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**UNITED STATES
  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, 2004.

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

Commission file number __________

AUCXIS CORP.(Name of small business issuer in its charter)

|Nevada                                   | n/a                
|---------------------------------------- | -------------------
|(State or other jurisdiction of          | (I.R.S. Employer   
|incorporation or organization)           | Identification No.)
|                                         |                    
|Suite 500-666 Burrard Street             |                    
|Vancouver, British Columbia CANADA       | V6C 3P6            
|(Address of principal executive offices) | (Zip Code)         

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, 2004 were $Nil. The aggregate market value as at May 13, 2005 of the
  common stock of the issuer, its only class of voting stock, held by non-affiliates
  was approximately U.S.$211,002 calculated on the basis of the price of the
  last trade of the issuer's common stock, as reported on May 11, 2005. 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 May 13, 2005 was 66,409,415,including 3,636,364
  mandatory redeemable shares.

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

Aucxis Corp. (“Aucxis” or the “Company”)
  was originally incorporated in Nevada on January 8, 1998 under the name Kazari
  International, Inc. (Kazari). On February 26, 1999, Kazari and e-Auction Global
  Trading Inc. (Barbados) entered into a share exchange agreement pursuant to
  which agreement Kazari purchased e-Auction (Barbados) shares on a one for one
  basis. Kazari had no viable business activities at the time of the share exchange
  agreement. On June 10, 1999, Kazari amended its name to e-Auction Global Trading
  Inc. 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 had a wholly owned subsidiary, e-Auction (Barbados),
  which in turn had one wholly owned subsidiary, Aucxis Corp. (Canada). Both of
  these companies are inactive and have not conducted any active business from
  inception to date that the current management is aware of.

The Company also owns Aucxis Corp. (Belgium) (“Aucxis
  NV”), directly. On April 11, 2003 Aucxis NV, voluntarily filed for bankruptcy.
  A trustee in bankruptcy had been entrusted with Aucxis NV’s management
  and the realization of its assets for the benefit of its creditors. Accordingly,
  the Company ceased consolidating the operations of Aucxis NV effective April
  11, 2003.

2

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On May 28, 2004, the company reached a settlement with the
  former owners of the Company’s subsidiary, ATS, with regard to all disputes
  and claims alleged against the company by the former owners of ATS. The former
  owners of ATS agreed to withdraw all claims against the Company in exchange
  for a portion of the proceeds received by Aucxis upon the eventual sale of ATS
  and a withdrawal by Aucxis of any claims against the former owners. The Commercial
  Court of Dendermonde granted its approval of the settlement on June 23, 2004.

On October 29, 2004, the Company announced that it had received
  confirmation from its Belgium counsel that the bankruptcy trustee had finalized
  the sale of its 92.5% ownership in Aucxis Trading Solutions, N.V. (“ATS”)
  (formerly Schelfhout Computer Systemen N.V.), a Belgium company.

Aucxis Corp. currently has no business operations aside from
  maintaining its listing while actively seeking new business opportunities.

Business overview

Aucxis owns existing technology with limited use and as such
  is currently reviewing and evaluating potential business opportunities in the
  energy and mining sectors while it restructures the Company.

Government Regulation; Government Approval

The Company is not currently subject to direct regulation
  by any government agency, other than regulations applicable to businesses generally.

Research and Development Costs

There were no research and development expenditures in the
  most recent year or in 2003 and 2002. In years prior to that, the Company had
  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. The reason for the decline in spending in this area was
  because of the suspension of software development activity. All research and
  development costs had 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

The Company’s has no intellectual property at this time,
  and its registered patents and trademarks have all expired.

Employees and contractors

As of December 31st, 2004, the Company had one
  (1) contracted officer. None of our employees is represented by a labor union
  or are covered by a collective bargaining agreement.

Item 2.Description of Properties.

The Company has offices located at Suite 500, 666 Burrard
  Street, Vancouver, BC, Canada V6C 3P6. Our office lease obligation in Vancouver
  is renewed on an annual basis at the end of May.

3

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We have not entered into any agreements to acquire any properties.

Item 3.Legal Proceedings.

On April 16, 2002, the former owners (“Schelfhout”)
  of the Company’s subsidiary ATS filed a request for arbitration against
  Aucxis NV (Belgium) and the Company alleging 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 sought to be compensated
  by Aucxis NV (Belgium) and the Company. Management believed that the claim brought
  against Aucxis NV (Belgium) and itself was without merit and had been vigorously
  defending both itself and Aucxis NV (Belgium).

On May 14, 2002 Aucxis NV (Belgium) brought an action against
  the former owners of ATS before the Court of Dendermonde (Belgium) relating
  to certain irregularities in the deletion of a non-compete clause from ATS’
  articles of association. On February 14, 2003 the claim was dismissed by the
  courts and an appeal was filed on March 25, 2003. As a consequence of the Aucxis
  NV bankruptcy filed on April 11, 2003, these proceedings have been stayed to
  allow the trustee in bankruptcy to make a decision regarding continuation.

On March 17, 2003, the former owners of the Company’s
  subsidiary, ATS, obtained a restraining order against the Company, effectively
  securing the remaining 92.5% of the ATS shares to satisfy any ultimate judgement
  which might have been awarded to the former owners of ATS as a result of their
  claims in respect of the arbitration. These attachments lapsed automatically
  as a consequence of the Aucxis NV bankruptcy filed on April 11, 2003.

On April 11, 2003, Aucxis NV voluntarily filed for bankruptcy
  and a trustee in bankruptcy was entrusted with Aucxis NV’s management
  and the realization of its assets for the benefit of its creditors. Through
  a series of negotiations with the former owners of ATS (Schelfhout), a settlement
  was reached whereby all claims were settled and the sale of ATS by way of auction
  was approved.

On May 28, 2004, the company reached a settlement with the
  former owners of the Company’s subsidiary, ATS, with regard to all disputes
  and claims alleged against the company by the former owners of ATS. The former
  owners of ATS agreed to withdraw all claims against the Company in exchange
  for a portion of the proceeds received by Aucxis upon the eventual sale of ATS
  and a withdrawal by Aucxis of any claims against the former owners. The Commercial
  Court of Dendermonde granted its approval of the settlement on June 23, 2004.

On October 25, 2004, Aucxis received confirmation from its
  Belgium counsel that the sale had been finalized.

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 year ended December 31, 2004.

4

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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 Pink sheets Bulletin Board under the symbol "AUCX".

For the year ended December 31, 2003

|Year Ending December 31, 2003 |            |          
|----------------------------- | ---------- | ---------
|                              | Price High | Price Low
|First Quarter                 | 0.003      | 0.003    
|Second Quarter                | 0.003      | 0.003    
|Third Quarter                 | 0.003      | 0.003    
|Fourth Quarter                | 0.003      | 0.003    

For the year ended December 31, 2004

The following table sets forth the closing prices for the
  common stock during the periods indicated.

|Year Ending December 31, 2004 |            |          
|----------------------------- | ---------- | ---------
|                              | Price High | Price Low
|First Quarter                 | 0.008      | 0.003    
|Second Quarter                | 0.003      | 0.003    
|Third Quarter                 | 0.005      | 0.003    
|Fourth Quarter                | 0.003      | 0.003    
|                              |            |          
|Year Ending December 31, 2005 |            |          
|                              | Price High | Price Low
|First Quarter                 | 0.006      | 0.003    




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.

5

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Item 6.Management’s Discussion
  and Analysis of Financial Condition and Results of Operations

Critical accounting policies

We have identified the policies below as critical to our business
  operations and the understanding of our results of operations. The impact and
  any associated risks related to these policies on our business operations is
  discussed throughout Management’s Discussion and Analysis of Financial
  Condition and Results of Operations where such policies affect our reported
  and expected financial results. For a detailed discussion on the application
  of these and other accounting policies, see Note 2 in the Notes to the Consolidated
  Financial Statements in Item 7 of the Annual Report on Form 10-KSB as at December
  31, 2004. Note that our preparation of this Annual Report on Form 10-KSB and
  the Quarterly Report on Form 10-QSB requires us to make estimates and assumptions
  that affect the reported amount of assets and liabilities, disclosure of contingent
  assets and liabilities at the date of our financial statements, and the reported
  amounts of revenue and expenses during the reporting period. There can be no
  assurance that actual results will not differ from those estimates.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board
  (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 123R, “Share
  Based Payment”. SFAS 123R is a revision of SFAS No. 123 “Accounting
  for Stock-Based Compensation”, and supersedes APB Opinion No. 25, “Accounting
  for Stock Issued to Employees” and its related implementation guidance.
  SFAS 123R establishes standards for the accounting for transactions in which
  an entity exchanges its equity instruments for goods or services. It also addresses
  transactions in which an entity incurs liabilities in exchange for goods or
  services that are based on the fair value of the entity’s equity instruments
  or that may be settled by the issuance of those equity instruments. SFAS 123R
  focuses primarily on accounting for transactions in which an entity obtains
  employee services in share-based payment transactions. SFAS 123R does not change
  the accounting guidance for share-based payment transactions with parties other
  than employees provided in SFAS 123 as originally issued and Emerging Issues
  Task Force Issue No. 96-18, “Accounting for Equity Instruments That Are
  Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
  Goods or Services”. SFAS 123R does not address the accounting for employee
  share ownership plans, which are subject to AICPA Statement of Position 93-6,
  “Employers’ Accounting for Employee Stock Ownership Plans”.
  SFAS 123R requires a public entity to measure the cost of employee services
  received in exchange for an award of equity instruments based on the grant-date
  fair value of the award (with limited exceptions). That cost will be recognized
  over the period during which an employee is required to provide service in exchange
  for the award – the requisite service period (usually the vesting period).
  SFAS 123R requires that the compensation cost relating to share-based payment
  transactions be recognized in financial statements. That cost will be measured
  based on the fair value of the equity or liability instruments issued. The scope
  of SFAS 123R includes a wide range of share-based compensation arrangements
  including share options, restricted share plans, performance-based awards, share
  appreciation rights, and employee share purchase plans. Public entities (other
  than those filing as small business issuers) will be required to apply SFAS
  123R as of the first interim or annual reporting period that begins after June
  15, 2005. Public entities that file as small business issuers will be required
  to apply SFAS 123R in the first interim or annual reporting period that begins
  after December 15, 2005. For nonpublic entities, SFAS 123R must be applied as
  of the beginning of the first annual reporting period beginning after December
  15, 2005. The adoption of this standard is not expected to have a material effect
  on the Company’s results of operations or financial position.

In December 2004, FASB issued SFAS No. 153, “Exchanges
  of Nonmonetary Assets - An Amendment of APB Opinion No. 29”. The guidance
  in APB Opinion No. 29, “Accounting for Nonmonetary Transactions”,
  is based on the principle that exchanges of nonmonetary assets should be measured
  based

6

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on the fair value of the assets exchanged. The guidance in
  that Opinion, however, included certain exceptions to that principle. SFAS No.
  153 amends Opinion No. 29 to eliminate the exception for nonmonetary exchanges
  of similar productive assets and replaces it with a general exception for exchanges
  of nonmonetary assets that do not have commercial substance. A nonmonetary exchange
  has commercial substance if the future cash flows of the entity are expected
  to change significantly as a result of the exchange. The provisions of SFAS
  No. 153 are effective for nonmonetary asset exchanges occurring in fiscal periods
  beginning after June 15, 2005. Early application is permitted and companies
  must apply the standard prospectively. The adoption of this standard is not
  expected to have a material effect on the Company’s results of operations
  or financial position.

The FASB has also issued SFAS No. 151 and 152 but they will
  not have any relationship to the operations of the Company. Therefore a description
  and its impact for each on the Company’s operations and financial position
  have not been disclosed.

The year ended December 31, 2004

Management continues to manage costs while simultaneously
  exploring new business opportunities for the Company. In October 2004, the company
  announced that the bankruptcy trustee of Aucxis NV, had confirmed the sale of
  ATS. Through the auction process, the trustee finalized the sale of ATS for
  proceeds of just over $2 million U.S. Of the gross proceeds received and
  after settling the obligations of Aucxis NV, the net amount available to Aucxis
  Corp. was USD $1,881,814. The main secured creditor claims included repayment
  of bridge loans with accrued interest, the Schelfhout litigation settlement
  payment and Belgium legal fees. There also was a provision made to be applied
  toward any final charges from CEPINA, the Belgium arbitration tribunal utilized
  during the Schelfhout litigation process.

Management of Aucxis Corp. has been successful in paying the
  outstanding loans and fees and in settling with Schelfhout. Terms of the settlement
  with Schelfhout included a one time cash payment of $536,090 to Schelfhout
  and an agreement to forward the entire CEPINA deposit of $77,478 (EUR 60,000),
  50% of which is for the benefit of Schelfhout. In return, Schelfhout agreed
  to drop all claims against the Company and to return 3,636,364 shares of the
  Company’s common stock held in certificates in his name and his wife’s
  name.

Subsequent to the year end, Management received the certificates
  in its possession and is in the process of having them cancelled and returned
  to the Company’s treasury. After settling the claims against Aucxis NV
  along with other pledged creditors such as Stibbe and including legal expenses
  and bridge loans, the balance for Aucxis Corp. was $345,731.36. The balance
  of the funds will be directed towards future investments for the Company and
  towards settling the claims by unsecured creditors of the Company.

Results of Operations

Comparison of Year ended December 31, 2004 to Year ended December 31, 2003

Revenues.

Effective April 11, 2003, the Company had voluntarily relinquished
  control of Aucxis NV to a trustee in bankruptcy and, accordingly, had deconsolidated
  the subsidiary and ceased consolidating the operations of ATS. As a result,
  revenue for the year has been reported on a non-consolidated basis as nil for
  the past two years.

Operating Expenses.

Selling, general and administrative expense for the year ended
  December 31, 2004 was $243,620 compared to $216,914 for the year ended
  December 31, 2003. Depreciation and amortization expense for the year was $5,601
  compared to $6,894 last year. Total operating costs for the year ended December
  31,

7

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2004 were $264,256 compared to $214,285 for the year
  ended December 31, 2003. There were no research and development costs incurred
  in the current year.

Net Loss/Earnings.

The company had a loss of $289,125 for the year ended
  December 31, 2004 compared to $704,593 for the year ended December 31, 2003,
  mainly due to the $1,007,000 that was allocated to the write down of the
  ATS investment offset by the gain on the cancellation of mandatory redeemable
  shares during the year ended December 2003.

Plan of Operation.

Our plan of operation for the coming year for Aucxis Corp involves the following

|1 | Financing and settlements of outstanding liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|  | Management is currently in negotiations with different
        groups who may be interested in assisting the Company with raising money
        and with projects ranging from the wireless industry to the resource sector.
        Management will likely not be able to secure financing and/or a viable
        project until all outstanding payables and claims are resolved. Management
        will be seeking the cooperation of all existing unsecured creditors by
        proposing a settlement of all outstanding payables.
| 
|2 | CMU evaluation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| 
|  | In the prior year management had engaged an Ontario
        technology company to review the Collateral Management Utility (CMU) to
        determine if it justifies additional research and development. Initial
        discussions indicated that the technology was of limited use and may not
        be worth pursuing. Management has suspended further work while it reviews
        other business opportunities in the energy and mining sectors.                                                                             
| 
|3 | Other strategic options and opportunities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| 
|  | Management will continue to pursue other business
        opportunities for the Company in the energy and mining sectors.                                                                                                                                                                                                                                                                                                                                                                                                                

Liquidity and Capital Resources

Management continues to examine a variety of options to raise
  additional financing. Aucxis continues to keep operating costs to a minimum.
  In an effort to raise funds from existing or new shareholders management intends
  to negotiate settlements with creditors regarding outstanding payables. It is
  not possible at this time to predict with any assurance the success of any of
  these initiatives; however management is working diligently towards the goal
  of self-sustainability.

Working capital for the year ended December 31, 2004 resulted
  in a deficit of $1,939,966 compared to a deficit of $1,579,089 for the
  year ended December 31, 2003.

Risks and Uncertainties

Our business plan is dependent upon opportunities that we
  identify. 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 develop a business. There can be no assurance
  that the Company will successfully address these challenges.

8

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The Company has incurred losses from operations in its last
  six fiscal years and as at December 31, 2004, had an accumulated deficit in
  shareholders' equity of $25.44 million.

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, 2004.                                                                                                           
|
| | (iii) | Consolidated Statement of Operations Deficit and
        Accumulated Comprehensive Income for the years ended December 31, 2004
        and December 31, 2003.
|
| | (iv)  | Consolidated Statement of Cash Flows for the years
        ended December 31, 2004 and December 31, 2003.                                                     
|
| | (v)   | Consolidated Statement of Stockholders' Equity for
        the years ended December 31, 2004 and December 31, 2003.                                           
|
| | (vi)  | Notes to Consolidated Financial Statements.                                                                                                                   

9

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AUCXIS CORP.

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004 AND 2003

(Expressed in U.S. dollars)

F-i

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Aucxis Corp.

|                                                              | Index
|------------------------------------------------------------- | -----
|                                                              |      
|Report of Independent Registered
      Public Accounting Firm | F-1  
|Consolidated Balance Sheets                                   | F-2  
|Consolidated Statements of Operations                         | F-3  
|Consolidated Statements of Cash
      Flows                   | F-4  
|Consolidated Statement of Stockholders’
      Deficit         | F-5  
|Notes to the Consolidated Financial
      Statements          | F-6  

F-ii

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Report of Independent Registered Public Accounting
  Firm

To the Board of Directors and Stockholders of 
  Aucxis Corp.

We have audited the accompanying consolidated balance sheets
  of Aucxis Corp. as of December 31, 2004 and 2003 and the related consolidated
  statements of operations and comprehensive loss, stockholders’ deficit
  and cash flows for the years then ended. These financial statements are the
  responsibility of the Company’s management. Our responsibility is to express
  an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform 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. as of December 31, 2004 and 2003, and the consolidated
  results of its operations and its cash flows for the years then ended in conformity
  with accounting principles generally accepted 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 $1,934,304 and has accumulated losses since inception of $25,449,484.
  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

April 15, 2005

F-1

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AUCXIS CORP.CONSOLIDATED BALANCE SHEETS 
  (Expressed in U.S. dollars)

|DECEMBER 31                                                |   | 2004        |   |   | 2003         |  
|---------------------------------------------------------- | - | ----------- | - | - | ------------ | -
|                                                           |   |             |   |   | (Restated -  |  
|                                                           |   |             |   |   | See Note 13) |  
|                                                           |   |             |   |   |              |  
|ASSETS                                                     |   |             |   |   |              |  
|                                                           |   |             |   |   |              |  
|CURRENT ASSETS                                             |   |             |   |   |              |  
|Cash and cash equivalents                                  | $ | 402         |   | $ | 19,724       |  
|Accounts receivable, net of allowance for doubtful         |   |             |   |   |              |  
|accounts of $Nil and
      $12,840, respectively           |   | 1,304       |   |   | 16,646       |  
|Total Current Assets                                       |   | 1,706       |   |   | 36,370       |  
|Property and equipment (Note 4)                            |   | -           |   |   | 18,900       |  
|Investments (Note 5)                                       |   | -           |   |   | 1,000        |  
|Total Assets                                               | $ | 1,706       |   | $ | 56,270       |  
|                                                           |   |             |   |   |              |  
|                                                           |   |             |   |   |              |  
|LIABILITIES                                                |   |             |   |   |              |  
|                                                           |   |             |   |   |              |  
|CURRENT LIABILITIES                                        |   |             |   |   |              |  
|Accounts payable (Note 5)                                  | $ | 780,849     |   | $ | 525,650      |  
|Accrued liabilities                                        |   | 64,886      |   |   | 62,235       |  
|Due to former Kwatrobox shareholders (Note 6)              |   | 624,412     |   |   | 574,834      |  
|Convertible debt (Note 7)                                  |   | 471,525     |   |   | 452,740      |  
|Total Current Liabilities                                  |   | 1,941,672   |   |   | 1,615,459    |  
|Mandatory redeemable shares of common
      stock (Note 8) |   | 4,215,914   |   |   | 4,215,914    |  
|Total Liabilities                                          |   | 6,157,586   |   |   | 5,831,373    |  
|                                                           |   |             |   |   |              |  
|Commitments and Contingencies (Note 11)                    |   |             |   |   |              |  
|Subsequent Event (Note 12)                                 |   |             |   |   |              |  
|                                                           |   |             |   |   |              |  
|STOCKHOLDERS’ DEFICIT                                      |   |             |   |   |              |  
|                                                           |   |             |   |   |              |  
|Common stock                                               |   |             |   |   |              |  
|Authorized: 250,000,000 shares, $0.001 par
      value     |   |             |   |   |              |  
|Issued and outstanding: 62,773,051 shares                  |   | 62,773      |   |   | 62,773       |  
|Additional paid-in capital                                 |   | 18,736,200  |   |   | 18,736,200   |  
|Accumulated other comprehensive income                     |   | 494,631     |   |   | 586,283      |  
|Accumulated deficit                                        |   | (25,449,484 | ) |   | (25,160,359  | )
|Total Stockholders’ Deficit                                |   | (6,155,880  | ) |   | (5,775,103   | )
|Total Liabilities and Stockholders’
      Deficit          | $ | 1,706       |   | $ | 56,270       |  

(The Accompanying Notes are an Integral Part of These Consolidated
  Financial Statements)

F-2

---

AUCXIS CORP.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
  (expressed in U.S. dollars)

|YEAR ENDED DECEMBER 31                              |   | 2004       |   |   | 2003         |  
|--------------------------------------------------- | - | ---------- | - | - | ------------ | -
|                                                    |   |            |   |   | (Restated -  |  
|                                                    |   |            |   |   | See Note 13) |  
|                                                    |   |            |   |   |              |  
|                                                    |   |            |   |   |              |  
|REVENUE                                             | $ | –          |   | $ | –            |  
|                                                    |   |            |   |   |              |  
|EXPENSES                                            |   |            |   |   |              |  
|                                                    |   |            |   |   |              |  
|Selling, general and administrative                 |   | 243,620    |   |   | 216,914      |  
|Depreciation                                        |   | 5,601      |   |   | 6,894        |  
|Gain on disposal of property and equipment          |   | –          |   |   | (9,523       | )
|Impairment loss on property and equipment           |   | 15,035     |   |   | –            |  
|                                                    |   |            |   |   |              |  
|Total operating expenses                            |   | 264,256    |   |   | 214,285      |  
|                                                    |   |            |   |   |              |  
|Operating loss                                      |   | (264,256   | ) |   | (214,285     | )
|                                                    |   |            |   |   |              |  
|Other income (expense):                             |   |            |   |   |              |  
|Share of income of equity investment                |   | –          |   |   | 10,296       |  
|Miscellaneous revenue                               |   | –          |   |   | 11,540       |  
|Impairment loss on investments                      |   | (1,000     | ) |   | (1,007,000   | )
|Gain on cancellation of mandatory redeemable shares |   | –          |   |   | 542,295      |  
|Interest expense                                    |   | (23,869    | ) |   | (47,439      | )
|                                                    |   |            |   |   |              |  
|Net loss for the year                               |   | (289,125   | ) |   | (704,593     | )
|                                                    |   |            |   |   |              |  
|Other comprehensive income (loss)                   |   |            |   |   |              |  
|Foreign currency translation
      adjustments      |   | (91,652    | ) |   | 342,573      |  
|                                                    |   |            |   |   |              |  
|Comprehensive loss                                  | $ | (380,777   | ) | $ | (362,020     | )
|                                                    |   |            |   |   |              |  
|Basic and diluted loss per share                    |   | (0.01      | ) |   | (0.01        | )
|                                                    |   |            |   |   |              |  
|Weighted average shares outstanding                 |   | 62,773,051 |   |   | 62,773,051   |  

(The Accompanying Notes are an Integral Part of These Consolidated
  Financial Statements)

F-3

---

AUCXIS CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS 
  (Expressed in U.S. dollars)

|YEAR ENDED DECEMBER 31                                                           |   | 2004     |   |   | 2003      |  
|-------------------------------------------------------------------------------- | - | -------- | - | - | --------- | -
|                                                                                 |   |          |   |   |           |  
|                                                                                 |   |          |   |   |           |  
|OPERATING ACTIVITIES                                                             |   |          |   |   |           |  
|Net loss for the year                                                            | $ | (289,125 | ) | $ | (704,593  | )
|Adjustments to reconcile net loss to net cash used in operating
      activities |   |          |   |   |           |  
|Depreciation                                                                     |   | 5,601    |   |   | 6,894     |  
|Share of income of equity investment                                             |   | –        |   |   | (10,296   | )
|Gain on cancellation of mandatory redeemable
      shares                        |   | –        |   |   | (542,295  | )
|Impairment loss on investment                                                    |   | 1,000    |   |   | 1,007,000 |  
|Gain on disposal of property and equipment                                       |   | –        |   |   | (9,523    | )
|Impairment loss on property and equipment                                        |   | 15,035   |   |   | –         |  
|Changes in operating assets and liabilities                                      |   |          |   |   |           |  
|Accounts receivable                                                              |   | 15,342   |   |   | 19,790    |  
|Prepaid expenses                                                                 |   | –        |   |   | 15,973    |  
|Accounts payable and accrued
      liabilities                                   |   | 256,114  |   |   | 197,246   |  
|                                                                                 |   |          |   |   |           |  
|CASH PROVIDED BY (USED IN) OPERATING
      ACTIVITIES                            |   | 3,967    |   |   | (19,804   | )
|                                                                                 |   |          |   |   |           |  
|INVESTING ACTIVITIES                                                             |   |          |   |   |           |  
|Change in subsidiary net assets                                                  |   | –        |   |   | (557,249  | )
|                                                                                 |   |          |   |   |           |  
|CASH USED IN INVESTING ACTIVITIES                                                |   | –        |   |   | (557,249  | )
|                                                                                 |   |          |   |   |           |  
|FINANCING ACTIVITIES                                                             |   | –        |   |   | –         |  
|                                                                                 |   |          |   |   |           |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND                                      |   |          |   |   |           |  
|CASH EQUIVALENTS                                                                 |   | (23,289  | ) |   | (21,034   | )
|                                                                                 |   |          |   |   |           |  
|DECREASE IN CASH AND CASH EQUIVALENTS                                            |   | (19,322  | ) |   | (598,087  | )
|                                                                                 |   |          |   |   |           |  
|CASH AND CASH EQUIVALENTS, BEGINNING
      OF YEAR                               |   | 19,724   |   |   | 617,811   |  
|                                                                                 |   |          |   |   |           |  
|CASH AND CASH EQUIVALENTS, END OF YEAR                                           | $ | 402      |   | $ | 19,724    |  
|                                                                                 |   |          |   |   |           |  
|                                                                                 |   |          |   |   |           |  
|Non-cash investing and financing activities                                      | $ | –        |   | $ | –         |  
|                                                                                 |   |          |   |   |           |  
|Supplemental disclosures                                                         |   |          |   |   |           |  
|Interest paid                                                                    | $ | –        |   | $ | –         |  
|Income taxes paid                                                                |   | –        |   |   | –         |  

(The Accompanying Notes are an Integral Part of These Consolidated
  Financial Statements)

F-4

---

AUCXIS CORP.CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT 
  (expressed in U.S. dollars)

YEARS ENDED DECEMBER 31, 2004 and 2003

|                             |              |  |         |  |               |  | (Restated – See |   |               |   |            |  
|---------------------------- | ------------ |  | ------- |  | ------------- |  | --------------- | - | ------------- | - | ---------- | -
|                             |              |  |         |  |               |  | Note 13)        |   |               |   |            |  
|                             |              |  |         |  |               |  | Accumulated     |   |               |   |            |  
|                             |              |  |         |  | Additional    |  | Other           |   |               |   | Total      |  
|                             | Common Stock |  | Paid-in |  | Comprehensive |  | Accumulated     |   | Stockholders’ |  
|                             | Shares       |  | Amount  |  | Capital       |  | Income          |   | Deficit       |   | Deficit    |  
|                             | #            |  | $       |  | $             |  | $               |   | $             |   | $          |  
|                             |              |  |         |  |               |  |                 |   |               |   |            |  
|Balance - December 31, 2002  | 62,773,051   |  | 62,773  |  | 18,736,200    |  | 243,710         |   | (24,455,766   | ) | (5,413,083 | )
|                             |              |  |         |  |               |  |                 |   |               |   |            |  
|Foreign currency translation | –            |  | –       |  | –             |  | 342,573         |   | –             |   | 262,133    |  
|                             |              |  |         |  |               |  |                 |   |               |   |            |  
|Net loss for the year        | –            |  | –       |  | –             |  | –               |   | (704,593      | ) | (704,593   | )
|                             |              |  |         |  |               |  |                 |   |               |   |            |  
|Balance - December 31, 2003  | 62,773,051   |  | 62,773  |  | 18,736,200    |  | 586,283         |   | (25,160,359   | ) | (5,775,103 | )
|                             |              |  |         |  |               |  |                 |   |               |   |            |  
|Foreign currency translation | –            |  | –       |  | –             |  | (91,652         | ) | –             |   | (91,652    | )
|                             |              |  |         |  |               |  |                 |   |               |   |            |  
|Net loss for the year        | –            |  | –       |  | –             |  | –               |   | (289,125      | ) | (289,125   | )
|                             |              |  |         |  |               |  |                 |   |               |   |            |  
|Balance - December 31, 2004  | 62,773,051   |  | 62,773  |  | 18,736,200    |  | 494,631         |   | (25,449,484   | ) | (6,155,880 | )

F-5

---

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

YEAR ENDED DECEMBER 31, 2004 AND 2003

|1. | NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The Company was incorporated in Nevada,
        USA on January 8, 1998 under the name Kazari International, Inc. and changed
        its name to e-Auction Global Trading Inc. on June 10, 1999. The Company
        changed its name to Aucxis Corp. on June 12, 2001 when its business was
        the development of e-business services for the perishable commodity marketplace
        primarily in Europe, the installation and maintenance of auction clock
        and cooling systems for traditional auction halls, and the development
        of software for auctions. The Company has suspended development of e-business
        services for the perishable commodity marketplace pending further review
        of the business opportunities. Refer to Note 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | These financial statements have been prepared
        on a going concern basis, which implies the Company will continue to realize
        its assets and discharge its liabilities in the normal course of business.
        The Company has not generated significant revenues since inception and
        has never paid any dividends and is unlikely to pay dividends or generate
        earnings in the immediate or foreseeable future. The continuation of the
        Company as a going concern is dependent upon the continued financial support
        from its shareholders, the ability of the Company to obtain necessary
        equity financing to continue operations and the attainment of profitable
        operations. As at December 31, 2004, the Company has a working capital
        deficiency of $1,939,966 (December 31, 2003 - $1,579,089), and
        has accumulated losses of $25,449,484 since inception. These financial
        statements do not include any adjustments to the recoverability and classification
        of recorded asset amounts and classification of liabilities that might
        be necessary should the Company be unable to continue as a going concern.
        These factors raise substantial doubt regarding the Company’s ability
        to continue as a going concern. 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. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-6

---

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

YEAR ENDED DECEMBER 31, 2004 AND 2003

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------
|  
|   | d)                                                    
|  
|   |                                                       
|  
|   | e)                                                    
|  
|   |                                                       
|  
|   | f)                                                    
|  
|   |                                                       
|  
|   | g)                                                    
|  
|   |                                                       
|  
|   | h)                                                    
|  
|   |                                                       
|  
|   | i)                                                    
|  
|   |                                                       
|  
|   |                                                       

F-7

---

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

YEAR ENDED DECEMBER 31, 2004 AND 2003

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------
|  
|   | i)                                                    
|  
|   |                                                       
|  
|   | j)                                                    
|  
|   |                                                       
|  
|   |                                                       
|  
|   |                                                       
|  
|   |                                                       

| |                                                                           | 2004     |   | 2003     |  
| | ------------------------------------------------------------------------- | -------- | - | -------- | -
| |                                                                           | $        |   | $        |  
| |                                                                           |          |   |          |  
| | Net loss – as reported                                                    | (289,125 | ) | (704,593 | )
| | Add:                                                                      |          |   |          |  
| | Stock-based compensation expense
      included in net loss – as reported | –        |   | –        |  
| | Deduct:                                                                   |          |   |          |  
| | Stock-based
      compensation expense determined under fair value method | –        |   | (107,635 | )
| |                                                                           |          |   |          |  
| | Net loss —
      pro forma                                                | (289,125 | ) | (812,233 | )
| |                                                                           |          |   |          |  
| | Basic and diluted loss per share –
      as reported                      | (0.01    | ) | (0.01    | )
| | Basic and diluted loss per share – pro forma                              | (0.01    | ) | (0.01    | )

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | During the prior year, the fair value of the stock
        options granted was estimated using the Black-Scholes option pricing model
        with the following weighted-average assumptions: risk free interest rate
        of 5.77%, expected volatility of 30%, an expected option life of three
        years and no expected dividends.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|k) | Basic and diluted net income (loss) per
      share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | The Company computes net income (loss)
        per share in accordance with SFAS No. 128, "Earnings per Share" (SFAS
        128). SFAS 128 requires presentation of both basic and diluted earnings
        per share (EPS) on the face of the income statement. Basic EPS is computed
        by dividing net income (loss) available to common shareholders (numerator)
        by the weighted average number of common shares outstanding (denominator)
        during the period. Diluted EPS gives effect to all dilutive potential
        common shares outstanding during the period including stock options, using
        the treasury stock method, and convertible preferred stock, using the
        if- converted method. In computing diluted EPS, the average stock price
        for the period is used in determining the number of shares assumed to
        be purchased from the exercise of stock options or warrants. Diluted EPS
        excludes all dilutive potential common shares if their effect is anti-dilutive.

F-8

---

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

YEAR ENDED DECEMBER 31, 2004 AND 2003

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | l)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   | m)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|3. | SUMMARIZED FINANCIAL INFORMATION OF DECONSOLIDATED SUBSIDIARY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | The Company has a 100% interest in Aucxis
        Corp. NV, a Belgium company (“wholly-owned subsidiary), which in
        turn had a 92.5% interest in Aucxis Trading Solutions NV (“ATS”).
        The Company also has advances receivable from Aucxis NV of $10,324,000.
        On April 11, 2003, Aucxis Corp. NV, voluntarily filed for bankruptcy.
        A trustee in bankruptcy had been entrusted with Aucxis Corp. NV’s
        management and the realization of its assets for the benefit of its creditors
        and its shareholders. Court proceedings for the final verification of
        claims and counterclaims took place on June 5, 2003.

F-9

---

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

YEAR ENDED DECEMBER 31, 2004 AND 2003

|3. | SUMMARIZED FINANCIAL INFORMATION OF DECONSOLIDATED SUBSIDIARY (continued)
      The proceeds that Aucxis Corp. NV received from liquidating
        its 92.5% interest in ATS was used to pay trustee fees and miscellaneous
        liabilities remaining on its balance sheet. The remaining proceeds were
        disbursed to Aucxis Corp in settlement of its claim for advances made
        to Aucxis Corp. NV. The recovered advances were used to pay the settlement
        amount agreed upon with Schelfhout. In the prior year, the company was
        unable to estimate, within the constraints of timeliness or cost, the
        amount that the Company would ultimately recover and accordingly, the
        Company ceased consolidating the operations of Aucxis Corp. NV effective
        April 11, 2003 and the Company provided for the impairment of this investment
        by writing it down to $1,000 and carrying it under the equity method
        as of December 31, 2003. In the current year the Company has written down
        the investment to nil. The Company will recognize any recovery of the
        advances in the period in which the proceeds are actually received (See
        Note 11).
      Summarized consolidated financial information of Aucxis
        Corp. NV as at and for the quarter ended March 31, 2003 immediately prior
        to filing for bankruptcy and deconsolidation by the Company was as follows:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                  |   | As at      
| | -------------------------------- | - | -----------
| |                                  |   | March 31,  
| |                                  |   | 2003       
| |                                  |   | (unaudited)
| | Current assets                   | $ | 3,143,712  
| | Noncurrent assets                | $ | 527,714    
| | Current liabilities              | $ | 3,055,624  
| | Noncurrent liabilities           | $ | 36,608     
| | Minority interests               | $ | 59,972     
| | Revenue                          | $ | 1,226,880  
| | Cost of goods sold               | $ | 307,800    
| | Net income (loss) for the period | $ | 10,296     

|4. | PROPERTY AND EQUIPMENT
|-- | ----------------------

| |                        |           |              | 2004         | 2003        
| | ---------------------- | --------- | ------------ | ------------ | ------------
| |                        |           | Accumulated  | Net Carrying | Net Carrying
| |                        | Cost      | Depreciation | Value        | Value       
| |                        |           |              |              |             
| | Furniture and fixtures | $
      – | $
      –    | $
      –    | $ 18,900    

|5. | RELATED PARTY TRANSACTIONS
|-- | --------------------------
|  
|   | a)                        
|  
|   | b)                        
|  
|   | c)                        

| |       |                                                                                            |   | 2004   |  |   | 2003   | 
| | ----- | ------------------------------------------------------------------------------------------ | - | ------ |  | - | ------ | 
| | (i)   | Consulting fees to a company controlled
      by the President, CEO and CFO of the Company | $ | 87,591 |  | $ | 95,033 | 
| | (ii)  | Professional fees paid to a firm in which a director is a
      partner                    | $ | –      |  | $ | 17,467 | 
| | (iii) | Management fees to directors and former
      directors                                    | $ | 7,683  |  | $ | 7,337  | 

F-10

---

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

YEAR ENDED DECEMBER 31, 2004 AND 2003

|6. | DUE TO FORMER KWATROBOX SHAREHOLDERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The amount due to former Kwatrobox shareholders
        relates to the acquisition of Kwatrobox from its former shareholders (“vendors”)
        and the balance is non-interest bearing. The Company has been in discussions
        with legal counsel of the Kwatrobox shareholders and is reviewing certain
        representations made by the vendors immediately prior to the acquisition
        of Kwatrobox.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|7. | CONVERTIBLE DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   | 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 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 $0.01 per share. Interest
        has been capitalized to the loan balances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   | The entire loan had been drawn down and was due
        to be repaid or converted on December 31, 2002. Since the repayment date
        has passed, the loan has been classified as a current liability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | Interest has accrued on the loans and effective
        May 28, 2004, the amount payable including accrued interest was fixed
        at $471,525 in conjunction with the Schelfhout settlement. This amount
        was paid subsequent to year end. See Note 12.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|8. | MANDATORY REDEEMABLE SHARES OF COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | On January 10, 2000, the Company completed and closed
        the purchase of 100% of the issued and outstanding shares of ATS. The
        Company acquired the shares of ATS in exchange for 3,636,364 shares of
        common stock and cash of $4,000,000. The shares of common stock were
        valued at $3,636,364, based on their estimated fair value at January
        10, 2000. Fair value was determined based on the cash price paid for stock
        in a contemporaneous private placement, the put feature related to the
        shares issued to acquire ATS and the market price of the Company’s
        stock around the acquisition date. The Company accreted $938,000 and
        $243,817 to the mandatory redeemable shares of common stock during
        the years ended December 31, 2000 and 2001, respectively. The accretions
        were recorded under a straight-line assumption based on a two-year amortization.
        The terms of the purchase agreement also provided the vendors with a put
        feature, which allowed the vendors to sell the shares back to the Company
        at $1.65 per share at the time of release if they were not freely
        tradable. Since the 3,636,364 shares issued to the vendors were subject
        to a put feature, which is beyond the Company’s direct control,
        they were classified as mandatory redeemable shares of common stock.
|  
|   | Under the terms of the purchase agreement, the vendors
        agreed not to sell or transfer any of their shares except on the basis
        of a time-release formula which presumes that the shares will be freely
        tradable at the time of release for sale or transfer. Under the time release
        formula, 454,545 shares were to be released on each of the 6, 12, 18 and
        24 month anniversary dates of the closing and 606,061 shares are to be
        released on each of the 36, 48 and 60 month anniversary dates of the closing.
        The first 454,545 shares were not free trading on July 10, 2000, the first
        anniversary date of the acquisition and during 2002 the vendors sought
        to exercise their right to retract 909,090 shares, representing the first
        two tranches under the time release agreement, on the basis that they
        were not free trading on their respective release dates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | During the year ended December 31, 2003, the Company
        finalized the disposition of a 7.5% interest in ATS pursuant to a court
        order allowing the former owners of ATS to reacquire a 7.5% interest in
        exchange for the transfer for cancellation of the first tranche of 454,545
        shares. Accordingly, the Company reduced the mandatory redeemable shares
        of common stock by $602,267 (454,545 shares), increased its non-controlling
        interest by $59,972 representing the carrying amount of the portion
        of ATS disposed of and recognized a gain on cancellation of mandatory
        redeemable common shares for the balance of $542,295.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | During the year ended December 31, 2004, the Company
        entered into a full settlement agreement with Schelfhout which included
        giving up a portion of the proceeds that the Company was to receive from
        Aucxis Corp. NV after ATS was sold. As part of the settlement the mandatory
        redeemable shares were relinquished and will be returned to treasury when
        they are received.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F-11

---

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

YEAR ENDED DECEMBER 31, 2004 AND 2003

|9. | STOCK OPTIONS
|-- | -------------

| |                                  |            |   |   | Weighted | 
| | -------------------------------- | ---------- | - | - | -------- | 
| |                                  |            |   |   | average  | 
| |                                  |            |   |   | exercise | 
| |                                  | Number     |   |   | price    | 
| |                                  |            |   |   |          | 
| | Balance, December 31, 2002       | 3,054,500  |   | $ | 0.34     | 
| | Cancelled/expired                | (2,436,500 | ) |   | 0.34     | 
| |                                  |            |   |   |          | 
| | Balance, December 31, 2003       | 618,000    |   |   | 0.35     | 
| | Cancelled/expired                | (618,000   | ) |   | 0.35     | 
| |                                  |            |   |   |          | 
| | Balance, December
      31, 2004 | –          |   | $ | 0.35     | 

|10. | 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 $17,500,000
        to offset future years taxable income.
      The components of the net deferred tax asset, the statutory
        tax rate, the effective tax rate and the amount of the valuation allowance
        are outlined below:
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                              |   | 2004       |   |   | 2003       |  
| | ---------------------------- | - | ---------- | - | - | ---------- | -
| |                              |   |            |   |   |            |  
| | U.S. operating losses        | $ | 17,500,000 |   | $ | 17,200,000 |  
| | Statutory U.S. tax rate      |   | 35%        |   |   | 35%        |  
| | Effective tax rate           |   | –          |   |   | –          |  
| | Deferred tax asset           |   | 6,125,000  |   |   | 6,020,000  |  
| | Valuation allowance          |   | (6,125,000 | ) |   | (6,020,000 | )
| |                              |   |            |   |   |            |  
| | Net deferred tax
      asset | $ | –          |   | $ | –          |  

|11. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | In 2002, the former owners of the Company (Schelfhout)
        filed a lawsuit against the Company, alleging that the Company deliberately
        committed a number of misrepresentations both prior to and subsequent
        to the closing of the ATS share purchase agreement. Schelfhout tried to
        recover his investment in ATS by having the Company repurchase his shares.
        However, a dispute over the value of the shares held by Schelfhout resulted
        in a delay in settling the claim. Also in 2002, Aucxis Corp. NV brought
        an action against the former owners of ATS relating to certain irregularities
        in the deletion of a non-compete clause from ATS’ articles of association.
        The claim was dismissed by the court and an appeal was filed in March
        2003. Aucxis Corp. NV declared bankruptcy in April of 2003 and as a result
        the proceedings were stayed to allow the trustee in bankruptcy to make
        a decision regarding continuation.
|   
|    | The case was ongoing until May of 2004, when the
        Company finally reached a settlement with the former owners of ATS. The
        former owners agreed to withdraw the claims against the Company in exchange
        for a portion of the proceeds to be received by the Company upon the sale
        of ATS and a withdrawal of any claims against the former owners.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

F-12

---

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

YEAR ENDED DECEMBER 31, 2004 AND 2003

|11. | COMMITMENTS AND CONTINGENCIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | In October of 2004, the Company received confirmation
        from its Belgium counsel that the sale of ATS had been finalized. The
        trustee was able to sell the assets of ATS for proceeds of just over $2
        million. Of the gross proceeds received, the net amount available to the
        Company to satisfy its claim for the $9,250,000 ($10,000,000 less
        $750,000 reclaimed by Schelfhout) that it had advanced to Aucxis Corp.
        NV to purchase ATS after the repayment of bridge loans, the Schelfhout
        litigation settlement payment, Belgium legal fees and other secured liabilities
        was $1,881,814. There was also a provision made to be applied toward
        any final charges from CEPINA, the Belgium arbitration tribunal utilized
        during the Schelfhout litigation process.
|   
|12. | SUBSEQUENT EVENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | Subsequent to December 31, 2004, the Company received
        the sum of $1,881,814 from Aucxis Corp. NV, this being the balance
        of funds available after Auxcis Corp. NV discharged all of its payables
        including settling its accrued payables. From this amount, the Company
        had to settle with its various secured creditors. These included repayment
        of the bridge loans with accrued interest, the Schelfhout litigation settlement
        payment, Belgium legal fees, final charges from CEPINA, as well as outstanding
        fees due for accounting and legal services performed. After having settled
        these claims, the Company received approximately $342,000 with which
        it will endeavour to settle all other unsecured claimants.                                                
|   
|13. | RESTATEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    | The Company has restated its financial statements
        for the year ended December 31, 2003. The nature of the restatement and
        the effects are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |                                              | As Reported |   | Adjustment |   | As Restated |  
| | -------------------------------------------- | ----------- | - | ---------- | - | ----------- | -
| |                                              | $           |   | $          |   | $           |  
| |                                              |             |   |            |   |             |  
| | Balance Sheet                                |             |   |            |   |             |  
| | Convertible debt                             | 533,180     |   | (80,440    | ) | 452,740     |  
| |                                              |             |   |            |   |             |  
| | Accumulated other comprehensive
      income | 505,843     |   | 80,440     |   | 586,283     |  
| |                                              |             |   |            |   |             |  
| | Income Statement                             |             |   |            |   |             |  
| | Comprehensive loss                           | (442,460    | ) | 80,440     |   | (362,020    | )

| | The adjustment was due to the correction to the foreign currency translation
        adjustment on the convertible debt balance.
      There was no change to the net loss or basic and diluted loss per share.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-13

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

None

Item 8aControls and Procedures

We maintain disclosure controls and procedures that are designed
  to ensure that information required to be disclosed in our Securities Exchange
  Act of 1934 reports are recorded, processed, summarized and reported within
  the time periods specified in the SEC's rules and forms, and that such information
  is accumulated and communicated to our management, including our chief executive
  officer and chief financial officer, as appropriate, to allow timely decisions
  regarding required disclosure. Within 90 days prior to the date of this report,
  our management carried out an evaluation, under the supervision and with the
  participation of our management, including our chief executive officer and chief
  financial officer, of the effectiveness of the design and operation of our disclosure
  controls and procedures pursuant to Exchange Act Rule 15d-14. Based upon the
  foregoing, our chief executive officer and chief financial officer concluded
  that our disclosure controls and procedures are effective in connection with
  the filing of this Annual Report on Form 10-KSB for the year ended December
  31, 2004.

10

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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    | 42  | Chairman of the Board, Director
|Dennis Petke   | 41  | Chief Financial Officer        
|Lewis Reinders | 67  | Director                       

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 is currently a Director and CFO
  of a US Public company in the Oil and Gas business.

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.

11

---

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 CAD $5,000 per
  annum and CAD $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 2004.

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, 2004 and December 31, 2003 regarding the compensation
  of the Company's Named Executive Officer:

|SUMMARY COMPENSATION TABLE                       
|-------------------------------------------------
|Name and Principal Position                      
|Salary
      (US$)                               
|Restricted
      stock
      awards
      (US$)  
|Dennis Petke,
      Chief Financial
      Officer
|2004                                             

Dennis Petke was named Chief Financial Officer and Corporate
  Secretary on August 21, 2001. Mr. Petke is compensated under contract through
  Q4 Financial Group Inc., a company controlled by Mr. Petke, at a current rate
  of approximately USD $3,850* (CAD $5,000) per month – as of October
  2004. Prior to that, Mr. Petke was being compensated at a rate of approximately
  $8500 per month (CAD $11,000). 1Average annual exchange rate for 2003 = 1.402 Average annual exchange rate for 2004 = 1.30

12

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STOCK OPTION GRANTS IN LAST FISCAL YEAR

No stock options were granted in the year ended December 31,
  2004, although the directors of the Company did receive options to purchase
  up to 50,000 shares of the Company’s common stock.

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.

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
  11, 2005 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, 2004 exceeded US $100,000 (collectively, the
  “Named Executive Officers”), and (iii) each of our Company's directors.

13

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|Name and Address of Beneficial Owner                                           |  | Number of Shares (1) |  | Percentage of 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                                          |  |                      |  |                     | 
|                                                                               |  |                      |  |                     | 
|Gary Jessop, Chairman                                                          |  | 150,000(3)           |  | *                   | 
|C/o Suite 500 – 666 Burrard Street, Vancouver,
      BC  V6C 3P6               |  |                      |  |                     | 
|                                                                               |  |                      |  |                     | 
|Lewis Reinders, Director                                                       |  | 150,000(3)           |  | *                   | 
|C/o Suite 500 – 666 Burrard Street, Vancouver,
      BC  V6C 3P6               |  |                      |  |                     | 
|                                                                               |  |                      |  |                     | 
|Dennis Petke, CFO                                                              |  | 112,000(3) (4)       |  | *                   | 
|C/O Suite 500 – 666 Burrard Street, Vancouver,
      BC V6C 3P6                |  |                      |  |                     | 
|                                                                               |  |                      |  |                     | 
|All executive officers and directors as a group
      (3 persons)              |  | 412,000(3)(4)        |  | *                   | 

* 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 options earned, but not yet granted, enabling
        the holder to purchase up to 150,000 shares, priced at an exercise price
        of $0.35 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4) | Includes 12,000 shares held directly.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Item 12.     Certain Relationships and Related
  Transactions.

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.

14

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

(a)     Exhibits

| | 21.1 | List of subsidiaries                                                                         
| | ---- | ---------------------------------------------------------------------------------------------
| |      |                                                                                              
| | 31.1 | Section 302 Certification
      of Acting Chief Executive Officer and Chief Financial Officer
| |      |                                                                                              
| | 32.1 | Section 906 Certification
      of Acting Chief Executive Officer and Chief Financial Officer

(b)     Reports on Form 8-K None

Item 14.Principal accounting fees
  and services

(1)     Audit fees

The principal accountant for our audit of annual financial
  statements and review of financial statements included in our Form 10-KSBs or
  services that are normally provided by the accountant in connection with statutory
  and regulatory filings or engagements for those fiscal years was:

|                   |   | 2004   |  |   | 2003   | 
|------------------ | - | ------ |  | - | ------ | 
|                   |   |        |  |   |        | 
|Audit Fees         | $ | 10,000 |  | $ | 20,000 | 
|Audit Related Fees | $ | Nil    |  |   | Nil    | 
|Tax Fees           | $ | Nil    |  |   | Nil    | 
|All Other Fees     | $ | Nil    |  |   | Nil    | 
|                   |   |        |  |   |        | 
|                   | $ | 10,000 |  | $ | 20,000 | 

15

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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.
|------------------- | ------------
|                    |             
|Dated: May 13, 2005 |             
|                    | By:         
|                    |             
|                    |             

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 | May 13, 2005
|Dennis Petke       |                         |             
|                   |                         |             
|                   |                         |             
|/s/ Gary Jessop    | Director                | May 13, 2005
|Gary Jessop        |                         |             
|                   |                         |             
|                   |                         |             
|/s/ Lewis Reinders | Director                | May 13, 2005
|Lewis Reinders     |                         |             

16

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