at December 31,
        2002.

| |                                                                                                                                                                                                     |          |  | Number outstanding |  | Weighted average |  |                       | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  | ------------------ |  | ---------------- |  | --------------------- | 
| |                                                                                                                                                                                                     | Exercise |  | at                 |  | Remaining        |  | Number exercisable at | 
| |                                                                                                                                                                                                     | price    |  | December 31, 2001  |  | contractual life |  | December 31, 2001     | 
| |                                                                                                                                                                                                     |          |  |                    |  |                  |  |                       | 
| |                                                                                                                                                                                                     | $0.01    |  | 96,500             |  | 1.0              |  | 96,500                | 
| |                                                                                                                                                                                                     | $0.35    |  | 2,958,000          |  | 8.0              |  | 2,958,000             | 
| |                                                                                                                                                                                                     |          |  |                    |  |                  |  |                       | 
| | The following reflects pro-forma net income and loss per share
      as if the Company had elected to adopt the fair value approach of Statement
      of Financial Accounting Standard (SFAS) 123:

| |                                                                                                                    |   | 2002      |  |   | 2001       | 
| | ------------------------------------------------------------------------------------------------------------------ | - | --------- |  | - | ---------- | 
| |                                                                                                                    |   |           |  |   |            | 
| | Net loss for the year                                                                                              |   |           |  |   |            | 
| | As reported                                                                                                        | $ | 1,225,962 |  | $ | 14,727,621 | 
| | Pro-forma                                                                                                          |   | 1,333,597 |  |   | 16,558,631 | 
| |                                                                                                                    |   |           |  |   |            | 
| | Basic and diluted loss per share                                                                                   |   |           |  |   |            | 
| | As reported                                                                                                        |   | .02       |  |   | .23        | 
| | Pro forma                                                                                                          |   | .02       |  |   | .26        | 
| |                                                                                                                    |   |           |  |   |            | 
| | The estimated fair value of each option granted was calculated
      using the Black-Scholes option-pricing model.



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|19. | CHANGE IN NON-CASH WORKING CAPITAL                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                        
|    |                                                                                                                        
|    |                                                                                                                        
|    | Accounts receivable                                                                                                    
|    | Inventory                                                                                                              
|    | Prepaid expenses                                                                                                       
|    | Accounts payable and accrued liabilities                                                                               
|    | Deferred items                                                                                                         
|    |                                                                                                                        
|    |                                                                                                                        
|    |                                                                                                                        
|    |                                                                                                                        
|20. | SEGMENTED INFORMATION                                                                                                  
|    |                                                                                                                        
|    | The Company operates in one operating segment, this being
      the installation of auction clocks and cooling systems.

| | Geographic information         |   |           |  |   |           | 
| | ------------------------------ | - | --------- |  | - | --------- | 
| |                                |   | 2002      |  |   | 2001      | 
| | Revenue                        |   |           |  |   |           | 
| | Canada                         | $ | -         |  | $ | 269,214   | 
| | Belgium                        |   | 5,370,102 |  |   | 4,256,938 | 
| | Netherlands                    |   | -         |  |   | 2,916,327 | 
| |                                |   |           |  |   |           | 
| |                                |   |           |  |   |           | 
| |                                | $ | 5,370,102 |  | $ | 7,442,479 | 
| |                                |   |           |  |   |           | 
| | Identifiable long lived assets |   |           |  |   |           | 
| | Canada                         | $ | 24,558    |  | $ | 278,892   | 
| | Belgium                        |   | 572,650   |  |   | 877,343   | 
| |                                |   |           |  |   |           | 
| |                                |   |           |  |   |           | 
| |                                | $ | 597,208   |  | $ | 1,156,235 | 
| |                                |   |           |  |   |           | 

|21. | LOSS PER COMMON SHARE
        The Company computes net income (loss) per share in accordance with
          SFAS No. 128, Earnings per Share (SFAS 128).
        The weighted average number of shares of common stock used for calculating
          the basic loss per share is 62,738,926 (2001  62,738,926). Fully
          diluted loss per share is the same as the basic loss per share for the
          year ended December 31, 2002 and 2001. Loss per share is determined
          based on the loss available to common shareholders as presented in the
          statement of operations, deficit and comprehensive loss.
        The 3,054,500 outstanding stock options are not included in the computation
          of earnings per share as they are anti-dilutive for the periods presented.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|22. | COMMITMENTS
        The Company has future minimum lease payments under operating leases
          relating to premises at December 31, 2002 as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | 2003                                                                                                                                                                                                               | $ | 89,000  | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ------- | 
| | 2004                                                                                                                                                                                                               |   | 89,000  | 
| | 2005                                                                                                                                                                                                               |   | 89,000  | 
| | 2006                                                                                                                                                                                                               |   | 89,000  | 
| | 2007                                                                                                                                                                                                               |   | 89,000  | 
| |                                                                                                                                                                                                                    |   |         | 
| |                                                                                                                                                                                                                    |   |         | 
| |                                                                                                                                                                                                                    | $ | 445,000 | 
| |                                                                                                                                                                                                                    |   |         | 
| |                                                                                                                                                                                                                    |   |         | 
| | In addition, the Company
        has an outstanding commitment to sell its remaining 40% investment in
        SDL Invest N.V. to a director of ATS under the terms of an option held
        by the ATS director.



---

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in U.S. dollars)

---

---

|23. | CONTINGENCIES
|--- | -------------
|    |              
|    | (a)          
|    |              
|    | (b)          
|    |              
|    | (c)          



---